-Net Sales for the Quarter Increase 6% to a Q1
Record $44.0 Million-
-Net Income for the Quarter Increases 7% to a
Q1 Record $11.2 Million-
-Adjusted EBITDA* for the Quarter Decreases 4%
to $12.3 Million-
-1st Quarter Recurring Service Revenues
Increase 22% to $21.1 Million With a
Gross Margin of 91%-
-Board Declares Quarterly Dividend of
$0.125 per share-
AMITYVILLE, N.Y., Nov. 4, 2024
/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 first quarter of fiscal
2025.
Financial Highlights:
- Net sales for the quarter increased 6% to $44.0
million (the highest Q1 sales in the Company's history).
- Recurring service revenue ("RSR") for the quarter increased 22%
to $21.1 million. RSR had a prospective annual run rate of
approximately $85 million based on October
2024 recurring service revenues.
- Gross margin for RSR increased to 91% for the quarter compared
to 90% for the same period last year.
- Gross margin for equipment revenue was 24% for the quarter
ended September 30, 2024, compared to 28% for the same period
last year.
- Net income for the quarter increased 7% to a quarterly
record $11.2 million.
- Earnings per share (diluted) for the quarter increased 7%
to $0.30 compared to $0.28 for the same period a
year ago.
- Adjusted EBITDA* for the quarter decreased 4%
to $12.3 million compared to $12.9 million, and
Adjusted EBITDA per share (diluted)* for the quarter decreased 6%
to $0.33 compared to $0.35 for the same period last
year, respectively.
- Cash and cash equivalents, other investments and marketable
securities were $102.2 million at September 30, 2024
compared to $97.7 million at June 30, 2024, a 5%
increase. The Company had no debt as of September 30,
2024.
- Cash Provided by Operating Activities for the quarter
ended September 30, 2024, was $12.0 million compared
to $11.2 million for the same period last year, a 7%
increase.
- The Board declared a quarterly dividend of $0.125 per
share, payable on January 3, 2025 to shareholders of
record on December 12, 2024.
- The Board authorized the Company to repurchase up to 1,000,000
shares of its common stock.
Richard Soloway, Chairman and
CEO, commented, "Fiscal 2025 began with record revenue and net
income for any first quarter in the Company's history and
represents the sixteenth consecutive quarter of record sales for a
quarterly reporting period. Our record quarterly net income
of $11.2 million represents 25% of sales, and our
Adjusted EBITDA was $12.3 million for Q1 and equates
to a 28% EBITDA margin. Our cellular (radio) communication device
sales increased 93% compared to Q1 last year and represent 70% of
our Intrusion and Access Alarm product sales. In addition, radio
sales for Q1 increased 23% sequentially and represent the highest
level of radio sales since Q3 of fiscal 2023, which was the last
quarter positively affected by the Verizon 3G sunset. While robust
radio sales do have a negative impact on our overall equipment
gross margins, which was 24% for Q1 compared to 28% in last year's
first quarter, strong radio sales ultimately leads to increases in
our recurring revenue business. Overall, our equipment revenue
decreased 6% for the quarter, which partially was a result of a
decrease in our door locking sales, which decreased 8% compared to
last year. Locking products represents approximately 60% of our
equipment revenues and the decline was primarily attributable to
several locking distributors' efforts to lower their inventory
levels. Our RSR increased 22% to $21.1
million and generated a gross margin of 91%, which was an
improvement on last year's RSR margin of 90%. RSR represents 48% of
total revenue in Q1 and our overall gross margin improved by over
200 basis points to 55.9% compared to 53.8% last year."
We continue to see growth in school and classroom security,
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.
Our recent introduction of Prima by NAPCO, a new All-in-One
Panel for security, fire, video and connected home with a 15-minute
installation, remains a very important focus to the Company.
When initially released approximately one year ago, the Prima line
was not complete as certain required peripherals were not yet
available. That has changed as the line is now complete, including
doorbells, indoor/outdoor cameras, smoke detectors and
strobes/sirens. Our goal is for Prima to address an important mass
segment of the security market, including residential and small
business systems. With built-in Wi-Fi/cellular radio
communications, customer alert notifications, and video and smart
home subscription options for each installed system, the security
dealer, as well as the Company, can add more recurring service
revenue generating accounts.
