Operator
Good afternoon. My name is Cleo, and I will be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Second Quarter Fiscal Year 2027 Earnings Release Conference Call and Investor Presentation. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad. If you would like to withdraw your question, press star 2. Thank you. At this time, I will turn the call over to Mr. Brian Shore, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.
Thank you, Operator. This is Brian. Welcome all to Park Aerospace's Fiscal 27 Second Quarter Investor Call. I have with me, as usual, Mark Esquivel, our president and COO. We just, I guess right after the close, published our second quarter earnings release. And in the earnings release, you'll find instructions as to how to access the presentation we're about to go through, either through a link, and it's also on the website. And you want to pull it up in order to make the presentation discussion more meaningful. So it's kind of a common theme for the last couple of quarters.
We have a lot of new investors.
I think last call we had about 170 people who participated in the call, and we have a lot of new investors. We have a lot of the veteran investors. So we have to find a balance between the old and the new, and we'll do the best we can to maybe find a middle ground or compromise. Obviously, the legacy investors probably don't want to hear the same material material being covered every time, but some of the new investors may find it more interesting and useful. So we'll do the best we can with that. And after we're done with the presentation, we'll be happy to answer your questions. So why don't we get started? Let's proceed on to slide two, forward-looking disclaimer information. Let us know if you have any questions about the forward-looking disclaimer information. Slide three, our table of contents. First of all, slide one, sorry, the first item in the table of contents is the investor presentation, which we're about to get to. And there's also a supplementary financial information attached as appendix one to the presentation. We're not going to go through that information, but let us know if you have any questions about it. As usual, we feature the James Webb Space Telescope in our table of contents. James Webb Space Telescope recently identified a mysterious new class of cosmic objects called black hole stars. They look like gigantic stars which shine up to 100 billion times brighter. So that sounds like a lot to me. Thank you, James Webb Space Telescope and Park. James Webb was produced with 18 Park proprietary Sigma Struts, as you probably all know. Let's go into slide four. So we go from the sublime to the mundane here. Here are the second quarter results. So let's just go through the right-hand column, second quarter, the quarter we're just announcing. Sales of $20,791,000, gross profit $7,135,000, gross margin $34.3%. We like that. We like our gross margin to be into the 30s. Adjusted EBITDA, $5,285,000. Adjusted EBITDA margin, 25.4%. What did we say about our Q2 during our Q1 investor call? We said our sales estimate was $19.5 to $21 million, so we came in within the range, maybe kind of toward the upper end, but within the range. Adjusted EBITDA estimate, we said $4.3 to $5.1 million, so we came in a little bit above their range with our EBITDA number. Significance of our forecast estimates, we remind you of this fairly often, And when we give these estimates, we're telling you what we think will happen. Sometimes we're wrong, sometimes we're not, but we're telling you what we think. Mark and I usually spend a lot of time going through this and come up with the ranges for you. We don't pad the numbers. I know a lot of other people do that. We don't give you numbers and subtract 10% from it. So when we announce the number, we can beat it. That's just not what we do. We understand that pretty much everybody else does that, but we're not like everybody else, as you probably know. So that's actually a kink song if you want to check that out. Pretty good one. Slide five, query results. We're continuing here. So we're mixing things up a little bit. I maybe should have explained at the beginning. We're changing the sequence of things, and we're changing the content a little bit just to try to make it a little more interesting for you. I don't know if it will be successful, but that's the objective here. So what we're doing with this slide here, slide five at the top, is we're talking about some key product groups that we'll circle back to in many cases. C2B fabric, we cover that a lot, 1.5 million of sales. A plate of materials produced with C2B fabric, 1.8 million. Often we describe, we discuss those two numbers because if they're really out of sync, out of alignment, they could distort the quarterly P&L, but those numbers are fairly close, so we're not going to get into that.
But just for information, we'd always like to know.
Missile system programs, So $5.7 million. Obviously, we emphasize missile systems a lot, so we thought you'd be interested in that number. Advanced composite materials for GE Aerospace Jet Engine Programs, $8.3 million.
We'll circle back on that. We cover that every quarter.
And here's something a little interesting with what we provide for you. Our second quarter sales value of production, we called SVP, was $21.1 million. That's not inventory value. That's actually sales value. And that's a modern-day record, we think, post-sale of our electronics business. And that's a really good thing. And we've got to give a lot of credit to our factory people, our four people, for producing and getting out the door of that much product. That's actually a pretty nice accomplishment under maybe not ideal circumstances, but when are there ideal circumstances. So we wanted to acknowledge our production people in terms of how much product was produced during the quarter. One other thing we never cover in these investor calls is EPS. We don't get into that, but we just wanted to mention something to you. It'll be discussed in more detail with our 10Q, which I think will be filed on Tuesday and Monday as a holiday, so you can look forward to it there. But you might have noticed already, and I just want to get ahead of this a little bit, that our tax rate for Q2 was quite low, was 18.6%. That's not a normal tax rate. There are significant benefits from stock option exercises which took place in Q2. A lot of stock option exercises in Q2, significant benefit. Our normal tax rate without that benefit, the stock option exercise benefit, if you will, for the tax rate would be probably around 26.5%, something like that. And just so you know, if we had that more, let's say, quote, unquote, normal tax provision or tax rate rather of 26.5%, probably looking at 19 cents rather than 21 cents. Like I said, we're reluctant to get into EPS stuff. We don't really cover that, but I thought it's such a significant difference in a tax rate that you'd probably be interested to know how that information. If you want more information about that, you really should call and talk to Gus and Chris. But like I said, when we publish our 10Q, there'd be a little bit more information about that particular item. Okay, let's not get too hung up on that. So let's go on to slide six, our top five customers for Q2 in alphabetical order. Let's see. Let's tie the customers to the pictures. The easy one is Kratos, the BQM-177A. That's a target unmanned aircraft. That obviously ties to Kratos, defense and security. Airbus H320, NEO with the L1A engines. That ties to the Middle River Air Structure Systems. We call it MRAS. And let's see. The Patriot. We talk about that a lot.
