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 First Quarter Fiscal Year 2027 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'll be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you'd like to withdraw your question, please press star two. At this time, I will turn today's call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference. Thank you very much, operator. This is Brian, of course. Welcome all to Park Aerospace's Fiscal Year 2027, first quarter investor call. I have with me, as usual, Mark Esquivel, our President and COO. We published our Q1 earnings release just after the close. If you haven't seen that, you'll want to take a look at that, because in the earnings release, there are instructions as to how you can access the investor presentation that we're about to go through. There's a link, and also you can access that on our website. A couple of preliminary comments here. It's only been seven weeks since our Q4 investor call. It's also been summer, I had a feeling this Q1 call would be kind of a quiet call with just little updates, and we move on. Actually, it didn't work out that way. There are a lot of important developments that we should go through with you, especially starting in the missile systems and then the new plant sections at the end. What we'll probably try to do is, go through the beginning portion or the front end, let's say, of the presentation, a little more quickly, so we can get to the back end, if you will, more quickly, again, and spend a little more time. That requires much more discussion, I think. It's fortunate, but in this sense, it's unfortunate. We have a lot of new investors at Park, and I apologize for, we're going to go through the front end, if you will, of the presentation a little more quickly just to have time for the back end. For the veteran investors, probably not a problem. A lot of this stuff we go over every quarter. For new investors, if there's anything you want to talk to us about that we went over too quickly, sorry. Please give us a call and we'd be happy to go through those items in more detail with you. I guess, the other thing I'll say is that we're happy to answer questions, of course, after we're done with the presentation. Why don't we get into it? Slide two is our forward-looking disclaimer language. Let us know if you have any questions about that. Slide three, our table of contents. Slide one, we start with our investor presentation, and appendix one, supplementary financial information. We don't intend to go through that during the call, but if you have any questions about any of the supplementary financial info, please let us know. We've been featuring the James Webb Space Telescope for a while now, in our table of contents. We're not going to break the pattern here. The James Webb shattered our timeline of the universe, talking about some big stuff here. Not just what we meant for the quarter, by spotting impossible infant galaxies containing old stars and heavy elements which should not be there. It seems to be kind of a common theme with James Webb. We keep saying, "Yeah, we thought so it'd be that way." All the things we believe, or most of them, just not really true. James Webb, which produced 18 proprietary Park SigmaStruts. Let's go on to slide four, our quarterly results. Let's just go through this quickly. Q1, the right-hand side, right-hand column. Sales, $18,312,000. Gross profits, $6,376,000. Gross margin, 34.8%. As we often say, we don't like it when it's below 30%, like it was in Q4. A little happier above 30%. Adjusted EBITDA, $4,576,000, and adjusted EBITDA margin, 25%. What did we say about our Q1 during our Q4 investor call when we gave you the kind of forecast estimate for Q1? We said sales estimate $17.7 million-$18.4 million. We came in within the range, maybe kind of towards the top end, but still within. Adjusted EBITDA estimate, $4.1 million-$4.6 million. Again, we came in within the range, maybe at the high end of the range. It was still within. I thought we didn't have to cover this anymore, but maybe we do. What is the significance of our forecast estimate? We've mentioned this many times, is that we're not doing the guidance thing where we give you a number to beat. We don't do that. When we give you these numbers, we're telling you, this is what we think is going to happen. Sometimes we're wrong. Sometimes it's off, sometimes a little high, sometimes a little low. We're not playing any game here. We're not giving you a number we think minus 10%, so we could beat it and be heroes and make the analysts happy and all that stuff. I know everybody, I shouldn't say, but a lot of other companies do that. We just don't. We were wondering, based upon the reaction to our Q4 call, whether everybody's listening to that. We think it's kind of strange that investors would invest in our company or they buy or sell stock, totally disregarding what management has been saying consistently for years now. Everybody has their freedom to do what they want. Let's go on to slide five. Quarterly results. Not too many comments about Q1 here. Considerations. I guess the main consideration is we're back to talking to ArianeGroup. We'll talk about ArianeGroup in much more detail when we get into the missile systems section of the presentation. Just for now, the reason we bring it up, it has an impact upon the quarterly bottom line. We entered into this business partner agreement with ArianeGroup in January 2022. Under which they appointed us as their exclusive distributor with the Raycarb C2B fabric in the U.S., or actually North America, sorry. Here's the thing. We had zero C2B fabric sales in Q1. That's actually a good thing, believe it or not, because as we explained, we sell the fabric to our defense industry customers for a relatively small markup. I don't know, not to trick, but the key thing is that when we buy C2B fabric for a customer, we'll sell to the customer, but almost always we store it in our plant. We stock, buy, order, store it for that customer in our plant. At some point, they're going to say to us, "We want you to pre-preg. We want you to take this fabric and make it into a pre-preg." We had $1.9 million of ablative material sales. That's a pre-preg sales using the C2B fabric, and that's very good margin. To the extent we sell fabric, or the extent we sell pre-preg made with the fabric, that can affect our margins. That's why we bring it up most quarters. Let's go on to slide six. This is something we do every quarter. This is Donna's little specialty, the top five customers in alphabetical order. Let's see if we can figure out who's doing what. AE Aerospace, that Patriot missile on the top right-hand side of the page. GKN, I think that's the Boeing 787. Kratos is obviously the Valkyrie tactical and aircraft. Middle River could be the Global 8000 or the A320XLR, but I think what we