Park Aerospace Corp (PKE) 2024 Q4 法說會逐字稿

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 fourth quarter fiscal year '24 earnings release conference call and investor presentation. (Operator Instructions) At this time I would like to turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.

Thank you, operator. Welcome all to our fiscal '24 Q4 investor conference call. I have with me Matt Farabaugh, our Senior Vice President, CFO. You probably noticed in the news release that we announced Matt is retiring original plan was in this month, but Matt has agreed to stay with us through I guess, would be sometime like May, July through to our Q1, 10-Q filing. So thank you for doing that, Matt.

We -- I think, the earnings release crossed the wires, maybe about [4:15]. You want to take a look at that because in the release itself. It gives you instructions as to how to access the presentation that we're just about to go through after the presentation, Matt, and I'll be happy to answer any questions you have.

If you look at the bottom of the cover page of the presentation, notes that we're celebrating, our 70 anniversary, Park was founded on March 31, 1954, yeah that was four years ago. Interesting, somebody recently asked me if I found the company and I'm saying, [boy], I must look really old. And I actually found the company that was two years old at the time.

So let's go to slide 2 if you have any questions regarding forward looking disclaimer language, I should tell you I forgot to mention this to you -- may be obvious during the presentation. I said I flew so the show must go on and we'll get through it.

No, I think a couple of years ago after COVID, when we were doing one of these investor presentations, I don't get sick very much, but it seems like when they get sick, it's always during the investor presentation. So I was just thinking the horizontal psychologist was sitting in them. I want to make a connection in Q2. Anyway on forward looking disclaimer, you have any questions about the forward-looking disclaimer.

Let us know. Slide 3, so table of contents, we have our presentation and we are the supplementary financial information. We're not going to go through it, but the supplementary financial information, but do you have any questions about it just let us know.

So the original fact was our factories actually a garage was in the Woodside, Queens, and I mean, I'm not using poetic license, it was a garage or garage and actually still a garage, we did a Google map search and that building still there. It's still garage I mean like for fixing cars and that kind of thing, maybe [2000] square feet a couple of years later.

I think exactly when the company moved to a real factory in Flushing, you're Flushing Queens, New York, which I think was maybe 8,000 square feet or 10,000 square feet. This picture is in that factory. The guy leaning forward going to the Lifetouch, Jerry Shore, my father that go into like a stone shares are used in the partner starting Park.

And as I said, sometimes it was like a second father to me, these are power presses and original business was nameplates and decorative trim. So these pressures which step out the sheets of name plate and my father and Tony they used to work to align, theey work to machines, they were repair the machines, they maintain their machines, they did engineering re-enhancements on machines. So I think -- when look in the dictionary, hands-on you some picture of these guys.

Anyway that we've had a long history. As you know, we changed our name to Park Electrochemical in 1960 and a lot of people thought that related to being an electronics business that's not true. When you go electronics until 61 electrochemical refers to the anodizing prices that will you just use, I guess, to make a name plates in decorative room.

We ended up selling that business, the original business and for the General Manager at a time, they will hand what this goes way back, progress picture way back to the mid 50s, I guess we call is our founders photo.

I guess when we did nice little meeting with our employees when we went through a presentation and went through lot of aspects of our history. We don't have time to go through that now, but I thought I'd just touch on a couple of things that should take time we'll keep moving.

Let's go to slide 4, talk about our Q4 numbers. So sales, [$16,000,333] are not bad, but then you look at gross margin, [27.3%]. Do you think with all that doesn't make a lot of sense at numbers low, especially considering that the sales were reasonable and then the EBITDA margin also was low. We feel like gross margins [230] and EBITDA margins, [120]. What do we say about our Q4 during our Q3 conference call, we gave you a sales estimate of $15 million to $16 million.

So we actually exceeded that number a little bit and their sales. But EBITDA estimate was $3.2 million to $4 million, and we just came in at the bottom of the range. So, obvious question why don't you -- what does the EBITDA look better considering that the sales were actually above the top of the range? Do you think that the data will be better?

So let's talk about that. First of all, voice talk I missed shipments, [565,000]. What was the main cause and the shipments that turning over the next slide, can you I guess you probably can't, let's go to the next slide. So we're leveraging the doubt international freight disruptions caused by the wars in the Middle East and Europe. That's that number is not a good number, but it's a struggle with the some international freight right now.

We like those numbers, what they are, let's put it that way. I didn't think considerations related to our Q4. So we're going to go through a few things here. I just want to explain, these are not excuses. We don't like that. We don't make excuses. Your explanations as to what happened you can choose to be interested in them or not, but it somebody who might be interested.

So I just first want some important, whenever I talk about production, these normally our production levels to match our sales pretty closely. But Q4 sales are $16.3 million, but our production, we call it sales value production. The sales value of our production was only $15.2 million, like $1 million under our sales, and that's actually a big deal for our P&L.

So first and not surprisingly where that sales would sales -- came from selling and inventory by [$1 million]. That has a negative impact of $275,000 and our gross profit and about $250,000 in EBITDA.

Why is that, if look at it this way, if we actually produce that product well, you saw it from inventory, we get the additional absorption of labor and overhead that would go into creating the inventory.

