Q1 2026 Park Aerospace Corp Earnings Call
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Paul: Good afternoon. My name is Paul and I'll be your conference operator. Today at this time I would like to welcome everyone to the park Aerospace Corp first quarter, fiscal year, 2026 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'd like to ask a question during this time, please press star 1 on your telephone keypad,
if you'd like to withdraw your question, please press star 2
Speaker Change: Thank you. At this time. I will turn the call over to Mr. Brian Shore, chairman and chief executive officer, Mr. Shore, you may begin your conference
Brian Shore: Thank you, operator. This is Brian. Welcome. All to the park Aerospace, Corp, fiscal, 26 q1 investor conference call. I have with me Mark, eskwala president and coo we announced our first quarter earnings right after the close. If you look at the uh news release. You'll see there's a link information as to how to access the presentation that we're about to go through the presentation will also be found on our website. You want to take a look at that? I do want to make this uh, call more meaningful. Uh, just a little quick. Um, comment. Before we get started, it's only been 2 months since our Q4 presentation and as a result, um, some items are just carried over from the Q4 presentation for context and cohesiveness. Uh, but we may just skip over some of those items. Really skim over some of the items that we just.
Brian Shore: Covered 2 months ago, just for purposes of keeping the presentation moving and of brevity. If we do skip over something that you want to discuss in more detail though. Please just uh, ask us questions about at the end.
Brian Shore: So, uh, and we'll try to highlight also, what's new? Even if there's a slide that had a lot of old stuff, maybe we'll just pick up 1 item. That might be new.
Brian Shore: Plant financial information. We're not going to review that during the call. But if you have any questions about it, please let us know. Um, as has become our kind of pattern of of late. We feature something about the James Webb Space Telescope, um, in our, um, table of contents slide as you probably know.
James Webb Space Telescope was produced with 18 of our Park proprietary Sigma struts, we very pleased and delighted about that. What do we have here? We have a, a bullet cluster with dark matter and the dark dark matters in blue. Now, this is an enhanced because the
Dark matter, you can't see it, it's invisible. Um I'm just in the right hand side, let's explain that. Dark matter is an invisible and hypothetical kind of strange. Hypothetical hypothetical form of matter, this is way beyond my, you know, uh, pay scale to understand what that even means. Which does not interact with light or other electromagnetic radiation so you can't really see it. That's why they're, you know, this pictures and enhance with the blue. A dark matter is a mystery of the universe, which cannot be explained by Einstein's general relativity or anything else known to mankind. It's just incredible. What the James Webb is discovered so far. It's just amazing, you know, we're thinking about all the things that we thought we knew we thought we understood about the universe.
Brian Shore: Um but maybe we don't, you know, some people say the universe is on fathomable and maybe they're right. Anyway, it's such a privilege and honor for us to be associated with the James Webb.
Brian Shore: Okay, let's change gears and go to more mundane things. July 4 is our quarterly result, you go to the right hand column q1 which we just reported sales, 15.4 million
Brian Shore: And gross profit or million 718,000. Gross margin 3.6% and we're happy about that. Uh, not where we want to be. We like to be higher but it's just nice to be nice to be over 30%, uh, and we'll explain how we got there. And just maybe 3 different factors that kind of affected our ability to, to, uh, get our gross margins up above 30%. Um, even Justin. I but uh, just a little tiny Less Than 3 million and our, even our margin 19.2%. Uh, what do we say about q1 or q1 during our Q4, investor call. We had to set our sales estimate, estimate is 15 to 16 million. So we came in kind of the middle of that range adjusted evida estimate 2.5 to 3. So we came in I guess pretty much the top of that range. Um, last quarter, we talked about what these estimates mean, but they don't mean and I don't want to go into it again unless you want me to. Uh, but basically these are not guidance where we give you a number where we plan, you know, kind of set.
Souls up to beat the number. We, when we give you these estimates, we're saying to you. This is what we think is going to happen. Okay, let's go on to slide 5. So don't blame that too much. And what I'd like to do, if you don't mind is, let's go to slide 6. Let's jump around here a little bit. The second bullet item on slide 6, your significant ongoing expenses related to operating a new manufacturing Factory manufacturing facility, sorry. Um, and that's why we're pleased to have our margins over 30% because this is a a drag. This Factory is under utilizing our significant costs are that's going through our pnl that drags down our our margins, including our gross margins. So that's 1 factor. I said, you're 3. Let's go back to slide 5, um, area in group. We discussed this, um, many times, our business partner agreement under, which we are, is the exclusive distributor for rate carbs. C2b fabric that's used for a blade of composite materials for advanced missile systems. But remember,
And, uh, so actually the other 2 factors aren't positive, they're just lack of negatives in our couple of quarters ago. We had, uh, actually last quarter, we had 4.4 million dollars sales of fabric during that quarter and that really brings our margin down a lot because we sell the fabric at a small markup. Ultimately, when we turn the fabric into, uh, composite material. That's where the margins really, um, are powerful. Uh, last quarter in q1, we had 1 Point, 1 Point.
