Good morning. 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 ‘23 Earnings Release Conference Call and Investor Presentation. [Operator Instructions] 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, Paul. This is Brian. Welcome everybody to our first quarter conference call. With me, as always, as usual, Matt Farabaugh, our CFO. So, this morning, we put out our earnings release, our first quarter earnings release.

And in earnings release, there are instructions how to access the webcast, get access to the presentation that we're about to go through, also the presentation is on our website. So, the presentation, as you've probably already noticed, is quite long but don't be alarmed. This is dilemma we had.

It's been less than two months since our Q4 conference call, less than two month. So, not very much time has passed, and a lot of the stuff in the Q4 presentation was new information, new material, which still is very relevant. So, we didn't want to just kind of eliminate that. So, what we decided to do is this.

We decided to carry over much of what was in the Q4 presentation to the Q1 presentation, but with some updates and additions, new items in other words. And what we'll do is focus during this call, focus on the updates and new items, and we'll be skipping over, will be skimming over a lot of the rest of it, so.

And also the Q4 call is still on our website. If you want to go back and listen to that, feel free, of course. If there are things we skip over that you want to ask questions about, please ask questions. It's not that we don't want to cover these things, but we're trying to be practical here.

Because we're going to be jumping around a little bit, hopefully, we’ll try to make it as cohesive as possible, but if it's a little bit uncohesive, if that's a term, we apologize for that in advance. As usual, we don't spend a lot of time in these presentations with what we consider to be dry financial analysis.

You want to do financial analysis, just let us know. We’re happy to respond to your questions. But we try to make these presentations more interesting and informative. I also want to give a little shout out to Donna D’Amico-Annitto, Annitto rather because she's like my partner in these presentations. I don't know how to do PowerPoint. I'm an old guy.

So, she does well with PowerPoint. And we end up working over 4th of July, over Christmas, and I think she spoke during vacation, but she worked pretty much over the 4th July holiday. So, thank you, Donna. Matt and I, of course will answer your questions at the end of going through the presentation.

And even though we're trying to skip -- try to skip over some things, and make it as concise as possible, it's still going to take probably 45 minutes, I would think. So, I just want to warn you about that. So, let's just jump in. Let's go to slide 2, forward-looking disclaimer. Let us know if you have any questions.

Slide 3 is our little table of contents, beginning with the investor presentation. There's Appendix 1 Supplemental Financial Information, which we attach to all of our presentations these days. Just let us know if you have any questions about any of that. Slide 4, of course, we have to slow down a little bit for slide four, our quarterly results.

Look at the right hand column with the yellow highlights. So, that's Q1. You see our sales, our gross profit -- gross profit -- margin 32%. We'd like to be better, but we're always happy when it's at least about 30%. And you can see our adjusted EBITDA and EBITDA margin.

Our forecast philosophy, we try to remind you about this every time, every call rather. Our forecast philosophy, when we tell you what we think is going to happen, we're -- we give you a forecast in a presentation. What we're doing is we're telling what we think is going to happen. We could be wrong.

We're telling you, this is what we think is going to happen. We don't play what we consider being a game and giving you a low number. So, we could beat it and look like a hero. I know lots of other companies do that, but it's just not for us. So, I just want you to know, when we give you a forecast, we're saying this is what we think is going to happen.

So, what did we tell you last quarter about Q1, what did we say during our Q4 investor call? We gave you a sales estimate of $12.75 million to $13.25. So, we came in kind of at the $12.783 million, came in within the range, but at kind of the bottom end of the range, I would say. Adjusted EBITDA estimate $2.75 million to $3.25 million.

And we came in within the range at $2.8 million EBITDA, I’m talking about kind of low end of the range. But nevertheless, we got in the range. And I’d say outstanding job by Park’s people to make the Q1 sales and adjustment EBITDA numbers. Why would you say that? [Indiscernible] you’ve really got it at the low end.

Well, it's hard to appreciate the daily battles and the herculean effort involved. Remember when we gave you the forecast during last quarter, during the fourth quarter conference call, we said, you know, -- at that point it was kind of interesting.

It was only about two and a half weeks to go to the end of the quarter, to the end of Q1, we gave you the Q1 forecast, because in Q4 we have to do our audit and everything. So, we announced later, after the -- maybe about over two months after the quarter ends.

So, we said, even in those circumstances, there's a lot, a lot of risk to the forecast we're giving you. How would that be? Everything that we're going to sell has been booked. It wasn't that. It was the supply chain chaos that we were addressing. We didn't know what we'd get. We didn't know what we'd get.

And we certainly didn't get what we wanted to get. So, what happened is that a large majority -- let me put it this way, a large amount. I shouldn't say majority. A large amount of what we produced and shipped in Q1 was produced and shipped in the last two weeks of Q1. So, it's a daily battle with the supply chain.

We got some raw materials in, okay, good. What we have to do? We got to go ahead and produce the product. We have to test the product. We have to certify the product. We have to ship the product in order to get -- to force the quarter over the finish line. This is what our people did.

Our people worked long, long, long hours, especially during those last couple of weeks to get the job done, to force the quarter over the finish line. And I can assure you, our quarters end on -- our quarters end on a Sunday, our financial periods end on Sundays.

I can assure you people work in that weekend, shipping that weekend, the last weekend of the quarter. So anyway, so yes, I said -- like I said, significant portion of the Q1 sales and production last two weeks. So just read my notes, covered that already. And we talked about the weekend.

So, Park’s people just brute forced the quarter over the finish line. We'll get back to this and what it means, what kind of people we have. But just want to make that point. That's why I'm saying outstanding job, even though we just got to the bottom of the range, both the top and bottom line. Let's go on to slide 5.

