Q3 2025 Park Aerospace Corp Earnings Call

Alicia: Good afternoon, my name is Alicia and I'll be your conference operator today. At this time, I would like to welcome everyone to PARC Aerospace Corps third quarter fiscal year 25 earnings release conference call and investor presentation.

Alicia: All lines have been placed on mute to prevent any background noise. 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, the number 1 on your telephone keypad. If you would like to withdraw your question, press star 2.

Thank you.

Alicia: At this time, I'd like to turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.

Alicia: Thank you Alicia. This is Brian. Welcome all to Park's third quarter investor conference call. With me, Mark Eskimo, our president and COO.

Alicia: Right after the close we Published our third quarter earnings press release you want to get a hold that because in that news release there are Instructions as to how to access the presentation that we're about to go through without access the presentation is so

Alicia: call Be Less Meaningful. And it's, the presentation's on our, you can link it, link to it for your webcast and that's how you say it. It's also on our website.

Alicia: We're going to go to slide two, our forward-looking disclaimer info. If you have any questions about it, please let us know. Slide three, this is our table of contents. The first item is our Q3 investor presentation, and we also have supplementary financial information in the appendix one at the back. We don't go over that normally during our investor calls, but if you have any questions about the supplementary financial info, please let us know. In the photo here, we have the missing link. Thank you, James Webb Space Telescope. I'm not sure I understand very well, but I'll do the best I can. This little box on the left, there's kind of an enlargement of that little box kind of in the middle of the image here.

Alicia: the universe began, which is I think about 13.8 billion years ago.

Alicia: All our scientists is that this is way too hot and too bright for a galaxy that old and nobody understands it. So once again, James Webb is challenging all the wisdom and knowledge that we supposedly had and saying, no, sorry, you're wrong. I mean, we don't really care what James Webb speaking.

Speaker Change: It's really quite exciting, as I think some of you know, our proprietary Sigma struts are used in the structure of the James Webb, they're important parts of the James Webb Space Telescope structure. This is supposedly the missing link, I don't know what that means, between primordial galaxies and modern galaxies. I think you've got to put modern in quotes because modern is not like 10 years old or something like that.

Speaker Change: So exciting and thrilling for us to be part of it. I would say this is probably like one of the top five things that PARC has done since we started.

Speaker Change: slide, not as old as some of the even modern galaxies, but 1954. Okay. Why don't we go down to Earth, or come back down to Earth and go to slide four and talk about our quarterly results. If you look at the right-hand column here... Sorry. I'm sorry.

Speaker Change: Growth margin 26.6 and if you know us you know that we're that is kind of a miserable growth margin. We don't really like growth margins below 30% so obviously we're not very thrilled with that one. Adjusted EBITDA 2,014,000. So what do we say about our two...

Speaker Change: 3 to 3.3 million. We're way below that number so something isn't right.

Speaker Change: Some doesn't make any sense. Let's talk about that. Let's go on to slide 5, the top of slide 5, 2-3 considerations.

Speaker Change: So, why is Q3 EBITDA considerably below the forecast range when the Q3 sales exceeded the top of the range? In other words, normally you would say, yeah, Q3, the sales were top of the range, the EBITDA should be top of the range.

Speaker Change: as well, so let's get into that. And unfortunately, it takes several slides to give you a proper understanding, so let's get into it.

Okay, first check item.

Speaker Change: fiscal 25-2 free sales for $14.4 million, as we just said, which exceeds the forecast range by about $150,000.

Speaker Change: But, and it's a big, big, big but, our Q3 sales value of production, we call it SVP, was only $13.2 million or $1.2 million less than Q3 sales. Normally we don't talk about SVP unless it's something significant.

Speaker Change: And I just want you to understand, SVP is not inventory value. That's the value of the product when it's sold. And it's good to think that way because when you're trying to compare production to sales, then you have apples to apples.

Speaker Change: So, that's why we use SVP rather than just the inventory value of the inventory that's produced when we do production. At PARC, SVP has a significant positive impact on the bottom line.

Speaker Change: As a result, this production of SVP shortfall has a significant negative impact on Q3 or Q4 EBITDA. Probably by about $300,000, actually, in terms of EBITDA.

Speaker Change: production absorbs a significant amount of cost into their produced inventory. So, what happened? Why are their production SVPs shortfall in Q3? So, there's several things to consider here. So, one, bringing up the new manufacturing lines and new factory.

Speaker Change: So we're going through the anticipated challenging process of optimizing new lines as we operate them and ramp them up in a production environment. It's a lot different.

Speaker Change: running something in a production environment is good. That's where you really learn. That's where you optimize, get the bugs out as compared to doing trials or even qualifications where, you know, you can take your time. Whatever you want to do, you do it.

production's a very different world. Go on to slide six.

Speaker Change: Ultimately, we expect the new lines, this is important, to run 25% to 50% or maybe even more faster than the existing lines. That depends on the product type. Also it depends on whether you're talking film or tape. But think about it conceptually, it's a lot faster.

Speaker Change: But we must go through the expected learning curves in order to achieve those results. But ultimately, that will deliver a lot of oomph to the bottom line to be able to run our product so much faster. The new lines are designed with better controls also, so this is another factor.

Speaker Change: better controls than the existing lines, capable of producing tighter tolerance, meaning better quality product. We actually do not need to run, okay, this is a key thing, need to run new lines at all to support current production levels.

Speaker Change: We're ramping up to prepare for the coming juggernaut. We talk about the juggernaut a lot. That's coming toward the end of the presentation. On slide 26, when we get to that, we can...

