OREANDA-NEWS. Park Electrochemical Corp. (NYSE:PKE) reported net sales of $29,058,000 for the 2017 fiscal year’s second quarter ended August 28, 2016 compared to net sales of $37,947,000 for last fiscal year’s second quarter ended August 30, 2015 and net sales of $31,490,000 for the 2017 fiscal year’s first quarter ended May 29, 2016. Park’s net sales for the six months ended August 28, 2016 were $60,548,000 compared to net sales of $75,776,000 for the six months ended August 30, 2015.  Net earnings for the current year’s second quarter were $1,981,000 compared to $4,569,000 for last year’s second quarter and $2,950,000 for the current year’s first quarter.  Net earnings were $4,931,000 for the current year’s six-month period compared to $9,346,000 for last year’s six-month period.

Park reported net earnings before special items of $1,995,000 for the current year’s second quarter compared to net earnings before special items of $4,639,000 for last year’s second quarter and net earnings before special items of $2,993,000 for the current year’s first quarter. In the current year’s second quarter, the Company recorded pre-tax restructuring charges of $23,000 related to the closure in fiscal year 2009 of its New England Laminates Co., Inc. facility located in Newburgh, New York. In last year’s second quarter, the Company recorded pre-tax restructuring charges of $91,000 in connection with the aforementioned facility closure and the closure in fiscal year 2013 of the Company’s Nelco Technology (Zhuhai FTZ) Ltd. facility located in Zhuhai, China. In the current year’s first quarter, the Company recorded pre-tax restructuring charges of $70,000 in connection with the 2009 closure of its New England Laminates Co., Inc. facility.

For the six-month period ended August 28, 2016, Park reported net earnings before special items of $4,988,000 compared to net earnings before special items of $9,506,000 for last fiscal year’s first six-month period. The current year’s six-month period included pre-tax restructuring charges of $93,000 related to the facility closures mentioned above.  Last year’s six-month period included pre-tax restructuring charges of $215,000 related to the facility closures mentioned above.

Park reported basic and diluted earnings per share of $0.10 for the current year’s second quarter compared to $0.23 for last year’s second quarter and $0.15 for the current year’s first quarter. Basic and diluted earnings per share before special items were also $0.10 for the current year’s second quarter compared to $0.23 for last year’s second quarter and $0.15 for the current year’s first quarter. 

Park reported basic and diluted earnings per share of $0.25 for the current year’s first six months compared to $0.46 for last year’s six-month period and basic and diluted earnings per share before special items of $0.25 for the current year’s first six months compared to $0.47 for last year’s six-month period.

Park believes that an evaluation of its ongoing operations would be difficult if the disclosure of its financial results were limited to accounting principles generally accepted in the United States of America (“GAAP”) financial measures, which include special items, such as restructuring charges. Accordingly, in addition to disclosing its financial results determined in accordance with GAAP, Park discloses non-GAAP operating results that exclude special items in order to assist its shareholders and other readers in assessing the Company’s operating performance, since the Company’s on-going, normal business operations do not include such special items. The detailed operating information presented below reconciles the non-GAAP operating results before special items to earnings determined in accordance with GAAP. Such non-GAAP financial measures are provided to supplement the results provided in accordance with GAAP.

Park Electrochemical Corp. is a global advanced materials company which develops and manufactures advanced composite materials, primary and secondary structures and assemblies and low-volume tooling for the aerospace markets and high-technology digital and RF/microwave printed circuit materials principally for the telecommunications and internet infrastructure, enterprise and military/aerospace markets.  The Company’s manufacturing facilities are located in Kansas, Singapore, France, Arizona and California. The Company also maintains R&D facilities in Arizona, Kansas and Singapore. 

Performance table, including non-GAAP information (in thousands, except per share amounts –unaudited):

                                   
  13 Weeks Ended   26 Weeks Ended  
                   
    8/28/16     8/30/15     5/29/16   8/28/16     8/30/15    
  Sales $   29,058       $   37,947       $   31,490         60,548       $   75,776      
                               
  Net Earnings before Special Items1 $   1,995       $   4,639       $   2,993         4,988       $   9,506      
  Special Items, net of Tax:                            
    Restructuring Charges     (14 )         (70 )         (43 )       (57 )         (160 )    
      Net Earnings $   1,981       $   4,569       $   2,950         4,931       $   9,346      
                               
  Basic and Diluted Earnings per Share:                            
    Basic Earnings before Special Items1 $   0.10       $   0.23       $   0.15         0.25       $   0.47      
    Special Items:                            
     Restructuring Charges     -            -            -          (0.01 )         (0.01 )    
      Basic Earnings (Loss) per Share $   0.10       $   0.23       $   0.15     $   0.24       $   0.46      
                               
    Diluted Earnings before Special Items1 $   0.10       $   0.23       $   0.15         0.25       $   0.47      
    Special Items:                            
     Restructuring Charges     -            -            -          (0.01 )         (0.01 )    
      Diluted Earnings (Loss) per Share $   0.10       $   0.23       $   0.15     $   0.24       $   0.46      
                               
  Weighted Average Shares Outstanding:                            
    Basic     20,235           20,337           20,235         20,235           20,442      
    Diluted     20,235           20,340           20,235         20,235           20,453      
                           
  1 Refer to "Reconciliation of non-GAAP financial measures" below for information regarding Special Items.      
         
                   

Comparative balance sheets (in thousands):

 
    August 28,
2016		   February 28,
2016		  
  Assets (unaudited)      
  Current Assets        
    Cash and Marketable Securities  $   239,706     $   237,425    
    Accounts Receivable, Net     18,369         22,583    
    Inventories     11,749         10,214    
    Prepaid Expenses and Other Current Assets     2,292         1,963    
      Total Current Assets     272,116         272,185    
           
