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What changed in PARK AEROSPACE CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PARK AEROSPACE CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+115 added−131 removedSource: 10-K (2024-06-11) vs 10-K (2023-05-12)

Top changes in PARK AEROSPACE CORP's 2024 10-K

115 paragraphs added · 131 removed · 97 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changePark is the exclusive North American distributor of ArianeGroup’s RAYCARB C2®B NG proprietary product. RAYCARB C2®B NG is used to produce ablative composite materials for critical rocketry and missile systems. Industry Background The aerospace composite materials manufactured by the Company and its competitors are used primarily to fabricate light-weight, high-strength structures with specifically designed performance properties.
Biggest changeIndustry Background The aerospace composite materials manufactured by the Company and its competitors are used primarily to fabricate light-weight, high-strength structures with specifically designed performance properties. Composite materials are typically highly specified combinations of resin formulations and reinforcements. Reinforcements can be unidirectional fibers, woven fabrics, or non-woven goods such as mats or felts.
The Company believes that it currently is in substantial compliance with the applicable Federal, state and local environmental laws and regulations to which it is subject and that continuing compliance therewith will not have a material effect on its capital expenditures, earnings or competitive position.
The Company believes that it is currently in substantial compliance with the applicable Federal, state and local environmental laws and regulations to which it is subject and that continuing compliance therewith will not have a material effect on its capital expenditures, earnings or competitive position.
Many of the Company’s composite materials are used in the manufacture of aircraft certified by the Federal Aviation Administration (the “FAA”). 6 Customers for the Company’s rocket motor materials include United States defense prime contractors and subcontractors. These customers fabricate rocket motors for heavy lift space launchers, strategic defense weapons, tactical motors and various other applications.
Many of the Company’s composite materials are used in the manufacture of aircraft certified by the Federal Aviation Administration (the “FAA”). Customers for the Company’s rocket motor materials include United States defense prime contractors and subcontractors. These customers fabricate rocket motors for heavy lift space launchers, strategic defense weapons, tactical motors and various other applications.
The Company’s aerospace composite materials are marketed primarily by sales personnel and, to a lesser extent, by independent distributors. The Company’s aerospace composite structures and assemblies are marketed primarily by sales personnel. The Company’s aerospace customers include fabricators of aircraft composite structures and assemblies.
The Company’s aerospace composite materials are marketed primarily by sales personnel and, to a lesser extent, by independent distributors. The Company’s aerospace composite structures and assemblies are marketed primarily by sales personnel. 6 The Company’s aerospace customers include fabricators of aircraft composite structures and assemblies.
During the 2023, 2022 and 2021 fiscal years, sales to no other customer of the Company equaled or exceeded 10% of the Company’s total worldwide sales. The loss of a major customer or of a group of customers could have a material adverse effect on the Company’s business or its consolidated results of operations or financial position.
During the 2024, 2023 and 2022 fiscal years, sales to no other customer of the Company equaled or exceeded 10% of the Company’s total worldwide sales. The loss of a major customer or of a group of customers could have a material adverse effect on the Company’s business or its consolidated results of operations or financial position.
Park is the exclusive North American distributor of ArianeGroup’s RAYCARB C2®B NG proprietary product. RAYCARB C2®B NG is used to produce ablative composite materials for critical rocketry and missile systems. Customers and End Markets The Company’s aerospace composite materials, structures and assemblies customers include manufacturers of turbofan engines, aircraft primary and secondary structures and radomes.
Park is the exclusive North American distributor of ArianeGroup’s RAYCARB C2B® NG proprietary product. RAYCARB C2B® NG is used to produce ablative composite materials for critical rocketry and missile systems. Customers and End Markets The Company’s aerospace composite materials, structures and assemblies customers include manufacturers of turbofan engines, aircraft primary and secondary structures and radomes.
These automated fabrication processes required different material formats but similar materials to hand lay-up. After the lay-up process is completed, the material is cured by the addition of heat and pressure. Cure and consolidation processes typically include vacuum bag/oven curing, high pressure autoclave and press forming.
Automated lay-up processes include automated tape lay-up, automated fiber placement and filament winding. These automated fabrication processes required different material formats but similar materials to hand lay-up. After the lay-up process is completed, the material is cured by the addition of heat and pressure. Cure and consolidation processes typically include vacuum bag/oven curing, high pressure autoclave and press forming.
Accordingly, the foregoing information may not be indicative of the Company’s results of operations for any period subsequent to the fiscal year ended February 26, 2023. Patents and Trademarks The Company holds several patents and trademarks or licenses thereto. In the Company’s opinion, some of these patents and trademarks are important to its products.
Accordingly, the foregoing information may not be indicative of the Company’s results of operations for any period subsequent to the fiscal year ended March 3, 2024. Patents and Trademarks The Company holds several patents and trademarks or licenses thereto. In the Company’s opinion, some of these patents and trademarks are important to its products.
At April 24, 2023, the unfilled portion of all purchase orders received by the Company, and believed by it to be firm, was $29,035,974, compared to $25,895,809 at April 25, 2022. A major portion of the Company’s backlog consists of composite materials. Various factors contribute to the size of the Company’s backlog.
At May 31, 2024, the unfilled portion of all purchase orders received by the Company, and believed by it to be firm, was $31,085,988, compared to $29,035,974 at April 24, 2023. A major portion of the Company’s backlog consists of composite materials. Various factors contribute to the size of the Company’s backlog.
Generally, however, the Company does not believe that an inability to obtain new; or to defend existing, patents and trademarks would have a material adverse effect on the Company. The Company ’ s Workforce At February 26, 2023, the Company had 110 employees.
Generally, however, the Company does not believe that an inability to obtain new; or to defend existing, patents and trademarks would have a material adverse effect on the Company. The Company ’ s Workforce At March 3, 2024, the Company had 123 employees.
Park is a long-term customer of ArianeGroup and uses ArianeGroup’s RAYCARB C2®B NG product in the production of many of Park’s key ablative materials, which Park supplies into critical rocket and missile programs.
RAYCARB C2B® NG is used to produce ablative composite materials for critical rocketry and missile systems. Park is a long-term customer of ArianeGroup and uses ArianeGroup’s RAYCARB C2B® NG product in the production of many of Park’s key ablative materials, which Park supplies into critical rocket and missile programs.
The factors described under “Risk Factors” in Item 1A of this Report could cause the Company's actual results to differ materially from any such results which might be projected, forecasted, estimated or budgeted by the Company in forward-looking statements.
Such forward-looking statements are based on current expectations that involve a number of uncertainties and risks that may cause actual events or results to differ materially from the Company’s expectations. 10 The factors described under “Risk Factors” in Item 1A of this Report could cause the Company's actual results to differ materially from any such results which might be projected, forecasted, estimated or budgeted by the Company in forward-looking statements.
During the Company’s 2023, 2022 and 2021 fiscal years, 41.2%, 49.5% and 27.9%, respectively, of the Company’s total worldwide net sales were to affiliate and non-affiliate subtier suppliers of General Electric Company, a leading manufacturer of aerospace engines. Sales to AAE Aerospace were 20.7% of the Company’s total worldwide sales in the 2021 fiscal year.
During the Company’s 2024, 2023 and 2022 fiscal years, 37.7%, 41.2% and 49.5%, respectively, of the Company’s total worldwide net sales were to affiliate and non-affiliate subtier suppliers of GE Aerospace, a leading manufacturer of aerospace engines.
Such customers sometimes work with a supplier to develop the specific resin system and reinforcement combination to match the application. Composite structure fabrication methods may include hand lay-up, resin infusion or more advanced automated lay-up processes. Automated lay-up processes include automated tape lay-up, automated fiber placement and filament winding.
The Company’s customers typically design and specify a material specifically to meet the requirements of the customer’s application and processing methods. Such customers sometimes work with a supplier to develop the specific resin system and reinforcement combination to match the application. Composite structure fabrication methods may include hand lay-up, resin infusion or more advanced automated lay-up processes.
Park was founded in 1954 by Jerry Shore, who was the Company’s Chairman of the Board until July 14, 2004.
The Company's manufacturing and research and development facilities are located in Newton, Kansas. Park was founded in 1954 by Jerry Shore, who was the Company’s Chairman of the Board until July 14, 2004.
The reinforcement combined with the resin is referred to as a “prepreg”. Aerospace composite materials can be broadly categorized as either thermosets or thermoplastics. While both material types require the addition of heat to form a consolidated laminate, thermoplastics can be reformed using additional heat. Once fully cured, thermoset materials cannot be further reshaped.
