PARK AEROSPACE CORP
For the period ended Aug 30, 2026. Filed Oct 13, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 30, 2026 · Filed Oct 13, 2026
PKE$23.38+3.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-05-31; filed 2026-07-20.
0001437749-26-023883
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-08-30; filed 2026-10-13.
0001437749-26-032567
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 55 previous paragraphs and 60 current paragraphs.
28 unchanged; 22 reworded; 10 added; 4 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
The Company's net sales in the 13 weeks and 26 weeks ended August 30, 2026 were $20.8 million and $39.1 million, respectively, compared to $16.4 million and $31.8 million, respectively, in the 13 weeks and 26 weeks ended August 31, 2025. The increase for the 13-week period was primarily due to higher sales to military and commercial markets partially offset by lower sales to the general aviation market. The increase in sales for the 26 weeks ended August 30, 2026 was due to higher sales to military and commercial markets. Sales in the 13-week and 26-week periods ended August 30, 2026 were negatively impacted by $0.9 million due to refunds to customers during the periods for amounts charged for tariffs in fiscal year 2026. The Company refunded these tariffs to customers subsequent to receiving refunds for these tariffs, which were originally paid in fiscal year 2026, from U.S. Customs and Border Protection during the second quarter of fiscal year 2027.
Current report
The Company’s gross profit in the 13 weeks ended August 30, 2026 was higher than the gross profit in the prior year’s comparable period due to the increase in sales, a more favorable product mix partially offset by higher materials, labor and overhead costs. The Company’s gross profit in the 26 weeks ended August 30, 2026 was higher than the gross profit in the prior year’s comparable period due to the higher sales in the period and a more favorable sales mix partially offset by the higher costs noted above. While sales were negatively impacted by the tariff refunds to customers, the impact was wholly offset by a reduction of cost of goods sold due to tariff refunds received by the Company during the quarter.
Current report
The Company’s earnings before income taxes and net earnings increased 72.6% and 79.9%, respectively, in the 26 weeks ended August 30, 2026, compared to the 26 weeks ended August 31, 2025, primarily due to the higher gross profit margins mentioned above and higher interest and other income partially offset by higher selling, general and administrative expenses.
Current report
The Company's net sales in the 13 weeks and 26 weeks ended August 30, 2026, were $20.8 million and $39.1 million, respectively, compared to $16.4 million and $31.8 million, respectively, in the 13 weeks and 26 weeks ended August 31, 2025. Sales for the 13 weeks and 26 weeks ended August 30, 2026 were higher by 26.9% and 23.0%, respectively, primarily driven by higher sales in the military and commercial markets partially offset by lower sales in the general aviation market. Sales in the 13-week and 26-week periods ended August 30, 2026 were negatively impacted by $0.9 million due to refunds to customers during the periods for amounts charged for tariffs in fiscal year 2026. The Company refunded these tariffs to customers subsequent to receiving the refunds for these tariffs, which were originally paid in fiscal year 2026, from U.S. Customs and Border Protection during the second quarter of fiscal year 2027.
Current report
The Company’s gross profits in the 13 weeks and 26 weeks ended August 30, 2026 were higher than the gross profits in the prior year’s comparable periods due to the higher sales mentioned above and a more favorable product mix partially offset by higher labor and overhead costs. The increased overhead costs were driven by higher salaries and fringe benefits, as well as increased utilities and shipping supplies.
Current report
Selling, general and administrative expenses increased by $132,000, or 5.8%, during the 13 weeks ended August 30, 2026 compared to the 13 weeks ended August 31, 2025, and these expenses, measured as percentages of sales, were 11.6% in the 13 weeks ended August 30, 2026 compared to 13.9% in the 13 weeks ended August 31, 2025. The increase in selling, general and administrative expenses during the 13 weeks ended August 30, 2026 was primarily due to higher freight costs, incentive compensation, information technology expenses, shareholder expenses, professional fees and trade show costs partially offset by lower legal expenses.
