Q2 2024 Park Aerospace Corp Earnings Call

Good afternoon, My name is Alicia and I'll be your conference operator today at this time I would like to welcome everyone to the park space.

Speaker 1: Good afternoon, my name is Alicia and I'll be your conference operator today. At this time, I would like to welcome everyone to the park space at Park Avenue.

Park Aerospace Corp, second quarter 24 earnings release conference call and Investor presentation. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star then the number one on your tell us.

Phone keypad, if you would like to withdraw your question Press Star two.

At this time I would like to turn the call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, You May begin your conference.

Speaker 2: Thank you, Alicia. So welcome, everybody. This is Brian , of course. Welcome to our.

Thank you Alicia So welcome everybody. This is Brian of course, welcome to work fiscal 'twenty for our second quarter Investor Conference call with me as usual.

Speaker 2: fiscal 24, our second quarter investor conference call with me as usual, Matt Farbauer, CFO . Make sure you're accessing the presentation. We announced our earnings just a little while ago and there are instructions as on access to presentation we're about to go through. Also, it's posted on our website if you want to do it that way. So what we're gonna do with this presentation, maybe a little bit of a different approach is that we'll focus on our second quarter dynamics and then a longer term outlook dynamics for our future.

Barbara you fold a mixture accessing the presentation, we announced our earnings just a little while ago when their instructions how to access the presentation were about to go through all sorts of posted on our website. If you want to do it that way.

So what we do with this presentation, maybe a little bit of a different approaches that will focus on our second quarter dynamics, and then a longer term outlook dynamics for our future and we're skip over some things like the the trend information regarding industry trends and then we'll go right to questions.

Speaker 2: and we'll skip over some things like the trend information regarding industry trends. And then we'll go right to questions.

Speaker 2: And, but you know, it probably still takes 45-50 minutes to get through our presentation. And of course, before we proceed, I want to just remind you, mention to you that we're in our 70th year in business. So let's go do it. Slide two is a forward-looking disclaimer information. Let us know if you have any questions. Slide three is our table of contents.

And but you know it probably still take 45 minutes to get through our presentation and of course before we proceed I want to just remind you mention to you that we're in are 70 issuers business. So let's go do it on slide two is our forward looking disclaimer information what are you still do you have any questions slide three is our people's content.

Our slide one is our Q2 presentation, we have supplementary financial information in appendix one.

Speaker 2: Slide one is our Q2 presentation, and we have supplementary financial information in Appendix 1. And we don't intend to cover that or discuss it, but if you have any questions about it, please let us know. A picture—

And we don't intend to cover that or it's got to be you have any questions about it. Please let us know a picture of the.

Speaker 2: Airbus AR, sorry, A321XLR, which is an important potential program future program for PARC. Let's go on to slide four. Let's slow down here a little bit. Our quarterly results. So let's go right to the right hand column there for Q2.

Airbus error, sorry for 'twenty, one extra lore, which is an important potential program future program for park, let's go on to slide four what slowed down here a little bit.

Our quarterly results. So let's go right to the right hand column there for Q2, if you notice the revenues are a way Josh in Q1 about $3 1 million will discuss that in detail of course, but I also want to highlight for you and it is highlighted actually makes it easier and yellow. It's a gross margin of 32, 7% which to me.

Speaker 2: If you notice, the revenues are way down from Q1, about 3.1 million. We'll discuss that in detail, of course. But I also want to highlight for you, and it is highlighted actually to make it easier in yellow, the gross margin of 32.7%, which to me is quite outstanding when you look at the comparison of Q1 with the $3 million top line loss and a 32.7% gross margin. That doesn't happen by accident, I don't think.

He is quite outstanding when you look at the comparison of Q1 was a 3 million dollar top line loss and it's really 2.7% gross margin and that doesn't happen by accident. I don't think you know we always comment that we don't like where our gross margin going below 3%. It does every now and then we tell you that I was actually a little bit surprised myself with.

Speaker 2: You know, we always comment that we don't like our gross margin going below 30%, and it does every now and then, and we tell you that.

Speaker 2: I was actually a little bit surprised myself with a top line loss of $3 million. I thought, boy, our gross margin isn't going to look so good. I was very pleased with that number. We have an EBITDA margin of 21.4% as well, which is pretty good. Let's go on to the text at the bottom of slide four. What did we say about Q2 during our Q1 investor call? You remember?

Top line had a loss of $3 million you know I thought boy, our gross margin as you look so good. So I was very pleased with that number and we have a an EBIDTA margin of 21, 4% as well, which is a pretty good let's go on to the text in the bottom of.

Slide four so what do we say about Q2 during our Q1 Investor call. You remember, we said well we didn't provide any sales or EBITDA estimates for Q2 why is that because we knew there was a burn down coming we told you about that but it was kind of new information for us and we didn't have any quantification of it.

Speaker 2: We said, well, we didn't provide any sales or EBITDA estimates for Q2 Wyzetown because we knew there was a burn down coming.

Speaker 2: We told you about that, but it was kind of new information for us, and we didn't have any quantification of it. So we said...

So we said you know it's to give you a forecast for Q2 or during our Q1 call. We've been just guessing and that's you know kind of do when you would just service. We warned you would essentially say, hey, something's coming but we didn't know yet we got to spend time with our customer to understand the scope of the burned down. So now we understand that we can.

Speaker 2: To give you a forecast for Q2 during our Q1 call, we would have been just guessing and that's kind of doing you a disservice. We warned you in a sense, we said, hey, something's coming, but we didn't know yet. We had to spend time with our customer, MRS, to understand the...

Speaker 2: scope of the burn down so now we understand that and we can discuss it with you in detail which we will. The second check item why their sales drop 3.1 million from Q1 to Q2 well it's just a coincidence but the sale drop is explained completely 100% by a 3.1 million drop in GA aviation jet engine program sales just all happens is exactly the same number.

Discuss it with you in detail, which we will the second Schuchard item why do our sales dropped $3 1 million from Q1 to Q2, well it just a coincidence, but the zelle drop is explained completely 100% by a $3 1 million drop in GE aviation jet engine programs I was just so happens it's exactly the same number and if you do the math on that you know this is Ted.

Speaker 2: And if you do the math, this is not.

I'm not suffer a brilliant people, but the Nanci aviation jet engine programs sales were essentially identical in Q1 and Q2, obviously that would make sense. So let's oh, let's go on to slide five.

Speaker 2: stuff for brilliant people but the non-GA aviation jet engine program sales were essentially identical and Q1 and Q2 obviously that would make sense.

Speaker 2: So let's keep going. Let's go on to slide five.

[noise] since all the G aviation jet engine programs, which parts supplies into our ramping up wriggling strong, which they definitely are or why the steep drop in G. H program sales in Q2, what's going on here well you already figured it out it's about the EM rash inventory burn down, which we'll discuss in great detail later presentation. So we'll get.

Speaker 2: Since all the GA Aviation jet engine programs which Park Supplies into are ramping up and going strong, which they definitely are, why does Steve Propp and GA Aviation program sales in Q2? What's going on here? Well, you already figured it out. It's about the MRes.

Speaker 2: inventory burn down which we'll discuss in great detail later presentation. So we'll get to that We'll go into detail about the burn down But let's just go back to our Q2 a couple of things we want to mention what other considerations Are there related to Q2 how things going with supply chain freight disruption and staffing challenges? We talked about those three things every quarter for I don't know. You tell me a couple years at least because they've been

That will go into detail about the burn down, but let's just go back to our Q2, a couple of things we Wanna mention what other considerations are there related to Q2, how are things going with supply chain freight disruption of staffing challenges, we talked about those three things every quarter for I don't know you tell me a couple of years of leased because they've been really.

Speaker 2: really important factors for Park and running our business. The challenges continue, but things seem to be improving. So what does that mean? It's not like they were before the pandemic. The lead times are longer, but it's something that we can count on more.

Important factors for parking and are running our business the challenges continue but things seem to be improving so what does that mean, it's not like they were before the pandemic. The lead times are longer it but it's something that we can count on more.

Speaker 2: During the worst part of this deal, it didn't matter what the lead times were, or we wouldn't be given lead times. We'd say, look, we'll get it to you when we get it to you. We don't even know. Or we'd be given lead time and we'd be blown. It made it very challenging to run.

During the worst part of this deal it didn't matter the lead times, where we wouldn't be good lead times, we'd say look we'll get it to you when we get it to you we don't even know or we'd be given the lead time in a week alone and it made it very challenging to run our business from a production management perspective from a supply chain perspective from a staffing perspective, so a lot better we still have a long.

Speaker 2: from a production management perspective, from a supply chain perspective, from a staffing perspective. So a lot better, we still have longer lead times, but as long as we...

Lead times, but as long as we kind of take those into account, we're able to manage our business and much better than over the last couple of years totally missed shipments in Q2, approximately 220000, the numbers down we still would like to be zero or people things. They did an outstanding job to bring the number down and what is it about you know want to guess probably you can.

Speaker 2: kind of take those into account, we're able to manage our business much better than over the last couple of years. Total miss shipments in Q2, approximately 220,000. The number's down. We still would like to be zero. Our people think they did an outstanding job to bring the number down. What is it about? I want to guess probably you can guess already international freight. That's been the thing that's really been the toughest for us. I think we're doing better with that as well, but we still get surprises with international freight.

Yes, you're ready international freight that's been the thing that's really been the toughest for US I think we're doing better with that as well, but we still get surprises with international frame our margins to continue to be affected by inflation and cost related to recently commissioned new planting doing Kansas will go into details about those things because we covered those in the last two or three presentations do you want to go back and take a look at kind of question.

Speaker 2: Our margins continue to be affected by inflation and costs related to recently commissioned new planting in Dune, Kansas. We'll go into details about those things, which we covered those in the last two or three presentations. You want to go back and take a look. Got any questions about the list? No, but I just want to flag those things continue. Let's go on to slide 6. Important here before we move on...

About the last snow, but I just want to flag those things continues Oh, let's go on to slide six.

Before we move on I believe you must give a special shout out to park's people for their outstanding job my opinion and delivering the margins that you achieved in Q2, considering the $3 1 million dollar drop in revenues compared to Q1. So there always will be some quarter to quarter variability based on product you extended it was in our favor and you know so let's say that was.

Speaker 2: I believe he must give a special shout out to Parks people for their outstanding job, in my opinion, and delivering the margins they achieved in Q2, considering a $3.1 million drop in revenues compared to Q1.

Speaker 2: So there always will be some quarter to quarter variability based on product. It was in our favor, you know, so let's say that. It was in our favor in Q2. But notwithstanding all that, our park people did an outstanding job in Q2, my opinion.

And her favorite in Q2, but notwithstanding all of that are parked people did an outstanding job in Q2. My opinion. So you know a park you'd probably you know what's playing out pretty well, we're not the answers company town. We don't have a lot of People's only defense you do schools. There are people are old school and our people know what to make money for our owners and to me, that's probably pretty import.

And for our owners you know I mean, you can tell me if you disagree, but if I was an owner I would think I'd I want people are dedicated to making money for me in my opinion. Our Q2 was one of our best part quarters why do we say that because you know when things are going great and your sales are up and everybody's a here or there, but as you know get to you know the employee of the year or sorry, the company's year Award to me.

Speaker 2: because when things are going great and your sales are up and everybody's a hero, everybody's gonna get the employee of the year, sorry, the company of the year award to me that doesn't mean anything. When the chips are down, you still deliver and perform. That to me is an indication of a very good solid company. So it's just my opinion, you can disagree. Let's go on to slide seven. I won't talk about slide seven too much. It's in every presentation, just kind of for perspective and reference. Let's go on to slide eight. Okay, we always do our top five customers every quarter.

Speaker 2: To me that doesn't mean anything. When the chips are down, you still deliver and perform. That to me is an indication of a very good, solid company.

That doesn't mean anything when it shifts are down you still deliver and perform that to me is an indication of a very good solid company. So that's just my opinion and you can disagree let's go on to slide seven I want to talk about slide seven too much.

Speaker 2: So it's just my opinion, you could disagree. Let's go on to slide seven. I wouldn't talk about slide seven too much.

Speaker 2: in every presentation just kind of a perspective and reference. Let's go on slide 8. Okay we always do our top five customers every quarter so we're continuing this tradition.

Every CT every presentation, just kind of a perspective and a reference let's go on to slide eight okay. We always do our top five customers every quarter. So we're continuing this tradition.

Spears theory wrap in Israel, they wrapped by Israeli aircraft for US is really aircraft makes the Gulfstream G to 80, I don't if you're worried that that's actually made under contract with Gulfstream. So they made the top five free doses in our top five I think pretty much every quarter wonderful wonderful customer, we love them and we've got a great photo.

Speaker 2: They made the top five, Kratos is in our top five, I think pretty much every quarter. Wonderful, wonderful customer, we love them. And we got a great photo here of the Valkyrie and it's doing a loyal wingman demo flight with guess what, the F-35 and F-22. So I would think of the three different airplanes, the Valkyrie's probably a lower cost of the three. So I'm thinking a little sarcastic, I guess. Middle River, we could use a lot of programs here, but we used the COMAC 919, Lifeport. They kind of through some circuitous means took over some of the AAR structures business that we supply into. Nord-Am we chose the 737-800, that's for the Weathermaster radar, which is on the 737 line. Let's go on to slide nine. Our pie charts, I always like these, I don't know if you got any opinion about it, let me know.

Here are the Valkyrie and it's doing a loyal wingman demo flight, we'd guess what do you have 35 and F. 'twenty two so I would think of the three different airplane. It's the Valkyrie is probably a lower cost of the three so I'm being a little sarcastic I guess middle River, we use that we could use a lot of programs here, but we saw commack 919, a light toward they'd kind of threw some.

Circuitous means I took over so many a our structures business that we used to supply into northern M. We chose to 737 800, and that's where the weather master radome they'll choose onto 730 several lines, let's go on to slide nine.

Our.

The pie charts.

I always like to use I know if if you got my opinion buy to let her know, but let me know what I think are useful I look at the difference 21 pandemic. Your 'twenty two 'twenty three very similar for six months or 24 commercial down a little bit why is that that's because the burn down burn down was all commercial you know we know Q2. So okay. Let's go on to slide <unk>.

<unk> another one of our you know.

Traditional slides, we loved niche military aerospace programs, which you certainly do this is the latest project every quarter she's head of customer service M. K went twenty-five warhead. That's on E. S M to western three lots to ensure dinner missile you'd probably know that this is a picture of the standard missile six these are some outstanding missiles.

