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BUTLER NATIONAL CORP

BUKS
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Business Summary

Butler National Corporation operates in two distinct industries: aerospace and gaming. The Aerospace Products segment serves a broad, worldwide spectrum of the aviation industry, including owners of aircraft and contractors involved with private, commercial, business, and government aircraft operations, as well as commercial weapon manufacturers and suppliers to governments and their agencies. The Professional Services segment provides management services in the gaming industry, which includes owning the land and building for the Boot Hill Casino and Resort in Dodge City, Kansas. The filing does not disclose overall market size or growth rates for these industries.

In the aerospace industry, the Company competes globally against subsidiaries of much larger companies, original equipment manufacturers, and smaller independent integrators or operators. Competition for aviation electrical/avionics installations comes from three primary sources: OEMs, independent commercial avionics shops, and government-focused contractors, some of whom possess greater financial and other resources. In the casino entertainment business, the Company competes with other casino facilities in Kansas and Oklahoma, as well as non-gaming resorts, state lotteries, on-track and off-track wagering, third-party online sports betting platforms, prediction markets, video lottery terminals, gray gaming machines, and card parlors. The Company's competitive advantages include proprietary Supplemental Type Certificates and Parts Manufacturer Approval for aircraft modifications, and a management contract for the Boot Hill Casino and Resort in Dodge City, Kansas.

The Company generates revenue through two operating segments. The Aerospace Products segment derives revenue from system design, engineering, manufacturing, sale, distribution, integration, installation, repairing, modifying, overhauling and servicing of aerostructures, avionics, aircraft components, accessories, subassemblies and systems. The Professional Services segment provides professional management services in the traditional gaming industry and in sports wagering. Revenue from Professional Services is derived from management of a gaming and related dining and entertainment facility, with all games, gaming equipment and gaming operations owned and operated by the Kansas Lottery. The Company's Aerospace Products business generated approximately 53% of its 2026 revenue from fixed-price contracts . Revenue recognition for aerospace contracts uses either the percent completion method or the point-in-time method depending on the nature of the performance obligation.

The Professional Services segment includes the management of the Boot Hill Casino and Resort in Dodge City, Kansas, which features approximately 500 slot machines , 15 table games , a restaurant and a sportsbook. Sports wagering is managed through the four lottery gaming facility managers, and the Company entered into a provider contract with DraftKings for interactive/mobile sports wagering, opening a DraftKings branded sports book at Boot Hill on February 28, 2023. Revenue from Professional Services decreased by 2% to $37.4 million in fiscal 2026 compared to $38.3 million in fiscal 2025. Sports wagering through the DraftKings platform brought in $6.5 million of revenue during fiscal 2026 compared to $5.8 million in fiscal 2025. Traditional casino gaming revenue decreased $1.3 million . Non-gaming revenue at Boot Hill Casino decreased to $4.2 million in fiscal 2026, compared to $4.6 million in fiscal 2025. The Boot Hill Casino, pursuant to its Management Contract extension with the State of Kansas, pays a total revenue share of 29% of gross legacy gaming revenue (sports wagering revenue share is 10% to the State). The Boot Hill Casino is contractually obligated to pay its proportionate share of certain expenses incurred by the Kansas Lottery Commission and the Kansas Racing and Gaming Commission, which amounted to $2.6 million during fiscal year ended April 30, 2026. On December 15, 2024, the tax rate to the state increased by 2% .

