Park Aerospace Corp. · NYSE:PKE

Park Aerospace — Investor Presentation (May 2021)

35 slides from Park Aerospace's investor presentation, May 13, 2021

1. Slide 1: Company Presentation May 13, 2021

   Company Presentation May 13, 2021

2. Slide 2: Forward Looking Disclaimer

   Forward Looking Disclaimer This presentation contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events or our future financial or operatin

3. Slide 3: Our Business

   Our Business  Park Aerospace Corp. develops and manufactures Solution and Hot-Melt Advanced Composite Materials used to produce composite structures for global aerospace markets:  Wide array of prepreg materials specifically designed for hand lay-up or automated fiber placement (AFP) manufacturing

4. Slide 4: Our Business (Continued)

   Our Business (Continued)  Park Aerospace also offers:  Specialty Ablative materials for Rocket Motors and Nozzles  Specially designed materials for Radome Applications  As a complement to our Advanced Composite Materials offering, Park Aerospace designs and fabricates Composite Parts, Structures

5. Slide 5: Our History

   Our History  Park founded on March 31, 1954 by Jerry Shore and Tony Chiesa with ~ $60 Thousand Investment  Company started in a small “factory” (garage?) in Woodside, Queens with 5 employees  1954 Results: Park’s Founders  Sales: $124,206.59  Pretax Profit: $887.38  Taxes Paid: $226.21  First

6. Slide 6: Our History (Continued)

   Our History (Continued) November 17, 1960 Park goes Public (Park recently celebrated 60th Anniversary of IPO!) 1961 Park acquires New England Laminates Company (“Nelco”) in Stamford, CT for ~ $200 Thousand 1984 Park lists on NYSE 1985 Park commences regular Quarterly Cash Dividend Mid-1980’s Park ha

7. Slide 7: Our History (Continued)

   Our History (Continued) Jan 2007 Park commits to Aerospace as second major area of business focus Jan 17, 2008 Ground-breaking of Park’s New Aerospace Facility in an empty field in Newton, KS May 2009 Park’s Newton, KS Aerospace Facility opens February 28, 2014 (11:00 PM) Park makes first production

8. Slide 8: Our History (Continued)

   Our History (Continued) December 2018 Park announces Major Expansion of Newton, KS Facility December 2018 Park sells its Electronics Business to AGC Inc. of Tokyo, Japan December 2018 Park’s transformation from an Electronics Company into an Aerospace Company is complete July 17, 2019 Park changed n

9. Slide 9: Major Expansion of Newton, KS Facilities

   Major Expansion of Newton, KS Facilities  December 2018…Park announced Major Expansion of Newton, KS Aerospace Manufacturing and Development Facilities  Redundant Plant for MRAS and its Aircraft OEM Customers  Park expects Redundant Plant will also be needed for Manufacturing Capacity  Approxima

10. Slide 10: Major Expansion (Continued)

    Major Expansion (Continued)  Expansion includes:  New 60” Hot-Melt Film and Tape Manufacturing Lines  New Mixing and Delivery Systems  New R&D Lab  Expanded Production Lab  Additional Slitting Capacity  Additional Freezer and Storage Space  Space to accommodate additional Hot-Melt Tape Line

11. Slide 11: Park's Balance Sheet, Cash and Cash Dividend History

    Park’s Balance Sheet, Cash and Cash Dividend History  Park has zero long-term debt  Park has $117 Million of Cash and Marketable Securities as of end of FY2021 Q4  Park’s Cash Dividend  Park has paid 36 consecutive years of uninterrupted regular quarterly cash dividends without ever skipping a d

12. Slide 12: Quarterly Results for FY2020 and FY2021

    Quarterly Results for FY2020 and FY2021 (In Thousands)* FY20 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY21 Q1 FY21 Q2 FY21 Q3 FY21 Q4 Sales $14,950 $13,723 $15,847 $15,494 $12,213 $9,250 $10,372 $14,441 Gross Profit $4,804 $3,813 $5,022 $5,034 $3,674 $2,638 $2,553 $4,326 Gross Margin 32.1% 27.8% 31.7% 32.5% 30.1%

