Park Aerospace Corp.

Good morning. My name is Shannon, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. second quarter fiscal year 2020 earnings release conference call and investor presentation. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press pound. Thank you. 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. Welcome, everybody, to our second quarter call. This is Brian with me as usual at Faribault, our CFO. So we have a presentation we prepared for you and for this call. It's been posted on our website, and also there's a link that's referred to in the earnings news release. So you probably want to get a copy of that in front of you because Matt and I will be going through the presentation. There's also some supplemental financial information that's attached to the presentation. I think there's Appendix 1. We're not going to read through it, but it's something you might want to take a look at at some point. Obviously, you know the news release is out, the earnings release is out as of earlier this morning. So there is a lot to cover, and I'm going to try to cover some more complex topics to give you some perspective on the quarter. So please just try to bear with us. But why don't we get started. So on slide two, we have our forward-looking disclaimer. We're not going to read through that, of course, but if you have any questions about it, please give us a call. Thanks on that. Slide three, Matt, why don't you pick up on slide three, talking about the expansion spending and also top five customers.

Sure. Thanks, Brian. Just as a reminder, we had announced that we were doing a major expansion at our Newton, Kansas facility. and we made that announcement back in December and this slide is really just to give you a quick update on where we're at on the spending on that expansion. So our estimated budget for the expansion was $20,500,000. So far through the end of Q2 we've spent $3,900,000 so a little short of $4 million on that and the remaining to be spent for That expansion is about $16,600,000. That expansion is expected to be, well, the construction and the installation of all the equipment is expected to be completed by next summer, so that's the summer of 2020. Let's see, the top five customers for the quarter are AAE Aerospace, AAR Corp., Kratos Defense and Security Solutions, and Megit PLC. and, of course, MRAS, including its subcontractors. And just a reminder that MRAS is now a subsidiary of ST Engineering Aerospace.

