This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk02: Good morning. My name is Michelle, 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 22, 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.
spk04: Thank you, Operator. This is Brian. Welcome, everybody, to our second quarter conference call. I have with me Matt Faribault, our CFO, as usual, of course. As most of you know, we announced our earnings this morning. In that earnings release, there are instructions as to how to access the presentation, which we're going to go through now. via webcast. The presentation is also posted on our website. And I think you really want to have a copy of the presentation in front of you as you go through it to make this call more meaningful. As usual, we try to provide insight, interesting perspective. We can't cover everything. We don't spend a lot of time ticking through dry data and numbers. That's really not what we try to do in these presentations. And I want to warn you, this could be a long one. I think the last three or four have been. It could be like 45 to a few minutes. So Hang in there if you can. And Matt and I, we have to answer questions when we're done with going through the presentation. So let's get started. Slide two, this is our four looking disclaimer. Let us know if you have any questions about our disclaimer language. Slide three is our table of contents. We have three appendices which are attached to the presentation. We're not going to go through those at this time. But again, let us know if you have any questions either at the end of our, at the end of the presentation or you can call us later. Slide four, okay, now we get into the part of the stuff. We go right with the numbers. So we just announced our fiscal year 22 Q2. As you know, sales were $13,618,000. Look at the right-hand column here. Gross profit, $4,411,000. Gross margin, 32.4% down from Q1, as you can see. Probably more or less at the level of the last couple years. and I think that we indicated the gross margins would come down in Q2, and we did our Q1 call. Just a deep dive, $3,232,000, and just a deep dive margin, correction, 23.7%. So what did we say about Q2 during our Q1 investor call on July 8th? We said our sales estimate was $13.25 to $14.25 million, so it seems like we came in within the range there. and our adjusted EBITDA estimate was $3 million to $3.7 million. Again, we came within the range. Our forecast philosophy, we cover this every quarter. I just want to say I'm not sure how much of this stuff we should go over because a lot of you are pretty familiar with us, but we still go over some of the basics just in case you forgot or in case we have some new people dialing in, which we hope to. Our forecast philosophy is a little different. We don't provide numbers that we can beat. We feel that's a little bit of a silly game. We know almost everybody plays it, but we don't. When we give you a forecast, we give you a range, we're saying to you this is what we think is going to happen. We could be wrong, but we're saying to you this is what we think is going to happen. Not easy happen, but happen assuming we do what we normally do, which is work very hard with a lot of dedication and commitment. So we're not trying to give a number that we can beat and then be heroes later on. We think that's kind of silly and almost, you know, just not worth your time. So just want to remind you of that. Let's go on to slide five. Lots of factors which affected 2.2, which we want to go through. And throughout this presentation, these will be kind of things, these will be repeating themes. Sales of essential component for missile programs. We discussed this over the last several quarters. And Q2, we had sales of the component of about $1 million. Remember, that's low margin. We have the relationship with the supplier. It's an overseas supplier. Some of our customers in OEMs that are on these missile programs in the U.S. ask us to buy this product for them. We have the relationship with the supplier overseas. These are critical programs. And then we sell the product to the customers. There is a markup involved, but it's quite low margin. Now, the flip side, as we discussed many times, is when we actually use that product and produce the, we call it ablative prepregs, and the margins are quite high. Now, once we sell the product to these customers, they can do whatever they want with it, but the expectation is that it will be used by us to produce the composite materials for these ablative programs for them at some point in the future. So it flips. When we produce the materials, good margin. When we sell the essential component, basically a markup low margin. So second quarter, low margin, $1 million of sales of that component. Difficulty sourcing key raw materials. Yeah, this is a big theme. Over $200,000 actually of missed sales because we couldn't, inability to source materials we needed. And then international shipment difficulties, another $200,000 in the sales in Q2. In other words, this is stuff going out, not coming in. We have overseas customers. We couldn't get international shippers to ship all this stuff. I mean, our people are really good at that, too, really good at it. We still couldn't ship $200,000 of product that was tested overseas. For us, it's very simple. We... ship the product, we invoice it, and then we record it as a sale in that quarter. If we can't ship it, it's not going to be a sale in a quarter. So $400,000 approximately missed there. And that doesn't sound good, but here's the thing. We had over a million dollars, additional dollars, at risk in the last couple weeks of the quarter. So our people did a really fantastic job, if you ask me, in getting this stuff done. A lot of brute force, a lot of moving things around, a lot of juggling, a lot of logistics, but it was a little bit of a nail-biter for us because there's a lot more at risk, all based on these same factors at the end of the quarter. So lots of brute force, daily battles, plus we're dealing with COVID quarantines. Fortunately, everybody's okay. Nobody got really sick this time around. But that wreaks havoc with our production scheduling and planning because, you know, what happens is somebody's wife gets tested positive, then they have to go home, then their whole crew has to go home, and we have to work around all that stuff. And this is not complaints. This is just our life that we want you to be aware of. And I think our people did a pretty terrific job in dealing with these kind of things. Domestic freight issues, yeah, international shipment difficulties, domestic freight issues. You know, okay, the supplier has material, but we can't get, you know, somebody to deliver it to us. We were talking about driving up to Kansas City train yard to go pick up some of the materials ourselves. We couldn't do that. We said, well, let us, but we were talking about it. Additional costs for expedited freight shipments. So, yeah, it's kind of like a little weird, you know, our suppliers aren't really getting the product to us. And they say, oh, well, last minute we can get you something, but then we're expected to pay the expiry rate, which, okay, you could say that's kind of an interesting perspective, but there are actual costs there, cost escalations. If you're paying attention to anything going on in the world, the Wall Street Journal, financial news, listening to other companies, these are not going to be surprises. This is kind of the day-to-day life of a company that's in manufacturing in the U.S., not just in aerospace, I don't think, either. Raw material cost increases, yeah, there are a lot of them. Most of them are covered. When we enter into an LTA with a customer, normally that's based on the LTA we have with the suppliers. No