Current report
Selling, general and administrative expenses increased by $194,000, or 4.2%, during the 26 weeks ended August 30, 2026 compared to the 26 weeks ended August 31, 2025, and these expenses, measured as a percentage of sales, were 12.2% in the 26 weeks ended August 30, 2026 compared to 14.4% in the 26 weeks ended August 31, 2025. The increase in selling, general and administrative expenses during the 26 weeks ended August 30, 2026 was primarily due to the expenses noted above.
Current report
In the 13 weeks and 26 weeks ended August 30, 2026, basic earnings per share were $0.21 and $0.38, respectively, and diluted earnings per share were $0.21 and $0.37, respectively. In the 13 weeks and 26 weeks ended August 31, 2025, basic earnings per share were $0.12 and $0.23, respectively, and diluted earnings per share were $0.12 and $0.22, respectively.
Current report
On January 13, 2026, the Company entered into an Equity Distribution Agreement with Needham & Company, LLC (“Needham”) and Citizens JMP Securities, LLC (“Citizens”) (the “Distribution Agreement”) with respect to an “at the market offering” program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.10 per share, having an aggregate offering price of up to $50.0 million through Needham and Citizens as its sales agents. The Company is not obligated to sell any shares under the Distribution Agreement. Subject to the terms and conditions of the Distribution Agreement, Needham and Citizens will use commercially reasonable efforts, consistent with their normal trading and sales practices and applicable laws and regulations, to sell shares of the Company’s common stock from time to time based upon instructions received from the Company, including any price, time or size limits or other customary parameters or conditions specified, subject to certain limitations. Under the Distribution Agreement, Needham and Citizens may sell shares of the Company’s common stock by any method permitted by law deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. The issuance and sale, if any, of shares of the Company’s common stock under the Distribution Agreement are made pursuant to a registration statement on Form S-3 that the Company filed with the U.S. Securities and Exchange Commission (“SEC”) on January 13, 2026 and was declared effective on January 21, 2026. The offering is described in a prospectus filed as part of the registration statement. During the fiscal year ended March 1, 2026, the Company sold 942,749 shares under the Distribution Agreement at an average price of $24.21 per share. Gross proceeds of $22.8 million were reduced by commissions and other expenses of $1.1 million resulting in net proceeds of $21.7 million. During the quarter ended August 30, 2026, the Company completed sales under the program. During that period, the Company sold 869,852 shares at an average price of $31.24 per share. Gross proceeds of $27.2 million were reduced by commissions and other expenses of $0.9 million resulting in net proceeds of $26.3 million.
Current report
The increase in working capital at August 30, 2026 compared to March 1, 2026 was primarily due to higher cash and investment balances at August 30, 2026 for the reasons described above as well as higher accounts receivable and inventory balances.
Removed paragraphs (4)
Previous report
The Company's total net sales in the 13 weeks ended May 31, 2026 were $18.3 million compared to $15.4 million in the 13 weeks ended June 1, 2025. The increase in sales was due to higher sales in the commercial market driven by higher sales under the GE Aerospace jet engine programs and higher sales in the military market.
Previous report
The Company's total net sales in the 13 weeks ended May 31, 2026 were $18.3 million compared to $15.4 million in the 13 weeks ended June 1, 2025. The increase in sales was primarily due to higher sales in the commercial and military markets reflecting increased demand in both markets.
Previous report
Selling, general and administrative expenses increased compared to the prior year’s comparable period in dollars but decreased as a percentage of sales. These expenses, measured as percentages of sales, were 12.9% in the 13 weeks ended May 31, 2026 compared to 14.9% in the 13 weeks ended June 1, 2025. The increase in selling, general and administrative expenses in dollars was primarily due to higher research and development costs, higher freight costs and higher shareholder expenses partially offset by lower professional and legal fees. As a percentage of sales, the decrease in selling, general and administrative expenses is due to the increase in sales in the 13 weeks ended May 31, 2026.
Previous report
The decrease in working capital at May 31, 2026 compared to March 1, 2026 was due principally to the payment of a long-term advance to a supplier of $2.2 million during the period, lower marketable securities and higher current liabilities, partially offset by higher cash, inventories, and prepaid expenses at May 31, 2026.
