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

Fiscal 2025 Q2 Highlights

• Net sales of $43.0 million decreased 9.7% YoY
• Recurring service revenue ("RSR") increased 14.4% to $21.2 million
• Gross profit margin of 57.0% vs 52.6% in prior fiscal year quarter
• Diluted EPS of $0.28 vs $0.34 in prior fiscal year quarter
• The Board declared a quarterly dividend of $0.125 per share, payable on April 3, 2025 to shareholders of record on March 12, 2025.

AMITYVILLE, N.Y., Feb. 3, 2025 /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 second quarter of fiscal 2025.

Richard Soloway, Chairman and CEO, commented, "As we complete the first half of Fiscal 2025, our performance has yielded mixed results. Our RSR increased 14.4% to $21.2 million and generated a gross margin of 91%, which was an improvement on last year's RSR margin of 90%. RSR represents 49% of total revenue in Q2 and our RSR had a prospective run rate of approximately $86 million based on our January 2025 recurring service revenue. For the quarter, our overall gross margin improved by over 400 basis points to 57.0% compared to 52.6% last year. The reduction in our equipment revenue was a result of lagging sales in intrusion and access alarm products and door locking devices, primarily as a result of reduced sales to two of our larger distributors, one of which we were informed made a corporate-wide decision to pull back on all purchases in an effort to reduce overall inventory levels, and a second distributor who is going through a management restructuring, which we believe delayed the authorization to approve transactions and resulted in reduced purchases. In addition, the timing of new project work for custom locking products has resulted in reduced sales of locking devices through Q2 of Fiscal 2025. In Fiscal 2025 we are completing a project related to a significant New York City building renovation which began in fiscal 2024. While we were disappointed in our overall equipment sales, we attribute the decline to timing and based on historical purchase activity of our largest distributors we anticipate improvement in equipment sales through the balance of Fiscal 2025."

"We continue to see growth in our school and classroom security sales, as evidenced by the recently announced contract with the Pasadena Unified School District, to provide security locking solutions for their 23 schools serving over 14,000 students. The district-wide project will implement Marks USA LA318GJ Intruder Lockdown mortise locks and Marks USA 195DB Intruder Lockdown cylindrical locks to meet California state requirements for classroom doors. In addition, we recently received a new purchase order from the integrator for Pepperdine University, relating to the expansion of dorm rooms. We also see growth in healthcare, and retail loss-prevention, as well as in multi-dwelling commercial and residential applications and remain confident that such sales will improve throughout fiscal 2025, as we continue to remain focused on further penetrating each of these markets."

"Prima by NAPCO, a new All-in-One Panel for security, fire, video and connected home with a 15-minute installation is gaining traction and remains a very important focal point for the Company. Prima addresses the important mass segment of the security market, including residential and small business systems."

"At the recent International Security Conference ("ISC") in New York City this past November, we recently introduced the new 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 will generate monthly recurring revenue for both locking dealers and the Company, which is something that has never been done before in the locking industry." 

Mr. Soloway concluded, "As we enter into the latter half of fiscal 2025, 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 $0.125 per share on April 3, 2025. As always, we will 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, February 3, 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/bxMaoJIPjv8. 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.

 

 

 

 

 

Contacts:

Francis J. Okoniewski

Vice President of Investor Relations

NAPCO Security Technologies, Inc.

Office 800-645-9445 x 374

Mobile 516-404-3597

[email protected] 

 

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SOURCE NAPCO Security Technologies, Inc.