Pact-3 MSC defensive missile system, that's a two for the price of one.
That ties to AE, Eurospace, and L3 Harris missile systems. That's nice and efficient. The bottom right, Bombardier Global 8000 business aircraft, and that ties to the Northern Group. Okay, let's go on to slide seven, our pie charts. Nothing too remarkable here, you know, pretty consistent. So let's not spend too much time on slide seven, just keep moving. Let's go on to this. Of course, you have questions. Let us know later, but we're going to move to slide eight. This is a little more interesting. Park Love's niche military airspace programs. This is a slide we give you every quarter. This is Elena's project. Sue, he does a real nice job. So the pie chart is interesting. Just look at the missile system percentage. It is growing. This is just one quarter, so we'll see what happens quarter to quarter. These things change, of course. But we've been talking a lot about missile systems, and missile systems is a portion of the pie chart is growing. We won't go through a description of the photos, individual programs, except we always say that we don't provide photos of programs that we're not somehow involved with. But we used to give you more information. Right now, we just, at this point, we don't feel we can do that. It's just too sensitive. We just don't know where the line is as to what we can say. We can't, so we don't want to push the envelope too much. Let's go on to slide nine. Okay, GE Aerospace Jet Engine Programs. Like I said, we're changing things up in terms of sequence a little bit, trying to make it a little more interesting. And this slide's a little different than it was in the past. Parked advanced composite materials and sole source qualified of multiple engine cell and thrust reverser components of the following GE Aerospace and CFM engine programs. So quickly, there's a Boeing 747-8 with a GenX-2B engine. Those are for spares. Our program is canceled. LEAP-1A engines for the A320 NEO airfare family. That's the Big Kahuna. LEAP-1C, that's for the COMAC 919. That's Chinese single aisle. CF-3410A, that's for the COMAC 909. That's a Chinese regional jet. And the Passport 20, we already talked about that, Bombardier Glow 8000 aircraft with the Passport 20 engines. So what's going on here? Park has an LTA requirements contract, again, to 29 for the above programs with MRAS, a sub of SD Engineering Singapore. Now, what's going on here? These look like they're all GE programs. You've got to read the little footnote. Footnote, MRAS is formerly a sub of GE Aerospace. So that's the connection. When we got on all these programs, MRAS was part of the GE Aerospace. And then I think in maybe 2018 or 19, GE Aerospace sold MRAS to SD Engineering, which which is a large Singapore aerospace company. Park is also exclusive to our AFP composite materials for the fan case for the GE9X engines for the Boeing 777 aircraft. Let's go on to slide 10. Update on GE aerospace jet engine programs are starting out with the Big Kahuna, the A320 NEO aircraft family. We're not going to read the variants for you, but you can see them for yourself. So as of August, Airbus had delivered 4,741 of these airplanes, and they have a backlog of firm orders, 7,571. That's just a huge, huge, huge, huge program, probably the biggest ever for commercial aircraft. So we're fortunate to be on that program. And here's the history of the ramp-up. You can see what's going on. They were ramping up the program until they hit the skids with 2020. That's the pandemic year. And they've been clawing their way back. 2025, 607 airplanes were delivered. And 2026 year to date, you don't want to analyze this number. That's not a good idea. You can do it if you want. That's not how it works because these aircraft companies, they make the years, if you will, in the last couple of months. But what's significant is that that number is quite a bit larger than the same period from 25, which was 333 deliveries in year-to-date August in 25. So that's good. It means that GE and aerospace and Airbus are ramping up this program, which is good news.
Okay, what are we doing here? Airbus is targeting A320 aircraft family delivery rate of 70 to 75 per month by the end of 27. Remember the prior page, I think, when we say 25 was like 51 per month, so we still have a way to go here, and stabilizing to a rate of 27 thereafter. Approved engines, this is important. These are two approved engines for the A320 aircraft family. One is the CFM LEAP 1A engine. That's the program we're on. We're on the A320 NEO aircraft family with the LEAP 1A engine, CFM. And we're not on the A320 NEO aircraft family program with the Pratt engine. So we covered that in the first and second bulletin item. Here's some interesting info. Third bulletin item. the CFM Leap 1A market share affirmed engine orders for the A320 NEO family of aircraft with 66.9% as of June 30. So the CFM Leap 1A market share continues to grow very nicely. And the prior quarters we explained why that is, you know, what's going on.
We're not going to go into it here, but if you have any questions about that, let us know.
The key thing is that the LEAP 1A market share, that's the program we're on, continues to grow.
I think when we started these presentations, it was maybe less than 60%.
