Park Aerospace Corp. Reports Third Quarter Results
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Insights
The reported financial results of Park Aerospace Corp. indicate a decline in net sales and net earnings for both the third quarter and the nine-month period of fiscal year 2024 compared to the same periods in the previous fiscal year. This downward trajectory suggests potential challenges in the company's operations or market conditions. The decline in net earnings is particularly noteworthy, as it reflects a decrease in profitability, which could be a point of concern for shareholders and potential investors. The company's earnings per share (EPS) also experienced a decline, which directly impacts shareholder value.
Moreover, the company's Adjusted EBITDA, a key metric used to assess a company's operating performance, has also decreased. This decrease could be indicative of operational inefficiencies or increased costs that are not being offset by revenue. It is important for stakeholders to consider whether these trends are due to temporary market conditions or if they reflect more systemic issues within the company's business model or industry.
Additionally, the company recorded several special items, including activist shareholder defense costs and losses on sales of investments, which may have contributed to the overall decrease in net earnings. These costs are non-recurring but can provide insight into the company's current challenges and the potential impact of external factors on its financial health.
Park Aerospace Corp.'s performance must be contextualized within the broader aerospace industry, which has faced various challenges such as supply chain disruptions, fluctuating demand due to global economic conditions and technological advancements that require continuous R&D investment. The company's decline in sales could be reflective of such industry-wide issues or could be due to competitive pressures.
It is also essential to consider the company's strategic positioning and product offerings, such as advanced composite materials and specialty ablative materials, which cater to a niche market within the aerospace sector. The business's ability to innovate and maintain a competitive edge through products like Aeroadhere® and Electroglide® is crucial for long-term growth. Given the specialized nature of Park's offerings, the company's financial health is closely tied to the health of the aerospace sector and the demand for advanced materials.
Understanding the company's sales pipeline, order backlog and market demand for its specific products would provide a more comprehensive picture of its future revenue potential. Furthermore, the impact of any strategic initiatives taken by the company to address the current downturn would be of interest to stakeholders looking to gauge the potential for recovery and growth.
The disclosed pre-tax activist shareholder defense costs suggest that Park Aerospace Corp. may be facing corporate governance challenges. Such situations can lead to legal and financial uncertainty and they often require companies to expend significant resources to address shareholder concerns or to defend against potential takeover attempts. It is crucial for investors to monitor the outcome of these issues, as they can have lasting effects on company leadership, strategic direction and overall corporate stability.
The reporting of special items, including the pre-tax charge for the modification of previously granted stock options, reflects the company's efforts to manage its capital structure and align the interests of its executives with those of its shareholders. These financial maneuvers, while impactful on the short-term financial statements, may have long-term benefits by potentially stabilizing the company's stock price and providing incentives for executive performance.
The reported additional tax expense due to tax deductions becoming unavailable related to stock options expiring unexercised also highlights the complexities of equity-based compensation and its implications on corporate tax strategy. Investors would benefit from understanding the nuances of these tax positions and their potential impact on future financial results.
NEWTON, Kan., Jan. 09, 2024 (GLOBE NEWSWIRE) -- Park Aerospace Corp. (NYSE-PKE) reported results for the 2024 fiscal year third quarter ended November 26, 2023. The Company will conduct a conference call to discuss its financial results and other matters at 5:00 p.m. EST today. A live audio webcast of the event, along with presentation materials, will be available at https://edge.media-server.com/mmc/p/on4ziexw at 5:00 p.m. EST today. The presentation materials will also be available at approximately 4:15 p.m. EST today at https://parkaerospace.com/shareholders/investor-conference-calls/ and on the Company’s website at www.parkaerospace.com under “Investor Conference Calls” on the “Shareholders” page.
