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Edited Transcript of PKE earnings conference call or presentation 10-Oct-19 3:00pm GMT

Q2 2020 Park Aerospace Corp Earnings Call

MELVILLE Oct 15, 2019 (Thomson StreetEvents) -- Edited Transcript of Park Aerospace Corp earnings conference call or presentation Thursday, October 10, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brian E. Shore

Park Aerospace Corp. - Chairman & CEO

* P. Matthew Farabaugh

Park Aerospace Corp. - Senior VP, CFO & Principal Accounting Officer

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Conference Call Participants

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* Christopher Edmund Hillary

Roubaix Capital, LLC - CEO and Portfolio Manager

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Presentation

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Operator [1]

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Good morning. My name is Shannon, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Second Quarter Fiscal Year 2020 Earnings Release Conference Call and Investor Presentation. (Operator Instructions) Thank you.

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.

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Brian E. Shore, Park Aerospace Corp. - Chairman & CEO [2]

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Thank you, operator. Welcome, everybody, to our second quarter call. This is Brian. With me as usual, Matt Farabaugh, our CFO.

So we have a presentation we prepared for you and for this call. It's been posted on our website. And also there's a link that's referred to in the earnings news release. So you probably want to get a copy in front of you because Matt and I will be going through the presentation. There's also some supplemental financial information that's attached to the presentation. I think it's Appendix 1. We're not going to read through it, but it's something you might want to take a look at, at some point. Obviously, the news release is out, the earnings release is out as of earlier this morning. So there is a lot to cover, and I'm going to try to cover some more complex topics to give you some perspective on the quarter. So please just try to bear with us.

But why don't we get started? So on Slide 2, we have our forward-looking disclaimer. We're not going to read through that, of course. But if you have any questions about it, please give us a call. Thanks on that.

Slide 3, Matt, why don't you pick up on Slide 3, talking about the expansion spending and also top 5 customers.

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P. Matthew Farabaugh, Park Aerospace Corp. - Senior VP, CFO & Principal Accounting Officer [3]

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Sure. Thanks, Brian. Just as a reminder, we had announced that we're doing a major expansion at our Newton, Kansas facility. And we made that announcement back in December. And we're just -- this slide is really just to give you a quick update on where we're at on the spending on that expansion. So our estimated budget for the expansion was $20.5 million. So far, through the end of Q2, we've spent $3.9 million, so a little bit more short of $4 million on that. And the remaining to be spent for that expansion is about $16.6 million. That expansion is expected to be -- well, the construction and the installation of all the equipment is expected to be completed by next summer. So that's the summer of 2020.

Let's see, the top 5 customers for the quarter are AAE Aerospace, AAR CORP., Kratos Defense & Security Solutions and Meggitt PLC, and of course, MRAS, including its subcontractors. And just a reminder that MRAS is now a subsidiary of ST Engineering Aerospace.

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Brian E. Shore, Park Aerospace Corp. - Chairman & CEO [4]

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Okay. Thanks, Matt. I'll take it back. Let's move to Slide 4, everybody, please. So here are the quarterly results, which you've seen presumably. The sales for the quarter, second quarter I'm talking about, $13.723 million. Gross profit -- gross margin, 27.8%, obviously way down. And EBITDA at $2.406 million, also down.

So let's talk about what we told you would happen or we said we believe would happen during our first quarter conference call. That was on July 11. We gave you a sales estimate of $14.5 million to $15.5 million, an EBITDA estimate of $3.1 million to $3.7 million. So a shortfall both top and bottom line. The sales shortfall is to the lower end of the forecast range, okay, not to build on the lower end, is $777,000 and the EBITDA shortfall is $694,000.

So obviously, if we go to Slide 4 (sic) [Slide 5], the question is what happened? Why did this happen? What happened in Q2? So as I already mentioned at the beginning, this explanation, the explanation is complex. It's also multifaceted. And we're going to go into some details because I think it will be helpful for you to understand and get the perspective. These are things we probably haven't discussed with some of you in the past, so just try to bear with me, please.

