Good morning, ladies and gentlemen. Today is Tuesday, December 15. And welcome to the Butler National Corporation Second Quarter Fiscal 2021 Financial Results Conference Call. [Operator Instructions] Your call leader 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. Drewitz. You may begin.

Thank you, and good morning to everyone, and happy holidays. Before Mr. Stewart begins, I would like to draw your attention to, except for historical information contained herein, the statements in 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 as 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 Commissions. So with that statement completed, I would like to turn the call over to Mr. Clark Stewart. Mr. Stewart? Stewart are you there? Clark D. Stewart: I'm here, yes.

The floor is yours, Mr. Stewart. Clark D. Stewart: Sorry about that. Ladies and gentlemen, I appreciate you dialing in this morning. We have a dog here that doesn't like to be interrupted. So I guess we're okay now though. We're fine. And I want to welcome you to the call. I think we're very lucky in the environment we're in to have a profitable position for the 3 months and the 6 months that we're talking about. I call your attention to the notes on Page 12 about the forward-looking information and also our 10-K, April 30, 2020, which tells you that a lot of our estimated position in the future is questionable, and we would recognize that any time. So I think that's the important item that we should cover today. Avcon and Tempe, our Aerospace operations are essential businesses, as mentioned on Page 14. And I think that, that has helped us out a lot. We've been able to maintain operations in all locations except for the casino. The casino during the 6-month period has been open for 27 weeks. I guess I'm not going to read all those numbers to you. I'll just kind of go through some of the other things that I noticed in there. We have reduced our staffing about 24 people overall since the first of -- since May 1. And that is kind of a matter we didn't get rid of, and the attrition just has reduced at about that much. We also -- I'll address casino a little bit. You can read all the rest of the numbers, but I talk about them, I believe. And the casino situation, we did appear before the Kansas Racing and Gaming Commission this last week and discussed the possibility of a debt transaction, which we've all talked about in the past, and they did approve our approach to the debt transaction. And we really can't discuss any further details. It was handled in like an executive session. And as I've talked on previous calls, on this transaction, if and when it's fully approved and closed, we will make the appropriate press releases and the documentation. We have no certainty as to what day, what month or what year that's going to occur, but that's where we are. The other positive thing is that our backlog continues to hold at Aerospace. And overall, we are about -- up 8% on the backlog from 2019, which is a very good thing. We continue to have active interest in the aerospace world. And our real problem is the international travel situation and the ability to get airplanes to Newton and get our people out to see the customers and all that is a definite deterrent, but we're still able to maintain a profitable position. And I think that is a good thing. Let me see if I've got anything else that I need to discuss, I think that, like I say, the COVID, we've had pretty good luck there. And we've had a few cases here and there, but basically, we have not been the source of any big outbreaks or anything like that in any part of our business, which is a real positive thing. And Craig, do you want to comment on the details of any of this information on Aerospace? Craig D. Stewart: The aerospace is -- we've kind of [ traced ] the orders out and Arizona have slowed a little bit. That's where you're seeing some of the drop in the backlog -- drop in the Aerospace segment overall. But Avcon's business in the Modifications side continues to be strong. The number of orders and quotes that we're taking in are pretty consistent. So we're encouraged that the business will stay strong here over the next 3 to 6 months. Clark D. Stewart: We did -- we have continued to spend money. We spent $1.7 million on R&D and product development research in the last 6 months. So that is continuing to move forward, and the customers are still there and the demand is there, and so we're moving forward on a number of those projects. I don't have any other comments. As far as -- David, I think we should answer questions if they have any.

Very good. Let's open it up to questions.

[Operator Instructions] Our first question comes from Sam Rebotsky.

Yes, Clark and Craig, this is a tough -- difficult time. It sounds very good that at least the state Board approved you to go forward. What does -- and right now, we don't know -- we need an improvement with the COVID to get more of the -- open for more hours in the gambling. Did they indicate anything about what they would like you to do as far as what you're doing presently when you had the... Clark D. Stewart: Yes. No. I appreciate -- I appreciate the question. And I would tell you that the market has changed a little bit. And what we're seeing is in the last 27 weeks, we're down in the revenue side, about 9%. And when you look at the other casinos in the state, they're anywhere from 15% to 35% down. And I think that what we're seeing is a much tougher rural market than what you see in the cities. As far as the health of the people and the willingness to come out, venture out and gamble. The other thing that we're seeing is the spend per visit or per patron, if you will, is up about 25% per visit. And that is somewhat unusual, but basically, what that's saying is that if they have any extra disposable income, they're making a trip to the casino and enjoying the games. We are sitting at 412 games now, I believe. And we have made a -- restructured the floor to keep the 6-foot spacing on all the machines and everything else. And we're operating with 3 people at the table games instead of 5 or 6 and so on. But we've done that, and that's worked out very well. So overall, I can say, we're surprised by the increase in the spend per visit per day. So that's the big difference. And I don't know that -- I don't know when that will swing back. It's gradually changing in the last couple of weeks as we get closer to Christmas. And who knows, maybe it will go back to where it was. But at least we're hanging in there pretty strong. Thank you for the question. A very good question.

