Napco (NSSC) Navigates Distributor Inventory Shifts Amidst Ongoing Investor Lawsuit – Hagens Berman

SAN FRANCISCO, May 12, 2025 (GLOBE NEWSWIRE) -- Security systems manufacturer Napco Security Technologies, Inc. (NASDAQ: NSSC), already facing a securities class action lawsuit stemming from earlier disclosures about its distribution network, reported mixed results for its third quarter of fiscal year 2025 on May 5. This new development underscores the challenges the company is currently navigating amidst ongoing legal scrutiny. Hagens Berman urges Napco investors who suffered substantial losses to submit your losses now. Class Period: Feb. 5, 2024 – Feb. 3, 2025Lead Plaintiff Deadline: June 24, 2025Visit: www.hbsslaw.com/investor-fraud/nssc Contact the Firm Now: NSSC@hbsslaw.com | 844-916-0895 Napco’s Decline in Sales While Napco reported quarterly results beating Wall Street’s revenue expectations, it disclosed that its sales fell by 10.8% year on year to $43.96 million. According to President and Chief Financial Officer Kevin Buchel, the dip in equipment sales was primarily attributable to inventory adjustments made by some of Napco's key distributors. This explanation comes at a sensitive time for the company, which is currently grappling with a securities class action lawsuit filed earlier this year. Napco Security Technologies, Inc. (NSSC) Securities Class Action The lawsuit, styled Patel v. Napco Security Technologies, Inc., et al., No. 1:25-cv-02308 (E.D.N.Y.), seeks to represent investors who purchased Napco securities between February 5, 2024, and February 3, 2025. The legal action was initiated following a significant downturn in Napco's stock price after the company reported a sharp decline in its second-quarter fiscal 2025 earnings and margins on February 3rd. That disclosure, which also revealed issues within Napco's distribution network, triggered a precipitous 26% drop in the company's share value in a single trading day. The core of the investor lawsuit centers on the accuracy and propriety of Napco's statements concerning its sales and forecasting practices. The complaint alleges that Napco made false and misleading statements and failed to disclose crucial information regarding its ability to forecast demand for its hardware products and the potential impact of demand fluctuations on its ambitious margin projections for fiscal year 2026. Specifically, the lawsuit claims that despite assuring investors of robust growth in its hardware division and its ability to meet its fiscal 2026 targets through effective forecasting and execution, Napco allegedly failed to reveal that it lacked the capacity to accurately predict demand. This alleged oversight, according to the complaint, minimized the potential impact of demand volatility while the company continued to promote optimistic margin forecasts that hinged on consistently increasing sales volumes. The truth, as investors learned on February 3rd, was starkly different. Napco's second-quarter fiscal 2025 results revealed a substantial 25% drop in equipment sales compared to the prior year's second quarter, along with significant declines in gross margin and gross profit for equipment revenue. The company attributed this disappointing performance to "reduced sales to two of our larger distributors," with one distributor explicitly citing efforts to reduce its inventory levels. These disclosures sent Napco's shares into a tailspin, erasing $9.77 per share in value and prompting analysts to downgrade their ratings on the company. Hagens Berman’s Investigation Securities litigation firm Hagens Berman is investigating potential securities fraud claims against Napco. Reed Kathrein, a partner at Hagens Berman, commented on the latest results, stating, “The continued decline in year-over-year sales, even as the company cites distributor inventory adjustments, reinforces the concerns raised in the existing class action regarding Napco’s ability to accurately forecast demand and manage its distribution network. These ongoing issues call in question the prior assurances the company allegedly made to investors.” If you invested in Napco and have substantial losses, or have knowledge that may assist the firm’s investigation, submit your losses now. If you’d like more information and answers to frequently asked questions about the Napco case and our investigation, read more. Whistleblowers: Persons with non-public information regarding Napco should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email NSSC@hbsslaw.com. About Hagens BermanHagens Berman is a global plaintiffs’ rights complex litigation firm focusing on corporate accountability. The firm is home to a robust practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and other wrongdoings. Hagens Berman’s team has secured more than $2.9 billion in this area of law. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw. Contact: Reed Kathrein, 844-916-0895

Napco (NSSC) Navigates Distributor Inventory Shifts Amidst Ongoing Investor Lawsuit – Hagens Berman

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