NAPCO Security Technologies(NSSC)

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NAPCO Security Technologies(NSSC) - 2020 Q4 - Earnings Call Transcript
2020-09-08 20:18
Napco Security Technologies, Inc. (NASDAQ:NSSC) Q4 2020 Results Earnings Conference Call September 8, 2020 11:00 AM ET Company Participants Patrick McKillop - Director, IR Richard Soloway - President & CEO Kevin Buchel - SVP & CFO Conference Call Participants Matt Pfau - William Blair Mike Walkley - Canaccord Genuity Jason Schmidt - Lake Street Raj Sharma - B. Riley FBR Operator Greetings and welcome to the NAPCO Security Technologies Incorporated Fiscal Fourth Quarter 2020 Earnings Conference Call. At this ...
NAPCO Security Technologies(NSSC) - 2020 Q3 - Quarterly Report
2020-05-06 23:51
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________. Commission File number: 0-10004 NAPCO SECURITY TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Delaware 11-2 ...
NAPCO Security Technologies(NSSC) - 2020 Q3 - Earnings Call Transcript
2020-05-04 18:51
Financial Data and Key Metrics Changes - For Q3 2020, net sales increased 4% to $26.2 million, marking a record performance and the 23rd consecutive quarter of year-over-year record sales compared to $25.1 million in the same period last year [15] - Gross profit for Q3 increased 11% to $12 million with a gross margin of 46%, up from $10.7 million and 43% last year [17] - Net income for Q3 increased 16% to a record $3.6 million or $0.20 per diluted share, compared to $3.1 million or $0.17 per diluted share last year [23] - Adjusted EBITDA for Q3 increased 22% to $4.9 million or $0.26 per diluted share, compared to $4 million or $0.22 per diluted share last year [24] Business Line Data and Key Metrics Changes - Recurring monthly revenue for the Alarm division increased 37% for the quarter and 39% for the nine months, with an annual run rate of $25.4 million as of March 2020 [16] - Sales of alarm communication services and intrusion and access products contributed to the increase in sales, while door locking products saw a decrease [15] Market Data and Key Metrics Changes - The company noted a 25% rise in commercial burglaries during the COVID-19 shutdown, indicating increased demand for security products [34] - The school security market remains a significant growth contributor, with new funding initiatives for school security upgrades [36] Company Strategy and Development Direction - The company aims to expand its cellular communications technology to other areas in the security business, focusing on generating recurring revenue from new product lines [42][43] - Management emphasized the importance of maintaining a high level of ownership in equity, with senior management owning approximately 38% [13][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather market challenges due to its strong balance sheet and focus on non-discretionary commercial sectors [47] - The company anticipates continued growth in recurring revenue and profitability, aiming for a 50% split between recurring revenue and equipment sales in the long term [59][74] Other Important Information - The cash balance at March 31, 2020, was $11 million, up from $8 million at June 30, 2019, with zero debt [25] - The company repurchased approximately $2.4 million worth of stock during the quarter, indicating a strategic use of capital [29] Q&A Session Summary Question: Update on the production facility in the Dominican Republic - The Dominican Republic facility experienced some disruption but is now operational, allowing the company to maintain production levels [51][54] Question: Update on a large distributor's purchasing status - The distributor's business increased by 64% sequentially, indicating a return to normal purchasing levels [55][56] Question: Future gross margin expectations for recurring revenue - Gross margins are expected to fluctuate, but the company aims to increase the proportion of high-margin fire radios in its product mix [57][64] Question: Market position and potential for market share gain - The company is optimistic about gaining market share due to its strong balance sheet and innovative product offerings, particularly in the recurring revenue segment [72][74] Question: Interest in anti-microbial locks - The company has seen growing interest in anti-microbial locks, particularly in healthcare settings, and expects this trend to continue [90][91] Question: Supply chain interest from new distributors - The company is experiencing increased interest from distributors who prefer American-made products due to supply chain disruptions affecting competitors [95][96]
NAPCO Security Technologies(NSSC) - 2020 Q2 - Earnings Call Transcript
2020-02-03 23:17
Napco Security Technologies, Inc. (NASDAQ:NSSC) Q2 2020 Results Earnings Conference Call February 3, 2020 11:00 AM ET Company Participants Patrick McKillop - Director, Investor Relations Richard Soloway - President and CEO Kevin Buchel - Senior Vice President and CFO Conference Call Participants Mike Walkley - Canaccord Genuity Jaeson Schmidt - Lake Street Matt Pfau - William Blair Jeff Kessler - Imperial Capital Operator Greetings. And welcome to the NAPCO Security Technologies, Inc. Fiscal Second Quarter ...
