PKE - NYSE

Good afternoon. My name is Paul, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. First 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'll be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. Thank you. At this time, I will turn the call over to Mr. Brian Shore, chairman and chief executive officer. Mr. Shore, you may begin your conference.

Thank you, operator. This is Brian. Welcome all to the Park Aerospace Corp. Fiscal 2026 Q1 investor conference call. I have with me Mark Esquivel, President and COO. We announced our first quarter earnings right after the close. If you look at the news release, you'll see there's a link with information as to how to access the presentation that we're about to go through. The presentation can be found on our website. You may want to take a look at that. I want to make this call more meaningful. Just a little quick comment before we get started. It's only been two months since our Q4 presentation. As a result, some items are just carried over from the Q4 presentation for context and release of this. But we may just skip over some of those items, really skim over some of the items that we just covered two months ago just for purposes of keeping the presentation moving in brevity. If we do skip over something that you want to discuss in more detail, though, please just ask us questions about it at the end. We'll try to highlight also what's new even if there's a slide that has a lot of old stuff, maybe we'll just pick out one item that might be new. When we get there, you'll probably realize what the important new items are toward the end of the presentation. When we're done, Mark and I will be happy to answer any questions you might have. So let me proceed when we go into slide two. That's our forward-looking disclaimer language. We're not going to go through it or read it for you, but if you have any questions about it, please let us know. Slide three, our table of contents. Slide one starts our Q1 investor presentation. And then also with Appendix one at the back of the presentation, supplement refund financial information. We're not going to review that during the call. If you have any questions about it, please let us know. As has become more kind of a pattern of late, we feature something about the James Webb Space Telescope in our table of contents slide. As you probably know, the James Webb Space Telescope was produced with 18 of our Park proprietary Sigma struts. We are very pleased and delighted about that. What do we have here? We have a bullet cluster with dark matter. The dark matter is in blue. Now this is enhanced because the dark matter, you can't see it. It's invisible. I'm just on the right-hand side. It lets explain that dark matter is an invisible and hypothetical, kind of strange hypothetical form of matter. This is way beyond my, you know, pay scale to understand what that even means, which does not interact with light or other electromagnetic radiation. So you can't really see it. That's why they're in those pictures and enhanced with the blue. Dark matter is a mystery of the universe. It cannot be explained by Einstein's general relativity or anything else known to mankind. It's just incredible what James Webb has discovered so far. It's just amazing, you know, in thinking about all the things that we thought we knew, we thought we understood about the universe, but maybe we don't. You know, some people say the universe is unfathomable and maybe they're right. Anyway, it's such a privilege and honor for us to be associated with James Webb. Okay. Let's change gears and go to more mundane things, slide four. Is your quarterly results. You go to the right-hand column, Q1, which just reported. Sales $15,400,000 in gross profit, $4,718,000 gross margin. 3.6%. We're happy about that. Not where we want to be. We'd like to be higher, but it's just nice to be nice to be over 30%. And we'll explain how we got there and just maybe three different factors that kind of affected our ability to get our gross margins up above 30%. Adjusted EBITDA, just a little tiny less than $3,000,000 and our EBITDA margin 19.2%. What did we say about Q1 or Q1 during our Q4 investor call? We had our estimate. Estimate is $15,000,000 to $16,000,000 so we came in kind of middle of that range. Adjusted EBITDA estimate, 2.5 to three. So we came in, I guess, pretty much at the top of that range. Last quarter, we talked about what these estimates mean, what they don't mean, and I don't go into it again unless you want me to. But, basically, these are not guidance where we give you a number where we plan, you know, kind of set ourselves up to beat the number. When we give you these estimates, we're saying to you, this is what we think is going to happen. Okay. Let's go on to slide five so we don't belabor that too much. And what I'd like to do, if you don't mind, is let's go to slide six. We'll jump around here a little bit. The second bone item on slide six significant ongoing expenses related to operating a new manufacturing factory. So manufacturing facility. Sorry. And that's why we're pleased to have our margins over 30% because this is a drag. This factor is underutilizing a significant cost that's going through our P and L that drags down our margins, including our gross margins. So that's one factor. I said there were three. Let's go back to slide five. Area group, we discussed this many times, our business partner agreement under which we are just the exclusive distributor for Ray Carb c two b fabric that's used for ablative composite materials for advanced missile systems. But remember, in so actually the other two factors aren't positive. They're just lack of negatives in our couple of quarters ago, we had actually, last quarter, we had $4,400,000 sales of fabric during that quarter, and that really brings our margin down a lot. Because we sell the fabric at a small markup. Ultimately, when we turn the fabric into a composite material, that's where the margins really are powerful. Last quarter in Q1, we had $1,100,000 sales of the fabric and $480,000 in the materials made with the fabric. And that's kind of more of a normal ratio, so it isn't really a big drag on our that wasn't really much of a drag on our Q1 earnings. And then, we'll get back to the recall in a second when we skip over to slide six again. Production versus sales. This is another factor that had negatively affected our margins a couple of quarters ago where our production was much lower than our sales, we call it SVP. But in Q1, were nicely matched, which is what we want. You know, we want our production and sales to be relatively nicely matched. So it's not really a factor. So it's not that these two things were positive, it's just a lack of negatives. In terms of the impact on Q1, and that's how we're able to, I guess, get our margins above the 30% number. But let's go back to slide five. Sorry about that. I'm probably making it a little dizzy here. Recall of Mark, maybe you could help us with that. One of Park's key customers is c two b fabric. We've talked about this quite a in the last couple quarters. What's the status of recall mark?

