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Edited Transcript of BUKS earnings conference call or presentation 17-Sep-19 2:00pm GMT

Q1 2020 Butler National Corp Earnings Call

Olathe Sep 23, 2019 (Thomson StreetEvents) -- Edited Transcript of Butler National Corp earnings conference call or presentation Tuesday, September 17, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Aric Peters

Butler National Corporation - Director of Business Development

* Clark D. Stewart

Butler National Corporation - President, CEO & Director

* Craig D. Stewart

Butler National Corporation - VP & President of Aerospace

* Tad Mitchell McMahon

Butler National Corporation - CFO

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Conference Call Participants

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* Tim Macmillan

Time-Slice Films Ltd. - Founder and Originator

* David Drewitz;Creative Options Communications;President

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen. Today is Tuesday, September 17, 2019, and welcome to the Butler National Corporation's First Quarter Fiscal 2020 Financial Results Conference Call. (Operator Instructions) Your call leaders for today's call are David Drewitz, Creative Options Communications; Clark Stewart, President and CEO; Craig Stewart, President of Aerospace Group.

I'll now turn the call over to Mr. David Drewitz. Mr. Drewitz, you may begin.

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David Drewitz;Creative Options Communications;President, [2]

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Thank you for that. And good morning to everyone. Before Mr. Stewart begins, I would like to draw your attention to, except for historical information contained herein, the statements of this conference call are forward-looking and made pursuant to the safe harbor provisions as outlined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause Butler National's actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market share through competition or otherwise; the introduction of competing technologies by other companies; new governmental safety, health and environmental regulations, which could require Butler to make significant capital expenditures.

The forward-looking statements included in this conference call are only made of the date of this call, and Butler National undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include, but are not limited to, factors described under the caption Risk Factors in the company's annual report on Form 10-K filed with the Securities and Exchange Commission.

So with that statement completed, I'm going to turn the call over to Mr. Clark Stewart. Mr. Stewart?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [3]

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Thank you, Mr. Drewitz. Good morning, ladies and gentlemen. We appreciate you taking the time to dial up the phone and listen about Butler National. We've had an exciting quarter, and as you can tell by looking at your 10-Q and the press release that the revenue was up basically $3.5 million over quarter 1 of 2018. And we're up 2.3% from the quarter ended April 30. So our revenue and our income are following each other, and we've had a successful quarter in actually 2- or 3-year in a row. I get nervous about that sometimes, but they're coming along pretty well.

Let's start out by looking at the press release, and you can all see that we did $17 million versus $15 million in the previous quarter and $13 million a year ago.

Our operating income was $3.5 million versus $900,000 a year ago and $746,000. And you notice our long-term obligations went from $3,765 million in April, $44,207 million in July. And I would call your attention and we'll talk about it in a minute but Note #11 in the 10-Q tells you we have to adopt the new accounting provisions for capital leases and all kinds of leases. And so you've got to be aware that most of the numbers in here are distorted because of that -- adopting that information. So we'll cover those as we go forward.

As you can see here, we spent $397,000 on R&D this quarter compared to a year ago, $318,000 and compared to the quarter ending in April, $655,000. So we're continuing to invest in the R&D to keep the product line fresh.

On Page 2 of the press release, you basically see that Aerospace Products increased 63% and Professional Services up 2%. We think that's pretty good, 2% increase in Professional Services, basically, in an agricultural and oil-based economy out there that is a little bit uncertain under the current policies with China and the agriculture situation.

Our net income, as we talked, is $2.1 million compared to $509,000, and our operating margin went from 6.7% to 20%. So basically, you see in the Aerospace, once you cover that fixed cost minimum amount, it goes to the bottom line real quick. There is considerable material cost but basically, it's labor. And once you cover the overheads, you're in good shape. Also, I'll be pointing out on the third paragraph on Page 2 of the press release, the $397,000 in project development.

You can look at all those numbers on the Professional Services. And like I said, they're distorted by Footnote 11, although, they are very good. And like I said, the 2% increase in revenue is not distorted. And the Aerospace down below has got a 63% increase in revenue. And that's distorted by one hangar lease, which is not as nearly significant as the lease in Professional Services.

