Park Aerospace Corp. Price & Performance (PKE)

Thank you, Alicia. This is Brian. Welcome all to Park's 3rd quarter investor conference call. With me Park Escobel, our President and COO. Right after the close, we published our 3rd quarter earnings press release You want to get a hold of that because in that news release there are instructions as to how to access the presentation that we're about to go through. Without access to presentation, this call less meaningful. And it's the presentations on our you can link it, link to it via webcast, that's how you see it. It's also on our website. And as the operator already said, after we're done, we're going through the presentation, Park and I would be happy to take questions. Just want to give you a warning, the presentation not sure, probably take 45 minutes or so to go through. So having said that, why don't we just go and get started? Let me go to Slide 2, our forward looking disclaimer info. Any questions about it, please let us know. Slide 3, this is our table of contents. First item is our Q3 investor presentation. And we also have supplementary financial information in appendix 1 at the back We don't go over that normally during our investor call, but if you have any questions about the supplementary financial info, please let us know.

In the photo here, we have the missing link Thank you, James Webb Space Telescope. So I'm not sure I understand very well, but I'll do the best I can. There's a little box on the left, there's a kind of an enlargement of that that little box kind of in the middle of the image here. And that's, I guess, apparently a really, really old galaxy. Only about 1,000,000,000 years after the universe began, which is I think about 13,800,000,000 years ago, And the problem for all our scientists is that this is way too hot and too bright or galaxy that old and nobody understands it. So once again, James Webb is challenging all the wisdom and knowledge that we supposedly had and saying sorry, you're wrong. I mean, we don't really care what James West speaking. I don't really care what your opinion is, what your beliefs Park, at least your facts, the facts of the deal. It's really quite exciting. As I think some of you know, our proprietary SigmaStruts are using important parts of the James Webb Space Telescope. Structure. This is supposedly the missing link. I know that means between primordial galaxies and modern galaxies.

I think you got to put modern in post. Modern is not like 10 years old or something like that, but we'll see. Interesting and it's really So exciting and thrilling for us to be part of it. I would say this is probably like one of the top 5 things that Park has done since we started. Not as old as some of the even modern galaxies, but 1954. Okay. When we get go down to earth or come back down to earth and go to Slide 4 and talk about our quarterly results. If you look at the right hand column here, [indiscernible] Sales of $14,408,000 dollars gross margin $26,600,000 And as you know, Wes, you know that we're that is kind of a miserable gross margin. We don't really like gross margin. Below 30%. So obviously, we're not very thrilled with that one. Adjusted EBITDA, $2,000,000 114,000 what do we say about our 2 during our Q2 investor call on October 15? Do we forecast, let's say? Sales estimate 13.5% to 14.8 quarter. So it looks like we came a little bit above the range for sales, but adjusted EBITDA $3,000,000 to $3,300,000 were way below that number.

So something isn't right something doesn't make any sense. Let's talk about that. Let's go on to Slide 5. On top of Slide 5, [indiscernible] [indiscernible] why is Q3 EBITDA considerably below the forecast range? When the Q3 sales exceed the top of the range. In other words, normally you would say, yes. Q3 sales were top of the range, EBITDA should be top of as well. So let's get into that. And unfortunately, it takes several slides to give you proper understanding. So let's get into it. Okay. 1st check item, [indiscernible] 14,400,000 as we just said, which exceeded our forecast range by about $150,000 But it's a big, big, big but our Q3 sales value of production, we call it SVP, was only $13,200,000 or $1,200,000 less than E3 sales. Normally, we're going to talk about SVP unless it's something significant. I just want you to understand, SVP is not inventory value. That's the value of product when it's sold. And it's good to think that way because when you were trying to compare production to sales, then you have apples to apples. So that's why we use SVP rather than just the inventory value of the inventory that's that's produced when we do production.

In part, SVP is a significant positive has a significant positive impact on bottom line as a result as production or SVP shortfall has significant negative impact on Q3 or Q3 EBITDA, and probably by about $300,000 actually in terms of EBITDA. Production absorbs a significant amount of cost into their produced inventory. So what happened? Why are their production SCP shortfall in Q3? So there's a several things to consider here. So, one, bringing up the new manufacturing lines and new factory. So we're going through the anticipated challenging process of optimizing new lines as we operate them and ramp them up in production environment, it's a lot different running something in production environment is good. That's where you really learn. That's where you optimize. But as compared to doing trials or even false [indiscernible] time, whatever you want to do it. Production is a very different world. Going to Slide 6, Ultimately, we expect the new lines, this is important to run 25% to 50% or maybe even more faster. Than existing lines. That depends on the product type. Also, it's depends on when you're talking film or tape. But think about it conceptually, it's a lot faster.

