Brian Shore - Chairman and Chief Executive Officer.

Sean Hannan - Needham & Company Scott Scher - LMJ Capital Eric Harwood - Tudor.

Good morning. My name is Latoya, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Electrochemical Corp. Third Quarter Fiscal Year 2018 Earnings Release Conference Call and Investor Presentation. [Operator Instructions] At this time, I will turn the call over to Mr.

Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin..

Thank you, operator. This is Brian Shore. Good morning, everybody. Happy New Year. I have with me Matt Farabaugh, who's our CFO. Actually, not officially with me. Our office is closed today because of the storm, so we're both at remote locations. So, if we seem like we're not as connected as usual, that would be the reason.

So, a couple of housekeeping things here. Again, the office is closed. So, if you want to contact the office, the best thing you'd do would be e-mail Martina. Her e-mail address is provided right at the top of the news release, so you can contact her that way. Also, on our website is a presentation, as well as a supplemental financial information.

Now as you know, you veterans anyway, Matt normally will read through the supplemental financial information. But we're not going to do that today just because we have so much to cover. So, the supplemental financial information, it's on our website. I suppose that you can take a look at it there.

This information is also - and you can also find the information - the supplemental financial information, as well as our presentation at sec.gov. Okay. So, why don't we get started? This is still Brian. Let me just spend a couple of minutes before we go to the presentation to talk about the third quarter.

So, electronics, let's talk about electronics first. So, we talked many times about the process of getting qualified on new 4.5G and 5G programs with our Meteorwave product line, in particular. I think our guys have done a really great job, Chris, Tony and Mark, in Asia in particular. I think you're doing a wonderful job.

And we're on many, many programs. Now the issue is, of course, that we can't force 4.5G and 5G to happen more quickly than it does. This is for infrastructure, industry infrastructure equipment, 4.5G and 5G infrastructure. So, at this point, we're starting to see some movement up, which is good news.

And just last couple of months, some movement up with our Meteorwave product line in particular. But we don't feel like that 4.5G and 5G is really ramping to production yet. This is maybe prototyping, maybe some demo units, that kind of thing. But the key thing is we're on the programs. So, when 4.5G and 5G do ramp up, we will see the benefit of that.

I don't think it's a matter of - yes, I don't think anybody doubts that 4.5G and 5G will happen. I think it's a matter of when. You can talk to a lot of different people, different opinions. Some people even think that maybe the end of this calendar year, we should start to see some ramp of 4.5G and 5G.

The other thing to talk about on electronics quickly is restructuring. It really hasn't been executed very well. We got behind a power curve in the summer. We got off to a bad start. We're crawling our way back. I think we're doing much better. We seem to have it under control.

So - but it was really not so good and kind of messy in the third quarter because we had - really didn't get off to a very good start in the second quarter. So, I think we'll do okay, but it's unfortunate that it did not go well, restructuring. I'm talking about the restructuring out West with Arizona and California, of course.

So those two things are probably the big story with electronics in Q3. Aerospace is doing well, doing fine, I think. The difference between Q2 and Q3 in aerospace is ablatives. And we talked about ablatives last time. Our ablative materials are very high-temperature specialty materials that go into rocket nozzles.

In this case, it's for the Atlas V and also the PAC-3, which is the latest generation on the Patriot missiles. And the business with ablatives is kind of lumpy. So, in the second quarter, it was actually $1.5 million more than the third quarter. And then the fourth quarter, probably about the same as the third quarter.

So that really explains 100% of the difference in the revenues for aerospace between Q2 and Q3. And that's not - was not unexpected. It's not a sign of anything other than that's the nature of ablatives. The rest of the business, I think, is doing well and moving in the right direction.

So, why don't we go back to the presentation? Again, it's posted on our website. You also can access it at sec.gov. There's a lot of information to cover, so I will just get right into it. And I'll try to remember to give you the heads-ups on the pages as I turn the pages. I actually just have a printout of it.

I'm not looking at it on my computer screen. So, the second and third page of the presentation, that's our cautionary language and our risk factors. And I would encourage you to read the risk factors when you have a chance. There's new risk factors on Slide 3, actually, regarding aerospace. And I would encourage you to read them.

And if you have any questions about them or you want to discuss them further, please give us a call. Happy to talk through the risk factors for you. Okay.

Now why don't we go to Slide 4, which is financial highlights? So, we've been saying for a while, if and when the tax law was passed that we would pay up the loan and then we'd do something special for the shareholders. And we'd like to keep our word, of course.

We'll discuss the impact of the tax law, the new tax law at Park, at the end of the presentation. But for now, first item is we paid off our loan in full. That was yesterday. We didn't take a lot of time to do that was $68.5 million balance remaining at the time. And we also declared a dividend of $3 per share. That's a total dividend of $60.7 million.

As you can see here, that's a special dividend. So, a couple of things about this dividend. This is not a return of capital dividend. It's taxable.

