Park Aerospace Corp. · NYSE:PKE
Park Aerospace — Q4 FY2023 Earnings Presentation
41 slides from Park Aerospace's earnings presentation, May 11, 2023
Slide 1: FY2023 Q4 Investor Conference Call
FY2023 Q4 Investor Conference Call May 11, 2023
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 FY2023 Q4 Investor Presentation……………………………………...……………….Slide 1 Supplementary Financial Information……………………………………………..Appendix 1 Park’s New Film Line in Production 051123 Slide 3
Slide 4: Quarterly Results for FY2021, FY2022 and FY2023
Quarterly Results for FY2021, FY2022 and FY2023 (In Thousands)* FY21 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY23 Q1 FY23 Q2 FY23 Q3 FY23 Q4 Sales $12,213 $9,250 $10,372 $14,441 $13,594 $13,618 $13,864 $12,502 $12,783 $13,875 $13,867 $13,530 Gross Profit $3,674 $2,638 $2,553 $4,32
Slide 5: Quarterly Results (Continued): supply chain, freight, staffing
Quarterly Results for FY2021, FY2022 and FY2023 (In Thousands)* (Continued) Even though we missed our FY2023 Q4 EBITDA estimate, Great Job by Park’s People to make our FY2023 Q4 Sales estimate under very difficult circumstances, especially considering significant challenges with: Supply Chain di
Slide 6: Quarterly Results (Continued): missed shipments and margins
Quarterly Results for FY2021, FY2022 and FY2023 (In Thousands)* (Continued) Total Missed Shipments in FY2023 Q4…Approximately $1.4 Million!!! Approximately $1.2 Million of which were missed shipments of higher margin ablative materials to overseas customers in Japan and Italy!!! • Raw materials
Slide 7: Quarterly Results (Continued): inflation
Quarterly Results for FY2021, FY2022 and FY2023 (In Thousands)* (Continued) Significant Inflation...it has not gone away or abated yet...not for us anyway • Raw materials costs • Shipping and other supplies costs • Utilities costs • Freight in and out costs • People costs • You name it, it probabl
Slide 8: Quarterly Results (Continued): inefficiencies and new plant costs
Quarterly Results for FY2021, FY2022 and FY2023 (In Thousands)* (Continued) Supply Chain disruptions causing significant inefficiencies in our manufacturing operations Staffing shortages and limitations causing inefficient deployment of our workforce and increased expenses as well Costs relate
Slide 9: Historical Fiscal Year Results
Historical Fiscal Year Results (In Thousands)* FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Sales $31,837 $40,230 $51,116 $60,014 $46,276 $53,578 $54,055 Gross Profit $8,299 $11,288 $16,184 $18,673 $13,191 $17,917 $16,473 Gross Margin 26.7% 28.1% 31.7% 31.1% 28.5% 33.4% 30.5% Adjusted EBITDA $1,
Slide 10: FY2023 Q4 Top Five Customers
FY2023 Q4 Top Five Customers (in Alphabetical Order) Aerojet Rocketdyne Aeromatrix Composites Kratos Defense and Security Solutions Middle River Aerostructure Systems (MRAS) and its subcontractors Nordam Group B777X with GE9X Engines Army Tactical Missile System “ATACMS” Kratos XQ-58 Valkyrie Boeing
Slide 11: 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 FY2023 FY2022 Revenues: FY2023 Revenues: $53.6 Million $54.1 Million 051123 Slide 11
Slide 12: Park Loves Niche Military Aerospace Programs
Park Loves “Niche” Military Aerospace Programs Aegis Combat System McDonnel F-15 Eagle Park’s Estimated FY2023 Military Revenues by Market Segment Estimated FY2023 Military Revenues: $20.8 Million E-8 JSTARS 051123 Slide 12
Slide 13: Military Markets – Trends and Considerations
Military Markets – Trends and Considerations The New World Order The “New World Order”…good times for the military/industrial complex The War in Europe grinds on Asia is not a happy place either these days Tensions in the world are high... Talk about World War III • “Limited” Nuclear War?
