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 PARCC Aerospace Corp. First Quarter Fiscal Year 2027 Earnings Release Conference Call and Investor Presentation. All lines have been placed on me 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 1 on your telephone keypad. If you'd like to withdraw your question, please press star 2. 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. Welcome all to – this is Brian, of course. Welcome all to the Park Aerospaces Fiscal Year 27 First Quarter Investor Call. I have with me, as usual, Mark Esquivel, our President and COO. So we published our Q1 earnings release just after the close. If you haven't seen that, you 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. So a couple of preliminary comments here. It's only been seven weeks since our Q4 investor call. It's also been summer, so I had a feeling this Q1 call would be kind of a quiet call, just little updates, and we move on. But it actually 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. So what we'll probably try to do is go through the beginning portion, 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 because that requires much more discussion, I think. Unfortunately, we – well, it's fortunate, but in a sense, it's unfortunate. We have a lot of new investors at PARC, 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. But for the rhetoric investors, probably not a problem. A lot of this stuff is we go over a quarter. But for new investors, if there's anything you want to talk to us about that we went over to quickly, sorry, please give us a call, and we'd be happy to go through those items in more detail with you.

And 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.

So 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, so 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 may do 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, the thoughts will be that way, and all the things we believe are most of them just not really true. James Webb was produced 18 proprietary park sigma struts. 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, 3, 4.8%. As we often say, we don't like it when it's below 30 like it was in Q4, so a little happier above 30%. percent. Just an EBITDA, $4,576,000. And just an EBITDA margin, 25%. What did we say about our Q1 during our Q4 investment call when we gave you the kind of forecast estimate for Q1? We said sales estimate, 17.7 to 18.4. So we came in within the range, maybe kind of toward the top end, but still within. Adjusted EBITDA estimate 4.1 to 4.6. And again, we came in within the range, maybe at the high end of the range, but still within. I thought we didn't cover this anymore, but maybe we do. What is the significance of our forecast estimate? So we've mentioned this many times is that we're not doing the guidance thing where we give you numbers a 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. Now, sometimes they're wrong. Sometimes it's off. Sometimes it's a little high. Sometimes it's a little low. But 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 it, 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 on the buyer's stock totally disregarding what management's been saying consistently for years now, but that's, you know, 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 talk on the Arian Group. Now, we'll talk about Arian Group in much more detail when we get into the missile system section of the presentation.

Just for now, the reason we bring it up, it has an impact upon the Corlea bottom line.

