Innovative Solutions and Support Inc (ISSC) 2025 Q2 法說會逐字稿

Good day and welcome to the innovative solutions and support second quarter 2025 results conference call and webcast. (Operator Instructions)Please note, this event is being recorded. I would now like to turn the conference over to Paul Bartolai, Head of Investor Relations. Please go ahead.

大家好，歡迎參加創新解決方案和支援 2025 年第二季業績電話會議和網路廣播。（操作員指示）請注意，此事件正在被記錄。現在，我想將會議交給投資人關係主管 Paul Bartolai。請繼續。

Thank you. Good morning, everyone, and welcome to Innovative Solutions and Supports second quarter 2025 results conference call. Leading the call today our CEO, Shahram Askarpour; and CFO Jeff DiGiovanni. Yesterday we issued a press release detailing our second quarter 2025 operational and financial results. This release is publicly available in the investor relations section of our corporate website at www.innovative-ss.com.

謝謝。大家早安，歡迎參加創新解決方案和支援 2025 年第二季業績電話會議。今天主持電話會議的是我們的執行長 Shahram Askarpour；和財務長 Jeff DiGiovanni。昨天，我們發布了一份新聞稿，詳細介紹了我們 2025 年第二季的營運和財務表現。本新聞稿可在本公司網站 www.innovative-ss.com 的投資者關係部分公開查閱。

I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements which by their nature are uncertain and outside of the company's control.

我想提醒您，管理層在今天的電話會議上的評論和對問題的回答可能包括前瞻性陳述，這些陳述本質上是不確定的，並且超出了公司的控制範圍。

Although these forward-looking statements are based on management's current expectations and beliefs, actual results could differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factor section of our latest reports filed with the SEC.

儘管這些前瞻性陳述是基於管理階層目前的預期和信念，但實際結果可能存在重大差異。有關可能導致實際結果不同的一些因素的討論，請參閱我們向美國證券交易委員會提交的最新報告中的風險因素部分。

Additionally, please note that you can find reconciliations of all historical non-GAA financial measures mentioned on this call in the press release issued yesterday. Today's call will begin with prepared remarks from Shahram, who'll provide a review of our recent business performance and strategic outlook, followed by a financial update from Jeff.

此外，請注意，您可以在昨天發布的新聞稿中找到本次電話會議中提到的所有歷史非 GAA 財務指標的對帳表。今天的電話會議將以 Shahram 的準備好的發言開始，他將回顧我們最近的業務表現和戰略展望，然後由 Jeff 提供財務更新。

At the conclusion of these prepared remarks, we will open the line for your questions, and with that, I'll turn the call over to Sharon.

在結束這些準備好的發言後，我們將開放熱線回答大家的提問，然後我將把電話轉給莎倫。

Thank you, Paul, and good morning everyone joining us on the call today. Let's begin with a high-level overview of our second quarter financial performance. During the second quarter, we delivered growth in revenue of just over 100%, driven by momentum from our new military programs, including significant growth from our F-16 program and contributions from our legacy platform.

謝謝你，保羅，大家早安，今天參加我們的電話會議。讓我們先概述一下我們第二季的財務表現。在第二季度，我們的收入增長了 100% 多一點，這得益於我們新的軍事計劃的推動，包括 F-16 計劃的顯著增長以及我們傳統平台的貢獻。

As we discussed last quarter, we have been seeing improved trends in our commercial business. As expected, this translated to improved results this quarter with notable strength in our air transport business. Our EBITDA increased by over 200% and profit by over 300% from last year, highlighting the significant operating leverage in our business as we continue to grow.

正如我們上個季度所討論的，我們看到商業業務的趨勢正在改善。正如預期的那樣，這意味著本季業績有所改善，我們的航空運輸業務表現顯著強勁。我們的 EBITDA 比去年成長了 200% 以上，利潤成長了 300% 以上，凸顯了我們在業務持續成長過程中所具有的顯著經營槓桿作用。

We are building a platform of scale with meaningful opportunity for EBITDA margin expansion as we grow the business. Our business momentum remains strong, with a backlog of approximately $80 million as of March 31, 2025. We were pleased with our strong second quarter results.

隨著業務的成長，我們正在建立一個規模平台，為 EBITDA 利潤率的擴大提供有意義的機會。我們的業務動能依然強勁，截至 2025 年 3 月 31 日，積壓訂單約 8,000 萬美元。我們對第二季的強勁業績感到滿意。

The trends in our core business remains strong. We are successfully executing our strategy to build a significant growth business. To that end, I would like to shift the discussion to an update on our progress on the IS&S Next, a long-term value creation strategy.

我們的核心業務趨勢依然強勁。我們正在成功執行打造顯著成長業務的策略。為此，我想將討論轉向我們在長期價值創造策略 IS&S Next 方面的進展更新。

As a quick refresher, our strategy centers on a combination of targeted commercial growth within high value markets, improving operating leverage, and a disciplined returns driven approach to capital allocation. We continue to execute against our initiatives during the quarter, and I would like to take a moment to highlight just a few of the key achievements.

簡單回顧一下，我們的策略以高價值市場內的目標商業成長、提高營運槓桿以及嚴格的回報驅動的資本配置方法為中心。本季我們將繼續執行我們的計劃，我想花點時間強調其中的一些主要成就。

As we have discussed, we have placed a priority on expanding our military business. In support of this objective, we've continued to make investments in both infrastructure and systems capabilities to support the high performance requirements of our defense customers.

