Good afternoon. My name is Alicia, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. second quarter 2024 earnings release conference call and investor presentation. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star two. Thank you. At this time, I would like to turn the call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference. Thank you, Alicia. Welcome, everybody. This is Brian, of course. Welcome to our fiscal 2024 second quarter investor conference call. I have with me, as usual, Matt Farber, our CFO. Make sure you're accessing the presentation. We announced our earnings just a little while ago, and there are instructions as how to access the presentation we're about to go through. Also, it's posted on our website if you want to do it that way. So what we're gonna do, with this presentation, maybe a little bit of a different approach, is that we'll focus on our second quarter dynamics and then a longer-term outlook dynamic for our future. We'll skip over some things like the trend information regarding industry trends, and then we'll go right to questions. You know, it probably still take 45, 50 minutes to get through our presentation. And of course, before we proceed, I wanna just remind you, mention to you that we're in our 70th year in business. So let's go do it. Slide two is a forward-looking disclaimer information. Let us know if you have any questions. Slide three is our table of contents. Our slide one is our Q2 presentation, and we have supplementary financial information in appendix one. We don't intend to cover that or discuss it, but if you have any questions about it, please let us know. A picture of the Airbus A321XLR, sorry, which is an important potential program, future program for Park. Let's go on to slide four. Let's slow down here a little bit. Our quarterly results. So let's go right to the right-hand column there for Q2. If you notice, the revenues are way down from Q1, about $3.1 million, and we'll discuss that in detail, of course. But I also want to highlight for you, and it is highlighted, actually, to make it easier in yellow, the gross margin of 32.7%, which to me is quite outstanding when you look at the comparison to Q1 with a $3 million top-line loss and a 32.7% gross margin. That doesn't happen by accident, I don't think. You know, we always comment that we don't like our gross margin going below 30%, and it does every now and then, and we tell you that. I was actually a little bit surprised myself with a top-line loss of $3 million, and I thought, boy, our gross margin is gonna look so good. I was very pleased with that number. We have an EBITDA margin of 21.4% as well, which is pretty good. Let's go on to the text at the bottom of slide four. So what did we say about Q2 during our Q1 Investor Call? You remember? We said, well, we didn't provide any sales or EBITDA estimates for Q2. Why is that? Because we knew there was a burndown coming. We told you about that, but it was kind of new information for us, and we didn't have any quantification of it. So we said: You know, it's to give you a forecast for Q2 during our Q1 call would have been just guessing, and that's, you know, kind of doing you a disservice. We warned you in a sense, we said, "Hey, something's coming," but we didn't know yet. We had to spend time with our customer, MRAS, to understand the scope of the burndown. So now we understand that, and we can discuss it with you in detail, which we will. The second checkout item, why did our sales drop $3.1 million from Q1 to Q2? Well, just a coincidence, but the sales drop ex is explained completely 100% by a $3.1 million drop in GE Aviation jet engine program sales. Just so happens, it's exactly the same number, and if you do the math, you know, this is not stuff for brilliant people, but the non-GE Aviation jet engine program sales were essentially identical in Q1 and Q2. Obviously, that wouldn't make sense. So, let's keep going. Let's go on to slide five. Since all the GE Aviation jet engine programs, which Park supplies into, are ramping up and going strong, which they definitely are, why the steep drop in GE Aviation program sales in Q2? What's going on here? Well, you already figured it out. It's about the MRAS inventory burndown, which we'll discuss in great detail later in presentation. So we'll get to that. We'll go into detail about the burndown, but let's just go back to our Q2. A couple of things we want to mention. What other considerations are there related to Q2? How are things going with supply chain, freight disruption, and staffing challenges? We talk about those three things every quarter for, I don't know, you tell me, a couple of years at least, because they've been really important factors for Park and in running our business. The challenges continue, but things seem to be improving. So, what does that mean? It's not like they were before the pandemic. The lead times are longer, but it's something that we can count on more. During the worst part of this deal, it didn't matter what the lead times were or we wouldn't be given lead times. We'd say: Look, we'll get it to you when we get it to you. We don't even know, or we'd be given a lead time, and it would be blown, and it made it very, challenging to run our business from a, you know, production management perspective, from a supply chain perspective, from a staffing perspective. So a lot better. We still have longer lead times, but as long as we kind of take those into account, we're able to manage our business much better than, over the last couple of years. Total missed shipments in Q2, approximately 220,000. The number's down. We still would like to be zero. Our people think they did an outstanding job to bring the number down. And what is it about? You know, want to guess? Probably you can guess already. International freight, that's been the thing that's really been the toughest for us. I think we're doing better with that as well, but we still get surprises with international freight. Our margins continue to be affected by inflation and costs related to recently commissioned new plant in Kansas. We'll go into details about those things because we covered those in the last two or three presentations. You want to go back and take a look, got any questions about them, let us know, but I just want to flag those things continued. Let's go on to slide six. Important here. Before we move on, I believe we must give