Park Aerospace Corp. · NYSE:PKE
Park Aerospace — FY2022 Q4 Earnings Presentation
47 slides from Park Aerospace's earnings presentation, May 12, 2022
Slide 1: FY2022 Q4 Investor Conference Call
FY2022 Q4 Investor Conference Call May 12, 2022
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
Slide 3: Table of Contents
Table of Contents FY2022 Q4 Investor Presentation…………………………………………………….Slide 1 Supplemental Financial Information……………………………………………..Appendix 1 05.11.22 Slide 3
Slide 4: Quarterly Results for FY2020, FY2021 and FY2022
Quarterly Results for FY2020, FY2021 and FY2022 (In Thousands)* FY20 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY21 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 FY22 Q3 FY22 Q4 Sales $14,950 $13,723 $15,847 $15,494 $12,213 $9,250 $10,372 $14,441 $13,594 $13,618 $13,864 $12,502 Gross Profit $4,804 $3,813 $5,022 $5,03
Slide 5: Quarterly Results for FY2020, FY2021 and FY2022 (Continued)
Quarterly Results for FY2020, FY2021 and FY2022 (In Thousands)* (Continued) Living the Park life in FY2022 Q4 (and FY2023 Q1...and beyond!) Supply Chain…Supply Chain…Supply Chain!!! • But things were supposed to get better towards the end of last year...Ha! Freight…Freight…Freight!!! • A Daily
Slide 6: Quarterly Results for FY2020, FY2021 and FY2022 (Continued)
Quarterly Results for FY2020, FY2021 and FY2022 (In Thousands)* (Continued) Inflation…Inflation…Inflation!!! • Raw material costs • Freight costs Crude Oil Prices! • Utilities Crude Oil Prices! • Supplies • Pretty much EVERYTHING But Inflation was supposed to be only transitory! Ha, ha! No
Slide 7: Quarterly Results for FY2020, FY2021 and FY2022 (Continued)
Quarterly Results for FY2020, FY2021 and FY2022 (In Thousands)* (Continued) The Supply Chain has become a free-for-all...order in the Supply Chain has broken down...chaos and panic pervade In some cases, even confirmed POs are not being honored But, at Park, we do not panic and we live with ch
Slide 8: Historical Fiscal Year Results
Historical Fiscal Year Results (In Thousands)* FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 Sales $31,837 $40,230 $51,116 $60,014 $46,276 $53,578 Gross Profit $8,299 $11,288 $16,184 $18,673 $13,191 $17,917 Gross Margin 26.7% 28.1% 31.7% 31.1% 28.5% 33.4% Adjusted EBITDA $1,055 $4,704** $10,248** $13,01
Slide 9: 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 had $110.0 Million of Cash and Marketable Securities as of end of FY2022 Q4 Spending to go to complete Major Expansion: ~$1 Million • Spending to date: ~$18.75 Million • Spending in FY2022 Q4: ~$600 Thousand
Slide 10: Park's Balance Sheet, Cash and Cash Dividend History (Continued)
Park’s Balance Sheet, Cash and Cash Dividend History (Continued) Park’s Cash Dividend While others cut or cancelled their dividends, Park maintained its regular $0.10 per share quarterly cash dividend throughout the pandemic and economic crisis Park has paid 37 consecutive years of uninterrupt
Slide 11: FY2022 Q4 Top Five Customers
FY2022 Q4 Top Five Customers (in Alphabetical Order) AAE Aerospace GKN Aerospace Kratos Defense and Security Solutions Middle River Aerostructure Systems (MRAS)* and its subcontractors Nordam Group Patriot Advanced Capability (PAC-3) Missile System Boeing P-8A Poseidon Sub Chaser Boeing 787 Gremlin
Slide 12: Park's Estimated Revenues by Aerospace Market Segment
Park’s Estimated Revenues by Aerospace Market Segment FY2020 FY2021 FY2020 Revenues: FY2021 Revenues: $60.0 Million $46.3 Million FY2022 FY2022 Revenues: $53.6 Million 05.11.22 Slide 12
Slide 13: Park Loves "Niche" Military Aerospace Programs
Park Loves “Niche” Military Aerospace Programs MK125 Warhead for Boeing RC-135 Standard Missile-6 Boeing Harrier AV-8 Park’s Estimated FY2022 Military Revenues by Market Segment Estimated FY2022 Military Revenues: $20.0 Million Collins Class Submarines 05.11.22 Slide 13
Slide 14: Military Markets – Trends and Considerations: The New World Order
Military Markets – Trends and Considerations The New World Order The New World Order…a Sea Change in attitudes about the Defense Industry and Defense Spending based upon the War in Europe Almost overnight What a difference a war makes U.S. 2022 Defense Appropriations Bill signed into law A
Slide 15: Military Markets – Trends and Considerations (Continued)
Military Markets – Trends and Considerations The New World Order (Continued) But Europe may be the real big Defense Spending story… Certain countries, like Germany, have already significantly increased their Defense budgets, and many others are considering, or in the process of, increasing their
Slide 16: Military Markets – Trends and Considerations (Continued)
Military Markets – Trends and Considerations The New World Order (Continued) On April 19, 2022, Lockheed commented that Russia’s attack on Ukraine has boosted demand for their missile defense systems. Lockheed’s CEO stated, “We’ve got demand signals for THAAD and PAC-3 from around the world.” He c
