Park Aerospace (PKE)
No longer Park Electrochemical - it's Park Aerospace now!
Park Aerospace operates a single pre-impregnated composite materials facility based in Kansas. At its heart, Park is a family business. The Shore family owns over a tenth of the business and have run the company since it was founded in 1954. The current CEO, Brian Shore, has been at the helm for nearly a quarter of a century.
For most of its history, Park Aerospace (as it’s known today) wasn’t an Aerospace company at all but an electronics business. It was called Park Electrochemical and originally generated most of its sales from selling materials for printed circuit boards. The transition from Electrochemical to Aerospace took place over many years and started back in 2008 with a decision to invest in a purpose-built facility designed to make materials for the Aerospace industry. This was a bold and costly investment since developing Aerospace products requires multi-year qualification periods due to the extremely high safety standards. Park came up against these barriers and it took two years to produce a prototype, six years to deliver a product, eight years to sign a long-term supply agreement, and a full decade to become profitable.
I love to own small, niche, cash generating businesses that provide ‘mission critical’ products and services to their customers. A critical product is very difficult to replace and therefore a supplier can retain power to raise prices over time and will often oversee a sticky source of cashflow over very long periods. Park’s new Aerospace business certainly fits this mould. It’s main contract, which runs until 2029, is as the sole supplier for Nacelles (the cases that go around aircraft engines) for most of Airbus’s new single isle commercial aircraft (the A320-Neo family). Additionally, Park has been growing its defence business, and is one of only two US-based suppliers to have achieved the qualification required to supply pre-impregnated composite materials to the US Defence Department.
Recognising the value of this new enterprise, the board shrewdly took the decision to sell the electronics business and now focuses solely on the higher growth and better-quality aerospace component. I started looking at the company towards the tail end of this transformation but am still optimistic about its prospects as Park cements its place as an aerospace materials business and benefits from the bounce back in air travel following the pandemic. I’m excited about the future and fortunate to be partnered alongside Brian Shore and his family.