Speaker Change: That's not the point. Ramping up a little too early, though,

Speaker Change: will cost our P&L in the short term. And it's hard to say, you know. You're always doing the best you can to judge, you know, one to ramp, one to ramp, you know.

and try to make little minor adjustments.

Speaker Change: But ramping up too late and not being prepared to support the major programs as they ramp up, that juggernaut,

Speaker Change: Well, we all know how that would end, and it's not a pretty picture, not a pretty thing to contemplate. You get behind, and you know, you're kind of screwed. So you want to err on the side of being early rather than being late, and you just continue to make the adjustments as you need to.

for us.

Speaker Change: Slide 7, ramping up the new lines now is part of our plan to be ready. But for the time being, the new lines run less efficiently until we get on the other side of the learning curves.

Speaker Change: That produces the rockets and missiles Oh, the ablative materials. This is the blade of materials key customer, which we produced with the C to C. C to be fabric is going through a recall of the fabric not park materials of the fabric. We will not discuss why that is like I said.

Speaker Change: All things very sensitive.

Speaker Change: But this customer or other customers continue to buy in stockpile significant amounts of C to C to be fabric apart.

Speaker Change: Our C to be fabric not materials sales are expected to be approximately almost 7 million $6 $9 million in fiscal 'twenty five to $2 5 million next year or more and actually $3 9 million of interest in our Q4. So these Oems there obviously.

Speaker Change: Committed because it's at their risk I mean, this is their inventory they keep buying or buying by stockpile. This product didn't Meanwhile, one of their key OEM who's, saying well you know when we qualify them to seek to be fabric and here's the thing let's go to the top of slide nine however, until this weird qualities complete we pause.

Speaker Change: Unable to produce do you play the materials as they seek to be fabric for this customer now what's gonna have to happen.

Speaker Change: First of all the program is so critical and that has to happen, but secondly, they're buying you know millions of millions of dollars of fabric. So let's try to have it has to happen, but until they get done with the recall, we can't produce the materials for them as a result park had no sales to this customer will buy the materials produced.

Speaker Change: C to be fabric during Q3.

Speaker Change: Remember that we sell suite to be fabric.

Speaker Change: So just be clear, we're saying we didn't have we didn't saw the materials that we're producing the fabrics. We still saw the fabric tutor furniture from things remember that park sells a C to be fabric to customers for a small markup. So.

Speaker Change: So when we sell the fabric door customer just stockpiling rule of fabric small margins our margins, but the margins, we're producing and selling a blade and materials. You can see two fabrics are significant let me just tell you what we're talking about here, we expected we didn't know what's going to happen.

Speaker Change: Beyond our control we have no control over that.

Speaker Change: Qualification, where the good guy in between there we're trying to help be helpful. But we can't control how quickly. This recall is done but just to give you a perspective in Q3, we expected to sell $400000 of materials made with XI to be fabric $400000 not a big a deal.

Speaker Change: Really over 300000, when it dropped to the bottom line. Okay. So now you've got a perspective on how this works and we saw the fabric the margins or very little because we got a little markup, we use a fabric to make materials I was a customer who wants a fabric for the customer the margins are and you know, let's use the term huge I would say okay.

Speaker Change: So that should give you a perspective until the recall is complete we will have to live with this P&L double whammy. So.

Speaker Change: The fabric with small markup, but not being able to sell a very high margin to play a materials producer fabric.

So at this point the recall is expected to be complete in March, but we put recall expected in quotes because it's not something we have control over now there is motivation because there's pent up demand you know for producing these.

Speaker Change: Rocket Motors and missile systems, and they can't do that with fabric that keeps a material from us.

Speaker Change: So let me just see if I have a note here just wanted to know that's okay.

Speaker Change: So if that does occur that the recall is done in March we expect our sales to this customer this customer alone of blade materials materials, using the fabric to be about a $2 5 million or more more than 26. The contribution from those sales well you know I just explained that that would be there's a pent up demand. So as soon as they are.

Speaker Change: Recall, it's complete and we'll be off to the races, and the limit will not be the market limit would be how much you know product.

Speaker Change: These systems are customers able to produce let's go on to slide 10, where we have been holding back talking about that very sensitive, but we felt you know you should really know what's going on here because like I said, you're investing your hard earned dollars of your top clients or in dollar. She now you're told to know these things I think there are at least to some extent to suit me sure.

Speaker Change: I'm with you slide 10 so.

Speaker Change: Here's a question why do we expect these things to happen in Q3, you know why don't we take these things into consideration in our Q3 EBITDA forecast. We gave you well, we actually did expect to produce and ship that $400000 of late of materials.

Speaker Change: Really on us that just because they had to call. It recall it didn't happen.

Speaker Change: So I think we reasonably expected that to happen in Q3, it didn't happen and we got to P&L double when we sold $400000 in situ fabric in Q3 and that doesn't help us frame much at all bottom line wise.

Speaker Change: And then also as we stated we ramped up our head count more quickly than expected just because you know our history has been no difficulty struggling to ramp up our head count or people doing much better job of hiring firing [laughter] firing sorry, finding the right people the right people for park, which is like a little bit of a needle in haystack I think where most.

Speaker Change: People are not cut out for park, which is how it is but as far as the production shortfall, we talked about and reduced productivity. We talked about you know that's on US we should have expected those things. When we gave you the forecast and we just missed the Mark you know of course, we did her best we missed the Mark we do not hit our production and productivity targets.