are doing here is Nordam relates to the Global 8000, and AMRES relates to the Airbus A321XLR. Let's keep going. Slide seven, these are the pie charts, which we like sharing with you every quarter. Nothing too remarkable about Q1. It seems to be more or less kind of aligned with the history there. We break it down, obviously, between military, commercial, and business aircraft. Let's go on to slide eight. This is Elena's slide, the Park Plus Niche Military Aerospace Programs. We don't talk anymore about the specific programs. They're just a little too sensitive, except to say that every program that we show you is a program we're involved with. We're not just showing you general defense programs. We're involved with all these programs. The pie chart, the missile systems, a little bit less than we would normally expect. Why is that? Because there were no C2B fabric sales in Q1, and that would be in that missile systems part of the pie chart. Pie charts, you got to look at them more long-term. You look at them one quarter over quarter, it's hard to figure out what to extrapolate from the short-term quarterly pie charts. Let's go on to slide nine. GE Aerospace jet engine programs for some of you new folks. We cover this every quarter because it's a very significant portion of our business. We have firm pricing LTA from 2019 to 2029 with Middle River Aerostructure Systems, which is a sub of ST Engineering Aerospace, a Singapore company. The key thing we need to explain to you every quarter is that if you look at these programs, they're all GE Aerospace or CFM, which is a JV with GE Aerospace programs. Why is that? What does that have to do with AMRES or ST Engineering? What it has to do with is that when we got in these programs, AMRES was owned by GE Aerospace, I think in maybe 2019. I'm not sure exactly when GE sold AMRES to ST Engineering, but we were already on all these GE Aerospace programs at the time. We built the redundant factory in Newton for GE. They asked us to do that to support their programs. These are some of the GE programs that were on through AMRES. We won't go through them. If you have any questions about them, let us know. These are some of the key programs that were on. Again, this is for GE Aerospace. It's engines, and this would be for engine nacelles and thrust reverser components, composite components. Let's go on to slide 10, still GE Aerospace. Additional program that's not listed on the prior page is the fan case containment wrap for the GE9X engines for the 777X airplane, and that's an important program for Park. Also, the LTA was amended to include film adhesive products, which are now in qualification. As we've told you many quarters now, the AMRES NSC did request a liftoff program agreement with us, and we haven't made a lot of progress of late. It's fine either way with us. AMRES has had some other priorities. When they have a little more bandwidth, I guess we'll continue with the discussions of the liftoff program agreement. Let's go on to slide 11. Let's talk about the GE Aerospace programs. The big kahuna is always going to be the A320neo aircraft family, including all these variants, which I won't read off to you. Look at the numbers. It's a huge, huge, huge, huge program. They've already delivered 4,470. These are neo airplanes. This is not A320. These are A320neo airplanes, and they have a backlog Airbus of 7,483. That's just a lot, a lot, a lot of airplanes for this program. The delivery history for A320neo family. I'm not going to go through numbers with you, except let's look at June and the first six months, 271 deliveries. Last year, this time, 232, we're doing a little bit better this year. Airbus is trying to ramp up. We'll get to that in a second. What we don't do is take June and multiply it by two. That wouldn't work because they back-end load the deliveries. If you look at the 232 and you multiply that by two, it's not going to give you 607. You see what I mean, for 25? The key consideration is that Airbus is way ahead of where they were last year at this time with A320neo deliveries. Let's go on to slide 12. Okay, here's a punch line at the top. Airbus is targeting A320 aircraft family delivery rate of 70-75 airplanes per month by the end of 2027, and then stabilizing in 2027 thereafter. Just, if you have any experience with commercial aircraft, that's a huge, huge, huge, huge number. Those numbers are unheard of, really, 75 airplanes per month. Approved engines, we've got to talk about that. These are two approved engines for the A320 aircraft family. One is the engine we're on, which is the CFM LEAP-1A, that's a CFM engine. There's another approved engine, which is a Pratt & Whitney PW1100G, that's a GTF engine. We're only on the CFM LEAP-1A engine for the A320 aircraft family. That's covered, I guess, in the next, the second little bullet item there. The third bullet item, okay, according to Aero Engine News, which is the bible, the CFM LEAP-1A market share of firm engine orders for the A320neo family of aircraft was 66.2%. That's a big number. That number just goes up and up and up. That's a huge market share. It says creeping up here, I guess that's one way to describe it. At the delivery rate of 75 airplanes per month, okay, 75 per month, that 66.2% market share translates into 1,192 LEAP-1A engines per year. That's just a whole lot of engines, a whole lot of engines that Park supplies into. We'll remember that number a little later on in the presentation when we get to that juggernaut slide. I'll try to remember anyway. Let's go on to slide 13. Still talking about those engines. The Pratt engine, the competitor engine, has struggled with serious reliability issues, and reliability has been a positive selling point for the LEAP-1A. According to Airbus, there's now a serious shortage. We got reliability issues, shortage issues of the Pratt engine. Meanwhile, CFM has ramped up production of the LEAP engine. Just full disclosure, we've also read some things that there's some complaints every now and then about CFM and how a great job they're doing with supplying engines as well, just to be fair about it. Could these factors lead to an even greater LEAP-1A market share? Maybe. Maybe. It seems like it's already having an impact because those numbers have been moving up. The market share numbers have been moving up as of March 3126. These are some huge numbers. 