Park Electrochemical : Reports Third Quarter Results and Announces Share Purchase Authorization

Park Electrochemical Corp. (NYSE-PKE) reported net sales of $34,679,000 for the third quarter ended November 30, 2014 compared to net sales of $39,678,000 for the third quarter ended December 1, 2013. Park’s net sales for the nine months ended November 30, 2014 were $125,845,000 compared to net sales of $127,613,000 for the nine months ended December 1, 2013.

Park reported net earnings before special items of $2,433,000 for the third quarter ended November 30, 2014 compared to net earnings of $4,721,000 for the third quarter of last year. During the third quarter ended November 30, 2014, the Company recorded pre-tax restructuring charges of $496,000 in connection with cost reduction initiatives in the United States and $140,000 related to the closure in fiscal year 2013 of its Nelco Technology (Zhuhai FTZ) Ltd. facility located in the Free Trade Zone in Zhuhai, China and the closure in fiscal year 2009 of its New England Laminates Co., Inc. facility located in Newburgh, New York. Accordingly, net earnings were $2,031,000 for the third quarter ended November 30, 2014.

For the nine-month period ended November 30, 2014, Park reported net earnings before special items of $16,027,000 compared to net earnings before special items of $15,833,000 for the last fiscal year’s first nine-month period. The nine-month period ended November 30, 2014 included pre-tax restructuring charges of $496,000 in connection with the cost reduction initiatives mentioned above and $490,000 related to the facility closures mentioned above. In addition, the Company recorded a pre-tax charge of $260,000 during the nine-month period ended November 30, 2014 for additional fees incurred in connection with the 2014 fiscal year-end audit. The nine-month period ended December 1, 2013 included a tax benefit of $2,181,000 in connection with a tax refund related to amended federal income tax returns and pre-tax restructuring charges of $319,000 related to the Zhuhai facility closure mentioned above. Accordingly, net earnings were $15,202,000 for the nine-month period ended November 30, 2014 compared to net earnings of $17,695,000 for the nine-month period ended December 1, 2013.

Park reported basic and diluted earnings per share before special items of $0.12 for the third quarter ended November 30, 2014 compared to basic and diluted earnings per share before special items of $0.23 for last year’s third quarter. Basic and diluted earnings per share were $0.10 for the third quarter ended November 30, 2014 compared to basic and diluted earnings per share of $0.23 for last year’s third quarter.

Park reported basic and diluted earnings per share before special items of $0.77 and $0.76, respectively, for the nine months ended November 30, 2014 compared to basic and diluted earnings per share before special items of $0.76 for the nine months ended December 1, 2013. Basic and diluted earnings per share were $0.73 and $0.72, respectively, for the nine months ended November 30, 2014 compared to basic and diluted earnings per share of $0.85 for the nine months ended December 1, 2013.

The Company also announced that its Board of Directors has authorized the Company’s purchase, on the open market and in privately negotiated transactions, of up to 1,250,000 shares of its Common Stock, representing approximately 6% of the Company’s 20,945,634 total outstanding shares as of the close of business on January 7, 2015. This authorization supersedes the unused prior Board of Directors’ authorizations to purchase shares of the Company’s Common Stock. Purchases by the Company pursuant to this Board of Directors’ authorization may occur immediately and from time to time in the future. Shares purchased by the Company will be retained as treasury stock and will be available for use under the Company’s stock option plan and for other corporate purposes. Any such share purchases by the Company would be in addition to the Company’s prior returns of capital to its shareholders in the form of regular and special cash dividends of $14.30 per share and a total of approximately $294 million since the 2005 fiscal year and any regular or special cash dividends which may be paid by the Company in the future. The Company has paid a regular cash dividend every quarter since 1985.

The Company will conduct a conference call to discuss its financial results at 11:00 a.m. EDT today. Forward-looking and other material information may be discussed in this conference call. The conference call dial-in number is [phone] in the United States and Canada and [phone] in other countries and the required passcode is 60182608.

