The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Gowshihan Sriharan - Singular Research - Analyst
: Congratulations, guys. Can you hear me? Yes.
Thank you for taking my call. Congratulations. In terms of this military revenue being, now being, a significant portion of the growth story, what
strategies or investments are you making, to remain, relevant to being market share? I know you mentioned you had. A gentleman you hired a
couple of years ago, what are the investments are required or spend that's necessary to continue to take market share and save up.
Question: Gowshihan Sriharan - Singular Research - Analyst
: Okay, awesome. In terms of, I know you guys had a foreign military engagement end of last year. How does the margin profiles of the foreign
military engagements compared to the domestic market? I would assume you're able to extract better pro margin profiles or pricing from the
foreign military programs.
Question: Gowshihan Sriharan - Singular Research - Analyst
: Okay, got you. And so with this 40%, military mix of business as the company basically continues to shift, particularly, in favour of the military, I
know you guys had a 60% usually gross margin target. So what would you anticipate the new margin profile to look like, kind of, and will that be
something you'll be targeting towards the end of the year?
Question: Gowshihan Sriharan - Singular Research - Analyst
: Got you. And just my final question before I jump back in line. In terms of, leveraging the balance sheet, how will you balance the need for the, this
significant infrastructure spend, investments required, in terms of expansion of production capacity, and with the pursuit of, strategic acquisitions?
Question: Gowshihan Sriharan - Singular Research - Analyst
: Awesome. Thank you, guys and congratulations.
Question: Douglas S. Ruth - Lenox Financial Services, Inc. - Analyst
: Hi, Shahram, Jeff, thank you for hosting the conference call. I was curious, could you share with us your strategy, with where the acquisition
opportunities are coming from? Are you working with an investment banker? How exactly are you finding, the opportunities?
Question: Douglas S. Ruth - Lenox Financial Services, Inc. - Analyst
: Yeah, now this 1 to 2 per quarter, is that number is that generally been fairly stable? Is it seem like it's increasing? Is it decreasing or what do you
see there?
Question: Douglas S. Ruth - Lenox Financial Services, Inc. - Analyst
: Okay, well I appreciate you answering my questions. I want to wish you all the best and we're looking for you know just this growth to continue,
so thank you for taking my question.
Question: Andrew Rem - Odinson Partners - Analyst
: Hey gentlemen, can you just remind us, on the 4th quarter call you guys talked about this pull forward effect, that you're expecting to come in the
2nd quarter just any revised thoughts that you have now that we're in it.
Question: Andrew Rem - Odinson Partners - Analyst
: So, is it still on the plan that the manufacturing will transition over in the 2nd quarter or maybe some of that pushes into the 3rd quarter?
Question: Andrew Rem - Odinson Partners - Analyst
: Okay, and then Jeff, is there any financial benefits that we can expect over time from the ERP implementation?
Question: Andrew Rem - Odinson Partners - Analyst
: Alright and then, it sounds like there's a lot going on. I mean you, you've got the acquisition and then I guess in conjunction with that you talked
about some of the things that you're the IT system, the ERP getting in compliance with the military standards, and then you know obviously you've
got the construction project which is up and running. Will you be at kind of a normalized by the time you exit fiscal '25 with all of this stuff going
on?
Question: Andrew Rem - Odinson Partners - Analyst
: And then Jeff, if I understood your comments right, maybe this quarter is kind of the low point for gross margin, and then they can kind of improve,
but I'm also kind of wondering if we should really just maybe just thinking about this business. Don't worry, get too hyper focused on gross margin
and just maybe focus on and EBITDA margin.
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FEBRUARY 13, 2025 / 10:00PM, ISSC.OQ - Q1 2025 Innovative Solutions and Support Inc Earnings Call
Question: Andrew Rem - Odinson Partners - Analyst
: So, if we kind of look out at a more normalized what are is your current expectation for what that can look like?
Question: Andrew Rem - Odinson Partners - Analyst
: Okay. All right. Well, nice quarter. Thanks a lot, guys.
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