Earnings call transcript Q1 2024

This access as Conference Call. release, in should me Welcome access operator. presentation Thank This morning our Matt the to there With we're about can Brian. our morning, and ’XX Investor fiscal earnings we as everybody. announced you, how that QX you to is go the Farabaugh, Park's instructions CFO. through. usual, are Good and earnings, to

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back Also, our column, gross we margin numbers hand to right note in XX.X%. the

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a And I guess I that maybe game. point with on because comment want we're top just of our disagree I to make that

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affected up sometimes to people higher leveling for in not that higher extent, some margins hasn't I missed at different off get that inflation start on us. we're leveled from, economists wish still Slide deflation something down, to has and here, base, we go X off started amount gone affected, would maybe factor If only It's Let's the although off back that X. that deflation. Inflation, quarter. factors Yeah, where away. prices to won't of dealing this items have it's our up but going level all we point. read but a off which for Continuing still with QX. is but and Inflation that is that's most

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XXXX, increase here have the sitting price but XXXX. prices we're We until fixed with in current

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into Let's XX. go Slide

commercial, me look have chart military at the you commercial the that of went was ‘XX and way just big down, here. guess look terms ’XX, in look this at look own. at fiscal to QX pandemic I interesting and we pretty -- So thing the if that charts ‘XX, pie business similar graphical year But pie aircraft. the where held ‘XX, of military depictions, its kind a I of is

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system, big program. Bottom read Range it. a on This very But Long for big side opportunity Radome materials for just Lockheed there's Defense Martin Israeli starting if Arrow Going but to ablative. a warhead. JSTARS. the I lot carries which Missile left, the That's re-entry the Park, right the for a System Anti-Ship future page, of that not about about as it, opportunity, Missile. of really ICBM is X Force. you so the MK-XXA. WXX-X talk JSTARS, Europe Israel, tested, missile just The defense And this also goes the well. top radome for Air with technology, by think, It being center,

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two price So there's for one. updates of your the

Let's go on to Slide XX.

a and continue markets. by talk but lot -- aerospace considerations fueled there's the with certainly very people about gung trends means, There's government the talk the be war what major are aerospace markets there's about talk military of for for And global Military that now. very the I'm industry. who in let's about bit Europe right winning strong, Starting war. in little the ho not to even tensions. sure So and ongoing a military --

the think about but big US deal. part abounds our Sales, Optimism terms picture. Military that's kind budget, a of of only Foreign We of that's Defense in

on, that especially So US Military for impact has big Sales Military demand Foreign contractors. the a much

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airplane about be happen. like it getting So years, into dream a might airlines a That's bit pipe three not seems a in an delivered maybe dream. of realizing, there going pipe better are that's that order This market little capitulation airplanes. that's we to -- go

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think watch any borderline in Well, optimism Right? don't Let's industry. kind to any there led what are industry was the that for for think to, answer. just things of about euphoria where I The about in and euphoria that. about. that. not the industry. I Think of I'm something good very comprehensive But think have saying times know.

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what Middle build was we'll we’ve that So for basically redundant told River signed XXXX, that build for through We'll LTA you. once factory you. that we factory

the factory. So LTA. we were entered did signed -- We We built into to going the what we said do. we

source XXX, sole and go AXXXneo nacelles, We're those and -- reversers, for for nacelles engine been I some some. five we the thrust and engines two programs the programs. engine all even call have are XXXX, the TR, We been family for the first making ARJXX, XXXX. LEAP aircraft, then composite spares Got got but too Bombardier the has got still canceled. cancelled, XXX-X materials TRs though though, the multiple and through won't of the many, the with let's program the it nice Then not Global picture picture Chinese XXX, the here.

