Q2 2023 Park Aerospace Corp Earnings Call

Speaker 1: Oh yeah, there's something I gotta tell you, which is that I've been under the weather a little bit. You may be able to hear it in my voice. I'm feeling just fine now, but the problem is I have a lingering cough, which is not a problem for me, but it could get a little annoying for you. So if I start to cough, please bear with me. Unfortunately, the thing that probably triggers coughing the most is trying to talk for an hour at a time. I may hand it over to Matt if it's getting problematical. So I just wanted you to be aware of that.

Speaker 1: And I apologize in advance for any kind of annoying distractions.

Speaker 1: So this presentation is probably about typical for us. Maybe it takes about 45 minutes. Of course, after we're done with the presentation, Matt and I will be happy to answer your questions. And I think that covers it in terms of the introductory remarks. So why don't we get started. Here we go. Why don't we go to slide 2, the looking for disclaimer language. We don't go through this as you know, but please call us if you have any questions about it. Slide 3, our table of contents, the investor presentation.

Speaker 1: supplementary financial information, which is attached to Appendix 1. We're not going to go through that, but please call us if you have any questions about the supplementary financial information. Let's go to Slide 4. I'll probably slow down a little bit now, but I think that's probably all there is to it.

Speaker 1: second quarter results with the history here as well. Sales for the second quarter, $13,875,000. Gross margin, $29.4. As I think you know, we really don't like it when that number is under 30, so we're not feeling so happy about the gross margin being under 30% I'm talking about. EBITDA, $2,079,000. Just EBITDA. Margin percentage, $19.

Speaker 1: five don't like that under 20% very much either. So those percentages aren't really things we're very thrilled about. What do we say about Q2 during the Q1 investor call? So we had a, sorry, that's the first call, sales estimate at 13.5 to 14 million. So we came in kind of right in the middle of that range at 13 million and 75, but adjusted EBITDA estimate was three to 3.5 million.

Speaker 1: and we came in well under that number, 2,709,000. So let's talk about that. Why don't we go on to slide five. So let's start out, saving job by parks people to make the Q2 sales number considering significant challenges with supply chain disruptions, freight disruptions, severe staffing shortages. I know it's a broken record, but these things are not going away. A broken record in the sense that we've talked about these things a lot recently.

Speaker 1: These things are not going away. You'd have to kind of live and almost understand how Difficult almost oppressive these things are and how you know I want to give credit to our people for making the top and the sales number notwithstanding all these things these three things together Probably total about seven or fifty thousand dollars of this shipments when you combine all three of them But nevertheless we still made our our top line number. So what happened to our EBITDA number? You know considering we made the top line number you would think we would make the EBITDA

Speaker 1: and we gave you our forecast, material supply costs, not new, just maybe a little bit more than we were expecting, freight in, freight out, you know, both ways, freight cost, people cost, absolutely, you name it, probably more expensive, you know, insurance, but we can give you a list of 20 things if you want. Now why do we fully pass these increased costs on to our customers in Q2? A very good question. And because, unlike many others, we honor our commitments and our confirmed POs. proprietary and doable options guidelines essentially require the

Speaker 1: part honor and integrity are not relative principles and not negotiable.

Speaker 1: to park honor and integrity in what matter most. Remember I told you I think last quarter that one of our suppliers was lecturing us about honoring our appeals with our customers and.

Speaker 1: You know what were they saying well everybody else is doing it meaning not honoring P.O. It's like well isn't that when we were kids you were told that doesn't count you know whatever That's not a good excuse for doing something that everybody else is doing it You know it's kind of sad that adults are taking this way and the other thing is well We're going to business so we haven't gone out of business yet, and I suspect we're doing a lot better than most So here those things I think are good explanations or good excuses the leg effect so what that means is that

Speaker 1: We honor our confirmed POs now. When we're asked to recuote, then we can take into account these active costs and pass them on if we choose to.

Speaker 1: than we can, but that might not be for three or four months down the road. The difference is with lots of other people, they're not waiting. They're just saying fine, we're not gonna harm the pricing that we have in the confirmed PO. Now we don't do that, so we have to wait, and that's the lag effect, and that's why we're always a little behind in terms of passing things on. So let's go on to the next slide. Historically high inflation, yeah, we talked about that, getting that G back in the bottle. Not looking too promising.

Speaker 1: Also lower margin product mix. So you're going to ask, well why didn't we anticipate that when you gave the forecast? Well, planning is very quote unquote interesting in this world of supply chain chaos. We do planning, but it's almost like whatever, it's a plan, but it never comes true because we're always juggling, always moving things around, moving something in, moving things out because we're planning to produce that product this week that the raw material won't come in. So we've got to move something else in that we have raw materials for.

Speaker 1: So it's kind of like brute force, a little bit chaotic, maybe sometimes more chaotic. I'm not very good at it, but it's an enormous amount of effort. But the bottom line is we don't know what we're going to be producing in a quarter. When we give you a forecast, we think this is what we're producing in shipping. We don't know that because there's so many uncertainties based upon especially supply chain disruptions, also workforce issues, freight in I would say. But that's the reason why we...

Speaker 1: we couldn't really fully anticipate, we didn't fully anticipate the product mix. So it's somewhat of a lower margin product mix. There was some stuff we wanted to ship at the end of the quarter that was higher margin. We just didn't get there. The raw materials didn't come in on time and we just, it wasn't possible to get it done.

Speaker 1: The supply chain disruptions, of course, a significant efficiency in our manufacturing operation. You know, most manufacturing people like to have a nice plan and everything's nice and simple and quiet and calm. We'll do this tomorrow, this next week, we'll do that, you know, three weeks from Tuesday. That's all nice and good, then you could throw it all out at the window and start all over again. And when you're moving stuff around a lot, you know, all the efficiencies, manufacturing efficiencies with manufacturing people like out the window, it doesn't.

Speaker 1: you know, they're gone. That's what we're living with. So, our list of excuses at PARC, excuses are not our thing. Bottom line is we do not make our EBIT.number plain and simple. No core legal is for our people. Now, you could say that's kind of harsh. You know, a lot of people, not their fault, but it doesn't matter. We're all in this together, you know, and harsh it might be, but at PARC, you know, we earn what we get. We don't earn the money. We don't get the bonus, period, end of story, whether people like it or not. That's our kind of way of doing things at PARC. you

Speaker 1: but we still thought you would want to know about some of the key things we're living with and which affected our Q2. In other words, not accuses, but you wanna know. Let's go on to slide eight. Sorry.

Speaker 1: This is a historical fiscal year results. We've shown this for the last few quarters. Things are very interesting. We highlight 2022 because...

