Park Aerospace Corp. · NYSE:PKE
Park Aerospace — Q3 FY2024 Earnings Presentation
49 slides from Park Aerospace's earnings presentation, Jan 9, 2024
Slide 1: FY2024 Q3 Investor Conference Call
FY2024 Q3 Investor Conference Call January 9, 2024 ***Park’s 70th Year in Business***
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 FY2024 Q3 Investor Presentation……………………………………...……………….Slide 1 Supplementary Financial Information……………………………………………..Appendix 1 Airbus A321XLR with LEAP-1A Engines 010924 Slide 3
Slide 4: Quarterly Results for FY2022, FY2023 and FY2024
Quarterly Results for FY2022, FY2023 and FY2024 (In Thousands)* FY22 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY23 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY24 Q1 FY24 Q2 FY24 Q3 Sales $13,594 $13,618 $13,864 $12,502 $12,783 $13,875 $13,867 $13,530 $15,551 $12,481 $11,639 Gross Profit $5,472 $4,411 $3,836 $4,198 $4,092 $4,086
Slide 5: Quarterly Results (Continued)
Quarterly Results for FY2022, FY2023 and FY2024 (In Thousands) (Continued) Our non-GE Aviation Jet Engine Sales were $7.5 million in FY2024 Q3 compared to $9.4 million in both FY2024 Q1 and Q2 • Although there will almost always be some degree of quarter-to-quarter variability in our business, the
Slide 6: Quarterly Results (Continued)
Quarterly Results for FY2022, FY2023 and FY2024 (In Thousands) (Continued) But, this quarter-to-quarter variability often does come with less than optimal visibility, which requires us to be very agile and fast on our feet with our supply chain, inventory and production management activities Wer
Slide 7: Quarterly Results (Continued)
Quarterly Results for FY2022, FY2023 and FY2024 (In Thousands) (Continued) We saw the freight train coming and we wanted to make sure we were ready Although ramping up our costs took some conviction (and maybe a little courage), it turns out it clearly was the right thing to do for Park Other
Slide 8: Quarterly Results (Continued)
Quarterly Results for FY2022, FY2023 and FY2024 (In Thousands) (Continued) Disrupting shipments to customers in the Middle East and Asia • Total Missed Shipments in FY 2024 Q3…Approximately $560 Thousand What was the main cause of that? You guessed it, international freight disruptions… And
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: Balance Sheet, Cash, Cash Dividend History and Share Buy-back Authorization
Park’s Balance Sheet, Cash, Cash Dividend History and Share Buy-back Authorization Park has zero long-term debt! Park reported $74.0 Million in Cash and Marketable Securities as of the end of FY2024 Q3 There are $9.3 Million of remaining Transition Tax Installment payments payable through June
Slide 11: Balance Sheet, Dividend History and Share Buy-back (Continued)
Park’s Balance Sheet, Cash, Cash Dividend History and Share Buy-back Authorization (Continued) As announced on May 23, 2022, Park’s board of directors authorized Park’s purchase of up to 1,500,000 shares of the Company’s Common Stock on the open market and in privately negotiated transactions Pa
Slide 12: FY2024 Q3 Top Five Customers
FY2024 Q3 Top Five Customers (in Alphabetical Order) AAE Aerospace Bombardier Aerospheres, Inc. Global 7500 Kratos Defense and Security Solutions Middle River Aerostructure Systems (MRAS) and its subcontractors The Nordam Group Gulfstream G280 Patriot PAC-3 Missile Defense System Kratos UTAP-22 Mako
Slide 13: Estimated Revenues by Aerospace Market Segment
Park’s Estimated Revenues by Aerospace Market Segment FY2021 FY2022 FY2021 Revenues: FY2022 Revenues: $46.3 Million $53.6 Million FY2023 FY2024 First 9 Months FY2023 Revenues: FY2024 First 9 Months Revenues: $54.1 Million $39.7 Million 010924 Slide 13
Slide 14: Park Loves Niche Military Aerospace Programs
Park Loves “Niche” Military Aerospace Programs Park’s Estimated FY2024 First 9 Months Military Revenues by Market Segment Northrop Grumman E-2D Estimated FY2024 First 9 Months Advanced Hawkeye SpaceX Falcon 9 Military Revenues: $16.6 Million Launcher with Dragon Spacecraft Mk-56 Vertical Launching S
Slide 15: Aerospace Industry Trends and Considerations
Aerospace Industry Trends and Considerations A Brief Update Commercial Aerospace Markets Domestic Air Travel is reported to have fully recovered from the Pandemic • Very good news for single aisle aircraft like the Airbus A320neo Aircraft Family International Air Travel is reported to be appro
Slide 16: Aerospace Industry Trends and Considerations (Continued)
Aerospace Industry Trends and Considerations A Brief Update (Continued) • The recent impressive ramp-up of A320neo Family Aircraft deliveries (see Slides 21 and 22 regarding this delivery ramp-up) certainly is supportive of that view Should the ramp-up of A320neo Family Aircraft deliveries be cons
Slide 17: Aerospace Industry Trends and Considerations (Continued)