For those unable to listen to the call live, a conference call replay will be available from approximately 2:00 p.m. EDT today through 11:59 p.m. EDT on Wednesday, January 14, 2015. The conference call replay can be accessed by dialing [phone] in the United States and Canada and [phone] in other countries and entering passcode 60182608 or on the Company's web site at www.parkelectro.com/investor/investor.html.

Any additional material financial or statistical data disclosed in the conference call will also be available at the time of the conference call on the Company's web site at www.parkelectro.com/investor/investor.html.

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 and tax benefits. 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 high-technology digital and RF/microwave printed circuit materials principally for the telecommunications and internet infrastructure and high-end computing markets and advanced composite materials, parts and assemblies and low volume tooling for the aerospace markets. Park’s core capabilities are in the areas of polymer chemistry formulation and coating technology. The Company’s manufacturing facilities are located in Singapore, France, Kansas, Arizona and California. The Company also maintains R&D facilities in Arizona, Kansas and Singapore.

Additional corporate information is available on the Company’s web site at www.parkelectro.com

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

			13 Weeks Ended												39 Weeks Ended
			11/30/14				12/1/13				8/31/14				11/30/14				12/1/13
Sales			$	34,679			$	39,678			$	42,349			$	125,845			$	127,613
Net Earnings before Special Items1			$	2,433			$	4,721			$	5,015			$	16,027			$	15,833
Special Items net of Tax				(402)				-				(60)				(825)				1,862
Net Earnings			$	2,031			$	4,721			$	4,955			$	15,202			$	17,695
Basic and Diluted Earnings per Share:
Basic Earnings before Special Items1			$	0.12			$	0.23			$	0.24			$	0.77			$	0.76
Special Items				(0.02)				-				-				(0.04)				0.09
Basic Earnings (Loss) per Share			$	0.10			$	0.23			$	0.24			$	0.73			$	0.85
Diluted Earnings before Special Items1			$	0.12			$	0.23			$	0.24			$	0.76			$	0.76
Special Items				(0.02)				-				-				(0.04)				0.09
Diluted Earnings (Loss) per Share			$	0.10			$	0.23			$	0.24			$	0.72			$	0.85
Weighted Average Shares Outstanding:
Basic				20,947				20,857				20,925				20,917				20,840
Diluted				20,989				20,917				21,029				21,002				20,871
1 Refer to "Detailed operating information" below for information regarding Special Items.

Comparative balance sheets (in thousands):

			11/30/2014				3/2/2014
Assets			(unaudited)
Current Assets
Cash and Marketable Securities			$	285,307			$	270,356
Accounts Receivable, Net				20,975				22,881
Inventories				14,197				13,871
Prepaid Expenses and Other Current Assets				3,105				4,132
Total Current Assets				323,584				311,240
Fixed Assets, Net				27,362				29,674
Restricted Cash				25,000				25,000
Other Assets				12,866				11,179
Total Assets			$	388,812			$	377,093
Liabilities and Shareholders' Equity
Current Liabilities
Current Portion of Long-Term Debt			$	17,500			$	10,000
Accounts Payable				4,622				6,109
Accrued Liabilities				5,686				5,139
Income Taxes Payable				4,321				2,995
Total Current Liabilities				32,129				24,243
Long-Term Debt				86,500				94,000
Deferred Income Taxes				58,124				58,124
Other Liabilities				261				183
Total Liabilities				177,014				176,550
Shareholders’ Equity				211,798				200,543
Total Liabilities and Shareholders' Equity			$	388,812			$	377,093
Additional information
Equity per Share			$	10.11			$	9.60
Total Cash, Restricted Cash and Marketable Securities			$	310,307			$	295,356

Detailed operating information (in thousands – unaudited):