We wanted to make it a return of capital dividend, but the way the new tax law operates, it prevented us from doing that because I'm not - I'm a little out of my element here, but based on the operation of the new tax law, the overseas earnings were attributed to our accumulated earnings and profits, which therefore make a return of capital dividend not possible.

As you remember from the past, the way a return of capital dividend works is if you have zero accumulated earnings and profits, then the dividend goes to reduce your basis in your stock rather than to be a current taxable item. Also, a buyback. I just want to comment. A buyback is not possible for Park at this time because we're in a process.

We'll get to that in a minute. Maybe some of you may have already. But along our process, it would not be proper - it would not be legal for us to do any kind of buyback, whether it'd be an open market program or a tender offer. I'm not saying we would have done that if not for this restriction.

I'm just saying there is a restriction and you should be aware of it. The third item, just a little history here for you, or perspective maybe. So, based upon this $3 per share dividend, and we also declared a regular quarterly $0.10 per share dividend on December 19.

If you take into account those two dividends, Park will have paid $412 million in cash dividends since fiscal 2005, and that would equal $20.10 per share. That's just since fiscal 2005, $20.10 a share. Now I was planning to tell you that, that $20.10 a share is prior to the current stock price, but it was as of the close yesterday.

I think the stock will moved up a little bit so that no longer will be the case. Okay. Let's go on to Slide 5. So, this is a big news item for Park, of course, a very big news item. So, we decided to initiate a strategic evaluation of our electronics business, which includes the potential sale of that business.

We retained Greenhill & Co., which is an investment banking firm, to help us with the strategic evaluation and possible sale of electronics. And we plan to complete the strategic evaluation during our second quarter of next year, 2019. That would be the quarter - that would be, what, June, July, August months. But no specific timetable has been set.

And of course, there's no assurance that anything will happen, a sale or anything else, as a result of the strategic evaluation. Let's go on to Slide 6. Park's iconic electronics business, sometimes known as Nelco.

What does it do? It develops and manufactures high-technology digital and RF/microwave printed circuit materials that is principally for the infrastructure - service provider infrastructure. This would be like Internet infrastructure; enterprise, which means like networking; military/aerospace, [indiscernible] semiconductor tests.

Semiconductor test is a niche market for us, but it's a very nice market. And so, the next item on Slide 6. I'm sure many of you know these things, but bear with me. Our electronics business is global. We have operations in Singapore, France, California, and Arizona. R&D in Singapore and Arizona.

And [indiscernible], we had our 60th anniversary, Park's 60th anniversary. Remember - you may remember some of this historical stuff. But we had a very auspicious beginning for our electronics business. Park was founded in 1954. By 1961, my father and Tony Chiesa found some bankrupt concern in the docks in Stamford, Connecticut.

And I think it was - like I said, in bankruptcy. Legend is that we paid $200,000 for it, although I think my father said we paid too much, as I recall. And that's how Nelco or our electronics business started way back in 1961. Very much innovation. The company wasn't a company that had a lot of money in its early days.

So, innovation was calling card, including the development of multi-layer circuit boards in 1962. My understanding is that was done for Lockheed in Sunnyvale. We still want to take weight out of some heavy-lift rockets, maybe for ICBMs. And I believe that was the first multi-layer circuit board ever made.

I can prove we actually did multi-layer circuit boards in 1962. People might debate whether that was the first, but I think it might be the first. So, many innovations, lots of magic right at the beginning of the electronics business, Parks electronics business. Slide 7. So, our electronics business, something built from nothing.

We - at Park, build lasting value no matter what we do, and that's what we do with our electronics business. How do we do that? It's not rocket science. We didn't go to business school for this. We stick to our principles of integrity and humility. Those are our two key principles. We work very hard. But more than that, perseverance.

What perseverance means is that we just stick with it, we go through thick and thin, all kind of obstacles we need to overcome, setbacks, problems, failures, and just keep going and going and going. And with that kind of mindset of never quit, never die, it's amazing what one can accomplish.

This business, wonderful products, wonderful technology and especially very wonderful people. It's a very special business, in my opinion, at least to me. Let's go on to Slide 8. So why would we consider selling electronics, our electronics business? Well, Park is a small company with limited and focused resources by design.

However, that's what we want. We don't want to be a big company. We want to be small and agile, flexible, not large and bureaucratic. Now other companies, they're large and bureaucratic. They have other strengths. Our strength as a smaller company is to be flexible, responsive and agile. So, we want that. That's by design.

We're not looking to build a larger organization. It turns out that the electronics industry and the aerospace industry are quite different, and they have different technologies, very different markets. So, it's become more and more difficult for Park as a small company to do justice to both the businesses.

It's just not fair because we're kind of not doing the best job we could for the two very different – two businesses in very different markets. So, let's go on to the third bullet item.

So, as part of this process that we're talking about, we're looking for a new owner for our electronics business, which has the resources, both human and financial, the focus and capability to enhance and develop the full potential of our electronics business and provide it with the future it deserves.

Again, we feel like maybe we're not really equipped to do that as a small company, to do that for both electronics and for aerospace. We understand that if we find a new owner, they're not going to run the company the way we do. That's not how it works.