While both material types require the addition of heat to form a consolidated laminate, thermoplastics can be reformed using additional heat. Once fully cured, thermoset materials cannot be further reshaped.
The prepreg material is interleafed with a carrier and cut to the roll lengths desired by the customer. The Company also manufactures prepreg using hot-melt impregnation methods which use no solvent.
The reinforcement is dipped in resin, passed through a drying oven which removes most of the solvent and advances (or partially cures) the resin. The prepreg material is interleafed with a carrier and cut to the roll lengths desired by the customer. The Company also manufactures prepreg using hot-melt impregnation methods which use no solvent.
The expansion includes enhanced and upgraded hot-melt film and tape lines and mixing and delivery systems, an expanded production lab, a new R&D lab, additional freezer and storage space and additional infrastructure to support the expanded operation. The expansion includes space for additional machinery and equipment.
The Company completed the expansion of its facilities in fiscal 2023, which doubled the size and provides additional manufacturing capacity. The expansion includes enhanced and upgraded hot-melt film and tape lines and mixing and delivery systems, an expanded production lab, a new R&D lab, additional freezer and storage space and additional infrastructure to support the expanded operation.
Air travel is also considered to be one of the most carbon intensive activity an individual can make. As air travel rebounds from the COVID-19 Pandemic and gradually returns to its aggressive pre-pandemic growth trajectory, aircraft fuel efficiency will return to being an increasingly important factor in addressing the reduction of greenhouse gas.
Air travel is also considered to be one of the most carbon intensive activity an individual can make. Aircraft fuel efficiency is an important factor in addressing the reduction of greenhouse gas.
The Company’s aerospace composite structures and assemblies and low-volume tooling are also developed and manufactured at its facility located in Newton, Kansas. Park offers a wide range of aerospace composite materials manufacturing capability, as well as composite structures design, assembly and production capability, all in its Newton facility.
The Company’s aerospace composite materials are designed, developed and manufactured at its facility located at the Newton, Kansas Airport. The Company’s aerospace composite structures and assemblies and low-volume tooling are also developed and manufactured at its facility located in Newton, Kansas.
Certain portions of this Report which do not relate to historical financial information may be deemed to constitute forward-looking statements that are subject to various factors which could cause actual results to differ materially from Park's expectations or from results which might be projected, forecasted, estimated or budgeted by the Company in forward-looking statements. 10 Generally, forward-looking statements can be identified by the use of words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “goal,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue” and similar expressions or the negative or other variations thereof.
Certain portions of this Report which do not relate to historical financial information may be deemed to constitute forward-looking statements that are subject to various factors which could cause actual results to differ materially from Park's expectations or from results which might be projected, forecasted, estimated or budgeted by the Company in forward-looking statements.
The 90,000 square feet expansion essentially doubled the size of the Company’s existing Newton, Kansas facilities. The new facility was originally conceived of as a redundant manufacturing facility for Park’s major aerospace customer and the large aerospace OEMs it supports, but it will also support additional manufacturing capacity.
The new facility was originally conceived as a redundant manufacturing facility for Park’s major aerospace customer and the large aerospace OEMs it supports, but it will also support additional manufacturing capacity. See “Operations” elsewhere in this Report.
Composite materials are typically highly specified combinations of resin formulations and reinforcements. Reinforcements can be unidirectional fibers, woven fabrics, or non-woven goods such as mats or felts. Resin formulations are typically highly proprietary, and include various chemical and physical mixtures. The Company produces resin formulations using various epoxies, polyesters, phenolics, cyanate esters, polyimides and other complex matrices.
Resin formulations are typically highly proprietary, and include various chemical and physical mixtures. The Company produces resin formulations using various epoxies, polyesters, phenolics, cyanate esters, polyimides and other complex matrices. The reinforcement combined with the resin is referred to as a “prepreg”. Aerospace composite materials can be broadly categorized as either thermosets or thermoplastics.
None of the information on the Company's website shall be deemed to be a part of this Report. AEROGLIDE®, COREFIX®, ELECTROGLIDE® and RADARWAVE® are registered trademarks of Park Aerospace Corp., and ALPHASTRUT™, PEELCOTE™ and SIGMASTRUT™ are common law trademarks of Park Aerospace Corp.
None of the information on the Company's website shall be deemed to be a part of this Report.
Park offers composite aircraft and space vehicle structures design and assembly services, in addition to “build-to-print” services. The Company believes that the ability to manufacture and develop both composite materials and structures at a single location can facilitate the needs of the aircraft and space vehicle industries.
The Company believes that the ability to manufacture and develop both composite materials and structures at a single location can facilitate the needs of the aircraft and space vehicle industries. Under a Business Partner Agreement with ArianeGroup SAS of Les Mureaux, France, Park is the exclusive North American distributor of ArianeGroup’s RAYCARB C2B® NG proprietary product.
Trademark applications for AEROADHERE™ and ELECTROVEIL™ are pending. 4 Operations The Company designs, develops and manufactures engineered, advanced composite materials and advanced composite structures and assemblies and low-volume tooling for the aerospace markets and prototype tooling for such structures and assemblies. The Company’s aerospace composite materials are designed, developed and manufactured at its facility located at the Newton, Kansas Airport.
AEROGLIDE®, AEROADHERE®, COREFIX®, ELECTROGLIDE®, ELECTROVEIL® and RADARWAVE® are registered trademarks of Park Aerospace Corp., and ALPHASTRUT®, PEELCOTE® and SIGMASTRUT® are common law trademarks of Park Aerospace Corp. 4 Operations The Company designs, develops and manufactures engineered, advanced composite materials and advanced composite structures and assemblies and low-volume tooling for the aerospace markets and prototype tooling for such structures and assemblies.
The Company works with aerospace OEMs, such as general aviation aircraft manufacturers and commercial aircraft manufacturers, and certain tier 1 suppliers to qualify its aerospace composite materials or structures and assemblies for use on current and upcoming programs. The Company’s customers typically design and specify a material specifically to meet the requirements of the customer’s application and processing methods.
The Company works with aerospace Original Equipment Manufacturers (“OEMs”), such as general aviation aircraft manufacturers and commercial aircraft manufacturers, and certain tier 1 suppliers (manufacturers of major components or systems such as engines, control systems, landing gear, braking systems, flight deck, avionics, aerostructures, electronic warfare systems and interior cabin products that are supplied to the OEMs) to qualify its aerospace composite materials or structures and assemblies for use on current and upcoming programs.
The key steps used in the manufacturing process include resin mixing, resin film casting and reinforcement impregnation via hot-melt process or a solution process. Prepreg is manufactured by the Company using either solvent (solution) coating methods on a treater or by hot-melt impregnation.
Prepreg is manufactured by the Company using either solvent (solution) coating methods on a treater or by hot-melt impregnation. A solution treater is a roll-to-roll continuous process machine which sequences reinforcement through tension/pressure rollers combining the solvated resin with the reinforcement and then passing the reinforced solvated resin through a drying oven.
See Note 10 of the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Report. See “Operations” elsewhere in this Report. The process for manufacturing composite materials, structures and assemblies is capital intensive and requires sophisticated equipment, significant technical know-how and very tight process controls.
The process for manufacturing composite materials, structures and assemblies is capital intensive and requires sophisticated equipment, significant technical know-how and very tight process controls. The key steps used in the manufacturing process include resin mixing, resin film casting and reinforcement impregnation via hot-melt process or a solution process.
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On January 5, 2022, Park announced that it entered into a Business Partner Agreement with ArianeGroup SAS of Les Mureaux, France. Under the Business Partner Agreement, ArianeGroup SAS appointed Park as its exclusive North American distributor of ArianeGroup’s RAYCARB C2®B NG proprietary product. RAYCARB C2®B NG is used to produce ablative composite materials for critical rocketry and missile systems.
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Park offers a wide range of aerospace composite materials manufacturing capability, as well as composite structures design, assembly and production capability, all in its Newton facility. Park offers composite aircraft and space vehicle structures design and assembly services, in addition to “build-to-print” services.
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Park will continue to purchase RAYCARB C2®B NG for its own programs, and, through the Business Partner Agreement, Park is now taking on the new role of ArianeGroup’s exclusive North American distributor for its RAYCARB C2®B product. The Company's manufacturing and research and development facilities are located in Newton, Kansas.
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Generally, forward-looking statements can be identified by the use of words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “goal,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue” and similar expressions or the negative or other variations thereof.
Removed
A solution treater is a roll-to-roll continuous process machine which sequences reinforcement through tension controllers and combines solvated resin with the reinforcement. The reinforcement is dipped in resin, passed through a drying oven which removes most of the solvent and advances (or partially cures) the resin.
