Park Aerospace Corp.

Good afternoon. My name is Paul, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. First Quarter Fiscal Year 2026 Earnings Release Conference Call and Investor Presentation. All lines will be 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. Thank you. At this time, I will turn the call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.

Thank you, Operator. This is Brian. Welcome all to the Park Aerospace Corp. Fiscal 26 Q1 Investor Conference Call. I have with me Mark Esquival, President and COO. We announced our first quarter earnings right after the close. If you look at the news release, you'll see there's link information as to how to access the presentation that we're about to go through. The presentation also can be found on our website. You want to take a look at that in order to make this call more meaningful. Just a little quick comment before we get started. It's only been two months since our Q4 presentation. And as a result, some items are just carried over from the Q4 presentation for context and cohesiveness. But we may just skip over some of those items, or at least skim over some of the items that we just covered two months ago, just for purposes of keeping the presentation moving and brevity. If we do skip over something that you want to discuss in more detail, though, please just ask us questions about it at the end. And we'll try to highlight also what's new, even if there's a slide that has a lot of old stuff, maybe we'll just pick out one item that might be new. And you'll, when we get there, you'll probably realize, but there are important new items toward the end of the presentation. When we're done, Mark and I will be happy to answer any questions you might have. So when we proceed, when we go into slide two, that's our forward-looking disclaimer language. We're not going to go through it or read it for you, but if you have any questions about it, please let us know. Slide three, our table of contents. Slide one starts our Q1 investor presentation. And then there also is an appendix one at the back of the presentation, supplementary financial information. We're not going to review that during the call, but if you have any questions about it, please let us know. As has become our kind of pattern of late, we feature something about the James Webb Space Telescope in our table of contents slide. As you probably know, James Webb Space Telescope was produced with 18 of our park proprietary Sigma struts. We're very pleased and delighted about that. What do we have here? We have a bullet cluster with dark matter. The dark matter is in blue. This is enhanced because the dark matter, you can't see it. It's invisible. Just on the right-hand side, let's explain that. Dark matter is an invisible and hypothetical, kind of strange hypothetical form of matter. This is way beyond my, you know, pay scale to understand what that even means, which does not interact with light or other electromagnetic radiation elements. So you can't really see it. That's why there's pictures enhanced with the blue. Dark matter is a mystery of the universe which cannot be explained by Einstein's general relativity or anything else known to mankind. It's just incredible what James Webb has discovered so far. It's just amazing, you know, thinking about all the things that we thought we knew, we thought we understood about the universe. But maybe we don't. You know, some people say the universe is unfathomable and maybe they're right. Anyway, it's such a privilege and honor for us to be associated with the James Webb. Okay, let's change gears and go to more mundane things. Slide four is your quarterly results. You go to the right-hand column, Q1, which we just reported. Sales, $15.4 million in gross profit, $4,718,000 gross margin, 30.6%. We're happy about that. Not where we want to be. We like to be higher, but it's just nice to be over 30%. And we'll explain how we got there. There's maybe three different factors that kind of affected our ability to get our gross margins up above 30%. Just at EBITDA, just a little tiny less than $3 million. And our EBITDA margin, 19.2%. What did we say about Q1? Our Q1 during our Q4 investor call, we had to set our sales estimate. Estimate is 15 to 16 million, so we came in kind of in the middle of that range. Adjusted EBITDA estimate, 2.5 to 3, so we came in, I guess, pretty much at the top of that range. Last quarter, we talked about what these estimates mean, what they don't mean, and I don't want to go into it again unless you want me to. But basically, these are not guidance where we give you a number, where we plan, you know, kind of set ourselves up to beat the numbers. When we give you these estimates, we're saying to you, this is what we think is going to happen. Okay, let's go on to slide five, so don't belabor that too much. And what I'd like to do, if you don't mind, is let's go to slide six. We'll jump around here a little bit. The second bullet item on slide six, there's significant ongoing expenses related to operating a new manufacturing facility. And that's why we're pleased to have our margins over 30%, because this is a drag. This factory is underutilized, and there's significant costs that's going through our P&L that drags down our margins, including our gross margins. So that's one factor. I said there were three. Let's go back to slide five. Arian Group, we discussed this many times, our business partner agreement, under which we are the exclusive distributor for our Raycarb C2B fabric that's used for ablative composite materials for advanced missile systems. So actually the other two factors aren't positive, they're just lack of negatives. A couple of quarters ago we had, actually last quarter we had $4.4 million sales of fabric during that quarter, and that really brings our margin down a lot because we sell the fabric. at a small markup. Ultimately, when we turn the fabric into a composite material, that's where the margins really are powerful. Last quarter in Q1, we had $1.1 million sales of the fabric and $480,000 in materials made with the fabric. And that's kind of more of a normal ratio. So it isn't really a big drag on our, that wasn't really much of a drag on our Q1 earnings and then we'll get back to the recall in a second when we skip over to slide six again production versus sales this is another factor that had negatively affected our margins a couple quarters ago where our production was much lower than our sales we call it svp but in q1 they were relatively nicely matched which is what we want you know we want our production and sales to be relatively nicely matched. So it's not really a factor. So it's not that these two things were positive. It's just a lack of negatives in terms of the impact on Q1. And that's how we're able to, I guess, get our margins above the 30% number. But let's go back to slide five. Sorry about that. I'm probably making a little dizzy here. Requal of Mark maybe could help us with that. One of Park's key customers is C2B Fabric. We've talked about this quite a bit in the last couple of quarters. What's your status at Recall, Mort?

