PKE Stock Up 3% Despite Q4 EPS Fall Y/Y Due to Tax Charge Headwind

Shares of Park Aerospace Corp. PKE have climbed 3.4% since the company released its fiscal fourth-quarter 2025 results. This gain outpaced the S&P 500’s 1.1% advance over the same time. However, over the past month, Park's 5.7% increase significantly trailed the broader market’s 12.6% surge, suggesting more muted investor enthusiasm relative to the benchmark despite its post-earnings uptick.

For the fiscal fourth quarter ended March 2, 2025, Park Aerospace reported earnings per share (EPS) of 6 cents compared with 13 cents in the same quarter last year. Excluding special items, EPS were 12 cents, slightly up from 11 cents in the prior-year period. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The company reported net sales of $16.9 million, modestly up from $16.3 million in the year-ago quarter. Net earnings before special items were $2.4 million, nearly flat compared to $2.3 million a year earlier. Including special items, net earnings fell to $1.3 million from $2.7 million, a 53.4% decline, largely due to a $2.2 million non-cash tax charge tied to potential repatriation of funds from the Singapore subsidiary.

Park Aerospace Corp. Price, Consensus and EPS Surprise

Park Aerospace Corp. price-consensus-eps-surprise-chart | Park Aerospace Corp. Quote

Other Key Business Metrics

Gross margin improved in the fourth quarter, with gross profit rising to $5 million from $4.5 million, and gross margin expanding to 29.3% from 27.3% a year earlier. Operating income also grew to $2.9 million versus $2.6 million. Selling, general and administrative (SG&A) expenses increased to $2.1 million from $1.9 million, but as a percentage of sales, they remained relatively stable at 12.4% versus 11.5%.

Adjusted EBITDA for the quarter reached $3.4 million, up from $3.2 million in the prior-year period.

Management Commentary

Chairman and CEO Brian Shore emphasized the importance of operational discipline and transparency, stating that the company deliberately avoids issuing typical guidance ranges, opting instead to explain known business dynamics. He highlighted that the fiscal fourth quarter benefited from a reduction in excess inventory buildup seen in the previous quarter, positively impacting both margins and earnings performance.

President and COO Mark Esquivel noted that customer-driven ramp-ups, particularly around the “Juggernaut” program involving GE Aerospace, have supported the recovery of factory output levels. Management also reiterated its intent to maintain strong pricing and profitability standards across its aerospace and defense customer base.

Factors Influencing Results

The quarter was affected by a $1.1 million storm damage charge related to Park’s Newton, Kansas facility, which notably compressed reported GAAP earnings. Additionally, the company recorded a $2.2 million non-cash tax charge related to potential repatriation from its Singapore subsidiary and a $0.1 million tax benefit linked to expiring tax statutes. These items weighed on the bottom line despite underlying operational improvements.

Management pointed out that the year’s performance was uneven, with earlier quarters impacted by customer order timing, inventory adjustments, and production inefficiencies. However, by the end of fiscal 2025, operations appeared to stabilize, with leaner inventory levels and improving finished goods turnover.

Fiscal 2025 Update

Full-year revenues rose 10.8% to $62 million from $56 million in fiscal 2024. GAAP net earnings for the year totaled $5.9 million, down 21.3% from $7.5 million. Adjusted EPS came in at 29 cents compared to 37 cents in the prior year. Excluding special items, EPS stood at 39 cents, up from 38 cents in the prior-year quarter.

For the full year, Adjusted EBITDA improved 6% to $11.7 million from $11 million, driven in part by cost containment and higher capacity utilization in the final quarter.

Guidance

Shore noted that the company anticipates ongoing benefits from higher production volumes tied to long-term aerospace contracts. He also cautioned that first-quarter fiscal 2026 sales could dip sequentially to between $5.2 million and $5.6 million, reflecting quarterly variability and order timing, not underlying demand weakness.

Other Developments

During the quarter, Park Aerospace finalized a new supply agreement with an Asian customer involving ablative materials for hypersonic missile applications. Management also confirmed a licensing arrangement with an unnamed OEM for Iron Dome-like defense technology. These moves reflect continued progress in expanding the company’s presence in strategic aerospace and defense sectors.

Additionally, the company is exploring a major manufacturing expansion, potentially at its Newton, Kansas site or elsewhere, citing the need to scale for future aerospace programs. This underscores Park’s longer-term capital planning in anticipation of sustained industry demand.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research