This is all pretty much what we had, repeat of what we had in Q4. So, freight, freight, freight. The information per end of year -- recent report that there might be a little light at the end of the tunnel in terms of international freight shipping in general. But why? Is that good news? Well, no, the report said it's a demand destruction.

So, you tell me if it's good news. But maybe at least that -- there'll be some loosening up of the access to international freight, which has been a real issue for us every quarter. Severe staffing shortages. Yes, they’re certainly not going away.

But what we're saying we’re dealing with this the right way, the Park way, which means we're focusing on a Park family culture, not taking shortcuts, like throw money at people. Total missed shipments, $1.25 million. Now, we announced Q4.

I think we're thinking it might be maybe $1 million, $1.25 million of missed shipments because all these reasons, freight, mostly supply chain. Supply chain was the big kahuna. So anyway, that gives you, I think just give a little bit idea, little perspective on the battles we're fighting, daily battle what we're saying.

And I that's I don't think - I don't think we're being a little overly dramatic when we -- when we describe our experience as a daily battle. And let's go on to slide 6. Yes, inflation, it's still there. Then the second check mark, historically high, maybe was with us for a while. Maybe it's not so easy to break the pattern.

Maybe we screwed the pooch as the astronauts used to say, pretty good here. Maybe now it's not going to be so easy to get out of it. So, not a list of excuses. We don't like excuses at Park. We don't go for that stuff.

But we do think you want to know what kind of stuff we're dealing with on a day-to-day basis since you’re investors in our company, should want to know what we're doing every day. Slide 7, yes. Supply chain has become a free-for-all. This continues, hasn't gotten better, not as far as we know, anyway, chaos and panic.

And in many cases, even confirmed POs are not being honored. We talked about that a lot last time, so won't go into it. But I just wanted you to know that continues. At Park, honor and integrity are what matter most. Principles do not come cheap. Back to that later. Slide 8.

So, during our last quarter -- this slide just comes right out of the last quarter -- last quarter presentation, Q4 presentation. And we highlight fiscal ‘20 and fiscal ‘22, because the point is, look at the fiscal ‘22 top-line compared to fiscal ‘20 top-line, it's much lower. Nevertheless, the gross profit margin was higher.

And EBITDA number was higher. Just -- not by a lot, but just a little tiny bit in -- sorry, fiscal ‘22 compared to fiscal ‘20, even though the top-line was much lower, and I thought that was an outstanding job by Park’s people on circumstances. Slide 9, let's keep moving here.

So, yes, most of what we have here is repeat of last quarter, but with some new items that I want to bring to your attention. So, Park has zero long-term debt. We're on slide 9, like I said, I told you that already. Reported cash, $107.3 million. That's gone down quite a bit. So, what's going on there? Are we spending money? Well, let's talk about that.

Park's investment philosophy, our cash is invested in highly secure and liquid securities, such as treasuries, governments, high-grade commercial paper. And the average maturity is 23 months. I think that's not that long. But with interest rates going up so much, it makes a big impact.

So, it's not the credit risk on the investments, but it's the interest rate risk that we're dealing with. Now, our practice is to hold our investments until maturity, not to trade. We don't do that. We could. I'm not saying we won't do in the future, but our practice has been to hold till maturity. So, we have mark-to-market reporting of cash.

Now, if you want to discuss this, you got to hook with Matt about it. I'm just trying to give you kind of a high level understanding. It's important. So, in other words, we report our cash, it's not based upon the investment, the cost. It's based upon the market value of the investment at that time.

So, all these securities are highly liquid and quoted like treasuries, like every second of every day. So, it's easy to get that market value, but the market value has gone down, even though they're fairly short-term ‘23 months, because interest rates have moved up quite a bit. So, that's why we're reporting a lower number that $107.3 million.

Now, the amortized cost basis of our cash at the end of the quarter was $111.3 million. You could -- we report the number -- required to report based upon GAAP requirements. But, once you have this information, you decide what number you think is more significant.

Now, if we hold these securities to maturity, then it's likely that we'll get closer to that $111.3 million number rather than the lower number.

Now, why is it not the right -- exact right number? Because the way the cost basis works -- amortized cost basis works rather, is that we take the investment at cost, then we amortize, either discount or premium over the life of the security until maturity. And that's what we do on an ongoing basis.

That's why it's not exactly what we originally paid for it. Like I said, if you want more information about that, talk to Matt. I know a lot of you guys are financial guys. You probably could run circles around me on this kind of stuff.

But I just wanted you to understand that number and just wanted to warn you also, we get to Q2, this discrepancy or difference, delta, let's call, probably will be greater, because interest rates are moving and they’re going up. They’ve come down a little bit. But the trend for us anyway has been moving up.

So, just wanted you to be aware of that, because it's something I think you should be aware of when you look at our cash numbers. Slide 10, we don't have to go over the top part of it. We went over this previously, no change there. Cash dividend, I just want to remind you that we paid $554 million or $27.05 per share in cash dividend since fiscal 2005.

Slide 11, here's something new at the top, share purchase authorization. On May 23, the Board authorized -- we announced that the Board authorized our purchase of up to 1.5 million shares of the company stock. Now, we've been in the blackout since the authorization, the blackout, I guess, ends tomorrow.

So what happens now? Now, it's interesting because even before we made this announcement, we just received a lot of input from investors, shareholders, some of you about this kind of capital allocation question. And we got very different opinions. We had maybe three different categories. Some opinions were, well, don't do a buyback.

Don't even announce a buyback. And some, we had a couple of shareholders, I can remember, these are all significant shoulders that thought, well, announce a buyback, but only kind of as a safety measure, don't buy at these levels.

But let's say in case the stock really goes down, there's a market event and there's chaos and the stock goes down to 7 or 8, then you have your lock loaded. That was the second category of input.