13. Slide 13: FY2017-FY2021 Results

    FY2017, FY2018, FY2019, FY2020 and FY2021 Results (In Thousands)* FY2017 FY2018 FY2019 FY2020 FY2021 Sales $31,837 $40,230 $51,116 $60,014 $46,276 Gross Profit $8,299 $11,288 $16,184 $18,673 $13,191 Gross Margin 26.7% 28.1% 31.7% 31.1% 28.5% Adjusted EBITDA $1,055 $4,704** $10,248** $13,012** $8,419

14. Slide 14: FY2021 Q4 Top Five Customers

    FY2021 Q4 Top Five Customers (in Alphabetical Order) AAE Aerospace CPI Radant Technologies Kratos Defense and Security Solutions Middle River Aerostructure Systems (MRAS)* and its subcontractors Boeing 747-8 Turkish Aerospace Industries Navy Multiband Terminal MK125 Warhead for Standard Missile 2 Si

15. Slide 15: Park's Estimated Revenues by Aerospace Market Segment

    Park’s Estimated Revenues by Aerospace Market Segment FY2020 FY2020 Revenues: $60.0 Million FY2021 FY2021 Revenues: $46.3 Million 051321 Slide 15

16. Slide 16: Park Loves "Niche" Military Aerospace Programs

    Park Loves “Niche” Military Aerospace Programs Lockheed Martin Long Range Anti- McDonnell Douglas F-15 Eagle Ship Missile (“LRASM”) Launched Avio Aster 30 104 to Zero! It is not even fair... from B-1B Bomber Air Defense Missile Park’s Estimated FY2021 Military Revenues by Market Segment Estimated FY

17. Slide 17: Park Loves its Commercial Aircraft Programs

    Park Loves its Commercial Aircraft Programs  Single-Aisle Aircraft vs. Wide-Body Aircraft  Clear Trend favoring Single-Aisle Aircraft  If you want to be in Commercial Aircraft, you want to be in Single-Aisle Aircraft (Park’s Opinion)  Major Single-Aisle Aircraft Programs: √ Airbus A320neo Family

18. Slide 18: Commercial Aviation...Emerging from the Abyss

    Commercial Aviation...Emerging from the Abyss  Higher Jet Fuel Prices and Environmental Concerns provide extra motivation for airlines to more quickly replace less fuel-efficient legacy aircraft with more fuel-efficient modern aircraft, such as the A320neo family of aircraft  China domestic aviati

19. Slide 19: GE Aviation Jet Engine Programs

    GE Aviation Jet Engine Programs  Firm Pricing LTA (Requirements Contract) from 2019  Park Composite Materials are Sole through 2029 with Middle River Aerostructure Systems Source on primary structure component (MRAS), a subsidiary of ST Engineering Aerospace for Passport 20 Engines for Bombardier

20. Slide 20: Update on GE Aviation Jet Engine Programs

    Update on GE Aviation Jet Engine Programs  Airbus A319neo/A320neo/A321neo/A321LR/A321XLR (A320neo Family of Aircraft) with LEAP-1A Engines…In the ramp mode…  Airbus Delivered 57 A320neo Family of Aircraft in March  Airbus plans to increase A320 Family of Aircraft production rate from 40 to 43 per

21. Slide 21: Update on GE Aviation Jet Engine Programs (Continued)

    Update on GE Aviation Jet Engine Programs (Continued)  A321XLR News • First Test Aircraft Nearing Final Assembly • First Flight expected in 2022 • Certification and entry into service expected in 2023 Airbus A321XLR 051321 Slide 21

22. Slide 22: Update on GE Aviation Jet Engine Programs (Continued)

    Update on GE Aviation Jet Engine Programs (Continued)  Bombardier Global 7500 with Passport 20 Engines…In the ramp mode! Bombardier Global 7500 with Passport 20 Engines  Comac ARJ-21 with CF34-10A Engines… In the ramp mode! Comac ARJ21 with CF34-10 Engines 051321 Slide 22

23. Slide 23: Update on GE Aviation Jet Engine Programs (Continued)

    Update on GE Aviation Jet Engine Programs (Continued)  Comac C919 with LEAP-1C Engines…Comac has indicated they intend to certify and begin deliveries of the aircraft before the end of 2021; Park’s Lightning Strike Protection materials now being used on program  Boeing 747-8…Boeing has announced i