But why don't we start with some background perspective, and I'm trying to paint a picture for you here by giving you a look back on perspective, okay? We've discussed this before, but I just want to remind you that in the fiscal '19 Q4, that was December of last year and January and February this year, the sales to the GE/MRAS programs was 3x, 3x the sales of the first quarter of that same year, just 9 months later. That's a very, very steep ramp for a very difficult and demanding and challenging customer and challenging programs to support. So -- but we did get the job done. We did not disappoint them in Q4 with the fairly huge ramp that they asked us to handle. But we did it mostly with brute force. And that's really what we had at that point. We didn't really have systems in place to operate at that level, especially for such a demanding and difficult customer.

But we -- I'm not -- I want to be clear, I'm not saying it in a bad way. We love MRAS. I love MRAS. I'll say that anybody ever asked, but they are a much more difficult customer than the other customers. So the fact that they are the ones that ramped 3x during the 9-month period put a lot of pressure and stress in our system. But we did not disappoint. And I got to tell you that I think we're the exception to the rule because there's a lot of suppliers in the supply chain right now. They're having real trouble keeping up and are causing real challenges for supply chain managers in the aerospace industry just because some of the programs that are ramping very steeply at this time.

Q1 of this year, fiscal year '20 Q1, more brute force. And then Q2, the current quarters are -- that we're reporting now, we're in the process of transitioning from brute force to sustainability. You can't do brute force forever. I guess at some point, it just kind of wears people out. So important and painful progress is being made. We're not there yet in terms of transitioning from brute force to sustainability. And I think maybe -- this is just my perspective, maybe we got a little burned out in Q2 from the brute force efforts in Q4 and Q1. Maybe we let down a little bit. Maybe our discipline slipped a little bit. I don't know, it's just my perspective. But if that's true, our heads are back in the game now. And that's quite obvious to me, I think, that's for sure.

Another thing I want to bring to your attention is, still on Slide 5, this practice we've had in the last few quarters, particularly Q4 and Q1, of making the quarter in the last few weeks. I think we got complacent about it and we got lulled into a sense that, well, don't worry, we'll make the quarter in the last few weeks. In other words, we'll pull all the stops, the production, we'll just push everything through and get everything shipped by the end of the quarter. But we got burned by that in Q2. We got behind and we couldn't catch up. The reasons I'll explain in the next few slides. And we didn't even see it coming. We didn't even see the sales and EBITDA shortfall coming into Q2, in the last few weeks of the quarter because, again, over the prior 2 quarters, we were used to making the quarter the last few weeks. It's a bad practice. We changed, so we're not doing that anymore. So I guess some things we learn the hard way. And -- but I think one good thing about us is that we do learn, even though sometimes just the hard way.

Let's move to Slide 6, please. And this, like I said, is going to be complicated, but try to bear with me. And obviously, questions at the end would be fine. Okay. So this is a big thing that is not obvious to anybody. We obviously just report our revenues and profits. We don't report production plans. So in Q2, our plan was to produce $2.9 million more product than we actually produced in Q2. So that's a huge, huge difference. I think we said that we missed our sales target, let me go back to check myself and I think it's on Slide 3, by $777,000. We missed our production objective or target by $2.9 million, almost $3 million.

Now that production shortfall also had an impact on our sales because obviously if you don't produce it, you can't sell it. The first check item under the first arrow item, so the fiscal '20 Q2 sales shortfall obviously had a negative bottom line impact. I mean that's just pretty straightforward. But what isn't obvious is until now, the large -- larger impact was from the production shortfall because when you produce product, some of that drops to the bottom line when the product is converted to inventory. I should say it's an important distinction. I forgot to mention, this $2.9 million, that's in sales values. That's the value of the product when it's sold, it's not an inventory value. But anyway, significant bottom line impact from the production shortfall. And well, the next question is why did that happen, of course. How could that happen?

So let's go to the next arrow item. So why the significant production shortfall in Q2? What happened? Okay, I just said that, right? And there were 3 discrete events, unrelated and discrete events that were all unexpected by us and that caused such significant difficulty in Q2. And this is where I need to explain a little bit about some of our raw materials and our processes I think we have discussed before. Normally, we don't go into this kind of detail, but I think to have real understanding as to what happened and for us to be transparent, which is our objective, of course, I think we need to go through this. There's something called polyurethane film that's used in our process. It's actually used by our customer as a manufacturing aid, but it's applied to our prepreg materials in a prepreg surface. It stabilizes the product in customer applications -- operations, rather. And it also prevents the product -- our product, the prepreg, from sticking to itself when it's rolled up in a roll because it's sticky. And there are other reasons or purposes for the use of polyurethane film, but it's widely used in the industry.