Park reported net sales of
Net earnings before special items for the 2024 fiscal year third quarter were
Adjusted EBITDA for the 2024 fiscal year third quarter was
During the 2024 fiscal year’s first nine months, the Company recorded
Park reported basic and diluted earnings per share of
Park reported basic and diluted earnings per share of
The Company will conduct a conference call to discuss its financial results at 5:00 p.m. EST today. Forward-looking and other material information may be discussed in this conference call. The conference call dial-in number is (877) 407-3982 in the United States and Canada, and (201) 493-6780 in other countries. The required passcode for attendance by phone is 13743214.
For those unable to listen to the call live, a conference call replay will be available from approximately 8:00 p.m. EST today through 11:59 p.m. EST on Tuesday, January 16, 2024. The conference call replay will be available at https://edge.media-server.com/mmc/p/on4ziexw and on the Company’s website at www.parkaerospace.com under “Investor Conference Calls” on the “Shareholders” page. It can also be accessed by dialing (844) 512-2921 in the United States and Canada, and (412) 317-6671 in other countries. The required passcode for accessing the replay by phone is 13743214.
Any additional material financial or statistical data disclosed in the conference call, including the investor presentation, will also be available at the time of the conference call on the Company's web site at https://parkaerospace.com/shareholders/investor-conference-calls/.
Park believes that an evaluation of its ongoing operations would be difficult if the disclosure of its operating results were limited to accounting principles generally accepted in the United States of America (“GAAP”) financial measures, which include special items, such as activist shareholder defense costs, losses on sales of investments and charges for modification of previously granted stock options. Accordingly, in addition to disclosing its operating results determined in accordance with GAAP, Park discloses non-GAAP measures, including Adjusted EBITDA, and operating results that exclude special items in order to assist its shareholders and other readers in assessing the Company’s operating performance, since the Company’s on-going, normal business operations do not include such special items. The detailed operating information presented below includes a reconciliation of the non-GAAP operating results before special items to earnings determined in accordance with GAAP and a reconciliation of GAAP pre-tax earnings to Adjusted EBITDA. Such non-GAAP financial measures are provided to supplement the results provided in accordance with GAAP.
Park Aerospace Corp. develops and manufactures solution and hot-melt advanced composite materials used to produce composite structures for the global aerospace markets. Park’s advanced composite materials include film adhesives (Aeroadhere®) and lightning strike protection materials (Electroglide®). Park offers an array of composite materials specifically designed for hand lay-up or automated fiber placement (AFP) manufacturing applications. Park’s advanced composite materials are used to produce primary and secondary structures for jet engines, large and regional transport aircraft, military aircraft, Unmanned Aerial Vehicles (UAVs commonly referred to as “drones”), business jets, general aviation aircraft and rotary wing aircraft. Park also offers specialty ablative materials for rocket motors and nozzles and specially designed materials for radome applications. As a complement to Park’s advanced composite materials offering, Park designs and fabricates composite parts, structures and assemblies and low volume tooling for the aerospace industry. Target markets for Park’s composite parts and structures (which include Park’s proprietary composite SigmaStrut™ and AlphaStrut™ product lines) are, among others, prototype and development aircraft, special mission aircraft, spares for legacy military and civilian aircraft and exotic spacecraft. Park’s objective is to do what others are either unwilling or unable to do. When nobody else wants to do it because it is too difficult, too small or too annoying, sign us up.