So, you know, we entered into this business partner agreement with Airing Group in January 22, under which they appointed us as their exclusive distributor, what they call Raycarb C2B fabric in the U.S., or actually North America, sorry. So here's the thing. We had zero C2B fabric sales in Q1. That's actually a good thing for the P&L, believe it or not, Because as we explained, we sell the fabric to our defense industry customers for a relatively small markup. Now, I don't know, not the trick, but the key thing is that when we buy C2B fabric for a customer, we'll sell to the customer, but almost always be stored in our plant. We stockpile it or store it for that customer in our plant. At some point, they're going to say to us, we want you to pre-pred. We want you to take this fabric and make it into a pre-pred. So we had 1.9 million of ablated material sales. That's a pre-priced sales using the C2B fabric, and that's very good margin. So that's whether we sell, to the extent we sell fabric or to the extent we sell pre-priced made with a fabric, that can affect our margins. That's why we bring it up most quarters. Let's go on to slide six, okay? 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. AAE Aerospace, that's that Patriot missile on the top right-hand side of the page. GKN, I think that's the Boeing 787. Let's see. Kratos is obviously the Valkyrie tactical aircraft. Now, Middle River could be the Globus 8000 or the HB20XLR, but I think what we are doing here is Norden relates to the Global 8000 and then MRAS relates to the Airbus 8, Bridge 21, XLR. Okay, let's keep going. Slide 7, 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, to a military, commercial, and business aircraft. Let's go on to slide 8. Now, this is Elena's slide, the PARC-BUS niche military aerospace programs. We don't talk anymore about the specific programs, they're just a little too sensitive, except to say that any time every program that we show you is a program we're involved with, 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, but Why is that? Because the Renault C2B fabric sales in Q1, and that would be in that missile systems part of the pie chart. So, you know, pie charts, you've got to look at them more long-term. You look at them 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. Okay, GE Aerospace and Engine Programs, for some of you folks, we cover this every quarter because it's a very significant portion of our business. We have firm pricing LTA from 19 to 29 with Middle River Aerostructure Systems, which is a sub of SD 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 the JV with GE Aerospace programs. So why is that? What does that have to do with MRAS or SD Engineering? What it has to do with is that when we got these programs, MRAS was owned by GE Aerospace. I think in maybe 19, I'm not sure exactly when GE sold MRAS to SD Engineering, but we were already on all these GE Aerospace programs at the time. We built their redundant factory in Newton for GE that they asked us to do that to support their programs And these are the some of the GE programs that were on MRes and we won't go through them if you have any questions about them Let us know but these are some of the key programs that we're on again. This is for You know to your space. It's a engine so this would be for engine and cells and thrust reverse components composite components Let's go on to slide 10 still GE Aerospace, so additional program that's not listed on the prior page is the fan case containment wrap for the GE 9X engines for the 777X airplane. That's an important program for PARC. Also, the LTA was amended to include film easer products, which are now in qualification. And as we've told you many quarters now, the MRS NSD did request a LIFA program agreement with us. We haven't made a lot of progress of late. It's finding the way with us, but MRAS is at some other priorities. So when they have a little more bandwidth, I guess we'll continue the discussions of the LIFA 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 8-20 neo-aircraft family, including all these variants, which I won't read off to you. And then, you know, 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 A320 neo-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 the neo-family, I'm not going to go through numbers with you, except let's look at June, the first six months, 271 deliveries. Last year, this time, 232. So 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. So that wouldn't work if they back and load the deliveries. I mean, 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? So the key consideration is that Airbus is way ahead of where they were last year at this time with A320 NEO deliveries. Let's go on to Flight 12. Okay, here's a punchline at the top. Airbus is targeting an A320 aircraft family delivery rate of 70 to 75 airplanes per month. By the end of 27 and then stabilizing 27 thereafter, just, you know, if you have any experience with commercial aircraft, that's a huge, huge, huge, huge number. Those numbers are, you know, unheard of, really, 75 airplanes per month. Approved engines, we've got to talk about that. These are two approved engines for the A-20 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 1100G, that's a GTF engine. We're only on the CFM LEAP-1A engine for the A-20 aircraft family, and that's covered, I guess, in the next, the second little bullet item there. And then the third bullet item, okay, according to Aero Engine News, which is the Bible, the CFM lethal name market share of firm engine orders for the A-20 NEO family of aircraft was 66.2%. That's a big number.

That number is going up and up and up.

That's a huge market share. So 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's 66.2% market share translation to 1,192 LEAP 1A engines per year. That's just a whole lot of engines, a whole lot of engines that, you know, that Park supplies into. And 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.

You know, let's go on to slide 13. Okay, 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. So we've got reliability issues, storage issues of the Pratt engine. Meanwhile, CFM has ramped up production of the LEAP engine. So, and just, you know, full disclosure, we've also read some things that there's some complaints every now and then about CFM and how great a job they're doing with supplying the engines as well, just to be fair about it. But could these factors lead to an even greater LEAP-1A market share? 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 31, 26. Okay, 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 PARC. If you look in the, I think, what do you call it, 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. So the A320 aircraft family program could end up being the world's largest commercial aircraft program ever. That's probably a given. And then the A320 neo-aircraft program could also end up being PARC's largest non-defense program ever all right so let's keep going here what's next slide 14 now this is the Chinese airplane COMAC 919 that's a single aisle competitor a 320 and 737 that is another version of a leap engine you know maybe see a family 1c I wonder if C stands for COMAC you know and they might stand for Airbus I don't know COMAC is increasing a manufacturing capacity to achieve production rates of 150. You can see their target rates here. I won't go through them. Detail, they reportedly have over 1,200 orders for the 919 aircraft, and they reportedly delivered only two in 23, 14, 24, 18, and 25. So they've got a long, long way to go to ramp up.