I don't remember, but it's grown quite a bit, and it continues to grow. And there's a huge, huge backlog, so there's a lot of ballast, if you will, in that market share. You know, it's not easy to change the market share so much month to month or quarter to quarter.
But nevertheless, that's what's happening.
At that delivery rate of 75 A320neo family aircraft per month and at 66.9% market share, that translates into 1,204 LEAP engines per year, which is a lot of damn engines, pardon my French.
So still with the same program as of June 30, there were 8,546 firm LEAP 1A engine orders. And, you know, that's a heck of a lot of engine orders. I think if you go to slide, what is it, slide 16, you could kind of figure out what that's worth. You can do your own math. Because in slide 16, it tells you what a revenue per unit is. Let me just say it's a big number. And that's not it. That's just a firm engine order. That doesn't mean that's it. Obviously, they're going to take more orders as time goes on. So let's continue on slide 12, a different program, the COMAC 919. That's the Chinese aircraft with a LEAP engine. It's a LEAP-1C engine. They reportedly have over 1,200 orders. And you can see the deliveries. They're trying to ramp up. They have them doing, you know, I'm sure they're not achieving the rates that they want. Their deliveries are expected to ramp to 59 and 28 and 93 by 30. Those are airplanes, not engines, by the way. So, and this is the single aisle, the Chinese single aisle airplane that's designed to compete against 737, the 8320. Let's go on to slide 13. The 777X with the G9X engines, this is a very delayed program, but still a very important program for PARC. The test programs have amassed over 1,700 flights. That's a lot, over 4,800 flight hours. That's a lot. Reportedly, they have over 670 open orders for the aircraft. And Boeing anticipates a certification entry to service and first delivery next year. This has been pushed back a lot, a lot of delays, But, you know, just my opinion is I have some optimism that this will happen next year, which would be really important for parks, an important program for parks. So let's get a nice picture of the 777X undergoing cold weather testing at Fairbanks. A friend of mine took that picture. Let's go on to slide 14. So G-engine program sales history and forecast estimates. We don't go through all the history. We don't need to do that. But what you might look at is look at fiscal 20. That was like the year before the pandemic. which is about $29 million, it took up to fiscal 26, if you look at the right-hand side of the slide, kind of halfway down, 26 to get back to that $29 million number. So, you know, we really had a setback with the pandemic, and it took us a while to even get back to the pre-pandemic numbers for these jet engine program sales. In fiscal, in our second quarter, $8.3 million of sales, and our forecast for Q3, This is a GE engine program sales forecast, $8 to $8.5 million. For fiscal 27 the whole year, we brought that number down from $32 to $35.
That number was based upon the input we have from our customers called a bill plan. And we haven't gotten a revised bill plan, but, you know, we're a little skeptical as to whether we'll achieve that bill plan because we have for first two quarters of the books, we've got a forecast of $2.3. And we're trying to be a little more conservative in terms of where we're going to go with the fiscal year. We'll see what happens. All right, let's go on to slide 15. So the GE program's outlook that we call our juggernaut, Park Commercial Aircraft Juggernaut. This is our first juggernaut, remember, GE Aerospace Genes and Programs. What's the timing for the Commercial Aircraft Juggernaut? For a long time, for years, we're saying when's it going to happen, when's it going to happen. We don't know. but we're no longer saying that. We're saying that commercial aircraft juggernaut is here because the programs are clearly ramping up. Commercial aircraft juggernaut drivers, what are they? They're the A320 neo-aircraft family production as it ramps up to the S-75 airplane for a month. The expected certification entry into service of the 777X and COMEX plan ramp up the C-919 aircraft. The other two, the aerospace programs, the Global 8000 and the C909, those programs are pretty much at rate, so that's good, but they're probably not going to be key drivers in terms of the ramp up of current rates, the current revenues rather to that aircraft juggernaut kind of revenue level. So let's continue. Here's a slide. Was it slide 16 we're on? Yep. Continuing with the juggernaut. So here is kind of how we lay out the juggernaut. We get to that 62,340 number. There are a couple of changes here, though, in the assumptions. And slide 17 has a footnote in terms of how we computed, how we arrived at assumptions, and how we did the math. But we actually increased A320 NIO to this 1,200 units because we decided we really should look at the current market share. We're holding off using like a 60% market share, but we thought that doesn't really make any sense anymore. And we brought down the number for the C919 just because they seem to be struggling to get that level. Now, remember, these are engines, so you've got to multiply the airplanes by two. So 200 engines means 100 airplanes. And we do the math, and we get to $62.3 million. And that compares to about, what, $30 million last year, something like that.
So it's still a long way to go in terms of the ramp-up.
