Q4 2021 Park Aerospace Corp Earnings Call
Yeah.
Good morning, My name is Justin and I'll be the conference operator today at this time I would like to welcome everyone to Park Aerospace Corp, fourth quarter fiscal year 'twenty, one the earnings release conference call and Investor presentation. All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question the nature of session if you'd like to ask the question. During the session simply press Star then the number one on the telephone keypad. If you would like to withdraw your question press. The pound key. Thank you at this time I will turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shaw You May begin your conference call.
Thank you very much operator, and welcome everybody to parks fourth quarter Conference call with me as usual of course, my SAR borrowers CFO.
We announced the published the earnings release early this morning.
So if you haven't checked it out you want to do that in the earnings release, the or instructions as to how to just so access the presentation were about to go through the presentation. You also can find on the website, but he really wanted to get the presentation in front of you in order to make this call more meaningful with lots of presentations from Europe might be.
The real confusing all soldiers are supplemental financial information that's attached as appendix one to the presentation not used to read that force. These presentations of going on for so long and we don't do that anymore, but feel free to access it you're asking the question do you like about it.
No.
The surgery down and probably almost a recall actually the we're not able to cover everything in these presentations are feeling Lindsay.
As we need to kind of select what we think would be of interest to you and helpful to you in understanding of our company. We do the best we can with the out and done you know an expert in the call maybe you'll cover something else the the.
Of course could go on for 45 minutes. So you see we really.
You know can't its on par not possible to cover everything we'll try to keep the 45 minutes when I sort of call I mean, the presentation well of as much time as you want for questions and answers. We're done with the presentation. Then I will turn it back over to you and you can ask any questions you want other bunch of presentation or anything about park generally that's on in the presentation.
So why don't we just go ahead and get started on our when we turn to slide two this is our forward looking disclaimer of language any questions about this just when the snow flight three we take a little bit longer on slide three in the slide two of us.
Slide three is a lot of stuff going on in your old very busy. So why don't we take a look at historical looking at the top line for.
The quarters are of the.
Plenty of with fiscal year of 123, and four you can obviously see what's going on based upon the significant downturn.
Downturn in commercial aerospace and also we talked about Destocking at some point come back a little bit in Q4, but I want to remind you right now right we start.
It's something we've discussed I think last quarter meeting of the prior quarter and that relates to the central component.
For rockets four of missile systems. This is our ablative product line. So remember how it works, but theres been a central component of the source overseas. We have the relationship with the supplier. So the Oems are concerned about the seas are critical missile programs they ask us.
The buy that component and then sell it to them just to have a safe stockpile that components of its in the central component of the.
The probably couldn't make it be made without it.
So we do that we buy the component and we sold back to I shouldn't say back we sold to the OEM to the customer they never owned at the begin with their product and they can do with what they want I guess, but you know the expectation is debt we will use the AD component to produce the the blade of materials. The composite of late of materials for these.
Rocket the missile programs are just the.
The significant for couple of reasons the effects of our top line off of our bottom line of we sold a small markups of the margins are quite quite small, but you know on the mutual contract the sales are quite high.
So I just want you didn't know the member remind you of that for background and the Q2, sorry in Q3, we had approximately $2 million of those sales of the components and the two four we of $3 5 million of sales of we predicted that I think we did our Q3 call. So it shouldn't be surprised you, but I just want to remind you of that because of it.
I was just kind of affect the numbers. So let's go through our Q4 of the current quarter on.
The fiscal 'twenty, one to 414 million of 441000 of our sales you can see the numbers moving up but in that number is $3 $5 million of sales of debt critical component with three of the low margins gross profit of.
For the 326, our gross margin of 30%, which is we like that we don't like well, let me put it differently. The HEICO was below 30% we were actually surprised about this because without the critical components of the central component. The margins are quite low. So we're surprised that the gross margins actually came in at exactly the 30% actually.
That's sort of of course number we don't do that that's just the math of came in three points of Europe and the.
Adjusted EBITDA of 3 million towards the 57000.
So we're a little bit surprised about that let me remind you of butter forecast philosophy before we go into the more discussion about the numbers.
So we'd give you a forecast we're telling you what we think is going to happen.
Based upon working very hard and everything we need to do to make it happen, but we're telling you. What we think is going to have but we don't give you a bolt on repeat it. We think that is kind of silly. We know watchful of the companies do that largest wall of like are we think it's kind of.
No not wasting your time to do that which all of you something of work telling you. What we think is going to happen we could be wrong, but we're telling you. What we think is going to happen. So alright, so let's keep that in mind, let's talk about what did happen in Q4, what do we say about Q4 during our Q3 conference call. We said the sales stuff. Some of it was 14% to 14 of health well, we came in within that range.
Okay.
Maybe to the higher end, but still within that range. No problem. We also said the adjusted EBITDA estimate was 2.3 2.8 million, while we came in at.
Now of $3 two.
On a three to five 7 million so quite a bunch of above the top of the range. That's not what we saw was going to happen and what happened was that we did not properly capture on her students for Q4 of the margins on a blade of products. So I'm not talking about the central component. These are our sales of the blade of a.
<unk> for our rockets of missile programs are very good margins and we just didn't fully capture those margins that's on us.
It was just not something we did to you know give you a low number we could be the hero. We don't we don't I should say, we just don't do that not.
Our way of doing things, let me see.
The off the cover on the numbers no I don't think so but there's another big item of kind of deal with on this page the stages of close down special items. Okay. You see at the bottom of since before special items as well there was a big special items.
Four $1.570 million that related to something we call. The school of pioneer plant, which is a plant in Singapore. We opened in 2008. This is the composite material plant. This is just around the time, we were going at the aerospace. This plant was going to be our our Asian aerospace composite materials.