Don't take a 1,200 orders there.

And they say that we heard the lack of availability of the engines has been reported to be limiting their COMEX ability to ramp up. My sense is I shouldn't speak for LEAP or CFM, I sense that they're giving a little more priority to Boeing and Airbus and a 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 program, Big G aerospace program, is the 777X with those GE9X engines. So this airplane has been very, very, very delayed, but 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, like, the same number that you see for the H-20, 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. So I think they're progressing well. Boeing anticipates certification of the aircraft in early to mid-27 and entry to service for delivery in mid-27. So 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 winter, that's a good bet if you're looking to get, you know, cold weather testing done, you know, often 40, 50 below. Let's go into, let's go into slide 16. So here's some numbers. GE Aerospace and Engine Program Sales History and Forecast Testaments. We won't go through all the numbers. That's probably not necessary. Maybe you just noticed that fiscal 20, just shy of 29 million, 28.9, and it took all the way to 26 to get back to the number 29.2, because obviously we're going through the pandemic. Look what happened at 21, my God. It just dropped like, you know, like dropped off a cliff or something like that. So our program sales forecast estimates, Q1, sorry, was 7.1 million, and Q2, we're estimating 7.5 to 8.25, and total 34, for the year, total 34, 38. Now you could say, because you're smart, well, if you add Q1 and Q2 and you multiply that by two, you're not going to get $34 million to $38 million. There's $34 million to $38 million. That comes from our customer. That's what we're told. We actually haircut a little bit to be a little conservative. And it looks like a stretch, but I just want to mention, last year at this time we're in the same position where we're looking at, we had a forecast for the year, and then Q1 and Q2, it was much less than half the total, and we ended up making the number anyway. So we'll see what happens.

We don't know what's going to happen. and I'm just telling you where we get 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 PARC itself, PARC's financial performance history and forecast estimates. So we already know what Q1 was. We talked about that. You know, at the bottom of the first box, 18.3 sales, 14.6 EBITDA, just EBITDA. Our estimate for Q2, 19.5 to 21 million sales, 4.3 to 5.1 million of EBITDA. And if you look at the footnotes, you just want to highlight something, something you're going to risk 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 you, too. So 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 a little concern about supply to international freight risk. I also want to say, just my opinion, that PARC, we focus very intensely on the quarters. It's very important to us. We work very hard in our quarters. But I think the understanding of PARC, if it's really about the quarters, that probably misses the point. And the point is probably, to me anyway, more the big picture. The quarters are always going to be quirky. You know, sometimes be high, sometimes be low, because all kind of factors that, you know, that might just affect that quarter that don't necessarily have big picture impact. It's just my opinion. You know, 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. So if you have any questions about it, just let us know. Slide 19, okay, change your gears a little bit. We talk about this every quarter, a buyback authorization activity. So under a buyback, we purchased 718,000 shares of our common stock, average price $12.94. So I just want to flag those numbers for you We'll circle back on them. I'm not surprised to hear we didn't buy any stock in Q1 or Q2. But let's go on to slide 20 because we juxtapose buybacks and public offering for a reason. So we did a recent public offering at ATM at the market offering for $50 million of Park Common stock. And during the Q4, we sold 943,000, 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, but 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 about 170,000 shares of a common stock. The total proceeds, again, before commissions, of $27,174,000. Average price at $31.24 per share. I just want to tell you that, you know, you should know that we're very disappointed about, we were very disappointed about this offering. a lot of the buying was done via blocks, and we turned them down a lot, you know, people would offer us, you know, to buy blocks, you know, X dollars or Y dollars and cents. We'd just say no so many times because we really were trying to protect the existing shareholders. And I think actually, you know, maybe we could pat ourselves on the back a little I think we did a pretty good job for you with the ATM. The next thing probably is the big, this is the total, not broken down by quarter. So 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. And the ATM offering is complete. But that $27.58 for sure, I wanted to go back and let's look at that. Yeah, back to slide 19 to buy it back. $12.94, we bought the stock for $12.94. We sold it for $27.58. So 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 deer or something like that? Okay, let's go on to slide 22. Parts 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. But you also should know that our cash and marketable securities were estimating to be approximately $114 million at the end of June, 2026. Obviously, the big jump is because of the ATM activity in June. So that's a lot of cash, no doubt. But remember, hold on, we're going to go into some more detail later on the presentation. We plan to invest $65 million in a new plant, also $25 million in Arians C2B fabric plant in the form of advanced payments. We'll discuss both those things later. But, you know, yeah, it's $65 million, $25 million. I don't know. Maybe get your calculator out. I think that's about $90 million. What did they say? $65 million here or $25 million there? Before you know, you have some real money.