The Recall, I think last time I said it would be soon, on the last call two months ago, but it's still not done. But last week I did reach out to my contacts at the customer, and they said it's imminent, which is better than it'll be a few weeks out. I think, you know, if I look at it, there's no guarantees, but I would say the approval will happen in the next couple weeks. And really the reality is it must happen. You know, we're a single source position on the program. I think as Brian will talk later in the presentation, this program is going to grow significantly. All indications are it's going to grow significantly just based on all the information from the customer and the information held in the public. So, like I said, Brian will cover that in the later slides.

Yeah, there must be enormous pressure to get this done now. I mean, it's no joke anymore, enormous pressure. And Mark and I were just talking about should we tell you about how many thousands of pounds of this, um, C2B fabric that we're storing for customers. And we thought maybe we shouldn't, it's too sensitive, but it's, it's a, we're storing a lot of this product that we sold to customers already. Uh, so, uh, there's a lot of, you know, pent up need for, uh, the, the prepreg material. I mean, the customers can't do anything with the fabric that's for us to, uh, to produce the material with. Let's go back to, um, slide, uh, six, um, Total misshipments, we can tell you every quarter, 275,000. That's up a little bit from Q4, unfortunately, caused by, surprise, surprise, international shipments, other miscellaneous issues. Impact of tariffs and tariffs-related costs on Q1, very minimal, you know, less than a few thousand bucks, let's say. Later on in the presentation, we'll talk a little bit more about what we might expect from tariffs in the future. Let's go on to slide seven. This is a slide we do every quarter, a top five customers in alphabetical order. These are just rounding up the usual suspects. I mean, all these customers often show up in our top five. So just to make it simple, the Patriot Missile, so we'll be talking about that one. That's AAE this time. Kratos, obviously, is the credit factor. He's obviously Kratos. That's, I think, a loyal wingman operation, actually. 787 would be GKN. And that's all we really want to talk about. The Middle River air structure, I think Donna decided that we feature so many GE programs photos that we didn't need to provide you with a photo this time. Let's go on to slide eight, our pie charts. I always liked these things, but you could see the 22, 23, 24, 25, and the 26. You know, it's fairly consistent. 21 was quite different. That was the pandemic year where commercial aircraft was very severely impacted by the pandemic. Okay, let's go on to slide nine. Alina does this Park Law's niche military airspace programs for us every quarter. And, you know, it's getting to be more and more difficult for us to provide much detailed information about these defense programs. It's so sensitive. The pie chart's interesting, though. Radomes, rocket nozzles, drones, those are really niche kind of programs. the markets for us, but even for us, aircraft structures are a niche. We don't really like commoditized stuff too much. And I guess the only thing maybe we can comment on, which is interesting, is this AAM-N4 Oriole air-to-air. That goes back to the 40s. It's one of the original air-to-air missile systems, but it's been repurposed for other purposes, so that's why it's on our list here. programs. These are all programs we're working on. We don't just, you know, put pictures up and stuff that we're not working on. Funny little anecdote, at least for me, this is produced by the Glenn Martin Company. Now, what's very interesting about that is that we talk so much about MRAS, you know, Middle River, which used to be GE Aerospace. The factory that MRAS is located in the Baltimore area is the old Glenn Martin factory. So I've In that factory, I don't even know, maybe 50 times. A lot of history there. I think, Mark, you've been there as well. I think that's all we'll probably say about slide 9 right now. We're going to slide 10. So this is the first slide where we're just not really going to say very much because it was covered. We have it in every quarter. It was covered in Q4. Just for anybody new, just really quickly, the little secret here is that you say, well, what is – Why are we in all these GE aviation programs or GE aerospace programs? All these engines are GE aerospace engines. And the secret there is that Middle River Aerostructure Systems was a sub of GE Aerospace for many, many years. And when we got on these programs, MRAS, we call it, was a sub of GE Aerospace. About five years ago, GE Aerospace sold MRAS to ST Engineering, which is a Singapore company, But these programs continue, these key Eurospace programs continue. We're trying to figure out the mystery there. Slide 11, I think nothing is new here. So, again, if you want us to go back and want to revisit any of these items, just ask questions or you can call us later if you want. But just for purposes of not kind of being totally repetitive, we're going to skip over things that we covered in Q4 today. Last item, LIFR program. We did cover this in Q4, but the update is still under negotiation. The ball's in their court. They have everything they need. As I think I mentioned, it's okay with us either way, whether we stay with our current LTA or go to the LIFR program. This LIFR program was requested by MRAS and SDE, something they want. And I don't know how to say this, but I think they pretty much want it, but MRAS is very consumed with other issues right now, and that's maybe preventing them from getting to this. Not all their suppliers get 100, 100, 100. You know, when I'm getting that, some of the suppliers are, you know, cause a lot of difficulty, and it's not funny. It's very challenging. So that's a little bit distracting for those folks right now. Let's go on to slide 12, update NG, aerospace genesis programs. Pretty much everything here was in Q4. I just want to mention that we often refer to aeroengineers as our Bible. It used to be a monthly, but now it's a quarterly. So there isn't even an aeroengineers update since we announced Q4 on whatever that was, May 15th. The only new item here is the first six months at $25, $39 per month. I wouldn't read too much into that because normally the first half of the year they're a little slow. My guess is probably nobody