Park Aerospace Corp. · NYSE:PKE
Park Aerospace — Q4 FY2024 Earnings Presentation
40 slides from Park Aerospace's earnings presentation, May 30, 2024
Slide 1: FY2024 Q4 Investor Conference Call
FY2024 Q4 Investor Conference Call May 30, 2024 ***Celebrating Park’s 70th Anniversary***
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 Q4 Investor Presentation……………………………………...……………….Slide 1 Supplementary Financial Information……………………………………………..Appendix 1 Happy 70th Birthday, Park 053024 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 FY24 Q4*** Sales $13,594 $13,618 $13,864 $12,502 $12,783 $13,875 $13,867 $13,530 $15,551 $12,481 $11,639 $16,333 Gross Profit $5,472 $4,411 $3,836 $
Slide 5: Quarterly Results for FY2022, FY2023 and FY2024 (Continued)
Quarterly Results for FY2022, FY2023 and FY2024 (In Thousands) (Continued) • International freight disruptions caused by the Wars in the Middle East and Europe Items and considerations related to our FY2024 Q4 Margins: Although FY2024 Q4 sales were $16.3 Million, Q4 production (we call it Sales
Slide 6: Historical Fiscal Year Results
Historical Fiscal Year Results (In Thousands)* FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024*** Sales $31,837 $40,230 $51,116 $60,014 $46,276 $53,578 $54,055 $56,004 Gross Profit $8,299 $11,288 $16,184 $18,673 $13,191 $17,917 $16,473 $16,534 Gross Margin 26.7% 28.1% 31.7% 31.1% 28.5% 33.4%
Slide 7: Historical Fiscal Year Results (Continued)
Historical Fiscal Year Results (In Thousands) (Continued) What is story behind our year over year margins? Probably a more meaningful question than the same question related to our quarter over quarter margins Ramping up for the Juggernaut (See slide 32) Going for the long term… At Park, w
Slide 8: Historical Fiscal Year Results (Continued)
Historical Fiscal Year Results (In Thousands) (Continued) If you consider the annual sales history, it is obvious we don’t need the expansion to support our current business levels But we clearly need it for the coming Juggernaut… We are staffing up our new factory expansion to prepare for wha
Slide 9: Historical Fiscal Year Results (Continued)
Historical Fiscal Year Results (In Thousands) (Continued) And we are ramping up our People Costs for the Juggernaut as well • Our current People Count is 126 • Our hourly People Costs are already up by approximately $800 Thousand per year compared to this time last year • And we just approved anot
Slide 10: Park's Balance Sheet, Cash and Cash Dividend History
Park’s Balance Sheet, Cash and Cash Dividend History Park has zero long-term debt! Park reported $77.2 Million in Cash and Marketable Securities as of the end of FY2024 Q4 There are $9.3 Million of remaining Transition Tax Installment payments payable through June 2025 Park’s Cash Dividend
Slide 11: FY2024 Top Five Customers
FY2024 Top Five Customers (in Alphabetical Order) AAE Aerospace Aerospheres, Inc. Kratos Defense and Security Solutions Middle River Aerostructure Systems (MRAS) and its subcontractors The Nordam Group COMAC C919 with LEAP-1C Engine Lockheed Martin Patriot PAC-3 Missile Defense System Boeing 737-700
Slide 12: Thank you, Kratos!!!
Thank you, Kratos!!! 053024 Slide 12
Slide 13: Park's 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 FY2023 Revenues: FY2024 Revenues: $54.1 Million $56.0 Million 053024 Slide 13
Slide 14: Park Loves "Niche" Military Aerospace Programs
Park Loves “Niche” Military Aerospace Programs Park’s Estimated FY2024 Military Revenues by Market Segment McDonnell Douglas F-15 Eagle Estimated FY2024 Adranos, Inc. Next Generation Short Military Revenues: $22.3 Million Range Interceptor (“NGSRI”) Northrop Grumman LGM-35 Sentinel Boeing P-8 Poseid
Slide 15: Supply Chain Challenges…All in the Past?