But it was part of our Singapore Company, our Singapore entered the year of soup for operation and electronics, our Singapore facility was the largest facilities. So it was part of that it wasn't a separate entity and the key thing was it was gonna be operated and managed by our Singapore team, which is the electronics group at the time I wouldn't say it was very successful.
Festival in terms of the marketing you know we never got very much us we didn't get the very much sales of whenever less hum.
For whatever reason of that.
That was it was not of I would not say it was great success, okay well done.
We sold our electronics business in its entirety on Asia.
ACG in December of 2018 non included the the.
The Singapore operation of course, the Singapore entity now this pie on your plant as I said it wasn't even a separate entity was part of the Singapore entity, but we separated it on and.
And dropped it into and into another.
The other entity owned by Park why is that because a G. C did not want of behind the pioneer of plant. They didnt want it. So we said okay fine we'll keep them.
And we have kept the we had of mothballed almost right away I think almost right away. When we did the sale of 2018, because we didn't have without AGC. We didn't have where are our Singapore people. We didn't have the ability to operate this plant anymore. We mothballed it we didn't write it off right away.
Because we had some of her.
Hopes that we could be able we might be able to use it at some point why is that.
Remember, we've been talking about working on on Asian, JV for a while I don't think we discuss it every quarter, we've been talking about it for a while and actually we're still in discussions with the age of large Asian Aerospace company about doing a JV in Asia and our thought is that we'll maybe this plant would be used in their JV. These discussions our high level of the executive level of this.
The company I would say, they're serious but also of Theres still preliminary and of COVID-19 has not been our friend.
Of course, we really need to get together, we've had a lot of.
Phone discussions correspondence back and forth questions and answers, but to me in order for this to get to the the next level. This discussion we need to get together and really their team needs to come to AR.
Kansas spend a couple of days with us and with the COVID-19 travel restrictions that just has not been possible not the number we'll do it so you know.
Really a sidetrack this whole thing we're still of active discussions I mean, I don't again I don't want to tell you.
Tony is dormant at all we sold the act discussions I mean like probably on the weekly basis, you know emails or phone calls on kind of thing, but I feel like until we're able to get together, it's kind of knock on I get to the next level. So why do we decided to write off this time because of this thing is going on for awhile.
And even if we do a JV, it's not clear of that when you use just facility.
J D.
So we decided to write on the assets at this time and I think that's the right decision I think it was the right you know.
Routines and thoughtful decision.
Just in case, you're interested not much of an impact of you know wise to the pre tax benefit now the Britain. The facilities by 200000 per year are positive and the EBITDA benefit is only that 80000, because you know some of the cost of depreciation. So just wanted you to be aware of that.
Because I think of the news released or it's kind of a reference to this a write down but I wanted to know the background of it just kind of wasn't we didn't have the ability to continue the operators plant. After we sold electronics day as you've seen between just didn't have the there's nobody to operated for US. So maybe the decision was kind of inevitable but.
We made it and I'd think of it was the right decision on the right time, what are we go on to slide four.
Just the.
One of more history here with our 2021 results you can see the top line kind of nice growth 17, 18, 1920 on Oops 21 of course.
No news flash your that's the affects of the commercial aircraft industry downturn in the Destocking, we talk about sometimes okay. Why don't we move on to slide five of our top five customers. This is something we do on all of I think every presentation actually it's kind of almost of one thing sometimes we have a little picture of free.
Customer.
A aerospace that's the end point of it.
25.
The fixture on the bottom left and we supply material to this program actually structural component is just not the rocket read the structural components of the of warhead, let's see CPI radiant the snuck one that's the over on the top right the N.
And and M. T Navy multi band terminal and we supply route on materials into the program of tradeoffs, we've talked about frito is quite a bit of.
Sure on the bottom middle of the Valkyrie.
We've told you we believe we're the main.
Material supplier of composite material supplier trails from older. The drone programs and this is the picture of the credo launching with the goal of baby drone kind of interesting such of drone launching of drone so how about the.
I think Craig what's actually you said they expect the force production delivery of the.
Valkyrie of the couple of months or the terminology Middle River aircraft Oh, that's the.
That's the.
The company that was owned by a part of GE aviation that was part of the S. Gene Engineering Aerospace you know about them and we of picture of a cause of some 47 eight on the top left of Turkish aerospace not no not.
Often of our top five of its really nice to have them, they're a contractor for Sikorsky aerospace the other.
The picture.
Of the scorekeeper helicopter on the bottom right, we provide materials for doses of the structures for the the Sikorsky helicopters. Okay. Why don't we go on to slide six.
These pie chart to find very interesting, let's look of military in 2021, just do the math 60 million of total revenue of 35% of about $21 million.
No you got the fiscal 'twenty, one where the total revenue was a lot of west the only $46 3 million a 59% of military and obviously the military of percentage of has grown quite a bit but actually the absolute number. It's about 27, a quarter million dollars sort of grew from 20 of 21, which is nice remember we decided about of your go to <unk>.
On military on a much.
We're happy with the results of completely you know when you do better are the at least we've achieved some results.
Just remember also that the 27th quarter of million includes quite a bit of the sale of the what do we call it the central component for.
Four of blade is for rocket programs.
So.
Just keep that in mind and look at the commercial aerospace portion of the pie was 28 million apparently it looks like and and the fiscal 'twenty on a $16 million and in 'twenty. One just doing the math, that's all so obviously quite a bit of the.
On the downturn in commercial aerospace one would go on to slide seven this is our fund slide and dawn of Lena kind of do this every quarter. They put together, we could probably come up with things that are fun and interesting there's tons of insurance.
Necessarily of biggest programs, but we thought we.
We want to make this a little bit of entertaining for years. So we tried to come up with some cool programs military programs top left there's a b on V. But it's not to be of one boot program. It's the L already of some of the long range anti ship missiles, that's being launched by the B, one b and.
So we are producing.
