If you want full access to all our reports, data and investing ideas, join The Aerospace Forum , the #1 aerospace, defense and airline investment research service on Seeking Alpha, with access to evoX Data Analytics, our in-house developed data analytics platform.Dhierin runs the investing group The Aerospace Forum , whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with si ...

Group 1 - The Aerospace Forum aims to identify investment opportunities in the aerospace, defense, and airline sectors, leveraging data analytics for informed decision-making [2] - The forum is led by an analyst with a background in aerospace engineering, providing insights into industry developments and their potential impact on investment strategies [2] - The service offers access to an in-house developed data analytics platform, evoX Data Analytics, enhancing the research capabilities for investors [1] Group 2 - The analyst emphasizes the importance of data-driven analysis in formulating investment ideas within the complex aerospace industry, which has significant growth prospects [2] - The forum provides direct access to data analytics monitors, allowing members to stay updated on market trends and investment opportunities [2]

Core Viewpoint - Park Aerospace Corp. has received an upgraded rating from "Neutral" to "Outperform," indicating increased investor confidence due to improving operational and financial metrics for Q1 FY2026 [1][9] Financial Performance - Q1 FY2026 sales reached $15.4 million, with a gross margin of 30.6%, up from 29.3% in Q1 FY2025. Gross profit was $4.7 million, and adjusted EBITDA was $3 million, reflecting an adjusted EBITDA margin of 19.2%, a significant recovery from previous quarters [2] - Net earnings doubled year-over-year to $2.1 million, resulting in an EPS of 10 cents, driven by enhanced operating efficiency and a favorable product mix [2] Strategic Developments - The company secured a proposed blanket order worth $40 million from a major OEM for C2B fabric, used in missile systems and defense platforms, highlighting its relevance in defense ecosystems [3] - Park is involved in key missile defense programs, including the Patriot PAC-3 and Israel's Arrow systems, with increasing demand due to geopolitical instability [4] Financial Health and Shareholder Returns - Park maintains a debt-free balance sheet with $65.6 million in cash and marketable securities. In Q1, the company repurchased $2.2 million in shares and paid $2.5 million in dividends, continuing a 40-year track record of uninterrupted quarterly dividends totaling over $603.6 million [5] Risks and Challenges - Execution timelines for major long-term agreements, such as the one with GE Aerospace for 2025-2030, remain uncertain, with clarity on volume and margins still pending [6] - The commercial aerospace segment shows limited growth visibility, with $0.3 million in missed shipments in Q1 primarily due to delayed commercial orders, indicating a need for broader recovery in aircraft production [7]

Company Overview - Park Aerospace Corp. develops and manufactures advanced composite materials for the global aerospace markets, including film adhesives and lightning strike protection materials [2] - The company's advanced composite materials are utilized in various applications such as jet engines, transport aircraft, military aircraft, UAVs, business jets, and rotary wing aircraft [2] - Park Aerospace also provides specialty ablative materials for rocket motors and nozzles, as well as materials for radome applications [2] Leadership Changes - Dale E. Blanchfield has retired from the Board of Directors after serving since 2004 and as Lead Independent Director since 2012 [1] - The Chairman and CEO, Brian E. Shore, expressed deep appreciation for Blanchfield's contributions and described him as a true friend and a significant presence on the board [2] Product Offerings - Park Aerospace's composite materials include proprietary product lines such as SigmaStrut™ and AlphaStrut™, targeting markets like prototype and development aircraft, special mission aircraft, and spares for legacy military and civilian aircraft [2] - The company aims to undertake projects that others may find too difficult or unappealing, positioning itself as a solution provider in challenging scenarios [2]

