PKE Park Aerospace Corp

Park Aerospace Corp. (NYSE-PKE) reported results for the 2020 fiscal year fourth quarter and year ended March 1, 2020. As previously reported, Park completed the sale of its Electronics Business to AGC Inc. on December 4, 2018. Therefore, the results of operations for the Electronics Business in the prior year are reported as discontinued operations. Continuing operations discussed below refer to Park’s Aerospace Business unless otherwise indicated, and prior periods in such discussion have been restated to reflect results excluding the Electronics Business. It is important to note that the fourth quarter ended March 3, 2019 was a 14-week period compared to the fourth quarter ended March 1, 2020, which was a 13-week period. In addition, the fiscal year ended March 3, 2019 was a 53-week period compared to the fiscal year ended March 1, 2020, which was a 52-week period.

The Company will conduct a conference call to discuss its financial results at 11:00 a.m. EDT today. A live audio webcast of the event, along with presentation materials, will be available at https://edge.media-server.com/mmc/p/6i37sjg7 at 11:00 a.m. EDT today. The presentation materials will also be available at approximately 9:00 a.m. EDT 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.

Continuing Operations:

Park reported net sales of $15,494,000 for the 2020 fiscal year fourth quarter ended March 1, 2020 compared to $16,659,000 for the 2019 fiscal year fourth quarter ended March 3, 2019 and $15,847,000 for the 2020 fiscal year third quarter ended December 1, 2019.  Park’s net sales from continuing operations for the fiscal year ended March 1, 2020 were $60,014,000 compared to $51,116,000 for the fiscal year ended March 3, 2019. Net earnings from continuing operations for the 2020 fiscal year fourth quarter were $2,633,000 compared to $1,588,000 for the 2019 fiscal year fourth quarter and $2,806,000 for the 2020 fiscal year third quarter. Net earnings from continuing operations were $10,205,000 for the 2020 fiscal year compared to $6,306,000 for last fiscal year.

Net earnings from continuing operations before special items for the 2020 fiscal year fourth quarter were $2,787,000 compared to $3,944,000 for the 2019 fiscal year fourth quarter and $2,806,000 for the 2020 fiscal year third quarter. Net earnings from continuing operations before special items were $10,503,000 for the 2020 fiscal year compared to $7,874,000 for last fiscal year.

EBITDA from continuing operations before special items for the 2020 fiscal year fourth quarter was $3,612,000 compared to EBITDA from continuing operations before special items of $4,251,000 for the 2019 fiscal year fourth quarter and EBITDA from continuing operations of $3,622,000 for the 2020 fiscal year third quarter. EBITDA from continuing operations before special items was $13,012,000 for the 2020 fiscal year compared to $10,248,000 for last fiscal year.

In the 2020 fiscal year fourth quarter the Company recorded a pre-tax stock option modification charge of $208,000. In the 2019 fiscal year fourth quarter, the Company recorded a one-time tax benefit of $788,000 related to the Tax Cuts and Jobs Act enacted in December 2017. Additionally, in the 2019 fiscal year fourth quarter, the Company recorded a pre-tax loss on the sales of marketable securities of $1,498,000 and a pre-tax stock option modification charge of $528,000. The loss on the sales of marketable securities was in connection with the liquidation of securities to fund a special cash dividend of $4.25 per share paid in February 2019. The stock option modification charge related to a reduction in the exercise prices of previously granted employee stock options resulting from the special dividends paid in February 2020 and February 2019.

Park reported basic and diluted earnings per share from continuing operations of $0.13 for the 2020 fiscal year fourth quarter compared to $0.08 for the 2019 fiscal year fourth quarter and $0.14 for the 2020 fiscal year third quarter. Park reported basic and diluted earnings per share from continuing operations of $0.50 for the 2020 fiscal year compared basic and diluted earnings per share from continuing operations to $0.31 for the 2019 fiscal year.

Park reported basic and diluted earnings per share from continuing operations before special items of $0.14 for the 2020 fiscal year fourth quarter compared to $0.19 for the 2019 fiscal year fourth quarter and $0.14 for the 2020 fiscal year third quarter. Basic and diluted earnings per share from continuing operations before special items were $0.51 for the 2020 fiscal year compared to $0.39 for 2019 fiscal year. 

