Full Transcript: Park Aerospace Q2 2027 Earnings Call

Park Aerospace (NYSE: PKE ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Park Aerospace Corp. 3 million, outperforming guidance on EBITDA. The company emphasized its strategic focus on growing missile systems and GE Aerospace jet engine programs, highlighting significant production ramp-ups planned for the A320neo and 777X programs. 8 million, with continued emphasis on missile systems and aerospace programs.

, supporting the PAC-3 MSE missile program, and plans for a new manufacturing plant in Tulsa to expand production capacity. 75 million in cash and marketable securities, despite plans for significant capital investments. Full Transcript OPERATOR (Cleo) Good afternoon, my name is Cleo and I will be your conference operator today. At this time I would like to welcome everyone to the Park Aerospace Corp.

second quarter fiscal year 2027 earnings release conference call and investor presentation. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad.

If you would like to withdraw your question, press star two. 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. Brian Shore, Chairman & CEO Thank you, operator. This is Brian.

Welcome all to Park Aerospace's fiscal '27 second quarter investor call. I have with me as usual Mark Esquivel, our President and COO. We just, I guess right after the close, published our second quarter earnings release, and in the earnings release you'll find instructions as to how to access the presentation we're about to go through, either through a link, and there's also the website. And you want to pull it up in order to make this presentation discussion more meaningful.

It's kind of a common theme for the last couple quarters. We have a lot of new investors. I think last call we had about 170 people who participated in the call, and we have a lot of new investors, we have a lot of the veteran investors. We have to find a balance between the old and the new and we'll do the best we can to maybe find a middle ground or compromise.

Obviously the legacy investors probably don't want to hear the same material being covered every time, but some of the new investors may find it more interesting and useful. So we'll do the best we can with that, and after we're done with the presentation we'll be happy to answer your questions. So why don't we get started? Let's proceed onto slide 2, forward-looking disclaimer information.

Let us know if you have any questions about the forward-looking disclaimer information. Slide three, our table of contents. First of all, slide one. Sorry.

The first item in the table of contents is the investor presentation which we're about to get to. There also is supplementary financial information attached as Appendix 1 to the presentation. We're not going to go through that information, but let us know if you have any questions about it. As usual, we feature the James Webb Space Telescope in our table of contents.

James Webb Space Telescope recently identified a mysterious new class of cosmic object called black hole stars. They look like gigantic stars which shine up to 100 billion times brighter. So that sounds like a lot to me. Thank you.

James Webb Space Telescope and Park. James Webb was produced with 18 Park proprietary Sigma Struts, as you probably all know. Let's go on to slide four. So we go from the sublime to the mundane.

Here, here. Quarterly results. So let's just go through the right-hand column. Second quarter.

Our current. The quarter we're just announcing sales of 20 million 791. Gross profit, 7 million 135. 3%.

We like that. We like our gross margins to be in the 30s. Adjusted EBITDA, 5 million 285. 4%.

What do we say about our Q2? During our Q1 investor call we said our sales estimate was 19 and a half to 21 million. So we came in within the range. Maybe kind of toward the upper end, but within the range.

1 million. So we came in a little bit above the range with our EBITDA number. Significance of our forecast estimates. We remind you of this fairly often when we give these estimates.

We're telling you what we think will happen. Sometimes we're wrong, sometimes we're not. But we're telling you what we think. Mark and I usually spend a lot of time going through this, come up with the ranges for you.

We don't pad the numbers. I know a lot of other people do that. We don't give you a number, then subtract 10% from it so when we announce the number, we can beat it. That's just not what we do.

We understand that pretty much everybody else does that, but we're not like everybody else, as you probably know. That's actually a Kinks song, if you want to check that out. Pretty good one. Slide 5.

Quarterly results. We're continuing here. So we're mixing things up a little bit. I maybe should have explained at the beginning.

We're changing the sequence of things and we're changing the content a little bit just to try to make it a little more interesting for you. I don't know if it will be successful, but that's the objective here. So what we're doing with this slide here, slide 5 at the top, is we're talking about some key product groups that we'll circle back to. In many cases, C2B fabric.

We cover that a lot. 5 million of sales of bladed materials produced with C2B fabric. 8 million. Often we discuss those two numbers because if they're really out of sync, out of alignment, they could distort the quarterly P&L.

But those numbers are fairly close, so we're not going to get into that. But just for information, we thought you'd like to know. 7 million. Obviously we emphasize missile systems a lot, so we thought you'd be interested in that number.