正如我們所討論的，我們把擴大軍事業務放在首位。為了實現這一目標，我們繼續對基礎設施和系統能力進行投資，以滿足國防客戶的高效能要求。

During the second quarter, we completed the integration of our ERP system, we further expanded our more robust IT infrastructure, and strengthened our security and accounting services to make us compliant with defense federal acquisition regulation supplements, or defaults requirements.

在第二季度，我們完成了 ERP 系統的整合，進一步擴展了更強大的 IT 基礎設施，並加強了安全和會計服務，以使我們符合國防聯邦採購法規補充或違約要求。

These are necessary investments as we continue to bid on larger DOD programs. We continue to expect at least 40% of our revenue to come from military customers during fiscal 2025, and we are excited by our progress and the opportunities that lie ahead of our military business.

隨著我們繼續競標更大的國防部項目，這些都是必要的投資。我們仍然預計，在 2025 財年，我們至少 40% 的收入將來自軍事客戶，我們對我們的進步和軍事業務未來的機會感到興奮。

We also have made further progress on the expansion of our Exton, Pennsylvania facility and remain on track for completion of the project by mid 2025. When complete, we will have doubled our footprint and increased our production capabilities by more than threefold. The building construction is near completion, and the preparation for clean room production environment will commence by the end of May.

我們在賓州埃克斯頓工廠的擴建方面也取得了進一步進展，並預計在 2025 年中期完成該專案。工程完成後，我們的佔地面積將擴大一倍，生產能力將提高三倍以上。目前廠房建設已接近尾聲，5月底將開始進行無塵室生產環境的準備。

As a reminder, we manufacture 100% of our products in our extern facility. With the ongoing trade uncertainty and priorities of the current administration, we should be in an enviable position given the likely significant push for reshoring of manufacturing and an America first mentality.

提醒一下，我們 100% 的產品都是在外部工廠生產的。鑑於持續存在的貿易不確定性和現任政府的優先事項，考慮到可能大力推動製造業回流和美國​​優先的心態，我們應該處於令人羨慕的地位。

During the second quarter, we continued with the integration of our most recent acquisition from Honeywell. As we discussed last quarter, much of the spending and the integration activities are being done ahead of the expected growth from these platforms. The integration is also resulting in some duplicative costs as we transition the manufacturing of products into our ex-facility.

第二季度，我們繼續整合最近從霍尼韋爾收購的業務。正如我們上個季度所討論的那樣，大部分的支出和整合活動都是在這些平台預期成長之前完成。當我們將產品製造轉移到工廠外時，整合也導致了一些重複成本。

Importantly, the integration is progressing, and we are excited by the opportunities from this acquisition. While we have spent a lot of effort on our military opportunities, we remain encouraged by the growth opportunities across our commercial air transport and business aviation markets.

重要的是，整合正在進行中，我們對此次收購帶來的機會感到興奮。雖然我們在軍事機會上投入了大量精力，但我們仍然對商業航空運輸和公務航空市場的成長機會感到鼓舞。

Our goal to achieve a larger percentage of our new production aircraft or OEM business is also being satisfied through organic product growth as well as our strategic acquisitions such as the F-16 product line. Even though it has been a couple of quarters, since we have announced the transaction, deploying capital for strategic acquisitions remain a key priority.

我們的目標是提高新生產飛機或 OEM 業務的佔比，並透過有機產品成長以及 F-16 產品線等策略性收購來實現。儘管距離我們宣布交易已經過去了幾個季度，但部署資本進行策略性收購仍然是我們的首要任務。

Although our most recent acquisitions have been focused on complementary product lines from large avionics suppliers, we continue to evaluate opportunities to acquire small avionics manufacturers where we anticipate synergies will be realized by incorporating their outsourced production in our facility.

雖然我們最近的收購主要集中在大型航空電子設備供應商的互補產品線，但我們仍在繼續評估收購小型航空電子設備製造商的機會，我們預計將其外包生產納入我們的工廠將實現協同效應。

We have demonstrated a track record of successfully scaling our business to a combination of organic growth and capital deployed or acquisitions. Since 2020, we have completed all acquisitions to complement our organic growth strategy.

我們已經成功地將業務擴展到有機成長和資本部署或收購的結合，並取得了驕人的成績。自 2020 年以來，我們已完成所有收購，以補充我們的有機成長策略。

Over this period, we have grown our revenue and net income from $22 million and $3.3 million respectively during fiscal 2020 to well over $60 million in revenue and $9 million in net income during fiscal 2025 based on our stated forecast for greater than 30% growth.

在此期間，我們的收入和淨收入分別從 2020 財年的 2,200 萬美元和 330 萬美元增長到 2025 財年的 6,000 萬美元以上收入和 900 萬美元淨收入，這基於我們對超過 30% 的增長的預測。

Given our capital light model and strong free cash flow generation, we have been able to generate this growth while maintaining modest leverage. We are proud of what we have accomplished and our position in the company for continued growth going forward.

