Q3 2023 Park Aerospace Corp Earnings Call

Speaker 2: I.

Speaker 3: I P.

Speaker 4: Good morning, my name is Doug and I will be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Third Quarter, Fiscal Year 23, earning to release conference call and investor presentation.

Speaker 5: All lines have been placed on mute to prevent any background noise.

Speaker 6: After the speaker's remarks, there will be a question and answer session.

Speaker 7: If you'd like to ask a question during this time, simply press star 1 on your telephone keypad.

Speaker 8: If you'd like to withdraw your question, press star 2.

Speaker 9: At this time, I would like to turn today's call over to Mr. Brian Schor, Chairman and Chief Executive Officer. Mr. Schor, you may begin your conference.

Speaker 10: Thank you, operator. This is Brian . Welcome everybody to our third quarter conference call. Happy New Year. With me as usual, as always, Matt Farber, our CFO . So we announced our earnings this morning. In the earnings announcement, there are also our instructions as to how to access the presentation.

Speaker 11: either via a webcast or through our website, you wanna have that up in front of you to make the call more meaningful, of course. Just one note, I don't want you to freak out too much about the length of the presentation. I think it's like 55 slides, but what we...

Speaker 12: What we did is we incorporated a number of slides from the prior presentation, Q2 and even Q1, for context and perspective. So the third quarter presentation stands on its own. You don't have to go back and start checking the second quarter or first quarter presentation to get the full picture. But those items that we carried over.

Speaker 13: pretty much intact, we'll probably skip over, at least skim over, so it's a lot of slides, but I think we'll be able to move through it relatively quickly. And when I say that, it's probably 45 minutes, but we're not gonna go through every slide and just cover that. So, of course, thank you very much.

Speaker 14: When we're done, when we're done going through the presentation, Matt and I will be happy to answer your questions, and I think that's it. So when we get started, here we go. So let's move on to slide two, our forward-looking disclaimer language. If you have any questions about that language, please let us know.

which we talk about a lot in these presentations. We have long-term pricing, fixed pricing. It could be subject to fixed adjustments, but it's not often based upon inflation factors. So that's also an issue. And inflation is really a burden for us. It's really becoming a burden for us.

and our people I think are doing a pretty special job in finding ways to overcome that burden because there's a real burden. It's not just kind of a round the arrow kind of burden. It's a real burden and something that we live with every day and we continue to live with. I'm not sure when it's gonna go away. Like I said, people say it's moderating. We don't see it in our little world. Let's go on a slide.

when we did our Q2 announcement, why don't we anticipate the product mix? And my comment is, I think the same comment we gave you last time, planning is interesting in the world of supply chain chaos. So we have a nice plan, it's great, but as soon as we put the plan in the drawer, then the chaos happens, because of supply chain disruptions.

and freight disruptions. Whatever we plan is nice, but it's not what we're able to do. We have to shuffle, we have to move things around. We have to scramble, we have to make things happen. That's the Herculean effort that's involved to make our numbers, to make our quarters. Because if we just kind of went...

as planned, it would not work out too well. And then Mike Tyson, everyone who has, everyone has a plan until they get punched in the mouth. It's got, I think it speaks to us because we have a plan, but almost immediately after the plan is put in the drawer, the world changes on us, and a lot. This is not normal, I mean, things always change a little bit.

And the fact has not been what we planned.

Supply chain disruptions continue to cause significant efficiencies in our manufacturing operations. If you know people that run manufacturing operations, one of the things they really like the best is the ability to plan the manufacturing operation with some kind of predictability. And when you have to scramble and adjust and move things around, it makes the manufacturing operations easier. For more information, visit www.fema.gov

Each person, each park person received a quarterly bonus, two or three quarterly bonus of 200 bucks. That's 5,000, you'll see up top, 6,000. I didn't get 200,000. I got 200 bucks for his or her outstanding job on a very challenging circle.

Let's continue to slide eight.

Slide eight, we won't discuss very much, but this is a slide that we provide in our presentations for historical context and reference. Any questions about the annual, historical annual results, let us know. Let's go on to slide nine, just to save a little time here. Parts balance sheet, cash, cash data and history, and recent, and recent, and recent, and recent.

share buyback authorization. We'll skim through some of this stuff. One of our key investors recommended we cover it to me. We cover this every quarter. I thought it was a good idea, so we're doing that. Some of this stuff is not that doozy because it's just kind of going over things like before. Let's see, our reported cash was $103.3 million in Q3.

ends up going down. Our practice, by the way, is to hold our investments to maturity, but the value of them on a current basis are gonna be depressed if interest rates are going up, which they happen, of course. We report, this is how reporting is done, mark the market. So it's not the investment value, which the market value of our.

securities and investments that are reported to you in that $103.3 million. Just so you know, in case, um, F.A.I. let's put it that way, the advertised cost basis over cash and marketable securities as of the end of Q3. So 109.2 million.

I just want you to have that information and you figure out either side what you think is a more relevant number If we hold these securities maturity, which has been our practice We probably get closer than 109 million dollars when they secure mature you get 21 months average charity But the present value 103.3 million

The other reason I want you to know that is in case you're wondering what happened to our cash, well it's not like the cash has been, we're not spending the cash recklessly. The value of the cash for reporting purposes is affected by interest rates. Again, we don't take any credit risk, we just take interest rate risk. So we have an average of 21 months, that means we're exposed to interest rate fluctuations.

Let's go on to slide 10. Any more questions about that, please call Matt later and ask him because that's about as much as I can explain about how we report our cash. Slide 10, we've got about maybe 13 million to spend on, especially the installment tax payments. So we've got a...

We'd like to share that with you because you're thinking about how much cash does Park really have, that's relevant. This is a liability. We have this on our books, but we still have to pay the IRS over what, the next three years or something like that, that $12.6 million. Cash dividends.

Every quarter we cover this Let's go to the last check item park has paid five hundred fifty eight million dollars now in cash dividends since The beginning of 2005 and I give you my comment that I always give you which is that that's a hell lot of money for A walk on the white park five hundred fifty eight million bucks. You

Let's go on to slide 11, share of purchase authorization. This has been kind of a hot topic of late. We announced in May 23, 2002 that our board authorized a purchase of one half million shares of companies of our Parc Stock, Comstock.

and did we purchase anything in Q3? No, we didn't purchase anything.

but not for not trying. So maybe the market was making us an offer we couldn't refuse.

Well, um...

We've been in a blackout since the middle of November , but during the Q3 period where we were not in a blackout, remember stock went down to like, I don't know, like $10, 11 cents or something like that. It was trading in the 10s for a little while, 10 and a half. At that point we felt the market might be making us an awful week.

I told them the last time, we don't think it's our job to buy stock, we think it's your job to buy stock, and your job to decide whether you want to buy stock or not. We don't think it's really our principal job. Our principal job is what? Do everything within our power to enhance the fundamental value of the company. That's who we work on every day. We're not market traders.

