NAPCO Security Technologies, Inc. Reports Fiscal 2025 Third Quarter Results

Fiscal 2025 Q3 Highlights Net sales of $44.0 million decreased 10.8% YoY Recurring service revenue ("RSR") increased 10.6% to $21.6 million, while equipment sales decreased 24.8% to $22.4 million RSR had a prospective annual run rate of approximately $89 million based on April 2025 recurring service revenues. Gross profit margin of 57.2% vs 53.8% in prior fiscal year quarter Diluted EPS of $0.28 vs $0.36 in prior fiscal year quarter The Board declared a quarterly dividend of $0.14 per share, payable on July 3, 2025 to shareholders of record on June 12, 2025, which represents a sequential increase over the most recent dividend paid of $.125 per share. , /PRNewswire/ -- NAPCO Security Technologies, Inc. (NASDAQ: NSSC), one of the leading manufacturers and designers of high-tech electronic security equipment, wireless communication devices for intrusion and fire alarm systems and the related recurring service revenues as well as a provider of school safety solutions, today announced financial results for its third quarter of fiscal 2025. Three months ended March 31, Nine months ended March 31, (dollars in thousands) (dollars in thousands) % Increase/ % Increase/ Financial Highlights (1) 2025 2024 (decrease) 2025 2024 (decrease) Net Sales $ 43,961 $ 49,267 (10.8) % $ 130,897 $ 138,490 (5.5) % Gross Profit $ 25,127 $ 26,484 (5.1) % $ 74,232 $ 73,909 0.4 % Gross Profit Margin 57.2 % 53.8 % 56.7 % 53.4 % Net Income $ 10,122 $ 13,196 (23.3) % $ 31,774 $ 36,284 (12.4) % Net Income as a % of Sales 23.0 % 26.8 % 24.3 % 26.2 % Diluted EPS $ 0.28 $ 0.36 (22.2) % $ 0.86 $ 0.98 (12.2) % Adjusted EBITDA(2) $ 13,159 $ 15,566 (15.5) % $ 37,877 $ 43,519 (13.0) % Adjusted EBITDA(2) as a % of Sales 29.9 % 31.6 % 28.9 % 31.4 % Adjusted EBITDA(2) Per Share $ 0.36 $ 0.42 (14.3) % $ 1.03 $ 1.18 % (12.7) % Cash Flows from Operating Activities $ 38,903 $ 31,032 25.4 % 1. In millions except percentages and per share data or as otherwise noted. 2. Represents a non-GAAP financial measure. An explanation and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure are presented in the schedules accompanying this press release. Richard Soloway, Chairman and CEO, commented, "With the completion of our third quarter of Fiscal 2025, we are pleased with our 30% adjusted EBITDA return and the continued strong gross margin of 91% of our RSR and the increase of 10.6% to $21.6 million. RSR represents 49% of total revenue in Q3 and our RSR had a prospective run rate of approximately $89 million based on our April 2025 recurring service revenue. The decrease in our equipment revenue for the quarter was primarily due to reduced sales to three of our larger distributors, two of whom were managing their corporate-wide existing inventory levels and the third which was driven by the timing of project work with their customer. At the recent International Security Conference ("ISC") in Las Vegas in early April, we introduced a new generational cloud-based MVP Access platform. Easy to afford with an economical "By-Door" flat monthly recurring revenue rate, MVP Access products empower security teams to experience 24/7 security management, enabling users to lock down doors, adjust threat levels and monitor real-time events from anywhere and eliminates the need for on-premises hardware or databases. This product line is expected to generate monthly recurring revenue for both locking and access control dealers and the Company." Mr. Soloway concluded, "As we enter into the final quarter of fiscal 2025, we are challenged with the headwinds and uncertainty of tariffs. In response to these uncertainties we instituted a price increase on all of our equipment products and will continue to monitor the situation and adjust our pricing accordingly. As tariff rates are presently established, we believe we may be well positioned to deal with the changing tariff landscape as compared to our competitors, as our products are principally manufactured in the Dominican Republic and USA as opposed to China, Mexico and other countries where final tariff rates could be significantly larger. We remain confident that our strong net income, Adjusted EBITDA* and cash flow, will improve further. As such we are pleased to continue our dividend program and will be paying the next quarterly dividend of $0.14 per share to shareholders on July 3, 2025, which is an increase over the most recent dividend paid on April 3, 2025. We will continue to strive to accomplish our goal of continued financial strength, product innovation, technical superiority and strong profitability, for the balance of fiscal 2025 and beyond". Conference Call Information Management will conduct a conference call at 11 a.m. ET today, May 5, 2025, and in order to participate please go to the Investor Relations section of the Company website at https://investor.napcosecurity.com/events-presentations or the webcast URL use https://app.webinar.net/y6pI7Zz7DoN. Alternatively, interested parties may participate in the call by dialing, in the (US) 1-800-836-8184 