8,472 firm LEAP-1A engine orders. Those are firm orders. That's just a huge amount of revenue for Park. If you look in the juggernaut slide, it kind of tells you what our revenue per unit is. You can do your own math if you have a pocket calculator. The A320 aircraft family program could end up being the world's largest commercial aircraft program ever. That's probably a given. The A320neo aircraft program could also end up being Park's largest non-defense program ever. All right, let's keep going here. What's next? Slide 14. This is the Chinese airplane, the COMAC 919. That's a single-aisle competitor, the A320 and the 737. That is another version of the LEAP engine, made by CFM LEAP-1C. I wonder if C stands for COMAC, and A might stand for Airbus. I don't know. COMAC is increasing manufacturing capacity to achieve production rates of 150. You can see their target rates here. I won't go through them in detail. They reportedly have over 1,200 orders for the 919 aircraft, and they reportedly delivered only two in 2023, 14 in 2024, 18 in 2025. They got a long, long way to go to ramp up. Don't take your 1,200 orders there. They say that we heard the lack of availability of the engines has been reported to be limiting COMAC's ability to ramp up. My sense is, I shouldn't speak for LEAP or CFM, my sense is they're giving a little more priority to Boeing and Airbus than to COMAC, but I could be wrong about that. I'm just telling you what I'm kind of sensing. Let's go on to slide 15. The other big GE Aerospace program is the 777X with those GE9X engines. This airplane has been very, very, very delayed. I feel that it's going well now, that it's on track. It's doing well in terms of certification. They've amassed lots of flights and lots of flight hours in the test program. They have over 650 open orders for this airplane. This is a much bigger airplane. You're not going to get the same number that you see for the A320, for instance. That's a lot of very nice orders. The certification test program has moved into phase 4B of the FAA type certification testing program. That's an important milestone. Just approved recently, that's good. I think they're progressing well. Boeing anticipates certification of the aircraft in early to mid 2027 and entry into service, first delivery in mid 2027. That's very good news. These pictures are interesting. This was at Fairbanks a few years ago. A friend of mine, I know a lot of friends up in Fairbanks, took this picture. It was up there for cold weather testing. If you go to Fairbanks in the winter, that's a good bet if you're looking to get cold weather testing done. Often 40, 50 below. Let's go into slide 16. Here are some numbers. GE Aerospace Engine Program sales history and forecast estimates. Okay. We won't go through all the numbers. That's probably not necessary. Maybe you just noticed that fiscal 2020, just shy of $29 million, $28.9 million. It took all the way to 2026 to get back to that number, $29.2 million. Which obviously, we're going through the pandemic. Look what happened in 2021, my God, it just dropped off a cliff or something like that. Our program sales forecast estimates are Q1, sorry, was $7.1 million. Q2, we're estimating $7.5 million-$8.25 million. For the year total, $34 million-$38 million. You could say, because you're smart, well, if you add Q1 and Q2, then you multiply that by two, you're not going to get $34 million-$38 million. There's $34 million-$38 million, that comes from our customer. That's what we're told. We actually haircut a little bit to be a little conservative. It looks like a stretch, but I just want to mention, last year this time we were in the same position where we had a forecast for the year, then Q1 and Q2, it was much less than half the total, and we ended up making the number anyway. We'll see what happens. We don't know what's going to happen. I'm just telling you where we got the number from. We'll see. A lot of variables in this world. Let's go on to slide 17. Okay, now we're talking about Park itself. Park's financial performance history and forecast estimates. We already know what Q1 was. We talked about that, at the bottom of the first box, $18.3 million sales, $14.6 million EBITDA, adjusted EBITDA. Our estimate for Q2, $19.5 million-$21 million sales, $4.3 million-$5.1 million of EBITDA. If you look at the footnotes, I just want to highlight something. Subject to risks described in slide two. We always include that in this slide, but we also say including supply chain, international freight risk. The reason we're highlighting that is we're a little concerned about some of these things short term, and to what extent they'll impact Q2. We're just going to flag that for you. Right now we're saying, as I told you, this is what we think is going to happen. We also want to let you know that we're a little concerned about supply to international freight risk. I also want to say, just my opinion, that Park, we focus very intensely on the quarters. It's very important to us. We work very hard on our quarters. I think the understanding of Park, if it's really about the quarters, that probably misses the point. The point is probably, to me anyway, more the big picture. The quarters are always going to be quirky. They'll sometimes be high, sometimes be low, because all kind of factors that might just affect that quarter, that don't necessarily have big picture impact. Just my opinion, you investors, you figure it out for yourself. That's my opinion. Slide 18. You know what? We're not going to go through this. This is the same slide that we presented last quarter. If you have any questions about it, just let us know. Slide 19. Okay, changing gears a little bit. We talk about this every quarter, our buyback authorization activity. Under our buyback, we purchased 718,000 shares of our common stock, average price $12.94. I just want to flag those numbers for you because we'll circle back on them. You're probably not surprised to hear we didn't buy any stock in Q1 or Q2. Let's go on to slide 20, because we juxtapose buybacks and public offering for a reason. We did a recent public offering, an ATM, at the market offering, for $50 million of Park common stock. During the Q4, we sold approximately 943,000 shares of common stock for total proceeds of about $22.8 million, or $24.21 per share. That's before commissions. No sales in Q1, we go on to Q2, which we're in now. Let's go on to, sorry, slide 21. Okay. In Q2, just in June, Park sold 870,000 shares of common stock for total proceeds, again, before commissions, of $27,174,000. Average price at $31.24 per share. I just want to tell you that, you should know that we're very disciplined about this offering. A lot of the buying was done via blocks, and we turned them down a lot. People would offer us to buy blocks, X dollars or Y dollars and cents. We would just say no so many times. Really, we're trying to protect the existing shareholders. I think, actually, maybe we could pat ourselves on the back a little bit. I think we did a pretty good job for you with the ATM. This is the total, not broken down by quarter. We sold a total of 1,812,601 shares for total proceeds, before commissions, just under $50 million, $49,996,000 at $27.58 per share. The ATM offering is complete. That $27.58 per share, I wanted to go back and let's look at that. Back to slide 19, the