So we're not too excited about buying 5 or 10,000 shares a day. It seems kind of like silly, a waste of time and petty. But when the stock was down to that level, we felt maybe the market was making us off where we could refuse. We're through neither with our buyback. They're doing a great job, you know, if you ever...

know somebody wants to do a buyback program, I'd recommend them with that reservation. And we were looking for blocks and big ones.

But we didn't find anything.

And we're told that the institutions are more really all buyers not sellers so we couldn't find anything And then if you remember the stock started moving away from us, you know up to 11 12 13 14 I thought we backed out because we don't want to compete against you know, actual outside buyers for buying the stock I just want you to know that I'm not saying the price here. We're not saying that the price goes

year six rising, our cheap money is in money coming to an end, we hope, will parks hard earned money finally be worth something? Maybe, we hope so. Let's go on to slide 12 rather.

This is, we cover this every quarter. Let's just go through it. AAE Aerospace, that's the MK125 warhead with a standard missile two, SM2. That's a really nice program, I like being on that program. Let's see, the next, Cradle of Defense.

Well, you can see the Kratos Valkyrie. We're really very pleased to be on that program. It's a real exciting program. We love working with Kratos also. And I don't know if you saw, but just recently announced that they did a new deal with Kratos with the Navy for a couple of Valkyrie aircraft.

So that's exciting for us anyway. Lockheed Martin, well that's a secret program. We're not allowed to talk about it, so we can't give you pictures or anything else. But there are the top five, so we can tell you they were a top five in 2-3, and that's what we can tell you about that. And Middle River, yeah, we know who they are. M-RAS, we call them.

and that's the COMAC 919 with the LEAF 1C engines. And then Nord-AM, bottom right, the Bombardier Global 8000 with the PES 420 engines. Actually, MRS is on that program as well as Nord-AM, but we're choosing to focus on...

Nord-Am this time for the Bombardier Global 8000. Now let's keep going. Slide 13 are pie charts. I guess what I would.

A highlight of interest is you look at fiscal 22 and fiscal 23, first nine months, boy it sure looks the same doesn't it? Hardly any change at all. I mean commercial is actually the exact same percentage. So it seems like the pie chart kind of break segmentation is stabilizing more or less.

at these levels, at least for now. Look at fiscal 21, that was that pandemic year, let's call it, and commercial was way, way off. Remember, maybe you do remember the airplanes were being flown empty, remember that? Okay, let's go on to slide 14.

Park loves niche military airspace programs. This is a slide we always do. Donna does the presentations, she does a great job. And you know, Donna works over the holidays and everything. It's a really great duty by work by Donna. Elena is the one who comes up with the programs for the Park Niche Military.

I want to give her some shout out as well. What do we have here? The Aster 30 missile, those are blade-ives, the Predator radome materials, the Growler radome materials, structures materials, and the Poseidon structure materials. You look at the pie chart.

Rocca Nozzles, drones, radomes, I would consider those all to be niche markets for us and we focus really on niche markets more than commoditized markets in commercial and military, but especially military. Okay, so let's go on to slide 15. Military markets.

So not every slide we have is a happy slide, but that's not what we're doing here. We're just trying to tell you what we think. The new world order, the sea chains, the war in Europe grinds on. Many in the government seem to be willing and maybe even eager to continue to sponsor and fund the war with military hardware and equipment and other things.

And Asia is not a happy place either these days. There's now open talk about the possibility of nuclear war. You mean like the end of civilization on Earth nuclear war? Is that the kind of nuclear war we're talking about?

days. There's now open talk about the possibility of nuclear war. You mean like the end of civilization on Earth nuclear war? Is that the kind of nuclear war we're talking about?

Elon Musk wants to establish colonies on Mars to preserve the human race in case we do not make it here on Earth.

You better hurry

I don't think this is a joke, not for us anyway.

My hope for us is that we sincerely hope that the warring nations find a way to end their war and stop the killing soon. What a waste of life.

But even if they do, we believe that aggressive military build-ups will likely continue for a while because there's so much ill will, fear, and mistrust in the world now. Let's go on to slide 16. Like I said, not every slide is a happy slide, but that's not our job. Our job is to...

I think to tell you what we think. Slide 16, not surprisingly, there's currently much emphasis in many parts of the world on aggressively expanding military budgets and spending on the US and foreign countries, and also not surprisingly, missile defense systems, including thearmor sentences likeUB amazingly trying to Alright.

One of the key areas of emphasis for increased defense spending, that's probably not a shocker, you know, under the circumstances. The missile defense system is going to be very important. And this is like the preeminent missile defense system, I think, at least for a lot of missile systems, the PAC-3 I'm talking about.

Remember the Patriot missile that was in the first Gulf War back in the early 90s? Well, this is obviously next generation, multiple generations after it, but it's been around for a while actually. Slide 17. This one.

Park supports the PAC 3 missile defense system with specially ablative composite materials and our ablative composite materials are sole source qualified in that program.

Japan, South Korea, Taiwan, Germany, Switzerland, Poland, Netherlands, Romania, worldwide factory missile systems or upgrading their systems. I think next quarter we probably want to just give you a list of countries that are not buying the or not using the factory missile system. And during President Zelensky's visit to Washington, the president of the United States, President

The US committed to providing Pactoring missile systems to Ukraine. That's a big thing. They've been asking me for a long time So that's like the big go home and now finally the Ukraine gets the Pactoring missile system.

So the last item on 17, slide 17, we've clearly discussed, we're getting a lot of indications about increased demands for the plated materials and this Raycorp C2B product to support the patch ring missile system and other missile systems. Let's go on to slide 18.

So, we're just at the first item, the checked item. We're just updating you, because we gave you prior indications on this number. As an update, Park is currently forecasting total fiscal 23 sales of libido materials in Raycorp C2B product to be approximately 7.5 million.

So again, we're just doing that because we've given you indications in Q1 and Q2, we want to update that indication. Serious supply chain and inventory management challenges continue to be potential significant strengths to the pace of the global military buildups.

So, why don't we continue, let's go on to slide 19. So, what I think we'll do here, just to say, this is one of the examples of, this is an example of what I was discussing during the introductory comments before we started into the presentation. This section of this presentation was included in our Q2 presentation.

Just on this slide 19, commercial aviation industry continues a strong recovery. Let's go to slide 20 quickly. There are watch items at the top here. We talked about these before. They haven't gone away, so important watch items. And the big question at the bottom of the slide is...

If the commercial aviation industry falters, what will the commercial aircraft industry do? How will they respond? In our opinion, whether you're talking about Boeing or Airbus, the answer might be quite different. Let's go on to slide 21. And commercial aircraft industry is facing this kind of same kind of challenges everybody's facing at the top of the page.

in more detail later on in the presentation.