LTA, well, then we get new quotes for customers, and we're normally going to make an adjustment based upon raw material cost increases. But not always covered. General freight cost increases, mostly covered, not always covered in terms of our P&L. Sorry, manufacturing supplies, yeah, not always covered. So there's risk in terms of manufacturing supplies, costs for those supplies, and go up and up and up. Miscellaneous other costs, yeah, all of the lot. You can tell me what they are, utilities, wages, benefits, insurance, you name it. It's a very strange environment we're in, in my opinion. I'm talking about just generally as a country. We finally have been able to increase our people count. Remember, we talk about that every quarter. We'll get into specifics later on. That's good news, but there's a two-edged sword here because obviously the people count goes up, the cost goes up as well. These are not any kind of excuses at all. We're not into that kind of excuse thing. We don't like that. But these are factors that we thought you would want to know about. So let's go on to slide six. I'm just going to talk about slide six. This is our annual P&L history going back to 2017. You can take a look on slide 34 at our forecast for the current fiscal year, fiscal 22, if you want to compare it to the prior years. But let's just move on. Let's keep going. Here is slide 7. So we were not including this information for a couple quarters, and one of our important shareholders said, you know, we'd really like to see this information every quarter. We said, sure. So here we go. PARC has zero long-term debt. This is our balance sheet, cash, cash dividend history, and capital allocations strategy. Sorry, I forgot to read the caption. PARC has zero long-term debt. PARC had $113 million of cash in marketable securities at the end of our Q2. We got spending to go to complete our major expansion, about $2.25 million, spending to date about $17.25 million, and we spent about $800,000 in Q2. And the tax transition payments, we've talked about those in the past. Matt's better at explaining that than I am, but they have to do with Trump tax law and overseas cash. So let's see. We have $14.3 million that we owe, $7.6 million that has been paid to date, and $1.7 million in fiscal was paid in the second quarter. those payments are to be paid to $14.3 million through calendar year 2025. Of course, you always have every quarter like a little over $2 million plus regular dividends, so you need to think about that as well in terms of cash outflows. Park's cash dividend, Park maintained a regular $0.10 per share quarterly cash dividend throughout the pandemic and economic crisis. I don't think everybody did that. Park has paid 36 consecutive years of uninterrupted regular quarterly cash dividends without ever skipping a dividend or reducing the dividend amount. I'm rushing because it's a long presentation, sorry. Park has paid $548 million, or $26.75 per share, in cash dividends since the beginning of fiscal year 2005. Let's go to slide six. Another $0.10 per share of regular quarterly cash dividends It was declared on September 13, payable November 4. It shows the record on October 1, 2021. So here we go. When this cash dividend is paid on November 4, 2021, FARC will have paid $550 million in cash dividends since the beginning of fiscal 2005 with three exclamation points. I don't know what you think, but for a small company like FARC, that's a heck of a lot of money. But we get it. Don't tell me what you did from yesterday. Tell me what you're going to do today and tomorrow. So now we go to Park's capital allocation strategy or a fancy way of saying what are we going to do with all that money for those of us that aren't really living in the Wall Street financial world. I think that's what it means. So acquisitions and potential collaborations. Park continues to watch and track certain potential acquisition opportunities and but also strategic targeting of certain aerospace industry segments and product lines. We talked about this last time, so we identified areas we want to go into that we think are strategic rather than just reacting to stuff that comes over the transom from bankers, let's say. Parker's reached out to several companies and continues to reach out to companies in the targeted segments, so we're still at it. We're still trying. Let's go on to the next slide, slide 9. potential strategic investments in major aerospace and aircraft programs. PARC has reached out to certain large OEMs regarding strategic investments in major new aerospace programs. So this is really interesting. These are household names, OEMs, in the aerospace industry. We're aware of new programs that they're considering. Maybe they haven't been announced yet. So we've reached out to them and asked if we could work with them on these programs, partly by making an investment. Obviously, we would also want the business as part of the discussion. So let's keep going. Park ruined every dollar of its cash through much dedication and sacrifice and a part of many park people over many years. Parks money is not easy or cheap money. There's not easy come, easy go with us. So we'll not invest our cash casually or do a deal just for the sake of doing a deal. That money, you know, when it comes hard, my feeling is you're going to tend to be much more thoughtful, much more careful, much more serious about how you spend it. You know, it's not going to be a let's just kind of throw money around for this thing or that thing, a cool idea that somebody had. If or when we do a deal or invest our cash in an acquisition or some other form of strategic investment, we will feel it's the right thing to do for PARC and its owners, meaning you. Well, I guess some of you are not shareholders, but many of you are. Slide 10. Okay, this is our, you know, one of our standard slides in our presentations, our top five customers, kind of a fun thing. Let's start with Aerojet. Rocketdyne, they've been on the news quite a bit recently. That goes with North Grumman Ground-based strategic deterrent. That's GBSD. Have you heard about that? That's a really big deal. We're very happy to be on this program, and we hope to get more penetration into GBSD. This is the next generation. ICBM is very important for our country's defense. Aeromatrix composites. We don't have a picture for Aeromatrix here, but there are multiple programs, Kratos, they seem to be in the top five quite a bit, and we have a picture of their UTAP 22 drone. We're told by Kratos that we are the main supplier of composite materials for their drone programs. So anyway, here we usually try to find a different picture every quarter because they seem to be in the top five quite a bit. Okay, Middle River Air Structure Systems, we know who that is, it's funny. Plenty of stuff about them in the rest of the presentations to dwell on here, but we found a nice picture of 747-8 engine nacelles in the bottom right. Those nacelles you see there are all made with PARC materials. And New Orleans Group, we featured New Orleans Group a different program last quarter, I think. This time it's a top-right Passport 20 engine. Now, what's interesting is that we produced the materials for the nacelles and thrust aversions for this engine through MRAS, But this is not MRES. This is a component of the engine itself. It's a primary structure of the engine, and this is produced by the Norden for the Passport 20 engine, which goes on the global 7,500 long-range business ship. Let's go on to slide 11. Okay, so here's another standard slide that we have in our presentations, our pie charts. We have 20, we have 21, and we have 22. 