Additional corporate information is available on the Company’s web site at www.parkaerospace.com
Performance table, including non-GAAP information (in thousands, except per share amounts –unaudited):
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||
| November 26, 2023 | November 27, 2022 | August 27, 2023 | November 26, 2023 | November 27, 2022 | ||||||||||||||||
| Sales | $ | 11,639 | $ | 13,867 | $ | 12,481 | $ | 39,671 | $ | 40,525 | ||||||||||
| Net Earnings before Special Items1 | $ | 1,203 | $ | 2,383 | $ | 1,746 | $ | 5,356 | $ | 6,178 | ||||||||||
| Special Items, Net of Tax: | ||||||||||||||||||||
| Activist Shareholder Defense Costs | - | - | - | (424 | ) | - | ||||||||||||||
| Stock Option Modification | - | - | - | (81 | ) | - | ||||||||||||||
| Loss on Sale of Marketable Securities | - | - | - | (48 | ) | - | ||||||||||||||
| Tax Impact of Cancelled Stock Options | - | (153 | ) | - | - | (153 | ) | |||||||||||||
| Net Earnings | $ | 1,203 | $ | 2,230 | $ | 1,746 | $ | 4,803 | $ | 6,025 | ||||||||||
| Basic Earnings per Share: | ||||||||||||||||||||
| Basic Earnings before Special Items1 | $ | 0.06 | $ | 0.12 | $ | 0.09 | $ | 0.26 | $ | 0.30 | ||||||||||
| Special Items: | ||||||||||||||||||||
| Activist Shareholder Defense Costs | - | - | - | (0.02 | ) | - | ||||||||||||||
| Stock Option Modification | - | - | - | - | - | |||||||||||||||
| Loss on Sale of Marketable Securities | - | - | - | - | - | |||||||||||||||
| Tax Impact of Cancelled Stock Options | - | (0.01 | ) | - | - | (0.01 | ) | |||||||||||||
| Basic Earnings per Share | $ | 0.06 | $ | 0.11 | $ | 0.09 | $ | 0.24 | $ | 0.29 | ||||||||||
| Diluted Earnings before Special Items1 | $ | 0.06 | $ | 0.12 | $ | 0.09 | $ | 0.26 | $ | 0.30 | ||||||||||
| Special Items: | ||||||||||||||||||||
| Activist Shareholder Defense Costs | - | - | - | (0.02 | ) | - | ||||||||||||||
| Stock Option Modification | - | - | - | - | - | |||||||||||||||
| Loss on Sale of Marketable Securities | - | - | - | - | - | |||||||||||||||
| Tax Impact of Cancelled Stock Options | - | (0.01 | ) | - | - | (0.01 | ) | |||||||||||||
| Diluted Earnings per Share | $ | 0.06 | $ | 0.11 | $ | 0.09 | $ | 0.24 | $ | 0.29 | ||||||||||
| Weighted Average Shares Outstanding: | ||||||||||||||||||||
| Basic | 20,250 | 20,471 | 20,256 | 20,323 | 20,463 | |||||||||||||||
| Diluted | 20,355 | 20,510 | 20,338 | 20,406 | 20,506 | |||||||||||||||
| 1Refer to "Reconciliation of non-GAAP financial measures" below for information regarding Special Items. | ||||||||||||||||||||
Comparative balance sheets (in thousands):
| November 26, 2023 | February 26, 2023 | ||||
| Assets | (unaudited) | ||||
| Current Assets | |||||
| Cash and Marketable Securities | $ | 73,989 | $ | 105,440 | |
| Accounts Receivable, Net | 9,897 | 9,989 | |||
| Inventories | 7,421 | 6,768 | |||
| Prepaid Expenses and Other Current Assets | 2,463 | 2,844 | |||
| Total Current Assets | 93,770 | 125,041 | |||
| Fixed Assets, Net | 23,747 | 24,251 | |||
| Operating Right-of-use Assets | 109 | 150 | |||
| Other Assets | 9,881 | 9,891 | |||
| Total Assets | $ | 127,507 | $ | 159,333 | |
| Liabilities and Shareholders' Equity | |||||