Core Insights - Park Aerospace Corp. (PKE) shares increased by 23.3% following the earnings report for the quarter ended June 1, 2025, significantly outperforming the S&P 500 index, which gained only 0.5% during the same period [1] - The stock has rallied 41% over the past month, indicating strong investor optimism regarding the company's financial results and future outlook [1] Financial Performance - Earnings per share (EPS) for the fiscal first quarter of 2026 reached 10 cents, up from 5 cents in the prior-year quarter [2] - Net sales amounted to $15.4 million, reflecting a 10.2% increase from $14 million in the same quarter last year [2] - Net earnings more than doubled to $2.1 million from $1 million year-over-year [2] - Gross profit increased by 15% to $4.7 million, with gross margin improving to 30.6% from 29.3% [3] - Adjusted EBITDA rose to $3 million, marking a 13.5% year-over-year increase from $2.6 million [3] Operational Metrics - Earnings from operations increased to $2.4 million, up 16.2% from $2.1 million a year ago [4] - Selling, General and Administrative (SG&A) expenses rose slightly to $2.3 million from $2 million [4] Balance Sheet Strength - The balance sheet remains robust with $65.6 million in cash and marketable securities as of June 1, 2025 [5] - Equity per share was $5.29, slightly down from $5.36 at the end of the previous quarter [5] - Despite a decline in inventories and total assets, the company maintains a strong liquidity position [5] Management Insights - Chairman and CEO Brian Shore expressed satisfaction with the gross margin exceeding 30%, attributing this to effective cost management and a favorable sales mix [6] - President and COO Mark Esquivel noted that while production volumes were flat, significant ramp-up is expected from key customers later in the fiscal year [7] Performance Drivers - Increased sales of fabric-based composite materials, particularly to defense and aerospace customers, were key drivers of performance [8] - $1.1 million of the quarterly revenue came from fabric sales, with an additional $0.5 million from materials made with the fabric, both contributing to stronger margins [8] Challenges - International logistics and tariff-related costs had a slight negative impact, but were not significant enough to hinder overall earnings momentum [9] - Cash decline was attributed to discretionary expenditures, including a $2.2 million share repurchase and a $1.5 million investment in expanding C2B fabric production capabilities [9] Future Guidance - For the fiscal second quarter of 2026, the company anticipates net sales between $15 million and $16 million, and EBITDA between $3.1 million and $3.4 million, indicating expected growth in both sales and profitability [10] - Management expressed confidence in a solid full-year outlook, supported by a proposed $40 million blanket purchase order and expanding defense-related opportunities [11] Strategic Developments - The company is constructing a new facility in Newton, Kansas, aimed at increasing manufacturing flexibility and capacity, with plans to finalize the expansion by the end of the calendar year [12] - Progress has been made on a long-term agreement with GE Aerospace covering engine-related composite components, expected to enhance long-term revenue stability [13]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the 13 weeks ended June 1, 2025, Park Aerospace Corp. reported net sales of $15.4 million and net earnings of $2.1 million, with total assets at $120.7 million and positive operating cash flow of $1.6 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 1, 2025, total assets decreased slightly to $120.7 million, driven by reductions in cash and marketable securities, while total liabilities increased and shareholders' equity decreased due to capital returns Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 1, 2025 (Unaudited) | March 2, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,624 | $21,621 | | Marketable securities | $44,947 | $47,213 | | Total current assets | $87,332 | $90,294 | | Total assets | $120,718 | $122,108 | | Total current liabilities | $10,128 | $9,261 | | Total liabilities | $15,767 | $14,954 | | Total shareholders' equity | $104,951 | $107,154 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales increased 10.2% to $15.4 million for the 13 weeks ended June 1, 2025, with net earnings surging to $2.1 million, largely due to the absence of a prior-year storm damage charge Statement of Operations Summary (in thousands, except per share data) | Metric | 13 