Butler National Corporation (BUKS) Earnings Call Transcript & Summary

Thanks, Jeff. Our next question Butler National reported record revenue, operating income and earnings during fiscal '26. Is this performance sustainable or the Avcon and Tempe [indiscernible]? I'll take this. We do not believe fiscal '26 was driven by a onetime event. Avcon continues to benefit from demand for aircraft modifications and engineering services for special mission aircraft and special missions integrations. Special Missions Electronics in Tempe delivered an exceptional year, and we continue to see healthy demand opportunities for new products and operational improvements. Results will naturally vary by year, but we remain confident in the long-term trajectory of both businesses based on backlog, customer demand and product pipeline. Let me point out a few specific examples. At Avcon, we achieved several significant milestones, including the successful completions and certification of our special missions Challenger 605/650 platform. We also recently completed a modification on the largest aircraft in Avcon's history, the CN-235. It was predominantly a systems integration and expanded focus of Avcon given our previous focus on structural modifications. Mission Systems integrations expands the scope of work we can perform while creating opportunities for high-value projects. Like much of the aerospace industry attracting experienced engineers and technicians continues to be an important priority. Depending on the specific program, engineering resources, production scheduling, customer timing and FAA certification activities can all influence when backlog converts into revenue. That is why we have continued investing in engineering and technical talent while also expanding scalable offerings such as kit sales. We expect an increasing portion of Aerospace Products revenue to come from kits and engineered solutions as alternatives to support the demand for our aircraft modifications. Kits are a great example of working with others, even globally to install our products and allow us to leverage our engineering, manufacturing and certification expertise while expanding our geographic reach through qualified installation partners. We believe this allows portions of our aerospace products business to grow without requiring proportional increases in hangar capacity or engineering headcount. We also note that we did have a onetime sale of our Learjet equipped with an Avcon STC Garmin avionics suite in special mission mods, including the delta fins and hard points, we will continue to look for value proposition aircraft acquisitions to modify and, for example, our King Air Model 350 on which we are working a project will be for sale in the near future. Our next question submitted. Several shareholders submitted questions regarding a potential NASDAQ uplifting. What milestones remain before the company formally pursues an uplifting. Jeff?

An uplifting remains an important long-term objective. The CEO search is appropriately the Board's highest immediate priority. At the same time, our long-term objective of pursuing a NASDAQ uplifting has not changed. Our immediate priority is continuing the momentum we've built by executing our strategy, successfully completing the CEO transition and maintaining strong operating performance. Beyond that, we continue to focus on strengthening the underlying business through improved profitability, balance sheet strength and consistent execution. While there are objective listing standards for NASDAQ to be met, the Board's evaluation extends beyond simple satisfying minimum requirements. We also consider trading liquidity, shareholder composition, governance readiness, market conditions and whether an uplifting would maximize long-term values for our shareholders. There are still several governance and structural initiatives the Board intends to complete before we believe the timing is appropriate. Do we expect that to occur in the very near future? No. However, we remain committed to pursuing an uplifting when we believe it will create the greatest long-term value for shareholders.

Thanks, Jeff. And our next question, what are management's priorities for fiscal '27? I'll take this. Our priorities are to execute a smooth CEO transition continued growing aerospace products and Mission Systems integration, convert backlog into revenue, while investing in engineering and manufacturing capabilities and maintain disciplined capital allocation and operational excellence. We have started to lay a positive foundation for fiscal year 2027. One of the areas we've already begun investing in is talent. During the past several months, we've added engineering and technical professionals who strengthen our ability to execute on future opportunities. Those investments support both Avcon's continued evolution in the higher-value mission system integration work and Tempe's continued product development efforts. We are focused on investing in the areas where we have proven competitive advantages. Aircraft modification and certification, Mission Systems integration at Avcon and electrical control systems at Butler National Tempe. Another important priority for fiscal 2027 is disciplined investment in product development. Every engineering program certification effort and new STC represents an investment in future growth. We evaluate these opportunities based upon their strategic importance, expected market demand, long-term return potential and alignment with our core capabilities. At the same time, we remain committed to disciplined capital allocation, balancing those investments while maintaining a strong balance sheet and returning capital to shareholders through our share repurchase program when appropriate. Our next question, where do you see the greatest long-term growth opportunity within the Aerospace Products segment? Jeff?

I actually see 3 highly complementary growth opportunities, kit sales, mission systems integration and our traditional airplane modifications. We already discussed kit sales and how they allow us to leverage our engineering and certification expertise while expanding our reach through qualified installation partners. Mission Systems integration represents one of our most significant long-term growth opportunities. Customers increasingly want complete mission-ready aircraft, not just modifications. Avcon's expertise in engineering, certification and integration positions us well to deliver comprehensive mission solutions and pursue larger, more strategic opportunities. Together, Mission Systems integration, kit sales and airplane modifications allow us to increase both the value we provide to customers and the scalability of our aerospace products business.

Great, Jeff. And moving on to our final question. Given leadership's transition and record '26 results, why are you optimistic about Butler National's future. Jeff?

Butler National enters fiscal 2027 from a position of strength. We have record financial performance, a strong balance sheet, growing aerospace capabilities and expanding backlog, talented employees and a clear strategy. Our portfolio of businesses continues to generate strong cash flow, providing the financial flexibility to invest in aerospace products while maintaining a disciplined approach to capital allocation. Perhaps even more importantly, we believe the opportunities in front of Butler National today are greater than they have been at any point in our recent history. We remain committed to executing our strategy with discipline and creating long-term value for all of our shareholders. In closing, as we look ahead, Butler National remains committed to investing in innovation within Aerospace Systems, improving operational efficiency across all segments and building long-term value for our shareholders. We're pleased you joined the call today and look forward to maintaining open communication with our shareholders as we continue to execute our strategy. Thank you for your interest in Butler National. That concludes our call. A recording of this call will be available on the Butler National Investor Relations website following the call for 30 days. Everyone, have a good day.

Thank you everyone. This concludes today's Butler National Corporation conference call. Thank you for attending.