Good morning. My name is Shomali, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Third Quarter Fiscal Year 2026 Ernie's Release Conference Call and Invested 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, simply press star and then the number two. Thank you. At this time, I will turn today's call over to Mr. Brian Schor, Chairman and Chief Executive Officer. Mr. Schor, you may begin your conference.

Thank you, Operator.

Welcome, everybody. Happy New Year. This is Brian. Welcome to the Park Aerospace Corps. This is your 2026 third quarter investor conference call. I have with me, as usual, Mark Esquivel, our President and CEO. correction, COO. I gave you a promotion there, Mark, sorry. And just so a little housekeeping stuff, we announced, released our third quarter earnings release or published our third quarter earnings release right after the close. You want to get a hold of that because in the release, there's link information to access the presentation we're about to go through. Presentation is also posted on our website. So we have a lot to cover when I get started. We have our dilemma. We have a lot of new investors, a lot of veteran investors. So how much do we cover the background stuff is, you know, always a little bit of an issue. We'll do the best we can. Also, I just want to mention that we did file an S3 registration statement with the SEC after the close as well. So we're going to get started with the presentation. We have a lot to cover. Obviously, at the end of our presentation, we'll be happy to take any questions you might have. So let's plow ahead. Slide two, forward-looking disclaimer. If you have any questions about this language, please let us know. Let's go on to slide three, table of contents. Fiscal year 26, Q3 investor presentation. We're about to go through that. And then the supplementary financial information in Appendix 1. We're not going to review that or cover it, but if you have any questions about it, please let us know. As has become our practice in recent quarters, we're featuring the James Webb Space Telescope, runaway supermassive black hole, 10 million times the mass of the sun. That sounds pretty big to me, being boosted from its galaxy at 100, sorry, 1,000 kilometers per second, which is about 2 million miles an hour. Thank you, James Webb Space Telescope. The James Webb was produced with 18 part proprietary sigma struts. James Webb is now orbiting, I think it's called a brain's orbit, about a million miles from Earth. Okay, let's go on to slide four. Our quarterly results, let's just focus on Q3, where we just announced the sales, $17,333,000. Gross profit, $5,903,000. Gross margin, 34.1%. Adjusted EBITDA, $4,228,000. That's just the EBITDA margin, 24.4%. We're not going to go over the history, but we provide it to you for perspective to part quarters. I mean, what do we say about 2-3, about our 2-3 accord we just announced during our October 9, 2025 to investor call? Sales estimate is $16.5 to $17.5 million. So we came in within that range. That's just the EBITDA estimate was $3.7 million to $4.1 million. So we came in a little bit above that range. Just want to remind you that when we provide you with these estimates, we don't do what's called guidance that I guess everybody else does, almost everybody else does. When we tell you, we give you an estimate, we are telling you, Mark and I are telling you what we think will happen. We don't provide any fudge room so we can, you know, we reduce our what we think by 10% so we can come in and beat the number and be heroes. We don't get involved in that kind of stuff. So I just want to always remind you when we talk about our estimates, what they mean, what they don't mean. Okay, let's go on to slide five. Quarterly results continuing with this, the Q3 considerations. All right, we always have to talk about the Arian Group business partner agreement because it has an impact upon our quarters. It gets a little tedious, but I think we need to explain it. We entered into a business partner agreement with Arian Group. They're, you know, a wonderful French company. We've known them for about 20 years. They're, I think, a JV between Saffron and Airbus, a large company. That was in January of 2022, under which Arian appointed Park as its exclusive North American distributor for their Raycarb C2B fabric used to produce ablative composite materials for advanced missile programs. So this is, you know, a lot of people consider to be the Cadillac of this category of fabric that's used for blade, as they call it sometimes, for missile programs. So this is why we have to talk about it, because let's just go into it. We had zero sales of the fabric in Q3. OEMs buy the fabric or stock-bound the fabric because they're trying to protect their very critical missile programs, but they have to buy from us since we're the exclusive distributor in North America. The OEMs, we buy the fabric from Arians, our partner, and then we sell it to the OEMs for a small markup, right? And we don't even deliver it to the OEMs. We store the product, the fabric, in our factory as a favor to them, I guess. Because ultimately, they don't need it. They're going to give us the releases at some point to go ahead and take that fabric and produce the pre-priced material with it. So small markup, I probably shouldn't have put this print in here because it's not going to explain it. Even smaller is a percentage considering tariffs. This is because we pass through all the tariffs, and they're significant, but you pass through on a dollar-for-dollar basis to go into our sales line. But we don't provide a markup on the tariffs. That would be kind of ridiculous. So that actually makes the markup percentage even lower, if you follow what I'm saying. We sold – so we had zero sales of fabric in Q3, and we had a little bit more than a million dollars of sales of the materials manufactured with C2B product in Q3. So when we produced the prepreg, that actually results in very good margins. So when we have significant sales of material, not too significant of fabric, that's actually a plus for our bottom line. But the opposite often happens, and we'll talk about that when we talk about our Q4 forecast. We have a lot of sales of fabric, not as much of materials that will drive down our margins. It's all good. It's all wonderful. Because ultimately, everything that we, all the fabric that we sell to the OEMs and they stockpile, we will end up producing. That's a reason we keep it in our factory. But the timing kind of distorts our quarters sometimes.