NAPCO Security Technologies(NSSC) - 2020 Q2 - Quarterly Report
2020-02-03 22:27
PART I: FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) NAPCO reported strong growth in H2 2019, with net sales up 8.1% to $52.1M and net income up 55.6% to $6.8M, driven by service revenue growth [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $101.4M, driven by cash, inventory, and new lease assets, while liabilities increased to $23.1M Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2019 (unaudited) | June 30, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $71,278 | $65,455 | | **Total Assets** | **$101,360** | **$85,908** | | **Total Current Liabilities** | $15,080 | $14,372 | | **Total Liabilities** | **$23,058** | **$14,736** | | **Total Stockholders' Equity** | **$78,302** | **$71,172** | - The adoption of the new lease accounting standard (ASC 842) resulted in the recognition of a **$7.4 million** operating lease right-of-use asset and a **$7.1 million** operating lease liability as of December 31, 2019[7](index=7&type=chunk)[102](index=102&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net income surged 24.5% to $3.6M for Q2 and 55.6% to $6.8M for H1, driven by strong service revenue growth Three Months Ended December 31 (in thousands, except per share data) | Metric | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | **$25,829** | **$24,829** | **4.0%** | | - Equipment Revenues | $20,045 | $20,685 | -3.1% | | - Service Revenues | $5,784 | $4,144 | 39.6% | | **Gross Profit** | **$12,127** | **$10,671** | **13.6%** | | Gross Margin | 47.0% | 43.0% | +4.0 p.p. | | **Operating Income** | **$3,994** | **$3,294** | **21.3%** | | **Net Income** | **$3,572** | **$2,869** | **24.5%** | | **Diluted EPS** | **$0.19** | **$0.15** | **26.7%** | Six Months Ended December 31 (in thousands, except per share data) | Metric | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | **$52,114** | **$48,205** | **8.1%** | | - Equipment Revenues | $40,966 | $40,275 | 1.7% | | - Service Revenues | $11,148 | $7,930 | 40.6% | | **Gross Profit** | **$23,645** | **$20,230** | **16.9%** | | Gross Margin | 45.4% | 42.0% | +3.4 p.p. | | **Operating Income** | **$7,603** | **$5,053** | **50.5%** | | **Net Income** | **$6,805** | **$4,373** | **55.6%** | | **Diluted EPS** | **$0.37** | **$0.23** | **60.9%** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $4.8M due to inventory build, while cash and equivalents increased to $11.8M by period end Six Months Ended December 31 (in thousands) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $4,813 | $6,346 | | Net Cash Used in Investing Activities | ($1,063) | ($1,119) | | Net Cash Used in Financing Activities | $0 | ($2,614) | | **Net Change in Cash and Cash Equivalents** | **$3,750** | **$2,613** | | **Cash and Cash Equivalents - Ending** | **$11,778** | **$7,921** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail ASC 842 adoption, revenue disaggregation, significant customer concentration, and an ongoing IRS tax examination - The company adopted the new lease accounting standard (ASC 842) on July 1, 2019, using the modified retrospective method, resulting in the recognition of an operating ROU asset and lease liabilities of approximately **$7.7 million**[102](index=102&type=chunk) - One customer accounted for **21%** of accounts receivable as of December 31, 2019, and **8%** of net sales for the quarter[69](index=69&type=chunk) - The IRS is examining the company's fiscal 2017 tax return. Additionally, the IRS has proposed a **$1.8 million** tax adjustment for fiscal 2016 related to intercompany balances, which the company is protesting and has not reserved for[78](index=78&type=chunk)[79](index=79&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Sales grew 8.1% driven by service revenues, expanding gross margin to 45.4%, while strong liquidity supports strategic inventory build [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Net sales increased 8.1% to $52.1M, driven by service revenues, boosting gross profit by 16.9% and operating income by 50.5% Results of Operations Summary (in thousands) | Metric | Six Months Ended Dec 31, 2019 | Six Months Ended Dec 31, 2018 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $52,114 | $48,205 | 8.1% | | Gross profit | $23,645 | $20,230 | 16.9% | | Operating income | $7,603 | $5,053 | 50.5% | | Net income | $6,805 | $4,373 | 55.6% | - The increase in sales for the six months was primarily due to increased communication service revenues (**+$3,218,000**) and sales of intrusion and access products (**+$971,000**), partially offset by a decrease in sales of door-locking products (**-$280,000**)[118](index=118&type=chunk) - The increase in gross profit and margin was