Parts using park materials for that program.
After 30 Air Defense missile, those or rocket nozzle materials. The blade of materials that go into that program. The F 15 Eagle hunted for zero of you know what that means the day.
The Hunter for it just didnt comp out of 104 wins zero losses. So the thought he was there we produce the materials for rate on through the.
The team and we have the J stars of parts for cover Assembly, losing the park materials and we have the Pie chart. You are kind of interesting is the rock and all of the word big structures of Big drones are big radar side of the big but you know still really important segment for us.
Okay, why don't we keep going got lots of couple of years slide eight.
Hum.
So we talked about we love R. R.
Our.
The military programs, so just and fair. It is you know of we need to also say, we love of our commercial aircraft programs, we gotta do the equal time to commercial.
So we've covered this just kind of review slides. So you know the story if you listened to our calls single aisle versus wide body of clear trend for single aisle.
Before the pandemic it was because people want to fly direct rather than go into of the hub and spoke system, but now it's even more so because of the domestic aviation has recovered is recovering has recovered to some extent international travel of probably a ways off domestic you know take of single aisle for domestic or international think of.
The body.
So.
Our view of if you Wanna be of commercial aircraft of the least now you Wanna be on single aisle. The three major single aisle programs. We're in two of three we thank those of the two of you want to be on.
No offense to the Max you know, we wish it well hopefully will.
We'll do really well on the future, but we're happy very happy to be on the <unk> hundred 20 Neo program and also of Commack 919 program. So we think we checked two of the three boxes and I'd say, if you want to be so the island, which we do are those the two boxes, we Wanna Checkbooks, our opinion and we think we're ideally positioned.
By luck in the commercial aircraft of news story, I think we're kind of being nice to ourselves by saying St. Partly but look I would say mostly by heart.
On that we're just very well positioned so slide nine.
The emerging commercial aviation emerging from the best in the certainly wasn't of bis.
Higher jet fuel prices and environmental concerns provide extra motivation for airlines to move the more quickly replace the less if you're on.
Fuel efficient legacy of aircrafts more fuel efficient modern aircraft such as the day through 'twenty family.
A year ago fuel price were downwards, saying, that's kind of an impediment for the new aircraft of no more fuel efficient aircraft now fuel prices are not so good they are very high of its little concerning the environmental.
Concerns are in place whether fuel prices are high or low, but the the the fuel price is higher fuel prices provide extra economic incentive for the euro for the airlines to go to the more efficient fuel efficient aircraft of course.
China domestic aviation domestic domestic is recovered to pre COVID-19 levels, even greater depending on who yes, that's where I saw the price positive for single aisle U S. Domestic aviation recovered a lot like 75% of pre COVID-19 levels. They are expecting a full recovery 2022, very pause of the percent of oil and just.
End of an interesting little anecdote or tune the although if you saw the two new U S. Domestic airlines, the recently announced they're launching.
They don't plan to buy from what they say don't plan to buy.
Airplanes that from.
From progress Park is on but still a very good sign of optimism about the U S. Domestic aviation market very good news for single aisle I think a year ago people said that this is just not possible nobody's going to start of the rollout of the U S.
Maybe ever but.
That was the the pessimism the time, let's go on to Slide 10. This is all sort of review slide we.
We provide the slide.
Pretty much every quarter I think the first item, we ought to the L. T. A started in 2019 through 2020 nine's requirements contract middleware aircrafts infrastructure system timber assets a subsidiary of FC Engineering Aerospace. So what's the G can actually of what are we talking with GE aviation viral these.
Programs to the age of programs because middle River.
<unk> was a subsidiary of GE Aviation total about I think two years ago was sold S. T engineering aerospace so the GE aviation legacy programs the programs huge of programs.
Used mris, which was part of GE aviation for all of the nacelle structures of thruster versus structures. So that's the connection here. We've done the factory was long, but that will later, it's just about done but when we signed up that LTA with Mras. We said, okay. Well. We'll go ahead now of build ever done. The fact why are we doing that.
The next item sole source of composite materials for engine of cells and thrust reversers from multiple and brushed programs. The whole <unk> hundred 20, neo family be airplanes with those leap one of the engines. That's the first five items. The Boeing 747, eight the Commack line, one nine commack a R. J 21, which is the regional.
For the for.
China.
And the Bombardier Global seven 500, it takes a long long long long time to qualify of material composite material supplier. So you see the problem here is that if something happened towards our one plan, it's actually a major crisis almost immediately for all of these aircraft programs. So it was very proper and understandable that day.
I suppose the bowl of redundant factory as part of our long part of or signing of the LTA. We did the it was actually I think of handshake, but you know we are people of all word one of the shire or not.
The top right items just quickly there's also a.
Ponant, we produce for those passport 20 engines, that's not part of the Amyris LTA, that's actually through G aviation still on.
We supply one of the contractors the picture of the legendary Boeing 746, 747, eight and the sales I Love. This picture because it gives you a perspective on these the cells are huge I mean look of the kind of get back on there and the use of salt or all of park materials, not only themselves the thrust of your versus structures and for Boeing.
So I'm internal fixed structures as well for the sub 47, I should say, let's go on to slide 11.
11 would do with time.
Pushing new head of Europe.
Okay. So let's do an update on the specific GE aviation programs. So the.
<unk> hundred 20 Neo family by the way we added the <unk> hundred 19 deal that's part of the family.
<unk> talked about that much but there are some sales. So that's part of the family of that uses the leap <unk> engines me when they use those leap one of engines. It's our program of definitely in the ramp mode I would say.
Airbus just from information Airbus delivered 57 Neo family of aircraft in March.
Airbus.
This was from Airbus. This is not you know industry gossip or analyst opinions that kind of stuff.
Airbus on plans to increase the <unk> hundred 20 family of aircraft production rate of 40, which currently is that from month to 43 from per month in Q3 45 four months of two four and just if you want to do some math the Idaho I like doing this on.