So our operating income from Aerospace increased from $357,000 to $2.3 million from previous year. We were pretty pleased with that. We think that's good progress, like our backlog is hanging in there at roughly $16 million -- $16.7 million as of July 31 this year. $13.4 million at July 31 a year ago. And we had $16.160 million at April 30. That's up $534,000 from that and shipments is $17 million. So net sales, I should say, it's not shipments. It's total revenue. And we see that as positive. We haven't seen anything that's really changing that very much at this point. I have Aric here, if you have questions about Aerospace sales later on, we can talk about those if we need to.

I think now we should look at 10-Q itself, and you'll notice we have some cash on board there, and we also have some major capital investment coming up, about $7 million. We're trying to be in a position where we can do that. Those investments have to do with a couple of million, between $2 million and $3 million at Boot Hill to rework the electrical systems so we don't have brownouts at the -- when we have storms or somebody cuts the power lines between us and Garden City or somewhere else. We've had all those occurrences that cost about $150,000 per occurrence. So we've got to spend some money to fix that. Avcon needed to increase staff job, that's $1 million-plus job. And here in Olathe, we're doing about $2.5 million of capital investment relative to BAI. And we're doing some capital investment in Arizona. So we're looking at $6.5 million, $7 million to be spent on capital investments in the next year or two.

As far as the balance sheet goes, I would -- you will see a new item under property, plant and equipment called finance lease right-to-use, $43,680 million. That is not the purchase of the land and building. That is the accounting change, and that's the present value theoretically of what we're leasing. So that -- it's fairly representative of what it would look like if we actually bought the thing, but it's a distortion because of the accelerated depreciation. Plus, the interest cost is greater than the lease cost. That will go on halfway through it, and then it will turn around and we'll get money to have more income than we should have. So anyway, that's -- you just need to study that if it's bothering you. It's not really bothering us. We just want to make sure no one is concerned.

Under current liabilities, you'll notice there's $1,070 million of current maturities of finance lease liability, which is the calculation per the SEC requirements. Compute that number. We also have a long-term lease liability down below of $42,384 million. Both of those are covered in Footnote 11.

Let's go over to the next page, which is revenue. That's summary of revenue and expense. We've got cost, Professional Services and Aero -- it's distorted by that big long-term lease and its valuation, so is depreciation and amortization. And of course, there is $1,097 million of interest expense. That is -- we repaid as part of the lease payment.

So there's some distortion there. And if you look at Footnote 11 and the 10-Q, you will see that the total distortion is about $510,000 decrease in overall net income.

So I think that's important. I think we're glad we finally got that thing put into the numbers. We didn't necessarily agree that this is what we ought to be doing, but we don't set the rules. We just do the accounting. So that's what it is, and we got it approved by our auditor. And there are things wonderful. That's called on Footnote 11. That's ASU 2016-02 Leases, Topic 842, if anyone wants to follow up on it. And I think that's as far as that goes. As far as financial information, we are really happy that we're moving in the direction we are moving.

Those questions on extension of the lease and the buyout of the lease, and the answer is -- or extension of the contract and the buyout of the lease, the answer is the extension of the contract seems to be moving. It's moved slow for the last 2.5 years. But maybe we'll get something to happen in the next month or two. I keep saying that to you and you don't believe me, but that's a fact we are actually moving a little bit.

Financing of the buyout seems to not be a major problem at this point. The banks, they call us and want to know where we stand on a fairly regular basis, so it is a good thing. I didn't say that they're going to loan us any money, they just say they're interested.

So with that, I think that's probably the big question in everyone's mind. And I appreciate your patience, and I think it's time for us to take calls unless somebody else here in this room has any comments? I don't see any. Craig, are you -- Craig is in Arizona, going to flight safety. So do you have any comments you want to make before we're done here?

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Craig D. Stewart, Butler National Corporation - VP & President of Aerospace [4]

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Nope. I think you covered it.

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [5]

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All right. Thank you. David, we are ready for questions.

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David Drewitz;Creative Options Communications;President, [6]

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All right. Erica, let's open the floor to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Tim Macmillan.

