Good morning. My name is Daniel. And I’ll be your conference operator today. At this time, I would like to welcome everyone to the Park Electrochemical Corporation's Second Quarter Fiscal Year 2019 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there’ll be a question-and-answer session. [Operator Instructions] Thank you. And at this time, I will turn today’s call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference..

Thank you, operator. This is Brian. Good morning everybody. I have with me Matt Farabaugh, we're a factory in Kansas, by the way. And sitting together for a change, normally we’d be on different lines. So this call should be very well coordinated. Anyway, we’ll go through our normal introductory remarks. Matt will start with a financial commentary.

And then I’ll add some business commentary. And then I'll go to the Q&A. Go ahead, Matt, when we get started..

Okay. Thanks, Brian. Certain statements we may make during the course of this discussion, which do not relate to historical financial information, maybe deemed to constitute forward-looking statements. Any forward-looking statements are subject to various factors that could cause actual results to differ materially from our expectations.

We have set forth in our most recent Annual Report on Form 10-K for the fiscal year ended February 25, 2018 various factors that could affect future results. Those factors are found in Items 1 and 1A of that form 10-K. Any forward-looking statements we may make are subject to those factors.

As Park has entered into an agreement to sell its Electronics Business to AGC, Inc., this presentation will focus on the aerospace business that will remain with Park going forward. All comparisons to prior periods have been updated to exclude Electronics.

I’d like to briefly review some of the items in our fiscal year 2019 second quarter ended August 26, 2018 P&L. Park sales were $11.2 million in the 2019 fiscal year second quarter compared to $11.4 million in the 2018 fiscal year second quarter, and $10.4 million in the 2019 fiscal year first quarter.

Gross profit for the 2019 fiscal year second quarter was $3.1 million or 28.1% of sales compared to $3.2 million or 28.3% of sales for the 2018 fiscal year second quarter, and $2.9 million or 27.4% of sales for the 2019 fiscal year first quarter.

Selling, general and administrative expenses for the 2019 fiscal year second quarter were $2.1 million or 18.9% of sales compared to $2.2 million or 19.7% of sales for the 2018 fiscal year second quarter, and $2.1 million or 20.2% of sales for the 2019 fiscal year first quarter.

Investment income net of interest expense in the 2019 fiscal year second quarter was $357,000 compared to $148,000 in the 2018 fiscal year second quarter, and $340,000 in the 2019 fiscal year first quarter.

Earnings before income taxes for the 2019 fiscal year second quarter were $1.4 million or 12.4% of sales compared to $1.1 million or 9.8% of sales for the 2018 fiscal year second quarter and $1.1 million or 10.5% of sales for the 2019 fiscal year first quarter.

Before special items, net earnings for the 2019 fiscal year second quarter were $1.0 million or 9.2% of sales compared to $0.9 million or 7.6% of sales for the 2018 fiscal year second quarter, and $0.8 [billion] [ph] or 7.9% of sales for the 2019 fiscal year first quarter.

Depreciation and amortization expense in the 2019 fiscal year second quarter was $434,000 compared to $452,000 in the 2018 fiscal year second quarter and $432,000 in the 2019 fiscal year first quarter.

Capital expenditures in the 2019 fiscal year second quarter were $160,000 compared to $319,000 in the 2018 fiscal year second quarter and $10,000 in the 2019 fiscal year first quarter.

EBITDA for the 2019 fiscal year second quarter was $1.7 million compared to $1.7 million for the 2018 fiscal year second quarter and $1.4 million for the 2019 fiscal year first quarter. EBITDA for the 2019 fiscal year or first six months was $3.0 million compared to $2.2 million for last year's comparable period.

The effective tax rate before special items was 25.3% in the 2019 fiscal year second quarter compared to 23.0% in the 2018 fiscal year second quarter and 25.2% in the 2019 fiscal year first quarter.

For the 2019 fiscal year second quarter, the top five customers were AAE Aerospace, GE, including its subcontractors, GKN, Kratos and Lockheed Martin in alphabetical order.

The top five customers totaled approximately 59% of total sales during the 2019 fiscal year second quarter, the top 10 customers totaled approximately 73% of total sales, and the top 20 customers totaled approximately 84% of total sales for the 2019 fiscal year second quarter..