Supply Chain Challenges…All in the Past? Supply Chain Challenges Whenever we hear that they are behind us, we find out that they are not… What are supply chain issues really all about anyway…what is causing them…why won’t they go away? Are supply chain issues fundamentally workforce issues…h
Slide 16: Supply Chain Challenges…All in the Past? (Continued)
Supply Chain Challenges…All in the Past? (Continued) What does this mean to Park? We have found ways to “manage” supply chain challenges with better planning, strategically carrying more inventory and providing suppliers with longer lead times, but supply chain issues continue to be a major challe
Slide 17: 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…Factory is in production! Sole Source for Composite Materials for Engine Nacelles and
Slide 18: 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 19: Update on GE Aviation Jet Engine 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 7,171 Airplanes as of March 31, 2024 (Source: May 2024 edition
Slide 20: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) • Pretty well actually…Airbus delivered the following number of A320neo Family Aircraft for each of the following calendar years: 2018: 386 or an average of 32 per month 2019: 561 or an average of 47 per month 2020: 431 or an average of 36
Slide 21: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Clearly, based upon their huge backlog, Airbus would already be producing A320neo Family Aircraft at the rate of 75 per month if not for Supply Chain constraints and limitations And what about Boeing…how will Boeing’s struggles and challenge
Slide 22: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) • At the delivery rate of 75 A320neo Family Aircraft per month, the 63.1% LEAP-1A market share translates into 1,136 LEAP-1A engines per year What is that worth to Park? • There currently are 8,132 firm LEAP-1A engine orders (Source: May 2024 e
Slide 23: Update on GE Aviation Jet Engine 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 before the end of 2024! EIS delayed from original 2023 target as, according to Airbus, certification is taking a little longer than
Slide 24: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Comac delivered its sixth C919 Aircraft to China Eastern Airlines on May 28, 2024 Comac is reportedly expanding C919 Aircraft production lines Recently reported that China’s CAAC (the “China FAA”) is aiming for a 2025 EASA Certification of
Slide 25: Update on GE Aviation Jet Engine Programs (Continued)
Update on GE Aviation Jet Engine Programs (Continued) Boeing 777X Aircraft with GE9X Engines According to Boeing, the B777X Aircraft will be certified by the FAA and EASA in 2025 Park expects approximately $1.75 million of B777X Program revenues in CY2024 Boeing 777X undergoing Cold Weather Te
Slide 26: 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 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 27: Burndowns, Aerospace Industry Inventory Management and the Inevitable Day of Reckoning
Burndowns, Aerospace Industry Inventory Management and the Inevitable Day of Reckoning We have been through the inventory burndowns…and you are probably tired of hearing about them…we certainly are tired of talking about them We have discussed at some length the very strange inventory management
Slide 28: Burndowns, Aerospace Industry Inventory Management and the Inevitable Day of Reckoning (Continued)
Burndowns, Aerospace Industry Inventory Management and the Inevitable Day of Reckoning (Continued) Sooner or later, the inevitable Day of Reckoning will come…sooner or later, the demands of the aircraft end programs will take over and drive our business levels and activities… And, from what we a
Slide 29: 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 30: Park's Financial Performance History and Forecast Estimates (Continued)
Park’s Financial Performance History and Forecast Estimates* (Continued) *From Continuing Operations **Before Special Items ***The FY2025 Q1 sales estimate is based upon fully booked sales for FY2025 Q1, and the FY2025 Q1 EBITDA estimate is based upon those fully booked sales; however, FY2025 Q1 sal
Slide 31: Financial Outlook for Park and GE Programs An Update
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 32: Updated GE Aviation Jet Engine 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 1080 $30,500 $32,940K 5 PP20 90 $49,000 $4,410K 6 C919 200 $26,500 $5,300K 7 ARJ21 72 $29,500 $2,125
Slide 33: Park Aerospace Corp. Financial Outlook: Sole-source Qualified Programs
Park Aerospace Corp. Financial Outlook principally based upon growth estimates of Programs on which Park is Sole-source Qualified…An Update 5 Sales EBITDA FY24 Base Year $56.0M* $11.0M Estimated GE Programs Incremental Sales¹ $31.2M Estimated incremental sales for multiple programs on which Park is
Slide 34: Park Aerospace Corp. Financial Outlook (Continued)
Park Aerospace Corp. Financial Outlook principally based upon growth estimates of Programs on which Park is Sole-source Qualified…An Update 5 (Continued) ¹ GE Programs Outlook Sales of $52.3M minus FY24 GE Programs Sales of $21.1M equals $31.2M. ² FY24 Non-GE Programs Sales are $34.9M (FY24 total sa
Slide 35: Major New Manufacturing Project Initiative (an Update)
Major New Manufacturing Project Initiative (an Update) 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
Slide 36: Major New Manufacturing Project Initiative (an Update) (Continued)
Major New Manufacturing Project Initiative (an Update) (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
Slide 37: Happy 70th Anniversary, Park
Happy 70th Anniversary, Park 053024 Slide 37
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053024 Slide 38
Slide 39: Appendix 1
Appendix 1 Park Aerospace Corp. May 30, 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 Commussi
Slide 40: Appendix 1 Continued
Appendix 1 Continued Earnings before income taxes before special items for the 2024 fiscal year fourth quarter were $3.0 million, or 18.4% of sales, compared to $2.6 million, or 19.6% of sales, for the 2023 fiscal year fourth quarter and $1.6 million, or 14.0% of sales, for the 2024 fiscal year thir