That's what we have to talk about, unfortunately.

Let's go on to slide six. Total misshipments in Q3, approximately 740,000. That numbers up quite a bit. It was caused principally by international freight, supply chain, and customer spec and engineering issues. So what was going on here?

Industry challenges are reemerging as industry recovers and program ramps accelerate.

This is actually a good thing, good news. You know, after the pandemic or when the pandemic started, it was a mess because the supply chain was so screwed up. And after a couple years, we kind of got back to something that would be more acceptable, which is okay. But now that the industry is recovering and the programs are ramping quickly, now the supply chain, the industry, is actually getting a little bit behind the power curve again. That's what's going on there. So, actually, it's good news. The impact of tariffs and tariff-related costs and charges, maybe Mark can help us with this. Go ahead, Mark.

Yeah, this is a very eventful update again, which is, I think, a good thing. We have minimal impact on tariffs in our Q3, just as we've had previously. I think we talked about it, you know, we price our materials on short-term basis, most of our business, so we're able to pass them on if we do get them. The second bullet, possible future of impacts, again, this has been quiet again for us the last few months, or, you know, it seems to stabilize as far as what's coming our way. That doesn't mean there could be changes to that, but as far as the, you know, the near term, you know, I probably think the bullet would be pretty similar to the first one, you know, going forward in the next few quarters. But you just never know, but there's minimal impact per part at this point.

Okay, thanks, Mark. Let's go on to slide seven and keep moving here. This is a slide that our veteran investors are familiar with every quarter. We share with you our top five customers, and we do a little picture of what's associated with each of these companies, the top five companies alphabetically. The 737 Max, you know, we've said in the past we don't have much content on that. That's actually Noriam. Noriam, that's a Weather Master Radome that Noriam produces for the 737 product line. So what else do we want to talk about here? I guess maybe, oh, the Valkyrie. Yeah, so we've talked about the Valkyrie quite a bit over the last few years. This is a credit program that we're on. But the recent news is the Marine Corps just selected a Valkyrie for its collaborative combat aircraft, to a program, Loyal Wing, that sometimes it's called. So that's very good news for Kratos and also for PARC. The PAC-3, that is an AA item, and the Airbus, that's obviously Middle River, Sikorsky, Sikorsky, and Norden, which program is associated with Norden. Let's go into slide 8, our pie chart here. So the comment is always that if you look at fiscal 21, One, which is really the pandemic year, the pie chart's quite different. The other year is kind of very similar year over year. People ask if the military piece of the pie chart will grow, and it might. But commercial's growing, too, so you're not sure. My expectation would be that business aircraft as a percentage would maybe shrink over time. So let's go to slide nine. PARC loves niche military aerospace programs. This is a slide that we include every quarter as well. And these are not necessarily the biggest military programs, Ron. These are just things I want to share with you. As we mentioned in the last couple of quarters, we feel less comfortable giving many specifics about these programs, but these are all programs that PARC is associated with. Let's see. The only thing that I would mention in terms of recent news is the Standard Missile 6, SM-6, a program that Navy just awarded Raytheon a contract to boost the SM-6 production. This is all public, so you can look it up yourself. I don't think we need to comment on any other programs here. Let's go on to – sorry, I've got to find slide 10, slide 10. This is another slide that we've included for probably, I don't know, a dozen presentations. So a lot of you are very familiar with it, no real change to it. GE Aerospace Jet Engine Programs, you know, major program opportunity for PARC. Firm pricing LTA from 19 to 29 with Middle River Aerostructure Systems, MRAS, which is currently a sub of SD Engineering Aerospace, a Singapore Aerospace Company. But when we got all these programs, they were a sub of GE Aviation, now GE Aerospace. That's why these programs are all related to GE engines or CFM engines. We built a redundant factory for them in exchange for agreeing to give us the LTA through 29. What programs are we talking about? The first, if you look at the bottom left side of the page, the first five are all A320 NEO aircraft family programs. They all have the same engine, Leap 1A engine, which is a CFM engine. The 747A, that airplane is no longer being produced, but there's still spares that were involved with the COMAC 919. COMAC is a Chinese aircraft company with Leap 1C engines. The 919 is COMAC's offering to compete, a single aisle to compete with the 737 and the 840. On the right-hand side of the page, the 909, that's also a COMAC aircraft, And that's a regional jet, and that also has a GE engine, of course, the Bombardier Global 7500 Passport 20 engine. The picture here is the 747-8, as you can see, engine nacelles. We like this picture because it just gives you a perspective on the size of these nacelles, and everything you see there is made with parked material, and a lot of what you don't see inside the nacelles are made with parked material as well on that 747 program. Let's go on to slide 11. So more on GE Aerospace. We're continuing. Let's skip the first item. Second item, tank case containment wrap. This is for the 777X, GE 9X engines for 777X. That's produced with our AFP material and other composite materials. And let's go on to the third item, Amherst Park LTA, which you already mentioned, was amended to include three proprietary park film adhesive formulation product forms. And the last item, LIFA program agreement, which was requested by MRES and SDE. Remember, SDE is the owner of MRES now. And we said agreement is under negotiation for a few quarters now, but this time it's on us, you know, because the MRES team wanted to get together with us in December, and we said, look, we've really got to focus on this expansion. And the convention is for their benefit, you know. So we say, can we delay the next meeting on the LIFA program a couple of months? And they said fine. So that one's on us. We can't blame anybody except us, the fact that this is still an open item. As we said previously, we'd love to have the LIFA program, but we're okay anyway. Let's go on to slide 12 and continue with the update on the – this is an update on GE Aerospace Gen Engine programs. So let's start with the A-20 NEO aircraft family. That's the big dog of all the GE Aerospace programs that we're on. As of November 25, Airbus had already delivered 4,275 A-20 NEO aircraft. And Airbus has a huge backlog of these aircraft, 7,900 as of, I guess, September. That's a total of over – when you look at how many were delivered and what's in the backlog, a total of over 12,000 airplanes. That's huge. And look at the delivery history here at the bottom half of the slide.