鑑於我們的輕資本模式和強勁的自由現金流生成，我們能夠在保持適度槓桿的同時實現這一增長。我們為我們所取得的成就以及在公司未來持續成長中的地位感到自豪。

Despite recent margin pressure due to acquisition related costs and inventory adjustments, as well as inherent lower gross margins in defense products, we expect EBITDA and profit margins to grow steadily. We are further establishing our company as a premier systems integrator in flight navigation and precision instrumentation with cutting edge technology.

儘管近期因收購相關成本和庫存調整導致利潤率承壓，且國防產品本身的毛利率較低，但我們預期 EBITDA 和利潤率將穩定成長。我們正在進一步將公司打造成為擁有尖端技術的飛行導航和精密儀器領域的頂級系統整合商。

A vertically integrated US based production provides a competitive advantage, fostering relationships with key aircraft manufacturers, operators, and defense organizations. In summary, we are encouraged by the progress we have made on our strategic priorities and remain committed to continuing to execute on our plan.

垂直整合的美國生產提供了競爭優勢，促進了與主要飛機製造商、營運商和國防組織的關係。總而言之，我們對戰略重點所取得的進展感到鼓舞，並將繼續致力於繼續執行我們的計劃。

During the quarter, we doubled our revenue, tripled our EBITDA, and quadrupled our profit from a year ago. As a result of our success, we remain on track to deliver on our goal to generate both revenue and EBITDA growth of greater than 30% when compared to fiscal year 2024.

本季度，我們的營收比去年同期翻了一番，EBITDA 成長了兩倍，利潤成長了四倍。由於我們的成功，我們仍有望實現我們的目標，即與 2024 財年相比，營收和 EBITDA 成長率均超過 30%。

We are excited by everything we have accomplished and are confident. We are strategically positioned to continue generating profitable growth. With that, I'll turn the call over to Jeff for his prepared remarks.

我們對所取得的一切成就感到興奮並充滿信心。我們的策略定位是繼續實現獲利成長。說完這些，我會把電話轉給傑夫，讓他發表準備好的演講。

Thank you, Shahram, and good morning to all those joining us. Today, I will provide a high-level overview of our second quarter performance, including a discussion of our working capital, balance sheet and liquidity profile at quarter end.

謝謝你，Shahram，向所有參加我們活動的人問好。今天，我將對我們第二季的業績進行高階概述，包括討論我們的營運資金、資產負債表和季末的流動性狀況。

We generated net revenues of $21.9 million in the second quarter, more than double our revenues during the second quarter last year. The increase was driven primarily by contribution from the recently acquired Honeywell military product line, which contributed $10.8 million and growth in our air transport market. Our results during the quarter benefited from some pull forward of revenues under our F-16 program.

我們第二季的淨收入為 2,190 萬美元，是去年第二季收入的兩倍多。這一成長主要得益於最近收購的霍尼韋爾軍用產品線的貢獻，該產品線貢獻了 1,080 萬美元，並促進了我們航空運輸市場的成長。本季我們的業績得益於 F-16 專案收入的提前成長。

We expect this dynamic could repeat again during our third fiscal quarter in anticipation of Honeywell ceasing production at its own facilities and transitioning that production to the company's facility.

我們預計這種動態可能會在第三財季再次重演，因為霍尼韋爾將停止其自有工廠的生產並將生產轉移到該公司的工廠。

Product sales were $13.2 million during the second quarter, up significantly from product sales of $4.9 million from last year, driven primarily by the recent acquired military product line. Service revenue was $8.8 million owing largely to customer service sales from the product lines acquired from Honeywell, including $3 million associated with the F-16 program and an increase of $700,000 in NRE programs partially offset by lower legacy customer service revenue.

第二季的產品銷售額為 1,320 萬美元，較去年同期的 490 萬美元大幅成長，主要得益於近期收購的軍用產品線。服務收入為 880 萬美元，主要歸功於從霍尼韋爾收購的產品線的客戶服務銷售，其中包括與 F-16 項目相關的 300 萬美元以及 NRE 項目增加的 70 萬美元，但部分被傳統客戶服務收入的降低所抵消。

Gross profit was $11.3 million during the second quarter, up from $5.6 million in the same period last year, driven by strong revenue growth and product mix, partially offset by higher depreciation expense resulting from the Honeywell acquisitions and continued investment.

第二季毛利為 1,130 萬美元，高於去年同期的 560 萬美元，這得益於強勁的收入成長和產品組合，但被霍尼韋爾收購和持續投資導致的更高的折舊費用部分抵消。

Our second quarter gross margin was 51.4%, down modestly from 52%. In the same period last year, but up meaningfully on a sequential basis from the 41.4% gross margin reported in the first quarter.

我們第二季的毛利率為 51.4%，較 52% 略有下降。與去年同期相比，但較第一季報告的41.4%的毛利率較上季大幅上升。

We generated more normalized gross margins under our Honeywell contracts, which was the main driver of the improved gross margin relative to the prior quarter. We expect our gross margins to continue to be lumpy in the near term as we continue to integrate the Honeywell product lines into our facilities.

我們根據霍尼韋爾合約實現了更正常的毛利率，這是毛利率相對於上一季提高的主要驅動力。隨著我們繼續將霍尼韋爾產品線整合到我們的工廠中，我們預計短期內我們的毛利率將繼續不穩定。

As we have discussed in prior quarters, there can be some duplicate costs as we prepare to integrate these products and the hiring and training of engineers and other staff to support these products. Additionally, as we have discussed previously, as it relates to the product mix, generally military sales carry a lower average gross margin versus commercial contracts.