Aerospace Industry Trends and Considerations A Brief Update (Continued) • There also is a high level of interest in unmanned and potentially autonomous systems, such as the Kratos XQ-58 Valkyrie Unmanned Combat Aerial System But the markets for Military and Defense hardware are also affected, and
Slide 18: GE Aviation Jet Engine Programs
GE Aviation Jet Engine Programs Firm Pricing LTA (Requirements Contract) from 2019 through 2029 with Middle River Aerostructure Systems (MRAS), a subsidiary of ST Engineering Aerospace (STE) Redundant Factory…Construction is complete and factory is in production! Sole Source for Composite Mate
Slide 19: GE Aviation Jet Engine Programs (Continued)
GE Aviation Jet Engine Programs (Continued) Park Composite Materials are also Sole Source on primary structure component for Passport 20 Engines for Bombardier Global 7500/8000 (not included in MRAS LTA) Fan Case Containment Wrap for GE9X Engines for Boeing 777X Aircraft* Produced with Park’s
Slide 20: Update on GE Programs
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 has a huge backlog of A320neo Aircraft Family firm orders of 6,753 Airplanes as of October 31, 2023 (Source: December 2023
Slide 21: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) • How is Airbus doing so far with their planned A320neo Family Aircraft production ramp up? Pretty well actually…according to reports, Airbus delivered: 73 A320neo Family Aircraft in December 2023 An average of 57 A320neo Family Aircraft pe
Slide 22: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) So, in CY2023, for the first time since the beginning of the pandemic, Airbus was able to return A320neo Family Aircraft production and delivery rates to pre-pandemic rates A very key milestone and accomplishment for Airbus There still coul
Slide 23: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) But what about the engines for the A320neo Aircraft Family? • By way of review, the A320neo Aircraft Family offers two approved engine options, namely the CFM LEAP-1A engine and the Pratt 1100G (GTF) engine • Park supplies into the A320neo Fami
Slide 24: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) • But that all recently changed The LEAP-1A has recently broken out as the clear market share winner for the A320neo Aircraft Family According to the December 2023 edition of Aero Engine News, the CFM LEAP-1A market share of firm orders for t
Slide 25: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) There currently are 8,150 firm LEAP-1A engine orders (Source: November edition of Aero Engine News) What are those firm orders worth to Park? • So what happened? Why has the market share of firm engine orders for the A320neo Aircraft Family s
Slide 26: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) The FAA published a new proposed rule on December 11, 2023 requiring the inspection of additional Pratt 1100G parts which could be affected by the powder metal issue It is difficult to fully comprehend the full implications of the crisis and
Slide 27: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Airbus A321XLR Aircraft Variant • Airbus recently confirmed that it expects the A321XLR to enter into service in the second quarter of 2024!!! • Boeing does not have a response to the A321XLR aircraft • Potentially very important program for Pa
Slide 28: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Comac ARJ21 Regional Jet with GE CF34-10A Engines…according to Comac: 112 ARJ21 Aircraft have been delivered and are in service There are 775 open orders for the Aircraft Comac recently delivered its first two ARJ21 Converted Freighter Ai
Slide 29: Update on GE Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Boeing 777X Aircraft with GE9X Engines According to a recent Boeing announcement, the B777X Aircraft will be certified by the FAA and EASA in 2025 Park expects approximately $2 million of B777X Program revenues in CY2024 Boeing 777X undergo
Slide 30: GE 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 FY2023 Q1: $6.4 Million FY2021 Q1: $4.1 Million FY2023 Q2: $6.1 Million FY2021 Q2: $2.9 Million FY2023 Q3: $5.0 Million FY2021 Q3: $1.8 Million FY202
Slide 31: FY2024 Q3 GE Aviation Programs Sales… MRAS Inventory Burn-down Part 2
Park’s FY2024 Q3 GE Aviation Programs Sales… MRAS Inventory Burn-down Part 2 The sharp drop-offs in FY2024 Q2 and Q3 GE Aviation Jet Engine Programs Sales were all about MRAS’s burn-down of Park inventory carried by MRAS (and certain of its subcontractors) The MRAS CY2023 build plan (their build
Slide 32: MRAS Inventory Burn-down Part 2 (Continued)
Park’s FY2024 Q3 GE Aviation Programs Sales… MRAS Inventory Burn-down Part 2 (Continued) Will this kind of disruptive inventory burn-down happen again? It likely will…it has happened before…it likely will happen again at some point in the future So, there may be (likely will be) some degree of
Slide 33: MRAS Inventory Burn-down Part 2 (Continued)