We won't go through the numbers.

But you can kind of see what happened is that they were ramping up as the program was growing and then hit the pandemic and, you know, kind of hit a brick wall, and the ramp up was slowed down a little bit. I think they're ramping up much more aggressively now. Now, in December of 2025, they delivered 97 airplanes, which is a lot, but they plan to deliver even more. You're probably right about this, but the 820 NEO has issues with fuselage panels and also software that was caused by solar activities, which reduced the deliveries. Those issues have been resolved, but nevertheless, they probably held back to deliveries in 2025. Let's go on to slide 13. This is a key thing. Airbus is targeting a delivery rate of 75. Remember, we're at 50, 51, 75 per month in 2027. That's obviously, you do the math, a 50% increase over where we are now, which is a lot, considering it's a very large program. It's 50% of a lot. On October 7, 25, the A320 aircraft family became the world's most delivered commercial jet. That was surpassing the 737. And A320 aircraft family continues to rack up in the waters. The game-changing A321XLR, we've spoken about this, you know, lots in the last few quarters. Maybe I won't go through each item, but if you have questions about it, please let us know. This is a pretty exciting game-changing aircraft for Airbrush. So this is part of the A320neo family. I just want you to understand that. We're the approved engines for the A320neo aircraft family. There are two of them. One is the CFM LEAP-1A engine. That's a program we're on. The other one is a Pratt-GTF engine, PW-1100G engine. We're not involved in the Pratt program, only the CFM program. On slide 14, we supply it to the – well, we just talked about the first item, the first bullet item, okay? Second bullet item. So basically, if you look at the market share of firm engine orders between the CFM LEAP 1A and the PRAT engine, and this is for the A320 program, of course, the CFM LEAP engine has a 64.5% market share, you know, much more than half. And it has been that way for a while. The LEAP market share is much more than the Pratt market share, which is good for PARC, because we're on the LEAP program and not the Pratt program. At that delivery rate of 75 airplanes per month, that 64.5% market share translates into, you know, a lot of engines per year, 1,161. Just so you understand, this 64.5% is based upon all orders, all backlog for both engines. We're talking about thousands and thousands and thousands of airplanes, so it's not a number that's easily distorted by kind of a small perspective, a short timeframe perspective. Let's keep going. The Pratt engine, unfortunately, continues to struggle with serious reliability issues. I just read an article this morning that these reliability issues are expected to continue. Now, for the LEAP engine, reliability has been a selling point. Reliability is a very, very key thing for airlines. on it. Reliability relates to how much downtime an airplane has related to maintenance. So if these airplanes are down for maintenance or inspections for these engines, that's a real bad problem because when the airplanes are underground, they're not making money.

And airlines, their margins aren't that great.

