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Good afternoon. My name is Julian, I'll be your conference operator today. At this time, I would like to welcome everyone to Park Aerospace Corp.'s fiscal year 2026 Q4 investor call and presentation. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star 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. This is Brian. Welcome all to Park Aerospace’s Q4 investor conference call. Thank you for joining us. With me, as usual, Mark Esquivel, President and COO. We published our fourth quarter earnings release just after the close. If you haven’t accessed that, you probably want to do that. In the earnings release, there are instructions as to how to access the presentation that we’re about to go over. There’s a link that’s provided. Also, you can access that presentation on our website. You want to do that so the call will be meaningful. We’ll review our presentation, of course, with you, and then we’ll be happy to answer questions. Just want to comment that we have a lot of new investors or potential investors at Park. During our third quarter call in January, there were over 150 participants. That’s a lot for us.

I suspect that that interest might continue. The point is that we have a lot of new potential investors or investors, then we have the veteran investors. We have to balance between covering the old stuff again and not covering it too much. I know sometimes when we do that, the veteran investors get a little impatient that we're going over things that we already went over. Out of respect for our new blood, new investors, we want to go back and cover some of these things that we cover every quarter. We'll do the best we can to find a middle ground and compromise, and that of course means that nobody's going to be happy, but anyway, we'll do our best of course. Why don't we go ahead and proceed, and we'll go right to slide two, which is our forward-looking disclaimer language.

We're not going to read this for you, but if you have any questions about it, please let us know. Let's go to slide three, table of contents. Slide one, we start with our investor presentation, and in appendix one, there's supplementary financial information. We don't normally cover that during our calls, but please let us know if you have any questions about it. Our practice has been, on our table of contents, to feature something about the James Webb Space Telescope. We discovered these little red dots, a new class of object. You think about that, a new class of object. I didn't know what to make of that. Small, extremely red points of light that represent a potential seeding of early supermassive black holes, challenging our understanding of galactic formation and evolution. Thank you, James Webb. The James Webb was produced with 18 proprietary Park SIGMA STRUTs.

This is not a high-volume program for us and probably not an opportunity for many spares since the James Webb is in the orbit a million miles away. Probably not going to send anybody up to replace any of the SIGMA STRUTs. Even though it's a small program in terms of revenue, we feature it every quarter now for the last, I don't know, couple of years because it's just such an incredible thing to be part of. It's just amazing. It's hard to describe. The words don't even get it. Amazing doesn't really get it. Because almost everything you hear that comes from James Webb says everything we believe, the smartest people in the world believe about the universe was not true. Sorry, we've got to start all over again. I don't know how to say it.

We're just so thrilled to be part of the James Webb. Even though from a business financial perspective, it's not a big impact. Like I said, probably no more revenue from the James Webb anytime soon. Let's go on to slide four. Going from the lofty to the, I don't know if it's mundane, but a little different kind of level. Our own quarterly results, important, but maybe not quite important in terms of the history of the universe perspective. Nevertheless, we'll go over our quarterly results. Q4 sales $24,187,000. Gross profits, $6,935,000. Gross margin 28.7%, which as you know, we don't like that too much. We don't like our gross margins above 30%, but when we get to the next slide or two, we'll explain what's going on here. That relates to the significant shipment sales of C2B fabric. Adjusted EBITDA, $5,171,000, and EBITDA margin 24.1%.

What did we say about our Q4 during our January 13th Q3 investor call? We said our sales estimate is $23.5 million-$24.5 million, we came in within the range, maybe kind of the top half, but still within the range. Adjusted EBITDA estimate, $4,750,000-$5,250,000 and it seems like we came in within the range, maybe the top half of the range, which is good. I need to explain, especially for some of our new potential investors, that when we give an estimate, we're telling you what we think is going to happen. We don't like this kind of thing that people do where they give a number, they haircut it by 10%, they can beat the number and they have a beat.

I don't like that term. These analysts come up with this sort of stuff like it's some game. We're not playing a game here. We don't like that. Makes us uncomfortable. We're not playing a game. The whole concept, "Oh, there's a beat. It's a beat." We don't want a beat. When we give you a number, we're telling you what we think is going to happen. If we're wrong, that means we didn't do a very good job. Now, sometimes we'll be wrong high, sometimes we'll be wrong low. We're not trying to do that. We're not trying to give you a number that we can beat so we could be a hero. To us, that seems like such a childish waste of time. I just want you to understand that. When we say we were within the range, that's a good thing.

That means our prediction was right. I probably cover that every quarter because it's a little different with many other companies, how they do that kind of guidance thing, and it's not something we really have to spend time with. Let's go into slide five, okay? Talk about Q4 a little bit more. ArianeGroup. Here we go, now we're talking about that gross margin number. ArianeGroup business partner agreement, we talk about this every quarter because it's significant from many perspectives. In terms of the quarterly P&L, we entered into the business partner agreement with Ariane in January of 2022, under which Ariane appointed Park as their exclusive North American distributor for their RAYCARB C2B fabric, used to produce ablative composite materials for advanced missile programs. We had $7.1 million of C2B fabric sales in Q4. Well, that's a lot. I mean, $7.1 million.

What was our number out of 24.1%? It's a very high percentage. As we previously explained, we sold C2B fabric to our defense initiative customers for a small markup. You think, well, that's not so good, but wait a minute, that's not the whole story. Park sold $1.3 million of ablative materials manufactured with C2B fabric in Q4, and as we also previously explained, our margins for producing and selling ablative materials manufacturing with this fabric are significant. Now, what's going on here, when we sell the product, we buy it from Ariane because we're exclusive. We have exclusive rights to buy it in North America. We sell it to the OEMs because, well, they're doing their stockpile on their product. Where does it go when they stockpile it? In our factory. We don't even ship to them. We hold it for them in our factory.

