Park Aerospace Corp

NYSE:PKE

Earnings Call Transcript

[Operator]

Good afternoon. My name is Paul, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Fourth Quarter Fiscal Year 2014 Earnings Release Conference Call and Investor Presentation. [Operator Instructions]. At this time, I would like to turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.

[Brian Shore, executive]

Thank you, operator. Welcome all to our fiscal '24 Q4 investor conference call. I have with me Matt Farabaugh, our Senior Vice President and CFO. You probably noticed in the news release that announced Matt's retiring originally plan with the end of this month, but Matt has agreed to stay with us through I guess, would be sometime like mid-July through our Q1 10-Q filing. So thank you for doing that, Matt.

We -- I think the earnings release crossed the wires may be about for 4:15. You want to take a look at that because in the release itself, it gives you instructions as to access the presentation that we're just about to go through after the presentation, Matt and I will be happy to answer any questions you have. If you look at the bottom of the cover page of the presentation notes that we're celebrating our 70th anniversary. Park was founded on March 31 1954, that was 4 years ago.

Interesting, somebody recently asked me if I found the company and I'm thinking, boy, I was really old. But no, I did actually found the company was 2 years old at the time. So let's go on to Slide 2. If you have any questions regarding forward-looking disclaimer language. Or I should tell you, I've got to months to you. You said it may be obvious during the presentation.

I share the flu. So the show must go on, we'll get through it. I think a couple of years ago, actually COVID during one of these investor presentations. I don't get sick very much, but it seems like when I get sick, it's always during the investor presentation. So I was just thinking of Ultra psychologists sitting in here that might want to make a connection to Anyway, on forward-looking disclaimer, you have any questions about the forward-looking disclaimer, let us know.

Slide 3. So table contents. We have our presentation and we have a supplementary financial information. We're not going to go through it, but the [indiscernible] financial information. But do you have any questions about it, just let us know. So the original -- well, it wasn't factories actually a garage was in the Woodside, Queens. And I mean I'm not using poetic license, it was a garage [indiscernible]. We did a Google map search and building is still there, it's still rise. I mean like for fixing cars and that kind of thing, maybe 2,000 square feet.

A couple of years later, I think, exactly when the company moved to a real factory in Flushing New York, Flushing Queens, New York, which I think was maybe 8,000 or 10,000 square feet. This picture is in that factory. The dialing forward to the left, that's Jerry Shore, my father, the guy in the right that's [indiscernible] father's partner starting Park. And as I said, sometimes he was like a second father to me. These are power presses. And the original business was nameplates and decker trim.

So these presses would stamp out the sheets of of nameplates. And my father and Tony, they used to work the line, they worked the machines, they would repair their machines. They maintain the machines. They did entering enhancements on the machine. So I think when look at a dictionary, [indiscernible], you see pictures of these guys. Anyway that we've had a long history, as you know, we change our name to Park Electrochemical in 1960. And a lot of people thought that related to being an electronics business, that's not true.

We think it went electronics until '61, electrochemical refers to the anodizing process that still use, I guess, to make a place integrity from selling that business, the original business in A4 to general manager at the time, they go hand. But this goes way back probably this picture way back to the mid-50s, I guess, we call it our founders photo.

I guess we did a nice little meeting with our employees when we went through a presentation and went through a lot of aspects of our history. We don't have time to go through that now, but I thought I'd just touch on a couple of things for the sake of time will keep moving. Let's go on to slide to talk about our Q4 numbers. So sales, [ $16.33 million ], not bad. But then you look at gross margin, 27.3%, you think all that doesn't make a lot of sense. That number is low, especially considering that the sales were reasonable and the EBITDA margin also is like growth margins to 30% and EBITDA margins under 20.

What did we say about our Q4 -- about Q4 during our Q3 conference call. We gave you a sales estimate of $15 million to $16 million. Actually that number a little bit in our sales, but EBITDA estimate was $3.2 million to $4 million, and we just came in at the bottom of the range. So obvious question is, well, why did -- what is the EBITDA look better considering that the sales were actually above the top of the range. You think that [indiscernible] better. So let's talk about that. First of all, when you talk about miss shipments, 565,000 always the main cause of this shipments without turning over the next like on oil gas, you probably can.

Well, let's go to the next slide. So we leasing the doubt. International freight disruptions caused by the wars in the Middle East and Europe. That number is not a good number, but it's a struggle with these international freight right now. We don't like those numbers, but they are what they are, let's put it that way. I don't think the generations related to Q4. So we're going to go through a few things here. I just want to explain, these are not excuses. We don't like that. We don't make excuses as to what happened, you can choose to be interested in them or not, but some of you might be interested. So this first one is important.

We never talk about production, because normally our production levels match sales pretty closely. But Q4 sales, they were $16.3 million, but our production, we call it sales value production, the sales value of our production was only $15.2 million under our sales. And that's actually a big deal for our P&L. So -- and not surprisingly, where that sales came from came from selling on inventory about by $1 million, that had a negative impact of $275,000 in the gross profit and about $250,000 in EBITDA.