They cannot afford to have excess downtime. And that's why the reliability issue is a real serious problem. I don't know what's going to happen, but, you know, one might even speculate that because reliability continues to be a problem with Pratt and the CFM LEAP is doing well with reliability, that could drive the market share potentially even more to the LEAP side of the ledger. CFM has significantly ramped up production deliveries of LEAP ventures, including LEAP 1A. That's really significant because we talked about supply chain restrictions, holding back the market, holding back deliveries. There are a lot of different things, but what was often was mentioned most often were engines. So the fact that CFM is leaping up, sorry, ramping up the LEAP engine is a good thing, because that will help Airbus ramp up the A-220 NEO program, which, of course, is what we want. Slide 15, what are we doing here? As of September 30th, 25, there were 7,900 firm LEAP. Here's what I'm talking about. These are a lot of engine orders, firm LEAP-1A engine orders. So, you know, we were recently told that our customer was given an indication as to how many engines, how many cells, basically, that's where they produce the cells they need to plan to produce for this program. And we can't disclose that number, but it is significantly more than 7,900, significantly more. The 8-20 Neo Aircraft Family Program can end up being our largest program. We'll see, but over the course of the program, it could be. I don't know everybody's different opinion about this, but I'll give you my opinion, which is probably not worth much, but my opinion is that Airbus will be making these airplanes with these engines in 2040. We'll see if I'm wrong or right. COMAC 919 is a Chinese aircraft. Single aisle, we talked about that. It also has a LEAP engine, LEAP 1C, and this is the single aisle to compete against the 737 and be for 20. COMAC is expected to fall short of its 25, 225 delivery target. Not surprising, it's Chinese companies, so sometimes they have historically had some trouble kind of getting their programs up and going. Target shortfall, they say it's caused by supply chain, whatever, you know, international production issues, international trade production issues. So I don't know. Let's just go on to the next slide. I don't think we need to be – let's go on to the next slide. We're still on to 919. COMAC is increasing manufacturing capacity to achieve production rates of 115 and 27, 229. Now, if you look at that juggernaut slide further down in the presentation, we're assuming 150. We're assuming a top set of 150, but COMAC is building capacity for 200 per year. COMAC reportedly has over 1,200 orders for the 919. Now, let's look at the 909. This is a regional jet, and again, produced by COMAC, with a GE engine, a different type of GE engine, of course. So, according to the state-run Global Times, 175 909s have been delivered. The 909 operating routes have expanded in 12 Asian countries, which is good because originally these airplanes were thought to be, well, China-only airplanes. That's obviously not happening. I mean, COMAC doesn't want it to happen anyway. 909 aircraft now carry over 30 million passengers. That's a lot of passengers in small airplanes. There were approximately 385 open orders. So here's a good thing to talk about because this aircraft has been at rate for a couple years. So it took Oklahoma a while to get to rate, but they're at rate. They got there. That's the key thing. So with the 919, maybe it'll take a little longer from the get-to rate, but my opinion anyway is they'll get to rate, and they'll be very good to park. These are starting from basically zero. So let's go to slide 17, the Bombardier Global 8,000 variant, the 7,500 variant. It was just certified in first delivery last month. The fastest civilian aircraft since the Concorde, 8,000 nautical mile range. This is 777X with G9X engines. The 777X test program has amassed a lot of hours, a lot of flights. Boeing reportedly has over 600 orders for the aircraft. The certification test program is moving into Phase 3 of the TIA, which is important. I mean, I'm not going to know what that means. I'm not expert in any way, but it's an important step along the way to getting the aircraft certified with FAA. Slide 18, stolen 777X. Boeing now anticipates FAA certification entry into service and first delivery of 777X in 27. This airplane's delayed, too, so we can't all just say, well, the Chinese are sometimes late with their aircraft. The Boeing CEO has indicated that 777X aircraft and the engines are performing quite well. You mentioned increased FAA scrutiny is a key factor in the certification delay. I think what he's really getting at, I think he wants to be nice about it, is that the FAA is being more stricter because of the issues with the MAX, the 737 MAX. Why don't we go on to slide 19. Here's some numbers. GE Aerospace Programs. This is why we emphasize a lot, because, you know, it's a big deal for PARC, the GE Aerospace and Engine Programs. We won't go into the sales history. You can see it here for your benefit. Q3, sales were 7.5 million. Our forecasts were Q4, three-quarters, eight-and-quarter million. And for the year, 29 million to 29.5 million, just kind of adding down. And you can see that there's a recovery going on here in fiscal 20, almost 29 million, and then it's kind of fell off a cliff during the pandemic. Like, there's a real struggle to get back to that level. It's only now that we're at that level this fiscal year. And my feeling and sense is that this number is going to – will move up quite aggressively over the next two or three years. Let's go on to slide 20. Okay, this is now talking about PARC, not just GE. This is all PARC, PARC's financial performance history and forecast estimates. So in the top part of the page, in yellow, fiscal year 2623, well, we already gave you those numbers. And then we have estimates, forecast estimates. Remember, what we said, this is not guidance. This is what Mark and I think is going to happen, the rest of our ability. Sometimes it's wrong, sometimes it's higher, sometimes it's lower, but we're telling you what we think is going to happen. Q4, a 23.5 million, a 24.5 million, EBITDA of four and three quarters, a five and a quarter. Now, a lot of smart people are thinking, well, what's going on here? Q3 sales were $17.3 million. Q4 sales a lot more. Q3 EBITDA, $4.2 million. So why isn't the forecast for Q4 EBITDA a lot more? We have a lot more sales.

Well, you've got to look at the footnote.

There's two asterisks. Forecasted to include approximately $7.2 million C2B fabric sales. So that's that small market, very, very light margins, and that's what's going on there. That's what you need to understand. That's why with those kind of sales, we're not seeing much higher EBITDA numbers. And then while we're at it, let's look at the total for forecast total for 26. This is just adding down, taking into account the Q4 forecast, 72.5 million to 73.5 million. And here's your EBITDA number. And, again, look at the footnote, three asterisk, forecasted to include approximately $9.8 million of C2-bit fabric sales, mostly in Q4, it looks like. Okay, let's go on to slide 21. So this is just some history with, on the right-hand column, the 26 forecast estimate included. The estimate we just went over with you, so we'll go over that again. And I think what's interesting is to look at the top line of sales, starting in 17, 18, 19, 20, went up $10 million approximately per year from 17 to 20, and then it fell off a cliff. Because there you have the pandemic and the supply chain issues and the industry chaos that resulted for a long time. And even last year in 25, we still had barely gotten back to that fiscal 20 number. Now we start to see in fiscal 26, we start to see some acceleration, getting out of that rut that the industry has been in for a long time, like five years. It's been a long five years, I would say. So it is what it is, but it's been a long five years. Let's look at the notes down here. Supply chain limitations affecting your airspace industry. That's what we just discussed. We looked at sales numbers ramping up, of course, for the juggernaut. And, again, reminding you, the fiscal 25 sales include $7.5 million of C2B fabric, and the 26 sales include $9.8 million of C2B fabric. Very important to understand those things, okay? And until now, you know, I should just go back and say the OEMs have been stockpiling lots and lots of C2B fabric, much more than what we're producing in terms of how that would translate into producing pre-preg with the C2B fabric. So let's go on to slide 22, changing gears a little bit, our buyback authorization and activity, an update. Okay, so we announced in May 22, our board authorized to purchase 1.5 million shares of our common stock. Under this authorization, Parker's purchased a total of 718,000 shares of its common stock, an average price of $12.94. So you have to say we're some kind of geniuses, I mean, considering what stock price is now. I mean, I don't know what you think, but we probably should be invited on CNBC or maybe to talk and be a guest lecturer at the Wharton School of Economics. Let's keep going. We don't have to talk about – well, except that we didn't buy any stock in Q2 or Q3. We haven't bought any stock so far in Q4.