But we need to find a company that we respect, that has important principles and that is a company that would be committed and dedicated to our electronics business.

So, we'll look for a transaction, which is in the best interest of our investors, the electronics business and our electronics business people and the customers and OEMs of our electronics business. We're looking for the right equation here. We're not looking to just do something quick. We want to do something that's right for everybody concerned.

So, in my opinion again, if we do sell our electronics business, the buyer will be a very fortunate company to own such a wonderful and special business. Let's move on to Slide 9. So, let's talk about our aerospace business for a little while.

And it becomes a little bit more relevant that we do that - or important that we do that any way, is when we do sell our electronics business, then Park will become an aerospace-only company. So, what does our aerospace business do? By the way, let's look at the picture on the bottom right of the page, Slide 9 we're on.

That's a picture of our facility in Newton, Kansas, which was a farm field 10 years ago. The building on the left is our main manufacturing facility. The small building on the right, that's where we have our Tin City operations, [indiscernible] to do development and design work. Anyway, let's go to the first item again, on Slide 9, the first aero item.

So, our aerospace business develops and manufactures hot-melt and solution advanced composite materials for the aerospace industry. We also design and manufacture composite parts, assemblies, primary and secondary structures and also low-volume tooling for the aerospace industry, all done in this location in the picture here in Newton, Kansas.

And our principal manufacturing and design and R&D facility located in Newton, Kansas, and we have a satellite manufacturing operation in Singapore. A little history on aerospace. It's more recent history, but it's very similar to the history with electronics.

In 2007, January 2007, I remember quite well, we had a sales meeting in Wichita, a global sales meeting. And at that point, we decided we're going to focus in aerospace as a second major area of business concentration for Park. And then, I guess in August, that would be about six months later, we found a farm field in Newton, Kansas.

It was like a wheat farm, as a site for our new aerospace facility. I remember seeing this field, and I went to speak to the people at the local town and their economic development group and asked them if we could have it. And they said, sure, it's just a farm field. And that was that. In January of 2008, January 17, we did the groundbreaking.

It was a cold, wintry day, not quite like it is in Northeast today, but it's cold and wintry. And then it was like, what, six years later, fast forward to 2014, sorry, on Slide 10, we went into production on the first major - first program for a major jet engine manufacturer, which is GE Aviation.

As some of you know, we've been asked by GE Aviation to never put their name in writing, but they said they're okay with us discussing them on our investor calls. So, this one is a big deal for a new kid in the block. And aerospace, being in aerospace six years, that's not very long. Actually, the groundbreaking was in 2008.

I think 2009 when we kind of opened for business. So maybe five years later, we would go on our production for this major jet engine manufacturer, GE Aviation. That was a big deal, a very highly unusual, almost unheard of. Their first program, moving on, was actually a legacy program. We're qualified on a legacy program.

Quite unusual, very unusual, especially for a new kid in the block. So, we're very fortunate, very lucky in that regard. The third item on Slide 10. So, our very special aerospace business was built from nothing.

You got the thing there, built from nothing, something built from nothing, a farm field producing wheat 10 years ago, I remember, but now it's a business with true lasting value built the Park way. Same principles here. Staying true to our principles of integrity and humility, working very hard. Of course, perseverance has been the key. We're in Kansas.

We didn't know anybody. We didn't know really very many people in aerospace. We're kind of on our own. We faced a lot of adversity, many challenges. We're kind of an outsider, too. Aerospace is a little clicky, and we're the new kid on the block. Who are you guys? Many disappointments, setbacks, failures. Some days seemed hopeless.

Some days everything seemed dark. I lived through it. But the difference is - and it's to me, is how value was built - we never quit, we never stopped, we never gave up, kept going and going and going no matter what, no matter what, even when it was pretty lonely because we didn't have too many friends or advocates.

So, a common building value is financial engineering. I'm sure there's some value in financial engineering as well. But the problem is when you're financial engineering over, what do you have, you're still the same company.

If that company hasn't focused on the things that really matter, if you're spending too much time in the boardroom and not enough time where the rubber hits the road, something very weak, very flimsy, not lasting. Fortunately, we didn't take that route. So, I think we have built something with substantial value and lasting value.

So, we haven't yet achieved greatness. Put that as our objective. It is a special business with significant opportunities. But look, we didn't do this. We didn't go to that farm field 10 years ago because we wanted to have an objective of mediocrity or something less than greatness. We're going for greatness.

And if it wasn't that, we wouldn't have done it. It just wouldn't have been worth it. It would have been so easy not to do it, not to do it. And Park was doing fine back then in 2007, right? We didn't need to do this, but we did it because we felt it was the right thing for the company. We felt it was the right thing long term for our investors.

And I'm glad we did it. But only would have done it, I'll speak for myself personally, if the objective was greatness. Something less than greatness, not interested. Okay. Let's go to Slide 11. Let's talk a little bit about some of the high-level items regarding our aerospace company.