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Tim Macmillan, Time-Slice Films Ltd. - Founder and Originator [2]

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Clark, it's always been kind of a concern when we talk about some on this option program. Is there any approved definition as to how that's going to be allocated over a time frame and price and what the criteria is? It seems like it's out there. And I think it creates uncertainty on the stock price a little bit as to how that's going to operate and so forth. Is there a definite plan that you've formulated yet or not?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [3]

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No. We probably will discuss that at our next Board meeting, which is coming up here in October and try to get that done. Right now, we've been trying to figure out how we make money and get all this -- you realize that our backlog is increasing faster than our increase in revenues. So that's the reason we've got to spend a little money here and there to try to get to the point where we can produce more product. But -- yes, but that is -- that's not been on the list until we get to the October meeting, Tim. So I can't...

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Tim Macmillan, Time-Slice Films Ltd. - Founder and Originator [4]

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Okay. Well, I -- as I said, I think once you can address that and give real clarity, it's going to help the price of the stock. It certainly -- it raises questions, and hopefully, you can get that handled.

Also on your -- you've mentioned this that -- about the -- you're thinking the extension is looking better. Can you say what makes you say that? Are people -- is everyone trying to get an extension along with you? Or are we the only ones?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [5]

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We really don't know what the other people are doing on it. We just know that we -- we're trying to get the lottery to talk to us and deal with us on the basis that we really want to move forward. And we're 5 years away from the end of the contract, and that kind of doesn't put a high priority on it except by us. And so we continue to pressure them and try to meet with them. And we do meet with them, and that's why I'm saying, we -- that's about what I can tell you is that we're -- we think we're moving forward. We're not moving backward. Let's say that. And we can go, if you'd ask me, I'd say we're moving backward. This week, I think we're moving forward. I couldn't tell you about next week. So it's a political situation from the standpoint of what state really does and how they do it, what policy they're establishing as they do it. And I guess my answer to you is it's still in a pretty good state of flux.

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Operator [6]

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Our next question comes from [Sam Ribowsky].

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Unidentified Analyst, [7]

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Yes. The backlog is $17 million. Last year, we did $32 million in sales, and we're increasing. Can we keep increasing the backlog? And is this backlog as profitable as the current quarter's portion?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [8]

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Okay. That's a good question, Sam. I would answer that, but I think the backlog is about the same mix as the last quarter. I don't see a difference in the backlog there. I think it's a matter of how the cycle of getting this. We've got airplanes that range from $0.5 million to $3 million or $4 million modifications, when they show up, that's a timing issue. We're shipping Gun Control Units out of Arizona, and that's a pretty steady flow. That backlog runs for a couple of years out there. So the answer to your question is as we're working the backlog on a regular basis and we're -- and we see that it's -- profitability seems to be pretty stable in that group. Would you agree with that, Aric? I'm looking at Aric Peters here. And he's saying, yes, that's a good statement. So yes, the answer to that, Sam, is yes.

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Unidentified Analyst, [9]

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Now the fact that we did $17 million in sales and the backlog is $17 million, when do we expect to complete the backlog? Is it 3 months? Is it 6 months?

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Aric Peters, Butler National Corporation - Director of Business Development [10]

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I'd say the backlog, as it sits right now, of course, it has new additions coming all the time. We will ship that $17 million over the next 18 months. But what we don't know the answer to is how much more orders keep coming in as we ship out the $17 million. So that is the key. And yes, the answer is we're covered for at least 18 months, I'd say.

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Unidentified Analyst, [11]

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And as far as the number of bids we have out there, is there -- can you quantify the dollar amount of bids that we have on the new work that we're bidding on?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [12]

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I couldn't -- I don't have a good list of it. My guess is it's in excess of $17 million. Probably close to $20 million. What we used to say is we have a booked land here with all these quotes in it. It's worth 5 years of business. Now which one of these quotes are going to come in next week? We don't have any idea. So that's a tough question to answer because we do -- a lot of this stuff is quoted a couple of years ahead of time.

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Unidentified Analyst, [13]

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Okay. And the -- yes, can you...