Remember that the.
<unk> hundred 20 Neo family of aircraft they have two wins and it's one of the leap one of the engine. That's the program. We're on the all sort of of Pratt engine now each airplane as two engines. So you got to remember that when Youre doing the math just FY I'm not telling you what's going out in the future of because I don't know, but if you look at the May edition of Aero engine news.
Says that the leap one day, which is C. F M CFM the joint venture between GE and Safran leap one of the engines, that's about 61% market share of all of the firm orders for engines for a day through 20 Neo family of aircrafts. Okay. So if you like doing math, but that's the current situation.
Not saying, we will have on the future because we don't know that but it's about 61% of market share. So two engines, but 61% think of it that way, let's keep go on now this is really pretty important the Airbus Q1 Investor call on April 29, 21 are the.
The C. Airbus CEO a market of pronounces you can try it first name, but I think it's Mr flow fiori, and probably not something that name correctly, sorry about the lot of French friends.
I stayed there will be a steep ramp up this is quote.
A steep ramp up in 2022 and 2023 for the single aisle aircraft that means the true.
20, Neo family of aircrafts steep ramp up the axis quote for 'twenty two 'twenty three he also commented during the call. The Airbus has provided scenarios through the supply chain to determine the fastest fossil ramp up of single aisle aircraft production of the supply chain supply chain can reasonably support you get what's going on here. So.
From my perspective, these guys over optimistic they're kind of push up the rate as much as possible the day through 'twenty deal and now they're trying to figure out what the supply chain can support the really important thing to understand okay. So that's the the age from 20 Neo.
Neil story of accept on slide 12, we even more.
Still on the April 20, Neo family H 'twenty actual our news this is part of that family.
On the leap one of engine first test flight nearing the aircraft. The first test. The aircrafts are nearing final Assembly first flight expected in 2022 certification of entry into service in 2023, I mean, that's kind of around the corner.
You know aircraft.
Timeframes of electronics in the old days that would be forever two years of the aircraft it's like tomorrow.
Many of you expect this airplane it would be a game changer very significant range holds a lot of people and it's the the theory of it will replace wide bodies for many emissions will be some missions and the the key thing is Boeing does not have or in the answer for this this aircraft Boeing is reportedly considering the five <unk>.
Which would be an answer to the extra of Lord My opinion, they really need to do it because they don't have an answer for it but the problem I guess for Boeing a little bit as day. This ex L or it's gonna be and the production and being sold in two years on Boeing has been announced as the five ex yet so I have no idea of what time.
Frame that would be talking about but it's gonna be into the future.
With the kind of a new airplane category.
I think the the general rule is it's always good to be first not maybe not always but usually go to the first let's go on to anyway. So just on so on 12, well I think this could be a really important program for park. The extra large part of the 820 family, but real important program for park, Let's go to slide 13, the global 7500.
I think the recently sold the 15th this airplanes on production are doing well in the ramp mode of ramping up which is really good news for us.
<unk> average age of 21.
This is a Chinese airplane by Commack, it's of regional jet it's in production of most.
Most of it for the China market for now and they're ramping up the 10 production ramping up on slide 14.
<unk> 919 with the leaf once the engines.
So commack of syndicated day in terms of certified.
Deliveries of the aircraft before the end of 2021. That's this year. So I guess, we'll see what happens I don't know, whether it's correct or not I haven't heard of any updates on that.
But whether it's 'twenty one or some other the date. After that this is of I think of very big potential program from Park. This is Arab buses attempt to be of real player in the commercial aerospace. This is their answer to the 737, the Max nature of 'twenty. This is their single aisle airplane and you see a picture of it here so.
I suspect, it's going to be big I suspect the originally was going to sell the.
Inside China member of domestic aviation no single aisle of blood.
The eventual I believe they liked the silhouettes outside of China, Our Boeing 747, eight Boeing announced will terminate production of the Quintus Sky's. The 2022 12 orders left the fill long with the Queen of some of you know why of the real fondness for the certain 47 eight.
One of the things that makes it a real sentimental thing for US is the first.
Program going on which the aviation was the 747 eight our first shipment.
For these programs was February 28.
2014 of about 11 o'clock at night, it was kind of a pretty exciting day for park actually.
So we have of special fondness of some 47.
Personally I took this picture actually at the enquiries you reported your airplane you see the gears down but the land.
Slide 15.
So our commercial aerospace your review.
The Armageddon revisited.
All of you know about all of the style of airplanes park by the thousands.
Don did a real nice job of just pictures of our airline terminals with ghost towns Yep.
Were there you've heard about it airplanes flying all of a jump the we see lots of pictures of like two people on unheard of plane.
Thousands of flights canceled of thousands and thousands of employees were laid off throughout the commercial aircraft in commercial aviation industries.
As you know arm again, almost all news about commercial in the aircraft industry was negative very negative.
Again as the analysts and you know the commentators and the people that get interviewed on T V.
I guess of lot of people listen to when it was or maybe not a good thing because of that you know it kind of becomes a self fulfilling prophecy aviation analysts and commentators predicted full of carbon will not come from many years or may never com, maybe it's over maybe the you know the commercial aerospace industries of staying in the past it was just.
It won't be an industry in the war almost end of days they were talking about slide 16.
The park, we did not completely by all the Doom and gloom stuff, we did not buy the at the end of the days were at hand, but it doesn't really matter either way, we've made our arrangements with them whereas to maintain.
Minimum monthly baseline critical mass production levels to preserve parks of ability to ramp up production when needed. We cover. This I think are in the last couple of calls the least so if you listened to the prior calls you know about this well it was very important for EM rash of park that we did this we didnt want to allow our production levels of the type of product we make for ambarella.