Speaker Change: And that's on US we're accountable for it as a result of park people will not receive a bonus for Q3. It's just you understand it sounds like replenishing anybody, but I got a hockey have decided to roll it together well wellness together. So if we're not making our numbers we don't get bonuses. That's just how it is now before you feel to barely four people, let's go to the top of slide <unk>.

Speaker Change: 11, however, there was a sense of optimism at park about to come here in the future in a park family members.

Speaker Change: See goodwill bonuses for the new year. This is not for the quarters go bonuses, but you will not pay for them.

Speaker Change: So let's go to the next item there were significant ongoing expenses in Q3 related to operating our new factory expenses for depreciation in the footnote below that's an annual amount of about 1000, sorry, 1 billion 260000 goes into gross.

Speaker Change: Profit gross margin.

Speaker Change: Non U P Tau of course.

Speaker Change: The rest is EBITDA facilities maintenance utilities insurance overhead expenses people expenses.

Speaker Change: But those things were taken into account when we gave you our forecast for Q3 peaceful renewed about two two so that's.

Speaker Change: That's that story Miss shipments in Q3 actually a little bit better you know what the production was shortfall was significant but you know if you have been with US recently last few quarters I think it's been like five or $600000 in the shipments I.

Speaker Change: I don't know if it's a trend, but you know it will take a little bit better.

Usual suspects international shipment issues supply chain issues customers on hold issues, I mean general customers aren't paying their bills, sorry, you're not going to get shipped another a miscellaneous issues. Yeah, we kind of have plenty attitude about getting paid for what we do slide 12. This is just something we do every quarter for you for maybe it's I don't know.

Speaker Change: Partly funded because it's always always the same group of five top customers own just.

Speaker Change: Just quickly the Commack 919 that is now what the air J 21 resorts headers, no call 919, or whether that's the M. S.

Speaker Change: M R S over here in the.

Speaker Change: Gulfstream G. A 280, that's a euro aero spares, which is a distributor for Israeli none aircraft Israeli aerospace still cool now, which makes the G to a business you had under contract for Gulfstream.

Speaker Change: Then bottom left you know we've talked about the slot.

Tax repatriate missile that's Aerojet and then our credo is of course, Gradovs Credo, swoop, Microneedle Hoover or special customers and the Valkyrie, there and there's some 37 800 that relates to the north and that's the weather Master Radome. That's used on the Gen 371, and including I think the Max as well.

Speaker Change: Okay, let's keep going let's get to wound up there on slide 13.

Speaker Change: Our pie charts I know about you I really always like the pie charts at if you look at them you could see a 'twenty two 'twenty three 'twenty four 'twenty five are pretty similar in terms of the breakdown 21 very different hours, though to the pandemic year and commercial aircraft was you know was a mess and then of course remember airplanes are being flown with like.

Speaker Change: Two people on them, we're not most of the month included at all.

Speaker Change: Okay, why don't we keep going slide 14, so parclose niche military aerospace programs.

Speaker Change: So these are all missile programs you know and this is the latest project and into the winter when we just focus on missiles. This this.

Speaker Change: This quarter and the interesting thing is there are a lot of other programs that we didn't didn't select I mean, there's a lot of missile programs.

Speaker Change: We're active on but do you see are some really nice wins that she left us she's selected I won't go through each one of them except to point out the bottomless, Spacex really I love that company I'm, just talking personally so really thrilled to be on that program in the bottom right Little history senior Sony Lockheed Sunnyvale.

Speaker Change: The 1962, we produced what was called Multilayer circuit boards, we developed multiple ports were the first in the World I believe 1962 for Lockheed Sunnyvale.

Speaker Change: Said, they wanted to reduce weight in the circuit boards either for ICP Ms. You know back in the old days and are the what we did was developed what's called multiple or circuit board. So we go way back with Lockheed Sunnyvale, one of history. There, let's go on to slide 15, Okay, you're used to slide so once in a lifetime on the junior space.

In engine programs with a firm pricing L. T. A 1929 with Middle River, a sub of Este <unk>, new aerospace and so the obvious question is who they what does what it says about because of all these programs Archie Aerospace program as well.

Speaker Change: As most of you know by now when we got on these programs Middle River was sub of Chi Aerospace engineers to be sold.

Speaker Change: River to S. T engineering on five years, Youll, but who are you on this progress we've done in factory, we told M. S. N G E.

Speaker Change: That oh, okay. Once we sign this LTA, which you saw we're sole source on these programs, we will build a redundant factory for you and we did.

Speaker Change: Plenty of millions all factory and the reason is we're sole sourced these programs on the G E.

Speaker Change: Wanted to have the security of a redundant factory because they all have all their eggs in our basket.

Speaker Change: So we did that and.

Speaker Change: And the factories have been in production for a couple of years, we already talked about that I won't go through all these programs, but these are really all wonderful programs. He said, we just love being on these programs so great to British programs or any questions any let it snow it's going to slide 16.

Speaker Change: Let's skip to the second item.

Speaker Change: The fan case containment wrap the Genex, sorry, [laughter] G. Nymex engines for the Triple seven next aircraft Genex is like in the seven to eight seven.

Speaker Change: And also the 747.

Speaker Change: G Nymex for the central sub X producer with or a F. The another composite materials and as I think you know from last time, we recently received a P O a $6 $5 million for this program and so that means the program is really starting to try to you know.

Speaker Change: Get born and go into production.

Speaker Change: Having their difficulties, we will get back to that later next item.

Speaker Change: We ever yes L. T. A provided for a six 5% a weighted average price increase effective January one so we're benefiting from that just last.