Why are we doing that? They're stockpiling it because obviously you're going to tell us at some point, "Please make this into your pre-preg material. Please produce the material for us." Everything that we stockpile will end up being produced by Park as ablative material, which is where those margins are very good. Stockpiling is good, and the OEMs are doing it because they are concerned about the availability of this very critical C2B fabric. Let's go on to slide six, missed shipments. Now, this is interesting because we started talking about this at the beginning of the pandemic. The industry was really not doing well. Supply chain, international shipments, one thing after another after another, every quarter with a lot of missed shipments.

That calmed down quite a bit over the last couple of years as things kind of got close to "normal" based upon the post-pandemic levels. All right? What's going on here is this is now re-emerging as a problem because now the industry is accelerating, recovering, and the program ramps are accelerating. Now the industry is kind of struggling once again with keeping up from a different perspective, but it's the same kind of phenomenon, it's just from a different perspective. Now we're talking once again about missed shipments, 715,000. Well, that's a lot. We talk about Q1 or Q1 forecast, it's going to be even more. It's something to think about. Ultimately, all this product gets produced and shipped, but the industry is now struggling again to keep up as the industry accelerates and ramps. Net impact of tariffs, tariff-related costs.

Mark, could you help us with a little perspective on tariffs and tariff-related costs, please?

Yeah. It's the same story as the last few quarters. Very minimal impact for us. Again, we typically pass these on to our customers through our pricing contracts or as we do pricing every few months with our regular business. No impact for us, but maybe a few thousand dollars this quarter.

All right. Thanks, Mark. Why don't we keep going? We can hustle through here. Slide seven for some of you new folks. This is something we do every quarter for, I don't know, as long as we've been doing presentations, I guess. Our top five customers for the quarter in alphabetic order. We do a little picture that ties into each of the customers. The top right, you'll hear a lot about this, the PAC-3 Patriot missile system. That's two for the price of one because that actually is Aerospace and L3Harris. That's nice. We got one picture for two. Kratos is obviously a Kratos BQM. That's a target drone. Middle River Aerostructure, we'll talk more about them. That's the Airbus A320 with the LEAP-1A engine. NORDAM is the Boeing Stratotanker. Let's keep going. Pie charts.

These have gotten a little boring, but they're becoming interesting again. Why don't we take a look at this? Park estimated revenue by aerospace market segment. See, in 2021, that was fiscal 2021. Remember where our fiscal year is, in February. That was a pandemic year. Look what happened. It wasn't that military was so great, it's just commercial was almost nothing. Remember that you saw the pictures of the 737s with two people on them, or probably more than likely they're really parked. They weren't flying at all. Commercial aerospace was terrible, and the airlines weren't ordering any airplanes. They were canceling as many as they could. You see that happened in 2021. In 2022, 2023, 2024, and 2025, it kind of normalized "for the pandemic level," post-pandemic level, which was kind of anemic, let's call it. Look at 2026.

Something's emerging there where the military is actually increasing more than it had been. If we showed you Q4 of 2026, it would be kind of shocking how strong, how significant military is. We're not going to do that because we don't want to get hung up on one quarter, but we think there might be a trend going on here. We look at 2026, which is in the bottom middle of the slide. Let's go on to slide nine, a little more pie chart stuff. This is another slide we include for every quarter, Park loves niche military aerospace programs. The top five, that's done by Donna, and this one's done by Alaina. Alaina's Head of Customer Service at Park. This is her thing she does every quarter. Park loves niche military aerospace programs. These are not necessarily the big programs.

Some are big, but some may not be. These are programs of interest. We thought you'd be interested in them. I just want to be clear, everything we show here, and everything we show every quarter, those are programs we're involved with, that we're supplying into. We're not just showing you nice pictures of rockets and planes and cool stuff like that. We just want you to be aware of it. We don't comment anymore on what we do with these programs. These just got to be too sensitive, just understand these are all programs that we supply into. The pie chart. Look at missile systems. That's getting to be pretty big there, I don't think that's an anomaly. We'll talk about missile systems as we proceed with the presentation.

I'm trying to hustle through because the back end of the presentation, when we get to missile systems, there's a lot to talk about. That's a lot of new stuff also. Slide 10, GE Aerospace jet engine programs. We provide a slide almost every, not almost every quarter, very minor changes. I do need to explain for some of our new investors. The firm pricing LTA, it's a requirements contract from 2019 to 2029 with Middle River Aerostructure Systems. Who are they? Don't know. They're a sub of ST Engineering Aerospace. Who are they? Don't know. We built a redundant factory. That was part of the deal that we actually made with GE Aerospace. When we entered into the LTA through 2029, we agreed to build a redundant factory. That was done a while ago. It's in production.

Sole source for composite materials for various engine nacelles, thrust reverser components for multiple MRAS programs. We have the A320neo family, 747, the COMAC C919, the COMAC C909, the Global 7500. The next slide is the 777X. Well, what's going on here? These are all GE engines, aren't they? We didn't say anything about GE. Also, CFM, which is a partnership with GE. Yeah. The thing is that when we entered into this contract, Middle River, MRAS, where they produced the cell and thrust reverser structures for these engines, was a sub of GE. I think in 2019 or 2020, I don't remember when, GE sold this MRAS to ST Engineering, which is a large Singapore aerospace company. That's the reason why all these programs are GE Aerospace. It's called GE Aerospace programs. Questions, let me know. Let's just keep moving here. Slide 11.