Removed
Such forward-looking statements are based on current expectations that involve a number of uncertainties and risks that may cause actual events or results to differ materially from the Company’s expectations.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Company is vulnerable to disruptions and shortages in the supply of, and increases in the prices of, certain raw materials. There are a limited number of qualified suppliers of the principal materials used by the Company in its manufacture of aerospace composite materials and composite structures and assemblies.
Biggest changeThere are a limited number of qualified suppliers of the principal materials used by the Company in its manufacture of aerospace composite materials and composite structures and assemblies. The Company has qualified alternate sources of supply for many, but not all, of its raw materials, but certain raw materials are produced by only one supplier.
Other possible developments, such as the enactment or adoption of additional environmental laws, could result in substantial costs to the Company. If the Company ’ s efforts to protect its proprietary information are not sufficient, the Company may be adversely affected.
Other possible developments, such as the enactment or adoption of additional environmental laws, could result in substantial costs to the Company. 13 If the Company ’ s efforts to protect its proprietary information are not sufficient, the Company may be adversely affected.
The Company’s Stock is included in certain market indices. Funds that are based on the indices the Company’s stock is included in are required to own the Company’s stock. A change in any index the Company is included in could create sudden movement in the Company’s stock price.
The Company’s Common Stock is included in certain market indices. Funds that are based on the indices the Company’s Common Stock is included in are required to own the Company’s Common Stock. A change in any index the Company is included in could create sudden movement in the Company’s Common Stock price.
Geopolitical Events The Company's operating results could be negatively affected if the Company were unable to attain the raw materials required in its manufacturing process. The Company’s suppliers of raw material, supplies and equipment could be impacted by geopolitical events, such as the war in Ukraine, thus interrupting the Company’s supply chain.
Geopolitical Events The Company's operating results could be negatively affected if the Company were unable to attain the raw materials required in its manufacturing process. The Company’s suppliers of raw material, supplies and equipment could be impacted by geopolitical events, such as the wars in Ukraine and the Middle East, thus interrupting the Company’s supply chain.
Significant increases in the cost of materials, supplies, labor, utilities or services purchased by the Company could also materially increase the Company’s cost of operations and could have a material adverse effect on the Company’s business and results of operations if the Company were unable to pass such increases through to its customers.
Significant increases in the cost of materials, supplies, labor, utilities or services purchased by the Company could also materially increase the Company’s cost of operations and could have a material adverse effect on the Company’s business and results of operations if the Company were unable to pass such increases through to its customers. 11 The Company is vulnerable to disruptions and shortages in the supply of, and increases in the prices of, certain raw materials.
During the Company's fiscal years ended February 26, 2023, February 27, 2022 and February 28, 2021, the Company's ten largest customers accounted for approximately 71%, 77% and 71%, respectively, of net sales. The Company expects sales to a relatively small number of customers will continue to account for a significant portion of its net sales for the foreseeable future.
During the Company's fiscal years ended March 3, 2024, February 26, 2023, and February 27, 2022 , the Company's ten largest customers accounted for approximately 64%, 69% and 75%, respectively, of net sales. The Company expects sales to a relatively small number of customers will continue to account for a significant portion of its net sales for the foreseeable future.
The Company is experiencing inflation in raw material and other costs. The impact of inflation on the Company’s profits has been partially mitigated by the Company’s ability to adjust pricing for a large portion of its sales to pass the impact of inflation through to its customers.
The impact of inflation on the Company’s profits has been partially mitigated by the Company’s ability to adjust pricing for a large portion of its sales to pass the impact of inflation through to its customers.
Certain of the Company's principal competitors are substantially larger and have greater financial resources than the Company, and the Company's operating results will be affected by its ability to maintain its competitive positions in these industries.
Certain of the Company's principal competitors are substantially larger and have greater financial resources than the Company, and the Company's operating results will be affected by its ability to maintain its competitive positions in these industries. The aerospace composite materials and composite structures and assemblies industries are intensely competitive, and the Company competes worldwide in the markets for such products.
The loss of any member of the Company’s senior management team might significantly delay or prevent the achievement of the Company’s business objectives and could materially harm the Company’s business and customer relationships.
Each of the Company’s executive officers, key technical personnel and other employees could terminate his or her employment at any time. The loss of any member of the Company’s senior management team might significantly delay or prevent the achievement of the Company’s business objectives and could materially harm the Company’s business and customer relationships.
The aerospace composite materials and composite structures and assemblies industries are intensely competitive, and the Company competes worldwide in the markets for such products. 11 The Company is vulnerable to an increase in inflation. Changes in the cost raw materials, supplies, labor, utilities or services could materially increase the Company's cost of operations.
The Company is vulnerable to an increase in inflation. Changes in the cost raw materials, supplies, labor, utilities or services could materially increase the Company's cost of operations. The Company is experiencing inflation in raw material and other costs.
If these steps prove to be inadequate or are violated, the Company’s competitors might gain access to the Company’s trade secrets, and there may be no adequate remedy available to the Company. 13 The Company depends upon the experience and expertise of its senior management team and key technical employees, and the loss of any key employee may impair the Company ’ s ability to operate effectively.
If these steps prove to be inadequate or are violated, the Company’s competitors might gain access to the Company’s trade secrets, and there may be no adequate remedy available to the Company.
The Company has qualified alternate sources of supply for many, but not all, of its raw materials, but certain raw materials are produced by only one supplier. In some cases, substitutes for certain raw materials are not always readily available, and in the past, there have been shortages in the market for certain of these materials.
In some cases, substitutes for certain raw materials are not always readily available, and in the past, there have been shortages in the market for certain of these materials. Raw material substitutions for certain aircraft related products may require governmental (such as FAA) approval.
The Company’s success depends, to a certain extent, on the continued availability of its senior management team and key technical employees. Each of the Company’s executive officers, key technical personnel and other employees could terminate his or her employment at any time.
The Company depends upon the experience and expertise of its senior management team and key technical employees, and the loss of any key employee may impair the Company ’ s ability to operate effectively. The Company’s success depends, to a certain extent, on the continued availability of its senior management team and key technical employees.
Removed
Raw material substitutions for certain aircraft related products may require governmental (such as FAA) approval.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−8 removed1 unchanged
Biggest changeLocation Owned or Leased Use Size (Square Footage) Westbury, NY Leased Administrative Offices 2,000 Newton, KS Leased Advanced Composite Materials, Parts and Assemblies 183,500 The Company believes its facilities and equipment to be in good condition and reasonably suited and adequate for its current needs. The Company’s manufacturing facilities have the capacity to substantially increase their production levels.
Biggest changeLocation Owned or Leased Use Size (Square Footage) Westbury, NY Leased Administrative Offices 2,000 Newton, KS Leased Advanced Composite Materials, Parts and Assemblies 183,500 The Company believes its facilities and equipment to be in good condition and reasonably suited and adequate for its current needs. The Company’s manufacturing facilities have the capacity to substantially increase their production levels. 16
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During the 2022 fiscal year, the Company completed the closure of its dormant Park Aerospace Technologies Asia Pte. Ltd. facility located in Singapore. In December 2018, the Company entered into a Development Agreement with the City of Newton, Kansas and the Board of County Commissioners of Harvey County, Kansas.
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Pursuant to this agreement, the Company agreed to construct and operate a redundant manufacturing facility of approximately 90,000 square feet for the design, development and manufacture of advanced composite materials and parts, structures and assemblies for aerospace.
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The Company further agreed to equip the facility through the purchase of machinery, equipment and furnishings and to create additional new full-time employment of specified levels during a five-year period.
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In exchange for these agreements, the City and the County agreed to lease to the Company three acres of land at the Newton, Kansas Airport, in addition to the eight acres previously leased to the Company by the City and County.
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The City and County further agreed to provide financial and other assistance toward the construction of the additional facility as set forth in the Development Agreement. The total cost of the additional facility was approximately $19.8 million, and the expansion is complete. As of February 26, 2023, the Company had $99,000 in equipment purchase obligations related to the additional facility.
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Pursuant to the Development Agreement, the City provided a sales tax exemption for materials the Company purchased for the facility, subject to issuance of Industrial Revenue Bonds (“IRBs”).
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On June 7, 2022, the City issued IRB Series 2022, in an aggregate principal amount not to exceed $18,500,000, pursuant to a Trust Indenture between the City and Security Bank of Kansas City.