Okay, thanks, Matt. I'll take it back. Let's move to slide four, everybody, please. So here are the quarterly results, which you've seen, presumably, the sales for the quarter. Second quarter, I'm talking about $13,723,000. Gross profit, gross margin, 27.8%, obviously way down. And EBITDA, $2,406,000, also down. So let's talk about what we told you would happen or we said we believe would happen during our first quarter conference call that was on July 11th. We gave the sales estimate of $14.5 to $15.5 million. An EBITDA estimate of $3.1 to $3.7 million. So the shortfall is both top and bottom line. The sales shortfall is to the lower end of the forecast range, okay, not the middle, the lower end, is $777,000. And the EBITDA shortfall is $694,000. So obviously, if we go to slide four, the question is what happened? Why did this happen? What the heck happened in Q2? So as I already mentioned at the beginning, this explanation, the explanation is complex. It's also multifaceted. and we're going to go into some details because I think it would be helpful for you to understand and get their perspective. These are things we probably haven't discussed with some of you in the past so just try to bear with me please. But why don't we start with some background perspective and I'm trying to paint a picture for you here by giving you a little background perspective, okay? We've discussed this before but I just want to remind you that in fiscal 19 Q4 that was December of last year in January and February this year, the sales for the GEMREST programs were three times, three times the sales of the first quarter of that same year. That's just nine months later. That's a very, very steep ramp for a very difficult and demanding and challenging customer and challenging programs to support. But we did get the job done. We did not disappoint them. in Q4 with the fairly huge ramp that they asked us to handle. But we did it mostly with brute force. And that's really all we had at that point. We didn't really have systems in place to operate at that level, especially for such a demanding and difficult customer. I want to be clear. I'm not saying it's in a bad way. We love MRAS. I love MRAS. I'll say that anybody ever asks but they are you know a much more difficult customer than the other customers so the fact that they're the ones that ran three times during that nine month period put a lot of pressure stress on our system but we did not disappoint and I got to tell you that I think we're the exception at the rule because there's a lot of suppliers in the supply chain right now they're having real trouble keeping up and our causing real challenges for supply chain managers in the aerospace industry just because some of the programs that are ramping very steeply at this time. Q1 of this year, fiscal year 20, Q1, more brute force. And then Q2, the quarter that we're reporting now, we're in a process of transitioning from brute force to sustainability. You know, you can't do brute force forever, I guess. At some point, you know, it just kind of wears people out. So important and painful progress is being made. We're not there yet in terms of transitioning from brute force to sustainability. And I think, you know, maybe this is just my perspective. Maybe we got a little burned out in Q2 from the brute force efforts in Q4 and Q1. Maybe we let down a little bit. Maybe our discipline slipped a little bit. I don't know which is my perspective, but if that's true, our heads are back in the game now, and that's quite obvious to me. I think that's for sure. Another thing I want to bring to your attention is this practice we've had in the last few quarters, particularly Q4 and Q1 of making the quarter in the last few weeks. and I think we got complacent about it and we got lulled into a sense that, well, you know, don't worry, we'll make the quarter in the last few weeks. In other words, we'll total the stops, the production, we'll just push everything through and get everything shipped by the end of the quarter. But we got burned by that in Q2 because we got behind and we couldn't catch up for reasons I'll explain in the next few slides. And we didn't even see it coming. We didn't even see the sales and even the shortfall coming and Q2 in the last few weeks of the quarter because, again, prior to quarters, we were used to making the quarter in the last few weeks. It's a bad practice. We've changed it. We're not doing that anymore. So I guess some things we learn the hard way, but I think one good thing about us is that we do learn, even though sometimes it's the hard way. Let's move to slide six, please, and this, like I said, is going to be complicated, but try to bear with me, and obviously questions at the