Park’s FY2024 Q3 GE Aviation Programs Sales… MRAS Inventory Burn-down Part 2 (Continued) Where are we going with the MRAS inventory burn-down? In our FY2024 Q2 Investor Presentation, we predicted that the burn-down would likely be completed in our FY2024 Q3 and that the Park inventory carried by
Slide 34: MRAS Inventory Burn-down Part 2 (Continued)
Park’s FY2024 Q3 GE Aviation Programs Sales… MRAS Inventory Burn-down Part 2 (Continued) Based upon our GE Aviation Programs bookings for FY2024 Q4: That concern was obviously well founded Our decision to ramp up our costs in FY2024 Q3 in order to be prepared for the FY2024 Q4 spike in demand
Slide 35: MRAS Inventory Burn-down Part 2 (Continued)
Park’s FY2024 Q3 GE Aviation Programs Sales… MRAS Inventory Burn-down Part 2 (Continued) And, by the way, the MRAS CY2024 build plan (their build plan, not ours!) translates into approximately $28 million of CY2024 Park GE Aviation Jet Engine Programs Sales, or approximately $7 million per quarter
Slide 36: 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 FY2023 Q1 $12.8 Million $2.8 Million FY2023 Q2 $13.9 Million $2.7 Million FY2023 Q3 $13.9 Million $3.3 Million FY2023 Q4 $13.5 Million $2.6 Million FY2023 Total $54.1 Mil
Slide 37: Financial Outlook for Park and GE Programs
Financial Outlook for Park and GE Programs An Update The following is our updated revenue Outlook for GE Aviation Jet Engine Programs and financial Outlook for Park generally Although we did provide quarterly forecast estimates for GE Aviation Programs and Park above, we believe the GE Aviation
Slide 38: Updated GE Programs Revenue Outlook…the Juggernaut
Updated GE Aviation Jet Engine Programs Revenue Outlook…the “Juggernaut” Engine Units per Year Revenue per Engine Annual Revenues per Program Assumptions¹ Unit Estimates² Program Estimates 4 A320neo³ 1181 $30,500 $36,025K 5 PP20 90 $49,000 $4,410K 6 C919 200 $26,500 $5,300K 7 ARJ21 60 $29,500 $1,770
Slide 39: Park Aerospace Corp. Financial Outlook
Park Aerospace Corp. Financial Outlook principally based upon growth estimates of Programs on which Park is Sole-source Qualified…An Update 6 Sales EBITDA FY23 Base Year $54.1M* $11.5M Estimated GE Programs Incremental Sales¹ $32.7M Estimated incremental sales for ADL ADRS, Kratos Valkyrie Unmanned
Slide 40: Financial Outlook (Continued)
Park Aerospace Corp. Financial Outlook principally based upon growth estimates of Programs on which Park is Sole-source Qualified…An Update 6 (Continued) ¹ GE Programs Outlook Sales of $55.0M minus FY23 GE Programs Sales of $22.3M equals $32.7M. ² Park is sole-source qualified on these three program
Slide 41: Financial Outlook (Continued)
Park Aerospace Corp. Financial Outlook principally based upon growth estimates of Programs on which Park is Sole-source Qualified…An Update 6 6 (Continued) The above financial outlook analysis is not a forecast as it only considers the estimated growth of programs on which Park is already sole sourc
Slide 42: Major New Manufacturing Project Initiative
Major New Manufacturing Project Initiative Major new Manufacturing Project Initiative for Park Requested by highly motivated Long-term Large Customer Park believes the Project has a high degree of likelihood to proceed Project is extremely confidential Park would need to build (or purchase
Slide 43: Major New Manufacturing Project Initiative (Continued)
Major New Manufacturing Project Initiative (Continued) Preliminary estimate of revenues from the Project are in the $20 million to $30 million per year range for more than ten years (likely Life of Program) High priority potentially very important project for Park and our Customer 010924 Slide 4
Slide 44: Update on James Webb Space Telescope… Revelations for the Ages
Update on James Webb Space Telescope… Revelations for the Ages… 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 approximate
Slide 45: Update on James Webb Space Telescope (Continued)
Update on James Webb Space Telescope… Revelations for the Ages…(Continued) Are our theories about star and galaxy formation correct…or fundamentally flawed? Are our modern cosmological theories about the Universe and its origins correct…or fundamentally flawed? Data and images from the JWST ar
Slide 46: Park Family Holiday Party Celebrated in Our Beautiful Factory
Park Family Holiday Party Celebrated in Our Beautiful Factory Cory Thanking our Park People Ugly Sweater Contest Winners for Their Dedication and Service to Our Company Annual Paper Airplane Throwing Contest Winners 010924 Slide 46
Slide 47: 010924 Slide 47
010924 Slide 47
Slide 48: Appendix 1 Supplementary Financial Information
Appendix 1 Park Aerospace Corp. January 9, 2024 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 49: Appendix 1 Continued
Selling, general and administrative expenses for the 2024 fiscal year third quarter were $1.8 Appendix 1 million, or 15.5% of sales, compared to $1.5 million, or 11.0% of sales, for the 2023 fiscal year third quarter and $1.9 million, or 14.8% of sales, for the 2024 fiscal year second quarter. Conti