Silver lining, just to go over this quickly again, as jet fuel prices increase, that gives the airlines more incentive to switch off their older legacy gas-guzzling aircraft for the more modern fuel-efficient airplanes.

they'll do it earlier than they originally planned as they have math, they have their own formulas and stuff like that, every airline does. It's not that complicated. It's all numbers. But as the fuel price goes up, that's a big variable that affects the equation. And that means, okay, now we're going to switch out our older airplanes earlier. So that's good news if you're flying into the new airplanes.

Flight 23, GA, aviation, jet engine programs, we're not going to go over this in great detail. This slide we include in every presentation with some minor modifications. Firm pricing LTA, it's a requirements contract from 19 to 29 with Middle River Aerostructure Systems, let's call them, Embraas, a sub-investing engineer in aerospace, which is a single-ware company.

So all these programs here are GE Aviation programs, you're probably wondering, well what does that do with Middle River or STE Engineering? Well, sorry, GE Aviation sold Middle River, MRS to STE Engineering a few years ago. All these programs date back to when...

MRS was owned by GA Aviation. That's the connection with GA Aviation. Even though GA Aviation doesn't own MRS anymore, all these programs are GA Aviation programs as you'll see. We've done the factory, we talked about that many times. We've built a redundant factory for GA Aviation and for MRS to support these programs.

Full source for composite materials for engine and cells, rest reversers for multiple programs, the A320, Neo family, 747, two comac airplanes, and a Bombardier Global. And then if you go to the bottom right corner of the page, we now start to talk about the 777X produced with our AFP composite materials.

And I always like to say here's a wonderful picture of the 747-8 engine itself. And I love this picture because you see the person in the background there gives you the perspective on the scale and size of these structures.

Let's go on to slide 24.

So we have a lot of slides updating GA aviation programs and we'll try to move through them quickly but they are important to PARCS so we'll want to cover them a little bit. First we'll start with the A320neo family of aircraft and then with the LEAF-1A engines. That includes A320, A321, A321LR, A320F.

The reason we say LEAP-1A engines is because A320neo program, program rather, aircraft, has two approved engines. One is the LEAP-1A engine produced by CFM, which is a JV between GEA, and Safran. That is a proud engine.

we're only on the CFM engine. So if an airline buys an A320neo and they specify the Pratt engine, then that's not, there's nothing in it for us. They specify the CFM engine, then there's a lot in it for us. So I just want, you understand, maybe I should have made that more clear in some of these presentations. Anyway, let's focus on the...

And why don't we just move on, we discussed that tension and that dynamic many times in the past. Slide 25.

So this is important. Airbus has had indicated its intention to achieve H320neal aircraft family production rates of 65 per month by early 2024. And that was pushed back from mid-2023, which is the original target, because of supply chain restrictions or limitations.

and 75 airplanes per month by mid 2025. Just so you know, that's a lot, a lot of airplanes. No commercial program has ever achieved those rates before. I believe that the A320neo, that Airbus was producing 63 per month before the pandemic hit, so they're still trying to crawl their way back up to that level.

This airplane will, I think, indisputably be the biggest selling commercial aircraft ever.

Airbus also recently indicated its attention to achieve reduction in the delivery rate of 15 NIOs per month by the end of 2022. Well, it looks like they did that November they got to 53.

In December , preliminary report, so yesterday was 58 in December . So that's your preliminary report. Hopefully that number will hold, but that's what I saw in the report. Is that rate sustainable? I don't know. I mean Airbus certainly is on a mission to make it sustainable and move it up from there. One thing which according to Airbus is quite clear.

It's the market and the ACU-20 aircraft family backlog. They're there to support these aggressive raids.

current backlog

is 6,349 airplanes. That's a lot, a lot of ship planes.

a lot of airplanes. And just to give you perspective, at the 50 a month, what is that? 50 x 12, that's 600, right?

Divide 6,349 by 600. That's over 10 years.

But see the problem that Airbus has is you want to order a new A320neo now, well I guess they have to give you delivery of like 2034 or something like that. That's terrible. Hahahaha you were wrong.

This is one of the reasons that we're trying to push the rate up so that the lead times aren't so long. Obviously, they want to increase the backlog, but they all want to keep increasing the lead times for these airplanes.

Let's keep going, slide 26. Okay, some recent disappointing news from Airbus. First of all, they said they wanted to ship 700 total commercial aircraft in 2022. Not gonna make that, didn't make it. I saw a couple reports yesterday, maybe 640, 672, but they indicated, I don't know, maybe about a month ago that they weren't gonna make a 700, so that wasn't a surprise.

Another recent announcement which...

probably is more impactful to Park. I'll just read from a quote, taking into account, this is Airbus, the fact that this complex environment will resist longer than previously expected. Airbus will be adjusting its speed at day 320 of family ramp up to rate 65.

for 23 and 24. It's not completely clear at this time as to when everybody expects to reach the rate of 65 they'll reach per month. So they're saying that, remember they said, what was it, gonna be, um,

early 2024, yep, early 2024, now they're saying, well, maybe that's not gonna work, but they're not gonna, they haven't said what your new target for reaching a 65 rate is, although they maintain that they wanna be at 75 by the middle of the decade 2025. So at this point anyway, they're not.

They're not pushing that out, but they're putting a cloud over the 65 and the one they're going to get for 65. Now, it's interesting that there's been recent news that the engine companies have more or less caught up because if you go on slide 27, the engine companies were the main culprit in terms of slowing down Airbus' ability to ramp these rates.

and the Airbus CEO recently confirmed that the engine companies are basically caught up. But there are lots of other supply chain constraints other than the engines.

forging castings, you name it, it's a real challenge with the supply chain, real challenge. You know the story, I mean with the pandemic, you know, lots of companies scaled back, laid off lots and lots of people, now there's an aggressive attempt to ramp back up.

and everybody's flat-footed, people are just reported. So this morning, people are still not going back to work.

There's lots and lots of job openings available and lots of people that aren't working.

So we won't go through that in any detail. I think you know that story. In a June 17, 2002 news release, we kind of staked out our ground, if you will. We said, look, we're going to support everybody no matter what, no matter what the ramp rate is.

And then, as at the end of October 2022, here's some meaningful...

the statistics data for you.

CFM had a 60.7% share. Remember, CFM shares the A320 NEO program with Pratt, 60.7%, so way over half, and that's firm orders.

This is not just speculation, those are firm orders. And let's see, how many orders were there? There was, yeah, right here, 6,816 firm orders for leak 1A engines. Still 10,000 firm engine orders.

So there's a lot of balance in that number, you know, I mean you can move around a little bit month to month But there's so many farm orders already in existence

that that share is probably not going to change so quickly. So this share obviously favors CFM, which is good for park as I explained.