Okay. Thanks a lot Matt. This is Brian again. So we have a few things to cover here. First of all, as you all know, we announced the sale of Electronics -- our Electronics Business to AGC, Inc. of Japan. The announcement was done on -- through a news release on July 25. We haven't spoken live since then. So you may have questions about it.

But I did -- because especially we're not going to do an investor call right after the news release. I did have a lot of commentary in my perspective, in my thoughts about how I felt about the transaction. So you might want to go back and read that news release. So I tried again to be pretty complete. I'm not going to go back through those comments.

It doesn't make any sense to me to do that except to say that, I think it's a good thing. I feel that it's a very good company, AGC, a very fine company. I think it's a good result all the way around. But I think you might want to go back and read my comments.

So when we did - announce the sale, the agreement to sell Electronics, we also indicated that we thought it would close in Q3. I want to update you on that a little bit. So since that time [indiscernible] has changed its rules a little bit. They extended the review periods from 30 days to 45 days for both the Phase 1 to Phase 2 necessary.

As a result, we think that the closing now is going to probably be like November or maybe December even January is a more likely timeframe. Most of the other approvals have been received, but [indiscernible] is still under review, so that's a little bit of an update there.

Now since as Matt indicated, and also in our news release we indicated, this is -- Electronics is now a discontinued operation. And that's a requirement under the accounting rules as I understand. The focus of our discussion or comments will be only on Aerospace. And it also changes the presentation of our financials pretty dramatically.

And unfortunately it's hard to really -- it makes the financials difficult to understand. So I'll try a little bit to give some perspective on the financials because until Electronics is sold and the legacy costs are reduced or eliminated, it's going to be difficult to kind of see through the financials to the reality.

So the thing about the way the reporting work as far as I understand is there are certain costs, which were assigned to Electronics, and those are the costs that would appropriately go in the Electronics business after its sold. All other costs continue with Park. So Park continues to carry all those costs in its current financials, including Q2.

Even though a portion of those costs -- maybe a good portion of those costs will be reduced or eliminated after the sale is complete, and after some timeframe, maybe 6 months to make those costs adjustments.

So right now we have kind of [a distorted] [ph] P&L of these recurring costs in the continuing ops portion of the deal reporting, which we really don't need, but that just how the reporting works.

So I just want you to understand that, so until all that clarifies, based upon the closing of the Electronics sale occurring and the cost being adjusted, it's going to be hard to really see through to the public reporting. So I just want to make that point. But I'll try to -- we'll try to help you get some perspective nevertheless.

Let me just go through my notes here. I think cover the fact that we're required to carry these costs. Again, costs can’t just disappear, either they're assigned to Electronics or they're retained by Park. We can't just say well those costs don't exist, not for a SEC reporting anyway.

So I wanted to remind you that we did a presentation on January 4 when we announced, that would have been our, I think, our third quarter results from last year, it's still posted on our website. In that presentation, there was a forecast for Aerospace as a standalone business. We have not updated that forecast or we're not doing that now.

But I just wanted to bring you back to that forecast. You can look it up, it’s still in our website, I'll try to remind you about some of the key components of it in next few minutes just to help you get some perspective. But that analysis was a pro forma analysis of what it did assume.

It assumed that Electronics have been sold, and all those legacy costs had been reduced already. That's the assumption. That's why it's pro forma. And we explained that when we did -- when we presented this information on January 4. So I think it was made clear.

But we don't have an apples-to-apples comparison now, because our second quarter and the EBITDA second quarter that Matt referred to in his comments will not kind of match up or reconcile with the presentation that we gave on January 4.

Again, we have not updated that presentation, and we're not doing that at this time, but I thought we just referred to it for perspective.

So let's talk about our revenues to start with, because in the current fiscal year in this presentation, the fiscal year '19, we had forecasted estimated revenues of $50 million to $54 million, all right? So our revenues in Q1 -- this is -- we're only talking aerospace, right.

We're talking about Park, the electronics business as a discontinuing operation. So as Matt said, all comments relate to Aerospace. Q1 revenues were $10.4 million. So that's certainly below that rate, that run rate, Q2, $11.2 million, which supported that. Now estimate for Q3, there's $12.25 million, that's pretty much all booked.

Our estimate for Q4 is $14 million, maybe a little bit more than $14 million. So what's going on here? First of all, if we look at $12.25 million, that kind of just -- we annualize that, if you follow me. And it's a little confusing, but I'm trying to do my best to clarify and give perspective.

