Good afternoon. My name is Paul, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Fourth Quarter Fiscal Year 2024 Earnings Release Conference Call and Investor Presentation. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will a question-and-answer session. [Operator Instructions] At this time, I would like to turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference..

Thank you, operator. Welcome all to our fiscal '24 Q4 investor conference call. I have with me Matt Farabaugh, our Senior Vice President and CFO.

You probably noticed in the news release that announced Matt's retiring originally plan with the end of this month, but Matt has agreed to stay with us through I guess, would be sometime like mid-July through our Q1 10-Q filing. So, thank you for doing that, Matt. We -- I think, the earnings release crossed the wires may be about for 4:15.

You want to take a look at that because in the release itself, it gives you instructions as to how to access the presentation that we're just about to go through, after the presentation, Matt and I will be happy to answer any questions you have.

If you look at the bottom of the cover page of the presentation notes that we're celebrating our 70th anniversary. Park was founded on March 31, 1954, that was four years ago. Interesting, somebody recently asked me if I found the Company and I'm thinking, boy, I must really old. But no.

I didn’t actually found the Company, I was two years old at the time. So, let's go on to Slide 2. If you have any questions regarding forward-looking disclaimer language. Or I should tell you, I forgot got to mention to you. You said it may, be obvious during the presentation. I share the flu. So, the show must go on, we'll get through it.

I think a couple of years ago, actually COVID during one of these investor presentations. I don't get sick very much, but it seems like when I get sick, it's always during the investor presentation. So, I was just thinking I hope there's no psychologists sitting in here that might want to make a connection pertaining to.

Anyway, on forward-looking disclaimer, you have any questions about the forward-looking disclaimer, let us know. Slide 3. So, table contents. We have our presentation and we have a supplementary financial information. We're not going to go through it, but the supplementary financial information. But do you have any questions about it, just let us know.

So, the original fact, well, it wasn't factory, it's actually a garage. It was in the Woodside, Queens. And I mean I'm not using poetic license. It was a garage, really, garage, and actually, it's still a garage. We did a Google map search and building is still there, it's still rise.

I mean like for fixing cars and that kind of thing, maybe 2,000 square feet. A couple of years later, I think, exactly when the Company moved to a real factory in Flushing New York, Flushing Queens, New York, which I think was maybe 8,000 or 10,000 square feet. This picture is in that factory.

The dialing forward to the left, that's Jerry Shore, my father, the guy in the right that's Tony Chiesa, he’s my father's partner starting Park. And as I said, sometimes he was like a second father to me. These are power presses. And the original business was nameplates and decker trim. So, these presses would stamp out the sheets of nameplates.

And my father and Tony, they used to work the line, they worked the machines, they would repair their machines. They maintain the machines. They did engineer enhancements on the machine. So, I think when look at a dictionary, hands on, you see pictures of these guys.

Anyway, that we've had a long history, as you know, we change our name to Park Electrochemical in 1960. And a lot of people thought that related to being an electronics business, that's not true.

We think it went electronics until '61, electrochemical refers to the anodizing process that still use, I guess, to make a place integrity from selling that business, the original business in A4 to general manager at the time, they go hand. But this goes way back probably this picture way back to the mid-50s, I guess, we call it our founders’ photo.

I guess we did a nice little meeting with our employees when we went through a presentation and went through a lot of aspects of our history. We don't have time to go through that now, but I thought I'd just touch on a couple of things for the sake of time will keep moving. Let's go on to Slide 4 to talk about our Q4 numbers.

So, sales, $16.333 million, not bad. But then you look at gross margin, 27.3%, you think all that doesn't make a lot of sense. That number is low, especially considering that the sales were reasonable and the EBITDA margin also is like growth margins to 30% and EBITDA margins under 20.

What did we say about our Q4 -- about Q4 during our Q3 conference call? We gave you a sales estimate of $15 million to $16 million. So, we’ve actually exceeded that number a little bit in our sales, but EBITDA estimate was $3.2 million to $4 million, and we just came in at the bottom of the range.

So obvious question is, well, why did -- what is the EBITDA look better considering that the sales were actually above the top of the range. You think that just the EBITDA would be better. So, let's talk about that.

First of all, when you talk about miss shipments, 565,000 always the main cause of this shipments without turning over the next like on oil gas, you probably can. Well, let's go to the next slide. So, we don't leave anything in doubt. International freight disruptions caused by the wars in the Middle East and Europe.

That number is not a good number, but it's a struggle with this international freight right now. We don't like those numbers, but they are what they are, let's put it that way. I don't think the generations related to Q4. So, we're going to go through a few things here. I just want to explain, these are not excuses. We don't like that.

We don't make excuses. Fewer explanations as to what happened, you can choose to be interested in them or not, but some of you might be interested. So, this first one is important. We never talk about production, because normally our production levels match sales pretty closely.

But Q4 sales, they were $16.3 million, but our production, we call it sales value production, the sales value of our production was only $15.2 million under our sales. And that's actually a big deal for our P&L.

So -- and not surprisingly, where that, sales came from, came from selling on inventory about by $1 million, that had a negative impact of $275,000 in the gross profit and about $250,000 in EBITDA. Why is that? Because look at it this way.