So it's significant when this is -- not our plan, we didn't plan to do this. We just came up short in terms of our production numbers. We plan to produce at the level of our sales, but we wouldn't get there are.

A lot of reasons for not excuses again, but we have less experienced people are gaining experience, lead some -- I just gave you one little example of what we're talking about. The experience lead will know what's acceptable, let's say, a treat aligner feel [one] or our tape line, which is basically our business. It's a continuous operation. So really important to keep those things running that's how it works.

And then conversely, we'll know what's acceptable, what's not. So we'll make the decision we know we need to stop, we need to keep going, unless expressly will knows we'll stop the line when they go, find somebody maybe [Cory], can take a look at duration to get out ruling as to whether we run or stopping. Certain run at approximately equally to suggest, just running scrap, and that's a bad idea.

But that's an example as to why we're struggling in our fourth quarter to get to production where we wanted to be. The good news is that in Q1, production was new levels were quite good until the storm, which we'll also talk about later on.

Then moving on to $474,000 or see took the fabric sales, we talked about that many times, but that's a product where we just we buy, we sell to our customer in a small mark up. So the margins or sales are there, but the margins are going to be very light.

Unclaimed property tax $212,000, the property tax goes into cost of goods sold and off, you know, where that sort of like a contractually the tax line, that's the cost of goods sold that affects our gross profit or EBITDA of course.

And we were planning on that. We a little bit of a -- I don't know what's called disagreement with the state of Kansas, and we ended up deciding to accrue for the amount and ultimately pay for as well. In Q4 was a 14-week quarter, which means that there's an extra week of fixed costs. The sales mix in Q4 was a little less favorable.

Let's go on to slide 6. Let's talk about the year-over-year results, end results comparison, which probably more meaningful in the quarter-on-quarter comparisons. Fiscal year '24, $56 million of sales, 29.5% EBITDA sorry, gross margin that's not really very wonderful. And 19.6% EBITDA margin. This still is a very different discussion than Q4 or were there certain incidences, which we certain incidence, instances which just reviewed which had impact on our Q4 margins.

The longer-term picture '24 is more about what we're doing intentionally to ramp up our businesses for what we call the juggernaut. So let's talk about that.

Let's go into slide 7. Now what is the story behind our year-over-year margin, as I said, probably more meaningful question. And the same second question related to quarter-over-quarter. Quarter-over-quarter is always going to be items in each quarter that had an effect to numbers which make quarter-over-quarter comparisons less meaningful. Year-over-year, those converts to income even out. So the year-over-year comparisons become more meaningful.

So ramping up the juggernaut and slide 3 to talk with the juggernaut we talk about almost every quarter going to long-term. At Park, we don't wear business for the quarter, although you may be shocked by how dedicated parts people are delivering outstanding results for you every quarter.

I just want you to be aware of that, but let's face it. If we're in a business a quarter never would have gone into aerospace to begin with. How is the long -- that was a decision based on very long-term thinking, not 1 year, not 5 years, not even 10 years. So that's just an example of how Park go through long term. And if we run our business for the quarter, we wouldn't have gone ahead with our $20 million factory expansion either.

Let's start with a little bit further. The top of slide 8, I think, yeah, if you consider the annual sales is to resolve, is we don't need the expansion this quarter, our gross addition levels. Let's go back to the slide 6, look at the sales split in '24, $56 million, looking to sales in '20. [$60 million], we certainly now expansion in ['20].

So we certainly didn't need expansion to get that $56 million of sales, whereas we did $60 million in '20. So certain saying with all sector cost. These are needed to support the business levels in '26, the extra cost because we see what's coming. We don't want to get caught behind the power curve.

Going back to slide 8, we clearly needed or the juggernaut, the plant, the new plant. We're still -- also we're staffing up our new factory expansion to prepare for what's coming, wondering a lot less efficient. We'll staff up and ramp up real factory.

And the good news is our new factory lines are ultimately expected to run more productively, meaning faster and efficiently than the lines in our existing factory. Makes sense, the original were designed back in whatever is 2007. These lines are more -- we use all learning over the last 15-years and assign these lines much more efficient, much more productive. And that will have a really nice impact on the bottom line as we ramp up some factor.

We're also carrying one additional $1.3 million per year depreciation cost-related expansion. Obviously, those costs don't affect EBITDA, but guess what, the expect growth this -- they don't impact the EBITDA, but they do impact gross margins. And just gross margins do include depreciation. That's about that's approximately 2.3% gross margins based upon a fiscal '24 sales, 2.3%.

So let's see how do we work that. If we go back to slide 8 -- slide 6 again, to 29.5% was athe gross margin. We were so you could just basically at 2.3% of that. We didn't have the new factory, just the depreciation loan and then we're carrying other additional overhead costs relate to the expansion, which is obvious, utilities insurance, you name it and those things are both effect on EBITDA and gross margins all related to the expansion.

Let's go into slide 9, ramping up our people clause for the juggernaut as well. We just -- it's not just about equipment and factories about people, we need people. Our current people kind of 126, our hourly people can to us rather already up by approximately $800,000 per year compared to last time this year. That cycle in a way, that's a temporary thing. That includes the additional people is on wage inflation as well.

