Park Electrochemical Corp. (NYSE:PKE) Q1 2020 Earnings Conference Call - Final Transcript

Jul 11, 2019 • 11:00 am ET

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Park Electrochemical Corp. (NYSE:PKE) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Matthew Farabaugh

company, now it's ST Engineering Aerospace.

Executive
Brian E. Shore

Okay. Thank you, Matt. So why don't we just keep moving? We'll try to hustle along here. Slide 4 is our results for Q1 with the prior quarter comparisons. I want to point out that we're trying to focus more on sales, gross margin, EBITDA, then EPS and net because the interest and taxes really tend to skew the numbers quite a bit. In Q1, tax rate was higher than Q4, interest income was lower than Q4, but if you look at the EBITDA numbers and the gross margin numbers, they are more apples-to-apples. So let's talk about Q1 as compared to what we indicated, what kind of forecast we gave you when we did our fourth quarter call, on May 17. We estimated sales of $14.25 million to $15.25 million and sales end up $14.95 million; that came within the range. We also estimated EBITDA $3.4 million to $3.8 million as to the EBITDA for Q1 was $3.372 million, it is a well kind of round to $3.4 million but that doesn't really tell whole story because when we do I'm going give you these estimates, we have an internal number which is not a range of course.

And what we do and we discussed this last time, we -- our internal number is going to be at the middle of that range. So we're not going to give you a lower range so we can beat it. We're telling you what we thing is going to happen to the best of our ability. So really we are looking for a $3.6 million in a sense because you see $3.4 million to $3.8 million, averages at midpoint to $3.6 million, so we were about $225,000 short in our EBITDA in Q1 from what we thought we were going to do. And so we're -- sorry, down the pages of Slide 4 factors which affected our Q1 EBITDA; training of third shift. So we talked about the third shift, bringing a third shift on during our last call because business was so strong and so demanding, but we were real just training the third shift in Q1. They are now not working but during the training period it's really cost because they're not working yet, do not really release the factory lines. And we do have a pretty extensive training; the skill level for the operators in the factory floor quite high. And so it's really important that the operators are trained effectively and completely, so that we don't have any mishaps, we don't have any issues of quality or safety or anything like that. It is just not like just going to work on the assembly lines. These three lines are very complicated to run and it's important that the guys and some gals are trained carefully and completely.

Next item, outside testing costs incurred to meet demanding production schedules. What's going on here? See the thing is that is just impacting demand