Park Electrochemical (NYSE: PKE)Q4 2019 Earnings CallMay 17, 2019, 11:00 a.m. ET
Contents:
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- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning. My name is Liz, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Park Electrochemical Corp. fourth quarter fiscal-year ’19 earnings release conference call.
[Operator instructions] At this time, I will turn today’s call over to Mr. Brian Shore, chairman and chief executive officer. Mr. Shore, you may begin your conference.
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Brian Shore — Chairman and Chief Executive Officer
Thank you, Liz. This is Brian. I have with me Matt Farabaugh, our CFO. Just want to let you know that we’re not in the same location.
We’re remote, so we’ll try to coordinate as the best of our ability. But I think it’s around the same location to me. Every now and then, there’ll be a little bit less than completely smooth coordination, but we’ll do our best. So let’s start by reminding you or telling you that there’s a presentation on our website.
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There’s also a webcast. I think some of you in the webcast have already seen the presentation. But if you haven’t seen the presentation, you just dialed in, you want to go on our website and take a look at that because we are going to be going through our presentation today. So why are we doing that? Because we haven’t — the only — I think we’ve done it only one other time, only prior time for our investor calls.
But Park is somewhat of a new company, somewhat old, somewhat new, but our fourth quarter was our first quarter as a pure aerospace company, and we’re not very well known either. We’re also in between analysts, which we’ll cover a little later on in the presentation. So what we want to do is try to help our investors understand our company to the best of our ability. So the presentation will not just focus on the Q4 and the year numbers, we’re also going to try to explain a little bit about who we are, what we do.
Some of you who already know this, so bear with us. But maybe some of you don’t. And like I said, we’re not that well-known and we’re just kind of emerging as an aerospace company. So we thought we should go through some background information as well.
The presentation may end up — seem a little like a hodgepodge because it’s little bit of the numbers, a little bit of the background of the Park, but bear with us. Also, I want to mention that we did a presentation at Needham conference on January 16, 2019, and that presentation is on our website still, and a number of the slides from this presentation, today’s presentation, are taken from that Needham presentation. So I just want you to be aware of that. Some of these slides we’ll skip over because they’re just for background so you’ll know more about us.
We’re trying to give you like one-stop shopping, so one document helps you understand a little bit about the quarter but also a little bit about what we do and who we are. But I also would encourage you to look at that Needham presentation if you have time. That’s still on our website because that will give you more background on who we are and what we do stuff. Obviously, won’t have any commentary in the fourth quarter because it was done before the fourth quarter ended.
So we’re not sure we’re going to do a presentation like this every quarter, but let’s see. But — and also, please let us know what you think, all right? Also, I want to warn you that it could take about half hour to go through the presentation, I’m not sure exactly how long, but it’s going to take a little while. So presentation has about, what, 18, 19 pages, and there’s also an appendix to the presentation, and the appendix just provides some supplemental financial information about the quarter and the year. OK.
So why don’t we get started? Let’s move to Slide 2. Slide 2 is our cautionary language. If you have any questions about this, anything in the language, any statements on Slide 2, you might want to give us a call later and we can walk through that with you. Let’s go to Slide 3.
In the Slide 3, Park’s transformation from an electronics company to an aerospace company. This is really important for context. If you’ve been listening in recently at our — the Needham presentation or even our third quarter conference call, you know some of this information, but I think for this call, to give it context, it’s important we cover this for you. We’re not going to go into lots of lots of detail but we just wanted you to have that context and perspective.
The company was founded in 1954. It went public in 1960, and we went into the electronics business in 1961. So — but in the mid-1980s, Park had become basically an electronics company, a printed circuit material company, a global electronics printed circuit material company. That was our business and that’s what our identity was.
And through the ’80s, ’90s and 2000s, we just became more and more of a pure electronics company. Then in January 2007, we did something which probably most people thought was pretty unusual. We committed to aerospace as a second major area of business focus for our company. And why would we do that is because we had become concerned about our future of electronics and we wanted for Park a good future.
It was a very hard decision to make, but I think with the benefit of hindsight, it was the right decision to make. So in January of 2008, a year later, we had our groundbreaking, you see in the top right there for our new aerospace manufacturing development facility in an empty field in Newton, Kansas. So some may call it the field of dreams. So it’s also may be a field of nothing because that’s really what we started with.
What you see here is just an empty field, and we started our aerospace business just from nothing. So it was a very difficult decision to make and it was a lot more difficult to execute. In May 2009, so that’s about 10 years ago now, right? That’s when we opened our Newton, Kansas aerospace facility, kind of because it was not really that smooth. We — some of our equipment didn’t operate properly.
It took two years to get some of the equipment to operate at the level we could actually make production product. But that was 10 years ago. So this has been a 10-year journey. Then fast-forward to December 4, 2018, just about six months ago, we sold our electronics business to AGC of Tokyo, Japan, and that was the completion of the transformation of Park from an electronics company to an aerospace company.
So as of December, about six months ago, Park is a pure aerospace company, no longer an electronics company. So that was the transition the — at least kind of the Reader’s Digest version of the transition from electronics company to an aerospace company. Let’s go to Slide 4, please. So Slide 4 and 5 were contained in the Needham presentation.
And I’m not going to go into details because we’re just trying to move as quickly as we can, so we don’t belabor the presentation too much. But just summary on Slide 4. So our basic business is advanced composite materials used to produce composite structures for the aerospace markets. And then, if we just want to — and you see at the bottom of Slide 4, the different markets that we supply into.
Well, these are all aerospace markets for an aerospace company. If you go to Slide 5, then you see also we produce as a complement to advanced composite materials offering, we’d also produced a composite parts, structures and assemblies, low-volume tooling, again, for the aerospace industry. That picture is the picture of our Newton, Kansas facility. The larger building is our main facility and the little building to the right with the same kind of color is also our facility and that’s where we have a warehouse and also R&D that is located in that smaller facility.
The other buildings in the picture are not ours. You can see a couple of things here. That’s an airport, that was not an accident. As an aerospace company, we wanted to be in an airport because we wanted to be very kind of immersed in the whole aerospace culture, so we want to be in the airport.
The other thing I’d point out is that parking lot is quite empty. Now this picture was probably taken six, seven, eight years ago, I don’t know. If you went there today, you can’t — there’s no parking. It’s actually a problem.
We don’t have any parking available at all because the plant is quite full. OK, so we’re not going to go into any more details. Let’s go to Slide 6. And this is something I’d like Matt to help us with, reconcile EPS and EPS before special item for Q4.