end will be fine. Okay, so this is a big thing that is not obvious to anybody. We obviously just report revenues and profits. We don't report production plans. So in Q2, our plan was to produce $2.9 million more product than we actually produced in Q2. So that's a huge, huge difference. I think we said we missed our sales target. Let me go back to check myself. I think it's in slide three. By $777,000. We missed our production objective or target by $2.9 million, almost $3 million. Now, that production shortfall also had an impact on our sales because obviously if you don't produce it, you can't sell it. The first check item under the first hour item, so the fiscal 2020 Q2 sales shortfall obviously had a negative bottom line impact. I mean, that's just pretty straightforward. But what isn't obvious is, until now, is that the larger impact was from the production shortfall, because when you produce product, some of that drops the bottom line when the product is converted to inventory. Now, I should say, it's an important distinction, I forgot to mention it, This $2.9 million, that's in sales values. That's a value of the product when it's sold. It's not an inventory value. But anyway, significant bottom line impact from the production shortfall. And, well, the next question is, why did that happen, of course? You know, how could that happen? So let's go to the next arrow item. So why the significant production shortfall on Q2? What happened? Okay, I just said that, right? And there were three... discrete events, unrelated and discrete events that were all unexpected by us and that caused us significant difficulty in Q2. And this is where I need to explain a little bit about some of our raw materials and our processes, things we haven't discussed before. Normally we don't go into this kind of detail, but I think to have a real understanding as to what happened and for us to be transparent, which is our objective, of course, I think we need to go through this. There's something called polyurethane film that's used in our process. It's actually used by our customer as a manufacturing aid, but it's applied to our prepreg materials on a prepreg surface. It stabilizes the product in customer applications, operations rather, and it also prevents our product, the prepreg, from sticking to itself when it's rolled up in a roll. because it's sticky. There are other reasons and purposes for the use of polyurethane film, but it's widely used in the industry. Anyway, so we did a change of the polyurethane film style, and this all relates to MRES programs, unfortunately, and that caused what's called wrinkling. In other words, the film wasn't sticking to the product in a kind of flat way. It was wrinkled. and this is not something we were able to pick up on. It was picked up by the customer and they call us and say, you know, this is wrinkling and we want to use it. So they send the product back to us for what's called rework. Now the poly, we call poly, is applied in the original process really automatically on the machine. But when you have to rework, it's very manual. You have to take it out, off and it's kind of a semi, you know, and manual process to repoly, to quote, repoly, rework this product. Now, in terms of, you know, I mentioned maybe we let down a little bit in Q2. I'll give you an example of that. So we had used this other style of poly for other applications, and it worked very well. So we decided to use it for this MRes application, and we didn't do any trials. And that was a mistake, and that was something, an example of maybe our disciplines weren't as good as they should have been. Maybe we were worn out a little bit in Q2, and we weren't on top of our game. We shouldn't have done that. We should have done trials. But we didn't do trials. We thought, well, look, it's worked in other applications. Let's just use it here. So we didn't do it, and we got burned because we get a call from the customer, and we had done an enormous amount of product, and they say, we have wrinkles. We've got to send it all back. So, okay, now we're doing the rework. Next one, unrelated but also polyurethane film, different supplier. This is just a quality issue, a pretty serious quality issue from the supplier with the polyurethane film. And, again, we didn't realize it in our own factory. It was our customer that realized it when they received our product. Again, how to ship it all back. Enormous amount of rework. This is very time consuming. Takes a lot of labor. And the thing is, not only do you have to pay for the labor to do the rework, guess what? That labor's not producing product to ship and sell. We get revenue from it. Revenue generation. But we had to fix it. We had to make it right.

