Good morning. My name is Michelle. And I'll be your conference operator today. At this time, I would like to welcome everyone to the Park Aerospace Corp. Second Quarter Fiscal Year '22 Earnings Release Conference Call and Investor Presentation. 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, Chairman and Chief Executive Officer. Mr. Shore, you may begin your conference.

Thank you, operator. This is Brian. Welcome everybody to our second quarter conference call. I have with me Matt Farabaugh, our CFO. As usual, of course, -- as most of you know, we announced our earnings this morning. In that earnings release, there are instructions as to how to access the presentation, which we're going to go through now via webcast. The presentation is also posted on our website. And I think you really want to have a copy of the presentation in front of you as you go through it to make this call more meaningful. As usual, we try to provide inside interesting perspective. We can't cover everything. We don't spend a lot of time ticking through dry data numbers. That's really not what we try to do in these presentations. And I want to warn you, this could be a long one. I think the last three or four have been, it could be like 45 to 50 minutes. So hang in there if you can. And Matt and I will be happy to answer questions so why don't we go through the presentation. So let's get started. Slide 2, this is our forward-looking disclaimer. Let us know if you have any questions about our disclaimer language. Slide 3 is our table of contents. We have three appendices, which are attached to the presentation. We're not going to go through those at this time. But again, let us know if you have any questions either at the end of the presentation or you can call us later. Slide 4. Now we get into the part of the stuff we go right with the numbers. So we just announced our fiscal year '22 Q2. As you know, our sales were $13.618 million. Look at the right-hand column here,…

[Operator Instructions] We have a question from Brian Glenn with Olcott Square. Your line is open.

Hi, Brian.

Hi, Brian. How are you doing?

Good. How are you?

Good. Thank you.

My question is -- there's two questions. So the first is -- thank you for the walk through, of course as always. The first is around the supply chain. You alluded to it a little bit. Is there a chance that you guys who are more than adequately prepared for a ramp that you're held back by the rest of the industry. I know Airbus has several thousand or more suppliers for that program. I know not all are sole source, so there's some ability to toggle. But is that a real risk going forward that you see as potentially material? And then the second question is around -- I know you haven't put in place guidance yet or brought it back. But if we go back to pre-COVID. I know during COVID, you guys worked on some military programs and there were some added efforts there. You talked about the Lightning Strike material through NORDEM. That's on the Passport 20 that looks like a new program that may happen or that is happening. And so commercial aside, if you think about the long term without getting into numbers. Is there kind of a net add in terms of the programs you might be on or that you are on versus if we go back to 2019 when you had that forecast in place?

Okay. Thanks. So let's see, the first question is supply chain and is that going to be an issue for us ramping up. I guess, as you at least implied, we are sole source on all the GE Aviation programs, including the Airbus A320 family programs. So I think the risk of our being replaced is non-existent on the existing programs if that's what you're getting at. But there certainly is a major challenge for us. Our supply chain as we're ramping up. Plus we're also doing trials and everything else. So there's even more work there, -- So it's a major challenge. And when will this kind of thing even out? I don't know. I mean there's a lot of reporting about it. When will the suppliers' kind of catch up and kind of get their rhythm back? I don't know, maybe toward the end of the year, that's what I hear some reporting about that. But of course, it's a case-by-case thing. We have 3 or 4 major suppliers that we use for these GE Aviation programs. And we really need to look at each one individually. Some are doing well. Some are struggling. And I don't want to how else answer except it's just a major effort and sometimes brute force effort. But the other side of the equation, I guess, is our people are very determined, very committed to finding ways to make things work. And we've been able to do that for the most part. So I don't know, Brian, I'm not sure if I answered your question adequately. Is that kind of information you're interested in? Or is it something else that you're going for there?

That was helpful. Yeah. I know you guys are sole sourced with respect to the GE program. It was just around people, even suppliers even outside of your vertical, right? They're supplying into [Indiscernible]. This is stuff totally outside of your control right. And it's a bottleneck for everybody.

