Good morning. My name is Shamali. And I will be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Third Quarter Fiscal Year 2026 Earnings Release Conference Call and Investor Presentation. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, simply press star and then the number two. Thank you. At this time, I will turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.
Thank you, operator. Welcome, everybody. Happy New Year. This is Brian Shore. Welcome to the Park Aerospace Corp. Fiscal Year 2026 Third Quarter Investor Conference Call. I have with me, as usual, Mark Esquivel, our President and COO. Just some housekeeping stuff, we announced and released our third quarter earnings release right after the close. You want to get ahold of that because in the release, there's link information to access the presentation we are about to go through. The presentation is also posted on our website. We have a lot to cover, so let's get started. We have our dilemma. We have a lot of new investors and a lot of veteran investors. So how much do we cover the background stuff is, you know, always a little bit of an issue. We will do the best we can. I also want to mention that we filed an S-3 registration statement with the SEC after the close as well. So we are going to get started with the presentation. We have a lot to cover. Obviously, at the end of our presentation, we will be happy to take any questions you might have. So let's plow ahead. Slide two, forward-looking disclaimer. If you have any questions about this language, please let us know. Let's go on to slide three, the table of contents. Fiscal Year '26 the Q3 investor presentation is what we are about to go through, and then the supplementary financial information in appendix one. We are not going to review that or cover it, but if you have any questions about it, please let us know. As has become our practice in recent quarters, we are featuring the James Webb Space Telescope, runaway supermassive black hole, 10,000,000 times the mass of the sun. That sounds pretty big to me, being boosted from its galaxy at a thousand kilometers per second, which is about 2,000,000 miles an hour. Thank you, James Webb Space Telescope. The James Webb was produced with 18 Park proprietary sigma struts. James Webb is now orbiting, I think it's called a range orbit about a million miles from Earth. Okay, let's go on to slide four. Our quarterly results. Let's just focus on Q3, where we just announced sales, $17,333,000. Gross profit, $5,003,000. Gross margin, 34.1%. Adjusted EBITDA, $4,228,000. Adjusted EBITDA margin, 24.4%. We are not going to go over the history, but we provide it to you for perspective. The prior quarters. I mean, what do we say about Q3? About our Q3 record we just announced during our October '2 investor call. Sales estimate was $16.5 to $17.5 million, so we came in within that range. Adjusted EBITDA estimate was $3,700,000 to $4,100,000. So we came in a little bit above that range. Just want to remind you that when we provide you with these estimates, we do not do what is called guidance that, I guess, almost everybody else does. When we give you an estimate, we are telling you what Mark and I think will happen. We do not provide any wiggle room so we can, you know, reduce our expectations by 10% so we can come in and beat the number and be heroes. We do not get involved in that kind of stuff. I just want to always remind you when we talk about our estimates, what they mean, and what they do not mean. Okay. Let's go on to slide five. Good quarterly results continuing this. The Q3 considerations. Alright. We always have to talk about the Erie Business Partner Agreement because it has an impact on our quarters. This might get a little tedious, but I think we need to explain it. We entered into a business partner agreement with the Arian group. They are a wonderful French company. We have known them for about twenty years. They are a JV between Safran and Airbus, a large company. That was in January 2022 under which Arian appointed Park as exclusive North American distributor for their C2B fabric used to produce ablative composite materials for advanced missile programs. This is, you know, a lot of people consider it to be the Cadillac of fabric in this category that is used for ablative, as they call sometimes, missile programs. So this is why we have to talk about it because OEMs buy the fabric or stockpile the fabric because they are trying to protect their projects. Let's just go into it. We had zero sales of the fabric in Q3. Very critical missile programs, but they have to buy from us. And so we are the exclusive distributor in North America. The OEMs buy the fabric from Arian, our partner. And then we resell it or sell it rather to the OEMs with a small markup. Right? And we do not even deliver to the OEMs. We store the product, the fabric in our factory as a favor to them, I guess. Because, ultimately, they do not need it. They are going to give us the releases at some point to go ahead and take that fabric and produce the prepreg material. With it. So small markup, I probably should have put this in here because it is not going to explain it. Even as far as I presented considering tariffs, this is because we passed through all the tariffs, and they are significant, but we pass through on a dollar-for-dollar basis to go into our sales line. But we do not provide a markup on the tariffs that would be kind of ridiculous. So that actually makes the markup even percentage even lower if you follow and say, we sold we had so we had zero sales of fabric in Q3. And we had a little bit more than a million dollars of sales of the materials manufactured with C2B product in Q3. So when we produce the prepreg, that actually results in very good margins. So, when we have significant sales of material, not too significant fabric, that is actually a plus for our bottom line. But the opposite often happens, and we will talk about that when we talk about our Q4 forecast. We have a lot of sales of fabric not as much of materials that will drive down our margins. It is all good. It is all wonderful. Ultimately, all the fabric that we sell to the OEMs and they stockpile, we will end up producing. That is the reason we keep it in our factory. But the timing kind of distorts our quarters sometimes, so that is what we have to talk about. Let's go on to slide six. Total shipments in Q3, approximately 740,000. That number is up quite a bit. It was caused principally by international freight supply chain and customer specifications and engineering issues. So what was going on here? Industry challenges are reemerging as the industry recovers and program ramps accelerate. This is actually good news. You know, after the pandemic, or when the pandemic started, it was a mess because the supply chain was so disrupted. And after a couple of years, we kind of got back to something that was more acceptable, which is okay. But now that the industry is recovering, and the programs are ramping quickly, now the supply chain, the industry is actually getting a little bit behind the power curve again. That is what is going on there. So, actually, it is good news. That impact of tariffs and tariff-related costs and charges maybe Mark can help us with this. Go ahead, Mark.