Okay. We already talked about this 777X. That's a little-known GE9X. That's a GE engine, of course. In this LTA, we also included some of our new film, proprietary Park film adhesive products, and for composite bond and metal bond, and those products are undergoing qualification. We've been talking about a LifePort Program Agreement to kind of supersede the 10-year deal for every quarter now for a while. This was requested by MRAS and STE, not by Park. We're happy to do it. It's under negotiation. We actually made some progress recently, but we'll see. There's still a way to go to get to the finish line. As we always say, we're happy either way. If we do the LifePort program, that's wonderful. If not, we're okay too. Let's go on to slide 12. Keep moving along here. Still in GE. Updated GE Aerospace jet engine programs.

Let's go through the programs, a little more detail. First, we start with the big kahuna, which is the A320 aircraft family, includes all these different variants. As of March, Airbus has already delivered 4,553 of these airplanes and had a backlog of 7,412 of these airplanes. You add those two numbers together, and the total is a big number. This is a huge program, and could be the biggest commercial aerospace program ever, aircraft program ever. A320neo family aircraft deliveries. You see the pattern here. They're ramping up. In 2019, they got to 561, then the pandemic hit, everything collapsed, down to 431. Kind of is going away back to that 561 level. We kind of got there in 2023, 2024, 2025, inching forward to 50 a month, 51 per month. Let's go to the next slide 13.

Well, one more item before we get to that punchline. 26 year to date, only 136 deliveries. That's not so good. Off to a slow start, Airbus' A320neo aircraft family. Why is that? What's going on? Well, Airbus had been targeting 75 neos per month by 2027. They've been very public about that. Looking at the prior page, we're kind of inching up to 51. We're nowhere close to 75. Airbus recently stated they expect to reach that delivery rate of 70, 75, backing off a little bit, by the end of 2027, stabilizing, that's their term, to a rate of 75 per month or after. They're backing off a little bit. What's going on here? Well, why? What's the problem? Maybe we should consider the engine situation. Sorry, it's a little complicated, but we need to give you the perspective, I think.

The two approved engines for the A320neo aircraft family. There's the CFM LEAP-1A engine, that's what we're on, and then there's the Pratt PW1100G engine. We're not on that program. We supply into the A320neo family aircraft using the LEAP engine, but we don't have any content on the A320neo family aircraft using the Pratt engine. Important to know that. Let's go on to slide 14. According to the first quarter 2026 edition of Aero Engine News, that's our bible, the CFM LEAP-1A market share for engine orders for the A320neo was 66.2%. That's interesting. What the heck is that number about? We cover this every quarter, and the number has been, like, 60%, 61%, 60%. 66.2%, that's not the historical number. That market share moved up. Well, is it sustainable? Well, is it a trend? We'll see.

At the delivery rate of 75 airplanes per month, 62.2%=1,192 LEAP engines per year. Can you remember that number? We'll get back to it later. Interesting number. The Pratt engine, now, here's the kind of the maybe issue. The Pratt GTF engine has struggled with serious reliability issues. You probably read about this. It's not a big secret. Reliability is a positive selling point for your CFM LEAP-1A. They upgraded one of the components recently for better reliability. According to Airbus, this is recent, there is now a serious shortage of Pratt PW1100G engines. Airbus indicated that's the main cause of their disappointing 2026 A320neo aircraft family deliveries. They're kind of putting the blame on this Pratt engine, not only with the reliability issues, now with shortages. Meanwhile, CFM has significantly ramped up production of their LEAP engine family, including the LEAP-1A.

Let's keep going here. Let's see if we can figure out what really is driving all this. Slide 15. Could these factors lead to an even greater, sorry, I'm rushing, CFM LEAP-1A engine market share for A320? I don't know. Interesting question. We read recently something that surprised us, which is Airbus now saying, "Well, CFM is delayed on deliveries as well for the LEAP-1A." I don't know what that means. The focus had really been on the Pratt engine, but now they're saying, "Well, LEAP is fine as well." Not sure what to make of it. My guess is if CFM can produce the engine, that they have an opportunity for more and more assured gains, but that's their business, not mine. As of March 31, there were 8,472 LEAP-1A engine orders. That's a lot of orders for engines.

If you look further later on in the presentation, we talk about our revenue per engine based upon current pricing. You can do your own math and figure it out. We're talking about some very large numbers here. A320neo aircraft family program could end up being the world's largest commercial aircraft program ever. We're very happy to be on that program. The A320neo aircraft program could end up being Park's largest non-defense program ever. That goes back a long, long time. We're talking electronics, back in the '90s and everything else. That's a big statement. Let's go on to another LEAP program, which is the COMAC 919. That's a Chinese single aisle to compete with the A320 and the Boeing 737.

COMAC is increasing manufacturing capacity to achieve production rates of 150 919 aircraft a year by 2027 and 200 by 2029. They reportedly have over 1,200 orders for the 919 aircraft. Let's go on to slides. What do we got here? We're at slide 16. COMAC delivered two of these airplanes in 2023, 14 in 2024, and 18 in 2025. That's not a lot. COMAC was targeting 25. That's a little off, 25 in 2025, but didn't get there. There are reports that CFM may be favoring Boeing and Airbus with LEAP engine availability. Now, these are three different engines. They're not interchangeable, but there's still a capacity question as to how many LEAP engines that CFM can produce.

The lack of availability of CFM LEAP-1C engines may explain the shortfall and may be emerging as more impactful to the ramp of the 919 aircraft program than originally anticipated by COMAC. Will this change improve for COMAC, not for CFM, as a result of the recent summit between President Trump and President Xi? The answer may be yes. There are reports that there is some plan to increase CFM LEAP-1C engine deliveries to COMAC as a result of that summit. We'll see what happens with that. You know, you get the theme here. It seems like the engines are often the gating items on these programs. Interesting. Slide 17. Let's talk about the 777X program. That's the other third big program that we're dealing with GE Aerospace engines. The 777X program, the GE9X engines.