The recall, it's I think last time I said it would be soon. The last call, two months ago, but it's still not done. But last week, I did reach out to my contacts at the customer, and they said it's imminent, which is better than it it'll be a few weeks out, I think. You know, if I look at it, there's no guarantees, but I would say the approval happen in the next couple weeks. And really, the reality is it must happen. You know, we're single source position on the program. I think Brian will talk later in the presentation. You know, this this program is gonna grow significantly. All indications are it's gonna grow significantly just based on, you know, all the information the customer, you know, the information held in the public. So like I said, Brian will cover that in a later slide.

Yeah. There must be enormous pressure to get this done now. I mean, it's no joke. Anymore. Enormous pressure. And Mark and I were just talking about should we talk tell you about how many thousands of pounds of this c two b fabric that we're storing with customers? And we thought maybe we shouldn't. It's too sensitive, but it's a it's a we're storing a lot of this product that we sold to customers already. So there's a lot of, you know, pent up need for the the pre break material. I mean, the the the customers can't do anything with the fabric. That's for us to to produce the material with. Let's go back to slide six. Total miss shipments, we can tell you every quarter, 275,000. That's up a little bit from Q4, unfortunately, caused by surprise international shipments, other miscellaneous issues. Impact of tariffs and tariffs related costs on Q1, very minimal you know, less than a few thousand bucks, let's say. Later on in the presentation, we'll talk a little bit more about what we might expect from tariffs in the future. Let's go on to slide seven. This is a slide we do every quarter. Our top five customers in alphabetical order. Your these are just running up to usual suspects. Mean, all these customers often show up in our top five. So, you know, just to make it simple, the the patri missile, so we'll be talking about that one. That's, a to e this time. Kratos, obviously, is the there's Valkyries. Obviously, Kratos That's, I think, a photo of long loyal wingman operation, actually. Seven eight seven would be g a k n, and, that's all we really wanna talk about. The Middle River air structure, I I think Donna decided that we we feature so many GE programs told us that we didn't need to provide you with a photo at this time. Let's go on to slide eight or pie charts. I always like these things, but you could see the 22, 23, 24, 25, and and the 26. You know, it's fairly consistent. '21 was quite different. That was the pandemic year where commercial aircraft was very severely impacted by the pandemic. Okay. Let's go on to slide nine. Does this park law's niche military aerospace programs for us every quarter. And, you know, it's getting to be more and more difficult for us to provide much detailed information about these these defense programs. It's so sensitive. The pie chart's interesting, though. Radomes, rocket nozzles, drones, those are really niche kind of area markets for us. But even for us, aircraft structures are niche. We don't really like come on stuff too much. And I guess the only thing maybe we can comment on, which is interesting, is this AAMN four Aureole, Aureole. That goes back to the forties, you know, with when the original air to air missile systems, but it's been repurposed rather purposes so that's why, you know, it's on our list here. Of programs. These are all programs we're working on. We don't just, you know, what patient have done, stuff that we're not working on. A funny little anecdote, at least for me, this is produced by the Glen Martin company, you know, which very interesting about that is that we talk so much about MRAS, You Know, Middle River which used to be GE Aerospace. The factories that were that were MRAS located in the Baltimore area, is the old Glen Martin factory. So I been in that factory I don't even know, maybe 50 times A lot of history there. I think Mark had been there as well. Think that's all we'll probably say about slide nine right now. We're gonna go to slide 10. So this is the first slide where we're just not really gonna say very much because it was covered. We have it in every quarter. It was covered in our in in Q4. Just for, you know, anybody new, just really quickly, you know, the the little secret here was that you say, well, what is only why we why we don't need GE Aviation programs or GE Aerospace programs? All these engines are GE aerospace engines. And the secret there is that Middle River Aerostructure Systems was a c was a sub of GE Aerospace for many, many years. And we got on these programs MRAS, we call it, was a sub of GE Aerospace. About five years ago, GE Aerospace sold MRAS to ST Engineering, which is a Singapore company. But these programs continue this year. Two years, these programs continue this year. To figure out the mystery there. Slide 11 I think nothing is new here. So, again, if you want us to go back ask you wanna revisit any of these items, just ask questions. Ring calls later if you want. But just for purposes of not kind of being totally repetitive, we're we're gonna skip over things that we covered. In Q4. Last item, life program, we did cover this in Q4, but the update is still under negotiation. The ball's in their court. You know, they have everything we've as I think I mentioned, okay with us either way whether we stay with our current LTA or go to life of program. This is this life of program is requested by MRAS and STE, something they want. And I don't know how to say this, but I think they they very much want it, but MRAS is very consumed with other issues right now, and that's be preventing them from getting to this. Not all their suppliers get 100, 100, 100, you know, if I'm what I'm getting at. Some of the suppliers are, you know, quite a of difficult difficulty, and and and it's it's not funny. It's very challenging. So it's a little bit distracting for those folks right now. Let's go on to slide 12. Update on GER, state changes, programs. Pretty much everything here was in Q4. I just wanna mention that we we often refer to aeroengineers as our bible. It used to be a monthly, but now it's quarterly. So there isn't even a Aero Engine News update since we announced Q4 on whatever that was, May 15. The only new item here is the the first six months at $25.39 per month. I wouldn't read too much into that because normally, I the first half of the year, they're a little slow. My my guess my guess is