Slide 17, rather, these are the footnotes I referred to. We're not going to go through these. Any questions, let us know. Slide 18, okay, we're changing gears. We probably have to pick up the pace a little bit. missile systems. Now, the good news about missile systems is they're really, even though there's so much going on for us in missile systems, it's like a frenetic pace for us to keep up with. But there's not a lot of new developments that are being reported in the presentation as compared to Q1. So a lot of this is just review. That's our new juggernaut. Next big thing, missile systems, park missile systems niche, we call it. We specialize in design and manufacture advanced composite ablated materials used to produce solid rock motor structures for critical missile systems, including the factory MSC Patriot missile system, which we talk about a lot. We also design and manufacture advanced composite materials used to produce other missile systems components. Depletion haven't been depleted. We covered this last time. It's well understood, widely known that the missile system stockpiles have been badly depleted by all these horrible wars that we've been involved with the last couple years, running empty, replenishing the depleted stockpiles. So there clearly is a highly urgent need to replenish depleted stockpiles. But is that it? Does it end there? Maybe not. Let's go on to slide 19. Okay, here we go. Quadrupling the production of the exquisite class of weapon systems, quadrupling, that's quite a concept for the airspace industry. It usually doesn't move that quickly in our experience. On March 6th, beginning of the year, 2006, President Trump met in the White House with seven top defense contractors. At the meeting, these contracts were reporting to agree to quadruple production of the exquisite class of weapon systems as rapidly as possible. That's really quite something, kind of shocking. And the PAC-3 missile system, of course, is head of that class, an exquisite class of weapon systems, plus other things that other programs PARC is on. Let's talk about PAC-3, the PAC-3 MSC Patriot Missile System. PARC also has qualified advanced composite blade materials for solid rocket motors for the PAC-3 MSC Missile System program. The PAC-3 missile system interceptors have been extensively and very effectively used by U.S. allies in the Mideast, including all these countries. And why are they using them? Because the bad people are shooting missiles at them. So they've been using the factory missile systems to intercept and destroy the incoming missiles, the ballistic missiles that are being shot at their countries, launched through their countries, and in particular, civilian population centers. Let's go on to slide 20. the factory MSC missile system. It's an extremely effective missile defense system, very high rates of successful intercepts and destruction of incoming ballistic missiles and other threats. But the stockpiles of those factory MSC missile systems have reportedly been badly depleted by all these horrible wars. I don't think we're talking out of school. We're not talking about anything confidential in the website information here. Just it's been widely reported that the system stockpiles have been depleted by these horrible wars. And the thing is that the Patriot missiles, they don't do any good if they're not available, as wonderful as they are. According to reports, there were dozens of people killed recently in Ukraine by Russian ballistic missiles. Incoming, which Ukraine was not able to intercept and shoot down because of a serious shortage. That's their terminology of Patriot missile interceptors. It's just heartbreaking. I mean, you know, these are people that died. It's not funny. It's heartbreaking, heartbreaking. On January 6, 2026, this is now kind of following on. What are we doing about it?
What's our government trying to do about it?
Lockheed announced it reached a seven-year agreement with the Department of War, increased the factory MSE interceptor production capacity from 600 per year to 2,000. Well, that's, you know, quite an assignment, 600 to 2,000. Let's go on to slide 21. More activity by the government January 13, like a week later, the Department of War announced it's investing a billion dollars in L3-Harris solid rock and mortar business to boost solid rock and mortar production for the PAC-3 MSC and other missile systems. This is all public stuff. We're not talking out of school here. Arian Group of France. Let's talk about them for a while. Arian Group is a joint venture between Airbus and Safran. Arian is an iconic and legendary missile launch system development and manufacturing company with very deep legacy technology. Arian's rocket and missile system programs include Arian VI heavy lift launcher used by the European Space Agency, the MS-1's submarine-launched ballistic nuclear deferred missiles. This is a very special company. Our relationship with them and its predecessors go back to the early 2000s. We're very proud and fortunate to be their partner. Like I said, they're a very special company, very special people, wonderful people, actually. We just want to go on the record to make sure everybody knows how we feel about this wonderful company, how privileged we feel we are to be connected with them, and how privileged our country should feel to be connected with Arian.
So let's go on to slide 22.
Arian produces a proprietary fabric called Raycarb C2B, which is used to produce a blade of composite materials for advanced solid rocket missile programs. And we're sole source qualified on a solid rocket motor for the PAC-3 MSC missile program for specialty blade of materials produced with Arian Group's proprietary C2B fabric. So we're qualified with our pre-preg material, but it's also qualified with Arian's C2B fabric. PARC entered into a business partner agreement. that's what they call it, with Arian in 2022, under which Arian appointed Park as its exclusive North American distributor of their C2B fabric. I think informally we were doing that for a long time, but they wanted to formalize it. That came from them, not us. On March 27, 25, we entered into what they call the new agreement with Arian, under which Park agreed to advance Arian 4,587,000 Euro against payments for future purchases by part of C2B Fabric. We paid the first installment in our fiscal year 26Q1. We'll get a second installment in our fiscal 27Q1. Let's go on to slide 23. Our third installment is basically being paid now. And we actually accelerated that. It was supposed to be April next year. It's now, I think, next month. And that was in exchange for Arian, increasing the allocation and pulling in the allocation, you know, accelerating the allocation, and then also in exchange for at least our asking if they could