So, a major jet engine company - again, we're not to put it into writing, that's GE Aviation. So, we're in year two, a 13-year long-term agreement, pricing after year three and year eight. This is for nacelles and thrust reversers. Those are very big parts.

Why don't you look at the picture right on Slide 11? You see those big white things? Huge structures, right? Seems a person in the background can give you the perspective on the size. So those are nacelles. The thrust reversers, you can't see there, blocker doors inside and transcowls.

But these are very, very, very large parts, which is good for a company that produces composite materials because the bigger the parts, the more materials. I'm not sure about this, but I would suspect that if you look nacelles and thrust reversers, that's probably by far the biggest usage of composite materials at GE Aviation.

I don't know that for a fact. I'm just speculating based upon knowing the engines and a little bit about the engines and how they're built. So, second item on 11.

We're sole source on multiple engine nacelle and thrust reverser programs, including the 747-8, which is what you see in the picture; A320neo with the LEAP engine; COMAC919 with the LEAP engine; Bombardier Global 7000 and 8000 with the Passport 20 engine. And that's not all the programs. Those are some of the key programs that we're on.

Sole source for thrust reverser, materials for thrust reversers and nacelles. And we're also sole source, the third item, for some internal fixed structure for a new engine program just ramping up now.

And we are also qualified, the last item on the top, the right top page, on a number of other internal fixed structure components for multiple engine programs. Why don't we go on to Slide 12? Continuing with GE Aviation. So, we have done - we've done multiple joint development and collaboration efforts. They're very, very key for Park.

These have led to our developing new products, but also getting qualified. And in aerospace, that's 90-something percent of the battle. You need to get qualified. You can develop a new product, but it's like, what is it? A tree falls in the forest, does it make a sound? Who knows.

But if you don't get the product qualified in a major program, it's not that meaningful. The beauty of this is as we develop the product, by working with GE and with their system, we also got these products qualified on these programs. There's two additional new products expected to be complete and qualified in fiscal 2019 as well.

The development of products is basically complete and now we're going into qualification. So, let's see, the second last item. This is something else, quite interesting. This is a large composite part. This is actually for a military program, again GE Aviation. We're still in development, although I think we're in the Phase 2 or Phase 3.

So, funding has been there. Very interesting opportunity for Park, and much a potential revenue as well if the program is successful. Redundant factory, we've discussed this before. I think we mentioned over the years, that if and when we sign an LTA, we would deliver it on the factory.

Even though we've signed the LTA, we haven't made a commitment to do that yet. We still need to work on some details with GE Aviation. This is a redundant factory, presumably in Newton, Kansas. And this is redundancy for the GE Aviation customers, in particular, Boeing and Airbus, for instance. Redundancy is very important in aerospace, of course.

Based upon our forecast, we probably need the additional factory anyway for just capacity, but the stated purpose of the redundant - of the additional factory is redundancy. Let's keep moving, Slide 13. Sorry, it's taking a little longer, but I want to go through these items with you quickly. So, this is a different company.

This is a major aerospace company in the U.S. And we're currently in qualification on two important specifications. We expect to be complete in the first quarter of fiscal 2019. Our fiscal 2019 starts in March. So that's March, April, May time frame. That's soon in other words. So, other specifications under review.

And also, significant opportunities for parts and spares for multiple legacy aircraft, especially military programs. That picture is a picture of a 747. That's my favorite airplane just so you know that. Slide 14, just a quick one. Textron's Scorpion tactical aircraft.

So, we've done lots of parts or assemblies and also tooling for all the prototypes of this aircraft. The key for us with these guys was being responsive.

There's flexibility so we could turn a part, meaning we get a data package into something we drive down to their factory in Wichita in one of our cars in less than two weeks, which we have to make a tool. We make a tool in a part less than two weeks. That's pretty unusual. So, let's keep going. Slide 15. The future, let's talk about the future.

If Park's electronics business is sold, Park will become an aerospace-only company. Already explained that. Second item. Park's opportunities in aerospace are now very significant after 10 years of hard work and perseverance. So, I think that was partly earned.

It certainly hasn't been easy, but I think a lot of the hard work and perseverance has paid off. So, if Park electronics business is sold, now we'll be able - then we'd be able to focus 100% of our efforts, our attention, our resources, our energy on our aerospace business and our significant opportunities in the aerospace industry.

My concern is that, as a small company, as I was saying earlier, we just don't - we don't have the bandwidth needed to take advantage of all the opportunities that we'd like to take advantage of. And that's kind of a shame, so we want to do something about that. The next item.

Because of the status we have earned in the aerospace industry that I've heard, I think we may be very well positioned to take advantage of fairly unique strategic opportunities, including acquisition opportunities in the aerospace industry.

So, I'm being a little optimist here and I think I need to be, but there are some - I believe there are some special opportunities that we have in terms of acquisitions based upon the status - our status in the aerospace industry.