Reworded paragraphs (22)
Previous wording
The Company’s gross profit margins, measured as percentages of sales, were 34.8% in the 13 weeks ended May 31, 2026 compared to 30.6% in the 13 weeks ended June 1, 2025. The higher gross profit margin for the 13 weeks ended May 31, 2026 was primarily due to the higher sales volume in the quarter which allowed for improved leverage of fixed overhead costs and a more favorable product mix, which was partially offset by higher waste in the current quarter.
Current wording
The Company’s gross profit margins, measured as percentages of sales, were 34.3% and 34.6%, respectively, in the 13 weeks and 26 weeks ended August 30, 2026, compared to 31.2% and 30.9%, respectively, in the 13 weeks and 26 weeks ended August 31, 2025. The higher gross profit margins for the 13 and 26 weeks ended August 30, 2026 compared to the prior year’s comparable periods were primarily due to higher sales in those periods, which allowed for improved leverage of fixed overhead costs and a more favorable sales mix partially offset by higher labor costs.
Previous wording
The Company’s earnings from operations before income taxes and net earnings increased 73.1% and 69.9%, respectively, in the 13 weeks ended May 31, 2026 compared to the 13 weeks ended June 1, 2025, primarily as a result of the higher gross margins in the 13 weeks ended May 31, 2026 and higher interest income in the 13 weeks ended May 31, 2026 partially offset by higher selling, general and administrative expenses.
Current wording
The Company’s earnings before income taxes and net earnings increased 72.2% and 88.6%, respectively, in the 13 weeks ended August 30, 2026, compared to the 13 weeks ended August 31, 2025, primarily as a result of higher gross profit margins mentioned above and higher interest and other income partially offset by higher selling, general and administrative costs.
Previous wording
Under a Business Partner Agreement with ArianeGroup SAS of Les Mureaux, France (“ArianeGroup”), ArianeGroup SAS appointed Park as its exclusive North American distributor of ArianeGroup’s RAYCARB C2®B NG proprietary product. RAYCARB C2®B NG is used to produce ablative composite materials for critical rocketry and missile systems. Park is a long-term customer of ArianeGroup and uses ArianeGroup’s RAYCARB C2®B NG product in the production of many of Park’s key ablative materials, which Park supplies into critical rocket and missile programs. On March 27, 2025, Park and ArianeGroup entered into an agreement under which Park would advance funds to ArianeGroup against future purchases of C2®B product in the aggregate amount in Euros of €4,587,000 payable in three installments in 2025, 2026, and 2027. The Company has made the 2025 and 2026 advances while the 2027 advance will be made in the first quarter of fiscal year 2028. These advanced funds are being used to help fund the purchase and installation, by ArianeGroup, of additional manufacturing equipment for ArianeGroup’s production of C2®B product.
Current wording
Under a Business Partner Agreement with ArianeGroup SAS of Les Mureaux, France (“ArianeGroup”), Park is the exclusive North American distributor of ArianeGroup’s RAYCARB C2®B NG proprietary product. RAYCARB C2®B NG is used to produce ablative composite materials for critical rocket and missile systems. Park is a long-term customer of ArianeGroup and uses ArianeGroup’s RAYCARB C2®B NG product in the production of many of Park’s key ablative materials, which Park supplies into critical rocket and missile programs. On March 27, 2025, Park and ArianeGroup entered into an agreement under which Park would advance funds to ArianeGroup against future purchases of C2®B product in the total amount in Euros of €4,587,000 payable in three installments. These advanced funds are to be used to help fund the purchase and installation, by ArianeGroup, of additional manufacturing equipment for ArianeGroup’s production of C2®B product.
Previous wording
In July 2026, the Company entered into a sublease agreement covering approximately 18 acres of total land in Tulsa, Oklahoma. The Company plans to build a new composites material manufacturing and development facility on the site. The facility will include full production lab facilities, office space, storage and freezer space and ancillary equipment necessary to support all planned manufacturing operations. The sublease commences on September 1, 2026, and has an initial term of 25 years with a renewal option for an additional 25 years. Annual rent under the sublease agreement for the initial five years of the sublease would be $269,469 with increases for each subsequent five-year period based upon the Consumer Price Index for All Urban Consumers, U.S., City Average All Items as published by the United States Department of Commerce. The Company expects economic development incentives to offset a significant portion of the rent expense.