even do more. We have a wonderful relationship with these people, and it's worked very, very well. What's the purpose of this $4,587,000 advance payment? To fund 50-50 with Arian and construction of additional C-tube and fabric manufacturing capacity in France. This additional French manufacturing capacity had to come online at 28. Approximately half of it is for us and half of it is for them because they need it for their own programs at Arian. So we went 50-50 on this additional capacity. We're 50-50 on the output. But unfortunately, this additional French capacity, manufacturing capacity, not the adequate support to ramp up in the factory MC program, not completely anyway, to that 2,000 interceptor per year rate. So now what do we do? Let's go on to slide 24. I'll try to pick up the pace a little bit here. Sorry, I'm taking too long. On July 18, this is all covered at our last Q1 investor call. This all just happened right at that point. July 18, Park and Arian entered into a term sheet agreement related to the construction establishment, this is big, by Arian of a U.S.-based C2B fabric manufacturing plant with expected capacity more than adequate to fully support the needs of the PAC-3 MSC missile program at that 2,000 interceptor per year rate. The term sheet agreement provides a definitive agreement, also will need to be entered into before the end of the year. But what's the significance of the signing of the term sheet? I mean, before the definitive agreement is signed, based on the term sheet signed by Arian and Park last July, Arian is proceeding with the construction and establishment of our U.S.-based C2B fabric manufacturing plant. That's really important. Let's go on to slide 25. And that's providing a term sheet. 100% of the output of that U.S. plant, the U.S. plant will be allocated to PARC, which will use to support the factory and other missile programs. That's really important because the capacity in France, we share that with Arian. This capacity is offer us in our programs. Also, under the terms of the term sheet, Park has committed to invest $25 million in Area Group's U.S.-based manufacturing plant. Now, it's not equity or debt kind of investment. The $25 million investment will be made by Park in the form of advanced payments to be fully applied against future purchases by Park of C2B fabric. The $25 million advanced payments are expected to be made by Park in 26 and 27 expected to be applied by Park against future C2B fabric purchase at the beginning in 2030. So why did we do that? It's kind of a strange thing to do. You guys think, why did Park enter the territory of Greenwood Arian, and why did we make the commitment to $25 million advance payment commitments? Because it was necessary to provide Arian with a green light to proceed with the construction of the U.S.-based C2B fabric manufacturing plant, And we at PARCC believe it is urgent that PARCC, that Arian Group rather, builds its U.S. plant as soon as possible. So let's go on to slide, what is it, 26 here? Yeah, slide 26. Although we're not at liberty as flow, it's a specific C2B fabric manufacturing capacity expected from Arian's U.S. plant. When a plant is completed online, its manufacturing capacity, together with the C2B fabric allocation from ARIAN's European operations, will be more than adequate to support the needs of the PAC-3 MSC program at the 2,000 interceptors per year rate and numerous other critical missile programs. So what's the timing of the ARIAN C2B fabric manufacturing plant in the U.S.? According to Arian, their U.S. plant was originally expected to take four years. That's a long time to be completed online. But Arian recently agreed with PARC to accelerate the timeline for the completion and bringing online of the U.S. plant by six months in exchange for a PARC's agreement to accelerate the $25 million advancement payment schedule. It's very good news because we want to get that plant up and running as soon as possible. So as a result of this recent agreement, PARC is now expected to make advance payments of $20 million this year and $5 million next year. That's all to be applied against future purchase by PARC or C2B Fabric. Now, this is all obviously dependent on us entering into that definitive agreement, which is expected to happen before the end of the calendar year. So let's go on to slide 27. Okay, so just for the record, I want to cover this. even though we are in business to make money for our shareholders, thank you very much, it would be obvious, is not all dollars and cents for us. There's more to it for us. As we already alluded to, every time a factory missile is launched and successfully intercepts, destroys an incoming ballistic missile, it's likely that there are people who are alive and walking around on the earth, or whether or not be. Lives are being saved. This is reality. This is not a theory. It's not some interesting paper or some kind of video game. That matters a lot to us. Okay, that matters a lot to us, so that motivates us a lot. We don't like seeing people getting killed, and they should be getting killed. But let's talk dollars and cents for a minute anyway. Under the terms of the term sheet, Park is expected to purchase a significant amount of C2B fabric to Marion during the period of 2030 to 2036. So why is that a good thing? Well, it's also a good thing because PARC will also be expected to sell all that fabric to its prearranged customers under prearranged arrangements with the customers with our distributors' markup. But in addition to that, PARC will be expected to manufacture and sell a blade of materials produced for that C2B fabric for those customers. So what kind of ROI do those sales of fabric and materials represent for PARC? Well, we're not going to disclose that specifically, but let's just leave it at this. It's a very, very good business deal for Park, and you should be happy about it from a business perspective. Very good. Let's go on to slide 28. Okay, changing gears here, talking about a new plant. And again, this has all been covered pretty much, not too much news here. July 17, we entered into this lease agreement for land at the 18 acres at Tulsa International Airport. That's where a new site will be. There's also going to be land for space for additional plant in the future. Plant size, 150,000 square feet approximately. The budget outflow, sorry, the capital budget, $65 million cash outflow, $10 million and $27 million, $45 million and $28 million, $10 million and $29 million. You probably noticed that this got pushed out a little bit. I think last quarter we said $25 million in fiscal 27. It takes a little longer to work through all the incentive agreements with Tulsa and Oklahoma. They're wonderful people. They're not a problem.
It's just longer than we expected.