正如我們在前幾個季度所討論的那樣，當我們準備整合這些產品以及僱用和培訓工程師和其他員工來支援這些產品時，可能會產生一些重複的成本。此外，正如我們之前討論過的，由於與產品組合有關，軍事銷售的平均毛利率一般低於商業合約。

However, importantly, there is a minimal operating expense associated with these contracts. So the incremental EBITDA margins are strong. We saw an example of this during the second quarter as the incremental military revenues came through with little to no incremental SG&A expenses, resulting in meaningful operating leverage.

然而，重要的是，這些合約相關的營運費用很少。因此增量 EBITDA 利潤率很高。我們在第二季度看到了一個例子，即增量軍事收入幾乎沒有增量銷售、一般和行政費用，從而產生了有意義的營運槓桿。

Operating expense during the second quarter of 2025 was $4.3 million, a modest increase from $3.9 million last year, despite the significant growth in revenue. The increase in operating expense was driven by approximately 300,000 from growth in our product development efforts in support of our long-term growth initiatives and 200,000 employee costs primarily to increased headcount, partially offset by a $100,000 decrease in third party and professional fees.

2025 年第二季的營運費用為 430 萬美元，儘管收入大幅成長，但較去年的 390 萬美元略有增加。營業費用的增加是由於我們為支持長期增長計劃而增加的產品開發力度，增加了約 300,000 美元，以及主要由於員工人數增加而增加了 200,000 美元的員工成本，但第三方和專業費用減少了 100,000 美元，部分抵消了這一影響。

Operating expenses represented 19.6% of revenue during the second quarter, a significant decline from 36.7% in the second quarter of last year, highlighting the opportunity for improved operating leverage as the business scales. Net income for the quarter was $5.3 million as compared to $1.2 million. GAAP earnings per share of $0.30, increased by over 300% from $0.07 with benefits from higher volume and increased operating leverage.

營業費用佔第二季營收的 19.6%，較去年第二季的 36.7% 大幅下降，凸顯了隨著業務規模擴大，提高營業槓桿的機會。本季淨收入為 530 萬美元，去年同期為 120 萬美元。公認會計準則每股收益為 0.30 美元，較 0.07 美元增長 300% 以上，受益於銷售增加和經營槓桿增加。

EBITDA was $7.6 million during the second quarter, up from $2.1 million last year on an or an increase of 260%, largely due to our revenue growth and operating expense leverage. Moving on to backlog, new orders in the second quarter of fiscal 2025 were $20.8 million and backlog as of March 31 was $80 million.

第二季的 EBITDA 為 760 萬美元，比去年的 210 萬美元成長了 260%，這主要歸功於我們的營收成長和營運費用槓桿。談到積壓訂單，2025 財年第二季的新訂單為 2,080 萬美元，截至 3 月 31 日的積壓訂單為 8,000 萬美元。

The backlog includes only purchase orders in hand and excludes additional orders from the company's OEM customers under long-term programs including Pilatus PC-12 '24, Textron King Air, Boeing P7 Red Hawk, The Boeing KC-46A and the F-16 with Lockheed Martin.

積壓訂單僅包括手頭上的採購訂單，不包括該公司 OEM 客戶根據長期計劃的額外訂單，包括皮拉圖斯 PC-12 '24、德事隆空中國王、波音 P7 紅鷹、波音 KC-46A 和洛克希德馬丁公司的 F-16。

We expect these programs to remain in production for several years and anticipate they will continue to generate future sales. Further, due to their nature, the customer service lines do not typically enter backlog. Now turning to cash flow, during the second quarter of 2025, cash flow from operations was $1.3 million compared to $200,000 in the year ago comparable period.

我們預計這些項目將持續生產數年，並預計它們將繼續產生未來的銷售。此外，由於其性質，客戶服務熱線通常不會積壓。現在轉向現金流，2025 年第二季度，營運現金流為 130 萬美元，去年同期為 20 萬美元。

This increase was due to higher net income and changes in working capital accounts. Capital expenditures were $1.6 million during the second quarter of fiscal 2025 versus 100,000 in the same period last year. The increase in capital expenditures are primarily related to the facility expansion.

這一增長是由於淨收入增加和營運資本帳戶的變化。2025 財年第二季的資本支出為 160 萬美元，而去年同期為 10 萬美元。資本支出的增加主要與設施擴建有關。

As a result of the building expansion, free cash flow during the second quarter was 300000 versus essentially flat free cash flow last year. Total net debt as of March 31 was $26.2 million. Our net leverage at the end of the quarter was 1.4 times.

由於建築擴建，第二季的自由現金流為 300,000，而去年的自由現金流基本上持平。截至 3 月 31 日的總淨債務為 2,620 萬美元。本季末我們的淨槓桿率為1.4倍。

Our cash and availability under our credit line was $8.8 million at the end of the second quarter, which provides us financial flexibility to support our ongoing operations, and facility expansion. That completes our prepared marks. Operator, we are now ready for the question-and-answer portion of the call.