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fan trying So the to case the fan is without of case the suppliers pass test the case wrap. redesign to

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worth is So that Park? to know. don't I how much

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it's quickly significant, as very their a So to holding back issue ramp supply to. want there's they chain as ability up what? and There's

as engine, family there's engines, is two you aircraft the well. a The LEAP the approved know on, AXXXneo one XXXXG offers we're Pratt engine which and this,

way, XXXX, aircraft. As of of LEAP family the precise had AXXXneo by CFM for market that's share the -- engine the April firm number XX.X% a orders a of end of

durability family. durability Recently on kind Now LEAP Pratt especially no important. new have it's -- far seem aircraft option this All widely AXXXneo new technology, pains, the it, of reported than is with but the XXXXG issues recently why with the durability reported engine be worse the maybe Pratt for to about reported engine serious growing engines. issue doubt engines issues

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aircraft Pratt in greater It's widely important the an issues. about, AXXXneo think but lead even are interesting issues to question. reported. increase durability an XX%? these share CFM's They're to to here's Now XXXXG Will something market than serious program family

question. me just a So let ask

and Let's a say airline you're AXXXneo big aircraft. ordering you're

make are to to Now select a Maybe engine the to take not delivered, select? decision. your What resolved? the you engine but are emotional, going running these will to you're think going is by going you that I to you're pretty I soon. want an durability mean time need you best even be airline, like an aircraft to going chance Pratt, you're be issues

in favor. So the it's durability a question as will to LEAP CFM, more share market whether which widely reported, engine’s are issues, the these move again

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ground problem are It's airline a airplanes with had airplanes not ground, it it's their on grounded. flying. on airplanes what that clear issue. bankruptcy were a so there's who more. when lot of -- happens the they're The one are a durability really issues. many the a because claims So the There's not minor That's

of. but we'll be to something want So happens, you might think what it's see aware I just

item. Going to next

market assuming per to XX% number, deliveries that aircraft XXXX that Assuming LEAP-XA month, basically share, translates that per year. engines XX

prior Interesting, the AXXXXLR in remember item. Next presentations. about we talked

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Slide XX.

with other conducted engine. currently LEAP-XC XXX CXXX touch XXX achieve to its has couple Eastern we'll Airlines of programs says. recently conducted plans China production rate passenger aircraft on. XXX. The years. CFM a within -- Comac orders. Comac That's the just X,XXX what flight Comac first year over So a just five with

produce able will Chinese issue their XXXX the is Here all that's they of airplanes at Comac to time. produce be outside dynamic. control government Global variant. they'll and I'm into Basically, The Comac this sold even Chinese the question. Whether market, the not sure another Chinese that's market. sell sold objective market to will be They ability it, in these. or If China. the is those can here the of

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be what think it in my I I opinion, could happens. we'll but will, wrong, see

this I year the break or think maybe going sooner we'll how that. even to know next than is in

XX. Aviation sales Slide to jet history. program GE engine on go Let's

we for you not QX, But we're some for is last kind the ‘XX forecast had not probably in and or more of or of the pandemic range of years, was GE million year. providing couple QX for of year, So either $X.X the that Park. Aviation ups the is programs downs, what less which a noticed

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their the customers. Airbus known pretty During be aggressive to was with pandemic,

of uncomfortable been they battles battle do couple cancel up, it's can Customers Airbus kind chain, push rates the been supply a can who -- aggressive, Airbus public not Airbus supply vocal chain, or that. pushing to supply of rates has wanted chain an for ramp been very the up, so they quite up, that now. supply years to orders, with also Airbus where aggressive pushing get out has publicly chain ramp with these the about get wasn't Almost to interesting in the pushing allowing now. very want. or to ramp the And supply the chain

job Some expectations. companies meeting pretty have with Airbus's done a good

sorry supply companies like companies companies companies Airbus the like MRAS, maybe Some chain, Safran, like maybe Safran. -- in

AXXXneo? a Airbus aircraft? the a well, many we don't are question, don't can the not but that answer How it lot key an So lot there's the take to suppliers But able expectations. And to program? that many lot, of they the a have lot. lot, answer I to lot, lot. not rates. They that few, a and produce into supply suppliers it, few know to do? I lot, But are more know a it's mean -- to I make to does what components going how but than Airbus's you down happens to it's our know even meeting a what be say, slow going are

the happening what with here. that up expectations, to suppliers, good a try the that's suppliers keep with? of caught really So with are they caught the lot They're inventory. And what's