The go below the critical mass because we knew we didn't know I guess, we didn't know anything nobody did but we had a lot of we believe we're going to ramp back up one day.
It was ended up being of approximately 700 to non $1000 a month.
The minimums were in terms of units because it was the production thing not on the sales thing.
But it turns out it was approximately 700 and 900000 per month starting about July.
And even though layoffs were widespread of proves eight pervasive through the commercial aircraft industry, we laid off nobody none of our people through the all of the darkest and seen the hope was days of the commercial aerospace industry listening to all of these guys on T. The you're talking about the end of the days. It's over you know everybody. We knew everybody. We knew it was like people off.
We did not do that and it turns out that decision did not lay off people was critically important the park because kind of ramping back up we have to go try to re hired these people in the call them back, which I know a lot of all the countries are doing we never let them go to begin with a reason for not letting go of wasn't on that because we don't we don't like doing that kind of thing as we discussed many of.
Times of the past slide 17.
Continuing the same scene.
Woke at length during our Q1 and Q2 Q3 Investor calls last year about the significant the emergence from the mismatch between the minimum monthly baseline critical mass production of Magic Retool. The Democrats and the then current end market requirements for GE programs with park is on I'm not talking about now I'm talking about that.
Airbus always maintain the Oregon the stay at 40, and we're going to go on to 40 all of the analyst not all of that can be unfair of a lot of the analysts and commentators oh, they're going to have to you know on the other shoe is going to drop alright fine.
Didn't drop and but we were producing with our minimum amount of about half level of what was needed to support the van market not the now mark of the Denmark of inventory Destocking and this is what happened you know everybody was so intimidated so frightened so afraid and you know like I said, the analysts and commentators and help very much the people.
We're willing to buy anything people were on the build of anything Youre, just kind of selling inventory down because basically the world's coming to win on what do we say, we said to you said inventory cannot be the stock to below zero. It's kind of you can't of a negative number of unless you're involved very creative accounting I guess the.
The version was mathematical and sustainable I mean, how long COVID-19 to sustain that kind of mishmash mismatch, we didn't know how long, but it was not going to be sustainable.
Unless the aircraft end market took another dramatic steep step down the day of reckoning was coming we we told you that this was our opinion well. It came a destocking has ended all of the day aviation programs of park is on or in the ramp mode, except from the 747, whose rates are unchanged.
Go to slide 18.
And the ramp is looking steep.
Just an update on the slide we did last quarter from perspective, GE Aviation program sales from falling periods word or these are calendar year periods. Just Wanna mention average normally talk fiscal years, but calendar year of 19, $29 3 million calendar year, 'twenty oops, $15 8 million, but the last six months of calendar year, 'twenty 5 million $5 million.
That's a $10 million run rate, but if you think about it seven out of 900000 hours of minimum.
800000 kind of.
In the middle of that range of 800 times 12 is about $10 million, so that kind of makes sense.
So we're running out of 10 million dollar rate during the last half the last half of calendar 'twenty.
Oh, okay.
The year 'twenty, one calendar year still kind of your forecast for GE aviation.
G M U can program sales based upon the roof workers, we recently youre seeing from the customer $25 5 million.
Well what happened the last time, we talked to is $24 million well it moved up.
Moving on.
No well have to see about the what does it mean this is not a forecast you were just telling you. The forecast. We're seeing are forecast to you would be done you know fiscal year basis of normally will provide ranges. When we give you a forecast but this is just to give you a perspective on how steep the ramp is $10 million right to the $25 $5 million right.
And the period of what like a month.
So that's perspective 19 slide 19.
Continuing.
The ramp mode, where the rent mode. In addition, we this is really important. In addition, we recently received an update the long term forecast for GE Aviation. This is not just the 2021 forecast just the 21 through 29.
The balance of the firm pricing L. T. A member that was 19% to 29, well, obviously, we wont talk on 'twenty one of the 29 now in terms of the updated forecast of the passage of the past so here's something really key on the apples to apples basis. The total updated forecast G aviation programs sales, where that 21 to 29 calendar year period of very soon.
<unk> to the total forecasted GE aviation program sales for the.
From the pre COVID-19 forecast for that same period, the basically back to where we were pre COVID-19 that's the.
Forecast we received.
How has the update the forecast constructed okay.
I think we told you. This before we are giving the units we know what materials how much of materials used what types of drilling unit by unit, we know what the selling prices for the materials. So we just build it from there we built a very detailed long term forecast.
Big Spreadsheets are lots and lots of detail, but that's how we build in our opinion of the update of long term forecasts that we were talking about now.
May not fully capture the steep ramp up of the day.
It's from 'twenty deal aircraft family production in 2023 predicted by the Airbus C. E O. Just a couple of weeks ago, and we say that because we think that those comments came after the receipt of forecast and then also.
My opinion is that the forecast may not capture the extra of large sales opportunities of the reason I say that it's because you know a lot of people think the XLR is going to be a big deal and then in the long term forecast, we don't really see.
Bump.
Which would be tied to the introduction of the the XO or the maintenance in there I'm just saying, we're just kind of wondering about it.
But an important question. So there is some upside we think maybe either of the forecast didn't fully capture of these two things, but the other side of equation is how of the commercial aerospace manufacturing supply chain.
Respond to the steep ramp that's a big question. That's the member of the ear, but she always said they went out the supply chain to figure out what the supply chain can support. So there's two different things are kind of pulling in different directions, I guess of slide 20.
How we are responding to the ramp up it's all about our people well sold park's people count is currently one of the six so what the heck happened here over the last quarter was one of seven and we told you we plan to hire 15 20 people, so where those people.
All of them increase their people so.
What well maybe people are getting paid the stay at home so who is that helping you.
We hear a lot on the you know the.
The financial news news about all of these companies I cant really reopen can't ramp up used again here of people, it's really terrible the garbage paying the stay home.