Slide 14: Military Markets – Trends (Continued)
Military Markets – Trends and Considerations The New World Order (Continued) The main thing restricting the rapid growth in military build-ups seems to be ongoing global supply chain limitations and challenges And, not surprisingly, Missile Defense Systems, including the PAC-3 (“Patriot”) Missil
Slide 15: Military Markets – Trends (Continued)
Military Markets – Trends and Considerations The New World Order (Continued) As previously discussed, Park has received customer and OEM indications regarding significant increases in ablative materials and RAYCARB C2®B product requirements to support PAC-3 Missile Defense Systems and other missil
Slide 16: Commercial Aerospace Markets Trends and Considerations
Commercial Aerospace Markets Trends and Considerations The Commercial Aviation industry continues its strong recovery and rebound from the pandemic and economic crisis Domestic Commercial Aviation (and shorter range international commercial aviation operations, such as trans-Atlantic operations)
Slide 17: Commercial Aerospace Markets (Continued)
Commercial Aerospace Markets Trends and Considerations (Continued) The economy…will People continue to fly if the economy falters? • Early indications that economic concerns may be beginning to affect travel patterns Inflation…will the flying public continue to be willing to absorb escalating co
Slide 18: Commercial Aerospace Markets (Continued)
Commercial Aerospace Markets Trends and Considerations (Continued) And, even if the Commercial Aviation industry remains strong, the second $64K question is how will the Commercial Aircraft industry deal with its own major challenges related to: Supply Chain issues Labor and staffing issues
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
Slide 20: Brief Update on GE Aviation Jet Engine Programs
Brief Update on GE Aviation Jet Engine Programs A320neo Aircraft Family with CFM LEAP-1A Engines (includes A319neo, A320neo, A321neo, A321LR and A321XLR Aircraft Variants) Airbus recently reaffirmed their plans to achieve 75 A320neo Aircraft Family deliveries per month by the end of 2026 The A
Slide 21: Brief Update on GE Aviation Jet Engine Programs (Continued)
Brief Update on GE Aviation Jet Engine Programs (Continued) Good-bye to the Boeing 747, the Great Queen of the Skies Good-bye to the Great 747, an Aircraft Like None Other 051123 Slide 21
Slide 22: GE Aviation Jet Engine Programs Sales History and Forecast Estimates
GE Aviation Jet Engine 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 F
Slide 23: Park's Financial Performance History and Forecast Estimates
Park’s Financial Performance History and Forecast Estimates Quarterly 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 Mill
Slide 24: Financial Outlook for Park and GE Programs
Financial Outlook for Park and GE Programs Because of ongoing significant challenges related to serious supply chain disorder, inflation concerns and severe staffing shortages (which seem to be a global phenomenon) and the significant uncertainty as to when these challenges will moderate and abate
Slide 25: Financial Outlook (Continued): assumptions
Financial Outlook for Park and GE Programs (Continued) And, in providing the GE Aviation Programs revenue outlook and the financial outlook for Park, we are assuming the following: • There is not a severe or prolonged economic downturn during the outlook timeframe • The global supply chain returns
Slide 26: GE Aviation Jet Engine Programs Revenue Outlook
GE Aviation Jet Engine Programs Revenue Outlook Engine Units per Year Revenue per Engine Annual Revenues per Program Assumptions¹ Unit Estimates² Program Estimates A320neo³ 10804 $30,500 $32,940K PP205 90 $49,000 $4,410K C9196 200 $26,500 $5,300K ARJ217 50 $29,500 $1,475K GE9X8 _______ _______ $6,50
Slide 27: Financial Outlook Based on Sole-source Qualified Programs
Park Aerospace Corp. Financial Outlook principally based upon growth estimates of Programs on which Park is Sole-source Qualified 6 Sales EBITDA FY23 Base Year $54.1M* $11.5M Estimated GE Programs Incremental Sales¹ $28.3M Estimated incremental sales for ADL ADRS Program, PAC-3 Missile System and Kr
Slide 28: Financial Outlook (Continued): footnotes