If we annualize the third quarter, that gets us right to the bottom of the range, the sales forecast. If we annualize the fourth quarter, our estimate for the fourth quarter -- that gets above the range, right. So why is that? What's going on? So remember, in our first quarter call, I told you that some of the businesses were the big OEMs.

And I think I mentioned GE, that moved to the right, so the program has moved to the right a little bit. That's because the programs were ramping a little more slowly than we expected as predicted by the forecast we received. But this is Aerospace, this is not Electronics. Let's think about what that means, all right.

So we're sole-source qualified on these programs. We're so -- all sorts of sole-source qualified on these programs, their airplanes sitting on the ramps, a lot of airplanes sitting on the ramps. A lot of customers are waiting for these airplanes.

So what's going to happen? Are they not going to deliver the airplanes? Of course, they're going to go and deliver the airplanes. They're waiting for engines. So everybody's scrambling. The engine manufacturers are scrambling to produce the engines. So these airplanes can be delivered to customers, which is the ultimate objective, I guess, right.

Installing airplane, putting the engines to customers, the customer pays for it, everybody is happy. Until that happens, nobody is happy. So it's a lot of urgency here. So what do we think was going to happen that it was just never going to happen? That doesn't make any sense. These are orders. These are planes that have been ordered.

The customers are unhappy. They're waiting for airplanes. So, of course, we're going to be playing catch up. Now, we were not behind. We don't like being behind. But these engines are new technology and sometimes new technology comes with challenges. It's good to be forward looking and not just relying on old technology, right.

But when you take on these challenges, new technology sometimes could cause some delays. But anyway, so what happened now, so we get last, let's say, three or four weeks, we're notified that things are moving back to left and pretty hard actually.

So, we're challenged, okay, we're obviously in a position where we're going to need to make an adjustment, and we do. It's not easy, but that's what we do for living here. We don't like saying no. So we made the adjustment.

So our forecast for Q3 and Q4 is based upon things moving pretty strongly to the left now, which when you think about it had to happen is to be expected, this is not Electronics, this is Aerospace. Most airplanes have to get delivered. They're sitting on the ramp without engines, customers are unhappy. Those airplanes have to get delivered.

So it's just a matter when it wasn't matter of yes, and when I guess happened already about a month ago. When things start to move back to left, the adjustments were made so that these airplanes get their engines and the engine manufacturers can ramp up their production.

So the airplane manufacturers get the engines and then customers get the airplanes and everybody is happy. So anyway, the Q4 run rate, like I said already, that’s the -- our estimated run rate --estimated revenue for Q4. That’s already above the forecast level for fiscal ’19. That was included in that January 4 presentation.

Again, I’m trying to give you perspective because the numbers we had reported can be a little confusing. Now let’s talk about EBITDA numbers because that’s even a little bit more confusing.

Again, because of the fact that costs that are in our EBITDA -- our report EBITDA, our second quarter EBITDA that would not have been in the pro forma forecast that we gave you on January 4. So, but here’s the good thing or here’s the good thing. You can decide this good thing.

Here’s the thing, we're basically tracking this forecast even though we’re not updating the forecast or tracking the forecast. We've taken into account in Q2, the revenues, and taken into account these additional costs repairing, we’re tracking the forecast.

So I saw that when a stock opened, the trade traded down, I'm thinking, well, this reporting is little confusing, and we need to do what we can to try to help explain. But the bottom-line that I would give you is that we’re tracking this forecast we gave you on January 4, all right.

And I know it’s hard to seek through that when you look at the second quarter report, but those are the facts as we know them as I know them anyway. So I just wanted to give you that commentary to help maybe a little bit perspective because the reaction, especially when stock opened indicate that people thought maybe this is a disappointing result.

I’m not sure, I would agree with that conclusion. I mean obviously everybody had to make their own decision as to whether they buy or sell their stock. I’m not recommending it. I’m just commenting on the reaction. So any way, all right. So let’s keep going here. Okay, what is behind the numbers, I’m going through my notes, sorry, I’m jumping around.

I guess I recover that, which behind the numbers is mostly the GE business. Now put things in perspective, I don’t think we’ve really given you the GE revenues too many times in the past.