If we actually produce that product rather than selling it from inventory, we get the additional absorption of labor and overhead that would go into creating the inventory. So, it's significant when -- this was not our plan. We didn't plan to do this. We just came up short in terms of our production numbers.

We plan to produce at the level of our sales, but we wouldn't get there. And there are a lot of reasons for not excuses again, but we have less experienced people. They’re gaining experience, leads. I'll just give you one little example of what we're talking about.

The experience lead will know what's acceptable, let's say, in a treater line or film line or tape line, which is basically our business. It's a continuous operation. So really important to keep those things running. That's how it works. That experience leave will know what's acceptable and what's not. So, they'll make the decision, no, we need to stop.

We need to get going. Less experience won't know we'll stop the line when they go find somebody, maybe inquiry, come take a look at this and to get a ruling as to whether we run or stop. Certainly, when I run if the product is not good, you just running scrap, and that's a bad idea.

But that's an example as to why we were struggling in our fourth quarter to get to a production where we want it to be. The good news is that in Q1, the production was levels were quite good until the storm hit, which we'll also talk about later on. Then moving on, $474,000 of CTP fabric sales.

We talked about that many times, but that's a product where we just -- we buy it, we sell it to our customer at a small markup. So, the margins at sales are there, but the margins are going to be very light. Unplanned property tax $212,000. The property tax goes at a cost of goods sold.

I don't know if you know where that that's not like actually a tax line that's in cost of goods sold. That affects our gross profit or EBITDA, of course. And we were planning on that. We had a little bit of a, I don't know, what's called disagreement with the state of Kansas, and we've ended up deciding the amount and ultimately, pay for it as well.

Q4 was a weak quarter, which means that there's an extra week of fixed cost. The sales mix in Q4 was a little less favorable. Let's go on to Slide 6. Let's talk about the year-over-year results, the annual result comparison, which probably is more meaningful than the quarter-to-quarter comparisons.

Fiscal year '24 $56 million of sales, 29.5% EBITDA -- sorry, gross margin, that's not really wonderful and 19.6% EBITDA margin. This still is a very different discussion than Q4, where there are certain incidents with certain incidents, instances which we just reviewed, which had an impact on our Q4 margins.

The longer-term picture of ‘24 is more about what we're doing intentionally to ramp up our business for what we call the juggernaut. So, let's talk about that. Let's go on to Slide 7. What is the story behind our year-over-year margins as I said, probably a more meaningful question than the same question related to our quarter-over-quarter.

Quarter-over-quarter is always going to be items in each quarter that affect the numbers which make the quarter comparisons less meaningful. Year-over-year, those things are even out. So, the year-over-year comparisons become more meaningful.

So, ramping up in the juggernaut and Slide 32, we talk about the juggernaut, we talk about that almost every quarter. Going for the long term. At Park, we don't wear business for the quarter, although you may be shocked by how dedicated Park’s people are to delivering outstanding results for you every quarter. I just want you to be aware of that.

But let's face it, we're in our business in the quarter, never would have gone to aerospace to begin with. That was a long -- that was a decision by someone, very long-term thinking. Not one year, not five years, not even 10 years. So, that's just an example of how Park goes for the long term.

And if we run our business for the quarter, we wouldn't have gone ahead with our $20 million factory expansion either. Let's talk about a little bit further on the top of Slide 8, I think you have to consider the annual sales history is, obviously, we don't need the expansion to support our great business levels. Let's go back to the Slide 6.

Look at the sales in '24, $56 million, look at the sales in ‘20, $60 million, we certainly have the expansion in '20. So we certainly didn't need expansion to get to $56 million of sales were we did $60 million of sales in '20, should we say, we have all sector costs, there's needed to support the business levels in 2016.

The extra cost is because we see what's coming, and we don't want to get caught behind the power curve. Going back to Slide 8, we clearly needed for the juggernaut, the plant, the new plant. Also, we're staffing up our new factory expansion and prepare for what is coming. Running a lot less efficiently, sorry, will staff up and ramp up in factoring.

Now the good news is, new factory lines are ultimately expected to run more productively, meaning faster and efficiently than the lines in our existing factory. Makes sense. The original lines were design back and whatever is 2007.

These lines are more -- we have to use all learning over the last 15 years to design these new lines much more efficient, much more productive. And that will have a really nice impact on the bottom line as we ramp up in the factory. And we're also carrying additional $1.3 million per year depreciation costs related to expansion.

Obviously, those costs don't affect EBITDA. But guess what? They expect growth or they don't impact EBITDA, but they do impact gross margins and the gross margins do include depreciation. And that's approximately 2.3% to the gross margins based upon the fiscal '24 sales, 2.3%. So, let's see how do we work that.

If we go back to Slide 8 -- Slide 6, again, 29.5% was a gross margin. We were saying we could just basically add 2.3% of that. If we didn't have the new factory, just a depreciation alone. And then, we’re carrying other additional overhead costs related to the expansion, which is obvious. Utilities, insurance, you name it.

And those things are both affect EBITDA and gross margins, all related to the expansion. Let's go on to Slide 9. We’re ramping up our people cost for juggernaut on as well. We just -- it's not just about equipment and factories, you've got people. We need people. Our current people count is 126.