or for international callers, 1-646-357-8785. A replay of the webcast will be available on the Investor Relations section of the Company's website. About NAPCO Security Technologies, Inc. NAPCO Security Technologies, Inc., is one of the leading manufacturers and designers of high-tech electronic security devices, wireless recurring communication services for intrusion and fire alarm systems as well as a provider of school safety solutions, The Company consists of four Divisions: NAPCO, plus three wholly owned subsidiaries: Alarm Lock, Continental Instruments, and Marks USA. Headquartered in Amityville, New York, its products are installed by tens of thousands of security professionals worldwide in commercial, industrial, institutional, residential and government applications. NAPCO products have earned a reputation for innovation, technical excellence and reliability, positioning the Company for growth in the multi-billion dollar and rapidly expanding electronic security market. For additional information on NAPCO, please visit the Company's web site at http://www.napcosecurity.com. Safe Harbor Statement This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, but are not limited to, statements relating to the impact of COVID-19 pandemic; supply chain challenges and developments; the growth of recurring service revenues and annual run rate; the strength of our balance sheet; our expectations regarding future results; the introduction of new access control and locking products; the opportunities for school security products; business trends , including the replacement of 3G radios, and our ability to execute our business strategies. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those risk factors set forth in the Company's filings with the Securities and Exchange Commission, such as our annual report on Form 10-K and quarterly reports on Form 10-Q. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and the Company undertakes no duty to update such information, except as required under applicable law. *Non-GAAP Financial Measures Certain non-GAAP measures are included in this press release, including non-GAAP operating income, Adjusted EBITDA and Adjusted EBITDA per share (diluted). We define Adjusted EBITDA as GAAP net income plus income tax expense, net interest expense, non-cash stock-based expense, non-recurring legal expense, other non-recurring income and depreciation and amortization expense. Non-GAAP operating income does not include amortization of intangibles or stock-based compensation expense. These non-GAAP measures are provided to enhance the user's overall understanding of our financial performance. By excluding these charges our non-GAAP results provide information to management and investors that is useful in assessing NAPCO's core operating performance and in comparing our results of operations on a consistent basis from period to period. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as Adjusted EBITDA, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. The presentation of this information is not meant to be a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles. Investors are encouraged to review the reconciliation of GAAP to non-GAAP financial measures set forth above. NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (unaudited) March 31, 2025 June 30, 2024 (in thousands, except share data) CURRENT ASSETS Cash and cash equivalents $ 73,413 $ 65,341 Investments - other — 26,980 Marketable securities 15,884 5,398 Accounts receivable, net of allowance for credit losses of $20 and $32 as of March 31, 2025 and June 30, 2024, respectively 24,250 31,898 Inventories 34,450 34,804 Income tax receivable 958 73 Prepaid expenses and other current assets 3,428 4,269 Total Current Assets 152,383 168,763 Inventories - non-current 12,410 15,109 Property, plant and equipment, net 9,487 9,077 Intangible assets, net 3,366 3,602 Deferred income taxes 7,752 5,428 Operating lease - Right-of-use asset 5,261 5,487 Other assets 204 286 TOTAL ASSETS $ 190,863 $ 207,752 CURRENT LIABILITIES Accounts payable $ 5,401 $ 7,977 Accrued expenses 8,776 10,345 Accrued salaries and wages 3,967 3,907 Dividend payable 4,468 — Total Current Liabilities 22,612 22,229 Accrued income taxes 1,327 1,122 Operating lease liability 5,376 5,512 TOTAL LIABILITIES 29,315 28,863 COMMITMENTS AND CONTINGENCIES (Note 13) STOCKHOLDERS' EQUITY Common Stock, par value $0.01 per share; 100,000,000 shares authorized as of March 31, 2025 and June 30, 2024; 39,771,035 and 39,768,186 shares issued; and 35,656,421 and 36,874,471 shares outstanding, respectively. 