So like I said, a little hodgepodge, we’re talking big picture, now we’re going to talk a little bit about Q4 here. So Matt, can you help us walk through the reconciliation, please?
Matt Farabaugh — Chief Financial Officer
Yes. Sure. You can note that there are a few items in the quarter outside of normal operations, so we list them here, stock option modification, loss on sale, marketable securities and Tax and Jobs Act. The first two, stock option and loss on sale security, they relate to the special dividend that we had done in the fourth quarter.
And you can see that we back them out of the GAAP EPS of $0.08, and they have an impact of — they reduced our EPS in the quarter by $0.05 and $0.02 each. So we back them out against — $0.07 better than the GAAP number to get to the — what would be a normal ongoing operation. And then the Tax and Jobs Cut — Tax Cut and Jobs Act, that really was adjustments for clarifying some guidance for the new tax act that was enacted in December of 2017, and that had the impact of lowering our EPS by $0.04. So if we back that out, those three special items really take our EPS — GAAP EPS from $0.08 up to what would be a sort of normal EPS going forward of $0.19.
Brian Shore — Chairman and Chief Executive Officer
OK. Thanks, Matt. I thought it’d be useful to walk the investors through that. While you’re on, could you also give us some help and understanding what to expect for a tax rate going forward, let’s say, in fiscal ’20?
Matt Farabaugh — Chief Financial Officer
Yes. Going forward, we would expect a tax rate probably in the mid-20% range. So our tax rate this quarter was a little bit lower than that just because of some various adjustments and things that are up and going on for the quarter in part related to the Tax Act and part related to the sale of the electronics business. But going forward, I think we probably would expect something in the mid-20s.
Brian Shore — Chairman and Chief Executive Officer
OK. That’s good. And then a little bit about investment income, where do you think we’re going to see next investment income going forward, let’s say, into the next year by quarter?
Matt Farabaugh — Chief Financial Officer
Going forward, well, let’s — assuming that our cash remains fairly constant and the interest rate environment remains fairly constant, I would say that our investment income in the quarters going through this year should be something in the area of, say, $900,000 a quarter.
Brian Shore — Chairman and Chief Executive Officer
OK. Excellent. We want to give you that perspective because the tax rate going forward and the interest income going forward may be a little different than what you saw in Q4. So we just wanted you to have that understanding.
OK. Good. Let’s go on to Slide 7. So now we’re talking more about our quarterly results in thousands.
There’s a lot going on here. First of all, we talked about this at some length in the third quarter call. But if you — well, I guess, we need to reference our — the largest part of our business goes to GE Aviation programs, and that’s some of the driver of our numbers. Last year, they were a little over 40% of our revenue of — I think we have a slide on that a little later on.
But in the first two quarters, there was some destocking going on. This is not our inventory. It’s the customer’s inventory or some other supplier’s, when I say destocking. And then in the last quarter, fourth quarter, restocking, so there’s kind of a little bit of whipsaw impact there.
Now we warned everybody about that in our third quarter. We said that the fourth quarter was going to be quite strong, and there are two reasons: One is the fundamentals and other one is the underlying programs are ramping, but also some of the inventory ups and downs. So that’s something we’ll be living with for a while, and we’ll maybe touch on that a little bit more later on in the presentation. But one of the reasons is that most of the programs we are on, are the ramping or even development, they’re not mature programs where everything’s kind of steady state.
So to manage the inventory on part of our customers is a little more challenging, so there’s those ups and downs. Anyway, so let’s talk about what happened here. What we said about Q4 during our January 3, Q3 investor call, we said we’re going to estimate sales at $16 million to $17 million, and we estimated the EBITDA at approximately $4 million. If you want to go back and listen to the call, you’ll hear those numbers.
So what was going on in here, Q4, like I already said, was our first quarter as an aerospace company. The quarter was already booked, but there was a major question as to whether we could actually produce and shipped that kind of number between $16 million and $17 million. But we decided to go forward even though it seemed very difficult, very challenging and some people may have even said seemingly, not even possible to achieve those numbers. If you look at the per quarter, we’re talking about one quarter difference, and that — and third quarter was up, right? So it was a significant challenge to produce that product and get out the door.
That product is all produced, the production value in Q4 is about the same as sales value. It’s not like we had a lot of stop and stock and when we entered Q3. So — anyway, so how are we — let’s go back to the presentation. How are we able to meet the sales and EBITDA objectives of Q4? Well, there were 70-hour work weeks from our production people.
They did an outstanding job. They stepped up. These people are hard-core, and to me, it’s an honor to work with them. I’m very pleased.
This is very hard work, 70 hours a week, week in, week out, running treaters. So most of you probably haven’t — aren’t familiar with that, but treaters have teams of four, they had to work really closely together with these teams, and once they start, they’re going to run. There’s no stopping them. So they have to keep up.
And 70-hour work weeks, week in, week out, that’s how it was done. That’s how we met the objectives that we have set out for our first quarter as an aerospace company. So I feel very happy about our people. Like I said, it’s an honor to work with them.
We’re bringing a third shift on now, but we waited a little while. First of all, it takes months to train people. Running treaters is a very — a lot of skill involve. It’s a very complicated equipment to run, and so training is really important.
We don’t just tire somebody and then go through a two-day training program and put them on the floor. It doesn’t work that way. Also, we’re reluctant to bring on new shifts and hire new people unless we’re confident that we’ll be able to sustain that level of workforce. We never laid off anybody in those 10 years from our aerospace business and we can’t — we’re not gods.
We can’t guarantee we never will. But we’re very committed not to laying people off because we want our people to believe that they have a future with our company. And we could say whatever we want. And say, oh, you have a future with our company, but then you’ll let them hope, so it’s not going to really go too well.
We want people to believe they have a future with our company. So we’re very careful about hiring people until we’re pretty confident that we can keep them. We also have, of course, training programs we call customer flexibility, which allows us to move people around. When department is a little slow, we move them to another department.
OK. So that’s Slide 7. How about Slide 8? OK, now looking at the year-over-year results. So you’re looking at the top line, you could see the growth.
Growth was driven in part by those GE Aviation program, which we’re ramping. And we’re not done ramping, we’ll talk about that. So the EBITDA numbers are what they are. Our gross margin is — was 31.7% — I should back up, sorry.
I think I forgot to mention that in the prior slide. It was kind of an important point, Slide 7, the gross margin in Q4 is 35.4%. You can see the gross margin move up as the top line moves up. So what do we tell you all? What do we tell our investors about fiscal ’19? We gave some kind of forecast.