22 for the first two quarters. And just for comparison, you know, look at how the pieces of the pie have moved around. The commercial is, you know, back dominating. I shouldn't say dominating. That's not right. But, you know, much more significant than it was, let's say, in 21. That's not, you know, I don't think it should be a big surprise to anybody. Military, maybe a little slower. We hear generally, not for us, due to budget issues. although I guess the Senate Armed Services Committee just released its full markup and just wrote this down so I could tell you about it. Good for many of our programs, including the Valkyrie. For us, military, it's really going to be the programs we're on and which ones are active, which ones are not. Military for us is very different than commercial. Commercial, especially the AMRCH programs, they're going to be running, running, running, you know, every month, every week. really. But military, you know, we could be on a really good program. It'll be active one quarter, and then it won't be active next quarter, and it will be active the following quarter. Obviously, we have no control over that. So that's why the military revenue could be a little choppy. But it's not, to me anyway, a function of the military market getting stronger or weaker. We think it's just fine from our perspective. Also, niche programs in Iran, we like those. We think they're less sensitive to the, you know, big budget fluctuations that These programs sometimes get caught up in. Business aircraft for us, that's mostly the Global 7500. That's the big dog for us in business aircraft, although we do supply into other like Gulfstream and Falcon and Citation-type programs. And business aircraft has been quite good for the last, I don't know, six, eight months, maybe nine months for maybe obvious reasons. People who are able to fly on business jets prefer to do that rather than airlines. A commercial, we'll go into much more detail about commercial throughout the presentation. So let's keep moving here. Don't want to get bogged down. Slide 12, this is one of the little fun slides that we do every quarter. This is Elena and Donna, their project. We have a lot of fun with this. These are not necessarily the biggest military programs, but, you know, they're programs we think you'd find to be of interest, the top left. So we're on the PAC-3 program. This is really kind of a fun thing or, you know, interesting thing for us, F-35. providing tracking data of an incoming missile to a ground-based interceptor in PAC-3. We've been in that PAC-3 program for a long time. I think we mentioned it many times. Then the next one to the right, U.S. Navy MK-41 vertical launch system. And we actually produce materials and parts for this program, but we're not really at liberty to talk about it very much, except this is a really nice picture. You should see the actual missiles being launched from the deck of the Navy ship. Next one, C-27J Spartan, medium-range surveillance aircraft. So this is a radar material for the Coast Guard. And then Avio Aster, hypersonic missile, beta materials, probably not surprising there. And then SpaceX, Falcon Heavy, really nice to be on this program. We hope to get more penetration to the SpaceX programs, but we're not really in a position to talk about what we do with that program. The niche programs, we consider radomes, rocket nozzles, and drones to be the niche military programs. That's where we like to focus. Let's go on to slide 13. Okay, changing gears here, update on our major expansion in Newton, Kansas. Total budget, moved it up to $19.5 million. I think last time we said it was $19 million, so it's creeping up a little bit. Spending to date, about $17.25 million. Spending to go, add it up, you know, everything else is a total of $19.5. That's $2.25 million to go. So even though the expansion is complete, the way it works is that there's holdbacks with some of the suppliers. When things get signed off and certified, then the final payments are released. That's why, you know, there's still some money to be paid out. Manufacturing trials in progress, which is good. Qualification runs expected to begin probably around Thanksgiving, so we're saying December. We push forward with a major expansion when many others are slashing their capital offending programs. maybe to zero, good thing we did. If we had, we'd be in a world of hurt right now. Originally this expansion was for redundancy, as you remember, but based upon everything going on, We really need this expansion for capacity as well. We figured it out now. We've been in big trouble because you don't do an expansion and get the building built or the equipment, design the equipment, get the equipment certified and released, get the factory qualified in six months. It's like a three-year process. If we didn't start and keep going, we'd have a real problem on our hands right now. Good thing we made the right decision. One thing that's a little new here, the pictures, the The bottom picture, you see the existing facility in the middle with the new offices, the facility on the left, this new facility. And this little building to the right, that's actually something that's been there all along. We never really talked about it, but I wanted you to see it. It's about 10,000 square feet. Ten City Aircraft Works. That's our R&D facility. And the name, we came up with the name. It's kind of a little bit of a secret thing, but anybody can guess how we came up with the name. Well, maybe we'll send you at least a dollar or something like that. All right, and then the middle picture, that's the new building with the new office, sorry, the existing building with the office expansion seats, two stories now. The building at the top is the new building. Let's keep going, slide 14. So commercial aviation, updates and developments, changing gears again onto commercial aviation. The first item we had a prior presentation on, Higher jet fuel prices and environmental concerns provide extra motivation for airlines to more quickly replace less fuel-efficient legacy single-aisle aircraft with more fuel-efficient modern single-aisle aircraft, such as the Airbus A320neo. Next item. So this is new stuff, and we're going to try to give you a little perspective here as to what's going on with the commercial aerospace, commercial aviation markets. Domestic commercial aviation activity was recovering nicely in all major markets, but the Delta variant negatively impacted recovery in August and September. The passenger traffic was down in August and probably September as well. September hasn't been fully reported, but that's the expectation. And the China domestic aviation market is probably impacting the most in major markets based upon the Delta variant outbreak in China. But the U.S. domestic aviation market, as well as other markets, major markets have also been negatively impacted by the Delta variant. The full U.S. domestic aviation recovery, meaning back to pre-COVID, I guess that's what we mean by that, which had been predicted to occur in the first quarter of next year or even earlier, maybe the fourth quarter of this year, may be pushed to the right to some extent by the Delta variant. My feeling is a very minor amount. That's my feeling. Let's go on to slide 15. Maybe we can talk about this more. Why will it be a minor amount, if at all? Will a temporary setback negatively impact airline orders for the airplanes produced by the large commercial aircraft manufacturers? Well, I don't know. If you're running an airline, airline business means long-term planning. You don't just order an airplane and buy it in two weeks. So if there's a two- or three-month setback, and pass you traffic data and you're running an airline, are you really going to change your order patterns? Are you going to push out orders? Are you going to cancel orders? We're not talking about the beginning of the