But just put things in perspective, the Q3 revenues -- our Q3 revenues with GE based upon -- these are booked, will be twice two extra revenues in Q1, twice, double, that’s in just two quarters. In Q4, they will be 2.5 times based upon what we expect the revenues in Q1.

So based upon our estimates we gave you just now for Q3 and Q4, the GE portion of those revenues, in Q3 double, Q1, Q4, 2.5 times in Q1. I just want to give you some perspective on the degree of the ramp that we’re dealing with are from GE.

And again, I think, other companies might say, look, we’ll do our best, or sorry, or whatever, but we don’t say those things, we just don’t like failing. So we find a way to make the adjustment and we do. So that’s a little more perspective. So let’s go on to some other things here.

And you might have some questions about the second quarter reported results, but I did my best to try to help a little perspective. Okay.

And other news about M&A is maybe some of you noticed -- some of you did, which you call me that GE announced that they’re selling, I know, that they entered into an agreement to sell MRAS, which is the location that we principally supply into that does the thrust reversers and the sales to a company called ST engineering in Singapore.

So I don’t want to comment too much because that’s -- it’s really for GE and ST to do the disclosure about this acquisition, but since it does such a great impact on Park, this MRAS is such an important customer to Park -- GE and MRAS. I’ll tell you a few things. First of all, I think it’s a very good result for MRAS.

Secondly, was not a surprise to us at all, so we were very plugged in, and, I think, it’s a good and positive result for Park too. We know this company, ST engineering. We kind of know them as ST Aerospace, it’s all part of the same group in Singapore. And we've been their facilities a number of times.

I have, actually myself, I think, a couple of times. And we're hopeful that this acquisition, if it does close, and we hope it closes, will actually give -- present Park with additional opportunities, not so much in MRAS, because remember we're sole sourced in the programs in MRAS.

So the opportunities in MRAS would have been based upon MRAS getting new programs, but through the relationship between MRAS and ST Engineering, more opportunities for Park at ST Engineering/ST Aerospace in Singapore. These are non-engine opportunities, aerospace, but not engine. So we think it's a good day.

And we're happy about it, and feel very good about the result. So, okay, couple of other comments. There is something else that I'm little surprised about. I think we've been working on this project for about a year. This is a GE Aviation project. It relates to a platform that we have only versus more content on. It's a new platform.

It's an exciting platform. And it seems like we're going to be -- it's still trade likely that we're going to have this program. It's not for and their sellers thrust reverser is didn't part of the engine. It's a very major big program, a very big program, very significant revenues. I'm not going to go to number now, but very significant revenues.

I would say just starting now it's a new program. You all have referred of it, I'm sure. But I don't want to go into what it is now. I think it's probably not appropriate to talk more in detail about this program. But it's a very positive and very exciting.

And this is -- it seems not an MRAS program, it's a GE Aviation program, but it somehow connected with MRAS, and that's part of the way that we were able to apparently get to this program. I was skeptical, maybe six months ago, because everybody and the brother was going after this program, but it seems like we are on the program.

We haven't been formally told that, but we got the deals for next year. So we're kind of thinking, I guess, that probably means we're getting the program. It's very exciting and it's some big revenue. This is a big program. It's an exciting engine program beyond exciting aircraft program to be on as well.

And we didn't have very much content in that engine or that the aircraft, because MRAS doesn’t do the sales and thruster reverses for that program. So that's interesting. Also, this is maybe some minor news, I'll quickly cover it. I don't know if you know this, but the Bombardier Global 7500 was recently certified.

Reason I mentioned that is that that aircraft uses the customer 20 engine manufactured by GE. And that's a program that we're on for the thrust reversers and nacelles. So that's nice, because that's a program where we're on. And it's quite nice that the airplane is moving on and getting certified.

But by the way, I should mention there is other item I just -- that I just talking about kind of little bit more mysteriously without naming a program. That item is not included in that forecast that we gave you on January 4. That was not included -- revenues from that program not included and they're significant like I said.

On Boeing, we haven’t mentioned them by name before. We've referred to them as a large aircraft company. Three are different things we're working on with the Boeing. They're all kind of niche things we're not looking to do on the structural -- qualifications, probably doesn't make sense for us. There is more of a niche company.

And I think what I'll do since we're probably running a late here, there is maybe we'll go into a little more detail during next call. And I think also during our next call, we're probably ask maybe Mark Escobar who is, I think, Senior Vice President of Aerospace to join the call.

