Q1 2023 Park Aerospace Corp Earnings Call

Speaker 1: We TR.

Speaker 2: Good morning. My name is Paul and I'll be your conference operator today at this time. I would like to welcome everyone to the park. Aerospace Corp. first quarter- fiscal year 23: earnings release, conference call and investor presentation. All lines have been placed on you ttoer on any background no.

Speaker 2: After the speaker's remarks there will be a question-and-answer- your session. If you would like to ask a question during this time, simply press Star and then one on your telephone key path. If you would like to withdraw your question, please press Star and then the number two on your telephone. Keep PA.

Speaker 2: Thank you at this time. I will turn the call over to MR Brian , share Chairman and Chief Executive Officer. Mr shore, we may begin your conference.

Speaker 3: Thank you PA, little sorry you. Thank you, Paul. This is Brian . Welcome everybody to our first quarter conference call with me. As always, as usual, that's car of our, our CFO . So this morning we put out our earnings release, our first quarter earning release. In an earnings release there are instruction, how of access to webcast. Get access to the presentation that we're about to go through, also the presentationations on our website. So the presentation, as you probably already noticeed, this quite long, but don't be alarmed, this is the ilemma we had. It's been less than two months since our Q4 conference call, less than two a months, So not another time has past.

Speaker 3: And a lot of stuff in the Q4 presentation was new information new material which still is very relevant. So we didn't want to just kind of eliminate that so what we decide to do is this we decide to carry over much of what was Q4 presentation to the Q1 presentation. But with some updates and addition new items in other words and what we'll do is focus during this call focus on the updates and new items and we'll be skipping over skin over a lot of the rest of it and so and also the Q4 call still our website' to go back and listen to that you know'll feel free of course. If there things miss skip over that you want to ask questions about Please. Ask. Quest is it's not that we don't want to cover these things but.

Speaker 3: Which are me practical here, because we're going to be jumping around a little bit. Hopefully it will try to make this Co? leesive as possible, But if it's a little bit, you know uninroicive but that's a term and we apologize to that in advance. As usual, we don't spend a lot of time these presentations with what we consider to be dry financial analysis. You want to do financial analysis? Just let us know. We happy to respond to your questions, but we try to make these presentations more interesting and formative. Also want to. It will shout out to Donna to make Ito and it rather because it seems like my partner knowing these presentations, I don't want your PowerPoint. I all guy.

Speaker 3: Investor presentation. There's appendix one and supplemental financial information in which we attached to all of our presentations these days. Just lets no. If youhave any questions about here that SL four fors have to slow down, look for Slide 4, our podland results.

Speaker 3: Look at the right-end column with the yellow highlights. So that's Q1. You see our sales are gross profit. Gross profit margins arety 2%. We'd like to be better, but we're always happy when it's at least about thirtwo percent and mean you see our adjusted EBITDA EBITDA margin, our forecast philosophy. We try to remind you about this every time. I recall rather our forecast philosophy when we tell you what we think is going to happen. We,'re we give you a forecast in a presentation. What we're doing is we're telling what we think is going to happen. We could be wrong. We're telling you that this is what we think is going to happen.

Speaker 3: We don't play what we consider being game and low number, So we be didn't look like a hero. I know what well other compies do. They's just not for us. So I just want you to know what we give you orcast. We're saying: this is what we thing is going to happen, and so what do we tell you last quarter about Q1?

Speaker 3: Would we say. Say, during our 2, four Investor callal we gave their sales estimate of 12 and three quarters a 13 in a quarter million of course. So we came in kindof 12 million. Seven 8, three came in within the range by the kind of the bottom end of the range. I would say adjusted EDA estimate two and three quarter to three in a quarter a million and we came in within the range at two point eight million EBITDA, talking about kind of low the range. But nevertheless we got in the range and I say a steady job by parks, people them. Take the Q1 sales and adjustment EBITDA numbers, I would say that easier really got it a low way.

Speaker 3: Well's. It's hard to appreciate the daily battles and killing for involvedremember. We gave you the forecast during last quarter during the fourth fourth quarter conference call. We said you at that point- it's kind of interesting- only by two and half weeks GoTo the end the quarter to the end of Q1. We gave the Q want forecast because when Q4 we to do our, our Board and everything, So we and that's later after, maybe about over two months after the quarter ends. So we said even in those circumstances there's a lot of, lot of risk that the foreast were give you in the guy. Would that be everything we're going to, we're going to sell has been booked? It wouldn't that.

Speaker 3: With the supply chain chaos he we're addressing. We didn't know we would get, we didn't know we get and we certainly didn't get what we wanted to get. So what happened is that a large majority in- let me put it this way- a large amount- I should majy a large amount- would be produced and shipped in. Q1 was produced and shipped the last two weeks of Q1.

Speaker 3: So it's a daily battle on with the supply chain. We got some raw materials and okay good, what do we got and go a and produce our product.

Speaker 3: We have to test the product, we have to certify the product, we have to shift the product in order to get the porrest, the quarter over the finish line. This is what our people did. If people work in long long, long hours, especially during the last couple of weeks, we get the job done.

Speaker 3: To force the quarter over the finish line and I can assure you our quarters end on off quarters and Sunday or financial periods on on Sundays. I can sure you people workking that weekend shipping that weekend the last weekend of the quarter and so.

Speaker 3: Anyway So yes, I say like I say, it's a significant portion of the Q1 sales and production last two weeks, or just re by, not here, covever that already. And we talked about the weekend. So parks, people just brot, force the quarter over the finish line' get backto this and what it means, what kind of people we have. But just want to make the point. That's why I'm saying outstanding job, even though we just got to the bottom of the range, both the top and bottom line. Let's go on to Slide five this is all pretty much, but we had repeatable. We had in Q4. So freight freight freight, the information P and recent report that there might a little at like in the tunnel in terms of international fareight shipping in general.