Speaker Change: Last couple of weeks.

Speaker Change: The IRS LTA was amended no I guess I don't know about a year or so ago to include film adhesive products that we developed under our joint development project with which you're using and then those products are all undergoing qualification undergoing qualification now life of program with.

Speaker Change: Talked about that last couple of quarters still working on it we had another meeting another negotiation session. The ball's in their court actually because right now we're waiting for some of our suppliers to give us pricing. So what I mean, there are suppliers court I guess before we're able to recommence our discussions we need our pricing.

Speaker Change: Suppliers. So we can provide the proper pricing to.

Speaker Change: Two a M S N S C for the life of program agreement.

Speaker Change: 17.

Speaker Change: Talk about updates on the jet engine programs, we always start with the big Kahuna. The <unk> hundred 20 Neo aircraft family with all these variance.

Speaker Change: Airbus has a huge backlog of 7221 airplane. That's a that's just a lot of airplanes for any kind of commercial aircraft program any program.

Speaker Change: Any program Airbus as you know is targeting to deliver rate of 75 airplanes per month by.

Speaker Change: By 2027, and then let's talk let's go to 18 little more information, let's see how they're doing go through 18 through 24, you know how many or how much she likes acre 20 Neo family aircraft deliveries, how many deliveries per year per month.

Speaker Change: Before they are Airbus finished with a bang there 602.

Speaker Change: Average of 50 per month are quite quite impressive and really impressive 92 airplanes delivered in December and that doesn't mean they are at a rate of 92, because these airplane companies had this kind of thing where they kind of make the year in the last couple of months, but anyway, that's a real big number and clearly based on this backlog data already producing 75 for them.

Speaker Change: Once you know thought wanting to not because suppliers spiking chain constraints aren't kind of tired of listening to hearing about supply can change the strengths I am anyway.

Speaker Change: 19 slide 19, so we'll we'll Airbus Chi that goal of 75 airplanes per month, Yes, Gosh, you asked me up that I think they will well they achieve it in 27 well after a very strong finished 24, which we just explained and a January nine 2005, briefs and guess what a week or so ago Airbus is commercial.

Speaker Change: Aircrafts CEO Infact Li reiterated Airbus is planning to achieve that 75 per month reduction goal in 'twenty seven.

Speaker Change: So here.

Speaker Change: A little bit and maybe comic relief are we waiting for Godot, you know waiting for adult it's a play by Samuel Beckett, Some Irish extensional Sky I.

Speaker Change: I just wanted to play hated it you know, it's terrible sorry, Sam but I think he's not alive anymore. So you're probably not going to get to Mad at me for saying that but the concept is golf Godot I think it's supposed to be God I'm not so good at this stuff, but I guess you know you take it from some you don't talk so much smarter than me, but I think the concept theres. Good always guide and if people are just sitting in there in a play waiting around.

For God God never shows up you know.

Speaker Change: So I think that's the theme of it.

Speaker Change: You said you don't want to really get it talk to so much smarter than me, but I think that's the idea.

Speaker Change: Heading for Godot, meaning what if all these things to ramp up the sitting on our rear rent do nothing we better not be we better be ready for the juggernaut of 275 per month charters on that's what we're doing you know.

Speaker Change: It's a funny thing in aerospace you get on one of the programs are so thrilled about and then some of these defense programs missile programs still thrilled about sole source and it's kind of a two edged sword is once you get in the program. So source you can't do anything so wait for the OEM. The you know the ramp up we can't tell Airbus to make more airplanes.

Speaker Change: We make more airplanes commack make more airplanes. Some of these defense contractors. So that's a two edged sword.

Speaker Change: But you know the thing for US as you know we can't we talked earlier about we can't judge it exactly so we just need to make sure we're ready, but we're not ready. We're screwed you know we're ready a little earlier you know okay. It hurts, our P&L temporarily but not be ready that's not that's not something I mean, you know what.

Speaker Change: These discussion let's go on to Slide 20, we know all about this approved engines for a day to 20 aircraft family you've got two of them. One is the CFM leap 180 of them was a Friday engine.

Speaker Change: And I'm just a little I know this is maybe out of sequence, but recently December section.

Speaker Change: 24, G announced that the FAA anti ASO, that's a European Virginia.

Speaker Change: A certified seed offense, new that's high pressure turbine durability kit for the leap when agents, that's a really big deal abuse durability has been the issue for both these engines the Pratt engine and the CFM nephritis sudden.

Speaker Change: You know like I don't Wanna be unfair, but really big problems with durability serious problems and it's a it's a real problem for airlines Airlines don't want airplanes have to sit on the ground because the durability issues you know that doesn't work for alliance. So this is really a great day, because you know I think <unk> trying to get there, but but she is making sure.

Speaker Change: Really nice progress on durability, you know kind of maybe putting some distance between them and their competitor, but we supply only into the CFM leap when they are part of the <unk> hundred 20 program, we don't supply anything in todays for 'twenty program using the crowd engines. According to.

Speaker Change: Merrill Lynch of news the CFM leap when a market share of firm orders with age between Neo family aircraft with 63, 9% as of November 30, but leap has had to you know the biggest market share for a long time, we track it every month.

Speaker Change: No kind of goes between 60 and 65, that's a nice market share.

Speaker Change: Delivery rate.

Speaker Change: <unk> of it to deliver rate of 75 airplanes, a month that market share of 63.9 translates into 1150 leap engines per year, what's that worth to park. It's worth a lot of you know that's a lot of claims or whatever you call. It to park a slide 21.