buyback. Sorry. Try again. $12.94. We bought the stock for $12.94. We sold it for $27.58. I think that's probably a pretty good deal for you, I would say. What's the expression? What is it? Like you buy cheap and sell dear or something like that? Let's go on to slide 22. Park's balance sheet, cash, incredible cash dividend history. We have zero long-term debt. We reported $89.4 million in cash and marketable securities at the end of Q1. You also should know that our cash and marketable securities were estimated to be approximately $114 million at the end of June 2026. Obviously, the big jump is because of the ATM activity in June. That's a lot of cash, no doubt. Remember, hold on, we're going to go into some more detail later on in the presentation. We plan to invest $65 million on a new plant, also $25 million in ArianeGroup's C2B fabric plant in the form of advanced payments, and we'll discuss both those things later. You had $65 million, $25 million. I don't know, maybe get your calculator out. I think that's about $90 million. What did I say? 65 million here, 25 million there. Before you know it, you have some real money. You ever hear that? I don't know. I don't know where that comes from, but it's, I don't know, from a movie or something like that. Let's keep going. Park has, I should say, it's 41 consecutive years of uninterrupted regular cash dividends. That's a good deal. On slide 23, here we go. $613.7 million, $0.29975 per share in cash dividends since the beginning of 2005. We declared another dividend. When that $0.125 per share cash dividend is paid on August 3rd, we will have paid over $30 per share in cash dividends since the beginning of 2005. I think that's pretty incredible, if I do say so myself. Here's a nice picture of our founders in Flushing, New York. This is not our original plant, actually. The original plant was in Woodside. It wasn't a plant, it was a garage. This is a real plant, I think about 89,000 sq ft, back in the 1950s. The reason we like to show you this slide when we're talking about paying $613 million of dividends is this company started with nothing back in 1954. Two guys that had some money left over from their war duty, started with nothing. I like to think about that sometimes. Let's go on to slide 24. Changing gears a little bit. Financial outlook for GE Aerospace Strategic Program, the commercial aircraft juggernaut. Here's the first juggernaut, commercial aircraft. What's the timing for the commercial aircraft juggernaut? We used to say, "The juggernaut is coming, it can't be stopped, and we better be ready." Remember that every quarter? We're saying, the juggernaut is here, or at least it's beginning now, in that sense. The drivers of the juggernaut, that A320 aggressive ramp-up, A320neo program, that's clearly a big one. Remember, 51 airplanes at 25, they're going to 75. That sounds like about a 50% increase. That's pretty huge. Expected certification, and entry into service of the 777X, and COMAC's planned ramp-up. Those are the three big drivers of the commercial aircraft juggernaut. Let's go on to slide 25, some numbers here. Let's talk about the A320 here. Remember, we mentioned this, that assumption in the first line, second column, 1,080. Well, that's based on 75 airplanes per month, but also based upon a 60% market share for the LEAP-1A. We told you in the prior slide, it's over 66%, which translates to 1,192. We're not using that number. We're using 1,080. I just want you to be aware of that. Maybe a little conservative. Just so you know, the PAS420 and the 909, those programs are really at rate or ready. You see, they're not the drivers of the juggernaut. It's the A320, the C919, and the GE9X program that are drivers of the commercial aircraft juggernaut. Let's go on to slide 25. We certainly won't cover this. These are just footnotes which explain how we computed the numbers on the prior slide. Slide 27. Okay. It's a half hour into the presentation. Now we're getting into the new stuff, the important stuff. I shouldn't say it that way, important new stuff. Missile Systems, Park's new juggernaut, and the next big thing for Park. Some of this is just going over some things we covered last quarter for review, and some of it is new. Park's Missile Systems niche. We specialize in design and manufacture advanced composite ablative materials used to produce solid rocket motor structures and heat shields for critical missile systems, including the PAC-3 Patriot missile system. Let me stop there because there was some breaking news this morning, announced by Lockheed, of something called the PAC-3 ASE. I just want you to understand, we'll talk about that a little later. Everything we talk about in this presentation, when I say PAC-3, refers to the PAC-3 MSE. That's the program we're on now. ASE is something new. I don't want you to confuse those two. Maybe we'll go back and talk about that later at the end of the section regarding missiles. This just happened this morning, I didn't have time to rewrite the presentation. Sorry about that. Whenever it says in this presentation, PAC-3, what it means is PAC-3 MSE, not the PAC-3 ASE, okay? Let's keep going. Depletion of the depleted. We covered this last time. Very bad depletion of missile systems based on the war in Europe, meaning Ukraine, last year's 12-day war, and now the war in Iran. It's a pretty dire situation, I think. Slide 28. Much reporting about how badly the stockpiles of critical missile systems have been depleted. We're not going to go into that now. If you want to, you can look it up yourself. Running it empty, it's a question. Maybe not empty, it's certainly concerning. How badly the stockpiles have been depleted. Replenishing the depleted stockpiles. Clearly a highly urgent need to replenish depleted missile system stockpiles. Is that it? Is that all we want to do? I don't think so, or maybe not. Talking about quadrupling the production of exquisite class of weapon systems. Just getting back to where we started from? No. Getting back to where we started from times four is, I think, what we're really talking about here. It's really incredible, unprecedented. You come up with your adjectives, I don't know. Slide 29. We reviewed this before, in March of this year. President Trump met with, in the White House, seven of the top defense contractors, including Lockheed Martin, L3. Why do we mention them? Because they're the big defense contractors on the PAC-3 MSE, and they need to quadruple their exquisite class of weapon systems as soon as possible. Clearly, the PAC-3 MSE missile system is a key member of the exquisite class of weapon systems. In our experience, our experience rather is that the defense industry has entered into hypersonic mode. Hypersonic or frenetic, something like that. You come up with your adjectives. In all our years, we have never seen anything like this, particularly