The Company will conduct a conference call to discuss its financial results at 11:00 a.m. EDT today.  Forward-looking and other material information may be discussed in this conference call.  The conference call dial-in number is (844) 466-4114 in the United States and Canada, and (765) 507-2654 in other countries.  The required passcode for attendance by phone is 4258059.

For those unable to listen to the call live, a conference call replay will be available from approximately 2:00 p.m. EDT today through 11:59 p.m. EDT on Wednesday, May 20, 2020.  The conference call replay will be available at https://edge.media-server.com/mmc/p/6i37sjg7 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 (855) 859-2056 in the United States and Canada, and (404) 537-3406 in other countries. The required passcode for accessing the replay by phone is 4258059. 

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 www.parkaerospace.com/investor/investor.html.

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 stock option modification charges, one-time tax benefits, loss on sales of marketable securities and EBITDA. Accordingly, in addition to disclosing its operating results determined in accordance with GAAP, Park discloses non-GAAP measures, including 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 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 (undergoing qualification) and lightning strike materials.  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					14 Weeks Ended					13 Weeks Ended				52 Weeks Ended					53 Weeks Ended
		March 1, 2020					March 3, 2019					December 1, 2019				March 1, 2020					March 3, 2019
	Sales	$	15,494				$	16,659				$	15,847			$	60,014				$	51,116
	Net Earnings before Special Items1	$	2,787				$	3,944				$	2,806			$	10,503				$	7,874
	Special Items, Net of Tax:
	Tax Impact of Cancelled Stock Options							-					-				(144	)				-
	Stock Option Modifications		(154	)				(408	)				-				(154	)				(408	)
	Loss on Sales of Marketable Securities		-					(1,160	)				-				-					(1,160	)
	Tax Cut and Jobs Act		-					(788	)				-				-					-
	Net Earnings from Continuing Operations	$	2,633				$	1,588				$	2,806			$	10,205				$	6,306
	(Loss)/Earnings from Discontinued Operations, Net of Tax	$	(249	)			$	102,398				$	(360	)		$	(653	)			$	107,239
	Net Earnings	$	2,384				$	103,986				$	2,446			$	9,552				$	113,545
	Basic Earnings per Share:
	Basic Earnings before Special Items1	$	0.14				$	0.19				$	0.14			$	0.51				$	0.39
	Special Items:
	Tax Impact of Cancelled Stock Options		-					-					-				-					-
	Stock Option Modifications		(0.01	)				(0.02	)				-				(0.01	)				(0.02	)
	Loss on Sales of Marketable Securities		-					(0.05	)				-				-					(0.06	)
	Tax Cut and Jobs Act		-					(0.04	)				-				-					-
	Basic Earnings per Share from Continuing Operations	$	0.13				$	0.08				$	0.14			$	0.50				$	0.31
	Basic (Loss)/Earnings per Share from Discontinued Operations		(0.01	)				5.02					(0.02	)			(0.03	)				5.29
	Basic Earnings per Share	$	0.12				$	5.10				$	0.12			$	0.47				$	5.60
	Diluted Earnings before Special Items1	$	0.14				$	0.19				$	0.14			$	0.51				$	0.39
	Special Items:
	Tax Impact of Cancelled Stock Options		-					-					-				-					-
	Stock Option Modifications		(0.01	)				(0.02	)				-				(0.01	)				(0.02	)
	Loss on Sales of Marketable Securities		-					(0.05	)				-				-					(0.06	)
	Tax Cut and Jobs Act		-					(0.04	)				-				-					-
	Diluted Earnings per Share from Continuing Operations	$	0.13				$	0.08				$	0.14			$	0.50				$	0.31
	Diluted (Loss)/Earnings per Share from Discontinued Operations		(0.01	)				4.99					(0.02	)			(0.03	)				5.26
	Diluted Earnings per Share	$	0.12				$	5.07				$	0.12			$	0.47				$	5.57
	Weighted Average Shares Outstanding:
	Basic		20,519					20,370					20,518				20,507					20,288
	Diluted		20,578					20,501					20,617				20,595					20,385
	1 Refer to "Reconciliation of non-GAAP financial measures" below for information regarding Special Items.