We had no choice.

A third item, which was unrelated as well, is toward the end of the quarter, we noticed that Some of the carbon fabric that we had received, again, for an MRES program was distorted and we couldn't use it, so we had to send it back to the weaver so they could rework it. Now, that wasn't our rework, but the problem is that we didn't have the carbon fabric we needed to produce and ship that product within the quarter, so that also caused us to be short in terms of production for the quarter. These are three unrelated discrete events. but they all kind of conspired against us to cause significant difficulty for a third quarter and let me explain why that is because the plot thickens. Next check item, carbon fiber availability limited to MRS program forecasts. In other words, our carbon fiber supplier, this is not the weaver, the carbon fiber supplier says, okay, we'll supply that forecast, we have the forecast but not one pound extra. That's all we got because there's a carbon fiber shortage. So they're helping us. They're treating us well but not going to give us any extra. So it's not like we could call them up and say, look, we have a problem with this product and you sent us more fiber. There's no more fiber. So in the case of the carbon weave distortion, it had to be reworked. In the case of the poly, it had to be reworked. because the carbon fiber that was used to make that free frame could not be replaced. So that causes us to have almost no slack or leeway in our system. And then we have, so next check item, because of these carbon fiber supply limitations and manufacturing capacity limitations, which we'll discuss in a couple slides down, we have very limited slack or leeway in system making recovery from issues like the above issues and Major Acquired Rework not possible during the quarter. And that's the key point. So it wasn't just these problems happened in a normal quarter when there wasn't so much stress in the system. These things might happen. They happen from time to time. You would never hear about it. But because there's so much stress in the system, both in terms of our capacity and also in terms of carbon fiber supply, we had no leeway. We couldn't recover. And therefore, we're telling you about it because it ends up being a key point. Those two things together, the events, and the tightness and stress in the system conspired in a way against us in Q3. And the last item on the page, if those limitations then exist, as I was saying, we would certainly be in a better position to recover and we might not even be discussing them at all. Okay, that is slide six. Let's go on to slide seven, continue this discussion. Top of slide seven. So the major rework related to polyurethane film, we're just kind of reviewing here a little bit, resulted in significant expense. This is labor that, again, we have to pay for, and labor that's not being used to produce product that we can sell and get revenue from. and our production workers are quite consumed with the rework and it was kind of like diverting the intended purpose of our production workers to something that had to be done. And of course, the bigger impact wasn't just the cost to do the rework, it's the production value shortfall, which has a major impact in the bottom line. 2.9, approximately $3 million of production shortfall, major impact in the bottom line, major impact. So I just want to be clear. We're not singling out or blaming our suppliers. We think our suppliers are very good. Generally speaking, we're very pleased with our suppliers. We feel they support us very well. They're good and dedicated suppliers that normally respond to issues to the best of their abilities as they arise. So this is not about blaming the suppliers. It's about explaining to you what happened because, as I said, normally these things happen from time to time. It's not that they just happen in the Thank you very much. Thank you. Since the issues had significant bottom line impacts, we believe it's appropriate to highlight them here, so we've done that. Continuing on the EBITDA story, significant expense utilization of limited hot melt manufacturing capacity to support ongoing manufacturing trials of composite materials for the containment rapid GE9X engines. This is more than we expected. We didn't understand how much effort and, you know, the extent of the trials that were required for this program. and as you know, that program is not part of the, we've discussed this with you before, we have POs on that program for the end of next year but that program is not an MRAS program, it's a GE program and it's not part of our long-term agreement with MRAS so the POs go through the end of next year and then we'll see what happens but we're not sure we're going to have that program long-term. I guess that will be determined later on. I just want to make sure you remember that. because it's not in the same categories like the A320 or Boeing 747, for instance. Anyway, last item on slide seven, we failed to achieve our sales and production objectives in Q2. The issues described above created obstacles to our achieving our objectives, but our execution was inadequate nevertheless. So, here you go. I mean, we didn't do our job either. As I said, maybe we're not totally on top of our game. I gave an example where we switched Polly Stiles, Polly Urethane Film Stiles when we should have done some trials. That wasn't good. But the good news is that I think our heads are screwed back on straight again and if we did slip a little bit I think we're back in the game, or heads are back in the game. Look, I'm not telling you it's okay or making excuses, but I think if you think about the brute force efforts in the first six months, it's probably not surprising that maybe if some of our people let down a little bit, it wouldn't be surprising that it happened. EVA diet issues, let's review. Major production, you know, reduction in production, lots of rework, and then the cost of 9X trials. Those were not the only things