So on Flight 37, we tell you what we...

We believe approximately how much revenue we receive for LEAP-1A unit. So maybe you can do your own math to figure out what this LEAP-1A backlog might be worth.

And like I said, Airbus wants to take more orders. That's not the whole world of it in terms of A320neos and I'm sure Leap 1A and Pratt engines as well. Flight 28, the A321XLR, we discussed this probably several quarters now. Pretty exciting program for Park, again with the Leap 1A engines.

First test flight was in June with a LEAF-1A engine, not a FRET engine. You're looking at their single-aisle aircraft. It's the only single-aisle aircraft which with 5,000 plus statute model range. We'll go back to that in a minute. It's kind of interesting. And the other item highlighted here, Airbus recently inducted.

an A320XLR, a long duration test flight, 13 plus hours. That's a long, long, long time for a single-aisle airplane. That's kind of unheard of, actually. You know, if you go on a 380 or 747, you might be up in the air for 12, 13 hours, but a single-aisle, no, I don't think so. And you know this, Boeing has said that...

they're not gonna respond, they're not gonna produce a new commercial aircraft this decade. They're not gonna introduce a new commercial aircraft this decade, so Boeing has basically seeded this whole niche, this market, Airbus, which is a good thing for Park, of course, since we're on that program. Slide 29, let's go on to some other.

G-8 aviation programs, COMAC 919. We talked about the big news last quarter. The bigger news is that COMAC got the production certificate for the C919. Now the production certificate's a real big deal because that allows COMAC to go into volume production of this aircraft.

Production certificates are often more difficult to obtain than type certificates. There's a lot more fanfare about type certificates, but there are a lot of airplanes that got type certificates, never got production certificates, and never heard of them any, so you don't think on a production.

So production certificates are, I guess, not as much fair and fair often, but probably more significant. That's a big deal. They got the production certificate. And there are 686 firm orders for 919 at this point, all for the Chinese market, I suspect. They have a LEAP-1C engines. For more information, visit www.thevenusproject.com

I'm gonna really discuss the COMAC ARJ21 very much.

in the last few quarters. But we just saw a report recently that there were 26 Air J21 aircraft delivered in 22. That's more than we expected, so we thought we'd highlight it for you. I mean, we're happy to be on the program. We're gonna say, again, this is for the Chinese market. This is for slide 31.

We discussed the bombarded global 7,500 and 8,000 in the prior quarter, so we probably won't spend a lot of time on this slide, Mach 9.94 of max cruise speed. That's pretty fast. I think that…

They broke the sound barrier doing some of the test line, which is interesting.

Slide 32.

Still with the GE Aviation area, we decided we'd provide a whole slide or two slides on the fan case. We haven't done this in the past because the 777X program had been kind of dormant and maybe in limbo we weren't sure, people weren't sure where it was going.

It seems like it's going ahead. The fan case containment wrap for the G9X engine for Boeing 777 aircraft, that's our end of the deal, the fan case containment wrap. Let's talk about the aircraft, the 777-8 variant, over 10,000 statute miles.

Remember I was saying that 5,000 statute model range for the XLR is a big deal. This is now, this is really the big leagues for widebodies, 10,000 statute model range. That's going a long, long way. 425 seats, depending on how they set up the seating arrangements.

And since the 747 and A320 programs have been cancelled, there's no other commercial aircraft which is anything close to those range and passenger capacity capabilities. So this could be an important niche, could be an important aircraft for Boeing. Hope it works for them. I'm not aware, I don't think anybody's aware that...

Airbus is trying to develop an airplane to compete against this airplane either. The 777X passenger and freighter version certification expected 2025. picture

was sent to me by a friend of mine from...

A company called Alaska Air and Fairbanks, the airplane is on the ramp, at the Alaska Air and Fairbanks. It was up there doing, just wanted to test aircraft doing cold weather testing in Fairbanks in the winter. And you know, if you want to do cold weather testing in an airplane.

Fairbanks is a place to go because you know you could easily see minus 40, minus 50 degrees temperature. So I really like that picture so I want to share it with you. Slide 33.

Trying to move a little faster, I guess. So continue with the 777X program. There was a little bit of an eruption in the test program.

It has been resumed, 353 firm orders. And what do we do? We produce composite, AFP composite materials for the GE9X fan case. We have significant perangic content in this program. And we recently quoted materials for the program exceeding 1.2 million. Why am I sure I'm not with you?

Not so much in numbers, just to say, yeah, this looks like it's getting real now for PARC. We haven't received a POG, I don't wanna make that clear, but we did receive a quote request for, and we did quote 1.2 million approximately for delivery in 2023. And remember, there's that design risk, we've talked about this in the past. The company that makes their fan case is trying to read us on their fan case, so.

It was unit number 1574. It will be delivered to Atlas Air in early 2023. First 747 was delivered to Pan Am January 22nd, 1970. This is the airplane that changed the world. It's heartbreaking, at least for me, to see that the city of this program ends.

This picture was taken October 10, 2022, at Anchorage, obviously in Atlas Air, 747-8, and they got the last one.

So anyway, okay, I took that picture, but let's move on to slide 35.

Yeah, so this is what gets a little complicated.

You kind of think, what the heck is going on here? If you look at the history on the left-hand side of the left-hand column with the numbers,

You see in fiscal 22 and fiscal 23, it's six plus million dollars per quarter for GAA Nation Program sales history and forecast estimates.

So six to seven million dollars per quarter. The prior year was the pandemic year. So that's the numbers much lower. But in 22 and then three quarters of the first two quarters of 23 over six million dollars per quarter. So then in 23, just five million.

the recent quarter, five million. And we actually estimated, I think, four and a quarter, four and three quarters when we did the Q2 presentations. We're getting a little bit above that, but still well below the history.

sort of thing, what's going on here? You know, the programs aren't going down, the program didn't allow.

Let's go to the right side. GA Edition Program Sales Forecast Testament for Q4. So we're now, again, estimating 4.25 to 4.75 million. And if you do the totals, that's just adding up the year to date through Q3 with the estimate for Q4, so that's just doing math. But I wanna mention to you that we have 5.8 million already booked.

and programs self-forecast estimate for Q4. So we're now, again, estimating 4.25 to 4.75 million. And if you do the totals, that's just adding up the year-to-date through Q3 with the estimate for Q4, so that's just doing math. But I wanna mention to you that we have 5.8 million already booked for Q1.

for fiscal 24 Q1, and we would expect to book more, you know, before Q1, book and ship more than that. So what the heck is going on here? That could be a watch out sign, maybe a warning sign. Let's go on to the next slide. What the heck is going on here, part two? So downstream inventory, production management challenges, dislocations.

adjustments and realignments. It's just math. You know, if our production isn't matching what Airbus is doing and the other companies that are using these GE engines, then something's got to give at some point. Remember, we're sole source of these programs.