Brian Shore: 1 million dollar sales of the fabric and 418000 on the tools made with a fabric, and that's kind of more of a normal ratio. So it isn't really a big drag on our, that wasn't really a much of a drag on our q1 earnings and then we'll get back to the recall in a second. When we skip over to, um, a slide 6, again, production versus sales. This is another factor that had negatively affected our margins, a couple quarters ago, where our production was much lower than our sales. We call it SVP, but in q1, they were relatively nicely matched, which is what we want, you know.
For these 2 things were positive. It just a lack of negatives uh in terms of the impact on, um, on on q1 and that's how we're able to I guess get our margins above the 30% number. Um, but let's go back to slide 5, sorry about that. I'm probably making a little dizzy here. Uh, recall of Mark maybe could help us with that. Uh, 1 of park, ski customers of c2b fabric, we've talked about this quite a bit in the last couple quarters. What's the status of the recall mark?
Brian Shore: Uh the recall it's I think last time I said it would be soon on the last call 2 months ago but it's still not done. Uh, but last week I did reach out to my contacts at the customer and they said it's imminent, which is better than it. It'll be a few weeks out. I think you know, if I look at it there's no guarantees but I would say the approval will happen in the next couple weeks and really the reality is it must happen. You know we're single Source position on the program I think is Brian will talk later in the presentation. Uh you know this this program is going to grow significantly. All indications are it's going to grow significantly. Just based on, you know, all the information.
The customer and you know the information held in the public. So like I said, Brian will cover that in the later. Slides
Speaker Change: Yeah, there must be enormous pressure to get this done now. I mean, it's no joke anymore enormous pressure and uh, Mark and I were just talking about. Should we talk tell you about how many thousands of pounds of this um c2b fabric that we're storing for customers and we thought maybe we should and it's too sensitive but it's it's a worse story. A lot of this product that we sold to customers already. Uh so uh there's a lot of, you know, pent-up need for uh the the pre-preg material. I mean you
Speaker Change: Can't do anything with it with a fabric that's for us to, uh, to produce the material with. Let's go back to, um, slide, uh, 6. Um, total Miss shipments, we can tell you every quarter 275,000 that's up a little bit from Q4, unfortunately, caused by a surprise, surprise International shipments, other miscellaneous issues impact of tariffs and tariffs with costs on q1, very minimal, you know, less than a few thousand bucks. Let's say later on, in the presentation, we'll talk a little bit more about what we might expect from tariffs in the future. Let's go on to the slide, uh, 7. Uh, this is a slide. We do every quarter or top 5 customers in alphabetical order. Uh, your, these are just rounding up The Usual Suspects. I mean all these customers often show up in our top 5, um, so uh you know, just to make it simple the the Patriot missiles. So we'll be talking about that 1. That's a a this time.
Speaker Change: that's I think a photo wingman operation actually um, 787
Would be G. Akn and, uh, that's all really want to talk about the Middle. River are structure. I think Donna decided that we we feature so many, um, GE, um, programs photos that we didn't need to provide you with the photo this time. Let's go on the slide 8, our pie charts. I always like these things but you could see the 22, 23, 24, 25, and the 26. You know, it's fairly consistent. 21 was quite different. That was the pandemic here, where commercial aircraft was, um, very severely impacted by the pandemic. Okay, let's go on the slide 9, UM, Elena does, this park laws Niche military airspace programs for us every quarter. And, um, you know, it's getting to be more and more difficult for us to provide much detail information about these. These defense programs are so sensitive. Um, the pie chart entry signal rate ohms, rocket nozzles strongs. Um, those are really Niche kind of, uh, the area markets for us. But even for US, aircraft structures and Niche, we don't really like
Speaker Change: To monetize stuff too much. Um,
Speaker Change: And uh, I guess the only thing maybe we can comment on which is interesting, is it's a um, and for Oreo air and air that goes back to the 40s, you know, it's when the original air air missile systems, uh, but it's been repurposed for other purposes, so that's why we're, you know, it's on our list here.
Speaker Change: Of programs. These are all programs are working on. We don't just, you know, put pictures of stuff that we're seeing for not working on. Um,
Speaker Change: We have it in every quarter. It was covered in our um in in Q4 uh just for you know anybody knew just really quickly you know the the uh Little Secret here is that you say well what is well the why do we? Why are we in all these g g Aviation programs? Sorry G Aerospace programs, all these engines are key areas space engines.