probably nobody or anybody else's, but I'm gonna guess they'll be in low fifties this year. You know? Somewhere between $15.55. That that's a guess. I don't have any inside information at all. And you know, I I think I mentioned this to you last time, but the first six months, there were a lot of engines were going to aftermarket, but this the last second six months of the year, for new airplanes. And they also have air Airbus imports and a lot of kites that built. The last item is the key one, the seventh Air their Airbus targeting 75 airplanes per month. Let's go on slide 13. Approved engines. This is all exactly this is from Q4 with no changes. Like I said, there's been no update to the aero engine news. So we talked about, you know, the market share of LEAP as compared to the CRAT and how many LEAP one a engine orders there are. Quite considerable quite considerable would say. Slide 14 update on the XLR, sorry, the H321XLR that's a variant of the A320 family, a Neo family which is we've just been talking about. The new item on 07/05/2025, AirAsia Inc. $12,300,000,000 agreement for up to 70 a three twenty one XLR aircraft. That's a lot of money, a lot of airplanes, I would say. This is a, you know, important program because it has a really unique capability in terms of fuel economy range and payload. So let's go on to slide 15. The nine one nine, the Comek airplanes. Let's see what's new here. The second item, they plan to achieve COMAK production rate of 200, nine one nine aircraft per year. That's pretty good. It's not 900, which is h 20 neo. You know, 75 times 12 is not 900. This is not nearly 900, but it's still pretty good. We'll take it. Trade issues, US has reported lifted the ban NG aerospace export license for the LEAP one c engines, which are used on the airplane. Let's go on to slide, 16, I think it is. COMEX, still with the COMEX family. The COMEX nine zero nine is regional jet using a different kind of GE engine. And, again, the new item is US has reported lifted ban on GE Aerospace license for that CF thirty four ten a engine, which is used on this on this regional jet. Triple seven x, what's new here? Okay. First item, we updated numbers over 1,400 flights in four thousand flight hours in the test program. This item second item is new. According to Boeing, the triple seven x program is on track for certification this year. Wow. And entry into service and 26. I I think they're hedging their bets. And I just saw this recently. You know, maybe the end of this year, maybe next year for certification. Now they're saying this year. So that's impressive, you know, how much they've gotten their act together. I mean, they deliver on that. 541 orders, so that's nice to Let's go on to slide 17. Some of the numbers here 6,200,000. Q1, these are GE Aerospace jet engine program sales history and forecast. Q1, 6,200,000. And we had forecasted in our Q4 presentation 5.2 to six, 5.6. So this came a little bit higher than that. Interesting thing to think about, 24,700,000 in for all 25 We read ahead, you'll you're probably familiar with the Juggernaut 61,000,000. So that's quite a bit of incremental sales for GE engine programs. The forecast down in the bottom right here are are Q2 forecast 6.7 to 7,200,000, and we're sticking with the 28 to $32,000,000 number for fiscal twenty even though, you know, if you look at Q1, Q2, we're we're getting off to a slow start. But as I mentioned, I'll remind you that the fiscal twenty six forecast is based upon input we've received from the customer. Let's go on to slide 18. Parts financial performance history and forecast estimates. The top half, we were recovered. The bottom half, let's go right to the forecast. Q2, we're estimating 15,000,000 to 16,000,000 of sales, 3 to 3,400,000.0. Of EBITDA. And I think that pretty much covers that slide. Let's go on to slide 19. This slide is exactly slide that was in Q4 presentation, historical fiscal year results. So we're not gonna discuss it. Again, in any things we're skipping over, we're skimming over If you want us to go back and discuss these again, let us know when we get to the question portion of the call or or call us you know, afterwards. We'll be happy to go over these things with you, but we already covered this slide in our prior presentation slide. So, again, I just wanna explain, we're we're including the slides for for context and cohesiveness so that the presentation holds together but When we covered things before, we're just not gonna go over it again. Well, before we did it in Q4. '4, very recently, just two months ago. Slide 20 general park updates. Again, most of the stuff was already covered. We covered the area group, the new agreement. Under which we're going to advance Ariane €4,587,000 against future purchases. And the last item is important in our Q1, we advanced area in 1,376,000 year old. That's approximately 1,500,000.0 based on exchange rate at the time. So let's keep that 1,500,000.0 number ahead and get back to that. Slide 21. And the purpose agreement, we'll revisit this at the toward the end of the presentation. Very important. Very timing is very important. The purchase agreement to for the, you know, the $5,000,000 investment to help Aireon increase their capacity for c two b fabric manufacturing. Next item, lining stripe. We recovered that, so we don't wanna cover that again. And the next item, the LTA, which is aerospace, we covered that, so we don't go over that again. And last item, these discussions continue with two Asian industrial developments relating to an Asian manufacturing joint venture with Park. I think our guys were supposed to be in Asia now, actually. But things came up, so I think that that trip is now gonna be in September. But, you know, these people have been to visit us. We've been to visit them already, so the the that these discussions are somewhat advanced at this point. Slide 22. More updates. Current 100, a 100, a 100. What does that MRAS love worth the park? I don't know how to quantify it, but it's, you know, just worth a whole, whole lot. You know. That's really our objective is for customers to love us. And Emirates is not the only customer who loves us, you know, that's for sure. And making customers love us is central to our park egg strategy. I think we talked a little bit about this. We never went into what the details about it, but we mentioned our strategy, this egg strategy. Making customers love us is actually central to that strategy. Tariffs, international trade issues, what's the impact going forward? Okay, Mark. Back to you. Can you help us, you know, get some understanding of where we're going with tariffs going forward?

