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spk00: Good afternoon. My name is Matt and I will be your conference operator today. At this time, I'd like to welcome everyone to the Park Aerospace Corp. Second Quarter Fiscal Year 2025 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'd like to ask a question during this time, please press star 1 on your telephone keypad. If you'd like to withdraw your question, please press star 2. This time, I'd like to turn the conference over to Mr. Brian Schor, Chairman and Chief Executive Officer. Thank you. You may begin.
spk02: Thank you, operator. Hello, this is Brian. Welcome to our Fiscal 25 Second Quarter Investor Conference Call. Nice to have you on board. With us today are Matt Tharbar, our CFO, and also Mark Esquivel, President and CEO. Well, we announced our earnings through news release right after the market closed. If you don't have that, you want to get access to that because in the earnings release, there's also instructions as to how you can access the presentation that we're about to go through. The presentation is also on our website. You want to have that up in order for the discussion to be more meaningful.
spk03: After
spk02: we're done, as the operator told you already, after we're done with going through the presentation, we'll be happy to answer questions. So why don't we go and get started? When we go to slide two, our forward-looking disclaimer info. Let us know if you have any questions about the forward-looking disclaimer language. Slide three, our table of contents. Beginning in slide one, we have our investor presentation. Then we also have supplementary financial information attached as appendix one at the end of the presentation. We don't intend to discuss that at this time, but if you have any questions about the supplementary financial information, let us know. Here we have the clearest picture of Mercury ever taken. What a beautiful picture, in my opinion. Thank you, James Webb Space Telescope, obviously taken by the James Webb Space Telescope. As many of you know, our proprietary sigma struts are incorporated into the structure of the James Webb Space Telescope. So that telescope has a special place in our hearts. Let's go on to slide four, the portal results. When we focus just on the right hand column, Q2, ,709,000 sales, ,757,000 of gross profit, ,204,000. Quickly, what did we say about our Q2 during our Q1 investor call? We said the sales estimate, 15.9 to 16.4 million. So we came in just a little tad above that adjusted EBITDAI estimate. We gave you 3.3 million. So we came in right within that range. Let's keep moving here. Slide five, please. Continuing with quarterly results, some considerations for Q2. There was approximately $2.2 million of area and rate carbs. He do BNG product sales during Q2 under Parks Business Partnership with Airing Group. We talk about this often. This is the fabric that we purchased from Airing Group for ablative programs, for missile programs. And we then sell it to the OEM customers. Turned around pretty quickly within a couple of weeks. Quite low margins. It's really a markup. But we always say, don't worry. We actually produce the product and make the ablative materials. That's where the margins are quite good. But by comparison, there was only 750,000 of ablative material sales during Q2. So you see a little bit of an imbalance there. Much more emphasis on the low margin part of the equation. Less emphasis on the higher margin. Eventually it all comes through, of course. There were significant ongoing expenses in Q2 related to bringing Parks new production facility fully online. You know all about this including expenses for depreciation. Let's just stop there with the asterisk. ,260,000 per year of depreciation expense related to the new production facility. This obviously does not affect EBITDA by definition. But it's important. But it does affect gross profit and gross margin. Approximately 2% impact on the gross margin just from the depreciation. And if you look at the gross margin in Q2, what was it? I think 28.5. Was that the number? Let me quickly make sure I'm telling you the right story. At 20.5, we always say we don't like it under 30. Just depreciation alone would bring it up above 30. But it's not just depreciation. There's also other stuff. There's other stuff also included in the EBITDA or effects EBITDA. Facilities, maintenance, utilities, insurance, other overhead expenses and expenses related to additional park people all related to the new facility. These additional expenses, it's not this is an accident or a problem. These are planned expenses. I just want you to understand that. Required to bring the new facility fully online in order to meet the needs of the coming juggernaut and coach which is described later on in the presentation. So it's all part of the plan. But nevertheless, these items are going to hold down our P&L and margins until that facility is ramped up. Right now, it's very underutilized. But we're doing it intentionally because we need to get going with that facility so we can meet the needs of the juggernaut and not get behind the power curve. Slide six, total miss shipments in Q2, 600,000. That's not a great number. What's the international shipment issue, supply chain, customers on haul, other miscellaneous issues? Yeah, so the aerospace industry is not really a happy place right now. A little more difficult, a little more challenging for us. We got wars as well that are a factor especially when you talk about international shipments. There was no impact on Q2, the sales and earnings from the storm damage except for the 64,000, sorry, I got that dyslexic thing there. 