The report presents the financial statements of the company for the quarter ended September 1, 2024. The company reported net income of $X million, a decrease of Y% compared to the same period last year. Revenue increased by Z% to $W million, driven by growth in the Asia and Europe regions. The company’s cash and cash equivalents decreased by $X million to $Y million, while its accounts payable and accrued liabilities increased by $Z million to $W million. The company’s stock-based compensation expense was $X million, and its total stock-based compensation expense for the quarter was $Y million. The company’s diluted earnings per share was $X, and its basic earnings per share was $Y. The company’s cash flow from operations was $X million, and its cash flow from investing activities was $Y million. The company’s cash and cash equivalents at the end of the quarter were $Z million.
Financial Overview
Park Aerospace Corp. is a manufacturer of advanced composite materials and parts for the global aerospace industry. In the 13 and 26 weeks ended September 1, 2024, the company reported strong financial results, with net sales increasing 33.9% and 9.4% respectively compared to the prior year periods.
However, the company’s profitability was impacted by several factors:
Storm Damage Charge On May 19, 2024, the company’s manufacturing facilities in Newton, Kansas were damaged by a severe storm. The company recorded charges of $46,000 and $1.1 million in the 13 and 26 week periods respectively related to the storm damage. This included costs for repairs, temporary equipment rentals, and employee downtime. The company expects to recover the majority of these costs through insurance.
Inflationary Pressures The company continues to experience inflation in raw material, freight, and other costs. This has put pressure on the company’s gross profit margins, which declined to 28.5% and 28.9% in the 13 and 26 week periods, compared to 32.7% and 31.8% in the prior year. The company has been able to partially offset these higher costs through pricing adjustments.
Supply Chain Challenges Some of the company’s customers are experiencing supply chain issues from other suppliers, which could result in delays in production and impact the company’s sales. The company has also seen some increases in raw material costs from overseas suppliers due to the wars in Ukraine and the Middle East.
Long-term Contract A substantial portion of the company’s revenue comes from a long-term contract with a major customer. While this contract provides visibility, the order forecast is updated periodically and does not guarantee quantities.
Earnings and Cash Flow Despite the headwinds, the company’s earnings before income taxes increased 19.1% in the 13 week period, though they declined 14.7% in the 26 week period compared to the prior year. Net earnings followed a similar trend, up 18.3% in the 13 weeks but down 15.0% in the 26 weeks.
The company ended the 26 week period with a strong balance sheet, with $25 million in cash and no debt. Operating cash flow was $4.2 million for the 26 weeks.
Outlook While the company faces some near-term challenges from inflation, supply chain issues, and the storm damage, the long-term outlook appears positive. The company is well-positioned to benefit from increased aerospace spending, particularly in the military and defense sectors. Its advanced composite materials and parts are in demand for a variety of aircraft programs.
The company is also making investments to expand capacity and improve efficiency, including the new production line that contributed to higher depreciation and maintenance costs in the current period. These investments should position the company for future growth.
Overall, Park Aerospace Corp. remains a well-run, financially strong company serving the critical aerospace industry. While near-term headwinds have impacted profitability, the company’s long-term prospects appear favorable.
Key Financial Highlights
Revenue and Profitability:
Metric | 13 Weeks Ended 9/1/24 | 13 Weeks Ended 8/27/23 | 26 Weeks Ended 9/1/24 | 26 Weeks Ended 8/27/23 |
---|---|---|---|---|
Net Sales | $16.7 million | $12.5 million | $30.7 million | $28.0 million |
Gross Profit | $4.8 million | $4.1 million | $8.9 million | $8.9 million |
Gross Profit Margin | 28.5% | 32.7% | 28.9% | 31.8% |
Earnings Before Taxes | $2.8 million | $2.4 million | $4.2 million | $4.9 million |
Net Earnings | $2.1 million | $1.7 million | $3.1 million | $3.6 million |
Storm Damage:
Inflation and Supply Chain:
Long-term Contract:
Balance Sheet and Cash Flow:
Outlook:
In summary, Park Aerospace Corp. delivered strong sales growth in the current period, but profitability was impacted by various headwinds. The company remains financially sound and is well-positioned for the long-term, with a focus on serving the critical aerospace industry.