398 398 Additional paid-in capital 24,909 23,712 Retained earnings 192,443 174,300 Less: Treasury Stock, at cost (4,114,614 and 2,893,715 shares as of March 31, 2025 and June 30, 2024, respectively) (56,315) (19,521) Accumulated other comprehensive income 113 — TOTAL STOCKHOLDERS' EQUITY 161,548 178,889 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 190,863 $ 207,752 NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months ended March 31, 2025 2024 (in thousands, except for share and per share data) Net sales: Equipment revenues $ 22,351 $ 29,735 Service revenues 21,610 19,532 43,961 49,267 Cost of sales: Equipment related expenses 16,852 21,179 Service-related expenses 1,982 1,604 18,834 22,783 Gross Profit 25,127 26,484 Operating expenses: Research and development 3,185 2,757 Selling, general, and administrative expenses 10,796 9,233 Total Operating Expenses 13,981 11,990 Operating Income 11,146 14,494 Other income: Interest and other income, net 862 637 Income before Provision for Income Taxes 12,008 15,131 Provision for Income Taxes 1,886 1,935 Net Income $ 10,122 $ 13,196 Income per share: Basic $ 0.28 $ 0.36 Diluted $ 0.28 $ 0.36 Weighted average number of shares outstanding: Basic 36,111,000 36,835,000 Diluted 36,253,000 37,118,000 NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) Nine Months Ended March 31, 2025 2024 (in thousands, except for share and per share data) Net sales: Equipment revenues $ 66,993 $ 83,133 Service revenues 63,904 55,357 130,897 138,490 Cost of sales: Equipment-related expenses 50,968 59,332 Service-related expenses 5,697 5,249 56,665 64,581 Gross Profit 74,232 73,909 Operating expenses: Research and development 9,349 7,736 Selling, general, and administrative expenses 30,710 26,319 Total Operating Expenses 40,059 34,055 Operating Income 34,173 39,854 Other income: Interest and other income, net 2,927 1,806 Income before Provision for Income Taxes 37,100 41,660 Provision for Income Taxes 5,326 5,376 Net Income $ 31,774 $ 36,284 Income per share: Basic $ 0.87 $ 0.99 Diluted $ 0.86 $ 0.98 Weighted average number of shares outstanding: Basic 36,511,000 36,792,000 Diluted 36,743,000 37,032,000 NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months ended March 31, 2025 2024 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 31,774 $ 36,284 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,705 1,627 Interest (income) expense on other investments (194) 112 Unrealized (gain) loss on marketable securities (131) (52) (Recovery of) credit losses (12) (26) Change to inventory reserve 78 634 Deferred income taxes (2,324) (2,331) Stock based compensation expense 1,143 876 Changes in operating assets and liabilities: Accounts receivable 7,660 (4,178) Inventories 2,973 (2,388) Prepaid expenses and other current assets 841 23 Income tax receivable (905) 75 Other assets 84 22 Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes (3,789) 354 Net Cash Provided by Operating Activities 38,903 31,032 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant, and equipment (1,879) (1,043) Purchases of marketable securities (10,222) (160) Purchases of other investments (78) (1,123) Redemption of other investments 27,252 — Net Cash Provided by (Used in) Investing Activities 15,073 (2,326) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from stock option exercises 54 427 Cash paid for dividend (9,164) (9,570) Cash paid for purchase of treasury shares (36,794) — Net Cash Used in Financing Activities (45,904) (9,143) Net increase in Cash and Cash Equivalents 8,072 19,563 CASH AND CASH EQUIVALENTS - Beginning 65,341 35,955 CASH AND CASH EQUIVALENTS - Ending $ 73,413 $ 55,518 SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ — $ 8 Income taxes paid $ 8,350 $ 7,437 Non-Cash Investing and Financing Transactions Cash dividends declared and not paid $ 4,467 $ — NAPCO SECURITY TECHNOLOGIES, INC. NON-GAAP MEASURES OF PERFORMANCE* (unaudited) (in thousands, except share and per share data) 3 months ended March 31, 9 months ended March 31, 2025 2024 2025 2024 Net income (GAAP) $ 10,122 $ 13,196 $ $31,774 $ $36,284 Less: Interest Income, net 764 637 2,631 1,806 Add: Provision for Income Taxes 1,886 1,935 5,326 5,376 Depreciation and Amortization 572 539 1,705 1,627 EBITDA (earnings before interest, taxes, depreciation and amortization) 11,816 15,033 36,174 41,481 Adjustments for non-GAAP measures of performance: Add: Stock based Compensation 386 266 1,143 876 Add: Nonrecurring Legal Expenses (income) (1) 957 267 560 1,162 Adjusted EBITDA $ $13,159 $ $15,566 $ $37,877 $ $43,519 Denominator: Basic Weighted Average Shares Outstanding 36,111,000 36,835,000 36,511,000 36,792,000 Effect of Dilutive Securities 142,000 283,000 232,000 240,000 Dilutes Weighted Average Shares Outstanding (Denominator) 36,253,000 37,118,000 36,743,000 37,032,000 Net Income per Diluted Shares Outstanding $ 0.28 $ 0.36 $ 0.86 $ 0.98 Adjusted EBITDA* per Diluted Shares Outstanding $ 0.36 $ 0.42 $ 1.03 $ 1.18 1. Nonrecurring Legal Expenses are legal fees that are determined not to be of a normal recuring nature and expenses necessary to operate the business. Contacts:Francis J. OkoniewskiVice President of Investor RelationsNAPCO Security Technologies, Inc.Office 800-645-9445 x 374Mobile 516-404-3597[email protected] SOURCE NAPCO Security Technologies, Inc. WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

NAPCO Security Technologies, Inc. Reports Fiscal 2025 Third Quarter Results

FAQ

Why Bearish?

How important is it?

Why Short Term?

Related Companies

Related News