You remember that? No, I don't know.

I can't know. I don't know where that comes from, but it's, I don't know, from a movie or something like that. So let's keep going. Park has faced 41 consecutive years of uninterrupted regular cash dividends. That's a good deal. So on slide 23, here we go, we paid $613.7 million, $29.97.5 cents per share in cash dividend since beginning of 2005. Now, when we declared another dividend, when that 12.5 cents per share cash dividend is paid on August 3rd, we will have paid over $30 per share in cash dividend since the beginning of 2005. Well, I think that's pretty incredible. I do say so myself. And here's a nice picture of our founders in Flushing, New York. This is not an original plant, actually. The original plant was in Woodside. It wasn't a plant. This is a real plant. I think about 89,000 square feet. 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. So I like to think about that sometimes. Let's go on to slide 24, changing gears a little bit. Financial outlook for GE or Space Ninja Program. the commercial aircraft juggernaut so here's the first juggernaut commercial aircraft what's the timing for the commercial aircraft juggernaut we used to say um the juggernaut is coming it can't be stopped and we better be ready remember that every quarter now we're saying well the juggernaut is here at least it's beginning now you know in that sense uh the driver's a juggernaut that a320 um aggressive ramp up a320 neo program that's clearly a big one remember 51 airplanes at 25, they're going to 75, well, that sounds like about a 50% increase, you know. That's pretty huge. Expected certification and entry into service of the 777X and COMEX 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 A-320 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. But 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 1080. I just want you to be aware of that, maybe a little conservative. Now, just so you know, the Passport 20 and the 909, those programs are really at rate already. So, you see, they're not the drivers of the Juggernaut. It's the A320, the 919, 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. Here's just footnotes, which explain how we computed the numbers of the prior slide. Slide 27. Okay, it's a half hour into the presentation, and now we're getting into the new stuff, the important stuff. Well, I shouldn't say it that way, but important new stuff.

Missile systems, Park's new juggernaut, and the next big thing for Park.

So 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 ablated materials used to produce solid rocket motor structures and heat shield for critical missile systems, including the PAC-3 Patriot missile system. Now, let me stop there because there was some breaking news this morning announced by Lockheed of something called the PAC-3 ASC. I just want to understand, we'll talk about that a little later, but everything we talk about in this presentation when I say PAC-3 refers to the PAC-3 MSC. That's the program we're on now. ASC is something new, and 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.

But this just happens morning, so I didn't have time to rewrite the presentation. Sorry about that.