46,000 of expenses were reported as a special item in our Q2 earnings release. So other than the 46,000, no impact from the storm damage on Q2 earnings and sales. All production lines were fully operational and functional throughout fiscal Q2. And that's quite remarkable. Just remember the storm happened in the last two weeks of Q1. So for all lines to be fully operational throughout Q2 was quite remarkable, really a miracle, quite an achievement by our people, let's go on to slide seven. Top five, we do this every quarter. Top five customers alphabetically. Air jet, rocket, these are the usual suspects. You're probably bored of hearing these names. They're involved with the factory missile system, aerospace, they're a rep for IAI Israeli aerospace industries, which are important customer of ours. And they produce the G280 for Colstree. GKN, that relates to the Boeing 787. That actually is not the airplane, it's the GX1B engine that used to use an airplane. Kratos, we talk about every quarter in the top five, I think, and we just select one of their aircraft this time it's a BQM 177A, quite interesting airplane if you want to look it up on the internet. Middle River air structures, yep, they're kind of a usual suspect. And MRAS, we chose the Bombardy Global 8000 to represent them. Let's go on to slide eight, estimated revenues by aerospace market segment, the pie charts. What's interesting to me is look at 22, 23, 24, 25 year to date, the pie chart's really very, similar. But the big difference is 21 and that was the pandemic year when particularly commercial aerospace was very much, I don't know how you say it, I mean, in jeopardy, almost looked like it might not make it. Let's go on to slide nine. This is the slide that Elena does for us. Elena is the head of customer service every quarter. She comes up with really interesting, cool programs to put this little slide. The pie chart, this is for the first six months, radars, rocket nozzles, drones, those are considered to be niche markets in the military, but for us even our air cross structures is niche. Perk programs quickly, David Clark, not a huge customer, but we love that customer. They make the helmets for the Air Force and we supply materials. We also do kitting for them, which is nice. Then we got the MK30 canisters for Raytheon ESS-M system. That's ablatives. The MK125 warhead for the SM2, SM6, those are hypersonic missiles, I think. That's actually not ablatives in this case. It's part of the structure. We can't say anything more about it. MK41 vertical launch system, that's actually parts that we produce with our materials. It seems like Elena was really focused on the missiles this quarter, so she must have been having a lot of dreams of missiles, I guess. Let's go on to nice selections. Thank you, Elena. This one is slide 10. G-Ear, space, jet engine programs, another slide we give you every quarter. You have to understand, some of you complain about we go over things too much. There are new investors that dial in every quarter. We have to be fair to them too, so we try to strike a balance here. Yes, we include the slide every quarter. Firm pricing LTA. It's a requirements contract from 1929 with MRAS, which is a sub of SD Engineering, a large Singapore aerospace company. We built a factory for GE, actually, and MRAS. That's in production, you know that. What's going on here? We're sole source qualified for the composite materials for the cells, thrust diversors. Are these programs? You notice they're all GE engine programs. Why is that? The reason is that when we entered into the LTA originally, MRAS was a sub of GE aerospace. We've got all these GE aerospace programs at that point. Subsequently to that, GE sold MRAS to SD Engineering, but we continue on these programs. I'm not going to go through the programs. Do you have any questions? Slide 11, continuing with GE aerospace. MRAS Park LTA provides for an approximate .5% weighted average price increase effective January 1, 2025 for the products covered by the LTA. I've been asked about this a lot, and I said, well, I really don't want to say, but now we're saying, you know, kind of an investor presentation where it's appropriate. Park composite materials, don't forget, we don't have to cover that one. We cover that every time. Let's go to the last one, FanCast Containment Wrap for Gen X engines for the Boeing 777 aircraft. That's produced with Park's AFP and other composite materials. Park recently received a PO for approximately $6.5 million for materials for this program. So this program is ramping. Our customer received a large order for case wrap units. We're clearly not going to talk about numbers, but this will slow down to us in terms of a PO. There's more coming, I suspect, a lot more. So this program is no longer just kind of development. It's really starting to ramp down. Park materials for this program are expected to include in the LIFAR program. So they're not in the LTA because this came after the LTA, but the expectation is that we'll just put the Gen X, the G9X program into the LIFAR program agreement, which we'll discuss in a second. Slide 12. So I'm just trying to watch the time. MRS Park LTA was amended to include three film adhesive product forms for composite bond, this is really outstanding because these film adhesive formulations were developed through a joint development agreement with MRS NGE. And a lot of time and effort went into this, but it's outstanding because as soon as the development's done, then we go right into qualifications. That's really a very wonderful and special MRS qualification of two proprietary film adhesive product forms in progress. Why not three? Because, so this is