But we must go through the expected learning curves in order to achieve those results. But ultimately, that will deliver a lot of oomph to the bottom line to be able to run our products so much faster. The new lines are designed with better controls also, just another factor. Better controls than the existing lines capable of producing tighter tolerance, meaning better quality product. Actually do not need to run okay, this is the key thing, need to run new lines at all to support crew and production levels. We're ramping up to prepare for the coming juggernaut. We talked about the juggernaut a lot. That's kind of toward the end of the presentation. On Slide 26, when we get to that, we can you'll see very clearly why we don't need to be running the new lines to support the production levels. That's not the point. We're ramping up a little too early though will cost our P and L in the short time and short term. And it's hard to say, you're always doing the best you can to judge when to ramp, when to ramp, when to ramp, and try to make little minor adjustments But ramping up too late and not being prepared to support the major programs as they ramp up at Juggernaut Well, we all know how that would end and it's not a pretty picture not pretty single contemplate.

You get behind and you're kind of screwed. So you want to on the side of being early, rather than being late and you just continue to make the adjustments as you need to. But the bottom line is in including the impact on bottom line, the bottom line is we better be ready for the coming juggernaut. That's the most important thing. For us Slide 7, ramping up the new lines is now part of our is ramping up the new lines now is part of our plan to be ready for the time being the new lines run less efficiently. Until we get on the other side of learning curves with the new lines and no business ramps up. This is not ramped up. Like I said, we don't even need to use new lines. So obviously, a lot of extra cost doing that. Next item, oil Park is very fortunate. To have a special and dedicated workforce, great people, Many of our production people are relatively new to Park and are still at the front end and steep ends of learning curves. This is another factor. As the new people are being trained and going through learning process, our productivity that's measured as production units or dollars per work hour is typically reduced, okay?

So that's going to affect our let's see, the temporary reduction in productivity negatively impacts profit [indiscernible] Okay? Takes more time to produce a unit, so that's going to affect our bottom line. In addition to that, this reduced productivity also negatively impacted our Q3 production levels, which contributed to the shortfall we talked about, which had a big impact on our bottom line. How much are we talking about in terms of the the the productivity or less lessen reduced productivity okay. Our current keep going, bottom of Slide 7. People got 134 compared to 124 At the end of Q2, what's going on there? Let's go on to Slide 8. Obviously, the increase in people count at least temporarily places additional pressure on profitability. We don't need the extra people ramping up for the juggernaut. And actually, since employee turnover is way down, we've been able to and this is something we didn't see coming. We've been able to ramp up our workforce more quickly than anticipated. That's a 2 edged sword. But our people, Tady, Nancy, others are doing a really good job of hiring the right people That's a key thing. We've always been able to hire people always for the last couple of years.

But it's putting the right people. That Park a pretty unusual quirky company. And I would say 9 out of 10 human beings are not really suitable for Park. So we got to find that one that 10 being. And that's also fairly significant. Those 10 extra people probably cost our P and L $150,000 in just quarter. The just approximately, so that's another big part of the equation. And that was not something we expected to happen. Because you know we've been talking for quarter after quarter, we're trying to ramp up, trend ramp up and it feels like it was frustrating. You make a little progress and you lose the progress. Let's keep going complex and send this is a tough one. Been kind of holding us back. We haven't want to talk about it because it's really sensitive situation. But my feeling, our feeling is that you're investing your hard earned dollars or your clients' hard earned dollars and you have the right to know some of this stuff. So we have to use some judgment but we're electing this point to tell you something that's pretty important. Sensitive situation regarding Arian Group's rate CARB C2BNG fabric.

Remember that Park entered into a business partner arrangement with Herring Group and January of 'twenty 2, 3 years ago under which Herring Group appointed Park as exclusive North American distributor of its proprietary C2B fabric. This fabric is used by Park to produce ablated materials for missiles and rockets. 1 of Park's key customers that produces the rockets and missiles of the ablative materials. This is the ablative material key customer which we produced with the C2B C2B fabric is going through a recall of the fabric, not Park materials of the fabric. We will not discuss why that is, like I said, all things very sensitive. But this customer and other customers continue to buy in stock [indiscernible] Our C2B fabric, not material sales are expected to be approximately almost $7,000,000 $6,900,000 fiscal 'twenty 5, $2,500,000 dollars next year or more and actually $3,900,000 just in our Q4. So these OEMs, they're obviously committed because that's at their risk. I mean, this is their inventory. They keep buying and buying and buying. Stock buying this product. Meanwhile, one of the key OEMs is saying, well, [indiscernible] And here's the thing, let's go to the top of Slide 9.

However, until this REPU is complete, we, Park not able to produce the ablated materials using C2B fabric for this customer. Now what's going to have to happen first of all, a program is so critical and has to happen. But secondly, they're buying 1,000,000 and 1,000,000 of dollars of this fabric. So it's got to have it has to happen. But until they get done with the requeue we can't produce the materials for them. As a result, Park had no sale to this customer of Obaida Materials produced with C2P Fabric during Q3. Remember that we sell C2B fabric So just to be clear, we're saying we didn't have we didn't sell any materials that were produced with the fabric. We still sell the fabric. 2 very different things. Remember that Park sells the C2B fabric to our customers for a small markup [indiscernible] small margins. Our margins but the margins we're producing and selling the blade materials using C2 Fabric are significant Let me just tell you what we're talking about here. We expected and we didn't know this is going to happen. Beyond our control. We have no control over the requalification We're the good guy in between trying to help be helpful, but we can't control how quickly this recall is done.