Our hourly people count, cost rather already up by approximately $800,000 per year compared to last time this year. That's not going away. That's not a temporary thing. That includes the additional people and some wage inflation as well. We just approved another five people to staff the manufacturing lines and the new factoring.

And that's just for now, it's not the end game. We need to hire a lot of people for the juggernaut. We increased our authorized people count for now from 133 to 138 as to ramp up our people costs and staff to bear for the juggernaut. Our productivity, we measure that sales value production as production divided by hours, hourly hours worked.

That means all airlines, so indirect and direct. That will temporarily slip. That's just the way it is, but ultimately, will reverse very much the positive as we ramp up production. The bottom line though is we want to be ready for the coming juggernaut, which we do. All these things are necessary.

So, this is like I said, different than the analysis regarding Q4, where there's certain special items that affected when you look at the fiscal year numbers, it's more a part of our plan, what we plan to do what we intended to do. Let's go on to Slide 10, Park’s balance sheet, cash and cash dividend history. We have zero long-term debt.

We reported $77.2 million in cash and marketable securities at the end of the fiscal year Q4 this year, '24 Q4. But don't forget, there's $9.3 million, remaining transition tax installment payments payable through June '25. And Matt just told me that $4.2 million of that is paid next month.

So, when we get to our balance sheet, you'll see an impact on the cash. So, there's two more payments in June this year, and one, and the remaining payment is June of '25. So, I think you want to consider that. Our cash dividends, Park has paid 39 consecutive years, uninterrupted regular quarterly cash dividends.

With that over skipping a dividend or reducing the dividend amount. We're going for four years here. Park has paid $594 million or $28.975 per share in cash dividends since the beginning of the fiscal year 2005. The $594 million for a little company like Park, that's a whole lot of money. I don't know it's probably a lot of money from Microsoft.

I don't know about Microsoft, but that's a hell a lot of money for a small company like Park, I would say. Slide 11. We always give you -- tell you about top five customers alphabetical order, aerospace that relates to the Lockheed Martin Patriot tie the names of the photos. Patriot, PAC-3 missile, which we talked often.

Aerosphere that relates to Gulfstream G280. So, Aerosphere as a rep distributor for Israel aircraft and they produce these -- some of the Gulfstream airplanes under contract for Gulfstream, like the 280. Kratos will get back to them. I think that's on the next page.

Middle River, so we could have done lots of examples that we chose the COMAC 919 and the Nordam group, that's the Boeing 737, 700. What we're talking about here is the WeatherMASTER Radome, which none produces with our materials. And we go on to Slide 12. This is a big thank you for Kratos. They're one of the top five, but Kratos gave us this gift.

I never received a gift like this. I mean that's an aircraft. That's an aircraft that saw operations, they gave us to us to put in our display or factory. It's a beautiful, beautiful aircraft, unmanned aircraft. I mean I'm just overwhelmed in what to say, even now, I don't know what to say.

So, we took a little picture and we did to thank Kratos, but now we're doing it publicly. So, let's go on to the slide. This is an airplane aircraft used by the Air Force. So, let's go on to Slide 13. Our pie charts. Interesting '24, the '21 was the pandemic year. So, you could see commercial aircraft was land and that's what's so low.

The rest is about rest of years really consistent. I'm actually surprised at commercial aircraft held up in '24 in the second and third quarter, we had those big burn-downs for MRAS, which you talked about. That I guess we had other commercial aircraft sales, which allowed us to hold our own. Let's go on to Slide 14.

This is Elena's project every quarter just to come up with some interesting Park less niche military aerospace programs, some interesting military programs. Our estimated '24 military revenues by market segment. We consider Radome’s rocket nozzles, and drones to be niche markets for us. Although even aircraft structure for us is a niche market.

It might not be fathers but for us in which market. So, what we got here Arduino's next-generation short-range interceptor, just a replacement for the Stinger missile, you probably heard missile, the Boeing EA-18G Growler. We supply Radome materials into that program. Northrop Grumman LGM-35A Sentinel, they call GBSD Ground Based Strategic Deterrent.

That's interesting term. It’s used to be called ICBM, the replacement for the Minuteman 3. So, we supply materials into this materials and parts in this program. So, this is more now for, it's for nuclear warheads.

McDonnell Douglas F-15 Eagle, and we supply Radome materials into that program and the Boeing PA Poseidon aircraft, that's a replacement of the Ryan structural materials into that program. Let's keep going. Let's talk a little bit about Slide 15 -- sorry. Let's talk a little bit about supply chain challenges.

In the past, I keep hearing that I've heard so many times, yes, supply chain issues are behind us or about to be mined whatever year that they're buying is, we find that they are not.

I can't tell you how many times I read reports from other public companies’ reports are using -- highlighting supply chain issues as the main reason why they're not making their numbers. We apply a supply chain issue is really all about anyway. What is causing them? Why won't they go away? Our supply chain issues fundamentally workforce issues.

Our workforce issues been resolved. I mean, isn't that what it's about? If you now the workforce, you can have all the machines and the equipment, you're just not going to be able to produce to the requirements you need to produce to the people to do it. We hear unemployment is not that bad.

So, what's going on here? Well, one of the things to consider is its widely reported that $7.2 million able body men just men between the ages of 25 and 54 have premier left to workforce and are not even looking for work. I guess a lot of them left are in the pandemic.

