Good morning, ladies and gentlemen. My name is Derrick and I will be your conference operator today. At this time, I would like to welcome everyone to the Park Electrochemical Corp. First Quarter Fiscal Year 2014 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. At this time, I will turn today's call over to Mr. Brian Shore, President and Chief Executive Officer. Mr. Shore, you may begin your conference.

Thank you, operator. Hello, everybody, good morning. This is Brian here, with me Matt Farabaugh, our VP and CFO, as usual. So, I’ll start with some introductory remarks and then we’ll go to our questions. Let’s start with Matt and so we’ve changed our approach to the conference call, a little bit as of the last quarter. Matt’s comments are really going to deal with only things which are not included directly in the news release, which was went over the wires this morning. And, also want to remind you that transcript of Matt’s comments were posted on our website earlier today, so if you want to go take a look at some of the detail items that Matt is covering, you can go ahead and do that. After Matt’s comments, financial comments. I will offer few comments my own and then we’ll go to the questions. Go ahead Matt.

Thanks, Brian. Certain statements we may make during the course of this discussion which do not relate to historical financial information may be deemed to constitute forward-looking statements. Any forward-looking statements are subject to various factors that could cause actual results to differ materially from our expectations. We have set forth in our most recent Annual Report on Form 10-K for the fiscal year ended March 3, 2013 various factors that could affect future results. Those factors are found in Item 1A and after Item 7 of that Form 10-K. Any forward-looking statements we may make are subject to those factors. I'd like to briefly review some of the items in our first quarter ended June 2, 2013 P&L, which are not specifically addressed in the earnings release. It is important to note for any discussions during this conference call that the first quarter ended June 2, 2013 and the first quarter of last fiscal year were 13-week periods. The fourth quarter ended March 3, 2013 was a 14-week period. During the fiscal year 2014 first quarter, North American sales were 48% of total sales, European sales were 9% of total sales and Asian sales were 43% of total sales, compared to 47%, 11% and 42% respectively for the first quarter of the prior fiscal year, and 49%, 9% and 42% respectively for the 2013 fiscal year fourth quarter. Sales of Park’s high performance non-FR-4 printed circuit materials were 86% of total laminate and prepreg material sales in the first quarter of fiscal year 2014, 81% in the first quarter of the prior fiscal year, and 82% in the fourth quarter of fiscal year 2013. Sales of Park’s aerospace materials and parts were $6.7 million in the first quarter of the 2014 fiscal year compared to $7.6 million in the…

Okay. Thanks a lot, Matt, short and sweet. This is Brian again. Okay, let me give a little perspective. I think my comments were shorter than unusual. Of course we spoke just about six weeks ago is this is what goes in the unusual timeframe between quarters between our fourth quarter and first quarter call. So, let me just add or develop a couple of points to matter we made. Our tax provision is higher in Q1 versus Q4, about the same as the prior Q1 and the reason for that is in part that our business is more profitable in the U.S. where the tax rates are higher. Investment income, that’s something you should be paying attention to, I think, analysts. So Q1 versus Q4, it’s $200,000 negative, let’s see, Q1 versus, Q1 was $300,000 negative and the reason in part is that our interesting comment in this current Q1 was a fairly low and of course the other region is the $52 million loan, which we look out I think in January to pay the special dividend maybe in February. And we had about $170,000 of interest expense in the first quarter on that loan and we haven’t had interest expense in the past. So that’s something that you are going to be seeing going forward at least as long as that loan remains outstanding. So, let’s talk a little bit about profit from operations. If we talk about tax provision, investment income, let’s focus on profit from operations and do the comparison work there, Q1 versus Q1 last year. So the revenues are actually lower this year’s Q1 versus last year’s Q1, but the operating profit is better. Why is that? Well, there’s a couple of few reasons here that are the key ones, anyway. The Waterbury…

(Operator Instructions) Our first question will be coming from the line of Sean Hannan, Needham & Co. Sean K. Hannan – Needham & Co. LLC: Yes, good morning, thank you. Can you hear me?