But whenever it says in this presentation, PAC-3, what it means is PAC-3 MSC, not the PAC-3 ASC, okay? So let's go. Let's keep going. Depletion of the depleted. We covered this last time. a very bad depletion of missile systems based on the war in Europe, maybe Ukraine, and last year's 12-day war, and now the war in Iran. It's a pretty dire situation, I think. Flight 28, much reporting about how badly the stockpiles of critical missile systems have been depleted, and we're not going to go into that now. If you want to, you can look it up yourself. But running it empty, it's a question. and maybe not empty, but it's certainly concerning how badly the stockpiles have been depleted. Replenishing the depleted stockpiles, yeah, clearly a highly urgent need to replenish the depleted missile system stockpiles, but is that it? Is that all we want to do? I don't think so, maybe not. We're talking about quadrupling the production of exquisite class of weapon systems. So 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, you know, in March of this year, President Trump met with the White House, seven of the top defense contractors, including Martin L3, why do we mention them, because they're the big defense contractors on the PAC-3 MSC, and they need to quadruple the exquisite class of weapons systems as soon as possible. Clearly, the PAC-3 MSC missile system is a key member of the exquisite class of weapons systems. So in our experience, our experience rather, is that the defense industry has entered into hypersonic mode, you know, 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 ablated materials for solid rocket missile systems. The quoting activity, especially for those ablated 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 MSC. We didn't need to specify that because there wasn't a PAC-3 ASC. There actually was a PAC-3 CRI, but I don't think they make that anymore. That was a prior iteration of the PAC-3 MSC, which is the most advanced version of the Patriot Missile System family. So these are big things. PARC is sole source qualified for advanced composite materials for solid rocket motors for the PAC-3 MSC missile system program. Slide 30. So stockpiles of these PAC-3 missile system interceptors, we already covered this just generally, but it relates to the PAC-3 as well. Very badly depleted by the wars, but now even more depleted by the current war with Korea. 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 MSC missile system is an extremely effective missile defense system, very high success rate, very high successful, sorry, here, I should read ahead, very high rates of successful intercept and destruction of incoming ballistic missiles and other threats. But, this is the kicker, Patriot missiles do no good if they're not available.

Let's go on to slide 31.

Did you see the report or read it on July 5th, a couple 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, you know all these people are dying it's not a joke as previously reported just continuing here on January 6th of this year Lockheed announced a reach of seven year agreement with the Department of War to grease the patent factory. This time I actually referred to MSC. MSC, most advanced version of the Packer Missile System Interceptor, production capacity from 600 per year 2000. That's just unheard of, 600 to 2000. 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. On January, still in January 2000, a lot happening in January, I guess, 2026. The Department of War also announced it's investing a billion dollars in L3Harris, solid rocket motor business, formerly Aerojet, now called L3Harris Missile Systems. We're doing solid rocket motor production for the Pac-3 and other missile systems. You see the focus here, the focus, the focus. Let's talk about the Arian Group. We discussed the Arian Group of France. They're a joint venture between Airbus and Serafran. They're a significant company Going to slide 32, our relationship with Aaron Group and its predecessors goes back to the early 2000s. We're very proud to be their partner. And just so you know, we're not being presumptuous. We use the term partner. That's what they call it. That's their term. So I just want you to understand that. We're not usually a presumptuous company. The Arian Group 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 MSC missile program for specially ablative materials produced with Arian Group's proprietary C2B fabric. PARC entered into a business partner agreement, that's what they call it, with Arian in January of 22, under which Arian appointed PARC as their exclusive distributor for C2B in North America. On last year, March of 25, we entered into what they call the new agreement with Arian, under which PARC agreed to advance Arian, 4,587,000 euro against future payments, sorry, Again, it's payments for future purchases by PARC, the C2B fabric. So when we buy C2B fabric in the future, rather than sending a check, we apply the advance. Do you understand how that works? You can read the installments. It's not necessary 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 28. What's the purpose of that advance, that 4,587,000 euro advance, to fund 50-50 with Arian, the construction of additional C2B fabric manufacturing capacity in France? This additional French manufacturing capacity is expected to come on line 28. Approximately half of that is for us and half is for them. It kind of makes sense if we went 50-50 on the project. This additional manufacturing capacity will not even be even close to adequate to support the ramp-up of the PAC-3 MSC missile program. So now what do we do? Now what? Okay, let's go on to slide 34. So continuing missile systems. July 18, well, that's pretty recent. That was, what, look at the calendar, two days ago. Two days ago, Arian and Park entered into a term sheet agreement relating to the construction and establishment by Arian of a U.S.-based C-2B fabric manufacturing plant with expected C-2B fabric manufacturing capacity adequate to fully support the needs and the ramp up of the factory MSC missile program. Well, that's really good news, isn't it? Now, Park and Area, 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, but this is not something we just did, you know, last 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. Okay, so what's the big deal about the term sheet then if it says that we're going to enter into a definitive agreement at the end of the year? Well, what's the key significance of the signing by Park and Arian of the term sheet agreement? There it is. Based on the signing of the term sheet agreement by Arian and Park, Arian will now, not later on, now proceed with the construction and establishment of a U.S.-based C2B fabric management factory Very, very important. Let's go on to slide 35. And as provided in the term sheet agreement, here we go, 100%, 100% of the output of Arian Group's U.S.-based C2B fabric manufacturing plant will be allocated to PARC. That's for us. Also on July 9, all recent stuff, you know, it was 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 tax-free MSC 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, and I guess we'll leave it at that. Under the terms of the term sheet agreement and coordination with this defense contractor customer, we've committed, Park's committed to invest $25 million in Marion's U.S.-based C2B fabric manufacturing plant.