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [14]

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I think, we could add $50 million in quotes out there.

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Unidentified Analyst, [15]

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$60 million in quotes?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [16]

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$50 million.

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Unidentified Analyst, [17]

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6-0?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [18]

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No. 5-0.

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Unidentified Analyst, [19]

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5-0.

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [20]

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Yes.

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Unidentified Analyst, [21]

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$50 million. 5-0. Okay. We -- yes. We've purchased the aircraft. Is it -- it's on the books, the new aircraft, that we purchased? Is that on the books now?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [22]

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Yes. That's correct. It's on the books.

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Unidentified Analyst, [23]

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Okay. And so were you surprised at the profitability of the current quarter?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [24]

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A little bit. I -- we forget about the fact that once we cover all those fixed costs, it all comes to bottom line. We really don't think about it that way, because as we price the stuff, we build in that the overhead associated with it. And so we kind of lose track of the fact that, that contribution comes in. So the answer is yes. But honestly, we're a little surprised.

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Unidentified Analyst, [25]

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And I know you have been trying to buy stock. And the window has been closed. When does it open up?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [26]

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Craig, that's your question.

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Craig D. Stewart, Butler National Corporation - VP & President of Aerospace [27]

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That window is open right now until the end of second quarter, which is October 31. So we can buy stock anytime now -- between now and October 31.

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Unidentified Analyst, [28]

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And I mean, it's nice that the price has moved up, and it moved up on the earnings on your announcement. And the activity increased, whether or not these are short-term or long-term buyers. Do you expect -- just tell the story a little more to get more people involved? Or what are we doing there?

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Craig D. Stewart, Butler National Corporation - VP & President of Aerospace [29]

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I think we've still got -- the big story that everybody wants to hear is the story about it getting the extension and the casino and aerospace split apart into 2 separate entities. I think we need to get closer to that happen before we go for the push on. We found and we've done it based on earnings. But it's all temporary, and we need something that will be more long term.

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Unidentified Analyst, [30]

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All right. Well, I hope, you keep doing what you're doing. If you could sort of replicate the profit of this quarter, I think you'll just get more retention. Good luck, guys.

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [31]

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Thank you, Sam.

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Craig D. Stewart, Butler National Corporation - VP & President of Aerospace [32]

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Thanks Sam.

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Operator [33]

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Our next question comes from [Tony Pisciotta].

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Unidentified Analyst, [34]

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I guess this is a question for Craig. I've noticed that since the inception of the stock buyback program, we picked up -- we, the company, have picked up about 2.25 million shares. And I've also noticed that because there's some footnotes, it says that every single one of those transactions has been a private transaction. In other words, we, the company, have yet to go into the open market to purchase any shares. Can you give us a little bit of color as far as where these 2.25 million shares came from? Are they coming out of an estate? Or are they coming out of just an inactive shareholder? We certainly don't need names, telephone numbers and so forth and so on, but just some sort of guidance as to who out there has 2 million to 3 million shares that they're anxious to sell.

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Craig D. Stewart, Butler National Corporation - VP & President of Aerospace [35]

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These -- the shares in general are coming from people that are contacting us. And it's a number. It's not -- most of them have not been big chunks of -- there hasn't been anybody selling 0.5 million, 1 million shares. There's been a few that are close to 100,000 shares here and there, but most of them are people that are contacting us and saying they'd be interested in selling their shares.

We did buy -- we've been out in the markets. It's been a while since we've been out in the open market. That was pretty slow and painful of buying 500 to 1,000 shares at a time, and there are a lot of days that -- what's the rules that go around that, that we couldn't even buy any shares or a number of days when we were out there that -- actually, most of the days that we were out there, we didn't buy any shares.

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Unidentified Analyst, [36]

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Right. And do you think that the reason that people are contacting you to see if the company has an interest, let's say, in buying 50,000, 100,000 or whatever, it is just because of the relative illiquidity of the stock and the fact that they realized that if they slam the market for 100,000 that they're going to adversely affect the company?