Speaker 3: But why? Why is that good news? Well no, the reports said it's is the demand disrtruuption. Hope you know, you tell me of it's good news, but maybe at least that you know there'll be some loosening up of the access to international freight, which has been a real issue for us every, every quarter. Severe staffing shortages- Yeah, they're certain, like all way. But what we're saying when you're dealing with this, the right way, the Parkway, which means you're focusing on a Park family culture, not taking short cuts like all money at people. Total misshipments: one to quarter million bucks.

Speaker 3: Now we announced Q4, I think we're thinking about be many a million bucks, one according million bucks of MIS shipments, because all of these reasons create mostly supply chain. Supply chain was the big onea And so anyway, I gives you, I think, a little bit idea perspective on the deal, on the battles: fighting, daily battle, we're saying, and that's I don't thinki don't think we're be a little little overly dramatic when we, when he described our experience in the daily battle and that's going to side 6, the inflation that you know it's still there, that second check Mark, historically high maybe, was with us for a while.

Speaker 3: maybeit's not so weed or break the pattern. Maybe we screwed the PO <expletive> the as restauranton to say pretty good here, maybe it's not going to be so easy to get out of. So not a list of excuses. We Don like excuses Park, we don't go for that stuff. But we do think you want to know. You know what kind of suff are dealingwith a day day basis and you know your investors and our competition. one of what we're doing every day. Slide 7: Yeah, supply chain become a free fall. This is you know. Continue is having gten better not, as far we know. Anyway, chaos and panic and in many cases even confer appeals are not being on or we taltalk about that a lot less time, So WOn't go into it, but I just want you know.

Speaker 3: In Q in sorry. Fiscal 22 compared to fiscal 20, even over the top line, was much lower and I thought that was an outstanding job by partch of people and a circumstances. Slide 9: let's keep moving hereso most of what we have here is repeat of last quarter, but with some new items that want to bring your attention. So parkers erare a long term debt. On Slide 9, like I said, co that already before, a cash 100 popointts green a million. That's gone down quite a bit. whatwas going on there? We're spending money. Well, let's talk about that. Parks investment philosophy. Our cash invest a highly C liquid Securities such as treasuries governments, high grade commercial pay.

Speaker 3: You of the investment at that time. So all these Securities is a high liquwoid and quoed like treasuries, like every second of every day. It's easy to get that market value. But the market value done down, even though they're really short, turn twent three months because interest rates have moved up quite a bit. So that's what we're reporting. A lower number, that one hundred seven point three now the amvertized CH cost basis of our cash at the end of the quarter was one hundred Eleven point three million. You could we report the number were proprired report based on gap requirements. By once you had this information you decide what number you think is more significant. Now and we hold these Securities and maturity.

Speaker 3: thenit's likely that we'll get closer to 101, pointing three million number rather than the lower number. Now, why is it not the right exactly number? Because the way the cost basis works, amortizeed cost basis works, or rather, is that we take the investment, that cost, that we amortize either DIS kind of cremium over your life, the security and il maturity, and that's we doing on ongoing basis. That's why it's not exactly what the what we originally pay for. Like I said, if you want more information about that, TAL them, and I know you, you guys, are financial guys. You probably could run circles around this kind of stuff, but I just wanted you to understand that number and just wanted to warn you also. We get to Q2, this thisdiscrepancy or difference.

Speaker 3: Delta let's call, probably will be greater because interest rates are moving and going up to come down a little bit, but the trend, for us anyway, has been moving up. So I just want you to be aware that, because it's something and I think it should be aware, when you look at our cash numbers Slide ten.

Speaker 3: We hope to go over the top part of that. We want over this previously. No change their cash dividend. But just want to mind you that we pay $554 million or $27 or five cents per share in cash dividends since fiscal two thousand and 5, Slide 11. here's something new: the top share purchase authorization I'll. May 23, the Board authorized. We announced at the Board authorized our purchase of up to one point five million shares of the company's stock. Now we've been in the blackout since the authorization. That black out guess ends tomorrow. So what happens now? Now it's interesting because even before we made this announcement, we just received a lot of.

Speaker 3: sevenor 8, then you have, you know, your lot to load it. That was the second category of input. The third was go ahead and announce buyback at some some cent book after the buyback was announced, also announce a buyback and go ahead and buy at these levels, more or less. So that was a three different kind of categories and theninput that we received. one thing I want to comment on is that there is one

Speaker 3: I don't know. I guess made analyst that said we now a buyback is a matter of repeasement, and I wanted to address that is one of the peacement. It means that we do believe it's the right thingto do, but we did it because we're towards were chickens and we thought, under pressure we're going to go and and do something we don't thing was the right thing for Park. To me that's what the ieacement means and I have to tell you that I would surprised to that comment because even know Park, we don't do that. We don't do that, we do with thing as best for the company. Now we appreciate the in put we get from shareholders and not's just sen your statement. I mean a lot of. You know that some of the things we've implemented are based upon the input from shareholders. Really good ideas.

Speaker 3: We get an idea and it's a good idea. lim min, we don't have any, not admit here stuff, but at the end of the day we'll do. We think it's right for Park. I just want to make sure you understand that we don't do things for peasement. We see that a lot in corporatein America these days and we think it's very sad and very appointment' CE O have no backbone. They just do what they think to exed, to keep your jobs or something like that. I' tellyou something: I'm not here. My job I'm to do think it's best for the company. Now, what we do, we'll see I I just wanted to give you a couple of things to think about. The item at the bottom of the page. So maybe our money is going to finally be we something and maybe it's now an important strategic asset.