But the only worry too much about the people.
Is this helping those people.
So you might want to think about that a little bit of these are people.
Some of them now have worked for a year.
Oh.
Getting fat.
You know are the mice turning of the mush, maybe the loser edge some of these people.
Our of wasted people know the they don't may not have the ability to go back to work again, maybe ever look if you're off for a few weeks spine a year.
On a year or.
So maybe some of the soles of broken souls, what about them.
There are people to you know.
Their lives are being destroyed the some of them, but there's plenty of it that's not part of discussion it's always about the businesses, which can't reopen on and I. Appreciate that I think that's a very good point, but why Don was nobody's thinking about those people and they are being helped by this.
You know I have the opinion about who's being helped and it's not them.
But the we worry about us we will take care of it are as usual parks people stepping up getting the job done Corey has done a magnificent job of kind of organizing our work force sales, we were able to meet the ramp up we don't we're not we don't talk about disappointing customers that's not in our vocabulary one way or another we will get the job.
On slide 21, so how we are responding thank goodness for our customer flexibility program, we talked about there's a lot of little more detail total current parts of participation 80% of it.
Got it.
Oh, they need per cent to job categories, 47%, 330% for 18% five year average high job categories, 5% without the customer flexibility program. It would just be very very difficult to get the job done. This this customer flexibility program is just one of its just a godsend at all of the salt.
Much during the downturn.
The keeps on going not laying people off and it's helping us incredibly now with the incredible flexibility to respond as we need to thank goodness, we didn't lay anybody off on the darker stays in the commercial aircraft industry, because we didnt after the part anybody back there all of their our team is there that's not the reason the only reason of the other reason is we just don't.
Believe in letting people go.
You know, we just thought of how we think about things of those people are precious and thank goodness for park right people without them, we would not be able to get the job on park is very fortunate and blessed to have the right people. It has let's go on to slide 22, GE Aviation program. How are we doing time Oh boy.
Maybe 145 minutes GE Aviation program sales history of forecast estimates.
So the top part of it is the history, which you are familiar with.
Q4 was $4 4 million I think that's pretty much what we predicted.
Our Q3 call a total of $13 2 million and looked at.
For for 'twenty, one sorry fiscal of 'twenty, one it looks like it's less than half of what fiscal year, 'twenty, which is not a big shock I don't think to anybody.
Our forecast.
Q1 of six five to 7 million Metropark, which booked Q2, six $5 million to $7 million for the fiscal year 'twenty was $26 $28 million.
Right well I don't know it could be I guess it depends on what happens in part with the 820 and you know what.
Mr. Jewelry said, the Airbus CEO that we just talked about and then the other side of equation is always can the supply chain of meet the ramp up and I'm not talking about us, but if any part of the supply chain not able to support the ramp up debt do you means the ramp up itself, maybe slowed down a little bit.
So.
Again, a picture of the 747 eight supporting Anchorage.
So you see the a lot of lot of picture of the terms of 47 eight.
Oh I get a good picture of authority and I loved the sub 47, eight so even though it's not our biggest program of like just loved the airplane the love putting pictures of the airplane in the presentation, but you know somebody asked about this it's actually less of $2 million of revenue for us per year. So even though it has a very sentimental value for us it's not one of the.
Bigger programs for GE aviation. So I just want you to be aware of it but you're seeing on the programs being ended slide 23, where the old forecast here for you.
The first the top box of history.
So just for perspective, the history, you'll do the Tory we cover the history of the earlier slide just to remind you who kind.
Kind of a broken record stuff here of the central component from missile programs.
This is last year 20, 123 of about $2 million in Q4 of about $3 5 million of just to keep that in mind.
Now, let's go to of forecast, we haven't given a forecast for awhile well, we gave the ish for cash you know like three years of four ish we're.
We're back to trying to give you a forecast we think theres still a lot of uncertainty, but we feel a little bit better. So we're body you with a forecast Q1 sale of 13.3 of three 8 million.
That's less than Q4 as you can see but you know again, we don't want to we don't have those the sales that the.
The central proponent.
Three six to $4 1 million of EBITDA. So we're getting back up there just you know.
Q1 of this is something we're not sure about we have forecast for cash forecast, we do pianos are weak and we cast our forecast.
But the gross margins in Q1 should be Oh, we're predicting quite a bit over 35%.
I'm, not saying that sustainable if you look at Q2 of its interesting because you're saying there the revenue or is it going up but.
But we're looking at the adjusted EBITDA down a little bit first of all of the Hartford's as broker record stuff, but there's a million dollars of the central component of sales in Q2, remember very low margins, but you know quarter to quarter. The the mix changes. It's since we're doing a lot more military we're gonna of quarter to quarter.
The mix changes and that's going to affect our bottom line.
The G aviation business. The there's really no mix change you know it is what it is military you know a lot of programs and you know one quarter of it'll be more of this one quarter. It would be more of that and that's going to up and down our EBITDA from quarter to quarter for the year of looking at $55 to 62 million revenue of 13.5 to 16.
The 5 million EBITDA I think.
Fiscal 'twenty, it's the prior part of the presentation was $60 million of revenue and $13 million EBITDA. So we're saying yeah, we're kind of back there.
Even a bit better than that so just a couple of things on when I mentioned these are taken into account when we do our forecast and we could be wrong, but like I told you earlier in the covers many times can give you a forecast for saying. This is what we think of you're going to happen based upon of course working hard. This is not a walk on the park city, whether you feel like that but working very hard on.
Josh, but we're still looking to hire people, we haven't given up.
Have the desire to hire you know maybe eight or nine people now and maybe some additional later on so there's real cost involved with people.
Entry level people are there, they're not they're expensive you know over $50000 was soaking wet.
Per person.
Hum.
New plant startup, there's going be some costs involved in new plant startup.
The raw material costs are going up you know I mean inflation quite of concern.
