Park Aerospace Corp. · NYSE:PKE
Park Aerospace — Investor Presentation (October 2022)
59 slides from Park Aerospace's investor presentation, Oct 6, 2022
Slide 1: Company Presentation October 6, 2022
Company Presentation October 6, 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: 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
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 (including RadarWave® materials) As a complement to our Advanced Composite Materials offering, Park Aerospace designs and fabri
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
Slide 6: Our History (Continued)
Our History (Continued) November 17, 1960 Park goes Public 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 had become global Electronics Business with other anci
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
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 changes n
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
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
Slide 11: Quarterly Results for FY2021, FY2022 and FY2023 Q1 and Q2
Quarterly Results for FY2021, FY2022 and FY2023 Q1 and Q2 (In Thousands)* FY21 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY23 Q1 FY23 Q2 Sales $12,213 $9,250 $10,372 $14,441 $13,594 $13,618 $13,864 $12,502 $12,783 $13,875 Gross Profit $3,674 $2,638 $2,553 $4,326 $5,472 $4,411 $3,836
Slide 12: Quarterly Results (Continued)
Quarterly Results for FY2021, FY2022 and FY2023 Q1 and Q2 (In Thousands)* (Continued) Outstanding job by Park’s People to make our FY2023 Q2 Sales number considering significant challenges with: Supply Chain disruptions and unreliability Freight disruptions and unreliability Ongoing severe s
Slide 13: Quarterly Results (Continued)
Quarterly Results for FY2021, FY2022 and FY2023 Q1 and Q2 (In Thousands)* (Continued) Significant inflation • Materials and supplies costs • Freight in and out costs • People costs • You name it, it probably is more expensive • Why didn’t we fully pass these increased costs on to our customers in
Slide 14: Quarterly Results (Continued)
Quarterly Results for FY2021, FY2022 and FY2023 Q1 and Q2 (In Thousands)* (Continued) • Historically high inflation may be with us for a while May be difficult to put that Genie back in the bottle Lower Margin product mix • Why did we not fully anticipate this? Planning is “interesting” in thi
Slide 15: 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 16: Park's Balance Sheet, Cash, Cash Dividend History and Share Buy-back
Park’s Balance Sheet, Cash, Cash Dividend History and Recent Share Buy-back Authorization Park has zero long-term debt Park reported $102.5 Million of Cash and Marketable Securities as of end of FY2023 Q2 Park’s cash investment “philosophy” • Park’s cash is invested in highly secure and liquid
Slide 17: Balance Sheet, Cash Dividend History and Buy-back (Continued)
Park’s Balance Sheet, Cash, Cash Dividend History and Recent Share Buy-back Authorization (Continued) Spending to go to complete Major Expansion: ~$500 Thousand • Spending to date: ~$19.25 Million • Spending in FY2023 Q2: ~$500 Thousand Total Transition Tax Installment Payments payable through C
Slide 18: Share Buy-back Authorization (Continued)
Park’s Balance Sheet, Cash, Cash Dividend History and Recent Share Buy-back Authorization (Continued) Park has paid $556 Million, or $27.15 per share, in cash dividends since the beginning of FY2005 Share Purchase Authorization As announced on May 23, 2022, Park’s board of directors authorized
Slide 19: FY2023 Q2 Top Five Customers
FY2023 Q2 Top Five Customers (in Alphabetical Order) AAE Aerospace GKN Aerospace Kratos Defense and Security Solutions Middle River Aerostructure Systems (MRAS)* Airbus A320neo and its subcontractors with LEAP-1A Engines RIM-161 Standard Missile (“SM-3”) Nordam Group Kratos BQM-177A SSAT Boeing 737-
Slide 20: 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 First 6 Months FY2023 First 6 Months Revenues: FY2022 Revenues: $26.7 Million $53.6 Million 011218 slide 20 100622 Slide 20
Slide 21: Park Loves "Niche" Military Aerospace Programs
Park Loves “Niche” Military Aerospace Programs Northrop Grumman E2-D Hawkeye Northrop Grumman Raytheon MK 56 Guided Missile Ground Based Strategic Deterrent Vertical Launching System (“GBSD”) Park’s Estimated FY2023 First 6 Months Military Revenues by Market Segment Estimated FY2023 First 6 Months M