Speaker 3: The thing is that we believe anyway that the economy in the country are in a very drug, troubling and dark place right now.

Speaker 3: Very concerning. We'll get better. People think get better. On my questions why, why LL get better? What's going to make it get better? And I'm not sure the answer that is very clear. I i't want to get into the discussion about what happened in our opinion about that that. So I just want to know that we're considering those two factors. But we will'll say you we're not with. All the announcement to make is so whether we're going to start buy stock in this low or not, we're going to think about that a little bit. We're going to what happens- what's what happens in the world, and make sure that we do what we think is best for the company I you put you have. We appreciate you. We welcome it at any time.

Speaker 3: But we'll do. We think especially for the company. And what is the company include? It includes the owners. We say what specially the comp? We mean cleaning the owners. Of course let's go in to Slide 12 So we're not to spend a lot of time on this, just say some time here. We do this every quarter, as you know. I know if you probably don't would knowicethis by memory, but these top five in the same top five is last quarter, So some of the stuff doesn't rotate too much. Every quarter we come up for the know different pictures, different programs, that the the top five customers are on the bary eight global actually relates norred in the pestsport.

Speaker 3: So speculating, but I think this might be a demonstration of the loyal MAN concept you know, with a mand aircraft next to the valory. I'm sure it's a speculation. Let's go in to Slide 13 numbers to talk about here. Except you might notice the Q1 is going to looking like last fiscalar in terms of the pie up breaks down. Military percentage may start to go up to based on something going to be talking about in this presentation. We'll see Slide 14. So this is a lane, a job. Every quarter come up with it some speictures of some military programs. These are always the biggest programs, but there are interesting.

Speaker 3: Programs for us, the fund stuff, and we D like to share with you and to say time in WOn't go want to details on lethese programs, except to say these are all programs on and there are some kind of new events, recent events relating to these, these prothese programs that caused us to want to highlight them. Okay, and you see a little 22% of space out of be private space. I think that's really what spaces these days- private space, I when we keep going 15. So these are important slides, the trenic considerations from military and commercial, but they're all from the Q4 presentation with very little new here. Starting up for started, start 15, rather new world orders. We taltalk about that.

Speaker 3: Expensively. The last check item: fill when its Sweden officially apply. Well, in June 20 ninth, and NATO approved there application cess the joint NATO. So that's a little bit an update there. sllyed 16 Europe : kind of a big story in the second ourrow item, but nothing new in a presentation here. 17 Asia: don't got the Asia and we covered all this in the last quarter except at the little abul ite.

Speaker 3: Little boullet item. Like to South Korea, they recently nounced they plan to purchase additional factory defense systems. Is that a big surprise, based on you, what's going in the world? troubl world, troubl country troubled, troubled global economy, and so not to me not a big surprise anyway that the agans are thinking of that. They better be careful at their defense systems. Be careful meaneting making sure they're intact and may be upgraded. The last item on 17 comes from the last quarter but it's still worth that looking into. To IOUs lcky. Ceos said they got.

Speaker 4: Got demand signals for that- a Pac 3- from around the world. So especially when you see missiles in hospals et cetera again, I don't think it's a big surprise, but just want to highlight that because I should know factory is an important program for us Slide eighteen.

Speaker 4: So we covered the first item first ourrow item last quarter. The second ourerrow item on that factory systemso. The third ourerrow item. This is actually new to this, to the presentation and it's happening already we hold. So these signals in the market. But now we're getting direct signals from a customers and OEMs saying verying significant increases in blade of materials in this ratecar product that to C two B product that's sold by Park under our partner agreement with airing group. Remember that we talked about that, I think, last quarter of the prior quarter. That's a pretty exciting thing. This is a pport factory missile. Other systems now wasshould.

Speaker 4: Tell you is that we talk about airing group. Actually let's talk about the check ite in near parccus forecastings 23 sales or blade of materials of rate car products. Well over one million. I don't know we did this is really over 13 million. But the rate car product, this is ke. It's not being sold to this outside customers, it's being sold to our customers and wegoing. The expectation is that we will convert that into preproduct at some point. So it's kind of a double enefit. We got the benefit of selling to customer this rate car C two B product but we also get the benefit of ultimately converting that into prep. So it's a double benefit. We take both those things into town. It's probably over 13 million. A perspective menner just looking into yesterday.

Speaker 4: durmal. More range has been in the last few years five to six million, with one year that was higher. So this is quite a bit more, and not surprising based on everything that's going. onrest item is that okay. Don't forget supply chain issues.

Speaker 4: In terms of everything including all you're listen to including military Slide 19 So.

Speaker 4: Commercial trends and considerations. Again, all this stuff was coveredheard during the, or most it us covered during the Q4 call this thing about. I had to predicict global traffic levels were covered to prepandiclevels in 2023, I don't it? Those includde in Q4 presentation. I think it's kind of a new thing, but it's not a conistent with other the thingsities we've heard. We talked a lot about these pages, about the significant increase in jet fuel costs and how our alliines are passing those to customers and everybody's just very happy about how things are going. And then on Slide 20 we say: but yes, there a limit how long this can go, how long?

Speaker 4: Customers are going to absorb these GES, increased picket prices for air travel which the airlines have to charge, not only their deet fuel cost going up significantly, have other costs going up, but obviously the big OM in terms of their cost by as jject fuel which is, you know, significantly higher. So' we, you know, just pent up thedemand, we get it. You know people of money, but you know it's going to going to Slide. The twent one's is this going, is just going forever. That makes sense as a to ied gravity. What about the AR word which is becoming more and more, not up, just a possibility, a probabbility, So looming possibility. How would glooming?