Even though the help wanted signs everywhere, what is happening, I don't know if you have an opinion about that. I heard you know this, guy Charles Payne, he's a, if what do you call financial news guy. He said he knows a guy 60 years old number working. A lot of people apparently never worked their whole life.

So obviously, the government's enabling that. I wonder why that's happening. But these lives, I mean this is not funny. These lines are being destroyed. After a couple of years, people sitting in the couching eating the potato chips, watching Oprah, whatever they do for two years. They try to come back to work, they can't. They've lost their edge.

It's a real tragedy. And that's probably what you want to hear about our investor presentation, but everybody now and then I'll give you my thoughts about something like that. Let's go on to Slide 16.

What does this mean to Park to supply chain issues? So, we found ways to manage supply chain challenges to better planning, strategically carrying more inventory, providing suppliers with longer lead times. But the issues continue to be a major challenge for us and they're very consuming of our time and energy.

So yes, we're managing it, but it's with a lot of effort. But what do the ongoing supply chain challenges need for the aerospace industry generally, maybe Park able to manage it with a lot of effort. But the aerospace industry continues to struggle with supply chain issues. These challenges are impacting program ramp-ups and new program introductions.

Demand is there, but the industry is just falling short means of demand. Where is this going? Is there a solution in sight? I don't know. You know what it is? if so, what is it? I don't know. Maybe you use my deals. I'm serious. I don't know. I don't know what the solution is. Going to Slide 17. We won't cover this in great detail.

As a slide we show you every quarter. Firm pricing, GE Aviation Jet Engine Programs for pricing LTA requirements contract from '19 to ‘29 with Middle River Aerostructure Systems, MRAS, which is a sub of ST Engineer Aerospace. So, we always have to explain this, we don't get it because we have all these GE.

Matter of fact, the title of the slide, GA Aviation engineering programs, all these programs listed below our GE Aviation programs. So, what's the connection? Well, the connection is that we on these programs, Middle River was a sub of GE Aviation, sold GE sold. I guess we called GE Aerospace now, sorry.

GE sold MRAS to ST Engineering, which is a large Singapore aerospace company, I don't know about five years ago. But MRAS and Park continue to support those programs just as when it was -- when it was owned by GE Aviation. I won't go into these programs we talked about a long time. So, I just point out a nice picture. 747 the program was canceled.

We sold some spares. I really love this picture because you could see how big these missiles are compared to the sky standing back here. And those cells are all Park material. Let's go on to Slide 18. Yes, we know have to cover the first check item, we cover that every quarter.

Second check item, fan case containment wrap or the GE9X, which produced to our AFP composite materials. We talked about that as we're going to start the quarter now as well. But here's some new relatively new stuff, MRAS qualification of three Park proprietary film adhesive formulation product forms in progress.

And then the next item, MRAS Park LTA, that's the LTA we referred to in the prior slide. And '29, was recently amended to include three Park film adhesive product forms for composite bond and metal bond.

That's a really great deal because we developed this film adhesive product line under a joint development agreement with GE and MRAS, but it's really wonderful because when we develop a product and then immediately goes into qualification on really important programs. The dilemma is you develop a new product and R&D level. It's a great product.

So, what I mean it's like threefold on far nobody you got to get in program, I think, 20 years. Like not 20 years, 20 seconds is between the time that our product is finished when it goes to the qualification. That's a very special thing that we have with that customer like a program agreement required by MRAS and STE.

Agreement is being actively worked on. We've talked about this before. When does it work to Park? I don't know what to hold on to. Let's go to Slide 19. Let's talk about some of the GE Aviation Jet Engine programs. So, start with the big kahuna A320neo. Airbus has a huge backlog of A320 aircraft, 7,170. I don't know if you know that.

That's such a huge number. And here's the problem for Airbus. Let's say they're currently producing at a rate of maybe 50 a month. Now that's six or a year, right? Well, how many years of backlog is that like 12 years. So, if you want to order a new one, you got to wait 12 years. That doesn't help.

They want to sell a lot more of these, so they really need to bring the lead times down. So that's why they're pushing hard to get to 75 per month, which is, what, 900 per year. So, I do the math, divide 7,171 by 900, that's better. It's not like tomorrow, but it's a lot better. That's their motivation.

And in my opinion, you can listen to other people, they have different opinions. I think Airbus is very determined to get to that 75 per month.

And during their annual shareholder meeting on April 25 -- sorry, their April 10th in the first quarter investor call on April 25, they again reaffirmed their plan to achieve a rate 75, A320 family aircraft deliveries per month in '26. Maybe the end of 26, I don't know, but in '26.

How are they doing so far with that ramp-up? This is notwithstanding an over and above all jurisdictions and limitations on what supply chain, supply chain. Let's go on to Slide 20. But they're doing pretty well, actually, I think, pretty well. Airbus delivered the following number of A320neo fuel aircraft each year in the following calendar year.

So, you can see the numbers ramping up. They get to '19. They peak at 561, then boom, they're hit by the pandemic and they slip back. Look at '23. So, 571 compared to 561. So '23, they actually exceeded the first-time pre-pandemic production levels.