Speaker 2: This is a picture of the standard missile 6. These are some outstanding missiles. I believe the SM-2 is a hypersonic missile. The Alenia C27J Spartan radar materials. We just have a lot of materials on Sikorsky. The Mk 41 vertical launching system is a little bit different here. Parts using our materials are actually not ablative. We have the pie chart. Rocking nozzles, drones, radomes, we consider those to be niche markets for parks. But even for us, aircraft structures is a niche market. We don't go for the big programs for structures with a lot of market pressure.

I believe there's some two was hypersonic missile the Alenia is I see 27, J Spartan a radar materials Sikorsky, we just have a lot of stuff a lot of materials and Sikorsky and am K 41 vertical launching system, a little bit different here at park.

Our material that's actually not ablative soon we had a pie chart rocket nozzles drones RAIT owns we consider those to be niche markets for park, but even for US aircraft structures. It's a niche market. We don't go for the big programs are for cost structures, where you know it's a lot of margin pressure that it's just not really for us okay.

Speaker 2: big programs for structures where it's a lot of margin pressure, it's just not really for us. Okay, let's go on to slide 11. And here's what we're gonna skip. Slide 11 through, what was it, um, slide 11.

Let's go on to slide 11, and here's what we're gonna skip.

Slide 11 through what was it.

Speaker 2: through 15 pretty much as very few changes from Q1. So if you want to ask questions about that, that's fine. But let's just skip over it. We included just for perspective and context. Let's jump to slide 16.

This figure it out yeah through 15 pretty much as very few changes from a Q1. So you know if you want to ask questions, but that's fine, but let's just skip over that I included we included just for perspective in context, let's jump to slide 16. Okay. So this is a slide that we include every every quarter.

Speaker 2: Okay, so this is a slide that we include every quarter just to kind of give you the lay of the land, GE aviation jet engine programs, obviously very important to park. So we have that, for those who don't know, firm pricing LTA, that's a requirements contract from 19 to 29.

And just to kind of give you the lay of the land GE aviation jet engine programs, obviously very important apart. So we had to for those who don't know a firm pricing L. T. A that's a requirements contract from 19 to 29 was with Mras Middle River Aerostructure systems, which as you saw by the S. T. A junior aerospace large Singaporean aerospace are complete.

Speaker 2: with MRAS, Middle River Aerostructure Systems, which is a sub of SD Engineering Aerospace, a large Singaporean aerospace company.

Speaker 2: We built a redundant factory. We said, we'll build you a factory if we sign the LTA.

And we built a redundant factory well like we said we'll build your factory. If you we signed a L. T. H. So of course, we live up to what we say in factories completes introduction, even though all of that so let's go with the next item sole sourced or deposit withdrawals for engine yourselves a threat T. Our thrust reversers. When these programs. So youre, probably thinking of you know noticed too old.

Speaker 2: we live up to what we say, the factory is complete, it's in production, you know all that. So, let's go to the next item, sole source for composite materials for engine installs and PRs, thrust reversers, all these programs. So you're probably thinking, if you don't know this, too well, what's going on here? These are all GE aviation programs, what's the connection? Well that would be an excellent question because they are all GE aviation programs.

What's going on here. These are old GE aviation programs, what what's the connection well that would be an excellent question because they are all G. A dish programs. So the connection is that when we first got involved in did the LTA and everything Embarassed was a sub which aviation subsea. We subsequently two we're getting on these programs.

Speaker 2: So the connection is that when we first got involved and did the LTA and everything, MRAS was a sub-G aviation. Subsequent to our getting on these programs, G aviation sold MRAS to SC Engineering. That's the little secret there. Boeing 747, those are spares, and they terminated, they canceled the program, we're still making spares. Let's go on to slide 17. So let me explain something. Par composite materials of sole source and primary structures.

She aviation sold him rest FC engineered that's the little Lowe's secret there a Boeing 747, those are spares you know they they terminate they cancel a program we're still making spears, let's go on to slide 17. So let me explain something park composite materials are sole sourced pardon me structures Oh on a primary structure.

Speaker 2: on a primary structure component for the PESPR-20 engine for the global 7500-8000, not included in the MRS-LTA. This is a little confusing.

For the passport 20 engine for their global 70 508000, not included in the Emirates L. T. A this is a little confusing because for the the nacelle and thrust reversers that is included in U S. L. T. A this is a different structure. This is a primary structure in the engine and that actually is not part of that is not an EM rash program that did you.

Speaker 2: because for the nacelles and thruster verges that is included in the MRSA SLTA, this is a different structure.

Speaker 2: This is a primary structure in the engine and that actually is not part of that's on an MRS program That's a GE aviation program. That's why that component is not included in the MRS-LTA

He aviation program. That's why that component is not included in the Russell S. T. A but you shouldn't believe that the 70. The passport 20 engine program is not in here myself T. A abuse for all the cells and in a N.

Speaker 2: You shouldn't believe that the 70th, the FESH for 20 engine program is not in the MRCELTA, because for all the cells and TR.

T. R materials. It is E. L. T E N. A fan cases containment wrap for the <unk> engine for the Triple Seven X aircraft, that's produced with our AFP composite materials not included in the Emirates LTA not yet anyway.

Speaker 2: materials it is in the LTA. Then a fan case containment wrap for the G9X engine for the 777X aircraft that's produced with our AFP composite materials not included in the MRes LTA not yet anyway and the reason I say that is this program seems like it's about to move and MRes has already said they want to get into the LTA so let's see what happens with that but not at this point. I mean it is through MRes it's just not in the LTA yet. MRes qualification of 2,000 is literally

When I say that is this program seems like it was about the move in and restaurant, where he said don't want to get into T. L. T. H, so, let's see what happens with that but not at this point I mean, they're just remember that's it's just not in the LTA yet Emirates qualification of two.

Speaker 2: proprietary film and easel formulations in progress. That's wonderful news, the qualifications in progress. PARC, MRS, I always put them first, MRS, PARC, LTA through 29, is recently amended to include three PARC film and easel product forms for composite bond and metal bond. Again, very wonderful news. And then the LIFO program agreement, we talked about that last time, it was requested by them. What's it worth to PARC? I don't know, I mean, what's the LIFO program? 20 years, 25 years.

Proprietary fill up a film user formulations in progress that's wonderful news the qualification progress Park I'm Embarassed. So I always put them first MRI spark L. D. H 'twenty nine. It's recently amended to include three parks for him and he is a product for them for composite bond Melbourne.

Got it very wonderful news and then the life of program agreement, we talked about that last time it was requested by them.

What's it worth of park I don't know I mean, what's the life of program 20 years 25 years I don't know and you can look at it I think it's our outlook was it slide 34, we say, it's about 55 million a year. So you can do your own math.

Speaker 2: And if you look at, I think it's our outlook, which is July 34, we say it's about $55 million a year. So you could do your own math and figure that out. Now, starting if we continue after...

Now starting if we continue after 29, which most betting people would say yeah, we're going to continue that at a normal would be higher if he so pricing would go up at that point of course, but you know just do your own math or do you want to get a little calculator or your iPhone.

Speaker 2: which most betting people would say, yeah, we're gonna continue, or that norm will be higher.

Speaker 2: But you know just do your own mess if you want to you know a little calculator in your iPhone um so slide 18

So slide 18.

Speaker 2: Update on G-aviation jet engine programs, the A320neo aircraft family, the CFM LEAP-1A engines, that's the

Update on GE aviation jet engine programs.

<unk> hundred 20, Neo aircraft family the CFM Leap <unk> engine. That's the there 319 E. L. F 2021 and the HB 21, LR XLR. This was a big dog just a big you know the big Kahuna energy aviation in terms of our G aviation work Airbus such a huge backlog and I would say that you have.

Speaker 2: That's 319 NEO, 320, 321, and the H321LR and XLR. This is a big dog, this is a big, you know, the big Kahuna and the GAVation in terms of our GAVation work. Airbus has a huge backlog, and I would say that huge. The H320 NEO family aircraft of 6,720 airplanes. That's a lot of airplanes, I mean, I'm sorry. During the Airbus first half, Ernie's call.

<unk> hundred 20 Neo family aircraft at 6720 airplanes, that's a lot of airplanes I mean, I'm sorry during the Airbus. It's a Q first half earnings call on July 25, 223, they just reaffirmed our plan to achieve a rate of 75 days really neo aircraft families deliberate deliveries for them.

Speaker 2: in July 25, 23, they just reaffirmed their plan to achieve a rate of 75-based green and yellow, everything that delivers for a month in 2006. You get a little nuance there, did you, did you, did you, did you ever say the end of 2006? Not saying that anymore, they're just saying to end of 2006. I don't know if I'm reading too much into it, but they're just not saying end of 2006 anymore. So I don't know, I'm not sure what's going on there. Maybe it's nothing. A will or a bunch to achieve that rate in 2006.

In 2006, you got a little nuance there did you say at the end of 2026 not seen it anymore. They just say 2026, I don't know if I'm reading too much into it but they're just not saying end of 2026 anymore. So I don't know I'm not sure what's going on there.

Maybe it's nothing of Wheeler Bush achieve that rate in 'twenty six.

Speaker 2: Hard to say, but based upon their huge backlog, huge backlog is very good reason to believe they'll get there in 26 or some time and they're not too distant future thereafter. Here's a nice picture of days for 21-0. That's their biggest seller in that family at this point. How's your bus doing with your plan, Rampup? Let's go on the slide. What is it? 19. Not too bad. According to reports, 23 year to date through August .

Hard to say, but based upon their huge backlog huge backlog. There's very good reason to believe that we'll get there in 'twenty six or sometime in the not too distant future thereafter, here's a nice picture of days for 'twenty When New York, That's your biggest seller in the and that family at this point.

How's your bus doing with your plant ramp up let's go on to slide 19, not too bad. According to reports Hum 23 year to date through August I don't have September in here yet. It was just too you know been working the presentation for a couple of weeks in September and so it's not I don't think reliable yet so I just didnt go there.

Speaker 2: I don't have September in here yet. I've been working the presentation for a couple weeks. September didn't always, I don't think reliably yet. So I just didn't go there. Airbus delivered an average of 43.5 and Neo Aircraft per month, so we're getting there. But here's something interesting. Levered an average of 15 in the last four months.

<unk> delivered an average of 43.5.

M D O aircraft per month, so we're getting there, but here's something interesting levered average of 50 and up in the <unk>.

The last four months through August So you would say that's moving in the right direction, Oh, I think you would say that clearly, though based upon their huge backlog need would already be at 75, a rate of seven five per month and not for supply chain restrictions limitations, that's probably obvious to you what about the engines.

Speaker 2: So you would say, I assume in the right direction. I think you would say that. Clearly though, based upon their huge backlog, they would already be at 75, a rate of 75 per month. And not for supply.

Speaker 2: That's probably obvious to you. What about the engines, though, for the A320neo Aircrest family? What about those engines? Well, we are review the A320neo Aircrest family offers two approved engine options, namely the CFM LEAP1A engine and a Pratt 1100G GTF engine. Now, we supply, Park supplies into the A320neo Aircrest family using the CFM LEAP1A engine. We have no content on the A320neo family using that credit.

Oh [laughter].

For the 820 Neo aircrafts family what about those agents while they are reviewed acre 20 Neo aircraft family offers two approved engine options, namely the CFM leap, one AI engine and the Pratt 1100 G. G. T. F. N G. Now we supply parts supplies into the <unk> hundred 20, Neo aircraft family using D. C. F. M. C. F. M D point of engine we have.

No content on the acreage 20, Youll family using that tried edge.

Speaker 2: Now here's something really, really interesting. The CFM, LEAP-1A, market share, a firm engine orders for entry 20, a new family or a credit that's been hovering around approximately 60% the last two years or so. You know that because every quarter we talk about it so you people that are pretty regular with PARC, you've heard that 60% more or less number, that kind of 59, 60, 61 range for a while now. But what happened, let's go on to slide 20. That's all changed.

Now here's something really really interesting to CFM leap one as markets. Your affirm engine orders made through 'twenty.

Neil family of aircraft has been hovering around approximately 60% last two years or so you know that because every quarter. We talk about it. So you have people that are pretty regular park, you've heard that 60% you know more or less number that kind of 50 960 61 range for a while now but what happened let's go on to slide 20, our that's the.

All changed in the last few months the leap one a is broken out as a clear market share winner for the eighth 20, New aircraft family now and read the CFM leap when a market share of firm orders for the age 20 Neo aircraft family has jumped to 66%. That's just the life 31 2023, well that's.

Speaker 2: In the last few months, the LEAP-1A has broken out as a clear market share winner for the A320neo aircraft family. Now in red, the CFM LEAP-1A market share firm orders for the A320neo aircraft family has jumped to 66% since July 31, 2023. Well, that's a huge jump. Why is that? This huge jump in market share is quite remarkable when it considers there are 12,348 firm engines.

The huge jump why is that the huge jump in market here is quite remarkable when you consider there are 12348 for Avengers I'm sorry, Frank.

For him engine orders, where.

Speaker 2: for the 820 NEO Aircraft family.

<unk> hundred 20 Neo aircraft family.

Speaker 2: Maybe there's so much balance in the market share that significant change, like a kicker percent of market share, would be considered the highly unlikely.

I mean, there's so much palace in the market share that significant change I think 60% of market share would be considered the highly unlikely.

Speaker 2: In other words, if you're 20 engines ordered, somebody gets five orders, well, that's good. You really move the needle. But if over 12,000 engine orders, it takes a lot to move that needle. The thicker set is just shocking. Use.

Other words after 'twenty or 'twenty engines watered somebody gets five orders well. That's good you you know you really move the needle but yes.

You have to over 12000 engine whatever it takes a lot to move that needle stick Mercedes just shocking huge number what's.

Speaker 2: What's going on here? Shocking a me, anyways, my opinion. I mean, maybe other people don't agree. But let's go on, what's going on here though? Why? It's like 21.

We're out here a shocking to me anyway. It's in my opinion I mean, maybe other people don't agree but let's go on on what's going on here a little while slide 21.

Speaker 2: Just a little side, it's delivery rate is 75, 820 NEO, family aircraft per month, a 66% leap, one-day market share translation to 1,188 leap, one-day end-of-the-sphere, that's just doing math, sorry, I mean, you've got a little calculator, your iPhone, you can do that yourself. What does that work to park? Well,

Just a little side its delivery rate of 75 extra 20 Neo family aircraft per month to 66% leap when a market share translates into 1188 leap one AIG spirit, that's just doing math, sorry, I mean, you've got a little cuts entered your iPhone you can do it yourself what does that work the park well.

