Park Aerospace Corp. (NYSE:PKE) Q2 2024 Earnings Call Transcript

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When the chips are down, you still deliver and perform, that to me is an indication of a very good solid company. So it’s just my opinion, and you could just disagree. Let’s go on to Slide 7. I wouldn’t talk about Slide 7 too much. It’s in every presentation. Just kind of a perspective and reference. Let’s go on to Slide 8. Okay. We always do our top five customers every quarter. So we are continuing this tradition, Aerospheres, very rapid. Israel, they wrap Israeli aircraft for us, Israeli aircraft makes the Gulfstream G280, if you’re aware that that’s actually made under contract with Gulfstream. So they made the top five, Kratos is in our top five. I think pretty much every quarter, wonderful, wonderful customer. We love them. And we had a great photo here of the Valkyrie, and it’s doing a loyal wingman demo flight.

With guess what? The F-35 and F-22. So I would think of the three different airplanes, the Valkyrie is probably lower cost of the three. So I’m being a little sarcastic, I guess. Middle River, we could use a lot of programs here, but with the Comac 919. LifePort, they kind of throw some circuitous means, took over some of the AAR structures business that we used to supply into. Nordam, we chose the 737-800, that’s where the WeatherMASTER Radome, which is on the 737 one. Let’s go on to Slide 9. Our pie charts, I always like to use, I don’t know if you have any opinion about it let me now, but let me know, I think they’re useful. Look at the difference of 2021, the pandemic year, 2022 and 2023, very similar. First six months of 2024, commercial down a little bit.

Why is that? That’s because the burn down, burn down was all commercial in Q2. So okay, let’s go on to Slide 10. Another one of our traditional slides, we love niche military aerospace programs, which we certainly do. This is the latest project every quarter. She’s our Head of Customer Service, MK125 Warhead. That’s on the SM2, SM3 that stands for standard missile, you probably know that. This is a picture of the standard missile 60s, are some outstanding missiles. I believe the SM2 was a hypersonic missile. The Alenia C-27J Spartan, a radome materials. So of course, we just have a lot of stuff, lot of materials in Sikorsky. MK-41 Vertical Launching System, a little bit different here. The parts using our material, it’s actually not [indiscernible], we have a pie chart.

Rocket nozzles, drones, radomes, we consider those to be niche markets for Park. But even for us, aircraft structures is a niche market. We don’t go for the big programs for structures where it’s a lot of margin pressure, it’s just not really for us. Okay. Let’s go on to Slide 11. And here’s what we’re going to skip, this Slide 11 through what was it figured out, yes, through 15, pretty much as very few changes from Q1. So if you want to ask questions about it that’s fine, but let’s just skip over it. I include it – we include it just for perspective in context. Let’s jump to Slide 16. Okay. So this is a slide that we include every quarter just to kind of give you the lay of the land, GE Aviation Jet Engine Programs is obviously very important to Park.

So we have – for those who don’t know, Firm Pricing LTA that’s a requirements contract from 2019 to 2029 with MRAS, Middle River Aerostructure Systems, which is a sub of ST Engineering Aerospace, a large Singaporean aerospace company. We built a redundant factory when they – we said, we’ll build you a factory, if you – we signed the LTA. So of course, we live up to what we say and the factory is complete, it’s in production, you all know that. So let’s go on to the next item, sole source for composite materials, for engine nacelles and thrust reversers, all these programs. So you are probably thinking if you don’t know us too well, what’s going on here. These are all the GE Aviation programs. What’s the connection? Well, that would be an excellent question because there are all GE Aviation programs.

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