So with the the LTA, which aviation those raw materials are locked in we couldn't have done in the LTA with GE aviation, if we didn't have an LTA from our suppliers, but.
Most of the other customers.
Customers not LTA, so we quote what we quote but often what we do is we unfortunately are.
Raise your prices to take into account the of the.
The raw material cost increases that's what we do it's not good and you know we don't know where that ends when prices have gone up on up and up but it's not a good thing.
Things like utilities are going off supply is going up.
The shipping going up normally of the covered as either part of our selling price or our raw material purchase price.
And there's also you know I would say well I'll speak for myself serious concerns about the economy, what's going on on how it's being managed inflation.
The interest rates and things like that.
And you know, we don't really spend a lot of time thinking about it but we can't deny or still living in the in the world out there.
So we do the when we do we need to do every day, but I don't think it would be proper for us to say, we're immune from the what goes on on the outside world.
Hey, why don't we go on to slide 24 of updating of our expansion of budgets now $19 million.
It was $18 million last time, we spoke to what happened we started with 20 in the half I think we pulled it down 18 on theory that business very slow so let's kind of the whole back a couple of things. She what happens. So we can make the decisions later on.
But with the ramp up and everything it's a increase of $19 million spent.
Spending to date that 15, I guess through the math, but for millions of go.
The completion is basically next month kind of little things will be of worked on for a while but the completion is basically next month, we start the manufacturing trials from the major equipment, which of you know pictured blow in the top of the bottom left on my corners a.
July July of 2021 qualification runs with of course.
<unk> September of 'twenty, one is of what's planned.
The these two items of equipment, they're not really they're huge and it's hard to give you a perspective on how big the Ara because some of the stuff, we don't want our competitors to see and you know.
They were able to see our presentations as well so we kind of took a funny perspective on these this equipment the tape line and film line.
Brian picture of our new offices.
The last open.
My office on top right.
Of the picture and then Youll see at the bottom middle of its a nice picture because you could see the on the left is the new facility on the right as the existing field, so the except with the new offices and the kind of towards the back between the two of them is that the passage way off to the right of the existing facility Theres also of the warehouse, but that's on capturing this picture so that is.
The story of their expansion.
I won't try to wrap it up here.
Slide 25 parks.
Parks reflections on its 2021 fiscal year was there of finest hour well, let's talk about the.
Park had its share of tragedy and heartbreak during the year the.
Kind of Heartbreak that does not go away.
But the park, we don't quit we don't give out we don't back down that's just not what we do which not on nature and we keep going we push forward with their major expansion when some others slashed capital spending we stay true to our principles when maybe some others didn't we did not sell out maybe.
Some others did we did not lay off anybody when so many others did by the thousands and thousands.
Park's people are precious.
Park family stuck together and sort of through the darkest days together and park, where our family we have each other's backs slide.
Slide 26.
Park is the strange unusual company filled with wonderful and special people, we're very fortunate when it comes to our people.
Not like the others of park, we play for keeps.
We're not pulling around we're looking to make an impact here.
Sold Park 2020 on one fiscal year of May had been park, especially forever.
You know I've been with the company since 1988 I can't speak to before then maybe of the fifteens in the early days and Woodside Queens, maybe there are some great years and right at the beginning of way before my time, but I can't tell you without hesitation that in my opinion the.
The 2020 weeks of school year.
Was the best parts Beshear since 1988, when I joined the company, but I can tell you that without hesitation I can't think of when all of the year. When you were a computer.
That would compare I think of our best year ever that's my opinion anyway, yes, our finest hour. So we will save the.
The last four or a picture of one of our crews, which we love to do the.
<unk> the ROE, that's quite of loopy and and the one the bottom row of Jose Who's the lead Joshua and Saracen now what's interesting is the chest Park second shift solution career in film line crew wait a minute the those of two different things well, what's going on here. This is the customer flexibility.
On each one of these five guys that's been approved.
The op rate both lines and that's a big deal you don't put somebody one of these lines with you know okay. Here you go just hard on them.
No it doesn't work that way so see how it works with the customer flexibility.
These guys are able to move back and forth between those two major lines and that was so important to us through the downturn and so important to us now and we're trying to ramp up so that's how it works.
So I think we're at the end of the presentation Slide 27 as our thank you slide operator, so we're happy to take questions of the extent that we need are already.
As a reminder of the asked the question you'll need the press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster and once again that is star one if you'd like to ask the question one moment of two questions.
The first question comes from Brad Hathaway from third of your your line is now open.
Thank you very much and congrats Brian on.
Getting through such a tough year really really impressive.
Thank you for a few of them.
William.
I appreciate your willingness to give us a 2022 forecasts and all of the commentary about kind of the.
On the ramp up of Youre seeing.
Given the things seem to be getting better and you kind of of previously commented on kind of prior forecast just being shifted at all to the right. I was curious if you had any thoughts on kind of the those type of forecast and also you've kind of when you will feel comfortable perhaps give me as the long term forecast again.
So as we just commented we're forecasting for the current fiscal year. It looks kind of like the 2020 fiscal year before even before the calamity of Urquhart cause of the world in the industry.
The forecast, maybe a little bit better, particularly EBITDA kind of right on that net range for top line.
<unk>.
I don't know how to answer that question, except maybe one way to look at it as that's kind of our starting point.
Obviously before we go out with the new more from forecast, we can't just kind of take whole forecast and kind of rolled out or push it back by two of the REIT by two years.
It really wouldn't be right, we have to take into account.
We know now and all of the updates and all of the you know the new developments and there are significant to the development. So I think.
Most of which are positive actually when we'll be ready for that I don't know I don't really feel like it'll be next quarter.
But let me just say I would hope that before the end of the year of this year, we'll be able to.
To rollout the forecast we're more than just one year.