The Aerospace Products segment includes the design, manufacture, sale and service of structural modifications, design, integration and installation of electronic equipment, systems and technologies that enhance aircraft operations, and the design, manufacture and sale of commercial controls, cabling and defense related articles. Products include aerial surveillance products, navigation/flight display installations, aerodynamic enhancement products, crew work stations, airplane range extension products, electrical power systems and switching equipment, Avcon stability enhancing fins, enlarged aircraft doors, airplane nose extension products, powered airplane sensor lifts, cargo/sensor carrying pods and radomes, provisions to allow carrying of external stores, fuel system protection devices, and specialized cabling and harnesses. Modifications performed include aerial photograph capabilities, extended range fuel tanks, aerodynamic improvements, radar systems, avionics systems, ISR – Intelligence Surveillance Reconnaissance, cargo or expanded-sized doors, special mission modifications, search and rescue, target towing capability, airborne research capability, and electrical systems integration. Special mission electronics products include cabling, HangFire Override Modules, electronic control systems, test equipment, Gun Control Units for Apache and Blackhawk helicopters, and Gun Control Units for land and sea based military vehicles. Aerospace Products revenue increased by 33% to $60.6 million in fiscal 2026 compared to $45.7 million in fiscal 2025, primarily due to an increase in the aircraft modification business of $7.6 million and an increase in special mission electronics of $6.5 million . Costs of Aerospace Products were 53% of segment total revenue in fiscal 2026, compared to 65% of segment total revenue in fiscal 2025. Aerospace Products operating income was $20.2 million in fiscal 2026 compared to $7.7 million in fiscal 2025.

During fiscal 2026, the Aircraft Modifications business entered into three contracts for modifications to large airplanes, including a CASA CN-235 upgraded with a new sensor package and a new Avcon-designed work station, and the Special Mission Challenger 605/650 modification that expanded product offerings including the under-fuselage radome/pod and rails for mounting of sensors. In April 2025, Avcon purchased a 33,600 square foot manufacturing and office space building improvement at the Newton Airport at 532 N. Oliver, Newton, Kansas on land leased from the City of Newton/Harvey County, Kansas. In September 2025, BHCMC, LLC sold its administration center located at 2601 N. 14th Avenue in Dodge City, Kansas, a 29,000 square foot owned facility, for $2.4 million , of which approximately $1.8 million was received in cash and the remaining $600 is recorded in accounts receivable at April 30, 2026. In December 2016, the Board of Directors approved a common stock repurchase program. In July 2023, the Board approved an increase from $4 million to $9 million . In October 2024, the Board approved an increase from $9 million to $11 million . In June 2025, the Board approved an increase from $11 million to $15 million . In August 2025, the Board approved the closure of the 2016 stock repurchase program and established a new $5 million 2025 stock repurchase program authorized through April 2027. The total remaining authorization for future common stock repurchases was $3.2 million as of April 30, 2026. During the fiscal year ended April 30, 2026, the Company repurchased $5.5 million of Company stock.

Fiscal 2026 total revenues increased 17% to $98.0 million compared to $84.0 million in fiscal 2025. Net income was $21.9 million compared to $12.6 million in fiscal 2025. Earnings per share was $0.34 for fiscal 2026 compared to $0.19 in fiscal 2025. Operating income was $28.5 million , an increase of 69% from $16.8 million in fiscal 2025, representing an operating margin of 29% in fiscal 2026 compared to 20% in fiscal 2025. The Company's cash position increased by $9.9 million during fiscal 2026.

Business Outlook

In the Aerospace Products segment, management is focused on developing and promoting new STC-approved airplane modifications and derivatives of its proprietary gun control design to open new market opportunities. The STC approval associated with the Special Mission Challenger 605/650 modification provides a baseline for further adaptation and the move into larger airplanes opens new market opportunities the Company believes will serve as a foundation for similar modification and integration work on other aircraft platforms supporting special mission applications. The Company anticipates capital expenditures in fiscal year 2027 to be approximately $11.5 million , consisting of $5.0 million on STCs, $3.6 million on equipment, and $2.8 million on buildings and improvements.

In the Professional Services segment, management looks for new ways to provide an enjoyable and entertaining experience to attract patrons to the gaming facility. The Company expects to enter into negotiations with the Kansas Lottery to renew or extend the Sports Wagering Management Contract, which is scheduled to expire in September 2027, and the Lottery Gaming Facility Management Contract, which also expires in 2027. The Company plans to construct a more efficient facility for storage and training adjacent to the casino, replacing the administration center that was sold in September 2025.