Our balance sheet continues to get stronger, with cash and cash
equivalents, other investments and marketable securities increasing
to $102.2 million. We have no outstanding debt and the net
cash provided by operating activities for the three months
ended September 30, 2024 was approximately $12 million in Q1.
Mr. Soloway concluded, "Fiscal 2025 began with more
record-breaking sales and profits. As fiscal 2025 progresses, we
are very encouraged with the strength of our Starlink radios sales,
particularly the Starlink Fire radio, which generates the most
profitable recurring revenue and our expectation is that Starlink
radio sales will remain strong. While we were disappointed in our
overall equipment sales, we anticipate improvement in our locking
sales once distributors complete the reduction of their inventory
levels, which should lead to improved equipment revenue, improved
equipment gross margins and the continuation of our very profitable
recurring revenue. Our strong net income and Adjusted
EBITDA*, coupled with the significant cash generated from
operations continues to grow our cash position. We are pleased
continue our dividend program and will be paying the next quarterly
dividend of $0.125 per share on
January 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."
Financial Results
Net sales for the quarter increased 6% to $44.0
million (the highest Q1 sales in the Company's history), as
compared to $41.7 million for the same period one year
ago. Research and development costs for the quarter increased 25%
to $3.1 million, or 7% of net sales, as compared to $2.4
million or 6% of net sales for the same period a year ago.
Selling, general and administrative expenses for the quarter
increased 15% to $9.7 million or 22% of net sales, as
compared to $8.4 million, or 20% of net sales for the same
period last year.
Operating income for the quarter increased 3% to $11.9
million as compared to $11.6 million for the same
period last year. Net income for the quarter increased 7% to a
quarterly record of $11.2
million, or $0.30 per diluted share, compared
to $10.5 million, or $0.28 per diluted share, for
the same period last year and represents 25% of net sales.
Adjusted EBITDA* for the quarter decreased 4% to $12.3
million, or $0.33 per diluted share, as compared
to $12.9 million, or $0.35 per diluted share for the
same period last year and equates to an Adjusted EBITDA* margin of
28%.
Balance Sheet Summary
As of September 30, 2024, the Company had $102.2
million in cash and cash equivalents, other investments and
marketable securities as compared to $97.7 million as
of June 30, 2024. Working capital (defined as current assets
less current liabilities) was $146.7
million at September 30, 2024 as compared with
working capital of $146.5 million at June 30, 2024.
Current ratio (defined as current assets divided by current
liabilities) was 6.9:1 at September 30, 2024, and 7.6:1
at June 30, 2024.
Conference Call Information
Management will conduct a conference call at 11 a.m. ET today, November
4, 2024, in order to participate please go to the Investor
Relations section of Company's website at
https://investor.napcosecurity.com/events-presentations or the
webcast URL use https://app.webinar.net/xlzRnBm4Yva.
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)
|
|
|
|
|
|
|
|
|
|
|
September 30, 2024
|
|
June 30, 2024
|
|
|
|
(in thousands, except
share data)
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
85,596
|
|
$
|
65,341
|
|
Investments -
other
|
|
|
10,926
|
|
|
26,980
|
|
Marketable
securities
|
|
|
5,666
|
|
|
5,398
|
|
Accounts receivable,
net of allowance for credit losses of $23 and $32 as of
September
30, 2024 and June 30, 2024, respectively
|
|
|
28,236
|
|
|
31,898
|
|
Inventories
|
|
|
36,395
|
|
|
34,804
|
|
Income tax
receivable
|
|
|
144
|
|
|
73
|
|
Prepaid expenses and
other current assets
|
|
|
4,466
|
|
|
4,269
|
|
Total Current
Assets
|
|
|
171,429
|
|
|
168,763
|
|
Inventories -
non-current
|
|
|
13,782
|
|
|
15,109
|
|
Property, plant and
equipment, net
|
|
|
9,287
|
|
|
9,077
|
|
Intangible assets,
net
|
|
|
3,523
|
|
|
3,602
|
|
Deferred income
taxes
|
|
|
6,177
|
|
|
5,428
|
|
Operating lease -
Right-of-use asset
|
|
|
5,410
|
|
|
5,487
|
|
Other assets
|
|
|
283
|
|
|
286
|
|
TOTAL
ASSETS
|
|
$
|
209,891
|
|
$
|
207,752
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
5,936
|
|
$
|
7,977
|
|
Accrued
expenses
|
|
|
9,446
|
|
|
10,345
|
|
Accrued salaries and
wages
|
|
|
4,694
|
|
|
3,907
|
|
Dividend
payable
|
|
|
4,610
|
|
|
ā
|
|
Total Current
Liabilities
|
|
|
24,686
|
|
|
22,229
|
|
Accrued income
taxes
|
|
|
1,136
|
|
|
1,122
|
|
Operating lease
liability
|
|
|
5,460
|
|
|
5,512
|
|
TOTAL
LIABILITIES
|
|
|
31,282
|
|
|
28,863
|
|
COMMITMENTS AND
CONTINGENCIES (Note 13)
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Common Stock, par value
$0.01 per share; 100,000,000 shares authorized as of September
30, 2024 and June 30, 2024; 39,771,035 and 39,768,186 shares
issued; and 36,684,068 and
36,874,471 shares outstanding, respectively.