Yeah. This is a very eventful update again, but I think it is a good thing. We have minimal impact on tariffs in our Q3 just as we have had previously. I think we talked about it. You know, we price our materials on a short-term basis for most of our business. So we are able to pass them on. The second bullet, possible future impact. Again, this has been quiet for us the last few months or it seems to stabilize as far as what is coming our way. That does not mean there could be changes to that. But as far as the near term, I probably think the bullet would be pretty similar to the first one going forward in the next quarter. But you just never know, but there is minimal impact for Park at this point.
Okay, thanks, Mark. Let's go on to slide seven. Keep moving here. This is a slide that our veteran investors are familiar with every quarter. We share with you our top five customers and a little picture of that associated with each of these companies, the top five companies alphabetically. The 737 MAX, you know, we have said in the past, we do not have much content on that. That is actually Norian, a weather master radon that Norian produces for the 737 product line. What else do you want to talk about here? I guess maybe oh, the Valkyrie. Yeah. So we have talked about the Valkyrie quite a bit. Over the last few years. This is a creative program that we are on. But US recent news is the Marine Corps just selected the Valkyrie for its collaborative combat aircraft program, loyal wingman, sometimes it is called. So that is very good news for Kratos and also for Park. The PAC three, that is an AA item, and the Airbus A320neo, that is obviously Middle River. Sikorsky, Sikorsky, New Orleans, we already talked about which program is associated with Neurocrine. Let's go on to slide eight, our pie chart here. So the comment is always that if you look at fiscal '21, which was really the pandemic year, the pie chart was quite different. The other years, kind of very similar. Year over year. People ask if the military piece of the pie chart will grow, and it might, but commercial is growing too, we are not sure. My expectation would be that business aircraft as a percentage would maybe shrink over time. So let's go to slide nine, Park Loves, Niche Military Aerospace Program. This is a slide that we include every quarter as well. And these are not necessarily the biggest military programs we are on. These are just things we want to share with you. As we mentioned in the last couple of quarters, we feel less comfortable giving many specifics about these programs, but these are all programs that Park is associated with. Let's see. The only thing that I would mention in terms of recent news is the Standard Missile Six (SM 6) program. The Navy just awarded Raytheon a contract to boost the SM 6 production. This is all public, so you can look it up yourself. Do not think we need to comment on any other programs here. Let's go on to, oh sorry. Could not find slide ten. Slide ten. This is another slide that we have included for probably, I know, a dozen presentations. So a lot of you are very familiar with it. No real change to it. GE Aerospace jet engine programs, you know, major program opportunity for Park, firm pricing LTA, from nineteen to twenty-nine with Middle River Aerostructure Systems, MRAS, which is currently a subsidiary of SD Engineering Aerospace, a Singapore aerospace company. But when we got all these programs, they were a subsidiary of GE Aviation, GE Aerospace. That is why these programs are all related to GE engines or CFM engines. We built a redundant factory for them in exchange for agreeing to give us the LTA through '29. What programs are we talking about? The first five are all A320neo aircraft family programs. They are all the same engine, LEAP one A engine, which is a CFM engine. The 747-8, that airplane is no longer being produced, but there are still spares that were involved with COMAC 919. COMAC is a Chinese aircraft company with LEAP one C engines. The 919 is COMAC's offering to compete as a single aisle against the 737 and A320. On the right-hand side of the page, 9090, it is also a COMAC aircraft, and that is a regional jet. And that also is a GE engine, of course. The Bombardier Global 7,500 passport 20 engine. The picture here is the 747-8. As you can see, engine installs. We like this picture because it just gives you perspective on the size of these nacelles and everything you see there is made with Park material, and a lot of what you do not see inside the nacelles are made with Park material as well. On that 747 program. Let's go on to slide 11. More on GE Aerospace, we are continuing. Let's skip the first item. Second item, vacate containment wrap. This is for the 777X G90X engines for the 777X. That is produced with our AFP material and other composite materials. And let's go on to the third item, Emirates Park's LTA, which you just mentioned, was amended to include three proprietary park film adhesive formulation product forms. And the last item, life of program agreement, which was requested by MRAS and SDE. Remember, SDE is the owner of MRAS now. We have said your agreement is under negotiation for a few quarters now. But this time, it is on us, you know, because the MRAS team wanted to get together with us in December, and we said, look, we are really going to focus on this expansion. And this expansion is for their benefit, you know. So we said, can we delay the lifetime program meetings a couple of months? And they said, fine. So that one