PKE Park Aerospace Corp

Park Aerospace Corp. (NYSE-PKE) reported results for the 2021 fiscal year first quarter ended May 31, 2020. As previously reported, Park completed the sale of its Electronics Business to AGC Inc. on December 4, 2018. Therefore, current costs relating to the sale of the Electronics Business are reported as discontinued operations. Continuing operations discussed below refer to Park’s Aerospace Business unless otherwise indicated.

The Company will conduct a conference call to discuss its financial results and other matters 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/xsr6eshy 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 $12,213,000 for the 2021 fiscal year first quarter ended May 31, 2020 compared to $14,950,000 for the 2020 fiscal year first quarter ended June 2, 2019 and $15,494,000 for the 2020 fiscal year fourth quarter ended March 1, 2020.  Net earnings from continuing operations for the 2021 fiscal year first quarter were $1,972,000 compared to $2,714,000 for the 2020 fiscal year first quarter and $2,633,000 for the 2020 fiscal year fourth quarter.

Net earnings from continuing operations before special items for the 2021 fiscal year first quarter were $1,972,000 compared to $2,858,000 for the 2020 fiscal year first quarter and $2,787,000 for the 2020 fiscal year fourth quarter. EBITDA from continuing operations for the 2021 fiscal year first quarter was $2,364,000 compared to EBITDA from continuing operations before special items of $3,372,000 for the 2020 fiscal year first quarter and EBITDA from continuing operations before special items of $3,612,000 for the 2020 fiscal year fourth quarter.

There were no special items in the 2021 fiscal year first quarter. In the 2020 fiscal year first quarter, the Company recorded a one-time tax charge of $144,000 for the write down of deferred tax assets for stock option expirations pertaining to employees who transferred to AGC Inc. in connection with the sale of the Electronics Business. In the 2020 fiscal year fourth quarter, the Company recorded a pre-tax stock option modification charge of $208,000.

Park reported basic and diluted earnings per share from continuing operations of $0.10 for the 2021 fiscal year first quarter compared to $0.13 for the 2020 fiscal year first quarter and $0.13 for the 2020 fiscal year fourth quarter. Park reported basic and diluted earnings per share from continuing operations before special items of $0.10 for the 2021 fiscal year first quarter compared to $0.14 for the 2020 fiscal year first quarter and $0.14 for the 2020 fiscal year fourth quarter.

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 2068676.

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, July 15, 2020.  The conference call replay will be available at https://edge.media-server.com/mmc/p/xsr6eshy 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 2068676. 

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 stock option modification charges, one-time tax charge 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
				May 31, 2020					June 2, 2019					March 1, 2020
			Sales	$	12,213				$	14,950				$	15,494
			Net Earnings before Special Items1	$	1,972				$	2,858				$	2,787
			Special Items, Net of Tax:
			Tax Impact of Cancelled Stock Options		-					(144	)				-
			Stock Option Modification		-					-					(154	)
			Net Earnings from Continuing Operations	$	1,972				$	2,714				$	2,633
			Loss from Discontinued Operations, Net of Tax	$	(15	)			$	(127	)			$	(249	)
			Net Earnings	$	1,957				$	2,587				$	2,384
			Basic Earnings per Share:
			Basic Earnings before Special Items1	$	0.10				$	0.14				$	0.14
			Special Items:
			Tax Impact of Cancelled Stock Options		-					(0.01	)				-
			Stock Option Modification		-					-					(0.01	)
			Basic Earnings per Share from Continuing Operations	$	0.10				$	0.13				$	0.13
			Basic Loss per Share from Discontinued Operations		-					-					(0.01	)
			Basic Earnings per Share	$	0.10				$	0.13				$	0.12
			Diluted Earnings before Special Items1	$	0.10				$	0.14				$	0.14
			Special Items:
			Tax Impact of Cancelled Stock Options		-					(0.01	)				-
			Stock Option Modification		-					-					(0.01	)
			Diluted Earnings per Share from Continuing Operations	$	0.10				$	0.13				$	0.13
			Diluted Loss per Share from Discontinued Operations		-					-					(0.01	)
			Diluted Earnings per Share	$	0.10				$	0.13				$	0.12
			Weighted Average Shares Outstanding:
			Basic		20,402					20,492					20,519
			Diluted		20,460					20,586					20,578
			1 Refer to "Reconciliation of non-GAAP financial measures" below for information regarding Special Items.

