NAPCO Reports Record Revenues, Net Income and Adjusted EBITDA* for Fiscal 2024
Rhea-AI Summary
NAPCO Security Technologies (NASDAQ: NSSC) reported record financial results for Q4 and fiscal year 2024. Highlights include:
- Q4 net sales increased 13% to $50.3 million
- Q4 net income rose 28% to $13.5 million
- Full-year net sales grew 11% to $188.8 million
- Full-year net income surged 84% to $49.8 million
- Recurring service revenue for Q4 increased 27% to $20.3 million
- Adjusted EBITDA for the year increased 72% to $58.9 million
The company's strong performance was driven by growth in recurring service revenues and robust sales from its locking product lines. NAPCO increased its quarterly dividend by 25% to $0.125 per share, reflecting its strong financial position.
Positive
- Record quarterly net sales of $50.3 million, up 13% year-over-year
- Record quarterly net income of $13.5 million, up 28% year-over-year
- Full-year net income increased 84% to $49.8 million
- Recurring service revenue grew 27% in Q4 with a 90.4% gross margin
- Adjusted EBITDA for the year increased 72% to $58.9 million
- Cash and investments increased 46% to $97.7 million with no debt
- Quarterly dividend increased by 25% to $0.125 per share
Negative
- Radio sales were down 5% sequentially and 10% compared to Q4 last year
- Research and development costs increased 28% in Q4
- Selling, general and administrative expenses increased 22% in Q4
News Market Reaction
On the day this news was published, NSSC declined 14.58%, reflecting a significant negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
-Net Sales for the Quarter Increase
-Net Income for the Quarter Increases
-Adjusted EBITDA* for the Quarter Increases
-4th Quarter Recurring Service Revenues Increase
-Net Sales for the Year Increase
-Net Income for the Year Increases
-Adjusted EBITDA for the Year Increases
-Board Declares Quarterly Dividend of
Financial Highlights:
- Net sales for the quarter increased
13% to$50.3 million (the highest quarterly sales in the Company's history) as compared to$44.6 million for the same period last year, and net sales for the year increased11% to a record$188.8 million as compared to$170.0 million for the same period last year. - Recurring service revenue ("RSR") for the quarter increased
27% to$20.3 million as compared to$16.1 million for the same period last year, and for the year increased26% to$75.7 million as compared to$59.9 million last year. RSR had a prospective annual run rate of approximately$84 million based on July 2024 recurring service revenues. - Gross margin for RSR increased to
90.4% and90.5% for the quarter and the year ended June 30, 2024 as compared to89% and89% , respectively, for the same periods last year. - Gross margin for equipment revenue was
31.4% and29.4% for the quarter and year ended June 30, 2024 as compared to30.5% and18.0% , respectively for the same periods last year. - Net income for the quarter increased
28% to a quarterly record$13.5 million as compared to$10.6 million for the same period a year ago. Net income for the year ended June 30, 2024 increased84% to a twelve month record$49.8 million as compared to$27.1 million for the same period last year. - Earnings per share (diluted) for the quarter increased
28% to$0.36 as compared to$0.28 for the same period a year ago. Earnings per share (diluted) for the year ended June 30, 2024 increased84% to$1.34 as compared to$0.73 for the same period last year. - Adjusted EBITDA* for the quarter increased
18% to$15.4 $13.0 million for the same period a year ago. Adjusted EBITDA* for the year ended June 30, 2024 increased72% to a record$58.9 million as compared to$34.3 million for the same period last year. - Adjusted EBITDA per share (diluted)* for the quarter increased
18% to$0.41 as compared to$0.35 for the same period a year ago. Adjusted EBITDA per share (diluted)* for the year ended June 30, 2024 increased71% to$1.59 per diluted share as compared to$0.93 for the same period last year. - Cash and cash equivalents, other investments and marketable securities were
$97.7 million at June 30, 2024 as compared to$66.7 million at June 30, 2023, a46% increase. The Company had no debt as of June 30, 2024. - Cash Provided by Operating Activities for the year ended June 30, 2024 was
$45.4 million $24.7 million - Robust net income, Adjusted EBITDA, and growing cash reserves demonstrating strong financial health of our business, is allowing us to increase our quarterly dividend to
$0.12 525% sequential increase. This next dividend will be paid on October 3, 2024 to shareholders of record on September 12, 2024.