Thanks. I get the easy one. Tariffs. So I think I mentioned last time, yeah, I mentioned last time there's been a little little or no impact to our business as far as tariffs. You know, we did get ahead of it. We you know, several months before they started coming in, we notified customers we would pass these costs along. But fortunately for us, there's been little you know, little impact as far as even getting tariffs from customers. I'm not saying we're I'm sorry, suppliers. I'm not saying we're not seeing them, but the ones we have seen had either been not significant or they've been passed on to the customer. So from our perspective to our business, there's just really no impact. But if you watch the news like, you know, we all do, you know, things are still dynamic. Still talking about, you know, 30% tariff in some countries. So we're watching that. But for now and we think in the, you know, very the short term, near term, we see any issue with our business from a a tariff perspective. Know, if something changed, I I don't know. But think we're pretty well covered at this point. So maybe by the next quarter, there'll be another update. Hopefully, the update is the same. So you know, we're not seeing any impact in the business. Going forward.

Thanks, Warren. Yeah. Tariffs are a hot topic these days. Any questions about it, just let us know. Let's go on to slide, 23. Our share buyback this is not really an update except confirming we purchased $2,165,000 worth of stock. that in Q1, Let's put that number in our little memory. We should go back to that. A little later on as well. We haven't purchased anything in Q2, and my guess is we probably won't be doing that. Let's go on to slide, 24. Oh, here we go. Okay. Now we can call these numbers. Park's balance sheet cash and incredible cash Dividend history. We have zero long term debt. Report we reported 65,600,000.0 cash and marketable securities at the end of Q1. Now in the end of Q4, it was 68,800,000.0 So that's a difference of 3,200,000.0. Right? But there are two things we just talked about, which are unusual expenditures in one. One was about $1,500,000 to Arian. The other one was 2,200,000.0 buyback. That's 3,700,000.0. So if you just those two things combined explain the difference, the drop in cash between Q4 and Q1. And one more thing I gotta remind you about. Remember we used to talk for many quarters about those transition tax installment payments? Well, the last installment, which is 4,900,000.0, is Q2. It actually was already paid in June, but you'll see that show up in our Q2 cash basis, like, $5,000,000. Out the window. That's our that was our last installment tax payment. That relates to repatriation. We talked about that many times, so we'll call that again. Forty years of dividends and over $600,000,000 of dividends paid. So far. Let's go on to slide 25. K. This is a no change financial outlook for two years based on your programs to juggernaut So these three slides, no change, and I don't think we're gonna go through the details again. The timing, we don't know But it's coming. It can't be stopped. But are we ready? Slide 26 There's that $61,000,000 number we're talking about. We've gone through the math many times. Math is straightforward as far as we're concerned. It's pretty transparent also because we were telling you what the revenue per unit is. We're giving you the unit assumptions. Doing the math. We don't give the number for the nine x program. We a little bit. That program hasn't been certified quite yet, so it's a little you know, more confidential. We don't give that information away. Slide 27 just a footnote which kind of explain all the math. On slide 26, I'm sure we're not going go over those. Slide 28. Okay. This is where we're gonna have to slow down, but this is this is the new in pigtailing. War and peace, question mark, end parens. Parks, new juggernaut. This is the the first juggernaut is the GE Aviation programs. This GE Aerospace programs. This is our new juggernaut. Supplies of key missile defense systems are reportedly seriously depleted as a result of recent wars in The Middle East and Europe. There's an urgent need to replenish those system. So I gotta stop here and explain something. We're gonna be talking about three different defense programs There are many programs and the others we're not able to talk about. But one thing I want you to be want you to understand is very important. We're not providing any inside information about these programs. Nothing at all. Everything we're telling you about is just based upon stuff publicly reported in news and other reports. So I just want you to understand that. We're not we're not giving away any inside information on these programs. The PAC three Patriot Missile Defense System, We've been talking about this for a while, but boy, it's become headline news. Largest deployment of PACS repatriate missiles defense systems in history occurred in response to Iran's list of missile strikes on that I can't pronounce it. Let's just say the dead air our air base in in Qatar. The Patriot Missile Battalion was reportedly moved to Qatar from South Korea and Japan in anticipation of Iran's ballistic missile strike in response to US strategic bombing