Let's go on to slide 23.

Trying to rush here a little bit, sorry. Our balance sheet, cash, and very incredible cash dividend history. We have zero long-term debt, $63.6 million of cash at the end of Q3. 41 consecutive years of uninterrupted regular quarterly cash dividends. and now paid $608.6 million, or $29.72.5 cents per share in cash dividends since the beginning of 2005. We're kind of sneaking up on that $30 per share number. Park founders always kind of like to include this photo with the cash dividend history because this is really at the beginning of park when we really had almost nothing.

We started with actually nothing.

Let's go on to slide 24. A lot of money, a lot of dividends, I would say, for a company to start with basically nothing. Slide 24, financial outlook for GE aerospace, gen-engine programs, the juggernaut.

We've used that term for a while now.

The timing, we're not sure. The juggernaut is coming as now with a capital NLW. Can't be stopped. Better be ready. Let's go on to slide 25. I'm rushing a little bit. I just want to stop and say for a second, for some of you new shareholders, If you want a more detailed explanation of some of these things, please just call us. We happen to go over these items in more detail. We're kind of rushing through them. We just want to get to some of the newer items toward the end of the presentation. Slide 25. So we're talking about ingenious per year assumptions, and there is a footnote explaining how we came up with those assumptions. Revenue per engine, that information is provided to us by our customer, the annual revenue per program just multiplying across. And we end up with a total of $61.8 million at the Outlook year. So a couple notes here. Our revenue per engine unit estimates are updated. We've been given updated information from our customer. And here's something we haven't really touched on, why the engine units for your assumptions may be conservative. Let's just try to explain this quickly. So A320 NEO, let's look at that one. We have 1,080 engines we're talking about per year. That's based upon 75 airplanes per month, two engines per airplane, a 60% market share for LEAP, just do the math, that's 1080, all right? So that's based upon how many A320 airplanes will be built with LEAP engines. Do you think that every engine and cell structure that's produced will end up on those engines?

That would be a really, you know, ideal situation.

But, you know, something called scrap and fallout and things get rejected sometimes. We're not taking that into account at all. We're not taking spares into account either. So that's why this assumption about engine use per year might be a little conservative. I just want to touch on that, okay? Slide 26, we don't have to go over this. These are all the footnotes related to how we computed the numbers and did the math on slide 25. Let's keep going. Now we're to changing gears completely. Warren Peace Park's new juggernaut. Actually, that term, the new juggernaut, came from one of our investors. We like it, so we decided to stick with it. Some of this is in review from last quarter. Some of it's a little new. Unprecedented demand for missile systems. Missile system stockpiles have been seriously depleted by the wars in Europe and the Mideast. There's an urgent need to replenish those depleted missile system stockpiles. According to Wall Street Journal reporting, the Pentagon is pushing defense OEMs to double or even quadruple missile system production on a breakneck schedule. That's a direct quote, obviously. A list of Pentagon-targeted missile systems include the Patriot missile system, the LRASM, and the SM-6, probably being a particular priority. The PARC actively participates in all of those missile systems. Review of and update on the Patriot missile defense system. That's the big one for us. Also, we focus on it because it's public. We're not providing any confidential inside information. Everything we're providing you is based upon public information. There's just lots and lots of public information about the Patriot missile system. You know, President Trump talks about it sometimes. The large deployment of Pact-Ray Patriot missile defense systems, largest, sorry, in history, occurred in response to Iran's missile strikes on our Ford Air Base in Qatar. That was, I guess, a few months ago after we bombed Iran, bombed our nuclear sites, on slide 38. So what happened here is we moved the Patriot missile systems to Qatar in anticipation of this attack from South Korea and Japan. But I don't know if South Korea and Japan are so happy about that. The Department of War wants to very significantly increase Patriot missile stockpiles in Asia. So we just took a lot of them out of Asia. So obviously we've got a problem on our hands in terms of Patriot missile systems availability. Israel's and Ukraine's supplies of Patriot missile systems have been seriously depleted as a result of those wars. Recent news from U.S. defense OEMs, including RTX, Boeing, Lockheed L3, indicating significant ramp-up of Patriot missile system production. It's apparent that U.S. plans to do much more than just replenish the depleted stockpiles. On September 3, 2025, Lockheed Missile and Fire Control Division received its biggest contract in history, $9.8 billion with a B, or from the U.S. Army. That's the branch that uses the Patriot Systems for about 2,000, just a little less than 2,000 Patriot missiles.

It's a lot.

