Defense Demand Fuels PKE's Q3 Earnings, Stock Up 5%

Core Insights - Park Aerospace Corp. has experienced a significant stock price increase of 4.8% following its earnings announcement for the quarter ended November 30, 2025, and a notable 14.2% rise over the past month, outperforming the S&P 500 index, which gained only 1.2% during the same period [1] Financial Performance - For the third quarter of fiscal 2026, Park Aerospace reported earnings per share of 15 cents, an 87.5% increase from 8 cents year-over-year [2] - Net sales reached $17.3 million, reflecting a 20.3% increase from $14.4 million in the same quarter last year [2] - Net earnings nearly doubled to $3 million from $1.6 million in the prior-year period [2] Key Business Metrics - Gross margin improved to 34.1%, up from 26.6% in the prior-year quarter, driven by higher sales volume and operational efficiencies [3] - SG&A expenses remained stable at 13% of net sales, compared to 13.8% in the prior-year period, indicating effective cost management [3] - Adjusted EBITDA rose to $4.2 million from $2.4 million a year earlier, marking a 75% increase [4] Management Commentary - Management highlighted strong demand in the aerospace sector, particularly in defense applications, as a key driver for improved results [5] - The company is focusing on niche aerospace segments that are often underserved, leveraging proprietary composite technologies like SigmaStrut and AlphaStrut for higher-margin projects [6] Factors Influencing Results - The performance was attributed to increased order flow in aerospace composites and the absence of extraordinary charges, providing a clearer picture of core operational strength [7] - Gross profit improved to $5.9 million from $3.8 million in the prior-year quarter, a 54% increase, due to higher sales and better absorption of fixed costs [8] - Operating income nearly doubled to $3.6 million from $1.9 million, benefiting from higher revenue and gross margin expansion [8]