Speaker 2: According to our outlook, it would be more $36 million per year. Yeah, just do the math again, do the math. Because we know what our content for engine is, $36 million per year. That's just for the X320 Neal family. Currently, our 8,144 firm Leap 1A engine order.

And accordingly or outlook, it would be worth a $36 million per year.

Do the math again doing that because we know what our content for graduate is $36 million per year. That's just for the a 320 neo family.

Currently our 8144 firm leap when a engine orders what is it what are those firm orders worth to park, well, that's a little bit more difficult to say because some of those airplanes will be delivered after 29 and like I said, if you're a betting person you're going to bet will continue after twenty-nine.

Speaker 2: What are those farm orders worth to park? Well, that's a little bit more difficult to say because some of those airplanes will be delivered after 29. And like I said, if you're betting first and you're going to bet, we'll continue after 29.

But our prices will go up after 29 now the prices also go up to 25. So it may be an offset so this year and next year are priced lower to go up in 'twenty five so they try to you know six one half dozen other but you could do your own math you can multiple 8144 by even 130.5 so.

Speaker 2: Now the price is also about 25, so maybe it offsets. So this year, next year, price will lower the go up in 25. So it's kind of, you know, 61 half does another. But you could do your own math. You can multiply 8,144 by even on 30.5.

Speaker 2: So, you know, that's how much it is per, that's 30,000.

You know that's how much it is per that's 30500 for unit not that's.

Speaker 2: per unit, that's about a quarter billion dollars. So that's just a rough kind of guesstimate. That's not the program. The program will continue when there will be more orders, I would expect. What happened anyway? So back to the main...

That's about quarter $1 billion. So that's just kind of rough kind of guesstimate. That's not the program. The program will continue and there'll be more orders I would just I would expect what happened anyway. So back to the main point here why is the market your firm and your orders for the age of 20 aircraft family why has it shifted so abruptly and dramatically in favor of that.

Speaker 2: Why is the market share firm engine orders for the 820 aircraft family? Why is the chip that's all abruptly and dramatically favor the CFM lead 1A engine?

CFM leap one a engine very serious issues. The Pratt 1100 G engine now we talked about this little last time to go of durability, but we're talking about a different category of issues. Now. These issues have been extensively reported and as a result, we will not attempt to cover them in detail here. However, the Pratt 1100 key engineers.

Speaker 2: Very serious issues, the PrAT 1100G engine. Now we talked about this a little less fine durability, but we're talking about a different category of issues. Now, these issues have been extensively reported and as a result, we will not attempt to cover them in detail here. However, the PrAT 1100G engine issues are expected to ground through into 58 through 20 NEO where I feel a layerplanes per year through 2026.

Alicia: is Alicia and I'll be your conference operator today.

Operator: At this time, I would like to welcome everyone to the Park Space, Park Aerospace Corp, 2nd quarter, 24 earnings release conference call and investor presentation. All lines have been placed on mute to prevent any background noise.

These are expected to ground 358, or 20 Neo are a family airplanes per year through 2026, which was met with as many as 650 ground. Each in the first half of 'twenty four that's not something you know analyst or commentator that's from the company, that's what they're saying.

Speaker 2: which has met with as many as 650 groundings in the first half of 24. That's not some analyst or commentator. That's from the company. That's what they're saying.

Operator: After these speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star two. Thank you.

Speaker 2: You run an airline, you don't make that much money to begin with, you don't want airplanes grounded. That is death for an airplane, you can't ever plane grounded. That's why it's such a serious issue. And let's go on to slide 22. And this also comes with a company. It's not somebody's opinion. The inspection or repair work is expected to take up to 300 days.

You run an airline you don't make that much money to begin with you don't want airplanes grounded that his death for an airplane you can ever airplane grounded that's why it's such a serious issue and let's go on to slide 22, and it's also coming from the company is not somebody's opinion. The inspection repair work is expected to take up the 300 days for engine. So we're talking about.

Brian Shore: At this time, I would like to turn the call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference. Thank you, Alicia. So welcome everybody. This is Brian, of course. Welcome to our fiscal 24, our 2nd quarter investor conference call with me as usual. My far bar is here, follow. Make sure you're accessing the presentation. We announced our earnings just a little while ago and our instructions as on access to presentation. We're about to go through. Also, let's posted our website. You want to do it that way.

Speaker 2: for engines. So we're talking about, you know, grounding airplanes for a long time. Very tough situation. It's difficult to fully comprehend the full implications of crisis and where he's going, but the story may not be over. May be far from over.

Rounding airplanes for a long time very tough situation is.

It was difficult to fully comprehend the full implications of the crisis and where he's going but the store he may not be over maybe far from over.

Speaker 2: My take on is whenever it seems like a crisis can't get any worse, it does. That just might take on it. Will this crisis lead to significant additional 820 Neowarecraft family marks your gains for Leap 1A engine?

My take on it is whenever it seemed like a crisis can't get any worse. It does that's just my take on it well there's crisis lead to significant additional ATM 20 Neo aircraft family marked your games.

Brian Shore: So what we're going to do with this presentation, maybe a little bit of a different approaches that we'll focus on. Our 2nd quarter dynamics and then I will return. I'll look dynamic for our future and we're skip over some things like the trend information regarding industry trends. And then we'll go right to questions. But you know, it probably still take 45 and 50 minutes to get through our presentation.

The leap one a engine.

Speaker 2: many believe it will what do you think and indeed the limit is that people are you know what are in these airplanes a lot of them they got to choose what you're gonna you know go with

Many believe it will what do you think.

I mean, either the dilemma is that people are ordering these airplanes a lot of them they've got to choose which engine theyre going to you know they're going to go with so.

Speaker 2: So, you know, think about that a little bit. Let's go on to slide 23.

So you know thinking about that a little bit let's go on to slide 23.

Brian Shore: Of course, before we proceed, I want to just remind you mentioned to you that we're in our 70th year in business. So let's go do it.

So.

Speaker 2: Well, the top item that's still in the A320 NEO family, this is the A321 XLR. Just want to highlight that. That's supposed to be entry into service in the second quarter next year.

The top item that's still on the <unk> hundred 20 Neo family. This is Dave for 'twenty, One X L or just want to highlight that that you know that it's supposed to be what entry into service in second quarter next year.

Brian Shore: Slide 2 is a forward-looking disclaimer information. Let us know if you have any questions. Like 3 is our table of contents or slide 1 is our Q2 presentation. And we have supplementary financial information in appendix 1. And we don't intend to cover that or discuss you have any questions about it. Please let us know a picture of the Airbus Air sorry April 21 XLR, which is an important potential program future program for park.

Speaker 2: bone doesn't have a response. And this is a real important program for PARK. A lot of, we see a lot of writing about it now. I think people, it is, we're getting pretty excited about this year's aircraft. We covered it in more detail in the past and we'll do that for you, but it's definitely, we would say a plus. A comeback 919 with those Leap 1C and

It doesn't have a response and this is a real important program for park.

We see a lot of writing about it now I think people just are getting pretty excited about this aircraft aircraft, we covered in more detail of passing them, we'll do that for you but.

Definitely I would say a plus of commack, Taiwan nine with a sleep one see engines hallmark plans to achieve a production rate of 150 C. 90, 190 aircraft a year within five years, that's what they say that's not some analysts that's what they say no when we get to our outlook I think on slide 34 of them or at least it will be 100, so just keep that in <unk>.

Brian Shore: Let's go on to slide 4. We'll just slow down here a little bit. Our quarterly results. And so let's go right to the right hand column there for Q2. If you notice the revenues are way down to Q1 about 3.1 million. We'll discuss that in detail of course, but I also want to highlight for you when it is highlighted actually make it easier in yellow. You know, we always comment that we don't like our gross margin going below 3% and it does every now and then we tell you that I was actually a little bit surprised myself with the top line loss of 3 million dollars and I thought boy gross margin is going to look so good.

Speaker 2: FOMEC plans to retrieve a product rate of 150 C919 air-cryptia or the fibers. That's what they say. That's not some analyst. That's what they say. No, when we get our outlook, I think in flight 34, we're only some 100 to just keep that in mind. They currently have over a thousand orders.

And are they currently have over 1000 orders.

Speaker 2: and two 911 aircraft are currently in service with China Eastern. Let's go in nice picture of it here. Let's go in the slide 24. Still in the 911

And 2919 aircrafts are currently serviced with China Eastern lets go a nice picture of it here, let's go on to slide 24 of them are still in the 919.

Speaker 2: China Eastern recently announced an order of 100 additional 919 aircraft to be delivered between 24 and 31. This is the largest 919 order to date. And then Gallup Air Brunei recently announced order 15. Why would I even tell you that? You know 15 orders would sound that much. The reason is because...

China Eastern recently announced the winner of 100 additional of 919 aircraft to be delivered between 24 and 31, it's the largest 919 order to date and at Gallup here Brunei originally announced that we were at 15 and why would I. Even tell you that you know 15 orders that sound that much. The reason is because until.

Speaker 2: Until now, the Comac airplanes have been considered to be China market airplanes only, like they'll sell a lot of these, but only into the China market. Well, obviously Brunei, if you know your geography, that's not part of China. So that's why I thought I'd highlight that, very interesting. And then let's talk about the Comac ARJ21, that's the regional jet with those GCF3410A engines.

Until now the Comaker planes have been considered to be China market airplanes, only like a sell a lot of these but only into the China market well, obviously Brunei. If you know your geographies that's not part of China. So that's why I thought I'd highlight that is very interesting and then let's talk about the coal Mac Jr. J 21, that's the regional jet with those.

Brian Shore: So I was very pleased with that number. And we have an EBITDA margin 21.4% as well which is pretty good. Let's go on to the text at the bottom of slide 4. So what do we say about Q2 during our Q1 investor call you remember. We said, well, we didn't provide any sales or EBITDA estimates for Q2 wise down because we knew there's a burn down coming. We told you about that, but it was kind of new information for us and we didn't have any quantification of it.

There's a G C of three for 10 of engines. According to Commack 112 aircraft have been delivered and service 775 open orders and here you go Gallup Air Brunei. They announce an order of 15 news airplanes. So again, you know previously thought to be a China only kind of market, but for now it's not in China.

Speaker 2: According to COMAC, 112 aircraft have been delivered in service, 775 open orders, and here we go. Gallup Air Brunei, they announced an order of 15 of these airplanes. So again, you know, previously thought to be a China-only kind of market, but Brunei is not in China, so here's a nice picture of the Air J-21, a regional chip. Let's go on to slide 25. Here's a nice picture of the Air J-21, a regional chip. Let's go on to slide 25. Here's a nice picture of the Air J-21, a regional chip.

Brian Shore: So we said, you know, it's to give you a forecast for Q2 during our Q1 call would have been just guessing and that's kind of doing you a disservice. We warned you in a sense we said hey something's coming but we didn't know yet. We had to spend time with our customer MRS to understand the scope of the burn down. So now we understand that and we can discuss it with you in detail, which we will.

So here's a nice picture of the E. R. J 21 regional jet, let's go on to slide 25.

Speaker 2: Okay, so the triple 7X, which is nine extensions, we talked a lot about less view quarters, but the issue with a fan cage redesign, if fan cage redesign successful, then the cage wrap won't be needed. I'll give you my perspective based on things I know, which is I guess, you know, considerable. I think that...

Okay. So the triple seven X, which he NYNEX engines, we talked a lot about you know last few quarters about the issue was a fan case redesigned its fan case redesigned successful then the cash wrap won't be needed I'll give you my perspective based upon things I know, which is I guess you know considerable I think that.

Brian Shore: The second check item, why do our sales drop 3.1 million from Q1 to Q2? Well, it's a coincidence, but this ill drop is buying completely 100% by a 3.1 million drop in GAV Asian jet engine program sales. It just all happened to the exact list same number. And if you do the math, I'm, you know, this is not stuff for billion people, but the non GAV Asian jet engine program sales were essentially identical in Q1 to Q2 obviously that wouldn't make sense. So let's keep going.

Uh huh.

Speaker 2: Chances of that happening are kind of fading away, so I think it's.

Chances of that happening are kind of fading away.

So I think.

Speaker 2: My opinion is this will be a real important exciting program for Park for a long time to come. Enter into and plant and to re into service 25. Currently an active program for Park, you should know that this is currently an active program for Park. I don't want to say too much more about it, but I feel quite encouraged that this is not going away and it's going to be moving up. I potentially spend the program for Park. So we're happy about that. What you've got to give on, I'll mention the 747, we're still making Spirit for the 747.

My opinion to be real important exciting program for park for a long time to come.

Entering two planned entry into service 25 are currently inactive program for park as you know there is currently an active program for park I don't want to see.

Brian Shore: Let's go on slide five. Since all the GAV Asian jet engine programs, which part supplies into or ramping up and going strong, which they definitely are, why the steep drop in GAV Asian program sales in Q2? What's going on here? Well, you already figured it out. It's about the MRS inventory burn down, which we'll discuss in great detail later presentation. So we'll get to that. We'll go into detail about the burn down.

Too much more about it but I feel quite encouraged that this is not going away and it's gonna be moving up potentially significant program for park. So we're happy about that what you Gotta give Arnold mentioned, there's some 47, we're still making spirits is 747 slide 26.

Speaker 2: Just slide your familiar with a couple of changes though to it. GAA should get at your program cell history. Won't go into the history. Just look at the right hand column though. Look at Q1, Q2, 6.2, 3.1. There's a 3.1 million dollar difference and I think that's about half, isn't it?

This slide you are familiar with a couple of little changes, though two at G. Aviation jet engine programs sales history I won't go into the history just look at the rate. It goes right hand column, though look at Q1 to Q2 $6. Two to 3.1, there was a $3 1 million dollar difference and I think that's about half isn't it yeah.

Brian Shore: But let's just go back to our Q2. A couple of things we want to mention with other considerations are there related to Q2. How things going with supply chain, freight disruption, staffing challenges. We talk about those three things every quarter for, I don't know, you tell me a couple years, at least, because they've been really important factors for parking and are running our business. The challenges continue, but things seem to be improving.

Speaker 2: For Q3 we got a 4 million book, but it's not a forecast because there's so much uncertainty which we'll talk about a little bit more We get it's a burnt down. We got in Q3 and Q4 so

For Q3, we got 4 million booked it but we're not it's not a forecast because there's so much uncertainty, which we'll talk about a little bit more we get into the burnt out got in Q3 Q4. So I mean look we would expect to be less than that but we're not giving you that as a forecast you. Just say this is what we know and we're not we're not giving you for because we just don't feel comfortable.