Why is that? Do you look at it this way, if we actually produce that product rather than selling it from inventory we get the additional absorption of labor and overhead that would go into creating the inventory. So it's significant when -- this was not our plan. We didn't plan to do this. We just came up short in terms of our production numbers. we plan to produce at the level of our sales, but we wouldn't get there. And there are a lot of reasons for not excuses again, but we have less experienced people are gaining experience, leads. I'll just give you one little example of what we're talking about.

The experience lead will know what's acceptable, let's say, the [indiscernible] or film line or tape line, which is basically our business. It's a continuous operation. So really important to keep those things running. That's how it works. That experience leave will know what's acceptable and what's not. So they'll make the decision, no, we need to stop. We need to get going. Less experience won't know we'll stop the line when they go find somebody maybe in corn come take a look at this and to get a ruling as to whether we run or stop. Certainly, when I run if the product is not good, you just running scrap, and that's a bad idea.

But that's an example as to why we were struggling in our fourth quarter to get to a production where we want it to be. The good news is that in Q1, the production was levels were quite good until the storm hit, which we'll also talk about later on. Then moving on, $474,000 of CV fabric sales. We talked about that many times, but that's a product where we just -- we buy it, we sell it to our customer at a small markup. So the margins at sales are there, but the margins are going to be very light.

Unplanned property tax $212,000 property tax goes at a cost of goods sold. I don't know if you know where that that's not like actually a tax line that's in cost of goods sold. That affects our gross profit or EBITDA, of course. And we were planning on that. We had a little bit of a I don't know what's called disagreement with the state of Kansas and we've ended up deciding the amount and ultimately, pay for it as well. Q4 was a weak quarter, which means that there's an extra week of fixed cost. The sales mix in Q4 was a little less favorable. Let's go on to Slide 6.

Let's talk about the year-over-year results, the annual result comparison, which probably is more meaningful than the quarter-to-quarter comparisons. Fiscal year '24 $56 million of sales, 29.5% EBITDA -- sorry, gross margin, that's not really wonderful and 19.6% EBITDA margin. This still is a very different discussion than Q4, where there are certain incidents with certain incidents, instances which we just reviewed, which had an impact on our Q4 margins.

The longer-term picture of 24 is more about what we're doing intentionally to ramp up our business for what we call the Juggernaut. So let's talk about that. Let's go on to Slide 7. What is the story behind our year-over-year margins as I said, probably a more meaningful question than the same question related to our quarter over quarter. Quarter-over-quarter is always going to be items in each quarter that affect the numbers which make the quarter comparisons less meaningful. Year-over-year, those things are even out. So the year-over-year comparisons become more meaningful. So ramping up in the juggernaut and Slide 32, we talk about the juggernaut we talk about that almost every quarter. Going for the long term.

At Park, we don't wear business for the quarter, although you may be shocked by how dedicated parts people are to delivering outstanding results for you every quarter. I just want you to be aware of that. But let's face it, we're in our business in the quarter, never would have gone to aerospace to begin with. That was a long -- that was a decision by someone, very long-term thinking.Not 1 year, not 5 years, not even 10 years. So that's just an example of how Park goes for the long term. And if we run our business for the quarter, we wouldn't have gone ahead with our $20 million factory expansion either.

Let's talk about a little bit further on the top of Slide 8, I think you have to consider the annual sales history is, obviously, we don't need the expansion to support our great business levels. Let's go back to the Slide 6. Look at the sales in '24, $56 million, look at the sales in $20 million, $60 million, we certainly have the expansion in '20. So we certainly didn't need expansion to get to $56 million of sales were we did $60 million of sales in '20 [ should we ] saying we have all sector costs, there's needed to support the business levels in 2016. The extra cost is because we see what's coming and we don't want to get caught behind the power curve.

Going back to Slide 8, we clearly headed toward the juggernaut the plant -- the new plant. Also, we're staffing up our new factory expansion and prepare for what is coming. Running a lot less efficiently, sorry, will staff up and ramp up in factoring. Now the good news is new factory lines are ultimately expected to run more productively, meaning faster and efficiently than the lines in our existing factory. Makes sense. The original lines were design back and whatever is 2007.

These lines are more -- we have to use all learning over the last 15 years to design these new lines much more efficient, much more productive. And that will have a really nice impact on the bottom line as we ramp up in the factory. And we're also carrying additional $1.3 million per year depreciation costs related to expansion. Obviously, those costs don't affect EBITDA. But guess what? They expect growth or they don't impact EBITDA, but they do impact gross margins and the gross margins do include depreciation.

And that's approximately 2.3% to the gross margins based upon the fiscal '24 sales, 2.3%. So let's see how do we work that. If we go back to Slide 8 -- Slide 6, again, 29.5% was a gross margin. We were saying we could just basically add 2.3% of that. If we didn't have the new factory, just a depreciation loan. And then other additional overhead costs related to the expansion, which is obvious. Utilities, insurance, you name it. And those things are both affect EBITDA and gross margins, all related to the expansion. Let's go on to Slide 9. And ramping up our people [indiscernible] juggernaut on as well. We just -- it's not just about equipment and factories, you've got people. We need people.