Anyway, so we did a change of polyurethane film style. And this all relates to MRAS programs, unfortunately. And that caused what is called wrinkling. In other words, the film wasn't sticking to the product in a kind of flat way, was wrinkled. And this is not something we were able to pick up on. It was picked up by the customer, and they called us to say, this is wrinkling and don't want to use it. So they sent the product back to us for what's called rework. Now the poly, we call it poly, is applied in the original process fairly automatically on the machine. But when you have to rework, it's very manual. You have to take it out -- all off, and it's kind of a semi-manual process to re-poly, they call it re-poly, rework this product.

Now in terms of -- I mentioned maybe we let down a little bit in Q2. I'll give you an example of that. So we had used this other solid-style poly for other applications and had worked very well. So we had since decided to use it for this MRAS application and we didn't do any trials. And that was a mistake and that was something -- an example of maybe our disciplines weren't as good as they should have been. Maybe we were worn out a little bit in Q2 and we weren't on top of our game. We shouldn't have done that. We should have done trials, but we didn't do trials. We thought, well, let's work in other applications. Let's just use it here. So we didn't do it and we got burned because we got a call from the customer and we had done an enormous amount of product and they say, we have wrinkles, we have to send all back. So okay, now we're doing the rework.

Next one, unrelated but also polyurethane film, different supplier. This is just a quality issue, a pretty serious quality issue from the supplier with the polyurethane film. And again, we didn't realize it in our own factory. It was our customer that realized it when they received our product. Again, had to ship it all back, enormous amount of rework. This is very time-consuming, takes a lot of labor. And the thing is not only you have to pay for the labor to do the rework, guess what, that labor is not producing product to ship and sell. We get revenue from it, revenue generation, but we had to fix it. We got to make it right. We had no choice.

The third item, which was unrelated as well, is toward the end of the quarter, we noticed that some of the carbon fabric that we have received, again, for an MRAS program, was distorted and we couldn't use it so we had to send it back to the weaver so they could rework it. Now that wasn't our rework, but the problem is that we didn't have the carbon fabric we needed to produce and ship that product within the quarter. So that also caused us to be short in terms of production for the quarter. These are 3 unrelated discrete events, but they all kind of conspired against us to cause significant difficulty for our third quarter. And let me explain why that is because the plot thickens.

Next check item, carbon fiber availability limited to MRAS programs forecast. In other words, our carbon fiber supplier, this is not the weaver, the carbon fiber supplier says, okay, we'll supply that forecast, we have the forecast, but not 1 pound extra. That's all we got because there's a carbon fiber shortage. So they're helping us, they're treating us well but not going to give us any extra. So it's not like we could call them up and say, look, we have a problem, this product, can you just send us more fiber? There's no more fiber. So in the case of the carbon weave distortion, that would be rework. In the case of the poly, it would be rework because the carbon fiber that was used to make that prepreg could not be replaced. So that causes us to have almost no slack or leeway in our system.

And then we have -- so next check item, because of this carbon fiber supply limitations and manufacturing capacity limitations, which we'll discuss in a couple of slides down, we have very limited slack or leeway in system, making recovery from issues like the above issues and major required rework not possible during the quarter. And that's the key point. So it wasn't just these problems happened in a normal quarter when there wasn't so much stress in the system. These things might happen. They happen from time to time. You would never hear about it, but because there's so much stress in the system, both in terms of our capacity, also in terms of carbon fiber supply, we had no leeway. We couldn't recover. And therefore, we're telling you about it because it ends up being a key point. Those 2 things together, the events and the tightness and stress in the system conspired in a way against us in Q3. And the last item on the page, if those limitations did not exist, as I was saying, we would have certainly been better positioned to recover and we might not be discussing them at all.

So okay, that is Slide 6. Let's go on to Slide 7, continue this discussion, top of Slide 7. So the major rework related to polyurethane film, just to kind of review here a little bit, resulted in significant expense. This is labor that, again, we had to pay for and labor that's not being used to produce product that we can sell and get revenue from. So -- and our production workers were quite -- are quite consumed with the rework, and it was kind of like diverting the intended purpose of our production workers to something that had to be done. And of course, the bigger impact wasn't just the cost to do the rework, it's the production value shortfall, which has a major impact to the bottom line at $2.9 million, approximately $3 million of production shortfall, major impact to the bottom line. Major impact.