The forecast for fiscal ’19 back in January 4 ’18 before we start fiscal ’19. And what we said was, we had a sales estimate of $50 million to $54 million, so we came in with then — came in, in that range. And it was, like I said, kind of a hockey-stick year because the first two quarters were destocking and the last quarter was restocking. Pro forma EBITDA, this is important to understand this distinction.
We estimated $10.5 million to $13 million. You might say, oh, we didn’t make that range, but it’s not true. This is actual EBITDA, and we had given you estimates for pro forma EBITDA. The pro forma assumptions as we stated at that time, which is — was an excellent presentation we gave at the time, assume all legacy costs are limited at the beginning of fiscal ’19 year.
Well, of course, it didn’t happen. And then I figure it’s probably an impact of $1 million to $1.25 million. So that means that we’re going to get apples to apples, turn the actual EBITDA $10 million — $10.25 million basically, right, into equivalent pro forma, that would be $11.25 million to $11.5 million, if you follow the math. So in terms of our forecast, we actually came in within that range as well.
OK. Why don’t we move on to Slide 9, sort of hustle through Slide 9. OK. So now we have forecast for Q1 and Q2 of this year, fiscal ’20.
This is something new for us. We haven’t done a lot of forecasting like this in the past. We did forecast for a four-year period, but not quarters. This is the first shot at it.
So what is our philosophy about forecasting, we just tell you the truth as we know it. That’s what we do. I don’t know what others do, but that’s what we do. By the way, we’re not going to give you a low range until we could beat it.
That to us sounds ridiculous and insulting and immature and childish and a real stupid waste of time. So — yes, you’d probably ask me, why don’t you tell us what you really think about it, but seriously, that’s not it. So when we give you a forecast. What we’re saying to you is this is what we think will happen.
Now we could be wrong, but we’re not going to play the game of giving you a low number we can beat. We’re telling you this is what we think will happen. I spent hours with Mark Esquivel, our COO, working on these forecast ranges. So there’s a lot of thought that goes behind them.
Maybe we’d be right, maybe we’d be wrong, but it’s our best guess as to what will happen and that’s the — what we do when we forecast. And so again, I want to remind you there’s this quarter-to-quarter volatility driven by these GE programs. Well, then one program that’s the 747 legacy program are in development or are ramping up so fast. So inventory management is more challenging for our large customers.
You can say, why are we giving you a kind of range for Q1? Q1 will be over in two weeks. Well, there’s still a lot to ship at the end of Q1. That’s not unusual. Sometimes at the end of the month, end of the quarter, it’s a lot to ship.
So we still want to provide you a range that Q1 will — is — ends I think two weeks from Sunday. And Q2, again, our best guess, some of it is booked. Some of it we have to book and ship, but we’re trying to give you our best guess. We’re not just giving you a low number, a safe number.
This is what’s booked, right? We’re trying to tell you this is what we think will happen, assuming we do our job and work our — what’s off. OK. So let’s go to Slide 10. Slide 10, other than the red portion of it, this was what was in the Needham presentation I referred to, that was given on January 16.
This is just taken from the Needham presentation as is, but — except the red stuff, was explaining that, so we’re including this in the current presentation. That Needham presentation, again, is on the Park’s website. You can look it up. So — and this is — so we’re including this presentation — sorry, we’re including this forecast that was from the Needham presentation for convenient reference only and we’re not updating or confirming this forecast at this time.
We’re not going to confirm the long-term forecast every quarter. I think we will drive everybody crazy. Our current intention, which is subject to change, is to update our long-term forecast annually toward the beginning of each calendar year and then we’ll just roll it one more year, which is what did this last year. So again, you can see the top-line growth.
This growth is based upon the forecast. We covered this in our last call but it’s based upon the detailed forecast we have from our large OEM, GE Aviation programs and also going through line item by line item and predicting what will happen. I wouldn’t say it’s an aggressive forecast. It does not assume any acquisitions or any unusual new programs.
So OK. I think that covers it. Again, just for reference, perspective because we showed you the prior quarters and in the prior years. Just remember, we take that $16.7 million number that we had for Q4, and we explained this I think in our last quarter call — just doing the math now, sorry, it’s my calculator, at $67 million, while you look at our forecast for fiscal ’20 at $59 million to $64 million, but we explained that we — you shouldn’t do that, that Q4 of ’19 is going to be a high quarter because of the restocking, and going forward into fiscal ’20, the numbers will come down a little bit and that you see in the quarterly forecast we just went over for Q1 and Q2.
OK. Let’s go on to Slide 11. And maybe, Matt, if you’re still there, maybe you could help us cover the first part of Slide 11, and then maybe I’ll give you some input on the acquisition strategy and JV strategy.
Matt Farabaugh — Chief Financial Officer
Sure. I’ll quickly go through the cash map here. So at year end, we had about $152 million of cash and marketable securities, but some of that is going to be used up. There’s things that we have going on where we know we have to use some of that cash.
One of those is a transition tax. So it’s, again, the new tax act that was enacted back in December of ’17. We have — the government gave everybody eight years to pay off the taxes related to that enactment. So we have about $19 million more dollars of taxes to pay related to that new tax act, and it goes out for another seven years.
At this point, we paid one of those eight years. Additionally, we have announced the expansion of our Newton, Kansas facility and we paid a little bit. I think the estimate was about $20 million of cost. We paid — put down some deposits up-front at this point, maybe about $18 million more based on our estimates of additional cash that we’ll have to lay out as we do that expansion.
So that — if you back those out of $152 million, we have about $115 million of cash remaining for use on whatever seems to be appropriate going forward. We paid, since fiscal-year ’05, $507 million of dividends. That’s $24.75 a share over that period of time, and Park has paid regular quarterly dividends and without ever skipping or decreasing them for the past 34 years. So 34 years of ongoing regular dividends.
At this point, you’ll note on our — by looking at our balance sheet, that Park’s debt is zero. So we have no debt, no long-term debt at all at this point. That gives us a lot of flexibility as well.
Brian Shore — Chairman and Chief Executive Officer
Thank you, Matt. So good summary. So going through acquisition philosophy, as Matt said, we have about — after we take care of these items, we’ll have about $115 million of cash left. Even though we’ve paid $507 million of cash dividends since ’05, that long-term debt, we still have some cash available.
But we have a pretty active acquisition program, if you will, but our strategy is a little bit different. I think we call it, hit them where they ain’t. We participate in some of these auctions and we think they’re just not usually for us. Why? Because first of all, the prices are — value seems to get bit up and we’re not going to overpay for something and just — we’re looking long-term, we’re not looking to make a splash for two years, and then somebody else’s problem when somebody retires or something like that.