Speaker Change: Let's continue with same theme here as of November 30, Okay ear was your new stuff there were.

Speaker Change: 8148 firm leap when agent waters, it's hard to.

Speaker Change: If you're not familiar you don't know, but that's just unheard of that so many engine orders, but what are those firm engine orders worth the park well a hell of a lot. If you look at slide seven slide Slide 37 will do that later on.

Speaker Change: It gives you a feel for what our revenue is per unit and its just a lot and obviously.

Speaker Change: A huge amount and obviously you know our Airbus want to sell more airplanes and C. If I want to sell more engine. This is how many firm orders. They have now they're not done yet so well lets go onto the next item. The 821 XLR. This is still talking to each one of your family It's Ed.

It's a new variant just got we're just beginning right now first delivery was in October very nice first commercial flight in November of last year first commercial Trans Atlantic flight.

Speaker Change: Remember 14, and then according to Airbus and has over 550 firm orders. This is a really exciting program for parts of beyond remember that the whole thing in theory about this.

Airplane much better its a single aisle, but it has really good range and much better payload more people more baggage you know so it could compete with the with the twin aisle wide bodies are at least that's the theory anyway. So a pretty exciting program I would think you know Boeing is not at this point.

Speaker Change: It's that they're going to do anything to compete against that extra alarm. So the actual our headset space to itself for as long as I guess there'll be there on the room slide 22.

Speaker Change: Doing time, who are not doing too well the comex nine when nine so let's talk about commack Rubin involved with the.

Speaker Change: Page 20. This is a different kind of leap engine elite when see engine.

Speaker Change: Chinese company plan to deliver 54.

Speaker Change: 919, 25, 80, 426th under 10, or 27, 126, and 20, so they're they're playing it ramp up they plan to achieve a rate of 150 airplanes used on edge lose your airplanes by 28.

Speaker Change: They report to have over 1000 orders for these airplanes. This is a very important program for parts and we stop and emphasizing the 919 is now flying with a three year for Chinese Airlines, it's really flying to China, mostly at this point and a lot of people thought Oh, it's gonna be a China only aircraft Oh don't tell Comat got it.

Speaker Change: We have delivered 16, so they're just starting but they're getting Europe and here's a big one they they're aiming they say to have yachts a certification that European certification 2025, what happens whether it's a China only airplane don't tell commack that because they're not thinking that so there's going to be a you know I think very exciting program for park again Linda.

Speaker Change: Put it that way, it's raining for South East Asia flashing 26, now outside of just showing the let's go on to slide 23.

Triple Seven X was the NYNEX engines. So you know this one in August the FAA temporarily grounded there triples have next after they had some mentioned attachment defects were discovered.

September six 2002 done 24, one of the triples have next Tesla aircrafts are poorly return to the skies.

Speaker Change: And I've seen several large about that but I haven't it's funny I I haven't seen much confirmation of it. So if you hear anything about it. Please let me know because I'm still trying to we're still trying to figure out what's going on there they're boeing's current certification and first delivery target for the trucks are an extra 26 and I was with 24, they have little over five.

September 24 level of 500 orders. This is a really important program for park. So that's why we highlighted and we haven't talked about this very much but we'll just quickly say the global 70 508000 with the passport 20 G engines, they have or they just announced or tuner 200 delivery of airplanes.

Going on to Slide 24, again, something you are familiar with.

Speaker Change: So what do we do here and this is G. Aerospace jet engine programs sales history and forecast estimates, let's just go down to the bottom right.

Speaker Change: And a lot of time with the history was with just running out of time here. So first of all Q3, we should talk about that $6 9 million of a.

Speaker Change: Sales of Vinci programs, and Oh, we have a forecast for Q4.

Speaker Change: Only five to $5 five so you see that's a little bit of a weak quarter Q1 was 5 million, but remember that was because of the storm damage in Q2, and Q3 of about $7 million. So looking for not a great quarter in Q4, and it's pretty much booked so we pretty much know what's going to happen. We think for the year 'twenty for fiscal 'twenty five 'twenty four 'twenty four.

Speaker Change: And a half million that compares to about 21 million from 24, and with 22 3 million and 23.

Speaker Change: So moving to the right direction, where even give you a forecast for fiscal 'twenty six notes approximately 3 million tons.

Speaker Change: 832, it's a preliminary forecast, but I want you to know that with this is based on input from our customer in this diesel low numbers, we get a low middle and high dose low numbers, you're getting from your customers well see what happens we will keep you posted let's go on to 'twenty five okay. We've got to slow down here a little bit.

Speaker Change: So parks finished performance history forecast estimates now this we're talking about all apart.

Speaker Change: So you already know a pistol a 20 523 is where you talked about that our Q4 forecast 15, and a half to $16 3 million sales three three to three 9 million EBITA. If you just do the math you know that the first three quarters. Our official 25 for the year. That's a key 0.5 to 61 point.

Speaker Change: $5 million.

Speaker Change: 11, five to $12 2 million for the year, but we'll talk about the year in next slide.

Speaker Change: So the EBITDA numbers for Q4 looking fairly good what's going on here well remember that 400000.

Speaker Change: C to B ablative materials materials that were looking at a solid Q3 now we have that scheduled for Q4, let's knock on wood about that one but you remember how much contribution is significant.

Speaker Change: Duction plan now remember we under produced production shortfall in Q3, so we actually and we burn down inventory. That's how we got our sales. We are cute. This is sorry, I should say finished goods inventory finished goods at the end of Q2 7 million at the end of Q3 700 thousands.