So I just want to be clear. We're not singling out or blaming our suppliers. We think our suppliers are very good. Generally speaking, we're very pleased with our suppliers. We feel they support us very well. They're good and dedicated suppliers and normally respond to issues to the best of their abilities as they arise. So this is not about blaming the suppliers. It's about explaining to you what happened because as I said, normally, these things happen from time to time. In fact, they just happened in the second quarter. Now more of them happened in the second quarter, but we deal with them. You never hear about them because the system allows us to recover. But since it had a major impact on our Q2 performance, I thought it was proper for us to kind of explain the dynamics and explain what happened in some detail. And I hope it wasn't too much detail. But like I said, however, in this case, like the presentation reads, since the issues had significant bottom line impacts, we believe it's appropriate to highlight them here, so we've done that.

Continuing on the EBITDA story. Significant expense and utilization of limited hot-melt manufacturing capacity to support ongoing manufacturing trials of composite materials for containment wrap for GE9X engines. This is more than we expected. We didn't understand how much effort and the extent of the trials that were required for this program. And as you know, that program is not part of the -- and we discussed this with you before, we have POs on that program until the end of next year. But that program is not an MRAS program, it's a GE program. It's not part of our long-term agreement with MRAS. So the POs go through the end of next year, and then we'll see what happens. But we're not sure we're going to even have that program long term. I guess that will be turned later on. I just want to make sure you remember that because it's not in the same categories like A320 or Boeing 747, for instance.

Anyway, last item on Slide 7, we failed to achieve our sales and production objectives in Q2. The issues described above created obstacles to our achieving our objectives, but our execution was inadequate, nevertheless. So there you go. I mean we didn't do our job either. As I had said, maybe we're not totally on top of our game. I gave you an example where we switched poly styles, polyurethane film styles when we should have done some trials. That wasn't good. But the good news is that I think our heads are screwed back on straight again. And if we did slip a little bit, I think we're back in the game, our heads are back in the game. And -- look, I'm not telling you it's okay or making excuses, but I think if you think about the brute force efforts in the first 6 months, it's probably not surprising that maybe if some of our people let down a little bit, it wouldn't be surprising that happened.

EBITDA issues, let's review. Major production -- reduction in production, lots of rework and then the cost of 9X trial. So those were not the only things that impacted EBITDA or bottom line, but also some of the -- 3x, the more major things.

Okay. Let's go on to another complex topic on Slide 8, hot-melt manufacturing capacity constraints. You'll probably be surprised to hear this because until now, we've been saying we felt we had enough capacity and we had available extra capacity. And of course, we said that because believed it. What's going on here? So let's start. The 60-inch, that's the width of the web, if you will, in these machines -- web capabilities of these machines. Hot-melt films and tape lines, to make hot-melt product, you need film and tape, the 2 separate lines that we purchased, when we did our original aerospace composite facility in Newton, Kansas, in 2008, were not specifically designed for the production of AFP-type materials. AFP is automated fiber placement. That's robotic methodology. We're making composite parts as compared to things like hand layups. This is a more modern methodology of producing composite parts, and the trend is toward more AFP. AFP is very expensive, so it's not going to be for every composite parts manufacturer. But for larger companies like MRAS, it makes a lot of sense. Very important technology for the future, and so the technology we're embracing. But any event, those original machines were not really designed for AFP, and I don't think we even knew much about AFP back in 2008. And you know what, we said this before and we did a lot of learning over the last 10 years, made a lot of mistakes and the original design, the factory and the equipment was not optimal with a bit of hindsight.

Anyway, but we made those -- these original lines work for AFP for A320neo program. Much of the A320neo program has been converted from hand layup to AFP. I think we indicated in the past, we did the AFP development work with MRAS. So we got on the ground floor there, and that's worked very well. But we have struggled, though, with the 60-inch lines for AFP material for GE9X program. The -- every material is different, and the GE9X program has been more difficult for us. So what we're doing is we're shifting the production of the prepreg -- the AFP-style prepreg materials for the GE9X program to our 24-inch hot-melt film and tape lines. And you may not even know we have these, but we've shown -- haven't used them very much, but it just [unlocked], but we recently upgraded the 24-inch film line for our film adhesive product line. And it just unlocked , like I said, but that was very fortunate because those upgrades allow us to produce the AFP material for the GE9X program much more effectively. So we're in the process of transferring the AFP materials for the GE9X program from the 60-inch lines, the original 60-inch lines to the 24-inch lines. That's a good thing.