Speaker 1: Obviously, you look at the 22 sales, much lower, but the gross margin quite a bit higher. And even the EBITDA number, not the percentage, the absolute number a little higher. So I want to flag that for you. Let's go on to slide nine. This is something that we're covering now for the last few quarters. Actually, one of our very good investors suggested it. And always like it, suggestions from investors. We don't do appeasement. We don't just do stuff to make people feel good.

Speaker 1: Somebody has a good idea, sure, why not? You know, we don't have this non-invented here kind of stuff, attitude of park, that's for sure. Anyway, so no zero long-term debt. 102.5 million of cash in marketable securities at the end of the quarter. Our management, our investment philosophy, highly secure liquid securities, treasuries, governments, high-grade commercial paper as an example. Current average maturity of 22 months.

Speaker 1: And our practice has been to hold our investments until maturity, that's kind of important. We'll get back to the second. We just mark the market reporting of our cash. We talked about it last time, and I did that because I knew this was coming, that as interest rates keep going up and up and up and up, and they're moving up, that's for sure. So it affects how we report our cash on a, um.

Speaker 1: for GAAP purposes. Now the amortized cost-based server cash is actually quite a bit higher. It's $107.2 million. And the theory is this, that if we hold these, the investments, the cash invested in these items we talked about, until they mature, which has been our practice, we're more likely to result with that higher number, approximately $107 million, rather than under $2.5 million. Just FYI, let's go on to slide 10.

Speaker 1: So let's talk about where some money is being spent. Major expansion, we spent about $500,000 in Q2, about half a million dollars still to go. This total transition tax of stolen payment, we've talked about this over the years, a little bit complicated, no one wants to see, but still $12.6 million to go.

Speaker 1: 8.4 million paid to date. This has to do with repatriation, you know, it's complicated. If you want a better explanation, call Matt. We don't want to take up your time to go through this explanation again. But a payment made in Q2, 1.7 million. So you see, that's starting to add up. And then also, I don't know if you noted in our balance sheet inventory bill, the 3.2 million compared to the beginning of the fiscal year. So that was really intentional. As I said, we're having a really rough time with supply chain kind of pulling her hair out.

Speaker 1: spending money on. And just FYI if you're interested. Cash dividend, yep, others cut or cancel dividends. We maintain a regular dividend throughout the pandemic. We pay 37 consecutive years of uninterrupted regular cash dividends. And then let's go on to slide 11. Here we go, $556 million, always like that number in bold. $556 million. That's a heck of a lot of money for a little company like Parker.

Speaker 1: That's a goddamn lot of money, I must say. $27.15 per share since 2005.

Speaker 1: So remember we got no long-term debt and still got quite a bit of cash. We have a share purchase authorization. We talked about this last time, announced on May 23, 1.5 million shares that we are authorized to buy. We haven't purchased any of our shares under this organization, not yet. So you may not agree with this, but our feeling is it's basically your job to buy our stock, not our job. Our jobs, do everything possible.

Speaker 1: You can disagree. It's not our opinion. It's not our job to buy our stock that's yours if you want to. So we're selling if you want to. It's our job to do everything within our power to maximize the fundamental value of the company. That's what we're doing 24-7 I think. So with the last item, with interest rates rising, error of cheap money, and cheap and easy money come to an end, we'll have harder and honest money, finally be worth something.

Speaker 1: Let's go on to slide 12. Top five, well, boring because you know what, same companies, same names as last quarter. So we've got to keep coming up with new pictures and new programs quickly.

Speaker 1: SM-3 missile, that's an AA program, ablated. It's a fast one, it's a fast damn missile. Mach 13, I guess, is about how fast it goes and some variants of it. The A320neal, you probably think that's an MRAS reference. It's actually GKN because GKN also supplies into the Link 1A program and with our materials. The 737-800, that's NORAM, that ties into NORAM. NORAM, that's its weather master radar.

Speaker 1: the pattern of the last fiscal year more or less, you know, with a couple of percentages here and there, not a lot difference, so whatever it's worth. Let's go on to slide 14. Parkland's niche military airspace programs. This is always Elena's project to come up with a kind of cool new program to discuss with you. These are always the biggest ones, but they're the fun, the cool stuff. GBSD, that's parts and materials.

Speaker 1: And it's actually more structures than the BLADAs. Raytheon MK-56 guided missile, the BLADAs materials, E2D Hawkeye, that's some parts we're producing. Probably the most fun is this helmet and spacesuit stuff by David Clark.

Speaker 1: This is for the Orion space program. So in the category of cool, I think that might get the award for this quarter. And you see the part chart, nothing dramatically different. I think we've talked that radon, rocket nozzles, drones, usually in the niche category. There are plenty of aircraft structures for military, which would be considered niche as well for us. Niche for us is good. Slide 15. So we covered this last time, but we're a little bit of a different angle, so we'll try to get to the end of the program.

Speaker 1: are less willing to rely and depend predominantly on the U.S., NATO, other alliances for the defense needs. That example is probably Poland, which is really up on the ante, significant increase in spending, short spending, both to expand and modernize military. Let's go on to slide 16. And not surprisingly, surprise, surprise, missile defense systems, including the PAC-3 missile, one of the key areas of emphasis when people are shooting rockets at you.

Speaker 1: missiles at you, you know, missile defense systems probably come to mind. As previously discussed, both Lockheed and Aerojet have recently announced significant increase in interest in orders for the factory missile system. Now, Park supports a factory missile defense system with specially-related composite materials, and we believe are sole source in those programs, that program. Factory missile defense system used in Asia, Japan, South Korea, Taiwan, key parts in their defense systems.

Speaker 1: And these countries, not surprisingly, are in the process of upgrading their systems.

Speaker 1: and adding systems. Yeah, it's kind of a rough world right now, unfortunately. I'm not, we're not happy about it. We're just.

Speaker 1: We're just supporting these programs. If it was up to us, it would be a different world. The Netherlands and Romania, they're buying a factory missile defense systems. And Poland, thank you Poland, they're ordering additional, they already have a factory, but they're ordering more, ordering more.

Speaker 1: Slide 17.

Speaker 1: Just continuing on military markets trends as previously discussed.

Speaker 1: We got to go into this because we gave an indication last time which we need to adjust. PARC received customer OEM indications regarding significant increases in the blade and materials in Raycarb C2B product requirements to support the PAC 3 and other missile defense systems.

Speaker 1: So, last quarter we said that we thought our ablative and rate carb C2B product sales would be well over 10 million in the fiscal year. However, based on recent inputs from our key customers, we believe that 6 million of the rate carb products... So, thank you very much. Thank you.

