Park Aerospace Corp. ($PKE)

Good afternoon. My name is Julian, and I'll be your conference operator today. At this time, I would like to welcome everyone to Park Aerospace Corp.'s fiscal year '26 Q4 investor call and presentation. [Operator Instructions] At this time, I will turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.

Thank you, operator. This is Brian. Welcome all to Park Aerospace's Q4 investor conference call. Thank you for joining us. With me, as usual, Mark Esquivel, our President and COO. We published our fourth quarter earnings release just after the close. If you haven't accessed that, you probably want to do that. In the earnings release, there are instructions as to how to access the presentation that we're about to go over. You can -- there's a link that's provided. Also, you can access that presentation on our website. You want to do that, so the call will be meaningful. So we'll review our presentation, of course, with you, and then we'll be happy to answer questions. I just want to comment that we have a lot of new investors or potential investors at Park. During our third quarter call in January, there were over 150 participants. That's a lot for us. And I suspect that, that interest might continue. So the point is that we have a lot of new potential investors or investors and we have a veteran investors. So we have to balance between covering the old stuff again and not covering it too much. I know sometimes when we do that, the better investors get a little impatient that we're going over, things went over. But out of respect for our new blood, new investors who want to go back and cover some of these things that we cover every quarter. So we'll do the best we can to find a middle ground and compromise. And that, of course, means that nobody is going to be happy. But anyway, we'll do our best, of course. Why don't we go ahead and proceed and we'll go right to Slide 2, which is our forward-looking disclaimer language. We're not going to read this for you. But if you have any questions about it, please let us know. Let's go to Slide 3, table of contents. Slide 1, we'll start with our investor presentation and in Appendix 1, your supplementary financial information. We don't normally cover that during our call, but please let us know if you have any questions about it. Our practice has been on our table of contents to feature something about the James Webb space telescope, discovered these little red dots, a new class of object. You think about the new class of object. I didn't know what to make of that, small extremely red points of light that represent a potential seeding of early supermassive black holes, challenging our understanding of Galactic formation and evolution. Thank you, James Webb. And the James Webb was produced 18 proprietary Park Sigma Strut. So this is not a high-volume program for us and probably not an opportunity for many spares since the James Webb is in orbit 1 million miles away. We're probably not going to send anybody up to replace any of the Sigma Struts. But even though it's a small program in terms of revenue, we feature it every quarter now for the last, I don't know, couple of years because it's just such an incredible thing to be part of. It's just amazing. I mean it's hard to describe. The words don't even get it amazing, doesn't really get it because we're -- almost everything you hear that comes from James Webb says everything we believe -- the smartest people in the world believe about the universe was not true. Sorry, we got to start all over again. So we're just -- I don't know how to say it, we're just so thrilled to be part of that -- the James Webb. Again, even though from a business financial perspective, it's not a big impact. And like I said, probably no more revenue from the James Webb anytime soon. Let's go on to Slide 4, going from the -- I don't know the lofty to the -- I don't know if it's mundane, but a little different kind of level. Our own quarterly results, important, but maybe not quite in --important in terms of the -- I don't know the history of the universe perspective, but nevertheless, we'll go over our quarterly results. Q4 sales, $24,187 million, gross profit, $6.935 million. Gross margin, 28.7%, which, as you know, we don't like that too much. We don't like gross margin below 30%. But when we get the next slide or 2, we'll explain what's going on here. That relates to the significant shipment sales of C2B fabric. Adjusted EBITDA, $5.171 million and EBITDA margin, 24.1% (sic) [ 21.4% ]. What did we say about our Q4 during our January 13 Q3 investor call. We said our sales estimates, $23.5 million to $24.5 million. So we came in within the range, maybe kind of the top half, but still within the range. Adjusted EBITDA estimate for quarter -- sorry, $4.75 million to $5.25 million. And it seems like we came in within the range, maybe the top half of the range, which is good. I need to explain, especially for some of our new potential investors, investors that -- when we give an estimate, we're telling you what we think is going to happen. We don't like this kind of thing that people do where they give a number. But it's -- they haircut it by 10%. So they can beat the number and they have a beat, I can't -- I don't like that term these analysts come up with this sort of stuff. Like it's some game. We're not playing a game here. We don't like that makes us uncomfortable. We're not playing the game, but the whole concept, it's a beat, it's a beat, it's a beat. We don't want to beat. When we give you a number, we're telling you what we think is going to happen. And if we're wrong, that means we didn't do a very good job. Now sometimes we'll be wrong high, sometimes we'll be wrong low. But we're not trying to do that. We're not trying to give you a number that we can beat so we could be hero. To us, that seems like such a childless waste of time. And I just want you to understand that. So when we say we're in the range, that's a good thing. That means our prediction was right. So I probably cover that every quarter because it's a little different with many other companies how they do that kind of guidance thing and it's not something we really have to spend time with. Let's go on to Slide 5, okay? Talk about Q4 a little bit more. ArianeGroup, here we go and now we're talking about that gross margin number. ArianeGroup business partner agreement, we talk about this every quarter, is significant from many perspectives. But in terms of the quarterly P&L -- so we entered into the business partner agreement with Ariane in January '22 under which Ariane appointed Park as their exclusive North American distributor for their Raycarb C2B fabric used to produce ablative composite materials for advanced missile programs. Now, we had $7.1 million of C2B fabric sales in Q4. Well, that's a lot. I mean $7.1 million, what was our number, 24.1%. It's a very high percentage. As we previously explained, we sell C2B fabric to our defense industry customers for a small markup. That's not so good. But wait a minute, that's not the whole story. Park sold $1.3 million of ablative materials manufacturing with C2B fabric in Q4. And as we also previously explained, our margins producing and selling ablative materials manufactured with this fabric are significant. Now what's going on here? When we sell the product, we buy it from Ariane because we're exclusive. We have exclusive rights to buy it in North America. So we sell it to the OEMs because when they're doing -- they're stockpile the product, where does it go in a stockpile? In our factory. We don't even ship to them. We hold it for them in our factory. Why are we doing that? They're stockpiling it because obviously, you're going to tell us at some point, "Please make this into your prepreg material. Please produce the material for us." So everything that we stockpile will end up being produced by Park as ablative material, which is where those margins are very good. And so stockpile is good. And they're doing it because the OEMs are doing it because they're concerned about the availability of this very critical C2B fabric. Let's go on to Slide 6. The shipments. Now this is interesting because we started talking about this at the beginning of the pandemic. The industry was not doing well, supply chain, international shipments, so one thing after another after another. And every quarter with a lot of missed shipments, that have come down quite a bit over the last couple of years as things kind of got close to "normal" based upon the post-pandemic levels, all right? But what's going on here is this is now reemerging as a problem because now the industry is accelerating, recovering and the program ramps are accelerating. So now the industry is kind of struggling once again with keeping up from a different perspective, but it's the same kind of phenomenon. It's just from a different perspective. So now we're talking once again about missed shipments, 715,000. Well, that's a lot. And we talk about Q1 or Q1 forecast, it's going to be even more. So it's something to think about. Ultimately, all this product gets produced and shipped, but the industry is now struggling to keep up as the industry accelerates and ramps. Net impact of tariffs, tariff-related costs. Mark, could you help us with a little perspective on tariffs and tariff-related costs, please?