In other words, not just to get in some auction with every Tom, Dick and Harry and financial buyers and that kind of thing. So, we'll see what happens, but these opportunities could be very special for Park. And again, it's based upon a lot of hard work and perseverance to earn that status that I think we have. Last item on Slide 15.

So, we've very carefully redesigned our cost structure for the future, from the bottom up, in the event our electronics business is sold and we do become an aerospace-only company. So, I want you to understand. We put hundreds of hours, management hours, into this model, and we've been working on it for two months. Hundreds of hours.

It's not something that an investment bank or MBA would do - dare at you. Hundreds of hours looking under every rock, every person, every detail, just the bottom-up model. We're showing you - I'm going to show you this. It's on the next page.

And why is that? Because we don't think you could figure it out yourself because the cost structure has been so fundamentally changed. It's not that we cut cost. It's we reinvented the cost. We start from the ground up. We thought, look, this is the business going forward.

Let's design a cost structure for that business rather than take our current cost structure and adjust it. We didn't think that would be the way to go. But we didn't think there's any way for you to figure it out, and that's not really fair to you because this could be pretty important for Park for the future. So, we thought we should help you.

We thought we should help you out. Something we've never done before that I remember anyway. Been doing this for a while. So, let's go to Slide 16. Slide 16, these are - this is Park's baseline pro forma forecast estimates, and this assumes Park's electronic business is sold.

Just for perspective, the aerospace revenues for fiscal 2018, probably about $40 million, okay? So just to put it in perspective. And you can look at the numbers. I guess they speak for themselves. If you go up to fiscal 2022, we show some pretty nice growth over that with 4 or 5-year period. Let me just go through some of the points here.

Now the fiscal 2019 pro forma. Remember 2019, that year starts in two months. It starts at the beginning in March. So that's really the year that's important here, the start, the baseline. Let's call it the baseline here. This pro forma for 2019 assumes two things.

One, it assumes that electronics business was sold by the beginning of the year, let's say, the end of this fiscal year, number one. And number two, all of the legacy costs that are going to tail off have already tailed off. Because if we sell electronics, the day it's sold, the legacy costs probably take 6 months to tail off.

It assumes all legacy costs are gone as of the beginning of the 2019 fiscal year, two months from now. That's a pro forma. The next - the following years aren't really pro forma years. They're just forecast years.

By fiscal 2020, if the business - electronics business is sold - it would have been sold, and most - the large majority of legacy costs would have ended by the beginning of fiscal 2020. Fiscal 2020, remember, starts 14 months from now. So, clearly, conservative forecast here.

Second item, the pro forma forecast assumes organic growth only, no additional revenue from significant opportunities or acquisitions. It's fairly conservative. What are the components of the forecast? Talking about the revenue, the top line. If we take the GE forecast, we don't take everything that we're dealing with the GE.

These are the things on which we're sole source. There's two other products I mentioned earlier that we're - that haven't developed and we're going to qualifications on those two products. That's it. There are many other opportunities not included in the GE forecast. We take GE's forecast, roll it to our model.

GE forecast is based upon how many airplanes Airbus will sell and how many airplanes Boeing will sell, Bombardier, COMAC. So, it also includes, let's say, a modest amount of revenue from the other major aerospace company that we talked about a few slides back, but I think a modest amount.

And then it also assumes approximately 5 million a year of incremental - we call it miscellaneous incremental business. And we don't just plug a number. That would have probably 100 names associated with it. Again, this hundreds of hours doing this modeling, both for the top line as well as the cost scenarios.

So that was in the assumptions that we used to build this model. Like I said, it is all organic. No revenue, many significant opportunities through opportunities or acquisitions. You might say, well, that's conservative. Of course, we hope that we will have new opportunities and maybe acquisitions.

And I just want to note also that GE forecast does not top out until fiscal year 2025. So, 2022, that's not - it's how the way it will run based upon the forecast that we have received from GE Aviation. Now we want to - brought this down to EBIT. We weren't going to go down to net or EPS because we figured there are variables there.

But if you want to do that math, the analysts, I think we probably want to assume approximately a 25% tax rate going forward. This assumes we sell electronics, so it would be mostly U.S. 21% is our new tax rate, I guess, plus some more stuff for state taxes.

And you see next page, after all these things we talked about early on are complete, the company probably has $90 million, $95 million of cash with no debt. And we would assume maybe 1.5% to 2% of interest income on whatever cash we have.

Now maybe I would go out based on what the Fed is doing, but that's a part you guys can figure out perhaps more than we are in that regard. If you want to do the rest of the modeling to bring it down to EPS or bring it down net. Let's go to Slide 17, additional financial commentary. So, here's the good news.

About $20 million of taxes that we're going to need to pay in connection with - based upon the new tax law regarding our overseas earnings and cash, $20 million. If we repatriate our cash before the new tax law was adopted, enacted, it would have been about $60 million. That's $40 million. That's after-tax $40 million.

So, I guess it paid off for us to hang in there to deliver $40 million. Next item. So here is that - here, we referred to this. The next item says that, okay, we assumed $20 million of taxes. Remember, we paid off the loan. That was $68.5 million. That's money already gone, paid it off.