Maybe he can give us more commentary about some of these aerospace activities. We're going to have to change his title by the way, after Electronics has sold. It won't be Vice President of -- Senior Vice President of Aerospace. It'll just be Park, which he won't -- that's Park will be an Aerospace company at that point. So let's see.

So we do products lightening strike. We have another product that we're also working on with an MoU with the GM Russ. Those are interesting opportunities for Park, not based on what MRAS, those are the defined opportunities based upon taking those products to other customers now that at least with LSP.

We're qualified in production for LSP with the MRAS. Couple of other quick ones, the expansion stay tuned. Watch for announcements. Well, we think we're going to need to announce something before the end of the calendar year. And the reason is that originally this thing has been ticked around for a while.

And I know we’ve been talking about it for a while. It always has been discussed from the context of redundancy, and now it’s really become the capacity issue as well. So we’re not going to be hold-off really much longer. And one of the reasons Matt and I are here is to review the expansion plan.

Also I just want to mention that watch out for new product announcement. We’re hoping to get and announced by this call, but we just get there, so maybe next week. So that concludes our introductory comments and remarks. Operator, we’re ready to questions now..

Thank you. [Operator Instructions] Our first question comes from Sean Hannan with Needham and Company. Your line is now open..

Yes. Thanks, good morning. Thanks for all the color here Brian. I just want to see if I could follow-up on some of his commentary referencing the pro forma views provided earlier in the year. Realizing you folks aren’t necessarily updating these views, but your commentary, I think, you had indicated you’re saying you’re tracking to it.

And at this point, I’m more focused now on fiscal '20, which is mainly the calendar '19 year.

So would I or would the street be interpreting correctly if we are thinking about how the activity has been picking up and pulling back to the left? Keeping that in perspective, keeping the perspective of what your prior goals were and also the scenario that there is some additional business that was not included within those pro forma estimates that – at least looking at those types of numbers the degree of comfort should be very high with what you had put out this past January.

If not, some potential too, although no promises yet, but some potential that we could maybe even have a chance to exceed. Just to get some feedback and thoughts around that.

I understand there is going to be a plenty of caveats, but perspective would be great?.

Yes, Sean, really glad you asked that question, because I should have covered the -- not just the '19 [indiscernible] focusing on the short term. So we will update this forecast, and I should have covered that. And maybe we’ll do that in the next call.

I thought we wait until the Electronics sale has been closed, but hopefully that will be the case by the next call. And we’ll go ahead and update the forecast. As far as fiscal '20, I’m looking at the forecast here of revenues $58 million to $63 million, we have just done a little bit of work on that in the last couple of days.

But we haven’t done enough to reissue the forecast, want to do a more thorough job. You’re correct, that new program is a pretty big upside. But I also mentioned that it's already been booked for the next year. And that’s not – that amount was not in the forecast we provided on January 4.

But it’s, I think only about $1 million for next year, because it's just beginning to ramp. By the time we get to 2024, the volumes are quite significant. And it ramps kind of linearly from next year --in the calendar '24, I’m talking about, sorry, that’s when the -- by the calendar '24 that’s when it peaks, so it peaks at a pretty high level.

So it will have some impact for the fiscal year '20, but it won’t drive the needle that much. When you get to the out years '21, '22, it start to drive the needle much more, and our fiscal 2023, which is calendar '24 that's when it will peak at a pretty high level.

But, so in terms of just our perspective, let's say next year, I wouldn’t give you any guidance above or below that range at this point. I don’t think we’re in a position to do that. That's we’re not confirming the range on, but we’re saying the range seems kind of like within reason. I guess that’s the best we can do right now.

But like I said, we will update this forecast where we do the whole thing and [Technical Difficulty].

Hello?.

Ladies and gentlemen, please standby. Your conference call will resume momentarily. [Operator Instructions] You may resume..

Okay. Hello, Sean. This is Brian. Hello. Can you hear me Sean? Operator, this is Brian.

[What happened to the] [ph] call?.

You’re live..

Sean, can you hear me still? It seems like we got cut off at some point operator. And we’re not hearing from the analyst, so he is asking a question. So why don’t we go to another question at this point, and maybe we'll dial back-in. And, we’ll continue with his questions at that time..