We just approved another five people to staff the manufacturing lines in the new factory and that's not just for now that. So at the end, we would need to hire a lot of people for the juggernaut. We increased our authorized people count for now from 133 to 138 of your ramp up our people costs and staff to bear for the juggernaut. Our productivity, we measure that sales value production as production divided by hours are really hours worked. I mean, all our leads.

So indirect and direct, that will temporarily slip. That's just the way it is, but ultimately will reverse very much a positive as we ramp up production. The bottom line, though, is we want to be ready for the coming juggernaut, which we do all these things are necessary. So this is like it's a different than the analysis regarding Q4, where there's certain special items that affected Q4. So when you look at the fiscal year numbers, it's more part of our plan. We plan to do what we intended to do.

Let's go into slide 10, Park's balance sheet, cash and cash dividend history. We have zero long-term debt. We reported $77.2 million in cash and marketable securities at the end of the fiscal year, Q4, this year, '24 Q4, but don't forget, there's $9.3 million remaining transition tax installment payments payable through June '25.

And Matt just told me that $4.2 million of that is paid next month. So when we get to our Q1 balance sheet, you'll see that impact on the cash. So there's two more payments, one June, this year, one and a delayed payment is June of '25. So I think you'd want to consider that.

Our cash dividends, Park has paid 39 consecutive years uninterrupted regular quarterly cash dividends, that are skipping a dividend or reducing the dividend amount for 40-years here, Parker's paid $594 million or [$28] and [$97.5] per share. The cash dividends since the beginning of fiscal year 2005.

The $594 million for a little company like Park, that's a whole lot of money on. I don't know. It's probably a lot of money from Microsoft. I don't know Microsoft, but that's a hell lot of money for a small company like Park.

I would say, slide 11, we always give you or tell you about top five customers in alphabetical order -- aerospace that relates to the Lockheed Martin Patriot. The titan these photos pay through a tax-free missile, which we talk about often. ArrowSphere that relates to the Gulfstream.

So ArrowSphere is as a rap distributor for Israeli Aircraft. I biggest, really company and they produce these some of the Gulfstream airplanes under contract for culturing, liked it 280.

Kratos, we'll get back to I think that's on the next page, Middle River. So we got a new done lots of examples why we chose the Komag highway nine and the Nordic group, that's the Boeing 737, 700, we're talking about here is a weather master radome with storm producers with our materials.

And we go on to slide 12, this is a big thank you for Kratos. There were the top five, but the criminals gave us just gift, and I never received a gift like this, I mean, that's an aircraft that's an aircraft that so operations. They gave us to us to put in our factory. It's a beautiful, beautiful aircraft, unmanned aircraft.

I mean, I'm just overwhelmed any to say, even now I don't say. So we took a picture and we to thank Kronos, but now we're doing it publicly. So let's go on to slide. This is an airplane aircraft for the Air Force.

So let's go on to slide 13. Our pie charts interesting '24 -- '21 was the pandemic here. So you could see commercial aircraft was slammed and that's what solo the rest it's about rest of years, perhaps really consistent, actually surprised that commercial aircraft held up in '24 of these in the second and third quarter, we had those big burn-down for MRS, which you talked about. But I guess with other crucial aircraft sales, which allowed us to hold our own there.

Let's go on to slide 14, this is a lane is a project every quarter just to come up with some interesting Parkland niche military program, and military aerospace programs. Some interesting military programs are estimated '24 nanometer revenues by market segment. We just hit our radar, which rocket nozzles and drones to be niche markets for us. Although even aircraft structure for us is a niche market, it might not be a problem for us and which market.

So when we got here, next-generation short range interceptor. I'll just a replacement for the [Stinger] missile. You're probably receiving missile the Boeing EA-18 Growler. We supplied right on material since that program. North Akron and LGM 35 Sentinel, the Globe GBSD Ground-Based Strategic Deterrent, that's interesting term used to be called ICBM to serve placement for the [Minuteman] three. So we've supplied materials on into this neutrals and Parkinson's program.

So this is -- for nuclear warheads. If those are gross of 15 Eagle and we supply road roaming rate on materials and spare part room and the Boeing P-8 Poseidon aircraft, that's replacement of the Orion structural materials instead of Congress, let's see going.

Let's talk a little bit about supply, slide 15. Sorry, let's talk a little bit about supply chain challenges. On the past, I keep hearing that I've heard so many times all the supply chain issues are behind us or about to be minus whatever we hear that behind us, is we find that they are not.

I can't tell you how many times I read reports from other public companies reports or using highlighting supply chain issues as the main reason why they're not making their numbers. Water supply issues, supply chain issues really all about anyway, what is causing that and why would they go away.

Our supply chain issues, fundamentally workforce issues of workforce issues been resolved or is and that was about if you don't the workforce, you can have all the machines, all the equipment, you're just not going to be produced to their requirements. You need to produce to get the people to do it.

We hear unemployment is not that bad. So what's going on here? Well, one of the things to consider it's widely reported 7.2 million able-bodied men, just men between the ages of 25 and 54 a prudent and left the workforce are not even looking for work, I guess a lot of electronic pandemic.