Current wording
In July 2026, the Company entered into a sublease agreement covering approximately 18 acres of total land in Tulsa, Oklahoma. The Company plans to build a new composites material manufacturing and development facility on the site. The facility will include full production lab facilities, office space, storage and freezer space and ancillary equipment necessary to support all planned manufacturing operations. The sublease commences on September 1, 2026, and has an initial term of 25 years with a renewal option for an additional 25 years. Annual rent under the sublease agreement for the initial five years of the sublease would be $269,469 with increases for each subsequent five-year period based upon the Consumer Price Index for All Urban Consumers, U.S., City Average All Items as published by the U.S. Bureau of Labor Statistics (“BLS”). The Company expects economic development incentives to offset a significant portion of the rent expense.
Previous wording
The Company’s gross profit margins, measured as percentages of sales, were 34.8% in the 13 weeks ended May 31, 2026 compared to 30.6% in the 13 weeks ended June 1, 2025. The higher gross profit margin for the 13 weeks ended May 31, 2026 was primarily due to the higher sales volume in the quarter which allowed for improved leverage of fixed overhead costs and a more favorable product mix.
Current wording
The Company’s gross profit margins, measured as a percentage of sales, were 34.3% and 34.6%, respectively, in the 13 weeks and 26 weeks ended August 30, 2026, compared to 31.2% and 30.9%, respectively, in the 13 weeks and 26 weeks ended August 31, 2025. The higher gross profit margins for the 13 and 26 weeks ended August 30, 2026 compared to the prior year’s comparable periods, were primarily due to the higher sales volume in the 13-week and 26-week periods which allowed for improved leverage of fixed overhead costs and a more favorable product mix.
Previous wording
Selling, general and administrative expenses included stock option expenses of $92,000 for the 13 weeks ended May 31, 2026, compared to stock option expenses of $88,000 in the 13 weeks ended June 1, 2025.
Current wording
Selling, general and administrative expenses included stock option expenses of $84,000 and $176,000, respectively, for the 13 weeks and 26 weeks ended August 30, 2026, compared to stock option expenses of $101,000 and $189,000 for the 13 weeks and 26 weeks ended August 31, 2025.
Previous wording
For the reasons set forth above, the Company’s earnings from operations were $4.0 million for the 13 weeks ended May 31, 2026 compared to $2.4 million for the 13 weeks ended June 1, 2025.
Current wording
For the reasons set forth above, the Company’s earnings from operations were $4.7 million and $8.7 million, respectively, for the 13 weeks and 26 weeks ended August 30, 2026, compared to $2.8 million and $5.3 million, respectively, for the 13 weeks and 26 weeks ended August 31, 2025.
Previous wording
Interest and other income was $786,000 for the 13 weeks ended May 31, 2026, compared to $355,000 for the prior year’s comparable period. Interest income increased 121% for the 13 weeks ended May 31, 2026 primarily due to higher investment balances. Cash balances were higher in the 13 weeks ended May 31, 2026 as a result of stock sales in the prior quarter that resulted in net proceeds of $21.7 million under the Company’s at the market offering. During the 13 weeks ended May 31, 2026, the Company earned interest income principally from its cash and investments, which consisted primarily of short-term instruments and money market funds.
Current wording
Interest and other income were $839,000 and $1,625,000, respectively, for the 13 weeks and 26 weeks ended August 30, 2026, compared to $390,000 and $745,000, respectively, for the prior year's comparable periods. Interest income increased 115.1% and 118.1%, respectively, for the 13 weeks and 26 weeks ended August 30, 2026, primarily due to higher cash and investment balances primarily driven by the cash raised from the Company’s $50 million At The Market stock offering conducted in the fourth quarter of fiscal year 2026 and the second quarter of fiscal year 2027 as well as higher returns on cash and investments. These increases were partially offset by interest received in the prior year on tax refunds. During the 13 weeks and 26 weeks ended August 31, 2025, the Company earned interest income principally from its cash and investments, which consisted primarily of short-term instruments and money market funds.