Speaker Change: Um, and the secret there is that, um, Middle River error structure, systems was a was a sub of GE Aerospace for many many years. And we got on these programs, uh,
Mrs. We call it was a sub of um, G Aerospace. And about 5 years ago, G Aerospace, sold Everest to St, engineering, which is a Singapore company. Uh, but these programs continue this year. 2 years fish programs, continue. If you're trying to figure out the mystery there, a slide 11.
Speaker Change: I think nothing is new here. So uh again if you want us to go back and ask you want,
Speaker Change: Revisit any of these items just uh, ask questions or you can call us later if you want. But just for purposes of not kind of being totally repetitive. We're we're going to skip over things that we covered. Um in uh Q4 uh last item, let life for program. We did cover this in Q4, but the update is still under negotiation, um, the balls in air Court, you know, they have everything we need. Um, as I think I mentioned, it's okay with us either way, whether we stay with our current LTA or go to the life of program. This is this life of program was requested by Mrs. Something they want.
Speaker Change: Um, and uh, you know how to say this, but um, I think they they very much want it. But Embrace is
Speaker Change: Consumed with other issues right now. That's maybe preventing them from getting to this, uh, not all their suppliers, get 100 100, you know, if I'm what I'm getting at, uh, some of the suppliers are, you know, cause a lot of difficulty. And, and it's not funny. It's very challenging. Uh, so, um, that's a little bit distracting from those folks right now. Uh, let's go on to, uh, slide 12. Um,
Update on G years by Jennings and programs. Um pretty much everything here was in uh Q4. I just want to mention that. We we often refer to Arrow Engineers or Bible. It used to be a monthly but now it's a quarterly. So there isn't even a Aero engine news update. Since we announced Q4 on, um, whatever that was May 15th. Uh, the only new item here is the the first 6 months of 2539 per month. I wouldn't read too much into that because normally they the first half of the year, they're a little slow my my guess, my guess is probably know better than anybody else is. But I'm going to guess. They'll be in a little 50s this year. You know somewhere between 15 and 55 that that's a guess. I don't have any insight information at all.
Speaker Change: Um, and uh, you know, I I think I mentioned this to you last time, but the first 6 months, there were a lot of engines were going after market, but the last second 6 months of the year for new airplanes and they also have are, are plus unfortunately, a lot of kites they built.
Speaker Change: Uh the last item is the key. 1 7 their their Airbus is targeting 75 airplanes per month.
Speaker Change: Uh, let's go on slide 13.
Speaker Change: Uh, approved engines. This is all exactly this from Q4 with no changes. Like I said, there's been no update to the aerial Engineers. Uh, so, um, we talked about, you know, the market share of the leap as compared to the Pratt and how many, um, leaflet, a engine orders. There are quite considerable. Um, quite considerable. I would say, uh, slide 14, um, update on the XLR, uh, sorry the a321xlr. That's a variant of the April 20th. What? We've just been talking about. Um, the new item, uh, July 5th. 255 are Asia, Inc, to 1, 2. 3, 2,
Uh 8 919 the call back planes. Um let's see um what's new here? Um the second item, they plan to achieve comak a production rate of 200 919 aircraft per year. That's pretty good. It's not 900% 12. Isn't that 900? This is not nearly 900 but it's still pretty good. We'll take it uh, trade issues. Uh, us has reported lifted the ban
Speaker Change: on this, um,
on this Regional Jet, uh, triple 7X
Speaker Change: My first item, we updated numbers over 1400 flights and 4,000 flight hours. And the test program. Um, this item second item is new. According to Boeing, the triple 7x program is on track for certification this year. Wow. And entry into service in 26. I think they're hedging their bets. And I just saw this recently know, maybe the end of this year, maybe next year for certification. Now, they're saying this year so
Speaker Change: That's impressive. You know how much they've got interact together. I mean, if they deliver on that 541 orders, so that's nice too. Let's go on a slide 17, some of the numbers here.
Speaker Change: 6.2 million q1, uh these are G Aerospace, jet engine programs, sales history, and forecast q1 6.2 million and we had forecasted in our Q4 presentation, 5.2 to 6 5.6%. This came in a little bit higher than that. Um, interesting thing to think about it, 24.7 million, in for all 25, we read ahead. You'll you'll probably familiar with the Juggernaut 61 million. That's quite a bit of incremental sales for GE engine programs. Uh to forecast down in the bottom right here, our acute to forecast, 6.7 to 7.2 million, and we're sticking with the 28 to 32 million number for fiscal 26. Even though we're, you know, if you look at q1 and Q2 we're kind of getting off to a slow start. But as I mentioned, I'll remind you that the fiscal
So 26 forecast is based upon input, we've received from the customer. Let's go on a slide, 18 Parks financial performance history forecast estimates to Top by half we already covered the bottom half, let's go right to the forecast. Q2 we're estimating 15 to 16 million in sales 3 to 3.4 million of the time and um I think that pretty much covers that slide. Let's go on a slide 19. This slide is exactly the slide that was in Q4 presentation historical fiscal year results. So we're not going to discuss it again and maybe things were any of these things were skipping over. We're skipping you over. If you want us to go back and discuss these again, uh let us know what when we get to the question. A portion of the call or or cost you know afterwards and we happen to go over these things with
Speaker Change: Carved this slide.