Yeah, we can hear you just fine Sean. How are you doing? Sean K. Hannan – Needham & Co. LLC: Great, great, hopefully, you’re doing well also. First, question for you Brain. So, I was looking to see, if you could characterize what you’d see in the quarter in terms of mix. How would you characterize the mix that you sold through versus February? And then was there, it sounds like there was slightly better mix. I just want to make sure that there wasn’t any sort of drop or if there is clarification that at the end of the day, maybe it was even consistent. Just want to make sure, that I understand exactly what that mix flow through was. And then how much of your gross margin improvement from February was mix related versus the more dramatic revenue leverage, say, from restructuring benefits. Thanks.

Okay. So, if you’re comparing Q1 and Q4, Sean, restructuring benefits, there is no leverage. The plant closures occurred in, like I said, August and September of last year. So, we’re talking about improvements in Q1 versus Q4. Revenue was a part of it, and remember, Q4 was a 14-week quarter, so you have to take that into account, because the number itself was a little higher, rev number in Q1 versus Q4, but that revenue was achieved in 13 weeks versus 14 weeks. The other factor, as I mentioned, is aerospace continues to improve that contributes to the bottom line and mix is important. The high performance percentage spiked up 86%. I think Matt said, that’s a big spike. That’s important. That has a big impact on our bottom line. That signal integrity product line has been quite strong. I think I’ve mentioned in last conference call, we always talk about high performance, non-high performance, but all high performances is not created equal. So, there is different degrees of high performance and the general rule of thumb is the high performance the higher the margins. So, the SI product line would be at the higher-end of our high performance product line. So, not just the number is being better 86%, but what’s in the 86% I think is driving the bottom line, the margins, the gross margins as well. Sean K. Hannan – Needham & Co. LLC: Okay. That’s helpful. And then, you’d made a reference point a little bit earlier in your prepared remarks about strong bookings within May and also generally decent demand in terms of what you’re seeing in the first three weeks of June. And so, with the mix characterization that you just provided for the May quarter in terms of rev generation, is that something that you’ve seen sustained kind of to current point, and any thoughts around that would be helpful.

You’re talking about the mix in the first weeks of June? Sean K. Hannan – Needham & Co. LLC: Yes.

I see. Well, we don’t see any departure in the first three weeks of June. I think the trends are continuing. We normally don’t offer resolution of, mixed resolution on three weeks, because we think that’s a little bit dangerous. But we would say that whatever trends we see in one place in Q1 seems to be continuing. Sean K. Hannan – Needham & Co. LLC: Okay. That’s helpful. And then, in terms of the regional geographies, can you provide a little bit more of a breakdown of what you saw for demand in the May quarter on a regional basis, how the geographies ended the quarter, and kind of how you’re seeing some of that performing now into these three weeks as well?

Okay. So, again, we don’t normally give resolution for a three-week period. We’ll talk about total bookings, total revenues sometimes. But, I would say that it is no difference or no break in the trend. The trend continues. Matt did give the breakdown from on a regional basis and I don’t think there is any significant change in the first three weeks as compared to history we had in the first quarter. Sean K. Hannan – Needham & Co. LLC: Okay. So nothing really struck out there in terms of regional geographies?

No, I wouldn’t think so. No. Sean K. Hannan – Needham & Co. LLC: Okay. And then, last question. From a competitive standpoint, I realized and we’ve talked about this a lot in the past, is a very competitive environment you operate in. I was hoping maybe you could discuss whether you sense any change in standing in terms of kind of the higher design in non-FR-4 for your share at some of your top customers. I saw Multek was not in your top 10 this quarter, not within your top five this quarter. Just trying to get a sense of where your competitive standing might be ebbing and flowing and are there any competitors perhaps that even if you’re not seeing share ships, are there competitors that are perhaps becoming a little bit more prominent from what you’re seeing at those top customers? Thanks.

So the Multek story, you’d probably want to talk to the Flextronics people, but there’s a special circumstance there, but that’s not a function of loss of market share. I don’t want to say anything more about that, but there is something. There is news there. It’s not our place to share that with you. Let’s talk to Flextronics people about that, but it’s not a market share story. I don’t think, well, let me back up. We’ll have to just say of course the market for electronics is really competitive and that’s not getting less. I’ve commented I think a number of times recently, even in annual report letters that the competitive landscape is getting more competitive. The suppliers coming out of Asia, in particular, Taiwan, Korea, Japan, become more aggressive, more assertive and they’ve also introduced better technology and that’s really a key thing. But, Sean, I don’t know, we’re not going anywhere. I think we’re continuing to fight the fight, and I feel pretty good about how we’re doing. So, we’re not Johnny-come-latelies to the market. We’ve been doing this long time. We continue to upgrade our technology, as you know, and I think we have a pretty good product line right now. We’re not going to win a prize. So when we win, the prize is usually not the deciding factor. Maybe I shouldn’t say usually. It’s going to be never the deciding factor, I don’t think, but we still do win. So there are reasons for that, and it’s not price. So it’s probably technology, and maybe the, I don’t know, maybe the confidence in Park as a supplier, you could talk to our customers about that, if you’d like to. But to tell you my guess that those are the two factors, because it’s…