On a day to day basis, downstream dislocations create major challenges for parking, managing our production and supply chain activities. We're trying to get some visibility and we keep getting these kind of strange indications as we saw in Q2, sorry Q3 and now Q4.

But this is a big one, for us anyway. Over the long term, only things, or two things, which matter to PARCC in connection with the gene aviation program's support are.

How many airplanes are delivered that have these engines on them? The H320neo with leap 1A, 919, the Air Gear 21, the Global 7500-8000, and the 777X. The other thing that matters if you want to complete the equation is the top of flight 37.

the expected park revenue per engine unit for those programs, based upon the park material usage per engine unit for those programs, which usage is given to us by our customer.

So starting in 2025, we're giving you this information because we kind of got exasperated trying to predict what's going to happen. We're going to tell you, we're telling you now what our estimated revenue per engine is and you could decide how many units you want to assume in terms of doing the math. Starting in 2025 based upon…

the program engine unit material usage information provided just by the customer, the estimated park revenues by program engine unit is approximately as follows.

So for day 320.

The Yale family, $30.5,000. For the Air J21, $29.5,000. The 919, $26.5,000. The global, $7,000. $3,500, $8,000, $49,000. Now, there are assumptions contained in each of these items which you need to look at.

we're not predicting those things will happen, we're just doing the best we can to kind of guess as to what will happen based upon indications from our customer. And this particularly relates to LSP and film adhesives, you know, which programs they'll be using or LSP products that are not using them now, the film adhesives that are not using them now.

So we have to make a little, some assumptions there. But we made the assumptions we think are reasonable, but they may or may not end up being correct. I just wanna make sure you understand that. The last item, GE9x, any case, it's significant. We're not gonna give you a number yet. You still kinda have a new program. I think it's a little early to do that. And of course to raise the risk that the program.

that the ban cases are redesigned and the program doesn't continue. So, okay, slide 39. Now let's talk about Park's Financial Performance History and Forecast Estimates. Nothing too harsh out of here, I don't think.

But I just want to mention to you that we just kind of covered this. You look at the sales numbers for fiscal 20, the quarters for fiscal 22 and 23, remember through Q2 that the GE aviation program sales were 6 million plus each of those quarters.

Alright, then in fiscal Q3, the current quarter, only 5 million. But the total sales are still 13.9 million. Now somebody who's pretty smart, figured it out and said, what's going on here? Well obviously, we're getting to those numbers by making up the lack of GA aviation sales with non-GA aviation sales.

And then look at the forecast for Q4, 13 and a half to 14 million dollars, what we're estimating. But we're only estimating four and a half million dollars of GA aviation sales, so again, I think you should be thinking about that. Well, it probably means that the non-GA aviation sales are moving in the right direction.

EBITDA estimate, 3 million, 3.5 million, and for fiscal 23, again, we're just kind of doing the math or taking a year to date and adding the estimate for Q4 and those are the numbers we come up with. Let's go on to slide 40 and this we're gonna skip.

because we covered these comments and thoughts about a forecast and outlook during the last couple quarters and not really too much change to them.

We feel, just to reiterate, that to provide a long-term forecast under the circumstances, the great uncertainty that we're dealing with, wouldn't be that meaningful. And if you want to skip, we can do that to slide 43. At the end of this section, we're saying that based upon all these considerations...

although there are serious concerns about the economy, inflation, workforce shortages, supply chain challenges, we believe the outlook for parks is quite positive. We don't think we're in a position to provide a meaningful long-term forecast.

With numbers, but we are able to say based upon this discussion that we think the outlook for park is quite positive

So let's go on to slide 44. Just some quick updates here. The expansion is basically complete. The qualifications should be done in a few months.

That middle picture, we have, and there's the top and bottom picture, we showed those before. The middle picture, though, is a passageway between the new plant and the old plant. We're looking from the new plant, looking to the old plant. And if you look at the top picture, the back is that passageway right at the top of the picture.

I don't know if you can see it. There is a sign in this picture, well the pass-away picture in the right, and it basically says it's a fire door, and if there's a fire, that door will close automatically. Why is that? Because remember, this is redundant factory, so if there's anything that goes, and it has one factory, you wanna make sure it's isolated so it doesn't migrate into the other factory.

Why don't we go on slide 45, James Webb. So we talk about this every quarter. No more revenue for PARC. You know, I don't think we're gonna get any more product up in the, to James Webb's face telescope, he's one million miles from the ridge right now. But it does have our 21 Sigma struts incorporated into the structure. And those struts are critical, you know, ho has Post shoots me Krzysztof Yestrain Kelly and James Webb

that telescope structure wouldn't work, it wouldn't happen, it just would collapse. Couple interesting items, the James Webb Spotted Concentric Angular Rings by the Giant Star showing first visual evidence of light pushing dust around. To the right of it is an image of that. I have no idea what it means, but to me it just, you know, seems very well inspiring.

and James Webb uncovers dense cosmic knot in the early universe. Again, that's way above my pay scale, but to me it just seems so inspiring to, you know, hear those kind of things about our...

comprehension, new comprehension, new insights, let's put it that way into the universe.

Slide 46.

We talked about this Aero Design Lab program last couple quarters.

The ADRS program, Park's Materials are currently sole source qualified on this program. There are over 6,000 Boeing 737 NG aircraft in service. This program is for the Boeing 737 NG aircraft. In May of 2022,

ADL received an STC for the 737-700. In November , ADL entered into an MOU with Delta to do the testing and certification for its kits for the 737-800 and 900 variants.

So that's all good. And thanks for watching.

receive Revenues approximately two million dollars in Calendly or 2023 related to this program Actually a good portion that's already booked I think but why are we telling you that only because we want you to know that this seems like it's real it's happening We're not the customer ADL access to code low-key it's we're not going to provide additional information about the program

It's like we're seven.

Okay, last quarter we talked about AFP, update in part on potential automated fiber replacement AFP manufacturing project initiative. We originally discussed this during our Q2 call, as I just said. Let's do an update. Not much of an update to the project. It's under serious consideration and review. We haven't made a decision yet. That's a front burner project for us.

This is something that's just been developing the last six months, but it's starting to become a fun purview.

for a project as well. The potential JV project is ongoing. Sure, it's consideration and review, receiving significant amounts of attention. So, it's somewhat of a balancing act for a little part to manage both these important potential opportunities at the same time. Good problem to have, but I just want you to know that.

real-world part of it. Let's go on to 48. Now, these slides are the same slides that were included in the prior presentation about the potential AFP project. To us, AFP is a very interesting potential strategic...

opportunity for part and in the slides, the next few slides we go through the reasons why we think AHP is interesting. But we're not gonna go back and review all the slides just to save some time. Obviously if you have any questions let us know. But slides 48 through 51 were pretty much what was contained in the Q2 presentation.

under current very challenging circumstances without our customer flex program, just not possible.

parks current people count 112. Well that's some progress it's still not we want it to want to be but our current people count of 112 was up from the people kind of 99.

reported in our Q2 investor presentation. The great news is all the progress we made has been made the right way, the parkway. Here's a little picture of a few of the guys that won our 2002 Holiday Party paper airplane throwing contest. This is an annual event to park, so congratulations to those guys. I won't mention your names right now, but I wanna point out something.