We have to buy — our objective is to buy something that will meaningfully contribute to Park’s value over the long period and it needs to be something unique, something different maybe, something nichey. One of the things we’ve done is we worked quite a bit with a couple of OEM customers that have been very helpful to us in terms of pointing us in the right direction. These are aerospace companies. In other words, let’s say, they like us, maybe love us, but they have other things they buy for the programs which made them not so happy about other products they buy, maybe they’re not so happy with the supply chain in that area.
So they pointed us in those directions. We’ve even found some overlap where — like two OEMs will point to certain areas within our own [Inaudible], maybe something is going on there. Not only they’ve given us the products, they’ve also given us names and, in some cases, many introductions for us. So we’ve made contacts.
Now these companies are not being auctioned or not for sale. So often the response is, what, we’re not for sale. But that’s the process. It’s a longer process.
It will take a little while — longer to get through it but we’ll end up with something better. And how does you plant the seed. You contact somebody, well, are you interested in talking? Well, no, as they don’t only know you. But you plant the seed, maybe have some follow-up discussions, and maybe at some point, he turns and say, well, maybe, we’d be interested in doing something with you.
So it’s very helpful. It’s — I mean, working with the OEMs is very good. We’re looking for things in aerospace. But again, some things which are unique and different and niche-y.
It’s not — the things that are auctioned, and I know their price is high but it’s kind of very standard stuff. Why is that? Because the people who like to bid on these things aren’t going to understand unique or niche-y technologies. They’re going to shy away from it because as I will get this stuff, right, so I’m not going to spend money on something I don’t know yet. So we end up competing with people that don’t really have deep understanding sometimes and after niches and then prices go up not for us.
So we’ll see, but our M&A program or activities is I think going in the right direction and it’s really active thing. We mentioned this during our last call, I think. We’re also seeking a JV partner in Asia. This would be a large aerospace company in Asia that could help us establish more of a presence in Asia.
In Asia, we think it would be very difficult for us to do it on our own, we just don’t have the resources but we’ve had some very interesting and promising early engagements with some very, I would say, solid aerospace companies in Asia. So that’s at the beginning stages but we feel encouraged about what we’re starting to do. OK. Slide 12.
Let’s keep going here. All right, here we go. Major jet engine company programs. Of course, this is GE Aviation.
We’ve been talking about this. Maybe I should have put these slides at the beginning, right, talking about this throughout the presentation. These slides, 12 and 13, were included in Needham presentation, so we won’t go through them in detail. I don’t think we want to take the time and do that.
But we do have a 13-year LTA — sorry, LTA, I’m rushing, with Middle River Air Structure Systems. Now I’ll explain that, that’s the major GE Aviation division that we supply into. This division producing these nacelles and thrust reversers structures for jet engines. As we’ll get into it in a couple of slides, that division was just sold to a company called ST Engineering aerospace.
But the redundant factory is in progress, that was something that was promised to GE Aviation in Middle River once we signed a 13-year LTA with firm pricing. And the programs, so we talked about the 747, you can see the picture of the 747 there, and those are nacelles, they’re very large. So those structures are composite structures, meaning a lot of composite content, which means good for us because there’s a lot of our content in these programs. So 747, that’s obviously, a mature program.
A320neo with a LEAP-1A engine. That’s ramping pretty hard and it’s predicted to be a very huge program by Airbus and others. LEAP-1C. That’s the COMAC919.
That’s a Chinese airplane that’s in development. So we’re just doing development work at this point. And then there’s a Bombardier Global 7500 with the Passport 20 engine. The Passport 20 engine is a new GE engine.
That’s also ramping. That’s a nice program for us. And we keep going down, there’s something else for the Passport 20. This is a GE Aviation program rather than an MRAS program because at the bottom of the page, we’re talking about not nacelles and thrust reversers but a primary structure that’s inside the engine, a part of the engine.
The top right, that’s something else which is new and exciting. There’s a critical structure that we’re working on with composite materials for the Genx — GE9X rather, engine for the Boeing 777X. And we’re just in qualification on that program. We’re going through qualification in that program.
Let’s keep going. So on Slide 13, we’ve done a number of joint development projects with MRAS. And it’s been very, very great for Park. We did AFP manufacturing.
We don’t have time to explain what it is but it is very important manufacturing technology. That was something we worked on. The development work within our product is also now qualified and in full production for AFP manufacturing. Lightning Strike material, another joint development project, again, the project development is complete.
The product is qualified and in full production. Film Adhesive, another joint development project, development complete, undergoing qualification. So these are things I think would be very difficult for product lines, areas for Park — very difficult for Park to get into without partnering with MRAS, and they’ve been just — I don’t know what to say, just wonderful. So the last two items on Slide 13, actually a little new information for you.
So this is new. We haven’t disclosed this before, but revenues from these major jet engine company programs and GE Aviation programs, were $21.7 million in fiscal ’19, so a little over 40% of our revenue. And then if we look at ramping these programs, the GE Aviation programs, based upon the forecasts that have been provided to us, this is not our reading into it, these programs will exceed $50 million per year by calendar year 2025. Let’s keep going.
Slide 14 and 15, Slides 14 and 15. Again, this was contained in the Needham presentation but it’s pretty important so we’re just going to touch on this. The major expansion of our Newton, Kansas facility. I’ve already mentioned in terms of our cash situation.
Let’s start by looking at the picture there. The bottom right, that’s an existing building, and the top left, that’s a new building. And also, if you look in between, there’s a passageway between the two buildings. This is an artist’s rendition.
This is not a photograph. This is an artist’s rendition. If you look at it, look there’s a passageway between the two buildings, and that passageway will accommodate not only people but also materials like forklifts going back and forth. So this was originally conceived as a redundant factory for MRAS and GE Aviation.
Why is that? Because it takes about three years to qualify composite materials for these key programs, which is obviously a long time. And so their concern is, redundancy is a big thing in aerospace because if something happens to one of our factories, then what are they going to do? It takes three years to qualify another supplier and what’s going to happen to all these programs, we’re sole-source qualified in these programs. You see the point? So we had agreed that once we signed that, the long-term, LTA, with the pricing that we would go ahead and build a redundant factory. It turns out, if you look at the second sub-bullet item, we need it for manufacturing capacity anyway at this point.
So we need to get going. About 90,000 square feet, about $20 million. That’s an update. When we announced this, we said it was $19 million.
So it’s really in the wrong direction, about $20 million. We plan to break ground in June, but I should tell you because we’re at the airport, it requires FAA approval and that’s a little bit of an unknown. So I’m not sure about June, that’s our plan. But at this point, it’s kind of in the hands of the FAA, a big government agency.