a special shout-out to Park's people for their outstanding job, my opinion, in delivering the margins they achieved in Q2, considering a $3.1 million drop in revenues compared to Q1. So there always will be some quarter-to-quarter variability based on product mix, and it was in our favor, you know, so let's say that, it was in our favor in Q2. But notwithstanding all that, our Park people did an outstanding job in Q2, in my opinion. So, you know, Park, you probably, you know us by now pretty well. We're not the fanciest company in town. We don't, you know, have a lot of people doing with their fancy B schools, but our people are old school, and our people know how to make money for owners. And to me, that's probably pretty important for our owners. You know, I mean, you can tell me if you disagree, but if I was an owner, I would think I'd, I want people who are dedicated to making money for me. In my opinion, our Q2 was one of our best Park quarters. Why do I say that? Because, you know, when things are going great and your sales are up and everybody's a hero, everybody's, you know, get the, you know, the employee of the year, sorry, the company of the year award. To me, that doesn't mean anything. When the chips are down, you still deliver and perform. That, to me, is an indication of a very good, solid company. So this is my opinion, you can disagree. Let's go on to slide seven. I wouldn't talk about slide seven too much, it's in every every presentation, just kind of for perspective and reference. Let's go on to slide eight. Okay, we always do our top five customers every quarter, so we're continuing this tradition. Aeros peres, they're a rep in Israel, and they rep Israeli Aircraft for us. Israeli Aircraft makes the Gulfstream G280. I don't know if you're aware of that. That's actually made under contract with Gulfstream. They made the top five. Kratos is in our top five, I think, pretty much every quarter. Wonderful, wonderful customer. We love them. We got a great photo here of the Valkyrie, and it's doing a loyal wingman demo flight with, guess what, the F-35 and F-22. I would think of the three different airplanes, the Valkyrie is probably a lower cost of the three. I'm being a little sarcastic, I guess. Middle River, we could use a lot of programs here, but we use the COMAC 919. LifePort, they kind of, through some circuitous means, took over some of the AAR structures business that we used to supply into. Nordam, we chose the 737-800. That's for the WeatherMaster radome, which is on the 737 line. Let's go on to slide nine. Our pie charts. I always like these. I don't know if you have any opinion about it, let me know, but I—let me know. I think they're useful. Look at the difference, 2021, the pandemic year, 2022, 2023, very similar. First six months of 2024, commercial down a little bit. Why is that? That's because the burndown, burndown was all commercial, you know, in Q2. So, okay, let's go on to slide 10. Another one of our, you know, traditional slides. We love niche military airspace programs, which we certainly do. This is Elena's project every quarter. She's our head of customer service. MK 125 warhead, that's on the SM-2, SM-3, that stands for Standard Missile, you probably know that. This is a picture of the Standard Missile 6. These are some outstanding missiles. I believe the SM-2 is a hypersonic missile. The Alenia C-27J Spartan, radome materials, Sikorsky. We just have a lot of stuff, a lot of materials on Sikorsky. And the MK 41 vertical launching system, a little bit different here. Parts using our material, it's actually not ablative. So we have the pie chart. Rocket nozzles, drones, radomes, we consider those to be niche markets for Park, but even for us, aircraft structures is a niche market. We don't go for the big programs, for aircraft structures where, you know, it's a lot of, margin pressure. It's just, not really for us. Okay, let's go on to slide 11. Here's what we're going to skip. Slide 11 through, what was it? Let's figure it out. Yeah, through 15. Pretty much few changes from, Q1. So, you know, if you want to ask questions about it, that's fine, but let's just skip over it. I, I included, we included it just for perspective and context. Let's jump to slide 16. Okay, this is a slide that we include every quarter, just to kind of give you the lay of the land. GE Aviation jet engine programs, obviously very important to Park. We have that. For those who don't know, firm pricing LTA, that's a requirements contract from 2019 to 2029 with MRAS, Middle River Aerostructure Systems, which is a sub of ST Engineering Aerospace, a large Singaporean aerospace company. We built that redundant factory. When they—we said, "We'll build you a factory if you—we, we sign the LTA." Of course, we live up to what we say. The factory is complete. It's in production. You know all that. Let's go on to the next item. Sole source for composite materials, for engine installs and TR thrust reversers, all these programs. So you're probably thinking, if you don't know us too well, what's going on here? These are all GE Aviation programs. What, what's the connection? Well, that would be an excellent question because they are all GE Aviation programs. So the connection is that when we first, you know, got involved and did the LTA and everything, MRAS was a sub of GE Aviation. Subsequently, we're getting on these programs. MRAS, GE Aviation sold MRAS to ST Engineering. So that's the little secret there. Boeing 747, those are spares. You know, they terminated, they canceled that program. We're still making spares. Let's go on to slide 17. So let me explain something. Park Composite Materials are sole source and primary structures, on a primary structural component for the Passport 20 engine for the Global 7500, Global 8000, not included in the MRAS LTA. This is a little confusing... because for the nacelles and thrust reversers, that is included in the MRAS LTA, this is a different structure. This is a primary structure in the engine, and that actually is not part of, that's not an MRAS program. That's a GE Aviation program, and that's why that component is not included in the MRAS LTA. You shouldn't believe that the 70, the F420 engine program is not in the MRAS LTA, because for all the nacelles and TR materials, it is in the LTA. Fan case containment wrap for the GE9X engine for the 777X aircraft, that's produced with our AFP composite materials, not included in the MRAS LTA. Not yet, anyway. The reason I say that is this program seems like it's about to move, and MRAS has already said they want to get into the LTA, so let's see what happens with that, but not, not at this point. I mean, it is through MRAS, it's just not in the LTA yet. MRAS qualification of two proprietary film adhesive formulations in progress. That's wonderful news, that the qualification's in progress. Park, MRAS, I always put them first. MRAS Park LTA through 2029. It's recently amended to include three Park film adhesive product forms for composite bond, metal bond. Again, very wonderful news. And then the life of program agreement, we talked about that last time. It was requested by them. What's it worth to Park? I don't know. I mean, what's the life of program? 