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Craig D. Stewart, Butler National Corporation - VP & President of Aerospace [37]

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I think that's pretty accurate. I think rather than try to do it -- and I think people realize too that if they try to sell 100,000 shares with the way the stock typically trades, to do that too, they're going to take you quite a while to do it and keep the price up, or you're going to depress the price and not get as much out of it. So yes, I think it makes sense for, in most situations, for people to contact us.

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Unidentified Analyst, [38]

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Okay. All right. Are you in contact with a particular market maker or various market makers such that if they see a piece of stock during an open window situation that they would contact you? In other words if -- I'll just make this up. If night trading is shown 0.25 million of shares. Did they know to give you or whomever in the company a call and say I'm being shown a block? Do you care?

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Craig D. Stewart, Butler National Corporation - VP & President of Aerospace [39]

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I know that there is one market maker that would do that, that we've used and been in contact with. I don't know that a majority of the market makers will do that. I think the majority of the market makers will try to transact those on the open market, and that may be -- in fact, it may be a real good idea to reach out to the market makers that are shown on the list there and let them know that if they get something that we...

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Unidentified Analyst, [40]

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If they're shown size, just give you a quick call.

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Craig D. Stewart, Butler National Corporation - VP & President of Aerospace [41]

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Sure. That's a great idea.

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Operator [42]

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Our next question comes from [Dan Zeff].

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Unidentified Analyst, [43]

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Nice quarter. Based on the backlog that you've stated and the expected capital spending, what are we looking at from a cash flow position at the end of the day over the next couple of years? You've made very nice healthy cash flows of at least $2 million or $3 million on average over the last several years. Is that $10 million number going to grow? And would that go down over time here?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [44]

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Yes. The $10 million, I would say, will go down as we make these investments. And I think that's true. We also have some people approaching us to loan us some money to do some of this building expansion, and we haven't really analyzed that. We're really more concerned about figuring out how to get the buildings taken care of on these airports where we have federal restrictions on the land for the military and you've got a lot of questions to be answered before we can really move forward.

We've negotiated a lease here at New Century, which is the old Naval Air Station, in Olathe, and it's taken about 2.5 years to get all -- everybody to sign that off to get it taken care of. So that takes a while. The answer is we're saving up some of that cash so we don't have to borrow as much money to do these things. So the answer is the cash probably won't grow a great deal more from where it is now than the cash on hand. And of course, around the casino, it takes a couple of million bucks all the time to -- $2 million to $3 million needs to be out there. So that's kind of the overall picture of it as I see it. Tad, do you have anything different on that?

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Tad Mitchell McMahon, Butler National Corporation - CFO [45]

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No.

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [46]

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Yes. I don't see that. That's my answer to the question is probably it's going to go down again.

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Unidentified Analyst, [47]

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All right. Over the next year or 2. But then I would assume that your business plan is that cash grows over 5 years. Or is this the long-term cycle you're spending at?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [48]

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Yes. We've got to remember on the business plan, we're looking at a new casino in Guymon, Oklahoma. 125 miles from Dodge City out there in the flat lands of the West, where distance is not a real problem. But we don't know whether that's a 5% hit or a 10% hit or what that is, maybe 20%. And so we're pretty sure that's going to be a challenge to maintain that revenue out of Dodge City and the profitability out of that segment.

From the airplane standpoint, as we all know, we're operating in a cycle, which we had probably in 2005 and '06. The airplane market right now, which if there's any problems with -- like Iran and these other places, we're going to have to pull back on some of the nonmilitary sales that we have, and that's -- those are significant. We're selling STC kits, which are essentially little packaged parts and (inaudible) paper. So that will all stop. So I guess what I'd tell you is that we're going to try and maintain the activity we've had as we've done in the last year or so. But I'm telling you there's some possibilities that, that won't be able to take place as we've done. So -- although we are working to do it better. Like I said, we do have a lot of orders out there and a lot of things coming about. So that's not a very good answer for you, but that's really the facts.

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Unidentified Analyst, [49]

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All right. So we're looking at a 5% to 20% hit possibly on the Professional Services line over the next few years. Is that accurate?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [50]

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It's going to -- Yes. It will happen in the next 2 years. These started at -- we're stronger in the first 2 or 3 years.