Speaker 4: What will the OEMs do? A blow bowling Airbus to and lay flow it out? Or would they do something else? And I think there might be a bifurcation there and we'll get into that. We lay on the presentation Slide 23: other factors which affect commercial higher jet fuel prices.

Speaker 4: Is an incentive for the airlines to convert from legacy airplanes to newer more modern more fuel efficient airplanes more earlier than they originally planned and don't it en the last. The bottom of side 23 don't think at those Slide supplly chain issues because they're large and allooming and in the very much kind of a day-to day thing that people of phenomenon people ought to deal with in the industry in the supply chain. Let's going to slslide 24 we do in turn this slide. We included every presentation So.

Speaker 4: I don't think we're going to spend any time on it. I any questions about what's going on here, the dynamic, let us know. The key thing is that these are all G aviation programs, because MRs was a originally with Gavi or now the best team engineering, but 1, all stuff started MS with a sub G aviation. That's all that, these programs, or gaviation type programs. Let's going on to Slide 25. So this is also from last quarter filman's. These are new, new developments regarding gaviation programs.

Speaker 4: iland when he's a good news, reppar. Light and strike, that's also going to Slide 26. good news, reppar. When we talked last time about the.

Speaker 4: The fan case contained RAP which we're excited about with the program was got restartstarted after there was dorant for a while and then we go to Slide 27, but then Boeing announced that they were pushing out the triple seven and to into service. Triple seven x are to enter into service until 2025. ling was a two year delay, obviously disappointing and maybe some downthe program itself, although some encouraging to some customers, some airlines, just for ordering the triple seven x. So that's a good thing and maybe the program will.

Speaker 4: Will be okay and just be delayed a little bit. Let's go on to Slide 28 all right. This. This relates to the I three 20 Neal family aircraft. This is pretty complicated and.

Speaker 4: It's not so easy to kind of put this all toil, a little nice package for you, but we try to give you some flavor, some perspective begs. Obviously a real important progr book: park.so we started in Slide 28. most of the stuff was carry over, but there's some new things in the related to the age of 20 deal family in the presentation. So, as on Slide 28, this is when Airbus putting down to markers, saying look, we have big plans for this program. These are the Ram, this is the ramp FRE. These are the target levels. Want to be at the rates one to be out of two thousand and 20, three two thousand and 20, five and on the Slide 20, nine.

Speaker 4: Important recent news. So this is now fast forward. This was in Q4 presentation. This is a fast warning. A year later, this now may have 2022. We they really kind of doubling down and saying: yes, we're committed to doing these things, we're committed to these. Rate 65 75, we're committed to these.

Speaker 4: When you know, near prior, they were kind of putting out when he called a triballoon, nor almost with, to see how kind of reaction he got. Now it's a little more tribal. You're saying up, we're doing this and let's go on to Slide 30, top of these Slide 30. Yeah, this is not new but it's interesting and it kind of relevant to what's going on here at this: suppliers a conference, when the Airbus executives, with kind of chasttizing the supply chain thing you know we needager to follow and the rate indications we're given you and have faith and we need to challenge you, not a second guess, but there was kind of strange but nevertheless, maybe relevant and considering what's going on.

Speaker 4: Now in March of last year, G said G viation said: don't worry, we're going to keep up elite LEAP rakates, you know we're good. And then now was important because prior to that, you know, G aviation was so publicly saying they they're skeptical about air buses indicating ramp rates on a as you're cutting program. Of coursebut look at the bottom here. This is a big one according to a may 24 Reuters report, C F found is facing industrial delays of 6, eight weeks- grouops, wait a minute, now it's unraveling, put's age going toapart and 6, eight weeks. Well, let's keep going with see that, you know that makes sense- to 6, eight weeks.

Speaker 4: Now let's go on to Slide 21. now in June 24- this is recent- speech made by Airbus. CEO Tory confirmed that supply supplyed engine. It's agging behind age hundred 20 neo aircraft production but stadi's conident airbuswill achieve a smooth ramp up to its higher, highest ever single aisle up Ward rate. CEO towry also apimplied the airbuswill would continue to produce eight 3, 20 aircraft and sole the engine in the aircraft todeliver them when engine are available. We also expressed some exasperation. I say seeing, but's pretty obvious to anyway, with a skepticism, those supply chaine to continue to question Airbus ability to achieve their targeted rates.

Speaker 4: So let's keep going out. Airbus don't only delivered 36 eightr and 20 Neil family aircraf per month and 2000 to 20, two through may, but Airbus produced 44 per month and the second quarter. So what's going on here? Why is what this? What is the discrepancy about? And Airbus wants to delivever 600 this year. That's the average 15 per month, isn't it? In the 600 of five by 12? Now there was something came about yesterday and I try to follow move that news. I have been up time in the presentation, but a ree from it.

Speaker 4: This is a CEO fariry's interview with aviation week on July , fifth on the reine from it. So bear with me year. It's kind of interesting and mayan. importantt our acknowledge of your problems, of your problems and Airbus supply chain is making the plan ramp up a 75 per month in 2025 and the target of delivering seven or 20 commercial aircraft in 22 tough challenges. This a quo from A. we enterroup said in the first half of 2021 that the industry should be paared for the ramp up. Money were sayaying, we were stupid.