Speaker 1: which plan that sale was planned for Q4, that in whole or in part may be pushed into the next fiscal year. So just for perspective, we're not saying this is what will happen if all those C2B Q4 sales are pushed into the following fiscal year. Our fiscal 23 sales of OBLADAs and C2B product would probably be at six million. Now like I said, we're not saying that. We wanna give you the baseline. If you wanted to guess, and please underline guess, for me.

Speaker 1: For us, we would guess about a third of that 6 million stays in this fiscal year, maybe two thirds moved into this fiscal year. So maybe two of the six.

Speaker 1: remains in the system here, another four maybe gets pushed. So you can do it in mass, however you like.

Speaker 1: fiscal year, another four maybe gets pushed. So you can do it in mass however you like. Um, slide um

Speaker 2: NASA Wraps

Speaker 1: Big caveat, I'm going to do the caveat stuff here, the new world order is seemingly far from the US from the serious supply chain and inventory management challenges the defense industry is facing. As reported that the US defense industry supply chain is struggling maybe badly to meet the significant increase in industry demands.

Speaker 1: Okay, so now we're gonna go on to commercial slide 19.

Speaker 1: Thanks for bearing with me here.

Speaker 1: So commercial market trends and considerations.

Speaker 1: So we discussed this many quarters now, the industry collapsed.

Speaker 1: the beginning of the pandemic and subsequent recovery and lots of details. We're not going to go over all that again. But suffice it to say that the commercial aviation industry continues a strong recovery and rebound from a pandemic and economic crisis.

Speaker 1: Sorry, domestic commercial aviation continues to lead to recovery. Domestic commercial aviation generally serviced by single aisle aircraft like the A320neo family. The customer demands fees to be there to support the continuing robust recovery of commercial aviation.

Speaker 1: Let's go on to slide 20. But, and there's a big but here, watch items, watch and corset items.

Speaker 1: These raise concerns about the sustainability of the recovery. What are they? The obvious ones. A broken record. The economy. Will people continue to fly if the economy folders badly? You know, I lose, my neighbor loses his jobs, maybe I'll take a, won't take that really fancy vacation. I lose my job, I'm not going anywhere. You get it. Inflation. Oh my goodness. Will the flying public continue to be one of these escalating ticket prices as the airlines pass on their significantly increased costs for jet fuel and other stuff like people?

Speaker 1: industry does falter.

Speaker 1: and airlines seek to defer, push out, cancel new aircraft orders, how will the commercial aircraft industry respond? That's what we're tied to, the aircraft industry.

Speaker 1: Maybe the answer would depend on which OEI we're talking about. If it's Boeing, I would suspect they may respond differently to Airbus. Airbus may try to press their advantage even more aggressively. I'm speculating. I don't know. I'm just kind of putting it out there. Um, July 21

Speaker 1: And of course, even if commercial, the commercial aviation industry remains strong, the aircraft industry still needs to deal with its own massive challenges related to what? I know, broken records, supply chain, labor staffing, inflation. Yes, big things that are not going away. Maybe getting worse, I don't know. You probably know more about tonight than I do. An interesting new wrinkle that complicate things for all of us, of course, we like simplicity in our presentations.

Speaker 1: demand for international travel, sorry, now recovering pretty nicely. That was not supposed to happen according to all these pundits and all these commentators and industry experts, not supposed to happen for a couple years or maybe ever.

Speaker 1: You know, maybe international travel is dead forever.

Speaker 1: But now, as a result, a number of these analysts and commentators are now predicting a resurgence for widebody. Widebody, owner range international aviation, ops are generally serviced by widebody aircraft. There's a connection.

Speaker 1: So it's interesting timing for this predicted widebody resurgence since Boeing will soon deliver its last 747. Airbus has canceled the A380. Let's go on to slide 22. So it's just an opportunity for the 777X, which is, as far as I know, the only aircraft in the mix which has close to the range in passenger capacity profiles on the 747-A380. Well, maybe. And also, I've got to ask this question, how much sure will the A321XLR take from the smaller widebody?

Speaker 1: or maybe the 737 MAX.

Speaker 1: And there are reports of this happening that airlines are swapping out their legacy airplanes earlier than they originally planned because of the very high jet fuel prices. Let's go on to 23. So this is a slide that we share with you every quarter, just kind of give you a summary. We have a firm pricing deal, the requirements contract through 2029 with Middle River Air Structure Systems, Verisub Avesti Engineering.

Speaker 1: What is this all about? All these seem like the kind of venture programs, so what's the connection? I think most of you know.

Speaker 1: Middle River, MRS was a sub of GE Aviation and when we entered into this deal they were sub of GE Aviation so we have all this GE Aviation legacy work through MRS. We built a redundant factory for them, GE Aviation, Sol Source.

Speaker 1: materials, end of the shells, thrust reversers on these programs which we won't tick off. Mostly what the A321, family, COMAC and Bombardier, that really sums it up. 7.7 is going away as we know. Let's go to the bottom right here. This is something we did add this quarter. Hopefully it's not premature. Hopefully we don't jinx ourselves. This is a main case containment wrap for the 9XG, 9X engines, for the 777X aircraft.

Speaker 1: We talked about this before, but then the airplane getting delayed and pushed out and delayed and pushed out, so we kind of cooled it on discussing it. But now it seems like there may be resurgence. We produced the…

Speaker 1: AFP composite materials for this containment wrap. Is it making a comeback? We don't know. We just have to remind you also that it's possible that the containment wrap will be designed out. Safran is attempting to redesign the fake face to eliminate the need for the containment wrap. So that's, that risk has been there for a long time. We just have to remind you of. Okay, let's go on to slide 24. These slides can be tedious but.

Speaker 1: We're doing our best here. We're trying not to go over things we've gone over so many times. So let's talk about update on GA nations, jet engine programs. Obviously, we started with the big Kahuna with A320 aircraft family, with LEAP-1A engines, and you could read what that family includes, a whole bunch of different aircraft variants.

Speaker 1: So we discussed at length over the last several quarters anyway, Airbus' public indications about its aggressive ramp rate for these programs, then the supply chain publicly expressing skepticism and challenging Airbus about their expectations, then the failure by certain members of the supply chain to meet those expectations, and the public tension which exists between Airbus and certain members of the supply chain because of all the above.

Speaker 1: So we're not gonna go over all the details of that again, just to kind of remind you of this dynamic so you have it for perspective. Slide 25. Let's say suffice to say though.

Speaker 1: Airbus has indicated its intention to achieve A320neo aircraft family production rates of 65 aircraft a month by early 2024.

Speaker 1: and 75 RCRAF a month by mid-25.

Speaker 1: And even though the ramp up to these rates is admittedly aggressive, Airbus has double tripled.