Weeks Ended June 1, 2025 | 13 Weeks Ended June 2, 2024 | | :--- | :--- | :--- | | Net sales | $15,400 | $13,970 | | Gross profit | $4,718 | $4,099 | | Earnings from operations | $2,419 | $2,082 | | Storm Damage Charge | $0 | $(1,052) | | Net earnings | $2,080 | $993 | | Diluted earnings per share | $0.10 | $0.05 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities improved to $1.6 million for the 13 weeks ended June 1, 2025, while financing activities used $4.6 million, resulting in a $1.0 million net decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | 13 Weeks Ended June 1, 2025 | 13 Weeks Ended June 2, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,590 | $(423) | | Net cash provided by investing activities | $1,999 | $469 | | Net cash used in financing activities | $(4,586) | $(2,532) | | **Decrease in cash and cash equivalents** | **$(997)** | **$(2,486)** | - Key uses of cash in financing activities for the quarter were **$2.5 million** for dividends and **$2.2 million** for the purchase of treasury stock[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, marketable securities composition, share repurchase program, a prior-year storm damage charge, and a new advance payment agreement with ArianeGroup SAS - The company's marketable securities, valued at **$44.9 million**, are all classified as available-for-sale and consist entirely of U.S. Treasury and other government securities, measured using Level 1 inputs[30](index=30&type=chunk)[31](index=31&type=chunk) - During the 13 weeks ended June 1, 2025, the company repurchased **166,955 shares** of its common stock, with authorization to purchase up to **781,766 additional shares** as of July 9, 2025[44](index=44&type=chunk) - A storm damage charge of **$1,052 thousand** was recorded in the prior-year quarter due to damage at the Newton, Kansas facilities, with no such charge in the current fiscal year[50](index=50&type=chunk)[51](index=51&type=chunk)[54](index=54&type=chunk) - On March 27, 2025, the company agreed to advance **€4,587 thousand** to ArianeGroup SAS for future C2®B product purchases through December 2033, with an estimated total purchase cost of **€36,000 thousand**[61](index=61&type=chunk) Net Sales by Geographic Region (in thousands) | Region | 13 Weeks Ended June 1, 2025 | 13 Weeks Ended June 2, 2024 | | :--- | :--- | :--- | | North America | $14,315 | $11,986 | | Asia | $674 | $719 | | Europe | $411 | $1,265 | | **Total net sales** | **$15,400** | **$13,970** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 FY26 sales growth to recovery from prior-year storm disruptions, leading to improved gross margin and doubled net earnings, while maintaining strong liquidity despite capital returns and a supplier advance [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Net sales increased 10.2% to $15.4 million in Q1 FY26, with gross profit up 15.1% and net earnings surging 109.5% to $2.1 million, primarily due to recovery from prior-year storm disruptions and the absence of related charges Q1 FY2026 vs Q1 FY2025 Performance (in thousands) | Metric | Q1 2026 (13 wks ended June 1, 2025) | Q1 2025 (13 wks ended June 2, 2024) | % Change | | :--- | :--- | :--- | :--- | | Net sales | $15,400 | $13,970 | 10.2% | | Gross profit | $4,718 | $4,099 | 15.1% | | Net earnings | $2,080 | $993 | 109.5% | - The increase in sales was primarily due to recovery from prior-year storm damage disruptions, which had delayed an estimated **$1.8 million** in Q1 FY25 sales[65](index=65&type=chunk)[75](index=75&type=chunk) - Gross profit margin increased to **30.6%** from **29.3%**, driven by higher sales volume and lower waste, despite costs for new manufacturing lines[66](index=66&type=chunk)[76](index=76&type=chunk) - Selling, general and administrative (SG&A) expenses rose **14.0%** to **$2.3 million**, mainly due to increased salaries, travel, and professional fees[78](index=78&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$65.6 million** in cash and marketable securities, despite a decrease in working capital to **$77.2 million** due to share repurchases, a supplier advance, and dividends, and believes resources are sufficient for the foreseeable future Key Liquidity Metrics (in thousands) | Metric | June 1, 2025 | March 2, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents and marketable securities | $65,571 | $68,834 | | Working capital | $77,204 | $81,033 | - The decrease in cash and