that impacted and Eva Thar, bottom line, but those are some of the three, those are three that I think are more major things. Okay, let's go on to another complex topic on slide eight. Hot melt manufacturing capacity constraints. You're probably surprised to hear this because until now we've been saying we felt we had enough capacity and we had to elevate extra capacity and of course we said that because we believed it. What's going on here? So, let's start. The 60 inch, that's the width of the The web, if you will, and these machine web capabilities, these machines. Hot melt film and tape lines. To make hot melt product, you need film and tape. They're two separate lines that were purchased when we did our original aerospace composite facility in Newton, Kansas in 2008. We're not specifically designed for the production of AFP type materials. AFP is automated fiber placement. That's robotic methodology for making composite parts as compared to things like hand layups. This is a more modern methodology for producing composite parts, and the trend is toward more AFP. AFP is very expensive, so it's not going to be for every composite parts manufacturer, but for larger companies like MRAS, it, you know, makes a lot of sense, very important technology for the future. and some of the technology we're embracing. But in any event, those original machines were not really designed for AFP and I don't think we even knew much about AFP back in 2008. And you know what? We said this before and we did a lot of learning over the last 10 years. We made a lot of mistakes and the original design of the factory and the equipment was not optimal with the benefit of hindsight. Anyway, but we made those, these original lines work for AFP for the A through 20 NEO program Much of the H320 NEO program has been converted from handle AF to AFP. I think we indicated in the past we did the AFP development work with MRAS. So we got on the ground floor there and that's worked very well. But we have struggled though with the 60 inch lines for AFP material for the GE9X program. Every material is different and the GE9X program has been more difficult for us. What we're doing is we're shifting the production of the prepregs, the AFP-style prepreg materials for the GE9X program to our 24-inch hot mill film and tape lines. And you may not even know we have these, but you haven't used them very much. But it's just dumb luck. But we recently upgraded the 24-inch film line for our film adhesive product line. and it's just dumb luck, like I said, but that was very fortunate because those upgrades allow us to produce the AFP material for the GE9X program much more effectively. So we're in the process of transferring the AFP materials for the GE9X program from the 16-inch lines, the original 16-inch lines to the 24-inch lines. That's a good thing. I want to point out, because I don't want you to get nervous, that the new 60-inch lines that are part of our expansion that Matt just talked about, those were specifically designed to produce AFP-type materials. Now AFP is very important, very much on our radar screen, and we're involved with it, and we want to embrace that technology because it's technology for tomorrow, not just yesterday. Continuing on slide 8, now AFP material requirements are ramping aggressively, and that's driven principally in by the H320 NEO program. And we're still on a steep learning curve regarding AFP material manufacturing. We're not operating yet with optimal efficiencies and productivity, but we're getting there. We're learning fast. That's kind of our, you know, story normally is that when we have a challenge, we attack it pretty aggressively. Last item on slide eight, the AFP hot melt, sorry, Hot melt manufacturing of AFB materials is generally a slower process than hot melt manufacturing for broad good materials. It also requires significant additional setup time in the tape line, and we had not fully appreciated that when we did our capacity analysis. So, like I said, we're learning a little bit as we go, and so some of our capacity concepts and thoughts have been adjusted as we've gone through the last few months. Going on to slide nine. So in order to relieve and open up the hot melt capacity, we've done a couple things. Well, we've implemented a fourth tape line manufacturing shift, so basically the tape line is running 24-7 now. The other operations to support a hot melt like film and mix are not required to go for the 24-7, but we're at that 24-7 shift structure, at least in tape right now, and that's also to support the GE9X program. And also, as I said, we're in the process of transferring the GE9X program to the 24-inch film and tape line to open up capacity. So, obvious question, what is our current hot melt manufacturing capacity? We previously indicated it was $40 million. That was based upon a $5 They work week with some overtime, a little overtime. With the 24-7 shift structure on the tape line, we now believe our capacity is $45 million, but that does not include the capacity from the 24-inch line. So $45 million plus the extra capacity from the 24-inch line. And that's, of course, once we get the GE9X transfer to the 24-inch line, and get the four shifts settled in. We believe $45 million is a reasonable number, plus whatever's available from the 24-inch line. So, we feel, sorry I should say, that capacity's kind of a tough thing because it's very, very mixed related. More AFP reduces capacity, less AFP increases capacity, and there's a lot of other different factors in terms of product mix that will have an impact upon capacity. Obvious question. Here's the answer. We believe we'll be fine. We have enough capacity to serve our needs, to serve MRAS's needs, and to take on other opportunities until the expansion comes online. As Matt said, we plan to have the expansion complete about a year, next summer, rather, next summer. I'm thinking it's still summertime, next summer. And then it should probably be about a year from then to get the qualifications done