Now, that's not an equity investment.

The $25 million we've made by Park in the form of advanced payments to be fully applied against future purchases of C2B fabric. The $25 million advance payments are expected to be made by PARC in 26 and 27, are expected to be applied by PARC against future C2B fabric purchases beginning in 30. So we're still working out the details, but, you know, the full application of $25 million, I don't know, could take 32, 33, we'll see. In other words, when the advance is fully utilized, fully applied to purchase of C2B in the future. Let's go on to 36. Why the heck are we doing this? It's $25 million, and that's a lot of money. Why are we making a $25 million advance payment commitment? Because it's necessary in order for Arian to proceed with the construction of the U.S.-based C2M manufacturing plant, and we believe it is highly urgent that Arian rebuilds its U.S.-based manufacturing plant as soon as possible. As explained above, Arian's U.S. plant is necessary to support the ramp-up of the Pact-3 missile program. So let's keep going. Why are we doing this? Just so you know, it's not all dials in Central Park. Almost every time a Pact-3 missile, MSC, MSC missiles launch 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.

Now, 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 are interested in that, I guess. On the terms of the term sheet agreement, there's a minimum required purchase. This is very key. A C2B fabric from 30 to 36. We're not going to go into what that number is. This is not a forecast. It's a minimum required purchase under the term sheet. What does that minimum amount translate into in revenues for parks during that 30 to 36 period? Well, remember how we do this. We buy the fabric from Arian. 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're going to ask us to pre-preg it. So we'll look at the revenues. We have to look at the revenues from selling in the fabric and then also from selling in the prepreg. And we're not going to give you a number, but it's hundreds of millions of dollars. So you think about that $25 million investment, and we get, you know, it comes back to us. Now, just cost the money, right? You know, cost the money, I don't know. You could figure it out better than I can. You know, what's the cost of money if we make the investment over the next couple of years or you don't get it fully, you don't pay back, let's say, $20,000, $32,000, $33,000. It's a cost of money. I don't know what that is, but you can figure it out. ROI, it's the best you'll ever see.

So let's go back to that talk about it.