Speaker 2: I mean, look, we would expect to be less than that, but we're not giving you that as a forecast. We're just saying, this is what we know, and we're not giving you a forecast. We just don't feel comfortable. Now, one thing we want to add is on the right hand, a little box here, see 9.4 million, remember we said earlier, same amount, 9 GAV Asian Programs, if you wanted to, too. So that annualized at 37.5 million, I just want to,

Brian Shore: So what does that mean? It's not like they were before the pandemic. The lead times are longer, but it's something that we can count on more during the worst part of this deal. We didn't know the lead times were, or we wouldn't begin lead times. We'd say, look, we'll get it to you when we get it to you. We don't even know, or we'd begin the lead time and we'd belong. And it made it very challenging to run our business from production management perspective from a supply chain perspective from the staffing perspective.

Now one thing I would add is on the right hand box here see $9 4 million remember, we said earlier the same amount of nine non GE aviation programs in Q1, and Q2, so that annualized at 37.5 million I just want them just to remember that number of $37 5 million if I forget when we get to our outlook. So we'll talk about that again, when we get to.

Speaker 2: Just to remember that number is 37.5 million. If I forget, we get to our outlook. So we'll talk about that again. We get to that outlook. I think I slide, I don't know, 35 or something like that. Okay, let's go to slide 27. Okay, now this is the painful part of the presentation.

Brian Shore: So a lot better. We still have longer lead times, but as long as we kind of take those into account, we're able to manage our business much better than over the last couple of years. Total misshipments in Q2, approximately 220,000. The numbers down, we still would like to be zero. Are people thinking, now stay in a job and bring the number down. And what is it about? You know, I want to guess, probably you can guess already international freight.

With that I'll look I think on slide 35 or something like that.

Let's go to slide 27, Okay. Now this is the painful part of the presentation.

Speaker 2: All about the received clearance?

Aviation sales are.

Well about the Emirates inventory burn down.

Speaker 2: the sharp drop loss and Q2 GA Gation program sales is all about the MRS has burned down a parking las

The sharp drop off in Q2 G Aviation program sales. It was all about air message burned down a park inventory carried by them and its sub contractors.

Brian Shore: That's been the thing that's really been the toughest for us. I think we're doing better with that as well, but we still get surprises at international freight. Our margin has to continue to be affected by inflation and cost related to recently commissioned new planting. We'll go into details about those things. We've covered those in less to its free presentations. You want to go back and take a look. Kind of questions about the less knowledge. I want to flag those things continues.

Now this is a really key point damn Ras calendar 'twenty two build plan that's their build plan not our planet. They're building. This is theirs. This is they're saying this is what they plan to build in 'twenty three we got a bill playing through I think 'twenty or 'twenty nine.

Speaker 2: Now this is a really key point. The Amriss County or 22 Bill Plan, that's their bill plan, not our plan. They're billed. This is what they plan to build in 23. We got a bill plan through, I think 20 or 29. This one from them, not us. It translates into a approximately 20 million dollar. 23 is our 23 million dollars of County or 23 Park GABA should GE program sales.

From them not us it translates into approximately $20 million 23, or $23 million of calendar year 'twenty Three Park G Aviation G program sales.

Brian Shore: Let's go on to slide six. Before we move on, I believe you must give a special shout out to parts people for their outstanding job, my opinion, in delivering the largest they achieved in Q2, considering its 3.1 million dollar drop in revenues compared to Q1. But there are people who are all school and are people know what to make money for owners. That to me, that's probably pretty important for owners, you know.

Speaker 2: It's very easy to do the math. Once we know how many units are going to build, we know how much materials use per unit. We know we sell the material for, so it's very easy to do that math to get the 23 million. That's a pre-precise number, assuming the build plan is correct, and normally it is. That's approximately 5.75 million per quarter.

It's very easy to do the math once we know how many units are going to build we do you know how much materials used per unit. We know we saw the material for so it's very easy to do that math. It gets $23 million, that's a pretty precise number assuming the build plan is correct and you know normally is that's approximately 5.75 million per quarter.

Speaker 2: So the MRAS Calendar 23 bill plan is reduced to some extent. It's just a side point.

So the I'm Ras calendar twenty-three build plans to reduce to some extent. This is just a side point because mrs's carrying excess finished structures inventories well I was reluctant put they said it would be so it could be confusing did you just say their build plan would be more except they have their own inventory that's nothing to do with park inventory as far as parts are concerned what matters to us.

Speaker 2: because M.R.S. is carrying excess finished structures in the door as well. I was reluctant to put this in, and it could be confusing. This is just saying, their build plan would be more except they have their own inventory. That's nothing to with parking inventory. As far as parking is concerned, what matters is their build plan. That's what matters. That says this is how many units are going to build, and that will drive how much material they're using.

Brian Shore: I mean, you could tell me if you disagree. But if I was in owner, I would think I, I want people who are dedicated to make money from me. In my opinion, our Q2 was one of our best park quarters. Why don't we say that? Because, you know, when things are going great and your sales are up and everybody's a hero. But it's, you know, get the employee of the year, sorry, the company of year award. To me, that doesn't mean anything. When the chips are down, you're still deliver and perform. That to me is an indication of a very good solid company. So, that's my opinion. You can disagree.

Your Bill plan, Okay. That's what matters. That's that says this is how many units they're going to build and that will drive how much mature older Park material they're using.

So, but since M. Rashes 2000 tweets rebuild plan translate to 5.75 million in Park Park. She program sales per quarter why were parks D programs sales only 3.1 million.

Speaker 2: So, but since MRAS's 2023 bill plan translates to $5.75 million in Park Street,

Speaker 2: program sales per quarter, why would Park's GE program sales only 3.1 million in June ?

In Q2, well I guess, we already kind of gave away the little secret, but what explains 2.65 million. That's just math that's taken a 5.75 months its about subtracting 3.1.

Speaker 2: Well, I guess we already kind of gave away the little secret, but what explains 2.65 million? That's just math. That's taken 5.75 subtractives.

Brian Shore: Let's go on to slide 7. I want to talk about slide 7 too much. So, every, every presentation, just kind of a perspective and reference.

Brian Shore: Let's go on to slide 8. Okay, we always do our top 5 customers every quarter. So we're continuing this tradition. Aerospheres, they're a rep in Israel. They rep is really aircraft for us. Israel aircraft makes the Gulf Stream G2 ADN, if you were that that's actually made on a contract with Gulf Stream. So they made the top 5 pre doses in our top 5. I think pretty much every quarter, wonderful, wonderful customer who loves them.

Speaker 2: This plays a 2.65 million dollar gap to in parts expected due to GEA program sales based upon the bill plan and parts actual

But if I just took $165 million gap due in part to expected in Q2 G. H T program sales based upon the build plan.

Parks actual Q2 G program sales well again, you know, it's all about the burn down D. M rest burned down to parks inventory cowboy Mris as subcontractors the inventory burn down explains 100% of the gap, our shortfall, which makes sense because the programs are ramping up their programs or go throng. So why would why better number would be down.

Speaker 2: Q2G program sales. Well, again, you know it's all about the burn down the MS burn down to park the inventory

Speaker 2: The inventory burn down explains 100% of the gap are shortfall, which makes sense because as we hear the program is ramping up, the programs are going strong. Why would our number be down? Well, that's the explanation. That's 100% of the explanation. Let's go on this slide 28. Why the inventory burn down? Why the surprise but excess park inventory being carried by AMRAS? Now, I'm going to say something. I mean,

Brian Shore: And we got a great photo here of the Valkyrie. And it's doing a loyal women demo flight. We guess what? We got the F-35, the F-22. So I would think of the three different airplanes. The Valkyrie is probably a lower cost of the three. So I'm thinking it was sarcastic, I guess. Middle River. We use, we could use a lot of programs here, but we used to come back 919. Lightport, they kind of threw some Massachusetts means took over some of the AAR structures business that we supply into. Nord Am, we chose the 737-800. That's for the weather master radio, which is on the 737 line.

That's that's the explanation that's 100% of the explanation, let's go on to Slide 28, why do your inventory burn down was surprised but excess park inventory being carried by Airbus.

Now I would say something I mean, very sincerely Emirates is a wonderful customer the relationship we never rest and park is very special and unusual in park is very fortunate to have such a wonderful customer as mris and that's such an unusual relationship with them and this is not just be as you know it's a no way that's not true I've been.

Speaker 2: wonderful customer. The relationship between MRS and PARC is very special and usual. PARC is very fortunate to have such a wonderful customer as MRS and has such an unusual relationship with MRS. This is not just BS. No way. It's not true. I've been doing this job for a long time and I've dealt with lots of customers over the years. Some were really good, some were not so good. But this customer is special. I would say quite special.

Doing this job for a long time and I've dealt with lots of customers over the years you know some really good somewhere not so good but just customer special I would say quite special and our relationship with them is quite special to really a true partnership.

Brian Shore: Let's go on to slide 9. [inaudible] Park Aerospace, Park Aerospace, Park Aerospace, Park Aerospace Park Aerospace, Park Aerospace, Park Aerospace Park Aerospace, Park Aerospace, Park[inaudible] Park Aerospace, Park Aerospace, Park Aerospace Park Aerospace, Park Aerospace, Park[inaudible] Park Aerospace, Park Aerospace, Park Aerospace, Park Aerospace, Park Aerospace, Park Aerospace, Park Aerospace, Park Aerospace, Park Park Aerospace, Park[inaudible] Aerospace, Park Repriatory Films of Formulations and Progress. That's wonderful news that the qualification in progress. Park, MRS, I was put in first, MRS Park LTA through 29.

Speaker 2: and the relationship with them is quite special too. Really a true partnership.

Speaker 2: You know, if you're around a while, you get nervous when a customer talks about big partners because that means when they want something, your partners, when you want something, you know how to partner with you.

And if we if you run a while you get nervous when a customer talks about being partners because that means when they want something your partners. When you want something you you know what a partner anymore.

Speaker 2: but with the mrs i give you but doesn't examples without you know thinking about it uh... it's in a true partnership you know win win true uh... there are there are the sourcing people are uh... very uh...

But with the Mris I gave you a dozen examples without even thinking about it it's been a true partnership you know win win through there I know there are the sourcing people are.

Very enlightened I would say very late and people, but to put it kindly maybe inventory management, it's not the aerospace industry strongest suit and what's going on here I'll give you my opinion I'm not extra at the aerospace industry. It's a strange industry no doubt, it's very risk adverse and Bruce just to change, but that's for obvious reasons.

Speaker 2: very lighten people. But to put it kindly, maybe inventory management is not the aerospace industry's strongest suit.

Speaker 2: What's going on here? I'll give you my pen. I'm not an expert in aerospace industry. It's a strange industry no doubt. It's very risk-conversed in the versus the change, but that's for obvious reasons. It's a safety. The F8 doesn't want some OEM or contractor to make and change the really nearly to airplanes or structures or systems. That would be dangerous. Okay, that would be dangerous.

Safety you know the FAA doesn't want you know some OEM or contractor to make making changed Willy nilly to airplanes or structures at systems that would be you know like a dangerous chaos can be dangerous, but there are some collateral effects. My opinion again are related to this are being risk averse and persistent.

Speaker 2: But there are some collateral effects, my opinion, again, related to this or being a risk of worse and a physician to change. So what happens in the aerospace industry, my opinion again, is the players tend to go on waterpots.

To change so what happens in the aerospace industry. My opinion again is the the players tend to go on autopilot too long they tend to overshoot do you just kind of get something locked in and they're not paying attention to the you know the signals that much they're not not that much agility lets say you know so it may be a little.

Speaker 2: They tend to overshoot. They just kind of get something locked in and they're not paying attention to the signals that much. They're not that much agility, let's say. So it may be a little bit of a byproduct of being risk-adversed and resistant to change, which is good because that's for safety. So.

But are a byproduct of risk adverse and resistant to change which is good because that's for safety. So.

Speaker 2: What happens is that can lead to increasing oscillations with these overshoots, you know? You wait too long, you wait too long, you're not reacting, and then by the time you realize, you know, you're six months late and reacting, then you have to... the correction is, you know, it could be...

What happens is that can lead to increasing oscillations with ease Overshoots you know.

You wait too long you wait too long, you're not reacting and then by the time you realize you know you're you're six months late and react and then you you have to do the correction as you know it could be pretty extreme.

Speaker 2: So for Park, I mean, we're not gonna change the aerospace industry. We chose to be in the aerospace industry. What does it mean for us? We need to be really agile, flexible, and have a lot of urgency in how we manage our business. We're certainly not single out in Nebraska, probably better than a lot of other companies in the aerospace industry. But this is, I guess, all.

So for park I mean, we're not going to change the aerospace industry, we chose to be in the aerospace industry. What does it mean for us we need to be really agile flexible and have a lot of urgency in how we manage our business were certainly not singling out embarassed are probably better than a lot of other companies in the aerospace industry, but this is I guess I'll try to be.

Speaker 2: trying to be kind of delicate about this is what's going on here and why we have this surprise and this immature burn down. Will this kind of immature surprise happen again?

<unk> kind of a delta, but this is a whats going on here and why we have this surprised just inventory burn down well this kind of inventory surprise happened again likely will happen tomorrow, how closely work with mris and work with them really closely there's nothing hidden or anything like that is very transparent it's happened before like what happened again at some point in future. So there may be.

Speaker 2: likely will happen to my how closely work with emberice work with really closely with nothing hidden right like that is very transparent before like will happen again at some point in future

Speaker 2: So there may be, like it will be, some degree of quarter of all till in our G program sale because of inventory management challenges, maybe someone of rollercoaster from time to time. That's just what it is. My opinion, fly to...

Like it will be some degree of quarter to quarter volatility in our G program sales because of inventory management challenges, maybe somewhat of a roller coaster from time to time, that's just the way. It is my opinion slide 29.

Speaker 2: uh... but but but but consider all the wonderful things which have resulted from the relationship with emris and many wonderful things still expected to come from the relationship on balance

But but but considering all the wonderful things, which have resulted from the relationship with Emirates and the many wonderful things still expected to come from the relationship on balance. There's no question whatsoever in our minds that we are extremely fortunate ever M. S N as a customer unbalanced not even close when you consider the pluses and minuses.

Speaker 2: There's no question whatsoever in our minds that we are extremely fortunate to ever message as a customer on balance, not even close when you consider the plus and minuses, not even...