|
|
|
398
|
|
|
398
|
|
Additional paid-in
capital
|
|
|
24,137
|
|
|
23,712
|
|
Retained
earnings
|
|
|
180,875
|
|
|
174,300
|
|
Less: Treasury Stock,
at cost (3,086,967 and 2,893,715 shares as of September 30, 2024
and
June 30, 2024, respectively)
|
|
|
(26,801)
|
|
|
(19,521)
|
|
TOTAL
STOCKHOLDERS' EQUITY
|
|
|
178,609
|
|
|
178,889
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
209,891
|
|
$
|
207,752
|
|
NAPCO SECURITY
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2024
|
|
2023
|
|
|
|
(in thousands, except
for share and per share data)
|
|
Net sales:
|
|
|
|
|
|
|
|
Equipment
revenues
|
|
$
|
22,917
|
|
$
|
24,391
|
|
Service
revenues
|
|
|
21,086
|
|
|
17,285
|
|
|
|
|
44,003
|
|
|
41,676
|
|
Cost of
sales:
|
|
|
|
|
|
|
|
Equipment-related
expenses
|
|
|
17,510
|
|
|
17,497
|
|
Service-related
expenses
|
|
|
1,877
|
|
|
1,766
|
|
|
|
|
19,387
|
|
|
19,263
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
24,616
|
|
|
22,413
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
|
|
3,057
|
|
|
2,437
|
|
Selling, general, and
administrative expenses
|
|
|
9,703
|
|
|
8,421
|
|
Total
Operating Expenses
|
|
|
12,760
|
|
|
10,858
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
11,856
|
|
|
11,555
|
|
|
|
|
|
|
|
|
|
Other
income:
|
|
|
|
|
|
|
|
Interest and other
income (expense), net
|
|
|
1,144
|
|
|
440
|
|
Income before Provision
for Income Taxes
|
|
|
13,000
|
|
|
11,995
|
|
Provision for Income
Taxes
|
|
|
1,815
|
|
|
1,517
|
|
Net
Income
|
|
$
|
11,185
|
|
$
|
10,478
|
|
|
|
|
|
|
|
|
|
Income per
share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.30
|
|
$
|
0.28
|
|
Diluted
|
|
$
|
0.30
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
36,865,000
|
|
|
36,827,000
|
|
Diluted
|
|
|
37,180,000
|
|
|
37,076,000
|
|
NAPCO SECURITY
TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
September 30,
|
|
|
|
2024
|
|
2023
|
|
|
|
(in
thousands)
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income
|
|
$
|
11,185
|
|
$
|
10,478
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
549
|
|
|
537
|
|
Interest (income)
expense on other investments
|
|
|
(193)
|
|
|
76
|
|
Unrealized (gain) loss
on marketable securities
|
|
|
(157)
|
|
|
57
|
|
(Recovery of) credit
losses
|
|
|
(9)
|
|
|
(24)
|
|
Change to inventory
reserve
|
|
|
(235)
|
|
|
822
|
|
Deferred income
taxes
|
|
|
(749)
|
|
|
(80)
|
|
Stock based
compensation expense
|
|
|
371
|
|
|
307
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
3,671
|
|
|
3,172
|
|
Inventories
|
|
|
(30)
|
|
|
(6,620)
|
|
Prepaid expenses and
other current assets
|
|
|
(197)
|
|
|
330
|
|
Income tax
receivable
|
|
|
(71)
|
|
|
(130)
|
|
Other
assets
|
|
|
3
|
|
|
17
|
|