Speaker Change: For.

Speaker Change: We're down about 700000 finished goods inventory. So in Q4 were looking to build back that inventory and then some and because you know remember production is really good for our P&L our bottom line.

And I think we'll do a better this quarter renters hitting our production targets.

Speaker Change: Abuse, where.

Speaker Change: I think we're trying to get ahead on production when you put it that way and I think we're doing pretty well I think we'll be okay, well productions that'll help our P&L run hurt. It just you know you asked about inventory inventory went up a lot.

Speaker Change: And Q3 as compared to Q2, but that was because of in transit a C to b inventory a lot of it.

Speaker Change: That ended up being part of our balance sheet and at the end of Q3, but the finished goods inventory actually went down quite a bit and I also want to tell you something you know just because okay. As you hear it we have planned for Q4.

Speaker Change: It says right here three point in footnote three a $3 9 billion dollar sales.

Speaker Change: C to be fabric, which is a lot, but a little over a million about 1.1 million of that is at risk because it requires French government approval and then that has a significant impact on our bottom line and that's actually a little higher margin than most of our XI to be fabric sales. So that may not happen and here is another.

Speaker Change: For example, where we're just a good guy try to help out, but it's the French government and some big OEM, they're trying to make this happen. They say, it's going to happen in the French government approval in Q4.

Speaker Change: It doesn't it doesn't we won't get the sale note sale will slip into Q1 I. Just wanted you to be aware of that okay. So let's go on to slide 26.

Speaker Change: Sorry, I would take it so long here, but it seems like there's always a lot to cover slide 26 is also one way to slow down a little bit.

Speaker Change: Because let's look at the annual numbers I think there's interesting perspective here, let's look at the important theme so supply chain limitations effect of the aerospace industry look at the top line you can see that you know are we got 60 million in fiscal 'twenty before the pandemic.

Speaker Change: There were 46, you can see next from 'twenty, one 'twenty two 'twenty three 'twenty four they're really struggling to get re born after the pandemic are the sort of the aerospace industry is a ramping up of course, where the juggernauts. So that's really more of a bottomline factor, we look at fiscal 'twenty five.

Speaker Change: That we already talked about and also fiscal 'twenty five includes $6 9 million C to be fabric seal, which of course are lower margin. So that's going to explain to some extent why.

Speaker Change: The margin numbers arent, what what would you see EBITDA numbers arent, what you expect I mean, if you look at compared to fiscal 'twenty, the topline or is it going to be about the same 25 is 20, maybe higher but the bottomline is lower well if you consider at $6 $9 million of Ctrip be fabric sales that we had almost none of them.

Speaker Change: It was in 'twenty that itself explains the shortfall and.

Speaker Change: Let's see one of the thing I want to bring to your attention.

Speaker Change: Oh yeah.

Speaker Change: When we think of Q1, we gave you a forecast for the year I think it was $60 million to $65 million topline with you more.

Speaker Change: We plan to make more or less we also took 13 to 15.

Speaker Change: Bottomline EBITDA and we're not going to make that now at that point.

Speaker Change: When we announced Q1 and gave it a forecast for the year, we expect there's lots of sales.

<unk> materials.

Speaker Change: And that's been a real disappointment, that's kind of why partly why we wanted to tell you about what's going on with our re qual. It's all about their recall you know and they're stockpiling like I said, a lot to the OEM stockpile lots and lots of the sequel C to be fabric, but until the recall is done we're not able to produce it and that really helped.

Speaker Change: Back, our Bottomline and and their current fiscal year and we didn't see this coming when we gave you that forecast it and I guess when we announce Q1 in July.

Speaker Change: Is that.

Speaker Change: Planes and say well you know we should have known that are ramping up cost from the juggernaut, we did but we didnt know that we're going to miss the mark so much with the seat to be materials and.

You know we want to take the responsibility for everything we can take responsibility for but that's.

Speaker Change: That's not on US I mean, that's not on us that didn't happen, where they're good guy you know trying to help out but those are two big behemoths they'd have to figure out how to do get just re qual done and it'll get it done and they have to get it done and there's a lot of motivation, but until it happens.

Speaker Change: Not able to produce those.

Speaker Change: Those materials and I already gave you a feel for what the margins are on those materials that alone would explain the shortfall in terms of what we forecasted at $13 million to $15 million. When we gave you the the the forecast for the fiscal year at our when we announce Q1 back in July.

Speaker Change: Sorry to slowdown, but no one wants to cover their general Park update slide 727 more.

Speaker Change: Most of this stuff just update so we talked about last time and to some extent. We include this because the updates because we don't want people say what happened is that mean that that's no longer an active thing. So we want to try to avoid that solution trader project I'm not.

Speaker Change: So it's still a front burner go project next won that major OEM supplier as part to part with them on the purchase of ingestion manufacturing line that.

Speaker Change: A $5 million investment 5 million each well, we're going to tell you now that OEM is Jerry.

Speaker Change: So we thought you should know that and also tell you that we're expecting $75 million under the contract sales through three for the contract that were negotiating with these people.

Speaker Change: So those are the updates let's go on to slide 28.

Speaker Change: Yeah.

Speaker Change: So yeah, we talked about this last time essential large high profile large and emphasized missile defense program update we're sole source qualified in this high profile program.

Speaker Change: We talked about being sole source qualified and what that means.

Speaker Change: This revenue is expected this year and ramp up from there.

Speaker Change: What's the program.

