Park Aerospace Corp.PKENYSE
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Shamali: Good morning. My name is Shamali. And I will be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Third Quarter Fiscal Year 2026 Earnings Release Conference Call and Investor Presentation. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, simply press star and then the number two. Thank you. At this time, I will turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.
Brian Shore: Thank you, operator. Welcome, everybody. Happy New Year. This is Brian Shore. Welcome to the Park Aerospace Corp. Fiscal Year 2026 Third Quarter Investor Conference Call. I have with me, as usual, Mark Esquivel, our President and CEO correction, COO. I gave you a promotion there, Mark. Sorry. And just some little housekeeping stuff, we announced and released our third quarter earnings release or published our third quarter earnings release right after close. You want to get ahold of that because in the release, there's link information to access the presentation we are about to go through. The presentation is also posted on our website. So we have a lot to cover, so let's get started. We have our dilemma. We have a lot of new investors, a lot of veteran investors. So how much do we cover the background stuff is, you know, always a little bit of an issue. We will do the best we can. Also, I just want to mention that we did file an S-3 registration statement with the SEC after the close as well. So we are going to get started with the presentation. We have a lot to cover. Obviously, at the end of our presentation, we will be happy to take any questions you might have. So let's plow ahead. Slide two, forward-looking disclaimer. If you have any questions about this language, please let us know. Let's go on to slide three, table of contents. Fiscal Year '26 the Q3 investor presentation, we are about to go through that. And then the supplementary financial information in appendix one. We are not going to review that or cover it, but if you have any questions about it, please let us know. As has become our practice in recent quarters, we are featuring the James Webb Space Telescope, runaway supermassive black hole, 10,000,000 times the mass of the sun. That sounds pretty big to me, being boosted from its galaxy at a 1,000 kilometers per second, which is about 2,000,000 miles an hour. Thank you, James Webb Space Telescope. The James Webb was produced with 18 Park proprietary sigma struts. James Webb is now orbiting, I think it's called a range orbit about a million miles from Earth. Okay, let's go on to slide four. Our quarterly results. Let's just focus on Q3, where we just announced sales, $17,333,000. Gross profit, $5,003,000. Gross margin, 34.1%. Adjusted EBITDA, $4,228,000. Adjusted EBITDA margin, 24.4%. We are not going to go over the history, but we provide it to you for perspective. The prior quarters. I mean, what do we say about Q3 about our Q3 record we just announced during our October '2 investor call. Sales estimate was $16.5 to $17.5 million, so we came in within that range. Adjusted EBITDA estimate was $3,700,000 to $4,100,000. So we came in a little bit above that range. Just want to remind you that when we provide you with these estimates, we do not do what is called guidance that, I guess, everybody else does, almost everybody else does. When we tell you, we give you an estimate, we are telling you what Mark and I are telling you what we think will happen. We do not provide any fudge room so we can, you know, we reduce our what we think by 10% so we can come in and beat the number and be heroes. We do not get involved in that kind of stuff. I just want to always remind you when we talk about our estimates, what they mean, what they do not mean. Okay. Let's go on to slide five. Good quarterly results continuing this. The Q3 considerations. Alright. We always have to talk about the Erie Business Partner Agreement because it has an impact upon our quarters. Guess a little tedious, but I think we need to explain it. We entered into a business partner group, Arian group. They are, you know, wonderful, a French company. We have known them for about twenty years. They are, I think, a JV between Saffron and Airbus. A large company. That was in January 2022, under which Arien appointed Park as exclusive North American distributor for their Ray Car of C2B fabric used to produce ablative composite materials for advanced missile programs. So this is, you know, a lot of people consider it to be the Cadillac of this category of fabric that is used for ablative, as they call sometimes. Missile programs. So this is why we have to talk about it because OEMs buy the fabric or stockpile the fabric because they are trying to protect their Let's just go into it. We had zero sales of the fabric in Q3. Very critical missile programs, but they have to buy from us. And so we are the exclusive distributor in North America. They the OEMs we buy the fabric from Aireon, our partner. And then we resell it or sell it rather to the OEMs with a for a small markup. Right? And we do not even deliver to the OEMs. We store the product, the fabric in our factory as a favor to them, I guess. Because ultimately, they do not need it. They are going to give us the releases at some point to go ahead and take that fabric and produce the prepreg material. With it. So small markup, I probably should have put this bread in here because it is not going to explain it. Even as far as I presented considering tariffs, This is because we passed through all the tariffs and they are significant, but you passed through passed through on a dollar per dollar basis to go into our sales line. But we do not provide a markup on the tariffs that would be kinda ridiculous. So that actually makes the markup even percentage even lower if you follow and say, we sold We had so we had zero sales of fabric in Q3. And we had a little bit more than a million sale million dollars of sales of the materials manufactured with C2B product in Q3. So when we produce the prepreg, that actually results in very good margins. So when we have significant sales of material, not too significant fabric, that is actually a plus for our bottom line. But the opposite often happens, and we will talk about that when we talk about our Q4 forecast. We have a lot of sales of fabric not as much of materials that will drive down our margins. It is all good. It is all wonderful. It is ultimately everything that we all the fabric that we sell to the OEMs and they stockpile, we will end up producing. That is the reason we keep it in our factory. But the timing kind of distorts our quarters sometimes, so that is what we have to talk with, Let's go on to slide six. Total miss shipments and Q3, approximately 740,000. That number is up quite a bit. It was caused principally by international freight supply chain and customer spec. And engineering issues. So what was going on here? Industry challenges are reemerging as industry recovers and program ramps accelerate. This is actually a good thing, good news. You know, after the pandemic or when the pandemic started, it was a mess because supply chain was so screwed up. And after a couple years, we kinda got back to something what would be more acceptable. Which is okay. But now that the industry is recovering, and the programs are ramping quickly, now the supply chain, the industry is actually getting a little bit behind the power curve again. That is what is going on there. So actually, it is good news. That impact of tariffs and tariff related costs and charges maybe Mark can help us with this. Go ahead, Mark.