We're kind of done with the section, the PAC-3 ASC. It was just announced by Lockheed. If you read carefully between the lines, it looks like the PAC-3 MSC has been used for a lot of things. It's overkill. It's very expensive overkill. So for cruise missiles and drones and that kind of thing, it's overkill, not necessary. The PAX-3 MSC is really designed for incoming long-range ballistic missiles. Very effective. It could be used to shoot and other things, but it's not really very cost-effective. If you read between the lines, it looks like the ASC is designed to fill that cap. Now, we've already spoken to our customer about this, and this is important. Everything I'm telling you about relates to the PAC-3 MSC. The PAC-3 ASC is gravy for PARC. It doesn't eat into anything we're talking about with the MSC. It's gravy for PARC. Now, obviously, we're very interested, and we were expressed, sure, and we delighted to support that program. We'll see what happens. But I want you to understand, that's not a negative for PARC. It's a potential big positive for PARC. Okay, let's go on to slide 36, totally different topic here. Park's major new manufacturing plant on July 17th, it's 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. So our new manufacturing plant, we've been talking about it for a while. We say we haven't made a site selection decision yet. Well, we have. It's 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 it will need it. This is important. So the existing, you know, the immediate plant, let's put it that way, probably needs about maybe 9, 10 acres. So there's another maybe 9 acres or so that will be available for another plant at some point in the future, which is important for us. It's a beautiful location at Tulsa International Airport. Maybe you'll visit it someday. Maybe we'll have a, I don't know, Shirley will be meeting there someday. parks, a new plant size, about 150,000 square feet. The budget, $65 million. Outflow, this is a guess because, you know, sometimes the outflow will straddle at the end of a fiscal year or so, just a guess, but approximately $25 million and $27 million, $35 million and $28 million and $5 million and $29 million. Let's go on the slide three and nine, please. Timeline for the new plant, complete the facility in fiscal 28, two years. Production and shipment of customers commence in Visible 29. Our new plan is designed to basically do what we do now, support Park's complete composite materials product line, including specially bladed materials, etc., etc., etc. What else? That's a key question because this is not just to do what we're doing now. That's part of it. We're also looking at this as a major development opportunity for Park. So what else is an important question. We'll see about that. Our new plan is expected to approximately double Park's current hot melt, free break, and film adhesive manufacturing capacity, principally used for the commercial aircraft programs like the GE Aviation, GE Aerospace programs, are approximately double the capacity. And then our new plant is expected to approximately triple our current solutions for the manufacturing capacity. And what's that used for? Well, it's used for a lot of things, but among other things, to support the missile assistance program. So we're going to be tripling our solution treating capacity with a new plant. I mean, tripling over, you know, 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 fireparks growth and development as a company in the future. So why did we choose Oklahoma? Probably a good question to ask. Could we have gone to other places? Well, we were very interested to understand, so let me back up. The second largest industry in Oklahoma, you know what the first is, or the chaos, is second largest aerospace, A&D rather. But 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? And so we're very pleased that we kind of, 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, so 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 will inspire us to be more creative and more innovative and our own thinking and our own development as a company. So 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 54. And, again, 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, you know. I don't know, maybe 2,000 square feet, something like that. But in my opinion, we're just getting started. Okay, operator, we're done with the presentation, and to the extent where any questions or any questions, we'll be happy. 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 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 Grasciutti 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 C2B outlook, just because it does have an impact on margin.

Yeah, but we don't mention it because it's more balanced between the fabric and the fruit break. At least that's what we're expecting. We also mentioned a little concern about international freight, and 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. And 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? And I know you should be looking at this probably on a multi-quarter period.

Yeah, that's hard for us to say. 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. And I think we'd also say, certainly, when you begin that breakdown of military, that second pie chart, that the missile systems portion of the pie chart grow as well.

Okay, and one final quick one, if I could. Just maybe this, I apologize, 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's the question about customers in the quarter? Sorry, was there a second 10% customer in the quarter?

Oh, we don't disclose. Yeah, we only disclose that for the year end. We don't disclose 10% customers by quarter. So definitely look at a 10K for the 10% customers for the year end. But sorry, we don't do that. You're probably guessing that MRAS is going to be – MRAS is 10%. That's a good guess. but we don't actually confirm that.

Thank you.

You're welcome.

Our next question is from Trevor Walsh with Citizens.

Hello, Brian and team. Thanks for taking the questions. How are you? Yeah, good. Good, good. So maybe just also piggybacking on the margin question. So I think last quarter you had mentioned that the C2B, more direct sales, not the pre-frag kind of caused some of the margin pressure in Q4, obviously a 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 markets pop up back to that 50%?

Yeah, okay, thanks for the question. So 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. And so 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, fabric sales, I should say, in Q4. And that really pushed the gross margin down quite a bit.

And unfortunately, the problem is that these things, you know, they're kind of out of sync.

So that's why we keep bringing it up, because if 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 in the pre-preg. But 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 to my follow-up. Is it purely kind of customer-driven then in terms of whether you're in a given quarter, or 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 time is dictating. It's more of that type. And then follow-up to that is how might that be changed or affected when you open up the new facility, both the Arion-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, you know, timing of the fabric purchases, in terms of the timing of the pre-prep purchases. The question about the Oklahoma plant, though, was I'm not sure we followed that one. What's that question again?