or anybody else's, but I'm going to guess they'll be in the little 50s this year. Some have been 50 and 55. That's a guess. I don't have any inside information at all. And, you know, I think I mentioned this to you last time, but the first six months, a lot of engines were going aftermarket, but the last second six months of the year for new airplanes, and they also have an Airbus, unfortunately, a lot of kites they've built. The last item is the key one. Their Airbus is targeting 75 airplanes per month. Let's go on to slide 13. Approved engines, this is all exactly, this is from Q4 with no changes. Like I said, there's been no update to the aeroengineers. So we talked about, you know, the market share of LEAP as compared to the PRAT and how many LEAP 1A engine orders there are. Quite considerable, I would say. Slide 14, update on PRAT. The XLR, sorry, the A321 XLR, that's a variant of the A420 family, a NEO family, which is what we've just been talking about. The new item, July 5th, 2025, AirAsia Inc. $12.3 billion. agreement for up to 70 A321XLR aircraft. That's a lot of money, a lot of airplanes, I would say. This is an important program because it has really a unique capability in terms of fuel economy, range, and payload. So let's go on to slide 15. The 919, the COMAC airplanes, let's see what's new here. The second item they plan to achieve, COMAC a production rate of 200 919 aircraft per year. That's pretty good. It's not 900, which is the H-20neo. You know, 75 times 12 isn't that 900. This is not nearly 900, but it's still pretty good. We'll take it. Trade issues. U.S. has reported a lift of the ban on GE Aerospace Export license for the LEAF-1C engines, which are used on this airplane. Let's go on to slide 16, I think it is. COMAC, still with the COMAC family, the COMAC-909 is their regional jet using a different kind of GE engine. And, again, the new item is U.S. has reported a lift of the ban on GE Aerospace Export license for that CF-3410A engine, which is used on this aircraft. on this regional jet. 777X, what's new here? Okay, first item, we update numbers over 1,400 flights and 4,000 flight hours in the test program. This item, second item, is new. According to Boeing, the 777X program is on track for certification this year. Wow. And entry into service in 26. I think they're hedging their bets. I just saw this recently. Maybe the end of this year, maybe next year for certification. Now they're saying this year, so That's impressive, you know, how much they've gotten to rack together. I mean, if they deliver on that. 541 orders, so that's nice, too. Let's go on to slide 17. Some of the numbers here, 6.2 million. Q1, these are GE Aerospace Jet Engine Program sales history and forecast. Q1, 6.2 million. And we had forecasted in our Q4 presentation 5.2 to 5.6, so this came a little bit higher than that. Interesting thing to think about, $24.7 million for all 25. If we read ahead, you're probably familiar with it. The juggernaut is $61 million. That's quite a bit of incremental sales for GE engine programs. The forecast down in the bottom right here, our Q2 forecast, $6.7 to $7.2 million. And we're sticking with the $28 to $32 million number for fiscal 26, even though if you look at Q1 and Q2, we're kind of getting off to a slow start. But as I mentioned, I'll remind you that the fiscal 26 forecast is based upon input we've received from the customer. Let's go on to slide 18. Parks financial performance history forecast estimates. The top half we already covered. The bottom half, let's go right to the forecast. Q2, we're estimating 15 to 16 million in sales, 3 to 3.4 million of EBITDA. And I think that pretty much covers that slide. Let's go on to slide 19. This slide is exactly the slide that was in the Q4 presentation, historical fiscal year results. So we're not going to discuss it again. And any of these things we're skipping over or skimming over, if you want us to go back and discuss these again, let us know when we get to the question portion of the call or call us afterwards when we happen to go over these things with you. But we already covered this slide. in our prior presentation slide. So again, I just want to explain, we're including these slides for context and cohesiveness so that the presentation holds together. But when we covered things before, we're just not going to go over it again. Well, before meeting in Q4, very recently, just two months ago. Slide 20, general park updates. Again, most of this stuff was already covered. We covered the airing group, the new agreement, under which we're going to advance ARIN 4,587,000 Euro against future purchases. And the last item is important because in our Q1, we advanced ARIN 1,376,000 Euro. That's approximately 1.5 million based on the exchange rate at the time. So let's keep that 1.5 million number in our head and get back to that. Slide 21. And the purchase agreement, we'll revisit this toward the end of the presentation. Very important. Timing is very important. The purchase agreement for the $5 million investment to help Arian increase their capacity for C2B fabric manufacturing. Next item, lighting stripe, we recovered that. So we don't want to cover that again. And the next item, the LTA with GE Aerospace, we covered that. So we don't go over that again. last item, these discussions continue with two Asian industrial governments relating to, uh, an Asian, uh, manufacturing joint venture with park. Um, I think our guys were supposed to be, um, in Asia. Um, now actually, but things came up. So I think that that trip is now going to be in, um, September, but you know, these people have been to visit us. We've been to visit them already. So the, the, that these discussions are somewhat advanced at this point, fly a 22, um, More updates, current MRES scorecard, 100, 100, 100. What does that MRES love worth the park? I don't know how to quantify it, but it's just worth a whole lot. That's really our objective is for customers to love us. And MRES is not the only customer who loves us, that's for sure. And making customers love us is central to our park egg strategy. I think we talked a little bit about this. We never went into the details about it, but we We mentioned our strategy, this egg strategy. Making customers love us is actually central to that strategy. Tariffs, international trade issues, what's the impact going forward? Okay, Mark, back to you. Can you help us, you know, get some understanding of where we're going with tariffs going forward?