Previous wording
For the 13 weeks ended May 31, 2026, the Company recorded an income tax provision of $1.3 million, which included a discrete income tax benefit of $0. For the 13 weeks ended June 1, 2025, the Company recorded an income tax provision of $694,000, which included a discrete income tax benefit of $(28,000) for the excess tax benefits of stock option exercises in the 13 weeks ended June 1, 2025 partially offset by the accrual of interest related to unrecognized tax benefits.
Current wording
For the 13 weeks and 26 weeks ended August 30, 2026, the Company recorded income tax provisions of $1.0 million and $2.3 million, respectively, which included discrete income tax benefits of $430,000 and $430,000, respectively, for excess tax benefits from stock option exercises. For the 13 weeks and 26 weeks ended August 31, 2025, the Company recorded income tax provisions of $831,000 and $1.5 million, respectively, which included discrete income tax benefits of $10,000 and $38,000, respectively, for the excess tax benefits from stock option exercises offset by the accrual of interest related to unrecognized tax benefits.
Previous wording
The Company’s effective tax rate for the 13 weeks ended May 31, 2026 was 26.4% compared to 25.0% in the prior year’s comparable period. The effective tax rate for the 13 weeks ended May 31, 2026 was higher than the U.S. statutory rate of 21% primarily due to state and local taxes. The effective rate for the 13 weeks ended June 1, 2025 was higher than the U.S. statutory rate of 21% primarily due to state and local taxes and the accrual of interest related to unrecognized tax benefits.
Current wording
The Company’s effective tax rates for the 13 weeks and 26 weeks ended August 30, 2026 were 18.6% and 22.2%, respectively, compared to 25.7% and 25.4%, respectively, in the prior year’s comparable periods. The effective tax rate for the 13 weeks ended August 30, 2026 was lower than the U.S. statutory rate of 21% due to the discrete tax benefits recorded in the period. Absent these benefits, the effective tax rate for the 13 weeks was higher than the U.S. statutory rate of 21% due to state and local taxes and liabilities. The effective rate for the 26 weeks ended August 30, 2026 was higher than the U.S. statutory rate of 21% primarily due to state and local taxes and liabilities, offset by excess tax benefits on stock option exercises. The effective tax rates for the 13 weeks and 26 weeks ended August 31, 2025 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and liabilities, and the accrual of interest related to unrecognized tax benefits offset by excess tax benefits on stock option exercises.
Previous wording
For the reasons set forth above, the Company’s net earnings for the 13 weeks ended May 31, 2026 were $3.5 million compared to net earnings of $2.1 million for the 13 weeks ended June 1, 2025.
Current wording
For the reasons set forth above, the Company's net earnings for the 13 weeks and 26 weeks ended August 30, 2026 were $4.5 million and $8.1 million, respectively, compared to net earnings of $2.4 million and $4.5 million, respectively, for the 13 weeks and 26 weeks ended August 31, 2025.
Previous wording
Of the $89.4 million of cash and cash equivalents and marketable securities at May 31, 2026, $32.7 million was owned by one of the Company’s wholly-owned foreign subsidiaries.
Current wording
Of the $114.7 million of cash and cash equivalents and marketable securities at August 30, 2026, $32.8 million was owned by one of the Company’s wholly-owned foreign subsidiaries.
Previous wording
The change in cash and cash equivalents and marketable securities at May 31, 2026 compared to March 1, 2026 was the result of higher cash collections due to the increased sales mostly offset by a supplier advance of $2.2 million paid in May 2026 and dividends paid to shareholders. The significant changes in cash provided by operating activities were as follows:
Current wording
The change in cash and cash equivalents and marketable securities at August 30, 2026 compared to March 1, 2026 was the result of the $26.3 million of proceeds from the issuance of common stock under the “at the market offering” described above and improved earnings in the 26 weeks ended August 30, 2026. These increases were partially offset by capital expenditures, dividends paid to shareholders, and the payment of a supplier advance of $2.2 million paid in May 2026. The significant changes in cash provided by (used in) operating activities were as follows:
Previous wording
In addition, the Company paid $2.6 million and $2.5 million in cash dividends in the 13-week period ended May 31, 2026 and the 13-week period ended June 1, 2025, respectively.