Even though they're help-wanted signs everywhere and what's just happening, if you have an opinion about and I heard you don't I saw Charles pain and Lisa, the clinical financial news guy, he said he was a guy 60 years old, never work is a lot of people. Apparently they've worked their whole life. And so obviously the garbage enabling that wonder why that's happening.

But these lives. I mean, it's not funny, these lives are being destroyed. After a couple of years, people sitting on the couch eating [potato] chips, watching Oprah whenever they do for two years. They tried to come back to work there. They can't. They've lost their edge. Through tragedy, that's I would probably would you will hear about our new investor presentation, but I renew and then I'll give you my thoughts about something like that.

Let's go on to slide 16, what has just been the park to supply chain issues? So we found ways to move supply chain challenge to better planning, strategically carry more inventory, providing suppliers with longer lead times. But the issues continue to be a major challenge for us. They're very consuming of our time and energy. So yeah, we're managing it, but it was a lot of effort.

But what are the ongoing supply chain challenges meet for the aerospace industry generally maybe Parks able to manage it with a lot of effort. But the aerospace industry continues to struggle with supply chain issues. These challenges are impacting program ramp ups and new program introductions, demand is there, but the industry is just falling short means in demand or is this going? Is there a solution in sight? I don't know. You know what is it? So what is it, I don't know if you have some ideas. I'm curious. I don't know. I don't know what the solution is.

Going to slide 17, we won't cover this in great detail. This is a slide we show you every quarter. Firm pricing, GE aviation jet engine programs for pricing, LTA requirements, contract form 19 to 29 with Middle River Aerostructure Systems armrest, which is a sub of ST Engineering aerospace.

So we always that's explain us and what I'm going to get it because we have all these to GE manufacture title this slide, GE aviation-related Congress. All these programs listed below are GE Aviation programs. What's the connection? Well the connection is that we garnish Cobra's Middle River was a sub GE aviation sold, GE sold, we just acquired GE aerospace, sorry.

GE sold, MRS to SDN hearing, which is a large Singapore aerospace company about five years ago. But MRS and Park continued to support those programs just as when it was -- when it was owned by GE Aviation.

I won't go through the progress. We talk about a long time. So I'll just point out a nice picture here. Some 47 program was canceled versus, so some spares. I will love this picture because you know you could see how big these cells are concrete and SkyStream back here and all of those vessels are all Park material.

Let's go on to slide 18. iwe know if the cover, the first check item, we cover that every quarter. Second check item, cash containment wrap for the GE9X would produce to our FP composite materials.

We talk about that in the second quarter knows well. For your solution relative new stopped MRS qualification of three Park proprietary film, adhesive formulation, product forms and progress. And then the next item, MRS Park LTA that CLT referred to in the prior slide [229] was recently amended to include three-part facilities or product forms for composite bond in Melbourne.

That's a really great deal because now we develop -- we develop this film. These are product lines under a -- the joint development agreement with GE and MRS but it's really wonderful because, we developed a product that immediately goes into qualification on really important programs.

No, the dilemmas you develop a new product in our R&D labs have great products. And what I mean, Secretary Paulson forest over the years, you've got to get a program. So it could take 20 years, like not 20-years, 20 seconds is between the time that our product is finished when it goes into qualification.

That's a very special thing that we have with that customer. Life of program agreement or partner numerous next year is being actively worked on. We talked about before was the waterpark. I don't know what's a whole fact.

Let's talk -- let's go to slide 19. Let's talk about some of the GE aviation jet engine programs will start with the Big Kahuna A320neo. Airbus has a huge backlog of it's virtually aircraft 7,170. I don't know if you know that, that's such a huge number and here's the problem for Airbus. Let's say the currently producing at a rate of maybe [50] a month, that [600] a year, right?

Well, how many years of backlog is there? It's like 12 years. So if you want, I wonder, I know when you've got to wait 12 years, I get it that doesn't help. They want to sell a lot more of these they really need bring that the lead times down. So that's why they're pushing hard to get to [75] per month, which is what, [900] per year, right.

So do the math. Divide [7171] by [900]. That's better. It's not like tomorrow, but slightly better. That's the motivation and not my opinion. You can listen to other people. They have different opinions. I think Airbus is very determined to get to that [75] per month and during their annual shareholder meeting on April 25, and I started in April 10, in the first quarter investor call April 25, again reaffirmed their plan to achieve rate of 75 April 20 family aircraft deliveries per month in '26.

Maybe the end of '26, I don't know, but in '26, how they do and so far with that ramp up? This is all notwithstanding and all known over and above all their restrictions and limitations of what supply chain supply chain.

Let's go to slide 20, but there are pretty well, actually, I think pretty well. Airbus delivered the following number of age between 20 new aircraft each year, the following calendar year, as you can see the numbers ramping up because the 19, if you can see the 561 then boom hit by the pandemic and has slipped back.

Look at at '23, so if I show you want to compare to 561, so '23 that actually exceeded the first time pre-pandemic production levels. So '23 for the first time since the beginning of the pandemic, Airbus was able to return to April 20 production and delivery rates to pre return to pre-pandemic rates. That's a key milestone and a very good accomplishment for Airbus. Congratulations to them. Because, it's over and above all the supply chain issues just here for all time or notwithstanding them.