marketable securities was primarily due to **$2.2 million** in treasury share repurchases, a **$1.6 million** supplier advance, and **$2.5 million** in dividend payments[93](index=93&type=chunk)[94](index=94&type=chunk) - The company entered an advance payment agreement with ArianeGroup SAS, with **€1,376 thousand** paid in April 2025 and future payments due in fiscal 2027 and 2028[100](index=100&type=chunk) - The company believes its financial resources are sufficient for the next 12 months and the foreseeable future to fund operations, investments, share purchases, and dividends[98](index=98&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposure as of June 1, 2025, remains consistent with the types and amounts disclosed in its most recent Annual Report on Form 10-K - Market risk exposure at the end of the quarter is consistent with the exposure reported in the most recent Form 10-K[106](index=106&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and Principal Financial Officer concluded that disclosure controls and procedures were effective as of June 1, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and Principal Financial Officer, concluded that disclosure controls and procedures were effective as of the end of the quarter[107](index=107&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the fiscal quarter[107](index=107&type=chunk) [PART II. OTHER INFORMATION](index=26&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings for the period - None[109](index=109&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes in risk factors were reported from those disclosed in the company's most recent Annual Report on Form 10-K - No material changes in risk factors were reported since the last annual report[110](index=110&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 FY26, the company repurchased **166,955 shares** of common stock at an average price of **$12.96** per share, with **781,766 shares** remaining available for repurchase under existing authorization Common Stock Repurchases in Q1 FY2026 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | March 3 - April 1 | 9,033 | $13.22 | | April 2 - May 1 | 157,922 | $12.94 | | May 2 - June 1 | - | $- | | **Total** | **166,955** | **$12.96** | - As of the end of the quarter, the company may still purchase **781,766 shares** under its publicly announced repurchase program[111](index=111&type=chunk) [Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[113](index=113&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - None[115](index=115&type=chunk) [Other Information](index=27&type=section&id=Item%205.%20Other%20Information) The company reported no other information - None[116](index=116&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications by principal executive and financial officers and Interactive Data Files in iXBRL format - Filed exhibits include CEO and CFO certifications pursuant to Sarbanes-Oxley Act and iXBRL data files[119](index=119&type=chunk)[121](index=121&type=chunk)

Financial Data and Key Metrics Changes - In Q1, the company reported sales of $15.4 million, with a gross profit of $4.718 million and a gross margin of 3.6%, which is below the desired level of over 30% [10][11] - Adjusted EBITDA was just under $3 million, resulting in an EBITDA margin of 19.2% [11] - The sales estimate for Q1 was set between $15 million and $16 million, with actual results landing in the middle of that range [12] Business Line Data and Key Metrics Changes - Sales of C2B fabric were $1.1 million in Q1, significantly lower than the $4.4 million reported in the previous quarter, which had negatively impacted margins [15] - The company experienced a more balanced production-to-sales ratio in Q1, which positively influenced margins [16] Market Data and Key Metrics Changes - Total shipments in Q1 were 275,000, slightly up from Q4, primarily due to international shipment issues [21] - The impact of tariffs on Q1 was minimal, with costs being less than a few thousand dollars [21] Company Strategy and Development Direction - The company is focusing on expanding its manufacturing capacity to meet increasing demand, particularly in defense and missile programs [81][83] - A new agreement with Aireon to increase C2B fabric manufacturing capacity was highlighted as a strategic move to support growing orders [72] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in defense programs, particularly in light