Park Aerospace Corp. · NYSE:PKE
Park Aerospace — FY2020 Q4 Earnings Presentation
27 slides from Park Aerospace's earnings presentation, May 14, 2020
Slide 1: FY2020 Q4 Investor Conference Call
FY2020 Q4 Investor Conference Call May 14, 2020
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: Quarterly Results for FY2019 and FY2020, Including FY2020 Q4
Quarterly Results for FY2019 and FY2020, Including FY2020 Q4 (In Thousands)* FY19 Q1 FY19 Q2 FY19 Q3 FY19 Q4** FY20 Q1 FY20 Q2 FY20 Q3 FY20 Q4 Sales $10,393 $11,211 $12,853 $16,659 $14,950 $13,723 $15,847 $15,494 Gross Profit $2,852 $3,145 $4,284 $5,903 $4,804 $3,813 $5,022 $5,034 Gross Margin 27.4%
Slide 4: FY2017, FY2018, FY2019 and FY2020 Results
FY2017, FY2018, FY2019 and FY2020 Results (In Thousands)* FY2017 FY2018 FY2019 FY2020 Sales $31,837 $40,230 $51,116 $60,014 Gross Profit $8,299 $11,288 $16,184 $18,673 Gross Margin 26.7% 28.1% 31.7% 31.1% EBITDA $1,055 $4,704** $10,248** $13,012** *From Continuing Operations **Before Special Items 0
Slide 5: FY2020 Top Five Customers
FY2020 Top Five Customers (in Alphabetical Order) AAE Aerospace AAR Corp. Kratos Defense and Security Solutions Middle River Aerostructure Systems (MRAS)* and its subcontractors Nordam Group Park’s Estimated FY2020 Revenues by Aerospace Market Segment…Two Cross Sections *MRAS is a subsidiary of ST E
Slide 6: Impact of COVID-19 and Economic Crisis on Global Aerospace Industry
Impact of COVID-19 Pandemic and Resulting Global Economic Crisis on Global Aerospace Industry How will Pandemic and Global Economic Crisis impact Global Aerospace Industry? How will it impact Park? It is not possible to quantify the impact at this time, but the impact is, and will be, significan
Slide 7: Impact of COVID-19 on Global Aerospace Industry (Continued)
Impact of COVID-19 Pandemic and Resulting Global Economic Crisis on Global Aerospace Industry (Continued) • Commercial Aircraft and Engine Manufacturers: Furloughs Temporary Plant Closures Significant Reductions in Rates Business Aircraft Industry…very significant • Dramatic reduction in bus
Slide 8: Commercial Aircraft Industry Recovery Considerations
Impact of COVID-19 Pandemic and Resulting Global Economic Crisis on Global Aerospace Industry (Continued) Commercial Aircraft Industry Recovery Considerations Jet Fuel Prices Reopening of Economy Economic Recovery Social Distancing: • On Planes? • At Gates? • Boarding? • At Airports? Fea
Slide 9: Business Aircraft Industry Recovery Considerations
Impact of COVID-19 Pandemic and Resulting Global Economic Crisis on Global Aerospace Industry (Continued) Business Aircraft Industry Recovery Considerations Jet Fuel Prices? Reopening of Economy Economic Recovery Corporate Profits Stock Market performance Will Social Distancing and Fea
Slide 10: GE Aviation Jet Engine Programs
GE Aviation Jet Engine Programs Firm Pricing LTA (Requirements Contract) through Park Composite Materials are Sole 2029 with Middle River Aerostructure Systems Source on large primary structure (MRAS), a subsidiary of ST Engineering Aerospace component for Passport 20 Engines (not included in MR
Slide 11: Update on GE Aviation Jet Engine Programs
Update on GE Aviation Jet Engine Programs A320neo/A321neo/A321LR/A321XLR (A320neo Family of Aircraft) with LEAP-1A Engines: Significant reductions Bombardier Global 7500 with Passport 20 Engines: Significant reductions; Bombardier recently announced reopening of plants which were temporarily clo
Slide 12: Perspective on GE Aviation Jet Engine Programs and A320neo Program
Perspective on GE Aviation Jet Engine Programs and A320neo Program in Particular FY2020 Revenues from GE Aviation Jet Engine Programs were $28.9 Million, or 48% of total FY2020 Revenues Approximately 60% of FY2020 GE Aviation Program Revenue estimated to be attributable to Airbus A320neo Aircraf
Slide 13: Perspective on GE Aviation Programs and A320neo (Continued)
Perspective on GE Aviation Jet Engine Programs and A320neo Program in Particular (Continued) The A320neo Program has ramped significantly for Park in the last three years Park received another increase from MRAS to its A320neo Program forecast earlier this year In February 2020, Park received
Slide 14: Perspective on GE Aviation Programs and A320neo (Continued)
