Park Aerospace CEO Says Lower Engine Forecast Is No Warning, Blames Customers' Ramp Pace
Brian Shore said Park cut its fiscal 2027 GE engine-program sales forecast to $32 million to $35 million and rejected a negative reading.
Park Aerospace Chairman and CEO Brian Shore told analysts on the company's second-quarter earnings call that a lowered full-year forecast for GE engine-program sales, now $32 million to $35 million for fiscal 2027, should not be read as trouble. He put the constraint on customers' manufacturing ramps, not on Park or end demand.
What Shore said about the cut
Shore said the prior forecast was a little higher and rested on a build plan from customers, which they have not revised. Park is "a little skeptical" it will be met, he said, because two quarters are booked and a third-quarter forecast exists.
GE engine-program sales were $8.3 million in the second quarter. Park forecasts $8 million to $8.5 million for the third quarter.
An analyst at Needham noted a stronger second quarter alongside a trimmed year. A second analyst asked whether fourth-quarter uncertainty was the driver. Shore answered: "just do the math" on the first three quarters, since reaching the old number would need a big jump in the fourth.
He said the fourth quarter may look like the second and third, and "we could be wrong." Park is "just trying to be realistic, not trying to be conservative," he said, adding that "it would be a mistake to interpret this information in some kind of negative way."
Customers, not demand, are the bottleneck
Shore said the key challenge is "not us, it would be our customers," whose ability to ramp manufacturing is limited. He said it is not the end market either, pointing to Airbus's backlog and its years-old 75-a-month target.
He called the "GE Aerospace Juggernaut" "very much intact." Park estimates annual GE engine-program sales at full ramp of $62.3 million, against about $30 million last year, he said. Park raised its A320neo engine assumption to 1,200 units and cut the COMAC C919 figure.
On the call, Shore also noted second-quarter sales of $20,791,000, gross margin of 34.3% and adjusted EBITDA of $5,285,000. He said an 18.6% tax rate, helped by stock option exercises, lifted earnings per share to $0.21 from about $0.19 at a normal 26.5% rate.
What to watch
Shore said Park expects to sign a definitive agreement with Arianegroup before the end of the calendar year on a U.S. plant making C2B fabric. Park expects to make $20 million of advance payments this year and $5 million next year toward it.
A revised customer build plan could reset the engine forecast. Park forecasts third-quarter sales of $21 million to $22.5 million.
Shore's own caveat on the forecast: \"Maybe we're being too conservative. Maybe the original build plan will end up coming true.\"
Sources
- Park Aerospace Corp. Announces Date of Second Quarter — globenewswire.com