3 million. We'll circle back on that. We cover every quarter, and here's something a little interesting with what we provide for you. 1 million.

That's not inventory value, that's actually sales value. And that's a modern-day record, we think, post sale of our electronics business. And that's a really good thing. And we got to give a lot of credit to our factory people, our floor people, for producing and getting out the door that much product.

That's actually a pretty nice accomplishment under maybe not ideal circumstances, but when are there ideal circumstances? So we wanted to acknowledge our production people in terms of how much product was produced during the quarter. One other thing we never cover in these investor calls is EPS. We don't get into that.

But we just wanted to mention something to you. It'll be discussed in more detail with our 10-Q, which I think will be filed on Tuesday. Monday's a holiday, so you can look forward to it there. But you might have noticed already, and I just want to get ahead of this a little bit, that our tax rate for Q2 was quite low.

6%. That's not a normal tax rate. There are significant benefits from stock option exercises which took place in Q2. There were a lot of stock option exercises in Q2, significant benefit.

Our normal tax rate without that benefit of stock option exercise benefit, if you will, for the tax rate, would be probably around 26 and a half, something like that. 5%, probably looking at 19 cents rather than 21 cents. Like I said, we're reluctant to get into EPS stuff. We don't normally cover that.

But I thought it's such a, you know, significant difference in a tax rate that you probably would be interested to know, have that information. If you want more information about that you really should call and talk to Gus and Chris. But like I said, when we publish our 10-Q, there'd be a little bit more information about that particular item. Okay, let's not get too hung up on that.

So let's go to slide 6. Our top five customers for Q2 in alphabetical order. Let's see. Let's tie the customers to the pictures.

Easy one is Kratos. The BQM-177A. That's a target unmanned aircraft that obviously ties to Kratos Defense & Security. Airbus A320neo with LEAP 1A engines.

That ties to Middle River Aerostructure Systems. We call it MRAS. And let's see, the Patriot—we talk about that a lot. PAC-3 MSE defensive missile system.

That's two for the price of one. That ties to Lockheed Martin Aeronautics and L3Harris Missile Systems. That's nice and efficient. The bottom right, Bombardier Global 8000 business aircraft.

And that ties to the Northern Composites Group. Okay, let's go on to slide seven. Our pie charts. Nothing too remarkable here.

Pretty consistent. So let's not spend too much time on slide seven. Just we can keep moving. Let's go on to—of course if you have questions, let us know later—but we're going to move to slide 8.

This is a little more interesting. Park loves niche military aerospace programs. This is a slide we give you every quarter. This is Elena's project.

She always does a real nice job. So the pie chart is interesting. Just look at the missile system percentage. It is growing.

This is just one quarter, so we'll see what happens quarter to quarter. These things change, of course. But we've been talking a lot about missile systems, and missile systems as parts of the pie chart is growing. We won't go through a description of the photos, individual programs, except we always say that we don't provide photos of programs that we're not somehow involved with.

But we used to give you more information. Right now we just—at this point we don't feel we can do that. It's just too sensitive. We just don't know where the line is as to what we can say.

We can't. So we don't want to push the envelope too much. Let's go on to slide nine. Okay.

GE Aerospace jet engine programs. Like I said, we're changing things up in terms of sequence a little bit. Try to make it a little more interesting. And this slide's a little different than it was in the past.

Park's advanced composite materials and sole-source qualified in multiple engine cowl and thrust reverser components of the following GE Aerospace and CFM engine programs. So quickly, there's Boeing 747-8 with the GEnx-2B engine. Those are for spares. That program is canceled.

LEAP-1A engine for the A320 family, that's the big kahuna. LEAP-1C, that's for the COMAC 919. That's Chinese single-aisle. CF34-10A, that's for the COMAC 909, that's a Chinese regional jet.

And the A320, we already talked about that. Bombardier Global 8000 aircraft with the Passport 20 engines. So what's going on here? Park has an LTA requirements contract again to '29 for the above programs with MRAS, a sub of ST Engineering, Singapore.

Now what's going on here? These look like they're all GE programs. You got to read the little footnote. Footnote: MRAS was formerly a sub GE Aerospace.

So that's the connection. When we got on all these programs, MRAS was part of GE Aerospace. And then I think in maybe 2018 or '19, GE Aerospace sold MRAS to ST Engineering, which is a large Singapore aerospace company. Park is also exclusive supplier AFP composite materials for the fan case for the GE9X engine for the Boeing 777 aircraft.