what going dozens weeks suppliers but the tried expectations. to we able they know inventory, where be in to a because just burn out Airbus produce. the meet just have but and of Not dozens to because of next don't want or but inventory, ahead. Park of it's and think, airplanes meeting to is, the Safran, details plan the to these got of they yet. with Airbus's couple it's expectations, MRAS We're They is not structures produce really don't finished MRAS not other dozens finished down, not we what's called meeting the We inventory, figure goods because

for months a low I first many very XX just the want. information. you Only expectations. Not number. what gave this not That's airplanes they five month per That's year. the of

our what's is try out, inventory. inventory and get and here. burned talking down. good with So inventory We really That what about? suppliers it's to that stuck just to they inventory. support think figure get the -- Airbus, happens to I need we are MRAS, facts. We'll to sit all we needs much details get down happened And how the don't okay, be that's with

the -- to terms a I for couple how at looking is to of the there's -- plan? weak, want information, that point our GE fairly I short of that. fairly going program of It what's know. be could next really mean, Over to is inventory, we And in down. And we down quarters, but period don't be what much it in Until is we're time we going doing we know burn here's light don't really had term. this burned the key don't what thing, guess, sales be for the no

better to you that So a would be it not meaningful, situation to thing the just the would would guessing guess. rather be because be explain something,

will be finite There's finite. I will of down. GE it just I that to number know are don't and don't how it amount down. be good a be the quantified. down. The we Aviation it We thing would know inventory, expect don't inventories be can program how much is long

say, the happened we'll be and QX, plan. should have is this, that down next get at able be us, will customer, information, credible up effective MRAS we're burn to for we When you, when come if to quarter, but down what's also fairly meaning their So our QX able we to done. tell we and we what a this okay, be burn maybe let's the in expectation, with will

Comac airplanes, last rate for or just at rates let's the million. AXXX kind be $XX of more look of for at $XX less So XXXX, you the the million, year, gets it if the Global to should say reference, current the normalized, inventory

once So Once is align the airplane. that's rates. will when then burned normalized. In our market words, these rates production end down, the are the inventory normalized, rates of things the other inventory with is

is yet the we the be inventory, finite, our just will Okay? be here share So have have we thing you. event to sales to have I detailed rates. key that's want to with markets numbers is But that which distort information the an is, temporarily, what end you aligned normalized, going perspective able that production the once our is to with don't

kind million of rates, end million, today's for $XX production this market At year. is upon that last number $XX like $XX fiscal point, -- for last that based million

So let's see.

on I just the next think that I we issue of to should go and kind think covers of slides. group this

We're it, outlook it. And we're in reason The got going we in that you people, if call go is guess doing is we went that we presentation, quotes bit outlook a know doing again. this what -- here? why reason over that investors we But through explain audience a what or So I I'll if over again. teaser, are of the quote we our we the little really didn't give I'll that. we'll QX

preliminary all great through So we go information detail. won't this in

that we're because kind to item in year-over-year because as XX, for even so Like a we not drive just first talking things a up to you says predictions spoke and for said, don't the We chain uncertain at ramp really what, forecast it's of they? Airbus we're of on lot will about, us. that when Are will about saying position, The the burden of not give I XX ‘XX. issues. be And to supply know. us within they're going forecast year-over-year

freight market. issues, that about, some okay, believe we're call we will anyway normalize, with these inflation at rather or or the dealing issues supply talking chain issues, issues, we'll normalized talk issues, we'd staffing know then more all be point things At we So about. that less point, the

visibility reason, for next into few years and an the So we're that better we're on have the where these outlook that theory we'll things resolve providing will going. then over

Slide we're again. are XX. I'm won't assumptions Slide through going So let's already, go says on go them to making. these those we the just XX so to cover just

XX. Slide

this is important. something and down of couple a slow take Let's because minutes

And we just the AXXXneo, that's the that's our looked at certain assumed rates that the from XX% comes this? airplanes per revenue So how a We share. engine, month the for customer. we number, per XX the market do and XXXX programs do LEAP at

just is So math. this

same just XX. Passport multiply thing across can You with and the the

for that producing year. I about year think airplanes Bombardier been a XX has So last

two So I XX assuming -- five to we XX, per there's there you XXX XXX. are year airplane. engines, thought in maybe predicting remember, These a well be engines. XXX, airplanes two you for moved we're years, up engines they will again told