Our current people kind of is 126 our hourly people count rather already up by approximately $800,000 per year compared to last time this year. That's not going away [indiscernible] great thing. That includes the additional people and some wage inflation as well. we just approved another 5 people to staff the manufacturing lines and the new factoring. And that's just for now, it's not the end game. We need to hire a lot of people for the juggernaut. We increased our authorized people count now from 133 to 138 as to ramp up our people costs and staff to bear for the juggernaut, our productivity, we measure that Sales value production as production divided by hours, hourly hours worked.

That means all airlines, so indirect and direct. That will temporarily slip. That's just the way it is, but ultimately, will reverse very much the positive as we ramp up production. The bottom line though is we want to be ready for the coming juggernaut, which we do. All these things are necessary. So this is, like I said, different than the analysis regarding Q4, where there's certain special items that affected when you look at the fiscal year numbers, it's more a part of our plan, what we plan to do what we intended to do.

Let's go on to Slide 10, parts balance sheet, cash and cash dividend history. We have 0 long-term debt. We reported $77.2 million in cash and marketable securities at the end of the fiscal year Q4 this year, '24 Q4. But don't forget, there's $9.3 million remaining transition tax installment payments payable through June '25. And Matt just told me that $4.2 million of that is paid next month.

So when we get to our balance sheet, you'll see an impact on the cash. So there's 2 more payments in June this year, [indiscernible] and the remaining payment is June of '25. So I think you want to consider that. Cash dividends [indiscernible] 39 consecutive years, uninterrupted regular quarterly cash dividends. With that overskipping a dividend or reducing the dividend amount. We're going for 4 years here. Park has paid $594 million or $2.975 per share in cash dividends since the beginning of the fiscal year 2005. The $594 million for a little [indiscernible] Park, that's a whole lot of money. I don't know it's probably a lot of money from Microsoft. I don't know about Microsoft, but that's a h*** a lot of money for us, [indiscernible] Park, I would say.

Slide 11. We always give you -- tell you about top 5 customers in Alphabet Aerospace, that relates to the Lockheed Martin Patriot tie the names of the photos, [indiscernible], which we talked about a aerosphere that relates to Gulfstream GED. So Aerosphere as a rep distributor for Israel aircraft and they produce these -- some of the Gulfstream airplanes under contract for Gulfstream, like the 280. Kratos will get back to them. I think that's on the next page, Middle River, so we could done lots of examples that we chose the COMAC919 and the Northern group, that's the Boeing 737 700.

What we're talking about here is the weather master [indiscernible] which none produces with our materials. And we go on to Slide 12. This is a big thank you for Kratos. [indiscernible] but Kratos gave us this gift. I never received a gift like this. I mean that's an aircraft. That's an aircraft that saw operations, they gave us to us to put in our display or factory. It's a beautiful, beautiful aircraft, unmanned aircraft.

I mean I'm just overwhelmed in what to say, even now, I don't know what to say. So we took a little picture and we did to thank Kratos, but now we're doing it publicly. So let's go on to the slide. This is an airplane aircraft used by the Air Force. So let's go on to Slide 13. Our pie charts. Interesting '24, '21 was the pandemic year. So you could see commercial aircraft was land and that's what's so low. The rest is about rest of years really consistent. I'm actually surprised at Commercial Aircraft held up in '24 in the second and third quarter, we had those big burn-downs for MRAS, which you talked about.

What I guess we had other commercial aircraft sales, which allowed us to hold our own. Let's go on to Slide 14. This is Elena's project every quarter just to come up with some interesting Park less niche military aerospace programs, some interesting midterm programs. Our estimated '24 military revenues by market segment. We consider rate on rock and isles and drones to be niche markets for us. Although even aircraft structure for us is a niche market. It might not be fathers but for us in which market.

So what we got here Adreno's next-generation short-range interceptor, just a replacement for the Stinger missile, you probably heard missile, the Boeing 18 Growler we supply rate of materials since that program. North of [ Coman LGM ], 35 Sentinel, they call GBSD ground-based [indiscernible]. That's interesting Tom used to be called ICBM, the replacement for the minimum. So we supply materials into this materials and parts in this program. So this is more now for, it's for nuclear warheads.

McDonald Douglas 15 Eagle, and we supply radome materials into that program and the Boeing PA beside an aircraft, that's a replacement of the Ryan structural materials into that program. Let's see, going -- let's talk a little bit about Slide 15, sorry. Let's talk a little bit about supply chain challenges. In the past, I keep hearing that I've heard so many times, yes, supply chain issues are behind us or about to be mined whatever year that they're buying is, we find that they are not. I can't tell you how many times I read reports from other public companies reports are using -- highlighting supply chain issues as the main reason why they're not making their numbers.

We apply a supply chain issue is really all about anyway. What is causing them? Why won't they go away? Our supply chain issues fundamentally workforce issues, or workforce issues been resolved? I mean, isn't that what it's about? If you now the workforce you can have all the machines and the equipment you're just not going to be able to produce to the requirements you need to produce to the people to do it. We hear unemployment is not that bad. So what's going on here? Well, one of the things to consider is its widely reported that $7.2 million able body men just men between the ages of 25 and 54 have premier left to workforce and are not even looking for work. I guess a lot of them left are in the pandemic.