Q3.

We were kind of limping along at 98, 99, 100, 101, 102. It's only after 2-3 that we really ramped up to this 112 number. So everything that was got, everything got done. The 13.9 million that was shipped.

CQ3, we shipped a very, very stressed staff, a very short staff, maybe 100, 100, or 102.

I just want you to be aware of that. Slide 53, we do not sell out or compromise or take up principles in order to recruit the additional people we need. That's really important. And just so you know, other companies, multi-larger companies, continue to aggressively target our people for recruitment. Now, question.

Well, they feel bad. It's sooner or later. We all know they will.

What will these larger companies do with the people they aggressively recruited?

So yeah, we all know the answer to that question.

As soon as these people are needed, they'll be thrown out like yesterday's garbage on the garbage heap, which is what happens every time in the past. That's why I'm saying that. I don't think that's an outrageous comment to make because that's exactly what's happened every time in the past.

And you think that in the boardrooms of these companies that are hiring a thousand people a time, throwing money, hiring bonuses, big money at these people, you think they're agonizing?

and hand wringing over, oh my god, what happens when the aircraft brakes go down? What am I going to do with all those people? It's not even being considered.

Why? Because we know what they're going to do. They're going to throw them on the garbage heap like they always do.

what they're going to do is they're going to throw them on the garbage sheep like they always do. They have people they hired.

But the good news is that we continue, PARC continues to make progress recruiting and recruiting people the right way, the PARC way, notwithstanding what these other companies might do or not do. Well, I think we hire someone.

Our attitude is we hire for life. So you won't casually just throw money at people, we'll hire, let's bring on 25 people. They're for life.

Now it doesn't mean if there are plenty of people in park and not right for them or vice versa, if that's the case, somebody doesn't have the right attitude for park, they're not going to stay at park. I'm not talking about that. I'm talking about good people, the right attitudes. When we hire somebody, we think about it carefully, seriously.

We're committed to them for life. We're not going to throw them in the garbage heap as soon as our business is down. We didn't do that during the pandemic.

You know, our business, we had less than, I think, we had $9 million sales in court. We didn't do it then, so that's not our intention. Our attitude is not that people are not commodities or not portability.

to be traded, you know, bid up and bid down.

That's different. So that's when I say we do things the parkway. That's one example of what we're talking about. Let's go on to slide 54. Our people have been through a lot together over the last few years. The many challenges and hardships and adversity that we've overcome.

I want you to list when you probably can figure that out for yourself. The wonderful news is that having endured and overcome the hardships, adversity, and challenges together, our Park family has overcome, sorry, has come together more closely and tightly than ever before. With a dedicated, motivated, and inspired workforce, a company can move mountains. Without such a workforce, we are not going to be able to move mountains.

a company can move nothing. And our people are moving mountains.

You know, to have 100 people push out $13.9 million on a quarter, there's some mountains being moved.

I'll tell you that. Park is very fortunate to have the wonderful people we have. The last slide, this is the Christmas party. You can see some of these folks with their Christmas ugly sweaters. This was, this is probably most of the Park people. Not all 112 of them.

We have a very nice person supporting. We take a picture of the Park family for you. Sorry that went on so long. We're just about an hour into the presentation. So operator, we're ready to take questions if there are any.

Thank you everybody for listening so far.

Thank you. Ladies and gentlemen, at this time we will be conducting a question and answer session. If you'd like to ask a question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

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

Our first question comes from the line of Nick Rispatella with NR Management. Please proceed with your question.

Oh, thank you. First of all, happy New Year and again thank you for your very comprehensive presentation. I listen to so many conference calls and really Park has about the most comprehensive.

That's wonderful. This is the first time in all my years I've ever seen Vito Corleone mentioned.

I have a presentation by the way. I got a kick out of that. So my question is...

And I know this might be a little difficult for you, but the language you have in the slide about the China program, COMEC.

significant upside potential. If there's any way you can quantify...

You know in your wildest dreams or just a range of what this might mean for park You know a couple of years down the road. That's first Secondly, you know it is China. There's a lot of Let's say tension

Do you see any risk politically for Park?

as a supplier in this program.

in this program. And then finally...

And this is kind of just a big picture question, Brian .

How would you characterize parks?

competitive position.

position you know your moat for lack of a better word.

Thank you. Thank you, Nick, and happy New Year to you. I appreciate the input. Just let me say, to the extent people are still listening, if there's anything you would like us to cover in presentations in the future, please let us know. This time is your time. It's not our time. It's not our opportunity to hype and promote our company and tell you how smart we are.

It's an attempt to communicate to you what we think might be meaningful in terms of understanding PARCC, our business, and our objectives. So Nick, the 919 program, what's the upside potential? So right now it's basically at kind of almost zero, and the question is how many 919s COMAC producers are probably going to be able to vape into and from the pitches that those 1019s produce. We are continue to see you know how many 919s COMACs have from the markets.

The good news for COMAC is they have a captive market, which is a Chinese market, and it's a controlled market. And the Chinese government will dictate to some extent, in my opinion anyway, what airplanes the Chinese airlines are buying. So, you know.

We've seen some numbers coming out of COMAC and we're reluctant to pass those on. We're not sure what they mean in terms of forecasts and ramp rates and stuff like that. We're reluctant to pass those on. We're not sure how much we can count on them.

But starting at zero, let's say they get to 100 airplanes per year, I'm just putting that number out there, as compared to 75 airplanes per month, which is what the A320 deal program is targeted.

That's still a lot of revenue for PARC and what we did this time was we actually decided we'd give you the revenue per program so you kind of do your own math. Obviously, I think you know this, there are two engines per C919, so you have to multiply that by two. The good news with the 919 is that engine, the Link-one C engine...

Sorry, that program only uses a LEAP engine, only uses a CFM engine, it's not a shared program with CRAD, so all the C919s that are produced are gonna be using that LEAP engine, LEAP1C engine with the park materials. The risk, it's a good point. I don't know how to quantify it. I would never say never.

I guess the counter argument or consideration might be this, that the 919 is a very important prestige program for the Chinese government, and there's a lot of risk in changing. Once you get an aircraft going, there's a lot of risk, a lot of expense, a lot of hassle in changing courses midstream.