Thanks. I get the easy ones. Tariffs, so I think I mentioned last time. Yeah, I mentioned last time there's been little or no impact to our business as far as tariffs. You know, we did get ahead of it. We, you know, several months before they started coming in, we notified customers we would pass these costs along. But fortunately for us, there's been little, you know, little impact as far as even getting tariffs from customers. I'm not saying, I'm sorry, suppliers. I'm not saying we're not seeing them, but the ones we have seen have either been not significant or they've been passed on to the customer. So from our perspective to our business, there's just really no impact whatsoever. But if you watch the news, like, you know, we all do, you know, things are still dynamic. They're still talking about, you know, 30% tariffs in some countries. So we're watching that. But for now, and we think in the short term, near term, we don't see any issue with our business from a tariff perspective. You know, could something change? I don't know. But I think we're pretty well covered at this point. So maybe by the next quarter, there'll be another update. Hopefully the update is the same. So, you know, we're not seeing any, Okay.

Thanks, Mark. Yeah, tariffs are a hot topic these days. Any questions about it, just let us know. Let's go on to slide 23, our share buyback. This is not really an update except we're confirming that in Q1 we purchased $2,165,000 worth of stock. Let's put that number in our little memory, so we'll go back to that. a little later on as well. We haven't purchased anything in Q2, and my guess is we probably won't be doing that. Let's go on to slide 24. Oh, here we go. Okay. We can call these numbers. Park's balance sheet cash, an incredible cash dividend history. We have zero long-term debt. We reported 65.6 million cash in marketable securities at the end of Q1. Now, at the end of Q4, it was $68.8 million. So that's a difference of $3.2 million, right? But there are two things we just talked about, which are unusual expenditures in Q1. One was about $1.5 million to Arian. The other one was $2.2 million buyback. That's $3.7 million. So those two things combined explain the difference, the drop in cash between Q4 and Q1. And one more thing I've got to remind you about. Remember we used to talk for many quarters about those transition tax installment payments. Well, the last installment, which is $4.9 million, is Q2. It actually was already paid in June, but you'll see that show up in our Q2 cash because it's like $5 million out the window. That was our last installment tax payment. That relates to repatriation. We talked about that many times, so I'm going to go with that again. Forty years of dividends and over $600 million of dividends paid. so far. Let's go on to the slide 25. Okay, this is a no change financial outlook for G-Earth space generator programs. It's a juggernaut. So these three slides, no change, and I don't think we're going to go through the details again. The timing, we don't know, but it's coming. Okay, if you stop, you better be ready. Slide 26, there's that $61 million number we were talking about. We've gone through the math many times. The math is straightforward as far as we're concerned. It's pretty transparent also because we're telling you what the revenue per unit is. We're giving you the unit assumptions and doing the math. We don't give the number for the 9X programs here a little bit. That program hasn't been certified quite yet, so it's a little bit more confidential. We don't give that information away. Slide 27, just the footnotes which kind of explain all the math on slide 26. I'm certainly not going to go over those. Slide 28. Okay, this is where we're going to have to slow down, but this is the new and big thing. War and peace, question mark, and parents, parks, new juggernaut. This is the first juggernaut is the GE Aviation Programs, I guess the GE Aerospace Programs. This is our new juggernaut. Supplies of key missile defense systems are reportedly seriously depleted as a result of recent wars in the Mideast and Europe. There's an urgent need to replenish those systems. So I've got to stop here and explain something. We're going to be talking about three different defense programs. There are many programs and the others we're not able to talk about. But one thing I want you to understand is very important. We're not providing any inside information about these programs, nothing at all. Everything we're telling you about is just based upon stuff publicly reported in news and other reports. So I just want you to understand that. We're not giving away any inside information on these programs. The PAC-3 Patriot Missile Defense Systems. We've been talking about this for a while, but, boy, it's become headline news. The largest deployment of PAK-3 Patriot missile defense systems in history occurred in response to Iran's ballistic missile strikes on that, I can't pronounce it, let's just say our air base in Qatar. The Patriot missile battalion was reportedly moved to Qatar from South Korea and Japan in anticipation of Iran's ballistic missile strike in response to U.S. strategic bombing in of Iran's nuclear weapon sites. So