Speaker 4: These spenders. We're stupid, money weightited, maybe the engine manufacturers and manufacturers as well. But then it was too late. You behind the curve when the curve is steep and it's difficult to catch up. That is Act exactly where we are now. So you can see licsensing and get a little bit unhappy and maybe exasperated, be saying: look, we warre you guys the bab. Last year I didn't pay attention to us, you know, listen to. Now look at a predict R.

Speaker 4: So Airbus is currently back to- I read from the article: get back to building liiders So otherwise complete the aircraft. What renges to be deliver? And this is important because I probably explained to the scrpc between production and deliveries.

Speaker 4: So let's see what else you said. You're on a ST, a quote on a single aisle. It is supply supply, constrained market, at least from the short term.

Speaker 3: They said they're any. The somem lines, Airbuses committed, doing this far never. Nonetheless, stust that he has not prepared to drop their production targets is a time to give up the ysical, of course that he says. The teams are working like crazy. Suppliers are ramping up and we're shaking the engine. Manufacturers shake attention. Manufacturers out them recover. They tell us they'll recover.

Speaker 4: So we also points to 2018 cris, when our Bud it was in the same predicament.

Speaker 4: And they were able to deliver their target. But they added to build a gliders and wait for the engineers to be hung. So there's obvious frustration on the part of airab Fe I to this movie. Before they wore the industry and the war, the engine companies pay attention what we're doing there. This guy to supply her conference airbuss Jack, was lecturing the supply chain. Pay attention we're doing and they didn't.

Speaker 4: And so now we re predicament, but they're building glidghter. So what does that mean? It's very important comment and a conduct confirms what we respect- to leting about on Slide 31 year, which is that Airbus is not going to stop, cost a lot of money. They're going to build lots of airplanes at don't of engines.

Speaker 4: Lots of the airplanes they'll keep building day 20 Neal because they don't want to get. They want to keep moving- this in my interpretation- that want to push forward. You know we get bogged down. Then, when the engines are made available, this is not just C F, M and social Pratt. You know fairness and both G e C F, M and Pratt, you know that a formall behind, when the engines are made available, the engines will behow the airplanes and the airplanes will be delivered. That's what they did before. That's what we're doing now in terms of this concept with gliders. That may explain that the screpancy that we saw, where you know why they're producing work airplanes, they are shipping. You know well, not. And now we know the answer and because it's from ourry himself, he said what they're doing.

Speaker 4: Okay So I don't head. Took a long time and we running late flight 3: two.

Speaker 4: Took a long time and we wantning late flight three two.

Speaker 4: So there's a news release that we came out with- why do we do this? To saying that we're committed to supporting Airbuses ramp rightand want to take a stand. These lot of suppliers were not to kind of wavering and that kind of thing. We want to stand and we're glad we did so. The bottom of Slide: three to no. We'll change there. Let's keep going. Slight three 3: the XLR news. The first test slightide of of an XLR equipment, LE when a eng used took place in June . That's really nice, also bowling in the boall CE O. it said we're not going to introduce, announce any airplanes, releast a few years.

Speaker 4: What does that mean? That means that probably never, probably never develop a response to the XLR and mean if they did, it's not going to be till of 2000 and thirty's, which at that point a much church relevant or not. So I think what bowling is? No, we's basically seeing this space, this whole space, that Airbus, a very important space. So question team from our and one of our investors looks for interval. I don't parks e through 20 dervive revenues reconciled to as 20 aircraft and we liveries. We talk about what's going on.

Speaker 4: At the the a 3: 20 big picture. Why don't our revenues reconcile? And the answer is: that's a good question. There's a lot of timing differences in a downstream supply chain- not our supply to downstream supply chain- and inventory is a big deal and to me it seems like inventory sometimes not managed to well. A lot of old corrections, you know, overshooting too much, a little too much, a little too much a little. So you know it's very hard to kind of a line and reconcile on a short term basis what we're doing and what air bus is doing. It doesn't work. However, this might be the most important thing in the presentation is last thing, the bottom thirty three at the end of the day it doesn't really matter building, which matters the park.

Speaker 4: In connection with the eight through 20 programs. How many a were 20 new aircraft equipped? But those see if they LE. When one a engines, Airbus delivers. That's it. So the timing differences are going to be hard to figure out by the end of day. That's all that appark and it's important thing to remember when you're think long term. At least for me it is fively 34. the home CK nine 1, nine first production aircraft taken for slight bombardi, a global 7500, new announcement. No, I would say it's exciting. The bombardy announced kind of a new, new derivative. Let's called of the 7500 clold the eight thousand.

Speaker 4: 8000 orical model range. Very fast. Airplane new the past 4, 20 engine two hundred 20, two thousand and 20 five entrying service and parks on that program that's nice: SL 20 35, almost seven and 47 coveverments every quarter. Boeing is announced that they're canceling the programs. Only three left to deliver Slide thirty-six.

Speaker 4: genation forecast. Gen ition programs forecast. So first, ong Q1 came at a six point four million. I think we told you when we did our.

Speaker 3: A Q4 call that would be somewhere between six and six point five million. So came in with und range and for Q2 we're.

Speaker 3: We're indicating six million to six point five million- significant supply chain risk in that forecast. Let's go on our slide 37. So if you look at Q1, we were to gme me the numbers for Q1, q2- our forecast is sales 13.5 to 14 million, adjusted EBITDA three million to three point five million- again significant supply chain risk with any forecasting at this point. Let's go on to 38. now these are important slides, I think, for us, but these slides are come from Q4, So we're not going to go through the new detail, but I think there's really Tre main way important points that being madejor. I just want to highlight one thing: first hour light of second check to see we're talking about.

Speaker 3: Forecasting problematic even for the next quarter. Forget about long-term Ve forecasting. So that's not really possible for us under this very stress environment, this chaotic environment with supply chain in particular.