Dividends, the special dividend, as well as the regular dividend that was declared, it's probably about $63 million. So, we just take our current cash position, do the math.

And that means that after all this stuff is done, after taxes are paid - or loans are paid off, already paid off, we don't have a loan anymore as of today, we have about $90 million to $95 million of cash remaining. So, the question, obviously, is what do we with that cash? Well, we'll see. A number of factors.

So, one is, let's see what happens with the potential sale or possible sale of electronics business. And if the business is sold, proceeds of that business, after-tax proceeds. We want a little bit of a deeper understanding of the tax law. We did our best to move quickly, but obviously, the new launches will be developed over the next few months.

And as I mentioned, there is unique acquisition opportunities. Unfortunately, I can't tell you more about this. But if I was able to, I would think any reasonable investor would say, you definitely want to take advantage of those or pursue those seriously. So that would be a consideration as well.

But, of course, there's also a possibility for returning more cash to shareholders, but we can't say what will happen because there are a lot of different moving parts, a lot of variables here. The last thing I want to comment on is our regular dividend, $0.10 per quarter. I don't remember when we increased it. That's probably 10 years ago from $0.08.

I think we paid regular dividends since - for 30 years now, our quarterly dividends. We tend to keep it. We don't intend to change it. We intend to continue the regular quarterly dividend of $0.10 per share per quarter at this time. Okay. Slide 18. That's our thank you slide.

And the last thing I want to mention to you is that there is a Needham conference and we intend to attend that conference. I believe we're doing a presentation on the 18th at 12:00 noon, but we'll send a news release about that. And that will be webcast, so everybody's welcome.

And we'll probably go through this presentation, maybe an expanded version of it. So, feel free to dial into that webcast for an update on everything about Park. Okay, operator. That concludes our introductory comments and remarks. And at this point, we're happy to take questions..

Thank you. [Operator Instructions] And the first question will come from Sean Hannan of Needham & Company. Your line is open..

Yes. Thanks for taking my question here, good morning folks and Happy New Year.

Can you hear me okay?.

We can hear you fine. Happy New Year Sean..

So certainly - you're certainly starting off here with a bang here, Brian. Pretty material announcement around the evaluation of the electronics business.

Is there a way perhaps if you can give us a little bit of context in that you've laid out some of your general viewpoints and estimates? Looking at your aerospace business, you have some assumptions that you're making in terms of where you could potentially ultimately end up with your net cash? Can you talk a little bit about the profitability of the electronics business today as you're looking to evaluate that and potentially consider the sale?.

No, I don't think we'd do that. Obviously, we're going to be asking people to sign NDAs. And then we'll select potential buyers and we'll send them information based upon them signing NDAs. We're not going to invite everybody into the process. We want to feel the company is a good company, good reputation, honorable company.

At that point, we would send the information to them. But we're not going to comment on the profitability or top line, bottom line of the electronics business at this time. I think that my feeling is - this is not your question, but I'll comment anyway, that many serious potential buyers will find this to be of great interest for a lot of reasons.

The numbers obviously would be important, but it would be the numbers and other reasons, strategic reasons..

Okay. Is there a way, perhaps, Brian, if you could at least give us an indication, was the electronics business profitable within the quarter you had just reported and the last quarter as well? At least, are we in the green or are we in the red at this point? Some indication at least would be helpful..

We're not in the red. But remember, we don't segment electronics and aerospace. There's no hard answer to that question. I would just say we're not in the red. So again, we will present the electronics business probably to the potential buyers. That will be on a confidential basis. I think that the numbers they see will be fine.

But I think that the proper strategic buyer will also look beyond the numbers and see even more value as well. But it's not in the red..

Okay. That’s helpful.

And then switching gears to the aerospace side of the business, on Slide 11 Brian, you’ve laid out for aircraft platforms as examples with different engines where you have got presence and you know it is true I believe one single jet engine company that places you on those platforms, I just want to make sure that I have that accurately that has been an assumption and I just want to validate that..

That's correct. Slide 11 and Slide, I think, slide - let me just check for sure, Slide 12 relate to GE Aviation. So, everything on these slides relate to GE Aviation. These are all programs we have through GE Aviation on Slide 11, second item..

Okay. And then these are the one programs that are in hand and would inherently be factored into the forecast that you laid out, which was very helpful to see, by the way. Whereas the bullet, the upper right of the slide, indicating you're qualified for internal fixed structure components.

Would that be factored into the thought process for organic revenues that would grow? Or given that it's only qualified, is that something that would be excluded? Just trying to understand context here..

Good question. The answer is generally arrived at the items on which we are qualified would not be included in that forecast..

Okay. And then that leads me to kind of the last question here and then I'll get out of the way.

Can you outline for some of us some of the key opportunities that you've either referenced today or in some prior calls or just overall, that would not be in the numbers, in the estimates, forecasts that you've sized on that one page? Can you outline for us some of the opportunities not in those numbers and then somehow qualitatively give us a perspective of how sizable those could be as an additive factor to what's been outlined as a potential revenue trajectory here?.