Prior presentations slide. So, again, just want to explain. We're including these slides for context and cohesiveness, so that the presentation holds together, but when we've covered things before, we're just not going to go over it again. Well, before I begin in Q4, I've recently just 2 months ago, slide, 20.
General Park updates. Again, most of the stuff was already covered. We covered the area in group, um, the new agreement under which, um, we're going to advance, uh, area in 4,597,000 Euro against future purchases. And the last item is important because, um, in our
Issue 1, we Advanced uh Ariane 1,376,000 Euro that's approximately 1.5 million based on the exchange rate at the time. So let's keep that 1.5 million number in your head, get back to that, uh, slide 21 and the purpose agreement will uh, revisit this at toward the end of the presentation, very important. Very timing is very important to purchase agreement to, uh, for the, you know, the 5 million dollar investment, uh, to help Aryan increase their capacity for c2b fabric manufacturing. Uh, next item, lightning strike we recovered that. So, we don't want to cover that again and the next item, uh, the LTA which the Aerospace we covered that. So we don't go over that again. And um, last item these discussions continue with 2 Asian industrial components relating to uh an agent, uh manufacturing joint venture with Park. Um, I think our guys were supposed to be, um, in Asia. Um,
Speaker Change: Now, actually, but things came up. So I think that that trip is now going to be in, um,
September. But, you know, these people have been to visit us. We've been to visit them already. So, the, the these discussions are somewhat Advanced at this point, so I 22, um, more updates, Uh, current Mrs. Scorecard 100, 100, 100 100. What does that Mrs? Love work to park. Uh, I don't know how to quantify it but it's, you know, just worth a whole lot. You know, that's
Speaker Change: Okay, Mark back to you can you help us? You know get some understanding of where we're going with tariffs going forward. Thanks I I get the easy ones um Tara. So I think I mentioned last time.
Speaker Change: Yeah, I mentioned last time. There's been a little, a little or no impact our business as far as tariffs. You know, we did get ahead of it, we, you know, several months, uh, before they started coming in, we notified customers. We would pass these costs along. But fortunately for us, there's been little, you know, little, um, impact as far as even getting tariffs from customers. Um, I'm not saying or I'm sorry suppliers. I'm not saying we're not seeing them, but the ones we have seen had either been not significant, or they've been passed on to the customer. So, from our perspective to our business, there's just really no impact. But if you watched the news like, you know, we all do, um, you know, things are still Dynamic. They're still talking about, you know, 30% tariffs in some countries. So we're watching that but for now and we think in the you know very the short term near term. We don't see any issue with our business from a terrorist perspective. You know if it's something changed I I don't know but um I think we're pretty well covered at this point so um maybe
Speaker Change: The next quarter, there'll be another update. Hopefully, the update is the same. So, uh, you know, we're not seeing any impact in the business, uh, going forward. So,
Speaker Change: Uh, okay.
Speaker Change: Thanks more. Yeah, Terrace for a Hot Topic these days. Any questions about just let us know. Let's go on the slide 23, our share buyback. Um, this is not really an update, except for confirming, uh, that in q1. Uh, we purchased 2 million 165,000 worth of stock. Let's put that number in our little memory, so we'll go back to that.
Speaker Change: A little later on as well. We haven't purchased anything Q2 and my guess is you probably won't be doing that. Let's go on a slide 24. Oh, here we go. Okay. And we can call these numbers Park is Park's, balance sheet, cash and incredible cash dividend history. We have zero long-term debt uh report. We reported 65.6 million cash and marketable series at the end of q1. Now, in the end of Q4 it was 68.18 Million. So that's a difference of 3.2 million, right? But there are 2 things we just talked about which are unusual expenditures in q1. 1 was about 1.5 million dollars to are in the other 1 was 2.2 million BuyBacks or 3.7 million. So if you just those 2 things combined, explain the difference, the drop and cash between Q4 and q1 and 1 more thing I got to remind you about. Remember, we used to talk for many quarters about those, uh, transition. Uh, tax installment payments, well, the
The last installment which is 4.9 million is uh, Q2 it actually was already paid in June, but you'll see that show up in our Q2 cache because like 5 million bucks, uh, out the window. That's a, that was our last installment tax payment, that relates to repatriation. We talked about that many times. So I'm going to go that again uh 40 Years of um dividends and over 600 million dollars of dividends paid so far. Let's go on to the slide uh 25. Um,
Speaker Change: Okay, this is a no change Financial outlook for years, based in your programs to Juggernaut. So these 3 slides, no chains. And I don't think we're going to go through the details again. The timing we don't know but um, it's coming. Okay, if you stop at better, be ready. Slide 26. Here's that 61 million dollar number. We're talking about we've gone through the math many times. The math is straight forward as far as we're concerned. It's pretty transparent and also because we were telling you what the, uh, Revenue per unit is we're giving you the unit assumptions and doing the math. We don't give the number for the 9x programs here, a little bit that program hasn't been certified quite yet. So it's a little bit, you know, more confidential. We don't want to give that information away. Uh slide at 27, just a footnote which kind of explain all the math on slide 26. And certainly not going to go over those uh, slide 28. Okay, this is where we're going to have to slow down, but this is the, this is the new 1, big thing or and peace. Question. Mark in Prince Park's new Juggernaut this is a
Speaker Change: The first Juggernaut is the GE Aviation programs I guess to Aerospace programs. This is our new Juggernaut supplies of key missile. Defense systems are reportedly seriously depleted, as a result of a recent wars in the Middle East and Europe. There's an urgent need to replenish those systems. So I got to stop here and explain something. We're going to be talking about 3 different uh defense programs. There are many programs and
Speaker Change: Any insight information on these programs, the Pack 3 Patriot missiles defense system.