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The Company simultaneously entered into a Bond Purchase Agreement with the City, whereby the Company agreed to buy the IRBs at a purchase price equal to the par amount of the IRBs issued. The Company redeemed the IRBs in August 2022. Neither the purchase nor redemption of the IRBs had an impact on the Company’s Consolidated Statements of Operations.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeBrian Shore has served as a Director of the Company since 1983 and as Chairman of the Board of Directors since July 2004. He was elected a Vice President of the Company in January 1993, Executive Vice President in May 1994, President in March 1996, and Chief Executive Officer in November 1996. He was President until July 28, 2014. Mr.
Biggest changeHe was elected a Vice President of the Company in January 1993, Executive Vice President in May 1994, President in March 1996, and Chief Executive Officer in November 1996. He was President until July 28, 2014. Mr. Shore also served as General Counsel of the Company from April 1988 until April 1994. Mr.
He was promoted to Second Shift Production Supervisor in 2012, Production Manager in 2013, Materials Manufacturing Manager in 2014, Production Control Manager in 2015 and Operations Manager in 2017. Prior to joining Park, Mr. Nickel served as a local High School Science Teacher with a focus on chemistry, physics and manufacturing technology.
He was promoted to Second Shift Production Supervisor in 2012, Production Manager in 2013, Materials Manufacturing Manager in 2014, Production Control Manager in 2015 and Operations Manager in 2017. Prior to joining Park, Mr. Nickel served as a local High School Science Teacher with a focus on chemistry, physics and manufacturing technology. Mr.
Esquivel was Vice President and General Manager of the Company’s former Neltec, Inc. business unit located in Tempe, Arizona, and was responsible for the day-to-day operations of Neltec, Inc. since his appointment to that position in September 2008, having held various positions since he originally joined Neltec, Inc. in 1994. Mr.
Esquivel was Vice President and General Manager of the Company’s former Neltec, Inc. business unit located in Tempe, Arizona, and was responsible for the day-to-day operations of Neltec, Inc. since his appointment to that position in September 2008, having held various positions since he originally joined Neltec, Inc. in 1994. 17 Mr.
Prior to joining the Company, Mr. Farabaugh was Corporate Controller of American Technical Ceramics, a publicly traded international company and a manufacturer of electronic components, located in Huntington Station, New York, from 2004 to September 2007 and Assistant Controller from 2000 to 2004. Prior thereto, Mr. Farabaugh was Assistant Controller of Park Aerospace Corp. from 1989 to 2000.
Farabaugh was Corporate Controller of American Technical Ceramics, a publicly traded international company and a manufacturer of electronic components, located in Huntington Station, New York, from 2004 to September 2007 and Assistant Controller from 2000 to 2004. Prior thereto, Mr. Farabaugh was Assistant Controller of Park Aerospace Corp. from 1989 to 2000. Prior to joining Park in 1989, Mr.
Esquivel was promoted to President and Chief Operating Officer of the Company on November 2, 2020, after having been elected Executive Vice President and Chief Operating Officer of the Company on May 7, 2019, and having been elected Senior Vice President and Chief Operating Officer in December 2018.
Farabaugh had been a senior accountant with KPMG. Mr. Esquivel was promoted to President and Chief Operating Officer of the Company on November 2, 2020, after having been elected Executive Vice President and Chief Operating Officer of the Company on May 7, 2019, and having been elected Senior Vice President and Chief Operating Officer in December 2018.
ITEM 4. MINE SAFETY DISCLOSURES. None. 16 EXECUTIVE OFFICERS OF THE REGISTRANT . Name Title Age Brian E. Shore Chief Executive Officer and Chairman of the Board of Directors 71 P. Matthew Farabaugh Senior Vice President and Chief Financial Officer 62 Mark A. Esquivel President and Chief Operating Officer 50 Cory Nickel Senior Vice President and General Manager 51 Mr.
ITEM 4. MINE SAFETY DISCLOSURES. None. EXECUTIVE OFFICERS OF THE REGISTRANT . Name Title Age Brian E. Shore Chief Executive Officer and Chairman of the Board of Directors 72 P. Matthew Farabaugh Senior Vice President and Chief Financial Officer 63 Mark A.
Shore also served as General Counsel of the Company from April 1988 until April 1994. Mr. Farabaugh was elected Senior Vice President and Chief Financial Officer on March 10, 2016. He had been Vice President and Chief Financial Officer of the Company since April 2012 and Vice President and Controller of the Company since October 2007.
Farabaugh was elected Senior Vice President and Chief Financial Officer on March 10, 2016. He had been Vice President and Chief Financial Officer of the Company since April 2012 and Vice President and Controller of the Company since October 2007. Prior to joining the Company, Mr.
There are no family relationships between the directors or executive officers of the Company. Each executive officer of the Company serves at the pleasure of the Board of Directors of the Company. 17 PART II
Each executive officer of the Company serves at the pleasure of the Board of Directors of the Company. 18 PART II
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Prior to joining Park in 1989, Mr. Farabaugh had been a senior accountant with KPMG. Mr.
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Esquivel President and Chief Operating Officer 51 Cory Nickel Senior Vice President and General Manager 52 Christopher Goldner Vice President – Finance 55 Mr. Brian Shore has served as a Director of the Company since 1983 and as Chairman of the Board of Directors since July 2004.
Added
Goldner joined Park Aerospace Corp. on March 4, 2024 and was elected Vice President – Finance on April 25, 2024. Prior to joining Park Aerospace Corp., Mr. Goldner served as Controller and Interim Chief Financial Officer at Spruce Power Holding Corporation (previous XL Fleet Corp.) from 2021 through 2023. Prior to that, Mr.
Added
Goldner served in a variety of roles for Hasbro, Inc. from 2000 through 2021, most recently as Vice President Fiscal Responsibility from 2019 through 2021 and Vice President, Assistant Corporate Controller from 2011 through 2019. There are no family relationships between the directors or executive officers of the Company.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed4 unchanged
Biggest changeFor the Fiscal Year Ended Stock Price Dividends February 26, 2023 High Low Declared First Quarter $ 14.21 $ 11.27 $ 0.10 Second Quarter 13.19 11.40 0.10 Third Quarter 13.82 10.08 0.10 Fourth Quarter 16.54 10.80 1.10 (a) For the Fiscal Year Ended Stock Price Dividends February 27, 2022 High Low Declared First Quarter $ 15.57 $ 13.03 $ 0.10 Second Quarter 16.20 14.40 0.10 Third Quarter 15.11 12.74 0.10 Fourth Quarter 13.74 12.73 0.10 (a) On February 9, 2023, the Company’s Board of Directors declared a special dividend of $1.00 per share payable April 6, 2023 to shareholders of record at the close of business on March 9, 2023.
Biggest changeFor the Fiscal Year Ended Stock Price Dividends March 3, 2024 High Low Declared First Quarter $ 16.92 $ 11.91 $ 0.125 Second Quarter 15.09 12.89 0.125 Third Quarter 16.23 13.14 0.125 Fourth Quarter 15.89 13.69 0.125 For the Fiscal Year Ended Stock Price Dividends February 26, 2023 High Low Declared First Quarter $ 14.21 $ 11.27 $ 0.10 Second Quarter 13.19 11.40 0.10 Third Quarter 13.82 10.08 0.10 Fourth Quarter 16.54 10.80 1.10 (a) (a) On February 9, 2023, the Company’s Board of Directors declared a special dividend of $1.00 per share payable April 6, 2023 to shareholders of record at the close of business on March 9, 2023.
As previously announced by the Company, shares purchased by the Company will be retained as treasury stock and will be available for use under the Company’s stock option plan and for other corporate purposes. 19 Stock Performance Graph The graph set forth below compares the annual cumulative total return for the Company’s five fiscal years ended February 26, 2023 among the Company, the New York Stock Exchange Market Index (the “NYSE Index”), and the Nasdaq US Small Cap Aerospace and Defense Index (the “Nasdaq Index”).
As previously announced by the Company, shares purchased by the Company will be retained as treasury stock and will be available for use under the Company’s stock option plan and for other corporate purposes. 20 Stock Performance Graph The graph set forth below compares the annual cumulative total return for the Company’s five fiscal years ended March 3, 2024 among the Company, the New York Stock Exchange Market Index (the “NYSE Index”), and the Nasdaq US Small Cap Aerospace and Defense Index (the “Nasdaq Index”).
The Company expects, for the foreseeable future, to continue to pay regular cash dividends. 18 The following table provides information with respect to shares of the Company’s Common Stock acquired by the Company during each month included in the Company’s 2023 fiscal year fourth quarter ended February 26, 2023: Period Total Number of Shares (or Units) Purchased Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs November 28 - December 26 0 $ - 0 December 27 - January 26 0 $ - 0 January 27 - February 26 0 $ - 0 Total 0 $ - 0 1,500,000 (a) (a) Aggregate number of shares available to be purchased by the Company pursuant to a share purchase authorization announced on May 23, 2022.