Okay, well maybe the way to look at it is, I try to, we try to break down what the forecast does include as some limited things. So, what it does include is the rest of the universe and I mean I do not know how to even approach that there is so many opportunities from so many different directions.

I mean some are even with GE Aviation, there is other opportunities with this large aerospace company I spoke about, but obviously not in the aerospace companies in the world. So, also new products are being developed and worked on, those lend more opportunities. The products which we develop with GE Aviation, where they help us get qualified.

Just so you know, when you're in the aerospace business and you have a product you want to sell and you go to a new customer, the first thing they're going to ask you is, what programs are you on? Why is that? They say, I don't want to be the first guy to try you out.

And there's so much - it's hard to comprehend the amount of money that's required to be spent just to qualify you on a major aerospace program. So, they won't do that if you're not proven in quantity. So, the fact that we just said, yes, we are on GE Aviation programs. Okay.

That's the end of that discussion because GE Aviation is known to be a pretty difficult company to get qualified with. I mean, to their benefit, it's good. It's good or difficult. But it is a lot of credibility.

So, what I'm getting at is those products that we've developed with GE Aviation's help and are getting qualified in GE Aviation's program, GE Aviation has been very nice to us. They said, well, you can sell those products to anybody you want.

So, we're just getting started with selling the products - that we're promoting the products and trying to sell the products that we've developed with GE Aviation, where we're qualified on those programs to other aircraft companies, large and small. Remember, we developed with GE Aviation, we talked about this before, an AFP material.

And that's going to production now with GE Aviation. AFP, Automated Fiber Placement. It's kind of a newer technology, robotic technology for producing composite parts. We can sell that material to other companies..

Okay. All right, that’s helpful. I will see if I can follow-up around this. Thanks for taking the questions here folks..

Sure. Good day, Happy New Year..

Thank you. The next question is from Scott Scher of LMJ Capital. Your line is open..

For someone who's not that familiar with your company, can you point us to any transactions that have taken place over the last two or three years that are comparable to the business that you own?.

Transactions? I'm not following you or what you're getting at. You mean….

I want to be able to guess what you're going to sell that business for electrochemical. I'm not quite familiar with your company. So, if an investment banker is going to put together a pitch book of comparable companies and comparable transactions, and that's how they do things.

So, for someone who's just trying to ramp up real quickly, maybe you can point me to, say this company that sold a year ago sold for 1x revenue. That one sold for 2x revenue. That sold for x, that sold for y. Any direction would be fantastic. Thank you..

Yes. There are really no comparables for this business. There are obviously lots of different companies in the electronics industry, but there are no direct comparables in terms of any kind of transaction I'm aware of in quite a few years. I'm just thinking out loud, but I don't think so. Rogers bought Arlon, but that's not really a pure comparable.

You can look at that transaction. And that's really a stretch to find - to think of anything. Yes, of course, I'm familiar with what you're talking about, what investment bankers do. But the discussion, it's well, there aren't really good comparables..

So, if I could follow up then. So, you made the decision to sell this. How far along are you in understanding what you perceive the value to be? And that's part a.

And part b is, if the value comes back and it's materially different than what you think, possibly lower, would you reverse course and not sell the business?.

We're not going to commit to sell the business unless it's right for Park. And we're not going to sell the business to the wrong party either. So, it has to be right for Park. So, this is something that we've given enormous amount of thought to, deep consideration. We have a good feeling, sense for what the value is.

Obviously, we're not going to disclose that. But if for some reason the process ends in something that's disappointing, we're in control. We're not going to do something just to do it. So, we don't have the right buyer, we don't have the right number, it's not going to happen.

But I would say that I'm really optimistic that there'll be serious interest, and this would be from strategic buyers. We don't really believe this is the right kind of opportunity for a financial buyer, not that we wouldn't necessarily talk to a financial buyer. But I think this is more an opportunity for a strategic buyer.

This business is an iconic business. It was started in 1961, and it's known very, very well throughout the world. It's a very special electronics business, kind of a niche business, a little different than our competitors, which are largely the larger Asian companies. The company has very good technology, has access to the U.S.

market, presence in the U.S. market. These are special things that I think would be coveted..

And then one follow-up question, again I apologize I am not familiar with your company.

The aerospace business is a separate entity and run by separate management correct?.

Well, see that's the problem. They're to some extent, but then there's corporate people that are covering both. And we don't like using the term corporate, but let's call it Park Electrochemical people that are covering both. So that's a problem, and that's where we get really spread real thin.

So those high-level resources, assets aren't able to focus and do both - don't do justice to both businesses..

So, is that, I mean, I guess that's the issue. I mean, obviously, you said now you'll have the opportunity to make acquisitions in aerospace. Obviously, you've been sitting on an enormous amount of capital for years, and you didn't feel compelled to make those acquisitions.

So, it wasn't that you didn't have access to capital, which you obviously have too much of.