for MRAS. Okay, let's move on to slide 10. Thanks for bearing with me those two complex issues about the factors for Q2 and also the capacity questions. So slide 10. Now we're talking our forecast, so let's discuss that. Q3, 14.75, this is revenue. Q3 of this fiscal year, fiscal 20, 14.75 to 15.75. I believe those are the same numbers that we gave you for Q3 when we did our first quarter conference call. But we brought the bottom line EBITDA down to $3 million to $3.5 million. And let's just talk about Q4 and the forecast we're giving you for Q4. This is the first time you see the Q4 forecast. It's $15.25 to $16.25 million revenue. and many more. We have about 14.5 million dollars either shipped or booked to be shipped That means what we ship so far and what we have in our books that is scheduled and planned to ship in Q3, $14.5 million. That means we need to book another maybe million dollars, right, that's shippable by the end of Q3. So our salespeople need to be out there hitting it really hard. They're challenged, but that's okay. We like that. That's their challenge. They need to be hitting it very hard. They need to be out there getting orders. and I also want to mention that we probably need a little bit more than that because there's this funny thing that happens at the end of our quarters often is that we get calls from customers who want to push things out a little bit or there's a de-booking or something like that so we have to be careful because I'm telling you what's been booked. That doesn't mean that something won't be pushed out. We get a call from a customer in November, no big deal, we just want to push it out a month. Well, okay, not a big deal to them but that's our next quarter so it happens. It happens often. I think it's happened for the last couple of quarters. So we just have to be on guard for that. And we need to build ourselves a little bit of a cushion, if you know what I mean. Now, why do you bring EBITDA numbers down for Q3 with the same revenue numbers we gave you in the prior forecast? And those EBITDA numbers are a little lower for Q4 as well. You haven't seen Q4 yet, but we've had internal Q4 numbers when we brought them down. So let's look at all the factors that affect Ebitda, you know, profitability for Q3 and Q4. There are a number of them. So, let's go through them all. Outside testing costs related to data development for new product. That was something you mentioned, actually, which is a factor for Q2. And it's tearing over. That has not been completed. Next one, G9X program, manufacturing trials, development expenses. That's big, and that's certainly not done. We're not done with that. We discussed that already. Sorry. Next one, film adhesive manufacturing trials. Development Expenses. That's carrying over. I think we mentioned that as a factor when we did our Q1 call for Q2. We're not done with that. Carrying over. And that's when AFD Manufacturing ramped up additional costs. That's significant. Cost of operating the 24-inch hot melt line for GU9X. That's significant. It's what's needed. It's what's right. But it's more expensive because it's a simple math. If you're dealing with a narrower web, you're getting less and the product out per minute or per hour, depending on how you want to look at it. Continuing rework related to polyurethane film. So we're not done with it yet. The difference is, though, there's no surprises. So with our second quarter, all these issues, the three issues we talked about a few minutes ago, were surprises to us, were not unexpected. And we struggled to deal with them as we discussed. but the fact that we're still doing the rework, it's not surprising to us, at least we know about it, so we can take that into account in our planning and our forecasting. It does have an impact on the bottom line, it's just not a surprise, it's not unexpected. So, and then there's the push out of delivery schedules, the P9X program, obviously that's going to, and that's pushed out quite a bit for Q3 and Q4 into Q1 and Q2 of next year, so that's going to That, of course, is a revenue hole, but we've taken that into account in our top line forecast. Legacy costs expected to continue into Q4. Those are, of course, related to the company, the prior company, before we sold electronics. Those are tapering off, but there's still something there. So there's a lot of factors here which we took into account in trying to be realistic in terms of our EBITDA forecasting for Q3 and Q4. Okay, let's go on to slide 11. We talked about these factors in our last quarter call. They're important to remember, and I think they're very relevant to today's world where it's a lot of stress in the system. So first of all, all of our major jet engine company programs, that's those MRSG programs, except the 747-8, are ramping or in development. Sorry. Anyway, the reason that's an issue is because there's much more risk when a program is ramping, much more chances that it'll be moved to the right. You have 747 as steady as she goes and hopefully it'll go forever, but not too many surprises. When a program is ramping, there's setbacks in development. Sorry, in development and ramping, there's setbacks and it gets slowed down. There are issues with supply chain. So there's a lot of risk in the system because most of the key programs are on for the GE Ignition programs are in development or are ramping. And, you know, an example we talked about was the push out of the 7779X program on the prior page. That really shouldn't be a shock. And we're not talking out of school. These things have been publicly reported in the news, both that the 7779X program has had some pushouts and delays, and the GE9x program has had some reported delays as well. This is all public information, so I'm not talking out of school at all. We don't do that. The next item, severe stress on the aerospace industry supply chain. We discussed that before. It's very palpable, and it has a real factor in terms of just kind of our day-to-day, I guess, you know, working in