Slide 29. Here's some big stuff. Slide 29. January 6, 2006. What was that, about a week ago? Yeah, about a week ago. Lockheed announced it reached a seven-year agreement. This is all being driven by the Department of War. With the U.S. Department of War to increase its Patriot Pack-3 missile segment enhancement, MSC interceptor. These are basically Patriot missiles. production to a capacity from 600 to 2,000, 600 to 2,000. Did you see that number? The last two years, this is even more interesting in a way, Lockheed already increases production of Patriot factory interceptors by 60%. So do the math, if it was increased by 60% to get to 600, that means it was 375 two years ago. So we're going from, I'm just doing the math, 375 to 2,000. You get those numbers? It's kind of unheard of. The new seven-year agreement framework is designed to encourage Lockheed and its suppliers to make the capital investments necessary. This is a theme, again, for Department of War. They want the Defense Department to make capital investments rather than paying dividends and buybacks and stuff like that. necessary to boost production capacity to levels needed to support to dramatically increase factory missile program requirements. Do we need encouragement? No. We don't need any encouragement. We're already building our factory. We'll get to that in a minute. We're planning to build a factory to support this program. Lockheed supported or poorly supplied factory missile supplies, sorry, missile systems to the U.S. and 60 other countries. So a lot of countries that want this system and aren't getting it right now. Breaking news. This is this morning. The U.S. Department of War is investing $1 billion in L-3 Harris solid rocket business, that's Airjet, to boost critical solid rocket production for Patriot and other missile systems. This is a separate, a new separate publicly traded company will be created in connection with this investment. This is a big deal. It's a big deal for PARC as well. But you see what's going on here? This is the Department of War driving all this stuff. It's a new world order, as we say later on in the presentation. Let's go to slide 30. The story continues. So what do we have to do with the Patriot missile system? PARC supports the factory Patriot missile system, especially the blade and materials produced with Airing Group. There's an Airing Group name again, their proprietary C2B fabric. This one probably should be in bold, but we're trying to be modest about it. PARC is sole source qualified for specialty ablated materials on the PAC-3 missile system program.

You just think about that.

You just think about all we just talked about will be discussed regarding this program. PARC is recently asked to increase our expected output of specialty ablated materials for the program by significant orders of magnitude. So how are we going to do that? We'll fully support this request with the additional manufacturing capacity provided by PARC's major facilities expansion discussed below. So we didn't need any incentive or encouragement. We were already there.

Okay, let's keep going.

Now we've got to go back and talk about the Airing Group a little bit more, not from the perspective of how it affects our quarters, from a kind of bigger-picture perspective. We have agreements with Airing Group, that really wonderful French aerospace company, JV between Airbus and Safran, laying into their proprietary C2B fabric used by PARC to produce a blade of composite materials for the Patriot missile system, and other missile systems. Then we entered into a business partner agreement, that's what they call it, because they refer to us as their partner, very nice, with Arian in January of 22, under which Arian appointed Park as its exclusive North American distributor under C2B Fabric. Slide 31, on March 27, 25, we entered into what they call a new agreement with Arian, under which PARC agreed to advance $4,587,000 to Arian against future purchases by PARC of C2B Fabric. Now, that was a 50-50 deal. PARC, this advances to be used by Arian to increase its C2B manufacturing capacity in Europe. So they kicked in the same amount. We went 50-50 on this investment to increase their capacity in Europe, and we already paid our first installment of that amount. of that amount, sorry, here in Group and Park are partnering on a study to investigate the economic and other considerations relating to potential establishment of a major C2B fabric manufacturing facility in the U.S. Park committed to contribute, again, it's a 50-50 deal, 350,000 euro to the study. We expect that amount to be expensed in our Q4. Originally, we said Q3H problem to Q4, but that's another 50-50 deal. This is something we're partnering on this study. At the bottom, PARC has engaged in ongoing discussions with the area and group relating to potentially significantly increasing C2B fabric manufacturing capacity in the U.S. to support critical Department of War missile programs, including the Patriot Missile System Program. It's very important that we highlight this because there's a significant need for much more C2B fabric capacity. So it's very important that this additional capacity be installed to support these programs as they ramp up aggressively. Let's go on slide 32. So we've referenced the Patriot missile steps. I'm already explaining this a little bit. It's a very high profile, well-known, numerous other – but there are – sorry, there are numerous other critical missile programs currently in production or in development, which PARC is actively supporting. Unfortunately, many of these programs are too confidential or sensitive for us to identify at this time. But please understand that certain of these programs represent very significant revenue opportunities for part over long periods of time. So last thing on war and peace, how about the U.S. defense industry's new world order? We talked about this a little bit. President Trump wants to increase the U.S. defense budget to $1.5 trillion with a T in order to build our dream military. So this is a two-edged sword for the defense industry, you know. It's being, what is it, somebody giveth and taketh away, here's the taketh away. But according to President Trump, the defense industry needs to get us back together.

So buyback, dividends, no, why don't you invest in defense programs, CEO, even CEO, pay limits.