the process. We go through a qualification with MRS and then MRS needs to go through a certification process with their customers on selective programs. So the first program that MRS intends to get us certified on does not use metal bonds. So that's why we're not qualified metal bonds. At this point, they'll come later, right? LIFAR program agreement requested by MRS and STE, agreement that's under negotiation in a mark led a team of, I guess, three park people to MRS couple weeks ago. We spent a couple days, they spent a couple days working on the agreement with MRS. So it's under negotiation. So we finally made some good progress on it, but just keep in mind, this is what they want. They requested it, they being MRS and STE, we're happy to do it, but they're the ones who requested it and for good reason. Okay, let's go on to 13, slide 13. Continuing with the, this is a little different, updated NGE aerospace programs now. 8-20 NEO aircraft family includes all these variants. I won't read them off. Airbus has a huge and underlying huge backlog of 8-20 NEO aircraft. Firm orders of 7,253. That's just so many airplanes, unbelievable number of airplanes. Airbus has been, had been maintaining that intent to achieve a rate of 75 8-20 NEO family aircraft deliveries per month in 26. Let's go on to 14. So this is just a little history here about the deliveries over the prior years of 8-20 NEO aircraft. You can see that kind of peaked to 19 and then that's what happened, pandemic, the number fell off. 23, they got back to the pre-pandemic rate, you know, 571 compared to 561. And year to date, through September, about 396, not about 396 deliveries compared to last year, year to date, 391. Don't annualize that, that doesn't work because aircraft industry, for some, you know, funny reason that a lot of deliveries happened in the last quarter. But it's basically saying, we're kind of tracking last year, which is a little disappointing. We were hoping that we would be able to show, you know, a little bit of improvement from last year. Last year is 48 airplanes per month, as you can see. Let's go on to slide 15. Then on June 24, 24, Airbus announces pushing out its goal of achieving the 75 aircraft family monthly delivery rate from 26 to 27. Not surprisingly, Airbus highlighted supply chain issues. Oh boy, supply chain issues. They should move all over again, especially engine availability issues as a key reason for the push out. You know, it's funny about this. Do you remember, what was it, a year or two ago? We were all clear with engines. You know, it was not just Airbus said it, the engine company said it, engines blow over an issue, everything's great. Now we're back in the soup with engines. I don't know what to make of that. But you know, now engines are front center in terms of what the main supply chain issues are all about. You know, supposedly maybe castings and forging for the engines, but it's engines. That's the problem. Clearly based upon their huge backlog, Airbus would already be at that 75 per month rate. You know, why is that? How many, what do we say, how many airplanes are in order? 6,000. I've got to go back, sorry. What was that number? No, sorry, 6,000. 7,200, 7,253. Okay. So let's say there are 50 now, which maybe you do not, but let's say there are 50 now. That's 600 per year. Well, how many years is that with 7,000 orders? The problem is Airbus wants to sell more airplanes. So you know, you order an Airbus airplane, your delivery is what, 13 years down the road? That's not for a conducive selling airplanes. So one of the reasons Airbus wants to push it up to 75, 75, equals to 900 per year. That's still not you order an airplane and you get it next year, but it brings the lead time down a lot, which will allow Airbus to sell more airplanes, which is what they want to do. They want to sell a lot more airplanes. So anyway, will Airbus achieve its goal of 75 deliveries per month? We certainly believe they will. Will they achieve it in 27? We believe they will, but we're not sure it really matters very much whether that goal is achieved in 27 or maybe 28. Key thing for PARC is that we need to be ready. And the key thing is they will get to that rate. All these orders will be filled. They'll take more orders and we just need to be ready. And you know, we're not sure, you know, what the timing of the ramp will be. I don't think anybody's sure. We just need to be ready. Number one, number two, those sales will be there and they're incredible sales for PARC. 16 approved engines for the A320 aircraft. There's two approved engines for the A320 Neo. There's the CFM LEAP 1A. That's the engine program we're on. Then there's a Pratt, Pratt & Whitney, PW1100G, GTF engine, not in that program, just on the CFM program. We spoke lots and lots about durability issues, especially for the Pratt engine. We'll cover that here. So let's see. According to the September 24 edition of Air Engine News, CFM LEAP 1A's market share of firm engine orders is 64.4%. That's a nice market share. I don't remember, but I think last quarter was maybe 62. It's been around that 62, 63, 64 range. Moved up last quarter, but that may not be sustainable. I don't know, but at least it's well over 60. At the delivery rate of 75 A320 Neo aircraft per month, that's 64.4%. LEAP 1A market share translates into 1,159, just do the math, LEAP 1A engines per year. What's that worth to PARC? Well, just go to slide 34. It'll give you an idea of what it's worth to PARC each year. Currently, this is just one of these youth numbers. 