But just to give you perspective, in Q3, we expected to sell $400,000 of materials made with C2B Fabric, $400,000 not that big a deal. [indiscernible] Over 300,000 would have dropped to the bottom line. So now you get a perspective on how this works. When we sell the fabric, the margins are very little because we get a little markup. We use our fabric to make materials. Now as the customer owns a fabric for the customer, the margins are let's use the term huge, I would say, okay? So that's to give you a perspective. Until the requal is complete, we'll have to live with this P and L double whammy Selling the fabric with a small Park, but not being able sell a very high margin of blade materials produce the fabric. Okay? So at this point, the recall is expected to be complete in March, but we put recall and expected in quotes because it's not something we have control over. Now there is motivation because there's pent up demand [indiscernible] rocket and motors and missile systems. They can't do that with fabricating material from us So let me just see if I have a note here.

I just want to know, it's okay. So if that does occur, that the recall is done in March, we expect sales to this customer, this customer will own of bladed materials materials using the fabric to be about $2,500,000 or more born in 20 The contribution from those sales, well, I just explained what that would be. There's a pent up demand. So as soon as the recall is complete, we'll be off to the races. And the limit will not be the market limit will be how much product, how many systems the customers have produce. Let's go on to Slide 10. We've been holding back talking about that very sensitive, but we felt you should really know what's going on here. Because like I said, you're investing your hard earned dollars or your call clients' hard earned dollars. You're told to know these things I think at least to some extent to the extent we can share them with you. Slide 10 [indiscernible] here's a question. Why didn't we expect these things to happen in Q3? Didn't we take these things into consideration in our Q3 EBITDA forecast we gave you? Well, we actually did expect to produce and ship that $400,000 of Lam materials.

That's not really on us. That's just because the recall didn't happen. So I think we reasonably expected that to happen. In Q3. Didn't happen and we got to P and L double WN, we sold $400,000 of C2 Fabric and Q3 and that doesn't help us very much at all bottom line wise. And then also as we stated, we ramped up our headcount more quickly than expected just because our history has been difficult to struggling to ramp up our headcount, our people doing much better job of hiring new firing, sorry, finding the right people, the right people for Park, which is like a little bit of a needle in haystack, I think, where most people are not cut out for Park, which is how it is. But as far as the production shortfall we talked about and the reduced productivity we talked about, that's on us. Should have expected those things when we gave you the forecast. And we just missed the mark. Of course, we did our best, we missed the mark. We do not hit our production or productivity targets. That's on us. We're accountable for it. As a result, our Park of people will not receive a bonus for Q3.

And just to understand, it's not like we're punishing anybody, but Park needed this attitude, roll this together. Roll this together. So if we're not making our numbers, we don't get bonuses. That's just how it is. Now before you feel too barely for our people, let's go to top of slide 11, however, there's a sense of optimism at Park about the coming year in the future. And Park family members will receive goodwill bonuses for the New Year. This is not for the quarter, this is goodwill bonuses but you will not pay for them. So let's go on to the next item. There were significant ongoing expenses in Q3 related operating our new factory, including expenses for depreciation and the footnote below, that's an annual amount of about 1,000 sorry, $1,260,000 goes into gross profit gross margin, non EBITDA of course. And the rest is EBITDA, facilities, maintenance, utilities, insurance, overhead expenses, people expenses. But those things were taken into account when we gave you our forecast for Q3, please, where you knew about them. So that's that story. Miss shipments in Q3 actually a little bit better, the production was shortfall was significant. But if you have been with us recently, the less quarters, I think it's been like $500,000 or $600,000 in the shipments.

I don't know if it's a trend, but we'll take a little bit better The use of suspects, international shipment issues, supply chain issues, customers on hold issues, that means, you know, customers aren't paying their bills, sorry. Not going to get shipped. Another miscellaneous issues. We kind of have a funny attitude about getting paid for what we do. Slide 12, this is just something we do every quarter for you for maybe as I hope it's probably fun because it's always the same group of 5 top customers. Just quickly, the COMAC 909 that is now what the Airjet [indiscernible] that relates to MRAS. Over here, the Gulfstream G280, that's AeroSpheres, which is a distributor for really not aircraft, it's really aerospace being called now, which makes the G280 business jet under contract from Culturing. Then bottom left, we talked about this a lot, the PAC-three Patriot missile. That's Aerojet. And then Kratos, of course, Kratos and Kratos, we're all about Pradov River. Very special customers in Valkyrie there. [indiscernible] rate on that's used on the 737 line, including I think the MAX as well. Okay, let's keep going. Let's get the room up here. Slide 13, our pie charts.