So, in '23, for the first time since the beginning of the pandemic, Airbus was able to return to A320 production and delivery rates to return to pre-finance. That's a key milestone and a very good accomplishment for Airbus, congratulations to them because it's over and above all the supply chain issues just here at the whole time.

We're notwithstanding them. The April '24, year-to-date, Airbus delivered 167 airplanes. I know it's four months, but it also delivered 51 airplanes in both March and April 24. So don't get to -- don't get confused by the beginning of the year always slow and kind of ramp up at the end of the year. This doesn't come from Airbus.

If you want my opinion, it's just my opinion, I can’t prove it. It's my opinion. My guess is they'll probably get they'll probably get 55 this year average for the year. That's just my guess, and it's not. Airbus is not saying what they're going to do this year.

What they're saying is the end of or '25, they're saying by the end of '26, they'll be at a rate of 75. Let's go to 21, on Slide 21. Yes. We already cleared covered this. Based upon this huge backlog, Airbus would already be producing A320neo aircraft at the rate of 75 per month, if not for supply chain constraints and limitations.

Again, what was the story about supply chain problems are behind us? I don't think so.

What about Boeing? How are Boeing struggles and challenges with the MAX impact A320neo family aircraft prospects and also the single aisle market share? I think it my opinion is it depends on whether Airbus is willing to try to move that number up from 75 to higher. There's a lot of reporting about it.

They're thinking about it, but they've not made any announcement. So, what about the engines though for the A320 aircraft? That's an important question for Park.

By way of review, A320neo offers two approved engine options, namely the CFM LEAP-1A engine, which is the program Park is on, and the Pratt engine, Pratt, PW1100G engine, which is Park not on that program. So, we just covered the second bullet item.

The third item, bullet item, according to the May '24 edition of your own engine news, that's our buy our buyable monthly edition. CFM LEAP-1A's market share for engine orders for the 20 neo family of aircraft is 63.1% as of March 24.

Slide 22, at the delivery rate of 75 A320neo per month is 63.1% LEAP, market share translates into 1,136 LEAP engines per year. What's that worth to Park? We'll cover that when we get to Slide 32. There are currently 8,132 firm LEAP-1A engine orders. That's a lot of engines. Were those firm orders, worth the Park? I don't know.

You might refer to Slide 32, but probably about a quarter $1 billion I would think. No. That's not precise because this is Slide 32. We assume the pricing were 25 to 29. So, note that pricing doesn't go into effect for the ongoing months. Also assumes film leases run program, not on it yet, we're qualifying.

But the other thing is that our pricing after 29 is clearly going to be higher. That's expected by MRAS and Park. So, we haven't taken into account that some of these engines will be delivered after 29. And we don't have a contract after 2019. So, I guess you could say, well, maybe it's not 29.

My opinion is that highly, highly, highly, highly likely that we'll be supplying this program for a long time after 29 and all the other MRAS programs. One of those firm orders with the Park we just talked about that. There are widely reported serious durability issues with the Pratt PW1100G and we talked about this before.

So, all these issues, in fact, market share between the Pratt and Leap engine interesting question, we don't know. And maybe the answer is similar to the Boeing question regarding Airbus A320 generally. Can is LEAP willing to produce or CFM rather want to try to produce more LEAP engines? And I know the answer to that question.

So meanwhile, CFM is already delivering new LEAP-1A engines with its new reverse bleed air system design that further improve durability. So, you see that the dichotomy thing here, it's like Pratt's having pretty serious durability issues and CFM is moving forward, improving durability. Let's go on to Slide 23.

We got the, A320XLR variant of the A320 family. We covered this, we covered every quarter, inspected and service at the end of '24. Boeing's not planning response. Airbus has 550 orders for the airplane, potentially important program for Park. Let's focus on the 919 a little bit more though. 919, this is a slide '23, with CFM LEAP-1C Engines.

919, that's the only engine for the 919. It's not like the A320 when there's two engines that are approved. COMAC plans to achieve a capture rate of 150, 919 aircraft within five years. If you look at our juggernaut slide, we're assuming less than that. COMAC has reported to have 15 under orders.

It's really hard to nail that down, but it's one of the reports I saw. China Southern just ordered another 100 airplanes going to Slide 24. COMAC just delivered its six unit. COMAC is reportedly expanding its 919 production line. This is important stuff.

Now look at this recently reported that China CAAC, that's like the China FA, is aiming for 2025 EASA, that's European certification agency, for the 919 aircraft. That's a really, really big deal, because the thought was this was going to be China only airplane. It's clear that China and COMAC, that's not what they're thinking about at all.

They want to take on Boeing Air Bus for single aisle. This could be a big program, important program, important program for Park. And like I said, they're expanding production lines, so these things, to me mean something. The last item is the, ARJ COMAC, ARJ21 Regional Jet. Don't spend a we don't spend a lot of time on that.

We'll accept it 35 aircraft reported newly delivered in '22 and '23. We'll get back to them later. And the rest of the program is going well, a good program for Park. And continuing on Slide 25, 777X aircraft, the GE9X engines. We've covered this for many quarters now, expecting certification in '25. Some people are skeptical about that, but we'll see.

I'm talking about the airplane. We expect about $1.7 million from this program in this calendar year '24. And, we'll see. There might be a little bit of a gap after we're done with the crude production just as there may be some almost level of waiting for the program to start to really ramp up.