pandemic when there was massive uncertainty about everything. This is a very different situation. My feeling is that if you're running an airline and you make that decision to push out or cancel orders under these circumstances, you're probably in the wrong business. You probably shouldn't be running the airline. With a large commercial aircraft manufacturer involving Airbus, change or adjust the production schedule based upon this temporary setback, I'd be shocked, I guess, if they did that. I would be quite surprised. In any event, we have not seen any evidence of this in our own business. Will the Delta variant be trending down by the end of November, as has been predicted by certain experts? I mean, people are saying it's trending out already. A lot of people are saying that. A lot of data, I guess, to support that. Also, you know, there are other countries that started with the Delta variant before us, like India and I think UK, and we look at their patterns. So I think there's a lot of expectation that the Delta variant is kind of winding down. And, you know, by the end of November, even maybe the end of October, we'll see it winding down even more. So my feeling is that, yeah, it did affect passenger traffic. They say that in, let's see, August, September. But my feeling also is this has no impact upon our commercial aerospace business. International commercial aviation has started to recover to some extent based upon some loosening of travel restrictions and increased vaccination rates. But, big but, it still significantly lags domestic aviation recoveries International commercial aviation is still expected to take a number of years to fully recover. Fully recover means a pre-COVID level. I don't know, maybe three or four years is what people think. Let's go on to slide 16. Since single-aisle commercial aircraft are designed to service domestic aviation markets as well as shorter-range international aviation markets, Park believes single-aisle is the place to be in commercial aviation, at least for now. Yeah, we feel we're in the right place. Because single-aisle, you know, that's the A320 family. That's like the... probably, I don't know, aircraft for the decade, maybe for multiple decades, Cormac 919. Those are all single aisles. Three interesting questions. How will GE Aviation's RISE engine development affect the commercial aircraft industry in the future? Have you heard about this GE Aviation RISE engine? It's actually not even GE Aviation. That's not correct. It's CFM, which is the partnership between GE Aviation and Safran. So that's actually not correct. But... Will Boeing develop a new single-aisle aircraft to compete against the A321XLR, which Airbus plans to introduce in 2023? Last one, will COMAC 919 be certified in China before the end of this year? We're not going to go into these items because we just don't have time. These could take 15, 20 minutes to have a proper discussion of these items. I just want to put them out there because they could be important in terms of what happens in the future in the commercial aviation industry and markets. Let's go on to 17. This is a slide you've seen almost, I think, every quarter with some minor modifications. We're not going to cover it just to save time, except just the first couple items. So just the basics here. We have a firm pricing LTA. It's a requirements contract from 2019 through 2029. with Middle River Air Structure Systems, MRAS, a subsidiary of ST Engineering Aerospace. What is this about? When we entered this contract, MRAS was a subsidiary of G-Aviation, and then it was sold to ST Engineering Aerospace, I think about three years ago. All the programs that are on through MRAS are GE Aviation or CFM-type programs. It's the GE Aviation tie-in that existed before the sale by GE Aviation of MRAS-ST Engineering. We've done the factory. We've talked about it already. Construction is complete. So our deal with GE Aviation and MRAS was as soon as they sign this LTA, we're going to go ahead and build this factory, and, of course, we did that. even though it was just a handshake, but of course we live up to our commitments. So let's not go into the rest of the items here. If you have any questions about them, please ask. Legendary Boeing 747-8 engine nacelles. I love this picture because especially this guy in the background, he shows you how huge these nacelles are. These are all part materials that go into these nacelles. Lots of content. Slide 18, John. update on GE Aviation jet engine program. So let's do an update now. It's going to take a little while, so we'll try to go through as quickly as possible. So the A320neo family of aircraft, this is the big, big dog. These have the LEAP-1A engines. It's ramping steeply. We had this in the last investor presentation, but let's just quickly go through it. On May 27, in a May 27 news release, Airbus stated, A320 family, Airbus confirms an average A320 family production rate of 45 per month and a Q4. That's basically now, right, Q4 of this year. I just want to mention that it's been at 40 throughout the pandemic. That's where they held at 40. And they call on suppliers to prepare for the future by securing a firm rate of 64 by Q2 of 2023, 64. That's moving up quite a bit. In anticipation of continuing recovering market, Airbus is also asking suppliers to to enable a scenario of 70 by Q1024 longer-term Airbus investigating opportunities for rates as high as 75 by 2025. Here's a little picture of the A320neo. So those are very big numbers. Let's keep going with slide 19. As of the end of August 2021, CFM, meaning Leap 1A engine, had a 60.25% share of firm orders for the A320neo family of aircraft, But at the source of that is the Aeroengine News, which is kind of like the Bible for commercial aircraft engines. So the A320 family of aircraft has two engines that are certified for the program. One is the CFM Leap 1A, and the other one is Pratt. So this is the share. We're talking about share that the CFM Leap 1A engine has. That's our program, the CFM. Elite 1A, we're not on the PRAT program. So the CFM is good for us. PRAT, we don't supply it to the PRAT program. So let's keep going here. Assuming a 60.25 CFM share, this is assuming that, and those are the facts now. We're not predicting that for the future. We don't know what will happen in the future, but this is the current share. And it's a big backlog. It's not just a few planes. It's thousands of planes, thousands of engines that have been ordered, 75 aircraft. H320 NEO aircraft family per month rate, that's the rate we were talking about at the prior slide, represents a significant increase of the number of units forecast in a long-term forecast. Let's talk about that. In a long-term forecast that we have from MRAS, H320 units, sorry, H320, if we do the math, we're kind of back into the math, it's equivalent to 57 airplanes per month, 57 H320 airplanes per month, assuming what share that, assuming it's the 60.25% share, for instance, and doing other computations, 57 compared to 75. So that represents, it's a lot higher, like I said, I think it's over 30% increase over our forecast. Our forecast tops out at that, assuming the 57 number in 2024. We're not at that number yet. We're not at that number in the forecast yet. So our forecast tops out in 2024. assuming a 57 rate, but Airbus is saying they want to get to 75. So big, big, big number. The difference is millions and millions of dollars per year for PAR, difference between 57 and 75. Will it happen? I don't know, but I want you to be aware of it because it's a big, big deal as far as I'm concerned. Now, there's some tension with Airbus suppliers, particularly engine suppliers, Some tension has developed over the aggressive A320neo aircraft family forecasted ramp-up. There's historically