The 777X test program has amassed over 1,500 flights, nearly 4,400 flight hours. Boeing has 652 open orders for the 777X. The certification test program seems to be moving along reasonably. Boeing anticipates FAA certification, entry into service, and first delivery of the 777X next year. This program is very very delayed a long time. I happened to be at Everett Field, where Boeing makes these airplanes, and I think the biggest building in the world, actually. They're all over the field. They're everywhere. A lot of cases, they don't have engines yet, waiting for engines. They're obviously waiting for certification. They can't start delivering the airplane until they get the FAA certification. Let's go on to slide 18. These points are kind of key.

Our understanding is that the COMAC 919 aircraft and the Global 8000 aircraft are already being produced and delivered and are close to targeted rates. We covered that in that original slide where we broke down the different programs, we didn't really deal with them in any detail. The point is that we're not expecting much upside from those programs because they're already being produced at their targeted rates. Clearly, the commercial aircraft juggernaut, as we call it, will be driven by the ramp-up of the A320neo aircraft family, the Boeing 777X, and the COMAC 919 aircraft. Let's go on to slide 19. We're still talking GE Aerospace. Just some numbers for you here. GE Aerospace and engine program sales history and forecast estimates. In Q4, $8.1 million, and in fiscal 2026, $29.3 million. See what happened here? Look at 20.

We're kind of almost at $29 million right before the pandemic. Wow, look what happened in 2021. Just dropped off a cliff. We're clawing our way back in 2026 to kind of get back to where we were in 2020 right before the pandemic. It's been a long five years, especially for the commercial aircraft industry, that's for sure. Our forecast for Q1 for GE Aerospace program sales, $6.8 million-$7.4 million. Our forecast for the year, $34 million-$38 million. It would be a mistake for you to take Q1 for anything multiplied by four. Think that's what we're thinking about. It doesn't really work that way. The forecast for the year, that's based upon input we have, we call a bill plan from our customer. We haircut a little bit.

The number we got from our customer is actually higher than the forecast we're providing you. We're trying to be a little conservative here. Let's go on to slide 20. Okay, now let's talk about Park, the Park numbers. Park financial performance history and forecast estimates. Top is just history. Totals you already know about, the Q4 you know about, totals you know about. You know by now, anyway. Forecast estimate for Q1, $17.7 million-$18.4 million in sales, $4.1 million-$4.6 million EBITDA. Now, remember we talked about missed shipments in Q1? We're expecting $1.3 million approximately, significant amount of missed shipments. We don't know yet. Q1 ends on Sunday. We're so close to the end of the quarter that we can give you some perspective. Normally, when we announce, the missed shipments normally really end up being a phenomenon in the last few weeks of the quarter.

Normally, when we announce, we can't give you any perspective on it, but we're so close to the end of the quarter, we give a perspective. It's the same kind of thing, supply chain thing. We're not getting components as quickly as we need. Some shipping issue where if the freight forwarder doesn't pick it up, international shipment, it's not a sale. We know all these sales cut-off issues with Park. It's a sale when it leaves our dock. You see, we're kind of back in that mode now, and the industry is struggling. The industry is starting to re-struggle, it looks like, because things are ramping up aggressively. Things were quiet, and things were kind of normalized, and the industry kind of caught up, but now we're back to maybe getting behind the power curve a little bit.

We'll have to see how that pans out, but it may take, I don't know, a couple of years for the industry to get back up to speed. Maybe it'll always be behind because things are ramping so aggressively. As soon as they catch up, then they'll turn around, "Oh, we ramp more." We'll have to see about that. Slide 21. We're just trying to share the full perspective with you. Slide 21. Let's stop here for a second. I know we're kind of running late here, but our historical fiscal year results, because it tells a story that's kind of interesting, I think. Look at the sales. This is aerospace only. We sold electronics, I think, in 2019, but this is aerospace only. $31.8, going year-over-year, $40.2, $51.1, $60.

From 2017 to 2020, we kind of were going up $10 million per year in aerospace, which is a lot. Look what happened 2021. We just kind of fell off a cliff. There's a pandemic year. 2022, 2023, 2024, maybe 2025, we try to crawl our way back to the 2020, the pre-pandemic fiscal year, and maybe just got there in fiscal 2025. It's been a difficult five years post-pandemic for the industry, that's for sure. 2026, it seems like we're breaking out a little bit with the sales of $73.3 million. 2026 is a little bit of a maybe departure, which is a good thing. Important themes, supply chain limitations, industry malaise while affecting aerospace industry post-pandemic. Yeah, the industry, to us, was kind of sleepwalking through those five years, in a sense, state of malaise, and it was a long five years.

Long five years for us, that's for sure. I think a lot of people didn't really believe in us very much. We believed in ourselves, but not too many people. I think we were a kind of forgotten company, that we were kind of lost, didn't really know what to do, and we never felt that way. We always stayed focused. I think we worked very hard in our quarters, that's for sure. I know that. I don't think it. We had to listen to people tell us to sell the company at $12 or $13 per share. You like that? That's the kind of crap we had to listen to. It was a long five years. We're in the industry, so there's not much we could do about it, but which to us, sleepwalking now, we'll get to that in a little while, but I think that that's over.