Even though the help wanted signs everywhere, what is happening, I don't know if you have an opinion about that. I heard Charles Pain's we call financial news guy, you said he knows a guy 60 years old number working. A lot of people apparently never worked their whole life. So obviously, the garment is enabling that. I wonder why that's happening. But these lives, I mean this is not funny. These lines are being destroyed. After a couple of years, people sitting in the couching eating the tail chips watching Oprah whatever they do for 2 years. They try to come back to work, they can't. They've lost their edge. It's a real tragedy. And that's probably what you want to hear about our investor presentation, but everybody now and then I'll give you my thoughts about something like that.

Let's go on to Slide 16. What does this mean to Park to supply chain issues. So we found ways to manage supply chain challenges to better planning, strategically carrying more inventory, providing suppliers with longer lead times. But the issues continue to be a major challenge for us and they're very consuming of our time and energy. So yes, we're managing it, but it's with a lot of effort. But what do the ongoing supply chain challenges need for the aerospace industry generally, maybe manage it with a lot of effort. But the aerospace industry continues to struggle with supply chain issues. These challenges are impacting program ramp-ups and new program introductions.

Demand is there, but the industry is just falling short means of demand. Where is this going? Is there a solution to site? No. You know what it is, if so, don't know. Maybe you use my deals. I'm serious. I don't know. I don't know what the solution is. Going to Slide 17. We won't cover this in great detail. As a slide we show you every quarter. Firm pricing, GA Avation jet engine programs for pricing LTA requirements contract from '19 to 29 with Middle River Aerostructure Systems, MRAS sub of visitors. So we always have to explain this, we don't get it because we have all these GE. Matter of fact, the title of the slide, GA Aviation a programs all these programs listed below our GE Aviation programs. So what's the connection.

Well, the connection is that we on these programs, Middle River was a sub of aviation, sold GA sold. I guess we called GE Aerospace now, sorry. GE sold MRAS to ST Engineering, which is a large Singapore aerospace company, I don't know about 5 years ago. But we're goose Park continue to support those programs just as when it was when it was owned by GE Aviation, I won't go into these programs we talked about a long time. So I just point out a nice picture. 747 the program was canceled. We sold some spares. I really love this picture because you could see how big these and the [indiscernible] are compared to the Sky standing back here. And those cells are all Park material.

Let's go on to Slide 18. Yes, we know have to cover the first check we cover that every quarter. Second set item, [indiscernible] containment wrap [indiscernible] produced to our AFP composite materials. We talked about that in the every quarter now as well. But there are some relatively new stuff, MRS qualification Park proprietary film adhesive formulation product forms and progress. And then the next item, Emirates Park LTA, that's the LTA we referred to in the prior slide to which is amended to include 3 Park film lease product forms for composite on and [indiscernible].

That's a really great deal because we developed this film heater product line unit development agreement with GE and MRAS, but it's really wonderful because when we develop a product and then immediately goes into qualification on really important programs. The dilemma is you develop a new product and R&D level. It's a great product. So what I mean it's like threefold on far nobody you got to get in program, I think, 20 years. Like not 20 years, 20 seconds is between the time that our product is finished when it goes to the qualification. That's a very special thing that we have with that customer life of program agreement required by MRS [indiscernible] agreement is being actively worked on.

We talked about this before. What does it work to I don't know what's the whole point.

Let's go to Slide 19. Let's talk about some of the GE Aviation [indiscernible] program. So start with the [indiscernible], A320neo. Airbus of 20 aircraft, 717. I don't know if you know that's such a huge number. And here's the problem for Airbus. Let's say they're currently producing at a rate of maybe 50 a month that a year, right? Well, how many years of backlog is that like 12 years. So if you want to order a new one, you got to wait 12 years. That doesn't help. They want to sell a lot more of these, so they really need to bring the lead times down.

So that's why they're pushing hard to get to $75 per month, which is, what, $900 per year. So I do the math, divide 17 by 900, that's better. It's not like tomorrow, but it's a lot better. that's their innovation. And in my opinion, you can listen to other people, they have different opinions. I think Airbus is very determined to get to that $75 per month. And during their annual shareholder meeting on April 25, sorry, their April 10th in the first quarter investor call on April 25, they again reaffirmed their plan to achieve a rate 75, A320 family aircraft deliveries per month in '26. Maybe the end of 26, I don't know, but in '26.

How are they doing so far with that ramp-up. This is notwithstanding an over and above all jurisdictions and limitations on what supply chain, the plight sheet. Let's go to Slide 20. But then pretty well actually, I think, pretty well. Airbus delivered the following number of A320neo aircraft each year in the following calendar year. So you can see the numbers ramping up. They got to '19, the P1 and boom hit by the pandemic, and they slip back. Look at '23. So if I compare it to 561. And so '23, it actually exceeded the first time pre-pandemic production levels. So in '23, for the first time since the beginning of the pandemic, Airbus was able to return to A320 production and delivery rates to return to pre-finance.

