NAPCO Security Technologies(US:NSSC)2025-02-03 20:55Financial Performance - Net sales decreased by 9.7% to $42.9 million for the three months ended December 31, 2024, and by 2.6% to $86.9 million for the six months[136]. - Recurring service revenue increased by 14.4% to $21.2 million for the three months and by 18.1% to $42.3 million for the six months[136]. - Total gross profit margin improved from 52.6% to 57.0% for the three months and from 53.2% to 56.5% for the six months[136]. - Gross margin for recurring service revenue rose to 91.3% for the three months and 91.2% for the six months, compared to 89.9% and 89.8% respectively[136]. - Net income decreased by 17.0% to $10.5 million for the three months and by 6.2% to $21.7 million for the six months[142]. Revenue Breakdown - Equipment revenues decreased by 25.1% to $21.7 million for the three months and by 16.4% to $44.6 million for the six months[141]. - Service revenues increased by 14.4% to $21.2 million for the three months and by 18.1% to $42.3 million for the six months[141]. Expenses - Research and development expenses increased by 22.2% to $3.1 million for the three months and by 23.8% to $6.2 million for the six months[153]. - Selling, general and administrative expenses rose by 17.8% to $10.2 million for the three months and by 16.6% to $19.9 million for the six months[155]. Taxation - The provision for income taxes for the three months ended December 31, 2024 decreased by $299,000 to $1,625,000 compared to $1,924,000 for the same period a year ago, with an effective tax rate of 13.4%[159]. - For the six months ended December 31, 2024, the provision for income taxes remained consistent at $3,440,000 compared to $3,441,000 for the same period a year ago, with an effective tax rate of 13.7%[160]. Cash Flow and Liquidity - Cash flows from operations generated $25.5 million for the six months ended December 31, 2024, compared to $18.7 million in fiscal 2024[136]. - Cash and cash equivalents increased by $20,678,000 during the six months ended December 31, 2024, totaling $99,195,000 as of December 31, 2024[161]. - Net cash provided by operating activities was $25.5 million for the six months ended December 31, 2024, driven by net income of $21.7 million[163]. - The net cash provided by investing activities was $17.7 million during the six months ended December 31, 2024, primarily due to the redemption of other investments totaling $27.3 million[165]. - Cash used in financing activities was $22.6 million for the six months ended December 31, 2024, mainly related to the purchase of treasury shares[166]. - The company had no outstanding debt as of December 31, 2024, and had an available revolving credit line of $20,000,000[162]. Market Sensitivity - A 100 basis point increase in interest rates would result in a decrease in the fair value of the investment portfolio by approximately $314,000[169]. - A 10% strengthening or weakening of the U.S. dollar against the Dominican Peso would result in an annual increase or decrease in income from operations of approximately $889,000[172].