been tension between aircraft and engine manufacturers about production rates based upon diverging economic drivers for the aircraft and engine makers. What does that mean? The aircraft makers make their money by selling airplanes. The engine makers make their money by servicing the engines, not by selling the engines. So there's that tension that's existed for a long time. This is not a new thing. So here's the point. The engine makers aren't so anxious for the aircraft maker to come out with the next generation airplane because they want to keep servicing the legacy engines on the legacy airplanes. CFM also supplies into the Legacy 737 and the Legacy A320 with the CF-56 engine. They want to keep getting some life out of those engines. So if everybody says, wait a minute, we're going to really up our production plans for the NEO, that means those airplanes are going to retire and then, gee, loses their revenue. and margins from the service of those engines because the airplanes are going to be retired. You get the dynamic. It's pretty important to understand that if you're into commercial aerospace. Flight 20, then on July 29, 2021, the Airbus CEO stated he is disappointed that some partners, many suppliers, aren't challenging the ramp-up. He further stated we have a backlog of more than 6,000 A320 NEO family aircraft, At a rate of 40, which was the rate they were at until, I guess, this quarter, that means 15 years of production. At a rate of 60, it means 10 years. That's a long, long time. Customers do not want to wait that long. We have to go. Now, this is SIC. I think this is a misquote. That doesn't make any sense. I think he said above 60. It's pretty obvious he said above 60. Otherwise, it wouldn't make any sense. He further stated, we expect the supply chain to ramp up at a much faster pace. So here we go. We have a little bit of tension here, as I said. The aggressive ramp up is partly based upon the success of the A321neo. The CEO also commented on July 29 that Airbus wants to be capable of a production share of A320neo significantly above 50% to a share of 60%. So my opinion is what will happen is just my opinion. I can be wrong. My opinion is that if Airbus can sell these airplanes, GE or CFM will supply the engines. And why do I think that? Okay, because they share this program with Pratt. So if CFM digs their heels in and says, well, we're not going to supply that many engines to support the airplanes that you want to produce, Airbus, Airbus would say, okay, that's fine, I'll go to Pratt, maybe Pratt can help us out. In that case, what happens to CFM, they don't get any revenue for servicing new engines because they're not selling the new engines on these programs, and the old airplanes, the legacy airplanes, are going to be replaced Anyway, but with NEOs that are produced with manufactured with Pratt engines, they lose you the way. This is my opinion. I could be wrong, but my opinion is that there's going to be a lot of haggling back and forth at the end of the day. If Airbus can sell these airplanes, G or Safran, G, Safran, and CFM will support it. Airbus also recently announced a resuming work on a new assembly line in Toulouse for the A321 NEO aircraft. So maybe they're putting money where their mouth is, not just talking about trying to move the rates up they're investing. So let's go on to slide 21. The XLR, H321 XLR, we've spoken about this for several quarters now. So this is supposed to be in service in 2023, and it's probably a big driver of the aggressive forecasts. of the A320neo family of aircraft. This is considered to be in the A321neo. They have over 450 orders already. Is it a game-changing aircraft? Yeah, it could be, I think probably, because with this range of over 5,000 miles and the seating capacity over 225 seats, well, it really replaces – some of the widebodies on some of the shorter international flights at much lower cost. So you're going from, let's say, North America to Europe, you want to get on the widebody or you get on an XLR, much lower cost for an airline with the XLR, and they still have quite a bit of seating capacity. So let's see what happens. A key question is this single-aisle 5,000-plus statute mile range, 225 seating capacity market being seeded, to the Airbus A321XLR. That refers to whether Boeing is going to develop an airplane to compete against it. And the last item is just back to the A320neo family, generally 95 orders in August, which is not bad. Let's go on to slide 22. These are still GE aviation programs. In this case, again, it's a CFM program. So COMAC 919, we talked about that quite a bit, kind of interesting dynamic here. Recent reports, U.S. export controls are slowing progress in 919, but COMAC almost immediately responded by saying, no, it didn't really, those export controls didn't make that much of a difference, and they were doubling down on their certification timeline before the end of this year. They're saying they're going to have their airplane certified this year, and that would be in China. for China deliveries, but nevertheless, they're sticking to it, so let's see what happens. Maybe by the next conference call, we'll know what would have happened. But this is an important potential program for PARC, so let's see what happens with it, but that's the dynamic there. Slide 23, let's go through this quickly if we can. The Global 7500 with the past 420 engines is ramping up. This also is planning to have our Lighting Strike material certified for this airplane next year, which is a good thing. Also, those are high-margin products for us. And the Comac Air J-21, that's a regional jet that's ramping up as well. Last one is the 747. We talk about this every quarter, and we have a lot of pictures of the 747. It's kind of a sentimental thing for us for reasons we've discussed probably in the past. But Boeing and out there are going to terminate the 747 program next year. So that will be a real sad thing for us. I mean, we'll have to have a vigil for them. But I also want to remind you, this is less than $2 million of revenue for us. So we emphasize a lot, but it's less than $2 million. That program is less than $2 million of revenue for us per year. Slide 25. Okay, let's just quickly review this. Commercial aerospace industry in a meltdown mode. Sorry, industry meltdown in review. Why don't we just kind of skip to the end? You can read all the different items here. We know about it. It was really Armageddon in the commercial aviation industry, commercial aircraft industry, both. Almost all the news about the industry back at the beginning of the pandemic was very negative. Aviation analysts and commentators predicted that the recovery would not come for many years or may never come, never come, rather. The end-of-day scenario, you know, pretty dire stuff, pretty dire stuff that was being talked about and believed also. Slide 26, result of the end of day's attitudes, companies in the commercial aircraft supply chain laid off thousands of people and went into bunker survival mode. Production slashed or even halted. Thoughts about industry recovery, how to handle it, were just not in the minds of many, probably most companies in the supply chain. It was all about survival for them. The sense of belief was that a recovery, if any, was so far in the future, it was not worth thinking about. But, surprise, surprise, people got tired of being locked down. vaccines were developed as promised, and people started to want to fly again for domestic flights, and lots of people. Remember, these flights were empty, so all of a sudden people wanted to get on these planes again, so it was kind of a big change. And as a result, airline companies wanted to buy airplanes again. At the beginning of the pandemic, airline companies just didn't want