Your next question is from the line of Morris Ajzenman, Griffin Securities. Morris B. Ajzenman – Griffin Securities, Inc.: Good morning guys.

Good morning. Morris B. Ajzenman – Griffin Securities, Inc.: Your comment earlier that aerospace was better than last year, was that referencing operating profit, because it’s look like the top line was down about $1 million or just less, was that referencing operating profit not the top line?

Exactly that compares to last years first quarter and also last year’s fourth quarter. Both comparisons, so it’s not a top line thing, it’s a bottom line thing, and that’s just because we’re performing better. We’re getting on the start-up mode. We’re getting more into a going concern mode. And I mean, I guess, we have to say things are going according to plan. We still have, we still make more mistakes than we should, but you could clearly see the trend of improvement, and that affects a lot of things. It affects how we perform with our product, with our customers, and also it affects how we perform financially. Now, last year’s first quarter, when we’re comparing to that, then we had the burden of two facilities we were carrying as well in Connecticut as well as Kansas. And we also the burden of the extra expense for the re-site qualifications, which were significant, and those things are behind us. But when you compare Q4 to Q1 or Q1 to Q4, in Q4 all those things behind us in Q4 as well, the improvement between from Q4 to Q1, not top line as you noted, it’s just we’re getting our act together more and more, which is what we would hope to do, we’d expect, again getting out of start-up mode, more into a going concern mode, and now we’re also as I said, because we’ve calmed things down, we’re in a position that we went after new business, and we’ve had some encouraging success in that area even though you don’t see reflected in the top line of Q1. Morris B. Ajzenman – Griffin Securities, Inc.: So, looking out, I know, you’re not in the business of predicting revenues particularly for any division, but aerospace this three-year agreement. When does that start-off and when without putting you in a corner, when do you think will start seeing some top line improvement?

What was the first question Morris, when was the start-up. I don’t know, what you… Morris B. Ajzenman – Griffin Securities, Inc.: The three-year agreement that you have with the jet engine company, is that already up and running. This would take time to get that up and running before we start seeing revenues. And coupled with that, would then be, when do you start, when do you believe we’ll start seeing some traction and top line growth for aerospace.

It’s a three year agreement and it’s less than $1 million in this calendar year, but more than $5 million is the estimate under the agreement in 2014 and 2015. But as I said, this company has come back to us very recently and asked us to significantly increase those numbers. So we’re in discussions with them now. And I think by the time we report our second quarter, I will be able to give you the results of how those discussions went. But this came from there side rather than our side, which of course is that’s an encouraging sign. Morris B. Ajzenman – Griffin Securities, Inc.: Okay. Aside from this one contract, which clearly is important, I’m not trying to overshadow that but, on a current book of business it would be staying at about $6.5 million, $7 million run rate quarters, next few quarters going out? Is there any reason to believe that that might improve putting aside this particular three year agreement?

