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What changed in PARK AEROSPACE CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PARK AEROSPACE CORP's 2024 and 2025 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 2025 report.

+161 added−143 removedSource: 10-K (2025-05-30) vs 10-K (2024-06-11)

Top changes in PARK AEROSPACE CORP's 2025 10-K

161 paragraphs added · 143 removed · 114 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

37 edited+4 added−4 removed35 unchanged
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.
Biggest changeThese advanced funds are to be used to help fund the purchase and installation, by ArianeGroup, of additional manufacturing equipment for ArianeGroup’s production of C2B® product. 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.
Hot-melt prepreg manufacturing is achieved by mixing a resin formulation in a heated resin vessel, casting a thin film on a carrier paper, and laminating the reinforcement with the resin film. 7 The Company also completes additional processing services, such as slitting, sheeting, biasing, sewing and cutting, if needed by the customer.
Hot-melt prepreg manufacturing is achieved by mixing a resin formulation in a heated resin vessel, casting a thin film on a carrier paper, and laminating the reinforcement with the resin film. The Company also completes additional processing services, such as slitting, sheeting, biasing, sewing and cutting, if needed by the customer.
Park believes that principle-based approach to hiring and retention makes the Company a desirable workplace for employees of all backgrounds while improving business performance by maintaining the Company’s “niche” culture. Environmental Matters Aviation is one of the fastest growing sources of the greenhouse gas emissions.
Park believes that principle-based approach to hiring and retention makes the Company a desirable workplace for employees of all backgrounds while improving business performance by maintaining the Company’s “niche” culture. 9 Environmental Matters Aviation is one of the fastest growing sources of greenhouse gas emissions.
The materials used in the manufacture of these engineered materials include graphite and carbon fibers and fabrics, carbonized rayon, aramids, such as Kevlar® ("Kevlar" is a registered trademark of E.I. du Pont de Nemours & Co.) and Twaron® (“Twaron” is a registered trademark of Teijin Twaron B.V.
The materials used in the manufacture of these engineered materials include graphite and carbon fibers and fabrics, carbonized rayon, aramids, such as Kevlar® (“Kevlar” is a registered trademark of E.I. du Pont de Nemours & Co.) and Twaron® (“Twaron” is a registered trademark of Teijin Twaron B.V.
After the structure has been cured, final finishing and trimming, and assembly of the structure, is performed by the fabricator or the Company. 5 Products The aerospace composite materials products manufactured by the Company are primarily thermoset curing prepregs.
After the structure has been cured, final finishing and trimming, and assembly of the structure, is performed by the fabricator or the Company. Products The aerospace composite materials products manufactured by the Company are primarily thermoset curing prepregs.
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.
During the 2025, 2024, and 2023 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.
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.
Air travel is also considered to be one of the most carbon intensive activities an individual can make. Aircraft fuel efficiency is an important factor in addressing the reduction of greenhouse gas.
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.
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 2, 2025. 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.
The Company competes for business primarily on the basis of responsiveness, product performance and consistency, product qualification, FAA data base design allowables and innovative new product development. 8 Backlog The Company considers an item as backlog when it receives a purchase order specifying the number of units to be purchased, the purchase price, specifications and other customary terms and conditions.
The Company competes for business primarily on the basis of responsiveness, product performance and consistency, product qualification, FAA approved material design allowables and innovative new product development. Backlog The Company considers an item as backlog when it receives a purchase order specifying the number of units to be purchased, the purchase price, specifications and other customary terms and conditions.
The Company’s success and future depends on the skills, experience, industry knowledge, passion and dedication of its work force. The Company places significant focus and attention on attracting, developing and retaining its employees, as well as ensuring its work force reflects Park’s principles of integrity and humility.
The Company’s success and future depends on the skills, experience, industry knowledge, passion and dedication of its workforce. The Company places significant focus and attention on attracting, developing and retaining its employees, as well as ensuring its workforce reflects Park’s principles of integrity, dedication and passion.
Park also believes that fair compensation, opportunities for career development, employee engagement, and a singular focus on the principles of integrity and humility, have organically cultivated a workforce that is diverse at all levels.
Park also believes that fair compensation, opportunities for career development, employee engagement, and a singular focus on the principles of integrity, dedication and passion, have cultivated a workforce that is diverse at all levels.
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.
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 2, 2025, the Company had 132 employees.
End markets include military aircraft, UAVs, business jets and turboprops, large and regional transport aircraft and helicopters, space vehicles, rocket motors and specialty industrial products. 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.
Radomes are used in military aircraft, UAVs, business jets and turboprops, large and regional transport aircraft and helicopters, space vehicles, rocket motors and specialty industrial products. 6 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.
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.
During the Company’s 2025, 2024, and 2023 fiscal years, 39.8%, 37.7%, and 41.2%, 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.
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.
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 now supports additional manufacturing capacity more broadly. See “Operations” elsewhere in this Report.
The qualification and certification of aerospace composite materials for certain FAA certified aircraft typically include specific requirements for raw material supply and may restrict the Company’s flexibility in qualifying alternative sources of supply for certain key raw materials. The Company continues to work to determine acceptable alternatives for several raw materials.
The qualification and certification of aerospace composite materials for certain FAA certified aircraft typically include specific requirements for raw material supply and may restrict the Company’s flexibility in qualifying alternative sources of supply for certain key raw materials.