Speaker Change: We've been talking about this for a while, but boy it's become, uh, Headline News.
Speaker Change: The largest deployment of p, 3 Patriot missile defense systems in history, occurred in response to Iran's ballistic missile strikes on that. Um, I can't pronounce it, let's just say that that are our are basing in Qatar. Um the Patriot missile. Battalion was reportedly moved to Qatar from South Korea and Japan.
Speaker Change: Um in anticipation of Iran's ballistic missile strike in response to the US, strategic bombing of Iran's nuclear weapons site. So we had Iraq the other obviously we we knew what the response was going to be, but how do you think South Korea and Japan feel about that? I think they're happy about it.
so the shell game here, you know, we, what's going on, we don't
Speaker Change: Our systems.
Speaker Change: It's the reason why we're doing this, we're you know, we're robbing Peter to pay Paul. It's not funny. Israel's supply of paper missile systems, have reportedly not, this is no Insight information. It's publicly reported have been seriously depleted as a result of the war with Iran, Ukraine, supply of patriot missile systems. Well, you know that they're begging for it.
Speaker Change: They're begging for it. They're Ukraine is has reportedly been seriously depleted as a result of the war with Russia.
Speaker Change: Other countries have been promised Patron missile systems for years. They don't have them, you know, can't get them.
Speaker Change: Um warranties continued on slide, 29 in the news conference. You just see this new conference, at the recent NATO Summit, president Trump stated in response to ukrainians reporter's, question by providing additional Patron missiles to Ukraine. It was kind of sad. I mean, almost all she was about to cry. Uh, we're going to, he said, president Trump, we're going to see if we can make some available for the US is supplying to Israel and they are very hard to get. This is what he said and William in the US need them too. So there's a problem, you know, there's an urgent desperate need for these things and we just don't have them.
The US reportedly has.
Speaker Change: 25% of Patriot missiles needed for the pentagon's military plans. 25% was recently reported to the US is temporarily paused Patriot missile systems to Ukraine over concerns about an alarming. That's not my term
Speaker Change: To turn. Those reported depletion of US, Stock piles of the weapon systems.
Speaker Change: The pause was intended to allow us to an assessment of current stock files. An urgent needs for the weapon systems that we're trying to figure out what we're doing. Um you know, it's almost like we have steamrolled
Slide slide, 30 continues more in peace, new Juggernaut then in a news conference in the white house. Yesterday with President Trump anal, Secretary General Mark ruty, I think I know how you pronounce it. I think that's how you pronounce it. Do you see this 1? President Trump announced that in response to Russia's continued military aggression. West weapon weapon system through Ukraine, including especially Patriot missile system. Shipments will be significantly increased so so much for the pause you know. But here's the other thing it was announced that 17 additional Patriot missile systems was not clear if that was referenced to batteries launchers or missiles.
Will be immediately transferred from another unnamed country. I don't know which country, which is not needed as much. They don't need them as badly. Okay, question mark to Ukraine. Um, so you wonder how that country feels about this, you know, are they pretty delighted? They're losing their Patriot systems again. Uh, you know, it's, um, when you call it the shell game, or pet, Robert Dean or pay Paul, this is not funny, it's not funny. Um, Pedro missile systems are planning to be incorporated into president Trump's golden dome missile defense system. So it's not just replenishing, all these missile systems. We need a lot more of them.
Speaker Change: They're going to be in the golden dome, according to Sputnik news that's the Russian. Russian news agency, I think or news agency in Russia.