of Iran's nuclear weapon sites. So we had Iraq together, obviously. We we knew what the response was gonna be. But how do you think South Korea and Japan feel about that? You think they're happy about it? It's a show game here. You know, we what's going on? We don't we're don't have enough systems. That's the reason why we're doing this. We're, you know, robbing Peter to pay Paul. It's not funny. Israel's supply of patron missile systems have reportedly not this is no inside information. It's publicly reported, but seriously depleted as a result of the war with Iran. Ukraine supply, Patriot missile systems, we know that they're begging for. They're begging for their Ukraine is has reportedly been seriously depleted. As a result of the war with Russia. Other countries have been promised Patriot missile system for years. They don't have them. We, you know, can't get them. Warrant piece continued on slide 29. The news conference, did you see this new conference at the recent NATO summit? President Trump stated in response to Ukrainian reporter Ukrainian reporter's question, about providing additional patriot missiles to Ukraine. It was kinda sad. I mean, I almost thought she was about to cry. Or We're going he said, president Trump, we're gonna see if we can make some available The US is supplying to Israel and they are very hard to get. This is what he said. And we, in The US, need them too. So there's a problem. You know? There's an urgent desperate need for these things, and we just don't have them. The US reportedly has 25% Patriot missiles needed for the Pentagon's military plans 25%. It was recently reported that The US has temporarily paused patriot missile systems to Ukraine over concerns about an alarming, that's not my turn. That's a turn that was reported depletion of US stockpiles of the weapon systems. Reports was intended to allow US to an assessment of crude stockpiles and urgent needs for the weapon systems, and we're trying to figure out what we're doing. It's almost like we got steamrolled. Slide slide 30, continuing with Patriot, War and Peace. New Juggernaut. Then in a news conference at the White House yesterday with president Trump and the old secretary general Mark Rutti, I think. I don't know how you pronounce it. I think that's how you pronounce it. Do see this one? President Trump announced that in response to Russia's continued military aggression, West weapon weapon systems to Ukraine, especially Patriot missile systems shipments, will be significantly increased So so much for the pause, you know. But here's the other thing. It was announced that 17 additional patriot missile systems not clear if that was reference to batteries, launchers, or missiles, will be immediately transferred from another an unnamed country. I don't know which country. Which does not need them as much. They don't need them as badly. Okay. Question mark to Ukraine. So wonder how that country feels about this. You know? Are they pretty delighted? They're losing their patriots systems. Again, you know, it's what do you call it? Shell game. Or pet Robert Peen or pet Paul. This is not funny. It's not funny. Patriot missile systems or planned to be incorporated into president Trump's Golden Dome missile defense system. So it's not just replenishing all these missile systems. We need a lot more of them. They're gonna be in the golden dome. According to Sputnik News yesterday, Russian Russian news agency, I think, or news agency in Russia. US army plans to boost its procurement of PAC three Patriot Missiles Systems by four times four times. So we could be, you know, kind of smart Alex about, you know, rushing in misinformation. But they're not the ones that came up with the story that Donald Trump was a Russian spy, Russian asshole. They're not the ones that came up with the story that that laptop was Russian misinformation. So, you know, what's this what is the expression? If you're in glass houses, you don't throw stones. Slide 31, it is apparent from the reporting that The US plans do much more than just replenish the complete the stockpile at Patriot missile systems a lot more. Yeah. So let's talk about our involvement with the PACT three Patriot Missile System. Park supports the PACT three Patriot missile system with specially related materials produced with that c two b fabric from airing room. And we're sole source qualified for specialty ablative materials on that program. Were recently asked to increase our expected output, especially blended materials for the program by significant orders of magnitude. We won't say how much, because it's too confidential. We can't give it away. Of course, Park will support this request. At Park, we are patriots. Park recently entered into that new agreement we talked about with the area group. Over to above for the purpose of increasing c two b manufacturing capacity. Under the circumstances, timing is very fortuitous. But will that additional manufacturing capacity be enough? Probably not. Park recently received a proposed blanket purchase order from a key OEM for up to $40,000,000 of c two b fabric. Yeah. What's going on here? Next slide, 32. TCCs as agreement are being negotiated. When we process that, you know, $40,000,000, if the