 

Comparative balance sheets (in thousands except per share information):

	March 1, 2020			March 3, 2019
Assets	(unaudited)			(Note 1)
Current Assets
Cash and Marketable Securities	$	122,355		$	151,624
Accounts Receivable, Net		10,925			9,352
Inventories		6,379			5,267
Prepaid Expenses and Other Current Assets		5,535			1,690
Total Current Assets		145,194			167,933
Fixed Assets, Net		16,100			10,791
Operating Right-of-use Assets		420			-
Other Assets		10,072			10,127
Total Assets	$	171,786		$	188,851
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable	$	4,735		$	3,169
Accrued Liabilities		1,709			2,920
Operating Lease Liability		152			-
Income Taxes Payable		2,111			5,066
Total Current Liabilities		8,707			11,155
Long-term Operating Lease Liability		268			-
Noncurrent Income Taxes Payable		15,986			17,669
Deferred Income Taxes		834			-
Other Liabilities		4,316			1,016
Total Liabilities		30,111			29,840
Shareholders’ Equity		141,675			159,011
Total Liabilities and Shareholders' Equity	$	171,786		$	188,851
Additional information
Equity per Share	$	6.90		$	7.84
(Note 1) - These amounts have not been audited and are based on the audited financial statements.

Comparative statements of operations (in thousands – unaudited):

	13 Weeks Ended					14 Weeks Ended					13 Weeks Ended					52 Weeks Ended					53 Weeks Ended
	March 1, 2020					March 3, 2019					December 1, 2019					March 1, 2020					March 3, 2019
Net Sales	$	15,494				$	16,659				$	15,847				$	60,014				$	51,116
Cost of Sales		10,460					10,756					10,825					41,341					34,932
Gross Profit		5,034					5,903					5,022					18,673					16,184
% of net sales		32.5	%				35.4	%				31.7	%				31.1	%				31.7	%
Selling, General & Administrative Expenses		2,147					2,768					1,949					7,932					8,968
% of net sales		13.9	%				16.6	%				12.3	%				13.2	%				17.5	%
Earnings from Operations		2,887					3,135					3,073					10,741					7,216
Interest:
Interest Income		717					1,289					802					3,330					2,379
Loss on Sales of Marketable Securities		-					(1,498	)				-					-					(1,498	)
Net Interest and Other Income/(Expense)		717					(209	)				802					3,330					881
Earnings before Income Taxes		3,604					2,926					3,875					14,071					8,097
Income Tax Provision		971					1,338					1,069					3,866					1,791
Net Earnings from continuing operations		2,633					1,588					2,806					10,205					6,306
% of net sales		17.0	%				9.5	%				17.7	%				17.0	%				12.3	%
(Loss)/Earnings from discontinued operations, net of tax		(249	)				102,398					(360	)				(653	)				107,239
Net Earnings	$	2,384				$	103,986				$	2,446				$	9,552				$	113,545
% of net sales		15.4	%				624.2	%				15.4	%				15.9	%				222.1	%

Reconciliation of non-GAAP financial measures (in thousands – unaudited):