US Army plans to boost it procurement of P represents by 4 times more times. So we could be, you know, kind of smart alecks about, you know, Russian and mention information, but they're not. The ones that came up with the story that Donald Trump was a, um,
Speaker Change: Russian spy Russian asset, they're not the ones that came up with the story that that laptop was Russian misinformation. So, you know, what's this? What is the expression? If you're in Glass Houses, you don't throw stones, uh, slide 31. Um, it is Apparent from the reporting that the US plans to do much more than just replenish the completed stockpile at Patriot missile systems a lot more. Yeah. Um, let's talk about our involvement with the p. Free paid for missile system. Uh Park supports the Pack 3 Patriot missile system with specialy by the materials produced with that C2, be fabric from airing group and we're so Source qualified.
Speaker Change: We were recently asked to increase our expected output, especially bladed, materials from the program by significant orders of medical magnitude. We won't say how much because it's too confidential, we can't give it away. Of course, Park will support this request a park. We are patriots Park recently entered into that new agreement. We talked about with hearing group referred to above or the purchase increasing, c2b manufacturing capacity.
Speaker Change: Under the circumstances, timing is very fortuitous.
But we'll add additional manufacturing capacity to be enough.
Speaker Change: Probably not.
Park recently received a proposed blanket purchase order from a t OEM for up to $40 million of c2b fabric.
Yet, what's going on here?
Speaker Change: Next slide, 32 T and cheese. This agreement are being negotiated uh when we processed that, you know, 40 million dollars and the material is being significant amount. We're not going to say how much
Confidential.
Uh, let's go into another program, which is a news. Maybe not quite as much as Patriot, but definitely in the news.
Speaker Change: Israel's Eero 3 and Hour 4 missile defense systems that are with 3 systems is reportedly been extensively had seen the extensive use in Israel's recent war with Iran Israel stockpiled these AR3 weapon systems and reportedly seriously depleted. Again just reading reports, no Insight information from us. There are 4 system which is reportedly a final stage of
Speaker Change: Development is designed to intercept Hypersonic missiles in the space transition zone. That's pretty elegant, right?
Speaker Change: But Germany's buying the arrow 3 and R4 systems from Israel. So again, it's not just, uh, replacing what's depleted. There's a significant additional need for these systems. Israel made to do may need to do much more than just replenish and depleted stock, but I guess it just said that of these aero systems, what's our involvement
Speaker Change: Uh, we're qualifying the arrow 3 for soul Source, qualifying, narrow 4, and that's all we want to talk about.
Say about it. Um, but on site 33, we're still sorry. Still an arrow. What are the signals Parts received in the market about these Wesson, what weapon systems? Let's just say acceleration
Speaker Change: Uh, so let's change here a little bit.
Speaker Change: Is the US plane to rely exclusively on missile defense systems in the future. You know, the golden dome
Speaker Change: Are we done with mad? If you're old enough, you might remember mad and mutually assured destruction, from the Cold War Days, Way, Way Back.
Speaker Change: Maybe not.
Speaker Change: What about the lgm 34 35a Sentinel missile system? That's certainly not a nice. Uh that's certainly not a defensive system, that's icbms.
Speaker Change: I see bam. You know what they are, right? Replacing the 450 Minute, Man, 3, icbms.
Partsman and man history. So that is interesting. If you I don't well, interesting to me anyway in 1972, when they first introduced the minute, man.
A locket Sunnyville s Park.
Uh, to take weight out of the missile system. And we did that by developing multiple circuit boards, are you aware of that to park developed invented multi circuit boards? That's what we did. And so we may be coming full circle, that was a very beginning of the mid men program and this is now to replace the minute and 3.
Speaker Change: 450 new missile silos, you know, missile silos, all. Maybe you seen them in videos and things like that 659 missiles again. This is all stuff. That's public you. Look it up yourself. You know nothing we're giving away here. What's our involvement? We're not. We're not able to say um, slide 34, we kind of touched on this already. As a general matter, is more difficult to discuss in defense programs. You support
As compared to commercial programs, we support many of the defense. Programs are highly sensitive and confidential But please understand something. There are several additional Critical Defense programs, which we are supporting or plenty of support and we're not able to discuss those things. In some cases, those programs represent significant Revenue potential for part. Now, little change gears here. Some people ask what will happen if fence spending every real lasting? Peace breaks out. We sure hope it does. What if the Israelis improve?
Speaker Change: Versions and their Wars. What if the Arab states sign up for those Abraham Accords? What happens if the ukrainians and Russians, they sell their difference and put their arms down. Be all very nice and wonderful.
Speaker Change: Right so um another you know, we talked about this last time so we're just going to update you a little bit, our Manu, major new expansion of parts, manufacturing facilities and update.
