NAPCO Security Technologies(US:NSSC)2025-11-03 18:06Revenue and Income - Total revenue increased by 11.7% to $49.2 million, with equipment revenue rising 12.3% to $25.7 million and recurring service revenues increasing 11.1% to $23.4 million[152]. - Operating income rose by 15.1% to $13.6 million, reflecting strong performance in both equipment and service revenues[160]. - Net income for the three months ended September 30, 2025, increased by 8.8% to $12.2 million compared to $11.2 million in the same period last year[162]. - The increase in net service revenues to $23.4 million was driven by a higher number of activated cellular communication devices[164]. Profitability and Margins - Gross profit margin improved from 55.9% to 56.6%, with equipment gross margin increasing from 23.6% to 26.0%[152][160]. - The provision for income taxes increased by 36.1% to $2.5 million, with an effective tax rate of 16.9%[171]. Expenses - Research and development expenses increased by 6.0% to $3.2 million, representing 6.6% of net sales[168]. - Selling, general and administrative expenses rose by 13.0% to $11.0 million, primarily due to increased legal fees and commission expenses[169]. Cash Flow and Liquidity - Cash and cash equivalents increased by $12.3 million during the quarter, totaling $105.8 million as of September 30, 2025[173]. - Net cash provided by operating activities for Q3 2025 was $11.6 million, up from $12.0 million in Q3 2024, with net income of $12.2 million in 2025 compared to $11.2 million in 2024[175][176]. - Cash flows from investing activities in Q3 2025 were $5.6 million, primarily from the redemption of marketable securities of $8.4 million, a decrease from $15.5 million in Q3 2024[177]. - Cash used in financing activities for Q3 2025 was $5.0 million, mainly for stockholder dividends, compared to $7.2 million in Q3 2024 for treasury share repurchases[178]. - The company has a revolving credit line of $20 million, which expires in February 2029, with no outstanding debt[174]. Investments and Commitments - The company has no material commitments for capital expenditures or inventory purchases as of September 30, 2025[179]. - The investment portfolio includes U.S. treasury securities valued at approximately $10.3 million, with a potential decrease of $207,000 in fair value for a 100 basis point increase in interest rates[180]. Market and Economic Factors - A 10% change in the exchange rate between the U.S. dollar and Dominican Pesos could result in an annual income change of approximately $865,000[184]. - Recent tariffs announced on U.S. imports, including a new 10% baseline tariff, could increase product costs and impact margins[185].