That's a key milestone and a very good accomplishment for Airbus, congratulations to them because it's over and above all the supply chain issues just Europe all the time. We're notwithstanding the April '24, year-to-date, Airbus delivered 167 airplanes. I know it's 4 months, but it also delivered 51 airplanes in both March and April 24. So don't get to -- don't get confused by the beginning of the year always slow and kind of ramp up at the end of the year. This doesn't come from Airbus. If you want my opinion, it's just my opinion, I prove it. It's my opinion.

My guess is it'll probably get probably at 55 this year average for the year, not just my guess. Airbus is not saying what the what they're saying is the end of -- or '25 you're seeing by the end '26 will be at a rate of 75%. Let's go to '21 on Slide 21. We already covered this based upon this huge backlog, Airbus would already be producing neo aircraft at the rate 75 per month have not like chain constraints and limitations.

Again, what was the story about supply chain problems are behind us? I don't think so. What about Boeing, how Boeing struggles and challenges with the MAX impact A320neo family aircraft prospects and also the semi market share. I think my opinion is it depends on whether Airbus is going to try to move that number up from 75 to hire. There's a lot of reporting about they're thinking about it, but they have not many announcement. So what about the engine to 220 aircraft. That's an important question for Park by whatever you A320neo offers 2 approved engine options, namely the CFM LEAP engine, which is the program Parkinson and the Pratt and PW1100G engine, which is parking on that program. So the -- we just covered the second bullet item.

The third item, bullet item, according to the May '24 addition of Euronews that's our [indiscernible] addition. CFM LEAP 1 as market share from engine orders for the neo family of aircraft to 63.1% as of March 24. The delivery -- sorry, Slide 22, at delivery rate of 75 A320neos per month, the 63.1% LEAP market share translates into 1,136 LEAP engines per year. what's that worth the park. We'll cover that when we get to Slide 32.

There are currently 8,132 firm LEAP-1A engine orders, that [indiscernible] engines. What those firm orders were to park I don't know. You might refer to Slide 32, but probably about $0.25 billion, I would think. That's not precise because Slide 32 and assume that the pricing were $259. So note that pricing doesn't go into effect in the ongoing months, also assumes film leases run program, not on it yet, we're qualifying. But the other thing is that our pricing after 29 is clearly going to be higher. That's expected by MRS and Park. So we haven't taken into account that some of these engines will be delivered after 29.

And we don't have a contract after 2019. So I guess you could say, well, maybe it's not 29. My opinion is that highly, highly, highly, highly likely that we'll be supplying this program for a long time after 29 and all the other MRS programs. One of those firm orders with the Park, we just talked about that. There are widely reported serious durability issues with the Pratt 100G and we talked about this before. So all these issues, in fact, market share between the Pratt and Leap engine interesting question, we don't know. And maybe the answer is similar to the Boeing question regarding Airbus A320 generally can LEAP willing to produce or to see if I'm rather willing to try to produce more LEAP engines.

And I don't know to answer that question. So meanwhile, CFM is already delivering new LEAP on -- as with its new reverse bleed air system design to further improve durability. So you see that the dicotomy thing here, it's like Pratt's having pretty serious durability issues and CFM is moving forward, improving durability. Let's go on to Slide 23. We got the A320 XLR variant A320 family. We are this, we covered every quarter and expect service to '24. Boeing is not planning response. Airbus has 550 orders for the airplane potentially important compart. Let's focus on the 919 a little bit more, though, 919, this is '23 with CFM on the engines on not that's the only engine for the 919.

It's not like the 20 where there is 2 engines that are approved. Comac plans to achieve a production rate of $159 in 5 years. You look at our juggernaut slide, we're assuming less than that. Comac has reported to have 150. It's really hard to nail that down, but it's one of the reports I saw, China Southern just ordering other 100 airplanes going to Slide 24. COMET just delivered 6 unit Macro expanding its 919 production line is just important stuff. And I look at this recently reported that China CAAC, that's like the China FA is aiming for 2025 as that's European certification for the wind-on aircraft.

That's a really, really big deal because the thought was this was going to be China only airplane. It's clear that China and COMAC. That's not what they're thinking about at all. They want to take on bone and Airbus for single aisle. This could be a big program, an important program, an important form for Park. And like I said, they're expanding production lines. So these things, to me, means something. The last item is the ARJ, Comac air and regional jet we don't spend a lot of time on that. We accept $35 million aircraft reportedly delivered in '22 and '23. We'll get back to that later.

And the rest of the program is going well, a good program for Park and continue on Slide 25. 777X aircraft, the GE9X engines, we've covered this for many quarters now, expecting certification in '25. Some people are septal about that. But we'll see -- I'm talking about the airplane. We expect about $1.7 million from this program in this calendar year '24. And we'll see, there might be a little bit of a gap after we're done with the crude production, just as there may be some almost been waiting for the program to start to really ramp up.