we had Iraq together, obviously. We knew what the response was going to be. But how do you think South Korea and Japan feel about that? You think they're happy about it? It's a show game here. You know, what's going on? We don't have enough systems. That's the reason why we're doing this. We're, you know, robbing Peter to pay Paul. It's not funny. Israel's supply of Patriot missile systems has reportedly not, this is no inside information, it's publicly reported, have been seriously depleted as a result of the war with Iran. Ukraine supplied Patriot missile systems. We know that. They're begging for it. They're begging for it. Ukraine has reportedly been seriously depleted as a result of the war with Russia. Other countries have been promised Patriot missile systems for years. They don't have them. We can't get them. War and peace continue on slide 29. In the news conference, did you see this news conference at the recent NATO summit? President Trump stated in response to Ukraine's reporter's question about providing additional Patriot missiles to Ukraine. It was kind of sad. I mean, I almost thought she was about to cry. He said, President Trump, we're going to see if we can make some available, but the U.S. is supplying to Israel, and they are very hard to get. This is what he said. And we in the U.S. need them too. So there's the problem. There's an urgent desperate need for these things, and we just don't have them. The U.S. reportedly has 25% of Patriot missiles needed for the Pentagon's military plans, 25%. It was recently reported that the U.S. has temporarily paused Patriot missile systems to Ukraine over concerns about alarming, that's not my term, that's a term that was reported, depletion of U.S. stockpiles of the weapon systems. The pause was intended to allow U.S. to do an assessment of Korean stockpiles and urgent needs for the weapon systems. We're trying to figure out what we're doing. It's almost like we got steamrolled Slide 30, continuing with Patriot, War and Peace, New Juggernaut. Then in a news conference in the White House yesterday with President Trump and A.O. Secretary General Mark Rutte, I think. I don't know how you pronounce it. I think that's how you pronounce it. Do you see this one? President Trump announced that in response to Russia's continuing military aggression, weapons systems through Ukraine, including especially Patriot missile system shipments, will be significantly increased. So, so much for the pause, you know. But here's the other thing. It was announced that 17 additional Patriot missile systems, it's not clear if that was referenced to batteries, launchers, or missiles, will be immediately transferred from another unnamed country, I don't know which country, which does not need them as much. They don't need them as badly. Okay, question mark to Ukraine. So I wonder how that country feels about this. Are they pretty delighted they're losing their Patriot systems? Again, it's, what do you call it, a shell game? or Robert Peter Payne, Paul, this is not funny. It's not funny. Patriot missile systems are planned to be incorporated into President Trump's Golden Dome missile defense system. So it's not just replenishing all these missile systems. We need a lot more of them. They're going to be in the Golden Dome. According to Sputnik News, that's the Russian news agency, I think, or news agency in Russia. U.S. Army plans to boost its procurement of Pac-3 Patriot missile systems by four times. four times. So we could be, you know, kind of smart Alex about, you know, Russian and misinformation, but they're not the ones that came up with the story that Donald Trump was a Russian spy, Russian asset. They're not the ones that came up with the story that that laptop was Russian misinformation. So, you know, what's this, what is the expression? If you're in glass houses, you don't throw stones. Flight 31 is, It is apparent from the reporting that the U.S. plans to do much more than just replenish the completed stockpile of Patriot missile systems, a lot more. Yeah. So let's talk about our involvement with the Pact Free Patriot Missile System. PARC supports the Pact Free Patriot Missile System with specially ablated materials produced with that C2B fabric from Aering Group. And we're sole source qualified. We're specialty ablated materials on that program. We were recently asked to increase our expected output, especially bladed materials from the program by significant orders of magnitude. We won't say how much because it's too confidential. We can't give it away. Of course, PARC will support this request. At PARC, we are patriots. PARC recently entered into that new agreement we talked about with Earing Group referred to above for the purpose of increasing C2B manufacturing capacity. Under the circumstances, timing is very fortuitous. But will that additional manufacturing capacity be enough? Probably not. Park recently received a proposed blanket purchase order from a key OEM for up to $40 million of C2B fabric. You get what's going on here? Next slide, 32. T's and C's of this agreement are being negotiated. When we process that $40 million, If the material is to be a significant amount, we're not going to say how