This next check item, we've carved that many times and the next check item, Boeing S481 open orders for this airplane. Next check item and the 777X orders continue to come in nicely even though Boeing notwithstanding Boeing's ongoing challenges. And this is also potentially very significant program for Park.

So, we're hoping for the best for this program. Slide 26. Okay. What are we talking about here? This is GE Aviation Jet Engine Program sales history and forecast estimates. When they go through the whole history, Q4 of '24 in the recent quarter, 7.6 million. I think we had estimated 7.5 million, so just about that number.

The total for '24, even though we had a good Q4, it's only 21.1 million. That's because we had those burn down quarters in Q2 and Q3. I'm talking about it for fiscal '24. So, $21 million, that's a low number, not a good number. compared to last year, the prior year $23 million to $22.3 million.

So, we had forecasted $6.3 million for that's even a great number. You look at the $7.6 million in Q4, but I guess it's an okay number. But it's really important that we now read this, footnote here carefully. The amount is fully, that amount is fully booked for Q1.

This is the forecast, but Q1 GE Aviation programs will be impacted by an unknown amount of storm damage to company's facilities reported on May 22, and the Company moved. We'll get back to this when we talk about the forecast for Park generally. So, let's keep going for now.

Slide 27, burn downs, aerospace industry management, inevitable day of reckoning. So, we've been through inventory burn downs. You're probably tired of hearing about them. We're tired of certainly tired of talking about them. We have discussed at some point the very strange inventory management practices of the aerospace industry.

I think I had a different term, not strange, but I decided to be a little nicer about it, in my, one of my early drafts. I mean, you're probably tired of hearing about those things too, and we certainly are. And we have literal known.

These burn down of strange inventory practices certainly can cause serious and even extreme distortions and disruptions, the business planning and expectations. But ultimately, sources and disruptions are as a matter of inevitability temporary and transitory nature. Why is that because the end program demand have to take over at some point.

I mean it's inevitable. It's just your math. Let's go on to Slide 28. Sooner or later, the inevitable day of reckoning, Nicole, will come. Sooner or later, the demands of the aircraft and programs will take over and drive our business levels and activities. That has to happen. It's inevitable.

And here's the thing, from what we're hearing now, I mean, really recently, that day of reckoning is coming rather soon, sooner or later. We heard just recently in '25. We're talking calendar years. Pretty big jump for the A220 program, pretty big jump. We've been kind of languishing with burn downs and inventory adjustments and we hear.

Now there's our inventory has been burned down. We don't have anymore. We don't want our inventory. I mean, the customers, the inventory they hold of our product is just fairly low. They can't really burn it down anymore. But now we hear, they have some finished structures inventory or they do what the customer does. So, it's a little bit exasperating.

But our customers have been told to get ready for a pretty big jump in '25. And they also been told that at '26, the end of '26, Airbus will be at that, 75 airplanes per month rate. So, I have a feeling that this day of reckoning is not far off. We'll see.

But the good thing is that although we did not know when the day of reckoning would come, we knew it was coming. It's inevitable as far as we are concerned. Cannot be stopped. It's like the locomotive that can't be stopped, the freight train. Good thing that at park, we did not wait.

Good thing that we are already that we are already ramping up for the day of reckoning, ramping up for the coming juggernaut. Let's go on to Slide 29. Here we go. Park Financial, history and our estimates. We won't go through the history. We sort of already kind of covered it fiscal year '24 Q4 in total, so we already talked about those numbers.

But let's talk about the forecast for Q1. This forecast was before the storm. It's really a shame because Q1 was looking at a really nice quarter. Why is that mostly because all those kind of things that affected Q4, none of them were affecting Q1. The production levels plan to be at least at the sales level.

And actually, I was thinking that we'd be at the top end of the range for both sales and EBITDA in Q1. So, the timing of this storm was very unfortunate. This Q1 was looking like a nice quarter, but we better go ahead and to Slide 30 and read that big footnote. The '25 Q1 sales estimate is based upon fully booked sales for Q1.

The '25 Q1 EBITDA estimate is based upon those fully booked sales. However, the Q1 sales and EBITDA will be impacted by unknown amounts by storm damage the Company's facility reported on May 22, '24 in a company news release. Although as reported, unknown amount of fiscal, Q1 sales will slip into Q2 as a result of storm damage.

The Company is not expected to lose any sales or business as a result of storm damage. Let's talk about this a little bit more. So, it was a pretty big event for us, but our people done really fantastic job to get in the factory up and running. All the hot melt lines in both the old and new factory are fully running, the tape lines, the film lines.

We're about to restart the solution treaters. No, I'd say pretty incredible job on their part, pretty incredible job. But that were, the number I'll just guess at this point a little bit, but my guess is the top-line is going to be in the 13s, not 16s. So major, major impact on the quarter.

We typically produce a lot at the end of the quarter, ship a lot at the end of the quarter. And we don't have the inventory, so we're we only could sell what we produce, and we're not able to produce. This one on the factory could produce. Last week, the P&L looked pretty ugly because we hardly produced anything, but we had full staff.