Yes, it's the same story as the last few quarters, very minimal impact for us. Again, we typically passed these on to our customers through our pricing contracts or as we do pricing every few months with our regular business. So no impact for us, but maybe a few thousand dollars this quarter.

All right. Thanks, Mark. So why don't we keep going to hustle through here. So Slide 7 for some of the new folks. This is something we do every quarter for, I don't know, as long as we've been doing presentations, I guess, our top 5 customers for the quarter, an alphabetic order. And we do a little picture that ties into each of the customers. The top right, you'll hear a lot about this, the PAC-3 Patriot Missile System. That's 2 for the price of one because that actually is AAE Aerospace and L3Harris, so that's nice. We got one picture for 2. Kratos is obviously a Kratos BQM -- that's a target drone, middle of aerostructure, we'll talk more about them. That's the Airbus A320 with the LEAP-1A engine. And Nordam is the Boeing straddle tanker. So let's keep going. Pie charts. These have gotten a little boring, but they're becoming interesting again. So when we take a look at this, Park estimated revenue by aerospace market segment. See in '21, that was -- fiscal '21 -- remember our fiscal year ends in February, that was a pandemic year. Look what happened. It wasn't that military was so great, its just commercial was almost nothing. Remember that the -- you saw the pictures of like the 737s with 2 people lined on them or probably more likely really Park that weren't flying at all. But commercial aerospace was terrible and the airlines weren't ordering the airplanes. They were canceling many as they could. So you see that happened in '21. In '22, '23, '24 and '25, it kind of normalized "for the pandemic level, post-pandemic level", which was kind of anemic, let's call it. But look at '26, there is something emerging there where the military is actually increasing more than it had been. And if we showed you Q4 of '26, it would be kind of shocking how strong, how significant military is. We're not going to do that because we don't want to get hung up on one quarter. But we think there might be a trend going on here when we look at '26 was in -- is in the bottom middle of the slide. And let's go on to Slide 9, a little more pie chart stuff. This is another slide we include for every quarter, Park loves niche military aerospace programs. The top 5 is -- that's done by Donna and this one is done by Elena. Elena is Head of Customer Service at Park. This is her thing she does every quarter, Park loves niche military aerospace programs. So these are not necessarily the big programs. These are just -- some are big, but some may not be. These are programs of interest, we thought you'd be interested in them. I just want to be clear, everything we show here -- everything we show every quarter, those are programs we're involved with. We're supplying into involved with. We're not just showing you nice pictures of rockets and planes and cool stuff like that. So we just want you to be aware of it. We don't comment anymore on what we do with these programs because they just got to be too sensitive, but just understand these are all programs that we supply into. And the pie chart, look at Missile Systems, that's getting to be pretty big there. And that's not -- I don't think that's an anomaly. We'll talk about Missile Systems as we proceed with the presentation. I'm trying to hustle through because at the back end of the presentation, when we get to Missile Systems, there's a lot to talk about. That's a lot of new stuff also. Slide 10, GE Aerospace jet engine programs. We provide this slide almost every -- almost every quarter, very minor changes. I do need to explain for some of our new investors. The Firm Pricing LTA is a Requirements Contract from '19 to '29 with Middle River Aerostructure Systems, where they know -- they're a sub of ST Engineering Aerospace, they don't know. We built a redundant factory. That was part of the deal that we actually made with GE Aerospace. When we entered into the LTA through '29, we agreed to build a redundant factory. That was done a while ago. It's in production. Sole source for composite materials for various engine nacelles, thrust reverser components for multiple MRAS programs. We have the A320neo family, 747, the Comac 919, the Comac 909, the Global 7500. And the next slide is the 777X. Well, what's going on here? These are all GE engines, aren't they? We did say about GE and also CFM, which is a partnership with GE. Yes. So the thing is that when we entered into this contract, Middle River MRAS, where they produce the nacelle and thrust structures for these engines, was a sub of GE. And I think in '19 or '20, I don't remember when GE sold this MRAS to ST Engineering, which is a large Singapore aerospace company. That's the reason why all these programs are GE Aerospace, or GE Aerospace programs. So questions let me know, let's just keep moving here on Slide 11. Okay. We already talked about this 777X, that's in those GE9X, that's a GE engine, of course. And in this LTA, we also included some of our new film -- proprietary Park film adhesive products and for composite bond and metal bond and all those products are under qualification. We've been talking about a Life of Program agreement to supersede the 10-year deal for every quarter now for a while. And this was requested by MRAS and STE, not by Park. We're happy to do what it's under negotiation. We actually made some progress recently, but we'll see. It's still a way to go to get to the finish line. As we always say, we're happy either way. If we do the Life of Program, that's wonderful. If not, we're okay too. Let's go on to Slide 12, keep moving along here, still in GE. Updated GE Aerospace jet engine programs. So let's go through the programs in a little more detail. First, we start with the big kahuna, which is the A320 aircraft family, includes all these different variants. As of March, Airbus has already delivered 4,553 (sic) [ 4,453 ] of these airplanes and had a backlog of 7,412 of these airplanes. So you add those 2 numbers together and that -- the total is a big number. This is a huge program and could be the biggest commercial aerospace program ever -- aircraft program ever. A320neo family aircraft deliveries, you see the pattern here, ramping up in '19, you got to 561 and the pandemic hit, everything collapsed to kind of 431, kind of going your way back to that 561 level, kind of got there in '23, '24, '25, inching forward the 50 a month, 51 per month. But -- let's go to the next slide, Slide 13. Well, just one more item before we get to that punchline. '26 year-to-date, only 136 deliveries, that's not so good, off to a slow start Airbus is for the A320neo aircraft family. Why is that? What's going on? Well, Airbus have been targeting 75 neos per month by '27. They've been very public about that. So you look at the prior page, we're kind of inching up to 51. We're nowhere close to 75. Airbus recently stated they expect to reach that delivery rate only of 75 -- 70, 75, so we're backing off a little bit by the end of '27, stabilizing, that's the return to a rate of 75 per month thereafter. So they're backing off a little bit. What's going on here? Why? What's the problem? Maybe we should consider the engine situation. So -- sorry, it's a little complicated, but we need to give you a perspective, I think, the 2 approved engines for the A320neo aircraft family. There's the CFM LEAP-1A engine, that's what we're on and then there's the Pratt PW1100G engine. We're not on that program. So we supply into the A320neo family aircraft using the LEAP engine. But we don't any content on the A320neo family aircraft using the Pratt engine. Important to know that. Let's go to Slide 14. Now according to the first quarter 2026, edition of Aero Engine News, that's our bible. The CFM LEAP-1A market share firm engine orders for the A320neo was 66.2%. Now that's interesting, like what the heck is that number about? We cover this every quarter. And the number has been like 60%, 61%, 60%, 66.2%, that's not our -- that's not the historical number. That market share moved up. It's sustainable. What is the trend, we'll see. But at that -- at the delivery rate of 75 airplanes per month, 62.2% equals 1,192 LEAP engines. Can you remember that number? We'll get back to it later, interesting number. The Pratt engine -- here's the kind of the issue. The Pratt GTF engine has struggled with serious reliability issues. You probably read about this. It's not a big secret. Reliability is a positive selling point for CFM LEAP-1A. They upgraded one of the components recently for better reliability. And according to Airbus, this is recent. There is now a serious shortage of Pratt PW1100G engines. And Airbus indicated that's the main cause of their disappointing 2026 A320neo aircraft deliveries. They're kind of putting the blame on this Pratt engine, not only with the reliability issues now with shortages. Meanwhile, CFM has significantly ramped up production of their LEAP engine family, including the LEAP-1A. So let's keep going here. Let's see if we can figure out what really is driving all this, Slide 15. Could these factors lead to an even greater [indiscernible] -- sorry, rushing CFM LEAP-1A engine market share for A320? I don't know. Interesting question. Now we sort of read recently something that surprised us, which is Airbus now saying, "Well, CFM is delayed on deliveries as well for the LEAP-1A." So I don't know what that means. The focus has really been on the Pratt engine now and say, well, LEAP is fine as well. So I'm not sure what to make of it. My guess is that the CFM can produce the engines that they have an opportunity for more market share gains, but that's their business, not mine. As of March 31, there were 8,472 LEAP-1A engine orders. That's a lot of orders for engines. And if you look further later on in the presentation, we talk about our revenue per engine based upon current pricing. You can do your own math and figure it out, but we're talking about some very hard numbers here. A320neo aircraft family program could end up being the world's largest commercial aircraft program ever. So we're very happy to be on that program. The A320neo aircraft program could end up being part's largest nondefense program ever. And that goes back a long, long time. We're talking electronics back in the '90s and everything else. So that's a big statement. Let's go on to another LEAP program, which is the Comac 919. That's a Chinese single-aisle to compete with the A320 and Boeing 737. Comac is increasing manufacturing capacity to achieve production rates of 150, 919 aircraft a year by '27 and 200 by '29. And they reportedly have over 1,200 orders for the 919 aircraft. Let's go on the slides we got here. We're at slide 16. COMAC delivering 2 of these airplanes in '23, 14 in '24 and 18 in '25. That's not a lot. Comac was targeting 25 -- that's not a lot -- 25 in '25, but can get there. So there are reports that CFM may be favoring Boeing Airbus with LEAP engine availability. Now these are different -- 3 different engines. They're not interchangeable, but there's still a capacity question as to how many LEAP engines that CFM can produce. So -- and the lack of availability of CFM LEAP-1C engines may explain the shortfall and may be emerging as more impactful to -- emerging as more impactful to the ramp of the 919 aircraft program than originally anticipated by Comac. Now will this change improve for CFM -- sorry, for Comac, not for CFM, as a result of the recent summit between President Trump and President Xi? The answer may be yes. There are reports that there is some plan to increase CFM LEAP-1C engine deliveries to Comac as a result of that summit. So we'll see what happens with that. But you get the theme here, it seems like the engines are often the gating items on these programs, interesting. Slide 17, let's talk about the 777X program. That's the other third big program that we're dealing with, with GE Aerospace engines. The 777X program, the GE9X engines, the 777X test program has masked over 1,500 flights, nearly 4,400 flight hours. We have 652 Boeing -- 652 open orders for the 777X and the certification test program seems to be moving along reasonably. Boeing anticipates FAA certification entering into service and first delivery of the 777X next year. This program is very, very, very delayed a long time. I happen to be at Everett Field and -- where Boeing makes these airplanes, I think the biggest building in the world actually. And they're all over the field, everywhere. A lot of cases, they don't have engines waiting for engines and obviously waiting for certification. The can't -- certification -- can't start delivering the airplane until they get the FAA certification. Now let's go on to Slide 18. So these points are kind of key. Our understanding is that the Comac 919 aircraft and the Global 8000 aircraft are already being produced and delivered at or close to targeted rates. We covered that in that original slide where we broke down the different programs, and we didn't really deal with them in any detail. The point is that we're not expecting much upside from those programs. These are already being produced at their targeted rates. Clearly, the Commercial Aircraft Juggernaut, as we call it, will be driven by the ramp-up of the A320neo aircraft family, the Boeing 777X and the Comac 919 aircraft. Okay. Let's go on to Slide 19. We're still talking GE Aerospace. Just some numbers for you here, GE Aerospace and Engine program sales history forecast estimates. So in Q4, $8.1 million and in fiscal '26, $29.3 million. See what happens here. Look at '20 -- we're kind of almost at $29 million right before the pandemic and then wow, look what happened in '21, just dropped off a cliff. And we're clawing our way back in '26 to kind of get back to where we were in '20 right before the pandemic. So -- and -- it's been long 5 years for the special commercial aircraft industry. That's for sure. So our forecast for Q1 for GE Aerospace program sales, $6.8 million to $7.4 million. Our forecast for the year, $34 million to $38 million. It would be a mistake for you to take Q1 for anything, multiply by 4 and think that's what we're thinking about. It doesn't really work that way. The forecast for the year, that's based upon what we have, we call it a build plan from our customer. And we haircut a little bit. The number we got from our customer is actually higher than the forecast we're providing you. We're trying to be more conservative here. Let's go on to Slide 20. Okay. Now let's talk about Park numbers, Park financial performance history and forecast estimates. Too obvious is history, totals, you already know about, the Q4 you know about, totals you know about. We know about now anyway. Forecast estimate for Q1, $17.7 million to $18.4 million in sales, $4.1 million to $4.6 million EBITDA. Now remember, we talked about missed shipments in Q1, we're expecting $1.3 million approximately significant amount of missed shipments. We don't know yet. Q1 ends on Sunday, we're so close to the end of the quarter that we can give you some perspective. Normally, when we announce -- the missed shipments normally really end up being a phenomenon in the last few weeks of the quarter. So normally, we announced, we can't give you any perspective on it, but we're so close to the end of the quarter, we give a perspective. It's the same kind of thing, supply chain thing. We're not getting components as quickly as we need, some shipping issues where if the freight forwarder doesn't pick it up, international shipment is not a sale. We normally sell cutoff issues at Park. It's a sale when it leaves our dock. So you see we're kind of back in that mode now When the industry is struggling because the industry is starting to struggle like, because things are ramping up aggressively. Things were quiet and things were kind of normalized and the industry kind of caught up, but now we're back to maybe getting behind the power curve a little bit. And let's see how that pans out, but it may -- I don't know. It may take, I don't know, a couple of years for the industry to get back up to speed or maybe it will always be behind because things are ramping so aggressively. As soon as they catch up and they'll turn around, we ramp more. We'll have to see about that. Slide 21. We're just trying to share the full perspective with you. Slide 21, let's stop here for a second. I know we're kind of running late here, but our historical fiscal year, results because it tells a story that's kind of interesting, I think, look at the sales -- this is aerospace only. We sold electronics, I think, in '19, but this is aerospace only, $31.8 million going year-over-year, $40.2 million, $51.1 million, $60 million. So from '17 to '20, we kind of were going up $10 million per year in aerospace, which is a lot. Then look what happened in '21. We're just kind of fell off a cliff. There's a pandemic year. And '22, '23, '24, maybe '25, we try to crawl our way back to the '20, the pre-pandemic fiscal year and maybe just got there in fiscal '25. But it has been a -- it's been a difficult 5 years post pandemic for the industry, that's for sure. Now '26, it seems like we're breaking out a little bit with the sales of $73.3 million, but '26 is a little bit of a maybe departure, which is a good thing. Important thing, supply chain limitations and industry malaise affecting aerospace industry post pandemic. Yes, yes, the industry to us was kind of sleep walking through those 5 years with a state of malaise. And it was a long 5 years, long 5 years for us, that's for sure. I think a lot of people were -- didn't really believe in us very much. We believe in ourselves, but we didn't -- not too many people. I think we're kind of forgotten company that we're kind of lost and we know what to do, and we never felt that way. We always stayed focused. I think we worked very hard in our quarters. That's for sure. I know that. I don't think it. We had to listen to people telling us to sell the company at $12 or $13 per share. You like that? That's the kind of crap to listen to. It was a long 5 years. And we're in the industry, so there's not much we can do about it, but the aero industry was to us sleep walking now. We'll get to that in a little while, but I think that that's over. The industry has gotten a pretty serious wake-up call, maybe shock treatment. We always want to remind you how many -- how much fabric sales were in these years because they do drive top line numbers and the bottom line as well. So I hope you don't mind that commentary, but we thought -- we're not complaining. We just thought you should know how we feel about things. If you want to invest in Park, you should know what we feel. Slide 22. Okay. So let's talk about this. This is interesting stuff. Our buyback authorization, yes, we purchased 718,000 shares of our common stock, $12.94 per share, $9.2 million, $9.3 million. We didn't buy any stock in our Q4, Q1. I -- probably I'm not shock to hear that. So we used to comment that we really