The third was go ahead and announce buyback -- some just implicated after the buyback was announced also, announce a buyback and go ahead and buy at these levels more or less. So, those are the 3 different kind of categories of input that we received.

One thing I want to comment on is that there is one, I don't know, I guess, maybe an analyst that said, we announced the buyback as a matter of appeasement.

And I wanted to address that because what does appeasement mean? It means that we didn't believe it was the right thing to do, but we did it because we're cowards, we’re chickens, and we thought we're under pressure, we're going to go and do something. We didn't think it was the right thing for Park. To me, that's what appeasement means.

And I have to tell you that I was surprised at that comment because if you know Park, we don't do that, we don't do that. We do what we think is best for the Company. Now we appreciate the input we get from shareholders, and that's a sincere statement.

I mean, a lot of you know that some of the things we've implemented are based upon input from shareholders, really good ideas. When we get an idea, when it's a good idea, we'll implement it. We don't have any -- hear stuff. But at the end of the day, we'll do what we think is right for Park. I just want to make sure you understand that.

We don't do things for appeasement. We see that a lot in corporate America these days, and we think it's very sad and very disappointing where CEOs have no backbone. They just do what they think they need to keep their jobs or something like that. But I'll tell you something. I'm not here to keep my job.

I'm going to do what I think is the best for the Company. Now, what will we do? We'll see. I just wanted to give you a couple of things to think about the item at the bottom of the page. So maybe our money is going to finally be worth something and maybe it's now an important strategic asset.

The other thing is that we believe anyway that the economy and the country are in a very troubling and dark place right now, very concerning. Will it get better? People think it will get better. My question is why? Why will it get better? What's going to make it get better? And I'm not sure the answer to that is very clear.

I don't want to get into a discussion about why it happened and our opinion about that. So, I just want you to know that we're considering those two factors, but we'll see. We're not -- we don’t have any announcement to make as to whether we're going to start buying stock at this low or not. We're going to think about that a little bit.

We're going to watch what happens, watch what happens in the world and make sure that we do what we think is best for the Company. Any input you have, we appreciate, we welcome it at any time. But we'll do we think is best for the Company. And what does the Company include? It includes the owners.

When we say what’s best for the Company, we mean including the owners, of course. Let's go on to slide 12. So, we're not going to spend a lot of time on this, just to save some time here. We do this every quarter, as you know. I don't know if you -- you probably wouldn't know this by memory, but these top 5 are the same top 5 over the last quarter.

So, some of the stuff doesn't rotate too much. Every quarter, we come up with different pictures, different programs that the top 5 customers are on. Bombardier Global actually -- the Passport 20 engine for the Global 7500. The XLR that relates to MRAS is the -- Sikorsky relates to GKN.

I think there was this announcement that Sikorsky got a $2.3 billion contract for Black Hawks. And PAC-3 Missile, I think you know by now, that's probably -- that's AAE and also Aerojet And Kratos, I know what that Kratos obviously relates to, the Valkyrie. I think there might be a T-38.

I don't know this, but I'm just speculating, but I think this might be a demonstration of the loyal wingman concept with a manned aircraft next to the Valkyrie. I'm not sure, it's just speculation. Let's go to slide 13.

Numbers, I’ve talked about here, except you might notice that Q1 is kind of looking like last fiscal year in terms of the pie breaks down. Military percentage may start to go up though based on some things we’re going to be talking about in this presentation, we'll see. Slide 14.

So this is Elena’s job every quarter, come up with some nice pictures of some military programs. These aren't always the biggest programs, but they're interesting programs for us, kind of fun stuff that we'd like to share with you.

And at the same time, maybe we won't go into details on all these programs, except to say these are all programs are on and there's some kind of new events, recent events relating to these programs that caused us to want to highlight them, okay? And you see a little, tiny 2% of space that would be private space.

I think that's really what space is these days, private space. Why don’t we keep going, 15. So, these are important slides, the trends and considerations for military and commercial, but they’re all from the Q4 presentation with very little new here. Starting on -- sorry, 15 rather new world order. We've talked about that extensively.

The last check item, Finland and Sweden, officially apply well on June 29th, and NATO approved their application, I guess, to join NATO. So that's a little bit of an update there. Slide 16. Europe, kind of a big story, the second arrow item, but nothing new in the presentation here. 17, Asia, don't forget about Asia.

And we covered all this in the last quarter, except that the little bullet item related to South Korea. They recently announced a plan to purchase additional PAC-3 defense systems. Is that a big surprise, based upon what's going in the world, troubled world, troubled country, troubled, troubled global economy.

And so not -- to me, not a big surprise anyway that the Asians are thinking of that they better be careful with their defense systems, be careful meaning, making sure they're intact and may be upgraded. The last item on 17 comes from the last quarter, but it's still worth looking into this.

Lockheed’s CEO said they got demand signals for THAAD and PAC-3 from around the world. So, especially when you see missiles hitting hospitals, et cetera. Again, I don't think it's a big surprise, but I just want to highlight that because, as you know, PAC-3 is an important program for us. Slide 18.

So, we covered the first item, first arrow item last quarter. The second arrow item around that PAC-3 system. So, the third arrow item, this is actually new to this -- to the presentation, and it's happening already.

We hold some of these signals in the market, but now we're getting direct signals from our customers and OEMS saying regarding significant increases in ablative materials and this RAYCARB product, that's a C2B product that's sold by Park under our partner agreement with ArianeGroup.

Remember that, we talked about that, I think last quarter, the prior quarter. That's a pretty exciting thing. This is to support PAC-3 missile and other systems. Now, what I should tell you is that we talk about the ArianeGroup.