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Unidentified Analyst, [51]

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All right. And in Aerospace, have we created a new baseline with our STCs and our R&D spending and stuff? Or can that drop by $10 million in a year also? Or are we really making more money over the long term on that side?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [52]

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We're making more money over the long term, clearly. We've made some product innovation that's caused that margin to go up substantially.

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Unidentified Analyst, [53]

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All right. Would it be fair to say the company would think it's more urgent now than before to pursue the spinoff and the reverse stock split, which also makes the cost of purchasing stock lower and cheaper for us buyers because you have to buy fewer shares and to facilitate a better, more seamless management of both of the divisions?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [54]

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I guess the answer is that we're proceeding basically as we have done it, and we think that we're moving forward with a good plan in both areas. I believe that there's no one causing any more pressure on the extension of the contract and the spinout than we are. You can't see it, but we definitely spend a lot of time every day on that topic. So that is high on the list. It will stay there until we get it accomplished.

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Unidentified Analyst, [55]

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All right. Is the Board going to be a bit merciful?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [56]

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Pardon?

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Unidentified Analyst, [57]

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All right. Finally, is the Board going to be merciful in its decisions based on the restricted stock issuances to the shareholders who actually have to pay for voting rights and the stock price?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [58]

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I'm not in control of the Board. That's going to be their decision.

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Unidentified Analyst, [59]

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Okay. Well, nice job on -- for the quarter.

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [60]

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The Compensation Committee will deal with that issue. But overall, like I say, I don't -- I'm not the one running the Board. So that's the way it is.

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Operator [61]

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(Operator Instructions) Our next question comes from [Denise Bachan].

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Unidentified Analyst, [62]

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Yes. So my question was the cost for Professional Services was $5.2 million from the fourth quarter but only $3.8 million in the first quarter. So can you help me understand the reason for the decrease and whether that decrease will continue into the second quarter?

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [63]

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Just a minute. Our CFO is going to answer that question. That's a technical question.

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Tad Mitchell McMahon, Butler National Corporation - CFO [64]

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Well, I think you mainly have to look back as Clark said on Footnote 11. Some of that decrease is the rents went away and it's been reclassified into interest and depreciation.

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Unidentified Analyst, [65]

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Okay. The depreciation and amortization increased from $0.6 million in the fourth quarter to $1.2 million in the first quarter. So that's like a $600,000 increase versus the increase in Professional Services was $1.5 million. So there's quite a bit of a difference between that.

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Tad Mitchell McMahon, Butler National Corporation - CFO [66]

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When you depreciate the $42 million that was capitalized in -- as lease, depreciation went up accordingly. And the rent expense is no longer classified as rent expense, and that's $1.2 million.

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [67]

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You can see on Page 10 of the 10-Q, on Footnote 7, there's a little summary down there that says increased depreciation, $693,000; increase in interest expense, $1,035 million; decrease in the rent, $1,218 million; a net increase in expense is $510,000.

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Tad Mitchell McMahon, Butler National Corporation - CFO [68]

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So that change in accounting principle is -- had an earnings hit of $500,000 this quarter that will continue throughout the year. So if you extrapolate that, it's about a $2 million hit on earnings in the 1 year.

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Unidentified Analyst, [69]

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Okay. I guess the fact is that I didn't look at was the increased interest expense. So if I look at that, then I'll understand why cost of services went down so much.

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [70]

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I believe that, that doesn't turn around until 2024. That will continue to be there.

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Operator [71]

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At this time, we have no further questions.

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [72]

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Thank you, David.

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David Drewitz;Creative Options Communications;President, [73]

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Clark, any closing...

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Clark D. Stewart, Butler National Corporation - President, CEO & Director [74]

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All right. I appreciate all of -- everybody's time they spent here today with us, 40-some minutes. We appreciate that very much. Thank you for your interest in Butler National. And we're looking forward to seeing you at the Annual Meeting.

Thank you very much. David, I think we're done.

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David Drewitz;Creative Options Communications;President, [75]

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Great. Thank you, everyone, and have a great day.

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Operator [76]

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This concludes today's conference call. Thank you for attending.