Accounts payable,
accrued expenses, accrued salaries and wages, accrued income
taxes
|
|
|
(2,113)
|
|
|
2,267
|
|
Net Cash Provided by
Operating Activities
|
|
|
12,025
|
|
|
11,209
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Purchases of property,
plant, and equipment
|
|
|
(680)
|
|
|
(256)
|
|
Purchases of
marketable securities
|
|
|
(111)
|
|
|
(42)
|
|
Purchases of other
investments
|
|
|
(46)
|
|
|
(347)
|
|
Redemption of other
investments
|
|
|
16,293
|
|
|
ā
|
|
Net Cash Provided by
(Used in) Investing Activities
|
|
|
15,456
|
|
|
(645)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds from stock
option exercises
|
|
|
54
|
|
|
ā
|
|
Cash paid for
dividend
|
|
|
ā
|
|
|
(2,942)
|
|
Cash paid for purchase
of treasury shares
|
|
|
(7,280)
|
|
|
ā
|
|
Net Cash Used in
Financing Activities
|
|
|
(7,226)
|
|
|
(2,942)
|
|
|
|
|
|
|
|
|
|
Net increase in Cash
and Cash Equivalents
|
|
|
20,255
|
|
|
7,622
|
|
CASH AND CASH
EQUIVALENTS - Beginning
|
|
|
65,341
|
|
|
35,955
|
|
CASH AND CASH
EQUIVALENTS - Ending
|
|
$
|
85,596
|
|
$
|
43,577
|
|
SUPPLEMENTAL CASH FLOW
INFORMATION
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
8
|
|
$
|
ā
|
|
Income taxes
paid
|
|
$
|
2,620
|
|
$
|
1,703
|
|
Non-Cash Investing and
Financing Transactions
|
|
|
|
|
|
|
|
Cash dividends
declared and not paid
|
|
$
|
4,610
|
|
$
|
ā
|
|
NAPCO SECURITY
TECHNOLOGIES, INC.
|
NON-GAAP MEASURES OF
PERFORMANCE* (Unaudited)
|
(in thousands, except
share and per share data)
|
|
|
|
|
3 months ended
September 30,
|
|
2024
|
2023
|
Net income
(GAAP)
|
$
11,185
|
$
10,478
|
Add back provision for
income taxes
|
1,815
|
1,517
|
Interest and other
(income), net
|
(1,144)
|
(440)
|
Operating Income
(GAAP)
|
11,856
|
11,555
|
Adjustments for
non-GAAP measures of performance:
|
|
|
Add back
amortization of acquisition-related intangibles
|
79
|
84
|
Add back
stock-based compensation expense
|
371
|
307
|
Add back
non-recurring legal expenses
|
(441)
|
456
|
Adjusted non-GAAP
operating income
|
11,865
|
12,402
|
Add back depreciation
and other amortization
|
470
|
453
|
Adjusted EBITDA*
(earnings before interest, taxes, depreciation and
amortization)
|
$
12,335
|
$
12,855
|
|
|
|
|
|
|
Adjusted EBITDA* per
Diluted Share
|
$
0.33
|
$
0.35
|
Weighted average number
of Diluted Shares outstanding
|
37,180,000
|
37,076,000
|
Contacts:
Francis J. Okoniewski
Vice President of Investor Relations
NAPCO Security Technologies, Inc.
Office 800-645-9445 x 374
Mobile 516-404-3597
fokoniewski@napcosecurity.com
View original
content:https://www.prnewswire.com/news-releases/napco-reports-revenues-net-income-and-adjusted-ebitda-for-q1-of-fiscal-2025-302294729.html
SOURCE NAPCO Security Technologies, Inc.