Okay, you’re right that is, it’s very difficult to predict. Because we can talk about the agreement, because it’s a written agreement, and the details in the agreement including our revenue estimates, but when we talk about everything else then. What are the questions? The questions are, how is the aerospace economy? That’s one facto and the other factor is, how do we do? And really what we need to do here is build more of the base of business. So we’re not depended on one large contract, one large opportunity to make us or break us. So that’s what we need to be doing, and I would expect that our people are out there hitting the pavement pretty hard, looking for new business opportunity is in with existing customers and new customers. Again, why is that? Because we feel we’ve gone through the transition, and we’re in a position to grow our business now. We’re stable enough or in a position to grow our top line. So, that would be let’s call a high intensity activity for Park right now. For the people who work in Kansas, who are our sales people to go out there in the streets, beat the bushes and find more business opportunities for us. I think those people, who are listening, know who they are, and it’s our responsibility to make that happen. But Morris, the problem with that it’s a very difficult to predict that’s not as a defined contract where I can share with you what the numbers are, what the expectations are. But, I can tell you, just give a little color here is that, we did not build that facility in Kansas. For the kind of top line, we’re showing you now that’s not what we had in mind. Morris B. Ajzenman – Griffin Securities, Inc.: That’s good color, thank you. One last question, I get back in queue, the three different regions; North America, Europe, Asia. Overall this quarter, your top line was down a little less than 6%, any one of those regions that were materially great decline, anything that stuck out in these regions. Can you give us percent of sales of, it looks like North America and Asia had the highest percent of sales, I think that’s correct year-over-year, but any of those regions that down more than the corporate average that we might a point or two anything to discuss there.

Well, Matt gave the numbers, so the numbers speak for themselves. I’d say as a general matter that Asia continues to be our strongest market and where our strongest opportunities are over the future. North America is kind of hanging in there, I’d mentioned even in the comment regarding our tax provision being a little higher this year that that’s because the expectation is for their bottom line in North America where tax breaks are higher. Europe is a little bit of an unfortunate story for us that we don’t, especially in electronics, Europe doesn’t seem to have a lot of upside. Now maybe a little bit in RF, which is not our main product line. Our main product line being digital in Europe, the opportunities are just not that great in Europe right now. And I don’t want to give the impression that we are giving up, because that would just not be true at all, but I also want to be realistic with you about how we see Europe. So I would think that Asia would continue to be growth market for us in the future. North America, maybe it depends, and Europe maybe not so much. Morris B. Ajzenman – Griffin Securities, Inc.: Brian, thank you.

Your next question is from the line of [Leonard Cooper, Park Electrochemical].

Hi, Brain. Can you hear me?

Yeah, we can hear you fine, Lynn. How are you doing?

Okay. And yourself?

Doing good. Thank you.

Sounds pretty good to me. In the financial numbers I didn’t hear depreciation and amortization. Did I miss that?

No, but Matt can you help us with that?

Yeah. Depreciation and amortization is running on, just under $1 million a quarter.

Okay. Thank you. In prior talks we spoke about private aviation, and there was a big inventory of used aircraft. How is that situation working out?

Yeah, business jets in particular, we don’t really do much with this very small single-engine type airplanes. That would be more recreational. Business jets, that’s always been a target market for us. I think the story is kind of mixed, and I think a lot of the business jet companies are still struggling, not doing too well, you can read the news yourself, you won’t come any particular companies, but that’s not really the wonderful story, that we like to be, maybe some of the target customers have changed a little bit, as the players shift their positions let’s say. But, we think that a lot of our opportunities may not be in the business jet area, maybe jet engines, maybe military, maybe UAVs, maybe helicopters, Boeing Airbus, probably not. Expect for very special technologies like those patented struts, where it would be Boeing space, it wouldn’t really be Boeing commercial. If they want to do business with us, they are going to have to come to us, because I believe we have a technology that they really need to have. We’re not going to get into, we don’t want to get into that game of competing against everybody else in the world for Boeing or Airbus business at this time anyway. So, going back to your question Len, I would think that the news that the business jet industry is still not that wonderful. And as a result, I think our sales and marketing focus are shifting a little bit to other aspects of aerospace.

Okay, how about drones, they seem to be everywhere.

Yeah and that’s UAVs is drones, I mentioned that as one of the markets for us. We were on many, many, many wrong programs.

Okay. On last year there was a return of capital situation, is that still a possibility this year on the dividends, we’re receiving every few months?

What’s the question about the dividends, Lynn?

Are there possibly going to be a return of capital as some of them were last year?

Yeah, I see. So I think what we’re going to do is we’re going to have to keep you posted and probably get back to you towards the end of the year. I think it’s difficult for us to give you that answer on a quarter-to-quarter basis, or a quarterly dividend to quarterly dividend basis. Just because the factors are moving around, they’re hard to really track, but we don’t want to give you information that we have to give you, we have to change the answer for you. So we don’t know at this point whether, to what extent the cash dividends will be returning capital.

Okay. Thank you, and one other question. I hear and read articles about quantum computing and cloud computing. Do these affect the interests of Park?