material is be a significant amount, we're not gonna say how much because, again, it's too confidential. Let's go into another program, which is a news. Maybe not quite as much as Patriot, but definitely a news. Israel's arrow three and arrow four missile defense systems The arrow three system has reportedly been extensive seen extensive use Israel's recent war with Iran. Israel stockpiled these arrow three weapon systems and reportedly seriously depleted. Again, just reading reports, no inside information from us. The r four system, which is importantly the final stage of development, designed to intercept hypersonic missiles in the space transition zone. That's pretty elegant. Right? Germany is buying the r o three and r o four systems from Israel. So, again, it's not just replacing what's depleted. There's a significant additional need for these systems. Israel may to do may need to do much more than just replenish depleted stockpile. I guess it just said that of these arrow systems. What's her involvement? We're qualifying the Arrow three. We're sole source. Qualifying the arrow four. That's all we're gonna talk about. Say about it. But on slide 33, we're still sorry. Still an arrow. What are the signals parts we're seeing in the market about these West weapon systems? Let's just say acceleration. So let's change gears here a little bit. Is The US planning to rely exclusively on missile defense systems in the future? You know, the Golden Dome? Are we done with MAD? If you're old enough, you might remember MAD mutually assured destruction from the cold war days way, way back. Maybe not. What about the LGM thirty four thirty five a Sentinel missile system? That's certainly not an ice that's certainly not a defensive system. That's ICBMs. ICBMs. You know what they are. Right? Replacing the four hundred fifty Minuteman three ICBMs. Parksman and man history. So it's interesting if you I well, interesting. To me anyway. In 1972, when they first introduced the Minuteman, Lockheed Sunnyvale asked Park to take weight out of the missile system And we did that by developing multi layer circuit boards. Do you wear that to park developed? Invented multi layer circuit boards? That's what we did. And so we may be coming full circle That was the very beginning of the MIDMAN program. It is now to replace the MIDMAN three. 450 new missile silos. You know, missile silos already. You've seen them in videos in two like that. 659 missiles. Again, this is all stuff that's public. You look it up yourself. You know? Nothing we're giving away here. What's our involvement? We're not we're not able to say. Slide 34, we kinda touched on this already. A general matter is more difficult to discuss in defense programs you support as compared to commercial programs we support. Many of the defense programs are highly sensitive and confidential. But please understand something. There are several additional critical defense programs which we are supporting or planning to support. And we're not able to discuss those things. In some cases, those programs represent significant revenue potential for PAR. Now, we'll change gears here. Some people ask what will happen to fence bending if real lasting piece breaks out? We sure hope it does. What if the Israelis and Persians end their wars? What if the Arab states sign up for those Abraham Accords? What happens if the Ukrainians and Russians, they sell their difference and put their arms down. Be all very nice and wonderful. Will this fence spending drop off precipitously as it did if it were two. You know what happened after war two? Over 90%, I think, like, 93% I mean, basically fell off a cliff. We beat our swords into plowshares that you probably know it's from the Bible. We're bending against that apart. We hope that peace breaks out, it's lasting peace, but we're bending against that our swords will be beaten into plow shears. Let's go on to slide three five. So another, you know, we talked this last time, so we're just gonna update you a little bit. Our major new expansion parts manufacturing facilities and update. So as you know, we're planning a new major new expansion of our manufacturing facilities. We'll require a new plant that could be in Newton, Kansas or somewhere else. The plant expansion will include the following lines. This is all something we covered before. Solution, hot melt film, hot melt tame, hypersonic material, manufacturing. Preliminary estimate cap estimated capital budget, The new manufacturing plant equipment, 35,000,000 plus or minus 5. I hate to tell you this, but that number may be a little low. We may need additional solution treating that might be based upon things we just talked about, things we just covered. So I'll have to we'll keep you updated on that. I just want you to be aware. Let's go on to slide 36. Why are we doing this? Our juggernauts require it. Our new long term business forecast requires it. Significant requirements and new business opportunities for both hot melt and solution composite materials. Defense and missile programs are drivers. And the long term forecast has moved higher just since May 15 since we last talked to you about it. Why are doing it to have the manufacturing capacity and the needed to take advantage