Mark A. Esquivel: Yeah. I did. This is a very eventful update again, but which is, I think, a good thing. We have minimal impact. On tariffs in our Q3 just as we have had previously. I think we talked about it. You know, we price our materials on short term basis. Most of our business. So we are able to pass them on. If we do get them, The second bullet, possible future, of impact. So, again, this has been quiet again for us the last few months or you know, it seems to stabilize as far as what is coming our way. That does not mean there could be changes to that. But as far as the you know, the near term, it you know, we I probably think the bullet would be pretty similar to the first one. You know, going forward in the next week quarter. But you just never know, but there is minimal impact for Park. At this point.
Brian Shore: Okay. Thanks, Mark. Let's go on to slide seven. Keep moving here. This is a slide that our veteran investors are familiar with every quarter. We share with you our top five customers and we do a little picture of that is associated with each of these companies, the top five companies alphabetically. The seven thirty seven MAX, you know, we have said in the past, we do not have much content on that. That is actually Norian. That is a weather master radon that Norian produces for the seven thirty seven product line. What else do want to talk about here? I guess maybe oh, the Valkyrie. Yeah. So we have talked about the Valkyrie quite a bit. Over the last few years. This is a creative program that we are on. But US the recent news is the marine corps just selected the Valkyrie for its collaborative combat combat aircraft program, loyal wingman, sometimes it is called. So that is very good news for Kratos and also for Park. The PAC three, that is an AA item, and the Airbus h h m 20 neo, that is obviously Middle River. Sikorsky, Sikorsky, New Orleans, we already talked about which program is associated with Neurocrine. Let's go on to slide eight, our pie chart here. So the comment is always that if you look at fiscal '21, which is really the pandemic year, the pie chart quite different. The other years, kind of very similar. Year over year. People ask if the military piece of the pie chart will grow and it might, but commercial is growing too, we are not sure. My expectation would be that business aircraft as a percentage would maybe shrink over time. So let's go to slide nine, Park Loves, Niche Military Aerospace aerospace program. This is a slide that we include every quarter as well. And these are not necessarily the biggest military programs we are on. These are just things we want to share with you. As we mentioned in last couple of quarters, we feel less comfortable giving many specifics about these programs, but these are all programs at Park. Is in are is associated with. Let's see. The only thing that I would mention in terms of for recent news is the the standard missile six SM six program. The Navy just just awarded Raytheon a contract to boost the s m six production. This is all public, so you can look it up yourself. Do not think we need to comment on any other programs here. Let's go on to oh, sorry. Could not find slide 10. Slide 10. This is another slide that we have included for probably, I know, a dozen presentations. So a lot of you are very familiar with it. No real change to it. GE Aerospace jet engine programs, you know, major major program opportunity for Park, firm pricing LTA, from nineteen to twenty nine with Middle River Aerostructure Systems, MRAS, which is currently a sub of SD Engineering Aerospace, a Singapore aerospace company. But when we got all these programs, they were a sub of GE Aviation, GE Aerospace. That is why these programs are all related GE engines or CFM engines. We built a redundant factory for them and exchange for agreeing to to to give us the LTA through '29. What programs are we talking about? The first if you look at the bottom left side of the page, the first five are all h three twenty neo aircraft family programs. They are all the same engine, LEAP one a engine. Which is a CFM engine. The seven forty seven eight that airplane is no longer being produced, but there are still spares that were involved with COMEC nine one nine. COMEC is a Chinese aircraft company. With LEAP one c engines. The nine one nine is COMAK's offering to compete a single aisle to compete with the seven thirty seven and the eight for 20. On the right hand side of the page, nine nine zero nine, it is also a COMAT aircraft, and that is a regional jet. And that also is a GE engine, of course. The Bombardier Global 7,500 passport 20 engine. The picture here is the seven forty seven-eight. As you can see, engine installs We like this picture because it just gives you perspective on the size of these nacelles and everything you see there is made with park material and a lot of what you do not see inside the nacelles are made with park material as well. On that 47 program. Let's go on to slide 11. So more on GE Aerospace, we are continuing Let's skip the first item. Second item, vacate containment wrap. This is for the triple seven x g nine x engines for triple seven x. That is produced with our AFP material and other composite materials. And let's go on to the third item. Emirates Park LTA, which you already mentioned, was amended to include three proprietary park film adhesive formulation product forms. And the last item, life or program agreement, which was requested by MRAS and SDE. Remember, SDE is the owner of MRAS now. And we have said your agreement is under negotiation for a few quarters now. But this time, it is on us, you know, because the MRAS team wanted to get together with us in December and we said, look, we are really going to focus on this expansion. And this expansion is for their benefit, you know. So we say, can we delay the the next meeting on the life of program a couple of months? And they said, fine. So that one is on us. We cannot blame anybody except us. The fact that this is still still an open item. As we said previously, we would love to have the life of program, but we are okay either way. Let's go on to slide 12, continuing with the update. On the this is now updated on GE Aerospace and Engine Programs. So let's start with the eight three twenty NEO aircraft m one. That is the big dog of all the November '25, Airbus had already delivered 4,275 a through 20 neo aircraft, and Airbus has a huge backlog of these aircraft, 7,900 as of, like, September That is a total of over when you look at how much I mean, we are delivered and what is in the backlog, it is all over over 12,000 airplanes. That is huge. We and look at