-- talking about being Well, single about aisle, the which are XXX triple a another XXX they XXX the sorry, AXXXneo, being Now a why MAX, assume talking year. we XXX? is they're the year, did at

a XX The able is like they're how quickly And market, said, year last to for really they So ARJXX, XXX CXXX it’s too up. the these we up, they function of thought a how it's really shipped of or to ramp not not year Comac ramp market. we limitation able produced issue the -- is wasn't the aggressive. airplanes.

number. protect really because the we trying so quite we're So units that not two, it's XX. the the have giving the times you in We this units. details, think would per GEXX, just But It's of at to don't that assumptions making the want revenue engine confidentiality the conservative. terms we're think do we we're point. conservative are The program. We to of be, disclose

we're as why is didn't Now the of about more have this next outlook wondering an which the slide, impact for Park. as well

this. received stick We these, with basically a that about forecasts. hockey So are forecasts with we of thought lot memoranda, from books bankers offering investment

$XX Somebody stuff. stick. is from now And doing real. be million steep to going doing fantasy of ramp kind they're million $XX not of It's sales, EBITDA, of up kind but hockey or two lot that's same years a of really

never X%. going here. What you guess program? we're is a I than say to chances less but the the I I zero, mean, are different AXXXneo Well, lose would say this little

and on. this we're programs hopes is not these So are dreams, predictions,

we're the prediction. that only Programs a are only on airplanes source. These how is engine. things and talking the LEAP is This dreams. stick hopes with about. sole hockey on, So Airbus question reality not the not many qualified produces that's question are This That's is meaningful.

number. So wanted $XX,XXX,XXX and this to I per of to we year just explain this the that's how basis get

go on to Slide Let's XX.

million, GE We programs baseline. baseline is subtracting the that quarter. the million just not the million $XX program That's we would the taken pretty forecast. number is here Let's incremental start million. we that's million, at prior a of year that conservative. Non-GE outlook last $X incremental and took through maybe just with slide that. that's is stop take something we total. the we last ’XX, Park a $XX was -- from we this believe a $X pretty million, incremental EBITDA. aggressive. $XX,XXX,XXX the from the revenues. actually is from conservative which number outlook I number (ph) these [‘XX] in sales, about a is the disagree baseline three growth We this other think $XX that's conservative. the pretty look just which And we comment we million sales, million programs, And revenue, assuming completely number. This X% outlook, year, year, say well. $XX.X with shared We year about $XX for is or $XX.X It’s think a million, year period think This the outlook. to of a sales, XX% second $XXX as over There you take

XX% contribution a things of things Matt for is carefully, $X.X we contribution number, assumed percentage. a not and the an pretty EBITDA, affected at from number, when be base the to good year estimated EBITDA, conservative. Adjustment money a little math margins revenues, I EBITDA that's And then aggressive probably did million. sure, And the presentation million, of good but number. incremental we prior normalize. That's that number our we a and has assuming about million is talked EBITDA. beginning think how conservative the also QX those $X.X and quarters the $XX that a get we to This

to on through as went XX, explanations these to are going footnotes. Slide them. kind So math. These over just did to we We just not go we're the of how

to stuff. is sole-source on is go upon or Let's stop important which because just qualified. XX. this outlook, Park principally programs growth based Park for second on Slide financial estimates a here We'll

opportunities going whole program does here. These these we on Okay. This a not outlook. outlook examples. an and of these programs What does not a mean? forecast. The that It consider above is It's opportunities just film growth have list are any one for cover to, not not we're revenue for other to opportunities, the example, any we're each adhesive. Adhesive, considering of does one AXXXneo, analysis Film second related except consider including, not them, revenue

the Park wise. large, customer. serious significant, structures, I Going which of with very existing revenue to the project, middle Potentially is in the page, down assemblies, integrations discussions mean,

Next on. talking OEM Defense and again, Missile Arrow that potentially hypersonic lots large. I'm We one, about some technology one, license programs very with in of the dollars a potentially military that related of slide to missile niche agreement X systems, large relating the Last aerospace lots very discussion working System, covered under large. to we're here. actually --