Not even close no no nothing to talk about not even close no there may be quarter to quarter G program sales volatility in the future, we're happy to work through and deal with the volatility challenges presented by it because to us the overriding Ley important consideration long term as long term outlook for G program sales, which was fine in slide 34.

Speaker 2: No, nothing to talk about. Not even close. No, there may be quarter to quarter G program sales volatility. In the future, we're happy to work through and deal with the volatility and challenges presented by it because to us, the overridingly important consideration, long-term outlook for G program sales, which we're planning to slide 34. Yeah, it causes it to, you know, we have to, it causes challenges with our production management, supply chain management, with our staffing management.

Yes. It causes it to go we have to of course, there's challenges with our production management and supply chain manage staffing management, we're happy to deal with it how do you deal with it on balance not even close to where we go with up or down.

Speaker 2: We're happy to deal with it. We're happy to deal with it. I'm balanced, not even close. Storm.

Based on the information we have we have a lot of we believe the burn down will likely be completed in our Q3 and our park inventory Apart Park inventory cowboy arm wrestle be quote unquote normalized by the end of Q3, we can put normalize it quote for a reason because that's kind of a complicated term lets go into slide 31 more consideration regard.

Speaker 2: Based on the information we have, we have a lot. We believe the burn down will likely be completed in our Q3 and our park inventory. The park inventory, the caribou, theirmressually, will be cool and cut normalized when the end of Q3. We put normalize it quote for reason because that's kind of a complicated term. Let's go on a slight dirty, one more consideration regarding inventory. Manage.

Inventory management is.

Speaker 2: As a general matter, we kind of touch this already is very important to avoid overcorrecting.

Hello matter, we kind of touches ready is very important to avoid over correcting as doing so kind of overshooting.

Speaker 2: as doing so kind of overshooting, can create additional volatility with increasing sine wave amplitude, nivatory swings like oscillations, you know. So you probably know what that means, sine waves that kind of go up and down, you see that. This is a conservative hours and others, that deal with...

Additional volatility was increasing sine wave amplitudes inventory swings like oscillations you know so you probably know what that means you know sine waves that kind of go up and down and you've seen that this is a concern of ours and others were not.

The only ones and I won't mention who but not we're not alone is concerned if our concerns are well founded it could result in a significant spike in demand and our Q4 and into a 25.

Speaker 2: And I will mention who, but we're not alone this concern. If our concerns well-founded, it could result as significant spike in demand in our Q4 into 25.

Brian Shore: It's recently amended to include three Park Films. These are product forms. They're composite bond and metal bond. Again, very wonderful news. And then the life of program agreement we talked about that last time was requested by them. What's it worth to park? I don't know. I mean, what's life of program? 20 years, 25 years? I don't know. And if you look at it, I think it's our outlook. It's a supply 34.

Speaker 2: So that shouldn't be a real surprise. We shall see, but in the meantime, we're keeping our tent up in our ears to ground.

So that shouldn't be a real surprise, we shall see but in the meantime, we're keeping our tena up in arrears to ground.

Speaker 2: Let's go in the slide 31. This is kind of a, I think, kind of something it offers for us for me anyway.

Let's go on to Slide 31. This is kind of a I think kind of summing it up for us for me anyway.

Speaker 2: Then you then, what do we think about all this? What do we think about all this? We think mostly short term noise is static. Now we, like I said, we have to deal with re-manage perspective.

Any event, what do we think about all of this what do we think about all of this we think mostly short term noise static now we've like I said, we have to deal with room managed perspective, you know the oscillations, the up and downs, but in terms of what matters to park long term, mostly short term noise of static.

Brian Shore: We say it's about 55 million a year, so you can do your own mass and figure that out. Now starting, if we continue after 29, which you know, most betting people would say, yeah, we're going to continue, that that normally higher piece of pricing would go up at that point of course. But you know, just do your own mass if you want to, you know, look calculated on your iPhone.

Speaker 2: you know, the oscillations, the up and down, but terms of what matters apart, you know, long-term, mostly short-term noises, static.

Speaker 2: We think the freight train to Jagadayat is coming down the tracks at us a hundred miles per hour and it cannot be stopped. See that looking slightly.

We think the freight train the juggernaut is coming down the tracks.

Brian Shore: So slide 18, update on GAVation, jet engine programs, the A320, NEO, aircraft family, the CFN Leap 1A engines. That's the 319 NEO, 320, 321, and the H320, 1LR and XLR. This is a big dog. This is a big, you know, the big Kahuna and the GAVation in terms of our GAVation work. Airbus has a huge backlog. And I would say that huge. The A320 NEO family aircraft of 6,720 airplanes. That's a lot of airplanes.

100 miles per hour and it cannot be stopped.

You got to look at slide 34.

We're not.

One around here, we think we better be ready are we too will be overrun that's what we think about it.

Speaker 2: I think we better be ready or week two will be overrun. That's a recent problem.

Speaker 2: So let's go on the slide 32. Okay, financial outlook.

So let's go on to slide 32, OK financial outlook that.

With time Huh.

Speaker 2: Thanks, Helwick, for Park and G programs. A little bit of an update.

So that's how to look for park in G programs, a little bit of an update.

Speaker 2: Okay, because someone's certainty with Q3, if he's the burn down, Q4, because they have this spike.

Okay, because I'm uncertainty with Q3, because the burn down in Q4, because they've just spike very difficult for us to provide meaningful forecast for Q3 and Q4, we're not gonna what's the point of guessing we're not going to just do what you would just service when will we be able to resume providing quarterly long term longer term forecast estimates I'm not sure.

Speaker 2: Very difficult for us to provide meaningful forecast for Q3 and Q4. We're not going to, what's the point of guessing? We're not going to, we're just doing it just service. One will be able to resume providing quarterly longer term forecast estimates. Not sure. We'll definitely keep it posted.

Brian Shore: I mean, I'm sorry. During the airbus, first half Ernie Cole on July 25, 23, they just reaffirmed their plan to achieve a rate of 75 basic groney, NEO, every family delivers deliveries for a month in 2006. You get a little new once there. Did you ever say the end of 2006? Not saying any more. They're just saying the end of 2006. I don't know if I'm reading too much into it, but they're just not saying end of 2006 anymore.

Well definitely keep you posted but we were able to provide the following your updated revenue outlook for GE aviation jet engine programs and financial outlook for park generally and we believe the GE aviation programs and park outlooks are much more meaningful and significant and quarterly forecast estimates because the quarters go up and down because who knows why.

Speaker 2: But we are able to provide the following updated revenue outlook for GAVations yet into programs and financial look for part generally.

Speaker 2: and we believe the GBA Asian programs in park outlooks a much more meaningful and significant and quarterly forecast estimate because the courts go up and down because who knows why but

Brian Shore: So I don't know. I'm not sure what's going on here. Maybe it's nothing. A will or bus should achieve that rate in 26. Hard to say, but based upon their huge backlog, huge backlog is very good reason to believe they'll get there in 26 or some time in the not too distant future thereafter. Here's a nice picture of dates for 21 NEO. That's their biggest seller in that family at this point. How's your bus doing with your plan ramp up?

But the key thing to watch is what are the what's the out long term outlook with a long career prospects, that's more meaningful for us and that we have a better feel for as well what's the timing for the outlook. We have the outlook in one year's time when people say what year is that just like we're not sure. What your it is I mean, if the CEO of Airbus.

Speaker 2: key thing to us is what is the long what's the outlook when the longer prospects that's more meaningful for us and that we have a better feel for as well. What's the timing for the outlook? We have the outlook and we're one of your side with people say what year is that? It's like we're not sure.

Speaker 2: 320 Niels in 2026. What am I supposed to say? No is wrong. I don't know. But I mean, so we don't know. Why play the guessing game?

Brian Shore: Let's go on the slide. What is it? 19. Not too bad. According to reports, 23 year to date through August. I don't have September in here yet. It was just, you know, been working the presentation for a couple weeks. September is not, I don't think, reliably yet. So I just didn't go there. Airbus delivered an average of 43.5 NEO aircraft per month. So we're getting there. But here's something interesting. Levered an average of 15 in the last four months through August.

So they're gonna be a 70 520 deals in 2020, so what am I supposed to say always wrong I don't know, but I mean, so we don't know is why plays a guessing game I'm not sure, but as I said and this is a key thing for park. The freight train is coming it can't be stopped and we better be ready.

Speaker 2: Oh, not sure, but as I said, and it's the key thing for park, the rate rate is coming, it can't be stopped, and we better be ready.

Brian Shore: So you would say that's moving the right direction. I think you would say that. Clearly, though, based upon their huge backlog, they would already be at 75 a rate of 75 per month and not for supply chain restrictions, limitations. That's probably obvious to you. What about the engines, though, for the A320 NEO aircraft family? What about those engines? While we are reviewing the A320 NEO aircraft family, it offers two approved engine options, namely the CFM Leap 1A engine and a Pratt 1100G GTF engine.

Speaker 2: And slide 33, these are the assumptions we use. I will go through them. This is the same assumptions that we shared with you last quarter. Go to slide 34. I'm gonna stop here. No, we're running late.

Slide 33. These are the assumptions we use we I won't go through them. This is the same assumptions that we shared with you last quarter go to slide 34, I'm going to stop here I know, we're running late but.

Speaker 2: This slide requires a little bit more discussion. Data 55 million dollar numbers. Any aggressive number?

This slide requires a little bit more discussion.

$55 million numbers and an aggressive number.

Speaker 2: Well, let's go through it. Let's go through the math. 8 through 20 nL.

Well, let's go through it let's go through the math.

<unk> hundred 20 neo.

Speaker 2: 11-88 remember we talked about number four we're just doing a math

11, 88, remember we talked about before we're just doing the math.

Speaker 2: 75 per month, 66% market share. We're not assuming that market share is gonna go up. You might, we're not assuming that. And we know what the revenue per unit is. There's $36 million per year from the 3.20 deal. This is assuming 25 to 29, 25 to 29 pricing. That's where 20.

75 per month, 66% market share, we're not we're not assuming that market share is going to go up.

We're not assuming that now we know what the revenue per unit is there are $36 million for per year from nature funny. Neil. This is assuming 25 to 29 25 29 pricing.

Brian Shore: Now, we supply, part supplies, into the A320 NEO aircraft family using the CFM Leap 1A engine. We have no content on the A320 NEO family using that product. Now here's something really, really interesting. The CFM, Leap 1A's market share, a firm engine order for entry 20, a Neal family or a crit that's been hovering around approximately 60% for the last two years or so. You know that because every quarter we talk about it, so you people that are pretty regular with Park. You've heard that 60% in a more or less number, that kind of 59, 60, 61 range for a while now. But what happened?

That's where 'twenty, that's where the.

Speaker 2: The global 758,000 aircraft, 90 airplanes, that's the low end of the bill plan. We have low numbers and high numbers from the MRS for the bill plan. It's a low end.

The global 70, 508000 aircrafts 90 airplanes, that's the low end of the build plan, we have low numbers in high numbers for NIM umbrella for the bill plants are low and.

Speaker 2: So we being aggressive. C919, what I tell you, you know, we're the...

But we'd be aggressive see 919, when I tell you you know it was worse the.

I'm very sorry that yeah, that's commack, sorry, Commack said youre going to be at 150 in five years that means 300. These are these are you got to convert two inches perfectly okay, where does she was at 100 equivalent 200 here Andrew is 100.

Speaker 2: Sorry that yeah, that's combats are combats that are going to be 150 in five years. That means 300 These are you got to convert two inches per plate. Okay, we're using a hundred equivalent 200 engines 100

Brian Shore: Let's go on the slide 20. That's all changed. The last few months, the Leap 1A has broken out as a clear market share winner for the A320 Neal aircraft family. Now in red, the CFM Leap 1A market share, a firm owner for the A320 Neal aircraft family has jumped to 66% to the life where you won in 2023. Well, that's a huge jump. Why is that? This huge jump in market share is quite remarkable when it considers there are 12,348 firm engines, sorry, firm engine orders for the A320 Neal aircraft family.

Speaker 2: Now let's talk about that. The April 20th, they're proficting 900 airplanes for you. The 737, they're just talking now about they're going to go to 57 from month, at 684 airplanes per year. We're talking only 100, which is 50 less than what Coma access. Is that aggressive?

Now, let's talk about that the April 'twenty, they're predicting 900 airplanes per year to 737, you talk now, but you're going to go to 57 per month at 684 airplanes per year, we're talking only 100, which was 50 lessen what comex says is that aggressive.

I Dunno, then you've got the revenue per unit those numbers we know.

Speaker 2: I don't know. And again, the revenue per unit, those numbers we know.

Speaker 2: Airdrie 21, that's the real jet. We are 55 is lower than the low end of the bill plan range. There's, you know, two numbers high and low. This is lower than the bill.

821, that's the regional jet.

Our 55 is lower than that.

The low end of the build plan range or you know two numbers high low this is lower than the build plan range we've been aggressive.

Brian Shore: I mean, there's so much ballast in the market share that significant change. I could kick a percent of market share and we'd be considered highly unlikely. In other words, if there are 20 engines ordered, somebody gets five orders. Well, that's good. You know, you really move the needle. But you have over 12,000 engine orders. It takes a lot to move that needle. The thicker set is just shocking huge number. What's going on here? Shocking to me, anyway, it's my opinion. I mean, maybe other people don't agree.

Speaker 2: We being aggressive. G9X, we're not going to give the unit numbers, but I can assure you it's conservative. Now, the number, the total numbers, went up. Why is that? Because the revenue per unit went up, because we have new pricing. The price is, you know, we're taking to a count the new pricing. That gives you the 77.5 million per year. Pretty conservative number of units, I would say. So let's talk a little bit about some of the footnotes here.

G nine X, we're not going to give the unit numbers, but I can assure you with conservative now the number. The total number went up why is that because the revenue per unit went up because we well we have new pricing the price Skus as you know we're taking into account the new pricing that gives you the 77.

$25 million per year pretty conservative number of units I would say, so let's talk a little bit about some of the footnotes here.

Brian Shore: But let's go on. What's going on here, though? Why? Slide 21. Just a little side. It's a delivery rate of 75, A320 Neal, family aircraft per month, a 66% Leap 1A market share translation to 1,188 Leap 1A engine per year. That's just doing mass. Sorry. I mean, you've got a little cut to enter your ISO and you can do that yourself. What does that work to park? Well, in a corner outlook, it would be more than $36 million per year.

Speaker 2: Item 3, I put notes 3, A320 Neal Air Group, Parkinson's Film, Reasons, Turtles, Qualified, and Uses Program. Is that aggressive?

