Park Aerospace's Q2 Earnings Rise Y/Y Despite Lower Sales

Core Insights - Park Aerospace Corp. (PKE) shares increased by 2.6% following the announcement of its fiscal second-quarter results, outperforming the S&P 500, which declined by 1.4% during the same period [1] - Over the past month, Park Aerospace stock has risen by 11.1%, significantly exceeding the S&P 500's 0.5% gain, indicating strong investor optimism post-earnings report [1] Financial Performance - For the second quarter of fiscal 2026, Park Aerospace reported earnings per share (EPS) of 12 cents, up from 10 cents in the same quarter last year [2] - Net sales were $16.4 million, a slight decrease from $16.7 million in the prior-year quarter, reflecting a 2% decline [2] - Net earnings increased by 16.4% year over year to $2.4 million from $2.1 million [2] Operational Metrics and Margins - The gross profit for the quarter was $5.1 million, representing 31.2% of net sales, compared to $4.8 million and 28.5% in the same quarter last year, indicating a 2.7 percentage point improvement in gross margin [3] - Operating income rose to $2.9 million from $2.6 million, with the operating margin increasing to 17.4% from 15.7% year over year [3] Adjusted EBITDA - Adjusted EBITDA for the quarter was $3.4 million, a 6% increase from $3.2 million a year ago [4] Management Commentary - No special items were reported for the quarter, indicating a clean operational performance without one-time charges or adjustments [5] - The absence of adjustments suggests stable core operations driving earnings performance, contributing to the stock's outperformance relative to the broader market [6] Factors Influencing Results - Earnings growth occurred despite a slight revenue decline, primarily due to improved cost efficiency [7] - The cost of sales decreased to $11.3 million from $12 million a year ago, enhancing the gross margin [7] - Selling, general and administrative (SG&A) expenses rose to $2.3 million from $2.1 million, but this increase was modest relative to revenues and offset by stronger gross profit [7] - Higher interest and other income increased to $0.4 million from $0.2 million in the prior-year period, bolstering pre-tax earnings to $3.2 million from $2.8 million [8] Balance Sheet Highlights - As of August 31, 2025, cash and marketable securities totaled $61.6 million, down from $68.8 million at the end of the prior fiscal year [9] - Total current assets were reported at $83.3 million, and shareholders' equity was $105.8 million, slightly down from $107.2 million six months earlier [9] - Equity per share declined modestly to $5.31 from $5.36 [9]