Actually, let's talk about the check item, Park is forecasting ‘23 sales of ablative materials and RAYCARB products well over $10 million. I don't know why we did this, it's really over $13 million. But the RAYCARB product, this is key. It's not being sold to just outside customers. It's being sold to our customers.

And we're going -- the expectation is that we will convert that into prepreg at some point. So, it's kind of a double benefit. We get the benefit of selling to customer this RAYCARB C2B product, but we also get the benefit of ultimately converting that into prepreg. So, it's a double benefit.

When you take both those things into account, it's probably over $13 million. And for perspective matter, I was just looking at this yesterday, normal range has been in the last few years, $5 million to $6 million, with one year that was higher. So, this is quite a bit more -- and not surprising based on everything that's going on.

Last item is that, okay, don't forget supply chain issues in terms of everything, including military. Slide 19. So commercial trends and considerations. Again, all the stuff was covered during the -- or most of it was covered during the Q4 call. This thing about IATA predicts global air traffic levels will cover to pre-pandemic levels in 2023.

I don't think that was included in the Q4 presentation. I think it's kind of a new thing, but it's not inconsistent with other things we've heard. We talked a lot about these pages about the significant increase in jet fuel costs and how airlines are passing those out to customers and everybody is just very happy about how things are going.

And then on slide 20, we say, but, yes, is there a limit to how long this can go, how long customers are going to absorb these increased ticket prices for air travel, which the airlines have to charge, not only are the jet fuel costs going up significantly, but other costs going up.

But obviously, the big kahuna in terms of air cost by is a jet fuel, which is significantly higher. So, the pent-up demand, we get it, people have money. But just going to Slide 21, sorry.

Is this going to just go on forever? Does that make sense? Does it defy gravity? And what about the R world, which is becoming more and more of not just a possibility or probability, so looming possibility, how about looming likelihood or probability of recession? So now we're in a recession kind of mindset.

And now you're concerned about first of all inflation, all you got to buy, spend a lot more money on gas, a lot more million on food. And now wait a minute, there's a recession. So maybe you start to hear about some of your pal whom -- their job. Do you really going to take the family to Cancun now, I don't know. I'm going to think about it anyway.

So why don't we go on to slide 22. And I think the key thing is the last part of it.

If the airlines slow down, they maybe push out some of the orders of airplanes, what will the OEMs do? What will Boeing and Airbus do? And will they slow it down or will they do something else? And I think there might be a bifurcation there, and we'll get into that a little later on the presentation. Slide 23.

Other factors which affect commercial, higher jet fuel prices is an incentive for the airlines to convert from legacy airplanes to newer and more modern, more fuel-efficient airplanes, more earlier than they originally planned.

And the -- in the last, the bottom of slide 23, don't forget those supply chain issues because they're large and are looming and they're very much kind of a day-to-day thing that people, phenomenon people have to deal with in the industry and the supply chain. Let's go to slide 24. This slide, we include in every presentation.

So I don't think we're going to spend any time on it. If you have any questions about what's going on the dynamic, let us now. The key thing is that these are all GE Aviation programs because MRAS was a sub -- originally was sub with GE Aviation. They're now sub of STE Engineering. But when it started, MRAS was a sub of GE Aviation.

That's how these programs are GE Aviation type programs. Let's go on to Slide 25. So, this is also from last quarter, Film Adhesive. These are new developments regarding GE Aviation programs. Film Adhesive, good news for Park. Lightning Strike, that's also, going to slide 26, good news for Park.

We talked last time about the Fan Case Containment Wrap, which we're excited about, the program was getting restarted after it was dormant for a while. And then, we'll go to slide 27. But then Boeing announced that they're pushing out the 777 entry into service -- 777X entry into service until 2025.

I think it was a two-year delay, obviously disappointing and maybe have some dormant program itself. Although some encouraging news, some customers, some airlines just to order 777X. So, that's a good thing. And maybe the program will be okay and just be delayed a little bit. Let's go on to slide 28. All right.

This is -- this relates to the A320neo family of aircraft. This is pretty complicated. And it's not so easy to kind of put this all into a little nice package for you. We try to give you some flavor, some perspective because it's obviously a real important program for Park. So, we start on slide 28.

Most of the stuff was carried over, but there's some new things in the -- related to the A320neo family in the presentation. So on slide 28, this is when Airbus is putting down the markers saying, look, we have big plans for this program. These are the -- this is the ramp rate. These are the target levels.

We want to be at the rates want to be out in 2023, 2025. And go on to slide 29. Important recent news. So, this is now fast forwarding. This was in Q4 presentation. It's a fast forwarding a year later. It's now in May of 2022, where they’re really kind of doubling down and saying, yes, we're committed to doing these things.

We're committed to these rates, 65, 75, we’re committed to these things. The year prior, they were kind of putting out what do you call, a trial balloon mode to see what kind of reaction we got. Now it's a little more trial balloon saying, no, we're doing this. And let's go on to slide 30.

Top of the slide 30, yes, this is not new, but it's interesting and it's kind of relevant to what's going on here. At this suppliers conference one of the Airbus executives was kind of chastising the supply chain, saying, "We need you to follow”, the rate indications we're giving you and have faith and we need to count on you not to second guess.

That was kind of strange, but nevertheless, maybe relevant considering what's going on. Now in March of last year, GE Aviation said, don't worry, we're going to keep up the LEAP rates. We're good.

And then -- that was important because prior to that, GE Aviation was publicly saying they're skeptical about Airbus' indicating ramp rates on the A320neo program, of course. But look at the bottom here, this is a big one. According to May 24 Reuters report, CFM is facing industrial delays of six to eight weeks.

Oops, wait a minute, now it's unraveling, is going apart. And six to eight weeks, well, let's keep going. Let's see if that makes sense, just six to eight weeks. Let's go on to slide 31.