Slide 17: Commercial Aerospace Markets-Trends and Considerations
Commercial Aerospace Markets-Trends and Considerations Commercial Aviation continues to recover, largely driven by continuing improvement in U.S. domestic and trans-Atlantic demand Single-aisle aircraft continue to lead the recovery over wide-body aircraft…single-aisle aircraft are designed to s
Slide 18: Commercial Aerospace Markets-Trends and Considerations (Continued)
Commercial Aerospace Markets-Trends and Considerations (Continued) So, all of the signals seem to be quite positive for Commercial Aviation And, generally, higher jet fuel prices provide airlines with extra motivation to more quickly replace less fuel-efficient legacy aircraft with more fuel-eff
Slide 19: Commercial Aerospace Markets-Trends and Considerations (Continued)
Commercial Aerospace Markets-Trends and Considerations (Continued) It is true that there is pent up demand for air travel as the world recovers from the pandemic and also true that there is lots of loose money in the pockets of individual and business travelers alike But, are individual and busi
Slide 20: Commercial Aerospace Markets-Trends and Considerations (Continued)
Commercial Aerospace Markets-Trends and Considerations (Continued) Something to think about while we are celebrating with exuberance (is it “irrational exuberance”?) If people start flying less, will airlines be less willing to order new airplanes or will they seek to push out or cancel existing
Slide 21: 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
Slide 22: GE Aviation Jet Engine Programs New Developments
GE Aviation Jet Engine Programs New Developments Park’s New Film Adhesive Product Park’s new Film Adhesive Product was developed under a joint development MOU between MRAS and Park The development of Park’s Film Adhesive Product has been a long process, but it is now complete Park’s new Film
Slide 23: GE Aviation Jet Engine Programs New Developments (Continued)
GE Aviation Jet Engine Programs New Developments (Continued) Park’s LSP Material is now in the process of being approved for use on the Bombardier Global 7500 Program (with GE Passport 20 engines) • Also very good news for Park Fan Case Containment Wrap for GE9X Engines for Boeing 777X Aircraft
Slide 24: 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 a May 27, 2021 news release, Airbus stated: “A320 Family: Airbus confirms an average A320 Family production rate of 45 aircraft per month in Q4 2021 and c
Slide 25: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Airbus delivered an average of 40 A320neo Family Aircraft in 2021 Airbus is currently delivering A320neo Family Aircraft at a rate of 49 per month Airbus recently stated that they plan to reach a rate of 65 A320neo Family Aircraft deliverie
Slide 26: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) GE Aviation recently stated, “We are experiencing an unprecedented ramp in LEAP production”, and further stated, “We are aligned with the airframers on what we need to produce through 2023 and we are solidifying what we need to do for 2024.” •
Slide 27: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) As of the end of March 2022, CFM (meaning the LEAP-1A engine) had a 57.4% share of firm orders for the A320neo Family of Aircraft (Source: May 2022 edition of Aero Engine News) • Assuming a 57.4% CFM (LEAP-1A) market share, the 75 A320neo Aircr
Slide 28: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Comac C919 with LEAP-1C Engines…After a number of delays, certification (in China) and entry into service expected by the end of 2022 Comac C919 with CFM LEAP-1C Engines Bombardier Global 7500 with GE Aviation Passport 20 Engines... 39 Glob
Slide 29: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Boeing 747-8…Boeing has announced it will terminate production of the Queen of the Skies in 2022… Last Boeing 747 expected to be delivered in October 2022 Sad Day for one of the best (maybe the best) Commercial Aircraft ever built Only 4
Slide 30: 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 FY2022 Q1: $7.0 Million FY2022 Q2: $
Slide 31: Park's Financial Performance History and Forecast Estimates
Park’s Financial Performance History and Forecast Estimates FY2022 Sales and Adjusted EBITDA history: Sales Adjusted EBITDA FY2022 Q1 $13.6 Million $4.1 Million FY2022 Q2 $13.6 Million $3.2 Million FY2022 Q3 $13.9 Million $2.7 Million FY2022 Q4 $12.5 Million $3.1 Million FY2022 Total $53.6 Million
Slide 32: Comments and Thoughts about Our Forecast and Outlook
Comments and Thoughts about Our Forecast and Outlook Forecasting is highly problematical and probably not very meaningful in the current environment of supply chain chaos and disorder Predicting the future in such an environment is somewhat of a guessing game Forecasting for Park and GE Aviati