I know about you, I really always like the pie chart too. If you look at them, you could see 22, 23 and 24 and 25 Park pretty similar in terms of the [indiscernible] Of course, the aircraft was a mess then, of course. Remember airplanes were being flown with like 2 people on them were not most of them not included at all. Why don't we keep going Slide 14. So Park Loves niche military aerospace programs. So these are all missile programs. This is a LENS project. Why don't we just focus on missiles this this quarter. And the interesting thing is there are a lot of other programs that we didn't select. I mean, there are a lot of missile programs that were active on. But these are some really nice ones that [indiscernible] She selected. I won't go through each one of them except I'll point out the bottom left SpaceX really I love that company. I'm just talking personally. So I'm really thrilled to be on that program. In the bottom right, little history [indiscernible] In 1962, we produced what was called multi layer circuit boards. We developed multiple circuit boards. We're the 1st in the world, I believe, in 1962 for Lockheed Sunnyvale, they said they wanted to reduce weight in the circuit boards.

These are for ICBMs back in the old days. And what we did was develop what's called multi layer circuit boards. So we go way back with Lockheed Sunnyvale, a lot of history there. Let's go on to Slide 15. Okay, you're used to slides, so we won't spend a lot of time on the GE or Space Chain Engine Programs. We have a firm pricing LTA. Of $19.29 with Middle River, a sub of ST Engineered Aerospace And so the obvious question is, who are they? What is this about? Because all these programs are GE or Space Programs. Well, as most of you know by now, when we got on these programs, in Middle River to ST Engineering about 5 years ago, but we're already on those programs. We're done in factory.

We told MRAS NGE at the time that, okay, once we sign this LTA, which is we're sole source on these programs, build a redone factory for you and we did $20,000,000 factory. And the reason is we're sole source to these programs. So GE was wanted to have the security of a redundant factory because they all have all the rigs in our basket. So we did that. And the factory has been in production for a couple of years. We already talked about that. I won't go through all these programs, but these are really all wonderful programs. As you said, they're we just love being on these programs. So great to be in these programs. Any questions to any of you let us know. Let's go on to Slide 16. Let's skip to the second item, fan case containment wrap or the Gen X sorry, not Gen X, G9X engines for the 777X aircraft. GE9X is like on the 787. And also the 747. [indiscernible] 7X produced with our AFD and other composite materials And as I think you know from last time, we recently received a PO of $6,500,000 for this program. So these are programs really starting to try to get born and go into production, having their we have the LTA provided for a 6.5% weighted average price increase effective January 1 and So we're benefiting from that just last couple of weeks.

The MRAS LTA was amended I guess, I don't know about a year or so ago to include film adhesive products that we develop under our joint development project with GE and those products are all undergoing qualification now. LIFO program, we talked about that last couple of quarters, still working on it. We had another meeting another negotiation session. The ball is in court actually. Because right now we're waiting for some of our suppliers to give us pricing. So what I mean sorry, suppliers' core, I guess, before we're able to recommence our discussions, we need our pricing from our suppliers. So we can provide the proper pricing to MRS and SC for the life of program agreement. Slide 17, let's talk about updates on the jet engine programs. We always start with the Big Kahuna A320neo aircraft family with all these variants. Airbus has a huge backlog of 7 1,221 airplanes. That's just a lot of airplanes for any kind of commercial aircraft program, any program any program. AirBrise, as you know, is targeting delivery rate of 75 airplanes per month. By 2027. And then let's talk let's go to 2018. A little more information, let's see how they're doing, go through 2018 through 24, how many air utilized A320neo aircraft deliveries delivering per year, per month, [indiscernible] average of 50 per month, quite impressive and really impressive. 92 airplanes delivered in December.

And that doesn't mean they're at the rate of 92. Because these airplane companies have this kind of thing where they kind of make their years in the last couple of months. But anyway, that's a real big number. And clearly, based on this backlog data already producing, 75 per month, it's not wanting to not because supply chain constraints. Aren't we kind of tired of listening and hearing about supply chain constraints? I am anyway. 19 Slide 19. So will Airbus achieve that goal of 75 Air [indiscernible] I think they will. They achieve it in 'twenty 7? Well, after a very strong finish in 'twenty four, which we just explained, the January 9 2005 briefing just what a week or so ago, Airbus's commercial aircraft CEO emphatically reiterated Airbus's plan to achieve that 75 per month reduction goal in 'twenty 7. So here, a little bit of maybe comment relief. Are we waiting for Godot? You know, waiting for Godot it's a play by Samuel Beckett, some Irish existentialist guy. I saw the play, hated it. It's terrible. Sorry, Sam, but I think he's not alive anymore. So probably not going to get too mad at me for saying that.

But the concept is God, I think it's supposed to be God. I'm not so good stuff. I could take it from some talk to somebody smarter than me. I think the concept is go though was God. People are just sitting in their play waiting around for God, God never shows up. So I think that's the theme of it. Like I said, when I really get it, talk to somebody smarter than me. But I think that's the idea. Are we waiting for Godot, meaning waiting for these things to ramp up and sitting on our rear end doing nothing? We better not be We better be ready for the juggernaut, the 75 per month charter That's what we're doing. It's a funny thing in aerospace, you get on the one of the programs we're so thrilled about and in some of these defense programs, the missile programs, still thrilled about, sole source And it's kind of a 2edged sword. Once you get in the program so sour, you can't do anything. So wait for the OEMs to ramp up. We can't tell Airbus to make more planes Boeing make more planes, COMAC make more airplanes. Some of these defense contractors So that's a 2 way sword.