This next check item, we covered that many times. And the next check item, Boeing [indiscernible] open orders for the airplane extra item and the 777X orders continue to come in nicely. Even though Boeing notwithstanding Boeing's ongoing challenges, and this is also potentially a very significant program for Park. So we're hoping for the best for this program. Slide 26. Okay. What do we talk about here. This is GA aviation jet engine program sales history and forecast estimates when they go through the whole history, Q4 of '24 in the recent quarter, $7.6 million, I think we had estimated $7.5 million, so just about that number.

Total for '24, even though we had a good Q4, it's only $21.1 million. That's base we had those burn down quarters in Q2 and Q3. I'm talking about it for fiscal '24. So $21 million, that's a low number, not a good number. compared to last year, the prior year $23 million to $22.3 million. So we had forecasted $6.3 million for that's even a great number. You look at the $6 million in Q4, but I guess it's an okay number. But it's really important to now read this footnote here carefully. The amount is fully -- that amount is fully booked for Q1 this is the forecast.

But Q1 GE aviation programs will be impacted by an unknown amount of the foreign damage to the company's facilities reported on May 22 in the company in the news release. We'll get back to this and we talk about the forecast for Park General. So let's keep it in for now. Slide 27, burndowns, aerospace industry management inevitable day of reckoning. So we've been through inventory burn down, you're probably tired hearing about them we're certainly target talking about them. We have discussed at some month a very strange inventory management practices of the aerospace industry.

I think at a different term, that strain, it's been at the size of the best about it in my -- one of my early address. I mean you're probably tired of hearing about those things, too, and we certainly are. And we have the literal though. These burn down of strange inventory practices certainly can cause serious and even extreme distortions and disruptions, the business planning and expectations. But ultimately, sources and disruptions are as a matter of inevitability temporary and transitory nature. Why is that because the end program demand have to take over at some point. I mean it's inevitable. It's just your math.

Let's go on to Slide 28. Sooner or later, the inevitable day of recon call will come sooner or later than programs will take over and drive our business levels and activities that has to happen. -- it's inevitable. And here's a thing from what we're hearing now, I mean, really recently, that day of reckons soon around later. We heard just recently in '25, we're talking calendar years pretty big jump for a day program, a pretty big jump. We've been kind of languishing with burn-downs and inventory adjustments and -- oh, yes. No, there's -- our inventory has been burned down. We [indiscernible] anymore. We don't have our inventory. I mean the customers inventory they hold of our product.

It's just fairly low in here we burn down anymore. But now we'll hear all day have some finished structures inventory or they do what the customer does. So it's a little bit exasperated. But our customers have been told to get ready for a pretty big jump in '25. And they've also been told that a 2626 Airbus will be at that airplanes per month rate. So I have a feeling that the day of recon is not far off, we'll see. But the good thing is that although we did not know when the day of reckoning would come -- we knew it was coming. It's inevitable as far as we are concerned, cannot be stopped like the locomotive that can't stop freight train.

Good thing that we did not wait thing that we are already ramping up for the day of ramping up for the coming juggernaut. Let's go on to Slide 29. Here Park Financial history and our estimates. But we won't go through the already kind of covered it in fiscal year '24 Q4 in total, and we already talked about those numbers. Let's talk about the forecast for Q1. This forecast was before the storm. It's really a shame as Q1 was looking at a really nice quarter. Why is that mostly because all those kind of things that affected Q4, none of them were affecting Q1 production level is planned to be at least at the sales level.

And actually, I was thinking we'd be at the top end for both sales and EBITDA in Q1. So the timing of this storm was very unfortunate was looking like a next quarter. But we better go ahead in Slide 30 and read that big footnote. The '25 Q1 sales estimate is based upon fully booked sales for Q1. the 25 Q1 EBITDA estimate is based upon those full book sales. However, the Q1 sales and EBITDA will be impacted, right? Unknown amounts but a storm damage the company's facility reported on May 22, 24 a company news release, although as reported an unknown amount of fiscal Q1 sales or Q2 as a result of store in damage the company is not expecting to lose any sales or business also storm damage.

Let's talk about this a little bit more. So is a pretty big event for us and what are people done a really fantastic job factory up and running all the hot melt lines at both the old new factory are fully running the tape lines, the film lines. We're about to restart the solution treaters I'd say a pretty incredible job on their part, a pretty incredible job. But that were -- the number -- I'll just guess at this point a little bit, but my guess is the top line is going to be in the 13 not 16. So a major, major impact on the quarter. we typically produce a lot at the end of the quarter, shipped a lot of the end of the quarter.

And we don't have any inventory. So we only could sell what we produce, and we're not able to produce become factory can produce last week, look pretty ugly because we hardly produced anything, but we had a full staff, everybody at full pay last week, we had everybody come in to help clean up the stuff. But the recovery is going really well, except it just it's going to be a mess for Q1 too bad these things happen, people did a great job in my opinion.

The key thing for me is I know when he was hurt. That was a key thing for me. So let's go on to Slide 31. This outlook -- sorry, financial outlook for Park programs and update. We don't have to go through this in detail because you've gone through this pretty much every quarter. Just one thing. What's the timing for the outlook. We kind of already covered this. I'm not sure but the judge owners coming can be stopped, you better be ready. I think maybe pretty soon, maybe not this year, calendar year, but I would think next year, so meaning calendar '25 in we'll see. So let's go on to Slide 32. This is a juggernaut slide, and we won't go into TL because we cover this 3, 4x already.