The industry's gotten a pretty serious wake-up call, maybe shock treatment. We always want to remind you how much fabric sales were in each year, as these do drive the top-line numbers and the bottom line as well. I hope you don't mind that commentary, but we're not complaining, we just thought you should know how we feel about things. If you want to invest in Park, you should know how we feel. Slide 22. Let's talk about this. This is interesting stuff. Our buyback authorization, we purchased 718,000 shares of our common stock, $12.94 per share, $9.2 million, $9.3 million. We didn't buy any stock in our Q4, Q1. I'm probably not shocked to hear that. We used to comment that we really don't like buybacks so much, and we don't comment on our stock price. You don't ask me to do that.

Except this is one exception. We said, "When a price gets so stupid, we don't have a choice but to buy the stock." We felt the price was goddamn stupid, and we bought a lot of stock at $12.94. Let's go on to the next slide. We juxtaposed these two slides intentionally. Our recently announced public offering, that's slide 23. We announced this during our last quarter call. We filed the necessary registration statement and prospective supplement for a $50 million at-the-market public offering, with the purpose to replenish a portion of the $50+ million, note that plus sign, that we plan to invest in our major new manufacturing plant. We'll get back to that later. Other investments under serious consideration, we'll talk about that soon as well.

To ensure, this is an important one, that Park has the necessary funds to be in a position to take advantage of and exploit the key opportunities currently being presented to Park and the new key opportunities as they arise in the future. That's a little bit more of an amorphous thing, but I think equally important. Now, let's go to numbers. During our Q4, under this registration statement, we sold 943 approximately shares of common stock, for proceeds of $22.8 million at a price of $24.21 per share. We bought the stock at $12.94, we sold it at $24.21. Now, I'll tell you something, I don't have an MBA, I don't have a degree in economics, but where we come from, that's a pretty good deal, I think. Just wanted to mention those two numbers to you. Let's go on to slide 24.

Here, still on the same kind of theme, Park's balance sheet, cash, been very incredible in cash dividend history, is our opinion, of course. We have zero long-term debt. That's not our opinion. Park reported about $89.4 million in cash and market securities at the end of the quarter. You say, "Well, that's a lot for Park." Actually, it's not. It probably isn't even enough. We'll get to that a little later in the presentation. We talk about the expansion plan and the other potential investment that we're seriously negotiating. It's probably not enough money for Park. 41 consecutive years of dividends. Park has paid $613.7 million, $29.975 per share since 2005. Our next dividend, which we're announcing soon, that'll put us over $30 per share since 2005.

We like to show the picture of our founders back in, Park was founded in 1954 with about $30,000. A small, it wasn't a factory, it was a garage in Woodside, Queens. This actually is a step up. This is about three years later. This actually is a real factory in Flushing, New York, which I think was about 10,000 ft, with our founders in the picture. Slide 25. I'll try to hustle. I know we're taking too much time here. Financial outlook for GE Aerospace engines and programs, the commercial aircraft juggernaut. For those of you who've been listening to our presentations, every quarter, we say what? We say, "The juggernaut is coming, it can't be stopped, and we better be ready." We're not saying that anymore. We're saying the juggernaut is here. Commercial aircraft juggernaut is now. Let's go through this quickly slide.

Was it slide 26? We show you this every quarter. I just want to remind you, the A320neo engine assumptions per year, 1,080, that's based upon a 60%, that's based on 75 airplanes per year and a 60% market share. That market share, the actual market share, that gives us 1,192 engines, not 1,080. We're still sticking with 1,080 to be conservative here. That's millions of dollars of additional revenue. Just want you to be aware of that. Slide 27 goes through a lot of the math as to how we computed the numbers on slide 26. We won't spend time on slide 27. Slide 28. We need to spend some serious time on this whole new juggernaut extreme, we call it. Let's just go through some basics. Park's missile systems niche.

Park specializes in the design and manufacture of advanced composite ablative materials used to produce solid rocket motor structures and heat shields for critical missile systems, including the PAC-3 Patriot missile system. We talk about that a lot, and we'll talk about it a lot during the presentation. I just want to flag here before I forget, that there are dozens of missile systems that we work on. It's just that the Patriot has so much notoriety, so well-known, so we tend to focus on that more, just as an example. The other programs we probably wouldn't want to talk about because it's maybe not something for public consumption. There are dozens of missile programs that we're on. Park also designs and manufactures advanced composite structural materials used to produce other missile system components. Depletion of the depleted. Okay, here we go.

It is well understood that critical missile system stockpiles were already badly depleted by the ongoing brutal war in Europe and last June's 12-day war in the Mideast. Now we have the war with Iran. The shell game. What's a shell game? That means moving the Patriot batteries from one country to another, one country to another, to try to be ready for the incomings. The shell game has been tried, but the law of diminishing returns is in play. There's only so many times the shells can be moved before there are no shells left to move. That's the problem. That's really the problem. Slide 29. There is much reporting about how badly stockpiles of critical missile systems, including the Patriot, PAC-3, and other systems reported have been depleted as a result of the war with Iran.

We're not going to report or cover the reporting here, as it could be irresponsible to do so. You can check it out yourself. You could go find it yourself. We just don't want to go into that. Running empty. Yeah. Running empty. Replenishing the depleted stockpiles. That's obviously very urgent. There clearly is a highly urgent need to replenish the depleted missile system stockpiles. Is that enough? Does it end there? Maybe not. Quadrupling the production of exquisite class of weapon systems. What? Quadrupling? You kidding me? I don't know. Maybe not. Let's go on to slide, what is it, 30? On March 29, 2026, I guess a couple of months ago, President Trump met with the White House with six top defense contractors, including Lockheed and L3Harris Missile Solutions.