much, because, again, it's too confidential. Let's go into another program, which is in the news. Maybe not quite as much as Patriot, but definitely in the news. Israel's Arrow 3 and Arrow 4 missile defense systems. The Arrow 3 system has reportedly seen extensive use in Israel's recent war with Iran. Israel stockpiled these Arrow 3 weapon systems and reportedly seriously depleted. Again, just reading reports, no inside information from us. The Arrow 4 system, which is reportedly in the final stages of development, is designed to intercept hypersonic missiles in the space transition zone. That's pretty elegant, right? Germany is buying the Arrow 3 and Arrow 4 systems from Israel. So again, it's not just replacing what's depleted. There's a significant additional need for these systems. Israel may need to do much more than just replenish the depleted stockpile. I guess I just said that of these Arrow systems. What's our involvement? We're qualifying the Arrow 3. We're sole source. We're qualifying the Arrow 4. That's all I want to talk about, say about it. But on slide 33, we're still, sorry, still in Arrow. What are the signals parts are receiving in the market about these weapons systems? Let's just say acceleration. So let's change gears here a little bit. Is the U.S. planning to rely exclusively on missile defense systems in the future, you know, the Golden Dome? Are we done with MAD? If you're old enough, you might remember MAD, Mutually Assured Destruction, from the Cold War days way, way back. Maybe not. What about the LGM-34-35A Sentinel missile system? That's certainly not an offensive system. That's ICBMs. ICBMs, you know what they are, right? Replacing the 450 Minuteman III ICBMs. Park's Minuteman history, so it's interesting if you're, well, interesting to me anyway. In 1972, when they first introduced the Minuteman, Lockheed Sunnyvale asked Park to take weight out of the missile system. And we did that by developing multi-layer circle boards. Are you aware of that? The Park developed, invented multi-layer circle boards. That's what we did. And so we may be coming full circle. That was the very beginning of the mid-man program, and this is now the replacement of the mid-man three. 450 new missile silos. You know missile silos all. Maybe you've seen them in videos and things like that. 659 missiles. Again, this is all stuff that's public. You look it up yourself. Nothing we're giving away here. What's our involvement? We're not able to say. Slide 34, we're kind of touching this already. A general matter is more difficult to discuss in defense programs you support as compared to commercial programs we support. Many of the defense programs are highly sensitive and confidential, but please understand something. There are several additional critical defense programs which we are supporting or are planning to support, and we're not able to discuss those things. In some cases, those programs represent significant revenue potential for PAR. Now, a little change of gears here. Some people ask, what will happen to defense spending if real lasting peace breaks out? We sure hope it does. What if the Israelis and Persians end their wars? What if the Arab states sign up for those Abraham Accords? What happens if the Ukrainians and Russians, they settle their difference and put their arms down? It would be all very nice and wonderful. Will this fence spending drop off precipitously as it did after World War II? You know what happened after World War II? Over 90%, I think like 93%, I mean, basically fell off a cliff. Will we beat our swords into plowshares? You probably know that's from the Bible. We're betting against that a park. We hope that peace breaks out, it's lasting peace, but we're betting against that our storage will be beaten into plowshares. Let's go on to slide 35. So another, you know, we talked about this last time, so we're just going to update you a little bit. Our major new expansion of parks manufacturing facilities, an update. So as you know, we're planning a major new expansion of our manufacturing facilities. It will require a new plant. That could be in Newton, Kansas or somewhere else. The plant expansion will include the following lines. This is all something we covered before. Solution, hot melt film, hot melt tame, hypersonic material manufacturing. Preliminary estimate capital budget. The new manufacturing plant equipment, $35 million plus or minus five. I hate to tell you this, but that number may be a little low. We may need additional solution treating equipment. That might be based upon things we just talked about, things we just covered. So we'll keep you updated on that. I just want you to be aware. Let's go into slide 36. Why are we doing this? Our juggernauts require it. Our new long-term business forecast requires it. Significant requirements and new business opportunities for both hot milk and solution deposit materials. Defense and missile programs are drivers. And our long-term forecast has moved higher just since May 15th, since we last talked about it. Why are we doing it? To have the manufacturing capacity and flexibility needed to take advantage of new opportunities as they arise. And last item, interesting, a little nuance to you, to