Okay. I understand that question. So it's a really good one. Because let's say we got everything organized, our suppliers are okay. But if Airbus is not able to source other key components or soon to be able to make the airplanes and it affects us. I get what you're going for. Well, that's a really good question. I don't have a crystal ball on that one. My feeling is it just my feeling is it's going to be ugly and messy for a while. My feeling is at some point, the supply chain some of these are very large companies that don't really aren’t that agile, don't move that quickly. At some point, will catch up and kind of get used to the new rhythm, the new rates and everything else. When that will be is a good question. I don't know. But I think probably -- I'll just give you my -- it's all my speculation. My feeling is toward the end of the year, we'll start to feel that things are getting a little better, not solved, not that don't any issues. And I'm not just talking about our supply chain, I'm talking about what you're asking about the supply chain for these airplanes, which like you said, thousands and thousands of different components are required to make these airplanes. You're probably not surprised to hear this, but Airbus for insist they have a massive function that deals with supply chain management. And they spend a lot of time to suppliers, they try to identify where the risks are and try to focus on them. I'm sure it doesn't surprise you that that's what any good OEM would do. So I don't know if that helps, but I don't want to as what else I can do.…

Understood, thanks. That’s very helpful. And thank to you and your team for the efforts on behalf of the shareholders?

Thank you. Thanks for those comments.

[Operator Instructions] Our next question comes from Brad Hathaway with Fairview. Your line is open.

Thanks for the time, and thanks for all the detail on the call. One question was, on your call, you mentioned that initially the new facility was mainly going to be kind of backup capacity, but now you're really going to need it. Is there any way in kind of big picture numbers to think about, I guess, the total kind of revenue capacity you have when that new facility is online?

So we talked about that before. I think we said it's about $60 million in capacity, new capacity. But remember -- you may not probably remember, at least we haven't covered this for a few quarters, I don't think. But in the factory, there is a big area, and we're talking back just is not like a little room, a huge area that set aside for another line. It could be a hot melt line or a solution line. So if we decide we need more capacity to be very easy to drop that in. We don't have to go build a new factory. The factory is where you build the equipment has already been designed because we just bought the equipment. So it would be easy to drop in a new line there. So it could be ramped up to much more than that at that point. So the thing I was saying, I just want to make clear is that the factor was originally agreed to with GE Aviation and MRAS as we're done in factory. Why is that? We just talked about being sole-sourced, it could take three years to qualify a composite material supplier on these major commercial aircraft programs three years. So it's kind of a scary thought. What happens if something happen on a factory rather? I mean it's like a really scary thought of. They had this discussion with people before. And it's kind of -- the room gets really quiet. So they asked us very understandably we'll build on the factory, which we did. If you look at the little photograph of the new factory. It's actually a separate building that is joined with a passageway for moving people and material that has a fire door on both sides. So it's kind…

Got it. Great. That's helpful. And is there any more color you can give us kind of on the M&A side and kind of anything you're seeing out there? I'd love to hear more about your thoughts there.

Yeah, the M&A side. So we continue to work in this area, the strategic area that we identified. And I think we might have mentioned it, but these products or products are used to make composite structures by our customers. It's not composite materials, but other things are used -- other products that are used to make composite structures. So that's one area we've been focused on. We probably contacted. And I mean, Matt, I don't know if you haven't done their number, a dozen or more of these companies. And we continue to reach out to other companies, and we keep trying. So that's something we feel real good about because we feel it makes so much sense for us to be in that area. The challenge is to find the right opportunity because obviously, a lot of times you’ve contact somebody and thank you very much for not for sale. That kind of thing. So these are not auctions where some things for sale, we so bankers putting it up for sale. So it's a little more difficult from that perspective. There are a couple of companies that we're kind of watching tracking to see how they're doing. They may be public and watching how they're doing and kind of maybe the timing isn't quite right yet. We're thinking about them. And then there's this other area we talked about, which is more of a kind of joint investment with very big OEMs and new aircraft programs which we've had discussions. We've had beginning discussions with one of these big OEMs. We've reached out to 2 of them. And the first discussion is in the beginning of the discussion, but it was with very high-level people. And I felt there was a serious interest in the report. They know us very well also. It's not like, who are you. So we're hopeful. We're hopeful that will be a good avenue for our investment and really great opportunity for Park's future.

That’s it. Thank you. Thanks for all the efforts.

Sure.

There are no further questions. I'd like to turn the call back over to Brian Shore for closing remarks.

Thank you, operator. Thank you, everybody, for listening in. Sorry, I went so long. Every time we try to -- at least I try to make a little bit more compressed, but I don't -- I'm not -- have not been very successful. Have a great day. Matt and I are available. Call us any time, we'd be happy to talk to you. Okay. Good day. Thank you.

This concludes the program. You may now disconnect. Everyone, have a great day.