8,238 firm LEAP 1A engine orders. That's a lot of engines. What are those firm orders worth to PARC? Well, go to slide 34. It tells you what we get per engine. I think it's about a quarter billion dollars. That assumes that we're going to continue to fly after 29, whether we have a life form or not. We're quite confident we will. It does not assume, doesn't take into account, there'll be price increases during that timeframe. But you think about it conceptually, quarter billion dollars doesn't really matter to us, whether it's 27, 28, 29. It's just a lot of revenue for PARC. And those engines are going to be sold. Those engines are going to be produced and sold. Those are our engines. That's our program. So I think of people selling a stock of 13 bucks. I'm not sure what they're thinking. Let's go on to slide 17. Airbus. Okay, here's one of the variants, A321XLR. Airbus opened an additional XLR production line in July. The A321XLR, powered by LEAP 1A engine, received its YASA type certification in July. That's really nice news. Good. And the YASA is the European equivalent, the FAA. The first A321XLR delivery scheduled for the latest month to Iberia. And according to Airbus, it has over 500 orders for this program, important program for PARC. Let's keep going. Slide 18. Okay, now let's go to Comac. Comac 919. That's the single aisle airplane that Comac developed to compete against the 737 and A320. It has another kind of LEAP engine. This is called LEAP 1C. I don't know. Maybe C stands for Comac. It's a variation of the same engine that's in the A320neo. Comac plans to achieve production rate of 150 919 aircraft a year by 28. I think that's credible. They're investing huge amounts of money in production lines. I think they're now three final assembly lines. A report to have over 1,600 orders for 919 aircraft. 919 is now flying for Air China, China Eastern, and China Southern, all Chinese airlines. Comac clearly has designs on getting out, you know, it's all these airplanes outside of China though. They've delivered nine so far and they've logged over 10,000 flight hours. This is an important program for PARC. We'll see what happens, but we believe and our customer believes it's a very important program with lots of upside opportunity. Let's talk about, let's go to slide 19 rather, 777X aircraft with GE 9X engines. In August of 2019, Boeing grounded this 777X test flight fleet after detecting engine attachment issues. The fleet remains grounded while Boeing continues to evaluate the problem. These engines, they achieved a record 134,400 pounds thrust. That's why those engines are pretty important. They're certified for 110,000 pounds. From the perspective of the Leap 1A engine for the A320, about 32,000 pounds, you know, so big, big, big engine, lots of power. October 11, 2024, Boeing announces pushing out its first delivery target to 26 or 25 because of development challenges, flight test pause, and the work stoppage. Boeing says they, sorry, not Boeing, according to data, Boeing has 481 orders for these airplanes. So a little bit of setback, but I mean, the thing is, it's very, this is a clean sheet airplane, so it's not surprising that they'll have problems like the engine attachment problem. It's very, very important that this happen, that this is detected during the development and certification phase, not after it is airplane flying near 38,000 feet with 400 people on it. So this is a real important program for PARC. We just, we have the best wishes for Boeing. Obviously, they're not, you know, they're having a bad time now, but we hope that Boeing finds a way to, you know, to move ahead and make things better. Let's go on to slide 20. We can quickly cover this. Pretty much everything here is provided for history for context. In the bottom right here, fiscal 25Q2, $7.1 million of sales. This is, I should read the title. GERA, State Engine Program, Sales, History, and Forecast Estimates. $7.1 million in Q2. I think our estimate was a little lower than that, but kind of in the range. And our forecast for Q3 is six and a quarter to $7 million. That's forecast for Q3. For the year, $23-26 million. Now, we provide that forecast last quarter. We're just sticking with it for the year. Okay, let's go on to slide 21. PARC's Financial Performance History and Forecast Estimates. So again, most of it is provided, most of the data here is provided for history context. Fiscal 25Q2, you already have that number, $16.7 million, $3.2 million. Our forecast for Q3, $13.5 to $14.25 million of sales, $3 to $3.3 million. Note the footnote subject to supply chain risks and limitations. We'll discuss that even further in the next slide. So let's go on to slide 22. This slide is the exactly same slide we presented to you last quarter. Everything is historical other than the forecast estimates. We're not changing the forecast estimates for the year. Pretty big ranges, $60-65 million sales, $13-15 million EBITDA. And this is what we provided last quarter. So I'm not changing it. But look at the important supply chain limitations affecting the aerospace industry. So I'm going to stop for a second. The aerospace industry is not really a happy place right now. Not so much fun. For the year, Paris and the Farnborough alternate every year. Last year was Paris. Lots of exuberance, maybe a rational exuberance, depending on hindsight, about all the orders are taken, all the engines, all the airplanes and engines being sold. Everybody's very excited about that. Wonderful, wonderful, wonderful. Okay, that's nice. Then we fast forward to Farnborough this year. Very different tone, very different mood, kind of glum. Because everything that is coming out of Farnborough, supply chain, supply chain, supply chain, supply chain, supply chain, the problem has been solved. One comment, I guess, was a little sarcastic