the delivery history here at the bottom of the the bottom half of slide. We will go through the numbers. But you could kinda see what happened is that they were ramping up as the program was growing and then hit the pandemic and, you know, kinda hit a brick wall. And the ramp up has was slowed down a little bit. I think they are ramping up much more aggressively now in December '25, they delivered 97 airplanes which is a lot, but they plan to deliver even more. You probably read about this, but the h 20 neo has issues with fuselage panels and also software that was caused by solar activities, which reduced the deliveries Those those issues have been resolved but nevertheless, we probably held back to deliveries in '25. Let's go on to slide 13. This is the key thing. Airbus is targeting a delivery rate of 75. Remember what I 50, 51, 75 per month in 2027. So that is, doing the math, a 50% increase over where we are now, which is a lot. Considering it is a very large program. It is 50% of a lot. On 10/07/2025, the a three twenty aircraft family became the world's most delivered commercial jet. That was surpassing the seven thirty seven and A320 aircraft family continues to rack up new orders. The game changing a three twenty one XLR, we have spoken about this you know, lawsuit in the last few quarters. Maybe I go through each item, but if you have questions about it, please let us know. This is a pretty exciting game changing aircraft for for Airbus. So this is part of the a three twenty a three twenty neo family. I just want you to understand that. Were there approved engines for the a three twenty new aircraft family, there are two of them. One is the CFM LEAP one a engine. That is a program we are on. The other one is a Pratt and Whitney GTF engine, p w 1,100 g engine. We are not we are not involved in Pratt program, only the CFM program. On slide 14, we supply it to the oh, I just talked about the first item, the first one. Okay? Second bullet item. So, basically, if you look at the market share of firm engine orders, between the CFMA through LEAP or one a and the Pratt engine, you know, and this is for the a three twenty program, of course. The leap CFM leap engine has a 64.5% mark share, you know, much more than half. So and it has been that way for a while. The LEAP market share is much more than the Pratt market share which is good for Park, because we are on the LEAP program and not the Pratt program. At that delivery rate of 75 airplanes per month, that is 64.5% market share translates into, you know, a lot of engines pure 1,160 Just so you understand, this relate this this this 64.5% is based upon all orders, all backlog for both engines. We are talking about thousands and thousands and thousands of airplanes, so it is not it is not a number that is usually distorted by kind of a small perspective or short time short time frame perspective. Let's keep going. The PRED engine, unfortunately, continues to struggle with serious reliability issues. I just read an article this morning that these reliability issues are expected to continue. Now for LEAP engine, reliability has been a selling point. Reliability is a very, very key thing for an airline. Not reliability relates to how how much downtime your airplane has late to maintenance. So if these airplanes are down for maintenance or inspections for these engines, that is a real bad problem because when the airplanes turn it around, they are not making money. Airlines their margins are not that great. They cannot afford to have excess downtime. And that is why the reliability issue is a real serious problem. I do not know what is going to happen but, you know, when I even speculate that because reliability continues to be a problem with Pratt, and the CFM LEAP is is doing well with reliability, that could drive the market share potentially even more to the leap side of the ledger. CFM is significantly ramped up production deliveries of LEAP benches according to LEAP one a. That is really significant because we talked about supply chain restrictions holding back the market, holding back deliveries. There are a lot of different things, but what was often was mentioned most often were engines. So the fact that CFM is leaping up I am sorry, ramping up the LEAP engine is a good thing because that will help Airbus ramp up their 20 needle program, which, of course, is what we want. Slide 15. What are we doing here? As of, 09/30/2025, there were 7,900 firm LEAP one eight. See what I am talking about. There is a lot of there there is a lot of engine orders. Firm leap one a engine orders. So, you know, we are recently told that our our customer was given indication as to how many engine how many nacelles, basically. That is where they produce nacelles They need to plan to produce for this program and we cannot disclose that number but it is significantly more than 7,900. Significantly more. The a three twenty neo aircraft family program can end up being our largest program. We will see. But over the long over the course of the of the program, it could be I do not know. Everybody is different opinion about this, but my I will give you my opinion, which is probably not worth much. But my opinion is that that Airbus will will be making these airplanes with these engines in 2040. We will see if I am wrong or right. Comeback nine one nine, is a Chinese aircraft. It has been a while. We talked about that. It also has a LEAP engine. LEAP one c. And this is the the single aisle to compete against the seven thirty seven b for '20. Comac is expected to fall short of his 25 two to 25 delivery target. Not surprising. It is a Chinese company so sometimes they have historically had some trouble kinda getting their programs up and going. Target shortfall, they say it is caused by supply chain, whatever, you know, the international international production issues, international trade production issues. So I do not know. Let's just go on to the next slide. I do not think we need to be let's go on the next slide. We are still under nine one nine. Comeback is increasing manufacturing capacity to achieve production rates of one fifty and twenty seven, two twenty nine. Now if you look at that juggernaut slide and you throw down the presentation, we are assuming one fifty. We are assuming a top set of one fifty. But Comac is building capacity for 200 per year. Comac reportedly has over 1,200 orders for the nine one nine. Now let's look at the nine zero nine. This is a regional jet and, again, produced by Comac with a GE engine, a different type of GE engine, of course. So according to the state run Global Times, under seventy five nine zero nines have been