But things for us is, we talked earlier about we can't judge it exactly, so we just need to make [indiscernible] we're ready. If we're not ready, we're screwed. If we're ready a little earlier, Okay, it hurts our P and L temporarily, but not be ready. That's not something you where these discussions the aircraft family, we've got 2 of them. 1 is the CFM LEAP-1A, the other one is [indiscernible] And just a little I don't know this is maybe out of sequence, but recently December 6, 24. GE announced that the FA and IASA, that's European version of FAA, a certified CFM's new that's high pressure turbine durability kit for the LEAP-1A engine. That's a really big deal because durability has been the issue for both these engines, the Pratt engine and the CFM [indiscernible] [indiscernible] don't want to be unfair, but really big problems with durability, serious problems. And it's a a real problem for airlines. Airlines don't want airplanes that have to sit on the ground because durability issues. That doesn't work for airlines. So this is really a great day because I think Pratt's trying to get there, but but GE is making some really nice progress on durability kind of maybe distance between them and their competitor.

But we supply only into the [indiscernible] part of the A320 program. We don't supply anything in today's the A320 program using the Pratt engines. According to Aero Engine News, the CFM LEAP-1A market share of firm orders for the age between Neo family of aircraft was 63.9% as of November 30. But LEAP has had the biggest market share for a long, long, long time. We track it every month. It kind of goes between 60% and 65%. That's a nice market share. At that delivery rate, of at the delivery rate of 75 airplanes per month, that Park percent translates into 11 50 LEAP engines per year. What's that worth Park park? It's worth a lot of clams or whatever you call it to park. Slide 21 let's continue same theme here as of November 30, okay, there was a new stock 8,148 from LEAP-1A engine orders It's hard to if you're not familiar, you don't know, but that's just unheard of that so many engine orders. But one of those firm engine orders worth the Park. Well, a hell of a lot. If you look at Slide Slide 37, we'll do that later on. It gives you a feel for what our revenue is per unit.

And it's just a lot. And obviously, it's just a huge amount. And obviously, Airbus wants to sell more airplanes and CFM wants to sell more engine This is how many firm orders they have now. Not done yet. So let's go on to the next item. The A321XLR. This is still talking A320 family. It's a new variant. We just got we're just beginning right now. First delivery was in October, very nice. [indiscernible] of last year, our 1st commercial transatlantic flight [indiscernible] This is a really exciting program for Park and beyond. Remember the whole thing theory about this, airplane much better it's a single aisle. But it has really good range and much better payload, more people, more baggage So it could compete with the twin aisle the wide bodies. At least that's a theory anyway. So pretty exciting program, I would think. And Boeing has not at this point been to pay off the balance that they're going to do anything to compete against that XLR. So the XLR had that space to itself for as long as I guess they'll be there on their own. Slide 22, I'm doing time, not doing too well. The COMAC 919, so let's talk about COMAC.

We've been involved with the Page 320, this has a different kind of LEAP engine, a LEAP 1C engine. Chinese company plan to deliver 54 [indiscernible] 126 and 28. So they're playing a ramp up. They plan to achieve a rate of 150 airplanes. These are not engines, these are airplanes. By 28. They report to have over 1,000 [indiscernible] stop and emphasize. The 919 is now flying with 3 different Chinese airlines. It's really flying in China mostly at this point. And a lot of people thought, oh, it's going to be a China only aircraft. Don't tell Comac that. They reportedly have delivered 16. So they're starting, but they're getting there. And here's a big one. They're aiming, they say, to have the OSHA certification, that's European certification 2025. What happened to the well, it's a China only airplane. Don't tell COMAC that because they're not thinking that. So this could be a this I think very exciting program for Park. Again, I want to put it that way, reaming for Southeast Asia slice 26, no outside of just China. Let's go on to Slide 23. 777X with the 9X engines. So you know this, in August, the FAA temporarily grounded the 777X after they had some engine attachment defects were discovered.

September 6, 2024, one of the 777X Test Flight aircraft reportedly returned to the skies And I've seen several articles about that, but I haven't it's funny I I haven't seen much confirmation of it. So if you hear anything about it, please let me know because I'm still trying to we're still trying to figure out what's going on there. The Boeing's current certification and first delivery target for the 777X is 26 and as with 24 they have a little over 5 September 24 level of 500 orders. This is a really important program for parks. That's why we highlighted. And we haven't talked about this very much, but we'll just quickly say the global 7,500, 8,000 with the Passport 28 gs engines they just announced their 200 delivery of that airplane. Going on to Slide 24, again something you're familiar with. So what do we do here? This is GE Aerospace Jet Engine Program sales history and forecast estimates. Let's just go down to the bottom right. A lot of time with the history, which is running out of time here. So first of all, Q3, we should talk about that, 6,900,000 dollars of sales on GE programs.