Now on June 24, this is a recent speech made by Airbus CEO Faury confirmed that supply of engines is lagging behind A320neo aircraft production, but stated he’s confident Airbus will achieve a smooth ramp-up to its highest ever single-aisle output rate.

CEO Faury also implied that Airbus would continue to produce A320 aircraft, install the engines on the aircraft, deliver them when the engines are available.

He also expressed some exasperation, I say seeming, but it's pretty obvious to me anyway, with the skepticism of those in the supply chain who continue to question Airbus' ability to achieve their target rates. So, let's keep going.

Now Airbus has only delivered 36 A320neo family aircraft per month in 2022 through May, but Airbus produced 44 per month in the second quarter. So, what's going on there? Why is it -- what is the discrepancy about? And Airbus wants to deliver 600 this year, that's an average 50 per month, isn't it? Yes, 600 divided by 12.

Now, there was something that came out yesterday, and I try to follow these news items. Didn’t have time to get in the presentation, but I'm going to read from it. This is CEO Faury's interview with Aviation Week on July 5th. I’m going to ready from it. So, bear with me here. It's kind of interesting and may be important.

Faury acknowledged severe problem, severe problems in the Airbus supply chain is making the planned ramp-up of 75 per month in 2025 and a target of delivering 720 commercial aircraft in '22, tough challenges. This is a quote from it. We iterated by saying the first half of 2021 that the industry should be prepared for the ramp-up.

Many were saying we were stupid, he said this, we are stupid. Money waited maybe the engine manufacturers, engine manufacturers as well, but then it was too late, you're behind the curve when the curve is steep and it's difficult to catch up that exactly where we are now. So you can see my sense, you get a little bit unhappy and maybe exasperated.

Saying, look, we warned you guys, maybe in the last year, they didn't pay attention to us, you don't listen to us and now look at the predictive that we're in. So Airbus is currently back to -- I'm reading from the article again, back to building gliders. Otherwise complete the aircraft, waiting for engines to be delivered.

And this is important, probably explaining the discrepancy between production and deliveries. So, let's see what else he said here. This is quote, on a single aisle, it is a supply-constrained market, at least for the short term.

He said -- lines, Airbus has committed to doing this, nonetheless stressed that he is not prepared to drop their production targets. Is it time to give up? This is quote, Of course, not he says. Teams are working like crazy. Suppliers are ramping up, and we're shaking the engine manufacturers, shaking engine manufacturers, have them recover.

They tell us they'll recover. So, he also points to 2018 crisis, when Airbus wasn't the same predicament. And they were able to deliver their target, but they had to build the gliders away for the engines to be hung.

So, there's obvious frustration on the part of Airbus, because they’ve been through this movie before, they warned the industry, they warned the engine companies, pay attention to what we're doing. This guy at the supplier conference, Airbus executive is lecturing the supply chain, pay attention what we're doing and they didn’t.

And so now, we're just at predicament. But they're building gliders. So what does that mean? It's very important comment. And it kind of confirms what we're speculating about on slide 31 here, which is that Airbus is not going to stop. It costs a lot of money. They're going to build lots of airplanes, they don't have engines. Lots of airplanes.

They'll keep building A320neo because they want to keep moving. This is my interpretation. They want to push forward, they don’t we get bogged down. And then when the engines are made available, this is not just CFM, it’s also Pratt, in fairness in both GE CFM and Pratt that have fallen behind.

When the engines are made available, the engines will be hung in the airplanes and the airplanes will be delivered. That's what they did before. That's what they’re doing now in terms of this concept of gliders. That may explain the discrepancy that we saw why they're producing more airplanes than are shipping.

Well, now we know the answer because it's from Faury himself, he said what they're doing. Okay. So I know that took a long time and we're running late. Slide 32.

So, there's a new release that we came out with, why’d we do this saying that we're committed to supporting Airbus' ramp rate? And we want to take a stand because a lot of suppliers were not, there kind of wavering and that kind of thing, we want to take a stand. And we’re glad we did. So, the bottom of slide 32, no real change there. Let's keep going.

Slide 33. The XLR news, the first test flight of an XLR equipped with LEAP-1A engines took place in June. That's really nice. Also, Boeing and the Boeing CEO has said they're not going to introduce, announce any new airplanes for at least a few years. What does that mean? That means that probably never -- probably never develop a response to the XLR.

And even if they did, it's not going to be until 2030, which at that point, I'm not sure it's relevant or not. So, I think what Boeing is doing is basically seeing this space, this whole space that Airbus is a very important space.

So, question came from one of our investors, on a short interval, why don't Park’s A320 derived revenues reconcile to A320 aircraft family deliveries? We talk about what's going on in the A320 big picture a lot, why don't our revenues reconcile? And the answer is that -- it's a good question.

There are a lot of timing differences in the downstream supply chain, not our supply, the downstream supply chain and the inventory is a big deal. And to me, it seems like inventory sometimes not managed well, a lot of over corrections, overshooting, too much too little, too much too little, too much too little.

So, it's very hard to kind of align and reconcile on a short-term basis what we're doing and what Airbus is doing. It doesn't work. However, this might be the most important thing in the presentation, this last at the bottom of 33. At the end of the day, it doesn't really matter.

The only thing which matters to Park in connection with the A320 program is how many A320neo aircraft equipped with those CFM LEAP-1A engines Airbus deliveries? That's it. So, the timing differences are going to be hard to figure out. But at the end of the day, that's all matters at Park.

And it's an important thing to remember when you're thinking long term, at least for me, it is. Slide 34, the Comac 919, first production aircraft has taken first flight. Bombardier Global 7500, new announcement. I would say it's exciting. Bombardier announced kind of a new derivative, let's call it, of the 7500, Global 8000.