Current wording
In addition, the Company paid $5.3 million in cash dividends in the 26-week period ended August 30, 2026 compared to $5.0 million in the 26-week period ended August 31, 2025. The Company received proceeds from stock option exercises of $3.6 million in the 26-week period ended August 30, 2026 compared to proceeds of $0.7 million from stock option exercises during the 26-week period ended August 31, 2025. While the Company did not repurchase shares in the 26 weeks ended August 30, 2026, the Company used cash of $2.2 million to repurchase shares during the 26 weeks ended August 31, 2025.
Previous wording
The Company's current ratio (the ratio of current assets to current liabilities) was 15.3 to 1.0 at May 31, 2026 compared to 18.2 to 1.0 at March 1, 2026.
Current wording
The Company's current ratio (the ratio of current assets to current liabilities) was 22.7 to 1.0 at August 30, 2026, compared to 18.2 to 1.0 at March 1, 2026.
Previous wording
During the 13 weeks ended May 31, 2026, the Company had operating cash flows of $2.7 million compared to $1.6 million for the 13 weeks ended June 1, 2025. During the same 13-week period, the Company expended $113,000 for the purchase of property, plant and equipment, compared with $481,000 during the 13 weeks ended June 1, 2025. The Company paid $2.6 million in cash dividends in the 13-week period ended May 31, 2026 compared to $2.5 million in cash dividends in the 13-week period ended June 1, 2025.
Current wording
During the 26 weeks ended August 30, 2026, the Company's net earnings, adjusted for depreciation and amortization, deferred income taxes, stock-based compensation, amortization of bond premium, provision for credit losses, loss on sale of marketable securities and changes in operating assets and liabilities, resulted in a $1.3 million operating cash inflow compared to a cash outflow of $0.5 million for the 26 weeks ended August 31, 2025. The increase was driven by increased earnings during the 26 weeks ended August 30, 2026. During the same 26-week period, the Company expended $469,000 for the purchase of property, plant and equipment compared with $664,000 during the 26 weeks ended August 31, 2025. The Company paid $5.3 million in cash dividends in the 26-week period ended August 30, 2026 compared to $5.0 million in the 26-week period ended August 31, 2025. The Company received proceeds from stock option exercises of $3.6 million during the 26 weeks ended August 30, 2026 compared to $0.7 million during the 26 weeks ended August 31, 2025. The Company purchased no treasury shares during the 26 weeks ended August 30, 2026 while it purchased $2.2 million in the 26-week period ended August 31, 2025.
Previous wording
The Company believes its financial resources will be sufficient, through the 12 months following the filing of this Form 10-Q Quarterly Report and for the foreseeable future thereafter, to provide for continued investment in working capital and property, plant and equipment and for general corporate purposes including the Company’s plans to build a new composites material manufacturing and development facility. The Company expects construction on the new facility to begin in fiscal year 2027. The Company’s financial resources are also available for purchases of the Company's common stock, cash dividend payments, appropriate acquisitions and other expansions of the Company's business.
Current wording
The Company believes its financial resources will be sufficient, through the 12 months following the filing of this Form 10-Q Quarterly Report and for the foreseeable future thereafter, to provide for continued investment in working capital and property, plant and equipment and for general corporate purposes, including the Company’s plans to build a new composites material manufacturing and development facility with an expected cost of approximately $65 million. The Company’s financial resources are also available for purchases of the Company's common stock, cash dividend payments, and appropriate acquisitions and other expansions of the Company's business.
Previous wording
The Company is not aware of any circumstances or events that are reasonably likely to occur that could materially affect its liquidity. The Company further believes its balance sheet and financial position to be very strong.
Current wording
The Company is not aware of any other circumstances or events that are reasonably likely to occur that could materially affect its liquidity. The Company further believes its balance sheet and financial position to be very strong.