for ablative materials for solid rocket missile systems. The quoting activity, especially for those ablative materials for solid rocket missile systems, hyper and frenetic. Hypersonic and frenetic, maybe. The PAC-3 Patriot missile system. Again, this relates to the PAC-3 MSE. We didn't need to specify that because there wasn't a PAC-3 ASE. There actually was a PAC-3 CRI, but I don't think they make that anymore. It was a prior generation of the PAC-3 MSE, which is the most advanced version of the Patriot missile system family. These are big things. Park is sole source qualified for advanced composite materials for solid rocket motors for the PAC-3 MSE missile system program. Slide 30. Stockpiles of these PAC-3 missile system interceptors. We already covered this just generally, but let's it relates to the PAC-3 as well. Very badly depleted by the wars, but now even more depleted by the current war with Iran. The PAC-3 missile system interceptors have been extensively and very effectively used by U.S. allies in the region, meaning the Middle East region, including Saudi Arabia, UAE, Kuwait, Qatar, Bahrain, Israel, and that's to defend against incoming ballistic missiles and other threats. The PAC-3 MSE missile system is an extremely effective missile defense system. Very high success rate. Those are here. I should read ahead. Very high rates of successful intercept and destruction of incoming ballistic missiles and other threats. This is the kicker, Patriot missiles do no good if they're not available. Let's go on to slide 31. Did you read, see the report or read it on July 5th? It was a couple of weeks ago. Dozens of people were killed in Ukraine by Russian ballistic missiles, which Ukraine was not able to intercept and shoot down because of a serious shortage, that's in quotes from them, of Patriot missile interceptors. It makes me want to cry, that all these people are dying. This is not a joke. As previously reported on, just continuing here, on January 6th this year, Lockheed announced it reached a seven-year agreement with the Department of Defense to increase the factory. This time, I actually refer to MSE. MSE, most advanced version of the Patriot missile system interceptor production capacity from 600 per year to 2,000. That's just unheard of. 600 to 2,000. That's incredible. What about us? Actually, our rate's a little higher. We're not going to tell you what it is, but it's a little higher even than that. Still in January 2000, a lot happening in January, I guess, 2026, the Department of Defense also announced it is investing $1 billion in L3Harris solid rocket motor business, formerly Aerojet, now called L3Harris Missile Solutions. We do solid rocket motor production for the PAC-3 and other missile systems. You see the focus here. Let's talk about the ArianeGroup. We need to discuss the ArianeGroup of France. They're a joint venture between Airbus and Safran. They're a significant company. Go on to slide 32. Our relationship with the ArianeGroup and its predecessors goes back to the early 2000s. We're very proud to be their partner. Just so you know, we're not being presumptuous. We use the term partner. That's what they call us. That's their term. I just want you to understand that. We're not usually a presumptuous company. ArianeGroup produces a proprietary fabric called Raycarb C2B, which is used to produce ablative composite materials for advanced solid rocket missile programs. Here's a big one. Park is sole source qualified on a solid rocket motor for the PAC-3 MSE missile program for specialty ablative materials produced for ArianeGroup's proprietary C2B fabric. Park entered into a business partner agreement, that's what they call it, with Ariane in January 2022, under which Ariane appointed Park as their exclusive distributor for C2B in North America. Last year, in March 2025, we entered into what they call the new agreement with Ariane, under which Park agreed to advance Ariane EUR 4,587,000 against future payments, sorry, against payments for future purchases by Park of C2B fabric. When we buy C2B fabric in the future, rather than sending a check, we apply the advance. You understand how that works? You can read the installments, it's unnecessary for me to read them for you. On slide 32 at the top of 33, we have one more installment to go, which is next April, I guess, something like that. It's Q1 of 2028. What's the purpose of that advance, that EUR 4,587,000 advance? To fund 50/50 with Ariane, the construction of additional C2B fabric manufacturing capacity in France. This additional French manufacturing capacity expected to come online 2028, approximately half of that is for us and half is for them. It kind of makes sense that they went 50/50 on the project. This additional manufacturing capacity will not even be close to adequate to support the ramp-up of the PAC-3 MSE missile program. Now what do we do? Now what? Let's go onto slide 34. Continuing, missile systems. July 18, well, that's pretty recent. That was, look at the calendar, two days ago. Two days ago. Ariane and Park entered into a term sheet agreement relating to the construction and establishment by Ariane of a U.S.-based C2B fabric manufacturing plant with expected C2B fabric manufacturing capacity adequate to fully support the needs and the ramp-up of the PAC-3 MSE missile program. Well, that's really good news, isn't it? Park and Ariane, we've been negotiating the terms of this agreement for several months. We haven't really talked about it because it wasn't really appropriate, this is not something we just did two days ago. The term sheet agreement provides that a definitive agreement consistent with the term sheet terms and provisions will be entered into before the end of the year. What's the big deal about the term sheet then if it says that we are going to enter into a definitive agreement at the end of the year? What's the key significance of the signing by Park and Ariane of the term sheet agreement? There is. Based on the signing of the term sheet agreement by Ariane and Park, Ariane will now, not later on, now proceed with the construction and establishment of a U.S.-based C2B fabric manufacturing plant. Very, very important. Let's go on to slide 35. As provided in the term sheet agreement, here we go, 100%. 100% of the output of ArianeGroup's U.S.-based C2B fabric manufacturing plant will be allocated to Park. That's for us. On July 9, all recent stuff, what was it, a week or two ago? We entered into a letter of agreement with a large defense contractor. This is a contractor that we work with on the PAC-3 MSE missile program. Letter of agreement ties into and relates to the term sheet agreement. There's only so much we can discuss about this, but it's a little complicated. This all ties together. Let me just, I guess we'll leave it at that. Under the terms of the term sheet agreement and in coordination with this defense contractor customer, we've committed, Park's committed to invest $25 million in Ariane's U.S.