Speaker Change: So as you know, we're planning a new major new expansion of our manufacturing facilities, well and require a new plant. That could be a Newton Kansas or somewhere else. Uh, the plan expansion will include the following lines. This is all something we covered before solution Hotmail film, Hotmail tame Hypersonic material, manufacturing, polymer estimate cap, estimate capital budget. A new manufacturing plant equipment, 35 million, plus or minus 5. I hate to tell you this, but that number may be a little low, um, we may need additional solution. Treating that might be based upon things. We just talked about things we just covered. So I'll have to, we'll keep you updated on that.
Speaker Change: I just want you to be aware. I was going to slide 36. Why we doing this? Our juggernauts require it, a new long-term business forecast requires it. Uh significant requirements and new business opportunities, for both hot milk and solution Composite Materials, defense and missile. Programs are drivers.
Speaker Change: And a longterm forecast has moved higher just since May 15th since we last talked to you about it.
Why are we doing it to have the manufacturing compassion and flexibility need to take advantage of new opportunities as they arise? The last item, it's interesting. A little Nuance you to have the manufacturing capacity needed for Park to be parked. What does that mean? Well, our colon cards, are parked flexibility, responsiveness and energy. That's how we build the business we got.
Speaker Change: You know, that's not normally how things are done in Aerospace, but, uh, we're different. And so we need a cushion manufacturing capacity. They're very important, very important for Park. Uh, we we don't, we never want to abandon what has worked for.
Speaker Change: Us. And what, you know, these are core principles for Park flexibility responses and urgency. Let's go on to uh, 37 537.
We are thinking of planning for long-term and back to why we're doing this expansion. Conceptually 5 years out. We'll get back to you on that. But you know,
Speaker Change: It probably will take to the end of the year, before we have our plans finalized, and then we have to design our Factory. We have to design the equipment, it's not, you know, stuff you order off the shelf like a Walmart, you know, all this equipment is very specially designed and a lot of engineering work, you know?
They build a factory and Equipment. It takes a long time, they go to, you know, the factory has to be completed. Equipment has to be delivered. This flyer is have to sign up. In the equipment, we have to do trials, we have to qualification runs, we're talking Years to, you know before we'd actually be able to ship qualified product from this new Factory years. So it's very important. We keep that in mind. That's what we need to look.
Speaker Change: Ahead. We're thinking of planning for our future conceptually 5 years out. That's probably not a bad concept number you know maybe a little less than that. Uh but it's not 2 years. It's probably not 3 years either. Um between now and when we're able to ship product when is the factory, we're not sharing a long-term uh new long-term forecast at this time, but suffice to say for now that it's an exciting challenging time for partners,
Speaker Change: The opportunities for part are significant.
Speaker Change: Time is now we must take advantage of the opportunities. Now, we must not squander these very special opportunities, you know, you could say, once a lifetime of just say that I thought, well, is that overly dramatic? So I I just very special opportunities, but we must not hesitate, you know.
This case he or she hesitates, you know, what happens. Um, so our objective is to have our expansion plan in place by the end of the calendar year and to be moving into implementation phase of our plan by then. So, um, after our last call whenever investor is good investor as well, you know, should we wait should you hold off? Uh, it's not how it works in Aerospace, you know, the wait until we get to, you know, the business booked or it's in our backlog, you know?
It's a kind of a circular this thing but if we waited, it would be too late.
Speaker Change: We wait too late, but we're not going to get in our backlog to begin with because nobody's going to give us the business. If we can't explain to them, that we have, the ability to handle the business to support the business with their manufacturing capacity. Uh, so Tommy is now, um,
I would just comment, maybe this sounds a little defensive, I don't know. But um,
But I want you to think about something Parts been around for 72 years. Why is that, you know, is it? Because we, we grab with the first shiny thing.
Speaker Change: Um, I don't think so, we haven't taken shortcuts. No easy way out. It's very good discipline. Uh, no debt cash over 600 million dollars of dividends paid. Are we, you know, given to doing wild in responsible things, you know, think about our history, think about that.
Speaker Change: For somebody else, it would make you nervous. Oh what are these people doing? Do you have any example of when we Chase something? We should have chased? Do you think about that a little bit? You know like I said maybe it sounds a little defensive but I thought it's better to talk about it. If you're somebody said well, you know, maybe you're being too aggressive. I don't think so. I don't think so. This is like I said maybe a once in a lifetime opportunity and what would be really? A responsible part would be to squander the opportunity and we're not going to do that. So
Speaker Change: That's it. Let's go on a slide 38. Nothing here. This is exactly the same slide that we had in our Q4 presentation. All I'll say is that? Estimated 9g program, incremental sales, that number is just so blown out the window. It's not even funny that we're not giving the number, but the number is, is quite significant. And, um, the numbers built up, pretty conservatively. Also, because we don't the line items include only things we know about it. They quantify, there are a lot of things we know about that. We can't quantify quite yet. Um, and they're not even in the, in our number, you know? Uh, so actually, even the number is quite a high number. It's also, I think a pretty conservative number. We spent a lot of time on this already, uh, we're taking this project, very seriously, a lot of due diligence being done by lots of different people and the different levels. Uh so um we want to make sure we get it right and uh that's it for us um operator we're done with the presentation so Mark and I be happy to take any questions the extent to our
Speaker Change: At this time.