Thank you. Our next question comes from Leonard Cooper, a Private Investor. Your line is now open..

Hi Brian..

Hello, Leon, how are you doing?.

Okay.

Can you hear me?.

Yes, I can hear you fine. We don’t know what happened here..

If you’re confused, I’m doubly confused. And I just scribbled down certain words. And I’d like your comments. One, Scorpion and two is Park involved in drones in any way.

And I then wrote down China and when I wrote down personnel, do we lose people in this transfer of the Electronics Business to the Japanese firm?.

Okay. So, Scorpion, that program, I think, we commented last time, it’s been pretty quiet. And my understanding is that Textron was out there trying to sell a program, trying to sell aircraft, and I suspect they'll be pretty quiet until what happens because they’ve done all the work they need to do.

This is again what is awkward thing is where you really should be looking at the Textron information because I don’t want to do disclosure with Textron. But my understanding is until they actually get a buyer and sell airplanes that the program will be really quiet for us. Drones, we do work on drones, we have for quite a while.

But we’re not talking about the little drones that are bought by individuals. We’re talking about mostly military drones, larger drones that are used for military purposes. And China, I’m not sure what you’re asking about China and not sure what you're asking about personnel.

Could you elaborate on China? What about China?.

Well, is the tension with China effecting Park?.

Well, we’re commenting on aerospace now. And on aerospace, I don’t think so. Remember that we’re on this -- a couple of Chinese aircraft programs through GE, through MRAS. One is the ARJ, which is a Comac regional jet, which is in production, limited production, but in production. We’re selling into that program.

The other one is C919, which is intended competitor to the single aisle, the A320 and 737. That program is still in development. But we're on the program with LEAP engine, that’s LEAP 1C engine. So we supplied some material into that program as they continue to do the development and goal for certification.

But we’re not seeing any impact from, mean like the China tensions with trade discussions, not seeing any impact from that.

And last one is personnel?.

Yes..

What about personnel?.

Do the electronics people go with this deal to the Japanese firm?.

Yes, of course, they would. So all the people that work at the Electronics locations, Arizona, probably California, [indiscernible] California, Singapore and France, all those people end up working for AGC. And then there’s some corporate people that aren’t assigned to a particular location that would be going to AGC, and some will not.

And that's all been worked through with AGC. All those details have been worked through with AGC and agreed to..

Thank you. And our next question comes from Brad Evans with Heartland. Your line is now open..

Thanks for taking the questions. Just with respect to your revenues that you're currently generating with Kratos. I'm assuming that most of that revenue is applicable to their target drone franchise -- the other target drone franchise.

And I'm curious whether -- I mean, is that a correct assumption?.

Right. I think -- there is really their business is drones are unmanned aerial vehicles. What I'd like to do is next time, in next call maybe we'll get Mark on the call and he could talk a little bit more detail about some of these programs, because I'm not sure, I know exactly which programs.

I know I understand that most of these drones like you say with the Kratos. And I get back to you individually, of course, as well. But I think it will be good opportunity next time when we're --after electronics is sold, that we're just an Aerospace company, talk little more.

If you get more information more detail about some of the individual programs and Kratos will be one of them..

I'd appreciate that because I know that, if I'm assuming, I mean you're getting some reasonable revenue from them because they're near Top 5. So I was assumed that's going towards their target drone franchise.

But I'll be curious whether you have inspecting to their tactical drone franchise, which is where they're expecting to see meaningful growth over the next several years?.

Okay. I'll tell you what, we'll get back to you with more information, but we'll also try to cover that in the next call as well..

Could you just speak to just the broader pipeline of what you're seeing today in terms of new business opportunities? Could just kind of -- I appreciate if you could amplify on what you're seeing there in terms of size and scope?.

So we talked about GE. We talked about GE a lot. We talked a bit about Boeing now. I think what we need to do was we need to kind of expand our presence and something we need to work on in terms of the overall market, covers the overall market. We're very focused and consumed on these large programs. We're focused and consumed on expanding the plan.

And I think we've done a really good job of covering all the market opportunities. And I believe that there are -- well first of all, we are seeing opportunities. I don't want to make it sound like there are. We're not seeing any of them.

But I guess what my point is that I think there are opportunities that we're really not tapping into, which we just don't have that presence in the market, but I think we should. So that's something we need to work on, and we're working on it now.