Previous wording
The Company’s contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist primarily of operating lease commitments, commitments to purchase raw materials and remaining advance payable to ArianeGroup SAS. In March 2025, the Company entered into an agreement with a supplier, ArianeGroup SAS, under which the Company would advance funds against future purchases. The agreement requires payments of €4,587 over three years, of which €1,376 was paid in April 2025 (actual cost of $1,564), €1,835 was paid in May 2026 (actual cost of $2,156) and €1,376 (approximately $1,575 based on July 7, 2026 exchange rates) is due in the first quarter of fiscal 2028. Under the agreement, the Company commits to purchase C2®B product through December 2033 at an estimated cost of €36,000. The Company has no other long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $140,000, to secure the Company’s obligations under its workers’ compensation insurance program. In July 2026, the Company entered into a sublease agreement covering approximately 18 acres of total land in Tulsa, Oklahoma. The Company plans to build a new composites material manufacturing and development facility on the site. The facility will include full production lab facilities, office space, storage and freezer space and ancillary equipment necessary to support all planned manufacturing operations. The sublease commences on September 1, 2026, and has an initial term of 25 years with a renewal option for an additional 25 years. Annual rent under the sublease agreement for the initial five years of the sublease would be $269,469 with increases for each subsequent five-year period based upon the Consumer Price Index for All Urban Consumers, U.S., City Average All Items as published by the United States Department of Commerce. The Company expects economic development incentives to offset a significant portion of the rent expense.
Current wording
The Company’s contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist primarily of operating lease commitments, commitments to purchase raw materials and remaining advance payable to ArianeGroup SAS. In March 2025, the Company entered into an agreement with a supplier, ArianeGroup SAS, under which the Company would advance funds against future purchases. The agreement requires payments of €4,587,000 in three installments, of which €1,376,000 was paid in April 2025 (actual cost of $1,564,000), €1,835,000 was paid in May 2026 (actual cost of $2,156,000) and €1,376,000 (approximately $1,549,000 based on October 5, 2026 exchange rates) that will be paid in the third quarter of fiscal 2027. Under the agreement, the Company commits to purchase C2®B product through December 2033 at an estimated cost of €36,000,000. The Company has no other long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $140,000, to secure the Company’s obligations under its workers’ compensation insurance program. In July 2026, the Company entered into a sublease agreement covering approximately 18 acres of total land in Tulsa, Oklahoma. The Company plans to build a new composites material manufacturing and development facility on the site. The facility will include full production lab facilities, office space, storage and freezer space and ancillary equipment necessary to support all planned manufacturing operations. The sublease commences on September 1, 2026, and has an initial term of 25 years with a renewal option for an additional 25 years. Annual rent under the sublease agreement for the initial five years of the sublease would be $269,469 with increases for each subsequent five-year period based upon the Consumer Price Index for All Urban Consumers, U.S., City Average All Items as published by the U.S. Bureau of Labor Statistics (“BLS”). The Company expects economic development incentives to offset a significant portion of the rent expense.
Previous wording
The foregoing Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company’s Condensed Consolidated Financial Statements, which have been prepared in accordance with US GAAP. The preparation of these Condensed Consolidated Financial Statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to sales allowances, allowances for doubtful accounts, inventories, valuation of long-lived assets, income taxes, contingencies and litigation, and employee benefit programs. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Current wording
The foregoing Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company’s Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Condensed Consolidated Financial Statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to sales allowances, allowances for credit losses, inventories, valuation of long-lived assets, income taxes, contingencies and litigation, and employee benefit programs. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Previous wording
The Company’s critical accounting policies that are important to the Condensed Consolidated Financial Statements and that entail, to a significant extent, the use of estimates and assumptions and the application of management’s judgment, are described in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in the Company’s Annual Report on Form 10-K for the fiscal year ended March 1, 2026. There have been no significant changes to such accounting policies during the 2027 fiscal year first quarter.
Current wording
The Company’s critical accounting policies that are important to the Condensed Consolidated Financial Statements and that entail, to a significant extent, the use of estimates and assumptions and the application of management’s judgment are described in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Company’s Annual Report on Form 10-K for the fiscal year ended March 1, 2026. There have been no significant changes to such accounting policies during the 2027 fiscal year second quarter.
Previous wording
The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after careful analysis of each individual issue. The required accrual may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters.
Current wording
The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
In the 13 weeks ended May 31, 2026, basic and diluted earnings per share were $0.17 compared to basic and diluted earnings per share of $0.10 in the 13 weeks ended June 1, 2025.