was, who cares how many engines, sorry, how many airplanes you can, orders you can take. If you can't make them, what difference does it make? Now, obviously, that's being sarcastic. But that was the recent mood. What's interesting, I guess, and we'll look at it that way, is we go through these kind of deja vu all over again. How many times have we heard less, less, less? Supply chain issues almost over, about solved, about solved, everything's going to be fine. And then we're back in the soup. Why is that? I don't know, maybe it's a psychological thing. My guess is they never were solved. It was just a wishful thinking, and wishful thinking is contagious. One person says it, another person says it, okay, fine. But supply chain issues are clearly not resolved, have not gone away, and they have an impact upon the industry. So just keep that in mind with these forecasts that we have all the risks that we put in a 10K, but supply chain issues are a key risk for these forecasts. And of course, we also are ramping up the cost for juggernaut, and that's not just a temporary thing. That's holding back our, not our top line, but our bottom line. Let's go on slide 23. Try to hustle here a little bit if we can. Oh, general park updates. I guess we're just covering a lot in this presentation, so it may take a little bit longer. Solution Treater Project, we plan to purchase and install an additional solution treater. Why are we doing that? It will take approximately three years to design and specify the equipment, install it, and conduct control trials, qualify the equipment for production with customers, three years. So we're quite concerned. We look at the opportunities we have. We look at the programs we run, the opportunities we have. We're concerned that we're going to run out of capacity. So we need to move now because it's a three-year time frame. We can't wait three years. We do that. We're, what's the term, screwed, I think. The budget for the project is about $70 million. This is something we decided to do when we're going to have the project. This will be placed in a new factory. Remember we told you that there was a big area set aside for a new line? Well, this is where that line's going to go. Another item, these items are all related. They're just updates. So major OEM suppliers ask partner, sorry, to partner and coach with them on the purchase of additional manufacturing line to support critical bench programs. This equipment is essential to these programs, so it's needed. This OEM is quite large in part, but they want us to be partners, 50-50, $5 million each. And we're now negotiating the agreement, but we plan to do this. It has to be done. This additional line is essential for these military programs. So we're talking a little bit about money as well because we want to get to that later on in terms of our cash. 24, slide 24. We recently qualified in an essential high-profile missile defense program. Park is potentially, sorry, this program is potentially larger for us than the Pack 3 missile program. Initial revenue is expected for Park next year and program expected ramp will be from there. And we probably need to make a $1 million in capital investment just to support this program. This is an important accomplishment for Park, let's put it that way. We can't talk, give you more details about the program, but you would have heard of it, that's for sure. So next item, Park recently entered into a license agreement with a major OEM to license technology used for hypersonic missile programs. We understand that Park is the only licensee of this technology. We're currently conducting manufacturing trials. Significant potential opportunity for Park on significant. Park, we need to make a capital investment of approximately $3 million. I just want to stop here because these are not certainties. And that's not the standard for us sharing things with you. I think you would want to know about important opportunities for Park, but if you just want to wait for these things to be locked, that's different, but I don't think that's really what you want to hear. So my point is that this may happen, it may not happen. A shareholder complained about, we talked about similar program a couple years ago, it didn't happen. Well, yeah, we talked about it because it's important and it seems serious. That wasn't a guarantee it's going to happen. So just keep that in mind, all right? Please, slide 25. New LTA with GE aerospace, these are separate item in progress for county, there's 25 to 30 under which GE is awarding two additional products for Park. And the incremental revenue from that is $3 million. This is not part of the program, by the way, this is separate incremental revenue. This is not the MRSA LTA, this is a GE aerospace LTA, separate LTA. Potential JV with major adhesive company related to adhesives for the aerospace industry. Those discussions and negotiations in progress, we've had numerous in-person meetings. I believe there's one next week actually in our facility. And a significant capital investment may be necessary to support the JV, we'll see. Another potential JV with a major Asian industrial conglomerate related to the manufacturer, marketing sale of certain parks, commercial composite materials products in Asia. So these discussions and negotiations in progress as they sure are, which we have a team over in Asia right now. And we've had a number of meetings already. This could involve significant capital contribution in Park. This OEM is quite aggressive. We're trying to slow it down a little bit. They definitely want to do this. So I think maybe a good possibility that actually happens. Slide 26, totally different topic, but