But the good news, as you look at the last arrow item, is that facilities still expect to be complete in 28, and production shipment is supposed to commence in 29, so that's not pushed back. Fiscal 29, I should say. Page, sorry, slide 29, continuing here. plant designed to produce our full product line, second arrow item expected to, this is important, approximately double Park's current hot melt prefrag and film adhesive manufacturing capacity. That's used to support GE Aerospace Programs and other commercial aircraft programs. But here's the key thing. By staffing up our existing hot melt manufacturing lines in Newton, Kansas, and a Newton facility, we'll be able to support the ramp of the GE Aerospace Programs and the other commercial aircraft programs and hotmail programs we support. So we'll be able to do that. And people are asking about that. How are we going to bridge the gap until our new plant's online? We can do that with our plant in Newton by staffing up our lines. But the additional hotmail manufacturing capacity provided by our new Tulsa plant will be necessary to provide to more properly and sustainably support those GE Aerospace programs and other commercial aircraft programs. So we'll be able to get through the transition, with our current plant, but it's really good. Our new plant's coming in online soon. And it's the same, really, almost the same exact story with the solution treating on slide 30, manufacturing capacity. We're tripling our solution treating manufacturing capacity with a new plant. That's used to support, among other things, missile system programs, the solution treating manufacturing capacity. And the same story, by staffing up the existing solution treating lines in a Newton-Kansas facility will be able to support the PAC-3 program at the 2,000 interceptors per year production rate because that, according to what our customers are indicating, we're not going to give you the specifics, we're supposed to be at that rate well before our new plant's online. But we can handle it. But the key part is the additional solution-treating manufacturing capacity provided by our new Tulsa plant will still be necessary to more properly and sustainably support the VACS-free program and other critical missile programs in the future. Why are we building the plant? Pretty obvious, because of our commercial aircraft juggernaut and missile systems juggernaut, they require it, and also to enable, facilitate, and promote parks growth and development as company for the future. Okay, so slide 31. Here's where we're kind of mixing things up again. These slides are somewhere embedded in the middle of the prior presentation. Forks for financial performance history and forecast estimates won't go through the history.
But Q2, so we already talked about Q2, 20.8 million sales, 5.3 million just EBITDA. Our forecast estimates for Q3, 21 to 22.5 million of sales, 5 to 5.8 million of EBITDA. Let's go into 3.2. we show you this slide every quarter except the new things we're including the first six months your date in the right-hand column we'll continue that you know like next quarter will be the first nine months just for information so when we continue let's go on to slide 33 recent public offering you know about this there's no news about this it was already complete when we did our first quarter investor call it was a 50 million dollar at the market public offering, ATM, I guess they call it, and we sold 1,812,000 shares at an average for proceeds of $49,996,000, average price of $27.58 per share, and that at the market offering was actually complete, I think, in June. Let's go on to slide 34. Our last slide, thankfully, I guess, Park's balance sheet, cash and cash dividend history, saving the best for last.
Park has zero long-term debt.
That's really important to us. I'm not saying we'll never have debt, but debt's kind of against our religion. I hear these sometimes watching financial news. Oh, the small companies with all the debt, they're struggling. It's the big seven or whatever they call it. They're doing so great. Well, I don't know about that, but we're not big believers in debt either. Park reported $114.75 million in cash in marketable securities as of the end of the second quarter. That's a lot of money, I agree. But remember, as we previously discussed, we plan to invest $65 million on our major new Tulsa manufacturing plant and $25 million in Arian Group's U.S. plant in the form of advanced payments. Now, $25 million eventually comes back to us, but that could take four or five years. So you add 25 and 65, you know, you get some real numbers there. I just want to mention something we haven't mentioned before, which maybe is obvious to you, but the 65 million, so those were the capital assets, the equipment and the factory and everything else. That's not the working capital. That's not the startup costs, which are, you know, going to be significant. That's over time. That's not just, you know, day one, but just keep that in mind. So when you look at it that way, 114.75 million is a lot of cash, but maybe it's not all that much, actually. PARC has paid 41 consecutive years of interrupted quarterly cash dividends. That's a nice thing for us. And saving maybe the very best for last, PARC has paid $616.4 million, or $30.10 per share in cash dividends since the beginning of fiscal year 2005. I always like to juxtapose that less comment to the picture of the PARC founders back in the 1950s, a plant in Flushing, New York, actually, not a first plant or a second plant. These two guys, the founders started the company with, you know, basically nothing, I think, a little money left over from the war duty. So I guess you could say Park has come a long way from those early days. But, you know, I don't want to spend a lot of time on this, but I still think it's important for all of us at Park to remember where we come from, And because those beginning days were so important for us and really set an example for what kind of what we want to be, the way we want to deal with things, deal with problems, deal with obstacles, deal with hurdles, roadblocks that come up every day today. So, okay, I think that ends our presentation. Yeah, it does, operator. I'd be happy to answer questions to the extent there are any.
Operator
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 2 if you would like 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 key. One moment while we pull for questions. Our first question comes from Jim Rituiti with Needham & Co. Please proceed with your question.
Thank you. Good afternoon. First off, if my numbers are right, it looks like it had very strong growth in missile systems, both sequential and year-over-year. So, you know, are these levels sustainable or are we going to – should we anticipate, you know, continued variability until we really see this missile ramp underway in earnest?