| Current Liabilities | |||||
| Accounts Payable | $ | 1,110 | $ | 4,545 | |
| Accrued Liabilities | 1,587 | 1,346 | |||
| Dividend Payable | - | 20,471 | |||
| Operating Lease Liability | 53 | 53 | |||
| Income Taxes Payable | 3,679 | 2,171 | |||
| Total Current Liabilities | 6,429 | 28,586 | |||
| Long-term Operating Lease Liability | 94 | 129 | |||
| Non-current Income Taxes Payable | 5,259 | 10,938 | |||
| Deferred Income Taxes | 1,897 | 1,995 | |||
| Other Liabilities | 1,843 | 1,751 | |||
| Total Liabilities | 15,522 | 43,399 | |||
| Shareholders’ Equity | 111,985 | 115,934 | |||
| Total Liabilities and Shareholders' Equity | $ | 127,507 | $ | 159,333 | |
| Additional information | |||||
| Equity per Share | $ | 5.53 | $ | 5.66 | |
Comparative statements of operations (in thousands – unaudited):
| 13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||||||||
| November 26, 2023 | November 27, 2022 | August 27, 2023 | November 26, 2023 | November 27, 2022 | |||||||||||||||||||
| Net Sales | $ | 11,639 | $ | 13,867 | $ | 12,481 | $ | 39,671 | $ | 40,525 | |||||||||||||
| Cost of Sales | 8,470 | 9,423 | 8,402 | 27,590 | 27,903 | ||||||||||||||||||
| Gross Profit | 3,169 | 4,444 | 4,079 | 12,081 | 12,622 | ||||||||||||||||||
| % of net sales | 27.2 | % | 32.0 | % | 32.7 | % | 30.5 | % | 31.1 | % | |||||||||||||
| Selling, General & Administrative Expenses | 1,804 | 1,523 | 1,853 | 6,272 | 4,888 | ||||||||||||||||||
| % of net sales | 15.5 | % | 11.0 | % | 14.8 | % | 15.8 | % | 12.1 | % | |||||||||||||
| Earnings from Operations | 1,365 | 2,921 | 2,226 | 5,809 | 7,734 | ||||||||||||||||||
| Interest and Other Income: | |||||||||||||||||||||||
| Interest Income | 261 | 299 | 139 | 724 | 653 | ||||||||||||||||||
| Earnings from Operations before Income Taxes | 1,626 | 3,220 | 2,365 | 6,533 | 8,387 | ||||||||||||||||||
| Income Tax Provision | 423 | 990 | 619 | 1,730 | 2,362 | ||||||||||||||||||
| Net Earnings | $ | 1,203 | $ | 2,230 | $ | 1,746 | $ | 4,803 | $ | 6,025 | |||||||||||||
| % of net sales | 10.3 | % | 16.1 | % | 14.0 | % | 12.1 | % | 14.9 | % | |||||||||||||
Reconciliation of non-GAAP financial measures (in thousands – unaudited):
| 13 Weeks Ended November 26, 2023 | 13 Weeks Ended November 27, 2022 | 13 Weeks Ended August 27, 2023 | ||||||||||||||||||||||||||||||||||
| GAAP | Special Items | Before Special Items | GAAP | Special Items | Before Special Items | GAAP | Special Items | Before Special Items | ||||||||||||||||||||||||||||
| Selling, General & Administrative Expenses | $ | 1,804 | $ | - | $ | 1,804 | $ | 1,523 | $ | - | $ | 1,523 | $ | 1,853 | $ | - | $ | 1,853 | ||||||||||||||||||
| % of net sales | 15.5 | % | 15.5 | % | 11.0 | % | 11.0 | % | 14.8 | % | 14.8 | % | ||||||||||||||||||||||||
| Earnings from Operations | 1,365 | - | 1,365 | 2,921 | - | 2,921 | 2,226 | - | 2,226 | |||||||||||||||||||||||||||
| % of net sales | 11.7 | % | 11.7 | % | 21.1 | % | 21.1 | % | 17.8 | % | 17.8 | % | ||||||||||||||||||||||||
| Interest Income | 261 | - | 261 | 299 | - | 299 | 139 | - | 139 | |||||||||||||||||||||||||||
| % of net sales | 2.2 | % | 2.2 | % | 2.2 | % | 2.2 | % | 1.1 | % | 1.1 | % | ||||||||||||||||||||||||