Have you heard of the next generation Iron Dome.

Speaker Change: Let's go onto the next item Park recently entered into a license agreement with an OEM to license technology of hypersonic missiles, not much of an update where just in phase two and so far the route of the manufacturing trials. So far the results are good let's keep going with the updates on slide 29.

Speaker Change: That agree.

Agreement with GE Aerospace this is not the MRI screen when we're talking about this GE aerospace we talked about last time now the only update as the agreement is complete executed that we talked last time, we were still in the works we.

Speaker Change: We can skip over the next item I'm not really much of an update and the last item the supplier scorecard for.

Speaker Change: For memory as 100 100 100.

Speaker Change: And what does that mean, it's hard I think for most people to appreciate what that really means how significant it is because it's just not.

Speaker Change: Heard of from at least from what people tell me.

Speaker Change: So, let's not dwell on that too much running out of time here and let's go on to slide Dirty.

Speaker Change:

Speaker Change: New emphasis this is an important thing we have to slow down and this went to.

Speaker Change: Park, new emphasis on military defense markets.

Speaker Change: Why this new emphasis well how many new commercial aircraft programs are in the works you got to troubled southern export cleanup program Commack 92, nine we can't talk about it but for reasons that were you know we're pretty sure we'll never get into that program what else.

Speaker Change: Don't know of anything else, maybe bond will come up with on a airplane, but that's still uncertain.

Speaker Change: Uncertain, so, but there are significant opportunities materializing, and which have materialized for us in the material or the defense.

Speaker Change: Military defense markets, particularly related to our new major missile programs, what's your focus a blade of materials and also materials for hypersonic.

Speaker Change: Currently engaged with several high profile and social missile programs ablate as hypersonic <unk>. Some of these programs are quite large lets go into slide three one. Unfortunately these programs are highly sensitive and confidential programs and which were not able to provide specific information at this time.

Speaker Change: So very sorry about that but he's a like I said quite sensitive programs will provide more information when we're able to for now let's just say there are several high profile programs on which part is engaged including three missile and hypersonic programs on which parks material undergoing serious serious evaluation.

Speaker Change: Each of these programs has the potential to generate 10 billion or more annual revenues for park.

Speaker Change: So this is not just casual stuff I wouldn't take I remember also park is a true Blue American company that I'm, saying that because we're talking about military foods, let's go on to slide 32, our recent questions from investors and Investor.

Speaker Change: Well, what about the fan case containment wrap for the Nymex engines.

Speaker Change: We used to talk about the redesign risk where the fan case could be designed out why were not talking about that anymore, we could be wrong, but we believe that chip sales and their program will proceed with the current pancakes designed utilizing the containment wrap we also had a question by the way about our strategy.

Speaker Change: And I don't know what to do about that if you want to go over with you, but the problem is really running really late and it probably takes at least five minutes to do even a very snapshot a presentation of our strategy. So I'm not sure how to handle that we'll try to figure. It out later slide 33, our buyback really not too much of an update here, we haven't bought any stock.

Speaker Change: Since the we did the Q.

Speaker Change: Three investor call.

Speaker Change: So and why is that because after the queues.

Speaker Change: Our Q2 Investor call. This is a Q3 first of all Q2 Investor call, which is October stocks seem to recover seem to get to better levels and we wanted to back off a little bit and let somebody else buy stock not just us.

Speaker Change: Oh that I'm kind of half joking about that about one thing you should know is that.

Speaker Change: During Q3.

Speaker Change: We did actually buy.

Speaker Change: What is it a 180000 approximately shares during Q3 at a total cost of 2.2 million 363000, and that is that pretty much would explain the change in cash from Q to Q Q2, Q3, the obviously a lot of factors up and down.

Speaker Change: But that will explain that the change in cash on its own.

Speaker Change: So no like I said no additional shares have been purchased under the authorization since October 10, which I think is more or less we announced Q2, and we'll see what happens and I'm going to buy more we really don't want to because we use our cash but you know if the stock goes down to the stupid levels and its been testing those to the levels of last few days we will.

Speaker Change: Feel like we May feel we don't really choice.

Speaker Change: 34 incredible cash dividend history, we can skip over there just to save time most of the last one when their regular cash dividend declared on December nine less the lifestyle of item. It was paid on February four 2025, and we will pay. It then we will have paid $601 $1 million.

Speaker Change: Cash dividends since fiscal 2005, so it will be over $600 million of that point.

Speaker Change: Like I always say, that's a hell of a lot of money for a small company like park going to slide 35, our balance sheet and cash.

Speaker Change: So we got no long term debt $70 million of cash at the end of Q3, and remember we got to pay $5 $1 billion, one more payment of the.

Speaker Change: The transition taxes to all the payments in June so we do a little math here, how do we think about our cash we start with the when we look at these three numbers $5 1 million and that's for sure solution treat are probably very likely contribution OEM partnership probably very likely and the other things that we're gonna problem and they're spending money on in there.

Speaker Change: Projects and opportunities, but these are highly unlikely. So we take that 17 six we take our numbers 70 million you say, yeah. We probably are looking at 52.44 million that we really have.

Speaker Change: And that's why I was saying, we really don't want to buy more stock because we want to keep that money for opportunities, but if the stock goes down the stupid levels will feel.

Speaker Change: We may feel I should say may feel compelled to go in and buy some more stock thirty-six. We can go through this really quickly. This. This is this these are the same slides that we've shared with you for last two quarters why are we doing it because if we don't somebody to say what happens here are you no longer you know onboard.