have the manufacturing capacity needed for PARC to be PARC. What does that mean? Well, our calling cards are PARC, flexibility, responsiveness, and energy. That's how we build the business we got. You know, that's not normally how things are done in aerospace, but we're different. So we need a cushion manufacturing capacity. They're very important, very important for PARC. We never want to abandon what has worked for us. These are core principles we're part of, flexibility, responsiveness, and urgency. Let's go on to slide 37. We were thinking of planning for a loan program back to why we're doing this expansion, conceptually five years out. We'll get back to you on that. But, you know, it probably will take to the end of the year before we have our plans finalized. And then we have to design our factory. We have to design the equipment. It's not, you know, stuff you order off the shelf like at Walmart. All this equipment is very specially designed and a lot of engineering work, you know. To build a factory and equipment takes a long time. You know, the factory has to be completed. The equipment has to be delivered. The suppliers have to sign up for the equipment. We have to do trials. We have to do qualification runs. We're talking years before we'd actually be able to ship qualified product from this new factory, years. So it's very important we keep that in mind. That's what we need to look ahead. We're thinking of planning for our future. Conceptually, five years out, that's probably not a bad concept number, maybe a little less than that. But it's not two years, and it's probably not three years either, between now and when we're able to ship product from this new factory. We're not sharing a new long-term forecast. at this time, but suffice to say for now that this is an exciting, challenging time for PARCC. The opportunities for PARCC are significant. Time is now. We must take advantage of the opportunities now. We must not squander these very special opportunities. You know, you could say once in a lifetime. I was going to say that. I thought, well, is that overly dramatic? So just very special opportunities. But we must not hesitate. In this case, he or she who hesitates, you know what happens. So our objective is to have our expansion plan in place by the end of the calendar year and to be moving it to implementation phase of our plan by then. So after our last call, one of our investors, good investor, asked, well, you know, should we wait? Should we hold off? It's not how it works in aerospace. You know, wait until we get the business booked or it's in our backlog. It's kind of a circular thing. But if we waited, it would be too late, way too late. But we're not going to get in our backlog to begin with because nobody's going to give us the business if we can't explain to them that we have the ability to handle the business, to support the business with the manufacturing capacity. So timing is now. I would just comment, maybe this sounds a little defensive, I don't know, but I want you to think about something. Park's been around for 72 years. Why is that? Is it because we grab with the first shiny thing? I don't think so. We haven't taken shortcuts, no easy way outs, very good discipline, no debt, cash, over $600 million of dividends paid. Are we, you know, given to doing wild and irresponsible things, you know, think about our history. Think about that a little bit. I'd appreciate it if you do that, you know. So maybe for somebody else who would make you nervous, oh, what are these people doing? Do you have any example of when we've chased something we should have chased? Can you think about that a little bit? You know, like I said, maybe it sounds a little offensive, but I thought it's better to talk about it if somebody said, well, you know, maybe you're being too aggressive. I don't think so. I don't think so. This is, like I said, maybe a once-in-a-lifetime opportunity, and what would be really irresponsible of PARC would be to squander the opportunity, and we're not going to do that. So that's it. Let's go on to slide 38. Nothing here. This is exactly the same slide that we had in our Q4 presentation. All I'll say is that estimated non-G program incremental sales, that number is just so blown out the window. It's not even funny that We're not giving the number, but the number is quite significant. And the number is built up pretty conservatively also because the line items include only things we know about and can quantify. There are a lot of things we know about that we can't quantify quite yet. And they're not even in our number, you know. So actually, even the number is quite a high number. It's also, I think, a pretty conservative number. We spent a lot of time on this already. We're taking this project very seriously. A lot of due diligence being done by lots of different people at different levels. So we want to make sure we get it right. And that's it for us. Operator, we're done with the presentation, so Mark and I would be happy to take any questions to the extent there are any at this time.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question 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, while we poll for questions.