is on us. We cannot blame anybody except us. The fact that this is still an open item. As we said previously, we would love to have the life of the program, but we are okay either way. Let's go on to slide 12, continuing with the update. This is now updated on GE Aerospace and Engine Programs. So let's start with the A320neo aircraft M1. That is the big dog of all the November '25, Airbus had already delivered 4,275 A320neo aircraft, and Airbus has a huge backlog of these aircraft, 7,900 as of September. That is a total of when you look at how many we mean we are delivered and what is in the backlog, it is all over 12,000 airplanes. That is huge. We look at the delivery history here at the bottom of the slide. We will go through the numbers, but you could kind of see what happened is that they were ramping up as the program was growing and then hit the pandemic and, you know, kind of hit a brick wall. And the ramp-up was slowed down a little bit. I think they are ramping up much more aggressively now in December '25, they delivered 97 airplanes which is a lot, but they plan to deliver even more. You probably read about this, but the A320neo has issues with fuselage panels and also software that was caused by solar activities, which reduced the deliveries. Those issues have been resolved, but nevertheless, we probably held back deliveries in '25. Let's go on to slide 13. This is the key thing. Airbus is targeting a delivery rate of 75. Remember what was 50, 51, 75 per month in 2027. So that is, doing the math, a 50% increase over where we are now, which is a lot. Considering it is a very large program, it is 50% of a lot. On 10/07/2025, the A320 aircraft family became the world's most delivered commercial jet, surpassing the 737, and the A320 aircraft family continues to rack up new orders. The game-changing A320 321XLR, we have spoken about this, you know, lawsuit in the last few quarters. Maybe I go through each item, but if you have questions about it, please let us know. This is a pretty exciting game-changing aircraft for Airbus. So this is part of the A320 A320neo family. I just want you to understand that. Were there approved engines for the A320 new aircraft family? There are two of them. One is the CFM LEAP one A engine, and that is a program we are on. The other one is a Pratt and Whitney GTF engine, PW1,100G engine. We are not involved in the Pratt program, only the CFM program. On slide 14, we supply it to the, oh, I just talked about the first item, the first one. Okay? Second bullet item. Basically, if you look at the market share of firm engine orders between the CFM A320 LEAP one A and the Pratt engine, you know, and this is for the A320 program, of course. The LEAP CFM engine has a 64.5% market share, you know, much more than half. So and it has been that way for a while. The LEAP market share is much more than the Pratt market share which is good for Park, because we are on the LEAP program and not the Pratt program. At that delivery rate of 75 airplanes per month, that is 64.5% market share translates into a lot of engines, pure 1,160. Just so you understand, this relates to this 64.5% market share based upon all orders, all backlogs for both engines. We are talking about thousands and thousands of airplanes, so it is not a number that is usually distorted by kind of a small perspective or short timeframe perspective. Let's keep going. The Pratt engine, unfortunately, continues to struggle with serious reliability issues. I just read an article this morning that these reliability issues are expected to continue. Now for the LEAP engine, reliability has been a selling point. Reliability is a very key thing for an airline. Not reliability relates to how much downtime your airplane has related to maintenance. So if these airplanes are down for maintenance or inspections for these engines, that is a really bad problem because when the airplanes turn around, they are not making money. Airlines, their margins are not that great; they cannot afford to have excess downtime. And that is why the reliability issue is a real serious problem. I do not know what is going to happen but, you know, when I even speculate that because reliability continues to be a problem with Pratt, and the CFM LEAP is doing well with reliability, that could drive the market share potentially even more to the LEAP side of the ledger. CFM has significantly ramped up production deliveries of LEAP benches according to LEAP one A. That is really significant because we talked about supply chain restrictions holding back the market, holding back deliveries. There were a lot of different things, but what was often mentioned most often were engines. So the fact that CFM is ramping up the LEAP engine is a good thing because that will help Airbus ramp up their A20neo program, which, of course, is what we want. Slide 15. As of 09/30/2025, there were 7,900 firm LEAP one A engine orders. So, you know, we were recently told that our customer was given indication as to how many nacelles they need to plan to produce for this program, and we cannot disclose that number, but it is significantly more than the 7,900. Significantly more. The A320neo aircraft family program can end up being our largest program. We will see. But over the long term of the program, it could be, I do not know. Everybody has different opinions about this, but my opinion is that Airbus will be making these airplanes with these engines in 2040. We will see if I am wrong or right. COMAC nine one nine is a Chinese aircraft. It has been a while since we talked about that. It also has a LEAP engine, LEAP one C. And this is to compete against the 737 and A320. COMAC is expected to fall short of its 25 to 25 delivery target; not surprising as it is a Chinese company, so sometimes they have historically had some trouble getting their programs up and running. The target shortfall, they say, is caused by supply chain production issues. So I do not know. Let us just go on to the next slide. I do not think we need to be, let's go on the next slide. We are still under nine one nine. COMAC is increasing manufacturing capacity to achieve production rates of 150 and 227,229. Now if you look at that juggernaut slide and you throw down the presentation, we are assuming a top set of 150. But COMAC is building capacity for 200 per year. COMAC reportedly has over 1,200 orders for the nine one nine. Now let's