April [24] year to date, Airbus delivered 167 airplanes on those four months, but it also leveraged 51 airplanes in both March and April '24. So don't get too totally confused by the beginning of the year, always slow and kind of ramp up in the end of the year. This does come from Airbus.

If you want my opinion, it's just my opinion, but I can't prove, it just my opinion, my guess is you'll probably get, but probably at 55 this year average for the year. I just my guess. That the Airbus has not saying what they're going to do this year. What they're saying is the end of or '25, you're saying by of '26 will be at a rate of [75].

Slide 21 -- slide 21, we are cleared cover this based upon this huge backlog, Airbus would already be producing entry 20 new aircraft at the rate of [75] per month, if not, for supply chain constraints and limitations.

Again, what was the story about supply chain problems are behind us, I don't think so. What about Boeing? How Boeing struggles and challenges with the MAX impact through 20 neo family aircraft prospects is also the single-aisle market share.

I think my opinion is it depends on whether Airbus's when you're trying to move that number up from 75 to hires and lot of reporting about are they thinking about it, but they've not made any announcement. So what about the engine installed per day through 20 aircraft content.

An important question for Park by way of review it's from 20 neo offers to approved engine options, namely the CFM LEAP-1A engine, which is the program partners on and a Park pad, PW 1,100 G engine, which is Park and none of that program.

So the second, we just covered the second bullet item, the third item, bullet item. According to the May 24, edition of your own news that's our by our bimonthly addition. CFM LEAP-1A is market share for new engine orders for the 20 neo family of aircraft to 63.1% as of March 24.

To delivery sorry, to slide 22, a delivery rate of 75 and 320 neos per month, 63.1% leap market share translates into 1,136 LEAP engines per year. What's it worth to park, we'll cover that. We could slide 32 there. There are currently, it does 132 firm LEAP-1A engine orders that totaled 100 engines, were those for a motors work apart? I don't know. You might refer to slide 32, but probably about a quarter billion dollars, I would think.

That's not precise because slide 32, the suite pricing were [25, 29]. So note that pricing doesn't go into effect in oh nine months also assumes film adhesives on the screening program not on yet weren't qualified, but would it -- would you rather say is that our pricing up to 29, including new hires that's expected by their MRS and Park. So we haven't taken into account and some of these -- some of these engines will be delivered after '29.

I will have a contract up to 29. So I guess you could say, well, maybe it's nothing up to '29. My opinion is that highly, highly, highly, highly likely that we'll be supplying this program for a long time after '29 and all the other numerous programs.

One of those firrm warns with the Park, which started protects. There are widely reported serious durability issues with the Pratt PW 1,100G engine we talked about this before. So all these issues affect market share between the Pratt and LEAP engine, interesting question, we don't know.

And maybe the answer is similar to the Boeing question regarding Airbus A320 generally, can leap [Borland] or produce or CFM, rather, will you're trying to produce more LEAP engines, and I know the answer to that question.

So meanwhile, CFM is already delivering new LEAP 1A engines with its new reverse bleed air system designed to further improve durability. So you see that the economy thing here, if I kind of Pratt's having pretty serious durability issues in CFM is moving forward improving durability.

But let's go to slide '23. We got the [H20 XLR] variant update your 20 family. We covered this. We covered every quarter. Inspected and enters service 224 moving got plenty of response. Airbus is 550 orders for your plants, potentially important ColdSpark. Let's focus on the [919] a little bit more though, 919 this is a slide 23 would see CFM LEAP 1C engines.

919 that's only engine from the 919 sounds like there are 21 dares to agents that are approved. COMAC plans to achieve a production rate of 150 C919 aircrafts within five years. You look at our juggernaut slide where some less than that. COMAC as reported of 15 on orders. That's really hard to nail that down with 22 reports as saw. Kind of Southern just order another 100 airplanes.

Go to slide 24, commercial delivered six units whom actually proportionally expanding its 919 production lines. It's important stuff. Then looked at this recently reported that Chinese CAAC, that's like the China phase aiming for 2025, that's European certification agency for the 919 aircraft, that's a really, really big deal because the thought was just was going to be China only airplane. It's clear that China Infomax, that's not what you're thinking about at all. They want to take on Boeing and Airbus for soon.

This could be a big program, important program and important program for Park. And like I said, we are expanding production lines. So these things to me means something? So last item is the ARJ -- COMAC ARJ21 regional jet. We spent an awful lot of time on that and well accepted 35 aircraft reported delivered reported and lead delivery in '22 and '23 get back to that later.

And the rest of the program is going well, a good program for Park and continuing to slide 25, it dropped to [777X] aircraft genomic surgeons. We've covered this for many quarters now expecting certification and '25, some people are skeptical about that. But we'll see we're talking about the airplane.

We expect about $1.7 million from this program in this calendar year '24. And we'll see there might be a little bit of a gap that we have done with the crude production tested. There may be some almost literally waiting for the program and start to really ramp up.

This next check item to cover them many times and the next check item, Boeing is [480] one orders for this airplane. Next check item and the triple seven, actually orders continue to come in nicely, even though Boeing, notwithstanding Boeing's ongoing challenges. And this is also potentially very significant commerce for Parks. We're hoping for the best for this program.