Speaker 1: quadrupled down on its commitment to meet these rates. Also, this is a big one, shockingly, Airbus recently indicated, I think the last couple of weeks or so, its intention to achieve a production rate of 50 ACE-320neo aircraft per month by the end of this year. Just like now.

Speaker 3: 50 per month

Speaker 4: So wow!

Speaker 1: That's kind of a big deal. I mean, this year, what is that, like next week? For one thing, sorry, which according to Airbus...

Speaker 1: is quite clear, is the market and the A320neo aircraft family backlog are there to support these aggressive rates. There's almost no doubt about that. This is not a matter of whether they have customers to buy these airplanes. It's a matter of can they produce these airplanes and ship the airplanes. And you know, Airbus is very much pressing this supply chain to support these rates. Their current backlog for the A320neo aircraft family, 6,150 airplanes. Of these A320neos, were there to support their same boats and wear a unique detailed confident suit. This infrastructure was redesigned and energetic to Sid

Speaker 1: Now I'm not an expert in this stuff at all, but I can tell you that's a heck of a lot of airplanes that they have in their back line. Let's go on to slide, what are we, 26. Still on the updates. Do we think Airbus will hit these targets? 65.

Speaker 1: early 24, 75, mid-25. Yeah, we think they will come close. Why? Because they're held by it to get there and they have a lot of good reasons for it. In our opinion, whatever it's worth, probably not much.

Speaker 1: The supply chain to focus its energy on supporting Airbus' aggressive A320neo.

Speaker 1: production targets rather than publicly challenging them. To us, we think it's kind of strange that that's being done. At the park, of course we're concerned, a little old park, we staked out our ground and its controversy.

Speaker 1: June 17, 2022, news release, we announced our full-known waiver in support of Airbus' player production rates for the A-20neo family.

Speaker 1: For us, it's a privileged honor for us to be able to support this Airbus A320neo program, which supposedly is going to be the biggest commercial aircraft program ever. We are all in. Let's go on to slide 27. We do this every quarter....

Speaker 1: So as of the end of July ,

Speaker 1: CFM or LEAP-1A had a 59.75% share.

Speaker 1: firm orders of day through 20 new family of aircraft. The source is Aeroengine News, that's like the Bible. Every month it's like 100 pages of huge amount of data. So this is not like somebody's just kind of off the top or the head opinion stuff. And actually 59.75, that's around the number. It's probably like 59.723 or something like that. Very detailed information is the point.

Speaker 1: Park also recently received updated H320 NeoEngine unit composite material usage for MRS. Why did that happen?

Speaker 1: We look at everything very very carefully.

Speaker 1: all the data, everything we hear from Airbus, everything we could possibly integrate into our little computer, and we challenge it, do we question it, does it make sense, does it make sense? So we went back to MRAS and said, you know, some of this information isn't looking right to us. Why is this information, usage information, so critical? He goesAm gripped?

Speaker 1: When we supply material to MRAS or through their contractors, they all supply through the same spec. So we don't know where it's going. We don't know if it's through A320 or Passport 20 or the 919, 747. So it's really critical for us to have this usage information so we can say, all right, if Airbus is producing this many airplanes.

Speaker 1: And this is the LEAP market share. We know that what that will translate to in terms of revenue is to part. So anyway, we went back to them, we challenged it and they said, yeah, you're right. They came back with all different usage information for us. Now that, whether that's more accurate, it's probably more accurate, but whether it's totally accurate, we don't know. We just keep looking and checking, looking and checking.

Speaker 1: Anyway, here we go. Assuming a 59.75% CFM market share and the updated usage data, the 75 A320neo aircraft family per month rate represents approximately 32.5 million per year of revenue to part before rebates starting 2025.

Speaker 1: What are the focus in 2025? If that's when we expect to film, he's been in a program and also there's a built in price increase in 2025. That's why we focus on 2025.

Speaker 1: based on our LTA.

Speaker 1: So we're not sure we're going to update this every quarter because the problem is this, that even if the engine usage information is not changed, the market share comes out every month and it changes. So we may be driving you crazy by saying it's up there, down there by a couple of, by a few hundred thousand dollars every.

Speaker 1: every time we do this dual quarterly conference call. So we'll see about that. But just wanted to give you that information. So you have it, slide 28. I still want updating GE Aviation. So on a short interval basis, parks A320, Neo Drive revenue will not reconcile to what Airbus is doing. It's just not gonna happen. There's all kind of reasons for that. But, and this is key, at the end of the day, the only thing which matters to park in connection with on our regents is our regular

Speaker 1: A320neo program is how many A320neo aircraft equipped with CFM LEAG-1A engines Airbus produces and delivers. It's easy for A320neo because there is noamer to connect, but the declared

Speaker 1: assuming we have the usage information correct, the rest is just timing, what quarter goes into.

Speaker 1: But at the end of the day, what matters to Park is how many of these airplanes are built and delivered with LEAP-1A engines.

Speaker 1: A little news on the XLR, we talk, we discuss this, I think a recorder.

Speaker 1: Most of this is not new actually. First test flight June 15, certification expected next year, entry into service 2024. So it has a lot of unique capabilities. In addition, including they claim, Airbus claims 30% lower fuel burn per seat as compared to legacy airplanes. Over 500 film orders and Boeing's not planning response. Is this a game changer? I think a lot of people think it is.

Speaker 1: Because this airplane has the ability to replace certain wide-body aircraft with much less expensive operating costs on shorter wide-body missions.

Speaker 1: So let's go on to slide 29. Okay, moving on from the A320. Comeback 919, here's some big news.

Speaker 1: In a recent ceremony,

Speaker 1: at the Beijing Central Airport attended by President Xi of China, the COMAC 919 received its type certificate from the China FAA, the CAAAC, kind of the China FAA. COMAC still needs to receive a reduction certificate. I don't know if you're familiar with this, but usually the first thing the OEM will get is a type certificate, but they need to get a production certificate which says, yeah, every time you make one of these, it's going to be the same. That's kind of very...

Speaker 1: superficial way of summarizing, but that's a kind of concept of a production certificate. That's really critical, actually, a production certificate. So they still need to get that in order to go into volume production. They do source a lot of the key components from Western suppliers. Congratulations, COMAC, for achieving a very important milestone. And this program is potentially a very important program for PARC. Unlike the EHV-20, the 919 at this point only uses a LEAP engine, so we're not sure.

Speaker 1: On the next slide, Boeing 747-8. As you know, Boeing announces terminating production of the Queen of the Skies. The last remaining 747 expect to be delivered this month to Atlas Air. I heard that actually one was just delivered and then one's being assembled. They're getting the last few, so that would go to Atlas Air later in this month apparently. A sad day for one of the best commercial aircraft ever built. Atlas Air is more of the 747-8 than anybody.