So, you know, there's been a real issue with the aerospace industry generally, programs getting – being not on time and not on budget. And I think that the Department of War doesn't really like that very much. They're asking the defense industry to kind of get its act together. What do we think about the new world order? We think it's great. Park does this great. It's wonderful. Slide 33. Okay, let's talk about our new plant. Sorry it's going on so long. I'm rushing, as you probably can hear, through this as quickly as I can. Park's major new composite materials manufacturing plant. So now we're going to give you a little bit more information about this new plant. We're planning to build a major new composite material manufacturing plant. The new plan is being designed to be fully functioning and integrated, a fully functioning, sorry, and integrated composite material manufacturing plan. It will include the following manufacturing line solution training, hotmail film, hotmail tape, confidential manufacturing lines, and support equipment. The new plan will also include full production, lab facilities, office space storage, and freezer and ancillary equipment necessary to support all manufacturing activities and operations. So it's like a fully integrated plant with everything that's needed. The new plant that is being designed to produce parts, to produce and support parts, complete composite materials product line, including film eases and lightning strike materials. Slide 34, but the plant is not being designed currently anyway to produce our composite parts, structures, and assemblies. Plant size, it's getting pretty big, 120,000 square feet. This could change. So that's our current guesstimate on the plant size. When a plant is complete and operational, get this, a new plant will approximately double parts' current composite materials manufacturing capacity. So that's, you know, you can see why the plant is that big. When will a new plant be completed? Well, we have some internal discussion about that, maybe debate. But let's just say for now the second half of calendar 27, and when will it be operational? What do you mean by operational? Not fully ramped up. That means we're producing and selling some product. You know, some product has been qualified for production and sale. Maybe second half of, let's say, calendar year 28 would be a target for when the plant will be operational. Estimate capital budget of new plant, approximately $50 million. What's the timing of the capital spend on the plant? Again, this is plenty of flux. At this point, fiscal year 27, that's the coming fiscal year, probably 60% of that money. Fiscal year 28, maybe 30% of the money. Fiscal year 29, maybe 10% of the money. That's how the money will be going out the door. How will we fund the capital spending for the new plant? Well, with our cash, with our cash flow, and to some extent from the offering that we just announced, if that offering is successful. But is the new plant project dependent on the public offering discussed below? Absolutely not. We're doing this. There's no question about it. Nothing has to be decided. It's going to be done. We're just finishing the planning. It's not dependent on anything. It's something we're committed to doing for very good reasons for PARC and for our investors. Okay, let's go on to slide 35. Still on the new plant. Where will the new plant be located? We have a finalist location in Midwest, but we're still waiting for approvals from local community, economic development. These things, for us, go much more slowly than we'd like. Why are we building this new plant? Well, that's obviously the $64,000 question, or maybe the $50 million question. Are juggernauts, plural, you know, both of our juggernauts we've talked about, require it? Our long-term business and sales outlooks require it. Significant additional composite materials manufacturing capacity is required to support our juggernauts and long-term business and sales outlooks. And we're doing this to ensure we continue to have the manufacturing capacity needed for PARC to beat PARC. So we're doing this to ensure PARC is able to continue to be the company of, yes, the can-do company, the yes-we-can company. So we're not looking to become a mill. We're not going to abandon how we got here, why we have the great, in my opinion, success we have, why we have more opportunities than we could ever handle. So it would be really foolish for us to abandon how we got here and become a mill company where, you know, we just run our factory like a mill, and then somebody, a customer wants something. Okay, we can help you out maybe a year from next month. I'm not exaggerating. That's really what happened in this industry. That's not for us. Let's go on to slide 36. What are calling cards? Flexibility, response, investment, and urgency. So we're doing this to ensure PARC is able to continue to do those things which got us here. It would be a very unfortunate mistake for us to abandon the things which got us here, a very bad mistake. So our new plan needs to be designed with being PARC in mind, being flexible, being responsive, having urgency, saying, yes, we can. You need something, we're going to move everything around. We were just talking yesterday, maybe Friday, about whatever large customers, is they want to move so many things around. If it was any other supplier, we'd say, well, sorry. We don't ever say sorry. Sure, we'll move everything around a lot. It requires us to juggle a lot. It requires production to juggle a lot. But that's what we do for a living, okay? And that's why we have the success that we have, in my opinion. When our new manufacturing plant is complete and fully operational, what will Park's total composite materials manufacturing capacity be? Well, you know, it's a question that isn't so easy to answer.

It depends on how do you define manufacturing capacity.