delivered. The nine zero nine zero nine operating routes of the ten and twelve Asian countries, which is good because originally, these airplanes are thought to be well, China only airplanes. That is obviously not happening. I mean, Comac does not want it to happen anyway. Nine zero nine aircraft now carried over 30,000,000 passengers. That is a lot of passengers in these small airplanes. There were seven 385 open orders So here is a good thing to talk about because this aircraft is in a rate for a couple years. So it took Old Comac a while to get to rate, but they are rate. They got there, and that is the key thing. So with the nine one nine, maybe it will take a little bit longer from the get to rate, but the my opinion anyway is they will get to rate, and that will be very good park. These are starting from base zero. So let's go to slide 17. The Bombardier Global 8,000 variant, the 7,500 variant, and it was just certified and first delivery last month. The fastest civilian aircraft since the Concorde, 8,000 nautical mile range. This triple seven x, with g nine x engines, The triple seven x tax program has amassed a lot of hours, a lot of flights. Boeing reportedly has over 600 orders for the aircraft. The certification test program is moving into phase three of the TIA, which is important. I mean, I am not going to know what that means. Not expert anyway, but it is an important step along the way to getting your aircraft certified with air FAA. Slide 18, stolen triple seven x. Boeing now anticipates FA certification entry into service and first delivery of triple seven x n 27. This airplane is delayed too, so we cannot all just say, well, the Chinese are sometimes late with your aircraft. The c the Boeing CEO has indicated that 777X aircraft and the engines are performing quite well. Mentioned increased FAA scrutiny as key factor in their certification delay. I think what he is really getting at, I what is nice about it is that the FAA is being more stricter because of the issues with the the MAX, the seven three seven MAX. Why do not we go on to slide 19? Here is some numbers, GE Aerospace programs. This is why we emphasize a lot because it is a, you know, it is it is a big deal for BART, the GE Aerospace jet engine programs. We will not go into the sales history. You can see it here for your benefit. Q3 sales were $7,500,000. Our forecast for Q4, 7.25%, eight seven 3 quarters, 8 a quarter million. And for the year, $29,000,000 to $29,500,000, just kind of adding down And you could see that there is a recovery going on here in fiscal twenty almost $29,000,000, and it is going to fell off a cliff during the pandemic. There has been a real struggle to get back to that level that it is only now. That we are at that level this this fiscal year. And my feeling and sense is that this number is going to will move up quite aggressively over the next two or three years. Let's go on to slide 20. Okay. This is now going talking about park, just GEs, solar park. Park's financial performance history and forecast estimates. So and the you know, top part of the page, in yellow, fiscal year twenty six u three. Well, we already gave you those numbers. And then we have estimates forecast estimates. Remember what we said, these are not this is not guidance. This is what Mark and I think is going to happen for the rest of our ability Sometimes we are wrong. Sometimes it is higher. Sometimes it is lower. We will be telling you telling you what we think is going to happen. Q4, about $23.5 million to $24.5 million. EBITDA of 4.75 to 5.25. Now a lot of smart people are thinking, well, what is going on here? Q3 sales were $17,300,000. Q4 sales a lot more Q3 EBITDA $4,200,000 So why is it the forecast for Q4 EBITDA a lot more? We have a lot more sales. You gotta look at the footnote, there are two asterisks. Forecasted to include approximately $7,200,000 of C2B fabric sales. So that is a small market very, very light margins, and that is what is going on there. That is what you need to understand. That is why with those kind of sales, we are not seeing much higher EBITDA numbers. And then while we are at it, let's look at the total for forecast total for '26. This is just adding down. Take into account the Q4 forecast. $72,500,000 to point 5,000,000, and here is your EBITDA number. And, again, look at the at the footnote three asterisk, forecast to include approximately $9,800,000 of C2Bit fabric sales mostly in Q4 it looks like. Alright? Okay. Let's go on to slide 21. So this is just some history with on the right hand column, the '26 forecast estimate included, the estimate we just went over with you. So we will go over that again. I think what is interesting is look at the top line, this sales starting in 1718, nineteen, twenty went up $1,010,000,000 approximately per year from '17 to '20, and then it fell off a cliff. You still have the pandemic and the supply chain issues and industry chaos that resulted for a long time. And even last year in '25, we still had barely gotten back to that fiscal twenty number. Now we start seeing fiscal twenty six. We start to see some acceleration getting out of that rut that the industry has been in for a long time, like five years. It has been a long five years, I would say. So it is what it is, but it has been a long five years. Let's look at the notes down here. So Supply chain limitations affecting your your fish industry. That is what we just discussed. We looked at sales numbers, ramping up, of course, for the Juggernaut. And, again, reminding you the fiscal twenty five sales includes $7,500,000 of C2B fabrics and a '26 sales include $9,800,000 of C2B fabric. Very important to understand those things. Okay? And until now, you know, I should just go back and say, the OEMs have been stocked by lots, lots, need to be fabric much more than the what we are producing in terms of how that would translate into producing the producing prepreg with the C2B fabric. So let's go on to slide 22. Change your gears a little bit. Our buyback authorization and activity, an update Okay. So we announced in May 22, our board authorized to purchase $1,500,000 shares of our common stock Under this authorization, Parkers purchased total 718,000 shares of its common stock at an average price of $12.94. $12.94. So you have to say we are some kind of geniuses I mean, considering the stock prices now, I mean, I know. I do not what you think, but we probably should be invited on CNBC or maybe to to talk and be a guest lecturer at the Wharton School of Economics Let's keep going. We do not have to talk about well, except that we are we did not buy any stock in Q2 or Q3. We are not we bought