The Company expects, for the foreseeable future, to continue to pay regular cash dividends. 19 The following table provides information with respect to shares of the Company’s Common Stock acquired by the Company during each month included in the Company’s 2024 fiscal year fourth quarter ended March 3, 2024: Period Total Number of Shares (or Units) Purchased Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs November 27 - December 3 0 $ - 0 December 4 - January 3 0 $ - 0 January 4 - March 3 0 $ - 0 Total 0 $ - 0 1,278,901 (a) (a) Aggregate number of shares available to be purchased by the Company pursuant to a share purchase authorization announced on May 23, 2022.
The total amount of this special dividend was approximately $20.5 million. As of May 5, 2023, there were 459 holders of record of Common Stock.
The total amount of this special dividend was approximately $20.5 million. As of May 31, 2024, there were 438 holders of record of the Company’s Common Stock.
This represents approximately 7% of the Company’s 20,458,210 total outstanding shares as of the close of business on May 18, 2022. This authorization supersedes any unused prior Board of Directors’ authorizations to purchase shares of the Company’s Common Stock.
This represents approximately 7% of the Company’s 20,458,210 total outstanding shares as of the close of business on May 18, 2022. This authorization supersedes any unused prior Board of Directors’ authorizations to purchase shares of the Company’s Common Stock. As of March 3, 2024, the Company had purchased 221,099 shares of the Company’s Common stock pursuant to the above authorization.
The graph has been prepared based on an assumed investment of $100 on February 26, 2018 and the reinvestment of dividends (where applicable). 2018 2019 2020 2021 2022 2023 Park Aerospace Corp. $ 100.00 $ 127.88 $ 111.03 $ 114.66 $ 115.76 $ 140.61 NYSE Index $ 100.00 $ 101.37 $ 101.35 $ 125.80 $ 140.61 $ 135.31 NASDAQ US Small Cap Aerospace and Defense Index $ 100.00 $ 124.89 $ 122.18 $ 151.36 $ 145.36 $ 146.64
The graph has been prepared based on an assumed investment of $100 on March 3, 2019 and the reinvestment of dividends (where applicable). 2019 2020 2021 2022 2023 2024 Park Aerospace Corp. $ 100.00 $ 86.82 $ 89.66 $ 90.52 $ 109.95 $ 113.90 NYSE Index $ 100.00 $ 99.98 $ 124.10 $ 138.71 $ 133.78 $ 157.29 NASDAQ US Small Cap Aerospace and Defense Index $ 100.00 $ 97.83 $ 121.20 $ 116.40 $ 117.42 $ 130.44
Removed
As of February 26, 2023, the Company had not purchased any shares of the Company’s Common stock pursuant to the above authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

38 edited+13 added−19 removed38 unchanged
Biggest changeThe significant changes in cash provided by operating activities were as follows: ● accounts receivable increased by 20% at February 26, 2023 compared to February 27, 2022 due primarily to the increase in total net sales in the last month of 2023; ● inventory increased 45% due primarily to higher raw material purchases at the end of February 2023, higher material costs and an increase of C2B material inventoried in support of the distributor agreement with ArianeGroup; ● prepaid expenses and other current assets decreased 8% due primarily to the decrease in income tax receivable; ● accounts payable increased 79% due primarily to the higher raw material purchases at the end of February 2023; 27 ● accrued liabilities decreased 10% due primarily to the reduction of payroll and services accruals; and ● income taxes payable decreased 12% at February 26, 2023 compared to February 27, 2022 due to the current tax provision in excess of the tax payments.
Biggest changeThe significant changes in cash provided by operating activities were as follows: ● accounts receivable increased by 24% at March 3, 2024 compared to February 26, 2023 due primarily to the increase in total net sales in the last month of 2024; ● inventory decreased 5% due primarily to higher sales in the fourth quarter of 2024 compared to the fourth quarter of 2023 and higher raw material purchases at the end of February 2023, offset by higher material costs and an increase of RAYCARB C2B material inventoried in support of the distributor agreement with ArianeGroup; ● accounts payable decreased 23% due primarily to higher raw material purchases at the end of February 2023 and timing of other payments; ● accrued liabilities increased 48% due primarily to higher property tax accruals and higher incentive payroll accruals; and ● income taxes payable increased 89% at March 3, 2024 compared to February 26, 2023 due to higher transition tax installment due in fiscal 2025.
The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company’s products and market conditions. 30 Valuation of Long-Lived Assets The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.
The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company’s products and market conditions. Valuation of Long-Lived Assets The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.
A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. 31
A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. 32
However, mainly because of past operations of the Company’s former Electronics Business and operations of predecessor companies, which were generally in compliance with applicable laws at the time of the operations in question, the Company, like other companies engaged in similar businesses, is a party to claims by government agencies and third parties and has incurred remedial response and voluntary cleanup costs associated with environmental matters.
However, mainly because of past operations of the Company’s former Electronics Business and operations of predecessor companies, which were generally in compliance with applicable laws at the time of the operations in question, the Company, like other companies engaged in similar businesses, is a party to claims by govern‐ment agencies and third parties and has incurred remedial response and voluntary cleanup costs associated with environmental matters.
The timing of expenditures depends on a number of factors, including regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with other parties. At February 26, 2023 and February 27, 2022, there were no amounts recorded in accrued liabilities for environmental matters.
The timing of expenditures depends on a number of factors, including regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with other parties. At March 3, 2024 and February 26, 2023, there were no amounts recorded in accrued liabilities for environmental matters.
The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Such earnings were decreased by changes in operating assets and liabilities of $6.1 million, resulting in $6.5 million of cash provided by operating activities from continuing operations.
Such earnings were decreased by changes in operating assets and liabilities of $6.7 million, resulting in $4.4 million of cash provided by operating activities from continuing operations.
Purchase orders are generally received in excess of three months in advance of delivery. 22 Results of Operations: 2023 Compared to 2022 Year Ended February 26, February 27, (Amounts in thousands, except per share amounts) 2023 2022 Increase / (Decrease) Net sales $ 54,055 $ 53,578 $ 477 1 % Cost of sales 37,582 35,661 1,921 5 % Gross profit 16,473 17,917 (1,444 ) -8 % Selling, general and administrative expenses 6,519 6,249 270 4 % Restructuring charges - 259 (259 ) -100 % Earnings from operations 9,954 11,409 (1,455 ) -13 % Interest and other income 1,078 375 703 187 % Earnings before income taxes 11,032 11,784 (752 ) -6 % Income tax provision 301 3,320 (3,019 ) -91 % Net earnings $ 10,731 $ 8,464 $ 2,267 27 % Earnings per share: Basic earnings per share $ 0.52 $ 0.41 $ 0.11 27 % Diluted earnings per share $ 0.52 $ 0.41 $ 0.11 27 % Net Sales The Company’s total net sales worldwide in 2023 were 1% higher than in 2022.
The lower earnings per share in 2024 reflects the impact of the higher costs in 2024 and the tax benefit from the reduction in uncertain tax positions in 2023. 25 2023 Compared to 2022 Year Ended February 26, February 27, (Amounts in thousands, except per share amounts) 2023 2022 Increase / (Decrease) Net sales $ 54,055 $ 53,578 $ 477 1 % Cost of sales 37,582 35,661 1,921 5 % Gross profit 16,473 17,917 (1,444 ) -8 % Selling, general and administrative expenses 6,519 6,249 270 4 % Restructuring charges - 259 (259 ) -100 % Earnings from operations 9,954 11,409 (1,455 ) -13 % Interest and other income 1,078 375 703 187 % Earnings before income taxes 11,032 11,784 (752 ) -6 % Income tax provision 301 3,320 (3,019 ) -91 % Net earnings $ 10,731 $ 8,464 $ 2,267 27 % Earnings per share: Basic: Basic earnings per share $ 0.52 $ 0.41 $ 0.11 27 % Diluted: Diluted earnings per share $ 0.52 $ 0.41 $ 0.11 27 % Net Sales The Company’s total net sales worldwide in 2023 were 1% higher than in 2022.
The Company does not have any significant customers in Russia or Ukraine. The Company has experienced some increases to raw material costs from overseas suppliers due to the impacts of the war in Ukraine.
The Company does not have any significant customers in Russia or Ukraine but does have customers in Israel. The Company has experienced some increases to raw material costs from overseas suppliers due to the impacts of the wars in Ukraine and the Middle East.