Everybody had full pay last week. They we had everybody come and help clean up and stuff like that. But the recovery is going really well, except it it's going to be a mess for Q1. Too bad, these things happen. People did a great job in my opinion. The key thing for me is nobody was hurt. That was a key thing for me. So, let's go on to Slide 31.

Park Financial outlook for Park and GE programs and update. We don't have to go through this in detail. Obviously, we've gone through this, pretty much every quarter. Just one thing, what's the timing for the outlooks? We kind of already covered this. Not sure, but the juggernaut is coming. It can't be stopped. It’d better be ready.

I think maybe pretty soon. Maybe not this year, calendar year, but I would think next year. So, meaning calendar '25. We'll see. So, let's go on to Slide 32. This is the juggernaut slide, and we won't go into detail because we cover this 3x or 4x already. Couple of points I want to make.

A320neo, we're assuming, 1,080 units and that assumes 75 airplanes per month, but also assumes a 60% market share for the LEAF engine. Remember, we said it's about 63.2? I forgot what the number was exactly.

So, what we're doing is we're bringing that to 60, and the reason we're doing that is we don't have to change this every quarter because every quarter, the market share is going to change. This way, we'll just use 60, which is a little bit lower number, 60%. But that way, we don't have to change the presentation every quarter.

So, I don't know if that was a good decision or not, but that's what we've done. And you can see this highlighted in footnote four. One other change that was made is we upped ARJ21, 72. Remember I said that they delivered 35 airplanes last year. The prior year, that's equivalent obviously to two engines. To 70 engine, two engines per airplane.

All these, programs are, two engine airplanes. And, well, we think we need a couple more spares. That's probably still pretty conservative in there. They're still trying to ramp up to some extent. 919, remember, COMAC said they're going to be at a 150 units per year, four or five years. Well, that's going to 300 engines, not 200 engines.

So generally speaking, we think this is relatively, conservative. The GE9X assumption, we're not going to provide, how many units we're talking about, but I think it's pretty conservative, actually, in my opinion. So, the juggernaut slide. Let's go on to Slide 33. We'll go through this pretty quickly.

We just updated the slide, financial outlook, based upon the growth estimates of programs, which were sole source qualified. You can read the footnotes to kind of explain the math, but we start with our base case of fiscal '24. And then we, the incremental program sales, I mean, we only had about $21 million in fiscal '24.

So, a lot of incremental GE program sales of 15 million. We decided to remove the reference to specific programs, because we felt uncomfortable. We felt. We're doing disclosure for customers and maybe they don't want that. So, we're just lumping all in one number, 15 million incremental sales of 7 million last year, non, this is for non-GE programs.

Last year, 35 million approximately. So, we're assuming that a 20% increase over course of whatever three or four years. We think that's a pretty conservative assumption.

And the rest is math, except the 4 million point out that I think the last time we did this maybe 2.5 million, but this is based on 11 million EBITDA, which is such a depressed number based upon the ramp up of our cost as we ramp up our factory and ramp up our cost to prepare for the juggernaut.

So, it gives us an approximate EBITDA estimate outlook of 35 million. And Slide 34 is all the footnotes, and I won't go through this. It's just math. But really, if you have any questions, let us know. Slide 35 and 36, these slides were in our Q3 presentation. I think exactly like this new major new manufacturing initiative.

The only new item is the last item of 36, our manufacturing project initiatives under active review and discussion with the customer. The point we're making is that this is a pretty active project, and the customer is highly motivated. So, we think it's a pretty and likely to saw actually happen.

This is major project to par as we outline in these two slides. Let's go on to Slide 37.

As I said, we had a nice little event to celebrate our 70th anniversary in the factory, top left, doing a little presentation, the history about Park for employees, discussions about how Park is a special company, and we've done some really incredible things over the years.

And my point to them is that even if they've only been with us a week or a month, we're part of the Park family, and they share in all those accomplishments, all those incredible things just like anybody else does. Top right. So, after the presentation was, I was doing the presentation.

A number of employees came up to me and said some very nice things. And one guy told me, I remember exactly how he said it, but Park's meant so much for him and his family. And thank me for that. And I tell you know, running any business Park on unusual, a lot of stuff, crap you got to deal with, but those kind of things make it all worthwhile for me.

This top right, this young man came up to me and introduced himself and said my name is Javaris, and he said I work as a treater operator. I've been here for one week. I said, so he said, the newest employee. So, I said, alright, Javaris. Then you and I will all cut the cake. We had a nice cake we'd had for our R&D event, and we cut it together.

And then the bottom picture is obvious. That's just a company photo of our employees at least the ones that are based in Kansas. Unfortunately, Mark wasn't able to be there, but everybody else, you normally see in Kansas who's there. I'm actually in the back row because the tolls people were, or like, Corey organized the photo session.

He said that the tolls people needed to be in the back row. So, if you can find me, let me know in the back left. And operator, that concludes our presentation. So, if there are any questions, we'd be happy to answer them..

We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Nick Ripostella with NR Management. Please proceed with your question..

And Brian, I'm glad that, as you said, no one got hurt from the storm, and thank God, it wasn't, any worse. I just have kind of a big picture question. Given the programs you're on and the future and the potential new opportunities.

I'm just wondering, do you think Park will continue to be a debt free company? Or at some point, would you consider borrowing money? And the reason I ask this is, if the stock weren't reflecting the potential, possibly, you could be more aggressive in repurchasing shares.