20 years, 25 years? I don't know. And if you look at, I think it's our outlook, which is slide 34, we say it's about $55 million a year, so you could do your own math and figure that out. Now, starting. If we continue after 2029, which, you know, most betting people would say, "Yeah, we're gonna continue," that number will be higher because, you know, pricing would go up at that point, of course. But, you know, just do your own math if you want to. Get a little calculator on your iPhone. So, slide 18. Update on GE Aviation jet engine programs, the A320neo aircraft family, the CFM LEAP-1A engines, that's the three nineteen neo, three twenty, three twenty-one, and the A321LR and XLR. This is the big dog. This is the big, you know, the big kahuna in the GE Aviation, in terms of our GE Aviation work. Airbus has a huge backlog, and I would say that's huge, of A320neo family aircraft of 6,720 airplanes. That's a lot of airplanes. I mean, I'm sorry. During the Airbus' Q1 first half earnings call on July 25, 2023, they just reaffirmed their plan to achieve a rate of 75 A320neo aircraft family deliveries per month in 2026. Do you get a little nuance there? Did you? Because they were saying the end of 2026. Not saying that anymore. They're just saying 2026. I don't know if I'm reading too much into it, but they're just not saying end of 2026 anymore. So I don't know. I'm not sure what's going on there. Maybe it's nothing. Will Airbus achieve that rate in 2026? Hard to say, but based upon their huge backlog, huge backlog, there's very good reason to believe they'll get there in 2026 or sometime in the not-too-distant future thereafter. Here's a nice picture of the A321neo. That's their biggest seller in that family at this point. How's Airbus doing with their planned ramp-up? Let's go on to slide, what is it? 19. Not too bad. According to reports, 2023 year to date through August, I don't have September in here yet. It was just two... I, you know, been working on the presentation for a couple of weeks. September's info was not, I don't think, reliable yet, so I just didn't go there. Airbus delivered an average of 43.5 neo aircraft per month, so we're getting there. Here's something interesting. Delivered an average of 15 in the last four months through August. You would say that's moving in the right direction. I would, I think you would say that. Clearly, though, based upon their huge backlog, they would already be at 75, a rate of 75 per month, if not for supply chain restrictions and limitations. That's probably obvious to you. What about the engines, though, for the A320neo aircraft family? What about those engines? Well, we review the A320neo aircraft family offers two approved engine options, namely the CFM LEAP-1A engine and the Pratt 1100G GTF engine. Now, we supply, Park supplies into the A320neo aircraft family using the CFM, CFM LEAP-1A engine. We have no content on the A320neo family using that Pratt engine. Now, here's something really, really interesting. The CFM LEAP-1A's market share of firm engine orders for A320neo family aircraft has been hovering around approximately 60% for the last two years or so. You know that because every quarter we talk about it, so you people that are pretty regular with Park, you've heard that 60%, you know, more or less number, that kind of 59, 60, 61 range for a while now. But what happened? Let's go on to slide 20. That's all changed. In the last few months, the LEAP-1A has broken out as a clear market share winner for the A320neo aircraft family. Now in red, the CFM LEAP-1A market share of firm orders for the A320neo aircraft family has jumped to 66%. That's as of July 31, 2023. Well, that's a huge jump. Why is that? This huge jump in market share is quite remarkable when it considers there are 12,348 firm engine orders for the A320neo aircraft family. I mean, there's so much ballast in the market share that a significant change, like a 60% in market share, would be considered to be highly unlikely. You know, in other words, if there are 20 engines ordered, somebody gets five orders, well, that's good. You know, you really move the needle. But you, you have over 12,000 engine orders, it takes a lot to move that needle.... 6% is just shocking! Huge number. What's going on here? Shocking to me, anyway. That's my opinion. I mean, maybe other people don't agree, but let's go on. What's going on here, though? Why? Slide 21. Just a little aside, its delivery rate is 75 A320neo family aircraft per month. A 66% leap when a market share translates into 1,188 LEAP-1A engines period. That's just doing math. Sorry. I mean, if you had a little calculator on your iPhone, you can do that yourself. What is that worth to PARC? Well, according to our outlook, it would be worth, $36 million per year. Yeah, just do the math again. Do the math. Because we know what our content per, per engine is, $36 million per year. That's just for the A320neo family. There currently are 8,144 firm LEAP-1A engine orders. What are those firm orders worth to PARC? Well, that's a little bit more difficult to say because some of those airplanes will be delivered after 2029. And like I said, if you're, you know, a betting person, you're going to bet we'll continue after 2029, but our prices will go up after 2029. Now, our pri-- the prices will also go up in 2025, so there may be an offset. So this year and next year, price will lower. They go up in 2025, so it's kind of, you know, six and one half dozen other. But you could do your own math. You can multiply 8,144 by, if you want, 30.5. You know, that's how much it is per, per... That's $30,500 per