So sometimes it takes a while to get things through them. If it’s not June, our hope would be it would be July, OK? Completion expected in the next year. And let’s not go into the different equipment that we’re including in the expansion, but not surprisingly this equipment is geared toward the GE Aviation type product line since it was originally designed as a redundant factory for GE Aviation. Going to Slide 15, a little bit — as far as a little bit about our manufacturing capacity.
I apologize I’m rushing. So I keep talking over my own words. The original — as for our existing hot-melt manufacturing capacity, about $40 million, hot-melt product, hot-melt prepreg product, composite materials, that’s the lion’s share of what we produce for GE Aviation. And for new structural — aerospace structural programs, new programs is generally going to sway toward hot-melt compared to solution for reasons we can discuss later if you’d like.
The expansion will provide another $50 million, five-zero million, of additional hot-melt capacity so that will give us about $90 million. But we also set it up in the new facility that there’ll be room for additional equipment. So if we want to make the additional investment in the equipment about $4 million to $5 million, that will give us another $50 million, five-zero million, of additional capacity if we decide we want it at some point in the future. And the current solution treating capacity is about $55 million.
So current capacity, this does not include composite parts for prepreg, for composite materials, $40 million plus $55 million. Let’s go to Slide 16. Recent developments. So yes, a little bit backwards here because we already covered this, but Middle River Aerostructure Systems, our largest customer and customer that’s been a wonderful customer to work with.
I think they’d probably feel the same way about us, but you have to ask them that question. They were sold to ST Engineering Aerospace, sold by GE Aviation to ST Engineering aerospace recently. And ST Engineering Aerospace is a major global aerospace company based in Singapore. We know this company very well.
We think very highly of them. We think they’re a great company and we’re very pleased with that result. We’ve known this company for 10 years. It’s not that we just got to know them, but we’re very pleased with the result.
Very happy about the new ownership of the Middle River Aerostructure Systems. Other development. Interestingly, Park is now one of two remaining American-owned aerospace composite material manufacturers. Two of our competitors, U.S.
competitors were sold recently to foreign-owned companies. So we’re one of two left, and you’re probably asking who the other one is. It’s a company called Hexcel which is a company much larger than Park. So there’s Park and Hexcel were the only American-owned composite material manufacturers left in the U.S.
Park name change. So we are planning to change our name and it will have something to do with aerospace. And we are going to ask you to approve it. We’re a New York corporation, Park is, so New York corporations are required to get shareholder approval for name change.
So when we send you our proxy for this year’s proxy vote, we’ll be asking you to approve a name change, a change of our name from Park Electrochemical Corp. to something else which will be aerospace related. Again, not very well-known company. So we — people are confused by our name as to who we are.
So we want to help eliminate that confusion as much as possible. Security analyst coverage of Park. Yes, we had one analyst and the gentleman left the firm. So now we have no coverage which is really unfortunate because the fact that we’re emerging, we have emerged I should say, as an aerospace company the transformation is complete, right? But now there’s nobody covering us.
But the good news is that we are looking for coverage by analysts that are more aerospace-oriented. The guy that was covering us until very recently was not an aerospace specialist, a very good analyst but not an aerospace specialist. We’re looking for analysts that are most aerospace specialists, and we had some quite some promising discussions with a couple of the analysts. So we’re cautiously optimistic, let’s say, that maybe one of them will pick up coverage pretty soon.
That would be a very good thing for Park if that happens. On Slide 17, another new thing is we had our 65th anniversary recently. Actually on March 31, so a little bit of history here. March 31, 1954, 65 years ago, my father, Jerry Shore, and his partner and my second father, Tony Chiesa, started the company with about $60,000 that they had left over from the war — war duty.
They’re in the top right, Park’s founders. My father’s the guy leaning forward. That’s Jerry. Tony’s the guy on the right, they’re tough customers, I’ll tell you.
They started this company in a small factory, basically a garage with five employees in Woodside, Queens. At the bottom right, the part that — what you’re seeing with the red awning, that was the facility, not the two things on the side. You can see in both sides are garages, and so I think it probably was a garage, you can see the doors. Now this is a picture in Google Maps view, it’s not what it looked back in the old days.
Original sales in ’54, $124,000, not million dollars $124,000. Pretax profit, $887.38. We always had a thing about making money at Park, good years and bad years, small or not, always had that thing about making money, and we actually paid taxes from the first year $226.21. We’ve been a taxpayer for a long time.
The first invoice was for $300 and was handwritten by my mother actually who came in to do the books every now and then, I guess, and it was to GE Schenectady actually. So isn’t that interesting. So many obstacles or roadblocks were thrown Park’s way in the early days but our beloved founders were unstoppable. So the world threw many obstacles their way, but the world really didn’t have a chance, because they were not going to be turned down.
They were not going to be turned back. They were unstoppable. And that unstoppable spirit of the beloved founders lives with us today in our minds and our hearts. Next slide, the long journey.
This is the 10-year journey. It’s been a long and difficult 10-year journey from when we first opened that first factory in Newton, Kansas 10 years though and it was opened with in “kind of” but we persevered and did not quit. Many challenges need to be overcome. Much adversity needed to be faced.
Many sacrifices needed to be made. Going into aerospace from nothing, it’s a very complex and challenging business, but why we do it, as I said we want Park to have a future and we took a very difficult path to get there. We were laughed at and dismissed as irrelevant by some but they’re not laughing now. Maybe they’re outside looking in, trying to get business back which they lost to us, but they’re not going to get it.
Many, maybe most, thought we were crazy to do what we did and maybe they were right. But it is amazing and incredible what can be achieved and accomplished with pure determination and sheer will and the unstoppable spirit we inherited from our beloved founders. It is quite amazing what could be overcome. We have not achieved greatness as a company.
That’s our singular objective, to achieve greatness. And I would — if I told you we’ve seen greatness, I wouldn’t — it wouldn’t be true, but we have accomplished great things against serious odds. A couple of examples, what our production people did in Q4 because a lot of folks would have said that’s not really possible, seemingly impossible to get out the — to produce and get out that much product in one quarter at that point. I mean, going forward, that would not be some similar problem, but we had a ramp up so fast.
And then how about transforming Park from an electronic company to an aerospace company in 10 years starting from nothing. I think that might have been a great thing as well. And again, serious odds in both cases. So we’re an aerospace company now.
We earned it, meaning we built it on our own one brick at a time. We didn’t take any shortcuts. We did everything the hard way but we are an aerospace company and the foundation for our future has been built. So thank you very much for hanging in there, a very long presentation, and I apologize for that.