截至第二季末，我們的現金和信用額度下的可用金額為 880 萬美元，這為我們提供了財務靈活性，以支持我們正在進行的營運和設施擴建。這樣我們的準備標記就完成了。接線員，我們現在準備好進行電話問答部分。

(Operator Instructions)

（操作員指示）

Gowshihan Sriharan, Singular Research

Gowshihan Sriharan，奇異研究

Good morning. Can you hear me? Congratulations on a strong quarter. My question is, you mentioned that the Honeywell product lines were pulled forward and you're expecting that to carry on into Q3. Any color on the magnitude of these pull forward and any and the FY '25 guidance of over 30% growth guidance that you guys have alluded to in the last call. Is that are you seeing any signs of audit delays post transition?

早安.你聽得到我嗎？恭喜本季業績強勁。我的問題是，您提到霍尼韋爾的產品線已經提前，您預計這種趨勢將持續到第三季。您能透露一下這些提前行動的幅度以及你們在上次電話會議中提到的 25 財年超過 30% 的成長預期嗎？您是否看到過渡後審計延遲的跡象？

We don't anticipate further delays post-transition. It is, there's a lot of moving parts with the transition of the Honeywell. They have supply chain issues obviously with delivering sufficient quantities to Lockheed before they can close the line and transfer it to us. We are working very closely with them.

我們預計移交後不會再出現進一步的延遲。確實，霍尼韋爾的轉型過程中有很多活動部件。顯然，他們在關閉生產線並將其轉移給我們之前，存在向洛克希德公司提供足夠數量的產品的供應鏈問題。我們正在與他們密切合作。

Our supply chain is engaged daily with their supply chain as well as Lockheed, to make this a successful transition for Lockheed because that's our cost and we will support them. In terms of in terms of our guidance that we gave for this year, I think we're well into over 30% growth as we see it and so that's kind of where we are.

我們的供應鏈每天都與洛克希德的供應鏈以及洛克希德合作，以確保洛克希德的成功轉型，因為這是我們的成本，我們將為他們提供支援。就我們今年給出的指導而言，我認為我們的成長率已經超過 30%，這就是我們現在的水平。

Okay. The air transport revenue seems to have improved in Q2. Is this driven by new orders or deferred demand? What is the pipeline for commercial retrofits looking even amid this high interest if the interest rates stay kind of steady at this level?

好的。第二季航空運輸收入似乎有所改善。這是由新訂單還是延期需求所推動的？如果利率保持穩定在這個水平，那麼即使在如此高利率的情況下，商業改造的前景如何？

To the answer, I really don't think the interest rates very much on what we do. Obviously delays in production of new airplanes, both from Airbus and Boeing due to their supply chain issues is creating high demand for aftermarket, upgrade of these airplanes. We're seeing benefits of that and, foreseeable future, we'll see, we hope that that's going to, that trend is going to continue.

對於這個問題的回答，我確實不認為利率對我們的工作有太大影響。顯然，由於供應鏈問題，空中巴士和波音的新飛機生產都出現了延遲，這導致對這些飛機的售後升級的需求很高。我們看到了它的好處，在可預見的未來，我們會看到，我們希望這種趨勢能持續下去。

Okay. And so on the gross margin level, sequentially the rebound, so as the Honeywell production transitions fully to external, should we expect the margins to stabilize near these levels, or does the mix shift towards the military is showing you with the 40% of sales act as a headwind as we move towards still poses a headwind towards the rest of FY '25.

好的。因此，就毛利率水平而言，接下來會反彈，因此，隨著霍尼韋爾的生產完全轉向外部，我們是否應該預期利潤率會穩定在這些水平附近，或者組合向軍事的轉變是否向您展示了 40% 的銷售額對我們而言仍然是一個阻力，對 25 財年剩餘時間仍然構成阻力。

I mean, I think we've talked about this a number of times before with regards to gross margins. Gross margins are very volatile and kind of lumpy as Jeff put it, and the reason for that is that prior to acquisitions, the things that we built here, we would build, we would sell them to target a certain gross margin. When we do acquisitions, the products that come in, the mix of the products have a large variability in gross margins.

我的意思是，我認為我們之前已經多次討論過毛利率問題。正如傑夫所說，毛利率非常不穩定，而且有點不穩定，原因是在收購之前，我們在這裡生產的東西，我們會生產出來，然後出售，以實現一定的毛利率。當我們進行收購時，收購的產品、產品組合的毛利率變化很大。

Some of them are very good, some of them are low. Then what we get is that in a quarter, depending on the mix. We would end up with some blended gross margin and it's really is difficult to predict because we don't know, where we have backlog of orders we know that, but with the new orders coming in, it's difficult to predict what kind of a margin we're going to get from that product mix.

有些非常好，有些則很差。那麼我們得到的是，在一個季度內，取決於組合。我們最終會得到一些混合毛利率，這確實很難預測，因為我們不知道，我們知道積壓的訂單在哪裡，但隨著新訂單的到來，很難預測我們將從該產品組合中獲得什麼樣的利潤。

So this is why we've been trying to steer everybody away from gross margins and put a focus on even the margins and profit margins. I mean, quite frankly, I care about profit more than anything else.