Or even the one year forecast as I said, there are uncertainties that we're still dealing with you.
It's not like kind of a state of the world right now.
We felt good enough that we're able to provide something to you I don't I don't know what answer the second question I would just say again of hope that by the end of the year of biggest you know with whats happening is we feel like we're getting a lot more useful information and you know what we're doing is we're really listening tour, what air and bus says what Bombardier shows what the.
Commack says what Boeing says for commercial I'm talking about and kind of not kind of tuning out all the analysts and everything and the commentators.
These statements really have not been helpful on I've been kind of wrong.
But it's really great like food day from 'twenty to be on the program because you know remember where the real says how about the ear, but she always so helpful to be able to tie you know what.
And what we're doing to what Airbus says and we can do it we can do it with a pretty.
Good precision.
Once we know what they're talking about so.
So I don't know sorry to not give you a better answer but I think that's all I can think of of right now.
But anyway, it's good to see everything after attempt the air moving kind of all of the programs.
That's great.
In terms of the and then in terms of M&A is there anything you can kind of update on.
What you've seen there.
Yeah, So I think last quarter, we talked about a little bit.
We thought that last year, we'd be able to get some distressed sales that didn't materialize.
The advisor sold assets because the fed you know made of possible people hang on.
A pretty active in two areas, we're actually putting a preliminary bidding on one company in the Arctic later on this week, we're still looking we're trying to find niche things you're trying to find things that everybody in the brother and all of the financial buyers without piling on and on calling on you know because the interest drives the price of so much.
But the other thing is that we are we have identified certain product area, that's very closely related to the composite structures and composite materials.
And we're doing some pretty good research I would say in that area and we've actually reached out to several companies that do of operations in that area of I guess at this point won't specify but it's something that will be used by a company producing composite structures. In addition to the composite materials. So we think it's really a good tie in and some of our customers of actually helped us in that.
Martin as well so we're optimistic we're talking about optimistic that's probably the entrepreneur I would say of these days.
M&A is a is more difficult, but we feel better about that and just going into the auction. Let me put it that way. These are companies of somewhat private somewhere divisions of large companies are probably not going to be for sale.
So we're trying to initiate the discussions and we'll see how of those go and then the other area I just want to mention or sort of projects. We work on them you know about the joint venture discussion and in Asia, but the other projects that we work on with some of the large customers that wouldn't be really M&A, but would involve a significant investment of capital.
So I guess I would talk about those maybe three things, we certainly haven't given up on wet down all even though you know we have this concern about.
These companies being bid up right now with the I guess the MTA inflation.
I don't know maybe it won't less maybe a debt will reverse we will see.
So.
Obviously, we'll let you know as soon as we have something reported and we don't have anything reported by now, but I guess the message I would say is that we're still working on it we haven't given up or just decided taking your offerings and wiped out or wait to valuations come back down.
Understood and in your mind of you and obviously if things continue to improve one would think of the M&A environment might become harder.
The future of unless you buy one of these deals that had kind of pushed you or something really neat really niche.
Is there a point at which you decide that the cash on the balance sheet.
Not gonna be usable.
Some kind of investment and you consider all of the other alternatives.
Sure. There's a point I don't know what that point is.
But yes sure that's the point so that's kind of an open question for us I understand exactly what you're getting on at least I think I do I don't have the can't keep the date, but.
But it's something in the back of our mindset shortly.
Yeah, I mean, obviously my preference would be the you find the next with bolt on acquisitions of you do that that would be a guesstimate that the well. Thank you and thank you.
You know we feel the same way about it but thanks for the comment go ahead sorry.
The I just said we can say thank you very much I appreciate all your efforts.
To generate the results we did in a year like.
The pandemic year like last year, what are you kind of a so thank you very much of the effort.
Thanks for your comments.
Thank you.
And again, ladies and gentlemen, if you have a question that is star one again, if you'd like to ask the question that is star one and our next question comes from Leonard Cooper.
Investing your line is now open.
Hi, Brian.
It sounds like.
<unk> bees.
Yeah, Hey line, how are you doing I haven't heard from you in a little while.
We're doing okay, we're hanging on.
Very good.
I just noticed the story.
Saying that we're gonna go.
The us is going to have a wind turbine.
All of arm.
I think it'll be the first.
The government.
And that kind of we'd be.
Yeah.
We're not we don't Wanna be wind turbines or not.
Market area for Us it's actually if you look at companies that are involved it's not really a very happy story of those of low margin programs.
And where aerospace and that's pretty much it we decided to go on aerospace.
We realized the raw.
Right from the start that we didn't know of tech redoing that you know and you don't know what you don't know aerospace of such a huge on complex field that we felt were small company. We don't have of pen with the get involved in other areas of boats of wind turbines are.
Skateboards of whatever your capacity to choose the obviously one of the things we're aerospace company. That's it no wind turbines for us.
Okay. It's just there's a lot of or doing the Nymex.
Those planes.
Yeah, you're right.
And I think they are getting more sophisticated a lot of expert on it but to think of you getting more sophisticated preliminary data my perspective as well.
Okay. Thank you very much.
It was very interesting.
Sure.
All of the past, okay, well, thanks for checking inland nice to hear from you. So hopefully we'll see you soon.
Thank you and I'm showing no further questions I would now like to turn the call back to Brian shore for closing remarks.
Yes.
Okay. Thanks, operator, thanks to everybody for listening I'm, sorry, I I said 45 minutes I think we went past 45 minutes I try to rush through it but you know there's always a lot of things you want to cover to help with perspective. So thanks again for listening and have a great day and feel free to call US you know, Matt and I are available anytime you want to talk.
So when we've talked to you fairly soon because channel or first quarter of ends actually just a couple of weeks. So I think probably early July we'll be doing our.
First quarter announcement kind of take care of have a great day Goodbye now.
This concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
[music].