The reason we mention those two is they're both very key for us on the Patriot missile system. At the meeting, the contractors reportedly agreed to quadruple production of exquisite class of weapon systems as rapidly as possible. Reportedly, that was reported by President Trump, I think, actually. This is a new world order for the defense industry, a radical and likely lasting change of the defense industry. The old days are likely gone for the defense industry. That is a good thing, in our opinion. Like I said, the industry generally had been sleepwalking for five years, defense and commercial. There's now this wake-up call. We have the NWO, we have the extreme depletion of the supply. This quadrupling scenario, which is more than a wake-up call, more than an alarm clock. It's shock treatment. What does the NWO mean for Park?

This is really important for you to understand. Our experience is that the defense industry has entered into hypersonic mode. That's our personal Park experience. Not just what we hear. That's our experience, our day-to-day experience. In all years, we have never seen anything like this, particularly for ablative materials, for solid rocket motors. Not even close. I've been at Park since 1988. I've never seen anything like this, electronics or aerospace. The quoting activity, especially for ablative materials for solid rocket missile systems, has been hyper and frenetic. Almost too much to bear, really. It's something we've never seen before, and it's hard to really describe and help you understand what we're experiencing. We're just trying to do the best we can here.

Just in case it's not obvious, the Patriot missile systems and many other missile systems which Park supports, are very key members of that "exquisite class of weapon systems." Let's keep going here. Missile systems on slide 31. We're now talking about specifically the PAC-3 Patriot missile system. Park is sole source qualified for advanced composite ablative materials for solid rocket motors for the PAC-3 missile system program. The PAC-3 missile system is considered by many to be the world's premier missile defense system. A lot of discussion about maybe it's not great for shooting down little drones, but for incoming ballistic missiles, yeah, that's the system everybody wants to have. Highly effective. Highly effective. We have covered the PAC-3 missile system extensively in recent quarterly investor presentations. We'll just hit the high points and new items here.

Stockpiles of the PAC-3 missile system interceptors were already badly depleted by the war in Europe and last June's 12-day Mideast war. We don't want to go into repeating reporting here, as it may not be appropriate and responsible to do so. Suffice to say, the current war with Iran has very badly depleted the already depleted stockpile of PAC-3 and interceptors. The PAC-3 missile system interceptors have been extensively and very effectively, maybe too effectively, meaning so effective that everybody in the world wants them, used by U.S. allies in the region, the Mideast region, during this war, including Saudi Arabia, U.A.E., Kuwait, Qatar, Bahrain, Israel, to defend against incomings during this Iran war. Slide 32. Just a little side note here.

Israel, you probably know, also uses its own system called Arrow 3 and Arrow 4 for missile defense, and Park is qualified and supports both those programs. Back to the PAC-3. As previously reported, on January 26th, Lockheed announced it reached a seven-year agreement with the Department of War to increase PAC-3 MSE interceptor production from 600 to 2,000. That's a lot. That's almost four, isn't it? 4x. What about us? What have we been told by our customer? We're not going to tell you. We're not at liberty to, but we can tell you it's more than 2,000. On January 13, 2026, I think we covered this last time as well. The DoW announced it was investing $1 billion in the L3Harris solid rocket motor business to boost solid rocket motor production for PAC-3 and other missile systems. That transaction's already closed, apparently. Slide 33.

Continuing with missile systems. ArianeGroup. We got to talk about ArianeGroup now. We talked about PAC-3, we've got to talk about ArianeGroup. ArianeGroup is a joint venture. It's a large French company between Airbus and Safran. Our relationship with ArianeGroup, and its predecessors, goes back to early 2000s. We have a very special relationship with Ariane, and we're proud to be their partner. We don't take liberties, that term partner, that's their term. We don't do that. That's a term they use for us. I just want you to be aware of that. ArianeGroup produces a proprietary product called RAYCARB C2B, which is a proprietary fabric, RAYCARB C2B, which is used to produce ablative composite materials for advanced solid rocket missile programs. Here's something highlighted.

Park is sole source qualified on a solid rocket motor for the PAC-3 missile program for specialty ablative materials produced with ArianeGroup's proprietary C2B fabric. We're kind of double sole source qualified. We're sole source, but also ArianeGroup with the C2B fabric is sole source. Park entered into a business partner agreement with Ariane in January of 2022, under which they appointed us as their exclusive North American distributor for C2B fabric. On March, this is something worth noting, March of 2025, we entered into what they call the new agreement with Ariane, under which Park agreed to advance Ariane EUR 4,587,000 to Ariane, that's about EUR 5 million, I guess, against payments for future purchases by Park C2B fabric. Okay, why did we do that? Slide 34. We paid the first installment in Q1 of 2026. We paid a second installment in Q1 of 2027.

The third installment, we paid, it'll turn last, I think, in Q1 of 2028. What's the purpose of this big advance, this EUR 5 million? To fund 50/50 with Ariane the construction of additional C2B fabric manufacturing capacity in France. That capacity will be online in maybe, I think, in 2028. Will this additional capacity be adequate to support the ramp-up of just the PAC-3 missile programs? Let alone do we talk about the other programs on which C2B is getting qualified or disqualified. The answer is no, not even close. What do we do now? Park's engaged in serious discussions with ArianeGroup relating to an agreement to significantly increase C2B fabric manufacturing capacity in the U.S. to support critical Department of War missile programs, including the PAC-3 missile programs.

The agreement under negotiation contemplates, this is important, Park making a significant investment in this C2B fabric manufacturing plant. Remember I mentioned our own expansion, and there is another investment here. We'll get to our own expansion in a minute. In our opinion, it's urgent that this C2B fabric manufacturing plant is built. The interest in C2B is hyper and frenetic. There are a lot of companies, a lot of customers, a lot of OEMs looking to sign up for C2B on their programs. The obvious challenge is the supply. It'll probably take about four years for this plant to be built. What do we got going here? We got the NWO, we have the war, where systems have been badly depleted, and quadruple aims.

