Park Aerospace Corp. · NYSE:PKE
Park Aerospace — Q2 FY2022 Earnings Presentation
43 slides from Park Aerospace's earnings presentation, Oct 7, 2021
Slide 1: FY2022 Q2 Investor Conference Call
FY2022 Q2 Investor Conference Call October 7, 2021
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 Q2 Investor Presentation…………………………………………………….Slide 1 Supplemental Financial Information……………………………………………..Appendix 1 Environmental and Community Considerations……………….……………….Appendix 2 Diversity and Our Workforce……………………………………………………...Appendix 3 100621 Slide 3
Slide 4: Quarterly Results for FY2020, FY2021 and FY2022 Q1 and Q2
Quarterly Results for FY2020, FY2021 and FY2022 Q1 and Q2 (In Thousands)* FY20 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY21 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 Sales $14,950 $13,723 $15,847 $15,494 $12,213 $9,250 $10,372 $14,441 $13,594 $13,618 Gross Profit $4,804 $3,813 $5,022 $5,034 $3,674 $2,638 $2,553
Slide 5: Quarterly Results (Continued): factors affecting FY2022 Q2
Quarterly Results for FY2020, FY2021 and FY2022 Q1 and Q2 (In Thousands)* (Continued) Certain factors which affected FY2022 Q2 Sales and Margins Sales of essential component for missile programs Difficulty sourcing key raw materials International shipments difficulties Domestic freight iss
Slide 6: FY2017 to 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
Slide 7: Balance Sheet, Cash, Dividend History and Capital Allocation
Park’s Balance Sheet, Cash, Cash Dividend History and Capital Allocation “Strategy” Park has zero long-term debt Park had $113.0 Million of Cash and Marketable Securities as of end of FY2022 Q2 Spending to go to complete Major Expansion: $2.25 Million • Spending to date: $17.25 Million • Spend
Slide 8: Balance Sheet, Cash, Dividend History and Capital Allocation (Continued)
Park’s Balance Sheet, Cash, Cash Dividend History and Capital Allocation “Strategy” (Continued) Another $0.10 per share regular quarterly cash dividend declared on September 13, 2021 payable November 4, 2021 to shareholders of record on October 1, 2021 • When this cash dividend is paid on November
Slide 9: Balance Sheet, Cash, Dividend History and Capital Allocation (Continued)
Park’s Balance Sheet, Cash, Cash Dividend History and Capital Allocation “Strategy” (Continued) Potential Strategic Investments in major Aerospace and Aircraft Programs • Park has reached out to certain large Aerospace OEMs regarding strategic investments in major new Aerospace Programs Park ear
Slide 10: FY2022 Q2 Top Five Customers
FY2022 Q2 Top Five Customers (in Alphabetical Order) Aerojet Rocketdyne Aeromatrix Composites Kratos Defense and Security Solutions Middle River Aerostructure Systems (MRAS)* and its subcontractors GE Aviation Passport 20 Jet Engine Nordam Group Northrop Grumman Ground Based Strategic Deterrent 747-
Slide 11: Estimated Revenues by Aerospace Market Segment
Park’s Estimated Revenues by Aerospace Market Segment FY2020 FY2021 FY2020 Revenues: FY2022 Q2 YTD FY2021 Revenues: $60.0 Million $46.3 Million FY2022 Q2 YTD Revenues: $27.2 Million 100621 Slide 11
Slide 12: Park Loves Niche Military Aerospace Programs
Park Loves “Niche” Military Aerospace Programs F-35 providing tracking data of an C-27J Spartan Medium Range incoming missile to a ground- U.S. Navy MK-41 Surveillance Aircraft based interceptor (PAC-3) Vertical Launching System Avio Aster Park’s Estimated FY2022 Q2 YTD Hypersonic Missile Military R
Slide 13: Update on Major Expansion of Newton, Kansas Facilities
Update on Major Expansion of Newton, Kansas Facilities Total budget: approximately $19.5 Million Spending To date: approximately $17.25 Million To go: approximately $2.25 Million Expansion is complete Manufacturing trials in progress! Qualification runs expected to begin in December 20
Slide 14: Commercial Aviation... Updates and Developments
Commercial Aviation... Updates and Developments Higher Jet Fuel Prices and Environmental Concerns provide extra motivation for airlines to more quickly replace less fuel-efficient legacy single-aisle aircraft with more fuel-efficient modern single-aisle aircraft, such as the Airbus A320neo Domes
Slide 15: Commercial Aviation... Updates and Developments (Continued)
Commercial Aviation... Updates and Developments (Continued) Will this temporary setback negatively impact airline orders for the airplanes produced by large Commercial Aircraft Manufacturers? Will the large Commercial Aircraft Manufacturers change or adjust their production schedules based upon
Slide 16: Commercial Aviation... Updates and Developments (Continued)
Commercial Aviation... Updates and Developments (Continued) Since Single-Aisle Commercial Aircraft are designed to service the Domestic Aviation markets, as well as shorter range International Aviation markets, Park believes Single-Aisle is the place to be in Commercial Aviation…at least for now!
