Good morning. My name is Shannon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp Second Quarter Fiscal Year 2020 Earnings Release Conference Call and Investor Presentation. All lines have been placed on mute to prevent any background noise. After the speakers’ remark, 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, Chairman and Chief Executive Officer, Mr. Shore. You may begin your conference.

Thank you, operator. Welcome everybody to our second quarter call. This is Brian and with me as usual is Matthew Farabaugh, our CFO. So we have a presentation we prepared for you and for this call, it's been posted on our website and also there is a link that's referred to in the earnings news release. So you probably want to get a copy of that in front of you because Matt and I will be going through the presentation. There's also some supplemental financial information that's attached to the presentation. I think it's Appendix 1. We're not going to read through it, but it's something you might want to take a look at some point. Obviously, you know the news release is out. The earnings release is out as of earlier this morning. So there is a lot to cover and I'm going to try to cover some more complex topics to give you some perspective on the quarter. So please just try to bear with us, but why not we get started. So on Slide 2, we have our forward-looking disclaimer. We're not going to read through that, of course, but if you have any questions about it, please give us a call. Thanks, on that. Slide 3, Matt, why don't you pick up on Slide 3, talking about the expansion spending and also top five customers.

Sure. Thanks, Brian. The -- just as a reminder, we had announced that we are doing a major expansion at our Newton Kansas facility and we made that announcement back in December. And we're just -- this slide is really just to give you a quick update on where we're at and the spending on that, on that expansion. So our estimated budget for the expansion was $20,500,000. So far through the end of Q2, we've spent $3,900,000, so a little bit -- little short of $4,000,000 on that and the remaining to be spent for that expansion is about $16,600,000. That expansion is expected to be about -- the construction in the installation of all the equipment is expected to be completed by next summer, so that's the summer of 2020. Let's see the top five customers for the quarter are AAE Aerospace, AAR Corp, Kratos Defense and Security Solutions and Meggitt PLC, and of course MRAS, including its subcontractors, and just a reminder that MRAS is now a subsidiary of ST Engineering Aerospace.

Okay. Thanks, Matt. I'll take it back to. Let's move to Slide 4, everybody please. So here the quarterly results which you've seen presumably. The sales for the quarter, second quarter, I'm talking about $13.723 million gross profit -- gross margin 27.8%, obviously way down, and EBITDA $2.406 million also down. So let's talk about what we told you would happen or what we said -- we believe would happen during our first quarter conference call that was on July 11. We gave you a sales estimate of $14.5 million to $15.5 million and EBITDA estimate at $3.1 million to $3.7 million. So the shortfalls both top and bottom line, the sales shortfall is to the lower end of the forecast range, okay, not the middle of lower end is $777,000 and the EBITDA shortfall of $694,000. So obviously, if we go to Slide 4, the question is what happened? Why did this happen? What the heck happened in Q2? So, as I've already mentioned at the beginning of this explanation -- the explanation is as complex. It's also a multifaceted. And we're going to go into some details because I think it would be helpful for you to understand and get the perspective. These are things we probably haven't discussed with some in the past. So just try to bear with me, please. Why don't we start with some background perspective and I'm trying to pin in a picture for you here by giving you a little background perspective, okay. We've discussed this before, but I just want to remind you that in fiscal '19 Q4 that was December of last year in January and February of this year, the sales to the -- for the GE/MRAS programs for three times the sales of the first quarter that same…

[Operator Instructions] Our first question comes from Christopher Hillary with Roubaix Capital. Your line is open.

Great. I just wanted to ask, you said in your comments that we could ask you about your long-term forecasts. I just wanted to ask, if you give us some more insight into what you may or may not have included in some of those longer-term forecasts?

So, the long-term forecast we've -- I think we discussed this before. So we start with the long-term forecast, we have from MRAS, I know on the GE programs. We have cut that to some extent, just to be a little bit conservative. The GE9X program, we have heard a lot. So that's kind of our baseline, and then there is a 100 of our line items that are considered in terms of how we get to the top line. And the bottom line is just doing the math in terms of, once we have the top line figuring what our costs are and coming up a with bottom line or EBITDA estimate. There is nothing unusual or extraordinary included in top line. There is nothing from acquisitions. It relates to -- it's based on organic growth. So I don't know. Is there anything else that I can help you with in that regard in some other -- did that answer your question?

Yes, I've advance my question. I'm just trying to get a sense of -- I think in your call today, you discussed that you might prefer to give yourself a little bit extra space in the forecasting and I was essentially asking how you -- with that in mind, how you characterize the longer-term forecasts?

Extra space on the top line and bottom line, just one understanding we are getting at.

I think, whichever way you think is more accurate, describe it?

Well, we're not going to update our long term forecast now as I said. We're going to do that once a year and we do the forecast. What we're telling you is this, what we think is going to happen as we've commented and we don't do forecasts, either short-term or long-term, which are created, so we can beat it and be hero and that kind of thing. We give you a forecast, we tell you this is what we think will happen based upon all the assumptions we're making, based upon the fact that we're going to work very hard to achieve these things. So we're not inclined to give you a conservative forecast. So we can be heroes and every quarter where it's a wonderful. I know a lot of companies will do that. I don't mean to be sarcastic about it, but it's just not what we would do. I think in the third quarter, sorry, the second quarter rather there were these three events, which were unexpected and -- but they don't have impacts on a long term though, I don't think. Those are short-term things and when you get to quarterly forecasting Chris. It's quite different than long-term forecast. You really have to -- you really have to focus on what pocket this is going to fall into. Is it going to be this quarter or next quarter, but long-term forecast is a little different. You should not solely dependent upon kind of nuances and subtle changes from month-to-month, let's say.

Okay. And then one more, just a follow-up and I'll pass. Obviously, you have a material cash balance and in previous calls, you've -- I think expressed some confidence that there is some acquisition opportunities particularly certain ones that perhaps customers of yours or supply chain members have suggested that you consider. Is there any updated color you might share on progress on that front?

Not really very much. What we've said before, still applies. It's a little bit of a tedious process because what we're trying to avoid is just kind of getting involved in auctions that are run by investment bankers, because we feel often those are over priced and are not really what we want. And often or not, really kind of niche either because niche things aren't really appealing often to kind of financial buyers and other buyers. So we've identified a number of companies in three, four different product categories and we reached out to them. But the reason it's a little bit more challenging is that these are not companies that have been put up for sale. These are companies that may not be for sale. So it's an effort we have to stay with and I guess what I can say is, we'll see what happens, but there really isn't any significant change from, I guess, when we talk about this maybe the last quarter.

[Operator Instructions] And I'm currently showing no further questions at this time, I will turn the call back over to Brian Shore for any closing remarks.

Okay, well thank you very much, operator, and thank you all for listening today. Again, I appreciate you hanging in there. I know, it was a fairly long discussion and a little bit complex it involved. But again, we thought it would be necessary for perspective, or at least helpful for perspective, let's say that way. So have a good day. Give us a call. If you have any additional questions, we're available, of course. Thank you again. Goodbye.

Ladies and Gentlemen, this concludes today’s conference call. Thanks for participating. You may now disconnect.