這就是為什麼我們一直試圖引導大家遠離毛利率，而把重點放在利潤率和利潤率上。我的意思是，坦白說，我最關心的是利潤。

Douglas S. Ruth, Lenox Financial Services, Inc

道格拉斯·S·露絲，萊諾克斯金融服務公司

Good morning, Sharm and Jeff. Thank you very much for the comments. Congratulations on the fabulous report. I specifically think that you clarified some of the questions that were out there, and I appreciate you taking the time to offer some clarity. Did you specifically say what percent of the sales in the quarter were to the Department of Defense or can you give us that?

早上好，Sharm 和 Jeff。非常感謝您的評論。恭喜您取得如此出色的報告。我特別認為您澄清了一些存在的疑問，我很感謝您花時間提供澄清。您是否具體說過本季銷售給國防部的百分比是多少，或者您能告訴我們嗎？

So right now $21.9 million in sales, 10.3 was associated with the F-16. Peace, so that would be with the military side. But then we have our own, we had our own, I don't have that breakdown in front of me, but legacy was a little bit north of $11 million for the quarter, which includes air transport and business aviation along with military. And there's some military in the services as well because of our NRE projects and customer service repairs.

因此，目前 2,190 萬美元的銷售額中，有 1,030 萬美元與 F-16 有關。和平，所以那是與軍事方面有關的。但是我們有自己的，我們有自己的，我面前沒有那個細分，但本季度的遺產略高於 1100 萬美元，其中包括航空運輸和商務航空以及軍事。由於我們的 NRE 項目和客戶服務維修，也有一些軍隊在服役。

Well, it sounds like it's approximately at least at least half which is.

嗯，聽起來大約至少有一半。

Yeah. I would say at least 40%, at least 40% military as we're experiencing.

是的。我想說至少有 40%，至少有 40% 是軍事人員，正如我們所經歷的。

And you had thought that like sort of as a run rate that it would be around 40%, do you think that that is going to hold true for the for the year?

您是否曾想過，運行率會在 40% 左右，您認為今年的運行率會如此嗎？

Yes.

是的。

Okay, and then what about hiring, were additional people hired during the quarter?

好的，那麼招募方面的情況如何？本季是否招募了更多人員？

Very little.

非常少。

Okay.

好的。

We just hired another military salesperson as well.

我們剛剛還僱用了另一名軍事銷售人員。

Okay.

好的。

Post quarter.

季度後。

Okay, are you thinking that you're done hiring it for the year or will there be additional people hired still this year or has that not been decided?

好的，您是否認為今年的招募已經完成了，或者今年還會再招募更多人員，或者還沒有決定？

I think that we continue to look for talented engineers. We continue to look for talented individuals that contribute to our organization. We are growing business and you can't hire people after you got the contracts because then it will be too late.

我認為我們會繼續尋找有才華的工程師。我們將繼續尋找能為我們的組織做出貢獻的人才。我們的業務正在成長，你不能在獲得合約後才僱用員工，因為那樣就太晚了。

So we continue looking for talent. In terms of the hiring we were doing to support the F-16 platform that we are completely doing that. But there are other acquisitions that we're looking at. Also we're looking at some significant growth from our base business. And so we, we're constantly in the hiring mode.

因此我們繼續尋找人才。就我們為支援 F-16 平台而進行的招募而言，我們完全是在這樣做。但我們正在考慮其他收購。我們也期待基礎業務實現顯著成長。因此，我們一直處於招募模式。

Okay, and are you working through search firms? Are you advertising open positions on your own website or LinkedIn or?

好的，您是透過搜尋公司來工作的嗎？您是否在自己的網站或 LinkedIn 上發布空缺職位？

Everywhere. Yes, so we, I think our, every job posting is on our website as well as depending on the position, we do work with some recruiters. We have an inside recruiter as well that works for our HR department. So we do all.

到處。是的，所以我認為我們的每個招聘資訊都在我們的網站上，而且根據職位不同，我們確實與一些招聘人員合作。我們還有一位內部招募人員，為我們的人力資源部門工作。所以，我們盡一切努力。

Okay. Now, I know that clean rooms can be very complicated. Is there any concern about you completing your clean room? You specifically mentioned that during your comments.

好的。現在，我知道潔淨室可能非常複雜。您對完成無塵室有什麼顧慮嗎？您在評論中特別提到了這一點。

No, now it's just, I mean we obviously our production floor here is a clean room facility. We're just expanding it. It's not part of the original building that the contractors are building for us, are. They build a structure and painted and all of that. We are almost done, and then we go in there and we got to put anti-static flooring down and put some partition walls. Some soundproofing walls for some areas, and those kind of things which we do routinely.

不，現在只是，我的意思是我們這裡的生產車間顯然是一個無塵室設施。我們只是在擴大它。它不是承包商為我們建造的原始建築的一部分。他們建造建築物、進行繪畫等等。我們快完成了，然後我們進去鋪防靜電地板並安裝一些隔間牆。有些區域會建造一些隔音牆，這些都是我們經常做的事情。

Okay, so you feel like you've got it under control?

好的，那麼您覺得已經控制住局面了？

Yes.

是的。

What about the, did you mention the status of the next generation, utility management system that was something that we, you had generally been talking about.

那麼，您是否提到了我們一直在談論的下一代公用事業管理系統的現狀。

Yeah, and it's, I guess I didn't put anything in there. It's, it is going on track. They're still planning on doing some flight testing on it, over the next month, and the project is finishing some qualification testing and getting it ready for flight test.