| Earnings before Income Taxes | 1,626 | - | 1,626 | 3,220 | - | 3,220 | 2,365 | - | 2,365 | |||||||||||||||||||||||||||
| % of net sales | 14.0 | % | 14.0 | % | 23.2 | % | 23.2 | % | 18.9 | % | 18.9 | % | ||||||||||||||||||||||||
| Income Tax Provision | 423 | - | 423 | 990 | (153 | ) | 837 | 619 | - | 619 | ||||||||||||||||||||||||||
| Effective Tax Rate | 26.0 | % | 26.0 | % | 30.7 | % | 26.0 | % | 26.2 | % | 26.2 | % | ||||||||||||||||||||||||
| Net Earnings | 1,203 | - | 1,203 | 2,230 | 153 | 2,383 | 1,746 | - | 1,746 | |||||||||||||||||||||||||||
| % of net sales | 10.3 | % | 10.3 | % | 16.1 | % | 17.2 | % | 14.0 | % | 14.0 | % | ||||||||||||||||||||||||
| Net Earnings Before Special Items | 1,203 | 2,383 | 1,746 | |||||||||||||||||||||||||||||||||
| Addback non-cash expenses: | ||||||||||||||||||||||||||||||||||||
| Income Tax Provision | 423 | 837 | 619 | |||||||||||||||||||||||||||||||||
| Interest Income | (261 | ) | (299 | ) | (139 | ) | ||||||||||||||||||||||||||||||
| Depreciation | 340 | 305 | 339 | |||||||||||||||||||||||||||||||||
| Stock Option Expense | 103 | 95 | 104 | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA | 1,808 | 3,321 | 2,669 | |||||||||||||||||||||||||||||||||
Reconciliation of non-GAAP financial measures - continued (in thousands – unaudited):
| 39 Weeks Ended November 26, 2023 | 39 Weeks Ended November 27, 2022 | |||||||||||||||||||||||
| GAAP | Special Items | Before Special Items | GAAP | Special Items | Before Special Items | |||||||||||||||||||
| Selling, General & Administrative Expenses | $ | 6,272 | $ | (679 | ) | $ | 5,593 | $ | 4,888 | $ | - | $ | 4,888 | |||||||||||
| % of net sales | 15.8 | % | 14.1 | % | 12.1 | % | 12.1 | % | ||||||||||||||||
| Earnings from Operations | 5,809 | 679 | 6,488 | 7,734 | - | 7,734 | ||||||||||||||||||
| % of net sales | 14.6 | % | 16.4 | % | 19.1 | % | 19.1 | % | ||||||||||||||||
| Interest Income | 724 | 65 | 789 | 653 | - | 653 | ||||||||||||||||||
| % of net sales | 1.8 | % | 2.0 | % | 1.6 | % | 1.6 | % | ||||||||||||||||
| Earnings before Income Taxes | 6,533 | 744 | 7,277 | 8,387 | - | 8,387 | ||||||||||||||||||
| % of net sales | 16.5 | % | 18.3 | % | 20.7 | % | 20.7 | % | ||||||||||||||||
| Income Tax Provision | 1,730 | 191 | 1,921 | 2,362 | (153 | ) | 2,209 | |||||||||||||||||
| Effective Tax Rate | 26.5 | % | 26.4 | % | 28.2 | % | 26.3 | % | ||||||||||||||||
| Net Earnings | 4,803 | 553 | 5,356 | 6,025 | 153 | 6,178 | ||||||||||||||||||
| % of net sales | 12.1 | % | 13.5 | % | 14.9 | % | 15.2 | % | ||||||||||||||||
| Net Earnings Before Special Items | 5,356 | 6,178 | ||||||||||||||||||||||
| Addback non-cash expenses: | ||||||||||||||||||||||||
| Income Tax Provision | 1,921 | 2,209 | ||||||||||||||||||||||
| Interest Income | (789 | ) | (653 | ) | ||||||||||||||||||||
| Depreciation | 984 | 826 | ||||||||||||||||||||||
| Stock Option Expense | 316 | 274 | ||||||||||||||||||||||
| Adjusted EBITDA | 7,788 | 8,834 | ||||||||||||||||||||||
| Contact: Donna D’Amico-Annitto | 486 North Oliver Road, Bldg. Z |
| Newton, Kansas 67114 | |
| (316) 283-6500 |
FAQ
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