Okay. So it item three I didn't footnote three 820 Neo aircraft Park assumes film he's materials qualified and used this program is that aggressive.

Speaker 2: well i don't you tell me we're qualifying that that's a lot of money from rest well qualifying or film he's a product with them they're hiring engineers they got a because that's why would they be doing that if they don't plan to put the film these on the programs you know that aggressive uh...

Well I don't know you tell me, where qualifying that that's a lot of money for them Ras as well qualifying their film he's a product with them, they're hiring engineers they got.

Because that's why would they be doing that if they don't plan to put the film he's on the programs you know is that aggressive.

Speaker 2: Well, I don't think so. Let's talk about some more. Item five, passport 20, item six, which relates to the 9119, and item seven, which relates to ARJ. We're assuming that everyone of cases are filming these, that it's not using the program.

Well I don't think so.

Brian Shore: Yeah, just do the mass again. Do the mass. Because we know what our content for the engine is, $36 million per year. That's just for the A320 Neal family. Currently, our 8,144 firm Leap 1A engine orders orders. One of those firm orders worth to park. Well, that's a little bit more difficult to say because some of those airplanes will be delivered after $29. And like I said, if you're betting first and you're going to bet, we'll continue after $29.

Let's talk about some more item five passport 20 items, six which relates to the 919.

And I, just haven't which relates to a R. J. We're assuming in every one of those cases are film adhesive is not used in their program.

Is that.

Speaker 2: Because, I mean, clearly, MRS wants to get our philanthropist products on all these programs. They don't want to have to buy philanthropist for Brand X and also for Brand Y. Why we doing it because we're being conservative. Why we still don't rather, or not they're not the programs, or being conservative. But you tell me, $55 million, is that an aggressive number? An aggressive number?

Because I mean, clearly emirates once again.

These are products and all these programs they don't want have to buy them. He's up for brand accident and also brand why why are we doing it because we're being conservative why are we assuming rather we're not they're not the progress are being conservative, but you're telling me $55 million is that an aggressive number.

Brian Shore: But our price will go up after $29. Now, the price is also about $25, so maybe an offset. So this year, and next year, price will lower that go up in $25. So it's going to, you know, $6.1, half does another. But you could do your own mass. You can multiply $8,144 by even on $30.5. So, you know, that's how much it is per, that's $30,500 for a unit. Not really. That's about $4 billion. So that's just going to rough kind of, guess a minute. That's not the program. The program will continue when you're being more orders. I would expect.

And aggressive number I don't think so we're just doing math here folks you know so if people think that we're you know kind of overdoing it or promote when you're hyping I don't know where that I don't know where you see that let's go onto slide 35, Okay. Tao Parker space core finish I'll look principally based upon growth estimates are programs on which.

Speaker 2: you know, so the people think that we're, you know, kind of overdoing it or promoting or hyping. I don't know where that, I don't know where you see that. Let's go on to slide 35s, okay, down. Parker Space Corps Finisher, I look principally based upon growth estimates of programs on which Parker Socials qualify, an update.

Park is sole source qualified and update alright.

Speaker 2: All right, this is pretty much very similar, although we've updated the estimated G-proger criminal sale to 3.7. Not just doing the math again. And there's put notes that on the next slide, slide 36, which line the math here, which pretty much not going to be changes. $20 million for the ADL, Crados, Pax Ring.

Alright, we will this is pretty much a very similar although we've updated the estimated G programs or criminal sale to three 2.7, that's just doing the math again footnotes that and then on the next play a slide slide 36, which you know explain the math here, which pretty well.

Brian Shore: What happened anyway? So back to the main point here, why is the market share firm engine orders for the 8020 aircraft family? Why is the chip is so abruptly and dramatically in favor of the CFM lead 1A engine? Very serious issues, the Pratt 1100G engine. Now, we talked about this a little less finding about durability, but we're talking about a different category of issues. Now, these issues have been extensive. We reported, and as a result, we will not attempt to cover them in detail here.

Or are you pretty much know abuse not too many changes its 20 million dollar for the ADL Credo is tax free.

Brian Shore: However, the Pratt 1100G engine issues are expected to ground 350A through 20 Neil Airplane for a year, through 2006, which is met with as many as 650 grounding in the first half of 2004. That's not some, you know, analyst or commentator. That's from the company. That's what they're saying. You run an airline, you don't make that much money to begin with, you don't want aeroplanes grounded. That is death for an aeroplane. You can't ever have aeroplane grounded. That's why it's such a serious issue.

Speaker 2: you know somebody said he's well tetanum was high it's like okay why don't you get that the information from to me this numbers conservative quite conservative

He said he thought that number was high it's like okay, well I know, where you get that information from to me. This number is conservative quite conservative, but yeah, I guess, we'll see about that.

Speaker 2: But I guess we'll see about that. 9G programs are criminal sales. Well, that's interesting because remember where you-

Now G programs incremental sales well that's interesting because remember we're using.

Speaker 2: baseline of 23 where there's 9 G.E.A. Vation sales for 32 million and 8 million brings it up to 40 million. That's the assumption here. 32 plus 8 is 40 million. That's soon like, you know, what would say 5% a year or five years, something like that. What where are we in Q1 and Q2?

Base line of twenty-three, where there's 90 aviation sales were three 2 million and 8 million brings it up to 40 million. That's the assumption here three two placetas 40 million that seems like you know, what we'd say, 5% a year over five years something like that.

What where are we in Q1 and Q2.

Were $37 5 million.

Speaker 2: So 5.5 million, but 8 million has already been achieved. Now, that's a key one of Q2. We keep going down. I mean, I'm not saying that's a new, we're gonna step number one, we'll move up and down. We should always do this based on timing of programs, you know? That's just how our estate works, but I just wanna point out, again, are we being aggressive? I don't know.

So a 5.5 million 8 million has already been achieved now that's Q1 and Q2, we could go down I mean, I'm not saying that we're gonna start number will will move up and down but it's always it's always based upon timing of programs. You know, it's just how it respects works, but I just want to point out again, we are being aggressive.

Brian Shore: And let's go on to slide 22. And this also comes from the company. It's not somebody's opinion. The inspection or repair work is expected to take up to 300 days for engines. So we're talking about, you know, grounding airplanes for a long time. Very tough situation. It's difficult to fully comprehend the full implications of the crisis and where it's going. But the story may not be over, maybe far from over. My take on it is whenever it seems like a crisis can't get any worse, it does.

No.

Speaker 2: see it. The rest of the math, you know, you could just fall through and I'm going to fall along yourself. You can see how we get to $36.5 million of EBITDA for OWL.

I don't see it in the rest of the math you know you could just fall through and I'm be fall on yourself you can see how we get to $36.5 million of EBITDA or outlook. Let's go slide 36, I'm not going to go through these items are these items just kind of explain in detail. The kinds of things you had talked about how we could do the math.

Speaker 2: So flight 36, I'm not gonna go through these items. These items just kind of explain detail, the kind of things we were talking about, how we could do the math. You have any questions, let us know. 537, let's stop there for a second. Just remember, very importantly, this is an outlook. This is not a forecast. Why do we say that? Because the outlook does not take into account. Lots of other programs are working on. We're not so sort of qualified on yet, we're working on. Now some will hit.

Brian Shore: That just might take on it. Will this crisis lead to significant additional 820 neo-aircraft family marks your gains for leap 1a engine? Many believe it will. What do you think? I mean, the dilemma is that people are, you know, watering these airplanes a lot of them. They got to choose which engine they're going to, you know, they're going to go with. So, you know, think about that a little bit.

You have any questions, let us know plus 37 won't stop there for a second just to remember you very importantly, this is the outlook. This is not a forecast why do we say that because it the outlook does not take into account lots of other programs. We're working on we're not sole source qualified them yet we're working on now some will hit.

Brian Shore: Let's go on to slide 23. So the top item that's still in the 820 neo family. This is the 821 XLR. Just want to highlight that. That's a, you know, that's supposed to be what entry is a service in step quarter next year. Bone doesn't have a response. And this is a, you know, a real important program for Park. You know, a lot of, we see a lot of writing about it now.

Speaker 2: and maybe some won't, but some will. And some of them are pretty big, you know, significant revenue.

And maybe some won't but some.

Well and some of them are pretty big you know significant revenues.

Deep of a bullet items, the first one Oh boy.

Speaker 2: The Bullet Hy Arabia burst a first one, boy.

Speaker 2: that's what we're talking big stuff here. The second one, okay, we allow to, we have a new film, He's a Product Line. What do you think?

Yeah, that's what we're talking big stuff, you're the second one okay. We we announced we have new film He's a product line. What do you think we don't want to sell any of it.

Speaker 2: The only film he has sales in any of the outlook is for day 320 new. Nothing else. Nothing else in GE. What about other customers? I think we're not approaching other customers. Of course we are.

Brian Shore: I think people, it is really getting pretty excited about this year. We covered it in more detail in the past, and we'll do that for you. But it's definitely we would say a plus a come back 919 with those leap 1c engines. Full Mac plans to receive a product rate of 150 c 919 aircraft year within five years. That's what they say. That's not some analysts. That's what they say.

The only film sales any of the outlook is for a day to 20, new nothing else nothing else since you eat what about other customers you think we're not approaching other customers and of course, we are.

And we have a lot of interested customers.

Speaker 2: So, kind of like, yeah, we are actually planning to sell that product to others.

Kind of like Yeah, we are actually planning to sell that product others.

Speaker 2: It helps a lot, by the way, to say yeah, we're getting qualified in a big program in terms of credibility. The Asian JV, we talked about that before, structures assembly and gracious project, that could be a big one. Technology license could be big. Israeli Arrow's remistial defense system could be big. So just wanna make a point again, none of that stuff is included in our office.

It helped a lot by the way they'd say yeah. We're you know we're getting qualified into big program.

In terms of credibility.

Brian Shore: No, we get to our outlook. I think in fly 34, we're only some 100 to just keep that in mind. They currently have over a thousand orders and two 919 aircraft are currently in service with China Eastern. Let's go in nice picture of it here. Let's go on to slide 24. Still in the 919. China Eastern recently announced the order of 100 additional 919 aircraft to be delivered to 2431. Just the largest 919 order to date.

The Asian JV, we've talked about that before structures Assembly integration project that could be a big one technology license could be big Israeli Arrow III missile defense system could be big So just want to make the point again, none of that stuff was included in our outlook and we're not going to do that we're not going to quantify for you because someone.

Speaker 2: And I'm not going to do that. We're not going to quantify it for you, because some will hit some wound, but some of these are big ones, you know, they're like binary. It might be zero, it might be a lot more than zero.

Had some won't but some of these are big ones, you know, they're like binary it might be zero or it might be a lot more than zero, but it probably won't be somewhere in between let's go to slide 38. Okay. These are updates happen just I guess by coincidence almost on the three programs that are include better that totaled $20 million in your outlook the ADL probe.

Speaker 2: Let's go on a slide 38. Okay, these are updates. I guess by Quinten it's almost on the three programs that are that are total at $20 million in the outlook.

Brian Shore: And then it got up there. Brunei recently announced the order of 15. Why would I even tell you that? You know, 15 orders that sound that much. The reason is because until now, the come back airplanes that be considered to be China market airplanes only like they'll sell a lot of these, but only into the China market. Well, obviously, Brunei is, you know, your geography. That's not part of China. So that's why I thought I'd highlight that very interesting.

Speaker 2: the ADL program, the Cratos program, and the factory. I don't even reach what it for you. I think all of everything's positive. I guess the only thing I highlight is the Cratos, the replicated program, that's something that DOD has announced recently. I think it's very positive news for Cratos in the Valkyrie. Very positive news. Seems like the government is really going forward with these automated unmanned

Graham.

Kratos program and the factory I won't even reached route for you you know I think almost everything is positive I guess, the only thing I'll highlight is our credo replicated to replicate a program that's something that our D O D as announced recently.

Brian Shore: And then let's talk about the comat the RJ 21. That's the regional jet with those GFC of 314 A engines. Okay, so the triple 7x with G9 X engines. We talked a lot about, you know, less reporters about the issue with a fan cache redesign, if fan cache redesign successful, then the cash wrap will be needed. I'll give you my perspective based upon things I know, which is I guess, you know, considerable.

This I think is very positive news for kratos in the Valkyrie.

Very very positive news it seems like the government is really going for it with these.

Automated unmanned systems.

Systems, and you know the Valkyrie seems to fit right with weighted there whenever these R&D article I see about it you know Valkyrie is always mentioned I mean about the replicate a program you know about the Pac three missile you know everybody wants. It then no it what's holding it back because the supply chain.

Speaker 2: And the Valkyrie seems to be right in there. We have any article I see about it. Valkyrie has always mentioned, I'm maybe about to replicate a program. You know about the Paxory Missile, everybody wants it and know it, it's holding it back, I guess, a supply chain. Let's go on a slide.

Going to slide.

Almost missed 40, okay.

Speaker 2: 40 okay, that's like 40, uh, do no, no, gonna go in a long time, we're getting there.

40, Oh.

Well no time, but were getting there.

Speaker 2: and they're for second place so this is a fly we shared with you before seventy four point two million dollars so we're paying down that transition tax is full of payment we paid three point two million in our Q1 nine point three million as far as i'm concerned you should consider that to be money spent i mean that that is that one is old you know it's almost like that it's almost like that

Hanging in there for a second please so this is a flywheel we shared with you before $74 $2 million. So we're paying down debt transition taxes totaling payment, we paid a $3 2 million and our Q1 Doctor one 3 million as far as I'm concerned you should consider that to be money spent I mean.

Brian Shore: I think that chances of that happening are kind of fading away. So I think just my opinions will be real important. Exciting program for Park for a long time to come enter into and plant entry into service 25, currently an active program for Park. You should know that this is currently an active program for Park. I don't want to say too much more about it, but I feel quite encouraged that this is not going away and it's going to be moving up. Potentially significant program for Park. So we're happy about that.

That is that's when he has told you know its almost like that like that we don't have any debt, but it's almost like that yeah and that money gets paid there's two more installments. The last one is in June 25 that money will be gone in June 25. So you got to consider that money gone, yes, 6 million for the three year project and we will see about that.

Speaker 2: And that money, and that gets paid, there's two months to all months, the last one is in June 25, that money will be gone.

Speaker 2: June 25, so you got to consider that money gone. The $6 million for the trigger project, we'll see about that, and there are a lot of other projects, some of which we, I kind of referenced in some of the outlook discussions that,

Brian Shore: We've got to give on. I'll mention the 747. We're still making. Services 7.7.