Speaker Change: With this there's this juggernaut to finish out.

Speaker Change: And we are.

Speaker Change: So 36, you're familiar with slide 36, 37, the only change in thought slide 37 is this as I said the E. R. J 21 that <unk> resolved yet now called the C 909, and then on slide 38.

Speaker Change: I just want to highlight on slide 38, and 39 <unk>.

Speaker Change: Questions about the 15 million dollar number estimated non G programs incremental sales.

Speaker Change: We think that number is conservative, especially considering you know the opportunities that we're seeing on these missile and defense programs right now so and that and the only thing that we're highlighting on slide sorry, the footnotes on slides three and it's just that at a 50 million dollar numbers conservative So again I apologize for taking it.

Speaker Change: So long to go through the presentation and operator, we'd be happy to take questions at this time.

Speaker Change: R&D.

Speaker Change: Thank you we will now conduct a question and answer session.

Speaker Change: As a reminder, if you would like to ask a question.

Speaker Change: Question. Please press star one on your telephone keypad Cochrane Nielsen Karen will indicate your line is in the question queue. You May Press star two if he would like to hear me okay.

Speaker Change: I'm sorry.

Speaker Change: Call participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please all impulse buy something.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Thank you. Our first question comes from the line of Nick.

Nick: Within our limits.

Speaker Change: Please proceed with your question.

Speaker Change: Oh good afternoon, Brian.

Brian Shore: I just want to say, thanks again for the transparency.

Speaker Change: The issues in the quarter it's appreciated.

Speaker Change: <unk> com and as always I'm more.

Speaker Change: Happy with the way you treat share repurchase.

Speaker Change: The language about buying when it get stupid.

Speaker Change: Yeah.

Speaker Change: Right on right on the Mark.

Speaker Change: I think the shareholder base is sufficiently pulse out low and understand.

Speaker Change: What the upside is so well may not get to those prices.

Speaker Change: But just a quick question I may have asked you this before.

Speaker Change: There were slides and cost conference calls, where there was park content on Spacex product.

Speaker Change: Well, obviously, we'll watch them.

Speaker Change: That's something that.

Speaker Change: <unk> Park can still have console.

Speaker Change: I'm just interested in like the second question is.

Speaker Change: I've asked this before as well do you think oh, well coma, a product and what new supply could.

Speaker Change: Could be affected by.

Speaker Change: Hostilities in coal.

Speaker Change: China platform or or or.

Speaker Change: That's pretty much a bold you're spot on.

Speaker Change: So that's it thank you so much.

Thank you Nick.

Speaker Change: Happy new year by the way yeah in the slide it talks about the we love niche.

Speaker Change: Military programs I think we do refer to Spacex program to me I really love that company. The only one with a blue origin was out the other one you were asking about I'm sorry, yes, the other yep.

Mark Eskimo: Mark you want to chime in and Blue origin, I think we have some involvement but maybe not that much.

Mark Eskimo: We've done some work with them to Brian we gave a little bit of stocks here for them you know in our parts operation that's it's really niche.

Mark Eskimo: It's a lot of volume we've got some some some minor structure for them and we get a project. Many years ago were looking at start technology, our composites, but they went ahead and went with a metal start insert and batten medal.

Mark Eskimo: Yeah, we did do design and build a couple of shots, but we were not down for life program. So kind of have connection there and we continue to talk with them and still looking for other opportunities.

Mark Eskimo: Okay. Thanks, you know to me I Love Spacex I just love the company. They you know they are very different than typical aerospace company out of credo sedan categories, while in a positive way a different in a positive way so.

So the more we can do with those are those people in particular, the happier I think at least I would be <unk> knits is an obvious question and a good one we'll have to see what happens.

Mark Eskimo: I would be quite shocked that you didnt happen quickly.

Mark Eskimo: Because.

Mark Eskimo: He didnt deny one nine is a real prestige programmed for the Chinese and.

No I'm not an expert in our culture, but.

Mark Eskimo: That's really important to them no prestige know make sure that their respected and lose face and for them to change gears with materials for the nine when nine program would be so risky and it could put the program back years you know.

Mark Eskimo: So well have to see what happens I don't know why but I'd be skeptical about Daisy didn't happen soon the Chinese as you know are there talk about developing their own engine.

Mark Eskimo: And I'm not so sure that's really a an issue with the trade tensions that might be more of an issue with CFM in my opinion CFM better make sure they get enough engines to the Chinese because if at all or just gonna give Chinese more motivation to develop an engine more quickly so.

Mark Eskimo: I'm just that's just my opinion I could be wrong, but.

Mark Eskimo: That's my perspective, you know, we're always nervous and concern, but I wouldn't say that would be at least for me or my top 10 concerns that you know we lose the commack, there's just because trade tensions between the U S and China will have to see how that works you know a lot of it could go different ways that people are thinking also.

Mark Eskimo: Well have to see how that works, but I don't know what else to say about it except play I guess, maybe for you know perspective, not one of my top 10 concerns.

Mark Eskimo: Right now anyway.

Speaker Change: And the other question sneakers that Didnt help you out a little bit well I'll call back so much.

Nick: Okay. Thank you Nick.

Speaker Change: Alright.

Speaker Change: Other questions I'd like to turn the floor back over to Brian for any closing remarks.

Brian Shore: Thank you very much operator, and thank you all for listening and having the patient to hang in there for all of our.

I'd like to take this opportunity from everybody at park all the park people to wish you. The very best in 2025, a very happy new year to you and your families. Thank you goodbye.

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

Okay.

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