still an update. MRSA supplier card, maybe I'm trying to cover too many things in this one presentation. All right, MRSA supplier scorecard. Park score, as you can see the scores, the first item was actually a mistake, really should have been 100. What these scores mean, what is their significance? We're told that MRSA has over 700 suppliers. Are these typical MRSA supplier scores? No, I don't think so. We're told that most suppliers would be happy to get 80s. I've been told that numerous times and a lot of them don't get 80s. Are these scores achieved by other suppliers ever? I don't think so. So similar theme is Park MRSA's best supplier, over 700. That's what I'm told. How does that happen? Is it a boardroom thing or a boil room thing? This is such a special situation for Park, and I'm not sure whether it's fully appreciated how special it is to achieve an accomplishment this is and how special it is for Park to have this kind of relationship with a company like this. See, it's our strategy for customers to love us. In order for that strategy to be implemented, that's more of the boiler room thing. That's really a culture thing. It depends on Park having very dedicated employees. That's how we achieve these scores. That's how we become their best supplier and what we're told anyway, their best supplier. I'm sorry to take the time, but just one little example. John Moon, we were told he has a house, but we would never know that. He's never released a plant. Something has to be shipped. It doesn't matter what time. He's not going anywhere until that truck has left the dock. That kind of dedication, if you want your customers to love you, you need to have people like that. The rest of strategy is nice, but in order to implement it, you need to have people that are very dedicated. Let's go on to slide 27. This is now a different topic. We got recent questions from investors. I'll hold a new section here that we haven't had previously. Let us know if you want us to continue with this. We thought it would be interesting to include some questions that we received from investors. We have questions about our film adhesive product line. We call it AeroAdhered. What advantages does an AeroAdhered have over competing products? Aero industry is a little strange. It looks for equivalency more than better. In other words, better is not really such a good thing. When we developed film adhesive, remember we did that with a joint development project with GE and MRAS. We went a lot of tweaking, a lot of fine tuning for needs. Generally speaking, we want equivalency because if it's not equivalent, if it's better, then the customer is going to have much more difficulty incorporating into their programs. Why would a customer then buy it from Park if it's just equivalent? Because it's a Park more than a product itself. They're buying it how we saw it. We're selling Park. We're selling the fact, flexibility, responsiveness, urgency. So people say, well, what is the expression? Oh, a customer says jump, you say how high. We don't do that. We say how high before they say jump. And I'm not kidding. We say how high before they say jump. That's what we're selling. Do we anticipate that AeroAdhered's margins will be higher or lower than Park's average margin? This is a question from an investor. Higher, and we're quite sure of that. Several years out, what sort of range of revenues are we targeting for AeroAdhered? Well, we're not sure. The strategy, though, isn't really a revenue strategy. It's to broaden the product line we offer to customers which manufacture aerospace composite structures. That's why we love adhesive so much because customers buy our product to make composite structures for aerospace. Obviously, they need composite materials to make composite structures, but they also use adhesives in the production of these composite structures. Just for reference, though, since we're asking about revenues, the A320 program is the first program that MRAS intends to get our film adhesive certified on. And that's $3 million per year once the program ramps to 75 airplanes per month. So let's, and obviously that's not it. We've got lots and lots of other opportunities working on, not just with MRAS, but other companies as well. Slide 28, more questions. What about that major new manufacturing project initiative we discussed in our Q2, sorry, Q4 investor presentation last year? What's the status? It's morphed into a larger product project. Why wasn't it discussed during our Q1 investor presentation? Well, the customer which initiated the project now wants a project to be an aerospace composite structures manufacturing technology, JV, a potentially larger, quite a bit larger project. This is JV, like with NewCo, we're two companies that own it, I guess. What about our strategy? What is it? Somebody actually asked if we have a strategy. Yes, we have a strategy. We call it the X strategy. We certainly not going to take the time to go into it now, but let us know if you want us to discuss our strategy. Probably take five minutes in an upcoming presentation. It's a straightforward strategy. It's not like an elegant strategy. It's very straightforward. So nothing we tell you is going to surprise you, but we have to go over it with you if you'd like. Slide 29, different topic, our buyback authorization. We announced on May 23, 22 that Park's board authorized the purchase of 1.5 million shares. Under this authorization, we've purchased a total of 551,729 shares, an average price of $12.94, total cost of $7.1 million, so we're spending some real money on this. Now, it highlights the recent buyback activity under the authorization. Since July 26, 24, the significance