Okay. And as far as the air (sic) [ aero ] -- have you been -- reduced the number of -- you reduced the number of employees of 24 -- part was in the aero, and part was -- part was the gaming? Or was it more one than the other? Clark D. Stewart: Actually, the -- actually, the gaming was where the reduction was, and we actually increased people at the Aerospace because what we're dealing with in aerospace is our -- we have big ticket sales transactions; where there, we -- maybe in the past, we were $200,000 to $300,000. We're now in the $500,000 to $1.5 million transactions. And so the revenue will bounce around from one quarter to the next. But the staffing, we actually increased the staffing at about 6 people overall, and that's reflecting the fact that the orders are coming in, and we're able to work on them. And then when the billing comes through, we have a significant increase in revenue. And with the months where it's not coming, we have a decrease. So that's where it goes. The casino people were down about 30 people overall. So -- and that's people who just didn't come back after the 65 days we were shut down.

Did you get any money -- yes, Clark, did you get any money for PPE (sic) [ PPP ]? Clark D. Stewart: We qualified as Butler at the Aerospace, but we did not take any because we cannot justify the fact that we were really out of business. We were essential business, and we were able to fund the short period of time that -- to be dealt with. So we left it alone and didn't do anything with it. In the casino side, yes, we have about $2,628,000, something like that. $2 million... Craig D. Stewart: Just over $2 million. Clark D. Stewart: Just slightly over $2 million. And we have not recognized that being forgiven at this point. Someday, I'm sure it will be or it will be considered. We've processed it through the bank. It's still going through the government agencies so whether we recover that or not. Our total loss from the shutdown is around $4.5 million -- between $4.5 million and $5 million. So that's where that stands.

And the $300,000 gain on the sale of the airplane, was that in this quarter or the previous quarter? Clark D. Stewart: I think that was previous quarter.

Okay. Okay. And as far as buying stock, how much more stock do we have to buy for the employee plans? Clark D. Stewart: You know what that is, Craig? Craig D. Stewart: I don't have that on my notes.

Yes. And I guess you can't discuss the Kansas -- how does this -- this meeting that just happened this week, is this part of their plan? Or was this -- how does that meeting come about? Was it set up in the budget? Or was it -- did you do anything for the meeting to happen? Or how long did you know before you participated in -- yes. Clark D. Stewart: Let me tell you what the rules of the game are. If we decide to do a financing transaction of any kind with the casino, that requires approval by the state of Kansas through the regulatory process, which is the Racing and Gaming Commission. And since we have -- we've been working on that for some time, and we figured now that the COVID may settle down, we might be able to move forward. We figured we needed to go to the Racing and Gaming Commission, described generally what we were thinking about doing and see if we can get them to approve it. And so they approved that concept, and they really don't dictate terms or anything like that. It's a question of overall financial stability of the institution is what they're worried about. They don't want us to go out and borrow a bunch of money or give away all cash or do something else that causes problems. So that's what that's all about. We just needed that box checked. Craig D. Stewart: Sam, we can -- the company can buy back about $2.8 million worth of shares. So right now, it would be 5.5 million, 5.6 million shares, somewhere in there.

Okay. And at this point, you're not going to do anything with the gaming until things straighten out because the terms should be much better once everything -- once the income is more normal, you should be in a better situation? Clark D. Stewart: Well, here's what we've said in the past, and it's still true. And if we ever get around to getting the transaction that works, we're going to send out a press release and have the phone call, and we can all discuss it. So far, that hasn't happened.

Okay. So right now, should we assume that the sales and earnings would be similar to this quarter going forward until -- or has the COVID improved sufficiently to improve a little bit over this quarter or... Clark D. Stewart: It depends on who you ask here in Kansas, but I'd say business as usual here. What we're experiencing right now is probably what we're going to experience for the next 6 months to next summer sometime is my guess. So we're about 10% off of where we would like to be, I guess. But that's an [ enviable ] position.

Yes. And because of the Thanksgiving and Christmas, I assume there is certain shutdowns that would go in this quarter anyhow. Would that be a fair assumption? Clark D. Stewart: Sure. We are open during this quarter, the third quarter. The question is, is the pattern of the people going to celebrate Christmas and New Year's and all the other holidays, what is the pattern they will follow going to the casino, and I couldn't answer that question for you. I've got 11 years' experience, and it's never been the same. So that's really where we are.

Okay. I mean this is a difficult time. And we've never had this experience. Hopefully, the vaccines do something. Do -- did we expect much vaccines in your area? Are we looking forward to that? Clark D. Stewart: No, I don't know. We're not a nursing home, so we're not high on the list. So I couldn't tell you. I couldn't tell you whether we're going to have a lot of them or not. I keep thinking since I'm over 80, I need to go down and get one, but I seem to -- not be in a nursing home, so I guess I'm okay.

You seem to be doing okay. Clark D. Stewart: The answer is, Sam, I can't answer. I don't know so much. I think we're going to be as well off as anybody else out in this part of the world.

Yes. Yes. Well, good luck, Craig, Clark and the whole team. Hopefully, I mean we'll pull through, hopefully sooner than later. And good luck and happy holiday. Clark D. Stewart: Thank you, and we appreciate your questions and happy holidays to you. We will continue to work hard and make all this stuff happen if we can. So that's what we're doing. Thank you very much.

[Operator Instructions] At this time, we have no further questions. Clark D. Stewart: It sounds like we're finished, David. Thank you very much, everyone, for joining the call. We appreciate your questions, and we're trying to do our best for you. Thank you.

Thank you, everyone. Take care.

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