unit, not million. That's about a quarter billion dollars. That's just in a rough kind of guesstimate. That's not the program. The program will continue, and there'll be more orders, I would just-- I would expect. What happened anyway? Back to the main point here. Why is the market share of firm engine orders for the A320 aircraft family, why has it shifted so abruptly and dramatically in favor of the CFM LEAP-1A engine? Very serious issues, the Pratt 1100G engine. Now, we talked about this a little last time, about durability, but we're talking about a different category of issues now. These issues have been extensively reported, and as a result, we will not attempt to cover them in detail here. However, the Pratt 1100G engine issues are expected to ground 350 A320neo family airplanes per year through 2026, which is met with as many as 650 groundings in the first half of 2024. That's not some, you know, analyst or commentator. That's from the company. That's what they're saying. You run an airline, you don't make that much money to begin with. You don't want airplanes grounded. That is death for an airplane. You can't have airplanes grounded. That's why it's such a serious issue. Now let's go on to slide 22. This also comes from the company. It's not somebody's opinion. The inspection and repair work is expected to take up to 300 days per engine. So we're talking about, you know, grounding airplanes for a long time. Very tough situation. It's difficult to fully comprehend the full implications of the crisis and where it's going, but the story may not be over. Maybe far from over. My take on it is whenever it seems like a crisis can't get any worse, it does. That's just my take on it. Will this crisis lead to significant additional A320neo aircraft family market share gains for LEAP-1A engine? Many believe it will. What do you think? I mean, the dilemma is that people are, you know, ordering these airplanes, a lot of them, they got to choose which engine they're gonna, you know, they're gonna go with. So, you know, think about that a little bit. Let's go on to slide 23. Well, the top item, that's still in the A320 neo family. This is the A321XLR. Just want to highlight that. That's a, you know, that is supposed to be, what, entry into service in the second quarter next year. Boeing doesn't have a response. This is a, you know, real important program for Park. You know, a lot of, we see a lot of writing about it now. I think people in the industry are getting pretty excited about this aircraft. We covered it in more detail in the past, and I won't do that for you, but it's definitely, we would say, a plus. A COMAC 919 with those LEAP-1C engines. COMAC plans to achieve a production rate of 150 C919 aircraft a year within five years. That's what they say. That's not some analyst. That's what they say. Note, when we get to our outlook, I think on slide 34, we're only assuming 100, so just keep that in mind. They currently have over 1,000 orders, and two C919 aircraft are currently in service with China Eastern Airlines. Let's go... Nice picture of it here. Let's go on to slide 24. Still on the C919. China Eastern Airlines recently announced an order of 100 additional C919 aircraft to be delivered between 2024 and 2031. This is the largest C919 order to date. And then Royal Brunei Airlines recently announced an order of 15. Why would I even tell you that? You know, 15 orders doesn't sound that much. The reason is because, until now, the COMAC airplanes have been considered to be China market airplanes only. Like, they'll sell a lot of these, but only into the China market. Well, obviously, Brunei, if you know your geography, that's not part of China. So that's why I thought I'd highlight that. Very interesting. And then let's talk about the COMAC ARJ21. That's the regional jet with those GE CF34-10A engines. According to COMAC, 112 aircraft have been delivered and serviced, 775 open orders. And here we go, Royal Brunei Airlines, they announced an order of 15 of these airplanes. So again, you know, previously thought to be a China-only kind of market, but Brunei is not in China, so here's a nice picture of the ARJ21, a regional jet. Let's go on to slide 25. Okay, so the 777X with GE9X engines. We talked a lot about, you know, last few quarters, about the issue with the fan case redesign. If the fan case redesign is successful, then the case wrap won't be needed. I'll give you my perspective based upon things I know, which is, I guess, you know, considerable. I think that chances of that happening are kind of fading away. So, my opinion, this will be a real important exciting program for Park for a long time to come. Entry into service, 25. Currently an active program for Park. You should know that this is currently an active program for Park. I don't want to say too much more about it, but I, I feel quite encouraged that this is not going away, and it's going to be moving up. Potentially significant program for Park, so we're happy about that. Always got to give honorable mention to 747. We're still making spares for the 747. Slide 26. This slide you're familiar with. A couple of little changes, though, to it. GE Aviation jet engine program sales history. Won't go into the history. Just look at the right, this right-hand column, though. Look at Q1 to Q2, 6.2- 3.1. There's a $3.1 million difference, and I think that's about half, isn't it? Yeah. For Q3, we got $4 million booked, but we're not—it's not a forecast because there's so much uncertainty, which we'll talk about a little bit more, and we get as a burndown regarding Q3 and Q4. So, I mean, look, we would expect to be less than that, but we're not giving you that as a forecast. We're just saying this is what we know, and we're not, we're not giving you a forecast. We just don't feel comfortable. Now, one thing I want to add is on the right-hand, the little box here, see $9.4 million. Remember we said earlier, same amount of non-GE Aviation programs in Q1 and Q2. So that annualized at $37.5 million. I want to remember that number, $37.5 million, if I forget, when we get to our outlook. So we'll talk about that again when we get to that outlook, I think, on slide, I don't know, 35 or something like that. Okay, let's go to slide 27. Okay, now this is the painful part of the presentation. GE Aviation sales are all about the MRAS inventory burndown. During that time, the sharp drop off, and Q2 GE