是的，我想我沒有在裡面放任何東西。一切正在步入正軌。他們仍計劃在下個月對其進行一些飛行測試，該項目正在完成一些資格測試並為飛行測試做好準備。

Okay, I really like your strategy, the acquisition strategy of using reverse engineering because over and over when we hear about one company buying another company, part of it is let's instead of having the products made in America, let's see if we can get them made somewhere else at a lower cost.

好的，我真的很喜歡你的策略，使用逆向工程的收購策略，因為當我們一次又一次地聽說一家公司收購另一家公司時，部分原因在於我們不是在美國生產產品，而是看看我們是否可以在其他地方以更低的成本生產它們。

So the fact that you are let's bring the stuff here to Pennsylvania and let's take cost out of it. I think that really plays to the company's competitive advantages. Are you, are there any, are you close to any additional acquisitions at this point?

所以事實上你讓我們把這些東西帶到賓州來，這樣我們就可以降低成本了。我認為這確實發揮了公司的競爭優勢。您目前是否有任何或即將進行任何其他收購？

Specifically.

具體來說。

With that strategy?

採用那種策略？

Yes, we're always evaluating some and we're also looking at some potentially foreign companies that we may buy and bring their production into the United States. The theory of outsourcing somewhere cheap is like you ship your problem somewhere else where it's outside your control. And it's your customers that end up suffering. So we've kind of always the philosophy of the company has always been to steer away from that.

是的，我們一直在評估一些公司，我們也在尋找一些潛在的外國公司，我們可能會收購這些公司並將其生產引入美國。在廉價的地方進行外包的理論就像是你將問題運送到你無法控制的其他地方。最終受苦的是你的客戶。因此，我們公司的理念始終是避免這種情況。

Okay and then Jeff, as far as financial covenants, do you feel that you have those set up properly, that you're comfortable that you're maintaining the covenants?

好的，傑夫，就財務契約而言，您是否認為您已經正確建立了這些契約，並且您對維護這些契約感到滿意？

Yes, the covenants. I mean, we're, we have a lot of headway in the covenant. So I feel very confident where we are with our covenants.

是的，契約。我的意思是，我們在契約方面取得了巨大進展。因此，我對我們的契約非常有信心。

You folks deserve a lot of credit. You really performed exceptionally well, and I'm grateful for what you're doing for the shareholders, and congratulations to both of you and your teams. Thank you for answering.

你們值得很多讚揚。你們的表現確實非常出色，我很感激你們為股東所做的一切，並向你們和你們的團隊表示祝賀。謝謝你的回答。

Thank you very much.

非常感謝。

Andrew Rem, Odinson Partners

安德魯雷姆（Andrew Rem），奧丁森合夥人

Hey gentlemen, I just want to, since you guys won't say it, I'll say it, which is, in regard to Doug's comment manufacturing in the US, you're smarter than Trump. So there we got that on the table. My question on revenue, Jeff, you had said, in the quarter $10.8 million came from acquisitions and then later you said about $3 million.

嘿，先生們，既然你們不說，那我就說吧，關於道格在美國製造的評論，你們比川普更聰明。所以我們把這個擺到桌面上了。傑夫，我的問題是關於收入，你說過，本季有 1,080 萬美元來自收購，後來你又說大約有 300 萬美元。

On the F-16 for customer service. So if I parse those two between product and customer service, am I right that from the acquisition $7.8 million for product and then $3 million for customer services that am I getting that right?

使用 F-16 進行客戶服務。因此，如果我將產品和客戶服務這兩者進行分析，那麼從收購中得出的結論是，780 萬美元用於產品，300 萬美元用於客戶服務，對嗎？

So it's $10.8 in total, of which $3 million was customer service at the Delta 7.8 product.

所以總共是 1,080 萬美元，其中 300 萬美元是 Delta 7.8 產品的客戶服務費用。

Okay, got it. And then, $6 million CapEx, that's still a good number for the full year?

好的，明白了。那麼，600 萬美元的資本支出對於全年來說仍然是一個不錯的數字嗎？

Yes.

是的。

And then sequentially D&A was down because I think it went from like 1.3 down to I want to say about 700,000. What's kind of a normalized level, G&A -- depreciation and amortization?

然後 D&A 連續下降，因為我認為它從 1.3 下降到我想說的大約 700,000。什麼是標準化水平，G&A——折舊和攤提？

Oh, I would say when you add those two together looking at that and then that would be our normalized level for six months. Look at the six-month period. So depreciation went down a little bit because we had amortization changes on our last acquisition during that period where you get to reassess and look at the items to make sure it was it was correct with the evaluations.

哦，我想說的是，當你將這兩者加在一起時，這就是我們六個月的正常水平。看看這六個月的時間。因此折舊略有下降，因為我們在那段時期的最後一次收購中進行了攤銷變更，您可以重新評估並查看項目以確保評估正確。

So we'll be closing that evaluation period next quarter and that should settle.

因此，我們將在下個季度結束評估期，事情應該會得到解決。

And then for the third quarter kind of pull forward in revenue, would you expect that to be kind of similar magnitude or much smaller?

那麼對於第三季的營收成長，您預期幅度會相似還是小得多？

Well I think given that a good chunk of this is tied into Honeywell supply chain, it's really difficult for us to predict that.