And we have a forecast for Q4 of only 5 to 5.5 cc. I a little bit of weak quarter Q1 was $5,000,000 but remember that was because of the storm damage, Q2 and Q3 about $7,000,000 So looking for not a great quarter in Q4. And it's pretty much booked, so we pretty much know what's going to happen. We think for the year 24 fiscal $25,000,000 to $24,500,000 that compared to [indiscernible] $22,300,000 $23,000 So So moving to right direction, we're even giving you a forecast for fiscal 'twenty 6 That's approximately 30,000,000 dollars 28, 33,000,000 So it's a preliminary forecast But I want you to know that this is based on an input from our customer. And these are the low numbers. We get a low and middle and high. Those are the low numbers we're getting from our customer. We'll see what happens. We'll keep you posted. Let's go on to 25. Okay, we've got a slow down here a little bit. So Park financial performance history and forecast estimates. Now this we're talking about a lot of Park. So you already know fiscal 2523 is where we talked about that. Q4, our forecast $15,500,000 to 16,300,000 sales, $3,300,000 to $3,900,000 EBITDA.

If you just do the math, we had the 1st 3 quarters, fiscal 25 for the year, about $68,500,000 to 61,500,000 dollars 11,500,000 to 12,200,000 for the year. But we'll talk about the year in the next slide. So the EBITDA numbers for Q4 looking really good. What's going on there? Well, remember that 400,000 of C2B ablated materials materials that we're looking to sell in Q3. Now we have that scheduled for Q4. That's knock on wood about that one. But remember how much contribution it's significant. Production plan, now remember we under produced, we had a production shortfall in Q3. So we actually and we burned down inventory. That's how we got our sales. This is I should say finished goods inventory. Finished goods at the end of Q2 were $700,000 At the end of Q3, about 700,000. So we burned down about 700 1,000 finished goods inventory. So in Q4, we're looking to build back the net [indiscernible] really good for our P and L bottom line. And I think we'll do better this quarter in terms of hitting our production Park, because we're I think we're trying to get ahead on production, let me put it that way, and I think we're doing pretty well.

I think we'll be okay with production. So that will help our P and L run, Hearne. But just so you know, yes, inventory went up a lot in Q3 as compared to Q2. But that was because of in transit, a C2B inventory lot of it that ended up being part of our balance sheet at the end of Q3. But the finished goods inventory actually went down quite a bit. And I also want to tell you something just because, okay, as you hear it, We have planned for Q4 it says right here, 3 point in footnote 3. $3,900,000 sales of C2B Fabric. Which is a lot, but a little over $1,000,000 about $1,100,000 of that is at risk because it requires French government approval. And then that has a significant impact to our bottom line. That's actually higher margin than most of our C2B fabric sales. So that may not happen. And here is another example where we're just a good guy trying to help out. But it's a French government and some big OEM, they're trying to make this happen. They say it's going to happen. And the French government approval in Q4 It doesn't, it doesn't.

We won't get to sale and that sale will slip into Q1. I just want you to be aware of that. Okay. So let's go on to Slide 26. Sorry, we're taking so long here, but seems like there's always a lot to cover. Slide 26 is also one we had to slow down a little bit. Because let's look at the annual numbers and think there's interesting perspective here. Let's look at the important theme. So supply chain limitations of affecting the aerospace industry. Look at the top line, you can see that. We had $60,000,000 in fiscal 2020 before the pandemic. And we're 46% and you can see next 'twenty one, 'twenty two, 'twenty three and 'twenty four, they're really struggling to get reborn after the pandemic. So that the aerospace industry is ramping up costs for the juggernaut. So that's really more of a bottom line factor in at fiscal 'twenty 5. That we already talked about. [indiscernible] also fiscal 2025 includes $6,900,000 of C fabric sales, which of course are [indiscernible] that's going to explain to some extent why the margin numbers aren't what the EBITDA numbers Park to expect I mean, if you look at compared to fiscal 2020, the top line going to be about the same and 25% to 20%, maybe even higher.

But the bottom line is lower. If you consider $6,900,000 of C2B Fabric sales that we had almost none of those in 'twenty, that itself were explained the shortfall. And let's see, one other thing I want to bring to your attention, [indiscernible] when we I think in Q1, we gave you a forecast for the year. I think it was $60,000,000 $65,000,000 top line which we plan to make more or less. We also said $13,000,000 to $15,000,000 Bottom line, EBITDA, we're not going to make that. Now at that point, we announced Q1 and gave you the forecast for the year. We expect that lots of sales of C2B materials And that's been a real disappointment. And that's kind of why why we wanted to tell you about what's going on with the recoil. It's all about their recoil. And they're stockpiling, like I said, lot the OEMs stockpiling lots and lots of the C2B fabric. But until the recoil is done, we're not able to produce it. And that really held back our bottom line [indiscernible] in the current fiscal year, and we didn't see this coming when we gave you that forecast at in, I guess, we announced Q1 in July.

