Butler National OTCMKTS: BUKS reported higher first-quarter fiscal 2027 revenue, operating income and net income, driven primarily by sharp growth in its aerospace products segment, according to management’s shareholder conference call.
Total revenue increased 53% year over year to $30.8 million from $20.1 million. Operating income rose 59% to $7.4 million, while net income increased 43% to $5.3 million. Earnings per share were $0.08, compared with $0.06 in the prior-year quarter.
“The first quarter of our fiscal 2027 year again reflects outstanding performance for Butler National as the business continued to perform exceptionally well,” CFO and Interim CEO Adam Sefchick said. The company’s overall operating margin rose to 24% from 23% a year earlier.
Aerospace segment drives quarterly growth
Aerospace products revenue climbed 92% to $21.7 million from $11.3 million in the prior-year period. Within the segment, Aircraft Modifications Division revenue increased 189% to $16.3 million from $5.6 million.
Sefchick said the growth was supported by the development of new FAA-approved supplemental type certificates, or STCs, as well as repeat modifications using existing STCs and the company’s domestic and international marketing networks. Higher sales of installation kits and more activity on larger, more complex special-mission aircraft projects also contributed to revenue and margins.
Aerospace products operating income rose 91%, broadly in line with segment revenue growth, while the segment maintained an operating margin of about 25%, according to Sefchick.
The company reported record aerospace backlog of $51.1 million as of July 31, 2026. Sefchick said backlog consists of contracted business expected to be recognized in future periods, though the timing can vary based on customer schedules, aircraft availability, engineering requirements, regulatory approvals, material availability, equipment deliveries and project complexity.
Management said it continues to see a healthy pipeline for both its Avcon aircraft-modification business and its Tempe defense-electronics operation. However, Sefchick cautioned that pipeline opportunities are not contracted backlog and may not all become orders.
Focus on scalable aircraft modification offerings
Executive Chairman Jeff Yowell described the company’s effort to expand Avcon’s business model through STCs, installation kits and mission-systems integration.
An STC is an FAA approval for a specific aircraft modification. Yowell said developing an STC requires engineering, certification work, capital and time, but it can create intellectual property that supports opportunities beyond the first aircraft modified.
While Avcon continues to perform modifications at its own facilities, management is also seeking to expand kit sales that can be shipped to qualified installation partners. That approach could allow the company to serve customers without requiring every aircraft to occupy Avcon hangar space.
“STCs create intellectual property, kits allow us to scale that intellectual property, and mission systems integration allows us to provide a higher value, more comprehensive solution to the customer,” Yowell said.
Mission-systems integration can include operator workstations, power and control systems, communications interfaces and other technologies needed to make installed aircraft equipment operate as a complete system. Yowell also cited work on Challenger 604, 605 and 650 aircraft platforms as examples of Avcon expanding its capabilities into larger aircraft.
Management said growth rates and margins may vary between periods. Capacity constraints can differ by program and may involve engineering resources, skilled labor, manufacturing capacity, hangar availability, customer timing or regulatory approvals.
Professional services posts modest growth
Professional services revenue increased 3% to $9.0 million from $8.8 million. Traditional casino gaming revenue rose 6% to $6.8 million, driven by increased gaming activity and patron spending, Sefchick said.
Mobile sports wagering revenue declined to $1.1 million from $1.3 million, reflecting a lower hold percentage during the quarter. Hold percentage represents the portion of wagers retained as gaming revenue.
Professional services operating income increased 8%. Direct operating costs fell 6%, though those savings were partially offset by higher marketing, promotional and other operating expenses.
Yowell also discussed recently announced extensions involving Boot Hill’s sports-wagering operations. The Kansas Lottery extended Boot Hill’s lottery sports-wagering management contract for three years through 2030 under the same material terms as the original agreement. Boot Hill and DraftKings extended and amended their sports-wagering agreement for 10 years.
Under the DraftKings extension, Boot Hill agreed to a lower revenue participation percentage than under the prior agreement. Yowell said the revised terms reflect the evolution of the Kansas sports-wagering market and provide long-term stability for an important component of the professional services business.
Capital allocation and CEO search
Butler National ended the quarter with $35.3 million in cash and cash equivalents. Stockholders’ equity increased 5% during the quarter, while total liabilities increased 11%.
Sefchick said the company’s capital-allocation priority is investing in existing operations where it sees attractive long-term returns, including engineering talent, certifications, manufacturing capabilities, equipment and infrastructure. The company will also evaluate share repurchases when it considers them an attractive use of capital and remains open to acquisitions, though management said acquisitions are not necessary to execute its current growth strategy.
Yowell said the board continues to work with an outside executive recruiter to evaluate external candidates for a permanent CEO. He said the company is not setting an artificial deadline and is prioritizing finding a leader capable of building on Butler National’s current strategy and growth momentum.
In the interim, Yowell said Sefchick will continue serving as both CFO and interim CEO, a structure the board believes has provided stability while the search continues.
About Butler National (OTCMKTS:BUKS)
Butler National Corporation, together with its subsidiaries, designs, engineers, manufactures, sells, integrates, installs, repairs, modifies, overhauls, services, and distributes a portfolio of aerostructures, aircraft components, avionics, accessories, subassemblies, and systems in North America, Europe, the Middle East, Asia, and internationally. It operates through two segments, Aerospace Products and Professional Services. The Aerospace Products segment provides aircraft modifications to business-size aircraft, which include passenger-to-freighter configuration, radar systems, addition of aerial photography capabilities, search and rescue, environmental research, mapping, intelligence surveillance reconnaissance modifications, and stability enhancing modifications for Learjet, Beechcraft, and Cessna aircraft along with other specialized modifications.
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