嗯，我認為考慮到其中很大一部分與霍尼韋爾供應鏈有關，我們很難預測這一點。

Okay.

好的。

But I don't anticipate a huge swing.

但我預計不會大幅波動。

Right, we don't expect a huge thing between Q2 right now and Q3. So it just --

是的，我們預計第二季和第三季之間不會發生重大變化。所以它只是--

Right now, its really hard to predict.

現在，真的很難預測。

Okay. So then we should at least sequentially in the fourth quarter expect a fairly meaningful decline?

好的。那麼，我們至少應該預期第四季會出現相當明顯的下降嗎？

I don't expect a meaningful decline, barring something goes completely wrong with the supply chain, I don't see. There's, we have $80 million in backlog as of end of end of March. So, and as long as, we can execute, and even for the transition, if it goes per plan that Tairo has put in place and they get the material from the supply chain on time, there really shouldn't be much variations but there was a lot of ifs there.

我預計不會大幅下滑，除非供應鏈出現徹底的問題。截至 3 月底，我們的積壓訂單金額為 8,000 萬美元。因此，只要我們能夠執行，即使是過渡，如果一切按照 Tairo 制定的計劃進行，並且他們按時從供應鏈中獲得材料，那麼實際上應該不會有太大的變化，但其中仍然存在很多如果。

Okay. And then can you just comment on in terms of making the transition? I think previously you guys had said kind of in the summer, so about the time that the facility expansion is completed. So it sounds like construction is nearly complete and then you've got to move in and that kind of stuff.

好的。那麼，您能否就轉變方面發表評論？我想你們之前曾說過是在夏天，也就是設施擴建完成的時候。聽起來好像施工已經接近完工，然後你就得搬進去之類的。

Should we be thinking that the integration, Honeywell will be largely complete sometime later in the summer. Is that the rough timeline?

我們是否應該認為，霍尼韋爾的整合工作將在夏季晚些時候基本完成。這是大致的時間表嗎？

That is our plan.

這就是我們的計劃。

Okay. Alright, well, great quarter you guys doing a fantastic job with the team. So appreciate it.

好的。好的，這是一個非常棒的季度，你們和團隊一起做得非常出色。非常感謝。

Thank you.

謝謝。

Gowshihan Sriharan, Singular Research. Please go ahead.

Gowshihan Sriharan，奇異研究。請繼續。

Thank you. My follow up is on this ERP system. Does that, as that goes on live? Will that improve productivity gains on inventory management and labor costs? Is that SG&A looking to go below 50% in FY '26?

謝謝。我的後續工作是針對這個 ERP 系統。那是在直播中嗎？這是否會提高庫存管理和勞動成本的生產效率？26 財年的銷售、一般及行政費用 (SG&A) 是否會降至 50% 以下？

So any European implementation, you still have some tweets you got to do on a go forward basis. Our goal is to really utilize the data to create actional data to make business decisions and previously the data was, we had to really work to get the data and the answers.

因此，對於任何歐洲實施項目，你仍然需要繼續發布一些推文。我們的目標是真正利用數據來創建可操作的數據，以便做出業務決策，而以前我們必須真正努力獲得數據和答案。

So I think you'll see improvements from a production. When I would say production in terms of getting the data and making the right business decisions on a go forward basis. Now how does that translate into the P&L, it's too soon to know what those impact will be.

所以我認為你會看到產品的改進。當我說生產時，指的是獲取數據並在未來做出正確的商業決策。現在這會對損益表產生什麼影響呢？現在還不知道會產生什麼影響。

So on a quarterly basis that SG&A level is going to be still look around $3 million to $4 million.

因此，按季度計算，銷售、一般及行政費用水準仍將在 300 萬至 400 萬美元左右。

That's correct. I mean, keep in mind we're still, the company's growing, the organization's growing. So you're always going to have some additional costs.

沒錯。我的意思是，請記住我們仍在發展，公司仍在成長，組織仍在成長。所以你總是會有一些額外的費用。

Gotcha. And on the Exon's capacity, which is going to hit triple by mid-2025, what kind of utilization rate is needed to kind of achieve that mid 30% or 30% growth on the top line and is at the EBITDA level, given the how does the current backlog support this?

明白了。而埃克森的產能到 2025 年中期將增長三倍，需要什麼樣的利用率才能實現 30% 左右或 30% 左右的營收增長，並達到 EBITDA 水平，考慮到目前的積壓訂單如何支持這一點？

So right now the 30% growth is based on everything that we have here today, and it really excludes a lot that the new building could produce. But the new building and the facility we could do about $250 million we project in revenue of this building.

因此，目前 30% 的成長率是基於我們今天所擁有的一切，而它實際上排除了新建築可以產生的許多東西。但新建築和設施我們預計可帶來約 2.5 億美元的收入。

Got you. Thanks for that and congratulations.

明白了。謝謝你，恭喜你。

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Shahram Askarpour for any closing remarks.

謝謝。我們的問答環節到此結束。我想將會議交還給 Shahram Askarpour 並請他做最後發言。

Thank you, operator, and thank you all for your time and interest in ISNS. Have a good day.

謝謝您，操作員，也謝謝大家對 ISNS 的時間和興趣。祝你有美好的一天。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。