Aviation program sales is all about MRAS's burndown of Park inventory carried by them and its subcontractors. Now, this is the really key point. The MRAS calendar year 2022 build plan, that's their build plan, not our plan, their build plan. This is their, this is their saying, this is what they plan to build in 2023. We got a build plan through, I think, 2020 to 2029. This comes from them, not us. It translates into approximately $20 million,23, sorry, $23 million of calendar year 2023 Park GE Aviation, GE program sales. It's very easy to do the math. Once we know how many units they're going to build, we know, you know, how much material is used per unit, and we know what we sell the material for. So it's very easy to do that math to get to $23 million. That's a pretty precise number, assuming the build plan is correct, and, you know, normally it is. That's approximately $5.75 million per quarter. So the MRAS calendar 2023 build plan is reduced to some extent. This is just a side point, because MRAS is carrying excess finished structures inventory as well. I was reluctant to put this in because it could be confusing. This is just saying their build plan would be more, except they have their own inventory. That's nothing to do with Park inventory. As far as Park's concerned, what matters is their build plan, okay? That's what matters. That says this is how many units they're going to build, and that will drive how much material, Park material, they're using. Since MRAS's 2023 build plan translates to $5.75 million in Park GE program sales per quarter, why were Park GE program sales only $3.1 million in Q2? Well, I guess we already kind of gave away the little secret, but what explains $2.65 million? That's just math. That's taking $5.75 million, subtracting $3.1 million. What explains the $2.65 million gap between Park's expected Q2 GE program sales based upon the build plan and Park's actual Q2 GE program sales? Well, again, you know, it's all about the burndown, the MRAS burndown of Park's inventory carried by MRAS and its subcontractors. The inventory burndown explains 100% of the gap or shortfall, which makes sense, because as we hear, the programs are ramping up, the programs are going strong. So why would our number be down? Well, that's the explanation. That's 100% of the explanation. Let's go on to slide 28. Why the inventory burndown? Why the surprise about excess Park inventory being carried by MRAS? Now, I'm going to say something I mean very sincerely. MRAS is a wonderful customer. The relationship between MRAS and Park is very special and unusual, and Park is very fortunate to have such a wonderful customer, as MRAS, and have such an unusual relationship with MRAS. And this is not just BS, you know, no way. It's not true. I've been doing this job for a long time, and I've dealt with lots of customers over the years. You know, some were really good, some were not so good, but this customer is special, I would say, quite special, and the relationship with them is quite special, to really a true partnership. You know, and, and we -- if you're around a while, you get nervous when a customer talks about being partners, because that means when they want something, you're partners. When you want something, you're not a partner anymore, you know? But with MRAS, I give you a dozen examples without even, you know, thinking about it. It's been a true partnership, you know, win-win, true. They're, I know they're, the sourcing people are, very, enlightened, I would say, very enlightened people. But to put it kindly, maybe inventory management is not the aerospace industry's strongest suit. What's going on here? I'll give you my opinion. I'm not an expert in the aerospace industry. It's a strange industry, no doubt. It's very risk-averse and averse to change, but that's for obvious reasons, because of safety. You know, the FAA doesn't want, you know, some OEM or contractor to making changes willy-nilly to airplanes or structures and systems. That would be, you know, like, danger. Chaos, it'd be dangerous. But there are some collateral effects, in my opinion, again, related to this or being risk-averse and resistant to change. So what happens in the aerospace industry, my opinion again, is the players tend to go on autopilot too long. They tend to overshoot. They just kind of get something locked in, and they're not paying attention to the, you know, the signals that much. They're not that much agility, let's say, you know, so it may be a little bit of a byproduct of being risk-averse and resistant to change, which is good, because that's for safety. What happens is that can lead to increasing oscillations with these overshoots, you know? You wait too long, you wait too long, you're not reacting, and then by the time you realize, you know, you're six months late in reacting, then you have to—the correction is, you know, could be pretty extreme. For Park, I mean, we're not gonna change the aerospace industry. We chose to be in the aerospace industry. What does it mean for us? We need to be really agile, flexible, and have a lot of urgency in how we manage our business. We're certainly not singling out MRAS. They're probably better than a lot of other, you know, companies in the aerospace industry. I guess I'll, you know, try to be, kind of, delicate about this is what's going on here and why we have this surprise and this inventory burn down. Will this kind of inventory surprise happen again? Likely will happen, no matter how closely we work with Embraer. We work with them really closely. There's nothing hidden or anything like that. It's very transparent. It's happened before. Likely happen again at some point in the future. So there may be, likely will be, some degree of quarter-to-quarter volatility in our GE program sales because of inventory management challenges, maybe somewhat of a roller coaster from time to time. That's just the way it is, in my opinion. Slide 29. But considering all the wonderful things which have resulted from the relationship with Embraer and the many wonderful things still expected to come from the relationship, on balance, there's no question whatsoever in our minds that we are extremely fortunate to have Embraer as a customer. On balance, not even close when you consider the plus and minuses, not even close. Not, no, nothing to talk about. Not even close. Though there may be quarter-to-quarter GE program sales volatility