These differences result in deferred tax assets and liabilities, which are included in the Company’s Consolidated Balance Sheets. Deferred income taxes are provided for temporary differences in the reporting of certain items, such as depreciation and undistributed earnings of foreign subsidiaries, for income tax purposes compared to financial accounting purposes.
Deferred income taxes are provided for temporary differences in the reporting of certain items, such as depreciation and undistributed earnings of foreign subsidiaries, for income tax purposes compared to financial accounting purposes.
The Company has no other long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $0.1 million to secure the Company's obligations under its workers’ compensation insurance program. 28 Environmental Matters: The Company is subject to various Federal, state and local government and foreign government requirements relating to the protection of the environment.
The Company has no other long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $0.1 million to secure the Company's obligations under its workers’ compensation insurance program.
The 2023, 2022 and 2021 fiscal years ended on February 26, 2023, February 27, 2022 and February 28, 2021, respectively. The 2023, 2022 and 2021 fiscal years each consisted of 52 weeks.
The 2024, 2023 and 2022 fiscal years ended on March 3, 2024, February 26, 2023 and February 27, 2022, respectively. The 2024 fiscal year consisted of 53 weeks and the 2023 and 2022 fiscal years each consisted of 52 weeks.
The Company's current ratio (the ratio of current assets to current liabilities) was 4.4 to 1 at February 26, 2023 compared to 20.1 to 1 at February 27, 2022. Cash Flows During 2023, the Company's net earnings from continuing operations, before depreciation and amortization, stock-based compensation, amortization of bond premium and gain on sale of fixed assets, were $12.6 million.
The Company's current ratio (the ratio of current assets to current liabilities) was 10.2 to 1 at March 3, 2024 compared to 4.4 to 1 at February 26, 2023. 28 Cash Flows During 2024, the Company's net earnings before depreciation and amortization, stock-based compensation, amortization of bond premium and gain on sale of fixed assets, were $11.1 million.
Such expenses, measured as percentages of sales, were 12.1% and 11.7% during 2023 and 2022, respectively.
Such expenses, measured as percentages of sales, were 14.6% and 12.1% during 2024 and 2023, respectively.
As a result of the Tax Act, the Company recorded taxes payable to be paid in installments over eight years. The remaining balance of these installment payments, as of February 26, 2023, was approximately $12.6 million to be paid over the next four years.
As a result of the Tax Act, the Company recorded taxes payable to be paid in installments over eight years. The remaining balance of these installment payments, as of March 3, 2024, was approximately $9.5 million to be paid over the next two years.
The total amount of this special dividend was approximately $20.5 million. 21 The Company's total net sales worldwide in 2023 were 1% higher than in 2022. Sales in 2023, to each of the markets the Company serves, were relatively even with the prior year sales levels.
The total amount of this special dividend was approximately $20.5 million. The Company's total net sales worldwide in 2024 were 4% higher than in 2023. The increase in sales was primarily driven by an increase in military market sales, while sales to each of the other markets the Company serves were relatively even with the prior year sales levels.
Decreases in cash and cash equivalents and marketable securities and increases in accounts payable and dividends payable were partially offset by increases in accounts receivable, inventories and prepaid expenses and other current assets.
Decreases in cash and cash equivalents and marketable securities, and inventories and increases in accrued expenses and accrued income taxes were partially offset by higher accounts receivable and lower dividends payable and accounts payable.
In 2023, 2022 and 2021, the Company incurred approximately $14,000, $13,000 and $9,000, respectively, for remedial response and voluntary cleanup costs and related legal fees, and the Company received, or expects to receive, reimbursement pursuant to general liability insurance coverage for approximately $14,000, $13,000 and $9,000, respectively, of such amounts.
It is the Company's policy to record appropriate liabilities for such matters when remedial efforts are probable and the costs can be reasonably estimated. 29 In 2024, 2023 and 2022, the Company incurred approximately $29,000, $14,000 and $13,000, respectively, for remedial response and voluntary cleanup costs and related legal fees, and the Company received, or expects to receive, reimbursement pursuant to general liability insurance coverage for approximately $29,000, $14,000 and $13,000, respectively, of such amounts.
Actual results may differ from these estimates under different assumptions or conditions. 29 The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its Consolidated Financial Statements.
The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its Consolidated Financial Statements.
The Company’s earnings from continuing operations were $5.5 million for 2021, including the pretax charges of $1.6 million for the closure of the facility located in Singapore. Interest and Other Income Interest and other income were $375,000 and $1.8 million for 2022 and 2021, respectively.
The Company’s earnings from continuing operations were $11.4 million for 2022, including the pretax charges of $259,000 for the closure of the facility located in Singapore. Interest and Other Income Interest and other income were $1.1 million and $375,000 for 2023 and 2022, respectively. The increase from 2022 was due primarily higher weighted average interest rates.
During 2023, the Company expended $1.0 million for the purchase of property, plant and equipment compared to $4.4 million during 2022 and the Company paid $8.2 million in cash dividends in 2023 and 2022.
During 2024, the Company expended $0.6 million for the purchase of property, plant and equipment compared to $1.0 million during 2023, and the Company paid $30.6 and $8.2 million in cash dividends in 2024 and 2023, respectively. The 2024 dividends paid included a special dividend of $20.5 million paid in the first quarter of 2024.
Liquidity and Capital Resources: (Amounts in thousands) February 26, February 27, Increase / 2023 2022 (Decrease) Cash and marketable securities $ 105,440 $ 110,361 $ (4,921 ) Working capital 96,455 120,147 (23,692 ) From continuing operations Fiscal Year Ended (Amounts in thousands) February 26, February 27, February 28, Increase / (Decrease) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Net cash provided by operating activities $ 6,491 $ 8,201 $ 13,340 $ (1,710 ) $ (5,139 ) Net cash (used in) provided by investing activities (7,018 ) (29,556 ) 32,958 22,538 (62,514 ) Net cash used in financing activities (8,047 ) (7,429 ) (9,785 ) (618 ) 2,356 Cash and Marketable Securities The Company believes it has sufficient liquidity to fund its operating activities for the 12 months from the date of the filing of this Form 10-K Annual Report and for the foreseeable future thereafter.
The net impact of the items described above was to increase basic and diluted earnings per share by $0.13 in 2023 and decrease basic and diluted earnings per share by $0.01 in 2022. 27 Liquidity and Capital Resources: (Amounts in thousands) March 3, February 26, Increase / 2024 2023 (Decrease) Cash and marketable securities $ 77,211 $ 105,440 $ (28,229 ) Working capital 89,187 96,455 (7,268 ) From continuing operations Fiscal Year Ended (Amounts in thousands) March 3, February 26, February 27, Increase / (Decrease) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Net cash provided by operating activities $ 4,408 $ 6,491 $ 8,201 $ (2,083 ) $ (1,710 ) Net cash (used in) provided by investing activities 31,388 (7,018 ) (29,556 ) 38,406 22,538 Net cash used in financing activities (33,466 ) (8,047 ) (7,429 ) (25,419 ) (618 ) Cash and Marketable Securities The Company believes it has sufficient liquidity to fund its operating activities for the 12 months from the date of the filing of this Form 10-K Annual Report and for the foreseeable future thereafter.
Earnings from Operations For the reasons set forth above, the Company’s earnings from operations were $10.0 million for 2023. The Company’s earnings from continuing operations were $11.4 million for 2022, including the pretax charges of $259,000 for the closure of the facility located in Singapore.
Restructuring Charges Restructuring charges were nil in 2023 compared to $259,000 in 2022 related to the closure of the Company’s Park Aerospace Technologies Asia, Pte. Ltd. facility located in Singapore. 26 Earnings from Operations For the reasons set forth above, the Company’s earnings from operations were $10.0 million for 2023.
Revenue Recognition The Company recognizes revenue when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services.
Recently Adopted Accounting Pronouncement See Note 14 of the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Report for a discussion of the Company’s recently adopted accounting pronouncements. 30 Revenue Recognition The Company recognizes revenue when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services.
In addition, the Company assesses the impairment of goodwill at least annually. Important factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends and significant changes in the use of the Company’s assets or strategy of the overall business.
Important factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends and significant changes in the use of the Company’s assets or strategy of the overall business. 31 Income Taxes As part of the processes of preparing its consolidated financial statements, the Company is required to estimate the income taxes in each of the jurisdictions in which it operates.
Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $136,000, or 2%, during 2022 compared to 2021. Such expenses, measured as percentages of sales, were 11.7% and 13.2% during 2022 and 2021, respectively.
Such expenses, measured as percentages of sales, were 12.1% and 11.7% during 2023 and 2022, respectively. Selling, general and administrative expenses in 2023 included $369,000 of stock option expenses compared to $285,000 of such expenses in 2022.
The decrease from 2021 was due primarily to lower average invested cash during the period and lower weighted average interest rates. During 2022 and 2021, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds.
During 2023 and 2022, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds. Income Tax Provision The Company’s effective income tax rate of 2.7% for 2023 was due primarily to the U.S.
The Company’s cross-training “Customer Flexibility Program” continues to help the Company to deal with the staffing shortages. The war in Ukraine has not had a negative material impact on the Company’s results of operations, but the Company has a potential for an increase in future sales due to increases in spending worldwide on missile defense systems and other defense programs.
While the wars in Ukraine and the Middle East have had a negative impact on the Company’s results of operations due to delayed shipments, the Company may experience an increase in future sales due to increases in spending worldwide on missile defense systems and other defense programs.
In addition, the Company paid $8.2 million in cash dividends during 2023 and 2022. In February 2023, the Company declared a special dividend of $1.00 per share. The Company recorded a dividend payable of $20.5 million at the end of 2023. Working Capital Working capital at February 26, 2023 was lower compared to February 27, 2022.
In addition, the Company paid $30.6 million and $8.2 million in cash dividends during 2024 and 2023, respectively. Working Capital Working capital at March 3, 2024 was lower compared to February 26, 2023.
Income Taxes As part of the processes of preparing its consolidated financial statements, the Company is required to estimate the income taxes in each of the jurisdictions in which it operates. This process involves estimating the actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes.
This process involves estimating the actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the Company’s Consolidated Balance Sheets.
Through February 26, 2023, the Company had incurred $19.6 million of costs for the expansion. On February 9, 2023, the Company’s Board of Directors declared a special dividend of $1.00 per share payable April 6, 2023 to shareholders of record at the close of business on March 9, 2023.
Unless otherwise indicated in this Discussion and Analysis, all references to years and quarters in this Discussion and Analysis are to the Company ’ s fiscal years and fiscal quarters, and all annual and quarterly information in this Discussion and Analysis is for such fiscal years and quarters, respectively. 2024 Financial Overview On February 9, 2023, the Company’s Board of Directors declared a special dividend of $1.00 per share payable April 6, 2023 to shareholders of record at the close of business on March 9, 2023.
Interest and Other Income Interest and other income were $1.1 million and $375,000 for 2023 and 2022, respectively. The increase from 2022 was due primarily higher weighted average interest rates. During 2023 and 2022, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds.
During 2024 and 2023, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds. Income Tax Provision The Company’s effective income tax rate was 20.8% for 2024 compared to an effective rate of 2.7% for 2023. The increased rate was due primarily to the U.S.
Additional claims and costs involving past environmental matters may continue to arise in the future. It is the Company's policy to record appropriate liabilities for such matters when remedial efforts are probable and the costs can be reasonably estimated.
Additional claims and costs involving past environmental matters may continue to arise in the future.
The Company’s net earnings from continuing operations in 2023 were 27% higher than in 2022, primarily due to higher interest income and a reduction in uncertain tax positions, partially offset by the cost and expense increases mentioned above. The Company is experiencing inflation in raw materials, supplies, freight costs and other costs and expenses.
The Company’s net earnings from operations in 2024 were 30% lower than in 2023, primarily due to a higher tax rate in 2024 compared to 2023 and the increased costs described above offset by higher interest income.
Delays of shipments of raw materials have impacted the Company’s production level and have caused inefficiencies in the Company’s manufacturing operations. The Company continues to experience supply chain challenges. Programs that the Company supplies into are, in some cases, experiencing supply chain issues from other suppliers to the programs.
Programs in which the Company participates as a supplier are, in some cases, experiencing supply chain issues from other suppliers to the programs that could result in delays in production for certain customers of the Company. The Company’s sales could be impacted by supply chain challenges its customers are experiencing from other suppliers.
Gross Profit The Company’s gross profit margin, measured as a percentage of sales, increased to 33.4% in 2022 from 28.5% in 2021. Higher sales and production levels combined with the fixed nature of certain overhead costs led to higher gross margins.
Higher sales in 2024 were primarily driven by increased sales in the military markets. Gross Profit The Company’s gross profit margin, measured as a percentage of sales, decreased to 29.5% in 2024 from 30.5% in 2023.
The Company’s gross profit margin, measured as a percentage of sales, decreased to 30.5% in 2023 from 33.4% in 2022. Higher costs for raw materials, supplies, freight, utilities, costs related to the new equipment trials and qualifications and higher waste costs from increased change-over resulting from supply chain challenges and uncertainties led to the decrease in gross margins.
The Company’s gross profit margin, measured as a percentage of sales, decreased to 29.5% in 2024 from 30.5% in 2023. Higher costs for labor, employee benefits, depreciation, utilities, and property taxes more than offset a favorable sales mix and higher pricing.
Net Earnings from Continuing Operations The Company’s net earnings from continuing operations for 2022 were $8.5 million, including the pretax charges of $259,000 for the closure of the facility located in Singapore. The Company’s net earnings from continuing operations for 2021 were $5.2 million, including the pretax charges of $1.6 million for the closure of the facility located in Singapore.
Net Earnings from Operations The Company’s net earnings from continuing operations for 2024 were $7.5 million compared to $10.7 million in 2023.
Removed
Unless otherwise indicated in this Discussion and Analysis, all references to years and quarters in this Discussion and Analysis are to the Company ’ s fiscal years and fiscal quarters, and all annual and quarterly information in this Discussion and Analysis is for such fiscal years and quarters, respectively. 2023 Financial Overview In 2019, the Company announced the major expansion of its aerospace manufacturing, development and design facilities located at the Newton City-County Airport in Newton, Kansas.
Added
The Company’s earnings from operations in 2024 were 16% lower than in 2023, primarily as a result of higher selling, general and administrative expenses, including higher incentive payments, as well as higher legal expenses resulting from shareholder defense actions, costs to settle an insurance claim as the result of the bankruptcy of an insurer and higher recruiting fees.
Removed
This expansion includes the construction of a manufacturing facility located adjacent to Park’s existing Newton, Kansas facilities. This facility, which was constructed in part to support a major aerospace customer, includes approximately 90,000 square feet of manufacturing and office space, and essentially doubled the size of Park’s existing Newton, Kansas manufacturing footprint.
Added
The increase in the 2024 tax rate compared to the 2023 tax rate resulted from a lower benefit from the reduction in uncertain tax positions in 2024 as compared to 2023. 22 The Company continues to experience inflation in costs of raw materials and supplies, freight costs and other costs and expenses.
Removed
The total cost of the expansion was approximately $19.8 million.
Added
Purchase orders are generally received in excess of three months in advance of delivery. 23 Results of Operations: 2024 Compared to 2023 Year Ended March 3, February 26, (Amounts in thousands, except per share amounts) 2024 2023 Increase / (Decrease) Net sales $ 56,004 $ 54,055 $ 1,949 4 % Cost of sales 39,470 37,582 1,888 5 % Gross profit 16,534 16,473 61 0 % Selling, general and administrative expenses 8,154 6,519 1,635 25 % Earnings from operations 8,380 9,954 (1,574 ) -16 % Interest and other income 1,053 1,078 (25 ) -2 % Earnings before income taxes 9,433 11,032 (1,599 ) -14 % Income tax provision 1,960 301 1,659 551 % Net earnings $ 7,473 $ 10,731 $ (3,258 ) -30 % Earnings per share: Basic earnings per share $ 0.37 $ 0.52 $ (0.15 ) -29 % Diluted earnings per share $ 0.37 $ 0.52 $ (0.15 ) -29 % Net Sales The Company’s total net sales worldwide in 2024 were 4% higher than in 2023.
Removed
The expansion is complete and includes new resin mixing and delivery systems, new hot-melt film and tape manufacturing lines, space to accommodate an additional hot-melt tape line or solution treating line, space to accommodate a confidential joint development project with a major aerospace customer, additional slitting capability, significant additional freezer and storage space, an expanded production lab, a new R&D lab and additional office space.
Added
The decrease in gross margin was primarily due to higher costs for labor, employee benefits, depreciation, utilities, property taxes and other items, partially offset by a favorable sales mix and higher pricing. Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $1.6 million, or 25%, during 2024 compared to 2023.
Removed
The Company’s earnings from operations in 2023 were 13% lower than in 2022, primarily as a result of higher costs for raw materials, supplies, freight, utilities, costs related to the new equipment trials and qualifications and higher waste costs from increased change-over resulting from supply chain challenges and uncertainties.