Speaker 1: and saying goodbye to the great 747 in Anchorage, Alaska, that's where the 747 reigns supreme. And I'm telling you, you see a lot of Atlas airplanes, a lot of Atlas 747 airplanes. They're almost all, I shouldn't even say almost, all for freight, for cargo, that are coming out of Anchorage. Lots and lots and lots of 747 operations in Anchorage.

Speaker 1: So let's go on to slide 32.

Speaker 1: This is where things get kind of complicated. So the left part of the...

Speaker 1: The left-hand column is just history.

Speaker 1: Nothing too shaky here. CQ2 6.1 million. So it's been in that six to seven million dollar range per quarter for a while now. OK. Got it. Then look at the right side of the page.

Speaker 1: What is this about?

Speaker 1: GA Aviation programs sales forecast estimate for Q3, four and a quarter to four and three quarter million. What the heck does that mean? And this is a good number because this is basically what's booked. We don't think we're going to get any new orders for shipment in Q3. So this is going to be the number. So what the heck is going on here?

Speaker 1: Good question. Let's go on to slide 33. This gets a little bit

Speaker 1: slide 33. This gets a little bit, I don't know.

Speaker 1: Let's talk about what's going on here. First of all, let's talk about the programs, which we just covered. A320. A320 into Proxy and Then as Coc Plasma Shift into Gas3 that Russell movements into Kan Means and then Skipevil message to more bursts ofknowing kind you're bringing your fort

Speaker 1: 50 per month this year.

Speaker 1: 65 per month, early 24. 75 per month by 25. When do we have to be at 50 per month to support 50 per month this year? Like, you know, 6, 8, 9 months ago.

Speaker 1: How about 65 per month, or 24? We should be ramping that level already.

Speaker 1: That's going to follow shortly thereafter.

Speaker 1: So what the heck is going on here and Linda 919 just got certified. That would be good news 7500 doing quite well, so What is going on here?

Speaker 1: 919 just got certified. That would be good news. 7500 doing quite well. So what is going on here?

Speaker 1: We talked about downstream inventory and production management challenges and dislocations, so we want to talk at a school here, but you know a lot of loyal investors are very interested in this stuff, and we think we owe you some kind of explanation as to what the heck is going on here. You know it's funny with this inventory management stuff. From the electronics industry, you know that.

Speaker 1: Electronics industries, you have no visibility. You're lucky that you have no lead times. There's no visibility, there's no forecast. I mean, you're lucky that, in some of our cases with these airplanes, there's six, seven, 10 year forecast. Electronics would be great and happy to have six week forecast.

Speaker 1: But you know, electronics, the industry was very effective at managing inventory and production. We didn't have these kind of crazy wild swings. That's the irony of it. In aerospace, apparently, this is kind of a common thing. It's not just related to our customers.

Speaker 1: And apparently it's not getting better. Very poor track record.

Speaker 1: with managing inventory and production. So it was always overshooting, overshooting, overshooting. Even though there's these long-term and market forecasts, that should make it a lot more straightforward to properly plan inventory and production.

Speaker 1: So the explanation, well there's finished goods inventory.

Speaker 1: The question is, okay, how much are we're having gotten a meaningful answer?

Speaker 4: So,

Speaker 1: You could imagine how Jaspy rating and frustrating this is for us And it's what we're dealing with at the end of the day Only thing which matters the part in connection with the GAA mission program through support Only thing that matters at the end of the day. How many LEAF 1A equipped A320 family aircraft Airbus Delivers?

Speaker 1: How many 919-AI-21 aircraft COMACs delivers? How many global 7,500-8,000 aircraft Bombardier delivers? Period. And the story. But, there is a big but though. The downstream inventory and production management dislocations create major challenges for park and managing our production supply chain.

Speaker 1: So the thing is, it's almost like we're almost enemies. We're known, our colon can't be very flexible, very agile, very responsive. I think people, maybe take advantage of that. Oh, Park, they'll just turn out of time, and we will. What?

Speaker 1: Our suppliers, no sir.

Speaker 1: No ma'am, that is not true. So that makes it much more difficult for us because maybe we can turn that a dime. Good luck with our suppliers. When we go to suppliers, it's kind of crap. What they're gonna do in two seconds, okay, thank you. We're gonna give you our allocation of somebody else.

Speaker 1: and it's time to ramp up. Oh sorry, we can't do that, that's pretty much a

Speaker 1: And you know what's happening, you know what, sorry, you know what's gonna come.

Speaker 4: I mean, it's just math.

Speaker 1: It's just math. It's only a matter of time. I don't know when. We'll get that call. Oh boy. We already did it. We got to ramp up fast.

Speaker 1: And this is all

Speaker 1: This is what we deal with.

Speaker 1: on a daily basis, weekly basis, and I don't know if it's getting better. So like I said, I don't wanna talk out of school, but we got a lot of loyal shareholders that have been with us a long time. I think you're only understanding an explanation of why the heck would we be looking at that kind of number for Q3. So that's our explanation, we're sticking with it. Slide 34, let's go on to the...

Speaker 1: Forecast for park. So you see, first of all, you got the Q3, Q2 actual, we stated that. Q3 forecast, nothing earth shaking here.

Speaker 1: three and a quarter, sorry 13 and a quarter, 13.75, 13 and three quarter sales, 3 and 3.5 just to be, but now we really wanted to give you a Q4 forecast at this point. And we actually the first draft we actually had it, but it really it wouldn't have been meaningful. And with that, that is going to be the day we are going to vouch for the future.

Speaker 1: these two big variables from Q4. One is this C2B product we discussed on the slide 17 at some length. We just don't know how much of that is gonna be pushed into next fiscal year. So it really makes Q4 very up in the air. And also, you know, the forecasting that we're receiving over the GEA days and programs, quite suspect. So it would not be possible to provide you with meaningful forecast for Q4 at this time. So we're sorry about that. Like I said, we really wanted to.

Speaker 1: but it just wouldn't be meaningful. Let's go on to slide 35.

Speaker 1: Sorry about that. I said 45 minutes. It's already 45 minutes.

Speaker 1: So we covered this.

Speaker 1: These slides are pretty much what was in the last presentation, so we'll just skim over it. I'll just start by saying, you know, forecasting, highly problematic, probably not very meaningful in the current environment, which is supply chain chaos and disorder, significant inflation, serious recessionary concerns and staffing challenges, very difficult to provide short-term and certainly long-term forecasting.