in the future, we're happy to work through and deal with the volatility and challenges presented by it, because to us, the overridingly important consideration long term is long-term outlook for GE program sales, which we explain in slide 34. Yeah, it causes it. You know, causes challenges with our production management, with supply chain management, with our staffing management. We're happy to deal with it. We're happy to deal with it. On balance, not even close. So where are we going with the burndown? Based on the information we have, we have a lot. We believe the burndown will likely be completed in our Q3 and our PARK inventory, the PARK, PARK inventory category, Embraer, will be "normalized" by the end of Q3. We put normalize in quotes for a reason, because that's kind of a complicated term. Let's go on to slide 30. One more consideration regarding inventory management. As a general matter, we kind of touched on this already, it is very important to avoid overcorrecting, as doing so, kind of overshooting, can create additional volatility with increasing sine wave amplitudes and inventory swings, like oscillations, you know. So, you probably know what that means. You know, sine waves, they kind of go up and down. You've seen that. This is a concern of ours and others. We're not, not the only ones, and I won't mention who, but not, we're not alone in this concern. If our concern is well-found, it could result in a significant spike in demand in our Q4 and into 2025. So that's shouldn't be a real surprise. We shall see, but in the meantime, we're keeping our antenna up and our ears to the ground. Let's go on to slide 31. This is kind of, I think, kind of summing it up for us, for me anyway. In any event, what do we think about all this? What do we think about all this? We think mostly short-term noise and static. Now, we, like I said, we have to deal with, from a management perspective, you know, the oscillations, the ups and downs, but in terms of what matters to PARK in the long term, mostly short term, noise and static. We think the freight train, the juggernaut, is coming down the tracks at us 100 mph, and it cannot be stopped. See that outlook on slide 34. We're not fooling around here. We think we better be ready, or we, too, will be overrun. That's what we think about it. So let's go on to slide 32. Financial outlook. How are we doing with time? Financial outlook for PARK and GE Programs, a little bit of an update. Okay, because of uncertainty with Q3, because of burndown Q4, because maybe there's a spike, very difficult for us to provide meaningful forecast for Q3 and Q4. We're not gonna... What's the point of guessing? We're not gonna, we're just doing you a disservice. When will we be able to resume providing quarterly longer, longer-term forecast estimates? I'm not sure, but we'll definitely keep you posted. We are able to provide the following updated revenue outlook for GE Aviation jet engine programs and financial outlook for Park generally. We believe the GE Aviation programs and Park outlooks are much more meaningful and significant than quarterly forecast estimates, because the quarters go up and down, because who knows why, but the key thing to us is what are the long-- what's the long-term outlook? What are the long-term prospects? That's more meaningful for us, and that we have a better feel for as well. What's the timing for the outlook? You know, we have the outlook, and well, one year is like, well, people say, "What year is that?" It's like, we're not sure what year it is. I mean, if the CEO of Airbus says that they're gonna be at 75 A320neos in 2026, what am I supposed to say, "No, he's wrong?" I don't know, but I mean, so we don't know. Why play the guessing game? We're not sure, but as I said, and this is the key thing for PARK, the freight train is coming, it can't be stopped, and we better be ready. And, slide 33, these are the assumptions we use. We—I won't go through them. This is the same assumptions that we shared with you last quarter. Go to slide 34. I'm gonna stop here. I know we're running late, but this, this slide requires a little bit more discussion. These are $55 million numbers. Is that an aggressive number? Well, let's go through it. Let's go through the math. A320neo, 1,188. Remember we talked about number before? We're just doing the math. It's 75 per month, 66% market share. We're not, we're not assuming that market share is gonna go up. It might. We're not assuming that, and we know what the revenue per unit is. There's $36 million per year from the A320neo. This is assuming 25-29 pricing. Passport 20, that's for the, the Global 7500, 8000 aircraft. 90 airplanes, that's the low end of the build plan. We have low numbers and high numbers from the MRAS for the build plan. It's a low end. So are we being aggressive? C919, what did I tell you? You know, that COMAC said they're going to be at 150 in five years. That means 300. These are, you got to convert two engines per airplane, okay? We're just using 100 equivalent, 200 engines, 100. Now let's talk about that. The A320, they're predicting 900 airplanes per year. The 737, we just talked how, but they're going to go to 57 per month. That's 684 airplanes per year. We're talking only 100, which is 50 less than what COMAC says. Is that aggressive? I don't know. And the, again, the revenue per unit, those numbers we know. ARJ21, that's the regional jet. We are, 55 is lower than the low end of the build plan range. There's, you know, two numbers, high and low. This is lower than the build plan range. Are we being aggressive? GE9X, we're not going to give the unit numbers, but I can assure you it's conservative. Now, the number, the total numbers went up. Why is that? Because the revenue per unit went up, because we, we have new pricing. The pricing is, is, you know, we're taking into account the new pricing. That gives you the $77.5 million per year. Pretty conservative number of units, I would say. Let's talk a little bit about some of the footnotes here. Okay, item three, item footnote three, A320neo aircraft. Parker assumes film adhesive materials qualify in the use of this program. Is that aggressive? Well, I don't know. You tell me. We're qualifying, and that's a lot of money for MRAS as well, qualifying their film adhesive products with them. They're hiring engineers. They got a big investment. Why would they be doing that if they don't plan