Release Date: July 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Park Aerospace Corp (PKE, Financial) reported a gross margin of 29.3% for Q1 fiscal year 2025.
- The company has zero long-term debt and reported $74.4 million in cash and marketable securities at the end of Q1.
- Park Aerospace Corp (PKE) has paid 39 consecutive years of uninterrupted regular cash dividends.
- The company's facilities were fully operational just two weeks after storm damage, showcasing effective recovery efforts.
- Park Aerospace Corp (PKE) is sole source qualified on several key GE Aerospace jet engine programs, ensuring future revenue streams.
Negative Points
- Q1 sales were significantly lower than estimated, at $13.97 million compared to the forecasted $15.75-$16.25 million.
- EBITDA for Q1 was $2.6 million, falling short of the estimated $3.25-$3.75 million.
- The company's facilities suffered significant storm damage, including roof and HVAC unit damage, leading to production disruptions.
- A one-time charge of approximately $1.1 million was recognized due to storm-related damages.
- Supply chain issues continue to impact the company's operations, with $300,000 in supply chain-related misshipments reported for Q1.
Q & A Highlights
Q: Can you provide more details on the impact of the storm damage on your Q1 results?
A: Brian Shore, CEO: The storm on May 19 caused significant damage to our Newton, Kansas facilities, disrupting production and impacting shipments. We estimated $1.8 million in storm-related misshipments, contributing to a total of $2.5 million in misshipments for Q1. Despite the damage, our team managed to get the facilities fully operational by June 3.
Q: How long will it take to complete all the repairs from the storm damage?
A: Brian Shore, CEO: It could take up to six months to complete all repairs. However, all production and lab facilities have been fully operational since June 3, thanks to temporary measures.
Q: What is the status of your insurance claim for the storm damage?
A: Brian Shore, CEO: We have submitted a claim under our property insurance policy, which has a wind damage deductible of approximately $2.5 million. Any recovery from the policy will be accounted for at the time of receipt.
Q: Can you elaborate on the supply chain challenges you are facing?
A: Brian Shore, CEO: Supply chain issues continue to be a significant challenge, impacting program ramp-ups and new program introductions. Workforce shortages and the aerospace industry's layoffs during the pandemic have exacerbated these issues. We manage our supply chain by carrying more inventory and providing longer lead times to suppliers.
Q: What are your expectations for the GE Aerospace jet engine programs?
A: Brian Shore, CEO: We are forecasting $23 million to $26 million in sales for the GE Aerospace jet engine programs for fiscal year 2025. Despite uncertainties, we believe these programs will be highly beneficial for Park Aerospace in the long term.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