A couple of points I want to make. A320neo, we're assuming 1,080 units, and that assumes 75 airplanes per month, but also assumes a 60% market share for LEAP engine Remember, we said it's about 63.2%. I forgot what the number was exactly. So what we're doing is we're bringing that to 60. And the reason we're doing that is we change is every quarter because every quarter, the market share is going to change. This way, we'll just million a little bit lower number, 60%, but we don't have to change the presentation every quarter. So I don't think it was a good decision or not. That's done. And you see this highlighted in footnote 4.

One other change that was made as we up to ARJ21 72. Remember, I said that they delivered 35 airplanes last year the prior that's closing obviously that -- sorry, just have the engine to in sheer plan. all these programs to engineer planes. And well, we need a couple more per spares. That's probably still pretty conservative in there. They're still trying to ramp up to some extent. 919, remember, Comac had there are going to be 50 units per year, 4 5 years. Well, that's going to 300 engines, not 200 engines. So generally speaking, we think this is relatively conservative. The GE9X assumption, we're not going to provide how many units we're talking about, but I think it's pretty conservative actually, in my opinion.

So that's that, the juggernaut slide, let's go into Slide 33. We'll go through this pretty quickly. We just updated the slide financial outlook based upon the growth estimates of programs, which were sole source qualified. You can read the footnote to kind of explain the math, but we start with our base case of fiscal '24. And then we -- the incremental program sales, I mean, we only had about $21 million in fiscal '24. So a lot of incremental GE program sales of $15 million.

We decided to remove the reference to specific programs because we felt in the company we felt we do disclosure for customers and maybe they don't want that. So we're just lumping oil 1 number, $15 million incremental sales of $7 million last year for non-GE poolings last year, $5 million approximately. So assuming that a 20% increase over course of whatever, 3 or 4 years. We think that's a pretty conservative assumption. And the rest is math, except the $4 million brings point that I think the last time we did this maybe $2.5 million, but this is based on $11 million EBITDA, which is such a depressed number based upon the ramp-up of our costs as we ramp up our factory and ramp up our cost to prepare for the juggernaut.

So it gives us an approximate EBITDA estimate outlook of $35 million. And Slide 34 is all the footnotes. I won't go through just math, but really, if you have any questions, let us know. Slide 35 and 36. These slides were in our Q3 presentation, I think exactly like this new threw manufacturing project initiative. The only new item is the last item manufacturing project initiatives under active review and discussion with our customer. The point we're making is that this is a pretty active project and the customer is highly motivated.

So we think there's a pretty good likelihood this will actually happen. This is a major project for Park as we outlined on these 2 slides. Let's go on to Slide 37. As I said, we had a nice little event to celebrate our 70th anniversary in the factory top left doing the presentation, the history about Park for employees, discussions about Park is a special company. We've done some really incredible things over the years. And my point to them is that even if they've only been more as a week or a month, they're part of the Park family, and they share in all those equities was incredible things just like anybody else does top right.

So after the presentation was -- I was on the presentation, a number of employees came up to me and sets of very nice things. One guy told them I remember exactly how you said it, but Parkman so much for him and his family, thank me for that. And I'll tell you, running any business park on we show a lot of stuff crap you got to deal with, but those kind of things make it all worthwhile for me. This [indiscernible], came up to me and introduced itself said, my name is Gavaris, and he said, I worked the treater operator. I've been here for 1 week. He said, oh, so he said, the newest employees, I said, all right, Gavaris, then you and I cut the cake. We had a nice cake we had for R&D event, and we cut it together.

So -- and then the bottom picture is obvious, that's just a company phone of all our employees, at least the ones that are based in cancers. Unfortunately, Mark wasn't able to be there, but everybody else you normally see in Kansas is there. I'm actually in the back row, be said those people were like Cory organized the photo sessions and tells people needing to be in the back row. So if you can find me, let me know on the back left.

And operator, that concludes our presentation. So if there are any questions, we'd be happy to answer them.

[Operator]

[Operator Instructions]. Our first question is from Nick Pastella with [indiscernible] Management.

[Unknown Analyst]

And Brian, I'm glad that, as you said, no one got hurt from the storm, and thank God it wasn't any worse. I just have kind of a big picture question. Given the programs you're on and the future and the potential new opportunities I'm just wondering, do you think Park will continue to be a debt-free company? Or at something would you consider borrowing money.

And the reason I asked this is it weren't reflecting the potential. Possibly, you could be more aggressive purchasing shares. And I'm not saying today, but if the stock does not reflect the bright future stays where it is or goes lower, would you consider being more aggressive and then maybe levering up

[Brian Shore, executive]

Thanks for the question. So interesting question. Yes, the stock price, I mean, I follow it. I mean, it's hard to figure out why it might be going up or down. I agree with your implication is that it certainly will -- echo there. Hello. Okay. One way -- Operator, so there's an echo on the line. I'll continue talking that's very distracting. So the stock price, I don't know why it goes up or down a little bit, but I certainly agree with the implication that it doesn't reflect the value of the company. And I guess my way of thinking about that is that ultimately off to.