Perspective on GE Aviation Jet Engine Programs and A320neo Program in Particular (Continued) On April 8, 2020, Airbus announced it was reducing production rates for the A320neo Family of Aircraft by one third in order “to adapt to the new Coronavirus market environment” Will Airbus drop another
Slide 15: Perspective on GE Aviation Programs and A320neo (Continued)
Perspective on GE Aviation Jet Engine Programs and A320neo Program in Particular (Continued) In addition, Park’s sales will be negatively impacted by the need to “burn down” the significant inventory held throughout the supply chain for those GE Aviation Programs resulting from the unprecedented s
Slide 16: Park's Perspective on Commercial Aircraft Industry
Park’s Perspective on Commercial Aircraft Industry Single-Aisle Aircraft vs. Wide-body Aircraft Trend already in place favoring Single-Aisle Aircraft Industry experts and analysts believe market for Single-Aisle Aircraft will recover before Wide-body Aircraft market If you want to be in Comm
Slide 17: Park's Perspective on Commercial Aircraft Industry (Continued)
Park’s Perspective on Commercial Aircraft Industry (Continued) Park’s strategy is to continue to emphasize Commercial Aerospace as one of its main end-market segments; Park believes Single-Aisle Aircraft is the place to be in Commercial Aerospace at least for the near term; Park believes it is ide
Slide 18: Park's Perspective on Future of Commercial Aviation
Park’s Perspective on Future of Commercial Aviation and Commercial Aircraft Industry Is the human race ready to pack it in and resign itself to living in fear and isolation? It is human nature to explore and to congregate…virtual living is overrated We are going through a tragic crisis for the
Slide 19: Long-Term Forecast Estimates Published at Needham Growth Conference
Park’s Long-Term Forecast Estimates Published at Needham Growth Conference on January 15, 2020 FY20* FY21 FY22 FY23 FY24 Sales $60,014K $68M to $73M $78M to $84M $86M to $92M $94M to $100M EBITDA $13,012K $16.0M to $19.5M $19.0M to $22.5M $22.0M to $25.5M $24.5M to 28.0M EBIT $10,949K $14.0M to $17.
Slide 20: So, What's Going on at Park?
So, What’s Going on at Park? Park has been fully operational throughout the crisis NY Office…technically open, but all employees are working hard and effectively from home Kansas Manufacturing Facility fully operational • Essential business in Kansas exempt from “stay home” order • Told by DOD
Slide 21: So, What's Going on at Park? (Continued)
So, What’s Going on at Park? (Continued) In Kansas, we are working on projects and new initiatives we just could not get to in recent years because we were driving our operation so hard; we are taking advantage of the additional bandwidth we now have available as a result of reduced production rat
Slide 22: So, What's Going on at Park? (Continued)
So, What’s Going on at Park? (Continued) Major Expansion of Newton, Kansas Facilities Proceeding with Project Completion now expected in early CY2021 Deferring certain items • Budget reduced from $20.5 million to approximately $18 million Spending • To date: approximately $8.5 million • To
Slide 23: So, What's Going on at Park? (Continued)
So, What’s Going on at Park? (Continued) CARES ACT and other government benefits related to economic crisis We have not applied for any benefits or loans, and we do not intend to Not right for us Park’s Cash Dividend Park has paid 35 consecutive years of uninterrupted regular, quarterly ca
Slide 24: So, What's Going on at Park? (Continued)
So, What’s Going on at Park? (Continued) Great opportunities for Park to potentially buy a company or companies which are highly strategic for Park at very good, or even distressed, values Great opportunities for Park to invest in its business and new business opportunities at a time when others
Slide 25: 05/14/2020 Slide 25
05/14/2020 Slide 25
Slide 26: APPENDIX I Supplementary Financial Information
APPENDIX I Park Aerospace Corp. May 14, 2020 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 27: APPENDIX I
APPENDIX I Before special items, net earnings for the 2020 fiscal year fourth quarter were $2.8 million, or 18.0% of sales, compared to $3.9 million, or 23.7% of sales, for the 2019 fiscal year fourth quarter and $2.8 million, or 17.7% of sales, for the 2020 fiscal year third quarter. Depreciation a