of July 26, that's after the Q1 blackout ended, was lifted. We purchased 331,180 shares of common stock, average price of $12.88, total cost of $4.251 million. Like I said, we're spending some real money on this now. Why do we do that? Because we thought the price was stupid, ridiculous. It's not really our preference to buy stock. We'd rather use our cash to take advantage of all the opportunities we have, but when the stock price is, we feel stupid and we don't think we have too much of a choice. Will we buy more? I don't know. We'll have to see. Maybe. So let's keep going. That's our buyback program. Slide 30, credible cash dividend history, 39 consecutive years of dividends. We've paid $596 million or $29.10 per share. This is fiscal 25. So a little bit of a thing here that we're developing, a concept anyway. So we have a regular dividend payable on November 5. It's not right. It should be paid on November 5, 2024. So sorry, that's a typo. I just noticed that. And we'll have paid $598.6 million at that point. And then it looks like, oh, there's another typo. The next regular dividend is planned to be declared by Parks Board about January 9, 2000. That's supposed to be 25. Sorry about this. And paid about February 4, 2025. And that's within the fiscal year. Somebody's not going to get paid this week for these mistakes. Unfortunately, I think that somebody's me because I'm the one who made the mistakes. So sorry about that. But the concept is during the fiscal year, we can look at the highlighted language we'll have paid by the end of the fiscal year, rather, $601.1 million in dividends since 25 and also $29.35 per share since 25. Due to the math, 05-25, that's 21 years. So if you want to do the math, divide 601.1 by 21. Sorry, that's 21 years. Sorry. 21 years, so divide 601.1 by 21. That's 28.6 million per year. Just FYI, you want to divide to 29.35 by 21. That's $1.40 per share per year of dividends paid since, on the average, paid since fiscal 25, the beginning of 25. Let's go on to slide 31, our long-term debt, $72 million of cash. We just talked about that. We have one more transition tax, the formal payment of $5.1 million in June of 25. Thinking about our cash, so some known or likely cash expenditures of $5.1 million. That's not likely. That's known. That tax payment in June, we have to pay that. Shared buyback and fiscal 25Q3 in our current quarter, that's $2.4 million. That's already been spent, so that's a known item. Solution tree or project, $7.5 million. That's an estimate. Contributions to the OEM partnership, approximately, well, $5 million, that's what we're talking about. That gives us a round number of $20 million, so $72 million, minus $20 million, and $62 million. So we go to slide 32. When we think about $52 million, well, that doesn't include a lot of other things that we've already discussed, a lot of items which we won't iterate here, these items that are listed, we've already discussed in presentation for the most part. And some of these things will happen, some won't. We also have, likely have additional expenditures in the plant when you actually start a production, no matter how much time you spent with the trials and qualification. We start a production, you realize some other things that might be needed. So there might be some additional investments that's required in the plant, equivalent investments. So what do we think about our cash? We think that we don't have unlimited cash, and we think we need to be careful how we spend it. Let's go on to slide 33, the juggernaut. We've covered this for the last three quarters, so we'll try to rush through it. Financial outlook for GE aerospace jet engine programs and for PARC, the juggernaut. So what's the timing? We're not sure, but it's coming, can't be stopped, we better be ready. Going to slide 34, the only change here, unfortunately, is the GE 9x program. So we moved up that number, that's based on specific inputs we have from our customer. We've heard higher rates, but that's based on specific inputs, rate inputs we have from our customer. As we said, we're not going to provide any more detailed information because it really is not our business. It's more up to Boeing and GE to disclose how many airplanes they plan to make per year, not for us to do that. So why don't we go on to the next slide, 35. PARC aerospace core high-level conceptual financial outlook. We start with a baseline year of fiscal 24. The estimated GE programs are criminal sales, that's just math, taking the number from the prior slides, subtracting the 24 sales, I think that was 21 million, incremental sales 37.6 million. Estimated non-GE programs are criminal sales, 15 million. So we decided to do something a little differently here. In the past, we were breaking it down between programs we're sole source qualified on. Another program is that we expect to get on, and other sales we expect to generate. We just put it in one bucket, 15 million. As indicated in the footnote, we believe that's a conservative number based on all the opportunities we're working on. The total here, you can see 108.6 million. The contribution, EBITDA contribution from the incremental sales is 19.7 million. That's based on a contribution rate, I believe, of 37.5%. The additional 4 million, we discussed that before. That relates to our base year, which is quite inefficient because we're operating well below efficiency of the new plant. And for many reasons we discussed in the past, which we won't go over here. Slide 36, just a footnote to the slide we just read, so we won't go through those. And that concludes the presentation. Thanks for listening. Operator, we're happy to take questions at this time.