Slide 26. Okay, what do we talk about here. This is GE aviation jet engine programs, sales history and forecast estimates. When they go through the whole history of Q4 six of '24 from recent quarter, some $7.6 million I think we had estimated $7.5 million. So just about that number.

The total for '24, even though we had a good Q4 is only $21.1 million. That's because we had to burn down quarters in Q2 and Q3. I'm talking about it for fiscal '24. So $21 million, that's a pretty low number clinically number compared to last year, the prior year '23, [$22.3 million]

So we had forecasted $6.3 million for Q1. That's not even the great number. You look at $7.6 million in Q4. And but I guess it's an okay number, but it's really important to now read this footnote here carefully. The amount is fully -- that amount is fully booked for Q1. Just for forecast, but Q1, GE Aviation programs will be impacted by an unknown amount of storm damage. The company's facilities recorded on May 22, and the company new lease will get back to this, and we talk about forecast for Park generally.

So let's keep going for now on. Slide 27. Burn-down Aerospace industry management inevitable day of reckoning. So we've been through inventory burn downs. You're probably tired of hearing about, and we're tired, certainly tired talking about them. We have discussed at some length the very strange inventory management practices of the aerospace industry.

I think at a different term, much stream has been inside to be little nicer, but it might be one of my earlier address. I mean, you're probably tired of hearing about those things too. And we certainly aren't, and we had literally no.

Deeper and downs as trade inventory practices certainly can cause serious and even extreme distortions and disruptions, the business plan and expectations. But ultimately, the distortions and disruptions are as a matter of inevitability, temporary and transitory nature. Why is that because the end program demands have to take over at some point. I mean, it's inevitable. It's just pure math.

Let's go into slide 28. Soon or later, the inevitable day of reckoning we call will come. Sooner or later, the demands of the aircraft and programs will take over and drive our ambition levels and activities that has to happen. It's inevitable and here's the thing from what we're hearing now.

I mean, really recently, that day of reckoning is coming rather soon, sooner and later, we heard just recently in '25, we're talking calendar years, a pretty big jump for a day 2, 20 program, pretty big jump. We've been kind of languishing with burn downs and inventory adjustments, and we hear all you and others -- our inventory has been burned down. We don't have anymore. We don't want our inventory at. I mean your customers inventory they hold of our product.

It's generally fairly low, the gear really burn down anymore. Now one year old and some finished structures inventory or they do with a customer does. So it's a little bit exasperating. But your customers have been told to get ready for a pretty big jump in '25.

And they also been told that at '26, Airbus will be at that 75 airplanes per month rate. So I have a feeling that this day of reckoning is not far off. We'll see. But the good thing is that although we did not know when the day of reckoning would come, we knew it was coming to now available as far as we are concerned, cannot be stopped. It's like a locomotive that QP stops freight rate, good thing that a park, we did not wait. Good thing that we are already ramping up for the day of reckoning, ramping up for the coming juggernaut.

As shown on slide 29. Okay, here we go. Our Park financial history and our estimates, but we will go through the history used to already kind of covered it. Fiscal year 24 Q4 and totals, we are talking about those numbers, but let's talk about the forecast for Q1. This forecast was before the storm. It's really a shame because Q1 was looking at a real nice quarter. Why's that mostly because all those kind of things that affected Q4. None of them were affecting Q1.

The production levels planned to be at least at the sales level. And actually, I was thinking that we'd be at the top end of the range for both sales and EBITDA in Q1. So the timing of this storm was very unfortunate piece [21] was looked like a nice quarter, but we better go ahead and it's like dirty and read that big footnote. The '25, Q1 sales estimate is based on fully booked sales for Q1.

The '25 Q1 EBITDA estimate is based upon those who book sales. However, the Q1 sales and EBITDA will be impacted by unknown amounts for the storm damage. The company's facility reported on May 22, '24 company news releases, although was reported to unknown amount of fiscal Q1 sales will slip into Q2. As a result of storm damage, the company has not expect to lose any sales or business as a result of storm damage.

Let's talk about a little bit more. So it was a pretty big event for us and what our people have done on a really fantastic job of getting the factory up and running, all the hot mill lines in both the old and new factory are fully running to tape lines for film lines. we are about to restart the solution three years.

No actually pretty incredible job on their part. I'm pretty credible job. But the number I'd just guess at this point a little bit, but my guess is the top line is going to be in the thirteens, not sixteens. So major major impact on the quarter.

No, we typically produce a lot of the end of the quarter shipped a lot in the quarter and we don't have any inventory. So we'll agree to sell what we produce and we're not able to produce bitume--- on the factory can produce last week for the P&L look pretty ugly because we hardly produced anything, but we had full stay of everybody that full pay less.

We take, we come and help clean up stuff like that. But the recovery is going really well, except it's going to be a mess for Q1, too bad. And these things happen. People did a great job, in my opinion. The key thing for me is so nobody was hurt. That was a key thing for me.