  Fixed Assets, Net     19,969         21,512    
  Restricted Cash      10,000         10,000    
  Other Assets     11,161         11,080    
     Total Assets $   313,246     $   314,777    
           
  Liabilities and Shareholders' Equity        
  Current Liabilities        
    Current Portion of Long-Term Debt $   3,000     $   3,000    
    Accounts Payable     4,936         6,155    
    Accrued Liabilities     5,304         4,580    
    Income Taxes Payable     2,164         2,943    
      Total Current Liabilities     15,404         16,678    
           
  Long-Term Debt     70,500         72,000    
  Deferred Income Taxes     43,937         43,937    
  Other Liabilities     1,024         1,295    
      Total Liabilities     130,865         133,910    
           
  Shareholders’ Equity     182,381         180,867    
           
     Total Liabilities and Shareholders' Equity $   313,246     $   314,777    
           
  Additional information        
  Equity per Share $    9.01     $    8.94    
  Total Cash, Restricted Cash and Marketable Securities $    249,706     $   247,425    
 

Comparative statements of operations (in thousands – unaudited):

                                 
    13 Weeks Ended     26 Weeks Ended  
                                 
    August 28,
2016		     August 30,
2015		     May 29,
2016		     August 28,
2016		     August 30,
2015		    
                                 
  Net Sales $   29,058       $   37,947       $   31,490       $   60,548       $   75,776      
                                 
  Cost of Sales     21,824           27,586           22,703           44,527           54,048      
                                 
  Gross Profit     7,234           10,361           8,787           16,021           21,728      
    % of net sales   24.9 %       27.3 %       27.9 %       26.5 %       28.7 %    
                                 
  Selling, General & Administrative
  Expenses		     5,110           5,009           5,337           10,447           10,810      
     % of net sales   17.6 %       13.2 %       16.9 %       17.3 %       14.3 %    
                                 
  Restructuring Charge     23           91           70           93           215      
                                 
  Earnings from Operations     2,101           5,261           3,380           5,481           10,703      
                                 
  Interest:                              
    Interest Income     369           317           378           747           582      
                                 
    Interest Expense     334           356           333           667           725      
                                 
  Net Interest Expense     35           (39 )         45           80           (143 )    
                                 
  Earnings before Income Taxes     2,136           5,222           3,425           5,561           10,560      
                                 
  Income Tax Provision     155           653           475           630           1,214      
                                 
  Net Earnings $   1,981       $   4,569       $   2,950       $   4,931       $   9,346      
                                 

Reconciliation of non-GAAP financial measures (in thousands – unaudited):

                                         
    13 Weeks Ended
August 28, 2016		     13 Weeks Ended
August 30, 2015		     13 Weeks Ended
May 29, 2016
    GAAP   Specials
Items		   Before
Special
Items		     GAAP   Specials
Items		   Before
Special
Items		     GAAP   Specials
Items		   Before
Special
Items
                                         
  Selling, General & Administrative
  Expenses		 $   5,110     $   -      $   5,110       $   5,009     $   -      $   5,009       $   5,337     $   -      $   5,337  
     % of net sales   17.6 %         17.6 %       13.2 %         13.2 %       16.9 %         16.9 %
                                         
  Restructuring Charge     23         (23 )       -            91         (91 )       -            70         (70 )       -   
     % of net sales   0.1 %         0.0 %       0.2 %         0.0 %       0.2 %         0.0 %
                                         
  Earnings from Operations     2,101         23         2,124           5,261         91         5,352           3,380         70         3,450  
     % of net sales   7.2 %         7.3 %       13.9 %         14.1 %       10.7 %         11.0 %
                                         
  Earnings before Income Taxes     2,136         23         2,159           5,222         91         5,313           3,425         70         3,495  
     % of net sales   7.4 %         7.4 %       13.8 %         14.0 %       10.9 %         11.1 %
                                         
  Income Tax Provision     155         9         164           653         21         674           475         27         502  
    Effective Tax Rate   7.3 %         7.6 %       12.5 %         12.7 %       13.9 %         14.4 %
                                         
  Net Earnings     1,981         14         1,995           4,569         70         4,639           2,950         43         2,993  
     % of net sales   6.8 %         6.9 %       12.0 %         12.2 %       9.4 %         9.5 %
                                         
                                         
                                         
                                         
                                         
    26 Weeks Ended
August 28, 2016		     26 Weeks Ended
August 30, 2015		              
    GAAP   Specials
Items		   Before
Special
Items		     GAAP   Specials
Items		   Before
Special
Items		              
  Selling, General & Administrative
  Expenses		 $   10,447     $   -      $   10,447       $   10,810     $   -      $   10,810                
     %   17.3 %         17.3 %       14.3 %         14.3 %              
                                         
  Restructuring Charge     93         (93 )       -            215         (215 )       -                 
     %   0.2 %         0.0 %       0.3 %         0.0 %              
                                         
  Earnings from Operations     5,481         93         5,574           10,703         215         10,918                
     %   9.1 %         9.2 %       14.1 %         14.4 %              
                                         
  Earnings before Income Taxes     5,561         93         5,654           10,560         215         10,775                
     %   9.2 %         9.3 %       13.9 %         14.2 %              
                                         
  Income Tax Provision     630         36         666           1,214         55         1,269                
    Effective Tax Rate   11.3 %         11.8 %       11.5 %         11.8 %              
                                         
  Net Earnings     4,931         57         4,988           9,346         160         9,506                
     %   8.1 %         8.2 %       12.3 %         12.5 %