-based C2B fabric manufacturing plant. That's not an equity investment. The $25 million will be made by Park in the form of advanced payments to be fully applied against future purchases of C2B fabric. The $25 million advanced payments are expected to be made by Park in 2026 and 2027, are expected to be applied by Park against future C2B fabric purchases beginning in 2030. We're still working out the details, but the full application of $25 million, I don't know, could take 2032, 2033, we'll see. In other words, when the advance is fully utilized, fully applied to purchases of C2B in the future. Let's go on to 36. Why the heck are we doing this? $25 million, that's a lot of money. Why are we making a $25 million advance payment commitment? Because it's necessary in order for Ariane to proceed with the construction of the U.S. based C2B manufacturing plant, and we believe it is highly urgent that Ariane builds its U.S.-based manufacturing plant as soon as possible. As explained above, Ariane's U.S. plant is necessary to support the ramp-up of the PAC-3 missile program. Let's keep going. Why are we doing this? Just so you know, it's not all dollars and cents for Park. Almost every time a PAC-3 MSE missile is launched and successfully intercepts, destroys an incoming ballistic missile, remember, the success rate is very high, it's likely that there are people who are alive and walking around the Earth who otherwise would be body parts scattered around. That's a harsh way to describe it, but the reality is a lot more harsh. That's for sure. We're not fooling around here. Let's go on to slide 37, but let's talk about dollars and cents for a minute. Shareholders who are interested in that, I guess. Under the terms of the term sheet agreement, there's a minimum required purchase, this is very key, of C2B fabric from 2030 to 2036. We're not going to go into what that number is. This is not a forecast. That's a minimum required purchase under the term sheet. What does that minimum amount translate into in revenues for Park during that 2030 to 2036 period? Well, remember how we do this. We buy the fabric from Ariane, we sell it to our customer, then we store it for them. We never deliver it to our customer. They keep it in our plant because ultimately, 100% of the time, they are going to ask us to pre-preg it. So we look at the revenues, we have to look at the revenues from selling them the fabric, and then also some selling in the pre-preg. We are not going to give you a number, but it is $hundreds of million dollars. So you think about that $25 million investment, and it comes back to us. Now, just the cost of money, right? Cost of money. I don't know. You could figure it out better than I can. What is the cost of money if we make the investment over the next couple of years, you do not get it fully paid back until, let us say, 2032, 2033? There is a cost of money. I don't know what that is, but you could figure it out. ROI, it is the best you will ever see. Let us go back to that talk about, we are kind of done with this section, the PAC-3 ASE, which was just announced by Lockheed. If you read carefully between the lines, it looks like the PAC-3 MSE is being used for a lot of things. It is overkill. It is very expensive overkill. For cruise missiles and drones and that kind of thing, it is overkill, not necessary. The PAC-3 MSE is really designed for incoming long-range ballistic missiles, very effective. It could be used to shoot down other things, but not really very cost-effective. If you read between the lines, it looks like the ASE is designed to fill that gap. Now, we have already spoke to our customer about this, and this is important. Everything I am telling you about relates to the PAC-3 MSE. The PAC-3 ASE is gravy for Park. It does not eat into anything we are talking about with the MSE. It is gravy for Park. Now, obviously, we are very interested, and we were express, sure, we are delighted to support that program. We will see what happens. But I want you to understand, that is not a negative for Park. It is a potential big positive for Park. Okay, let us go on to slide 36. Totally different topic here. Park's major new manufacturing plant on July 17. It is also pretty recent news here. Park entered into a long-term lease agreement to lease 18 acres of land at the Tulsa, Oklahoma International Airport. Our new manufacturing plant we have been talking about for a while. We said we are looking at it and have not made our site selection decision yet. Well, we have. It is going to be the Tulsa International Airport. That will be the site of Park's major new manufacturing plant. The site will also provide space for an additional plant location in the future if and when needed. This is important. So the existing, the immediate plant, let us put it that way, probably needs about maybe nine, 10 acres. So there is another maybe nine acres or so that will be available for another plant at some point in the future, which is important for us. It is a beautiful location at Tulsa International Airport. Maybe you will visit it someday. Maybe we will have a shareholder meeting there someday. Park's new plant size, about 150,000 sq ft. The budget, $65 million. Outflow, this is a guess because sometimes the outflow will straddle the end of a fiscal year, so just a guess, but approximately $25 million at 2027, $35 million at 2028, and $5 million 2029. Let's go on to slide 39, please. Timeline for the new plant. Complete the facility in fiscal 2028, two years. Production and shipment to customers commence in fiscal 2029. Our new plant designed to basically do what we do now, support Park's complete composite materials product line, including specialty ablative materials, et cetera. What else? That's a key question because this is not just to do what we're doing now. That's part of it, but we're also looking at this as a major development opportunity for Park. The what else is an important question. We'll see about that. Our new plant is expected to approximately double Park's current hot melt, prepreg, and film adhesive manufacturing capacity, principally used for the commercial aircraft programs like the GE Aviation, GE Aerospace programs, or approximately double the capacity. Our new plant is expected to approximately triple our current solution treating manufacturing capacity. What's that used for? Well, it's used for a lot of things, but among other things, to support the missile systems program. We're going to be tripling our solution treating capacity with the new plant. I mean, tripling over, compared to our current capacity in Newton, Kansas. Let's go on to slide 40. Why are you building our new manufacturing plant? Well, pretty obvious. Our juggernauts require it. Also to