My perspective is that Park is a pretty attractive supplier for the market, especially with the sale of electronics, because it makes us an aerospace-only focused company. And I think a lot of the market, not just speculation, but just what I told. Looks it as differently than the competitors. The competitors have their own strengths and weaknesses.

But I think a lot of companies in the market look at Park a little differently. And that's an advantage that I think we need to explore and take more -- that we need to take more advantage of.

So does that help you with your question?.

Well, I guess I'd be curious.

I think if you could, I know it's difficult to give to put numbers and names and the platforms out there, but it just -- it'd be helpful to kind of understand whether the opportunity set in terms of front-end engineering and prototyping whether you're seeing more opportunity or less than you were say 12 or 18 months ago..

Okay. Well that's easy. I think definitely more. We get consumed with dealing with these big things, but nevertheless, I believe it's more. And going back to what I said earlier, I think it would be good for us, and maybe in the next call just to going to these programs and opportunities in more detail.

And there is always going to be a limitation as to how many names we can mention and numbers we can mention, but at least giving more perspective, because until now we've been in aerospace and electronics.

When we get the aerospace, we're usually talking about maybe two, three big customers, and we really don't give much perspective on the rest of the market. And we have many more aerospace customers than we have electronics customers.

I think we have over 100 active aerospace customers actually, and some are small, but that doesn’t mean it how important.

So we probably have given a historical view, because of our time limitations in the past on these calls, we focus on the GE, maybe Boeing, maybe look on Scorpion, Rockwell, things like that, but we’re not getting into the details about the rest of the market. And the rest of the market is significant. It’s not just those three or four companies..

Let me just ask one more question, I’ll seat the floor.

How do you view Park – as we move into -- if there is more investment on DOD side in hypersonic technologies, how do you -- do you feel Park is positioned to participate in that market at all?.

Okay. So, it’s something we’re definitely watching and tracking and trying to find relative to that area. So I think it’s little early for us to say that we’re locked in an area, but it's something we’re tracking, paying attention to talking to people, about to talking to OEMs, the companies are developing these technologies to be able to participate.

And when we talk about things like that we also consider product development because in some cases we may need a different kind of product in order to tap into those markets..

Thank you. And our next question comes from Christopher Hillary with Roubaix Capital. Your line is now open..

I just want to ask if you care to share any color today on how the M&A pipeline looks from your perspective just given the significant cash balances you’ll be caring in the not too distant future?.

We’ve been pretty active in the M&A area. It’s been a juggling act for a small company because we’re in the middle of -- we’ve been working on the sale of Electronic now as a big job for us. We’re a small company by design. I think I explained that before, we don’t want to have a bureaucracy that's not our business model.

But nevertheless, we haven’t looking at a number of opportunities. And one of particular we spend quite a bit of time on ended up that wasn’t for us. But we did invest a lot of time we were in that whatever last crown or something like that and that going to somebody else, which is probably good result anyway. But it has been something we focus on.

We -- I think we discuss it pretty much every day. We’re looking at things developing our opportunities. I wouldn’t say right now there is something eminent going to announce next month or two, because these things are -- before you get to announcement, there is a lot work that’s required before you get to that point.

So I'm going to look for an announcement next month or two, a big M&A transaction. We’ve looked at small companies as little as $5 million of revenue. And when I say looked at, this means active discussion – our active discussions and negotiations. And we’ve looked at quite much larger companies as well. Again, active involve and active engagement..

Okay. Great. Thank you. Good luck for the rest of the year..

Thank you. That's all aerospace, I think, you know that. But I just want to make sure everybody understand, everything we’re looking at is in the aerospace area..

Thank you. And I’m not showing any further questions at this time. I would now like to turn the call back over to Brian Shore for any further remarks..

Thank you, operator. I don’t know what happen in the middle of call apparently the call get interrupted and we just kind went dead for a little while. I think Sean, maybe that interrupted our discussion a little bit. So if want to call back we can finish it up. But so apologize for that a little glitch. But thank you very much for dialing in.

Thank you for your good questions. And feel free to call Matt and me, just you can reach out to us and find us. We’re in Kansas right now. We'll be here the rest of the day. And I guess that's it. So have a real nice day, and again, nice talking to you. We’ll be in touch soon. Good bye..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. And you may all disconnect. Everyone have a wonderful day..