I want to point out because I don't want you to get nervous that the new 60-inch lines that are part of our expansion that Matt just talked about, those were specifically designed to produce AFP-type materials because now AFP is very important, very much in our radar screen and we're involved with and we want to embrace that technology because it's a technology for tomorrow, not just yesterday.

Continuing on Slide 8. Now AFP material requirements are ramping aggressively, and that's driven principally by the A320neo program. And we're still in a steep learning curve regarding AFP material manufacturing. We're not operating yet with optimal efficiencies and productivity, but we're getting there and learning fast. So that's kind of our story. And normally is that when we have a challenge, we attack it pretty aggressively.

Last item on Slide 8. The AFP -- hot-melt -- sorry, hot-melt manufacturing of AFP materials is generally a slower process than hot-melt manufacturing for broadgood materials and also requires significant additional set up time in the tape line. And we had not fully appreciated that when we did our capacity analysis. So like I said, we're learning a little bit as we go. And so some of our capacity concepts and thoughts have been adjusted as we've gone through the last few months.

Going on to Slide 9. So in order to relieve and open up the hot-melt capacity, we've done a couple of things as -- well, we implemented a fourth tape line manufacturing shift. So basically, the tape line is running 24/7 now. The other operations to support a hot-melt like film and mix are not required to go 24/7. But we're at 24/7 shift structure, at least in tape right now, and that's also to support the GE9X program. And also, as I said, we're in the process of transferring the GE9X program to 24-inch film and tape line to open up capacity.

So obvious question, what is our current hot-melt manufacturing capacity? We've previously indicated it's $40 million. That was based on a 5-day work week with some overtime, a little overtime. With the 24/7 shift structure with the -- on the tape line, we now believe our capacity is $45 million, but that does not include the capacity from the 24-inch line. So $45 million plus the extra capacity for the -- from the 24-inch line. And that's, of course, once we get the GE9X transferred to 24-inch line and get the fourth shift settled in, we believe $45 million is a reasonable number plus whatever is available from the 24-inch line. So we feel -- sorry, I should say, the capacity is -- kind of a tough thing, is very, very much related. More AFP reduces capacity. Less AFP, increased capacity. And there's a lot of other different factors in terms of product mix that will have an impact upon capacity.

So obvious question, here is the answer. We believe we'll be fine. We have enough capacity to serve on these -- serve MRAS' needs and to take on other opportunities until the expansion comes on line. As Matt said, we plan to have expansion complete about a year -- next summer, rather, next summer, I'm thinking it's still summertime, next summer. And then it's probably about a year from then to get qualifications done for MRAS.

Okay. Let's move on to Slide 10. Thanks for bearing with me, those 2 complex issues about the factors for Q2 and also the capacity questions. So Slide 10.

Now we're talking about our forecast, so let's discuss that. Q3, $14.75 million -- this is revenue, Q3 of this fiscal year, fiscal '20, $14.75 million to $15.75 million revenue. I believe that's the same -- those are the same numbers that we gave you for Q3 when we did our first quarter conference call. But we brought the bottom line EBITDA down to $3 million to $3.5 million.

Now let's just talk about Q4 forecast we're giving you for Q4. This is the first time you see the Q4 forecast. $15.25 million to $16.25 million revenue, $3.25 million to $3.75 million EBITDA. Just to give you perspective on Q3, we have about $14.5 million either shipped or booked to be shipped in Q3. That means what we shipped so far and what we have in our books that is scheduled to and plan to ship in Q3, $14.5 million. That means we need to book another maybe $1 million, right, that's shippable within the -- by the end of Q3. So our salespeople need to be after it, hit it really hard. They're challenged, but that's okay. We like that. That's your challenge, so you'd be hitting it very hard. You need to be out here getting orders. And I'd also want to mention that you probably need a little bit more than that because there's this funny thing that happens at the end of our quarters often is that we get calls from customers who want to push things out a little bit or is debooking or something like that. So we have to be careful because I'm telling you what's been booked, that doesn't mean that something will be pushed out when we get a call from a customer in November. No big deal, we just want to push out a month. Well, okay, not a big deal for them, but that's for next quarter. So it happens often. I think it's happened for the last couple of quarters. So we just have to be on guard for that, and we need to build ourselves a little bit of cushion, if you know what I mean.