Let's to XX. go Slide on

had of we financial our appropriately. Why us. we outlook? we thought, reviewing dividend. announced increase February Let's we through made approved some history. to the regular X that the go are Directors Market announcement reacted, response to this in price our Board are of this? why the And doing stock sense year, So an

went equivalent dividend, be current and was in market and so about announcement stock the the $X.XX the to a that up that there to price, $XX.XX think would because special $XX.XX. $XX.XX I between

(ph), wiped [XXXX] that common deleting that Cap Index pretty stock good the out And the so we're didn't S&P gain. March, Small announced S&P In much our from feel about that. entire we

it the you Small price S&P many $XX an a since many that again through also clear. when maybe that share pay upon and maybe has XX/XX/XXXX, provided we last that's and make just cap. XXXX, on -- announced paid our QX outlook probably and But our other we those didn't market we thought it when how obviously We continuing this our companies none. that’s over with And we We dividends you time, we wasn't reviewed. went impact Cap mentioned in how stock Index, because to of it

when kind on. it's the sure is a financial we say thing, to look, because not explained regular basis why we time, the this outlook of we're did thing we to We be forecast. pretty consider you ever wouldn't were a our decided is to like sure, Board reliable and what of saying, We this wouldn't That's this the key increase increase is looking the formed but you outlook, with to that Board's thing. good Maybe improves, at pretty decision dividend. regular in dividend the an hope count the review outlook this say we

the So basis. are comfortable regular increasing on we yeah, dividend very in that

Is again didn't Slide muted surprised provision which of theory consider that response financial a the that broken? it to much, all that. what on the a lot. such A the go all us Is market not kind outlook? takes just about, explained institutional investor, company to the Maybe comes market our is Not not that What smart big public was to forecast believe it mentioned the with Maybe me market market -- know the information don't doesn't believe that investing reaction? us. like our a real. the for talking Even of are is not big into programs that we've We a efficient? We're to sole-source You market very out he it's Let's the outlook programs. recently a broken. efficient already And data, we're significant XX. that was which, thought the on most impact understand programs, any couple my was sure. be qualified old that those Why of of slides have We on. some Maybe. a are guess, we're value. part, talking the I future. account Park’s will right the listed of computer ago this about though

market we doesn't. But us, believe the maybe

in was end that it happened So allowed about here were quarter our is we first shortly our only at that Purchase to Stock Under this plan, the stock quarter. And quarter, of $X,XXX,XXX. SEC purchased Company through after that rules cost we of first implemented under total about was that two from regulations. plan the really when -- ended, average QX, the purchase with what under the first end our an the Needham. common we plan the maximum to Rule amount the and talking thing XXbX-X XXX,XXX weeks shares price when the we of key announced we QX, implemented of Plan $XX.XX, through The of

on go to Let's XX. Slide

QX not We're disclosed when we quarter. about report purchases talking any, that our So in that occur, will if that. be

during in did. investor our Investor QX public buy investing community, that prefer happen seem and know investment didn’t to the that. responded, the Now of company any investing to you we not We outlook did public investor we meaningful the the like provision they stock. that -- did our the to in our way to but we Call, didn't. But prefer we the some investment -- the -- We of you this, went public told past response we since in financial prefer

So we did.

to XX. on go Let's Slide

quarter, We have, of hold just gears to to give of still that this million made payments tax We update. made the now the So within $XX.X they're We change $XX and of of a is kind payments June last we in QX, here. end ’XX. years. transition of had installment The as be you an that million have be two made of cash.

be won't around money that So long. for

project. is directly working be project. the $X to ADL for the this Solution difference capital Joint we This The a kind would project call used development that of a million. here project, what $X treater derivative of AFP customer is with or development investment, million. joint

we'll the perspective. million. $XX.X Additional buybacks, you with happens We to well, number want what But cash all like is after about stuff see see that. remaining that for looks just

and zero Let's to on The go we XX. long-term have cash allocation, balance debt. capital sheet,

You dividends know mention been to our through since $XXX fiscal million that the dividends. won't cash it, again, go except it's story cash paid XXXX. about I we in

Our thoughts and allocation. about our cash capital

announced guess think good me different XX it’s into we So gears after the a and after announced I minutes I'd for we're called like institutional to I up, I change something Two here. second -- been call, know delayed came investors and people. QX. we but we've they're --