Speaker Change: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
1 moment, please while we pull for questions.
Speaker Change: Thank you. Our first question is from Nick, Rio Stella with NR manager,
Hey, good afternoon. Um, a lot of exciting things going on there. I just have a simple question, slide 21. Uh, the recently entered in into new LTA
You know, is there anything different about this LTA than previous ones with G Aerospace that you could discuss?
Speaker Change: Um, dear you, exactly you what are you asking about? The the on slide 21 you reference? Oh, slide, 21, okay, yeah. I I knew LTA with G Aerospace for 25 through 30
Speaker Change: And I'm just wondering if is there anything different in that LTA?
Speaker Change: Than, you know, previous ones.
That's a good question. And that evidence is that we're probably confusing everybody. Um, so the LTA we've been talking about for years is an LTA with, uh, Mrs. And it was not, they're not the aviation. Uh, so by and large those programs that we talked about are Mrs. Programs, that's a separate LTA that goes through 2029 19329, this LTA Market, this is something more negotiated with the Aerospace. There's still engine programs but they're different engine programs in different materials. So, this is it all they, they defeated the ga Vision programs. And maybe we're we're confusing. No matter too much, but it's a different LTA.
Speaker Change: But there, but just so, you know, that the, um, all of the G Aerospace revenues are included included in that.
Speaker Change: In the history and our our sales history, as well as a juggernaut. So we include the G Aerospace revenues from the MRA slta and for the G LTA in both the history uh, in historical sales to go to g g, g Aviation programs, as well as the uh, like Juggernaut um, slide.
Speaker Change: Okay. Okay, and 1 other question.
Just go ahead. Hello? Yeah. Yes, please. Yeah, this this may be a difficult 1 but at what point do you think you would feel comfortable?
Filling in some of the question marks on your long-term forecast. You know, when you use terms like, you know, blowing out the water. It's very exciting but if someone were to attempt to build a model out a few years,
Speaker Change: I won't point. Where would you feel comfortable?
You know, giving us some information to build such a model, you know, for the longer term picture.
Speaker Change: You know, we feel it's a little premature, they share these this information with the public, and it might also be a little bit shocking to. Uh, so we're we're holding back a little bit. I think we want to get a little more confident and you know, Nick. Like I said, we're doing a lot of due diligence, a lot of internal discussions and, um, and uh, so we we, I think we like a little more Comfort confidence and, you know, and what we're doing in terms of the budget and everything else because that'll be part of the equation I guess. Um, I don't have an answer but you know, like I said, we hope to have a a plan complete by the end of the calendar year and going to the implementation phase that point. So I think by that time, we should feel and we're in a position to provide uh, that information. So I don't know about during our Q3 call, which would be what October? Um, no, that's our cue to call in October, uh, but but I hope that if not, then by the time of our Q3 call, which would be the beginning of June,
Speaker Change: January. So I'm sorry about that but I appreciate it. If you could just hang in there that's uh that's okay. And then just to
Speaker Change: You know, Pat you all on the back I think with respect to your plans for Investments.
He's a team. There has pretty much earned the trust of shareholders. I think, um, you've been wise and not buying stupid things. And, uh, certainly with cherry purchase, you've been judicious. And I've seen a lot of bad examples, so I just want to reflect that sentiment. Thank you.
Thank you very much, Nick, you know, um, this is Charlie Munger guy. Um, he passed away recently, but he, I'm probably going to get this wrong. He said something about their successful, not because they're always brilliant, but they're never stupid, you know, and being not being stupid, you know, it's, it means a lot like, don't do something stupid. Don't let go for the gold, shiny stuff, when it's just BS and uh, just me to everybody's doing it. Don't, you know, be sheep. It's everybody else doing it. So we try to be really this 1 over the years and not just be so everybody else is doing it. Not do those things and do what we think is, right for the company.
Speaker Change: Okay, so next week, we won't see a press release with, uh, an investment in Bitcoin mining.
Speaker Change: Maybe not, I don't know. Yeah, okay, thank you so much.
Speaker Change: Thank you, Nick.
Speaker Change: Thank you. There are no further questions at this time. I'd like to hand the floor back over to Brian Shore for any closing remarks
Brian Shore: Okay. Well, thank you very much for everybody. Very much for listening in. Uh was nice to uh update you and uh please feel free to call us if you like have any followup questions and have a good day. Thank you, goodbye.
This concludes today's conference, give me a disconnect your lines at this time. Thank you for your participation.