Now why do we bring the EBITDA numbers down for Q3? We were saying revenue numbers we gave you in the prior forecast, and that was EBITDA numbers are a little lower for Q4 as well. You haven't seen Q4 yet, but we've had internal Q4 numbers and we brought them down. So let's look at all of the factors that affect EBITDA and the profitability for Q3 and Q4. You'll remember all of them. So let's go through them all.

Outside testing costs related to data development for new product. That was something we mentioned actually which affected Q2 as carrying over. That's not been completed. Next one, GE9X program manufacturing trials, development expenses. That's big, and that's certainly not done. We're not done with that. We discussed that already. Next one, film adhesive manufacturing trials and development expenses, that's carrying over. I think we mentioned that as a factor when we did our Q1 call for Q2. We're not done with that, carrying over. And next one, AFP manufacturing ramp-up, additional costs. That's significant. Costs of operating a 24-inch hot-melt line for GE9X, that's significant. It's what's needed, it's what's right, but it's more expensive because the -- just simple math. If you're dealing with a narrower web, you're getting less product out per minute or per hour, depending how you want to look at it.

Continuing rework related to polyurethane film. So we're not done with it yet. The difference is, though, there's no surprises. So with our second quarter, all these issues, the 3 issues we talked about a few minutes ago, were surprises to us, were not expected. And we struggled to deal with them, as we discussed. But the fact that we're still doing the rework, it's not surprising to us. Since we know about it, so we can take them into account in our planning and our forecasting. It does have an impact on our bottom line, it's just not a surprise, not unexpected. So -- and then there's the pushout of delivery schedule for GE9X program. Obviously, that's going to -- and that's pushed out quite a bit for Q3 and Q4 into Q1 and Q2 of next year. So that's going to -- causes a revenue hole, but we're taking them into account in our top line forecasts.

Legacy costs expected to continue into Q4. Those are costs related to the company -- the prior company before we sold electronics. Those are tapering off, but there's still something there. So there's a lot of factors here which we took into account in trying to be realistic in terms of our EBITDA forecasting for Q3 and Q4. Okay?

Let's go on to Slide 11. We talked about these factors in our last quarter call. They're important to remember, and I think they're very much relevant to today's world with a lot of stress in the system. So first of all, all of our major jet engine company programs, that's those MRAS, GE programs, except the 747-8, are ramping or in development. Anyway, the reason that's an issue is because there is much more risk when a program is ramping, much more chances that it will be moved to the right. You have 747 steady as you go and hopefully, it will go forever but not too much surprises. When a program is ramping, there are setbacks in development -- sorry, development and ramping, you have setbacks and slow down. There are issues with the supply chain. So there's a lot of risk in the system because most of the key programs we're on for the GE Aviation programs are in development or are ramping. And an example we talked about was the pushout of the triple X -- GE9X program in prior page. That really shouldn't be a shock. And we're not talking out of school. These things have been publicly reported in the news, both the 777X program has some pushouts and delays and the GE9X program has recorded delays as well. These are all public information, so I'm not talking out of school, we don't do that.

Next item, severe stress on the aerospace industry supply chain. We discussed that before. It's very palpable, and it has a real factor in terms of just kind of our day-to-day, I guess, working in existence in the industry.

The last item is a new one, but we discussed it previously in this presentation. Because of tight manufacturing capacity and carbon fiber supply, there is very little slack and leeway in the system, making it difficult for us to recover from supply or production setbacks. So we don't know if anything happened this quarter, but there is that risk, if there is some surprise, it puts us back on our yields in terms of how to recover and deal with it effectively and quickly so it doesn't impact the quarter.

Let's go to Slide 12. Now this is really the same long-term forecast that we gave you in January, and our practice is to update the long-term forecast only once a year. So we probably will update this forecast this coming January. The reason that we're including it on this presentation is for fiscal '20, what we've done, rather than just kind of using the prior forecast, we have the first quarter and second quarter fiscal '20 actuals, we just gave you the forecast for Q3 and Q4. We figured we should add them up to both the sales and EBITDA numbers so you have something that is more current. Other than that, there is no change to the long-term forecast. And let's not stick in this page too long. If you have any questions about it, let us know.