8,000 nautical mile range, very fast airplane, uses the Passport 20 engine, 2025 entry into service, and Park is on that program. That's nice. Slide 35, the Boeing 747, we cover this every quarter. Boeing has announced that they're canceling the program. There's only 3 left to deliver. Slide 36. GE Aviation forecast -- GE Aviation program’s forecast.

So first of all, in Q1 came in at $6.4 million. I think we told you when we did our Q4 call that we'd be somewhere between $6 million and $6.5 million and so came in within the range. And for Q2, we're indicating $6 million to $6.5 million, significant supply chain risks in that forecast. Let's go on to slide 37.

So if you look at Q1, we already gave you the numbers for Q1. Q2, our forecast is sales, $13.5 million to $14 million, adjusted EBITDA $3 million to $3.5 million. Again significant supply chain risk with any forecasting at this point. Let's go on to 38. Now, these are important slides, I think, for us, but these slides come from Q4.

So, we're not going to go through them in detail -- but I think there's really for me anyway important points that are being made here. I just want to highlight one thing. First, the second check to see what we're talking about. Forecasting is problematic even for the next quarter, forget about long-term forecasting.

So, that's not really possible for us under this very-stressed environment, this chaotic environment with supply chain in particular. But, we think we can provide meaningful insights into our company outlook. We broke it down by business -- sorry, by military aircraft first and then commercial aircraft in terms of outlook.

I'm not going to go through these things. Please let us know if you have any questions. All these things are included in the Q4 presentation still apply -- well, let me just add one thing on slide 39. There's something we did add here at the bottom about Airbus and what they're doing.

So we say, Airbus is trying to establish an irreversibly dominant position in single aisle, permanently end the duopoly, take as much market share as possible but permanently end the duopoly, and that seems to me what they're doing. And as -- at the bottom, Boeing has no response to the XLR niche is being left to Airbus. Slide 40.

So, we go through some of these programs, how the recession affect these programs. I'm not going to go back over that. Slide 41, same thing with the Global 7500, how would a recession affect that program. At the bottom of 41, this is the important part of it.

Based upon the above considerations, although there are serious concerns about the economy, inflation, workforce shortages, supply chain chaos, we believe the outlook for Park is quite positive for the reasons stated in the prior few slides. Let's go on to slide 42. We give you an update every quarter. I'm not going to go through these numbers.

I think they kind of speak for themselves. Any questions about our expansion, let us know. Let's go on to Slide 43, James Webb. This is kind of a small program for Park. I mean, there were 21 SigmaStruts that we provided for the James Webb. But it's -- it may be we're not supposed to be emotional in business, but this one is a little emotional for us.

It's kind of a big deal. So, we do include it in our quarterly presentations, we may include it for next couple of quarters as well. So, 21 of our SigmaStruts are incorporated into the structure of the James Webb Space Telescope. And they were made here.

So, you see that arrow that's a little workstation, our a little workstation where we made those SigmaStruts. Maybe look at the two arrows pointing down from there. That's where they are now 1 million miles from the earth, it says L2, that’s where those SigmaStruts are now, 1 million miles from the earth.

That’s a plan to release the first full color images from the James Webb Space Telescope on July 12. You've heard that some of the people of NASA who’ve seen these already, got very kind of emotional when they saw these images. So, it would be very interesting to see what the first images look like.

We're thrilled and honored to be playing a part on this incredible James Webb Space Telescope machine. Let's go on to slide 44. This was covered actually in our Q3 presentation. An investor asked me, well, what happened with this because we didn't cover in the Q4 presentation. There wasn't much of an update. But now there is an update.

If you look at the highlighted item, this is the only thing we cover. We're working with a new potential JV partner on these initiatives. They’re still -- they're still front burner, and we're actively working on these things, discussing them, but we decided that we want to work with the different partners.

So, we're working with that additional prospective partner on these projects, okay? Let's go on to slide 45. Okay. This is a new and exciting thing for Park. We haven't talked about this before, kind of a new development. This company Aero Design Labs.

So, they have this program that they call the -- what is it, Aero Design Labs Drag-Induction System program, ADRS, and Park's materials are sole source qualified in that program. It's a mod for the 737 legacy aircraft, of which there are thousands and thousands are flying and operational around the world. It is not the max. These are legacy airplanes.

The ADRS program designed to make the 737 aircraft more aerodynamically efficient, meaning more fuel efficient, resulting in significant fuel savings. As a result of the significant increases in jet fuel prices, the economics of installing these kits are even more compelling.

ADL received the STC from the FAA for the 737-700 and is planning to receive the STC for the 800-900 by the year-end. STC is a big deal, it's okay, you're good. The FAA is approved, they signed off. Slide 46. So, as we said, thousands of Boeing 737 legacy aircraft. And this is a potentially very significant program for Park.

Park will consider -- actually is considering additional investment to support this program as necessary. Let's go on to Slide 47. So, we received a nice little award from one of our favorite customers, OEMs, Aerojet Rocketdyne. So, we received a Distinguished Supplier Award from Aerojet. It's given to less than 1% of their suppliers, according to them.

We're very honored about that. And yes, they are one of the major programs on which Park supports Aerojet. It's a PAC-3 missile program. And there's a little picture of the banner. It's actually on the wall in our PAC-3 right now. It's a customer service team, Dakota, Elena, and Sarah holding it up for us. Thank you, ladies. Slide 48. Park's people.

So, we covered this during the last quarter and most of these slides are just the same as we had in the last quarter. So, we won't spend a lot of time with them, although very important. Headcount -- people count rather, 106. So, we're still not really at the levels we want to be at.

