ISSC stock is trading at $9.25 down from a high of $11.25 earlier this month and down from a high of $29 last year when the Eclipse deal was announced.
Innovative Solutions & Support, Inc. (NASDAQ:ISSC) announced revenues for Q2 FY2008 of $6.8M with a net loss of $3.8M. There was a $4.4M operating loss in the quarter. Q2 revenue included $1.4M in air data revenue and $611K for engineering charges related to scope changes and NRE. $300K in revenue was from short swing profits resulting from stock trading.
Revenues for the first half of FY2008 were $11.6M with a net loss of $11.2M.
Product gross margins improved to 40.3%.
R&D is running $3.3M per quarter. SG&A is also running at $3.3M per quarter.
Cash on hand was $44M. Shareholder equity is $61M.
The company announced $20M in new bookings, including $4M in new air data bookings attributed to the IP legal expenses.
However, they also reported a debooking of $9M in previous backlog. Some $3M of that backlog was canceled due to a retrofit customer canceling their retrofit plans.
The remaining debooking and pushouts occurred as a result of slowdowns at one large customer. ISS was informed of these changes during April, making it very unlikely that ISS will achieve the $40M in revenue originally forecast for the year. Guidance to $35M for the year with an upside to $37M was given. According to management there is a chance that the revenue projections for 2009 could be lowered as well. Q3 projections of $12M were lowered to $9M. Q4 will also be affected. They still hope to reach profitability in Q4, but this is based on achieveing their production volume targets which are at risk.
During the call last quarter, management commented that legal expenses were expected to be concluded by the end of March. However, the legal proceedings have not concluded and it appears that legal expenses will continue, although at a reduced level.
ISS management are still reporting that half of their revenue will come from Eclipse in this fiscal year.
Eclipse has delivered 62 aircraft calendar YTD against a previously stated plan of 455 for the calendar year. It looks increasingly unlikely that Eclipse will deliver the aircraft they've forecast to ISS and it looks probable that ISS will once again be forced to lower revenue projections as the Eclipse failure to make its production numbers becomes clearer.