existence in the industry. The last item is the new one, but we discussed it previously in this presentation. Because of tight manufacturing capacity and carbon fiber supply, there's very little slack and leeway in the system, making it difficult for us to recover from supply or production setbacks. So, we don't know that anything happened this quarter, but, you know, there is at risk. If there's some surprise, it puts us back on our heels in terms of how to recover and deal with it effectively and quickly so it doesn't impact the quarter. Let's go to slide 12. Now, this is really the same long-term forecast that we gave you in January, and our practice is to update a long-term forecast only once a year, so we probably will update this forecast this coming January. The reason that we're including it on this presentation is for fiscal 20, what we've done, rather than just kind of using the prior forecast, we have first quarter and second quarter fiscal 20 actuals, We just gave you the forecast for Q3 and Q4. We figured we should add them up, both the sales and EBITDA numbers, so you have something that's more current. Other than that, there's no change to the long-term forecast. And let's not stick on this page too long. If you have any questions about it, let us know. Let's go to slide 13. Kind of a change of pace here, because now we're talking about some more interesting, I shouldn't say interesting, but maybe more... What fun or exciting things. So, recent developments. First of all, I just want you to know that we have a company presentation on our website now. I think we put it on our website in maybe August. And it's something you might want to check out. The quarterly presentations really focus mostly on what happened during the quarter and are kind of myopic in that respect. The company presentation gives you more of a broad perspective on the company, what our products are, who our customers are, what kind of technology we're involved with, market segments, so history of the company. So if you have some time, you want to check that out. It's on our website. Let's see. So other interesting recent developments. We had groundbreaking for a major expansion in Newton, Kansas on August 15. There's a picture of some people with shovels. I think we did a news release about it, but it was a pretty nice and exciting day. We had a lot of people come from the local community. It was quite a few people. So for the local people, it's a big thing as well. Obviously, for us, it's a big thing. Our next item was Park actually rang the closing bell to New York Stock Exchange on August 26. There's a picture of us doing that. I was a little skeptical about doing this and, you know, the New York Stock Exchange had asked us to do it for a little while and, you know, I just was, I didn't know if we wanted to do it. And, but we finally said, okay, fine, we'll do it. And I wasn't sure if we were going to go. And my wife said, oh, Brian, you know, you have to go. So I did and I was really glad I did because, you know, the New York Stock Exchange, they did a wonderful job. They made it so special and I can't say enough about how wonderful job they did and they just made it a real special day for PARC and I feel very grateful to New York Stock Exchange for doing it and I'm glad my wife told me I better go. Also, it's just a coincidence, it wasn't the reason we did it but it just so happens that this year is our 35th anniversary of listing on New York Stock Exchange back in 1984, you might know. Well, if you go to our company presentation, you'll learn history. We went public in 1960, but originally in the American Exchange, then New York Stock Exchange in 1984, I believe. Oh, one little item. We changed our name. We're no longer Park Electric Chemical. This is the first quarter, I think, first quarterly conference call. We're Park Aerospace Corp. That was actually put up to a shoulder vote in July. The shoulder approved it, of course. And our name is now Park Aerospace Corp. We were Park Electric Chemical Corp. for a long, long, long time, since 1960. The company was founded in 1954. But since 1960, we've been Park Electric Chemical, now we're Park Aerospace. Park is one company. We also mentioned this, that we're going to do it last quarter call. We had two entities, two principal entities. One was kind of a corporate entity in New York. The other one was our operating entity in Kansas. Well, we merged the two, so it's now just one company. We mentioned this last call, a major private space company. We received additional POs, and it's becoming significant now, and it's quite exciting for us. This company is very clear. They don't want us to say anything about who they are, what the program is, so obviously we're respecting that, but it is an exciting program. And like I said, it's becoming significant, I mean in dollars, actually. Just a little update on our dividends. We've paid $511 million so far, $224.95 per share. and Cash Dividends since 2005. So I guess we'll wait to the next dividend. It will be over $25 a share. So maybe we should talk about that next quarter. Next item, PARCC is immersed in ramps of difficult and challenging programs. And these are things we've been discussing during the first part of this call and presentation. But lots of growing pains, but they're worth it. At PARCC, we just don't choose the easy path. It's just not our way. Look for challenges and we embrace challenges. Sometimes we're going to fail, but at PARC we say failure is not an option. That doesn't mean we don't fail. That means we don't accept failure. So when we fail, we've got to get right back in the game and find a way to fix it and make things right. Long-term prospects for PARC, in my opinion, unchanged. So let's see what we can do. Let's see what we can do. We're not deterred, but let's see what we can do. Okay, so that's the end of the presentation. Operator, if anybody's still on the call, sorry it went so long. Everybody, we're ready for questions from the shareholder audience.