of recent geopolitical events [59][61] - The company is preparing for significant increases in production capacity to meet urgent needs for missile defense systems [72][73] Other Important Information - The company has zero long-term debt and reported $65.6 million in cash and marketable securities at the end of Q1, down from $68.8 million at the end of Q4 [53][54] - A share buyback of $2.165 million was executed in Q1, with no purchases anticipated in Q2 [52] Q&A Session Summary Question: Is there anything different about the new LTA with GE Aerospace compared to previous ones? - The new LTA is negotiated with GE Aerospace and involves different engine programs and materials compared to the previous LTA with MRAS [98][99] Question: When will the company feel comfortable providing long-term forecast details? - The company is conducting internal reviews and expects to provide more information by the end of the calendar year when they have more confidence in their plans [101][103]

Financial Performance - FY2026 Q1 - Sales reached $154 million, with a gross profit of $4718 thousand and a gross margin of 306%[10] - Adjusted EBITDA was $2963 thousand, representing 192% of sales[10] - The company reported $656 million in cash and marketable securities[62] Key Agreements and Business Updates - Park entered into a Business Partner Agreement with ArianeGroup, selling $11 million of C2B fabric and $480 thousand of ablative materials manufactured with C2B fabric in FY2026 Q1[13] - A new agreement with ArianeGroup involves Park advancing €4587 million against future C2B fabric purchases, with the first installment of €1376 million paid in FY2026 Q1[54] - Lightning Strike Protection materials were certified on the GE Aerospace Passport 20 Engine, expecting approximately $500 thousand per year in revenues[56] GE Aerospace Programs - FY2026 Q1 sales for GE Aerospace programs were $62 million[45] - The company forecasts GE Aerospace programs sales to be between $67 million and $72 million for FY2026 Q2 and between $280 million and $320 million for the total FY2026[47] - CFM LEAP-1A engine had a 652% market share of firm engine orders for the A320neo Family of Aircraft as of March 31, 2025[34] Share Repurchase Program - During FY2026 Q1, Park purchased 166955 shares of its common stock at an average price of $1297 per share, totaling $2165453[59] - As of the report, the company has purchased a total of 718234 shares at an average price of $1294 per share, costing $9296401[59] Future Expansion - The company is planning a major new expansion of its manufacturing facilities, with a preliminary estimated capital budget of $35 million +/- $5 million[84]

[First Quarter Fiscal 2026 Financial Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%202026%20Financial%20Highlights) Net sales increased 10.2% year-over-year to $15.4 million, with net earnings rising to $2.08 million or $0.10 per diluted share Q1 FY2026 Key Financial Metrics Comparison | Metric | Q1 FY2026 (USD) | Q1 FY2025 (USD) | Q4 FY2025 (USD) | | :--- | :--- | :--- | :--- | | Net Sales | $15,400,000 | $13,970,000 | $16,939,000 | | Net Earnings | $2,080,000 | $993,000 | $1,246,000 | | Diluted EPS | $0.10 | $0.05 | $0.06 | Q1 FY2026 Non-GAAP Financial Metrics Comparison | Non-GAAP Metric | Q1 FY2026 (USD) | Q1 FY2025 (USD) | Q4 FY2025 (USD) | | :--- | :--- | :--- | :--- | | Net Earnings before Special Items | $2,080,000 | $1,781,000 | $2,417,000 | | Adjusted EBITDA | $2,963,000 | $2,610,000 | $3,418,000 | | Diluted EPS before Special Items | $0.10 | $0.09 | $0.12 | [Non-GAAP Financial Measures and Special Items](index=1&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Special%20Items) The company uses non-GAAP measures to assess operational performance, with no special items reported in Q1 FY2026 - Park discloses non-GAAP measures, including Adjusted EBITDA and operating results excluding special items, to provide a clearer assessment of the Company's ongoing, normal business operations[10](index=10&type=chunk) - The company reported no special items for the first quarter of fiscal year 2026. Special items in prior periods included: - **Q1 FY2025:** A **$1,052,000** pre-tax charge for storm damage - **Q4 FY2025:** A **$2,147,000** non-cash tax charge for potential repatriation of foreign earnings - **Q4 FY2025:** A **$957,000** tax benefit from the expiration of the statute of limitations for uncertain tax positions[5](index=5&type=chunk) [Business