So for them to decide they want to change engines or change the parts and the cell structures, anything's possible, but it's a lot of effort, a lot of risk, and it's a risk for their program, which.

They know the world is watching, is my opinion again, and I don't think they want a hiccup. So I think they want a smooth introduction of this airplane into their market. They want the world to see how that's, the world to be impressed with how it's going. So I think they're going to be reluctant, because I'm here smart, to throw variables into the program that really aren't necessary for them.

that could cause some setbacks in the program that aren't necessary for them, or they're looking at the big picture. There is some talk.

I think we discussed this maybe a couple quarters ago, that COMAC or the Chinese government, I don't remember where it came from, it's kind of the same, wants to have a Chinese alternative, Chinese engine alternative to the leak 1C from 919.

by 2025. And you know, I would say I'm highly skeptical about that target. I don't think that's realistic. And I haven't heard that coming out of China for a while, so I think maybe they, in my opinion, maybe decided to kind of back off on that target. Ultimately, you know, China wants to take whatever technology, airplane technology,

that would have an impact, let's say, through the end of this decade. So, and you're right, there are definitely tensions. I think, just one other comment, G has a lot going on in China, a lot have been wrote in China, as much as there are tensions.

There are also symbiotic relationships where both parties are kind of dependent on each other as much as they may not want to work together. They kind of don't have any choice. They're being practical. They're being practical and they want their programs to succeed. Let's see, the last question was, how are we different? How are we unique?

from let's say our competitors. So that's a good question, maybe a better question for our customers, ask our customers. My perspective on it is probably many different kind of things. At PARC we have a pretty extreme culture and for me, if you really want to have culture, you need to be willing to live and die by it and not just gonna talk about it in the boardroom somewhere.

And for us, we try to do things consistent with our culture, not just talk about it.

One of the things that is kind of a calling card for PARCC is flexibility, responsiveness, urgency. The aerospace industry is kind of strange. It's, well, yeah, it's nine months, 12 months, whatever lead time. Okay, I guess that's what it is. That's not for us. We don't...

want to kind of get ourselves dragged into that kind of mindset. So I would just maybe list that one item as maybe distinguishing a factor between PARC and our competitors.

Thank you, that is very helpful.

Thank you, Nick. Our next question comes from the line of Brandon Dietz with Hoffman Prairie. Please proceed with your question.

Hey Brian , happy new year. Thanks for taking the questions. Just got a couple questions.

First, to start off, for the AFP initiative, you noted a potential major multi-front JV project with a large aerospace company. Just curious, what does multi-front mean?

Multi-front means there's really two different major initiatives that

related to the JV discussions. And at this point, I think it's too early for us. It wouldn't be appropriate for us to discuss what they are. But both of them are significant initiatives and they're different types of things. These, this was raised by this company. It came from their side originally, these two concepts.

I'm sorry, I wanted to put it out there because I wanted you to know that in terms of transparency, that we're juggling two major projects, the AFB project as well as the multi-front JV project with this large aerospace company. I'm sorry to do that because maybe I got to reach curiosity up too much.

Okay, okay, no worries. It definitely piqued our curiosity and very interesting.

Very encouraging to hear.

My second question is more of a housekeeping and modeling question around the rate card C2B sales. I think in the past you noted you expected like a pretty small amount in Q2 and Q3. Based on your updated expectations, is it fair to assume the majority of what's expected for the fiscal year is going to accrue in Q3?

four and is it possible to quantify these amounts just for our bottling purposes?

Let me just quickly check if I can find that information. Yeah, so about half of that number is expected in Q4. That's correct. That's right. About half, that 7.5 million-dollar number is expected in Q4. So that's a correct observation. Okay.

Let me just quickly check if I can find that information. Yeah, so about half of that number is expected in Q4. That's correct, that's right, about half that 7.5 million-pound number is expected in Q4. So that's a correct observation. Okay, okay.

It was nice to see the increase in headcount. I know it's been a struggle over the past year or two. And you noted it was kind of a sudden increase after G3. Did anything change at Park in its hiring strategy or was it just the labor market being a little more cooperative?

We didn't change our strategy, you know, we stuck to our principles like I said. There was one event though that took place in our little town of Newton, I mean it's about 3,000, which is there's another company that has been in Newton for a long time, not in aerospace, that shocked everybody by closing its doors with maybe one week notice.

What surprised us about it is that this is one of the companies that was aggressively hiring people with hiring bonuses and

big pay packages up until the day of the announcement. So that was a good opportunity for us. And we've hired a number of people from that company. They're local people, which is really good. We'd rather our preference, especially for production people, is to hire people that are local rather than from Wichita. So that helped us a lot.

We didn't change our approach, we didn't change our standards, or you know, we didn't do any of that. It was just that we had some people who were available all of a sudden. And look, I mean, I don't know what's going to happen to the economy, but it's possible we'll see more of this in the future.

Yeah, yeah definitely. You noted that even with those high areas you're not still where you want to be. I mean how should we think about like what is an optimal level of headcount for park that you still need to get to?

So that's a good question and something we're actively discussing and being really, if not a black one answer, depends on how we structure the shifts, and how we structure the shifts, and then we'll be a little different. But I think maybe another half a dozen people, approximately, maybe up to kind of like 120, we get to a point where we feel pretty good, maybe one is justMMM

Maybe one last one quick one. I know there's limitations on the ADRS program in terms of what you can

you can tell us but really encouraging the season 2 million forecasted for calendar year 2023.

You know, is that something you guys are already producing or is this still kind of tentative on when you know production will start to produce the kits for the program?

Some of that is booked, a good portion of it is booked. I think maybe about 40% of it. And we have orders to ship in our fourth quarter.

Our fourth quarter meeting in the next two months. So I think it's real and that's the reason we provide that number because we just, 2 million kind of a round number but we wanted to communicate to our investors that this is not just something we're talking about as a prospect anymore, it looks like it's really going to happen.

It looks like it is happening. Yeah, it seems like it could be pretty significant. So definitely encouraging to you guys on the program. All right, well that's all my questions, Brian . Thanks for, once again, thanks for taking them and happy new year.

Happy New Year to you. Thank you for your questions and thank you for your interest.

Our next question comes from the line of Daniel Baldini with OBERN. Please proceed with your question.

Hi, good morning. Thanks for taking my question. This is sort of a broad question. I'm trying to understand what portion of the demand for your products has been.

destroyed by the pandemic and

related economic chaos and what's just been deferred.

And for me, maybe the way to think about it is to go back, you know, basically three years ago, right before the pandemic started.

You went to the Needham conference and in your presentation you had what you called a long-term forecast estimate.

and you had

sales growing over the four-year period to $94 to $100 million for fiscal year 24.

