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 Third Quarter Fiscal Year 2022 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 all. Happy New Year. Welcome to our Q3 investor conference call. I have with me, as always, as usual, Matt Farabaugh, our CFO. So we announced our earnings this morning. There was a news release. In the earnings release, there is instructions as to how to access the presentation, which we're about to go through if you want to get that presentation in front of you. It's also posted on our website. That's another avenue to get the presentation in front of you. But without actually viewing the presentation, this call will be less meaningful, I think. As usual, what we try to do with these calls is mix it up a little bit, try to provide useful and interesting information to you, an interesting perspective we can. We're not into just going through a dry analysis of numbers and data. We can always do that for you later if you will call back. So we have this dilemma that keeps growing every quarter, which is the stuff we cover every quarter and we just go through it again and the problem is the presentations get longer and longer. We want to discuss new stuff as well. So we're going to skip over, at least skim over a couple of sections that we've – on topics we've covered before multiple times in prior presentations and calls. So I guess that's it. I just want to warn you, I guess, just to go through the presentation, it's a long presentation. We'll try to go through it as quickly as possible, but it could take up to 50 minutes, maybe a little bit more. That's 5-0, not 1-5. And then after we're done with the presentation to the extent you have any questions, Matt and…

[Operator Instructions] Our first question comes from Brad Hathaway with Far View. Your line is open.

Hey Brian, thank you for the detailed presentation. Especially appreciate the commentary on what the MRAS programs would look like in with the A320 in 2025. That was really incremental and helpful. So thank you for that. One quick question for you and then one longer one. The quick one is, can you give us any kind of thought on the materiality of the Ariane space, I guess, sales relationship that was announced yesterday?

So we can't quantify it. I guess I'll answer it this way. First of all, we already buy a lot of this product. So from our perspective, it's a big deal already. In terms of being a distributor and selling these products to others, we're just really getting started. We'll have to see. And we're really hard to predict. These are very critical components, this fabric, the C2 fabric that's used in a lot of missile programs. So other companies want to get involved with the missile programs, they're going to need this material. And they'd have to get it through us at least in North America. But I can't really quantify it. It just, I mean, we just, yesterday, I think in the news release I think we signed this agreement with them just about a month ago. So maybe not even a month ago, sometime mid-December. So I have to get back on that. We'll have to update you as we go. I wouldn't expect though because the way the nature of how aerospace works in particularly defense, that next quarter we're going to tell you we've got $5 million of sales of this product. I think it's kind of more of a long-term effort to develop this business.

Got it. Understood. Any future detail you can give on the materiality over the long-term would be great, we appreciate it. So the second question is on capital, and we discussed it many times. But in this presentation, you talked about; I guess a project that could use $6 million to $9 million of capital. But you still have, even with a conservative calculation; you have basically close to $100 million of capital on the balance sheet. How do you think about, I guess, your alternatives to use that capital going forward? And what are you seeing in terms of things you're excited about or things you're most excited about compared to where we were six months ago?

So we certainly don't need that amount of money to run our business on a day-to-day basis. I mean, normally, we generate cash. We like to be conservative. So we want to have some working capital available. So that's our opportunity of money, really and I know it's $6 million to $9 million. I mean, for some companies, that would be a lot. For us, it's probably not that much. I mean, it's important money because we had to earn that money. Nobody gave it to us. That's kind of our mindset in our money and know that we don't spend it casually. But to your point, it doesn't make a huge dent in the cash position now. And this is probably a little bit of maybe good frustrating discussion for you and some other shareholders because all we can do is say we're working on things, a number of things, but we really can't identify or quantify what those things are, including acquisitions. And I know we've been talking about it for a long time, so I wouldn't blame some shareholders being a little skeptical of that, and we blame it all. Our standard is a little different. We're not looking to just buy something to buy something. We cover that probably a dozen times. But let me just go back to what I said. To us, this is our opportunity money for the future. And whether we do something or other – we've done a lot of dividends in the past. We continue to pay a regular dividend. That's something that, obviously, we always consider. But my hope would be that we still are able to use a good portion of cash to develop opportunities for Park for the future.

No. And to be clear, my preference is always that if you can find a high return use of that capital, whether it's an acquisition or whether it's a joint venture or whether it's an investment in another factory, it could be returns from the new nature because they're going to be incredible. That would be my preference. But just to push a little bit more, you got – as you say, the aerospace industry was dead a year ago and is now recovering. So I guess, if you couldn't get – if you couldn't find a deal that worked for Park in the last 18 months, at what point do you say, you know what, it's going to be actually even harder trying to go your valuation criteria going forward and say that you're not going to be able to put cash to work?

Good question. So you're right. We thought that when the market collapsed that there would be a lot of great opportunities, maybe companies that were good talent companies but had too much debt and that kind of thing, the valuation is to be really good. But that didn't happen. I'm not the expert in that topic, Brad, but I understand that there's just so much free money, so much Fed money around that people were able to hang on rather than selling at these kind of distressed levels, bargain basin levels hang on and get through the difficult times which is I think what a lot of people did. And you're quite correct that the valuation never went down to as much as we would have liked, but they certainly are very high right now. Everything is high, any asset cars, houses, boats, planes and businesses. And that's obviously not our friend. That's not good for us. And maybe with interest rates going up, maybe nobody wants interest rates go up except us because we're the ones who have the cash, maybe that will help us a little bit. It seems like the tenure is up little bit again. So that might actually be good news for us. But the more direct answer is that we have to keep adjusting our focus and looking at other ways and other things, which is what we've done and what we're doing because, you're right. I mean, what did Einstein say, keep doing the same thing and expecting result, that's a definition of being insane. So just to keep adding and saying, oh, we're still doing the same thing, it does not bring logic to it when your point is correct. I mean, we have not had that success. So what we do is we keep adjusting our focus and refocusing and retuning, looking from other perspectives. And we're pretty actively doing that actually right now. The frustration with M&A stuff is, obviously, there's only so much I can say. We can't really give any specifics. I'm sure you understand that. That's not something that's possible. So I don't want to say except I'm hoping that you'll see some interesting things in the future on the M&A side. But we're continuing to work at it. But very good point, not just continuing to beat our head against the wall doing the same thing, adjusting our focus as we go so that we have a better chance of being successful.

Great, excellent. Thank you very much for your efforts and efforts for the Park.

Happy New Year Brad.

[Operator Instructions] I'm not showing any additional questions. I'd like to turn the call back over to Brian Shore for any closing remarks.

This is Brian again, of course. So Happy New Year to all. Thank you very much for listening to our very long presentation. Every time I want to make it shorter, it gets longer. But Matt and I wish you a Happy New Year and all the best. And feel free to call us if you have any follow-up questions. Always happy to talk to you. Thanks and goodbye.

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