It was that you didn't have the intellectual bandwidth to be able to make acquisitions and grow the business at the level or the rate that you thought you could because you didn't have the intellectual bandwidth to do that?.

I don't know if I would put it that way. First of all, the opportunities are developing now, but based upon 10 years of hard work. So, I'm not sure we were prepared to really do significant acquisitions 3 or 4 or 5 years ago, but we probably hadn't earned the status to have special opportunities for the acquisition 3 or 4 or 5 years ago.

So, I think I would agree partly with what you're saying, but it's not just that, well, if we had a couple of more people, we could have done the acquisitions, 3 or 4 or 5 years ago. We probably wouldn't kind of have to impress the business enough to be able to do the acquisition. That would be special acquisitions..

Got it. Thank you..

Thank you. Thanks for the questions. Happy New Year..

Thank you. The next question is from Eric Harwood of Tudor. Your line is open..

Hi, just a couple of quick follow-ups on the questions that just came through. I guess, in terms of you made kind of an indication on the projection slide that you built this new cost structure and financial model from the bottoms up.

Should we expect -- excluding acquisition spend, should we expect a change in the cash flow profile of the stand-alone aerospace from the way the business looks today?.

Yes. I mean, we haven't given you cash flow information, but I think the cash flow would be positive. If you look at EBIT/EBITDA numbers, I mean, I think you can translate those under cash flow fairly easily. So, I would think that the cash flow will be positive, will be good..

Got it. And then I guess just one. So, you've been in this electronics business for a very long time. Why not - it sounds like the financial profile of that business is perhaps not quite as attractive as the aerospace business. The aerospace suppliers are trading at possibly higher multiples.

Why not sell that business and focus on electronics, which has been your bread-and-butter for 50 years, 60 years?.

We think electronics would be better off owned by a different kind of company at this point. At least that's our objective, to find the right owner, the right buyer. But we didn't put in 10 years of very, very hard labor with aerospace to just now back away and sell it.

We think that aerospace has so much potential that's not been realized at all at this point. We're just, I think, really getting started with aerospace. We paid dues. And it's not that we're there, not that we achieved what we want, not that we're not going to pay more dues.

We paid a lot of dues, but I think that the results of that is now we're positioned to take advantage of where we are in electronics. I think it would be very weird to want to sell it now. I mean, I wouldn't have put the 10 years in if we're just going to sell it.

I put the 10 years in because we're going to build something meaningful and lasting for the future for our company and for our investors..

Got it.

And then on the electronics, it sounds like you have a few potential acquirers in mind, specifically, I’m not going to ask you to say specifically who, but have you had in-bounds from competitors our strategic or sponsors of that business in the past?.

Not too many. I think it was probably commonly known that we would not have an interest in the past, so not too many. But yes, this is a strategic situation, in my opinion, so it doesn't take long being in the business as long as we have to come up with the usual suspects pretty quickly as to who the likely strategic buyers would be.

And like the up close as you imply, we're going to name names, but of course, we talk to our banker for the list. It's like, well, do you have two minutes? Because here's the list. I mean, it doesn't take long..

Okay. And then one last quick one.

Have you discussed the decision and ultimately possible sale with the top customers and is there any sensitivity around the, I guess the agreements that you have with them?.

You’re talking about aerospace or electronics?.

Either, yes..

Yes. So not very many. Maybe one or two critical customers that we really could trust because obviously it's a very confidential matter, maybe one or two we've given an advance notice to. Not many. We're going to go into that communication process now. I think some of our guys are already talking to our customers, particularly in the electronic side.

And the message for them, and the OEMs as well, is we're not just dumping this contest, this business. We want to find a better owner for the business that can do more with it, enhance it, will focus on it, have resources.

This should be a better thing for the business because of course, we want to reassure our customers and OEMs this is going to be a positive thing, not a negative thing.

Our intention is to make this a positive thing for all parties concerned, electronics, aerospace, investors, our people who work at Park, all parties concerned; and then, of course, our customers and the OEMs, customers..

Okay. You said before that you spent about two months working on the models.

Is it fair to assume you've also been spending that same amount of time with bankers and the board evaluating the transaction? Or are you relatively, I guess, early in the process?.

No, I think that's fair to assume. We spend a lot of time in all different levels, all different aspects of this potential transaction, as you just implied in your question. Not a new topic. No. [Indiscernible].

Thank you. I appreciate it..

Yes, thank you. Happy New Year..

You too..

Thank you. [Operator Instructions] There are no further questions in the queue. I would like to turn the call back over to Brian Shore of for closing remarks..

Okay. Thank you, operator, and thank you all for listening in. Very nice talking to you, very nice updating you on our business. And so unfortunately, our office is closed because of the storm. If you want to contact us, like I said, the best thing to do is send an e-mail to Martina. Her e-mail address is right at the top of the new release.

And other than that, hopefully, we'll talk to you soon. And I want to wish you all of you and your families just the very best of everything in 2018. Goodbye. Have a good day..

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day everyone..