Let's go on to slide 10. Update on GE Aerospace jet engine programs, starting out with the big kahuna, the A320neo aircraft family. We're not going to read the variants for you, but you can see them for yourself. So as of August, Airbus had delivered 4,741 of these airplanes and they have a backlog of firm orders, 7,571.

That's just a huge, huge, huge, huge program. Probably the biggest ever for commercial aircraft. So we're fortunate to be on that program. And here's the history of the ramp up.

You can see what's going on. They were ramping up the program until they hit the skids with 2020. That's the pandemic year, and then clawed their way back. 2025, 607 airplanes were delivered, and 2026 year to date.

Want to analyze this number? That's not a good idea. You can do it if you want. That's not how it works because these aircraft companies, they make the years, if you will, in the last couple of months.

But what's significant is that that number is quite a bit larger than the same period from '25, which was 333 deliveries and year-to-date August '25. So that's good. It means that GE—ramp up, ramp up—GE and Aerospace—sorry, I'm a little tired—GE Aerospace and Airbus are ramping up this program, which is good news. Slide 11.

Okay, what are we doing here? Airbus is targeting A320 aircraft family delivery rate of 70 to 75 per month by the end of ’27. Remember the prior page, I think—what did we say ’25 was, like 51 per month? So we still have a way to go here, and stabilizing to a rate of 27 thereafter.

Approved engines. This is important. These are two approved engines for the A320neo aircraft family. One is the CFM LEAP 1A engine.

That's the program we're on. We're on the A320neo aircraft family with the LEAP 1A engine—CFM—and we're not on the A320neo aircraft family program with the Pratt engine. So we covered that in the first and second bundle item. Here's some interesting info.

Third bullet item. 9% as of June 30. So the CFM LEAP 1A market share continues to grow very nicely. And in prior quarters, we explained why that is.

You know what's going on. We're not going to go into it here, but if you have any questions about that, let us know. The key thing is that the LEAP 1A market share—that's the program we're on—continues to grow. I think when we started these presentations, it was maybe less than 60%, I don't remember, but it's grown quite a bit and continues to grow.

And there's huge, huge backlog. So there's a lot of ballast, if you will, in that market share. You know, it's not easy to change the market share so much month to month or quarter to quarter. But nevertheless, that's what's happening.

9% market share, that translates into 1,204 LEAP engines per year, which is a lot of damn engines, pardon my French. Let's go on to Slide 12. So, still with the same program, as of June 30 there were 8,546 firm LEAP 1A engine orders. And, you know, that's a heck of a lot of engine orders.

—Slide 16, you could kind of figure out what that's worth. You can do your own math because on Slide 16 it tells you what a revenue per unit is. Let me just say it's a big number, and that's not it. That's just the firm engine order.

That doesn't mean that's it. Obviously you're going to take more orders as time goes on. So let's continue on Slide 12. A new, a different program: the COMAC 919, that's the Chinese aircraft with a LEAP engine.

It's a LEAP 1C engine. Therefore they have over 1,200 orders. And you can see the deliveries—they're trying to ramp up. They haven't been doing, you know, the—I'm sure they're not achieving the rates that they want.

Their deliveries are expected to ramp to 59 and 28 and 93 by authority. Those are airplanes, not engines. But, by the way, this is the single-aisle, the Chinese single-aisle airplane that's designed to compete against the 737 and the A320. Let's go on to Slide 13, the 777X with the GE9X engines.

This is a very delayed program but still a very important program for Park Aerospace. The test programs amassed over 1,700 flights—that's a lot—over 1,400 flight hours—that's a lot. Reportedly, they have over 670 open orders for the aircraft. And Boeing anticipates a certification, entry to service and first delivery next year.

This has been pushed back a lot, a lot of delays. But, you know, just my opinion is I have some optimism that this will happen next year, which would be really important for Park—important program for Park Aerospace. So, a nice picture of the 777X undergoing cold-weather testing at Fairbanks. Friend of mine took that picture.

Let's go on to Slide 14. So, GE engine program sales history and forecast estimates. We don't go through all the history. You don't need to do that.

But what you might look at is—look at fiscal ’20, that was like the year before the pandemic—just about $29 million. It took up to fiscal ’26—if you look at the right-hand side of the slide, kind of halfway down ’26—to go back to $29 million numbers. So, you know, we really had a setback with the pandemic, and it took us a while to even get back to the pre-pandemic numbers for these jet engine program sales. 3 million of sales.

5 million. For fiscal ’27, the whole year, we brought that number down from 32, and 35 was a little higher. That number was based upon the input we have from our customers, called a bill plan. And we haven't gotten a revised bill plan.