I'm -- point dividends. you their this they me, you're not pay then to be yourself was and I -- And I'm that that me. inclined more. to mentioned Park should maybe more to think So underpaid Brian, buybacks Both we glad less said would

that's getting at. what they're think I

tell come not it’s up, it's But to or my dividends, been Board something nobody's people what do maybe think something never days never remember my you other been whenever situation. that personal the each you I and It's on about XXX% they our once, my come just considered, I three same to on and like have each other that. situation. just up let's backtrack the you I've been I So I'm ever know about else. want the the can when Board two don't since second. I never thing. other, for with a taking are talking is ‘XX ever people table. they cash, glad within to confidence that talking were family that said to talking because never I with say me did and tell before want buybacks, situation once discussed, of I don't

is. Let's So pay is that's it think $XXX,XXX, what go right? back to all my me, I think I

statement. look not You -- XXX% I'm check proxy can the sure about that.

in turn to for, extent some pay year, So, gifts able to without company me the I many and pay year additional order I maybe afford offers Board the years it. reduced bonuses the exception, holiday bonuses, money the I for more be or every for to the accept to workforce anyway. never Every Board down,

thing say, strange said What's it going more. pay more. wants on brought maybe since been may a this two like to The I paid sound here? up. to but I'll me shareholders should Board Well, say be These it's

I made, me could time happen. this get won't to things just not to pay do time do get sacrifices not want that will to spend couldn't something The to I've that would with. I the the liked have I to that people do, job. You spend It's I that enough with

a our And me. want people. thing. kind Park I'm I complaining. it also money. thing this have the do care investors. care people I our just the And people. to the about lot. that's I'm for for See, I long-term our care a about I me. key future. telling of reality. Just a I love don't about I about Park. But for key of That's the do I you I because job care not life fact a

me the appreciate comment. motivation that guts, So that kind understand here. had somebody I whatever, to the appreciated want to I of just actually tell this. I people, two

it out it, So of I bit should a led my air and little quiet. well to let's keep maybe thinking, say, kind this not

Let’s go to XX. on

we Culture you'd us. like be is be to the is Park So to excerpt really going really that at I'm secret the lost. would not Read The Culture, is Park it message would Family your it. convenience. read the Park we're a our here almost The But following Family. the recent family, key done thing Without to Family from Park for an our everything nothing, here. if success.

go arduous Park Let's the XX. Others on now At but Park are not in keeps, of to mediocrity, the play settle and greatness playing Park our for for we the is for and for we're keeps. we Slide like may at difficult family, path others. and go XXth and to year greatness hard. we In

will film people. tradition call every share south teams, the it we special, our our R&D not one developing our provide adhesive the But So our I'm outstanding steal to by because R&D you for to job our of Group. quarter, to make we people Special the names it it easier going photos, this formulations. Park’s is group,

We've the Polymer started the which finish projects And long line. a of chemistry long, is been majority to get long, electronics. are very doing time, large formulation even for never challenging. R&D this

we developed being projects one the narrowed one very, we process that commercialized, outstanding. MRAS, as like here we're with fact the two is and but are very, said, the the two well, other So And other working which good. -- starting formulations, these we're these of not very I qualification so just of two,

had trials, the about And qualification adhesive the the doing qualification then runs, we haven't else, workforce what that. film something internal do runs, to

The the runs With the had R&D adhesive did group. We it? who qualification trial R&D trials for stepped we plant? have new They the film the runs qualified. new it. it. and to and to people up runs. do and they qualification have didn’t And So staffed did do Well, plant staff and The qualification a about new plant. what

the less. see think in do the photo presentation, didn't R&D So can was he the say, group, it. the beginning Well, day. remember wasn't out for I at with one to did you of more we There's -- our make I op, able person

would is people, we and of this So Outstanding do of by actually. say. less. group, saying whole small great the that experience I basis pretty I'm more accomplishments with from our group a R&D

if any answer them. happy listening. are we'll time, much So, Operator, very Well, there okay. to you for thank at questions this be

Park Aerospace (PKE) 6 Jul 232024 Q1 Earnings call transcript