look at the nine zero nine. This is a regional jet and produced by COMAC with a GE engine, a different type of GE engine, of course. So according to the state-run Global Times, under seventy-five nine zero nines have been delivered. The nine zero nine aircraft are operating routes in ten to twelve Asian countries, which is good because originally, these airplanes were thought to be well, China-only airplanes. That is obviously not happening. I mean, COMAC does not want it to happen anyway. Nine zero nine aircraft have now carried over 30 million passengers. That is a lot of passengers for these small airplanes. There were 7385 open orders. So here is a good thing to talk about because this aircraft is in a rate for a couple of years. So it took COMAC a while to reach rate, but they are at rate. They got there, and that is the key thing. So with the nine one nine, maybe it will take a little bit longer to get to rate, but my opinion anyway is they will get to rate, which will be very good for Park. These are starting from base zero. So let's go to slide 17. The Bombardier Global 8,000 variant, the 7,500 variant, was just certified, and the first delivery last month was the fastest civilian aircraft since the Concorde, an 8,000 nautical mile range. This triple seven X, with G90X engines, the triple seven X test program has amassed a lot of hours, a lot of flights. Boeing reportedly has over 600 orders for the aircraft. The certification test program is moving into phase three of the TIA, which is important. I mean, I am not going to know what that means. I am not an expert, anyway, but it is an important step along the way to getting your aircraft certified with the FAA. Slide 18, stolen triple seven X. Boeing now anticipates FAA certification entry into service and first delivery of the triple seven X in 27. This airplane is delayed too, so we cannot all just say, well, the Chinese are sometimes late with their aircraft. The Boeing CEO has indicated that 777X aircraft and the engines are performing quite well. Mentioned increased FAA scrutiny as a key factor in their certification delay. I think what he is really getting at, I think, it is nice about it, is that the FAA is being more stringent because of the issues with the 737 MAX. Why do not we go on to slide 19? Here are some numbers on GE Aerospace programs. This is why we emphasize a lot because it is, you know, it is a big deal for Park, the GE Aerospace jet engine programs. We will not go into the sales history. You can see it here for your benefit. Q3 sales were $7,500,000. Our forecast for Q4, 7.25%, eight %, 7 quarters, 8 a quarter million. And for the year, $29,000,000 to $29,500,000, just kind of adding down. And you could see that there is a recovery going on here in fiscal twenty, almost $29,000,000, and it has been a real struggle to get back to that level; only now are we at that level this fiscal year. And my feeling and sense is that this number is going to move up quite aggressively over the next two or three years. Let's go on to slide 20. Okay. Now we are talking about Park, just GE's solar park. Park's financial performance history and forecast estimates. And, you know, the top part of the page, in yellow, fiscal year twenty-six Q3. Well, we already gave you those numbers. And then we have estimates. Forecast estimates. Remember what we said, this is not guidance. This is what Mark and I think is going to happen for the rest of our ability. Sometimes we are wrong. Sometimes it is higher, sometimes it is lower. We will be telling you what we think is going to happen. Q4, about $23.5 million to $24.5 million. EBITDA of 4.75 to 5.25. Now a lot of smart people are thinking, well, what is going on here? Q3 sales were $17,300,000. Q4 sales, a lot more. Q3 EBITDA was $4,200,000. So why is the forecast for Q4 EBITDA a lot more? We have a lot more sales. You have to look at the footnote; there are two asterisks. Forecasted to include approximately $7,200,000 of C2B fabric sales. So that is a small market with very light margins, and that is what is going on there. That is what you need to understand. That is why with those kinds of sales, we are not seeing much higher EBITDA numbers. And while we are at it, let's look at the total forecast for '26. This is just adding down; taking into account the Q4 forecast, $72,500,000 to $75,000,000, and here is your EBITDA number. And again, look at the footnote three asterisks forecast to include approximately $9,800,000 of C2B fabric sales, mostly in Q4 it looks like. Alright? Okay. Let's go on to slide 21. So this is just some history with on the right-hand column, the '26 forecast estimate included, the estimate we just went over with you. I think what is interesting is look at the top line, this sales starting in 1718, nineteen, twenty went up $1,010,000,000 approximately per year from '17 to '20, and then it fell off a cliff. You still have the pandemic and the supply chain issues and the industry chaos that resulted for a long time. And even last year in '25, we still had barely gotten back to that fiscal twenty number. Now we start seeing fiscal twenty-six. We start to see some acceleration getting out of that rut that the industry has been in for a long time; it has been a long five years, I would say. So it is what it is, but it has been a long five years. Let's look at the notes down here. So supply chain limitations affecting your industry. That is what we just discussed. We looked at the sales numbers, ramping up, of course, for the Juggernaut. And, again, reminding you the fiscal twenty-five sales includes $7,500,000 of C2B fabrics and the '26 sales include $9,800,000 of C2B fabric. Very important to understand those things. Okay? And until now, you know, I should just go back and say, the OEMs have been stocked by lots and lots, and they need fabric much more than what we are producing in terms of how that would translate into producing the prepreg with the C2B fabric. So let's go on to slide 22. Change your gears a little bit. Our buyback authorization and activity, an update. Okay. So we announced in May 22, our board authorized to purchase $1,500,000 shares of our common stock. Under this authorization, Parkers purchased a total of 718,000 shares of its common stock at an average price of $12.94. So you have to say we are some kind of geniuses considering the stock prices now. I do not know what you think, but