spk00: Great, thank you so much. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, we'll pull for questions. I'm going to have star one if you'd like to ask a question. First question here is from Nick Ripasolo from NR Management. Please go ahead.
spk01: Good afternoon, Brian. First, I just want to say on share repurchase, I'm very appreciative of how judicious you are when we purchase. I come across so many smaller companies that they overpay for their stock, sometimes double where it's currently trading, and then put that in their press release that return cash to shareholders, which actually they destroyed value. So you've been very wise, and I'm appreciative of that. A couple of quarters ago, I think you were talking a little bit about automation potentially in a new facility. So I've been reading a lot and watching a lot about the use of robots and other automation in factory settings. So can you just give me your perspective? Do you feel at any point you'd be disadvantaged by not having automation in the facilities? I'd like to understand your perspective on that. And kudos to the workforce there. It just goes to show you some places have great culture and don't need a union. You've built a great organization in that regard.
spk02: Thank you. Thank you very much for those comments, Nick. Appreciate it. As far as automation is concerned, if you visited our facility, you would see that we're operating these lines that run continuously with usually a staff of about four people. So you don't look at it like an assembly line where you think, oh boy, a lot of these procedures and processes could be automated or reduce cost, maybe improve efficiency. So that doesn't mean we're not interested, but I think that the opportunities for a park type operation are maybe not quite as much to bank for the buck wise as other kind of operations would be. But we talked also about automation with respect to that project, that manufacturing project that's now morphed into a potential technology, JV, and that's an area where automation
spk03: would be
spk02: front and center, I think. So that project still has to be initiated. Like I said, it morphs, so it's a larger, different kind of project. But that project would involve quite a bit of automation, I believe.
spk01: Okay,
spk02: thank you.
spk01: Can I ask one more? Sure. I know this is a difficult thing to say, but where would you be disappointed in terms of Airbus's, say, ramp up of deliveries next calendar year? Where would you be disappointed if it didn't reach whatever the number is? 52, 54, 50, where would it disappoint you?
spk02: I'm sure I understand your question. You're talking about in terms of our annual sales?
spk01: No, the deliveries that is.
spk02: Per month to me? Monthly rate? Yeah, correct. Yeah, well, we're disappointed already. So maybe that's a hard question to answer. The supply chain has clearly become more of a known issue, probably zero along. My guess is that this year, maybe look at the 50, last year 48. I've seen all kinds of different forecasts. I mean, obviously, we'd like to be 75, so maybe that's not a proper answer. It would be nice if next year there are 55. I don't know if that helps, but if there are not, we're already disappointed. So we're probably disappointed with any number that's under 75. But the key thing is for us to hang in there and be ready for the ramp, because as far as we're concerned, there's no question they'll get to 75. Just with all the orders they have, it just doesn't make any sense they wouldn't get to 75. So the key thing for us is to make sure we're ready for that, and that's really important. That means we need to ramp up the new facility. That's why we're doing that now, but we're also kind of suffering through the additional cost burden of ramping up a facility that is still operating at a very low rate.
spk01: Okay, thank you. Yes, and as you've said before, this is a long-term proposition. And I really loved your comment about the stock price. You know, stupid. And certainly got pretty stupid at one point. So I appreciate it. Thank you so much, Brian.
spk02: Thank you, Nick. Very nice to hear from you.
spk00: Once again, if you'd like to ask a question, it is star one on your telephone keypad. I have no further questions. I have to turn the floor back to Mr. Schor for any closing comments.
spk02: Okay, well, thank you, operator. I just want to say I'm sorry that it took so long. I think what we did was we tried to cover too much during this presentation. I think everything we covered was meaningful and information that many of you probably want to know about, but nevertheless, we put up more than we could chew. Sorry, but I apologize for that. In any event, thank you very much for listening. We hope you have a very good day. We'll talk to you soon. Goodbye.
spk00: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.
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