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NAPCO Security Technologies Inc

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.

AMITYVILLE, N.Y. , May 5, 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 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. Okoniewski
Vice President of Investor Relations
NAPCO Security Technologies, Inc.
Office 800-645-9445 x 374
Mobile 516-404-3597
fokoniewski@napcosecurity.com 

Cision View original content:https://www.prnewswire.com/news-releases/napco-security-technologies-inc-reports-fiscal-2025-third-quarter-results-302445375.html

SOURCE NAPCO Security Technologies, Inc.