Speaker 3: But we think we CAn't provide meaningful insights into our company outlook. We broke it down by business. I'm sorry, but military aircraft first and then commercial aircraft. In terms of outlook, I'm not going to go through these things. Please let know you have any questions. All these things that are included in the Q4 presentation still apply well. I just let me just have one thing on Slide 3, nine or something. No, we did add here. It's the bottom about Airbus and what they're doing. So we say Airbus is trying to establish it irroverously dominant position in single aisle.

Speaker 3: priminly ended to doo do opoly takes as much market share as possible but primently ended do opoly, and that seems to me what you're doing. And as at the bottom Boeing, have no response to the XR that is being left there, but Slide 40. So we go through some of these programs: how the recession affect these programs, not going to go back over that Slide 40. one say thing with the global seventthousand 500, how would the recession affect that program? At the bottom 40 one, this is important part of it. Based upon the above considerations, all there are serious concerns about the economy inflation, workforce shorttage and supply chain cast. We believe the outlook for Park is quite positive for the reason stated in the far few slides.

Speaker 4: Let's go on a Slide three 2: we give you an update every quarter. Not going to go. These numbers think they kind of speak from thethemselvess. Any questions about our expansion? letus of the snow? Let's go on Slide for 3: James web. This is kind of a small program for Park on the newer 21 Sigma stretch that we provide for the jamess web, but it's it. Maybe that' spoped to be emotional business, but this one a little motional for us. It's kind of a big deal. So we do included in our quarterly presentations. We may includde for next couple of quarters as well. So 21 of our Sigma strets are incorporated into the structure of the jamess web space telescope and they were made here.

Speaker 4: So you see that arrow, that's a little workstation, or a little workstation where you may, those Sigma thres, maybe at the two hourvers pointing down from there, that's where they are now one million miles from the year with's L 2, that's for those Sigma thres are now one million miles from the Earth.

Speaker 4: That's a plan to release the first full color images from the James web basace telescope on July 12. I heard that you know some of the people NASA CI ready got to very kind of emotional when it saw these images. So it would be very interesting to see what the imagges from the first images look like. We're thrilled and honoor to be playing apart on this incredible James web space the telescope mission. So one to Slide 44 40, fourthis wasn't covered actually in our Q3 presentation. Investor asked me what would happen with this because we didn't cover in a Q4 presentation. There wasn't much of an update. But now there is an updated. Go to the highlighted item. This is the only will cover.

Speaker 4: We're working with a new potential JV partner on these initiatives. We're still there's still burger and we're actively working on these things, discuss them, but we decide that we want to work with a different partner. So we're working with that differentition prospective partner on these projects.

Speaker 3: Okay let's on to Slide the 45. okay, this is a new and exciting thing for Park. We haven't talked about this before, of the new development, this company, a design Labs, So they, this program that's, they call the- what is it? airor design Labs, drag indust system program 80 RS and appars, materials or sold for source, qualified in that program that's, it's a mod for this seven thirty, seven legacy aircraft at which there are thousands, thousands of flying and operation around the world. This is not the MAX, these legacy airplanes.

Speaker 4: The eds program, designed to make to seven-thirty-seven aircraft more aerodynamically efficient, me more fuel efficient, resulting in significant fuel savings.

Speaker 4: As a result of the significant increases in jetge fuel prices. The economics seven installing these kits are the more compelling. El received the C from the FA for the sevenvent y 3, the seven thir 7, seven hundred and it's planning to receive the TC for 80.9 thousand by the year. And C is a big deal of it. Ok, good F phas approved that they signed off.

Speaker 4: Slide 46. So, as we said, thousands of Bo seven 3, seven legacy aircraft- and this is a potentially very significant program of Park park- will consider- actually is considering- an additional investment support this program if necessaryily. Let's going to Slide forty seven And so we received a nice little award from one of our favoorite customers. Oems urget rocket time. So we received a distinguished supplier award from theet. It's given to less than 1% of the suppliers according to them. We're very honored about that and yes, they are one of major programs on which Park support urg and su PX missile program.

Speaker 4: And there's a little picture of the banner. It's actually on the wall factory right now. It's a customer service team: Dakota, Elaine and sah holding it up forus. Thank you, Ladies. Slide 48 pars people. So we covered this during the last quarter and mostly slides are just the same as we had in last quarter So we don't spend a lot of time with them. al-over, very important- had count people count rather one of six So we're still not really the levels we want to be at, but one Don' we just kind of fast forward? We talked many times not not woraring money of people. We do it differently at Park: Slide 49 of people or what they get.

Speaker 3: So are we TAL about the fact we don't lay anybody all during the pandemic and economic cris?

Speaker 3: Are we talk about the fact we and lay anybody out during the, the pandemic and economic cris. So let's go on to Slide fifteen.

Speaker 4: Peter Drucker here is helping us a culty strategy for breakfast. So how were we able to make our Q1 sales and EBITDA numbers with such a severely reduced workforce? With a magic? I don't think so. Our people have been working very long hours, some case 70 hour weeks, weak and week out.

Speaker 4: Nobody really ask, or people do it, they just do it.

Speaker 4: So you know the ply of others out there who let go many, many people, maybe thousands of people, and now they need people to work extra hours forthem.

Speaker 4: And my comment is. Good luck with that.

Speaker 4: You know you. Just you know you like go be 10 or 12 or maybe 100 of my pals. Now you want me that work hard for you. Why would I want to do that? Because you hob, you don't care about me, So why should I care about you? So my comment would be: good luck with that. You understand how very fortunate and lucky we already have. The wonderful people we have. Understand why we love, or people, as it turns out lovely, our people's good business. There are people are willing to do what's needed for a business to be successful. These 'were all part of this business. we'reall part of it. We're not like lessusing them. You don't do that.