of new opportunities as they arise? The last item, interesting, a little nuance. Need to have the manufacturing capacity needed for park to be parked. What does that mean? Well, our calling cards are parked. Flexibility, response, and the synergy. That's how we build the business we got. You know? That's not normally how things are done in aerospace, but we're different. So we need a cushion manufacturing capacity Very important, very important for Park. We we don't we never wanna abandon what has worked for us and what you know, these these are core principles for a part. Flexibility, responsiveness, urgency. Let's go on to 37, slide 37. We are thinking of planning for long term and back to why we're doing this expansion. Conception five years out. We'll get back to you on that. But, you know, it probably will take to the end of the year before we have our plans finalized. And then we have to design our factory. We have to design the equipment. It's not know, stuff you order off the shelf like at Walmart, you know. All this equipment is very specially designed and a lot of engineering work. You know? To build a factory and equipment, it takes a long time. They go to you know, the factory has to be completed. Equipment has to be delivered. The suppliers have to sign up for the equipment. We have to do trials. We have to do qualification runs. We're talking years, you you know, before we'd actually be able to ship qualified product from this new factory years. It's very important to keep that in mind. That's why we need to look ahead. We're thinking and planning for our future. Conceptually, five years out, that's probably not a bad concept number You know, maybe a little less than that, but it's not two years and probably not three years either. Between now and when we're able to ship product for this new factory. Not sharing a long term new long term forecast. At this time, but suffice to say for now that it's an exciting challenging time for Clark. The opportunities for Park are significant. Time is now. Must take advantage of the opportunities now We must not squander these very special opportunities You know, you could say once a lifetime. I was gonna say that. I thought, well, is that overly dramatic? So I just very special opportunities. But we must not hesitate. You know? This case, he or she hesitates. You know what happens. So our objective is to have our expansion plan in place by the end of the calendar year. And to be moving it to implementation phase of our plan by then. So after our last call, whenever investors investor asked, well, you know, should we wait? Should we hold off? It's not how it works in aerospace, you know. You know, wait until we get to, you know, the business book or to our backlog. It's a kind of a circular thing, but we waited, it would be too late. Way too late. But we're not gonna get in our backlog to begin with because nobody's gonna give us the business if we can't explain to them when we have the ability to handle the business, to support the business with the manufacturing capacity. So timing is now I would just comment. Maybe this sounds a little defensive. I don't know. But but I want you to think about something. Pork's been around for seventy two years. Why is that? You know? Is it because we we grab what the first shiny thing I don't think so. We haven't taken shortcuts. No easy way outs. Very good discipline. No debt, cash, over $600,000,000 of dividends paid. Are we you know, giving into doing wild and responsible things? You know? Think about our history. Think about that. A little bit. I'd appreciate if you do that. Know? So maybe for somebody else who would make you nervous, oh, what are these people doing? Do you have any example of when we've chased something we should have chased? Can you think about that a little bit? You know? Like I said, maybe it sounds a little defensive, but I thought it's better to talk about it if somebody said, well, you know, maybe you're being too aggressive. I don't think so. I don't think so. This is, like I said, maybe a once in a lifetime opportunity. And what would be really responsible apart would be to squander the opportunity. And we're not gonna do that. So that's it. Let's go on to slide 38. Nothing here. This is exactly the same slide that we had in our Q4 presentation. All I'll say is that estimated non g program incremental sales That number is just so blown out the window. It's not even funny that we're not giving the number, but the number is is quite significant. And the number is built up pretty conservatively also because we don't the line items are the only things we know about and can quantify. There are a lot of things we know about that we can't quantify quite yet. And they're not even in the in our number. Know? So, actually, even the number is quite a high number. It's also, I think, a pretty conservative number. We spent a lot of time, on this already. We're taking this project very seriously. A lot of due diligence being done by lots of different people in the different levels. So we wanna make sure we get it right. And that's it for us. Operator, we're done with the presentation, so Mark and I'd be happy to take any questions, except there are any at this time.