Management believes the ultimate disposition of known environmental matters will not have a material adverse effect on the liquidity, capital resources, business, consolidated results of operations or financial position of the Company.
The Company believes it maintains an effective and comprehensive environmental compliance program. Management believes the ultimate disposition of known environmental matters will not have a material adverse effect on the liquidity, capital resources, business, consolidated results of operations or financial position of the Company.
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.
At May 16, 2025, the unfilled portion of all purchase orders received by the Company, and believed by it to be firm, was $25,809,185, compared to $31,085,988 at May 31, 2024. A major portion of the Company’s backlog consists of composite materials. Various factors contribute to the size of the Company’s backlog.
Factors That May Affect Future Results The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies without fear of litigation so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the statement.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Environmental Matters” included in Item 7 of Part II of this Report and Note 10 of the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Report. 10 Factors That May Affect Future Results The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies without fear of litigation so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the statement.
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.
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.
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.
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 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 Company believes that the demand for thermoset advanced materials is greater than that for thermoplastics due to the fact that parts fabrication processes for continuous fiber reinforced thermoplastics require much higher temperatures and pressures and are, therefore, typically more capital intensive than parts fabrication processes for most thermoset materials. 5 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.
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 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.
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 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 Company’s aerospace composite materials are used by such fabricators and by the Company to produce primary and secondary structures, aircraft interiors and various other aircraft components. The Company’s customers for aerospace materials, and the Company itself, produce structures and assemblies for commercial aircraft and for the general aviation and business aviation, kit aircraft, special mission, UAVs and military markets.
The Company’s aerospace customers include fabricators of aircraft composite structures and assemblies. The Company’s aerospace composite materials are used by such fabricators and by the Company to produce primary and secondary structures, aircraft interiors and various other aircraft components.
Park’s composite material products and the aircraft parts that are crafted using such products, enable aircraft to operate on substantially less fuel than would be the case using comparable aluminum-crafted aircraft parts.
Park’s composite material products and the aircraft parts that are crafted using such products, enable aircraft to operate on substantially less fuel than would be the case using comparable aluminum-crafted aircraft parts. This reduced fuel consumption creates economic savings for end-users of applicable aircraft, while also substantially reducing the carbon based emissions of such aircraft.
In the case of the Company’s subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at the waste sites by various companies which contracted with the subsidiaries to provide waste disposal services.
In the case of the Company’s subsidiaries, generally any waste has been removed from their manufacturing facilities and disposed of by companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its subsidiaries has been accused of or charged with any wrongdoing or illegal acts in connection with any such sites.
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.
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. 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 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.
The process for manufacturing composite materials, film adhesives, and composite structures and assemblies is capital intensive and requires sophisticated equipment, significant technical know-how and very tight process controls.
The Company’s materials are used to produce heat shields, exhaust gas management devices and insulative and ablative nozzle components. Rocket motors are primarily used for commercial and military space launch, and for tactical and strategic weapons. The Company also has customers for these materials outside of the United States.
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 materials are used to produce heat shields, exhaust gas management devices and insulative and ablative nozzle components.
Competition The Company has many competitors in the aerospace composite materials, structures and assemblies markets, ranging in size from large international corporations to small regional producers. Several of the Company’s largest competitors are vertically integrated, producing raw materials, such as carbon fiber and woven fabric, as well as composite structures and assemblies.
The Company continues to work to determine acceptable alternatives for several raw materials. 8 Competition The Company has many competitors in the aerospace composite materials, structures and assemblies markets, ranging in size from large international corporations to small regional producers.
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.
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.
This reduced fuel consumption creates economic savings for end-users of applicable aircraft, while also substantially reducing the carbon based emissions of such aircraft. 9 The Company is subject to stringent environmental regulation of its use, storage, treatment, disposal of hazardous materials and the release of emissions into the environment.
The Company is subject to stringent environmental regulation of its use, storage, treatment, disposal of hazardous materials and the release of emissions into the environment.
Manufacturing The Company’s manufacturing facilities for aerospace composite materials and for composite structures and assemblies are located in Newton, Kansas. On August 19, 2019, the Company broke ground on the expansion of its facilities located in Newton, Kansas, which included the construction of a redundant manufacturing facility located adjacent to the existing facility.
Manufacturing The Company’s manufacturing facilities for aerospace composite materials, film adhesives, and composite structures and assemblies are located in Newton, Kansas. The Company recently completed an expansion of its facilities, which doubled the size of such facilities and added manufacturing capacity.
A radome is a protective cover over an electrical antenna or signal generator, designed to minimize signal loss and distortion. Radomes are used in military aircraft, UAVs, business jets and turboprops, large and regional transport aircraft and helicopters, space vehicles, rocket motors and specialty industrial products.
A radome is a protective cover over an electrical antenna or signal generator, designed to minimize signal loss and distortion.
Some of the Company’s competitors may also serve as a supplier to the Company.
Several of the Company’s largest competitors are vertically integrated, producing raw materials, such as carbon fiber and woven fabric, as well as composite structures and assemblies. Some of the Company’s competitors may also serve as a supplier to the Company.
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 customers for aerospace materials, and the Company itself, produce structures and assemblies for commercial aircraft and for the general aviation and business aviation, kit aircraft, special mission, UAVs and military markets. Many of the Company’s composite materials are used in the manufacture of aircraft certified by the Federal Aviation Administration (the “FAA”).
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The Company believes that the demand for thermoset advanced materials is greater than that for thermoplastics due to the fact that parts fabrication processes for continuous fiber reinforced thermoplastics require much higher temperatures and pressures and are, therefore, typically more capital intensive than parts fabrication processes for most thermoset materials.
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On March 27, 2025, Park and ArianeGroup entered into an agreement under which Park would advance funds to ArianeGroup against future purchases of C2B® product in the total amount in Euros of €4,587,000 payable in three installments in 2025, 2026, and 2027.
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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.
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Rocket motors are primarily used for commercial and military space launch, and for tactical and strategic weapons. The Company also has customers for these materials outside of the United States. End markets include military aircraft, UAVs, business jets and turboprops, large and regional transport aircraft and helicopters, space vehicles, rocket motors and specialty industrial products.
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Neither the Company nor any of its subsidiaries has been accused of or charged with any wrongdoing or illegal acts in connection with any such sites. The Company believes it maintains an effective and comprehensive environmental compliance program.
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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. 7 Prepreg is manufactured by the Company using either solvent (solution) coating methods on a treater or by hot-melt impregnation.
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See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Environmental Matters” included in Item 7 of Part II of this Report and Note 11 of the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Report.
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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 changeWhile Company personnel have been tasked to detect and investigate such incidents, cybersecurity attacks and other data security breaches can and are expected to occur in the future and the Company may be unable to implement adequate preventive or remediation measures, as breach and disruption techniques change frequently and are generally not detected until after an incident has occurred. 14 The unauthorized use of the Company’s intellectual property and/or confidential or personal information or any material disruption in the systems that store such information could materially harm the Company’s competitive position, reduce the value of the Company’s investment in research and development (through the loss of trade secrets or other proprietary and competitively sensitive information) and other strategic initiatives, compromise personally identifiable information regarding customers or employees, delay the Company’s ability to access its information systems at critical times, cause operational disruptions and delays, jeopardize the security of the Company’s facilities or otherwise materially and adversely affect the Company’s business or financial results.
Biggest changeThe unauthorized use of the Company’s intellectual property and/or confidential or personal information or any material disruption in the systems that store such information could materially harm the Company’s competitive position, reduce the value of the Company’s investment in research and development (through the loss of trade secrets or other proprietary and competitively sensitive information) and other strategic initiatives, compromise personally identifiable information regarding customers or employees, delay the Company’s ability to access its information systems at critical times, cause operational disruptions and delays, jeopardize the security of the Company’s facilities or otherwise materially and adversely affect the Company’s business or financial results.
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.
The Company is vulnerable to an increase in inflation. Changes in the cost of 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.
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.
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.
There can be no assurance that the Company will be able to make the technological advances necessary to maintain such competitive advantages or that the Company can recover major research and development expenses. The industries in which the Company operates are very competitive.
There can be no assurance that the Company will be able to make the technological advances necessary to maintain such competitive advantages or that the Company can recover major research and development expenses. 11 The industries in which the Company operates are very competitive.
While there is potential for increasing the Company’s position with the combined customer, the Company’s revenues may decrease if the Company is not retained as a supplier. The Company is subject to a variety of environmental regulations.
While there is potential for increasing the Company’s position with the combined customer, the Company’s revenues may decrease if the Company is not retained as a supplier. 13 The Company is subject to a variety of environmental regulations.
See “Customers and End Markets” in Item 1 of Part I of this Report. The Company's business is dependent on the aerospace industry, which is cyclical in nature. The aerospace industry is cyclical and has experienced downturns.
See “Customers and End Markets” in Item 1 of Part I of this Report. 12 The Company's business is dependent on the aerospace industry, which is cyclical in nature. The aerospace industry is cyclical and has experienced downturns.
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.
During the Company's fiscal years ended March 2, 2025, March 3, 2024, and February 26, 2023, the Company's ten largest customers accounted for approximately 66%, 64%, and 69%, 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.
A variety of conditions, both specific to the individual customer and generally affecting the customer’s industry, can cause a customer to reduce or delay orders previously anticipated by the Company, which could negatively impact the Company’s business and operating results.
The Company relies on short-term orders from its customers. A variety of conditions, both specific to the individual customer and generally affecting the customer’s industry, can cause a customer to reduce or delay orders previously anticipated by the Company, which could negatively impact the Company’s business and operating results.
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.
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.
Deterioration in the market for aerospace products has often reduced demand for, and prices of, advanced composite materials, structures and assemblies. A potential future reduction in demand and prices could have a negative impact on the Company’s business and operating results.
Deterioration in the market for aerospace products has often reduced demand for, and prices of, advanced composite materials, structures and assemblies. A potential future reduction in demand and prices could have a negative impact on the Company’s business and operating results. In addition, the Company is subject to the effects of general regional and global economic and financial conditions.
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.
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.
In coordination with such service providers, Park also continues to update its infrastructure, security tools (including firewalls and anti-virus software), and employee training and processes, to protect against security incidents and to prevent their recurrence.
The Company has addressed past cybersecurity breaches by working with leading providers of incident response, risk management and digital forensics services. In coordination with such service providers, Park also continues to update its infrastructure, security tools (including firewalls and anti-virus software), and employee training and processes, to protect against security incidents and to prevent their recurrence.
These attempts, which might be related to industrial or foreign government espionage, activism, or other motivations, include covertly introducing malware and “ransomware” to the Company’s computers and networks, performing reconnaissance, impersonating authorized users, and stealing, corrupting or restricting the Company’s access to data, among other activities.
These attempts, which might be related to industrial or foreign government espionage, activism, or other motivations, include covertly introducing malware and “ransomware” to the Company’s computers and networks, performing reconnaissance, impersonating authorized users, and stealing, corrupting or restricting the Company’s access to data, among other activities. 14 As with most companies, the Company has experienced cyber-attacks, attempts to breach the Company’s systems and other similar incidents, none of which, has resulted in loss of data or materially affected the Company’s business, operations or financial results.
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. 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.
The 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.
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.
Geopolitical events could interrupt the Company ’ s supply chain or otherwise increase costs. 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.
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 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.
Additionally, the Company’s customers may experience interruptions from other suppliers that could cause a customer to delay or cancel orders. The Company's business could suffer if the Company is unable to develop new products on a timely basis.
Additionally, the Company’s customers may experience interruptions from other suppliers that could cause a customer to delay or cancel orders. Other geopolitical risks include political and economic instability and disruptions, restrictions on the transfer of funds, trade conflicts and the imposition of duties, tariffs, and similar government charges, as well as import and export controls.
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In addition, the Company is subject to the effects of general regional and global economic and financial conditions. 12 The Company relies on short-term orders from its customers.
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Such risks could reduce demand for the Company’s products and increase the Company’s cost of operations, which could have a material adverse effect on the Company’s business and results of operations. The Company's business could suffer if the Company is unable to develop new products on a timely basis.
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As with most companies, the Company has experienced cyber-attacks, attempts to breach the Company’s systems and other similar incidents, none of which, has resulted in loss of data or materially affected the Company’s business, operations or financial results. The Company has addressed past cybersecurity breaches by working with leading providers of incident response, risk management and digital forensics services.
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Raw material substitutions for certain aircraft-related products may require governmental (such as FAA) approval.
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While Company personnel have been tasked to detect and investigate such incidents, cybersecurity attacks and other data security breaches can and are expected to occur in the future and the Company may be unable to implement adequate preventive or remediation measures, as breach and disruption techniques change frequently and are generally not detected until after an incident has occurred.
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A change in any index the Company is included in could create sudden movement in the Company’s Common Stock price. 15 Catastrophic events may disrupt the Company ’ s business. The Company’s operations could be impacted by catastrophic events outside our control, including severe weather conditions such as tornadoes, hurricanes, floods, earthquakes, storms, epidemics, pandemics, acts of war and terrorism.
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Any such event could cause a serious business disruption affecting the Company’s ability to produce and distribute products and could expose it to third-party liability claims.
Added
Additionally, such events could impact the Company’s suppliers, customers, and partners, which could cause energy and raw materials to be unavailable to the Company and could cause customers to be unable to purchase or accept our products and services. Any such occurrence could have a negative impact on the Company’s operations and financial results.
Added
Operational risks may adversely impact the Company ’ s business or results of operations. The Company’s operating results are dependent on the continued operation of its production facilities and its ability to meet customer contract requirements and other needs. Insufficient capacity threatens the Company’s ability to generate competitive profit margins and may expose it to liabilities related to contractual commitments.
Added
Operating results are also dependent on the Company’s ability to complete new construction projects on time, on budget and in accordance with performance requirements. Failure to do so may expose the business to loss of business opportunity and associated revenue which could have a negative impact on the Company’s operations and financial results.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement reviews the Company’s IT, data security and other systems, processes, policies, procedures and controls at least annually to (a) identify, assess, monitor and mitigate cybersecurity risks; and (b) identify measures to protect and safeguard against cybersecurity threats and breaches of confidential information and data and IT infrastructure and its other assets or assets of its customers or other third parties in the Company’s possession or custody.
Biggest changeThis multi-layered approach enables early detection and facilitates prompt response to potential cybersecurity threats. 16 Management reviews the Company’s IT, data security and other systems, processes, policies, procedures and controls at least annually to (a) identify, assess, monitor and mitigate cybersecurity risks; and (b) identify measures to protect and safeguard against cybersecurity threats and breaches of confidential information and data and IT infrastructure and its other assets or assets of its customers or other third parties in the Company’s possession or custody.
Removed
This multi-layered approach enables early detection and facilitates prompt response to potential cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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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
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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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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.
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.
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.
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.
Each executive officer of the Company serves at the pleasure of the Board of Directors of the Company. 18 PART II
Each executive officer of the Company serves at the pleasure of the Board of Directors of the Company. 19 PART II
Nickel was elected Senior Vice President and General Manager of the Company on August 15, 2022. He was appointed as Vice President and General Manager of the Company in October 2020. Mr. Nickel originally joined Park Aerospace Corp. in 2011 as a Solution Treater Operator, an entry level position.
He was appointed as Vice President and General Manager of the Company in October 2020. Mr. Nickel originally joined Park Aerospace Corp. in 2011 as a Solution Treater Operator, an entry level position.
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.
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. 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.
ITEM 4. MINE SAFETY DISCLOSURES. None. 17 EXECUTIVE OFFICERS OF THE REGISTRANT . Name Title Age Brian E. Shore Chief Executive Officer and Chairman of the Board of Directors 73 Mark A.
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.
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. Mr. Jamieson rejoined Park Aerospace Corp. and was elected as Senior Vice President of Project Management on July 30, 2024.
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.
Esquivel President and Chief Operating Officer 52 Constantine Petropoulos Senior Vice President – Administration and General Counsel 47 Cory Nickel Senior Vice President and General Manager 53 Christopher Goldner Vice President – Finance 56 John Jamieson Senior Vice President of Project Management 64 Mr.
Removed
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.
Added
Shore also served as General Counsel of the Company from April 1988 until April 1994. Mr.
Removed
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.
Added
Petropoulos rejoined Park Aerospace Corp. on February 10, 2025 as Senior Vice President – Administration and General Counsel. Prior to rejoining Park Aerospace Corp., Mr. Petropoulos served as Partner at Hughes, Hubbard & Reed, a prominent New York law firm, from May 2021 to July 2024. Prior to that, Mr.
Added
Petropoulos served as Senior Vice President and General Counsel of the Company from September 2014 to May 2021. Prior to his originally joining the Company in September 2014, Mr. Petropoulos had been Managing Attorney at Scientific Games Corporation in New York City since November 2011.
Added
From September 2007 to October 2011, he was Senior Corporate Counsel, Finance & Strategic Development at Coca-Cola HBC SA in Athens, Greece, and from October 2002 to September 2007, he was an attorney at Latham & Watkins LLP in New York City. 18 Mr. Nickel was elected Senior Vice President and General Manager of the Company on August 15, 2022.
Added
Prior to that, he was Chief Operating Officer of Active Dynamics Group from 2018 to 2022. Prior to that, he served as Vice President of Supply Chain of Park Aerospace Corp. from 2014 to 2018. Prior to that, Mr.
Added
Jamieson served as General Manager of Active Metals Company from 2012 to 2013 and Vice President of Global Manufacturing and Engineering of Sanmina Corporation from 2003 to 2012. 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

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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.
Biggest changeFor the Fiscal Year Ended Stock Price Dividends March 2, 2025 High Low Declared First Quarter $ 16.96 $ 13.59 $ 0.125 Second Quarter 14.89 11.96 0.125 Third Quarter 15.57 12.70 0.125 Fourth Quarter 15.46 13.25 0.125 For 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 As of May 19, 2025, there were 410 holders of record of the Company’s Common Stock.
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”).
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. 21 Stock Performance Graph The graph set forth below compares the annual cumulative total return for the Company’s five fiscal years ended March 2, 2025 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. 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 Company expects, for the foreseeable future, to continue to pay regular cash dividends. 20 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 2025 fiscal year fourth quarter ended March 2, 2025: 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 December 2 - January 1 0 $ - 0 January 2 - February 1 0 $ - 0 February 2 - March 2 0 $ - 0 Total 0 $ - 0 948,721 (a) (a) Aggregate number of shares available to be purchased by the Company pursuant to a share purchase authorization announced on May 23, 2022.
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.
This represented 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 2, 2025, the Company had purchased 551,279 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 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
The graph has been prepared based on an assumed investment of $100 on March 1, 2020 and the reinvestment of dividends (where applicable). 2020 2021 2022 2023 2024 2025 Park Aerospace Corp. $ 100.00 $ 103.28 $ 104.26 $ 126.65 $ 131.20 $ 125.74 NYSE Index $ 100.00 $ 124.12 $ 138.73 $ 133.80 $ 157.32 $ 181.53 NASDAQ US Small Cap Aerospace and Defense Index $ 100.00 $ 123.88 $ 118.97 $ 120.02 $ 133.32 $ 191.88
Removed
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.

Item 7. Management's Discussion & Analysis

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

43 edited+27 added−19 removed27 unchanged
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.
Biggest changeThe significant changes in cash provided by operating activities were as follows: ● accounts receivable increased by 4% at March 2, 2025 compared to March 3, 2024 due primarily to the increase in total net sales in the fourth quarter of 2025 compared to the fourth quarter of 2024; ● inventory increased 12% at March 2, 2025 compared to March 3, 2024 due primarily to higher finished goods inventory at March 2, 2025 to support first quarter 2026 shipments; ● prepaid expenses decreased 53% at March 2, 2025 compared to March 3, 2024 due to lower prepaid taxes as a result of utilization of prior year overpayments; ● accounts payable decreased 30% at March 2, 2025 compared to March 3, 2024 due primarily to the timing of raw material purchases in the fourth quarter of 2025 compared to 2024; ● accrued liabilities decreased 34% at March 2, 2025 compared to March 3, 2024 due primarily to a decrease in property tax accruals and lower incentive payroll accruals; and ● income taxes payable (including the non-current portion) decreased 42% at March 2, 2025 compared to March 3, 2024 due to lower remaining transition tax installment payments due.
While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes its liability for unrecognized tax benefits is adequate. Interest and penalties recognized on the liability for unrecognized tax benefits are recorded as income tax expense.
While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes its liability for unrecognized tax benefits is adequate. Interest and penalties recognized on the liability for unrecognized tax benefits are recorded as income tax expense. 33
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.
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. 27 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.
The Company believes that its existing cash, cash equivalents and marketable securities, and cash flow from operations will be sufficient to fund necessary capital expenditures and operating cash requirements for at least the next twelve months from the date of the filing of this Form 10-K Annual Report.
The Company believes that its existing cash, cash equivalents and marketable securities, and cash flow from operations will be sufficient to fund necessary capital expenditures and operating cash requirements for at least the next 12 months from the date of the filing of this Form 10-K Annual Report.
Contractual Obligations: The Company's contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of operating lease commitments, commitments to purchase raw materials and commitments to purchase equipment, as described in Note 10 of the Notes to Consolidated Financial Statements included elsewhere in this Report.
Contractual Obligations: The Company's contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of operating lease commitments, commitments to purchase raw materials and commitments to purchase equipment, as described in Note 9 of the Notes to Consolidated Financial Statements included elsewhere in this report.
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.
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.
See Note 11 of the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Report for a discussion of the Company's contingencies, including those related to environmental matters.
See Note 10 of the Notes to Consolidated Financial Statements included in Item 8 of Part II of this report for a discussion of the Company's contingencies, including those related to environmental matters.
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.
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.
While annual environmental remedial response and voluntary cleanup expenditures, including legal fees, have generally been constant from year to year, and may increase over time, the Company expects it will be able to fund such expenditures from cash flow from operations.
While annual environmental remedial response and voluntary cleanup expenditures, including legal fees, have generally been constant from year to year, with increases over time, the Company expects it will be able to fund such expenditures from cash flow from operations.
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 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 2, 2025 and March 3, 2024, there were no amounts recorded in accrued liabilities for environmental matters.
On an ongoing basis, the Company evaluates its estimates, including those related to sales allowances, allowances for doubtful accounts, inventories, valuation of long-lived assets, income taxes, restructurings, contingencies and litigation, and employee benefit programs.
On an ongoing basis, the Company evaluates its estimates, including those related to sales allowances, inventories, valuation of long-lived assets, income taxes, restructurings, and employee benefit programs.
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 2025, 2024, and 2023 fiscal years ended on March 2, 2025, March 3, 2024, and February 26, 2023, respectively. The 2025 and 2023 fiscal years each consisted of 52 weeks and the 2024 fiscal year consisted of 53 weeks.
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.
These decreases were partially offset by higher sales in 2025 and a higher tax benefit from the reduction in uncertain tax positions in 2025 compared to 2024. 26 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.
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.
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.
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.
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 2, 2025, was approximately $5.3 million to be paid in the second quarter of 2026.
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.
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.
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 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. 30 Environmental Matters: The Company is subject to various federal, state and local government and foreign government requirements relating to the protection of the environment.
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.
In addition, the Company paid $10.1 million and $30.6 million in cash dividends during 2025 and 2024, respectively. 29 Working Capital Working capital at March 2, 2025 decreased $8.2 million compared to March 3, 2024.
For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available.
For a tax position that meets the more likely than not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority.
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.
Such earnings were decreased by changes in operating assets and liabilities of $6.6 million, $6.7 million and $6.1 million in fiscal 2025, 2024 and 2023, respectively. This resulted in $4.7 million, $4.4 million and $6.5 million of cash provided by operating activities from continuing operations in fiscal 2025, 2024 and 2023, respectively.
Such adjustments are recognized entirely in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by the Company.
The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available. Such adjustments are recognized entirely in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by the Company.
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 Company continues to experience inflation in costs of raw materials and supplies, freight costs and other costs and expenses. 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.
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.
During 2025 and 2024, 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 38.1% for 2025 compared to an effective rate of 20.8% for 2024.
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.
The Company paid $10.1 million, $30.6 million and $8.2 million in cash dividends in 2025, 2024 and 2023, respectively. The 2024 dividends paid included a special dividend of $20.5 million paid in the first quarter of that year.
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.
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. 28 Liquidity and Capital Resources: (Amounts in thousands) March 2, March 3, Increase / 2025 2024 (Decrease) Cash and marketable securities $ 68,834 $ 77,211 $ (8,377 ) Working capital 81,033 89,187 (8,154 ) From continuing operations Fiscal Year Ended (Amounts in thousands) March 2, March 3, February 26, Increase / (Decrease) 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 Net cash provided by operating activities $ 4,717 $ 4,408 $ 6,491 $ 309 $ (2,083 ) Net cash (used in) provided by investing activities 23,987 31,388 (7,018 ) (7,401 ) 38,406 Net cash used in financing activities (13,650 ) (33,466 ) (8,047 ) 19,816 (25,419 ) 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.
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.
In 2025, 2024 and 2023, the Company incurred approximately $37,000, $29,000 and $14,000, 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 $37,000, $29,000 and $14,000, respectively, of such amounts.
General The Company’s Discussion and Analysis of its Financial Condition and Results of Operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Critical Accounting Policies and Estimates: The following information is provided regarding critical accounting policies that are important to the Consolidated Financial Statements and that entail, to a significant extent, the use of estimates, assumptions and the application of management's judgment. 31 General The Company’s Discussion and Analysis of its Financial Condition and Results of Operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
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.
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.
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.
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.
Federal rate and state income tax reductions in uncertain tax positions.
This increase in rate was offset by the U.S. federal rate and state income tax reductions in uncertain tax positions.
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.
The increase in sales was primarily driven by an increase in sales in the military and commercial aircraft markets and, to a lesser extent, higher sales in the business aircraft market, while sales to each of the other markets the Company serves were relatively even with the prior year sales levels.
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.
The lower selling, general and administrative expenses, as a percentage of sales, were due to higher legal fees in 2024 as a result of shareholder activism defense costs, costs incurred in 2024 to settle an insurance claim as a result of the bankruptcy of the insurer, lower incentive compensation expense and an additional week of expenses included in 2024.
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. Recently Adopted Accounting Pronouncement See Note 13 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.
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.
Cash Flows During 2025, the Company's net earnings before non-cash storm damage charges, depreciation and amortization, stock-based compensation, provision for deferred income taxes, loss on sales of marketable securities, amortization of bond premium and gain on sale of fixed assets, were $11.3 million compared to $11.1 million in fiscal 2024 and $12.6 million in fiscal 2023.
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.
The change in cash and marketable securities at March 2, 2025 compared to March 3, 2024 was primarily the result of stock repurchases of $4.3 million in the second and third quarters of 2025, as well as a transition tax payment of $4.2 million made in the second quarter of 2025.
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.
Income Taxes As part of the processes of preparing its consolidated financial statements, the Company is required to estimate its income taxes payable 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.
Sales in 2023, to each of the markets the Company serves, were relatively even with the prior year sales levels. Gross Profit The Company’s gross profit margin, measured as a percentage of sales, decreased to 30.5% in 2023 from 33.4% in 2022.
The Company’s gross profit margin, measured as a percentage of sales, decreased to 28.4% in 2025 from 29.5% in 2024.
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.
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. 2025 Financial Overview On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which transitioned the area.
Additional claims and costs involving past environmental matters may continue to arise in the future.
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.
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.
The Company’s net earnings from operations in 2025 were 7% higher than in 2024, primarily due to an 11% increase in sales, and higher interest income in 2025 offset by the $1.1 million storm damage charge, higher costs of sales referenced above, higher selling, general and administrative costs and higher tax expense in 2025 due to a provision recorded for undistributed foreign earnings.
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.
Decreases in cash and cash equivalents and marketable securities and higher current income taxes payable were partially offset by higher inventories and accounts receivable, as well as lower accounts payable. The Company's current ratio (the ratio of current assets to current liabilities) was 9.7 to 1 at March 2, 2025 compared to 10.2 to 1 at March 3, 2024.
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.
Higher sales in 2024 were primarily driven by increased sales in the military, commercial aerospace and business aircraft markets. Gross Profit The Company’s gross profit margin, measured as a percentage of sales, decreased to 28.4% in 2025 from 29.5% in 2024.
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.
The increase in the 2025 tax rate compared to the 2024 tax rate primarily resulted from a deferred tax provision recorded in the fourth quarter of fiscal 2025 on unrepatriated foreign earnings offset by a higher benefit from the reduction in uncertain tax positions in 2025 as compared to 2024.
Removed
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.
Added
None of the Company’s manufacturing lines or equipment were damaged by the storm. The roofs on the facilities were damaged along with specialty HVAC units used to control the temperature and humidity in certain manufacturing, laboratory and research and development areas. Repairs are substantially completed. The storm had limited impact on the Company’s production lines.
Removed
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 a decrease in gross margins. Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $270,000, or 4%, during 2023 compared to 2022.
Added
Remaining repairs are scheduled to be completed in the first quarter of 2026. The Company recorded a charge of $1.1 million in 2025 related to the damage and related repair and downtime costs. The Company's total net sales worldwide in 2025 were 11% higher than in 2024.
Removed
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.
Added
A less favorable sales mix and higher labor and overhead costs due to ramping up of manufacturing capacity in anticipation of customer program volume increases as well as higher depreciation more than offset the increase in sales. 23 The Company’s earnings from operations in 2025, as a percentage of sales, were 15.1% compared to 15.0% in 2024, primarily as a result of lower selling, general and administrative expenses which offset the lower gross profit margin noted above.
Removed
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.
Added
The Company may also experience increasing costs resulting from the imposition of duties, tariffs, and similar governmental charges by the United States and certain foreign jurisdictions on the products of its customers and suppliers.
Removed
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.
Added
These issues may be exacerbated by trade conflicts that restrict the transfer of funds or impose import and export controls on the Company’s products or supply chain inputs. The Company’s sales could also be impacted by these supply chain challenges to the extent that its customers are experiencing them from their other suppliers.
Removed
Federal rate and state income taxes, including $214,000 of additional tax due to tax deductions becoming unavailable related to stock options expiring unexercised in the 2023 fiscal year, offset by a reduction in uncertain tax positions related to the expiring statute of limitations of tax positions taken in prior years regarding the taxability of funds repatriated from the Company’s subsidiary in Singapore of $2.8 million.
Added
Purchase orders are generally received more than three months in advance of delivery. 24 Results of Operations: 2025 Compared to 2024 Year Ended March 2, March 3, (Amounts in thousands, except per share amounts) 2025 2024 Increase / (Decrease) Net sales $ 62,026 $ 56,004 $ 6,022 11 % Cost of sales 44,384 39,470 4,914 12 % Gross profit 17,642 16,534 1,108 7 % Selling, general and administrative expenses 8,246 8,154 92 1 % Earnings from operations 9,396 8,380 1,016 12 % Storm damage charge (1,098 ) - (1,098 ) 100 % Interest and other income 1,209 1,053 156 15 % Earnings before income taxes 9,507 9,433 74 1 % Income tax provision 3,625 1,960 1,665 85 % Net earnings $ 5,882 $ 7,473 $ (1,591 ) -21 % Earnings per share: Basic earnings per share $ 0.29 $ 0.37 $ (0.08 ) -22 % Diluted earnings per share $ 0.29 $ 0.37 $ (0.08 ) -22 % Net Sales The Company’s total net sales worldwide in 2025 were 11% higher than in 2024.
Removed
The Company’s effective income tax rate of 28.2% was higher in 2022, due to the lack of the uncertain tax position reduction as occurred in 2023.
Added
The decrease in gross margin was primarily due to a less favorable product mix and higher labor and overhead costs due to ramping up manufacturing capacity in anticipation of customer program volume increases, as well as higher depreciation expense. Selling, General and Administrative Expenses Selling, general and administrative expenses increased by $0.1 million, or 1%, during 2025 compared to 2024.
Removed
Net Earnings from Operations The Company’s net earnings from continuing operations for 2023 were $10.7 million, including the reduction in uncertain tax positions of $2.8 million and $214,000 of additional tax due to tax deductions becoming unavailable as a result of stock options expiring unexercised.
Added
Such expenses, measured as percentages of sales, were 13.3% and 14.6% during 2025 and 2024, respectively. The increase in selling, general and administrative expenses in 2025 was primarily due to higher salaries and fringe benefits as well as higher travel expenses, professional fees, and research and development expenses.
Removed
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.
Added
These increases were offset by lower legal expenses in 2025 as well as lower incentive compensation and stock option expense and costs incurred in 2024 for shareholder activist defense costs and to settle an insurance claim as the result of the bankruptcy of an insurer and the additional week in 2024 compared to 2025, which resulted in higher fixed expenses in 2024. 25 Earnings from Operations For the reasons set forth above, the Company’s earnings from operations were $9.4 million for 2025 compared to earnings from continuing operations of $8.4 million for 2024.
Removed
Basic and Diluted Earnings Per Share Basic and diluted earnings per share for 2023 were $0.52, including the additional tax due to tax deductions becoming unavailable as a result of stock options expiring unexercised and the reduction in uncertain tax positions, compared to basic and diluted earnings per share for 2022 of $0.41, including the pretax charges for the closure of the facility located in Singapore.
Added
Storm Damage Charge On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which moved through the area. None of the Company’s manufacturing lines or equipment were damaged by the storm.
Removed
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.
Added
Although the building structures are secure, the roofs on two of the three buildings in the Company’s Newton, Kansas campus needed significant repairs and the roof on one building needed to be replaced. Also, multiple specialty HVAC units were damaged or destroyed.
Removed
Critical Accounting Policies and Estimates: The following information is provided regarding critical accounting policies that are important to the Consolidated Financial Statements and that entail, to a significant extent, the use of estimates, assumptions and the application of management's judgment.
Added
These specialty HVAC units are necessary to control the temperature and humidity in certain manufacturing areas, quality laboratories and R&D laboratories, as required by certain specifications and certifications the Company is subject to. The Company has remediated much of the damage and is scheduled to complete the repairs in the first quarter of 2026.
Removed
The majority of the Company’s shipping terms define the performance obligation to be satisfied upon shipment. Accounts Receivable The Company’s accounts receivable are due from purchasers of the Company’s products. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required.
Added
The Company recorded a charge of $1.1 million in 2025 related to the damage and related repair and downtime costs. Interest and Other Income/Expense Interest and other income were $1.2 million in 2025 compared to $1.1 million in 2024.
Removed
Accounts receivable are due within established payment terms and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than established payment terms are considered past due.
Added
Higher weighted average interest rates in 2025 were offset by lower levels of marketable securities in 2025 due partially to share repurchases of $4.2 million in 2025 as well as a transition tax installment payment of $4.2 million made in the second quarter of 2025 related to the one-time transition tax on deemed repatriated earnings of non US subsidiaries recorded in fiscal 2018.
Removed
The Company determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the conditions of the general economy and the aerospace industry.
Added
The increased rate was due primarily to a deferred tax provision of $2.1 million recorded in the fourth quarter of fiscal 2025 on unrepatriated foreign earnings that the Company had previously considered to be indefinitely reinvested.
Removed
If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company writes off accounts receivable when they become uncollectible. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value.
Added
Although the Company is currently involved in discussions with Asian industrial conglomerates regarding potential Asian-based manufacturing joint ventures, the Company would consider contributing certain of its intellectual property to such joint ventures but would consider contributing only minimal capital to such joint ventures.
Removed
In addition, the Company assesses the impairment of goodwill at least annually.
Added
Other than such potential joint ventures, the Company is not currently involved in any activities which would likely lead to the Company’s investment of such funds overseas.
Removed
Contingencies and Litigation The Company is subject to a number of proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses.
Added
As a result, the Company determined that it is unlikely that opportunities to invest these funds overseas will be realized in the foreseeable future and, therefore, the Company has provided for the potential repatriation of such funds currently held by its Singapore subsidiary.
Removed
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

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+2 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. 33
Biggest changeThe 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. 34
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.
Based on the average anticipated maturity of the investment portfolio at the end of the 2025 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.
Added
The Company may also experience increasing costs for raw materials resulting from the imposition of duties, tariffs and similar governmental charges by the United States and certain foreign jurisdictions.
Added
The Company generally passes changes in the costs of its raw material costs through to its customers however the volatility in prices caused by the imposition of duties, tariffs and other similar governmental charges by various governments may make this more difficult.

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