Park being park manufacturing capacity, that means run the business the way we want to run it, so we have that maximum flexibility, responsiveness, and urgency. If we run a factory like a mill, I just plant it, you know, six days a week, 24 hours a day, we could do that, but then our flexibility is almost milled. But parking, park, manufacturer capacity, maybe about $220 million, parking, park, manufacturer capacity, but pushing it to some extent, still being parked, but pushing it to some extent, about $260 million. These are preliminary estimate numbers. We've been asked by a number of investors, please give us some help here. Please give us some perspective on the manufacturing capacity. The maximum sustainable manufacturing capacity, this is what we don't want, would be about $315 or $20 million. That's not what we want, okay? So when you ask, and we haven't asked what the manufacturing capacity is, we have to say, well, depends what you mean by that. Let's go on to slide 37, and I just want to say these are numbers we're working on. We're doing a massive amount of work, you know, Mark and the guys on the expansion plan. So a lot of work has been done, but we're not quite finished with everything. And even after we're finished, things can move, you know, mix can change and things like that, which will affect capacity in sales. Slide 37, PARC's long-term sales outlook for composite materials, including film adhesive materials and lightning strike protection materials. So we've got to say again, what does this mean? Our number is approximately 200 million. 200 million, okay? But how is this outlook computed? It's really important to understand what this means because it's not a forecast. It's an outlook. And this is how this outlook was computed, with line items that are known items. These are known sales and known programs and known customers. There's no other category. There's all line items of known opportunities, known customers, known programs. That's how it's computed. So that's what that outlook includes. What does it not include? So do you think that in the next three or four years, will there be no other opportunities? like six months from now or a year from now or tomorrow, we'll get a call from an OEM about a program they want us to work on. My guess is it'll probably be tomorrow because we're getting so many opportunities. They're not including any of that, which we don't know, you know, what comes. So it's important you understand it's not a forecast. It's just an outlook with the methodology that we use. What are the high and low risk of the outlook? So I think we feel pretty confident about the line items in the forecast. But it's possible that either we're on those programs or we'll get in those programs. Those programs will be ours. But it's possible those programs won't pan out to the level that we're being told by our customers. Maybe they won't be as strong. Maybe it will take a moment to ramp up. I don't know. It's possible. So there's risks in the low side. What about the high side? The high side is all those things we just talked about that we don't know yet that are definitely going to come. There's no way. We haven't provided another category in our forecast or outlook, rather, the way we computed it, just things we know about. What's the target year for the outlook? Well, that's another controversial question internally. I think we're saying fiscal year 31, and I'll tell you I would say the end of fiscal year 31. Fiscal year 31 sounds like a long time from now, but it starts four years from now. That means for us to be able to be at that level, everything has to be ramped up. The plant would have to be fully built, and the new plant, and qualified. All programs have to be qualified. And we'd have hired all the people, all the staffing, and we're fully ramped up. So to me, to do that in four years, that's a little aggressive. That's why I think what we should think about to be a little more conservative is the end of fiscal 31, which is more like five years from now. It doesn't mean we want to be sales, but to be ramped up that level, probably I would think to be more conservative, we might want to think five years from now, we're in four years from now. Thoughts about our ROI for parts investment in the new plant, $50 million. We're not going to go through what the bottom line impact is now, but, you know, you think about it. This year, what is $72 million of sales? We're talking about $200 million of sales, $50 million investment. So you could probably do the math a little bit on your own. We've got some real smart investors. We're not going to go through that number now, but we think that the ROA would be extremely attractive that we wouldn't, we doubt any investor would ever have a problem with it. Let's go on to slide 38. Park's newly announced public law free. Just touch with us quickly. Today, sorry it's going on so long. Today, we filed a form SRE registration statement, a prospective supplement with the SEC for a $50 million at-the-market public offering of Park's common stock. What's the purpose of this offering and financing? Well, first of all, to replenish a portion of the $50 million that we plan to invest in our new composite plant, composite materials plant. That's part of it. But very importantly, to ensure that PARC has a necessary fund to be in a position to take advantage of and exploit key opportunities currently being presented to PARC and new key opportunities as they arise in the future. The availability of funds necessary to exploit key opportunities has been a key strategic advantage to PARC. So, you know, you're probably thinking, well, can you give me an example? Yeah, I can give you an example. We talked about GE Aerospace, you know, how many hundreds of millions of dollars of business was represented. Well, remember what happened? GE said to us, it was GE at the time, not CE, yeah, we'll give you the LTA for 2029. But, Clark, we're concerned, because you're sole source qualified in these programs, we want you to build a redundant factory. And then if you commit to doing that, we'll give you the LTA. And we said, sure, we'll do that. We didn't say sure, but we've got to go see if we can get the money or go to banks. You know, it would have been terrible. This GE, if you're smart, would think, well, I don't know if Park's going to get the money. Let's go talk to somebody else. That never happened because we said right there on the spot, yep, we'll do it. And we had the money to do it. It was about $20 million at a time. I think we believe if we had to do that plan now, it would probably be twice as much based on re-inflation. We are quite sure it is in Park's and our investors' very best interest for Park to be able to continue to exploit such opportunities as they arise in the future. Just a little interesting information, I don't know, footnote. You know where our last public offering was? It was, well, Martina found a tombstone in our office. It was March 6, 1996, 30 years ago. It was a $100 million convertible note offering that was converted to all equity, almost all equity, I think 96 of it was converted to equity. Underwriters were Needham, Robin Stevens, and Lehman, who we have until the last two. Anyway, just a little interesting history. Sorry to go on for so long, everybody, but Operator, we have to take any questions at this time, to the extent there are any.

Operator? Thank you.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star key. And, again, if you have any questions, you may press star, then the number one, on your telephone keypad to join the queue and ask a question. And it looks like we have no questions at this time. Therefore, I'll turn the floor back over to Mr. Brian Shore for closing remarks.

Thank you, Arpere, and thank you, everybody, for listening. We apologize that the presentation went on so long. There's a lot to cover. Please feel free to give us a call if you have any follow-up questions. Some of the items I think we kind of skimmed over a little bit quickly, so feel free to give us a call. We're happy to help you out with any follow-up questions. Have a good day, and once again, happy new year. All the best to you and your family in 2026.

Thank you, and this concludes today's conference, and you may disconnect your lives at this time. Thank you for your participation.