	13 Weeks Ended March 1, 2020													14 Weeks Ended March 3, 2019													13 Weeks Ended December 1, 2019
	GAAP				Specials Items				Before Special Items					GAAP				Specials Items				Before Special Items					GAAP				Specials Items			Before Special Items
Selling, General & Administrative Expenses	$	2,147			$	(208	)		$	1,939				$	2,768			$	(528	)		$	2,240				$	1,949			$	-		$	1,949
% of net sales		13.9	%							12.5	%				16.6	%							13.4	%				12.3	%						12.3	%
Earnings from Operations		2,887				208				3,095					3,135				528				3,663					3,073				-			3,073
% of net sales		18.6	%							20.0	%				18.8	%							22.0	%				19.4	%						19.4	%
Interest Income		717				-				717					1,289				-				1,289					802				-			802
% of net sales		4.6	%							4.6	%				7.7	%							7.7	%				5.1	%						5.1	%
Loss on Sales of Marketable Securities		-				-				-					(1,498	)			1,498				-					-				-			-
% of net sales		0.0	%							0.0	%				-9.0	%							0.0	%				0.0	%						0.0	%
Net Interest and Other Income/(Expense)		717				-				717					(209	)			1,498				1,289					802				-			802
% of net sales		4.6	%							4.6	%				-1.3	%							7.7	%				5.1	%						5.1	%
Earnings before Income Taxes		3,604				208				3,812					2,926				2,026				4,952					3,875				-			3,875
% of net sales		23.3	%							24.6	%				17.6	%							29.7	%				24.5	%						24.5	%
Income Tax Provision		971				54				1,025					1,338				(330	)			1,008					1,069				-			1,069
Effective Tax Rate		26.9	%							26.9	%				45.7	%							20.4	%				27.6	%						27.6	%
Net Earnings from continuing operations		2,633				154				2,787					1,588				2,356				3,944					2,806				-			2,806
% of net sales		17.0	%							18.0	%				9.5	%							23.7	%				17.7	%						17.7	%
(Loss)/Earnings from discontinued operations, net of tax		(249	)			-				(249	)				102,398				(102,128	)			270					(360	)			-			(360	)
% of net sales		-1.6	%							-1.6	%				614.7	%							1.6	%				-2.3	%						-2.3	%
Net Earnings		2,384				154				2,538					103,986				(99,772	)			4,214					2,446				-			2,446
% of net sales		15.4	%							16.4	%				624.2	%							25.3	%				15.4	%						15.4	%
Earnings from Operations										3,095													3,663												3,073
Addback non-cash expenses:
Depreciation										402													462												410
Stock Option Expense										115													126												139
EBITDA										3,612													4,251												3,622
Reconciliation of non-GAAP financial measures (in thousands – unaudited) continued:
	52 Weeks Ended March 1, 2020													53 Weeks Ended March 3, 2019
	GAAP				Specials Items				Before Special Items					GAAP				Specials Items				Before Special Items
Selling, General & Administrative Expenses	$	7,932			$	(208	)		$	7,724				$	8,968			$	(528	)		$	8,440
% of net sales		13.2	%							12.9	%				17.5	%							16.5	%
Earnings from Operations		10,741				208				10,949					7,216				528				7,744
% of net sales		17.9	%							18.2	%				14.1	%							15.1	%
Interest Income		3,330				-				3,330					2,379				-				2,379
% of net sales		5.5	%							5.5	%				4.7	%							4.7	%
Loss on Sales of Marketable Securities		-				-				-					(1,498	)			1,498				-
% of net sales		0.0	%							0.0	%				-2.9	%							0.0	%
Net Interest and Other Income		3,330				-				3,330					881				1,498				2,379
% of net sales		5.5	%							5.5	%				1.7	%							4.7	%
Earnings before Income Taxes		14,071				208				14,279					8,097				2,026				10,123
% of net sales		23.4	%							23.8	%				15.8	%							19.8	%
Income Tax Provision		3,866				(90	)			3,776					1,791				458				2,249
Effective Tax Rate		27.5	%							26.4	%				22.1	%							22.2	%
Net Earnings from continuing operations		10,205				298				10,503					6,306				1,568				7,874
% of net sales		17.0	%							17.5	%				12.3	%							15.4	%
(Loss)/Earnings from discontinued operations, net of tax		(653	)			-				(653	)				107,239				(103,203	)			4,036
% of net sales		-1.1	%							-1.1	%				209.8	%							7.9	%
Net Earnings		9,552				298				9,850					113,545				(101,635	)			11,910
% of net sales		15.9	%							16.4	%				222.1	%							23.3	%
Earnings from Operations										10,949													7,744
Addback non-cash expenses:
Depreciation										1,544													1,784
Stock Option Expense										519													720
EBITDA										13,012													10,248

Contact: Donna D’Amico-Annitto486 North Oliver Road, Bldg. Z Newton, Kansas 67114(316) 283-6500