any stock so far in Q4. Let's go on to Slide '23. Trying to rush you a little bit, sorry. Our balance sheet cash and very incredible cash dividend history, we have zero long term debt, $63,600,000 of cash at the end of Q3. Forty one consecutive years of uninterrupted regular regular quarterly cash dividends. And now paid $608,600,000 or $29.72.5 per share in cash dividends since the beginning of 2005. We are kinda stinking up on that $30 per share number. Parks founders always kinda like to include this photo with the with the cash dividend history because this is really the beginning of Park. When we really had almost nothing. We started with basically nothing. Let's go on to slide 24. It is a lot a lot of money, a lot of dividends, I would say, for a company to start with basically nothing. Slide 24, financial outlook for GE, GE Aerospace, Gen programs, the Juggernaut. We have used that term for a while now. The timing, we are not sure that Juggernaut is coming as now. With the capital n o w. Cannot be stopped. Better be ready. Let's go on to slide 25. I am rushing a little bit. I just want to stop and say for a second for some of you new shareholders, if you want a more detailed explanation of some of these things, please just call us. We are happy to go over these items in more detail. We are kind of rushing through them. We just want to get to some of the the newer items that toward the end of the presentation. Slide 25. So the we are talking about engineers per year assumptions. And there is a footnote explaining how we came up with those assumptions. Revenue per engine, that is that is that in sorry, that information is provided to us. By our customer. And the annual revenue per program just multiplying across. And we end up with a total of $61,800,000 at the outlook year. So couple notes here, our revenue per engine unit estimates are updated. We have been given updated information from our customer. And here is something we have not really touched on, why the engine units or your assumptions may be conservative. Let's just try explain this quickly. So h and 40 neo, let's look at that one. We have 1,080 engines. We are talking about the year. That is based upon 75 airplanes per month, two engines per airplane, a 60% mark share for LEAP. Just do the math. That is eight eighty. Alright? So that is based on how many LEAP how many a three twenty airplanes will be built with LEAP engines. Do you think that every engine itself structure that is produced will end up on those engines? That would be a really, you know, ideal situation, but you know, something called scrap and fallout and things get rejected sometimes. We are not taking that into account at all. We are not taking spares into account either. So that is why this assumption about NGUs per year might be a little conservative. I just want to touch on that. Okay? Slide 26, we do not have to go over this. These are all the footnotes related to the how we computed the numbers and did the math on slide 25. Let's keep going. Okay. Now we are to changing gears completely. Warren Peace Parks new Juggernaut. Actually, that term, the new Juggernaut came from one of our investors. We liked it, so we decided to stick with it. Some of this is a review from last quarter. Some of it is a little new. Unprecedented demand for missile systems. Missile system stockpiles have been seriously depleted. By the wars in Europe and Mideast. There is an urgent need to replenish those depleted missile system stockpiles. According to Wall Street Journal reporting, the Pentagon is pushing defense OEMs to double or even quadruple missile missile system production on a breakneck schedule. That is a direct quote, obviously. List of Pentagon targeted missile systems include the Patriot missile system, the LRASM, and the SM six. Patriot probably being a particular priority. Apart actively participates in all of those missile systems. Review of an update on the Patriot Missile Defense System, that is the big one for us. Also, we focus on it because it is public. We do not we are not providing any confidential inside information. Everything we are providing you is based upon public information. There is just lots and lots of public information. About the patriot missile system. You know, president Trump talks about it. Sometimes. A large deployment of PAC three Patriot missile defense systems, largest, sorry, in history, response to Iran's ballistic missile strikes. On our Ford Air Base in Qatar. That was, I guess, a few months ago after we bombed Iran, bombed our nuclear sites. On slide 38. So what happened here is we moved the Patriot missile systems to Qatar anticipation of this attack from South Korea and Japan, but I do not know if South Korea and Japan are so happy about that. The Department of War wants a very significantly increased patron missile stockpiles in Asia. So, we just took a lot of them out of Asia. So obviously, we had a problem on our hands in terms of Patriot missile systems availability. Israel's and Ukraine's Patriot missile systems have been seriously completed. A result of those wars. Recent news from US defense OEMs including RTX Boeing Lockheed l three indicating significant ramp up of Patriot missile system production. It is apparent that US plants do much more than just replenish the depleted stockpiles. On 09/03/2025, Lockheed missile and fire control division received its bigger biggest contract in history, a $9,800,000,000 with a b, or from the US army. That is the branch that uses the patriot systems. For about 2,000, just a little less than 2,000 Patriot missiles. It is a lot. Slide 29. Here is some big stuff. Slide 29. Well, new. On 01/06/2006. What was that? About a week ago? Yeah. About a week ago. Lockheed announced it reached a seven year agreement This is all being driven by the Department of War. With the US Department of War to increase its Patriot PAC three missile segment enhancement, MSC interceptor. These are basically pager missiles. Production to a capacity from 600 to 2,000. 