Speaker 4: But that love us. To be sincere, it's not since re than it doesn't count. Let's go on to Slide 51, like this thing about our strategies and moving mountains. With a dedicated, motivated asspire workforce, a company can move mountains, including meeting our EBITDA sales targets. With a very severely reduced workforce, without such of workforce you can move nothing. Like I said, good luck trying to get your people to work extra outwardsors and things like that we just laid off after a palsace because obviously you're telling them 't give a deal about them. So why you give a dal about you? Let's keep going. Your cut reflectx program. We're just updating the numbers. Very critical program for Park.

Speaker 4: Without this we would not be able to achieve. What we achieve is a very important program for Park and we recently increased the hourly premium that employees receiing for customer flex prove in participation Slide 52. closing up here. Sorry we take us along, I apologize. We try to skip over as much as we could, but it's hard to skip where everything our principles are not cheieap. We covered this during Q4, So just a review here is: it can be the cost of the par onour PO and appeal confirmations in the world where many others are not do so. But the partk we do- we say we're going to do a park- is our orders are bond. Now what's kind of interesting here in terms of update is we're kind what we've been told by people about some of the things we commit to.

Speaker 4: We're told by you, the supplier who's not not honoring POS, that we should not honor RPOs either. We should honor RPOs to our customersand then F? Well, if you do that,'re going to go to business. That's very interesting, because my comment is: you go to a business when you sell your soul.

Speaker 3: When you sell your soul, you have nothing left, and that' So only a matter of time. Their days are numbred. That's when you go to a business. So I don't really agree with that comment. I thought it's kind of interesting that people are encouraging us to not be Honorable as well, though- and it happens again- it is conven and convenent for par, not just for many of people want to recruit them in the world. What many others are doing just that. But a park of people- precious our people, not commodities- be bid up and sold shortum. Like I said, loving our people's good, good business. But we've been told that we should just bid up people and hire to hire them, and then, when wedon't need them, just get rid of. What's a big deal? They're expendable.

Speaker 4: I thought for us let's go on to hundred 53, the same concept. Here this will come a new angle on it. It was in toconven for Park not to ask for accept any epp or government money, meaning taxpayer money, the government that have any money.

Speaker 4: it'will come from us, the taxpayers. During the pandemic and economic cris, while other as many, many others, including large companies, took tens of million dollars, the government money, many tax payer money me, our money as incentives, incentives not to let go more employees at Park. We earn our own money. We're not inclined to accept Corp welfare or government handouts in Park. We made money and pay taxes every quarter throughout the pandemic.

Speaker 4: During the pandemic and economic cris, while other as many, many others, including large companies, took tens of million dollars in the government money- many tax Mayer money, meing our money as incentives andincentives not to let go more employees at Park. We earn our, our money. Were not inclined to accept corporate welfare, our government handouts at Park. We made money and pay taxes every quarter throughout the pandemic at Park.

Speaker 4: We CPT over people. We do not need government money as incentive to keep our people or people pressure. So Yeah, we were lectured by others that we should take the money. Look at' millions dollars free money. What is the thing over the free and no free lunch? Well, go in a flation. We have now of that money all that free. But the money people took, all free money people took.

Speaker 4: reallyi don't know about that. Maybe freeedom was right, freeland right in freelunch. So the ultimate priorty is that some of these people actually that you know took a lot of government money here. The people trying to hire employees away's going to Slide 54. you closing Slide. Others need to make their own decisions on choices about what matters and what does not and leave with those choices. But a Park honor inteity of what matter most. Park of principles are not cheap, but Park we're not like the others of par. We for teach at Park. We're not going around're looking to make animpactwe're not going for mediaiocrity. A Park we go for great is.

Speaker 4: So here we have a picture of our blade of material special operations team. It's kind of it's an iar process, we CAn't talk a lot about it. We got Kevin. He yes, these people are big into customer flex. ay, these there, long-terer employees. Actually, solphy is new doing well serea, lots of PL customer flex.

Speaker 3: Categories and Michelle is new as well. So these people did a lot of work and T lot, lot of things, of course, through the quarter, but there are a lot of this itar work for the.

Speaker 3: L materials for missile programs during the quarter. So job Bo done by them and something when knew we haven't done before. sllike 55, there's a Board of Directors. We know I hated this but for two years we had all meetings. I hated it, but finally we got together in person. A May and 18 we had in person Board meet a park of the company and we didn't. I saw a picture and I just want to comment: apologize, we don't dress up with for Board meetings. So you know separate Brady is and know nice shack it on. The rest of this we just kind of dress free, casualually. Ok, Thank you very much for being patient, listening and operator. Now, if's for any questions, we happy to take them.

Speaker 2: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star one on your telephone kepad. You may press AR two if you would like to remove your questions from the queue.

Speaker 2: one moment pleased while we pull for questionsthankking. Our first question is from Nick repostspellar with NR management. Please proceed for questions.

Speaker 5: Good morning byyan. I wonder if you could comment on kind of new niche markets for Park potential. I'm thinking of SpaceX largein.

Speaker 5: You know electric aviation. Are there any products that Park could could make in for those markets and do you think your your sales process would be different for those endeavors? Thank you so muchthanks, Nick. Thanks for the question. So we haven't done a lot terms of sales so far. These two markets, like V tall afric aircraft and and private space, we do have product that we are targeting toward these B tall type air I esscall aircraft.