to put the film adhesive on the programs, you know? Is that aggressive? Well, I don't think so. Let's talk about some more. Item five, Passport 20, item six, which relates to the 919, and item seven, which relates to ARJ. We're assuming in every one of those cases, our film adhesive is not used in the program. Why is that? Because, I mean, clearly, MRAS wants to get their film adhesive products on all these programs. They don't want to have to buy film adhesive from brand X and, and also from brand Y. Why are we doing it? Because we're being conservative. Why are we assuming, rather, we're not-- they're not in the programs? We're being conservative. So you tell me, $55 million, is that an aggressive number? Is that an aggressive number? I don't think so. We're just doing math here, folks, you know. So if people think that we're, you know, kind of overdoing it or promoting or hyping, I don't know where that -- I don't know where you see that. Let's go on to slide 35. Okay, now, Park Aerospace core financial outlook, principally based upon growth estimates of programs on which Park is sole source qualified and updates. All right, we will—this is pretty much, very similar, although we've updated the GE estimated, GE programs, incremental sales to $32.7 million. That's just doing the math again. There are footnotes that on the next slide, slide 36, which, you know, explain the math here, which you pretty much know, there's not too many changes. The $20 million for the ADL, Kratos, Maxar. You know, somebody said he thought that number was high. It's like, okay, I don't know where you get that information from. To me, this number is conservative, quite conservative. You know, I guess we'll see about that. Non-GE programs, incremental sales. Well, that's interesting because remember, we're using baseline of 2023, where there's non-GE Aviation sales for $32 million, and $8 million brings it up to $40 million. That's the assumption here. Thirty-two plus eight is $40 million. That seems like, you know what? We say 5% a year over five years, something like that. But where are we in Q1 and Q2? We're at $37.5 million. So $5.5 million of the $8 million has already been achieved. Now, that's Q1 and Q2. It could go down. I mean, I'm not saying that. That number will move up and down, because it always does based on timing of programs, you know? That's just how aerospace works. But I just want to point out, again, are we being aggressive? I don't know. I don't see it. And the rest of the math, you know, you could just, you know, follow through, and, I mean, follow along yourself. You can see how we get to $36.5 million of EBITDA for outlook. Let's go... Slide 36. I'm not going to go through these items. These items just kind of explain detail, the kind of things we already talked about, how we could do the math. You have any questions, let us know. Slide 37, let's stop there for a second. Just remember, very importantly, this is an outlook. This is not a forecast. Why do we say that? Because it, the outlook does not take into account lots of other programs we're working on. We're not sole source qualified on yet. We're working on. Now, some will hit, a lot, maybe some won't, but some will, and some of them are pretty big, you know, significant revenues. The bullet items, the first one, boy, that's, we're talking big stuff here. The second one, okay, we announced we have a new film adhesive product line. What do you think, we don't want to sell any of it? The only film adhesive sales in any of the outlooks is for the A320neo, nothing else. Nothing else in GE. What about other customers? You think we're not approaching other customers? Of course, we are. And we have a lot of interested customers. So kind of like, yeah, we are actually planning to sell that product to others.... It helps a lot, by the way, to say, yeah, we're, you know, we're getting qualified in a big program, in terms of credibility. The Asian JV, we talked about that before. Structures, assembly, integrations project, that could be a big one. Technology license could be big. Israeli Arrow 3 missile defense system could be big. So just want to make the point again, none of that stuff is included in our outlook. And I'm—we're not going to do that. We're not going to quantify it for you, because some will hit, some won't. But some of these are big ones, you know, they're like binary. It might be zero, it might be a lot more than zero, but it probably won't be somewhere in between. Let's go on to slide 38. Okay, these are updates just, I guess, by coincidence, almost on the three programs that are included that total $20 million in the outlook, the ADL program, the Kratos program, and the PAC-3. I won't even read through it for you. You know, I think all, everything's positive. I guess the only thing to highlight is the Kratos Replicator, the Replicator program. That's something that DoD has announced recently. This, I think, is very positive news, news for Kratos and the Valkyrie. Very, very positive news. Seems like the government is really going for it with these automated unmanned systems. And, you know, the Valkyrie seems to fit right with, right in there. Wherever these, any article I see about it, you know, Valkyrie is always mentioned, I mean, about the Replicator program, you know about the PAC-3 missile. You know, everybody wants it, and, you know, what's holding it back, I guess, is supply chain. Let's go on to slide, almost missed 40. Okay, slide 40. Doing, kind of going long on time, but we're getting there. Hang in there for a second, please. So this is a slide we've, we shared with you before, $74.2 million. So we're paying down that, transition taxes, full in payment. We paid, $3.2 million in our, Q1. $9.3 million, as far as I'm concerned, you should consider that to be money spent. I mean, that, that is, that's money that's owed, you know. It's almost like debt. Like debt. We don't have any debt, but it's almost like debt, yeah. And that money, and that gets paid, there's two more installments. The last one is in June 2025. That money will be gone in June 2025, so you got to consider that money gone. The $6 million for the Korea project, and we'll see about that, you know, and there are a lot of other projects, some of which we, you know, I kind of referenced in some of the outlook discussions, that programs would require investment, so we'll see about it. But it looks like, you know, kind of conceptual number, $58-$59 million. That's not a forecast, but it's kind of how we look at things in terms of, okay, this is how much money we have, this is kind of how much money is committed. You know, obviously, we hope to be generating cash as well. So that's why I said it's not a forecast, but for us, it's conceptually important. 