enable, facilitate, inspire Park's growth and development as a company in the future. Why did we choose Oklahoma? Probably a good question to ask. Could have gone a lot of other places. Well, we were very interested to understand. Let me back up. The second largest industry in Oklahoma, you know what the first is, oil and gas, is second largest aerospace, A&D rather. We wanted to understand, what do we mean by that? What's the culture of A&D in Oklahoma? Is it like big commercial aircraft companies, maybe more like what we have in Wichita, or is it something else? We're very pleased that we, by spending a lot of time here doing due diligence, we think the A&D culture in Oklahoma is more, a lot of startups, more about, I wrote some notes down here, I'm reading from them. Normally, I don't write notes. Innovation, creativity, imagination, risk-taking, more of a progressive kind of mindset, space and defense activity startups. We think that's very good for us. We think that'll inspire us to be more creative and more innovative in our own thinking and in our own development as a company. That's our thought behind Oklahoma. We're really excited about it, actually. We've come a long way since we started a company in that little garage in Woodside, Queens, back in 1954. A garage is not like a, what do you call it, like a euphemism. I mean, it was really a garage. I mean, with cars and stuff. I don't know, maybe 2,000 sq ft, something like that. In my opinion, we're just getting started. Okay, operator, we're done with the presentation. To the extent there are any questions or any questions, we'll be happy to, Mark and I will be happy to answer them. At this time, we'll be conducting a question and answer session. If you'd 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 to remove your question 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 poll for questions. Our first question is from James Ricchiuti with Needham & Company. Hi. Thank you. Afternoon. I'm wondering if you can tell us if there's any Raycarb C2B fabric sales that you're embedding in that fiscal Q2 outlook, just because it does have an impact on margins. Yeah. We don't mention it because it's more balanced, between the fabric and the prepreg. At least that's what we're expecting. We also mentioned a little concern about international freight, so that could have an effect on it. It's not significant. If we expected something that would have a significant impact on the bottom line, we would have brought that up. Got it. Also, I'm wondering if we look at the revenue split, commercial, aircraft, military in Q1, should we assume a similar type of profile in terms of the Q2? I know you would be looking at this probably on a multi-quarter period. Yeah, that's hard for us to say. It's probably about the same. I think we would say longer term that the military portion of the pie chart will start to become more prominent. I think we'd also say certainly when you get into that breakdown of military, that second pie chart, that the missile systems portion of the pie chart will grow as well. Okay. One final quick one, if I could. Maybe this, I apologize, if this was in some of the materials you provided or maybe in the queue. Did you have a second 10% customer in the quarter? I'm sorry. What was the question about customers in the quarter? Sorry, was there a second 10% customer in the quarter besides- We don't disclose, yeah. We only disclose that for the year-end. We don't disclose 10% customers by quarter. You'd have to look at our 10-K for the 10% customers for the year-end. We, yeah, sorry, we don't do that. Okay. You're probably guessing that Embraer is going to be, Embraer's 10%. That's a good guess, we don't actually confirm that. Fair enough. Thank you. You're welcome. Our next question is from Trevor Walsh with Citizens. Great. Hello. Hi, Brian and team. Thanks for taking the questions. How are you? Sure. Yeah, good. Good. Maybe just also piggybacking on the margin question. I think last quarter, you had mentioned that the C2B more direct sales, not the pre-preg, kind of caused some of the margin pressure in Q4. Obviously, nice recovery, here in Q1. Was it really just that dynamic of the C2B sales, or was there something else in the quarter that helped kind of gross margins pop up back to that 15? Yeah. Okay. Thanks for the question. I think you know how it works. I mean, every quarter, there's going to be lots of factors go up and down, but we're highlighting the big one here. I think that would be one of the more significant factors when you compare the gross margins in Q4 and Q1. In Q4, there was, I don't remember the number, but quite significant C2B sales and fabric sales, I should say, in Q4. That really pushed the gross margin down quite a bit. Unfortunately, the problem is that these things, they're kind of out of sync, so that's why we keep bringing it up, because you look at things long term, it's all fine because like I said, 100% of the C2B fabric that we purchase ends up being produced into prepreg. The timing is out of sync, so it can really skew our margins in a quarter-to-quarter basis. Got it. Okay. That's helpful, and that was kind of leading into my follow-up is I guess, is it purely kind of customer driven then in terms of when you, whether you're in a given quarter, whether you're going to sell X amount of C2B versus prepreg, and it's not necessarily you choosing to do one or the other, it's more just what customer demand and kind of timing is dictating? It's more of that type. Follow-up to that is how might that be changed or affected when you open up the new facility, both the Ariane specific facility and your new facility in Oklahoma? The answer to the first question is, we don't decide anything. Customers decide everything in terms of timing of the fabric purchases, in terms of the timing of the prepreg purchases. The question about the Oklahoma plant, though, I'm not sure we followed that one. What was that question again? Does the dynamic of the timing change at all with either the? Oh Facility for C2B in the U.S., or if that really doesn't necessarily like move that dynamic in terms of like, again, the timing of the fabrics, specifically the sales. I don't know if it's going to change anytime soon, except maybe, one way we might think about it is as these programs ramp, the numbers get larger and larger, and I think it might be more likely that they are more aligned as the programs ramp and get larger and larger. We don't know. I mean, it's like I said to answer your first question, it's never our decision. It's always the customer's decision as to when they want to buy the fabric, when they want to buy the proof tags. That's what we do here. We do what the customers ask us to do. We don't tell customers what they should do. They tell us what we should do. That's a little bit, I think I know that sounds