And I'm not saying today, but if the stock does not reflect the bright future, stays where it is or goes lower, would you consider being more aggressive and then maybe levering up?.

The stock price, I mean, I follow when we follow it. I mean, it's hard to figure out why it might be going up or down. I agree with your implications that it's certainly. So, the stock price, I don't know why it goes up or down a little bit, but I certainly agree with location. That doesn't reflect the value of the Company.

And I guess my way of thinking about that is that, ultimately, you'll have to. And I think, ultimately, as the numbers pan out, the numbers we're talking about, that the world, the market will recognize the value of the Company. Until then, I guess, we'll just do the best we can to explain what we're doing, and some people will understand it.

Maybe some people won't agree. I don't know. As far as going to debt, Nick, right now, we don't see a need to do that. We completed our expansion. As you know, we paid for it, and that itself will lead to that, the very significant uptick in revenues as we call the juggernaut.

This other project we're talking about, so that could lead I think we talked about maybe $6 million to $10 million of capital, but what we didn't talk about is working capital. We're talking about capital equipment and the plant and that kind of thing. But the working capital could be a lot, could be, like, $15 million or something like that.

So, that gives you a little additional perspective. Would we go into debt? I'm sure we felt that it was a legitimate reason to do it, and there's some opportunity that was important enough that requires to go into debt. So, generally speaking, we've not been a company that's had debt. It's not been our philosophy is to have cash.

We've always had cash, and we feel good about that. And you certainly feel good about it when you go into, like, these what do you call it? Black swan things like the pandemic. But we're not so philosophically opposed to that that we wouldn't consider it if the circumstances we felt were compelling..

Our next question is from Chip Rewey with Rewey Investments. Please proceed with your question..

Can you talk a little bit more about the potential storm recovery aspect? You say you have extra staffing.

How much of that can really be recovered potentially in your second quarter and third quarter and both from a revenue and a profit point? I imagine some of the profits are just burned because you have to hang on to your staff, which is understandable. And then secondly on that extra opportunity that you talked about with center opportunities.

Is there any timeframe for when you expect that to be a bid or potentially awarded?.

We don't expect to lose any business and all the business that we're supposed to be, all the sales, let's put it that way, that we lost in Q1, will be in Q2, it won't go into Q3. The profit story is a little different. Let's say we just hypothetical, let's say we end up at $13.5 million in Q1 when we're thinking to be over $16 million.

The bottom line will be a lot different than if we planned $13.5 million. It was kind of even across the quarter then we're running for towards $16 million and then the last two weeks everything goes down to zero. So, there's some amount of profit, which will not be recovered even though all sales won't we won't lose any sales.

All sales that were lost in Q1 will be in Q2. I don't know if that answers your question, but and I don't I can't quantify that. I try to quantify the, well, maybe I did not. If I did not, I intended to. So let me do that now. We're thinking that sales-wise that we're probably going to be in the 13s when we were planning on 16.

So, we're going to think of losing over $2 million of sales in Q1. All that will be translated into Q2. The profit stuff is much more difficult for us to estimate at this point. Even though we're at the end of the quarter, it's still a very dynamic situation. As far as the new project is concerned, It's not a matter of award.

It's not like we're competing for it. I just want you to understand that. But the customer's needs are for that project to be up and running by '26. So that's kind of a time frame that you might consider. Not it's from their end, not from our end. That's not a lot of time actually because a lot to be done to get there..

And just following up on that, if you're not competing for it, is it business that you think you can get or that you hope to be awarded? And if they want deliveries in '26 like when would you need to start out with any capital, later this year or early next year? And on the storm insurance, was there on the storm, was there any insurance of any kind, either for capital or business interruption?.

Yes. We have insurance. The wind damage insurance, which is it comes under wind damage, our deductible is quite high. And it's we did that intentionally because, when you think of insurance, we have cash, a good balance sheet. We think of the cash drop across. We don't want to bet against the banks.

We set our deductible's pretty high in the theory that if we set them lower, obviously, the premium will be much higher, and, ultimately, insurance companies get a win because they always win. So, there's a pretty high deductible, but we still expect to have some insurance recovery.

And there is business interruption insurance that's included, but we don't have amounts at this point because it's very difficult for us to quantify the loss, not only in terms of this interruption, but the repair in the facility. The roof itself is intact right now and it's secure, but still eventually need to be replaced.

So, on that the question about that project, it's a customer that we're very close to, and I'm not at liberty to describe which one. They're talking to us exclusively a great length about how this would be done. Their timing is '26. That's what, from their perspective, that's what they need. I got to be careful.

It's a very confidential project, so I don't want to say too much about it because I want to give it away. But yes, I mean, it's good question. I would think that next year, we would need to start ramping up the capital in order to meet that requirement by maybe the beginning of next year.

It still may not happen, but I think there's a high likely it'll happen because the customer is very motivated, and they're not talking anyone else about this..

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

Thank you. This is Brian Shore, of course. Thank you very much for listening in. Have a good afternoon. And if you have any follow-up questions, please feel free to call us. We'd be happy to try to help you with them. Have a good afternoon, and we'll talk to you soon. Thank you..

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