Slide 22: 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 Two Major Impacts Significant increases in defense budg
Slide 23: Military Markets – The New World Order (Continued)
Military Markets – Trends and Considerations The New World Order (Continued) Not surprisingly, Missile Defense Systems, including the PAC-3 (“Patriot”) Missile Defense System, are one of key areas of emphasis for increased defense spending As previously discussed, both Lockheed and Aerojet Rocke
Slide 24: Military Markets – The New World Order (Continued)
Military Markets – Trends and Considerations The New World Order (Continued) As previously discussed, Park had 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 25: Military Markets – The New World Order (Continued)
Military Markets – Trends and Considerations The New World Order (Continued) The big Caveat: the “New World Order” is seemingly far from immune from the serious supply chain and inventory management challenges the defense industry is facing… It has been reported that the U.S. defense industry su
Slide 26: Commercial Aerospace Markets-Trends and Considerations
Commercial Aerospace Markets-Trends and Considerations We have discussed the Commercial Aviation industry collapse at the beginning of the pandemic and its subsequent recovery in considerable detail over the last several quarters, and we will not repeat all of the prior commentary at this time S
Slide 27: Commercial Aerospace Markets-Trends (Continued)
Commercial Aerospace Markets-Trends and Considerations (Continued) But the following watch and caution items raise concerns about the sustainability of the Commercial Aviation industry’s recovery: The economy…will People continue to fly if the economy falters badly? Inflation…will the flying p
Slide 28: Commercial Aerospace Markets-Trends (Continued)
Commercial Aerospace Markets-Trends and Considerations (Continued) And, of course, even if the Commercial Aviation industry remains strong, the Commercial Aircraft industry still needs to deal with its own massive challenges related to: Supply Chain issues Labor and staffing issues Inflation
Slide 29: Commercial Aerospace Markets-Trends (Continued)
Commercial Aerospace Markets-Trends and Considerations (Continued) Is this an opportunity for the B777X aircraft, the only aircraft in the mix which has close to the range and passenger capacity profiles of the 747-8 and A-380? Also, got to ask…how much share will the A321XLR take from the small
Slide 30: 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 31: Update on GE Aviation Jet Engine Programs
Update on GE Aviation Jet Engine Programs Airbus A320neo Aircraft Family with LEAP-1A Engines (includes A319neo, A320neo, A321neo, A321LR and A321XLR Aircraft variants)... We have discussed at length over the last several quarters: • Airbus’s public indications about its aggressive A320neo Aircr
Slide 32: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Suffice it to say that Airbus has indicated its intention to achieve A320neo Aircraft Family production rates of 65 aircraft per month by early 2024 (pushed back from mid-2023 as a result of Supply Chain limitations, particularly from engine su
Slide 33: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Do we think Airbus will hit its targets of 65 A320neo Family aircraft by early 2024 and 75 A320neo Family Aircraft by mid-2025? • Yes, we think they will, or at least come close Why? Because Airbus is hellbent to hit these targets for a numbe
Slide 34: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) As of the end of July 2022, CFM (meaning the LEAP-1A engine) had a 59.75% share of firm orders for the A320neo Family of Aircraft (Source: September 2022 edition of Aero Engine News) • Park also recently received updated A320neo engine unit com
Slide 35: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) On a short-term interval basis, Park’s A320neo derived revenues will not reconcile exactly to A320neo Aircraft Family deliveries But, at the end of the day, the only thing which matters to Park in connection with the A320neo Program is how ma
Slide 36: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Comac C919 with LEAP-1C Engines… Big News…in a recent ceremony at the Beijing Central Airport attended by China President Xi Jinping, the Comac C919 received its Type Certificate from the Civil Aviation Administration of China (the CAAC)!!!