airplanes. One airplane pieces so much uncertainty about what the future was, but now they want to buy airplanes again and lots of airplanes. And somebody needs to produce the thousands and thousands of components which go into these airplanes, the airplanes that the airline companies want to buy now. Let's go on to slide 27. But the commercial aircraft supply chain was going very flat-footed in the bunker survival mode. It's not in the mindset to quickly ramp back up to meet the renewed demand. Plus, since the supply chain companies had laid off such a massive number of employees, they did not have the workforce to meet the industry ramp up anyway. These companies tried to hire back the employees they laid off, but it has been widely reported that it's not been so easy. Plus, the government was paying people not to go back to work, so that didn't help either. What's the result of all this? The whipsaw effect in which the commercial aircraft industry supply chain was caught flat-footed and struggling, in some cases badly, to meet the unexpected increased demands of the commercial aircraft industry as it recovers. So kind of whipsaw because they were kind of clamping down in their survival mode, then all of a sudden, no, we need to ramp back up again. And the response has been, you know, I would say lukewarm. This is today's commercial aircraft industry supply chain dynamic. It's a difficult one. By 26, by the park, we did not buy all the doom and gloom news. We did not buy the end of days we're in hand. Here's what we said. This is interesting. This is what we said on May 14, 2020. This is the beginning of the pandemic. The beginning of the crisis when confusion, uncertainty, and fear reign supreme. Just read this. I'm not going to read it for you, but go through it. Quite interesting. We were not going into the bunker mode. We were in the go-for-it mode. And you know what? We were pretty much alone. I don't remember too many people that were, you know, joining the, I don't know what you call it, the mission that we were on. But the last item when we got one for you, we believe the glory days of aviation were turning. We intend to be part of it. Let's go on to slide 29. At PARC, although we do not know when, we believe the commercial aircraft industry recovery would come, and we want to be ready for it and be a part of it. We're not giving up on the commercial aircraft industry. It's quite the opposite for us, actually. So we made arrangements. We talked about this before with MRAS to maintain minimum monthly baseline critical mesh production levels. reserve parts ability to ramp up production we need. This is critically important. If we went below these levels, we have a real problem in our hands because we would not have the critical mass to ramp back up, and it would be a problem for us, big one, a problem for MRS, big one, and a problem for some of those aircraft manufacturers, big one. And even though layoffs are widespread and pervasive, and we didn't really know anybody that wasn't laying off people in the commercial aerospace industry, we laid off nobody, none of our people, through all the darkest and seemingly hopeless days in the commercial aerospace industry. It turns out the decision not to lay off any of our people is really important for PARC because if we laid off people, we'd be in such bad condition in terms of trying to ramp back up. It would be very, very difficult for us. Slide 30. So GA Aviation jet engine programs are the ones where PARC is on, ramping up fast. So GA Aviation programs, Jet engine programs that PARC is on are ramping up, and the ramp-ups are looking steep. Just for perspective, we shared this with you last quarter. Look at Q3 of 2021, $1.8 million. Then move forward two quarters to Q1 2022, $7 million. That's a four-times increase in two quarters. Four times in a quarter. That's very, very significant for a manufacturing company. We're not just selling stuff. We have to make it. We have to get the raw material. We have to produce it. We have to test it. We have to ship it. A very big challenge, very big challenge. Just FYI, so fiscal year 22, Q1 and Q2 are already at pre-COVID levels, already, if you look at Q1 and Q2. And a ramp-up has still a long way to go. Important question, how is the commercial aerospace manufacturing supply chain responding to this steep ramp? I would maybe give it a C-, not so great. It's an issue and challenge for us every day. Slide 31, how is PARCC responding to the GAA program steep ramp-up? All about our people. I'm going to try to rush even faster here because I know we're going really long. Our current head count is 114. We're at 105 last quarter, so we're ramping up our head count a little bit, but still a challenge. still a number of people are looking to hire, two step forward and one step back in terms of the hiring process. So parks people stepped up once again. That's what parks people do in order to get everything done in Q2. We already talked about the challenges that we had to be able to overcome, so I won't go back over those again. Once again, thank goodness for parks customer flexibility program. Won't go into the details, but this program, as we talk about almost every quarter, has been really critical to Park, especially as we're trying to ramp back up. Slide 32, how is Park responding to the GE Aviation Program's steep ramp-up continued? All about our people. We can't say enough about our people. Thank goodness for Park's great people. Without them, we couldn't get the job done. Park is fortunate and blessed to have such great people, and every Park person received a $150 bonus for his or her dedication and outstanding work during the the second quarter. Well earned and deserved. A lot of brute force, a lot of supply chain issues, freight issues, COVID quarantine issues, logistics planning, big challenge, but through dedication, loyalty, and commitment, we were able to meet our objectives for Q2. So, slide 33, rushing this quickly. You see the numbers, not much discussion about it. The only thing I would say is that This is GE forecasting, of course. It's difficult quarter to quarter because of the inventory practices. Things can move from one quarter to another. It can move forward, move back. That makes it more difficult. To me, one of the big questions, though, is when will the numbers ramp up to meet the, especially the forecasted numbers that Airbus is coming out with that we spoke about earlier in the presentation? Because, you know, we have a mismatch here. We're not operating anywhere near those levels. So at some point, either Airbus is going to bring those numbers down or our numbers are going to have to go up. But it can't be both ways. So something's going to have to give. Is it going to be in the fourth quarter? Is it going to start in the fourth quarter? I don't know. It's hard to say. It's really hard to say. If I had a feeling about it, you know, I would let you know. But at this point, I'm just saying it's out there. It's kind of hanging out there that we know something's got to give. Something's got to happen. Unless Airbus says, wait a minute, we changed our mind. We're bringing our numbers back down to 55 or 57. you know, per month, maybe that's a different story. But unless Airbus backs off and backs off a lot, something's got to give because we're nowhere close to operating a level to support that program. And the other programs we talked about as well that are ramping up. Slide 34, again, you know, the numbers are pretty straightforward, so we won't go into them in any great detail. I'll just mention in Q3, we expect about $400,000 of blade of sales. That's good. In Q4, though, we expect about $2.5 million of of the critical essential proponent sales, which, you know, not great margins, but also