Now, if I look at, if I take your nine month numbers and add your estimate for the fourth quarter and then apply the breakdowns just for the nine months, it seems to me that,

your commercial business is back to pre-pandemic levels and your military business is back to pre-pandemic levels. But the business business is off by, you know, I don't know, it's maybe half or a little bit more than half of what it was.

commercial business is back to pre-pandemic levels and your military business is back to pre-pandemic levels, but the business business is off by, I don't know, it's maybe half or a little bit more than half of what it was. So if you say, if you say, if you say, if

I would argue that the demand has simply been postponed by, say, three years.

Do you think that you could have $94 to $100 million of revenue three years from now in fiscal year 27?

and if not, what's sort of changed over this three-year period about your...

If not, what's sort of changed over this three-year period about your sort of outlook for the potential?

Okay, well thank you Daniel. Another good question. As I said, we don't feel comfortable providing a new long-term forecast because of all the short-term uncertainty. As I explained, we think the outlook is good for PAR. But you know, it's a really good question. Like how much has been deferred? You used the term destroy your question. I'm not aware of any.

far as I estimate by the big drop off in business.

Yes, I agree. So for example, I mentioned that the H-320neo program was producing at 63 airplanes per month before the pandemic. And you know, the number I heard for calendar 22 was only 41 per month. Now they're up to 50, maybe a little bit more. They're trying to call the way back.

but it's still quite a bit less than it was pre-pandemic. And that's probably a good kind of metric for other programs, especially in the commercial area. Military is a little different because it has a different kind of, different drivers, different dynamics, you know, I would say. So the, do we just want to say we're going to shift everything for years? I don't think we're quite prepared to do that.

doing about six airplanes per year, 24 engines. So I think I mentioned that was probably a little under $2 million per year for us. So that's true, the 747 that went away. Some people would argue, maybe would have gone away anyway, but who knows. But probably a very few examples of that. Probably mostly things were deferred.

and not quite back to where they were. And the A320 new program like I said is a real good example because that's not anywhere close to back to where it was. Now that's not Airbus' choice. They have lots and lots of orders. They'd like their production rates to be up to over 60 at this point, but just have a lot of trouble. But they're struggling to get there. And the big issue with supply chain.

supply chain. Well, you know, we talked about what happened and, you know, the pandemic occurred, it was really Armageddon. I mean, it was very frightening times because we didn't know what's going to happen. Not only it was bad, what it what had happened in terms of the contraction in the industry, but I mean, people are really talking about the world's coming to an end. So what do companies do? They slash the...

in shape and have caught up. I mean, I don't want to be disrespectful, but he keeps pushing that date back because he's had other predictions that supply chain would be back in kind of normal shape earlier than that. So I'm rambling here a little bit. I think part, just one other comment, maybe part of our ability to get back those numbers are going to be based upon these programs.

getting back to where they're supposed to get to. And then these other things, like these other opportunities, like ADL, for example, the PAC-3, I mean, I don't know where that's going, but it seems like everybody and their brother and sister watch PAC-3 missiles these days. So it's hard to even quantify what the upside is there. You know, I just read the stuff you can read.

significant upside revenue. But I think when we gave those forecasts, Daniel, I think at that point we said we're not looking at kind of a...

We're looking at a current business and a current business going organically rather than acquisitions and large joint ventures. So maybe I should take the potential joint venture out of the equation for this discussion. Yes. Let's take it up.

So let me follow up. Last quarter you had a slide where you noted that assuming a 59.75% LEAP market share and a 75 per month build for the A320neo, that represented approximately 32.5 million per year of revenue.

or is 32.5 million sort of what you've been expecting all along?

for the LEAP engine. I don't remember exactly what we were thinking about when we did that long-term forecast, but I guess I would say that I'd be surprised if that long-term forecast contemplated a rate of over 75 per month.

That would be surprising. So, you know, the dynamic has changed. And we talked about this over the last few quarters. This is my opinion again, but not completely because Airbus has been pretty vocal about this. They're on a mission. They're on a mission single aisle to do what? To make Boeing a second tier supplier. They see an opportunity. They're going forward. They're trying to be as aggressive as possible.

You know, we talked about the XLR. That was something that was not on the table. We did that long-term forecast three or four years ago. Boeing doesn't have a response to the XLR. They said they're not going to develop new airplane in this decade. So I think that's a new dynamic which partly was caused by the accidents with the MAX and then the pandemic, which makes Airbus even more aggressive in their mindset than they were previously.

We provide you the market share that LEAP has as compared to Pratt, and we tell you that the people at Airbus are still talking about 75 per month by 2025. But you read the same stuff I do, is 2025 a realistic time frame?

Some people would say maybe it's not, although Airbus has not backed off that. But I guess I would just add one thing, which is that my opinion is Airbus will get there and maybe people could argue it won't be 2025, but my opinion is they'll get there. They're highly motivated to get there, highly motivated. Okay, and if you'll permit me one last.

related question. So as I've noted, your business, jet business, has fallen off quite substantially since the pandemic started. What are your opinions about the prospects for that recovering?

So, you know, our business yet business, the biggest program that we have in the business yet segment is the global 7500-8000, which is a good program to be on. We have a lot of content on that program also per engine unit. That's kind of maybe the leading big, big business yet right now. Gulfstream is trying to come up with an answer.

in terms of the range capabilities of size. My opinion about the business jet industry is this, and just an opinion, and I just want to say that, people will disagree, some people will anyway. My opinion is that a recession is coming this year.

And then the question is how does that impact the business jet industry? My opinion again is that it will impact the industry differently in a different way for the really big business jets as compared to small and mid-sized business jets. Why is that? The global $7588,000, I think it's $78 million per unit.

Probably not, in my opinion. So I think the Gulf Marines and the Bombardiers and the Falcons would probably do better in a recession. Now, the smaller and the size, that's a different market, that's a different buyer. Maybe it's a guy who has four or five car dealers and...

He wants to have a jet. It's maybe now not a $75 million jet. It might be a $5 to $10 million jet. That guy probably doesn't have $500 or $600 million in a bank. He's more vulnerable to recession. And that guy might be affected more in terms of his buying attitudes about jets.

than the guy or the company who buys the $75 million airplane. So my feeling is that the larger aircraft, the Bellscream, the onboarding Falcons will do better. The smaller jets maybe will be more affected by the recession. And I also would base that opinion upon –

past history. In the past when recessions have occurred, economic downturns have occurred, the companies that made the smaller business jets were hurt badly. I'm not aware of any reason why that pattern or dynamic would be very different if there's another recession.

Okay, great. Well, thanks very much for your time.

Sure. Thank you for questions in your interest. If there are no further questions in the queue, I'd like to hand the call back to Mr. Shore for closing remarks.

Thank you, operator, and thank you all for listening. We appreciate it very much. Have a happy new year. All the best to you and your family in 2023. Feel free to give us a call anytime if you have any follow-up questions. Thank you and take care. Goodbye.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day.