Richard Soloway, Chairman and CEO, commented, "Fiscal 2024 concluded with record revenue and net income for both the 4th quarter and the full fiscal 2024 year ending June 30, 2024. The 4th quarter sales of
We were also pleased with the increase in the recurring service revenues annual run rate, which increased to
Our balance sheet continues to get stronger, with cash and cash equivalents, other investments and marketable securities increasing
Our Alarm Lock and Marks locking hardware lines continue to see growth in school and classroom security, healthcare, and retail loss-prevention, as well as in multi-dwelling commercial and residential applications. Locking sales in Q4 grew approximately
Our recent introduction of Prima by NAPCO, a new All-in-One Panel for security, fire, video and connected home with a 5-minute installation, remains a very important focus to the Company. 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.
NAPCO's record results for Q4 and fiscal year 2024, was primarily the result of the continued growth and profitability from recurring service revenues as well as the strong sales from our Alarm Lock and Marks locking product lines. Radio sales were down
Mr. Soloway concluded, "Fiscal 2024 was an amazing record-breaking year where we generated net income of
Financial Results
Net sales for the quarter increased
Operating income for the quarter increased
Adjusted EBITDA* for the quarter increased
Balance Sheet Summary
As of June 30, 2024, the Company had
Conference Call Information
Management will conduct a conference call at 11 a.m. ET today, August 26, 2024, in order to participate please go to the Investor Relations section of Company's website at https://investor.napcosecurity.com or the webcast URL use https://app.webinar.net/ZjmeNQvqWAQ. 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 | ||||||
June 30, 2024 | June 30, 2023 | |||||
(in thousands, except share data) | ||||||
CURRENT ASSETS | ||||||
Cash and cash equivalents | $ | 65,341 | $ | 35,955 | ||
Investments - other | 26,980 | 25,660 | ||||
Marketable securities | 5,398 | 5,136 | ||||
Accounts receivable, net of allowance for credit losses of | 31,898 | 26,069 | ||||
Inventories | 34,804 | 35,062 | ||||
Income tax receivable | 73 | 75 | ||||
Prepaid expenses and other current assets | 4,269 | 3,402 | ||||
Total Current Assets | 168,763 | 131,359 | ||||
Inventories - non-current | 15,109 | 13,287 | ||||
Property, plant and equipment, net | 9,077 | 9,308 | ||||
Intangible assets, net | 3,602 | 3,939 | ||||
Deferred income taxes | 5,428 | 2,652 | ||||
Operating lease - Right-of-use asset | 5,487 | 5,797 | ||||
Other assets | 286 | 312 | ||||
TOTAL ASSETS | $ | 207,752 | $ | 166,654 | ||
CURRENT LIABILITIES | ||||||
Accounts payable | $ | 7,977 | $ | 8,061 | ||
Accrued expenses | 10,345 | 8,079 | ||||
Accrued salaries and wages | 3,907 | 3,546 | ||||
Total Current Liabilities | 22,229 | 19,686 | ||||
Accrued income taxes | 1,122 | 1,110 | ||||
Operating lease liability | 5,512 | 5,689 | ||||
TOTAL LIABILITIES | 28,863 | 26,485 | ||||
COMMITMENTS AND CONTINGENCIES (Note 14) | ||||||
STOCKHOLDERS' EQUITY | ||||||
Common Stock, par value | 398 | 397 | ||||
Additional paid-in capital | 23,712 | 21,553 | ||||
Retained earnings | 174,300 | 137,740 | ||||
Less: Treasury Stock, at cost (2,893,715 shares) | (19,521) | (19,521) | ||||
TOTAL STOCKHOLDERS' EQUITY | 178,889 | 140,169 | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 207,752 | $ | 166,654 | ||
NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||
Three Months Ended June 30, | |||||||||
2024 | 2023 | 2022 | |||||||
(in thousands, except for share and per share data) | |||||||||
Net sales: | |||||||||
Equipment revenues | $ | 29,938 | $ | 28,551 | $ | 30,532 | |||
Service revenues | 20,392 | 16,107 | 12,697 | ||||||
50,330 | 44,658 | 43,229 | |||||||
Cost of sales: | |||||||||
Equipment-related expenses | 20,530 | 19,856 | 22,394 | ||||||
Service-related expenses | 1,955 | 1,768 | 1,611 | ||||||
22,485 | 21,624 | 24,005 | |||||||
Gross Profit | 27,845 | 23,034 | 19,224 | ||||||
Operating expenses: | |||||||||
Research and development | 3,027 | 2,364 | 2,106 | ||||||
Selling, general, and administrative expenses | 10,854 | 8,861 | 8,924 | ||||||
Total Operating Expenses | 13,881 | 11,225 | 11,030 | ||||||
Operating Income | 13,964 | 11,809 | 8,194 | ||||||
Other income: | |||||||||
Interest and other income (expense), net | 762 | 382 | (181) | ||||||
Income before Provision for Income Taxes | 14,726 | 12,191 | 8,013 | ||||||
Provision for Income Taxes | 1,192 | 1,626 | 476 | ||||||
Net Income | $ | 13,534 | $ | 10,565 | $ | 7,537 | |||
Income per share: | |||||||||
Basic | $ | 0.37 | $ | 0.29 | $ | 0.21 | |||
Diluted | $ | 0.36 | $ | 0.28 | $ | 0.20 | |||
Weighted average number of shares outstanding: | |||||||||
Basic | 36,939,000 | 36,827,000 | 36,760,000 | ||||||
Diluted | 37,232,000 | 37,137,000 | 36,879,000 | ||||||
NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||
Year Ended June 30, | |||||||||
2024 | 2023 | 2022 | |||||||
(in thousands, except for share and per share data) | |||||||||
Net sales: | |||||||||
Equipment revenues | $ | 113,071 | $ | 110,062 | $ | 97,612 | |||
Service revenues | 75,749 | 59,935 | 45,981 | ||||||
188,820 | 169,997 | 143,593 | |||||||
Cost of sales: | |||||||||
Equipment-related expenses | 79,862 | 90,197 | 78,471 | ||||||
Service-related expenses | 7,204 | 6,567 | 5,966 | ||||||
87,066 | 96,764 | 84,437 | |||||||
Gross Profit | 101,754 | 73,233 | 59,156 | ||||||
Operating expenses: | |||||||||
Research and development | 10,763 | 9,328 | 8,024 | ||||||
Selling, general, and administrative expenses | 37,173 | 33,580 | 32,907 | ||||||
Total Operating Expenses | 47,936 | 42,908 | 40,931 | ||||||
Operating Income | 53,818 | 30,325 | 18,225 | ||||||
Other income: | |||||||||
Interest and other income (expense), net | 2,568 | 903 | (283) | ||||||
Gain on extinguishment of debt | — | — | 3,904 | ||||||
Income before Provision for Income Taxes | 56,386 | 31,228 | 21,846 | ||||||
Provision for Income Taxes | 6,568 | 4,101 | 2,247 | ||||||
Net Income | $ | 49,818 | $ | 27,127 | $ | 19,599 | |||
Income per share: | |||||||||
Basic | $ | 1.35 | $ | 0.74 | $ | 0.53 | |||
Diluted | $ | 1.34 | $ | 0.73 | $ | 0.53 | |||
Weighted average number of shares outstanding: | |||||||||
Basic | 36,812,000 | 36,741,000 | 36,725,000 | ||||||
Diluted | 37,066,000 | 37,005,000 | 36,867,000 | ||||||
NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
Fiscal Year ended June 30, | |||||||||
2024 | 2023 | 2022 | |||||||
(in thousands) | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net income | $ | 49,818 | $ | 27,127 | $ | 19,599 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 2,163 | 1,930 | 1,771 | ||||||
Gain on disposal of fixed asset | — | (15) | — | ||||||