Slide 37: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Bombardier Global 7500 with GE Aviation Passport 20 Engines... 39 Global 7500 Aircraft delivered in 2021 Bombardier delivered its 100th Global 7500 Aircraft in March 2022 Bombardier recently announced the Global 8000 Variant • 8,000 NM Ra
Slide 38: 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 remaining Boeing 747 expected to be delivered this month to Atlas Air Sad Day for one of the best Commercial Aircraft ever built Saying
Slide 39: 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 40: GE Aviation Programs Sales History and Forecast Estimates (Continued)
GE Aviation Programs Sales History and Forecast Estimates (Continued) What the heck is going on here? Downstream Inventory and Production Management challenges and dislocations At the end of the day, the only thing which matters to Park in connection with the GE Aviation Programs we support is
Slide 41: 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 42: 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 dominated by supply chain chaos and disorder, significant inflation, serious recessionary concerns and severe staffing challenges Predicting the fu
Slide 43: 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 because there is too much at stake for the countries seeking to increase their defense budgets and spending Commercial Aircraft business O
Slide 44: 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 now that the aircraft is certified in Ch
Slide 45: Forecast and Outlook (Continued)
Comments and Thoughts about Our Forecast and Outlook (Continued) • Bombardier Global 7500/8000 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 clea
Slide 46: Update on James Webb Space Telescope
Update on James Webb Space Telescope (Another Update!) Reminder: 21 of Park’s proprietary SigmaStruts™ are incorporated into the structure of the JWST The JWST (along with Park’s SigmaStruts produced in Newton, Kansas) is established at the Lagrange 2 (L2) Orbit Point located approximately One M
Slide 47: Park is Qualified on Aero Design Labs ADRS Program
Park is Qualified on Aero Design Labs (ADL) ADRS Program (Another Update...non-Update?) Reminder...Park’s materials are currently sole source qualified on ADL’s Drag-Reduction System (ADRS) Program for Boeing 737 Legacy Aircraft There are many thousand Boeing 737 Legacy Aircraft in service aroun
Slide 48: Update on Major Potential Project Initiatives in New Plant
Update on Major Potential Project Initiatives in New Plant (Reveal!) There is additional space in our new plant which is set aside for new project initiatives, including a potential project initiative we are currently actively working on…this project involves the purchase and installation of major
Slide 49: Potential Project Initiatives in New Plant (Continued)
Update on Major Potential Project Initiatives in New Plant (Reveal!) (Continued) AFP manufacturing utilizes robotic technology and is a form of “additive” manufacturing technology (as compared to the subtractive manufacturing technology utilized by conventional hand-lay-up of composite structures)
Slide 50: Potential Project Initiatives in New Plant (Continued)
Update on Major Potential Project Initiatives in New Plant (Reveal!) (Continued) Park is not interested in “automation” to replace our existing People But, since it is, and may continue to be indefinitely, very difficult to properly staff our operations, AFP automation may be a useful strategic
Slide 51: Potential Project Initiatives in New Plant (Continued)
Update on Major Potential Project Initiatives in New Plant (Reveal!) (Continued) The potential disadvantages of AFP manufacturing of composite structures compared to conventional hand-lay-up manufacturing include: • AFP manufacturing, like most automated processes, may not be well suited for lower
Slide 52: Park's People
Park’s People Update on Park’s great Customer Flexibility Program Current Total Participation: 74%...Participation break-down: • 2 job categories: 36% • 3 job categories: 22% • 4 job categories: 21% • 5 job categories: 21% It would just not be possible to continue to get the job done under the
Slide 53: Park's People (Continued)
Park’s People (Continued) So, maybe that is just capitalism and the free market at work? • But is it? • Some of these companies which are targeting our People were given huge amounts of government money (funded by us and other taxpayers like us) during the pandemic • This government money (funded
Slide 54: Park's People (Continued)
Park’s People (Continued) • Or is it “crony capitalism”? • Or phony capitalism? • Or no capitalism at all? • What do you think? And one more thing about the companies who are targeting our People… • What will they do as soon as the people they recruit and hire are not needed? Keep them? What d
Slide 55: Park's People (Continued)
Park’s People (Continued) And one more thing about our precious People… INFLATION Even though we did not cause it and we are not in a position to stop it, it is very hard to hear people talking about choosing between buying gas and food… • Very hard And this is not rocket science…any high sc
Slide 56: Park's People (Continued)
Park’s People (Continued) • So, we recently implemented an “inflation pay premium” for all of our People making approximately $60,000 per year or less… As I said, we did not cause this brutal inflation, and we are not in a position to cover all of the damage done by this brutality, but it bothers
Slide 57: Closing Thoughts: We Earn What We Get
Closing Thoughts We Earn What We Get At Park, during and throughout the pandemic: We kept all of our People…we laid off nobody while many others were cutting their employees loose by the thousands We made money every quarter while many others were losing money by the bucketloads We maintaine
Slide 58: Closing Thoughts: We Earn What We Get (Continued)
Closing Thoughts We Earn What We Get (Continued) At Park, we earn what we get, and we don’t ask for or accept government handouts or corporate welfare What do we want from our government? Our only ask would be to stop taking our hard earned, honest and decent money and giving it to other compa
Slide 59: 011218 slide 59 100622 Slide 59
011218 slide 59 100622 Slide 59
Park Aerospace — Investor Presentation (October 2022) on 6ix