don't like buybacks so much. And we don't comment on our stock price and only as can do that, except this is one exception. We said when the price gets so stupid, we don't have a choice but to buy the stock. So we thought the price was God damn stupid and we bought a lot of stock at $12.94. So let's go on to the next slide. We just [ got ]these 2 slides for intentionally. Our recently announced public offering, that's Slide 23, we announced this during the last quarter call. We filed the necessary Registration Statement and Prospectus Supplement for $15 million at-the-market public offering. It was the purpose to replenish a portion of the $50 million plus, we've got plus sign, that we plan to invest in our major new manufacturing plant. We'll get back to that later. Other investments under serious consideration, we'll talk about that soon as well to ensure -- this is an important one -- that Park has the necessary funds to be in a position to take advantage of and exploit the key opportunities currently being presented to Park and the new key opportunities as they arise in the future. That's a little bit more of kind of an amorphous thing, but I think equally important. Now let's go to the numbers. During our Q4 under this Registration Statement, we sold 943 approximately shares of common stock before -- for proceeds of $22.8 million at a price of $24.21 per share. So we bought -- let's see. We bought the stock at $12.94. We sold it at $24.21. I'll tell you some -- I don't know the NBA, I don't know how to read economics, but where we come from, that's a pretty good deal, I think. So I just wanted to mention those 2 numbers to you. Let's go on to Slide 24. Here, still the same kind of theme, Park's balance sheet cash and very incredible cash dividend history in our opinion, of course. We have 0 long-term debt. That's in our opinion. Park reported about $89.4 million in cash and marketable securities at the end of the quarter. And you say, well, that's a lot for Park. And actually, it's not. I mean probably it isn't even enough. We'll get to that later in the presentation. We talk about the expansion plan and then other potential investments that we're seriously negotiating is probably not enough money for Park. 41 consecutive years of dividends. Park has paid $613.7 million, $29.975 per share since 2005. So our next dividend, which we're announcing soon, that will put us over $30 per share since 2005. We'd like to show the picture of our founders back in -- Park was founded in 1954 with about $30,000, a small, wasn't a factory, was a garage in Woodside Queens. This actually is a step up. It is about 3 years later. It's actually the real factory in Westbury, New York, which I think was about 10,000 feet, with our founders in a picture. Slide 25. I'll try to hustle. I know we're taking too much time here. Financial outlook for GE Aerospace engine programs, the Commercial Aircraft Juggernaut. So for those of you who have been listening to our presentations every quarter, we say what? We say the juggernaut is coming, it can't be stopped and we better be ready. We're not saying that anymore. We're saying that juggernaut is here. Commercial Aircraft Juggernaut is now. So let's going to go through this quickly, slide -- this is Slide 26. We show you this every quarter. I just want to remind you, the A320neo engine assumptions per year 1,080, that's based upon a 60% -- that based on 75 airplanes per year and 60% market share. But that market share, the actual market share, that gives us 1,192 engines, not 1,080. We're still sticking with 1,080 being conservative here. That's millions of dollars of additional revenue. I just want you to be aware of that. And Slide 27 goes through a lot of the math as to how we computed the numbers on Slide 26. So we won't spend time on Slide 27. Slide 28. Okay. So here we go. And now we need to spend some serious time on this whole new juggernaut extreme, we call it. Let's just go through some basics, Park's Missile Systems niche. Park specializes in the design and manufacture of advanced composite ablative materials used to produce solid rocket motor structures and heat shields for critical missile systems, including the PAC-3 Patriot Missile System. We talk about that a lot, and we keep -- we'll talk about it a lot during the presentation. I just want to flag here before I forget that there are dozens of missile systems that we work on. It's just the Patriot is so much known variety, so well known, so we tend to focus on that more just as an example. And the other programs are probably we want to talk about is it's maybe not something for public consumption, but there are dozens of missile programs that we're on. Park also designs and manufactures advanced composite structure materials used to produce other missile system components. Depletion of the depleted, okay. Here we go. It's well understood that critical missile system stockpiles were already badly plated by the ongoing brutal war in Europe in last June's 12-day war in the Middle East. And now we have the war with Iran. The shell game, what's a shell game. That means moving the Patriot battle -- batteries from one country to another, one country to another to try to be ready for the incomings. The shell game has been tried. The law of diminishing returns is in play. There's only so many times the shells can be moved before there are no shells left. That's the problem. That's really the problem. Slide 29. There is much reporting about how badly stockpiles of critical missile systems are growing the Patriot PAC-3, and Other systems report have been depleted as a result of the war with Iran. We're not going to report -- the reporting here is going to be responsible to do so. But you can check it out yourself. You can go find yourself. We just don't want to go into that. Running empty, yes, running empty. Replenishing the depleted stockpiles. Well, that's obviously very urgent. There clearly is a highly urgent need to replenish the depleted missile system stockpiles. Is that enough? Does it end there? Maybe not. Quadrupling the production of exquisite class of weapon systems. What? Quadrupling? You kidding me? I don't know, maybe not. Let's go on to Slide -- is it 30? March 29, 2026, I guess, a couple of months ago, President Trump met with the White House with 6 top defense contractors, including Lockheed and L3Harris Missile Solutions. The