You know and there are a lot of other projects some of which we you know I kind of referenced in some of the outlook discussions that programs that would require investment. So we'll see about it but it looks like it all kind of conceptual number 50 $859 million, that's not a forecast, but it's kind of how we look at things in terms, okay. Just how much money we have.

Brian Shore: Slide 26. Just slide your familiar with a couple of little changes though to it. GAA should get as your program sells history. Won't go into the history. Just look at the right, it's right in calm though. Look at Q1, Q2, 6.2, 3.1. There's a 3.1 million dollar difference. And I think that's about half, isn't it? Yeah. For Q3, we got 4 million booked, but we're not, it's not a forecast because there's so much uncertainty which we'll talk about a little bit more.

Speaker 2: programs would require investment. So we'll see you by that. But it looks like you know, kind of conceptual number, 58, 59 million. That's not a forecast. But it's kind of how we look at things in terms of, okay, this is how much money we have. This is kind of how much money is committed. And you know, obviously we hope to be generating cash as well. So that's why it's not a forecast. But for us, it's conceptually important. 41.

Just to kind of how much when he's committed and you know obviously, we hope to be generating cash as well. So that's why I say, it's not a forecast but for us it's a conceptually important 41.

Brian Shore: When we get as a burn down, we got in Q3 and Q4, so I mean, book, we would expect to be less than that, but we're not giving you that as a forecast. We're just saying, this is what we know and we're not, we're not giving you a forecast. We just don't feel comfortable. Now, one thing I want to add is on the right hand little box here. See 9.4 million. Remember, we said earlier, same amount of non-GAA based programs, if you want to Q2. So that annualized at 37.5 million. I just want to just remember that number at 37.5 million, if I forget, when we get to our outlook, so we'll talk about that again.

Speaker 2: our balance sheet cash dividend history and buy back. Every quarter we cover this we got zero long-term debt, dividend history, or others, a cutter cancel of dividends, park maintenance, regular quarterly cash dividends, ride to pandemic, economic crisis, park estate, 38, because second of years of an uninterrupted regular quarterly cash dividends without our skipping a dividend, reducing dividend amount, and a big one in blue, park estate, 586 million, 586 million bucks.

Our balance sheet cash dividend history buyback.

Every quarter, we cover this we got zero long term debt dividend history, while others are cut or cancel the dividend sparked maintains its regular quarterly cash dividend throughout the pandemic and economic crisis Parkers paid 38 consecutive years underwrite uninterrupted regular quarterly cash dividends without ever skipping a dividend, reducing given an amount.

And a big one in Blue Park has paid $586 million 586 million Bucks.

Speaker 2: $28.60 per share in cash to even since beginning of fiscal 05. And as always say, that's a hell lot of money for a little company like Park. And I was announced on May 23, 22, our board authorized parts purchase of up to 1.5 million shares and companies stock.

Our $28 60 per share in cash dividends since the beginning of physical Oh, five and there's always say that's a hell of a lot of money for a little company like Park and.

Brian Shore: We get to that outlook. I think I'll slide, I don't know, 35 or something like that.

Brian Shore: Okay, let's go to slide 27. Okay, now this is the painful part of the presentation. GAAVation sales are all about the MRS inventory burned down. Two times a sharp drop loss and Q2. GAVation program sales is all about MRS's burned down a parking inventory carried by them and its subcontractors. Now, this is a really key point. The MRS count your 22 build plan. That's their build plan, not our plan. They're build plan.

And I was announced on May 23, 22, our board authorized a park purchase of up to one 5 million shares of company stock in it.

Speaker 2: that I made in 2012-203, Park Implinated and implemented a rule 10B51 program, which expired by terms on July 7, 2023. Under that plan, we purchased 221,099 shares of our common stock. An average price of $13,2 cents total cost $2,799,000.

May 12, 2023 park implemented a rule implemented rule 10, B five one program, which.

Which expired by its terms on July seven 2023 under that plan. We purchased 221099 shares of our common stock at an average price of $13.02 total close to $2 million or $79000. On August 11, 23, we implemented another can be five one.

Brian Shore: This is what they plan to build in 23. We got a build plan through, I think, 20 or 29. This comes from them, not us. It translates into approximately 20 million dollars. 23 is our 23 million dollars of calendar year, 23 park GAAVation G program sales. It's very easy to do the math. Once we know how many units are going to build, we know, you know, how much materials use per unit.

Speaker 2: On August 11, 23, we implemented another Kenbee CYONE program, which expires by terms today under that plan.

Ram, which expires by its terms today.

Under that plan No park stock has been purchased.

Speaker 2: And we're just about wrapping up here. The park family, this is our slide, was a 43. Yep, the secret continues, the secret to our success continues. Okay, we give you an update in our customer flex program. We have none of that less couple quarters, just be sure you're trying to pre-brevity, but total participation is 52%.

Brian Shore: We know we sell the material for. So it's very easy to do that math, it gets 23 million. That's a pretty precise number, assuming the build plan is correct and, you know, normally it is. That's approximately 5.75 million per quarter. So the MRS calendar 23 build plan is reduced to some extent. This is just a side point. I think this MRS is carrying excess finished structures inventory as well. I was reluctant to put this in because it could be confusing.

And we're just about wrapping up here the park family Sorry, Slide was at 43 Yep.

The secret continues the secret to our success continues okay. We can do we're giving you an update on our customer Flex program. We havent done that last couple of quarters, just because we're trying to for brevity, but a total participation of 50% 62%.

Speaker 2: Don't read something negative to that. We have given a question to new people. It takes a little while for them to be qualified to be in the customer search program. So it's still a very important program. Very, very important.

Don't read something negative to that we have quite a few new people and it takes a little while for them to be qualified to be in a customer such program. So still a very important program very very important.

Brian Shore: This is just saying their build plan would be more except they have their own inventory. That's nothing to a parking inventory. As far as parking is concerned, what matters is their build plan. That's what matters. This is how many units are going to build and that will drive how much material they're using. So, but since MRS's 2020 build plan translates to 5.75 million in park G program sales per quarter, why were park G programs sales only 3.1 million in 2.2?

Four our success now and in the future Park family The Park family current people Count 119.

Speaker 2: in the future. Park family, the park family crew, people count.

Speaker 2: 119. I'm a little higher than you're used to. Our short-term plan is they have another 15 employees and a crew star park people can't count. The 134.

Number a little higher than you're used to our short term plan is to add another 15 employees an increase our park people cant count the 134 park people so what's going on here, but before we get to that just be buys that doing this will cost about $1 million per year of extra cost or if you want to use 110 people is it.

Speaker 2: Park people so what's going on here? But before we get to that, just be advised that doing this will cost about a million dollars per year at your cost.

Speaker 2: Or if you want to use 110 people as a baseline, which is kind of where we have been for less, a couple of quarters, that's $1.5 million extra cost to our PNL we're talking about. And here's something interesting, this can happen relatively quickly, particularly for your production workers. And why is that? Well, to my shock, and then we started using social media.

Baseline, which is kind of where we have been for last couple of quarters, that's a $1.5 million of extra cost to our P&L, we're talking about and here's something interesting. This could happen relatively quickly, particularly for your production workers and why is that well to my shock, we started using our social media for our recruiting people Corey.

Brian Shore: I guess we already kind of gave away the little secret, but what explains 2.65 million? That's just math. That's taken 5.75. It's about subtracting 3.1. What explains it to 2.65 million dollar gap to an architect expected Q2G program sales based upon the build plan and parks actual Q2G program sales. Well, again, you know, it's all about the burn down. The MRS burn down to parks inventory, categorically, MRS as subcontractors. The inventory burn down explains 100% of the gap are shortfall, which makes sense because as we've heard, the programs are ramping up. The programs are going strong. So, why would our number be down? Well, that's the explanation. That's 100% of the explanation.

Speaker 2: recruiting people, Cory, Courtney, Nancy, they come up with really great ideas. I said, oh, okay, whatever. But what do I know? I mean, I'm not, I'm just going to say good to the stuff. It's really helped a lot. It's made a big difference. And I think the other thing that's more important is that the park family culture is taking hold. Courtney says it's a great place to work. And we really believe that. Not an easy place to work, great place to work. And

Courtney Nancy they come up with a really great idea as I said, Oh, Okay. Whatever you know, but you know what do I know, what I mean, I'm not I'm guessing that's very good at this stuff. It's really helped a lot. It's made a big difference and I think the other thing that's more important is that the park family culture. It's taken hold you know court. He says as a great place to work and you know, we really believe that nothing.

He place to work great place to work and.

Speaker 2: You know, I was a little frustrated because I felt, boy, we're doing all the right things. We don't let people off. We love our people. We're people of family to us. We treat people as family. You know, why is it harder for root people? I think we just had to stick with it a little while.

You know, it's a little frustrated because I felt we were doing all the right things, we don't lay people off we love or people or people or family to wash through treat do boy family. You know why is it harder route people I think we just have to stick with it a little while longer and now he's taken hold award I think is out and you know we got right out the door people looking to to come work for us right now.

Brian Shore: Let's go on this slide 28. Why the inventory burn down? Why the surprise but excess park inventory being carried by MRS? Now I'm going to say something I mean very sincerely, MRS is a wonderful customer, the relationship between MRS and Park is very special and unusual and Park is very fortunate to have such a wonderful customer as MRS and have such an unusual relationship with MRS. And this is not just BS, you know, in no way, it's not true.

Speaker 2: And now it's taken hold, the word I think is out. And we don't light up the door if people look into come work for us right now. So that's good news. But watch our course because we could get up to 134 number pretty quickly, especially for production workers. Half the 15 is going to be production time.

So that's good news, but you know what your costs because you know we could get up to once every four number pretty quickly, especially for production workers have about half. The 15 is gonna be production type workers.

Brian Shore: I've been doing this job for a long time and I've got a lot of customers over years, you know, some really good, some were not so good. But this customer special, I would say quite special and a relationship with them is quite special to really a true partnership, you know, if you're around a while, you get nervous when a customer talks about being partners because that means when they want something you're partners, when you want something you're not a partner anymore.

Speaker 2: uh... so that's good news that's going to slide forty four i guess it's good news i mean look at the point for as people just date we need to get ready for the juggard not we too will be overrun

So okay. That's good news, let's go on to Slide 44, I guess, it's good news I mean, when I look at slide 44, as previously stated we need to get ready for the Juggernaut, we too will be overrun.

Speaker 2: A great part of people are committed to making money for owners of recorder. We run our business for Park Future for a long term. Not for the next quarter. You know, that kind of commitment is maybe what you call in light and self-interest. I think that's a term where people realize, for us to have a future, we need to make money for owners of recorder. You know, if you're an owner, you want people making money for you.

A great part people are committed to making money for owners every quarter, we run our business for park's future for long term not for the next quarter, you know that kind of commitment. It's maybe what he called enlightened self interest I think that's a term where people realize brushed out in the future we need to make money for owners every quarter. You know if you're an owner you want you know people, making money for you.

Brian Shore: But with MRS, I give you a dozen examples without even thinking about it, it's been a true partnership, you know, win-win, true. You know, there are sourcing people are very enlightened, I would say, very enlightened people. But to put it kindly, maybe inventory management is not the aerospace industry is strong as soon. What's going on here? I'll give you my opinion, I'm not an expert in the aerospace industry, it's a strange industry no doubt.

Speaker 2: But what do we mean here? We run a business not for the park's future in other words we're hiring people or place the hired people in advance so we're ready for the germa. I will get overrun

But what do we mean here, we run a business not for the park's future in other words, we're hiring people a place to hire people in advance. So we're ready for the journal, we don't get overrun so in other words youre not running for the quarter running for the future and our enemies. Your plan is increase of park's people count the one in 43 people so let's see what happens with that.

Speaker 2: So in other words, you're not running for the quarter, running for the future. Now, our intermediate plan has increased our park people count to one or 43 people. So, let's see what happens with that. A park we're very so very fortunate and blessed to have the great park people we have. A parker people have been playing for a play for keeps.

Brian Shore: It's very risk-adversive versus the change, but that's for obvious reasons because it's a safety, you know, the F8 doesn't want, you know, some OEM or contractor to make and change really nearly to airplanes or structures or systems, that would be, you know, like chaos would be dangerous. But there are some collateral effects, my opinion, again, related to this or being a risk adverse and a recession to change. So what happens in the aerospace industry, my opinion, again, is the players tend to go out of the water too long, they tend to overshoot, they just kind of get something locked in and they're not paying attention to the signals that much, they're not that much agility, let's say, you know, so it may be a little bit of a byproduct of being risk adverse and resistant to change, which is good, because that's for safety.

Our park, we're very so very fortunate and blessed to have the great Park people, who have a parker people been playing for a play for keeps and we know on our Saturday, if you're playing for keeps and where traditionally we've always feature or some group of crew from park. This is our.

Speaker 2: and we now have been on our 70th year of playing for keeps. And my tradition is we always feature some group or crew from park.

Speaker 2: Aerospace Composers Truckers Crew.

Aerospace composite structures crew.

So really emphasizing just because we're looking at significant of structures and assembly program opportunities. We're working on right. Now. So this crew is very important to really do it a little bit.

Speaker 2: really emphasizing this because we're looking at significant structures and assembly program opportunities working on right now.

Brian Shore: So what happens is that can lead to increasing oscillations with these overshoots, you know, you wait too long, you wait too long, you're not reacting and then by the time you realize that, you know, you're six months late and react and then you have to, the correction is, you know, could be pretty easy to treat. So for Park, I mean, we're not going to change the aerospace industry, which always to be an aerospace industry.

Speaker 2: So this crew is very important and ready to do it a little bit

Speaker 1: This is also a very great group because they do other things. They do eye-tart work. I can't explain that to you. That's not a lot of luck. Do that. They're in the customer's flexible grant. So they can do it two or three other jobs. So very wonderful to have people like this. Anyway, operator and everybody else, thanks for listening. That concludes our presentation. We're ready to take any questions I might be out there. Great. Great. Thank you. We will now be conducting a question and answer session.

Also very great group, because they do other things they do I start work I can't explain that to you that's not in the money to do that there are any costs reflects programs. So they can do two or three other jobs. So very wonderful to have people like this anyway, operator, and everybody else faithful listening that concludes our presentation and were ready to take any questions.

Might be out there.

Thank you.

Please go ahead.

Yeah.

Your question. Please press star one.

Hum.

Okay.

Right.

<unk>.