Fiscal 2026 operating income was $28.5 million , an increase of 69% from $16.8 million in fiscal 2025, representing an operating margin of 29% in fiscal 2026 compared to 20% in fiscal 2025. Costs and expenses represented 71% of total revenue in fiscal 2026, compared to 80% in fiscal 2025. Costs of Aerospace Products were 53% of segment total revenue in fiscal 2026, compared to 65% in fiscal 2025, reflecting increased efficiencies. The Company continues focusing on margin expansion initiatives, including efficiencies in implementation of improved operational processes and controlling general and administrative expenses, and has made a deliberate shift toward higher-margin product lines and improved operational alignment.

The Company anticipates capital expenditures in fiscal year 2027 to be approximately $11.5 million , consisting of $5.0 million on STCs, $3.6 million on equipment, and $2.8 million on buildings and improvements. The Company's estimate is subject to adjustment based on market conditions and management's discretion. The Company anticipates its cash balance will be sufficient to cover cash requirements through the current fiscal year. During the fiscal year ended April 30, 2026, the Company has initiated contacts with potential financing sources for the refinancing of the gaming facility debt that becomes due in calendar year 2027, which includes a balloon payment in the approximate amount of $20.6 million in December 2027.

With respect to Professional Services, management anticipates the impact of decreased cattle processing and meat packing operations near the Boot Hill Casino and Resort in Dodge City, Kansas will likely continue through fiscal year 2027 and put downward pressure on Professional Services revenue originating from traditional table games. With respect to Aerospace Products, the Company continues to enjoy a strong backlog, especially with respect to aircraft modifications, but has experienced and anticipates continuing to experience vigorous competition for skilled technicians and fabrication labor, and believes labor costs in Aerospace Products will continue to rise. The Company has experienced and anticipates continuing supply chain disruptions as a result of global supply chain constraints and labor instability. U.S. trade policy changes and tariffs have impacted demand for the Company's services and could have a material adverse effect on operating results, including as a result of the possibility of higher inflation, an economic slowdown or general economic uncertainty.

Risk Factors

The Company faces significant customer concentration risk, as during fiscal 2026 it derived 39.1% of revenue from five customers, with two major customers providing 29.9% of total revenue, and one customer accounted for 22.7% of total accounts receivable at April 30, 2026. The Aerospace Products business generated approximately 53% of its 2026 revenue from fixed-price contracts, exposing the Company to cost overruns from increases in labor, materials, overhead, and tariffs. A balloon payment in the approximate amount of $20.6 million is due in December 2027, secured by certain assets, and financing to repay such indebtedness may not be available on favorable terms. The Company depends on the U.S. government and friendly foreign countries for a significant portion of revenues, and international sales amount to 12% of total revenue in fiscal 2026, exposing the Company to risks including export regulations, tariffs, and political instability. The Boot Hill Casino pays a total revenue share of 29% of gross legacy gaming revenue and 10% of sports wagering revenue to the State of Kansas, and the tax rate to the state increased by 2% on December 15, 2024.