primarily due to the higher mix of service revenues[119](index=119&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Strong liquidity, including an $11M credit facility, supports operations, with a strategic $7.1M increase in inventories - The company believes its current working capital, cash flows from operations, and its revolving credit agreement will be sufficient to fund operations through the next twelve months[126](index=126&type=chunk) - As of December 31, 2019, the company had no outstanding borrowings and **$11,000,000** in availability under its revolving credit facility[130](index=130&type=chunk) - Inventories increased by **$7.1 million**, primarily to build stock of new devices related to recurring communication service revenues and to level-load production output[128](index=128&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Primary market risk is foreign currency exposure to the Dominican Peso, with a 10% USD/RD$ change impacting income by $700,000 - The company is exposed to foreign currency risk related to expenses incurred in Dominican Pesos (RD$) at its production facility[132](index=132&type=chunk) - A **10%** strengthening or weakening in the U.S. dollar to the RD$ would result in an annual increase or decrease in income from operations of approximately **$700,000**[132](index=132&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, concluded disclosure controls and procedures were effective with no material changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of December 31, 2019[134](index=134&type=chunk) - No changes in internal controls over financial reporting occurred during the six months ended December 31, 2019, that have materially affected, or are reasonably likely to materially affect, these controls[135](index=135&type=chunk) PART II: OTHER INFORMATION [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the prior fiscal year's Form 10-K filing - There has been no material change in the risk factors previously disclosed in the Company's Form 10-K for the year ended June 30, 2019[136](index=136&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) Required CEO/CFO certifications and XBRL data files are included as exhibits to this report - Exhibits filed with this report include CEO and CFO certifications (31.1, 31.2), Section 1350 certifications (32.1), and XBRL data files (101 series)[137](index=137&type=chunk) Signatures [Signatures](index=30&type=section&id=Signatures) The quarterly report was signed on February 3, 2020, by the Chairman, President, CEO, and Principal Financial Officer - The report was duly signed and authorized on February 3, 2020[140](index=140&type=chunk)
NAPCO Security Technologies(NSSC) - 2020 Q1 - Quarterly Report
2019-11-08 22:01
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________. Commission File number: 0-10004 NAPCO SECURITY TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Delaware ...
NAPCO Security Technologies(NSSC) - 2020 Q1 - Earnings Call Transcript
2019-11-04 22:34
NAPCO Security Technologies, Inc. (NASDAQ:NSSC) Q1 2020 Earnings Conference Call November 4, 2019 11:00 AM ET Company Participants Patrick McKillop - Director IR Richard Soloway - President & CEO Kevin Buchel - SVP Operations & Finance Conference Call Participants Matt Pfau - William Blair Jaeson Schmidt - Lake Street Capital Jeffrey Kessler - Imperial Capital Operator Greetings, welcome to the NAPCO Security Technologies, Inc. Fiscal First Quarter 2020 Earnings Release Conference Call. At this time, all pa ...
NAPCO Security Technologies(NSSC) - 2019 Q4 - Annual Report
2019-09-13 21:01
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended June 30, 2019 or ¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition period from ___ to___ Commission File Number 0-10004 NAPCO SECURITY TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of (I.R. ...
NAPCO Security Technologies(NSSC) - 2019 Q4 - Earnings Call Transcript
2019-09-03 19:50
NAPCO Security Technologies, Inc. (NASDAQ:NSSC) Q4 2019 Results Earnings Conference Call September 3, 2019 11:00 AM ET Company Participants Patrick McKillop - Director of Investor Relations Richard Soloway - President and CEO Kevin Buchel - Senior Vice President of Operations and Finance Conference Call Participants Jaeson Schmidt - Lake Street Capital Jeffrey Kessler - Imperial Capital Matt Pfau - William Blair Operator Greetings, and welcome to the NAPCO Security Technologies Inc. Fiscal Fourth Quarter 20 ...
NAPCO Security Technologies(NSSC) - 2019 Q3 - Quarterly Report
2019-05-08 20:55
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________. Commission File number: 0-10004 NAPCO SECURITY TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) (State or oth ...