But why don't we just kind of fast forward, we talked many times about not throwing money at people, we do it differently at Park. Slide 49, people earn what they get. So, we talked about the fact we didn't lay anybody off during the pandemic and economic crisis. So, let's go on to slide 50. Peter Drucker here, who's helping us out.

“Cultural eats strategy for breakfast.” So, how were we able to make our Q1 sales and EBITDA numbers with such a severely reduced workforce? Was it a magic? I don't think so. Our people have been working very long hours, in some cases, 70-hour weeks, week in and week out. Nobody really ask our people to do it, they just do it.

So, there are plenty of others out there who let go many, many people and maybe thousands of people, and now they need the people to work extra hours for them. And my comment is good luck with that. You just -- you like goal of 10 or 12 or maybe 100 of my pals.

Now you want me to work hard for you? Why would I want to do that? Because you obviously don't care about me, so why should I care about you. So, my comment would be good luck with that. Do you understand how very fortunate and lucky we are to have the wonderful people we have, understand why we love our people.

As it turns out, loving our people is a good business. Because our people are willing to do what's needed for our business to be successful, this for all part of this business, we're all part of it. We're not like dressing them. We don't do that. But their love has to be sincere. If it’s not sincere, then it doesn't count. Let's go on to slide 51.

Like this thing about our strategies and moving mountains with a dedicated, motivated, inspired workforce, the Company can move mountains, including meeting our EBITDA and sales targets with a very severely reduced workforce. Without such a workforce, you can move nothing.

Like I said, good luck trying to get your people to work extra hours and things like that. We just laid off after -- obviously, you're telling them, you don't give a damn about them, so why should they give a damn about you? Let's keep going here. Customer Flex Program. We're just updating the numbers. It's a very critical program for Park.

Without this, we would not be able to achieve what we achieved is a very important program for Park. And we recently increased the hourly premium that our employees receive for Customer Flex Program participation. Slide 52, closing up here. Sorry, we're taking it so long, I apologize.

We try to skip over as much as we could, but it's hard to skip over everything. Our principles are not cheap. We covered this during Q4. So just a little review here. It is inconvenient and costly for Park to honor our POs and PO confirmations in a world where many others are not doing so. But at Park, we do what we say we're going to do.

At Park, our word is our bond. Now, what’s kind of interesting here in terms of update is what kind of -- what we've been told by people about some of the things we commit to, we were told by the supplier who's not honoring their POs that we should not honor our POs either. We should honor POs to our customers.

And they say, well, if you do that, you're going to go out of business. That's very interesting because my comment is, you go out of business when you sell your soul. When you sell your soul, you have nothing left. And it's only a matter of time, your days are numbers. That's when you go out of business. So, I don't really agree with that comment.

I thought it's kind of interesting that people are encouraging us to not be honorable as well though. And it happens again and it is inconvenient for Park not to throw money at people in order to recruit them in a world where many others are doing just that.

But at Park, our people are precious, our people are not commodities to be bid up and sold short. Like I said, loving our people's good business. But we've been told that we should just bid up people and to hire them, and then when we don't need them, just get rid of them. What's a big deal? They're expendable. That's not for us.

Let's go on to next slide, 53. The same concept here, just kind of a new angle on it. It was inconvenient for Park not to ask or accept PPP or government money, meaning taxpayer money, the government doesn't have any money. It will come from us, the taxpayers.

During the pandemic and economic crisis, while others, many, many others, including large companies took tens of millions of dollars of government money, meaning tax payer money, meaning our money as incentives, incentives not to let go of more employees. At Park, we earn our own money.

We're not inclined to accept corporate welfare or government handouts. At Park, we made money and paid taxes every quarter throughout the pandemic. At Park, we kept all of our people. We do not need government money as incentive to keep our people. Our people are precious. So yes, we were lectured by others that we should take the money.

Look, it's millions of dollars, it's free money. What is the thing? Milton Freedman, no free lunch. Look, the inflation we have now. Was that money all that free, the money people took, free money people took, really? I don't know about that. I think maybe Milton Freedman was right, Milton Freedman was right, no free lunch.

So, the ultimate priority is that some of these people actually that took a lot of government money or the people trying to hire employees away. Let's go on to slide 54. Here's our closing slide. Others need to make their own decisions, own choices about what matters to them, what does not, and live with those choices.

But at Park, honor and integrity are what matter most. At Park, principles are not cheap. At Park, we're not like the others. At Park, we play for keeps. At Park, we're not fooling around. We're looking to make an impact. We're not going for mediocrity. At Park, we go for greatest.

So here, we have a picture of our ablative materials special operations team. It's kind of -- it's a process. We can talk a lot about it. We got Kevin. He has -- these people are big into customer practice. These are long-term employees. Actually Sophie is new, doing well. Sarah, [ph] lots of customers flex categories and Michelle is new as well.

So, these people did a lot of work and did a lot of work of course during the quarter, but there's a lot of this work for the ablative materials for missile programs during the quarter. So, job well done by them. And something we knew we haven't done before, slide 55. There's our Board of Directors.

We -- I hated this, but for two years, we had Board meetings, I hated it. But finally, we got together in person, on May 18th, we had in-person Board meeting at Park at the Company, and we did a nice little picture. And I just want to comment, I apologize, we don't dress up for Board meetings.

So, except for Brad, he has a nice jacket on and the rest of us were just kind of dressed very casually. Okay. Thanks very much for being patient, listening. And operator, now if there are any questions, we'll be happy to take them..

[Operator Instructions] Our first question is from Nick [indiscernible] with NR Management..

Good morning, Brian. I wonder if you could comment on kind of new niche markets for Park potential. I'm thinking of SpaceX, electric aviation.