We’re trying, like I said, combine a little bit about the quarter, a little bit about the year but also a little bit of background in Park. And so operator, if anybody’s still listening, we’re very happy to take questions.
Questions & Answers:
Operator
[Operator instructions] We have a question from the line of Leonard Cooper, private investor. Your line is now open.
Unknown speaker
Hi, Brian. But I sit here wondering whether all this is for naught because almost every day, we read about climate change. And I wonder are we a polluter? Are we making active efforts not to pollute?
Brian Shore — Chairman and Chief Executive Officer
Well, are you talking about our production? Or are you talking about the end products?
Unknown speaker
I’m talking about both, the factories…
Brian Shore — Chairman and Chief Executive Officer
OK. Well, I mean as far as our production, we’re very, very careful about respecting the environment, particularly any kind of emissions. We have very strict standards that we comply with. So I don’t think we’re a polluter.
I don’t think so. In terms of the end product, so if you look like the LEAP engine for instance, the whole theory behind LEAP engine is to be more fuel efficient, I shouldn’t say the whole theory, but I think that’s the major thrust of it, better fuel efficiency. Not — but you’d have to talk to Boeing and Airbus. But my guess is it’s not just to protect the environment, it’s also to get better efficiency, better range, better performance out of the airplanes.
So I know some people that are saying that we need to all take trains in the future and no planes. Well, if that happens it’s probably not a good day for Park because we’re an aerospace company. We like stuff that flies.
Unknown speaker
Well, I wouldn’t worry about that.
Brian Shore — Chairman and Chief Executive Officer
No? OK.
Unknown speaker
So keep up the good work.
Brian Shore — Chairman and Chief Executive Officer
Well, thank you.
Operator
Our next question comes from the line of Christopher Hillary with Roubaix Capital. Your line is now open.
Christopher Hillary — Roubaix Capital — Analyst
Hi. Good morning.
Brian Shore — Chairman and Chief Executive Officer
Good morning.
Christopher Hillary — Roubaix Capital — Analyst
First, congratulations on the progress, and thank you for all the clarity on your business and your forecast. It’s greatly appreciated.
Brian Shore — Chairman and Chief Executive Officer
Well, I’m glad you liked it. That’s why I said at the beginning. We’re really looking for input on any recommendations and for future quarters at what kind of things you like to see or hear, but thanks for that input.
Christopher Hillary — Roubaix Capital — Analyst
Yes. I certainly think medium-term targets are an excellent way to give an outlook in the business that balances the long term with the short-term reality. So thank you again for that. I guess my question was I wanted to ask you, it’s unusual to find a company of your size growing at your rates at your level of profitability, particularly during a project ramp.
Can you share any comment you might have about how you’re managing your profitability as you go through these numerous products ramping up?
Brian Shore — Chairman and Chief Executive Officer
Well, I don’t want to be kind of too much of a wise guy about it but let’s talk about 1954. I mean the company made, whatever, I don’t — $270, but we’ve always had kind of a thing, and this I’m serious about, about making money and sometimes more and sometimes less. We’ve gone through difficult times, difficult transitions. Five, six years ago, we were going through a difficult transition, trying to get aerospace up and running with a lot of the setbacks, a lot of things weren’t going right.
But making money is something we’ve always been pretty committed to. So we manage our business very carefully. Now we’re always looking for opportunities and as you’re kind of, I think, implying anyway those opportunities require investment, right? But we don’t do pie in the sky stuff, it has to for us be real, it has to be something tangible. We’re not like DuPont — I’m not — or some other big company like that.
I’m not putting them down, that’s good for them, where they can invest in kind of blue sky R&D. That’s not for us. The things we did with MRAS are just wonderful because they helped us a lot and we worked with them closely. They helped us develop these products, develop the technologies, get them qualified, get them on live programs.
And if you’re in aerospace and specialty materials, you think, well, I could spend a lot of time and money to develop a new product. But who cares because it’s not going to be qualified in any program, it can take 10 years or maybe never. It’s like the thing about a — what is it? Sorry, a tree falls in the forest and nobody’s around, does it make a sound. Does it matter? So I don’t know how to answer that question except to tell you that it’s something that we talk about every damn day, everything.
All the opportunities, all the programs. We know what we’re about. We know we’re here to make money. We know this is — look, we really love what we do, but we know we’re here to make money and that’s no joke for us.
So we’ll have some setbacks. We have some bad times, good times, better quarters, worse quarters, but we never lose sight of that, that we’re here to make money. So I don’t know if that helps at all because I’m not giving you specifics because there is not one specific thing I can give you. I think the main answer is the underlying theme of our kind of mindset about who we are and what we’re doing and why we’re here and our ability to have a future.
We think it’s very dangerous to get into this kind of mindset about, don’t worry, things will be great three, four years from now and just bear with us while we’re kind of not making money. I think that’s quite dangerous, I do anyway, and we’re committed to not allowing ourselves to kind of get into that kind of mindset. Is there anything else more specific that I can help you with, though, because I don’t — wasn’t…
Christopher Hillary — Roubaix Capital — Analyst
Sure. I understood. I guess it’s still a general question, but I sensed in your comments today that you are potentially a bit more confident or enthusiastic about the company’s ability to add incremental business partners or projects. Is that a fair assessment of your comments today?
Brian Shore — Chairman and Chief Executive Officer
I think that’s right. I agree. And just one other comment about that, is that credibility is the really, really, really big deal in aerospace. And why is that? Because aerospace is such a conservative industry and the reason is that it’s just very risk-averse.
I mean you don’t want to make a mistake. Because look what happens if you make a mistake. It gets to be front page headlines on The Wall Street Journal. I mean if you’re making screwdrivers and make a mistake, you’re probably not get — make the front page of The Wall Street Journal and CNN and everything else.
So there’s a lot of really deep risk aversion. But the credibility that we have for being on those GE Aviation programs — GE Aviation is known to be — well some people say, one of the maybe most — or maybe the most difficult large aerospace OEMs to get qualified with to get on their programs. And I know people say, “Oh, they’re too strenuous. They do too much in terms of the qualification procedures.
They’re too tough. And they complain.” But look, it’s their business. They have the right to decide how they want to run it. But the point is that the industry knows that.
They know that we’re qualified on these very critical structures, very important structures and that gives us enormous credibility. So the credibility gap has gone. It’s closed. So when we look at a new program, they’re not going to say who are you or what are you qualified on because they’re not going to want to take the risk.
Like I’m the first guy that really put you on a major program. Why don’t you come back when you have something else? And I’ll be the second guy or the third guy. So I think that credibility helps a lot and it’s stuff we’ve learned over the recent years and it’s helped a lot. So I think you’re right.