Speaker 1: wouldn't be that meaningful. But we go through what we think our outlook is. We think we can provide you meaningful input on a company's outlook, even if there is an economic recession. A lot of people say there already is, but even if there's a recession. So we're not gonna go through that. Feel free to read it, ask us questions if you like. Let's skip over to slide 38, where we have the kind of bottom line at the end here, based upon the above considerations, although there are serious concerns about the economy inflation, workforce shortage and supply chain chaos.

Speaker 1: We believe the outlook for parks is quite positive and like I said in the past three slides we went through why we believe that.

Speaker 1: Let's go on to slide 39, a major expansion, new Kansas. We can cover this pretty quickly because I'm not even going to read the numbers to you. I mean, there's really not much news here.

Speaker 1: Last item, while many others are slashing their capital budgets or canceling their capital budgets altogether, we pushed forward and completed our expansion.

Speaker 1: Let's go to slide 40, James Webb Space Telescope. This is our cool slide, fun slide. I think this is our second fun cool slide.

Speaker 1: So reminder 21 of our proprietary Sigma struts are incorporated into the James Webb James Webb along with those struts

Speaker 1: Reminder, 21 of our proprietary Sigma struts are incorporated into the James Webb. James Webb along with those struts is established.

Speaker 1: at the Lagrange II orbit point, which is about 1 million miles from Earth. That just kind of blows my mind. I think those trucks will reduce their little factory in Kansas. They're a million miles from Earth.

Speaker 1: Donna and Elaine are in charge of this. We have so many really cool photos, images, from the James Webb and I said, okay, you guys have to choose three. So that was hard, you should probably have to choose 100. These images are just so unbelievable to me, just so awesome. I don't even know what, I can't explain what they are. And Elaine is our resident James Webb geek, so she could probably give you a great explanation as to what these images are about.

Speaker 1: But I did see something interesting in an article where it said that the recent article indicating that James Webb is seeing stuff which is not supposed to be there. I thought it was very interesting, I digress for a second, and that the whole point, you know, seeing what is there rather than what's supposed to be there and what kind of science is all about, you know, not...

Speaker 1: It doesn't matter what you believe is true, science is about...

Speaker 1: the truth, the reality, not what you believe or what's supposed to be there. That's how science progresses, that's how the.

Speaker 1: humankind for questions, I think. So not getting hung up on what people believe is supposed to be there.

Speaker 1: For Einstein, time and space are supposed to be absolutes. Supposed to be absolutes. But it doesn't matter what they're supposed to be, they're not.

Speaker 1: Anyway, I'm digressing, like I said, but I just found that kind of very interesting and I don't want to spend a lot more time with James Webb, this article about seeing stuff not supposed to be there. Okay, let me move on. Slide 41. Okay, so we're going to move on to slide 41. Okay, so we're going to move on to slide 41.

Speaker 1: So, sorry about this. A lot of you are looking forward to a really great update on the ADL. Just a reminder, our materials are currently sole source qualified on ADL's ADRS program for the 737 Legacy aircraft. There are many thousands of 737 Legacy aircraft that service around the world. You can look it up. I think it's over 5,000. However, recently, Park asked... I'm sorry.

Speaker 1: ADL asked us to low-key it about the ADRS program. So we're not gonna provide any new updates to the program at this time, except to say we continue to work actively on the program opportunity, and we're also very pleased to have the opportunity to participate in this exciting, potential program. So sorry about that again, but we wanna honor ADL's request to this point. 42, this is kind of a big one.

Speaker 1: We've been talking about space set aside, new factory for project initiatives. So let's update major potential project initiatives and new plant. So we've been talking about this for a couple quarters but we haven't told you what we have in mind. But now the big reveal, we're gonna tell you about one of the main projects that we have in mind. This project relates to automated fiber placement, AFP manufacturing of aerospace composite structures.

Speaker 1: A final decision has not been made on the project, but Park has conducted significant due diligence on the project. The capital investment for the equipment, including all support equipment necessary to provide complete AFP manufacturing capability to interested customers, is estimated to be approximately $10 million.

Speaker 1: Although the equipment location decisions are still being reviewed, we believe that all the equipment involved, and there will be a lot, would fit in our recently completed major expansion in Newton, Kansas. Let's go on to slide 43, continuing with the sub-tenant AFP. So what is AFP? AFP manufactures robotic technology.

Speaker 1: There's a form of additive manufacturing technology as compared to the subtractive manufacturing technology utilized by conventional hand layup of composite structures. That's an important point. If PARC proceeds with the investment in AFP manufacturing, it should be seen as a long-term strategic investment. It would not be a quick payback investment.

Speaker 1: This would be long term, would be strategic. At this point, AFP manufacturing is generally done in house by large aerospace OEMs.

Speaker 1: not people like Park, but we believe there may be a niche for us in AFP manufacturing of aerospace composite structures. If Park proceeds with this project, it may at least to some degree also though be a build it and they will come type project. So it will take some conviction and courage to do this, but you know we normally aren't sure of those things, I don't think. There are many potential advantages to AFP manufacturing of aerospace composite structures compared to traditional hand layup.

Speaker 1: manufacturing, which is what we do now and what most companies do. Labor cost reduction is related to elimination of certain manual processes. Just don't do them. No ply cutting, no manual layup. I'll go on to slide 44. What is this not? We're not interested in automation to replace our existing people. A lot of companies talk about that. That's not what's going on here.

Speaker 1: But, and big but since it is and may continue to be indefinitely very difficult to properly staff operations, AFP automation may be a very useful strategic approach to supplementing our existing workforce in order to facilitate expanded manufacturing activities. It's been a strategic, I should say, manufacturing activity.

Speaker 1: cost savings related to very high material utilization rates from the AFP additive manufacturing process compared to much lower yielding material utilization rates associated with a hand-laid subtractor. Just think about it. When you do subtractive manufacturing, you're subtracting stuff. You're taking stuff out of the equation, throwing it out.

Speaker 1: So material yields were subtractive manufacturing and layup. It could be significant yield loss, 10, 20, 30%. I mean that's huge. An AP manufacturer is not because it's adding. You're not subtracting if you only add it. So that's a big difference.

Speaker 1: Also significantly improved quality, reliability, repeatability and consistency associated with the AFP automation, process automation, which is kind of typical of automation as compared to manual operations. It's also potentially better suited for volume manufacturing.

Speaker 1: especially of larger composite structures. Now the disadvantages, let's go on slide 45, wave B manufacturing system,

Speaker 1: AFP manufacturing, like most automated processes, may not be well suited for a lower volume production, especially of awkwardly designed, quickie composite structures. So quick turns, smaller volume, the economics may not always be there. Also, this is a big thing, this is a big barrier entry, significant unafraid investment. We told you the dollars, but the credit curve cost. It's a big, big deal. So a lot of companies think, ah, not for us.