Brian Shore: It wasn't me for us, we need to be really agile, flexible, and have a lot of urgency and how we manage our business. We're certainly not singling out at MBRAS, they're probably better than a lot of other, you know, companies in the aerospace industry, but this is, I guess, I'll, you know, try to be kind of delicate about this is what's going on here and why we have this surprise in this inventory burned down.

Thank you.

If you would like.

A question from the queue.

No.

Participants using speaker equipment.

So you can pick up your handset before pressing the star.

One moment please.

Awesome.

Brian Shore: Will this kind of inventory surprise happen again? Likely will happen to mine how closely work with MBRAS and work with them really closely. There's nothing hidden right now like that is very transparent. It's happened before, like will happen again at some point in the future. So there may be, like it will be, some degree of quarter, quarter of all till in our G program sale because of inventory management challenges. Maybe some would have rollercoaster from time to time.

Brian Shore: That's just what it is, my opinion, flight 29, but, but, but, considering all the wonderful things which have resulted from the relationship with MBRAS and the many wonderful things still expected to come from the relationship on balance, there's no question whatsoever in our minds that we are extremely fortunate ever MSS as a customer on balance, not even close when you consider the plus and minus is not even close, not, no, nothing to talk about not even close. No, there may be quarter to quarter G program sales volatility in the future.

Hey, Brian .

Hi.

Like to turn the floor back over to you.

Okay.

Okay well this is Brian again, thank you very much operator. Thank you all for listening again feel free to give Matt or me a call. If you have any follow up questions and you have a good day and we'll talk to you again soon take care bye.

Speaker 2: Okay, well, just trying again. Thank you very much, operator. Thank you all for listening in. Feel free to give a mad or me a call if you have any follow-up questions. And you have a good day and we'll talk again soon. Take care, bye.

Brian Shore: We're happy to work through and deal with the volatility and challenges presented by it because to us, the overridingly important consideration long term is long term outlook for G program sales, which we've explained in slide 34. Yeah, it causes, you know, we have to, it causes challenges with our production management with supply chain management, with our staffing management. We're happy to deal with it. I'm balanced.

Thank you.

Speaker 1: In some groups today's telecoms, you may disconnect your lines at this time. Thank you for your...

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Thank you for your participation.

Brian Shore: So where do we go with the burn down? Based on the information we have, we have a lot. We believe the burn down will likely be completed in our Q3 and our park inventory, the park, park inventory,[inaudible] park inventory, park inventory, park inventory, park inventory[inaudible] Well, let's go through it. Let's go through the math. 8-20-0, 11-88 remember we talked that number before. We're just doing a math. 75 per month, 66 per cent market share.

Okay.

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Yeah.

Uh huh.

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Hum.

Yeah.

Hum.

[music].

Brian Shore: We're not, we're not assuming that market share is going to go up. It might, we're not assuming that. And we know what the revenue per unit is. There's $36 million per year from the 8-20-0. So this is assuming 25 to 29, 25 to 29 pricing. That's for 20, that's for the global 758,000 aircraft. 90 airplanes. That's the low end of the bill plan. We have low numbers and high numbers from the MRS for the bill plan.

Brian Shore: It's a low end. So we're being aggressive. C919. What I tell you, you know, we're sorry that, yeah, that coma, sorry, coma said they're going to be at 150 in five years. That means 300. These are, these are, you got to convert two inches per plane. Okay. We're going to use it 100 equivalent to 200 engines to 100. Now, let's talk about that. The 8-20, they're predicting 900 airplanes per year. The 737, we're just talking now about to go to 57 per month.

Brian Shore: That's 684 airplanes per year. We're talking only 100, which is 50 less than what coma exists. Is that aggressive? I don't know. And again, the revenue per unit, those numbers we know. 8-21, that's the real jet. We are 55 is lower than the low end of the bill plan range. There's, you know, two numbers high and low. This is lower than the bill plan range. We've been aggressive. C9X, we're not going to give the unit numbers, but I can assure you it's conservative.

Brian Shore: Now, the number, the total numbers went up. Why is that? Because the revenue per unit went up because we have new pricing and the price is, you know, we're taking to account the new pricing that gives you the 77.5 million per year. Pretty conservative number of units, I would say.

Brian Shore: So, let's talk a little bit about some of the footnotes here. Okay, so item three, item footnotes three, 8-20, Neal Air Group. Is that aggressive? Well, I don't know. You tell me, we're qualifying. And that's a lot of money for MRS as well. Qualifying your film, he's a product with them. They're hiring engineers. Why would they be doing that? I don't think so. Let's talk about some more. Item five, passport 20, item six, which relates to the 919 and item seven, which relates to ARJ.

Brian Shore: We're assuming that everyone locations our film adhesive is not using the program. Why is that? Because, I mean, clearly, MRS wants to get our film adhesive products and all these programs. They don't want to have to buy film adhesive for brand X and also for brand Y. Why are we doing it before being conservative? Why are we assuming, rather, we're not, they're not the programs for being conservative? But you tell me, $55 million.

Brian Shore: Is that an aggressive number? And aggressive number? I don't think so. We're just doing math here, folks. You know, so the people think that we're kind of overdoing it or promoting or hyping. I don't know where that, I don't know where you see that.

Brian Shore: Let's go on to slide three, five. It's okay. Now, Parker is based core financial. I look principally based upon growth estimates of programs on which Parker socials qualify and update. All right. We will, this is pretty much very similar, although we've updated the estimated G program. You're coming. I'll say all to 3.2.7. That's just doing the math again. And there's put notes that on the next plate slide, slide three, six, which, you know, slide the math here, which pretty, well, pretty much no obvious.

Brian Shore: Not to many changes. $20 million for the ADL, Crado's, tax rate. You know, somebody said, well, that number was high. It's like, okay. I don't know where you get that information from. To me, this number is conservative, quite conservative. But, you know, I guess we'll see about that. 9G programs, incremental sales. Well, that's interesting because remember we're using. Base Line of 23 where there's 9 G.E, aviation sales for 32 million and 8 million brings it up to 40 million.

Brian Shore: That's the assumption here. 32 plus 8 is 40 million. That's soon like, you know, what would say 5% a year or over 5 years, I'm like that. What where are we in Q1 and Q2? We're 37.5 million. So 5.5 million, but 8 million has already been achieved. Now, that's Q1 and Q2. We could go down. I mean, I'm not saying that's a new, we're going to step number one. We'll move up and down.

Brian Shore: We should always do this based on timing of programs, you know. That's just how our space works. But I just want to point out, again, we being aggressive. I don't know, and I'll see it. In the rest of the mass, you know, we could just follow through and I'm going to follow along yourself. You can see how we get to $36.5 million of EBITDA for our look.

Brian Shore: Let's go. So flight 36, I'm not going to go through these items. These items just kind of explain detail, the kind of things we were talking about, how we could do the mass. You have any questions, let's know. 5.37, let's stop there for a second. Just remember, very importantly, this is an outlook. This is not a forecast. Why do we say that? Because the outlook does not take it to account. Lots of other programs are working on.

Brian Shore: We're not still sort of qualified on yet. We're working on. Now, some will hit, and maybe some won't, but some will. And some of them are pretty big, you know, significant revenues. The bullet abs, the first one. Boy, we're talking big stuff here. The second one. Okay, we announced we have a new film. He's a product line. What do you think? We don't want to sell any of it. The only film he has sales in any of the outlook is for the age of 20.

Brian Shore: Nothing else. Nothing else in GE. What about other customers? I think we're not approaching other customers. Of course, we are. And we have a lot of interesting customers. So kind of like, yeah, we are actually planning to sell that product others. It helps a lot, by the way, to say, yeah, we're, you know, we're getting qualified in a big program in terms of credibility. The Asian JV, we talked about that before.

Brian Shore: Structures assembly and a gracious project. That could be a big one. Technology license could be big. Israeli arrows, remistial defense system could be big. So just want to make a point, again, none of that stuff is included in our look. Now, we're not going to do that. We're not going to quantify it for you because some will hit some won't. But some of these are big ones, you know, they're like binary. It might be zero. It might be a lot more than zero. But the problem won't be somewhere in between.

Brian Shore: Let's go on a slide 38. Okay, these are updates. I guess, I guess by Quinton, it's almost on the three programs that are, that are, that told that $20 million in the outlook, the ADL program, the Kratos program, and the factory. I don't even reach for it for you. You know, I think all of everything is positive. I guess the only thing to highlight is the Kratos replicated, the replicated program. That's something that DOD announced recently.

Brian Shore: I think it's very positive news for Kratos and the Valkyrie. Very, very positive news. People like the government is really going forward with these automated unmanned systems. And, you know, the Valkyrie seems to fit right in there. There were these, any article I see about it, you know, Valkyrie has always mentioned, I'm thinking about the replicated program, you know, about the factory missile, you know, everybody wants it, and know what, what's holding it back, I guess, is supply chain.

Brian Shore: Let's go on a slide. We're getting there, hang in there for a second please. So this is the fly we shared with you before, $74.2 million, so we're paying down that transition taxable repayment. We paid $3.2 million in our Q1, $9.3 million, as far as I'm concerned you should consider that to be money spent. I mean that is that money is owed, you know, it's almost like debt, we don't have a debt but it's almost like debt, you know, and that money, and that gets paid, there's two months to all months, the last one is in June 25, that money will be gone in June 25, so you got to consider that money gone.

Brian Shore: The $6 million for the trigger project, and we'll see about that, you know, and there's a lot of other projects, some of which we, you know, I kind of referenced in some of the dialogue discussions that programs would require investment, so we'll see you by that, but it looks like, you know, all kind of conceptual number, $50, $59 million, that's not a forecast, but it's kind of how we look at things in terms of, okay, there's so much money we have, this is kind of how much money is committed, and you know, obviously we hope to be generating cash as well, so that's why I said it's not a forecast, but for us it's conceptually important.

Brian Shore: 41, our balance sheet, cash dividend history, buy back. Every quarter we cover this, we've got zero long-term debt, dividend history, while there's a color cancel of dividends, park maintenance, regular quarterly cash dividends, right to pandemic, an economic crisis, Parkes Bay 38, because second of years of an uninterrupted regular quarterly cash dividends, without our skipping a dividend, reducing dividend amount, and a big one in blue, Parkes Bay 586 million, $586 million, or $28,60 per share in cash dividends since beginning of fiscal 05, and as always say, that's a hell lot of money for a little company like Park, and I was announced on May 23, 22, our board authorized park purchases of up to 1.5 million shares and companies stock, then I made the $12,200, 23, Park implemented a rule 10B51 program, which expired by terms on July 7, 2023.

Brian Shore: Under that plan, we purchased 221,099 shares of our common stock, the average price is $13,2 cents, total cost is $2,779,000. On August 11, 23, we implemented another 10B51 program, which expires by terms today. Under that plan, no park stock has been purchased, and we're just about wrapping up here.

Brian Shore: The park family, this is our slide, was at 43, the secret continues, the secret to our success continues. Okay, we've given you an update on our customer-fucked program, we haven't done that in less couple quarters, just be sure you're trying to prebrevity, but total participation is 52%. Don't read something negative in that, we have given quite a few new people, and it takes a little while for them to be qualified to be in the customer-fucked program, so still a very important program, very, very important for our success now and in the future.

Brian Shore: Park family, the park family current people count, 119. I'm a little higher than you're used to, our short-term plan is to add another 15 employees and increase our park people count to 134 park people, so what's going on here? But before we get to that, just be advised that doing this will cost about a million dollars per year extra cost, or if you want to use 110 people as a baseline, which is kind of where we have been for less, couple quarters, that's $1.5 million extra cost to our PNL we're talking about, and here's something interesting, this can happen relatively quickly, particularly for the production workers, and why is that?

Brian Shore: Well, to my shock, we started using social media for recruiting people who were recording and answering, they come up with really great ideas, I said, oh, okay, whatever, you know, but what do I know? I mean, I'm just going to say good to this stuff, it's really helped a lot, it's made a big difference, and I think the other thing that's more important is that the park family culture, it's taken hold, you know, Courtney says it's a great place to work, and you know, we really believe that, not an easy place to work, great place to work, and... You know, I was a little frustrated because I felt, boy, we're doing the right things.

Brian Shore: We don't lay people off. We love our people. People are family to us. We treat people as family. You know, why is it hard to recruit people? I think we just had to stick with it a little while longer. And now it's taken hold. The word, I think, is out. And, you know, we got to light up the door of people looking to come work for us right now. So that's good news.

Brian Shore: But, you know, watch our course because, you know, we could get up to 134 number pretty quickly, especially for production workers, half about half the 15 is going to be production type workers. So, okay, that's good news.

Brian Shore: Let's go on to slide 44. I guess it's good news. I mean, when I look at slide 44, as previously stated, we need to get ready for the juggernaut. We too will be overrun. So, a great park people are committed to making money for owners every quarter. We run our business for park future for a long term, not for the next quarter. You know, that kind of commitment is maybe what you call enlightened self-interest.

Brian Shore: I think that's a term where people realize, first of the future we need to make money for owners every quarter. You know, if you're an owner, you want, you know, people make money for you. But what do we mean here? We run a business not for the park future. In other words, we're hiring people or place the higher people in advance. So, we're ready for the juggernaut. We don't get overrun. So, in other words, you're not running for the quarter, running for the future.

Brian Shore: Now, our intermediate plan is to increase our park people count to one or 43 people. So, let's see what happens with that. A park where very, so very fortunate and blessed to have the great park people we have. A park where people have been playing for keeps. And we now have our 70th year playing for keeps.

Brian Shore: And my tradition is we always feature some group or crew from park. This is our aerospace composite structures crew. So, really emphasizing this because we're looking at significant structures and assembly program opportunities working on right now. So, this crew is very important and ready to do it a little bit. This is also a very great group because they do other things. They do eye-car work. I can't explain that to you. I'm going to look at that. They're in a custom reflector program, so they can do it two or three other jobs. So, very wonderful to have people like this. Anyway, operator and everybody else, thanks for listening.

Brian Shore: That concludes our presentation. We're ready to take any questions that might be out there.

Operator: Great, great. Thank you.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation to indicate your line is in the question queue. You may press star two if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions. Sorry Brian, I'm not seeing any questions at this time.

Brian Shore: I would like to turn the floor back over. Thank you for closing comments Okay, well, just trying again. Thank you very much Operator. Thank you all for listening in. Feel free to give Matt or me a call if you have any follow up questions. And you have a good day and we'll talk again soon. Take care. Bye. Thank you.

Operator: This concludes today's teleconference. You made this connect your lines at this time. Thank you for your participation. You You