PARK AEROSPACE CORP

Park Aerospace Corp. is an aerospace company that develops and manufactures solution and hot-melt advanced composite materials used to produce composite structures for the global aerospace markets, with its advanced composite materials including film adhesives and lightning strike protection materials ¹. The Company offers an array of composite materials specifically designed for hand lay-up or automated fiber placement manufacturing applications, and its materials are used to produce primary and secondary structures for jet engines, large and regional transport aircraft, military aircraft, Unmanned Aerial Vehicles, business jets, general aviation aircraft, and rotary wing aircraft ¹. Park also offers specialty ablative materials for rocket motors and nozzles and specially designed materials for radome applications, and as a complement to its advanced composite materials offering, the Company designs and fabricates composite parts, structures and assemblies and low-volume tooling for the aerospace industry ¹. Target markets for Park’s composite parts and structures, which include its proprietary SigmaStrut and AlphaStrut product lines, are prototype and development aircraft, special mission aircraft, spares for legacy military and civilian aircraft, and exotic spacecraft ¹. The Company’s core capabilities are in the areas of polymer chemistry formulation and coating technology, and its manufacturing and research and development facilities are located in Newton, Kansas ¹.

The Company is planning to build a new composites material manufacturing and development facility to support expected significantly increased demand and future opportunities for the Company’s commercial aircraft and defense-related businesses, with the site of this new location currently being finalized and construction expected to begin in fiscal year 2027 ². Under a Business Partner Agreement with ArianeGroup SAS, Park is the exclusive North American distributor of ArianeGroup’s RAYCARB C2B NG proprietary product, which is used to produce ablative composite materials for critical rocketry and missile systems ³. 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, with these advanced funds to be used to help fund the purchase and installation of additional manufacturing equipment for ArianeGroup’s production of C2B product ⁴.

During the Company’s 2026 fiscal year, 39.3% of total worldwide net sales were to affiliate and non-affiliate subtier suppliers of GE Aerospace, and sales to Aerojet Rocketdyne accounted for 11.7% of total worldwide sales in the 2026 fiscal year ⁵. The Company’s ten largest customers accounted for approximately 71% of net sales in fiscal 2026 ⁶. As of May 18, 2026, the unfilled portion of all purchase orders received by the Company was approximately $51,425,000, compared to approximately $25,809,000 as of May 16, 2025 ⁷. The Company had 125 employees as of March 1, 2026 ⁸.

The Company’s total net sales worldwide in fiscal 2026 were $73,301,000, an 18% increase compared to $62,026,000 in fiscal 2025, driven primarily by increased sales in the military, commercial aerospace and space markets partially offset by decreased sales in the business aircraft market ⁹. Gross profit margin increased to 30.9% in fiscal 2026 from 28.4% in fiscal 2025, resulting from higher sales prices, a more favorable sales mix, and lower labor and overhead costs as a percentage of sales due to improved leverage ¹⁰. Earnings from operations were $13,500,000 in fiscal 2026 compared to $9,396,000 in fiscal 2025, and net earnings were $11,272,000 compared to $5,882,000 in the prior year ¹¹.

The Company’s cash and marketable securities totaled $89,368,000 as of March 1, 2026, compared to $68,834,000 as of March 2, 2025 ¹². Working capital was $102,714,000 as of March 1, 2026, compared to $81,033,000 as of March 2, 2025 ¹³. The Company’s current ratio was 18.2 to 1 as of March 1, 2026, compared to 9.7 to 1 as of March 2, 2025 ¹⁴.

Management’s discussion indicates that the Company is planning to build a new composites material manufacturing and development facility to support expected significantly increased demand and future opportunities for the Company’s commercial aircraft and defense-related businesses, with construction expected to begin in fiscal year 2027 ². The Company expects the planned new composite materials manufacturing facility to be a significant capital project and anticipates funding-related expenditures from cash generated from operations, existing cash and marketable securities, and if appropriate, other available capital resources ¹⁵.

The Company continues to experience inflation in costs of raw materials and supplies, freight costs and other costs and expenses, though 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 ¹⁶. The Company also experienced 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, with the impact largely mitigated by the Company’s ability to adjust pricing to pass the impact of these costs through to its customers ¹⁷.

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, and 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 ¹⁸. While the wars in Ukraine and the Middle East have had a negative impact on the Company’s results of operations due to delayed shipments, the Company may experience an increase in future sales due to increases in spending worldwide on missile defense systems and other defense programs ¹⁹.

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 ¹⁵. The Company expects, for the foreseeable future, to continue to pay regular cash dividends ²⁰. On January 13, 2026, the Company entered into an Equity Distribution Agreement with Needham & Company, LLC and Citizens JMP Securities, LLC with respect to an “at the market offering” program under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $50.0 million, and as of March 1, 2026, the remaining amount available to be sold under the Distribution Agreement was $27.2 million ²¹.

The Company has a number of long-term contracts pursuant to which certain of its customers place orders, though these contracts are primarily requirements based and do not guarantee quantities, with an order forecast generally agreed concurrently with pricing and typically updated periodically during the term of the underlying contract ²². Purchase orders are generally received more than three months in advance of delivery ²².

The Company’s customer base is highly concentrated, with the ten largest customers accounting for approximately 71% of net sales in fiscal 2026, and the loss of one or more key customers could adversely affect the Company’s profitability ⁶. The Company is vulnerable to disruptions and shortages in the supply of certain raw materials, as there are a limited number of qualified suppliers and certain raw materials are produced by only one supplier, and raw material substitutions for certain aircraft-related products may require governmental approval ²³. The Company is experiencing inflation in raw material and other costs, and significant increases in the cost of materials, supplies, labor, utilities or services could materially increase the Company’s cost of operations if the Company were unable to pass such increases through to its customers ²⁴. Geopolitical events, such as the wars in Ukraine and the Middle East, could interrupt the Company’s supply chain or otherwise increase costs, and the Company’s customers may experience interruptions from other suppliers that could cause a customer to delay or cancel orders ²⁵. The expansion of the Company’s operations through building a new composite materials manufacturing plant involves significant risks and uncertainties, including cost overruns, delays in finalizing the site, obtaining permits or approvals, contractor or supply chain disruptions, equipment procurement or installation issues, staffing challenges, delays in qualification or certification, and failure to achieve expected production levels ²⁶. The Company’s business and operations may be adversely affected by cybersecurity breaches or other information technology system or network intrusions, and while the Company has experienced cyber-attacks and attempts to breach its systems, none have resulted in loss of data or materially affected the Company’s business, operations or financial results ²⁷.

Management’s message to shareholders emphasizes that the Company’s total net sales worldwide in fiscal 2026 were 18% higher than in fiscal 2025, with the increase in sales primarily driven by an increase in sales in the military and commercial aircraft markets and, to a lesser extent, higher sales in the space market, partially offset by lower sales in the Business Aircraft market ⁹. Management highlights that the Company’s gross profit margin increased to 30.9% in fiscal 2026 from 28.4% in fiscal 2025, and that net earnings in fiscal 2026 were 92% higher than in fiscal 2025, primarily due to an 18% increase in sales, higher gross margins, higher interest income in fiscal 2026 and a $1.1 million storm damage charge in fiscal 2025 ¹⁰. The strategic priorities emphasized by management include the planning and construction of a new composite materials manufacturing facility to support expected significantly increased demand, with construction expected to begin in fiscal year 2027, and the Company’s continued ability to adjust pricing to pass the impact of inflation and tariff-related costs through to its customers ².