Slide 33: Comments and Thoughts about Our Forecast and Outlook (Continued)
Comments and Thoughts about Our Forecast and Outlook (Continued) • How would a recession impact the outlook for Park’s military business? We believe not much at all because there is too much at stake for the countries seeking to increase their defense budgets and spending Commercial Aircraft bus
Slide 34: Comments and Thoughts about Our Forecast and Outlook (Continued)
Comments and Thoughts about Our Forecast and Outlook (Continued) • Comac C919 and ARJ21 Programs - although the relatively small ARJ21 program may have only limited future upside potential, we believe the C919 program has significant upside potential for Park once the aircraft is certified and deliv
Slide 35: Comments and Thoughts about Our Forecast and Outlook (Continued)
Comments and Thoughts about Our Forecast and Outlook (Continued) • Bombardier Global 7500 Program (technically a business jet program) - this is clearly a very key program for the restructured Bombardier company…in our opinion, it is a mandatory success program for Bombardier…Bombardier is clearly p
Slide 36: Update on Major Expansion of Newton, Kansas Facilities
Update on Major Expansion of Newton, Kansas Facilities Total budget: approximately $19.75 Million Spending To date: approximately $18.75 Million To go: approximately $1.0 Million Expansion is complete Film Line and Tape Line trials are complete Film Line and Tape Line Qualifications ar
Slide 37: Update on James Webb Space Telescope
Update on James Webb Space Telescope Park’s proprietary SigmaStruts™ are incorporated into the structure of the JWST The JWST, along with Park’s Sigma Struts™ produced by Park’s People at our “little” plant in Newton, Kansas, are established at the Lagrange 2 (L2) Orbit Point located approximate
Slide 38: Park's People
Park’s People Park’s current People Count is 105 (recently bottomed out at 98)!!! Ideal People Count would be 125 to 128! Minimum People Count needed to properly operate and function is 115! Many other companies are throwing money at people in order to recruit them They bid up people when
Slide 39: Park's People (Continued)
Park’s People (Continued) At Park, our People earn everything they get We believe our Park People are compensated properly, but they earn what they get…every cent of it… No giveaways… “No free lunches” (Milton Freedman) We respect and admire our People too much to marginalize, demoralize and
Slide 40: Park's People (Continued)
Park’s People (Continued) Remember the panic and uncertainty about whether the world would even survive? Well, we did not let go of any of our People then…would we let go of any of our People if there is a recession? What do you think? “Culture eats strategy for breakfast” (Peter Drucker)
Slide 41: Park's People (Continued)
Park’s People (Continued) People talk lots about “strategies” (sometimes developed by fancy Ivy League consulting firms), but, with a dedicated, motivated and inspired workforce, a company can move Mountains…without such a workforce, a company can move Nothing, no matter how elegant their strategy
Slide 42: Closing Thoughts: Principles are not Cheap
Closing Thoughts Principles are not Cheap Will there be a recession? The excesses in the economy and our Society seem so extreme to us • Are they sustainable? • Will people be willing to continue to pay highly elevated prices for almost everything when the money supply is tightening and the days
Slide 43: Closing Thoughts: Principles are not Cheap (Continued)
Closing Thoughts Principles are not Cheap (Continued) Principles are not cheap…Principles only count when it is “inconvenient” to hold true to them It is “inconvenient” and costly for Park to honor our POs and PO confirmations in a world where many others are not doing so • At Park, we do what w
Slide 44: Closing Thoughts: Principles are not Cheap (Continued)
Closing Thoughts Principles are not Cheap (Continued) What is next for Park? We will continue to press forward We will continue to attack We will continue to make money for our Owners And we will keep swinging for the fences At Park, we are not like the others…at Park, we play for keeps…
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Slide 46: Appendix 1
Appendix 1 Park Aerospace Corp. May 12, 2022 Investor Conference Call – Supplementary Financial Information The financial and other data contained herein (the “Supplementary Data”) is being provided pursuant to the requirements of Regulation G promulgated by the U.S. Securities and Exchange Commissi
Slide 47: Appendix 1 Continued
Before special items, selling, general and administrative expenses for the 2022 fiscal year fourth Appendix 1 quarter were $1.5 million, or 12.2% of sales, compared to $1.4 million, or 9.7% of sales, for the 2021 fiscal year fourth quarter and $1.6 million, or 11.5% of sales, for the 2022 fiscal yea