As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Christopher Haley with Worldwide Capital. Your line is open.

Hi, good morning. Good morning. Great, I just wanted to ask you, you said in your comments that we could ask you about your long-term forecasts. I just wanted to ask if you could give us some more insight into what you may or may not have included in some of those longer-term forecasts.

The long-term forecasts, I think we've discussed this before, So we start with the long-term forecast we have from MRAS on the DE programs. We haircut that to some extent, just to be a little bit conservative. The GE9X program, we haircut a lot. So that's kind of our baseline. And then there's 100 other line items that are considered in terms of how we get to the top lines. The bottom line is just doing the math, you know, in terms of once we have the top line, figuring out what our costs are and coming up with a bottom line or even a diastemic. There's nothing unusual or extraordinary included in the top line. There's nothing from acquisitions. It relates to, it's based on organic growth. So, I don't know, is there anything else that I can help you with in that regard? Some other, did that answer your question?

Yeah, I've answered my question. I'm just trying to get a sense of, I think in your call today, you discussed that you might have preferred to give yourself a little bit extra space in the forecasting, and I was essentially asking, with that in mind, how you characterize the longer-term forecasts.

Extra space in the top line or bottom line? I just want to understand where you're getting at.

I mean, I think whichever way you think is more accurate to describe it.

Well, we're not going to update our long-term forecast now, as I said. We're going to do that once a year. And when we do the forecast, what we're telling you is this is what we think is going to happen. As we've commented, we don't do forecasts either short-term or long-term, which are created so we can beat it and be zero and that kind of thing. We give you a forecast. We tell you this is what we think will happen based upon all the assumptions we're making and based upon the fact that we're going to work very hard to achieve these things. So we're not inclined to give you a conservative forecast so we can be heroes in every quarter where I was so wonderful. I know a lot of companies will do that. I don't mean to be sarcastic about it, but it's just not what we would do. I think in the third quarter, sorry, the second quarter rather, There were these three events which were unexpected. But they don't have impacts in the long term, though, I don't think. Those are short-term things. And when you get to quarterly forecasting, Chris, it's quite different than long-term forecasting because then you really have to focus on what bucket this is going to fall into. Is it going to be this quarter, next quarter? But long-term forecasting is a little different because you're not so dependent upon the kind of nuances and and so on.

Updated Car, you might share on progress on that front.

Not really very much. What we said before still applies. It's a little bit of a tedious process because what we're trying to avoid is just kind of getting involved in options that are run by investment bankers because we feel often those that are overpriced and are not really what we want. and often are not really kind of niche either because niche things aren't really appealing often to financial buyers and other buyers. So we've identified a number of companies in three or four different product categories and we've reached out to them. But the reason it's a little bit more challenging is that these are not companies that have been put out for sale. These are companies that may not be for sale. So it's an effort we have to stay with, and I guess all I can say is we'll see what happens. But there really isn't any significant change from, I guess, when we talked about this maybe last quarter.

Okay.

I think that's a great approach.

I appreciate your time. Thank you. Thank you. Thanks for your questions.

Thank you. Once again, ladies and gentlemen, if you wish to ask a question at this time, please press star then 1 on your touchtone telephone. And I'm currently showing no further questions at this time. I'll turn the call back over to Brian Shore for any closing remarks.

Okay. Well, thank you very much, operator, and thank you all for listening today. Again, I appreciate you hanging in there. I know it was a fairly long discussion and a little bit complex and involved, but, again, we thought it would be necessary for perspective or at least helpful for perspective, let's say it that way. So have a good day. Give us a call if you have any additional questions. We're available, of course. Thank you again. Goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.