we probably should be invited on CNBC or maybe to talk and be a guest lecturer at the Wharton School of Economics. Let's keep going. We do not have to talk about well, except that we did not buy any stock in Q2 or Q3. We have not bought any stock so far in Q4. Let's go on to Slide '23. Trying to rush you a little bit, sorry. Our balance sheet, cash, and very incredible cash dividend history, we have zero long-term debt, $63,600,000 of cash at the end of Q3. Forty-one consecutive years of uninterrupted regular quarterly cash dividends. And now we have paid $608,600,000 or $29.72.5 per share in cash dividends since the beginning of 2005. We are kind of sticking up on that $30 per share number. Park's founders always like to include this photo with the cash dividend history because this is really the beginning of Park. When we really had almost nothing, we started with basically nothing. Let's go on to slide 24. It is a lot of money, a lot of dividends, I would say, for a company to start with basically nothing. Slide 24, financial outlook for GE, GE Aerospace, and programs, the Juggernaut. We have used that term for a while now. The timing, we are not sure that Juggernaut is coming as now with the capital. It cannot be stopped. Better be ready. Let's go on to slide 25. I am rushing a little bit. I just want to stop and say for a second for some of you new shareholders, if you want a more detailed explanation of some of these things, please just call us. We are happy to go over these items in more detail. We are kind of rushing through them. We just want to get to some of the newer items toward the end of the presentation. Slide 25. So we are talking about engines per year assumptions. And there is a footnote explaining how we came up with those assumptions. Revenue per engine, that is in sorry; that information is provided to us. By our customer. And the annual revenue per program just multiplying across. And we end up with a total of $61,800,000 at the outlook year. So a couple of notes here, our revenue per engine unit estimates are updated. We have been given updated information from our customer. And here is something we have not really touched on, why the engine units or your assumptions may be conservative. Let's just try to explain this quickly. So H and 40 neo, let's look at that one. We have 1,080 engines. We are talking about the year. That is based upon 75 airplanes per month, two engines per airplane, a 60% market share for LEAP. Just do the math; that is 880. Alright? So that is based on how many LEAP A320 airplanes will be built with LEAP engines. Do you think that every engine structural part produced will end up on those engines? That would be a really ideal situation, but something called scrap and fallout, and things get rejected sometimes. We are not taking that into account at all. We are not taking spares into account either. So that is why this assumption about NGUs per year might be a little conservative. I just want to touch on that. Okay? Slide 26, we do not have to go over this. These are all the footnotes related to how we computed the numbers and did the math on slide 25. Let's keep going. Okay. Now we are changing gears completely. Warren Peace Parks new Juggernaut. Actually, that term, the new Juggernaut came from one of our investors. We liked it, so we decided to stick with it. Some of this is a review from last quarter. Some of it is a little new. There is unprecedented demand for missile systems. Missile system stockpiles have been seriously depleted by the wars in Europe and the Mideast. There is an urgent need to replenish those depleted missile system stockpiles. According to Wall Street Journal reporting, the Pentagon is pushing defense OEMs to double or even quadruple missile system production on a breakneck schedule. That is a direct quote, obviously. The list of Pentagon targeted missile systems includes the Patriot missile system, the LRASM, and the SM-6. Patriot probably being a particular priority. Park actively participates in all of those missile systems. Review of an update on the Patriot Missile Defense System, that is the big one for us. Also, we focus on it because it is public. We are not providing any confidential inside information. Everything we are providing you is based upon public information. There is just lots and lots of public information about the Patriot missile system. You know, President Trump talks about it sometimes. A large deployment of PAC-3 Patriot missile defense systems, the largest in history, is a response to Iran's ballistic missile strikes on our Ford Air Base in Qatar. That was, I guess, a few months ago after we bombed Iran's nuclear sites. On slide 38. So what happened here is we moved the Patriot missile systems to Qatar anticipation of this attack from South Korea and Japan, but I do not know if South Korea and Japan are so happy about that. The Department of War wants a very significantly increased Patriot missile stockpiles in Asia. So, we just took a lot of them out of Asia. So obviously, we had a problem on our hands in terms of Patriot missile systems availability. Israel and Ukraine's Patriot missile systems have been seriously depleted as a result of those wars. Recent news from US defense OEMs including RTX, Boeing, and Lockheed indicating significant ramp-up of Patriot missile system production. It is apparent that US plants must do much more than just replenish the depleted stockpiles. On 09/03/2025, Lockheed's missile and fire control division received its largest contract in history, a $9,800,000,000 contract from the US Army for about 2,000, just a little less than 2,000 Patriot missiles. That is a lot. Slide 29. Here are some big numbers. On 01/06/2006, Lockheed announced it reached a seven-year agreement—This is all being driven by the Department of War. With the US Department of War to increase its Patriot PAC-3 missile segment enhancement, MSC interceptor. These are basically Patriot missiles. Production capacity increased from 600 to 2,000. You see that number? The last two years? This is even more interesting in a way. Lockheed records an increase of 60%. So do the math; if it was increased by 60%, to get to 600 means it was 375 two years ago. So we are going from just doing the math backwards three seventy-five to 2,000. You get those numbers? It is kind of unheard of. Unheard of. The new seven-year agreement framework is designed