So let's go on to slide 31. Park Financial outlook, sorry financial outlook for Park [GE] programs and update. We'll have to go through this in detail because we've gone to this pretty much every quarter. Just one thing, what's the timing for the outlooks? We kind of already covered this? Not sure with the juggernaut is coming and can't be stopped, we better be ready. I think maybe pretty soon, maybe not this year, calendar year, but I would think next year. So meaning calendar '25, we'll see.

So let's go to slide 32. This is a juggernaut slide, and we won't go into detail because we cover this three, four times ready. Couple of points I want to make. In page 20, Neil, we're assuming 1,080 units, and that assumes 75 airplanes per year -- per month, but also assumes a 60% market share for the LEAP engine. When we said it's about 63.2%, I forget what the number was exactly. So we're doing is we're bringing down to 60%. And the reason we're doing that as we looked at changes every quarter because every quarter the market share is going to change.

This way, we'll just use 60%, which is a little bit lower number 60%, but that we don't have to change the presentation every quarter. And so I don't that was a good decision or not, but that's what we've done. And you see this highlighted in and footnote for one of their change that was made as we upped ARJ2172. Remember, I said that they delivered 35 airplanes last year, the prior that's equivalent, obviously the ones, but I sorry to [70] engines per plant.

All these programs are two of your points and what we think we need a couple more spares that's probably still pretty conservative and they're still trying to ramp up to some extent. 919 member call, Mike said they are going to be at 150 units per year for five years, let's call it 300 engine, not 200 engine.

So generally speaking, we think is relatively conservative, the GE9X assumption, and we're not going to provide a how many units we're talking about. But I think it's pretty conservative actually, in my opinion. So that's at the juggernaut slide.

Let's go to slide 33. I will go through this pretty quickly. We just updated this slide, financial outlook based upon the growth estimates of programs which were sole source qualified. You can read the footnotes, a kind of explain the math, but we start with our base case fiscal '24. And then we on the incremental program sales, I mean, we learned about $21 million in fiscal '24. So a lot of incremental GE program sales of $15 million.

We just decided to remove the reference to specifics our programs because we sold the company, we felt is we don't disclosure for customers and maybe I don't want that. So we just want to know what number $15 million incremental sales of $7 million last year and nine is for non-GM program last year, $35 million approximately. So I'm assuming that a 20% increase, over course of whatever, three, four years, we think that's a pretty conservative assumption.

And the rest is math, except a $4 million, bringing pointed, I think last time we did $2.5 million, but this is based on $11 million EBITDA, which is such a depressed number based upon the ramp up of our costs as we ramp up our factory and ramp up our cost to prepare for the Juggernaut. So it gives us a approximately EBITDA estimate of $35 million.

And slide 34 is all the footnotes. I won't go through this. It's just math, but really if you have any questions, let us know. A slide 35 and 36, these slides during our Q3 presentation. I think exactly like this do a major new manufacture [Kroger] initiative. Doing new item this last item on 36. Our manufactured project condition is under active review and discussion with our customer.

The point I'm making is that this is a pretty active project and the customers highly motivated. We think there's a pretty good likelihood this will actually happen. This is a major project for Park as we outlined on these two slides.

Let's go to slide 37. As I said, we had a nice little event to celebrate our 70 anniversary in the factory, top left to do the presentation, the history about Park for employees. Discussions about a park is a special company, and we've done some really incredible things over the years.

And my pointed them is that even if they've only been with us a week or a month for part of the Park family, and they share and all those accomplishments, it was incredible things just like anybody else does top right? So after the presentation was I will start with a presentation, a number of employees came up to me, certain very nice things that one guy told me exactly how you said it, but Parks and it's so much for him and his family. Then thank me for that.

And I'll tell you, on running any business park to unusual product stuff, crap, you got to deal with, but those kind of things make it all worthwhile for me. This dark Friday's young man came up to me and introduce themselves. So it might industry of ours and who said, I worked through the treater operator. I've been here for one week, isn't always. So the newest employees said all right? You and I I will cut the cake. We had a nice cake. We had three R&D event and kind of together.

So and in the bottom picture is obvious that some just a company photo of our employees, at least the ones that are based in Kansas. Unfortunately, Mark was unable to be here, but everybody else. And what you normally see in Kansas was there, I'm actually in the back row bust, I told people, [Mike Kourey] organize their photo session. So that tells people needed to be in the back room. So if you could finally, let me note the backlog.

And operator, that concludes our presentation. So if there are any questions, we'd be happy to answer them.

(Operator Instructions) Nick Ripostella, NR Management.

Good evening and Brian, I'm glad that, as you said, no one got hurt from the storm and thank god it wasn't any worse. I just have kind of a big picture question, you have given the programs you're on and the future and the potential new opportunities. I'm just wondering, do you think Park will continue to be a debt-free company or at some point, would you consider borrowing money?

And the reason I ask this is, if the stock were to warrant reflecting the potential possibly you could be more aggressive in repurchasing shares? And I'm not saying today, but if the stock does not reflect the bright future stays where it is or goes lower? would you consider being more aggressive and then maybe levering up?

Thank you.

Thanks, Nick for the question. So interesting question, yeah the stock price, I mean I follow when we follow it, I mean it's hard to figure out why it would might be going up or down. It's likely that I agree with your implication of that?