41, our balance sheet, cash dividend history, and buyback. Every quarter, we cover this. We've got zero long-term debt, dividend history, whether it's cut or cancel a dividend, Park maintains regular quarterly cash dividends throughout the pandemic and economic crisis. Park has paid 38 consecutive years of uninterrupted, regular quarterly cash dividends without ever skipping a dividend, reducing dividend amount. A big one in blue, Park has paid $586 million, $586 million bucks or $28.60 per share in cash dividends since beginning of FY 2005. As I always say, that's a hell lot of money for a little company like Park. As announced on May 23, 2022, our board authorized Park's purchase of up to 1.5 million shares in the company's stock. Then on May 12, 2023, Park implemented a Rule 10b5-1 program, which expired by its terms on July 7, 2023. Under that plan, we purchased 221,099 shares of our common stock, an average price of $13.02, total cost of $2,879,000. On August 11, 2023, we implemented another 10b5-1 program, which expires by its terms today. Under that plan, no Park stock has been purchased. And we're just about wrapping up here. The Park family. This, sorry, slide. Was it 43? Yep. The secret continues. The secret to our success continues. Okay, we've given you, we're giving you an update on our Customer Flex program. We haven't done that for the last couple of quarters, just because we're trying to, for brevity, but our total participation is 62%. Don't read something negative into that. We have, you know, quite a few new people, and it takes a little while for them to be qualified to be in the customer flex program. So still a very important program. Very, very important for our success now and in the future. Park family, the Park family, current people count, 119. Isn't that number a little higher than you're used to? Our short-term plan is to add another 15 employees and increase our Park people count to 134 Park people. What's going on here? Before we get to that, just be advised that doing this will cost about $1 million per year, extra cost. If you want to use 110 people as a baseline, which is kind of where we have been for the last couple of quarters, that's $1.5 million of extra cost to our P&L we're talking about. Here's something interesting. This could happen relatively quickly, particularly for the production workers. Why is that? Well, to my shock, you know, we started using social media for recruiting people. Corey, Courtney, Nancy, they come up with really great ideas. I said: "Oh, okay, whatever," you know, but to, you know, what do I know? I mean, I'm not, I'm just not very good at this stuff. It's really helped a lot. It's made a big difference. I think the other thing that's more important is that the Park family culture has taken hold. You know, Courtney says it's a great place to work, and you know, we really believe that. Not an easy place to work, great place to work. You know, I was a little frustrated because I thought, boy, we're doing all the right things. We don't lay people off. We love our people, our people are family to us. We treat people like family. You know, why is it hard to recruit people? I think we just had to stick with it a little while longer, and now it's taking hold. The word, I think, is out. You know, we got right out the door of people looking to come work for us right now. That's good news. You know, watch our costs because, you know, we could get up to that 134 number pretty quickly, especially for production workers. Half, about half the 15 is going to be production type workers. Okay, that's good news. Let's go on to slide 44. I guess it's good news. I mean, depending on how you look at it. Slide 44. As previously stated, we need to get ready for the juggernaut, or we too will be overrun. Great Park people are committed to making money for our owners every quarter. We run our business for Park's future, for the long term, not for the next quarter. You know, that kind of commitment is maybe what you call, you know, enlightened self-interest. I think that's a term where people realize for us to have a future, we need to make money for our owners every quarter. You know, if you're an owner, you want, you know, people making money for you. But what do we mean here? We run a business not for the Park's future. In other words, we're hiring people or plan to hire people in advance, so we're ready for the juggernaut, and we don't get overrun. So in other words, we're not running for the quarter, we're running for the future. And our intermediate plan is to increase our Park people count to 143 people. So let's see what happens with that. At Park, we're very, so very fortunate and blessed to have the great Park people we have. At Park, our people have been playing for keeps, and we now have been on our seventieth year of playing for keeps. And our tradition is we always feature some group or crew from Park. This is our aerospace composite structures crew. So really emphasizing this because we're looking at significant structures and assembly program opportunities we're working on right now. So this crew is very important. We're into it a little bit. This is also a very great group because they do other things. They do ICTR work. I can't explain that to you. That's not, I'm not allowed to do that. They're in a customer flex program, so they can do two or three other jobs. So very wonderful to have people like this. Anyway, operator, and everybody else, thanks for listening. That concludes our presentation, and we're ready to take any questions that might be out there. Great, great. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. All right, Brian, I'm not seeing any questions at this time. I would like to turn the floor back over to you for closing comments. Okay, well, this is Brian again. Thank you very much, operator. Thank you all for listening in. Feel free to give Matt or me a call if you have any follow-up questions, and you have a good day, and we'll talk to you again soon. Take care. Bye. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.