about a million dollars of the sales of the inflated materials, which are relative good margins. Same question. Oh, if you want to go back and look at all the factors that we talked about regarding Q2 on slide five, go do that because they apply for Q3 and Q4. Those factors haven't gone away, ones we keep talking about. Same question, though, about the GE programs, particularly Airbus. At what point is our production going to match their requirements? At this point, it's not matching. At some point, something's going to have to happen, like I said. Are they going to bring their numbers down, or are we going to have to move our numbers up? When that will happen, I don't know. But it's out there. It's kind of looming out there. And we're ready. We're ready to go. Obviously, our challenges with our supply chain, they'll continue, but Parker's ready to go. As I said, it's really good we didn't stop that expansion. We're going to slow it down. Very important for PARC. Let's go on to slide 35, 36. These are the last slides, so let me go through them fairly quickly, but they're important to us, changing gears a lot here. What matters the most at PARC? We're deeply saddened by what we see and hear in our world today. We're told that people who work for a living do not matter. We're told they're expendable. We're told they're going to be sacrificed for some loosely defined or undefined greater good. So to us, it's really tragic. But we understand we're a small company and what we say or what we believe doesn't matter all that much about these larger issues. But what matters a lot is what we say and think about our own people. So at PARC, our people are not expendable. At PARC, our people matter the most. At PARC, our people are everything. At PARC, our people are family. We do not turn our back on family. Our people will not be forsaken. Our people not be sacrificed. At PARC, our people are precious. At PARC, we're the most fortunate when it comes to our people. I know I say this a lot, you know, but it's because I mean it a lot. Let's go on to slide, our last slide, which is 36. At PARC, our people work for a living. That's what they do. At PARC, our people make money for our owners. That is what they do. It's something that our people are committed to. I'm talking about all of them. Now, we make money every quarter throughout this pandemic. and economic crisis. Did everybody do that? I don't think so. I think most companies in the aerospace supply chain probably did not do that. But that was something that our people did, and it wasn't easy. Throughout this pandemic, throughout the economic crisis, our people did that, made money for owners every quarter. That's what they do. Not an accident, not luck. It's based upon serious commitment and dedication. Serious commitment and dedication. So just wanted you to know that. Park is a strange and unusual company filled with wonderful and special people. At Park, we're not like the others. At Park, we play for keeps. So we always feature, always at least in the last few quarters, a picture of one of our crews. In this case, we're featuring two crews, customer service and purchasing planning teams. When we go from left to right, Jordan, Teresa, Jonathan, Chris, Dakota, Sarah, and Elena. So These people, you know, all the things we've been talking about throughout this presentation, these people were on the front lines with all the supply chain issues, freight issues, international freight issues, juggling customer orders, quarantine issues, production planning, and then the possible environment. Because, you know, normally you want some visibility in production planning. You don't want things to change every week, every day. But these things that kept coming up, you know, let's say, you know, COVID quarantine, you can't predict that. So lots of juggling, a lot of moving schedules around. Big job. Root force was probably the way of the quarter for these people. But this group saw to it that we met our objectives for Q2. They always found ways to overcome the obstacles. So thank you very much. Sorry it takes so long. I was really rushing. You probably made it difficult for us. some of you to follow me, so it's gone so quickly, maybe skipping over things. But, operator, we're now done with our presentation, so if there are any questions, we'd be happy to take them.
spk02: As a reminder, to ask a question, please press star, then 1. If your question has been answered and you'd like to remove yourself from the queue, press the pound key. Again, that's star 1 to ask a question. We have a question from Brian Glenn. With all cut square, your line is open.
spk04: Hi, Brian. Hi, Brian. How are you doing? Good. How are you? Good. Thank you.
spk01: My question is, there's two questions. So the first is, thank you for the walkthrough, of course, as always. The first is around the supply chain. You alluded to it a little bit. Is there a chance that you guys, who are more than adequately prepared for a ramp, that you're held back by the rest of the industry. I know Airbus has several thousand or more suppliers for that program. I know not all are sole source, so there's some ability to toggle. But is that a real risk going forward that you see as potentially material? And then the second question is around, I know you haven't put in place guidance yet or brought it back, but if we go back to pre-COVID times, I know during COVID you guys worked on some military programs and there were some added efforts there. You talked about the lightning strike material through Nordham that's on the Passport 20. That looks like a new program that may happen or that is happening. And so commercial aside, if you think about the long term without getting into numbers, is there kind of a net add in terms of the programs you might be on or that you are on versus if we go back to 2019 when you had that forecast in place?
spk04: Okay, thanks. So, let's see, the first question is supply chain, and that could be an issue for us ramping up. As you, I guess, at least, you know, implied, we are sole source on these, all the G aviation programs, including the Airbus 8 through 20 family programs. I think the risk of our being replaced is nonexistent, you know, on these existing programs. That's where you're getting at. But this certainly is a major challenge for us, many of these art supply chains. We're ramping up. Plus, you know, we're also doing trials and everything else, so it's even more work there. So it's a major challenge. And, you know, when will this kind of thing even out? I don't know. You know, I mean, there's a lot of reporting about it. When will the suppliers kind of catch up and kind of get their rhythm back? I don't know. Maybe toward the end of the year. That's what I hear some reporting about that. But, of course, it's a case-by-case thing. We have three or four major suppliers that we use for these GA aviation programs, and we really need to look at each one individually. Some are doing well. Some are struggling. And I don't know how else to answer it except it's just a major effort. and sometimes prove force effort. But the other side of the equation, I guess, is our people are very determined and very committed to finding ways to make things work, and we've been able to do that for the most part. So I don't know, Brian, I'm not sure I answered your question adequately. Is that kind of information you were interested in or is something else that you're going for there?
spk01: That was helpful, yeah. I know you guys are sole source with respect to the GE program. Yeah, it was just around people, even suppliers, even outside of your vertical, right? They're supplying into the 320. And, you know, this is stuff totally outside of your control. Got it. Right, and it just bottlenecks everybody.
