Innovative Aerosystems (formerly Innovative Solutions & Support) reported fiscal 2025 fourth‑quarter revenue of $22.2 million, a 45% year‑over‑year increase that surpassed consensus estimates of $18.6 million by $3.6 million. The lift was driven by a 35% rise in military‑program sales, which offset a modest decline in commercial‑support revenue and benefited from higher pricing power in the defense segment.
Gross profit for the quarter reached $14.1 million, up 64.8% from $8.5 million a year earlier, and gross margin expanded to 63.2% from 55.4% in the prior year quarter. The margin improvement reflects a favorable sales mix that shifted toward higher‑margin military contracts and the successful integration of Honeywell‑acquired product lines, which lowered component costs and increased throughput.
Operating expenses climbed to $5.8 million, up from $4.2 million a year earlier, but as a percentage of revenue fell to 19.6% from 36.7% in the prior year quarter. The lower expense ratio is a result of disciplined cost control and the scaling of manufacturing operations at the newly expanded Exton facility. Net income rose to $7.1 million, or $0.39 per diluted share, beating the consensus EPS estimate of $0.12 by $0.27—an 225% beat—thanks to the combined effects of higher revenue, margin expansion, and operating‑leverage gains.
Adjusted EBITDA for the quarter was $9.6 million, a 71.1% increase from $5.6 million a year earlier, and the adjusted EBITDA margin climbed to 43% from 25% in the prior year quarter. The company’s backlog stood at $77.4 million as of September 30, 2025, including commitments from major customers such as Pilatus, Textron, Boeing, and Lockheed Martin. The robust backlog underscores continued demand for the company’s high‑margin military‑program solutions and signals strong future revenue prospects.
Management highlighted the quarter as a “transformational year” for the rebranded Innovative Aerosystems, citing the successful integration of acquired assets, the expansion of manufacturing capacity, and the launch of the Liberty Flight Deck product line. The company reiterated its long‑term target of $250 million in revenue with a 25%–30% adjusted EBITDA margin by fiscal 2029, and it maintained a positive outlook for the next quarter, citing continued momentum in defense contracts and a growing pipeline of commercial‑support opportunities.
Analysts responded to the results with enthusiasm, noting the significant earnings and revenue beats and the company’s strong margin trajectory. The market reaction reflected confidence in the company’s execution and its strategic focus on high‑margin defense programs and scalable manufacturing capabilities.
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