Park Aerospace Corp. Financial Outlook principally based upon growth estimates of Programs on which Park is Sole-source Qualified (Continued) 6 ¹ GE Program Outlook Sales of $50.6M minus FY23 GE Program sales of $22.3M equals $28.3M. ² Park is sole-source qualified on these three programs, but we ar
Slide 29: Financial Outlook (Continued): other opportunities not included
Park Aerospace Corp. Financial Outlook principally based upon growth estimates of Programs on which Park is Sole-source Qualified (Continued) 6 6 The above outlook analysis is not a forecast as it only considers the estimated growth of programs on which Park is already sole source qualified, plus 25
Slide 30: Update on Major Expansion of Newton, Kansas Facilities
Update on Major Expansion of Newton, Kansas Facilities EXPANSION IS COMPLETE!!! The New Facility Expansion was fully qualified and approved by MRAS for production on April 5, 2023!!! The first production run occurred on April 19, 2023!!! The expansion cost $20 Million! It has been a long (
Slide 31: Aeroadhere FAE-350-1 Structural Film Adhesive Product
Park Recently Introduced Our New Aeroadhere™ FAE-350-1 Structural Film Adhesive Product On May 9, 2023, Park announced the introduction of Aeroadhere™ FAE-350-1, our new Structural Film Adhesive Product for use in bonding of aerospace primary and secondary structures Aeroadhere FAE-350-1 is a 35
Slide 32: Analysis of Park Cash and Cash Application
Analysis of Park Cash and Cash Application (in thousands)¹ Net Cash and Marketable Securities $105,500 as of February 26. 2023 Transition Tax Installment Payments remaining² $12,500 $1.00 per share special dividend3 20,500 Solution Treater for ADL project4 6,000 AFP Project Capital Investment 5 10,0
Slide 33: Balance Sheet, Cash Dividend History and Capital Allocation
Park’s Balance Sheet, Cash Dividend History and Thoughts about Capital Allocation Park has zero long-term debt! 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
Slide 34: Balance Sheet, Dividends and Capital Allocation (Continued)
Park’s Balance Sheet, Cash Dividend History and Thoughts about Capital Allocation (Continued) On February 9, 2023, Park’s Board of Directors declared a special dividend of $1.00 per share (a total amount of approximately $20.5 Million) which was paid on April 6, 2022 • Why did we do that? • What a
Slide 35: Balance Sheet, Dividends and Capital Allocation (Continued)
Park’s Balance Sheet, Cash Dividend History and Thoughts about Capital Allocation (Continued) • How about Park? How has Park done in generating capital? Started by two guys in a garage in Woodside, Queens in 1954 with a few bucks they had left over from War Duty Nobody ever gave us anything (at
Slide 36: The Park Family: Culture Eats Strategy for Breakfast
The Park Family “Culture Eats Strategy for Breakfast” (Peter Drucker) Oh, at Park, we have a strategy too, but it is our Park Family Culture which makes us strong and allows us to endure How do we generate capital at Park? How do we generate lasting value? Through dedication Through sacrific
Slide 37: Culture Eats Strategy for Breakfast (Continued)
The Park Family “Culture Eats Strategy for Breakfast” (Peter Drucker) (Continued) Why do our People do such things? Maybe because “actions speak louder than words…” (Abraham Lincoln) When just about everybody was laying off their employees, in some cases by the thousands, we at Park laid off n
Slide 38: The Park Family (Continued)
The Park Family “Culture Eats Strategy for Breakfast” (Peter Drucker) (Continued) If you want your people to love your company, you better love them... Our People are Family, and we don’t turn our backs on Family… Peter was right… Park’s Dedicated Film Line and Tape Line Crews 051123 Slide 38
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Slide 40: Appendix 1 – Supplementary Financial Information
Park Aerospace Corp. Appendix 1 May 11, 2023 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 41: Appendix 1 Continued
Appendix 1 Continued Before special items, earnings before income taxes for the 2023 fiscal year fourth quarter were $2.6 million, or 19.5% of sales, compared to $2.8 million, or 22.1% of sales, for the 2022 fiscal year fourth quarter and $3.2 million, or 23.2% of sales, for the 2023 fiscal year thi