BUTLER NATIONAL CORP SEC 10-K Report

Butler National Corp, a company specializing in aerospace products and professional services, has released its 10-K report for the fiscal year 2025. The report highlights the company's financial performance, business operations, strategic initiatives, and the challenges it faces in its competitive markets.

Financial Highlights

Butler National Corp reported strong financial performance for fiscal year 2025:

• Total Revenues: $84.0 million, reflecting a 7% increase from fiscal 2024 driven by a 15% rise in Aerospace Products revenue.
• Operating Income: $16.8 million, representing a 27% increase from fiscal 2024, with an operating margin of 20% compared to 17% in the previous year.
• Net Income: $12.6 million, slightly up from $12.5 million in fiscal 2024, indicating stable profitability.
• Basic Earnings Per Common Share: $0.19, compared to $0.18 in fiscal 2024, showing a modest increase in shareholder value.
• Diluted Earnings Per Common Share: $0.19, consistent with the basic earnings per share, reflecting stable earnings performance.

Business Highlights

The company achieved significant milestones in its business operations:

• Aerospace Products Segment: Experienced a 15% increase in revenue, driven by targeted marketing efforts for new Supplemental Type Certificates (STCs) and special mission products. This segment focuses on designing, engineering, manufacturing, and servicing aerostructures, avionics, and aircraft components.
• Professional Services Segment: Revenue from Professional Services, which includes management of the Boot Hill Casino and Resort, decreased by less than 1%. The segment saw a decline in traditional casino gaming revenue, offset by an increase in sportsbook revenue through the DraftKings platform.
• New Product Launches: During fiscal year 2025, the company obtained new approvals for airplane modifications, including special configurations of the Avcon Special Mission Pod, the Avcon King Air Nose Extension, and various provisions for the Learjet Model 60.
• New Production Facilities: The company expanded its fabrication capabilities by acquiring a new facility in Newton, Kansas, to address increased demand and labor availability challenges.
• Operational Efficiency: Improved operating profit margins in the Aerospace Products segment by increasing engineering and fabrication efficiencies, resulting in a decrease in costs as a percentage of revenue from 72% to 65%.
• Future Outlook: The company anticipates continued strong backlog in Aerospace Products, particularly in special mission electronics, despite facing competition for skilled technicians. In Professional Services, economic factors in the region surrounding the Boot Hill Casino may continue to impact traditional gaming revenue.

Strategic Initiatives

Butler National Corp is focused on increasing long-term shareholder value through several strategic initiatives:

• Strategic Focus: The company aims to drive increased revenues from product and service innovations, strategic acquisitions, and targeted marketing programs. In the Aerospace Products segment, it is actively developing and promoting new STC-approved airplane modifications and derivatives of its proprietary designs to open new market opportunities. In the Professional Services segment, the company is exploring new ways to enhance the customer experience to attract more patrons to its gaming facility.
• Capital Management: The company has a $2 million line of credit with Kansas State Bank, which was unused as of April 30, 2025. It also has notes payable with Academy Bank, N.A., with balances of $27.4 million and $4.6 million, secured by assets and management contract compensation. The stock repurchase program was increased to $15 million, with 12,001,818 shares repurchased at an average price of $0.73 per share. The company has not paid any cash dividends and does not expect to declare any in the foreseeable future.
• Future Outlook: The company anticipates capital expenditures of approximately $12.5 million in fiscal year 2026, focusing on STCs, equipment, and building improvements. It plans to continue investing in developing and marketing new aircraft modifications and STCs. The company expects to maintain sufficient cash balance to cover cash requirements through the current fiscal year. It also plans to continue its stock repurchase program, with an additional $4 million authorized in June 2025. The company is monitoring external factors such as U.S. trade policy changes, inflation, and labor availability, which could impact its operations and financial performance.

Challenges and Risks

Butler National Corp faces several challenges and risks in its operations:

• Competitive Markets: The company operates in highly competitive markets, both in aerospace and gaming industries, which could adversely affect its business. The aerospace segment faces competition from larger companies and OEMs, while the gaming segment competes with other casinos and entertainment options.
• Regulatory Environment: The company is subject to extensive government regulation, particularly in aerospace and gaming, which could lead to increased compliance costs or operational restrictions.
• Customer Concentration: The company faces significant customer concentration risk in its Aerospace Products business, with a large portion of revenue derived from a few major customers. A loss of business from these customers could materially affect financial results.
• Economic and Cyclical Risks: Economic downturns and cyclical industries pose risks to both aerospace and gaming operations, potentially reducing consumer spending and demand for products and services.
• Regulatory Challenges: The need for FAA approvals could delay product development and sales.
• Cybersecurity Threats: The company faces risks related to cybersecurity threats, which could disrupt operations and lead to financial losses.
• Inflation and Supply Chain Disruptions: Management highlights the impact of inflation on operational costs, including labor and materials, which could affect profitability. The company is also experiencing supply chain disruptions, impacting productivity and costs.
• Market Risks: The company is exposed to market risks, including changes in U.S. trade policy and tariffs, which could impact demand and costs. Rising inflation and interest rates are also significant concerns, potentially increasing operational expenses and affecting financial performance.

SEC Filing: BUTLER NATIONAL CORP [ BUKS ] - 10-K - Jul. 03, 2025