And I think, ultimately, as the numbers pan out, the numbers we're talking about, that the world of market will recognize the value of the company. Until then, I guess, we'll just do the best we can to explain what we're doing and some people will understand it. Maybe some people won't agree, I don't know. As far as going to debt, Nick, right now, we don't see a need to do that. We completed our expansion.

As you know, we paid for it, and that itself will lead to that the very significant uptick in revenues as we call the -- call the juggernaut. This other project we're talking about -- so that could lead -- I think we talked about maybe $6 million to $10 million of capita, but what we didn't talk about is working capital. We talk about -- we're talking about capital equipment in the plant and that kind of thing. But the working capital could be a lot, maybe like $15 million or something like that.

So that gives you a little additional perspective. Would we go in at that? I'm sure we felt that it was a legitimate reason to do it. And there's some opportunity that was important enough that required us to go into debt. So generally speaking, we've not been a company that's had yet debt. It's not -- our philosophy is to have cash. We've always had cash, and we feel good about that. And we feel good about it when you go into like the, what do you call, Black Swan things like the pandemic. But we're not so philosophically opposed to debt that we would consider it after circumstances, we felt were compelling. We're not -- I'm not sure.

[Operator]

.

Our next question is from Chip Rewey with Rewey Investments.

[Unknown Analyst]

Can you talk a little bit more about the potential storm recovery aspect you say you have extra staffing. How much of that can really be recovered potentially in your second quarter and third quarter? And both from a revenue and a profit point, I imagine some of the profits are just burned because you have to hang on to your staff understandable. And then secondly on that, extra opportunity that you talk about tension opportunity. Is there any time frame for when you expect that to be a bit or potentially awarded?

[Brian Shore, executive]

Okay. Thanks for the question. We don't expect to lose any -- there's an all of business that we're supposed to all the sales we put it that way that were lost in will be in Q2. I won't go into the profit story is a little different. Let's say, just hypothetical. Let's say we end up at $13.5 million in Q1 when we're thinking to be over $16 million. The bottom line will be a lot different than if we planned $13.5 million, it was kind of even across the quarter, then we're running for towards $16 million and then in the last 2 weeks, everything down to zero.

So there's some amount of profit, which will not be recovered, even though all the sales now, we won't lose any sales. All the sales that were lost in Q1 will be in Q2. I don't know if I answered your question, but -- and I don't -- I can't quantify that. I try to quantify the -- well, maybe I didn't, if I didn't, I intended to let you that now.

We're thinking that sales-wise that we're probably going to be in the when we were planning on '16. So we're going to take it losing over $2 million of sales in Q1. All that will be translated into Q2. The profit stuff is much more difficult for us to estimate at this point, even though we're at the end of the quarter, it's still a very dynamic situation. As far as the new project is concerned, it's not a matter of award. It's not like we're competing for it. I just want you to understand that. But the customers' needs are for that project to be up and running by '26. So that's kind of a time frame that you might consider not from their end or from our end. That's not a lot of time, actually, a lot to be done to get there.

[Unknown Analyst]

Okay. And just following up on that, if you're not competing for it, is it a business that you think you can get or that you hope to be awarded and if they want deliveries in 26, like when would you need to start allocating capital later this year or early next year. And on the storm insurance, was there on the storm, was there any insurance of any kind, capital or business interruption?

[Brian Shore, executive]

Yes, we have insurance. The wind damage and insurance, which is -- comes under wind damage, our deductible is quite high. And we did that intentionally because we think of insurance, we have cash a good balance sheet we think of their catastrophic loss. We don't want to bet against the banks. We said our deductibles pretty high in the theory that if we -- we said I'm lower, obviously, the premium will be much higher. And ultimately, insurance companies going to win because they always win.

So there's a pretty high deductible, but we still expect to have some insure recovery and there is business interruption insurance that's included. But we don't have amounts at this point because it's very difficult for us to quantify the loss, not only in terms of business interruption, but the repair and the facility, the roof itself is intact right now and it's secure, but still eventually need to be replaced.

So on that question of the project, it's a customer that we're very close to and Liberty described which one. And you're talking to us exclusively at great length about how this would be done. Their timing is 26%. That's what from their perspective, that's what they need. And I got to be careful. It's a very confidential project. So I don't want to say too much about it, you only give it away. But yes, I mean it's a good question.

I would think that next year, we would need to start ramping up the capital in order to meet that requirement by maybe the beginning of next year. And still not -- sorry, I just want to say, it's something that happened, but I think there's a high likely it will happen because the customer is very more innovated, and they're not talking to anybody else about this.

[Operator]

There are no further questions at this time. I'd like to hand the floor back over to Mr. Shore.

[Brian Shore, executive]

This is Brian, of course. Thank you very much for listening in. Have a good afternoon. And if you have any follow-up questions, please feel calls to be happy to try to help you with them. Have a good afternoon, and we'll talk to you soon. Thank you.

[Operator]

This concludes this conference. You may disconnect your lines at this time. Thank you for your participation.