Let's go to Slide 13. Kind of a change of pace here because now we're talking about some more interesting -- I shouldn't say interesting but maybe more, what, fun or exciting things. So recent developments. First of all, I just want you to know that we have a company presentation on our website now that we put in our website in maybe August. And it's something you might want to check out. The quarterly presentation is really focused mostly on what happened during the quarter and kind of myopic in that respect. The company presentation gives you more of a broad perspective on the company, what our products are, who our customers are, what kind of technology we're involved with, market segments, so history of the company. So if you have some time, you may want to check that out. It's on our website.

Let's see, so other interesting recent developments. We had a groundbreaking for a major expansion in Newton, Kansas, on August 15. There's a picture of some people with shovels. I think we did a news release about it, but it was a pretty nice and exciting day. We had a lot of people come from the local community. It was quite a few people. So for the local people, it's a big thing as well. Obviously, for us, it's a big thing.

Next item was Park actually rang the closing bell at the New York Stock Exchange in August 26. There's a picture of us doing that. I was a little skeptical about doing this. The New York Stock Exchange had asked us to do this for a little while. And I just was -- I didn't know if we want to do it. And -- but we finally said, okay, fine, we'll do it. And I was encouraged to give it a go. And my wife said, oh, Brian, you have to go. So I did, and I was really glad I did because the New York Stock Exchange, they did a wonderful job. They made it so special, and I can't say enough about how wonderful job they did. And they just made it a real special day for Park, and I'm very -- I feel very grateful to the New York Stock Exchange for doing it. I'm glad my wife told me I better go.

Also, just a coincidence, it wasn't the reason we did it, but it just so happens that it's our -- this year is our 35th anniversary of listing on New York Stock Exchange back in 1984. You might know, well, if you go to our company presentation over in history, we went public in 1960. We're originally in the American Exchange, then New York Stock Exchange in 1984, I believe.

Oh, one little item, we changed our name. We're no longer Park Electrochemical. This is the first quarter, I think, first quarterly conference call where we're Park Aerospace Corp. We -- that was actually put up to shareholder vote in July. The shareholder approved it, of course. And our name is now Park Aerospace Corp. We were Park Electrochemical Corp. for a long, long, long time since 1960. Company was founded in 1954. But since 1960, we've been Park Electrochemical. Now we're Park Aerospace.

Park is one company. We also mentioned this that we're going to do at the last quarter call, we had 2 entities, 2 principal entities. One was kind of a corporate entity in New York. The other one was our operating entity in Kansas. Well, we merged it, too, so it's now just one company.

We mentioned this last call, major private space company, we received additional POs. And it's becoming significant now, and it is quite exciting for us. This company, to be fairly clear, they don't want us to say anything about who they are, what the program is, so obviously respecting that. But it is an exciting program. And like I said, it's becoming significant, I mean in dollars, actually.

Just a little update on our dividends. We paid $511 million so far, $24.95 per share in cash dividends since 2005. So I guess with the next dividend will be over $25 a share. So maybe we should talk about that next quarter.

Next item, Park is immersed in ramps of difficult and challenging programs. And these are things we've been discussing during the first part of this call and presentation. But lots of growing pains, but they are worth it. At Park, we just don't choose the easy path, it's just not our way. We look for challenges, and we embrace challenges. Sometimes, we're going to fail. But at Park, we say failure is not an option. That doesn't mean we don't fail, that means we don't accept failure. So when we fail, we get right back in the game, find a way to fix it and make things right.

Long-term prospects for Park, in my opinion, unchanged. So let's see what we can do. Let's see what we can do. We're not deterred. Let's see what we can do.

Okay. So that's the end of the presentation. Operator, if anybody is still on the call, sorry, it went so long. Everybody, we're ready for questions from the shareholder audience.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Christopher Hillary with Roubaix Capital.

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Christopher Edmund Hillary, Roubaix Capital, LLC - CEO and Portfolio Manager [2]

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I just wanted to ask, you said in your comments that we could ask you about your long-term forecasts. I just wanted to ask if you can give us some more insight into what you may or may not have included in some of those longer-term forecasts.