spk04: Right. Okay, I understand that question. So it's a really good one because, let's say, we've got everything organized, our supplier is okay, but if – Airbus is not able to source other key components. They're still not going to be able to make airplanes, and it affects us. I get what you're going for. Well, that's a really good question. I don't have a crystal ball on that one. My feeling is it's going to be ugly and messy for a while. My feeling is at some point the supply chain – some of these very large companies that don't really, you know, aren't that agile, don't move that quickly. At some point, everybody will catch up and kind of get used to the new rhythm, the new rates and everything else. When that will be is a good question. I don't know. But I think probably, I'll just give you my, it's almost speculation. My feeling is toward the end of the year, we'll start to feel that things are getting a little bit better. Not solved, not that there won't be any issues. And I'm not just talking about our supply chain. I'm talking about Well, you're asking about the supply chain for these airplanes, which, like I said, thousands and thousands of different components are required to make these airplanes. You know, you're probably not surprised to hear this, but, you know, Airbus, for instance, they have a, you know, massive function that deals with supply chain management, and they spend a lot of time with suppliers. They try to, you know, identify where the risks are and try to focus on them. I'm sure it doesn't surprise you. That's probably what any good OEM would do. So, yeah. I don't know if that helps, but I'm not sure what else I can do. The next question, we haven't reissued our long-term forecast yet, Brian, but maybe in the third quarter we'll try that. We're a little bit uncomfortable now because there's a lot of uncertainty, the things we talked about throughout the presentation. But absolutely, yes, the programs we've been working on and developing over the last year and a half since the pandemic started Those aren't just temporary things just go up our factory. Those are things which we hope and expect will have long-term impacts to us. Now, in aerospace, I just want to add, you've got to do this because some of the programs you run, they're going to go away. So even if they just kind of break even or keep the same levels, you need to keep getting new programs. But our objective, of course, is not just to kind of maintain our levels. It's to increase our levels, our sales levels. The Lightning Strike is a good example. That's commercial, of course. And we hope that we also get Lightning Strike on the ARJ-21. That's the COMAC regional jet. Once we get a Lightning Strike on that program, if we can, then we'll have a clean sweep of all Lightning Strike on these programs. Lightning Strike, that's actually from fairly significant revenue, but also quite good margins. That's a product we really love selling. But then there's lots and lots of military programs. We talk about them, you know, every quarter. We have little pictures. Some of them are little. Some of them may not be little. And, you know, you've got to get your foot in the door to get a start. You deal with, you know, maybe some small content, and you try to grow it to larger and larger content. You know, we had a picture of GVSD. GVSD is a really big deal. And also SpaceX. We haven't featured those programs before. So that's good. We're getting on those programs, and we're not just going to stop once we penetrate. We want to do more and more and more. For us, you know, it's always good to do something with a customer because then we kind of show our stuff. We can show how we service, how we respond, how we support a program. It's much more difficult to say, look, you know, put us on your program because we're good at doing all these things. It's like, well, everybody says that, you know. But once we get a chance to actually start to work with a customer, then we can demonstrate how we feel we're different than, you know, other suppliers, meaning our competitors.
spk01: Understood. Thanks. That's very helpful. And thanks to you and your team for the efforts on behalf of shareholders.
spk04: Thank you. Thanks for those comments.
spk02: Again, that's star one to ask a question. Our next question comes from Brad Hathaway with Fairview. Your line is open.
spk03: Thanks for the time and thanks for all the detail in the call. One question was early in the call you mentioned that initially the new facility was mainly going to be kind of backup capacity, but now you are really going to need it. Is there any way in kind of big picture numbers to think about the total kind of revenue capacity you have when that new facility is online? So we talked about that before.
spk04: I think we said it's about $60 million in capacity, new capacity. But Remember, you know, you may probably remember, at least we haven't covered this for a few quarters, I don't think, but in the factory there's a big area, and, you know, we're talking factories, this is not like a little room, a huge area that's set aside for another line. It could be a hot melt line or a solution line. So if we decide we need more capacity, it would be very easy to drop that in. We don't have to go build a new factory. The factory is already built. The equipment has already been designed because we just bought the equipment, so it would be easy to drop in a new line there. So it could be ramped up to much more than that at that point. So the thing I was saying I just want to make clear is that the factory was originally agreed to with GE Aviation and MRAS as redundant factory. Why is that? We just talked about being sole source. It takes three years to qualify a composite material supplier on these major commercial aircraft programs three years. So it's kind of a scary thought. What happens if something happened to one of our factory, rather? I mean, you know, it's like a really scary thought. I had this discussion with people before, and it's kind of like the room gets really quiet. So they asked us very understandably, we'll build another factory, which we did. If you look at the little photograph of the new factory, it's actually a separate building that is joined with a passageway for moving people and material that has a fire door on both sides. So it's kind of the best of both worlds. We manage it as one factory, but it's actually two factories, totally redundant. So if something happens to one factory or even one line, the other line of the factory is available. But that was the original concept, but because business has ramped up so much and it's getting stronger and stronger, it's no longer a matter of redundancy, which is really critical in aerospace when you're sole source on something. It's also a matter of capacity. So what I'm saying is that it's really good we did what we did because if we were starting now, we realized, wait a minute, we have a problem with capacity now. We'd be in a world of hurt because it would take us three years to go, approximately three years to go build a factory, you know, get everything designed. Let's say we're starting from the beginning, and then we have to get the machines to go through trials and get the machines signed off on by, the supplier and then a qualification, which also doesn't matter. Even though it's only a plant qualification, a material qualification still takes a long time. So I'm thinking maybe three years' time frame. But then we'd have a real problem on our hands. It would be too late, and we would not have enough capacity, I don't think.
spk03: Got it. Great. That's helpful. And is there any more color you can give us kind of on the M&A side and kind of anything you're seeing out there? I'd love to hear more about paying your thoughts there.
spk04: Yeah, the M&A side. So we continue to work in this area, this strategic area that we identified. And I think we might have mentioned it, but these products or products are used to make composite structures by our customers. It's not composite materials, but other things that are used, other products that are used to make composite structures. So that's one area we've been focused on. We've probably contacted, I mean, Matt, I don't know if you have another number, but about a dozen or more of these companies and we continue to reach out to other companies and we keep trying. So that's something we feel real good about because we feel it makes so much sense for us to be in that area. The challenge is to find the right opportunity because, you know, obviously a lot of times you contact somebody and thank you very much, we're not for sale, That kind of thing. These are not auctions where it's something for sale. We saw bankers putting it up for sale, so it's a little more difficult from that perspective. There are a couple of companies that we're kind of watching and tracking to see how they're doing. They may be public and watching how they're doing and kind of maybe the timing isn't quite right yet, but we're thinking about them. And then there's this other area we talked about, which is more of a kind of joint investment with banks. very big OEMs and new aircraft programs, which we've had discussions. We've had beginning discussions with one of these big OEMs. We've reached out to two of them. And, you know, the first discussion is, you know, the beginning discussion, but it was with very high-level people, and I felt there was a serious interest in their part. They know us very well also. It's like, who are you? So we're hopeful. We're hopeful that will be a good avenue for our investment and really a great opportunity for Park's future.
spk03: Fantastic. Thank you. Thanks for all the efforts. Sure.
spk02: If there are no further questions, I'd like to turn the call back over to Brian Shore for closing remarks.
spk04: Thank you, operator. Thank you, everybody, for listening in. Sorry it went so long. Every time we try to make a little bit more compressed, but I've not been very successful. Have a great day. Matt and I are available. Call us any time. We'd be happy to talk to you. Okay. Good day. Thank you.
spk02: This concludes the program. You may now disconnect. Everyone, have a great day.
Disclaimer