Thank you. Now be conducting a question and answer session. If you'd like to ask a question, please press 1 on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press 2 to remove your question from the queue. Key. One moment, while we poll for questions. Our first question is from Nick Ripostella with NR Management.

Hey. Good afternoon. Lot of exciting things going on there. I just have a simple Slide 21, the recently entered in into new LTA. You know, is there anything different about this LTA than previous ones? With GE Aerospace? That you could discuss?

I didn't hear you exactly. You what are you asking about the the On slide twenty one, you referenced Oh, slide twenty one. Okay. Yeah. A a new l

with GE Aerospace. For 25 through 30. And I'm just wondering if is there anything different in that LTA than, you know, previous ones?

That's a good question, and that evidence is that we're probably accusing everybody. So the LTA we've been talking about for years is an LTA with MRAS, and it was not they're not GE Aviation. So by and large, those programs that we talk about are MRAS programs. That's a separate LTA that goes through 2029 '19 through 02/1929. This LTA market this is something more negotiated with GE Aerospace There's still engine programs, but they're different engine programs and different materials. So this is you know, they they defeated the GA vision programs and maybe were more confusing the matter too much, but it's a different LCA. But there but just so you know, that the all of the GE Aerospace revenues are included included in that in the history, in our our sales history, as well as the juggernaut. So we include the GE Aerospace revenues from the MRAS LTA and from the GE LTA in both the history, you know, historical sales to GE GE or irrigation programs as well as the, you know, slide. Okay. Okay. And one other question?

Just go ahead. Hello? Yeah. Yes, please. Yeah. This this may be a a difficult one. But at what point do you think you would feel comfortable filling in some of the question marks on your long term forecast You know, when you use terms like, you know, blowing out the water, it's very exciting. But if someone were to attempt to build a model out a few years, at what point would you feel comfortable you know, giving us some information to build such a model, you know. For the longer term picture.

Well, we have the models internally, and we've, you know, a lot of time reviewing them internally. We're in the board, of course. I I think, you know, we feel it's a little premature to to share these this information with the public. And it might also be a little bit shocking to So we're we're holding back a little bit. I think we wanna get a little more confidence and you know, Nick, like I said, we're doing a lot of due diligence, a lot of internal discussions, and and so we we I think we like a little more comfort confidence in, you know, in what we're doing in terms of budget and everything else besides it'll be part of the equation, I guess. I don't have an answer, you know, like I said, we hope to have a the plan complete by the end of the calendar year. And go into implementation phase at that point. So I think by that time, we should feel that we're in a position to provide that information. So I don't know about during our Q3 call, which would be, what, October? No. That's our Q2 call in October. But but I hope that if not then by the time of our Q3 call, which would be the January. So I'm sorry about that, but I I appreciate if we could just hang in there.

That's that's okay. And then just to you know, pat you all on the back, I think with respect to your plans for investments, the team there has pretty much earned the trust of shareholders, I think. You've been wise and not buying stupid things. And, certainly, with share repurchase, you've been judicious, and I've seen a lot of bad examples. So I just wanna reflect that sentiment. Thank you.

Thank you very much, Nick. You know, this Charlie Munger guy he passed away recently, but he he I'm probably gonna get this wrong. He said, something about they're successful not because they're always brilliant, but they're never stupid. You know? And being not being stupid, you know, it's means a lot. Like, don't do something stupid. Don't let go for the gold shiny stuff. When it just BS and, just be everybody's doing it. Don't, you know, be sheep Everybody else doing it. So we try to be really disciplined over the years and not just be so everybody else is doing it, not do those things and do what we think is right for the company.

Okay. So next week, we won't see a press release with an investment in Bitcoin mining.

Maybe not. I don't know. Yeah. Okay.

Thank you so much.

Thank you, Nick.

Thank you.

There are no further questions at this time. I'd like to hand the floor back over to Brian Shore for any closing remarks.

Okay. Well, thank you very much for everybody very much for listening in. It was nice to update you, and please feel free to call us if you like, have any follow-up questions, and have a good day. Thank you. Goodbye.