In a very big way, because what they do is they drive the demand in that infrastructure in a very, very big way. When you talk about cloud computing, the need for high-speed, low loss materials for lots of bandwidth, for more data processing, more data transmission, more data storage, hub routers’ storage, switches.

So, it’s a good thing for Park?

Yeah, it’s a good thing for people in high-end electronics. The cloud is, I think, a big deal. I don’t know much about the cloud, but when you start talking about cloud computing, it really dramatically spikes the need for internet bandwidth.

Okay. Well, thank you.

Okay. Good.

Your next question is from the line of Jiwon Lee, Sidoti & Company. Jiwon Lee – Sidoti & Co. LLC: Yes, good morning. I had some trouble with this line, but can you hear me now?

We can hear you fine, Jiwon, yes. Jiwon Lee – Sidoti & Co. LLC: Okay, excellent. Okay. Well, let’s just try to keep it simple. Brian, just wanted to ask you about that composites business, the growth that you are hoping to achieve. Just kind of going back to the customer that gave you that $13 million three-year contract, is that sort of the worries about the unnecessarily high concentration that prevents you from pursuing the business? Otherwise, why wouldn’t you want more business with them?

Well, did I say we didn’t? I don’t understand your question. Maybe I didn’t. Go ahead, Jiwon. Jiwon Lee – Sidoti & Co. LLC: No, I’m just wondering, it seems that they are obviously interested in doing more business with you.

Then we’re delighted about that and we’re very, very interested. But, at Park we take customer seriously. We don’t jump in without evaluating the situation seriously. So last thing we want to do is commit to something that we’re not prepared to live up to. So, we have to evaluate it carefully, but we’re very excited to have the opportunity. But, we have responsibilities too and I think the worst thing you could do is, what is it, jump in and then figure out later and realize that you don’t have a plan, you don’t the manufacturing capacity, you don’t have the equipment, you don’t have the capability. So we just want to make sure that even though we’re excited about the opportunities that we never disappoint. So we want to evaluate these things carefully and make sure that is right for us. But, yeah, we’re very pleased, very excited that we’d these opportunities. Jiwon Lee – Sidoti & Co. LLC: Okay. And then, if we have to sort of kind of compare the margin profiles between the composites, with the mix in mind that you have on the composites side and the PCB side, are there a lot of variables?

You mean comparing electronics and aerospace or within aerospace and electronics. Jiwon Lee – Sidoti & Co. LLC: It’s comparing electronics and aerospace, please.

Okay. So within electronics and aerospace there is a wide array of our products with different margin contribution. But as the general matter, I think that they’re fairly comparable. If you look at incremental contribution, incremental revenue, I think that in aerospace they are going to be some products, which are very high margin probably not, probably wouldn’t have too many electronics products of those margins, but you know, what is it that pyramid analysis, where there would be less volume opportunity for the extreme high margin products. But I think there is look at it kind of the, what you call out that, in the wheelhouse of electronics and aerospace that the margins would be similar. And that means that we are talking not the commodity area in either Aerospace or electronics. Jiwon Lee – Sidoti & Co. LLC: Okay. And lastly for me, so far in the quarter how would you characterize the impact of the copper?

Did you talk about that Matt?

Yeah, we actually mentioned, copper in the first quarter was favorable from the fourth quarter not a huge number $74,000.

Compared to the prior first quarter was not…

It was negative compared to the prior first quarter. Jiwon Lee – Sidoti & Co. LLC: Okay, great. And just one more thing if I can jab in, the geographic colors to me, it seems like the improvement in bookings and revenue activities since April was more attributable to how the Asian side of the PCB activity. Would you say that is more correct?

Yeah, I think that’s partly true that Asia has a significant role in the upside in April and even the bookings in May. Jiwon Lee – Sidoti & Co. LLC: Okay, that’s all for me. Thank you.

Mr. Shore, I’m showing no further questions in queue.

Okay, thank you very much operator, and thank you everybody for dialing in today and talking to Matt and me about our first quarter. Matt and I will be in the office rest of the day. So, if you have any follow-up questions feel free to give us a call. And have a great summer and we’ll talk you soon. Good bye

Ladies and gentlemen that concludes today’s conference. We thank you for your participation. You may now disconnect. Have a great day.