NAPCO Security Technologies(US:NSSC)2025-05-05 17:28Financial Performance - Net sales decreased by 10.8% to $44.0 million for the three months ended March 31, 2025, and by 5.5% to $130.9 million for the nine months[134]. - Recurring service revenue increased by 10.6% to $21.6 million for the three months and by 15.4% to $63.9 million for the nine months[134]. - Total gross profit margin improved from 53.8% to 57.2% for the three months and from 53.4% to 56.7% for the nine months[134]. - The overall gross profit for the nine months increased by $323,000 to $74.2 million, representing 56.7% of net sales[153]. - Gross profit from service revenues was 90.8% for the three months, slightly down from 91.8% in the prior year, while it increased to 91.1% for the nine months compared to 90.5%[134]. Cash Flow and Investments - Cash flows from operations generated were $38.9 million for the nine months ended March 31, 2025, compared to $31.0 million in fiscal 2024[134]. - Cash and cash equivalents increased by $8,072,000 during the nine months ended March 31, 2025, totaling $89,297,000 as of that date[164]. - Net cash provided by operating activities was $38.9 million for the nine months ended March 31, 2025, attributed to net income of $31.8 million and changes in operating assets and liabilities[166]. - The net cash provided by investing activities was $15.1 million during the nine months ended March 31, 2025, primarily from the redemption of other investments[168]. - Cash used in financing activities was $45.9 million for the nine months ended March 31, 2025, mainly related to the purchase of treasury shares and payment of dividends[169]. - The Company had no outstanding debt as of March 31, 2025, with an available revolving credit line of $20,000,000[165]. Expenses - The company experienced a significant increase in research and development expenses, rising by 15.5% to $3.2 million for the three months and by 20.9% to $9.3 million for the nine months[156]. - Research and development expenses for the nine months ended March 31, 2025 increased by $1,613,000 to $9,349,000, representing 7.1% of net sales compared to 5.6% for the prior period[157]. - Selling, general and administrative (SG&A) expenses for the nine months ended March 31, 2025 increased by $4,391,000 to $30,710,000, primarily due to compensation increases and hiring additional staff[159]. Tax and Interest - The Company's effective tax rate for the nine months ended March 31, 2025 was 14.4%, up from 12.9% in the prior year, due to lower estimated R&D tax credits and higher non-deductible stock-based compensation[163]. - Interest and other income, net for the nine months ended March 31, 2025 increased by $1,121,000 to $2,927,000, driven by higher interest income on short-term investments[161]. - A 100 basis point increase in interest rates would result in a decrease in the fair value of the investment portfolio by approximately $318,000[171]. Market and Strategic Focus - The U.S. announced a new universal baseline tariff of 10% on imports, which may increase product costs and impact margins[137]. - The company is focused on innovation and adapting to industry trends through ongoing research and development activities[135].