Innovative Solutions and Support Inc (ISSC) reported a solid Q3 2024, underscored by the continued integration and ramp of Honeywell product lines. Total net revenues reached $11.8 million, up approximately 48% year over year, driven by the Honeywell asset contributions and growth in the company’s legacy platforms. Gross margin expanded to 53.4%, contributing to adjusted EBITDA of $3.1 million and an EBITDA margin of 26.1%, as the company benefited from integration synergies and operating leverage. Net income was $1.56 million ($0.0889 per share), with a solid net margin of roughly 13.2%. The quarter featured backlog of $9.3 million and new orders of about $10.6 million, underscoring revenue visibility from both legacy and Honeywell-enabled programs.
The company also highlighted meaningful balance sheet improvements and cash flow strength. Net debt declined to $9.3 million at quarter-end, producing a net leverage ratio of approximately 0.8x, while cash and availability under the credit line stood at about $20.7 million. Operating cash flow was $0.93 million for the quarter, and free cash flow for the first nine months reached $4.8 million (year-to-date). ISSC signaled a disciplined approach to capital allocation, including potential capex investments to expand manufacturing capacity (planning for a 40,000 sq ft expansion and approximately $5 million expenditure with potential state/local support) to enable growth beyond $100 million in annual revenue in the coming years.
Management remains focused on five growth pillars: expansion of existing platforms, OEM and retrofit programs, pipeline opportunity growth, new market opportunities (notably military and cockpit automation), and selective acquisitions. The leadership team communicates ongoing confidence in double-digit organic growth and the potential for additional acquisitions, while continuing to monitor execution risks related to the Honeywell integration and broader macroend market dynamics, including cargo market softness. Overall, ISSC appears well-positioned to scale, with robust cash generation, a leavening of working-capital efficiency, and a clear path toward higher revenue and margins in 2025 and beyond.