Hey, Jim, we're breaking up a little bit, but how are you doing? You know, if you look at slide – that's fine, slide 32 is a good question. I think it is sustainable, you know, and the reason you want to look at slide 32, Look at the sales, you know, from 17, 18, 19, 20, we're, you know, growing pretty aggressively, you know, $10 million a year more or less. Then we hit 21, the fiscal 21, the pandemic, and that really kind of slowed us down for several years. It took us through, you know, to 25 to really get back to the, you know, levels of 20. But I think we're back on that trajectory, and I think it's pretty aggressive, probably more aggressive than what was before. It's going to be our challenge to keep up with the growth, both in the missile programs as well as the GE programs. I think we talked about the jargon of 62 million for the GE programs. Last year was maybe, what, 31 million, something like that. So there's a long way to go there, and certainly a long way to go with the missile programs as well.
Brian, hopefully you can hear me clearly. I wanted to also go back to the commentary regarding your full-year sales with the GE programs. I mean, you have a short Q2, I think, versus expectations, and yet you're trimming the full year. It sounds like you're being conservative, but, again, this is based on build plans that you get. So I'm just trying to understand that a little better and reconcile that.
Yeah, unfortunately, Jim, you're breaking up quite a bit, but I think you're asking about what the GE programs forecast, let me see if I can actually pull it up for you. It was on, so the history, if I can't find it quickly, I won't talk about it too much. Okay, thank you for that, that's slide 14, okay, thank you. And so you're asking if the growth is sustainable, whether it be conservative. I don't know. The forecast for fiscal 27, 32 to 35 million, I don't think that's what we're trying to be conservative there. I do know there's a lot. What we can tell you, Mark and I can tell you, is there's a lot of energy toward ramping up these programs, especially the 8-20 NEO program. And then if the 777X gets certified next year, that program will have a lot of growth as well pretty quickly, I think.
Like I said, you know, we have fiscal 26. That was that the last full fiscal year, $29 million, and the jargon of $62 million. So a long way to go with the GE programs.
Good. Thanks. A policy is going to be back in the queue.
Was there something else, Jim? Jim, we're having trouble hearing you.
Yeah, no, I'm sorry about the connection. I'll jump back in the queue.
Operator
Your next question comes from Trevor Walsh with Citizens. Please proceed with your question.
Hey, Brian and team, thanks for taking the questions. Maybe just to revisit that last question, just to clarify. So, yeah, we saw you took the full year GE number down, And I understand a lot of moving pieces, but are you seeing – your Q3 number looked kind of right on with what we were expecting, so it seems like it's maybe a little bit more uncertainty with Q4. Is that a fair statement? And then beyond that, are there any specific programs that are kind of creating that uncertainty, or is it more just kind of broad-based of just kind of what you're seeing, you know, within the group as a whole for you?
Okay. I think we're misunderstanding this. No, just do the math. Look at Q1, Q2, and Q3, and then, you know, it would be a big jump in Q4 to get that number. The forecast that we provide was based on what's called a bill plan, and they're probably just ramping it up a little more fully than they originally planned. But I think it would be a mistake to read anything other than, you know, a pretty aggressive ramp up from this information. We're just trying to be more realistic with Q4. There's nothing holding back Q4, but, you know, we're thinking, well, maybe Q4 will be similar to Q3 and Q2, in that range anyway. And we could be wrong, but we're just trying to be realistic, not trying to be conservative realistic. But, again, I want to emphasize, I think it would be a mistake to interpret this information in some kind of negative way, that things are not going well, the programs aren't ramping up as quickly as possible. The key thing, I think, the key challenge, it's not us, it would be our customers, is their ability to keep up with the program ramps. It's a challenge. These are manufacturing companies, so it's a challenge for a manufacturing company to ramp up so quickly. But I would also say, I don't want to make this worth to death too much, that we're clearly out of that pandemic mode where everything was just kind of going sideways for so long and we just weren't seeing any growth at all. The growth is aggressive.
Yep. Okay. Fair enough. That makes sense, Brian. I appreciate the color. Maybe switching gears to missile systems a little bit. I appreciate the color around how the Newton facility can just generally support in this interim period before Tulsa gets up and running, both kind of the full extent of the GE ramp and then as well as the PAC-3 2000 rate as well. But obviously there was just a big announcement with the Navy and Raytheon around SM6, which I know you guys have some content on. PAC-3 is not the only game in town. So is it fair to say that as these other missile programs ramp up as well, that the Newton facility can also support those as well? Or do you kind of get to a point where you have to have to make some decisions about kind of what lines are doing and just maybe talk more broadly. I know there's sensitivities around it, but just how comfortable you feel like given the pace of the ramp, how Newton can kind of get us through to when Tulsa's up and running.
Yeah, you know, we probably overemphasize the PAC-3 program. It's just we do that because there's so much visibility about it, so much knowing about it. We have companies publicly talking about the rates, you know, which is a little different than some other missile programs. And since we're sole source on the materials for the solid rocket motors, it's easy to kind of key into the discussion about the PAC-3. But, you know, as I was going through it just now, I was thinking, yeah, we're really emphasizing PAC-3 maybe to the detriment of a lot of other programs that we're working on. PAC-3 is clearly the largest program that we have now, but there are many, many other missile programs that we're working on. Mark and I were just talking about that, and it's a lot to keep up with. At this point, the answer is we plan to be able to handle everything with a Newton plant, but that will be by stretching, by staffing up the solution trio lines quite aggressively. But we plan to be able to get there with the PAC-3 as well as the other missile programs. I think we'll all be very relieved on the new capacity, and Tulsa comes online, because we'll be stressed to get to that point.