It certainly will it go there, hello. Okay. One way. Operator, so there's an echo on the line at this point, I don't know why. I'll continue talking what's very distractive. So the stock price, I don't know why it goes up or down a little bit, but I certainly agree with the implication that doesn't reflect the value of the company.

And I guess my way of thinking about that is that ultimately, you'll have to and I think ultimately, as the numbers pan out the numbers we're talking about that the world, the market will recognize the value of the company. Until then, I guess we'll just do the best we can to explain what we're doing and some people will understand it. Maybe some people won't agree. I don't know.

As far as go into debt, Nick, right now, we don't, see you need to do that. We did -- we completed our expansion as you know, we paid for it and that itself will lead to that the very significant uptick in revenues as we call the West Coast to Juggernaut. Just other project we're talking about. So that could lead to -- I think we talked about maybe $6 million to $10 million of capital.

But what we didn't talk about is working capital. We talk about cap, we're talking about capital equipment in the plant and that kind of thing. But the working capital could be a lot like $15 million or something like that.

So that gives you a little additional perspective. Would we go into debt? I'm sure, we felt that it was a legitimate reason to do it. And there's some opportunity, there was important enough that require us to go into debt.

So generally speaking, we've not been a company that's a jet that it's not an our philosophy is to have cash. We've always had cash and we feel good about that. And, you certainly feel good about it when you go into like these, what we call black swan, things like a pandemic, but we're not so philosophically opposed to debt that we would consider if the circumstances we thought were compelling.

(inaudible)

I'm not sure.

Okay. Thank you.

[Ted Brewey], Ruby Investments.

Thanks for taking the question. Can you talk a little bit more about the potential storm recovery aspect, you say you have extra staffing. How much of that can really be recovered potentially in your second quarter and third quarter and both from a revenue and a profit point. I imagine some of the profits are just burn because you have to hang on to your staff, is understandable.

And then secondly, on that extra opportunity that you talked about potential opportunity, is there any timeframe for when you expect that to be a bid -- bid or potentially awarded? And thank you.

Okay. Thanks for the question. We don't expect to lose any business in all of business that were spotted, the all the sales and put it that way that we lost in Q1 will be in Q2. It will compete. It won't go into Q3. The profit store is a little different, let's say we just hypothetically, let's say we end up at $13.5 million in Q1, we were taking to be over $16 million.

The bottom line. It will be like different than if we plan $13.5 million was kind of even across the quarter that we're running for towards $16 million. And then the last two weeks everything goes down to zero.

So there's some amount of profit which will not be recovered. Even all sales, all moves we won't lose any sales or sales that were lost in Q1 will be in Q2. And I'll finish your question, but I don't I can't quantify that. I tried to quantify the -- or maybe I didn't clarify if it is largely intended to change that now.

conWe're thinking that sales-wise, that we're probably going to be in the thirteens when we were planning on sixteens. So we're going to lose and over $2 million of sales in Q1. All that will be translated into Q2.

The profit stuff is much more difficult for us to estimate at this point even though we're at the end of the quarter, is still a bright and dynamic situation. As far as a new project is concerned, it's not a matter of award solar competing for it. I just want you to understand that. But the customer's needs are for that project to be up and running by '26. So that's kind of a timeframe that you might consider, not it's from there --- from there and from our end. That's a lot of time actually to be a -- lot to be done to get there.

Okay. And just following up on that, if you're not competing for it, is that business that you think you can get or that you hope to be awarded and if they want deliveries in '26, like when would you need to start allocating capital, later this year, early next year? And on the storm insurance, was there or the storm? Was there any insurance of any kind, either for capital or business interruption?

Yes, we have insurance. The wind [damage] and insurance, which is that it comes under wind damage, our deductibles quite high and that we did that intentionally because we think of insurance, we have cash and good balance sheet. We think of the cash drop clause.

We want to bet against the banks. We said are doctors pretty high in the theory that if we -- we sell lower, obviously, their premium be much higher. And ultimately, insurance company is going to win because they always win.

So there's a pretty high deductible, but we still expect to have some insurance recoveries and there is busy eruption insurance that's included, but we don't have amounts at this point. It's very difficult for us to quantify the lowest, not only in terms of business interruption, but the repair and the facility, the roof itself, it is intact right now and it's secure, but it still will eventually need to be replaced.

So on that, your question about that project, it's a customer that we're very close to, and I'm not at liberty to describe which one. They're talking to us exclusively at great length about how this could be done. Their timing is '26. That's what from their perspective, that's what they need, not going to be careful. It's very confidential projects. I don't want to say too much about it, so I wouldn't give it away.

But yeah, I mean, it's a good question. I would think that next year we wouldn't need to start ramping up the capital in order to meet that requirement, but maybe the beginning of next year.

Great. Thank you.

And still may not, sorry, I just wanted to say, if something that happened, but I think there's a high likelihood of happening because the customer very motivated and they're not talking to anybody else about this.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Mr. Brian Shore.

Thank you. This is Brian again, of course, thank you very much for listening in. Have a good afternoon. And if you have any follow-up questions, please feel free to call us. We have to try to help you with them, have a good afternoon, and we'll talk to you soon, thank you.

That concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.