Are there any products that Park could make for those markets? And do you think your sales process would be different for those endeavors?.

Thanks, Nick. Thanks for the question. So, we haven't done a lot in terms of sales so far in these two markets, like maybe electric aircraft and private space. We do have a product that we are targeting toward these tall type aircraft I guess you call them aircraft. And we have been working toward these private space companies.

I mentioned a little in a pie analysis, there's some from private space. But I would say not the success that we would have liked to achieve so far. But still those two markets that you mentioned, Nick, are still markets that are really interested in targeting.

And I think we have products that may help us maybe they’re appropriate for those markets.+ Is that helpful or do you want more information?.

` Yes. No Thank you. Thank you so much. Thank you..

Thank you. Our next question is from Brian Glenn with Olcott Square Investment Partners..

Just two questions. I guess, the first, this goes back to, I think, it's slide 17, it might be 18 million. You mentioned fiscal year 2023 sales for the ablative and RAYCARB, you guys are expecting $10 million.

Is there any indication that you can provide with respect to what that figure would have looked like for fiscal year 2022 just so we can understand the trajectory a bit?.

Yes. $5 million, $5 million to $5.5 million, something like that. And I think we said that, yes, we really should have said over $13 million. I think we're trying to be too conservative. This is a forecast. This is not all booked. So actually, the number we're looking after this year is over $13 million. But yes, last year was, I think, 5.5.

I don't have the number in front of me, but somewhere in the 5ish..

Understood. Okay. That's helpful. And then the second question, and I know you mentioned you've spoken with shareholders, and I've asked a few times as well regarding capital allocation, specifically share repurchases.

And the only other thing I want to bring up, I know you guys are giving serious thought about the best way for the Company to consider that, and there's a lot of assumptions that go into that. But, the only other thing I wanted to bring up is if there's the view that you guys have a multiyear period of earnings growth.

And I know nothing is guaranteed, but if that's the view, and obviously there's some calculus as to whether the stock is cheap relative to that growth or not. But I did want to bring up, you save a couple of bucks on the dividend for the shares you repurchased. And the other thing you do is you potentially cash out short-term shareholders.

So, anyone who has ownership in the company, and I know you appreciate ownership, but anyone who has a short time horizon is more likely to be a seller. So, you effectively cleanse the capital structure a bit with respect to the ownership piece. And there's sort of a selection bias that exists whenever a company engages in share repurchases.

Again, they have to be thoughtful and calculated, but you do end up kind of calling your investor base and you end up with, hopefully, a better crop of fellow shareholders and partners that have an appreciation that the business is worth more, that's why they didn't sell and also a better time horizon, which is more of a long term.

So, there's kind of that selection bias, which I think, should be considered by the Board and might be appealing..

I agree, and I appreciate the input. You've gave this input before, appreciated. And I commented, we see -- it was kind of interesting. I don't know why but we received probably from maybe 6 to 8 different investors input, opinions about capital allocation. And that was interesting, with some was before we even made the announcement.

So I don't know there's some anticipation or whatever, but we appreciate the input. And we give consideration to all the valid input. Your input is valid. I can't tell you what direction we're going right now. I think at this point, we want to evaluate a little bit.

As I mentioned, we are pretty concerned about the situation in our country and the economy and the country generally and where it's going. It's one of the factors and not the only factor, but the factors you're mentioning are obvious. We've received some analysis even from unsolicited, but appreciated from some shareholders.

And I gave a little kind of number crunching about, well, if you buy stock, just make sure at this level, looks what happen. And we've done it ourselves. We have outside advisors and investment banks that do this work for us as well. But we always appreciate kind of input. And I won't disagree with anything you said. I think it's all valid.

At the end of the day, we have to make a decision based upon considering all the factors and like often is the case, Brian, in the big boy and big girl world, all the indications aren't going in the same direction. So, you have to make judgments and you do the best you can.

And then, you always course correct, I hope, anyway, if you realize that wait a minute, that wasn't the right decision. So, I think that's the best I can do in answering your -- responding, except to just say again, I don't disagree with anything you said..

Yes. I appreciate that. And yes, I totally understand. I guess, the last thing, which is, I guess, is more of a question. But it looks like -- again, I'm a passive shareholder, of course.

It looks like outside of any significant M&A, and I know you guys know this much better than me, but it looks like all the growth opportunities that Park has explored or considered or some of the partnerships you're through the facility expansion, it seems like -- and correct me if I'm wrong, that they're relatively small in terms of the capital that they may require.

And I know you can't talk about what hasn't happened or what's being privately negotiated. But as I kind of glance across like a number of levers that you're polling over the last two years, they're all pretty light on the capital investment side or the working capital related to that partnership.

But I guess, correct me if I'm wrong, I guess that's the question is, am I reading that right, or some you're looking at to possibly have a larger capital commitment component?.

I would say that's partially correct. Now, if we talk about this thing in the slide and the presentation about these two projects, capital projects and the plan, you're right, I think it's $7 million, $8 million, something like that.

However, we have ongoing discussions with others about projects that would consume much more capital, not talking M&A here, as you pointed out. But joint ventures, for instance, which would consume much more capital. And we've been kind of proactive in that regard. We're trying to use our balance sheet as an advantage.

We've talked -- spoken OEMs and even customers saying, maybe you like, maybe we should talk, we initiate discussions sometimes about this project or that project, something we could do together. And those -- some of those are -- would consume much more capital..

[Operator Instructions] There are no further questions at this time. I would like to turn the floor back over to Brian Shore for any closing comments..

Okay. Thank you, Paul, and thank you, everybody, for listening. I appreciate the questions. I appreciate your time. Matt and I are always available. Feel free to call us any time you want. And have a great summer, and we'll talk to you soon. You take care..

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation..