Park Aerospace Corp. (PKE) 2025 10-K Review

Park Aerospace Corp. is an aerospace‐focused advanced materials specialist, developing and manufacturing composite prepregs, film adhesives, lightning‐strike protection, structural assemblies and tooling for jet engines, commercial and military aircraft, UAVs and space applications. At the core of Park’s offering is its expertise in polymer chemistry, coating technology and composite structures, all centralized at its Newton, Kansas facility. This review highlights the key takeaways from Park’s 2025 Annual Report (Form 10-K) and offers insight into its business model, financial performance, risk factors and future outlook.

Warren.AI 💰 6.5 / 10

---

I. Business Overview (Item 1)

• Materials & Structures: Park designs thermoset prepregs based on epoxies, phenolics, cyanate esters and polyimides with carbon, glass, aramid and specialty fiber reinforcements. It also fabricates composite parts (SigmaStrut™, AlphaStrut™) and low‐volume tooling.

• Markets & Customers: Products serve OEMs and tier-1s in commercial and military jet engines, transport and regional aircraft, business jets, UAVs, helicopters, radomes, rocket motors and space vehicles. GE Aerospace supply accounts for ~40% of net sales; no other customer >10%.

• Manufacturing Footprint: Single 183,500 sq ft Newton, Kansas campus expanded in early 2024 to double composite materials and structures capacity. NADCAP and AS9100C accredited.

• Partnership: Exclusive North American distributor of ArianeGroup’s RAYCARB C2B® NG ablative material, supplying rocket and missile programs; in March 2025 advanced €4.6M to support ArianeGroup production expansion.

---

II. Financial Performance (Items 7 & 8)

1. Net Sales & Growth • 2025 net sales: $62.0 M, +11% vs 2024. Growth led by military aerospace, commercial transport and business aviation segments. • 2024 net sales: $56.0 M, +4% vs 2023.

2. Gross Profit & Margins • 2025 gross margin: 28.4% vs 29.5% in 2024. Margin headwinds from less favorable product mix, higher labor & overhead ramp and depreciation. • 2024 gross margin: 29.5% vs 30.5% in 2023.

3. Operating Earnings • 2025 operating margin: 15.1% vs 15.0% in 2024. SG&A controlled despite 11% sales boost; 2024 included higher legal, activist defense and insurance‐claim costs. • 2025 EBIT: $9.4 M; includes $1.1 M storm damage charge.

4. Net Earnings • 2025 net income: $5.9 M (EPS $0.29) vs $7.5 M (EPS $0.37) in 2024. 2025 tax charge for un‐repatriated foreign earnings ($2.1 M) and storm damage charge drove year-over-year decline. • 2024 net income: $7.5 M (EPS $0.37) vs $10.7 M (EPS $0.52) in 2023.

5. Cash Flow & Balance Sheet • Operating cash flow (2025): $4.7 M; Working capital ratio ~9.7×. • Cash, marketable securities: $68.8 M (net of $5.3 M TCJA transition tax payable). Zero debt. • Share repurchases: $4.3 M in 2025; authorization for up to 1.5 M shares (remaining ~0.8 M). • Dividends: quarterly $0.125/share; $10.1 M total in 2025.

---

III. Risk Factors (Item 1A)

Customer Concentration: GE Aerospace accounts for ~40% of sales; loss or program disruption could be material.

Industry Cyclicality: Aerospace demand is highly cyclical and sensitive to economic downturns, fuel prices and travel trends.

Supply Chain & Raw Materials: Limited qualified suppliers for carbon fiber, reinforcements and specialty resins; geopolitical events (Ukraine, Middle East) may interrupt supply or raise costs.

Currency & Commercial Terms: International sales, some AR in Europe/Asia; IFRS‐to‐GAAP subtle differences; mostly short-term purchase orders without guaranteed minimums.

Environmental & ESG: Exposed to Superfund sites from legacy operations; robust NADCAP/AS9100C quality but solvent handling and hazardous materials remain regulated.

R&D & IP Protection: R&D intensive; must consistently introduce new formulations. 2025 R&D costs up vs 2024. Trade secrets vital; risk of IP misappropriation.

Geopolitical & Defense Spending: Military sales tied to U.S. and allied defense budgets; wars may delay shipments but also spur missile/rocket program growth.

---

IV. Operations & Backlog

• Backlog: $25.8 M as of May 16, 2025 vs $31.1 M at May 31, 2024. Primarily composite materials orders with multi-month lead times.

• Capacity Expansion: 2024 $19.8 M facility expansion in Newton doubled capacity. Specialty HVAC and roof repairs from May 2024 storm charged $1.1 M; fully restored by 2026.

• Certifications: NADCAP for materials manufacturing/testing and composites fabrication; AS9100C for quality management.

• Subsidiaries: Park Aerospace Technologies Corp. (Newton, KS); Neltec, Inc. (Tempe, AZ) divested earlier.

---

V. Outlook & Analyst Takeaways

Strengths • Pure‐play aerospace composites niche: R&D, manufacturing and structural assembly in one site.

• Robust quality credentials: NADCAP, AS9100C, exclusive RAYCARB C2B®.

• Net cash positive with zero debt, solid dividend (yield ~3%) and share buyback.

Challenges • High customer concentration (GE).

• Margin pressure from mix, inflation and capacity ramp.

• Cyclic demand subject to defense budgets and travel trends.

Park Aerospace is a well-positioned small‐cap composite specialist with a track record of steady sales growth and dividend returns. Financial discipline, balanced capital return and exposure to defense and commercial aerospace markets underpin a base case of modest earnings growth. Key watchpoints include margin recovery, backlog stabilization and execution on R&D/new product qualification.

Investment Score: 6.5/10

---

Disclaimer: This review is for informational purposes only and does not constitute investment advice. Please consult a financial advisor before making any investment decisions.