Overview](index=2&type=section&id=Business%20Overview) Park Aerospace Corp. develops and manufactures advanced composite materials for the global aerospace industry, serving diverse markets - The company develops and manufactures solution and hot-melt advanced composite materials for composite structures in the global aerospace markets[11](index=11&type=chunk) - Key products include film adhesives (**Aeroadhere®**), lightning strike protection materials (**Electroglide®**), and proprietary composite **SigmaStrut™** and **AlphaStrut™** product lines[11](index=11&type=chunk) - Target markets include jet engines, transport aircraft, military aircraft, UAVs, business jets, and spacecraft. The company also offers specialty ablative materials for rocket motors and nozzles[11](index=11&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) This section presents the company's detailed financial statements, including performance, balance sheets, and operations [Performance Table (including non-GAAP information)](index=3&type=section&id=Performance%20Table) Comparative performance metrics for Q1 FY2026, Q1 FY2025, and Q4 FY2025, including GAAP and non-GAAP figures Performance Summary (in thousands, except per share) | Metric | Q1 FY2026 | Q1 FY2025 | Q4 FY2025 | | :--- | :--- | :--- | :--- | | Sales | $15,400 | $13,970 | $16,939 | | Net Earnings before Special Items | $2,080 | $1,781 | $2,417 | | Net Earnings (GAAP) | $2,080 | $993 | $1,246 | | Diluted EPS before Special Items | $0.10 | $0.09 | $0.12 | | Diluted EPS (GAAP) | $0.10 | $0.05 | $0.06 | [Comparative Balance Sheets](index=4&type=section&id=Comparative%20Balance%20Sheets) Balance sheet summary as of June 1, 2025, showing total assets, cash, liabilities, and equity per share Balance Sheet Summary (in thousands) | Account | June 1, 2025 | March 2, 2025 | | :--- | :--- | :--- | | Cash and Marketable Securities | $65,571 | $68,834 | | Total Current Assets | $87,332 | $90,294 | | Total Assets | $120,718 | $122,108 | | Total Liabilities | $15,767 | $14,954 | | Shareholders' Equity | $104,951 | $107,154 | - Equity per share decreased from **$5.36** on March 2, 2025, to **$5.29** on June 1, 2025[15](index=15&type=chunk) [Comparative Statements of Operations](index=5&type=section&id=Comparative%20Statements%20of%20Operations) Statement of operations for Q1 FY2026, detailing net sales, gross profit, and gross margin performance Statement of Operations Summary (in thousands) | Metric | Q1 FY2026 | Q1 FY2025 | Q4 FY2025 | | :--- | :--- | :--- | :--- | | Net Sales | $15,400 | $13,970 | $16,939 | | Gross Profit | $4,718 | $4,099 | $4,958 | | Gross Margin | 30.6% | 29.3% | 29.3% | | Earnings from Operations | $2,419 | $2,082 | $2,851 | | Net Earnings | $2,080 | $993 | $1,246 | [Reconciliation of Non-GAAP Financial Measures](index=6&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) Reconciliation of GAAP Net Earnings to Adjusted EBITDA, detailing adjustments for taxes, depreciation, and other items Reconciliation of GAAP Net Earnings to Adjusted EBITDA (in thousands) | Line Item | Q1 FY2026 | Q1 FY2025 | Q4 FY2025 | | :--- | :--- | :--- | :--- | | GAAP Net Earnings | $2,080 | $993 | $1,246 | | Income Tax Provision | $694 | $376 | $1,940 | | Interest Income | ($355) | ($339) | ($335) | | Depreciation | $456 | $439 | $460 | | Stock Option Expense | $88 | $89 | $107 | | Storm Damage Charge | - | $1,052 | - | | **Adjusted EBITDA** | **$2,963** | **$2,610** | **$3,418** |

Sales and Revenue - In fiscal years 2025, 2024, and 2023, 39.8%, 37.7%, and 41.2% of the Company's total worldwide net sales were to GE Aerospace suppliers[32]. - The Company's total net sales worldwide in 2025 were $62.0 million, an increase of 11% compared to $56.0 million in 2024[126]. - Net sales for 2024 were $56,004,000, a 4% increase from $54,055,000 in 2023, primarily driven by military market sales[138][139]. - Net sales for the fiscal year ended March 2, 2025, increased to $62,026,000, representing a 10.4% growth from $56,004,000 in the previous year[185]. Financial Performance - Earnings from operations were $9.4 million in 2025, a 12% increase from $8.4 million in 2024[132]. - Net earnings from operations for 2025 were $5.9 million, down 21% from $7.5 million in 2024, impacted by a $1.1 million storm damage charge and a $2.1 million tax provision[136]. - The gross profit margin decreased to 28.4% in 2025 from 29.5% in 2024, primarily due