Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $49.2 million, a record for the quarter, representing a 12% increase year-over-year [9][12] - Net income rose 9% to $12.2 million, which is 25% of revenue, and adjusted EBITDA increased 21% to $14.9 million, equating to an adjusted EBITDA margin of 30.4% [10][16] - Cash reached $106 million as of September 30, 2025, with cash from operations at $11.6 million [10][17] Business Line Data and Key Metrics Changes - Equipment sales were $25.7 million, up 12% year-over-year, supported by price adjustments and strong distributor relationships [9][12] - Recurring revenue grew 11% to $23.5 million, maintaining a gross margin of 90.3%, driven by Starlink Fire Radios [10][12] - Equipment gross margin improved to 26%, a 300 basis point increase from the previous quarter [10][14] Market Data and Key Metrics Changes - The company reported strong sell-through stats for locking products, with locking sales at $17.1 million for Q1, a significant increase from $13.9 million in the same period last year [36][37] - The recurring revenue service now has a prospective annual run rate of approximately $95 million, reflecting continued demand for StarLink Fire Radios [12][13] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through a recurring revenue model, which now represents nearly half of total sales [19][20] - NAPCO is investing in school security solutions, integrating locking, access control, and alarm technologies to provide comprehensive safety solutions [20][21] - The introduction of the MVP Cloud-Based Access Control platform aims to create a new subscription-based revenue stream, enhancing the company's market position [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather economic challenges and continue executing its growth plan [6][7] - The company anticipates further benefits from pricing strategies and expects to see a larger impact in upcoming quarters [9][10] - Management highlighted the importance of innovation and operational efficiency in maintaining competitive advantages [19][20] Other Important Information - The company declared a quarterly dividend of $0.14 per share, payable on January 2, 2026 [10][11] - NAPCO's manufacturing facility in the Dominican Republic is noted for its cost efficiency and stability, providing a competitive edge [23][57] Q&A Session Summary Question: What percentage of your locking mix is represented by networked products? - Most sales in locking are traditional products, with MVP just starting to gain traction [26][27] Question: How does MVP technology differ from competitors? - MVP is a fully integrated system that combines locks and cloud services, allowing for enhanced functionality and recurring revenue [29][30] Question: How much of the hardware revenue growth was due to price versus volume? - Approximately 60% of the 12% increase in equipment revenue was due to volume increases, with 40% tied to pricing increases [34] Question: What is the status of the Pasadena school contract? - The project was completed successfully, and there are significant opportunities in school security across the country [82][84] Question: What are the plans for the cash on the balance sheet? - The company is considering potential M&A opportunities but remains cautious to ensure any acquisition is accretive [87][89]

Company Overview - NAPCO is a leader in commercial & residential security products with over 10,000 dealers, integrators & distributors in the US[5] - The company has two dozen patents and proprietary software[5] - The company is shifting towards recurring revenue and school security[5] Financial Highlights - Fiscal Fourth Quarter 2018 sales reached a record of $27.3 million, a 6% increase[48] - Recurring revenue increased by 49%[48] - Recurring revenue annual run rate is $14.7 million as of July 2018[48, 67] - TTM Revenue of $91.7 million with zero debt[67] - EPS up from $0.17 to $0.20[48] Market Opportunity - The company addresses both commercial (80%) and residential (20%) markets[8] - The company provides solutions for school security, addressing a market of 100,000 K-12 schools and 10,000 campuses[41] Stock Information - Market Capitalization is $284.0 million[66] - Insider Ownership is 38%[66, 67]

Company Overview - NAPCO is a leader in designing and manufacturing commercial & residential security products, selling through 10,000+ dealers, integrators & distributors in the US [5] - The company has two major growth drivers: recurring revenue and school security [5] - NAPCO is the only company with products in all three security verticals: Alarms & Connectivity, Locking, and Access Control [34] Financial Performance - FY 2020 sales reached $101.3 million [43] - FY 2020 recurring revenue increased by 38% [43] - Recurring Revenue Annual Run Rate is at $27.5 million [43] - FY 2020 RMR Gross Margin was 82% [43] - The company has a cash balance of $18.2 million and zero debt [43] - Adjusted EBITDA for FY 2020 was $14.7 million [43] Market and Growth Opportunities - The company estimates a commercial market of 5 million buildings [39] - The company estimates a residential market of 120 million homes [41] - School security is a major growth driver, with increased funding, for example, Florida $500 million and Wisconsin $100 million [18, 21]