Management Priorities

Management's message emphasizes a focus on increasing long-term shareholder value from increased cash generation, earnings growth, and prudently managing capital expenditures. The strategy is to continue driving increased revenues from product and service innovations, strategic acquisitions, and targeted marketing programs, specifically developing and promoting new STC-approved airplane modifications and derivatives of the proprietary gun control design in Aerospace Products, and providing an enjoyable and entertaining experience to attract patrons in Professional Services. Key forward-looking statements include the expectation that the impact of decreased cattle processing and meat packing operations near Boot Hill Casino will likely continue through fiscal year 2027 and put downward pressure on Professional Services revenue originating from traditional table games, and that labor costs in Aerospace Products will continue to rise. The Company anticipates capital expenditures in fiscal year 2027 to be approximately $11.5 million , consisting of $5.0 million on STCs, $3.6 million on equipment, and $2.8 million on buildings and improvements.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Competition; Item 7, MD&A — Results of Operations
  2. [2] Item 1, Business — Professional Services
  3. [3] Item 1, Business — Professional Services
  4. [4] Item 7, MD&A — Results of Operations
  5. [5] Item 7, MD&A — Results of Operations
  6. [6] Item 7, MD&A — Results of Operations
  7. [7] Item 7, MD&A — Results of Operations
  8. [8] Item 7, MD&A — Results of Operations
  9. [9] Item 7, MD&A — Operations by Segment
  10. [10] Item 7, MD&A — Operations by Segment
  11. [11] Item 1A, Risk Factors — Taxation
  12. [12] Item 1A, Risk Factors — Taxation
  13. [13] Item 1A, Risk Factors — Taxation
  14. [14] Item 1A, Risk Factors — Taxation; Item 7, MD&A — Operations by Segment
  15. [15] Item 7, MD&A — Results of Operations
  16. [16] Item 7, MD&A — Results of Operations
  17. [17] Item 7, MD&A — Operations by Segment
  18. [18] Item 7, MD&A — Operations by Segment
  19. [19] Item 7, MD&A — Operations by Segment
  20. [20] Item 7, MD&A — Operations by Segment
  21. [21] Item 7, MD&A — Operations by Segment
  22. [22] Item 7, MD&A — Operations by Segment
  23. [23] Item 2, Properties — Aerospace Products
  24. [24] Item 2, Properties — Professional Services
  25. [25] Item 7, MD&A — Liquidity and Capital Resources
  26. [26] Item 7, MD&A — Liquidity and Capital Resources
  27. [27] Item 7, MD&A — Liquidity and Capital Resources
  28. [28] Item 5, Stock Repurchase Program
  29. [29] Item 5, Stock Repurchase Program
  30. [30] Item 5, Stock Repurchase Program
  31. [31] Item 5, Stock Repurchase Program
  32. [32] Item 5, Stock Repurchase Program
  33. [33] Item 5, Stock Repurchase Program
  34. [34] Item 5, Stock Repurchase Program
  35. [35] Item 5, Stock Repurchase Program
  36. [36] Item 7, MD&A — Cash Flow Summary
  37. [37] Item 7, MD&A — Results Overview
  38. [38] Item 7, MD&A — Results Overview
  39. [39] Item 7, MD&A — Results Overview
  40. [40] Item 7, MD&A — Results Overview
  41. [41] Item 7, MD&A — Results Overview
  42. [42] Item 7, MD&A — Results Overview
  43. [43] Item 7, MD&A — Results Overview
  44. [44] Item 7, MD&A — Results Overview
  45. [45] Item 7, MD&A — Results Overview
  46. [46] Item 7, MD&A — Results Overview
  47. [47] Item 7, MD&A — Results Overview
  48. [48] Item 7, MD&A — Results Overview
  49. [49] Item 7, MD&A — Cash Flow Summary
  50. [50] Item 7, MD&A — Capital Expenditures
  51. [51] Item 7, MD&A — Capital Expenditures
  52. [52] Item 7, MD&A — Capital Expenditures
  53. [53] Item 7, MD&A — Capital Expenditures
  54. [54] Item 7, MD&A — Results of Operations
  55. [55] Item 7, MD&A — Results of Operations
  56. [56] Item 7, MD&A — Results of Operations; Item 1A, Risk Factors — Financing
  57. [57] Item 1A, Risk Factors — Customer Concentration
  58. [58] Item 1A, Risk Factors — Customer Concentration
  59. [59] Item 1A, Risk Factors — Customer Concentration
  60. [60] Item 1A, Risk Factors — International Sales
  61. [61] Item 7, MD&A — Results of Operations
  62. [62] Item 7, MD&A — Results of Operations
  63. [63] Item 7, MD&A — Results of Operations
  64. [64] Item 7, MD&A — Results of Operations
  65. [65] Item 7, MD&A — Results of Operations
  66. [66] Item 7, MD&A — Operations by Segment
  67. [67] Item 7, MD&A — Operations by Segment
  68. [68] Item 7, MD&A — Cash Flow Summary
  69. [69] Item 7, MD&A — Cash Flow Summary
  70. [70] Item 7, MD&A — Cash Flow Summary
  71. [71] Item 7, MD&A — Cash Flow Summary

Analysis on 7/8/2026