Just does the dynamic of the timing change at all with either the new facility for CQB in the U.S., or if that really doesn't necessarily kind of move that dynamic in terms of, like, just, 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 kind of are more aligned as the programs ramp and get larger and larger. But 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, you know, when they want to buy the fabric, when they want to buy the proofreads, you know. And 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, but that's probably a unique thing about PARC, which is, yeah, we try to be responsive and flexible and do everything we can to help our customers and not tell them what to do. They tell us what to do. I know that sounds strange, but 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. Just one quick one as a final, Brian, if I can. Of the kind of the outline that you give around the commercial-oriented juggernaut, the GE programs. Obviously, A320 and LEAP for that portion at least is the biggest contributor. But is there anything kind of in the next, I don't know, two, three quarters that you think could be more of a surprise to that kind of your calculus there from the other programs, whether it's COMAC or some of the Boeing? Is there anything that you think, whether it's to the more negative or positive, but just something that could maybe move that needle that's not necessarily, again, A320 specific?

So as we said, we believe the Global 7,500-8,000 program and the COMAC-909 program are really at rate already, so we don't expect much from them. I don't think we're going to see huge upside from the 919 program in the next few quarters because that's the issue is not that COMEC doesn't have the orders. It says 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. So 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. And the Boeing program, yeah, next few quarters, I don't know, maybe three or four quarters out. But, you know, Boeing's already made a lot of these airplanes. They're sitting there in Payne Field in Washington. Some have engines, some don't. But, you know, they've already built a lot of airplanes in anticipation of the certification and entry into service. But, you know, once they get to that point next year, early next year, I think we can expect to see that program accelerate more.

It's been a little bit sold out, actually, waiting for the aircraft to get certified.

But the A320 is going to be the big kahuna, I think. You know what I mean? When you compare the A320 programs, A320 is a big driver. It's very dynamic. And a lot of pressure from Airbus to ramp that program up is aggressive. as possible. And 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's 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.

Yeah, Nick, I think the time was good because I think if NASA came out tomorrow, we'd have all these people asking about it. Well, we really can't talk about it. So, you know, I'm glad we're able to talk about it today. You know, so go ahead. Sorry, go ahead.

And the second, I just wanted to say it's wonderful that we have, you know, 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 it's quite a feather in the cap. The Needham guy, that guy is great. I have followed him for many, many years. So this is good news. The only other question I have is, I mean, you know, you put out such a thorough presentation all the time. There really isn't much to ask. But just on Juggernaut 2, you know, Andrew 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, and I may have referenced this the last time, Are there missing programs that, like, don't need the materials that you, the type that you would supply? Or is that just a foolish question? And that's about it.

No, I don't think it's foolish. Good question. First of all, we love Anderil. We like to do as much with them as possible. But there are many other kind of materials other than C2B that are used in other programs. And, you know, the issue is C2B availability and, you know, and the factory MSCs can have priority. So, you know, other customers may not want to get in line, back in the back of line. So they are looking at other kind of materials. And we're happy to work with those as well, you know, happy to work with those. And we do. But we'd love to do more business with the annual and we're working with them. So I don't know if that helps to answer your question.

Okay, so you are working with them right now?

Well, yeah, yeah, we are. I'm just saying we'd like to do more, but, yeah, we're definitely working with them.

Okay, that's wonderful. Thank you so much.

Okay, thanks for your questions.

Our next question is from Christopher Hillary with Rubeau Tapper.

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, the new business would definitely be positive. Now we're going to have some more costs to deal with as we bring up the plant. You know, the timing is going to be the cost will precede the revenues. But, no, the new business, the margins are quite good, you know, quite special, I would think.

And then 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?

So the immediate expansion plan relates to expanding what we're doing now, but 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 PARC to consider. And then we also mentioned that this was our specification, actually. We were dealing with a few different locations, a finalist, if you will. We were looking for 20 acres approximately this 18 because we knew that we'd only need about half of that for the meat 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's floor for any closing comments.

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.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.