Explains to say, well, we should have known that our [indiscernible] but we didn't know that we're going to miss the mark so much with the C2B materials and We want to take the responsibility for everything we can take responsibility for, but that's not on us. I mean, it's not on us. That didn't happen We're the good guy trying to help out [indiscernible] those are 2 big behemoths that have to figure out how they do get this free fall done. And they'll get it done. They have to get it done with a lot of motivation. But until it happens, we're not able to produce those materials. And I already gave you a feel for what the margins are in those materials. That alone would explain the short fall in terms of what we forecasted at $13,000,000 to $15,000,000 when we gave you the the forecast for the fiscal year when we announced Q1 back in July. [indiscernible] Most of the stuff just updates that we talked about last time And to some extent, we include this because the updates because if we don't, people say, what happened? Does that mean that that's no longer an active thing?

We want to try to avoid that. [indiscernible] [indiscernible] It's still a front burner gold project. Next one that [indiscernible] Park roof them on purchase of industrial manufacturing line. That's a $5,000,000 investment $5,000,000 each. Well, we're going to tell you now that OEM is earring group. So we thought you should know that and also tell you that we're expecting $75,000,000 in contract of sales through [indiscernible] the contract that we're negotiating with these people So those are the updates. Let's go on to Slide 28. So we talked about this last time. Essential large high profile large and emphasized missile defense program and update. We're sole source qualified in the Sypro profile program. And we talked about being sole source qualified and what that means. Additional revenues expected this year and ramp up from there. Program Have you heard of the next generation Iron Dome? Let's go on to next item, Park recently entered into license agreement within OEM to license technology for hypersonic missiles Not much of an update. We're just in the Phase 2 and so far the of the manufacturing trial. So far the results are good. Let's keep going with the updates in Slide 29.

Steve, that Agreement with GE Aerospace. This is not the MRAS agreement we're talking about. This is GE Aerospace. We talked about it last time. Now the only update is the agreement is complete, executed that when we talked last time, we still in the works. We can skip over the next item, not really much of an update. And the last item, the supplier scorecard for Membras, 100 100, 100, What does that mean? It's Park, I think, for most people to appreciate what that really means, how [indiscernible] it's just not heard of from at least from what people tell me So let's not dwell on that too much. We're running out of time here. Let's go on to Slide 30. New emphasis, this is an important thing, we have to slow down on this one too. Park new emphasis on military defense Park, Why this new emphasis? Well, how many new commercial aircraft programs Park in the work? Got the 777Xports in that program, COMAC 929, we can't talk about it, but for reasons that we're pretty sure we'll never get in that program. We also don't know of anything else, maybe Boeing will come up with another airplane, but that's still uncertain.

But there are significant opportunities materializing and which have materialized. For us in the material and defense military defense markets, particularly related to new major missile programs, What's our focus, ablative materials and also materials for hypersonics, currently engaged in several high profile and essential missile programs. Ablative and hypersonics. Some of these programs are quite large. Let's go on to Slide 31. Unfortunately, these programs are highly sensitive and confidential programs. In which we're not able to provide specific information at this time. I mean, I feel very sorry about that, but these are like I quite sensitive programs. We'll provide more information when we're able to. For now, let's just say there are several high profile programs on which Park is engaged including 3 missile and hypersonic programs in which parts mature undergoing serious as an underlying serious evaluation. Each of these programs has the potential to generate $10,000,000 or more annual revenues [indiscernible] So this is not just casual stuff I wouldn't take. Remember also Park is a true blue American company and I'm saying that because we're talking about Let's go on to Slide [indiscernible] Recent questions from investors. Investor well, what about that 10 case container wrap for the 9X engines?

We used to talk about the redesigned risk where the fan test could be designed out Why are we not talking about that anymore? Could be wrong, but we believe that ship to sales and the program will proceed with the current tank is design. Utilizing the container wrap. We also had a question by the way about our strategy And I don't know what to do about that because we want to go over it with you. But the problem is we're a running really late and it probably takes at least 5 minutes to even a very snapshot presentation of our strategy. So I'm not sure how to handle that. We'll try to figure it out later. Slide 33, our buyback really not too much of an update here. We haven't bought any stock since the we did the Q investor call So, and why is that? Because after the Q3 Q2 investor call, this is the Q3 investor Q2 investor call, which was in October, the stock seemed to recover, seem to get better levels. And we wanted to back off a little bit and let somebody else buy stock, not just us. That's kind of only half joking about that.

But one thing you should know is that during Q3, We did actually buy 180,000 approximately shares during Q3. At a total cost of $2,363,000 And that [indiscernible] the change in cash from Q2 to Q3. There are obviously a lot of factors up and down, but that will explain that the change in cash on its own. So no like I said, no additional shares purchased under the authorization since October 10, which I think is more or less when we announced Q2. And we'll see what happens. Are we going to buy more? We don't want to because we use our cash, but if the stock goes down to stupid levels and it's been testing those stupid levels in the last few days. We'll feel like we may feel we don't have a choice Slide 34, incredible cash dividend history. We can skip over this just to save time. Let's do the last one. When their regular cash dividend declared on December 9, last hour item, is paid on February 4, 2025 and we'll pay it, then we'll have paid $01,100,000 in cash dividends since fiscal 2005. So it will be over 600,000,000 dollars at that point. And like I always say, that's a hell of a lot of money versus [indiscernible] [indiscernible] 35, our balance sheet and cash.