24. Slide 24: Commercial Aerospace Year in Review... Armageddon Revisited

    Commercial Aerospace Year in Review… Armageddon Revisited  Airplanes Parked by the Thousands  Airline Terminals were Ghost Towns  Airplanes Flying Almost Empty  Thousands of Flights Cancelled  Thousands and thousands of employees were laid off throughout the Commercial Aircraft and Commercial A

25. Slide 25: Commercial Aerospace Year in Review (Continued)

    Commercial Aerospace Year in Review… Armageddon Revisited (Continued)  But, at Park, we did not completely buy all the doom and gloom news…we did not buy that the “End of Days” were at hand  So, we made arrangements with MRAS to maintain minimum monthly baseline (critical mass) production levels t

26. Slide 26: Commercial Aerospace Year in Review (Continued)

    Commercial Aerospace Year in Review… Armageddon Revisited (Continued)  We spoke at length, during our FY2021 Q1, Q2 and Q3 investor calls, about the significant divergence from and mismatch between the minimum monthly baseline (critical mass) production amounts agreed to with MRAS and the then curr

27. Slide 27: The GE Aviation Jet Engine Programs Park is on are in the Ramp Mode

    The GE Aviation Jet Engine Programs Park is on are in the Ramp Mode  And the ramp is looking steep! For perspective, GE Aviation Program Sales for the following periods were:  CY2019: $29.3 Million  CY2020: $15.8 Million  Last 6 Months of CY2020: $5.0 Million  CY2021 Forecast for GE Aviation Pr

28. Slide 28: GE Aviation Programs Ramp Mode (Continued)

    The GE Aviation Jet Engine Programs Park is on are in the Ramp Mode (Continued)  In addition, we recently received an updated Long-Term Forecast for GE Aviation Program Sales for CY2021 through CY2029 (the balance of the Firm Pricing LTA period), and…  On an apples to apples basis, total updated f

29. Slide 29: How is Park Responding to the GE Aviation Programs Ramp-up?

    How is Park Responding to the GE Aviation Programs Ramp-up?…It is All About Our People  Park’s current People count is 106!  So, what happened? Why haven’t we increased our People count as planned? • People getting paid to stay home?  Who is that helping?  But, as usual, Park’s People are steppi

30. Slide 30: How is Park Responding to the Ramp-up? (Continued)

    How is Park Responding to the GE Aviation Programs Ramp-up?…It is All About Our People (Continued)  And Thank Goodness for Park’s Customer Flexibility Program  Current Total Participation: 80%...Participation break-down: • 2 job categories: 47% • 3 job categories: 30% • 4 job categories: 18% • 5 j

31. Slide 31: GE Aviation Programs Sales History and Forecast Estimates

    GE Aviation Programs Sales History and Forecast Estimates  GE Aviation Programs sales history:  FY2020 Total: $28.9 Million  FY2021 Q1: $4.1 Million  FY2021 Q2: $2.9 Million  FY2021 Q3: $1.8 Million*  FY2021 Q4: $4.4 Million  FY2021 Total: $13.2 Million Cathay Pacific 747-8 Departing Anchorag

32. Slide 32: Park's Financial Performance History and Forecast Estimates

    Park’s Financial Performance History and Forecast Estimates  FY2021 Sales and Adjusted EBITDA history: Sales Adjusted EBITDA FY2021 Q1 $12.2 Million $2.4 Million FY2021 Q2 $9.3 Million $1.4 Million FY2021 Q3 $10.4 Million $1.4 Million FY2021 Q4 $14.4 Million $3.3 Million FY2021 Total $46.3 Million

33. Slide 33: Park's Reflections on its 2021 Fiscal Year... Park's Finest Hour?

    Park’s Reflections on its 2021 Fiscal Year… Park’s Finest Hour?  Park had its share of tragedy and heartbreak during the year…  The kind which does not go away  But, at Park, we don’t quit, we don’t give up and we don’t back down…its is just not in our nature to do so  We pushed forward with our

34. Slide 34: Park's Reflections on its 2021 Fiscal Year (Continued)

    Park’s Reflections on its 2021 Fiscal Year… Park’s Finest Hour? (Continued)  Park is a strange and unusual company filled with wonderful and special People  We are very fortunate when it comes to our People  We are not like the others...at Park, we play for keeps...  Park’s 2021 Fiscal Year may

35. Slide 35: 051321 Slide 35

    051321 Slide 35

Park Aerospace — Investor Presentation (May 2021) on 6ix