Park Aerospace Corp. · NYSE:PKE
Park Aerospace — FY2022 Q2 Earnings Presentation
51 slides from Park Aerospace's earnings presentation, Oct 7, 2021
Slide 1: Company Presentation October 7, 2021
Company Presentation 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 011218 slide 3 070821 Slide 3
Slide 4: 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 5: Our Business (Continued)
Our Business (Continued) Park Aerospace also offers: Specialty Ablative materials for Rocket Motors and Nozzles Specially designed materials for Radome Applications As a complement to our Advanced Composite Materials offering, Park Aerospace designs and fabricates Composite Parts, Structures
Slide 6: 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 7: 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 8: 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 9: 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 changed n
Slide 10: 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 11: 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 12: Park's Balance Sheet, Cash, Cash Dividend History and Capital Allocation Strategy
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 13: Balance Sheet, Cash, 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 14: Balance Sheet, Cash, 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 15: 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 16: Quarterly Results (Continued)
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 17: 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 18: 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 19: Park's 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 011218 slide 19 070821 Slide 19
Slide 20: 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 21: James Webb Space Telescope Teaser
James Webb Space Telescope Teaser Launch planned for December 2021 “Going where no man (or woman) has gone before”… Fathoming the unfathomable Seeing the unseeable Knowing the unknowable 011218 slide 21 070821 Slide 21
Slide 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 011218 slide 32 070821 Slide 32
Slide 33: 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 34: 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 35: 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 36: 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 37: 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 38: 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 39: 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 40: It is Still All About Our People (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 41: 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 42: 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 43: 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 44: What Matters the Most at Park (Continued)
What Matters the Most at Park (Continued) At Park, our People Work for a 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 Par
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Slide 46: Appendix 1
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 47: 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 48: 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 49: 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 50: 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 51: 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