06/2000. You see that number? The last two years. This is even more interesting in a way. Lockheed record increases production of of Patriot PAC free interceptors by 60%. So do the math, It was a if it was increased by 60% to get to 600, that that means it was 375. Two years ago. So we are going from I am just doing the math. Three seventy five to 2,000. You get those numbers? It is on kind of unheard of. Unheard of. The new seven year agreement framework is designed to encourage Lockheed and its suppliers to make the capital investments necessary This is a team again for Department of War. They want the Defense Department to make capital investments rather than paying dividends and buybacks and stuff like that. Necessary to boost production capacity to levels needed to support to dramatically increase PAC-three missile program requirements. Do we need encouragement? No. We do not need any encouragement. We are already building our factory. We would get to that in a minute. I am planning to build a factory to support this program. Lockheed or poorly supplied PEG factory missile supply. Sorry. Missile systems to The US and 60 other countries. So a lot of countries that want to system and are not getting it right now. Breaking news. This is this morning. US Department of War is investing $1,000,000,000 in l three Harris solid rocket business, that is Airjet, to boost critical solid rocket production for Patriot and other missile systems. This is a new separate publicly traded company will be created in connection with this investment. This is a big deal. It is a big deal for Park as well. But you see what is going on here? This is Department Ward driving all this stuff. It is new world order, as we say, later on the presentation. Let's go on to Slide 30. The story continues. What do we have to do with the Patriot missile system? Park supports the factory Patriot missile system with special ablative materials produced with airing room. There is an airing group name again. Their proprietary C2B fabric. This one probably should be in bold, we are trying to be modest about it. Park is sole source qualified. For specialty ablative materials on a PAC three missile system program. You just think about that. And think about all we just talked about, what we discussed regarding this this program. Parkers recently asked to increase our expected output, especially by the materials from for the program by significant orders of magnitude. So how are we going to do that? We will fully support this request with the additional manufacturing capacity provided by parks major facilities expansion discussed below. We did not need any incentive or encouragement. We are already there. Okay. Let's keep going. Now we gotta go back and talk about area area group a little bit. More, not from the perspective of how it affects our quarters from a kind of bigger picture perspective. We have agreements with Airing Group a really wonderful French aerospace company JV between Airbus and Safran, relating to their proprietary C2B fabric used by Park to produce a blade and composite materials for the Patriot missile system and other missile systems. Then we entered into a business partner agreement, that is what they call it, They because they refer to us as their partner, very nice. With Erin in January 22, under which Arian appointed Park as its exclusive North American distributor other C2B fabric. Slide 31. On March 2725, we entered into what they call a new agreement with Aireon under which Park agreed to advance €4,587,000 to area against future purchase by park of C2P fabric. Now that was a fifty fifty deal. Park this advances to be used by by Aireon to increase its CQP manufacturing capacity in Europe. So they kicked in the same amount. We went fifty fifty on this investment. To increase the capacity in Europe, and we already paid our first installment of that amount of that amount. Sorry. Here in group with Park, our partnering on a study to investigate the economic and other considerations relating to potential establishment of a major C2B fabric manufacturing facility in The US. Park committed to contribute Again, it is fifty fifty deal. It is greater €50,000 to the study. We expect that amount to be expensed in our Q4. Originally, we said Q3 is probably in Q4, but that is another fifty fifty deal. This is something we are partnering on this study. The bottom park is engaged in ongoing discussions with Erin Group relating to potentially significantly increasing C2B fabric manufacturing capacity in The US to support critical Department of War missiles programs, including the Patriot Missile System program. It is very important that we highlight this because there is a significant need for for a much more C2B fabric capacity. So it is very important that this additional capacity be installed to support these programs as they ramp up aggressively. Let's go on slide 32. So we have referenced the pay missile steps. I am already explaining this a little bit, but it is a very high profile, well known, numerous other but there are new sorry. There are numerous other critical missile programs currently in production or in development which Park is actively supporting. Unfortunately, many of these programs are too confidential or sensitive for us to identify at this time. Please understand that certain of these programs represent very significant revenue opportunities for Park over long periods of time. So last thing on war and peace. How about The US defense industry's new world order? We already talked about this a little bit. President Trump wants to increase The US defense defense budget to $1,500,000,000,000 with a t in order to build our dream military. So this is a two edged sword for the defenses industry. You know? The it is being what is it? Somebody giveth and taketh away. Here is the taketh away. But according to president Trump, the defendant industry needs to get us back together. So buybacks, dividends, no. Once you invest in defense programs, CEO even CEO pay limits, So, you know, there has been a real issue with the aerospace industry generally. Programs getting being not on time and not on budget. And I think that the department ward does not really like that very much. They are asking the defense industry to kind of get its act together. What do we think about the new world order? We think it is great. Parkton is great. We think it is wonderful. Slide 33, Okay. Let's talk about our new plan. Sorry it is going on so long. I am rushing as you probably can hear through this as quickly as I can. The park's new major new composite materials manufacturing plant. So now we are going to give you a little bit more information about this new plant. We are planning to build a major new composite material manufacturing plant. New plant is being designed to be fully functioning and integrated a fully functioning, sorry, and and integrated composite material manufacturing plan. It will include the following manufacturing line solution training, hot mill film, hot mill tape, confidential manufacturing lines, and support equipment, New plan will also include full production, lab facilities, office space storage, and freezer, and ancillary equipment necessary to support all plant manufacturing activities and operations. It is like a fully