That's driving a very hyper need for the C2B fabric, which is, like I said, considered, my understanding, the premier product for missile systems, for solid rocket motors for missile systems. Let's go on to slide 35. This will tie together a little bit as well. Our new manufacturing plant. Yeah, sorry, we're going so long here. An update. We talked about this for the last couple of quarters, but we're regrouping with our new manufacturing plant. Why is that? We're planning, okay, let's go through it. Park is planning to build a major new manufacturing plant. New plant will include the following manufacturing lines. This is going to review solution treating, hot melt film, hot melt tape. What else? Why else? We're always looking to expand and develop our business. We don't want to limit ourselves always to what we're doing now.

New plant is being designed to produce and support our complete composite materials product line, including specialty ablative materials for solid rocket motors, film adhesive materials, and lightning strike protection materials. What else? Well, again, we're looking always to develop into new areas. I mean, new related areas, not looking to go into making amusement park merry-go-rounds or something like that. What has changed from the original plant design discussed just in our Q3 investor call in January? Hot melt, let's break it down. Is hot melt film and tape manufacturing capacity contemplated by the original plant adequate? Yeah, it probably is, actually. Let's go on to slide 36. The hot melt film and tape lines primarily support Park's commercial aircraft programs. The commercial aircraft juggernaut. We think we're okay with the commercial aircraft juggernaut. How about the solution treating capacity, though, contemplated by the original plant design?

Is it adequate? No, it's not adequate. The current plant design contemplates the current. I'm not talking about the original plant design from three and four months ago. The current plant design, the one we're working with now, contemplates additional solution treating capacity, but that still may not be enough, and we're evaluating increasing solution treating capacity even further. Why is that? The solution treating line support, among other things, Park's missile system programs. Yep, the missile systems juggernaut. You see the connection here. The original plant design contemplated a plant design of 120,000 sq ft. Will that be enough? Probably not, because again, we're looking at increasing the solution treating capacity to support the missile systems juggernaut. 120,000 sq ft may not be enough. This is all coming at us pretty recently, so like I said, we're regrouping.

We didn't know that there'd be another war in Iran. We didn't know that President Trump would bring these guys in and say, "You know, we got a new world order here, a new sheriff in town. You increase your missile production by four times." We didn't know that was coming. We're trying to regroup and make the adjustments that are good for Park for the future. How much land are we looking for? This is important. We're looking for 20 acres. Why is that? Because the original plant, even with the, let's say, expanded footprint, let's say it's a little bit more than 120,000 sq ft, that would fit within 10 acres very nicely. We're looking for 20 acres because you want to have the ability to add another plant of approximately the same size at some point in the future.

It's important for us that the plants are in the same campus. We don't want a second plant across town. It doesn't work too well for us. We want to have that ability to expand. That's why our spec is approximately 20 acres. Doesn't have to be exactly, but that's the concept anyway. Slide 37. Will the new plant still approximately double Park's current composite materials manufacturing capacity? No, it'll more than double Park's current solution treating manufacturing capacity. Will the capital budget for new plants still be approximately $50 million? I don't think so. No, it's going to be more than that. I should say something. This is the capital budget. What about working capital? What is startup costs? It's significant, and we're not even talking about that.

Going back to that cash number of $90 million approximately, plus the amount we're seriously negotiating investing with the Ariane plant in the U.S. Yeah, those two things together, you say, yeah, we probably don't have enough money. It'll likely be more, "Where will the new plant site be located?" In the U.S. heartland, at a location which is supportive of, conducive to, and inspirational for Park's future development and growth as a company. We're not just looking at it from a mundane perspective. We just need this many machines to make this much product. It's about our future. Where do we want to go for our future? For the next, we build a plant, we'll be there for 30 years. We've got to think 30 years out. Slide 38. Sorry it's taking so long, folks. We're building this new manufacturing plant. Why? Why are we doing it?

Our commercial aircraft juggernaut and missile system juggernaut extremely require it. That's just basic math. We need the capacity to support those juggernauts. This is more futuristic thinking, enable, facilitate, inspire Park's holistic growth and development as a company for the future. After all, we're only 72 years young. Thank you everybody for hanging in there. Operator, we're done with the presentation. We'll be happy to answer any questions that an investor may have at this point.

Thank you. With that, we will indeed be conducting a question and answer session. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For any participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Nick Ripostella with NR Management. Please proceed with your question.

Hey, can you hear me?

Yeah, we can hear you fine, Nick. Yeah, how you doing?

Great. Good afternoon. It's nice to hear you all and that everything's moving along. Okay. I've been thinking about this one for a while. On the C2B fabric, is there any alternative that's used in any missile programs that you know of? That's my question.

Okay, let's deal with that. That's a complicated question. There are stockpiles of two different types of fabric which are available, they're not in production anymore, and there's no plan to put them back in production. Interesting, since you brought it up. This is my perspective on it, not only mine. Until a couple of months ago, I think some of the defense subcontractors were kind of counting on using those stockpiles and think, "Oh, we got a long stockpile. It lasts for many, many years." When you take everything and multiply it by four, they started to panic. Like, these stockpiles are not going to last very long at all. That probably is one of the reasons that there's kind of a hyper-interest in C2B.

There always are going to be efforts to develop new products that would be, let's say, equivalent to C2B or could serve the same purpose that C2B serves. What's existing in the market now at the level of C2B, there are other ablator products that are not at the level of C2B in terms of capability. There are two products that are kind of close, but they're stockpiles that are being depleted and limited. It's important, it's an interesting question, and the answer is maybe a little more complicated.

Okay. Do you consider that a risk? Necessity is the mother of invention.

