Executive Summary
In the third quarter of fiscal 2025, Park Aerospace Corp (NYSE: PKE) reported revenues of $14.4 million, a slight increase from the expected range but fell short on earnings before interest, taxes, depreciation, and amortization (EBITDA) due to unexpected production shortfalls. The gross margin was 26.6%, indicating challenges with cost management and pricing strategies, as management expressed dissatisfaction with gross margin levels below 30%. The company is transitioning to new production lines aimed at enhancing efficiency, but the ramp-up has incurred additional costs, affecting profitability. Despite these hurdles, future revenue projections from key programs and a solid cash position suggest potential for recovery.
Key Performance Indicators
QoQ: -13.77% | YoY:-11.79%
QoQ: -19.53% | YoY:-14.04%
QoQ: -29.46% | YoY:-28.20%
QoQ: -23.67% | YoY:-40.94%
QoQ: -21.10% | YoY:-39.31%
Key Insights
Revenue for Q3 was $14.4 million, a 13.8% decrease year-over-year and a 14.8% drop quarter-over-quarter. Gross profit registered at $3.83 million, representing a gross profit margin of 26.6%. Operating income was $1.85 million, with a margin of 12.8%, showcasing operational pressures. Net income fell sharply to $1.577 million or $0.078 per diluted share, reflecting a 40.94% decline in net income from Q2 2025. The company maintains a strong current ratio of 7.55 and a quick ratio of 6.69, indicat...
Financial Highlights
Revenue for Q3 was $14.4 million, a 13.8% decrease year-over-year and a 14.8% drop quarter-over-quarter. Gross profit registered at $3.83 million, representing a gross profit margin of 26.6%. Operating income was $1.85 million, with a margin of 12.8%, showcasing operational pressures. Net income fell sharply to $1.577 million or $0.078 per diluted share, reflecting a 40.94% decline in net income from Q2 2025. The company maintains a strong current ratio of 7.55 and a quick ratio of 6.69, indicating healthy liquidity.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
14.41M |
-11.79% |
-13.77% |
| Gross Profit |
3.83M |
-14.04% |
-19.53% |
| Operating Income |
1.85M |
-28.20% |
-29.46% |
| Net Income |
1.58M |
-40.94% |
-23.67% |
| EPS |
0.08 |
-39.31% |
-21.10% |
Key Financial Ratios
operatingProfitMargin
12.8%
operatingCashFlowPerShare
$0.14
freeCashFlowPerShare
$0.13
dividendPayoutRatio
158.7%
Management Commentary
Management highlighted that the gross margin was disappointing, expressing, 'We don't really like gross margins below 30%.' The ramp-up of new manufacturing lines has added cost pressures, with CEO Brian Shore noting, 'Ramping up new lines now is part of our plan to be ready...but it takes more time to produce a unit.' Furthermore, while Park faced production shortfalls, management emphasized their expectation of significant pent-up demand leading to future revenue growth: 'Until the requal is complete, we can't produce the materials...but once it is done, we'll be off to the races.'
We don't really like gross margins below 30%.
â Brian Shore, CEO
Until this requal is complete, we can't produce the ablative materials using C2B fabric for this customer.
â Brian Shore, CEO
Forward Guidance
For Q4 2025, Park Aerospace anticipates revenue in the range of $15.5 million to $16.3 million. Management expects to recapture the production shortfall from Q3, bolstered by $400,000 of high-margin ablative materials tied to requalifying contracts expected to complete by March 2026. The company's focus on growing its defense materials segment and the anticipated recovery in jet production rates in the aerospace market present profitable opportunities. Investors should monitor the completion of the C2B fabric requalification closely, as it directly impacts projected revenues for fiscal 2026.