Speaker 1: There is still due diligence which needs to be completed and there is no hard deadline for the final decision on the EFP project. We're hopeful to be in a position to make the decision in the near future and we'll keep it posted. So this is, we don't know if we're gonna do it or not. We may not. We thought we should share with you what we're doing which we should put a lot of time into it and doing a lot of work on it. And potentially though, I think it could be a pretty exciting project for PARC, although like I said, it's kind of a long-term concept rather than a quick ROI or payback.

Speaker 1: Let's go on a 46 like 46 Park people

Speaker 1: changing gears here completely. Update on our great customer flex program, so you see the numbers percentages. It just wouldn't be possible to continue to get the job done under the current very challenging circumstances without our customer flex program. That's not just hyperbole, this is a fact. I mean, every day our customer flex program comes into...

Speaker 1: and it becomes a factor for us, has an impact on our ability to get things done. Parks per current people count 99 people.

Speaker 1: That's not a good number. Ideal head count, people count would be 125.

Speaker 1: Minimum pupil count to properly operate a function, 115.

Speaker 1: some people count to properly operate a function, 115. So what's going on here?

Speaker 1: What is going on here?

Speaker 1: There are a number of factors, but one important factor.

Speaker 1: important factor.

Speaker 1: This may not be politically correct, but I'm not here to be politically correct. I'm here to tell you what we're thinking and what we believe. One important factor is that certain other companies, mostly larger companies, have been aggressively targeting our people for recruitment.

Speaker 1: people on LinkedIn, it's so easy to find them. They want people from this function or that function.

Speaker 1: So maybe this is just capitalism, the free market of work, sure, isn't that great?

Speaker 4: What is it?

Speaker 1: Some of these companies which are targeting our people, we're giving huge amounts of government money. Where did the money come from? From us, other taxpayers like us during the pandemic. Huge bucks!

Speaker 1: Discovered money funded again by us and other taxpayers was intended to incentivize recipients not to lay off their people.

Speaker 1: But in some cases, recipients laid off significant numbers of people, anyway, thousands.

Speaker 1: In some cases, recipients of the Government money funded by us.

Speaker 1: are still losing very big bucks.

Speaker 1: So you tell me, is this just capitalism and the free market at work for the government to take our heart and honestly earn money?

Speaker 1: tax money and give it to others who have done nothing to earn it or deserve it.

Speaker 1: So those others can use that money to aggressively target and recruit our people.

Speaker 4: Is that capitalism?

Speaker 4: capitalism 548

Speaker 1: Maybe it's crony capitalism, or phony capitalism, or no capitalism at all.

Speaker 5: What do you think?

Speaker 1: One more thing about these companies who are targeting people.

Speaker 1: What will they do as soon as the people they recruit and hire are not needed?

Speaker 1: Is Igor to keep them?

Speaker 1: Well, maybe come up with your own opinion about that. In any event, whatever the cause or the politics of it all, we're dealing with our workforce challenges as we always do. We don't give up. We keep going. We don't sell out. We don't sell our souls. We keep coming up with new ideas. We keep working at it.

Speaker 1: But we're not looking to sell out. We're looking to use this challenge as an opportunity to actually upgrade our workforce and make sure we're the right kind of people we're gonna park. Well this idea, which seems to have some promise, is bringing on a weekend shift. I could tell you that...

Speaker 1: Courtney, Nancy, and Corey as well, is something we're putting, they're putting so much effort into all the time, all the time, all the time.

Speaker 1: Working it, working it, working it, coming up with new ideas, meeting with prospective employees, promoting park, promoting the park culture, a lot of effort. And itís worthwhile to do it right rather than to do it wrong. And thatís my opinion. Slide 49, back to park people, another not so great story, inflation. Now Iím not talking about parks inflation. Weíre talking about the inflation that people deal with in terms of living every day. People know we didnít cause it and weíre not in a position to stop it.

Speaker 1: It's very hard to hear people talking about choosing between buying gas and food.

Speaker 1: It's very hard to hear that.

Speaker 1: to hear that. And this is not rocket science.

Speaker 1: Any high school economics student will tell you if you pump trillions of dollars

Speaker 1: into an economy which is already recovering from the pandemic, then you seek to shut down the oil and gas industry, you will cause significant and persistent inflation, not transitory inflation.

Speaker 1: The people who cause this inflation, they're smart people. They knew what they were doing. They understood the consequences of their actions.

Speaker 1: Well in our opinion they just didn't give a damn. They just don't care about our people, how their actions are going to hurt our people, are hurting our people.

Speaker 4: See you then.

Speaker 1: Our people are expendable. They don't matter.

Speaker 1: But to us, our people are not expendable.

Speaker 1: Our people matter the most. Our people are precious.

Speaker 1: Slide 50. So we recently implemented an inflation pay premium for all of our people. We're making approximately $60,000 or less per year.

Speaker 1: As I say we did not cause this brutal invasion and we're not a position to cover all the you know All the sins all the damage done by this brutality

Speaker 1: But it bothers us, it bothers us a lot to see our people suffer.

Speaker 1: So we implemented this inflation pay premium to do what we thought we could do to help our people.

Speaker 1: And you should know, since sometimes numbers matter.

Speaker 1: that this recently implemented inflation pay premium will cost us approximately $150,000 per year going forward indefinitely.

Speaker 1: Let's go on to slide 51, closing thoughts. Sorry to go on so long, it's already an hour, but we just had our closing thoughts now. So let's see if we wrap it up. At PARC, during, throughout the pandemic, the topic here, the theme is we earn what we get. At PARC, during and throughout the pandemic, we kept all of our people, we laid off nobody, or many others were cutting their employees loose by the thousands.

Speaker 1: We made money every quarter while many others were losing money by the bucket loads.

Speaker 1: We maintain our quarterly cash dividend while many others are slashing their cash dividends are cancelling them altogether.

Speaker 1: We continued and completed our major plant expansion, while many others were slashing their capital budgets.

Speaker 1: and spending or canceling them all together. I apologize.

Speaker 1: We maintained our outstanding balance sheet of significant cash and zero long-term debt. We're leveraging your balance sheets.

Speaker 1: just to stay alive.

Speaker 1: We paid our taxes, lots of them, many others were paying none, maybe generating NOL, so they don't pay tax in the future either.

Speaker 1: We took the government handout for corporate welfare money.

Speaker 1: Well, you easily could have taken it, lots of it. I was told by lots of people, Brian , what's wrong with you? It's free money, take it. You know, go take it. It's like millions of dollars.