reason we mentioned those 2 is they're both very key for us on the PAC-3 missile system. After many contractors report agreed to quadruple production of exquisite class of weapon systems as rapidly as possible, importantly -- Now -- reported by President Trump, I think, actually. This is a new world order for the defense industry, a radical and likely lasting change of defense industry. The old days are likely gone for the defense industry. And that is a good thing in our opinion. So like I said, the industry generally had been sleep walking for 5 years, defense and commercial, but there's now this wake-up call. We have the NWO. We have the extreme depletion of the supply and then this quadrupling scenario, which is more than a wake-up call, more than lock -- more than clock, I would say, it's shock treatment. What does the NWO mean for Park? So this is really important for you to understand. Our experience is that the defense industry has entered into hypersonic mode. That's our personal Park experience. Not just what we hear, that's our experience, our day-to-day experience. All years we have never seen anything like this, particularly for ablative materials, for solid rocket motors, that enclosed. I've been at Park since 1988. I've never seen anything like this in electronics or aerospace. The coating activity, especially for ablative materials for solid rocket missile systems, has been hyper and frenetic, almost too much to bear really. It's something we've never seen before. And it's hard to really describe and help you understand what we're experiencing. We're just trying to do the best we can here. And just in case it's not obvious, the PAC-3 missile systems and many other missile systems which Park supports are very key members of that "exquisite class of weapon systems." So let's keep going here. Missile Systems on Slide 31. We're not talking about specifically the PAC-3 Patriot Missile System. Park is sole source qualified for advanced composite ablative materials for solid rocket motors for the PAC-3 Missile System program. The PAC-3 Missile System is considered by many to be the world's premier missile defense system. So a lot of discussion about maybe it's not great for shooting down little drones, but for incoming ballistic missiles, yes, that's the system every wants to have, highly effective, highly effective. We have covered the PAC-3 Missile System extensively in recent quarterly investor presentation. So we'll just hit the high points and new items here. Stockpiles of the PAC-3 Missile System interceptors were already badly depleted by the war in Europe and last June's 12-day Middle East war. So we don't want to go into repeating reporting here because it may not be appropriate and responsible to do so. But suffice to say the current war, the rand is very badly depleted -- already completed stockpile of PAC-3 receptors. The PAC-3 Missile System interceptors have been extensively and very effectively, maybe too effectively, meaning so effective that everybody in the world wants them, used by U.S. allies in the region, the Middle East region during this war, including Saudi Arabia, UAE, Kuwait, Qatar, Bahrain, Israel, defending against incomings during this Iran war. Slide 32, just a little side note here. Israel, you probably know this also uses its own system called Arrow 3 and Arrow 4 missile defense and Park is qualified and supports both those programs. Back to the PAC-3, as previously reported, on January 26, Lockheed announced it reached a 7-year agreement with the Department of War to increase PAC-3 MSE interceptor production, 600 to 2,000. That's a lot. That's almost 4, isn't it, 4x. What about us? What have we been told by our customer, we're not going to tell you, we're not at liberty to, but we can tell you it's more than 2,000 in January 13, 2026. I think we covered this last time as well. The DoW announced investing $1 billion in the L3Harris solid rocket motor business to boost solid rocket motor production for PAC-3 and other missile systems. That transaction is already closed apparently. Slide 33, continuing with Missile Systems. ArianeGroup, we got to talk about ArianeGroup. We talked about PAC-3, now we talk about ArianeGroup. So ArianeGroup is a joint venture. It's a large French company between Airbus and Safran. Our relationship with ArianeGroup and its predecessors goes back to early 2000s. We have a very special relationship with Ariane and we're proud to be their partner. And we don't take liberty to a partner. That's their term. We don't do that. That's the term they use for us. I just want you to be aware of that. ArianeGroup produces a proprietary product called Raycarb, which is -- sorry, proprietary fabric Raycarb C2B, which is used to produce ablative composite materials for solid rocket missile programs. So here's something highlighted. Park is sole source qualified on the solid rocket motor for the PAC-3 Missile Programfor specialty ablative materials produced with ArianeGroup's proprietary C2B fabric. So we're kind of double sole source qualified. We're sole sourced, but also ArianeGroup with the C2B fabric is sole sourced. Park entered into a business partner agreement with Ariane in January of '22, under which they appointed us as their exclusive North American distributor for C2B fabric. On March -- this is something worth noting, March of '25, we entered into, what they call the new agreement with Ariane under which Park agreed to advance Ariane EUR 4,587,000 to Ariane, that's about EUR 5 million, I guess, against payments for future purchases by Park C2B fabric. Why do we do that? Slide 34. Yes, we paid the first installment in Q1 of '26. We paid a second installment in Q1 of '27. And third installment we paid last, I think, in Q1 of '28. What's the purpose of this big advance is approximately EUR 5 million to fund 50-50 with Ariane, the construction of additional C2B fabric manufacturing capacity in France. Will this capacity -- that capacity will be online and maybe, I think, in '28. Will this additional capacity be adequate to support the ramp-up of the -- just the Patriot missile programs. So when we talk about the other programs in which C2B is getting qualified or is qualified, the answer is no, not even close, not even close. So what do we do now? Park has engaged in serious discussions with ArianeGroup relating to an agreement to significantly increase C2B