to encourage Lockheed and its suppliers to make the capital investments necessary. This is, again, for the Department of War. They want the Defense Department to make capital investments rather than paying dividends and buybacks and stuff like that. Necessary to boost production capacity to levels needed to support the dramatically increased PAC-3 missile program requirements. Do we need encouragement? No. We do not need any encouragement. We are already building our factory. We will get to that in a minute. I am planning to build a factory to support this program. Lockheed is poorly supplied in their PAC missile factory. Sorry, missile systems to the US and sixty other countries. So a lot of countries want the system and are not getting it right now. Breaking news. This morning, the US Department of War is investing $1,000,000,000 in L3 Harris solid rocket business to boost critical solid rocket production for Patriot and other missile systems. This is a new separate publicly traded company that will be created in connection with this investment. This is a big deal for Park as well. But you see what is going on here? This is the Department of War driving all this stuff. This is a new world order, as we say, later on in the presentation. Let's go on to Slide 30. The story continues. What do we have to do with the Patriot missile system? Park supports the factory Patriot missile system with special ablative materials produced with Arian Group's proprietary C2B fabric. This one probably should be in bold; we are trying to be modest about it. Park is sole source qualified for specialty ablative materials on a PAC-3 missile system program. Just think about that. And think about all we just talked about regarding this program. Parkers have recently been asked to increase our expected output, especially by the materials for the program by significant orders of magnitude. How are we going to do that? We will fully support this request with the additional manufacturing capacity provided by Park's major facilities expansion discussed below. We did not need any incentive or encouragement. We are already there. Okay. Let's keep going. Now we got to go back and talk about Arian a little bit more, not from the perspective of how it affects our quarters from a kind of bigger picture perspective. We have agreements with Arian Group, a really wonderful French aerospace company, a JV between Airbus and Safran, relating to their proprietary C2B fabric used by Park to produce ablative and composite materials for the Patriot missile system and other missile systems. We entered into a business partner agreement, that is what they call it, because they refer to us as their partner, very nice. With Arian in January '22 under which Arian appointed Park as its exclusive North American distributor for the C2B fabric. On March 27, 2025, we entered into what they call a new agreement with Arian under which Park agreed to advance €4,587,000 to Arian against future purchases by Park of C2B fabric. Now that was a fifty-fifty deal. Park's advances will be used by Arian to increase its CQP manufacturing capacity in Europe. So they kicked in the same amount. We went fifty-fifty on this investment to increase the capacity in Europe, and we have already paid our first installment of that amount. Arian Group with Park has partnered on a study to investigate the economic and other considerations relating to the potential establishment of a major C2B fabric manufacturing facility in the US. Park committed to contribute again; it is a fifty-fifty deal. I expect that amount to be expensed in our Q4. Originally, we said Q3; it’s probably in Q4, but that is another fifty-fifty deal. This is something we are partnering on in this study. Bottom line, Park is engaged in ongoing discussions with Arian Group about potentially significantly increasing C2B fabric manufacturing capacity in the US to support critical Department of War missile programs, including the Patriot Missile System program. It is very important that we highlight this because there is a significant need for much more C2B fabric capacity. So it is very important that this additional capacity be installed to support these programs as they ramp up aggressively. Let's go on to slide 32. So we have referenced the Patriot missile systems. I have already explained this a little bit, but it is a very high-profile, well-known, numerous other critical missile programs currently in production or in development, which Park is actively supporting. Unfortunately, many of these programs are too confidential or sensitive for us to identify at this time. Please understand that certain of these programs represent very significant revenue opportunities for Park over long periods of time. So the last thing on war and peace. How about the US defense industry's new world order? We already talked about this a little bit. President Trump wants to increase the US defense budget to $1,500,000,000,000 to build our dream military. This is a two-edged sword for the defense industry. You know, it is being what is it? Somebody giveth and taketh away. Here is the taketh away. But according to President Trump, the defense industry needs to get us back together. So buybacks, dividends, no. Once you invest in defense programs, CEOs even have to limit their pay. So, you know, there has been a real issue with the aerospace industry generally. Programs have been delayed and not on budget, and I think that the Department of War does not really like that very much. They are asking the defense industry to kind of get its act together. What do we think about the new world order? We think it is great. Parkton is great. We think it is wonderful. Slide 33, okay. Let's talk about our new plan. Sorry it is going on so long. I am rushing, as you probably can hear, through this as quickly as I can. Park's new major composite materials manufacturing plant. So now we are going to give you a little bit more information about this new plant. We are planning to build a major new composite material manufacturing plant. The new plant is being designed to be fully functional and integrated. It will include the following manufacturing line solutions: training, hot mill film, hot mill tape, confidential manufacturing lines, and support equipment. The new plan will also include full production lab facilities, office space storage, and freezer, and ancillary