I think we are in a better position to take on new programs as a result.
Christopher Hillary — Roubaix Capital — Analyst
Thank you for that. And then I want to say, I agree with your commentary about the M&A landscape and the types of transactions that you look for. It also seemed today that you sounded a bit more optimistic that some opportunities were in the pipeline. Is that also a fair reaction to your comments today?
Brian Shore — Chairman and Chief Executive Officer
The M&A pipeline?
Christopher Hillary — Roubaix Capital — Analyst
Right. It sounds like in the call, you were a bit more confident that some things were starting to shape up, whereas maybe in some previous periods, you seemed a little bit less certain.
Brian Shore — Chairman and Chief Executive Officer
Well, we’ve been more active. We’ve contacted a number of companies, and in many cases, like I said that, we were put in touch with these companies by these OEMs that are looking for some more help. And we have another list we just got a couple of weeks ago from one of our OEM friends and we need to follow up with that list as well. We’ve been kind of tied down with getting our quarter done and everything else, but we need to get back to that.
So the way — what’s happened for us is that these are not companies that are hired bankers to sell. Sometimes they’re individually owned, family owned but have some unique or interesting technology. So the first reaction is, “Well, no, we’re not for sale.” OK, all right, let’s stay in touch. We’ll see you at a trade show or something like that.
And let’s keep talking, and often they’re very open. We’re not going to do hostile takeover, it’s usually a private company anyway. So it’s not like we’re a threat to them. And maybe they’re a little bit interested in the back of their mind.
And so I think it’s a process, and what we can do is start the discussion but we can’t accelerate the pace of it. And if we try to, that problem would just turn some of these people off. So I would say, we’re more active, but to some extent, it’s going to be circumstantial as to whether, and when, we bring something to the finish line.
Christopher Hillary — Roubaix Capital — Analyst
Well, you certainly have a strong track record with your capital return in investments, so I encourage you to continue doing what you’re doing. Thanks very much.
Brian Shore — Chairman and Chief Executive Officer
Well, thank you for your comments.
Operator
Our next question comes from the line of Brad Evans with a Heartland. Your line is now open.
Brad Evans — Heartland — Analyst
Good morning, Brian.
Brian Shore — Chairman and Chief Executive Officer
Hi, Brad. How are you doing?
Brad Evans — Heartland — Analyst
Well. Thanks.
Brian Shore — Chairman and Chief Executive Officer
Hope you’re doing well.
Brad Evans — Heartland — Analyst
I thought the presentation was highly informative, too. So thank you for the presentation. I just have a follow-up question on the new business pipeline. And I was hoping if you could just qualitatively discuss how that pipeline has changed in terms of — however you want to characterize it in terms of size or activity as it relates to how big or wide that funnel has become or how it’s changed in the last, say, six or 12 months and how that funnel could affect the 2023 forecast that you put out for — that you’ve had out there for some time now.
Brian Shore — Chairman and Chief Executive Officer
So that forecast, Brad, doesn’t assume any huge home runs or grand slams. It’s not like we’re thinking some major programs are going to come out left field. That forecast is kind of more of a working-class forecast based upon things we know, programs we’re working on and programs we hope to get on, rather than some kind of wide-eyed optimism. In terms of the funnel, yes.
So I think the funnel is pretty good. I think we’re a little challenged because we need to be — we need to put the resources into these opportunities and I think we need to do a little bit of work, do a little better job of putting resources, identifying and putting resources into the opportunities. I think they’re a little bit –they’re more than we used to and it’s important that we don’t pass them up because we’re so busy right now that, everything’s good we don’t have to worry. Of course, that would not be good attitude.
And so I don’t think that’s very helpful because I don’t know what kind of perspective that gives you. Maybe in some of our future calls, we should have somebody from marketing get on or maybe Mark, our COO, and maybe they could talk a little bit more about some details. But sometimes the problem is that the customer doesn’t want their name mentioned. One of the things that we were real excited about is, what do they call it, eVTOL, electric vertical takeoff and landing vehicle that’s being developed by a large OEM.
And actually in Q1, this quarter, we’re expecting $500,000 of revenue, and that was pushed out because they’re redesigning the — they’re doing a project redesign. They pulled it back for that. But, that’s a really nice program to be involved with, and some of these are going to be larger, some smaller and that’s just development course. So who knows if we could be more than that.
I’m not sure we would have seen that kind of program a couple of years ago. I’m not sure about that. The other thing that I would just mention is that, like I said, Brad, we’re really pleased with the ST Engineering Aerospace acquisition. They’re really good people and we’ve known them for a long time, and we’re hoping that it’s possible that, that will lead to more opportunities, not just through Middle River but through the other areas that ST Engineering Aerospace are involved in.
So we’re pursuing that and we’re hopeful. So I don’t know — but maybe we’ll try to do a better job during some of our coming calls with somebody get on and maybe talk through some of these opportunities. Again, I just have to mention we may not be able to mention names in some case that’s always a little bit of an issue, especially when we’re talking about new stuff, development stuff, which is I think what you’re interested in.
Brad Evans — Heartland — Analyst
Right. So it sounds like the new business pipeline is highly active and it’s limited by resource constraints on your end, so that’s a good problem to have. So keep up the good work there. I’d be curious, just a follow-up question on the pipeline, as it relates to the military and space end markets, which I know we don’t have a lot of exposure to today, and the UAV market is listed as — you’ve got that in the compendium here as one of the end markets you’re targeting.
I’m curious if you could talk about how you see the military and the space end markets perhaps as a growth potential for the company over the next several years?
Brian Shore — Chairman and Chief Executive Officer
So it’s one of our target markets. We also have a potential product we’re thinking of developing, that would be for composites that are used in space. We do have our strut program, which is used in space programs like the James Webb Space Telescope. Also, I would add, the fact that we’re one of two U.S.-owned composite material companies might actually help our penetration into military and space.
So we’ll see about that. I’m not sure, but it’s one of the markets that we’re looking into. Not — looking into it isn’t the right way to describe it, it sounds like it’s too like casual, one of the markets we’re trying to pursue. The UAVs — I think we’ve mentioned Kratos as one of our largest customers in the past, and I think most of what we do with Kratos relates to UAVs, and there’s this other eVTOL program that we’re interested in.
So well, I shouldn’t say interested in, we’re qualified on and we were expecting to actually ship, like I said, $500,000 in Q1 on that program, but it was pulled back for redesign. And so those are areas that we really like. If you talk about Boeing, Airbus, primary structure programs, I’m not sure that, that’s going to be our future so much. Those areas are very protected by the incumbent suppliers and we’ve had a couple of go-arounds, where we — on one of the programs where we were supposed to be on it, and we were being encouraged, we did some — they did trials with our material.