So we got no longer term debt, $70,000,000 in cash at the end of Q3. And remember, we got to pay $5,100,000 1 more payment of the transition taxes to all the payments in June. So we do a little math here, how do we think about our cash. We started with the when we look at these three numbers, $5,100,000 and that's for sure. [indiscernible] probably very likely. And there are other things that we're probably spending money on other projects and opportunities, but these are highly likely. So we take that $17,600,000 we take our numbers $7,000,000 and we say, yes, we probably are looking at $52,500,000 that we really have That's why I was saying we really don't want to buy more stock. Because we want to keep that money for opportunities But if the stock goes down to stoop levels, we'll feel we may feel, I should say, may feel compelled to go in and buy some more stock. 36, we can go through this really quickly. This is These are the same slides that we've shared with you for the last few quarters. Why are we doing it? Because if we don't, somebody's just say, what happened to your Are you no longer on board with this juggernaut to financial outcome?

And we are. So 36, you're familiar with Slide 36. 37, the only change on Slide 37 is this, as I said, the ARJ21, the COMAC results yet [indiscernible] I just want to highlight on Slide 3839, there's some questions about the $15,000,000 number estimated non G programs incremental sales. We think that number is conservative, especially considering the opportunities that we're seeing on these missile and defense programs right now. So and the only thing that we're highlighting on slide sorry, the footnotes on slide 39 is just that. That $15,000,000 number is conservative. So again, I apologize for taking so long to go through the presentation. But operator, we'd be happy to take questions at this time. If there are any.

Thank you. We'll now conduct a question and answer session. Thank you. Our first question comes from the line of Nick [indiscernible] Please proceed with your question.

Good afternoon, Brian.

And I just want to say thanks again for the transparency. On the issues in the quarter. It's appreciated. And as always, I'm very happy with the way you treat share repurchase and the language about buying it when it gets stupid is Right on the mark. I think the shareholder base is sufficiently patient now and understand what the upside is. So we may not get to those prices any times. But just a quick question, because I may have asked you this before, There were slides in past conference calls where there was part content on SpaceX product And obviously, there's Blue Origin. Is that something that Park can still have content in? I'm just interested in that. And the second question is, I may have asked this before as well. Do you think in any way COMAC product and what you supply could be affected by hostilities between China etcetera? I mean or are they pretty much they need your stock And so that's it. Thank you so much.

Thank you, Nick. Happy New Year by the way. Yes, in the slide it talks about the we love niche military programs. I think we do refer it to SpaceX program. To me, I really love that company. Other one was at Blue Origin. Was that the other one you were asking about? I [indiscernible] Mark, Park you want to chime in on Blue Origin? I think we have some involved, but maybe not that much.

Yes. We've done some work with them, Brian. We do a little bit of structure for them. In our parts operation. It's really niche. It's a lot of volume. We've built some minor structure for them. And we did a project many years ago We're looking at struct technology with composites, but they went ahead and went with a metal strut instead. Metal Yes. We did do design and build a couple of struts, but we were not down selected on program. So we have connection and we continue to talk with them. And still looking for other opportunities.

Okay. Thanks. To me, I love SpaceX. I just love that company. They're right different than typical aerospace company out of Kratos in that category as well in a positive way. A difference in this positive way. So the more we can do with those those people in particular, the happier I think at least I will be. Kumak, it is an obvious question and good one. We'll have to see what happens. I would be quite shocked [indiscernible] the 919 is a real prestige program for the Chinese and I'm not an expert in the culture, but that's really important to them. Prestige, make sure that they're respected and lose face. And for them to change gears, would be so risky and could put the program back years. So love to see what happens. I don't know. But I'd be skeptical about anything and have happens soon. The Chinese, as you know, they talk about developing their own engine. And I'm not so sure that's really an issue with trade tensions. That might be more of an issue with CFM. In my opinion, CFM better make sure they get enough engines to the Chinese because if it all, we're just going to give the Chinese more motivation to develop an engine more quickly.

So I I'm just that's just my opinion. I could be wrong. But that's my perspective. We're always nervous and concerned, but I wouldn't say that would be at least for me, our my top ten concerns that we lose the COMAC business because trade tensions between the U. S. And China. Love to see how that works. A lot of it could go different ways than people are thinking also We'll have to see how that works. But I don't know what else to say about it except I guess maybe for perspective, not one of my top ten concerns right now anyway. Any other questions Nick or is that help you out a little bit?

No, okay. Thank you so much.

Okay. Thank you, Nick.

All right, I'm seeing no other questions. I'd like to turn the floor back over to Brian for any closing remarks.

Thank you very much, operator, and thank you all for listening and having the patience hanging here for all hour. And I'd like to take this opportunity from everybody at Park, all the Park people, to wish you the very best in 2025, a very happy New Year. To you and your families. Thank you This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible]