A Quick Take on Innovative Solutions

"we doubled our revenue, tripled our EBITDA and quadrupled our profit from a year ago"

Introduction

• For a more extensive introduction, see our Primer on ISSC.

• Innovative Solutions and Support (ISSC) develops and manufactures aircraft systems and products focused on improving safety, efficiency, and performance for both commercial and military aircraft.

• ISSC manufactures 100% of its products in its Exton, Pennsylvania, facility, including flight displays, navigation systems, and communications and data management solutions.

• The company made three transformational Asset and License purchases from Honeywell, which were responsible for producing stunning Q2/25 results.

• See our more extensive Primer.

There are reasons to be optimistic:

• ISSC produced a monster Q2, from the Q2CC (our emphasis)

we doubled our revenue, tripled our EBITDA and quadrupled our profit from a year ago.”

• The company generated great operating leverage from its Honeywell asset acquisitions, which were good for half the revenues without adding much to OpEx.

• Management only guides for 30% revenue and EBITDA growth for FY25, which seems a bit of a softball to us with H1 growth at nearly 90%.

• Q2 EPS of $0.31 might be difficult to equal or surpass, but even on the average analyst FY25 estimate of $0.72, the shares would still be reasonably priced.

• The company is also at the end of expanding its Exton facility, doubling the footprint and tripling its production capacity (up to $250M/y). With backlog of $80M and multiple contracts not even counted in backlog, they have plenty to keep them going.

• The Honeywell acquisition and its facility CapEx costs are falling away, which will increase cash flow.