Got it. Maybe one more for me, and then I'll hop back in the queue. Good to hear that REN is able to kind of pull forward their timetable around the build-out for their facility. I mean, it seemed like it just took an additional infusing of funding and commitment from you to do that. If things got really kind of dire from just everything requiring C2B, could there be Is there a scenario where that can be pulled forward even more with additional funding, whether it's from you or some other kind of third party to help move that along, or is that kind of what it is at this point?
That's a funny question because, you know, people keep asking that. I think the answer is no, about money.
And what we did, we pulled forward our advance payments. We didn't increase our advance payments. We pulled them forward. We accelerated them in order to help them get their plant uproading more quickly. So is there an opportunity for Arian to squeeze that time frame, let's say four years, three and a half years, less than three and a half years? I don't know. I think it would be a challenge. I think it would be difficult. I'm not saying it's not possible. And, you know, maybe a couple of months you were there, but significantly, my guess is probably not. It's not a matter of money either. That's not the issue. So the reason I'm kind of laughing is because people have offered that, you know, what was taken. It's not money.
Yep, got it. Okay, perfect. Appreciate that other questions.
Operator
Thank you. As a reminder, 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 2 if you would like to remove your question from the queue. Your next question comes from Fabio Wolfinger with Switzerland. Please proceed with your question.
Good afternoon, and thanks for your presentation. Hello. Good afternoon, and thanks for your presentation. I'm calling from Zurich. As you told, you lowered your full year sales forecast for some of the programs. For any shipments that have been delayed, have customers confirmed new delivery dates or are you still assuming those sales will return? And looking into physical year 2028, Do your latest customer schedule support faster sales growth than this year, or should investors lower their growth expectations for that year as well? I'm asking especially about the difference between confirmed orders and expected demand. Could you give a rough breakdown of the reduction and tell us when you expect any delayed sales to be recovered?
I'm not sure I know what you're referring to in terms of reduction and delays we haven't provided a forecast for this fiscal year or next fiscal year but I'm not sure I understand what you're getting at in terms of these delays or reductions you're referring to I'm sorry maybe you can clarify or yeah no I was listening about and I thought about some programs accounting for reduction approximately for these engine programs right the engine programs um so I don't know what to say about it the engine programs I if you're talking about the fact that we brought down the the full year forecast and that's what you're referring to yeah I know I think now I understand for the GE programs. I thought you were referring to a forecast roll apart. We brought that down. Yeah, that's great. Yeah, yeah. Like I said, I think the original forecast we provided was based upon the bill plan we received from our customer. And we weren't aggressive with it. We didn't round up rates like that. And we're just saying now, based upon the fact we have two quarters in the books, and we have a forecast for Q3, that we wanted to bring the number down a little bit to be realistic. But the, you know, the ramp, in our opinion, is going to happen. Whether it, you know, moves a couple of quarters here or there, I think is not relevant. And, you know, we started talking about the GE Aerospace Juggernaut. I think our main point was we don't know exactly what the time frame is, but the key thing is it'll get there and we better be ready for it. So I think the second question about this, I think we're really over-reading or overly focused on the fact that we brought that number down a little bit. I don't think it really means anything in terms of long-term big picture. Those programs are still there, and they're still ramping. I think it's not a function like the – we talked about the COMAC program, the 919. So maybe that's what you're referring to. That program's a little delayed, but I don't think we had really big expectations for that this year at all. So it's not a function of the programs themselves. It's a function of how quickly our customers can ramp up their production. We can meet their requirements. Park is not the problem. But I don't think it's the end market either. I don't think it's the programs or how many airplanes the OEMs are able to sell. I think it's just a function of how quickly the industry can ramp up. And that's really been the story for several years now. as we're trying to emerge from the pandemic, you know, because you probably know this, but Airbus had this target of 75 airplanes a month for years ago, years ago. And they really were struggling to get, you know, even up to 50, maybe past 50. It wasn't that the market wasn't there. Look at the backlog. God, there's so many airplanes sold. So it's a function of the industry ramping up production, not park only, but the whole industry ramping up production to get to those rates. But I think I would say that maybe we're overthinking this annual forecast because clearly the vibe, if we look at it that way, we're getting is that there's an aggressive ramp-up going on. And if we talk to our customer, they're talking about very aggressively ramping up. I guess I would say maybe we're wrong. Maybe we're being too conservative. Maybe the original bill plan will end up coming true. We don't get revised bill plans every year from them, so you haven't gone back to them and said, what do you think about the bill plan? We're just trying to be a little bit more realistic based upon Q1, Q2, and Q3. But I think we don't want to overthink that or read too much into it. Let me put it that way. That's my opinion anyway. The GE aerospace juggernaut, as we call it, I think is very much intact and very exciting for PARC.
Okay, thank you very much.
Yeah, thank you. I'm sorry I didn't understand your question at the beginning. It was just I was taking it.
What about the aerospace outlook since July? That's what I'm asking. Yes, thank you. Okay, thank you.
Operator
Thank you. This now concludes our question and answer session. I would like to turn the floor back over to Brian Shore for closing comments.
Okay, this is Brian again. Thank you all for listening in, and thank you for the questions. It's been very nice talking to you. Please give us a call if you have any follow-up questions, happy to help you with that. Have a good day.
Operator
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.