really strange. That's probably a unique thing about Park, which is, yeah, we try to be responsive and flexible and do everything we can to help our customers, not tell them what to do. They tell us what to do. I know that sounds strange. I think maybe some of our competitors don't really think that way all the time. Got it. No, I think it makes sense. Thanks. Maybe just one quick one as a final, Brian, if I can. Of the kind of the outline that you gave around the commercial-oriented juggernauts, the GE programs, obviously A320, and LEAP is, for that portion at least, is the biggest contributor. Is there anything in the next, I don't know, two, three quarters that you think could be more of a surprise to that, your calculus there from the other programs, whether it's COMAC or Yeah Some of the Boeing. Is there anything that you think, whether it's to the more negative or positive, just something that could maybe move that needle, that's not necessarily, again, A320 specific? As we said, we believe the Global 7500, 8,000 program and the COMAC C919 program are really at rate already. We don't expect much from them. I don't think we're going to see huge upside from the C919 program in the next few quarters because that's the issue, is not that COMAC doesn't have the orders. It's just they have to find a way to ramp up, and that means they have to deal with supply chain issues and their own manufacturing ramp-up as well. We talked about the fact that maybe they don't have enough engines, and it's hard to make airplanes without engines. Obviously, I'm being sarcastic. The Boeing program, yeah, next few quarters, I don't know, maybe three or four quarters out. Boeing's already made a lot of these airplanes. They're sitting there in Paine Field in Washington, some have engines on, some don't. They already built a lot of airplanes in anticipation of the certification and entry into service. Once they get to that point next year or early next year, I think we could expect to see that program accelerate more. It's been a little bit sold out, actually, waiting for the aircraft to get certified. The A320 is going to be the big kahuna, I think. You know what I mean? When you compare the A320 to other programs, A320 is a big driver. It's very dynamic, and a lot of pressure from Airbus, to ramp that program up as aggressively as possible. They're struggling, of course, we talked about this many times, with supply chain issues as well. It's Airbus, I mean. Got it. Okay. Thanks, Brian. That is all I have. I appreciate it, and thanks for all the updates. Okay. Thank you. Our next question is from Nick Ripostella with NR Management. Hey, good evening. First of all, Brian, thank you for clarifying with respect to that announcement on the missile program today. I was wondering about that. Nick, I think the time was good because I think if the announcement came out tomorrow, we'd have all these people asking about it. Well, we really can't talk about it. I'm glad we were able to talk about it today. Yeah, go ahead. Sorry, go ahead. The second, I just wanted to say it's wonderful that we have great research coverage now after all these years, and I had a chance to look at that report from Citizens. It's very thorough and quite a feather in the cap. The Needham guy, that guy is great. I have followed him for many, many years. This is good news. The only other question I have is, you put out such a thorough presentation all the time, there really isn't much to ask. Just on Juggernaut, too, Anduril has been working on missiles that are competitive, reportedly with, the Patriot, and I was just wondering, do you know anything about those, and do those use materials? I guess another way of asking it, I may have referenced this the last time, are there missile programs that don't need the materials, the type that you would supply? Is that just a foolish question? That's about it, thanks. No, I don't think it's foolish. Good question. First of all, we love Anduril. We like to do as much with them as possible. There are many other kinds of materials other than C2B that are used in other programs. The issue is C2B availability and the Patriot factory MSCs can have priority. Other customers may not want to get in line, in the back of the line. They are looking at other kinds of materials, and we're happy to work with those as well. Happy to work with those. We do. We'd love to do more business with Anduril, and we're working with them. I don't know if that helps to answer your question, but Okay, you are working with them right now? Well, yeah. We are. I'm just saying we'd like to do more. Okay We're definitely working with them. Okay. That's wonderful. Thank you so much. Okay. Thanks, Nick. Thanks for your questions. Our next question is from Christopher Hillary with Roubaix Capital. Hi. Thanks for taking my question. Hello. I wanted to ask on your longer-term EBITDA margins, could you give any commentary with all this new business coming online? Do you feel like these are accretive or dilutive to your long-run EBITDA margins? The new business? Well, Yeah Would definitely be a positive. We're going to have some more costs to deal with as we bring up the plant. The timing of the costs will precede the revenues. No, the new business, the margins are quite good. Quite special, I would think. One other question I wanted to ask is, it does seem like there's an awful lot of new business activity, and while you're expanding substantially, are there other capacity expansions or certain capabilities that you are exploring adding to your current expansion plans? The immediate expansion plan relates to expanding what we're doing now. Of course, we want to take the opportunity to make sure we're taking advantage of any kind of enhancement that would be appropriate for Park to consider. This was our specification, actually. We were dealing with a few different locations, the finalists, if you will. We were looking for 20 acres approximately. This is 18. Because we knew that we'd only need about half of that for the immediate expansion plan. We wanted to have additional acreage to place another location, another plant on our campus without having to go across town or something like that for other opportunities that we're working on, that we are working on now and also in the future. Thanks very much, and congrats on all the progress. Well, thank you very much. Thanks for saying that. Thank you. There are no further questions at this time. I'd like to hand the floor back over to Brian Shore for any closing comments. Okay. Well, thank you everybody for tuning in, and sorry the call went as long as it did, but it was nice to talk to you. If you have any follow-up questions, feel free to give us a call. Otherwise, please enjoy the rest of the summer, and we'll talk to you soon. Thanks. Bye. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.