Park Aerospace (NYSE:PKE) reported first-quarter fiscal 2027 sales and adjusted EBITDA within the forecast ranges management provided on its prior earnings call, while Chairman and CEO Brian Shore used the company’s investor call to outline several new developments tied to missile-defense programs, a new Oklahoma manufacturing plant and a completed stock offering.
Shore said the quarter produced sales of $18.3 million, gross profit of $6.4 million and gross margin of 34.8%. Adjusted EBITDA was $4.6 million, representing an adjusted EBITDA margin of 25.0%. Management had previously estimated first-quarter sales of $17.7 million to $18.4 million and adjusted EBITDA of $4.1 million to $4.6 million.
Margins Rebound as C2B Fabric Sales Drop to Zero
Park said it recorded no sales of ArianeGroup’s Raycarb C2B fabric during the first quarter, which Shore described as favorable for margins because fabric is resold to defense customers at a relatively small markup. By contrast, the company recorded $1.9 million of ablative material sales tied to prepreg products made using C2B fabric, which Shore said carry “very good margin.”
During the question-and-answer session, Needham & Company analyst James Ricchiuti asked whether C2B fabric sales were included in the company’s second-quarter outlook. Shore said the expected mix was “more balanced” between fabric and prepreg sales and that management did not expect the dynamic to have a significant bottom-line effect. He also noted some concern around supply chain and international freight risk.
Citizens analyst Trevor Walsh asked whether the margin improvement from the prior quarter was mainly due to the C2B sales mix. Shore said many factors affect quarterly margins, but added that C2B fabric sales were a significant reason margins were pressured in the fourth quarter and improved in the first quarter. He said the timing of fabric purchases and prepreg conversion is driven by customers, not Park.
Second-Quarter Outlook Calls for Higher Sales
For the second quarter of fiscal 2027, Park estimated sales of $19.5 million to $21.0 million and adjusted EBITDA of $4.3 million to $5.1 million. Shore cautioned that quarterly results can be “quirky” and said the company remains focused on its longer-term business development opportunities.
Park also discussed sales tied to GE Aerospace engine programs. Shore said first-quarter GE Aerospace engine program sales were $7.1 million, with second-quarter sales estimated at $7.5 million to $8.25 million. For the full fiscal year, management estimated $34 million to $38 million in sales from those programs.
Shore highlighted the Airbus A320neo family as the company’s largest commercial aircraft growth driver. He said Airbus is targeting an A320 aircraft family delivery rate of 70 to 75 aircraft per month by the end of 2027. Park supplies into the CFM LEAP-1A engine through composite components for engine nacelles and thrust reversers, and Shore cited Aero Engine News data showing the LEAP-1A had a 66.2% market share of firm engine orders for the A320neo family.
Other commercial aerospace programs discussed included the COMAC C919, which uses the CFM LEAP-1C engine, and Boeing’s 777X, which uses the GE9X engine. Shore said the 777X certification program is progressing and noted Boeing anticipates certification in early to mid-2027 and entry into service in mid-2027.
Missile Systems Seen as a Major Growth Driver
Shore devoted a substantial portion of the call to missile systems, describing them as “Park’s new juggernaut” and “the next big thing for Park.” He said Park specializes in advanced composite ablative materials used in solid rocket motor structures and heat shields for critical missile systems, including the PAC-3 MSE Patriot missile system.
Shore said missile stockpiles have been badly depleted by conflicts in Ukraine, the Middle East and Iran, creating what he described as an urgent need for replenishment and increased production. He said Park is sole-source qualified for advanced composite materials used in solid rocket motors for the PAC-3 MSE missile system program.
Shore also discussed a newly announced Lockheed Martin PAC-3 ASE program, clarifying that the presentation’s PAC-3 references related to the PAC-3 MSE program. He said the ASE program appeared intended to address threats such as cruise missiles and drones, while the MSE is designed for incoming long-range ballistic missiles. Shore characterized the ASE program as potential “gravy for Park” and said it does not reduce the company’s opportunities tied to the MSE program.
Park said it entered into a term sheet agreement with ArianeGroup on July 18 related to the construction of a U.S.-based C2B fabric manufacturing plant. Shore said 100% of the output of ArianeGroup’s planned U.S. C2B plant will be allocated to Park. The plant is expected to provide enough C2B fabric capacity to support the PAC-3 MSE ramp-up.
Park also entered into a July 9 letter of agreement with a large defense contractor tied to the PAC-3 MSE program. Under the term sheet and in coordination with that customer, Park committed to invest $25 million in ArianeGroup’s U.S.-based C2B fabric plant. Shore said the investment is not an equity investment, but will be made as advance payments to be applied against future C2B purchases beginning in 2030. He said minimum required purchases from 2030 to 2036 would translate into “hundreds of million dollars” of revenue for Park when fabric sales and related prepreg sales are considered.
New Tulsa Plant and Balance Sheet Updates
Park also announced it entered into a long-term lease for 18 acres at Tulsa International Airport in Oklahoma, which will be the site of a new manufacturing plant. Shore said the planned facility will be about 150,000 square feet and carry a budget of $65 million. The company expects approximately $25 million of outflow in fiscal 2027, $35 million in fiscal 2028 and $5 million in fiscal 2029.
The company expects to complete the facility in fiscal 2028 and begin production and shipments to customers in fiscal 2029. Shore said the plant is expected to approximately double Park’s current hot melt prepreg and film adhesive manufacturing capacity and approximately triple its current solution treating manufacturing capacity. The plant will support Park’s composite materials product line, including specialty ablative materials.
Park reported $89.4 million in cash and marketable securities at the end of the first quarter and estimated cash and marketable securities of approximately $114 million at the end of June 2026. The company has no long-term debt. Shore noted that Park plans to invest $65 million in the new plant and $25 million in ArianeGroup’s C2B fabric plant through advance payments.
Park also completed its $50 million at-the-market stock offering. Shore said the company sold a total of 1.8 million shares for proceeds before commissions of just under $50.0 million, at an average price of $27.58 per share. He contrasted that with prior buyback activity, under which Park purchased 718,000 shares at an average price of $12.94.
The company declared another cash dividend of $0.125 per share, payable Aug. 3. Shore said that once paid, Park will have distributed more than $30 per share in cash dividends since the beginning of 2005.
About Park Aerospace (NYSE:PKE)
Park Aerospace (NYSE: PKE) is a specialized materials and manufacturing company that designs, develops and produces high-performance composite structures, engineered laminates and specialty adhesives for aerospace, defense and industrial markets. Its product portfolio includes advanced honeycomb cores, composite assemblies, dielectric and high-reliability circuit materials, as well as structural and bonding solutions that meet demanding performance and weight requirements.
The company operates through two principal segments.