Interest expense (income) on other investments | 31 | (470) | — | ||||||
Unrealized (gain) loss on marketable securities | (56) | 80 | 426 | ||||||
(Recovery of) Provision for credit losses | (99) | (112) | 17 | ||||||
Change to inventory reserve | 1,691 | (445) | 1,187 | ||||||
Deferred income taxes | (2,776) | (2,818) | (214) | ||||||
Stock based compensation expense | 1,733 | 1,464 | 1,649 | ||||||
Gain on extinguishment of debt | — | — | (3,904) | ||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (5,730) | 3,261 | (1,154) | ||||||
Inventories | (3,255) | 1,883 | (19,274) | ||||||
Prepaid expenses and other current assets | (867) | (564) | (430) | ||||||
Income tax receivable | 2 | (75) | — | ||||||
Other assets | 25 | 35 | (103) | ||||||
Accounts payable, accrued expenses, accrued salaries and wages, accrued income | 2,688 | (6,581) | 8,762 | ||||||
Net Cash Provided by Operating Activities | 45,368 | 24,700 | 8,332 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Purchases of property, plant, and equipment | (1,594) | (2,962) | (1,482) | ||||||
Proceeds from disposal of fixed asset | — | 38 | — | ||||||
Purchases of marketable securities | (206) | (148) | (81) | ||||||
Purchases of other investments | (1,351) | (35,281) | — | ||||||
Redemption of other investments | — | 10,091 | — | ||||||
Net Cash Used in Investing Activities | (3,151) | (28,262) | (1,563) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Proceeds from stock option exercises | 427 | 85 | 155 | ||||||
Cash paid for dividend | (13,258) | (2,298) | — | ||||||
Net Cash (Used in) Provided by Financing Activities | (12,831) | (2,213) | 155 | ||||||
Net increase (decrease) in Cash and Cash Equivalents | 29,386 | (5,775) | 6,924 | ||||||
CASH AND CASH EQUIVALENTS - Beginning | 35,955 | 41,730 | 34,806 | ||||||
CASH AND CASH EQUIVALENTS - Ending | $ | 65,341 | $ | 35,955 | $ | 41,730 | |||
SUPPLEMENTAL CASH FLOW INFORMATION | |||||||||
Interest paid | $ | 14 | $ | 16 | $ | 16 | |||
Income taxes paid | $ | 9,330 | $ | 8,811 | $ | 2,168 | |||
NAPCO SECURITY TECHNOLOGIES, INC. | ||||
NON-GAAP MEASURES OF PERFORMANCE* (Unaudited) | ||||
(in thousands, except share and per share data) | ||||
3 months ended June 30, | 12 months ended June 30, | |||
2024 | 2023 | 2024 | 2023 | |
Net income (GAAP) | $ 13,534 | $ 10,565 | $ 49,818 | $ 27,127 |
Add back provision for income taxes | 1,192 | 1,626 | 6,568 | 4,101 |
Interest and other (income), net | (762) | (382) | (2,568) | (903) |
Operating Income (GAAP) | 13,964 | 11,809 | 53,818 | 30,325 |
Adjustments for non-GAAP measures of performance: | ||||
Add back amortization of acquisition-related intangibles | 84 | 90 | 337 | 361 |
Add back stock-based compensation expense | 857 | 330 | 1,733 | 1,464 |
Add back non-recurring legal expenses | 58 | 373 | 1,220 | 576 |
Adjusted non-GAAP operating income | 14,963 | 12,602 | 57,108 | 32,726 |
Add back depreciation and other amortization | 452 | 442 | 1,826 | 1,569 |
Adjusted EBITDA* (earnings before interest, taxes, | $ 15,415 | $ 13,044 | $ 58,934 | $ 34,295 |
Adjusted EBITDA* per Diluted Share | $ 0.41 | $ 0.35 | $ 1.59 | $ 0.93 |
Weighted average number of Diluted Shares outstanding | 37,232,000 | 37,137,000 | 37,066,000 | 37,005,000 |
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
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SOURCE NAPCO Security Technologies, Inc.
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