Added
The increase in selling, general and administrative expenses in 2024 was primarily due to shareholder activist defense costs in 2024, higher research and development costs, higher stock option expense due to the modification of previously granted stock options, costs to settle an insurance claim as the result of the bankruptcy of an insurer, higher recruiting fees, higher incentive compensation and the additional week in 2024 compared to 2023, which resulted in higher fixed expenses. 24 Earnings from Operations For the reasons set forth above, the Company’s earnings from operations were $8.4 million for 2024 compared to earnings from continuing operations of $10.0 million for 2023.
Removed
With the recovery of the aerospace markets, some companies in the aerospace supply chain have not been fully prepared to ramp up their production as quickly as needed, which has created a risk to the Company of not getting enough raw materials on a timely basis to fully support the Company’s customers’ demands.
Added
Interest and Other Income Interest and other income were $1.1 million in both 2024 and 2023. Higher weighted average interest rates in 2024 were offset by lower levels of marketable securities in 2024 due to the payment of the special dividend in the first quarter.
Removed
The Company’s sales could be impacted by supply chain challenges its customers are experiencing from other suppliers. The tight labor market has created challenges in hiring personnel. Although the Company feels very positive about its workforce, staffing to proper levels continues to pose challenges for the Company.
Added
Federal rate and state income tax reductions in uncertain tax positions.
Removed
Selling, general and administrative expenses in 2023 included $369,000 of stock option expenses compared to $285,000 of such expenses in 2022. 23 Restructuring Charges Restructuring charges were nil in 2023 compared to $259,000 in 2022 related to the closure of the Company’s Park Aerospace Technologies Asia, Pte. Ltd. facility located in Singapore.
Added
The benefits from the reductions in 2024 and 2023 were $574,000 and $2,800,000, respectively, related to the expirations of statutes of limitations on tax positions taken in prior years regarding the taxability of funds repatriated from the Company’s subsidiary in Singapore in 2023 and to the expiration of statutes of limitations related to state throw-back rates in 2024.
Removed
Income Tax Provision The Company’s effective income tax rate of 2.7% for 2023 was due primarily to the U.S.
Added
As noted above, net earnings in 2024 included shareholder activist defense costs, a charge related to the modification of previously issued stock options, legal costs stemming from the settlement of an insurance claim due to the bankruptcy of an insurance carrier and recruiting fees, partially offset by the tax benefit from the reduction in uncertain tax positions.
Removed
The net impact of the items described above was to increase basic and diluted earnings per share by $0.13 in 2023 and decrease basic and diluted earnings per share by $0.01 in 2022. 24 2022 Compared to 2021 Year Ended February 27, February 28, (Amounts in thousands, except per share amounts) 2022 2021 Increase / (Decrease) Net sales $ 53,578 $ 46,276 $ 7,302 16 % Cost of sales 35,661 33,085 2,576 8 % Gross profit 17,917 13,191 4,726 36 % Selling, general and administrative expenses 6,249 6,113 136 2 % Restructuring charges 259 1,570 (1,311 ) -84 % Earnings from continuing operations 11,409 5,508 5,901 107 % Interest and other income 375 1,777 (1,402 ) -79 % Earnings from continuing operations before income taxes 11,784 7,285 4,499 62 % Income tax provision 3,320 2,093 1,227 59 % Net earnings from continuing operations 8,464 5,192 3,272 63 % Loss from discontinued operations, net of tax - (328 ) 328 -100 % Net earnings $ 8,464 $ 4,864 $ 3,600 74 % Earnings (loss) per share: Basic: Continuing operations $ 0.41 $ 0.25 $ 0.16 64 % Discontinued operations - (0.01 ) 0.01 -100 % Basic earnings per share $ 0.41 $ 0.24 $ 0.17 71 % Diluted: Continuing operations $ 0.41 $ 0.25 $ 0.16 64 % Discontinued operations - (0.01 ) 0.01 -100 % Diluted earnings per share $ 0.41 $ 0.24 $ 0.17 71 % Net Sales The Company's total net sales worldwide in 2022 were 16% higher than in 2021 due primarily to the higher sales to commercial aerospace and business aircraft customers resulting from the decreasing impacts of the Pandemic on those markets, partially offset by lower military sales during 2022.
Added
The 2023 earnings included the benefit from the reduction in uncertain tax positions of $2.8 million. Basic and Diluted Earnings Per Share Basic and diluted earnings per share for 2024 were $0.37 compared to basic and diluted earnings per share for 2023 of $0.52.
Removed
Selling, general and administrative expenses in 2022 included $285,000 of stock option expenses compared to $191,000 of such expenses in 2021. 25 Restructuring Charges The Company recorded restructuring charges of $259,000 in 2022 compared to $1.6 million in 2021 related to the closure of the Company’s Park Aerospace Technologies Asia, Pte, Ltd. facility located in Singapore.
Added
The change in cash and marketable securities at March 3, 2024 compared to February 26, 2023 was primarily the result of the special dividend of $1.00 per share paid in April 2023, which totaled $20.5 million, stock repurchases of $2.9 million in the second and third quarters of 2024, as well as regular dividends of $10.2 million.
Removed
Earnings from Continuing Operations For the reasons set forth above, the Company’s earnings from continuing operations were $11.4 million for 2022, including the pretax charges of $259,000 for the closure of the facility located in Singapore.
Added
Environmental Matters: The Company is subject to various Federal, state and local govern‐ment and foreign government requirements relating to the protection of the environment.
Removed
Income Tax Provision The Company’s effective income tax rate of 28.2% for 2022 was due primarily to the U.S. Federal rate and state income taxes. The Company’s effective income tax rate was higher in 2021, due to unfavorable adjustments to valuation allowances on state tax credits and a higher state effective tax rate in 2021.
Added
In addition, the Company assesses the impairment of goodwill at least annually.
Removed
Discontinued Operations On December 4, 2018, the Company completed the sale of its Electronics Business, including manufacturing facilities in Singapore, France, California and Arizona and R&D facilities in Singapore and Arizona, to AGC Inc. for an aggregate purchase price of $145 million in cash, subject to post-closing adjustments for changes in working capital compared to the target net working capital, excluding cash in certain acquired subsidiaries and certain accrued and unpaid taxes of certain acquired subsidiaries.
Removed
See Note 12, “Discontinued Operations”, of the Notes to Consolidated Financial Statements elsewhere in this Report for additional information on the sale. The operating results of the Electronics Business are classified, together with certain costs related to the sale, as discontinued operations, net of tax, in the Consolidated Statements of Operations.
Removed
The Company’s loss from discontinued operations was lower in 2022 compared to 2021 primarily as a result of exiting the facility in Fullerton, California, previously used in the electronics operations, at the beginning of the third fiscal quarter of 2021. 26 Basic and Diluted Earnings Per Share Basic and diluted earnings per share from continuing operations for 2022 were $0.41, including the pretax charges for the closure of the facility located in Singapore, compared to basic and diluted earnings per share for 2021 of $0.25, including the pretax charges for the closure of the facility located in Singapore.
Removed
The net impact of the items described above was to decrease basic and diluted earnings per share by $0.01 in 2022 and $0.07 in 2021.
Removed
The change in cash and marketable securities at February 26, 2023 compared to February 27, 2022 was primarily the result of positive operating cash flow more than offset by capital expenditures and regular quarterly dividends paid by the Company to its shareholders during 2023 and a number of additional factors.
Removed
Recently Adopted Accounting Pronouncement See Note 15 of the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Report for a discussion of the Company’s recently adopted accounting pronouncements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed3 unchanged
Biggest changeThe Company generally passes changes in the costs of its raw material costs through to its customers. The Company currently does not use hedging strategies to minimize the risk of price fluctuations on commodity-based raw materials; however, the Company regularly reviews such strategies on an ongoing basis. See “Materials and Sources of Supply” in Item 1 of this Report. 32
Biggest changeThe Company generally passes changes in the costs of its raw material costs through to its customers. The Company currently does not use hedging strategies to minimize the risk of price fluctuations on commodity-based raw materials; however, the Company regularly reviews such strategies on an ongoing basis. See “Materials and Sources of Supply” in Item 1 of this Report. 33
Based on the average anticipated maturity of the investment portfolio at the end of the 2023 fiscal year, the Company does not believe that a hypothetical 10% fluctuation in short-term interest rates would have had a material impact on the consolidated results of operations or financial position of the Company.
Based on the average anticipated maturity of the investment portfolio at the end of the 2024 fiscal year, the Company does not believe that a hypothetical 10% fluctuation in short-term interest rates would have had a material impact on the consolidated results of operations or financial position of the Company.

Other PKE 10-K year-over-year comparisons