Speaker 3: And we have been working towards private space companies. I mentioned a little pie. In the pie analysis there are some private space but I would say not the success that we would have liked to achieve so far. But it still those two markets you mentioned Nick, areyst-still, markets that we all not in targeting and I think we have products that that make may help us. You maybe our appropriate fse markets? Okay, I don't help. What more information? Yes no, Thank you. Thank you so much.

Speaker 6: Thank you, new kic. Thank you. Our next question is from Brian Glenn, with alcot square investment partners. Please reciit your question.

Speaker 1: Hey brain Yeah soori, had it on you how you doing' ol.

Speaker 7: As always, thanks. Sort walked through. It's appreciated. Just two questions that I guess the first goes back to- I think it's Slide se, menteen-am, it might be 18. you mentioned fiscal year 2020 three sales for the ablive and Ray CARB. You guys were expecting one million. Is there any indication that you can provide with respect to what that fure would have looked like for a fiscal year 2020 2, just so we can understand the trajectory that five point zero zero zero zero zero five million to five a half millions, something like that, and I think much that we really should have say over teen mion. I think we're trying to be servativeab.

Speaker 8: Is.

Speaker 7: If there's the view that you guys have a multiyear- the period of earnings growth- and I know nothing's guaranteed, But if that's, if that's the view, and obviously there's some calculus as to whether the stock is cheapper relative to that growth or not- But I did want to bring outyou you say a couple of Bucks on the dividend for the shares you repurchase and the other thing you do is you potentially cash out short-term shareholders. So anyone who's?

Speaker 2: Has ownership in the company and I know you appreciate owner, ship. But anyone who is a short typeaniz is more likely to be a seller to So effectively cleansse a capital structure that with respect to the ownership piece. And there's sort of a selection bias that exists whenever a company engages in share repurchases. Again, they have to be thoughtful than calculated. But you do end up kind of calling your Investor base and you end up with hopefully a better crrop of fellow shareholders and partners that have an appreciation that the business is worked more. That's why they didn't sell.

Speaker 2: And also a better time riseon and which is more of the long term. So there's kind of that selection bias which I think should be considered by the Board and might be a tealing. So I agree and I appreciate the input. You know you get us input before appreciate and I commented we see it was kind of interesting. idont knowwhy would have a lowerable. We receiive only from maybe 68 different investors. You know input opinions about capital allocation- and I was interesting with some- was before we even made the announcement. So I don't there some anticipation whatever. But we appreciate the input and you know we give consideration to all of valid input Europe but is valid.

Speaker 4: I CAn't tell you what direction we're going right now. I think at this point we want to evaluate a little bit as I mentioned. We are pretty concerned about the situation in our country and economy in the country generally and where it's going that's it's one of the factors. I'm not the only factor. But the factors you'rementioning are obvious. We know we received some analysis even from unsolicited but appreciated from some shareholders and I davable kind of number quenching about well if you buy stock is made sure at this level looks what we Ve done it ourselves. We have we have outside of the advis is.

Speaker 3: And banks that doing this workforce as well but we always appreciate it kind of input. It. I'm I won T disagree that anything you said I think it's all valid end. The day you know we have to make a decision based upon considering all the factors and like you know often is a case Brian the big. Bo the grow worlds you know all the indications aren't going to same directions. You have to make judgments and you best can and then you know you always course correct. I hope anyway if you realize that you know way that out that n in the right decision. So I think that's the best I can do in answering your' responding except to just say again. i't disagree. You said.

Speaker 2: Yeah you know, I appreciate that and Yeah, I totally understand. I I guess the last thing, which is, I guess is more of the question, but it looks like again I'm on the passive shareholder of course looks like outside of any significant and then A- and I know you guys know as much better than me, but it looks like all the growth opportunities that Park has explored or considered or some of the partnerships you're through the facility expansion it it seems like in correct meth- I'm wrong- that they're relatively small in terms of the capital that they may required. I know you CAn't talk about what hasn't happened or what's being privately negotiated.

Speaker 7: But as I, as I kind of glance across, like a number of levers that you're pulling over the last two years, they're all pretty light on the capital investment sideze where the working capital related to that partnership. But iguess correct me if I'm right. I guess that's the question is, and am I reading that right, or some you're looking at do possibly have a larger capital commitment component. I would say that's partially correct. Now, if we talk about this thing, they slide in the presentation about these two projects: capital project that can plant- and you're I think it's you know- 7, $8 million, somelike that. However, we have ongoing discussions.

Speaker 4: With others about projects that would consume much more capital, not talking out in a year, as you pointed out, the joint ventures, for instance, which would consume much more capital and we've been kind of colactive in that regard. You re trying to use our balance sheet as an advantage and we've talk, we spoken OEMs and even customers saying maybe you would like, maybe we should talk in, should we initiate discussion sometimes about this project, of that project, something we could do together, and those- some of those are- would consume much more kindofable.

Speaker 2: Okay that's yes, that's helpful. Thanks again and appreciate the walk and the price. Thank you, have you done.

Speaker 9: Thank you. As a reminder, I would like to ask you a question. Please press Star one on your telephone keepipam. You may press star two people like to remove your questions. You Thank you.

Speaker 1: There are no further questions at this time. I would like to turn the floor back over to Brian shor for any closing comments.

Speaker 10: Okay Thank you, Paul. Thank you everybody for listening, appreciate the questions, appreciating your time. Matt and I are always available. Feel F calls any time you want and have a great summer and we'll talk you soon. You take care.

Speaker 9: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker 11: The center. The next available comeference specialist will be with you momentarilyproference center. Can I name pleaseyes, how did this rangeachel nowso moment pleasure along for pthank youyour.