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Brian E. Shore, Park Aerospace Corp. - Chairman & CEO [3]

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The long-term forecasts, we -- I think we discussed this before. So we start with the long-term forecast we have from MRAS on the GE programs. We haircut that to some extent just to be a little bit conservative. The GE9X program we hear from a lot. So that's kind of our baseline. And then there's 100 line items that are considered in terms of how we get to the top line. The bottom line is just doing the math in terms of once we have the top line, think whatever our costs are and coming up with the bottom line or EBITDA estimate. The -- there's nothing unusual or extraordinary included in the top line, nothing from acquisitions that relates to -- it's based upon organic growth. So I don't know if there's anything else that I can help you with in that regard and some other -- did that answer your question?

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Christopher Edmund Hillary, Roubaix Capital, LLC - CEO and Portfolio Manager [4]

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Yes, that answered my question. I'm just trying to get a sense of I think in your call today, you discussed that you might have preferred to give yourself a little bit extra space in the forecasting, and I was essentially asking how you -- with that in mind, how you would characterize the longer-term forecasts.

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Brian E. Shore, Park Aerospace Corp. - Chairman & CEO [5]

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Extra space on the top line or bottom line? Which -- want to understand where you're getting at.

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Christopher Edmund Hillary, Roubaix Capital, LLC - CEO and Portfolio Manager [6]

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I mean, I think whichever way you think is more accurate to describe it. I don't...

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Brian E. Shore, Park Aerospace Corp. - Chairman & CEO [7]

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Well, we're not going to update our long-term forecasts now, as I said. We're going to do that once a year. And when we do the forecast, what we're telling you is this is what we think is going to happen. As we commented, we don't do forecasts either short term or long term, which are to be created so we can beat it and be a hero and that kind of thing. We give you a forecast, we tell you this is what we think will happen based upon all these assumptions we're making and based upon the fact that we're going to work very hard to achieve these things. So we're not inclined to give you a conservative forecast so we could be heroes and every quarter we are always so wonderful. I know a lot of companies will do that, and I don't mean to be sarcastic about it but it's just not what we would do.

I think in the third quarter -- sorry, the second quarter, rather, there were these 3 events which were unexpected and -- but they don't have impacts on the long term, though, I don't think. Those are short-term things. And when you get to quarterly forecasting, Chris, it's quite different than long-term forecasting. You really have to focus on what bucket this is going to fall into. Is it going to be this quarter or next quarter? The long-term forecasting is a little different. You are not so dependent upon the kind of nuances and subtle changes from month to month, let's say.

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Christopher Edmund Hillary, Roubaix Capital, LLC - CEO and Portfolio Manager [8]

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Okay. And then one more just to follow up and I'll pass. Obviously, you have a material cash balance. In the previous calls, you've, I think, expressed some confidence that there's some acquisition opportunities, particularly certain ones that perhaps customers of yours or supply chain members have suggested that you consider. Is there any update or color you might share on progress on that front?

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Brian E. Shore, Park Aerospace Corp. - Chairman & CEO [9]

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Not really very much. What we said before still applies. It's a little bit of a tedious process because what we're trying to avoid is just kind of getting involved in auctions that are run by investment bankers which we feel often those are overpriced and are not really what we want. And often they're not really kind of niche either because niche things aren't really appealing often to kind of potential buyers and other buyers.

So we've identified a number of companies in 3 or 4 different product categories, and we've reached out to them. But the reason it's a little bit more challenging is that these are not companies that have been put out for sale. These are companies that may not be for sale. So it's an effort we have to stay with. And I guess all I can say is we'll see what happens. But there really isn't any significant change from, I guess, when we talked about this maybe the last quarter.

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Operator [10]

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(Operator Instructions) And I'm currently showing no further questions at this time. I'll turn the call back over to Brian Shore for any closing remarks.

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Brian E. Shore, Park Aerospace Corp. - Chairman & CEO [11]

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Okay. Well, thank you very much, operator, and thank you all for listening today. Again, I appreciate you hanging in there. I know it was a fairly long discussion and a little bit complex and involved, but again, we thought it would be necessary for perspective or at least helpful perspective, let's say it that way. So have a good day. Give us a call if you have any additional questions. We're available, of course. Thank you again. Goodbye.

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Operator [12]

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Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.