Slide 17: 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 18: 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…ramping steeply… In a May 27, 2021 news release, Airbus stated: “A320 Family: Airbus confirms an average A320 Family production rate of 45 aircraft per month
Slide 19: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) As of the end of August, 2021, CFM (meaning the LEAP-1A engine) had a 60.25% share of firm orders for the A320neo family of aircraft (Source: October 2021 edition of Aero Engine News) • Assuming a 60.25% CFM (LEAP-1A share), 75 A320neo Aircraft
Slide 20: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) • On July 29, 2021, Airbus CEO Guillaume Faury, stated that he is “disappointed that some partners [meaning suppliers] are challenging the ramp-up”. CEO Faury also stated, “We have a backlog of more than 6,000 [A320neo Aircraft Family]. At a rate
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 • Likely big driver of aggressive forecasted ramp-up of A320neo Family of Aircraft • Over 450 orde
Slide 22: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Comac C919 with LEAP-1C Engines…Comac continues to maintain that they intend to certify and begin deliveries of the aircraft before the end of 2021 Recent report that U.S. export controls were slowing progress of C919 program Comac responde
Slide 23: 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… Certification of Park’s Lightning Strike Protection Materials planned for CY2022 Bombardier Global 7500 with Passport 20 Engines Comac ARJ-21 with CF34-10A Engines… In the ra
Slide 24: 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…Long Live the Queen… Legendary Boeing 747…the Queen of the Skies in Real Life 100621 Slide 24
Slide 25: Commercial Aerospace Industry Melt-down in Review
Commercial Aerospace Industry Melt-down in Review… 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 Aviation
Slide 26: Commercial Aerospace Industry Melt-down in Review (Continued)
Commercial Aerospace Industry Melt-down in Review… (Continued) And, as a result of the “End of Days” attitudes, companies in the Commercial Aircraft supply chain laid off thousands and thousands of employees and went into the bunker- survival mode…production was slashed or even halted…thoughts abo
Slide 27: Commercial Aerospace Industry Melt-down in Review (Continued)
Commercial Aerospace Industry Melt-down in Review… (Continued) But, the Commercial Aircraft supply chain was caught very flat-footed in the bunker- survival mode and was not in the mindset to quickly ramp back up to meet the renewed demand…plus, since the supply chain companies had laid off such m
Slide 28: Commercial Aerospace Industry Melt-down in Review (Continued)
Commercial Aerospace Industry Melt-down in Review… (Continued) But, at Park, we did not buy all the doom and gloom news…we did not buy that the “End of Days” were at hand…here is what we said during our FY2020 Q4 Investor Call on May 14, 2020 at the beginning of the Pandemic and Crisis, when confu
Slide 29: Commercial Aerospace Industry Melt-down in Review (Continued)
Commercial Aerospace Industry Melt-down in Review… (Continued) At Park, although we did not know when, we believed the Commercial Aerospace Industry recovery would come, and we wanted to be ready for it and to be part of it… We were not giving up on the Commercial Aerospace Industry…it was quite
Slide 30: GE Aviation Jet Engine Programs Park is on are Ramping Up Fast
The GE Aviation Jet Engine Programs Park is on are Ramping Up Fast The GE Aviation Jet Engine Programs Park is on are Ramping Up (except the 747-8, whose rates are unchanged)…and the Ramp-up is looking Steep! For perspective, GE Aviation Program Sales for the following periods were: FY2021 Q3:
Slide 31: How is Park Responding to the GE Aviation Programs Steep Ramp-up?
How is Park Responding to the GE Aviation Programs Steep Ramp-up?… It is Still All About Our People Park’s current People count is 114!!! Getting there, but still a challenge… • Two steps forward and one step back? In FY2022 Q2, Park’s People stepped up and got the job done once again…that is
Slide 32: How is Park Responding to the Steep Ramp-up? (Continued)
How is Park Responding to the GE Aviation Programs Steep Ramp-up?… It is Still All About Our People (Continued) And we can’t say it enough…Thank Goodness for Park’s Great People Without them, we would not be able to get the job done Park is fortunate and blessed to have the Great People it has
Slide 33: 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 34: 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
Slide 35: What Matters the Most at Park
What Matters the Most at Park We are deeply saddened by what we see and hear in our World today We are told that people who work for a living do not matter. We are told they are expendable. We are told they are to be sacrificed for some loosely defined or undefined “greater good” But, at Park
Slide 36: What Matters the Most at Park (Continued)
What Matters the Most at Park (Continued) At Park, our People Work for Living…that is what they do… At Park, our People make money for our Owners…that is what they do… Park is a strange and unusual company filled with wonderful and special People At Park, we are not like the others… at Park,
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Slide 38: Appendix 1: Supplementary Financial Information
Park Aerospace Corp. Appendix 1 October 7, 2021 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 Commi
Slide 39: Appendix 1 Continued
Selling, general and administrative expenses, before special items, for the 2022 fiscal year second Appendix 1 quarter were $1.5 million, or 10.9% of sales, compared to $1.6 million, or 16.8% of sales, for the 2021 fiscal year second quarter and $1.6 million, or 12.1% of sales, for the 2022 fiscal y
Slide 40: Appendix 2: Environmental and Community Considerations
Appendix 2 Park Aerospace Corp. Environmental and Community Considerations Park Aerospace Corp. is a designer and manufacturer of composite materials and structures for aircraft and other aerospace applications. (Composite structures are structures which are produced from composite materials.) One o
Slide 41: Appendix 2 Continued
Appendix 2 Continued Park takes its responsibilities to its Community very seriously. Park is committed to protecting the air, water and ground of its Community environment from any source of contamination or pollution. Park invests significant financial and human resources towards controlling any p
Slide 42: Appendix 3: Diversity and Our Workforce
Appendix 3 Park Aerospace Corp. Diversity and Our Workforce • Park has a very diverse workforce, which Park is very pleased about • At Park, all of our People are equal and all of our People are treated equally • At Park, all of our People are Special, but nobody receives special treatment • At Park
Slide 43: Appendix 3 Continued
Appendix 3 Continued • At Park, we are not Gods so we are not able to guarantee we will never lay off anyone, but our People are family to us, and the last thing we would ever want to do is lay off family • At Park, we want our People to understand that, through hard work and dedication, they can bu