EPS of $0.10 increased by 104.1% from previous year
Gross margin of 30.6%
Net income of 2.08M
""We're pleased to have our margins over 30%, especially given the considerable ongoing expenses related to operating our new manufacturing facility."" - Brian Shore
Park Aerospace Corp (PKE) Q1 2026 Financial Results - Navigating Challenges and Capitalizing on Opportunities
Executive Summary
In Q1 2026, Park Aerospace Corp (PKE) reported a revenue of $15.4 million, a slight decrease from the previous quarter but reflecting a 10.24% growth YoY. The company demonstrated resilience with a gross profit margin of 30.6%, aided by ongoing cost management despite underutilization of its new manufacturing facility. Management's commentary highlighted the successful navigation of external challenges, including tariffs and logistic disruptions, while simultaneously emphasizing future growth opportunities related to key defense contracts and capacity expansions.
The focus on high-margin composite materials for missile systems positions Park well within the aerospace and defense sector. However, the company acknowledged challenges in sustaining margins above 30% due to significant fixed costs associated with the new manufacturing facility and competitive industry pressures that could impact pricing strategies. Investors should monitor how these dynamics evolve in upcoming quarters as Park aims to capitalize on burgeoning defense market requirements and enhance production capacity to meet demand.
Key Performance Indicators
Revenue
15.40M
QoQ: -9.09% | YoY:10.24%
Gross Profit
4.72M
30.64% margin
QoQ: -4.84% | YoY:15.10%
Operating Income
2.42M
QoQ: -15.15% | YoY:16.19%
Net Income
2.08M
QoQ: 66.93% | YoY:109.47%
EPS
0.10
QoQ: 61.03% | YoY:104.08%
Revenue Trend
Margin Analysis
Key Insights
Q1 2026 Revenue: $15,400,000
YoY Change: +10.24%
QoQ Change: -9.09%
Gross Profit: $4,718,000 (Gross Margin: 30.6%)
EBITDA: $2,774,000 (EBITDA Margin: 18% and Adjusted EBITDA margin of 19.2%)
Balance Sheet Highlights:
- Total Assets: $120,718,000
- Total Liabilities: $15,767,000 (Liabilities to Asset Ratio: 13.07%)
- Cash and Cash Equivalents: $65,571,000
Investment Factors:
- EPS: $0.10 (Diluted)
- Significant cash reserves will allow flexibility amid market fluctuations, with zero long-term debt enhancing financial stability and leverage.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
15.40M
10.24%
-9.09%
Gross Profit
4.72M
15.10%
-4.84%
Operating Income
2.42M
16.19%
-15.15%
Net Income
2.08M
109.47%
66.93%
EPS
0.10
104.08%
61.03%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Strategic Initiatives: Management expressed optimism regarding the long-term need for advanced composites within missile defense systems.
- Quote: Brian Shore stated, "We're pleased to have our margins over 30%, especially given the considerable ongoing expenses related to operating our new manufacturing facility."
Market Potentials: Management confirmed a blanket purchase order proposal for $40 million of c2b fabric to support increased production capacity.
- Quote: Mark Esquivel hinted at a favorable outlook, stating, "We're single-source qualified for specialty ablative materials on that program, and we are ready to support increased expected output."
Operational Efficiency: Management noted production and sales are well aligned, diminishing prior concerns about lower production affecting financials.
- Quote: Shore emphasized, "We want our production and sales to be relatively nicely matched. In Q1, we achieved that, which aided our margins significantly."
"We're pleased to have our margins over 30%, especially given the considerable ongoing expenses related to operating our new manufacturing facility."
— Brian Shore
"We're single-source qualified for specialty ablative materials on that program, and we are ready to support increased expected output."
— Mark Esquivel
Forward Guidance
Given the evolving market for defense materials and Park's strategic positioning as a sole source for specialty materials in missile systems, management remains optimistic about growth in subsequent quarters.
- Expectations for Q2 suggest revenues will maintain a range of $15 million to $16 million, while they aim for EBITDA of $3.0 million to $3.4 million. Additionally, ongoing negotiations for expanded agreements with key customers are anticipated to yield favorable outcomes.
- Investors should pay close attention to potential tariff impacts and their mitigating strategies to safeguard profit margins.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PKE Focus
30.64%
N/A
N/A
N/A
ISSC
41.40%
8.42%
1.54%
50.79%
KAMN
34.70%
6.03%
0.00%
-8,457.30%
VSEC
10.50%
9.57%
-0.92%
-68.93%
CW
36.30%
16.00%
3.96%
29.49%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Park Aerospace's strategic focus on military and aerospace sectors positions it well for sustainable growth against rising demand for composite materials. The strong financial fundamentals—highlighted by zero long-term debt and significant liquidity—underscore the firm’s capacity to withstand market fluctuations and seize growth opportunities. Investors should monitor contract developments and the effectiveness of management in addressing cost pressures as the company aims for upward trajectory in profitability and market share.
Key Investment Factors
Growth Potential
The aerospace defense sector is witnessing a significant uptick in demand due to geopolitical tensions, which Park is positioned to capture through existing and upcoming defense contracts for composite materials.
Profitability Risk
Risks include reliance on a few key customers and the impact of external economic factors, such as tariffs and competition in pricing strategies, that may pressure profit margins.
Financial Position
With a robust balance sheet featuring $65 million in cash and no long-term debt, Park's financial standing affords it the capability to invest in growth while maintaining operational flexibility.
SWOT Analysis
Strengths
Strong product offering in the aerospace composite materials market
Solid balance sheet with no long-term debt and abundant cash reserves
Established relationships with key defense contractors
Weaknesses
Operating costs associated with new manufacturing facilities impacting profit margins
Limited diversification in customer base
Opportunities
Increased defense spending driven by geopolitical conflicts and military contracts
Expansion of manufacturing capabilities to enhance production efficiency and meet demand
Threats
Pressure from competitors potentially impacting profit margins
Economic conditions that could introduce volatility to supply chain costs and logistics