			13 Weeks Ended November 30, 2014															13 Weeks Ended December 1, 2013														13 Weeks Ended August 31, 2014
			GAAP					Specials Items				Before Special Items						GAAP					Specials Items			Before Special Items						GAAP					Specials Items				Before Special Items
Net Sales			$	34,679								$	34,679					$	39,678							$	39,678					$	42,349								$	42,349
Cost of Sales				26,081									26,081						28,640								28,640						30,178									30,178
%				75.2	%								75.2	%					72.2	%							72.2	%					71.3	%								71.3	%
Gross Profit				8,598									8,598						11,038								11,038						12,171									12,171
%				24.8	%								24.8	%					27.8	%							27.8	%					28.7	%								28.7	%
Selling, General & Administrative Expenses				5,754				-					5,754						6,106								6,106						6,252				-					6,252
%				16.6	%								16.6	%					15.4	%							15.4	%					14.8	%								14.8	%
Restructuring Charge				636				(636	)				-						-				-				-						83				(83	)				-
%				1.8	%								0.0	%					0.0	%							0.0	%					0.2	%								0.0	%
Earnings from Operations				2,208				636					2,844						4,932				-				4,932						5,836				83					5,919
%				6.4	%								8.2	%					12.4	%							12.4	%					13.8	%								14.0	%
Interest Income				222									222						139								139						226									226
%				0.6	%								0.6	%					0.4	%							0.4	%					0.5	%								0.5	%
Interest Expense				361									361						187								187						360									360
%				1.0	%								1.0	%					0.5	%							0.5	%					0.9	%								0.9	%
Net Interest Expense				(139	)								(139	)					(48	)							(48	)					(134	)								(134	)
%				-0.4	%								-0.4	%					-0.1	%							-0.1	%					-0.3	%								-0.3	%
Earnings before Income Taxes				2,069				636					2,705						4,884				-				4,884						5,702				83					5,785
%				6.0	%								7.8	%					12.3	%							12.3	%					13.5	%								13.7	%
Income Tax (Benefit) Provision				38				234					272						163				-				163						747				23					770
Effective Tax Rate				1.8	%								10.1	%					3.3	%							3.3	%					13.1	%								13.3	%
Net Earnings				2,031				402					2,433						4,721				-				4,721						4,955				60					5,015
%				5.9	%								7.0	%					11.9	%							11.9	%					11.7	%								11.8	%

Detailed operating information (in thousands – unaudited), continued:

			39 Weeks Ended November 30, 2014															39 Weeks Ended December 1, 2013
			GAAP					Specials Items				Before Special Items						GAAP					Specials Items				Before Special Items
Net Sales			$	125,845								$	125,845					$	127,613								$	127,613
Cost of Sales				88,147									88,147						89,963									89,963
%				70.0	%								70.0	%					70.5	%								70.5	%
Gross Profit				37,698									37,698						37,650									37,650
%				30.0	%								30.0	%					29.5	%								29.5	%
Selling, General & Administrative Expenses				18,602				(260	)				18,342						18,703									18,703
%				14.8	%								14.6	%					14.7	%								14.7	%
Restructuring Charge				986				(986	)				-						319				(319	)				-
%				0.8	%								0.0	%					0.2	%								0.0	%
Earnings from Operations				18,110				1,246					19,356						18,628				319					18,947
%				14.4	%								15.4	%					14.6	%								14.8	%
Interest Income				595									595						284									284
%				0.5	%								0.5	%					0.2	%								0.2	%
Interest Expense				1,074									1,074						543									543
%				0.9	%								0.9	%					0.4	%								0.4	%
Net Interest Expense				(479	)								(479	)					(259	)								(259	)
%				-0.4	%								-0.4	%					-0.2	%								-0.2	%
Earnings before Income Taxes				17,631				1,246					18,877						18,369				319					18,688
%				14.0	%								15.0	%					14.4	%								14.6	%
Income Tax Provision				2,429				421					2,850						674				2,181					2,855
Effective Tax Rate				13.8	%								15.1	%					3.7	%								15.3	%
Net Earnings				15,202				825					16,027						17,695				(1,862	)				15,833
%				12.1	%								12.7	%					13.9	%								12.4	%