Speaker 1: On many others, we're taking huge amounts of government handout money funded by taxpayers like us.

Speaker 1: On many others, we're taking huge amounts of government handout money funded by taxpayers like us. Money comes from us.

Speaker 1: We're taking huge amounts of government handout money funded by taxpayers like us. Money comes from us. On slide 55 after some major discussions, Americans opened up theeson- rooftop telescope and published the most recent science-based book, The EdmundSL. Just before the Platoiss unforgettable again covered a lot of things, that getting old, I understand the

Speaker 1: At PARC, we are what we get when we ask for except government handouts or corporate welfare.

Speaker 1: What do we want from the government? Not that anybody's asking, but I'll tell you anyway. Only ask when you stop taking our hard-earned, honest, and decent money.

Speaker 1: giving it to other companies which have not earned it and do not deserve it.

Speaker 1: What are the keys to success in life and business apart?

Speaker 1: achieving great things through sacrifice and dedication. For certain, others are not sure. What is it?

Speaker 1: Hiring better lobbyists. Make sure you're at the front of the line for government handouts and favors.

Speaker 1: What sense of value is that? What kind of values are those?

Speaker 6: Kind of sad.

Speaker 1: But at a park, we're not like the others. At a park, we play for keeps. So at the end of every presentation, we'll always feature some park people, a crew, or department. So bottom right.

Speaker 1: This is part solution mix team, a crew. We have William looking very cool with his shades on, with Johnny. Johnny is the, you know, how should I say it, the guy who's done this the longest, I don't wanna say old timer, but Johnny's the veteran. And Daniel, Daniel's new in the team, but I understand Daniel's doing very well. Great new addition to our solution mix crew. So let me tell you something.

Speaker 1: You know, we used to have electronics locations, and I come to my head, I think we had about 14 locations which had solution mix rooms around the world. And every time they go visit a location, it goes to the mix room. Why is that? That's always the dirtiest.

Speaker 1: crappiest looking room, the resin is dripping everywhere, it's caked in the floors, and when I throw it into the factory, it's often the management, the local management, would try to steer me away from the mix room. Of course, that means I would be more determined to go.

Speaker 1: I've probably been in mixed rooms hundreds, maybe three, four hundred times over the years. I'm not trying to exaggerate you there probably, three or four hundred times. This is by far the cleanest mixed room I've ever seen anywhere in my life.

Speaker 1: And I never asked these guys to do anything. They did this on their own.

Speaker 1: So it means so much to us, it means so much to me that people take the initiative to create such a wonderful environment, such a beautiful mixed room. And I know you probably haven't been to 300 other mixed rooms, but if you had, you would know what I'm talking about. They didn't clean this up for this picture. This is how it looks all the time. Beautiful. As people say, we get off the floor, I said, yeah, maybe we should have a little picnic eating off the floor in the next room.

Speaker 1: So to me it means a lot, very special. And thank you very much to William, Johnny and Daniel.

Speaker 1: doing such a wonderful job in terms of keeping the mix room. So, it's such a beautiful condition. Okay, operator, that ends our presentation, and Matt and I have to take questions at this time.

Speaker 4: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question too. You may press star 2 if you'd like to remove your question from the queue.

Speaker 4: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.

Speaker 4: For distance-using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions.

Speaker 4: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. The information on the phone will indicate your line of the question.

Speaker 4: Our first question is from Brandon Deaps with Hoffman Prairie Hold. Please proceed with your questions.

Speaker 4: Hey, Brian . How are you doing today? Thanks for taking the question. Not too bad. I just wanted to follow up real quick on the GE Aviation Q3 guidance. Pretty decent size reduction from Q2 to Q3, and I may have missed some of your commentary, but can you provide maybe just a little more detail? I mean, is this just a calendar shift into Q4? Do you expect to recoup?

Speaker 4: Kind of those missed sales in fall in quarters. Just hoping to get a little more detail around that reduction

Speaker 1: So if you missed it, we did a pretty, I did a lot of commentary on this point and you probably want to go back and listen to it.

Speaker 1: I don't really want to go over all the commentary again. I don't want to try to sum it up unfairly because there are a lot of factors here. Some of it is a little bit delicate, let's put it that way. But I think what I did was I tried to be as candid as possible out of respect for you and other long-term shareholders that are really interested in what's going on. My suggestion is go back, listen to that portion of the call if you haven't, then give us a call and ask your family and other follow-up questions about that point if that's okay.

Speaker 4: Okay, yeah, yeah, that's definitely okay. We can follow up with you on that. I did have a question on the 2025 32.5 million figure. I'm pretty impressed by, you know,

Speaker 4: the increases you guys have noted over the last few quarters. If I go back and kind of back into the ship set value that implies.

Speaker 4: It's pretty decent, I think 8 to 13% increase over the last few quarters. Is that just pricing or are you able to provide any commentary on what's driving the increase?

Speaker 4: and ships that you guys are seeing.

Speaker 1: Yeah, that's just for the A320 also. So the, I guess a couple things going on here, a few. One is we have these new usage numbers. Remember as we had questioned whether the prior usage assumption was correct. Remember, when we shipped something, we don't know what program it's going to. We sold the program, so we shipped the same spec. So the usage information is really critical to us. So the usage information changed and went up more.

Speaker 1: more square feet of material for a ship set for a 320. Second thing is that in 2025 there was a built-in price increase based upon our LTA.

Speaker 1: So that's fixed, that's part of our LTA.

Speaker 1: And

Speaker 1: The third thing is I mentioned that by 2025 we also expect that film adhesive would be on the A320 program. So those are the three factors that would affect the A320 unit numbers. Let's put that one.

Speaker 1: The third thing is I mentioned that by 2025, we also expect that film adhesive would be on the A320 program. So those are the three factors that would affect the A320 unit numbers, let's put it that way. Okay, okay, excellent.

Speaker 4: All right, well, that's everything I had. Once again, appreciate the time.

Speaker 1: Oh yeah, I appreciate your time and a long call to listen to but thank you.

Speaker 4: Thanks.

Speaker 7: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad.

Speaker 7: Thank you. There are no further questions at this time. I would like to turn the floor back over to Brian Short for any closing comments.

Speaker 1: Thank you very much, operator, and thank you all for listening. I apologize for going so long. This is the longest we've ever gone, I'm pretty sure. Also apologize for the coughing. I can only imagine just irritating to listen to that. So, you know, I got through it, but without probably some distracting coughing noise. So thank you for bearing, for hanging in there and bearing with me on that little issue. So thanks again for listening. Feel free to give mad.

Speaker 1: and call anytime if you have any follow-up questions. And have a good autumn, and we'll talk to you soon. Take care.

Speaker 7: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.