equipment necessary to support all plant manufacturing activities and operations. It is like a fully integrated plant with everything that is needed. The new plant is being designed or produced parks to produce and support Park's complete composite materials product line, including film adhesives and lightning strike materials. Slide 34, the plant is not being designed currently anyway to produce composite parts or structures. The plant's size is getting pretty big, around 120,000 square feet. This could change, but that is our current estimate on the plant size. When the plant is complete and operational, get this, the new plant will approximately double Park's current composite materials manufacturing capacity. So, see why the plant is that big? When will the new plant be completed? Well, we have some internal discussion about that and even debate. But let us just say for now, the second half of calendar '27. And when will it be operational? What do mean by operational? Not fully ramped up. That means we are producing and selling some products. You know, some products have been qualified for production and sale. Maybe the second half of, let us say, calendar year '28, would be a target for when the plant will be operational. The estimated capital budget for the new plant is approximately $50,000,000. What is the timing of the capital spend on the plant? Again, this is planning in flux at this point: fiscal year '27, probably 60% of that money; fiscal '28, maybe 30% of the money; fiscal year '29, maybe 10% of the money. That sort of money will be going out the door. How will we fund the capital spending for the new plan? Well, with our cash, with our cash flow, and to some extent from the offering that we just announced if that offering is successful. But the new plant project is not dependent on the public offering discussed below? Absolutely not. We are doing this. There is no question about it. Nothing has to be decided. It is going to be done. We are just finishing the planning. It is not dependent on anything. It is something we are committed to doing for very good reasons for Park and for our investors. Okay, let us go on to slide 35. Where will the new plant be located? We have a finalist location in the Midwest, but we are still waiting for approvals from local community economic development. These things, for us, go much more slowly than we like. Why are we building this new plant? Well, that is obviously the $64,000,000 question. Or maybe the $50,000,000 question. Our juggernauts require it. Our long-term business and sales outlooks require it. Significant additional composite materials manufacturing capacity is required to support our juggernauts and long-term business and sales outlooks. And we are doing this to ensure we continue to have the manufacturing capacity needed for Park to be Park. So we are doing this to ensure Park is able to be the company of, yes, the can-do company, the yes-we-can company. So we are not looking to become a mill. We are not going to abandon how we got here. Why we have the great success we have, and why we have more opportunities than we could ever handle. So it would be really foolish for us to abandon how we got here and become a mill company where, you know, we just run our factory like a mill, and then somebody wants something. Okay. We could help you out maybe a year from next month. I am not exaggerating. That is really what happens in this industry. That is not for us. Let us go on to slide 36. What are our calling cards? Flexibility, responsiveness, and urgency. So we are doing this to ensure Park's ability to continue those things that got us here. It would be a very unfortunate mistake for us to abandon the things that got us here. A very bad mistake. So our new plan needs to be designed with being Park in mind. Meaning being flexible, being responsive, having urgency, saying, yes. You need something; we are going to move everything around. We just talked yesterday, maybe Friday, about whatever large customers, they want to move so many things around. It was any other supplier; we would say, well, sorry. We do not ever say sorry. Sure. We will move everything around. A lot. It requires us to juggle a lot. It requires production to juggle a lot, but that is what we do for a living. Okay? And that is why we had the success that we had, in my opinion. When our new manufacturing plant is complete and fully operational, Park's total composite materials manufacturing capacity will be, well, you know, it is a question that is not so easy to answer. It depends on how do you define manufacturing capacity. Park being Park manufacturing capacity means running the business the way we want to run it so we have that maximum flexibility, responsiveness, and urgency. If we run a factory like a mill, I just planted, you know, for us six days a week, twenty-four hours a day, we could do that. But then our flexibility is almost none. But Park manufacturing capacity could be about $220,000,000. Park manufacturing capacity but pushing it to some extent. Still being Park but pushing it to some extent could be about $260,000,000; these are preliminary estimate numbers. We have been asked by a number of investors to please give us some help here. Please give us some perspective on the manufacturing capacity. The maximum state of manufacturing capacity, this is what we do not want, would be about $315 or $320,000,000. That is not what we want. Let us go on to slide 37, and I just want to say these are numbers we are working on. We are doing a massive amount of work, you know, Mark and the guys on the expansion plan. So a lot of work has been done, but we are not quite finished with everything. And even after we are finished, things can move. You know, the mix can change; things like that, which will affect capacity and sales. Slide 37, Park's long-term sales outlook for composite materials, including film adhesive materials and lightning strike protection materials, so we got to say again, what does this mean? Our number is approximately $200,000,000. 