integrated plant with everything that is needed. New plant is being designed or produced parks, to produce and support parks complete composite materials product line, including film adhesives and lightning strike materials. Slide 34, the plate is not gonna is not being designed currently anyway to produce a composite parts, structures, assemblies. Okay? Plan plant size, it is getting pretty big, a 120,000 square feet. This could change, but that is our current guesstimate on the plant size. When a plant is complete and operational, get this, new plant will approximately double parts current composite materials manufacturing capacity. So that is, you know, see why the plant is that big. When will a new plant be completed? Well, we we have some internal discussion about that and even debate. But let's just say for now, the second half of calendar '27. And when will be operational? What do mean by operational? Not fully ramped up. That means we are producing and selling some product. You know, some product has been qualified. For production sale. Maybe second half of, let's say, calendar year '28, would be a target for when the plant will be operational. Estimated capital budget for new plant, approximately $50,000,000. What is the timing of the capital spend on the plant Again, this is planning in flux. At this point, fiscal year '27, that is the coming fiscal year, probably 60% of that money Fiscal '28, maybe 30% of the money. Fiscal year '29, maybe 10% of the money. That sort of money will be going out the door. How will we fund the capital spending for the new plan? Well, with our cash, with our cash flow, and to some extent from the offering that we just announced if that offering is successful. But is the new plant project dependent on the public offering discussed below? Absolutely not. We are doing this. There is no question about it. Nothing has to be decided. It is going to be done. We are just finishing the planning. It is not dependent on anything. It is something we are committed to doing for very good reasons for Park and for our investors. Okay. Let's go on to slide 35. Stolen a new plant, Where will the new plant be located? We have a finalist location in Midwest, but we are still waiting for approvals from local community. Economic development. These things, for us, go much more slowly than we like. Why are we building this new plant? Well, that is obviously the $64,000 question. Or maybe the $50,000,000 question. Are juggernauts plural? You know, both of our juggernauts, we talked about require it. Our long term business and sales outlooks require it. Significant additional composite materials manufacturing capacity is required. To support our juggernauts. And long term business and sales outlooks. And we are doing this to ensure we continue to have the manufacturing capacity needed for park to be parked So we are doing this to ensure park is able to to be the company of, yes, the can do company, the yes we can company, So we are not looking to become a mill. We are not going to abandon how we got here. Why we have the the great in my opinion, success we have. Why we have more opportunities than we could ever handle. So it would be really foolish for us to abandon how we got here become a mill company where, you know, we just run our factory like a mill, and then somebody want customer wants something. Okay. We could help you out maybe a year from next month. I am not exaggerating. That is really what happens in this industry. That is not for us. Let's go on to slide 36. What are our crawling cards? Flexibility, responsiveness, and urgency. So we are doing this to ensure Parker's able to continue to do those things which got us here. It would be very unfortunate mistake for us to abandon the things which got us here. A very bad mistake. So our new plan needs to be designed with being parked in mind. Meaning being flexible, being responsive, having urgency, saying, yes. We can. You need something. We are going to move everything around. We just we just talking yesterday, maybe Friday. About whatever large customers, they want to move so many things around. It was any other supplier, we would say, well, sorry. We do not ever say sorry. Sure. We will move everything around a lot. It requires us to juggle a lot. It requires production juggle a lot, but that is what we do for a living. Okay? And that is why we had the success that we had in my opinion. When our new manufacturing plant is complete and fully operational, Mobile Park's total composite materials manufacturing capacity be? Well, you know, it is a question that is not so easy to answer. It depends on how do you define manufacturing capacity. Park being parked manufacturing capacity, that means run the business the way we want to run it so we have that maximum flexibility responsiveness, urgency. If we run a factory like a mill, I just plant it, you know, for us six days a week, twenty four hours a day, we could do that. But then our flexibility is almost no. But parking park manufacturing capacity, maybe about $220,000,000. Parking park manufacturing capacity, but pushing it to some extent. Still being parked, but pushing it to some extent. About 260,000,000 these are preliminary estimate numbers. We have been asked by a number of investors Please give us some help here. Please give us some perspective on the manufacturing capacity. The maximum state of manufacturing capacity, this is what we do not want. Would be about 315 or $20,000,000. That is not what we want. Okay? So when you ask we have not asked what the manufacturing capacity is, we have to say, well, depends on what you mean by that. Let's go on to slide 37, and I just want to say these are numbers we are working on. We are doing a massive amount of work. You know, Mark and the guys on the expansion plan. So a lot of work has been done, but we are not quite finished with everything. And even after we are finished, things can move. You know, mix can change. Things like that, which will affect capacity and sales. Slide 37. Park's long term sales outlook for composite materials, including film adhesive materials and lightning strike protection materials, So we gotta say again, what does this mean? It is our number is approximately 200,000,000. 