Innovative Solutions and Support Inc

What they do

IA designs and manufactures flight deck systems, air data systems, and autothrottle products, including ThrustSense Autothrottle, Vmc Mitigation, NextGen Flight Deck, Liberty Flight Deck, and COCKPIT/IP. It sells to commercial aerospace, business aviation, and military customers, and reports operating leverage from a capital-light model. The company is Nasdaq-listed under ISSC and is rebranding as Innovative Aerosystems with a planned ticker change to 'IA'.

Revenue drivers

• Commercial aerospace and business aviation — Management cited strong organic growth in these markets as the driver of the ~11% third-quarter revenue increase, offsetting lower F-16 revenue versus the prior-year period.
• Military programs (including F-16) — Military revenue was elevated in the prior-year comparable period due to transition of manufacturing into the Exton facility; the Aydin Displays acquisition adds military display technology and naval and ground defense exposure.
• Next-generation flight deck platforms — Liberty Flight Deck won its first production award, an agreement with a Japanese eVTOL developer to design the primary display and avionics architecture; ThrustSense, NextGen Flight Deck and COCKPIT/IP are the other named growth products.

Recent performance

For the quarter ended June 30, 2026, net sales were $26.7 million, up 10.7% year over year. Gross profit was $13.8 million (51.7% margin), net income was $4.5 million or $0.25 per diluted share, and adjusted net income was $6.0 million or $0.33 per diluted share. EBITDA was $7.3 million and adjusted EBITDA was $7.7 million, up 74.7%. For the nine months ended June 30, 2026, operating cash flow was $15.5 million (+50.4%) and free cash flow was $12.3 million (+155%). Backlog stood at $82.9 million.

Strategy

Management's stated long-term objective is $250 million in annual revenue. It is pursuing acquisitions to broaden the avionics portfolio, having completed the Aydin Displays purchase in July 2026 and deployed more than $35 million of capital toward strategic investments during fiscal 2026. It is also investing in next-generation flight deck automation, with Liberty Flight Deck's first production award from a Japanese eVTOL developer. The company is rebranding as Innovative Aerosystems, changing its ticker to 'IA', and was added to the Russell 2000 Index. It cites $53.7 million of cash and available credit capacity as financial flexibility for growth priorities.

Risks

• Customer concentration and program timing — Results have swung with military program timing, as shown by elevated prior-year F-16 revenue tied to the Exton manufacturing transition.
• Regulatory certification — The company lists the ability to gain and sustain domestic and international regulatory approval for its products as a risk factor.
• Supply chain and tariffs — Delays in components from third-party suppliers and general economic trends including tariffs and trade restrictions are cited risk factors.
• Acquisition integration and leverage — IA carries $48.7 million of long-term debt as of June 30, 2026, and states net debt to trailing twelve-month adjusted EBITDA of 1.4x after spending over $35 million on strategic investments in fiscal 2026.

Outlook

Management said it expects to finish fiscal 2026 on a positive note, driven by continued strength across commercial, business jet and military markets plus recent acquisitions. It pointed to its business development pipeline and growing commercial traction for next-generation flight deck products. No specific revenue or earnings guidance figures were provided in the release.