to a less favorable sales mix and higher labor and overhead costs[118]. - Basic and diluted earnings per share for 2025 were $0.29, down from $0.37 in 2024, reflecting storm damage and tax charges[137]. - Net earnings decreased to $5,882,000, down 21.3% from $7,473,000 in the prior year[185]. Costs and Expenses - Selling, general and administrative expenses increased by 1% to $8.2 million in 2025, representing 13.3% of sales compared to 14.6% in 2024[129]. - The effective income tax rate rose to 38.1% in 2025 from 20.8% in 2024, primarily due to a deferred tax provision of $2.1 million[135]. - The Company continues to face inflation in costs of raw materials and supplies, which has been partially mitigated by the ability to adjust pricing[121]. - The Company has experienced inflation in raw material and other costs, which has been partially mitigated by its ability to adjust pricing for a large portion of its sales[61]. Assets and Liabilities - Cash and marketable securities decreased by $8,377,000 from $77,211,000 in 2024 to $68,834,000 in 2025[150]. - Working capital decreased by $8.2 million from March 3, 2024, primarily due to decreases in cash and cash equivalents[154]. - Total current assets decreased to $90,294,000 from $98,845,000, a reduction of 8.3%[184]. - Total liabilities decreased to $14,954,000 from $19,395,000, a decline of 22.5%[184]. Stock and Dividends - The Company declared dividends of $0.125 per share for each quarter in the fiscal year ended March 2, 2025[104]. - The company paid $10.1 million in cash dividends in 2025, down from $30.6 million in 2024, which included a special dividend of $20.5 million[155]. - The Company had purchased 551,279 shares of its Common Stock under a buyback authorization of up to 1,500,000 shares[107]. - The company repurchased treasury stock amounting to $4,252,000 in 2025, compared to $2,880,000 in 2024, indicating an increase of 48%[190]. Manufacturing and Operations - The Company has completed an expansion of its manufacturing facilities in Newton, Kansas, which doubled the size and added manufacturing capacity[33]. - The manufacturing process for composite materials is capital intensive, requiring sophisticated equipment and tight process controls[34]. - The Company believes its manufacturing facilities are in good condition and have the capacity to substantially increase production levels[89]. - The Company collaborates with aerospace OEMs to qualify its composite materials for current and upcoming programs[23]. Environmental and Compliance - The Company believes it is in substantial compliance with applicable environmental laws and does not anticipate making material capital expenditures for environmental control facilities in the near future[49]. - The Company’s composite material products enable aircraft to operate on substantially less fuel, leading to economic savings and reduced carbon emissions[48]. - The Company’s management believes that the ultimate disposition of known environmental matters will not materially affect its financial position[51]. Cybersecurity - The Company has experienced cyber-attacks but none have materially affected its business or financial results[74]. - The Company has a cybersecurity strategy that includes continuous monitoring and adherence to the NIST Cybersecurity Framework[83]. - The Company has not identified any known cybersecurity threats that have materially affected its operations or financial condition[86]. Market and Industry Risks - The Company’s business is dependent on the cyclical nature of the aerospace industry, which can experience downturns affecting demand and prices[64]. - The Company is vulnerable to disruptions in the supply of raw materials, with certain materials produced by only one supplier, which could materially affect operations[62]. - The market price of the Company's securities can fluctuate based on various external factors, including market conditions in the aerospace industry[77]. Management and Workforce - As of March 2, 2025, the Company employed 132 individuals, emphasizing the importance of a skilled and dedicated workforce for its success[44]. - The Company’s success relies on the experience and expertise of its senior management and key technical employees, with potential risks associated with their loss[72]. - The Company engages in product development efforts with OEMs, but there is no guarantee that these efforts will result in sales[68].