200,000,000? Okay? But how is this out? What computed. It is really under important to understand what this means because not a forecast, it is an outlook. And this is how this outlook was computed with line items that are known items. These are known sales and known programs and known customers. There is no other category. There is all line items of known opportunities, known customers, known programs. That is how it is computed. Well, that is what that outlook includes. What does it not include? So do you think that in the next three or four years, will will there be no other opportunities, like, six months from now or a year from now or tomorrow. We will get a call from an OEM about a program they want us to work on. My guess is it would probably be tomorrow because we are getting so many opportunities. You are not including any of that. Which we do not know. You know, what comes. So it is important you understand it is not a forecast. It is just an outlook. How we what the methodology that we use. What are the high and low risk of the outlook? So I think we feel pretty about the line items in the forecast, but it is possible that that will you know, that either we are on those programs or we will get in those programs Those programs will be ours. But it is possible those programs will not pan out to the level that we have been we are being told by our customers you know, maybe they will not be as strong, maybe it will take a longer to ramp up I do not know. It is possible. So that there is risk on the low side. What about the high side? The high side is all those things we just talked about, things we do not know yet. That are definitely going to come. They are not there is no way We we have not used we have not provided other category in our forecast or outlook rather. The way we computed it. Just things we know about. What is the target year for the outlook? Well, that is another controversial question internally. I think we are saying fiscal year '31, and I will tell you I would say the end of fiscal '31. You said fiscal thirty year '31 sounds like a long time from now. But it starts four years from now. That means for us to be able to be at that level, everything had to be ramped up. The plant would have to be fully built and the new plant and qualified. All the programs have to be qualified. And we would have, you know, hired all the people, all the staffing and we are fully ramped up. So to me, to do that in four years, that is a little aggressive. That is why I think what we should think about to be a little more conservative is the end of fiscal 03/01, is more like five years from now. Does not mean we want to be sales, but to be ramped up that low, probably, I would think to be more conservative, we might want to think five years from now, rather than four years from now. Thoughts about our ROI? For parks investment in the new plant, $50,000,000. We are not going to go through the what the bottom line impact is now, but, you know, you think about it. We have this year, what is $72,000,000 of sales We are talking about $200,000,000 of sales. $50,000,000 investment. So you could probably do the math a little bit on your own. You had some real smart investors. We are not going to go with that number now, but we think that their way would be extremely attractive that we would not if without any any investor would ever have a problem with Let's go on to slide 38. We new Park's newly announced public offering, just touch on this quickly. Today, sorry, it is going on so long. Today, we filed a form s three registration statement of prospective supplement with the SEC for a $50,000,000 at the market public offering of parts common stock. What is the purpose in this offering and financing? First of all, to replenish a portion of the $50,000,000 that we plan to invest in our new composite plant, composite materials plant, that is part of it. But very importantly, to ensure that Park has the necessary funds to be in a position to take advantage of and exploit key opportunities currently being presented to Park and new key opportunities as they arise in the future. The availability of funds necessary to exploit key opportunities has been a key strategic advantage to Park. So, you know, you are probably thinking, well, can you give me an example? Yeah. I can give you an example. We talked about GE Aerospace. You know, how many hundreds of millions of dollars of business was represented. Well, remember what happened. GE said to us it was GE at the time, not not as GE Yeah. We will give you the LTA for 2029. But Park, we are concerned to get your sole source qualified in these programs we want you to build a redundant factory. And then if you commit to doing that, we will give you the LTA. And we said, sure. We will do that. We did not say sure, but we gotta go see if we can get the money or go to banks and you know, that it would have been terrible. This GE, if you are smart, would think, well, I do not know if Park is going to get the money. Let's go talk to somebody else. That never happened. Because we said right there, on the spot, yep. We will do it. And we had the money to do it. It was about $20,000,000 at a time. I think we believe if we had to do that plan now, it would probably be twice as much between the inflation. We are quite sure it is in parks and our very best interest for park to be able to continue to exploit such opportunities as they arise in the future. Just a little interesting information. Do not know. Footnote. You know where our last public offering was? It was well, Martina found a tombstone in our office. It was 03/06/1996, thirty years ago. It was a $100,000,000 convertible note. Offering that was converted to all equity almost all equity. I think 96 of it was converted to equity. Were Needham, Robin Stevens, and Lehman. We would have until last two. Anyway, just a little interesting history. Sorry to go on for so long, everybody, but operator, we are happy to take any questions at this time to the extent there are any Operator? Thank you. Thank you.
Shamali: We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star to to remove yourself from the queue. Participating in speaker equipment, it may be necessary to pick up your handset before pressing the star key. And again, if you have any questions, you may press star then the number 1 on your telephone keypad to join the queue and ask a question. And it looks like we have no questions at this time. Therefore, I will turn it before back over to Mr. Brian Shore for closing remarks.
Brian Shore: Thank you, operator. Thank you, everybody, for listening. We apologize the presentation went on so long. There is a lot to cover. Please feel free to give us a call if you have any follow-up questions. Know, of the items, I think, we kinda skimmed over a little bit quickly, so feel free to give us call. We are happy to help you out with any follow-up questions. Have a good day, and once again, happy New Year. All the best to you and your family in 2026. Goodbye.
Shamali: Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.