Everything was supposed to be great and all of a sudden, well you’re not getting it. And we suspected it would happen, and as the incumbent heard about it, got nervous and did something to protect their turf. And we feel that in that area also, the way we’ll get in or could get in would be being very price aggressive and that’s just not our business model so we like these kind of niche-y things, space things, UAV things, the things that are being developed like these eVTOL vehicles that are being developed by a number of companies, so what they call urban mobility or something like that. So again, I guess the emphasis is more on these things rather than these large structural programs for Boeing and Airbus.
Brad Evans — Heartland — Analyst
I’m sorry, Brian, did you say that you are shipping presently to Kratos at this point?
Brian Shore — Chairman and Chief Executive Officer
Yes. That was, I think, a couple of quarters ago, we were — they were announced as a top five customer. So they’re an important customer.
Brad Evans — Heartland — Analyst
Sorry, I had forgot that. Thanks for that reference. I did not recall that. Just the last question I have is just technical question for Matt.
So the cash in/out dynamics, as you have on Slide 11, as you said, Matt, that $19 million transition tax installment payment is paid over eight years. So, I mean, over that period, clearly, the company will be generating free cash flow beyond the current year with the Newton, Kansas expansion. So that — I mean clearly, that’s a tax bill that has to be paid, but it’s over a longer time horizon. So I mean investors should think about that $19 million as, you have cash that you could use today to deploy strategically, correct?
Matt Farabaugh — Chief Financial Officer
Well, yes. If everything is going right, we should be definitely generating cash from our operations over that period of time, so there is — in the near term, there is some availability of that, as long as we are confident that we’re going to have offsets to make sure we cover those taxes in the future. But we just wanted to lay it out that we — there are — there is a commitment, so the $115 million is really more of our starting point to generate cash flows and use the — that fund of money to look for various opportunities that may come our way.
Brad Evans — Heartland — Analyst
Understood. By the $19 million is a ratable payment over eight years, correct?
Matt Farabaugh — Chief Financial Officer
Yes. Over — it’s over seven now, but yes.
Brian Shore — Chairman and Chief Executive Officer
Over what, Matt? Seven you say?
Matt Farabaugh — Chief Financial Officer
Seven remaining years now.
Brian Shore — Chairman and Chief Executive Officer
Seven to go, yes. Seven to go. Yes.
Operator
Our next question comes from the line — yes. We do have a question from the line of Frederick Share with ShareCo.
Unknown speaker
Yes. Good morning.
Brian Shore — Chairman and Chief Executive Officer
Morning.
Unknown speaker
A question about the special dividend in February. Because of the sales transaction, will that be considered a return of capital?
Brian Shore — Chairman and Chief Executive Officer
Matt, I’m pretty sure it’s not a return of capital in this case, but could you back me up on that?
Matt Farabaugh — Chief Financial Officer
No. It wouldn’t be.
Unknown speaker
OK. The second question regards redundancy. Since, I would presume the greatest natural threat in the Wichita area is tornado. Does it make sense to build adjacent buildings for redundancy?
Brian Shore — Chairman and Chief Executive Officer
So it’s a good point, but actually, that’s — statistically, that’s not the case. It would be more like a fire that would be the biggest threat to a factory, so even in the Wichita area, you’re more likely to have a factory destroyed by a fire than a tornado. So it’s a good point, and it’s something we discussed. And we have weighed plus and minuses, but the pluses of having adjacent factories are so much greater than any risk of one tornado wiping out two factories, pretty unusual thing and have to be the right trajectory and the right path, highly unlikely.
But if you noticed, even though there’s a passageway between two factories, so we can use both buildings in an integrated way and that’s both for materials and people. It is two separate buildings. There will be a fire door at the end of each passageway so that if there is a really big fire, one building would be protected. So it’s a good point and we certainly spent a lot of time thinking about it.
We talked to the people in GE Aviation at some length about it as well because, remember, this is something that they wanted and they — you know it’s not just with GE Aviation. It’s Airbus and Boeing. They’re the ones ultimately who really are very concerned about redundancy and it was OK from their perspective. But more importantly, from our perspective, we thought it was OK.
We live in tornado country. We’ve been around for a while there, so it’s not a new thing for us, and we think that we’ll be OK.
Unknown speaker
And my last question, and in this meeting and previous meetings there’s been no mention of the Textron program on their aircraft.
Brian Shore — Chairman and Chief Executive Officer
Scorpion?
Unknown speaker
Is that still — the, yes, the Scorpion. Has that gone on any — than two tests?
Brian Shore — Chairman and Chief Executive Officer
We just saw — sorry. I interrupted. What was your question?
Unknown speaker
Where is that right now?
Brian Shore — Chairman and Chief Executive Officer
I was just going to comment, interesting that we just saw that one of the prototypes flying by our plant the last couple of days, we take pictures of and videos because they used a Newton airport for test flights. So you really need to talk to Textron about that or go on their website, but my understanding is that all the — they built prototypes. They have flying prototypes. They did some test articles.
But at this point, from our perspective, the program is not active, my understanding is, and again I feel a little bit uncomfortable because I don’t want to be doing disclosure for Textron. My understanding is at this point, they’re doing more testing maybe for military and stuff like that. But mostly, they have the — the objective is to sell the airplanes. I think the airplanes are fully developed and now they’re trying to get sales of the aircraft.
So we’re standing by, waiting to help, but at this point, we’re hoping that they start to sell the airplane. We hope to get a — they get a first sale and then we’d certainly would be talking to them again.
Unknown speaker
Thank you very much.
Operator
And I’m showing no further questions in queue at this time. I would like to turn the call back over to Mr. Shore for closing remarks.
Brian Shore — Chairman and Chief Executive Officer
OK. Thank you very much operator, and thank you all for hanging in there for such a long call. Appreciate it. So that’s it.
If you have any follow-up questions, give Matt or me a call. Have a great day. We’ll be talking to you pretty soon because our first quarter ends just a couple of weeks. We’ll be talking to you again in our first quarter pretty soon, but have a great day.
And like I said, call us if you have any questions. Thank you. Goodbye.
Operator
[Operator signoff]
Duration: 69 minutes
Call participants:
Brian Shore — Chairman and Chief Executive Officer
Matt Farabaugh — Chief Financial Officer
Unknown speaker
Christopher Hillary — Roubaix Capital — Analyst
Brad Evans — Heartland — Analyst
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