Thank you.

Our first question is from Nick Ripostella with NR Management.

Hey, good afternoon. A lot of exciting things going on there. I just have a simple question. Slide 21, the recently entered into new LTA. You know, is there anything different about this LTA than previous ones with GE Aerospace that you could discuss?

I didn't hear you exactly.

What are you asking about the... On slide 21, you referenced... Oh, slide 21, okay. Yeah, a new LTA with GE Aerospace for 25 through 30. And I'm just wondering, is there anything different in that LTA than, you know, previous ones?

That's a good question. And then evidence is that we're probably accusing everybody... So the LTA we've been talking about for years is an LTA with MRAS, and it was not GE Aviation. So by and large, those programs that we talk about are MRAS programs. That's a separate LTA that goes through 2029, 19 through 2029. This LTA, this is something more negotiated with GE Aerospace. There are still engine programs, but they're different engine programs and different materials. So this is... They feed into GE Aviation Programs, and maybe we're confusing the matter too much, but it's a different LTA. But just so you know, all of the GE Aerospace revenues are included in the history, in our sales history, as well as the juggernaut. So we include the GE Aerospace revenues from the MRAS LTA and from the GE LTA revenues. in both the history, historical sales to GE aviation programs, as well as the juggernaut slide.

Okay, okay. And one other question? Go ahead. Hello?

Yeah.

Yes, please. This may be a difficult one, but at what point do you think you would feel comfortable filling in some of the question marks on your long-term forecast. When you use terms like blowing out the water, it's very exciting. But if someone were to attempt to build a model out a few years, at what point would you feel comfortable giving us some information to build such a model for the longer-term picture?

Well, we have the models internally, and we've, you know, spent a lot of time reviewing them internally and reviewing the board, of course. I think, you know, we feel it's a little premature to share this information with the public, and it might also be a little bit shocking, too. So we're holding back a little bit. I think we want to get a little more confidence, and, you know, Nick, like I said, we're doing a lot of due diligence, a lot of internal discussions, and so I think we'd like to get a little more comfort, confidence in what we're doing in terms of the budget and everything else, because that will be part of the equation, I guess. I don't have an answer, but like I said, we hope to have the plan complete by the end of the calendar year and go into the implementation phase at that point. So I think by that time, we should feel we're in a position to provide that information. I don't know about during our Q3 call, which would be, what, October? No, that's our Q2 call in October. But I hope that, if not then, by the time of our Q3 call, which would be the beginning of January. So I'm sorry about that, but I appreciate if we could just hang in there.

That's okay. And then just to, you know, pat you all on the back, I think with respect to your plans for investments, The team there has pretty much earned the trust of shareholders, I think. You've been wise and not buying stupid things. And certainly with share repurchase, you've been judicious. And I've seen a lot of bad examples. So I just want to reflect that sentiment. Thank you.

Thank you very much, Nick. You know, this Charlie Munger guy, he passed away recently. But I'm probably going to get this wrong. They said something about they're successful not because they're always brilliant, but they're never stupid, you know. And not being stupid, you know, means a lot. Like don't do something stupid. Don't let go for the gold shiny stuff when it's just BS and just everybody's doing it. Don't, you know, be sheep to everybody else doing it. So we try to be really disciplined over the years and not just because everybody else is doing it, not do those things and do what we think is right for the company.

Okay, so next week we won't see a press release with an investment in Bitcoin mining. Maybe not. I don't know. Okay. Thank you so much.

Thank you, Nick.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Brian Shore for any closing remarks.

Okay, well, thank you very much for everybody, very much for listening in. It was nice to update you. And please feel free to call us if you have any follow-up questions. And have a good day. Thank you. Goodbye.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.