Comparative balance sheets (in thousands): 

	May 31, 2020			March 1, 2020
Assets	(unaudited)
Current Assets
Cash and Marketable Securities	$	121,070		$	122,355
Accounts Receivable, Net		6,590			10,925
Inventories		6,680			6,379
Prepaid Expenses and Other Current Assets		5,243			5,535
Total Current Assets		139,583			145,194
Fixed Assets, Net		18,364			16,100
Operating Right-of-use Assets		387			420
Other Assets		10,068			10,072
Total Assets	$	168,402		$	171,786
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable	$	2,487		$	4,735
Accrued Liabilities		1,361			1,709
Operating Lease Liability		142			152
Income Taxes Payable		2,824			2,111
Total Current Liabilities		6,814			8,707
Long-term Operating Lease Liability		245			268
Non-current Income Taxes Payable		15,986			15,986
Deferred Income Taxes		793			834
Other Liabilities		4,367			4,316
Total Liabilities		28,205			30,111
Shareholders’ Equity		140,197			141,675
Total Liabilities and Shareholders' Equity	$	168,402		$	171,786
Additional information
Equity per Share	$	6.88		$	6.90

Comparative statements of operations (in thousands – unaudited):

	13 Weeks Ended
	May 31, 2020					June 2, 2019					March 1, 2020
Net Sales	$	12,213				$	14,950				$	15,494
Cost of Sales		8,539					10,146					10,460
Gross Profit		3,674					4,804					5,034
% of net sales		30.1%					32.1%					32.5%
Selling, General & Administrative Expenses		1,630					1,922					2,147
% of net sales		13.3%					12.9%					13.9%
Earnings from Continuing Operations		2,044					2,882					2,887
Interest and Other Income:
Interest Income		656					948					717
Earnings from Continuing Operations before Income Taxes		2,700					3,830					3,604
Income Tax Provision		728					1,116					971
Net Earnings from Continuing Operations		1,972					2,714					2,633
% of net sales		16.1%					18.2%					17.0%
Loss from Discontinued Operations, Net of Tax		(15	)				(127	)				(249	)
Net Earnings	$	1,957				$	2,587				$	2,384
% of net sales		16.0%					17.3%					15.4%

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

	13 Weeks Ended May 31, 2020												13 Weeks Ended June 2, 2019													13 Weeks Ended March 1, 2020
	GAAP				Specials Items			Before Special Items					GAAP				Specials Items				Before Special Items					GAAP				Specials Items				Before Special Items
Selling, General & Administrative Expenses	$	1,630			$	-		$	1,630				$	1,922			$	-			$	1,922				$	2,147			$	(208	)		$	1,939
% of net sales		13.3%							13.3%					12.9%								12.9%					13.9%								12.5%
Earnings from Continuing Operations		2,044				-			2,044					2,882				-				2,882					2,887				208				3,095
% of net sales		16.7%							16.7%					19.3%								19.3%					18.6%								20.0%
Interest Income		656				-			656					948				-				948					717				-				717
% of net sales		5.4%							5.4%					6.3%								6.3%					4.6%								4.6%
Earnings from Continuing Operations before Income Taxes		2,700				-			2,700					3,830				-				3,830					3,604				208				3,812
% of net sales		22.1%							22.1%					25.6%								25.6%					23.3%								24.6%
Income Tax Provision		728				-			728					1,116				(144	)			972					971				54				1,025
Effective Tax Rate		27.0%							27.0%					29.1%								25.4%					26.9%								26.9%
Net Earnings from Continuing Operations		1,972				-			1,972					2,714				144				2,858					2,633				154				2,787
% of net sales		16.1%							16.1%					18.2%								19.1%					17.0%								18.0%
Loss from Discontinued Operations		(15	)						(15	)				(127	)							(127	)				(249	)			-				(249	)
% of net sales		-0.1	%						-0.1	%				-0.8	%							-0.8	%				-1.6	%							-1.6	%
Net Earnings		1,957				-			1,957					2,587				144				2,731					2,384				154				2,538
% of net sales		16.0%							16.0%					17.3%								18.3%					15.4%								16.4%
Earnings from Continuing Operations									2,044													2,882													3,095
Addback non-cash expenses:
Depreciation									277													366													402
Stock Option Expense									43													124													115
EBITDA									2,364													3,372													3,612

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