manufacturing -- fabric manufacturing capacity in the U.S. to support critical Department of missile programs, including the PAC-3 missile programs. Agreement under negotiation contemplates this important Park making a significant investment in this C2B fabric manufacturing plant. I mentioned our own expansion and there is another investment here. We'll get to our own expansion in a minute. In our opinion, it's urgent that this C2B fabric manufacturing plant is built. So the interest in C2B is hyper and phonetic. So there are a lot of companies, a lot of customers, a lot of OEMs looking to sign up for C2B on their programs. The obvious challenge is the supply, probably take about 4 years for this plant to be built. When we got going here, we got the NWO. We have the war where systems have been badly depleted and quadrupling. So that's driving a very, very, very hyper need for the C2B fabric, which is, like I said, considered, my understanding, the premier product for missile systems, for solid rocket motors for missile systems. Let's go on to Slide 35. This will tie together a little bit as well. Our new manufacturing plant -- sorry, we're going so long here. An update, we talked about this for the last couple of quarters, but we're regrouping with our new manufacturing plant. Why is that? We're planning -- okay, let's go through it. Park is planning to build a major new manufacturing plant. New plant will include the following manufacturing lines. This is going to review solution treating, hot melt film, hot melt tape, what else. What else? Because we're always looking to expand and develop our business. We don't want to limit ourselves to all what we're doing now. New plant is being designed to produce and support our complete composite materials product line, including specialty ablative materials, solid rocket motors, film adhesive materials and lighting strike protection materials. What else? Well, again, we're looking always to develop into new areas, I mean, new related areas, not looking to go into making Park Mary go rounds or something like that. What has changed from the original plant design discussed just in our Q3 investor call in January? So hot mill, let's break it down. Is hot mill film and tape manufacturing capacity contemplated by the original plant adequate? Yes, it probably is actually. Let's go on to Slide 36. The hot mill film and tape lines primarily support Park's commercial aircraft programs, Commercial Aircraft Juggernaut. So we think we're okay with the Commercial Aircraft Juggernaut. How about those solution -- how about the solution treating capacity though contemplated by the original plant design? Is it adequate? No, it's not adequate. But the current plant design contemplates the current -- I'm not talking about the original plant design for 3 and 4 months ago, the current plant design, the one we're working with now contemplates additional solution capacity, but it still may not be enough. And we're evaluating increasing solution treating capacity even further. Why is that? The solution treating lines support, among other things, Park's missile system programs, yes, the missile systems juggernaut. So you see the connection here. The original plant design contemplated a plant design of 120,000 square feet. Will that be enough? Probably not, because again, we're looking at increasing the solution treating capacity to support the missile systems juggernaut. So 120,000 square feet may not be enough. This is all coming at us pretty recently. So like I said, we're regrouping. It's only -- we didn't know that there will be another war in Iran. We didn't know that President Trump would bring these guys in and say, "We got a new world order here, new [ sheriff ] in town you increase your missile production by 4 times." We didn't know that was coming. So we're trying to regroup and make the adjustments that are good for Park for the future. How much land we're looking for? This is important. We're looking for 20 acres. And why is that? Because the original plant, even with, let's say, expanded footprint, let's say, it's a little bit more than 120,000, that would fit within 10 acres very nicely. But we're looking for 20 acres because we want to have the ability to add another plant of approximately the same size at some point in the future. It's important for us that the plants are in the same campus, in a second plant across town, it doesn't work too well for us. So we want to have that ability to expand. That's why we're -- our spec is approximately 20 acres, that's not exactly, but that's the concept anyway. Slide 37. Will the new plant still approximately double Park's current composite materials manufacturing capacity? No, it will more than double Park's current solution treating manufacturing capacity. Will the capital budget for the new plant still be approximately $50 million? I don't think so. It should be more than that. And I should say something. This is the capital budget. What about working capital and startup costs, significant. We're not even talking about that. Going back to that cash number of $90 million approximately, plus the amount we're seriously negotiating, investing with the plant in the U.S. When you add those 2 things together, you say, yes, we don't -- I don't have enough money, likely be more. Where will the new plant site be located? In the U.S. Heartland at a location which is supportive of, conducive to and inspirational for Park's future development and growth as a company. So we're not just looking at it from a mundane perspective, we just need these many machines to make this much product. It's about our future. We're going to go for our future. The next -- we build a plant, we'll be there for 30 years. You got to think 30 years out. Slide 38 -- sorry, it's taking so long folks. We're building this new manufacturing plant. Why? Why are we doing it? Because our commercial aircraft juggernauts and missile systems juggernauts require it. That's just basic math. We need the capacity to support those juggernauts. Also, though, to enable -- this is more futuristic thing to enable, to facilitate and inspire Park's holistic growth and development as a company for the future. After all, we're only 72 years young. So thank you, everybody, for hanging in there. Operator, we're done with the presentation. We'll be happy to answer any questions that investors may have at this point.