Yeah. That new products will be developed. Yeah, sure, it's a risk, but of course, we would like to be involved.

Right. Okay.

That's our attitude. I don't want to say too much more about it actually, Nick. Yeah, we're not sitting back passively and saying, okay. We want to be the driver of new products as well. At the same time, supporting everything we're doing with Ariane, our partner. We would never undermine them or do anything to hurt them. We would not do that.

Okay. By the way, all the manufacturing, that Ariane, they have plants in France. Is that where tariffs would hit if there were any, on a product like that? Or are you shielded from that somewhat?

Would tariffs apply to the product that's being shipped to France?

Yeah. In other words, yeah.

Yeah. Well, I think the answer would be yes. I think it's pretty obvious the answer is yes. The tariff situation is changing, of course, and dynamic. Yeah, tariffs did apply to products that were being imported from France.

Well, I find it interesting that the Department of War wants to quadruple. The material is important, and it would seem like they're shooting themselves in the foot by tariffing something that is kind of-

Yeah.

Withholding the program.

Sorry to interrupt. That's an interesting point. It's been brought up by us.

Yeah.

To the Department of War.

Okay. Is it fair to say that the missile programs, throughout the world are mostly using C2B? Is that an incorrect statement?

Missile programs. Other programs?

Yeah.

As to other missile programs, there's many different kind of missiles and many different kind of ablative materials.

I see.

C2B is considered to be, my opinion, but not only my opinion, it's a premier material, ablative material.

Okay.

For solid rocket motors.

Okay. All right. Fair enough. Okay. I'm sorry, but you can stop me if I'm going too much, but I've asked this before, and you already have a lot on your plate, but is there any content or work developing on anything with SpaceX or Blue Origin or others?

Mark, you want to chime, that's fine. I think we do a little bit of work with Blue Origin. My opinion is we'd love to do work with SpaceX. They're not solid rocket motor people. Solid rocket motors are for defense. They're one shots. You can't reuse a solid rocket motor. When you think about SpaceX, they're big into reusing their rocket systems, they have a whole different kind of psychology about it. My opinion, we talk about this internally, I'd love to be able to work with SpaceX. I'm not sure we're doing very much. Mark, Blue Origin, I think we do a little bit with Blue Origin, aren't we?

Yeah, we're doing a little bit. I think most of that work's in our parts business, Brian, our structures business. We do supply some materials. Lately, we've been building some parts for them.

Good. Good.

Okay, fair enough. One other thing. Are we expecting to do additional aftermarket stock sales, maybe to need to raise more capital?

It's a $50 million ATM. I think we explained how much we raised so far, and it was only in our Q4, as we explained. We haven't raised any since the end of Q4. The balance is still available, and we'll see. I think we try to be very intelligent and very disciplined about the ATM. We said no a lot. In other words, on pricing. Said, "No, it's not going to work for us." We're trying to protect our existing shareholders. I think we did quite an outstanding job of that, if you don't mind my saying so, Nick. We were quite disciplined, and we would get offers, "No, that's not going to work for us." We want to be careful about how we do it, and I think we're quite disciplined, like I said.

I think it worked out fine, and I was very happy with the results. Yeah, we'd like to raise some more money, and we'll have to see what happens.

Okay. Well, you know how I feel.

We'll update you every quarter, though. Go ahead. Were you about to say, Nick? We know how you feel.

You know how I feel. You've done, yes, an excellent job of caring for shareholders. There's no question about that. Just one little other thing here. You've been in this business for a long time, as you said. With the new facilities you're building, are they much different? I know you highlighted some things in the call, but in terms of the technology, because I don't know. At some point in the last couple of years, you've talked about automation and things like that. I'm just curious, because there is a lot going on in terms of extensive robotics and things like that, but maybe you're just not the type of process that could avail yourself of those things. I'm just curious about your outlook on that and where.

Yeah. We want to use those things as tools intelligently. We don't want to go into automation because it's "cool." We could show people in a factory, look how automated it is.

Right.

Complicated. There's probably multiple edges to that sword. We talk to this internally. It's an important point. Often, automation is really good if you want to do the same exact thing every time, because machine, you're going to not make the mistakes people make. If your kind of culture is about flexibility, responsiveness, urgency, change things quickly, that's not really what automation is best at. That's what people are best at.

Right.

I say, we want to use automation, but we want to be intelligent about it. We want to think it through. Where would we like to use automation? Where can it be helpful to us?

I hear you. I guess I'm one of those nerds that I watch too many videos of aircraft engines being built and autos. I find them fascinating. Just thought I'd -

Yeah.

It's amazing. People don't realize how complex it is, particularly on aircraft engines. Anyway. All right. Thank you for your time. I just have to say, there's an old Bruce Springsteen song, "From small things mama, big things one day come." That is Park.

Well, thank you very much. I've to look that one up. All right. I'm not familiar with that one, but I'll go check it out. Thank you very much.

Thank you so much. Thank you.

You take care too.

All right. Good night.

Operator, do we have. Go ahead, yeah.

Yeah. I was just going to say, as a reminder, if there are any more questions, you can just press star one to get yourself in queue. Okay. That looks like there are no further questions at this time. I would like to turn the floor back to Brian Shore for closing remarks.

Thank you, operator. Thank all of you for listening and being patient with us. I know we went on really long. I appreciate you taking the time to listen. So it's, I guess, the beginning of summer. Have a wonderful summer, and we'll talk to you again pretty soon, I guess, mid-July, when we announce our Q1. If you have any questions, any follow-up questions, feel free to give us a call anytime. Thanks. Have a great day. Take care. Bye.

Thank you. With that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful rest of your day.