200,000,000? Okay? But how is this computed? It is really important to understand what this means because it is not a forecast; it is an outlook. And this is how this outlook was computed with line items that are known items. These are known sales and known programs and known customers. There is no other category. There are all line items of known opportunities, known customers, known programs. That is how it is computed. Well, that is what that outlook includes. What does it not include? So do you think that in the next three or four years there will be no other opportunities, like in six months from now or a year from now or tomorrow? We will get a call from an OEM about a program they want us to work on. My guess is it would probably be tomorrow because we are getting so many opportunities. You are not including any of that. Which we do not know. You know, what comes. So, it is important you understand it is not a forecast. It is just an outlook. The methodology that we used. What are the high and low risks of the outlook? So I think we feel pretty good about the line items in the forecast, but it is possible that we will not be on those programs or we will not get those programs. Those programs will not pan out to the level that we have been we are being told by our customers; maybe they will not be as strong; maybe it will take longer to ramp up; I do not know. It is possible. So there is risk on the low side. What about the high side? The high side is all those things we just talked about, things we do not know yet. That are definitely going to come. There is no way; we have not provided other categories in our forecast or outlook rather. The way we computed it. Just things we know about. What is the target year for the outlook? Well, that is another controversial question internally. I think we are saying fiscal year '31; and I will tell you I would say the end of fiscal '31. You say fiscal thirty year '31 sounds like a long time from now. But it starts four years from now. That means for us to be at that level, everything had to be ramped up. The plant would have to be fully built and qualified. All the programs have to be qualified. And we would have, you know, hired all the people, all the staffing, and we are fully ramped up. So to me, to do that in four years, that is a little aggressive. That is why I think we should think about being more conservative; the end of fiscal 03/01 is more like five years from now. It does not mean we want to be slow, but to be ramped up that low, probably, I would think to be more conservative, we might want to think five years from now rather than four years from now. Thoughts about our ROI? For Park's investment in the new plant, $50,000,000. We are not going to go through what the bottom line impact is now, but you think about it. We have this year, what is $72,000,000 of sales? We are talking about $200,000,000 of sales, a $50,000,000 investment. So you could probably do the math a little bit on your own. You have some really smart investors. We are not going to go with that number now, but we think that their way would be extremely attractive that we would not if without any investor would ever have a problem with. Let us go on to slide 38. We are announcing a new public offering; just touch on this quickly. Today we filed a form S-3 registration statement of prospective supplement with the SEC for a $50,000,000 at-the-market public offering of Park's common stock. What is the purpose of this offering in financing? First of all, to replenish a portion of the $50,000,000 that we plan to invest in our new composite materials plant; that is part of it. But very importantly, to ensure that Park has the necessary funds to be in a position to take advantage of, and exploit key opportunities currently being presented to Park and new key opportunities as they arise in the future. The availability of funds necessary to exploit key opportunities has been a key strategic advantage to Park. So, you know, you are probably thinking, well, can you give me an example? Yeah. I can give you an example. We talked about GE Aerospace. You know, how many hundreds of millions of dollars of business was represented. Well, remember what happened. GE said to us, it was GE at the time, not as GE. Yeah. We will give you the LTA for 2029. But Park, we are concerned to get your sole source qualified in these programs we want you to build a redundant factory. And then if you commit to doing that, we will give you the LTA. And we said, sure. We will do that. We did not say sure, but we got to go see if we can get the money or go to banks, and you know, that would have been terrible. This GE, if you are smart, would think, well, I do not know if Park is going to get the money. Let's go talk to somebody else. That never happened, because we said right there, on the spot, yep. We will do it. And we had the money to do it. It was about $20,000,000 at the time. I think we believe if we had to do that plan now, it would probably be twice as much between inflation. We are quite sure it is in Park's and our very best interest for Park to be able to continue to exploit such opportunities as they arise in the future. Just a little interesting information. Do not know. Footnote. You know where our last public offering was? It was, well, Martina found a tombstone in our office. It was 03/06/1996, thirty years ago. It was a $100,000,000 convertible note offering that was converted to all equity almost all equity. I think 96 of it was converted to equity. Were Needham, Robin Stevens, and Lehman. We would have until last two. Anyway, just a little interesting history. Sorry to go on for so long, everybody, but operator, we are happy to take any questions at this time to the extent there are any. Operator?
We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star to remove yourself from the queue. Participating in speaker equipment, it may be necessary to pick up your handset before pressing the star key. And again, if you have any questions, you may press star then the number 1 on your telephone keypad to join the queue and ask a question. And it looks like we have no questions at this time. Therefore, I will turn it back over to Mr. Brian Shore for closing remarks.
Thank you, operator. Thank you, everybody, for listening. We apologize the presentation went on so long. There is a lot to cover. Please feel free to give us a call if you have any follow-up questions. Know, of the items, I think we kind of skimmed over a little quickly, so feel free to give us a call. We are happy to help you out with any follow-up questions. Have a good day, and once again, happy New Year. All the best to you and your family in 2026. Goodbye.
Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.