[Operator Instructions] And our first question comes from the line of Nick Ripostella with NR Management.

Can you hear me?

Yes, we can hear you fine, Nick.

Okay. I just wanted to -- I've been thinking about this one for a while. On the C2B fabric, is there any alternative that's used in any missile programs that you know of? [indiscernible]

Okay. Let's deal with that. That's a concrete question. There are stockpiles of 2 different types of fabric, which are available, but they're not in production anymore and no plan to put back production. So interesting since you brought it up. This is my perspective on it, but not only mine. Until a couple of months ago, I think some of the defense contractors were kind of counting on using those stockpiles, and we got a long stockpile last for many, many years. But when you take everything multiply by 4, they start to panic like these stockpiles are not going to last very long at all. And that probably is one of the reasons that there's kind of a hyper interest in C2B. Now there are always going to be efforts to develop new products that maybe would be, let's say, equivalent to C2B or could serve the same purpose that C2B serves. But what's existing in the market now, there are -- that are at the level of C2B, there are other ablative products that are at the level of C2B in terms of capability. There are 2 products that are kind of close, but there are stockpiles that are being depleted and limited. So it's important. It's an interesting question and the answer is maybe a little more complicated.

Okay. So do you consider that a risk? I mean, necessity is the mother of invention.

Yes. But new products will be developed. Yes, sure, it's a risk. But of course, we would like to be involved. And that's our attitude. We don't -- I don't want to say too much more about it, actually, Nick. But yes, we're not sitting back passively and saying, okay, I mean, we want to be the driver of new products as well. And at the same time, supporting everything we're doing with Ariane, our partner. We would never undermine them or do anything to hurt them that -- we would not do that.

Okay. So by the way, so all the manufacturing that Ariane -- they have plants in France. So is that where tariffs would hit if there were any like -- on a product like that? Or are you shielded from that somewhat?

Would tariffs apply to the product that's been shipped?

Yes. In other words -- yes.

Yes. Well, I think the answer would be yes. I mean, I think it's pretty obvious. The answer is yes. Now the tariff situation is changing, of course, and dynamic, but tariffs did apply to products that are being imported from France.

Well, it's just -- I find it interesting that the Department of War wants to kind of quadruple -- the material is important. And it would seem like they're shooting themselves in the foot by tariffing and something that...

Yes. That's -- Sorry, that's an interesting point. It's been brought up by us, I mean, to the Department of War.

Okay. So is it fair to say that the missile programs throughout the world that are using -- mostly using C2B? Or is that an incorrect statement?

Missile programs. Other programs?

Yes.

So as for other missile programs, there's many different kind of missiles and many different kind of ablative materials. C2B is considered to be my opinion, but not only my opinion, the premier material, ablative material fabric for stop rocket motors.

Okay. All right. Fair enough. Okay. I'm sorry, you can stop me if I'm going too much. But I've asked this before, and you already have a lot on your plate. But is there any content or work developing on anything with SpaceX or Blue Origin or others?

So we Mark, do you want to chime in that. I think we do a little bit of work with Blue Origin. My opinion is we'd love to do work with SpaceX. They're not solid rocket motor people. Solid rocket motors are for defense. They're one shot. You can't reuse solid rocket motor. So when you think about SpaceX, they're big into reusing their rocket systems. They have a whole different kind of psychology about it. My opinion, and we talk about, I love to build, work with SpaceX. I'm not sure we're doing very much. Mark, Blue Origin, I think we're doing a little bit Blue Origin, are we?

Yes, we're doing a little bit. I think most of that works in our parts business, Brian, our structure -- but we supply some material. But lately, it's been -- we've been building some parts for that.

Okay. Fair enough. One other thing. So are we expecting to do additional at-the-market stock sales, maybe you need to raise more capital?

Yes. So it was a $50 million ATM. I think we explained how much we raised so far. And it was only in our Q4 as we explained. We didn't -- we haven't raised any since the end of Q4. So the balance is still available and we'll see. I think we try to be very intelligent and very disciplined about the ATM. We said no a lot. In other words, on pricing. So no, it's not going to work for us. We're trying to protect our existing shareholders. And I think we did quite an outstanding job with that, if you don't mind my saying so, Nick. We're quite disciplined and we get offers. No, no, that's not going to work for us. So we want to be careful about how we do it. And I think we're quite disciplined, like I said. And I think it worked out fine. I was very happy with the results. And yes, we'd like to raise more money, and we'll have to see what happens. We'll update you every quarter, though. So go ahead. What were you about to say, Nick?

You know how I feel, you've done, yes, an excellent job of caring for shareholders. There's no question about that. And just one little other thing here. You've been in this business for a long time, as you said. So the new facilities you're building, are they much different? I know you highlighted some things in the call. But in terms of the technology -- because I don't know, at some point in the last couple of years, you've talked about automation and things like that. I'm just curious because there is a lot going on in terms of extensive robotics and things like that. But maybe you're just not the type of process that could avail yourself of those things. But I'm just curious about your role?

Yes. So we want to use those things as tools intelligently. We don't want to go into automation because it's "cool", so we could show people in the factory, look how automated it is. Automation is complicated. And it's not -- it's probably multiple edge to that sort. We talked to this internally, but it's an important point. Often automation is really good if you want to do the same exact thing every time because machine you're going to not make the mistakes people make. But if your kind of culture is about flexibility, responsiveness urgency, change things quickly, that's not really what automation is best at. That's what people are best at. So that's why I say, yes, we want to use automation, but we want to be intelligent about it. We want to think it through where would we like to use automation and where it can be helpful to us.

I hear you. I guess I'm just -- on one of those nodes where I watch too many videos of aircraft engines being built and autos, I find them fascinating. So I just thought things that are -- people don't realize how complex it is, particularly on aircraft engines. But, anyway. And I just have to say there's an old Bruce Springsteen tone, From Small Things Mama, big things one day come, and that is Park.

Thank you very much. I've looked that one up, I'm not familiar with that one, but I'll go check it out.

[Operator Instructions] That looks like there are no further questions at this time. So I'd like to turn the floor back to Brian Shore for closing remarks.

Thank you, operator, and thank all of you for listening and being patient with us. I know we went on really long. I appreciate you taking the time to listen. And so it's, I guess, the beginning of the summer, have a wonderful summer. We'll talk to you again pretty soon, I guess, kind of mid-July when we announce our Q1. And of course, if you have any questions, any follow-up questions, feel free to give us a call any time. Thanks. Have a great day. Take care. Bye.

Thank you. And with that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time. And have a wonderful rest of your day.