NSSC NAPCO Security Technologies Inc

​

​

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

​

FORM 8-K

​

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

​

Date of Report (Date of earliest event reported)

May 2, 2024

​

NAPCO SECURITY TECHNOLOGIES, INC.

(Exact name of registrant as specified in charter)

​

​

333 Bayview Avenue, Amityville, New York 11701

(Address of principal executive offices)

​

Registrant’s telephone number, including area code (631) 842-9400

​

(Former name and former address if changed from last report)

​

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

​

​

​

​

​

Securities registered pursuant to Section 12(b) of the Act:

​

​

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (section 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (section 240.12b-2 of this chapter).

​

Emerging growth company ☐

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

​

​

​

​

Item 2.02.    RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 6, 2024, the registrant issued a press release to report results for the fiscal quarter ended March 31, 2024. This press release is furnished as Exhibit 99.1.

The information in this Current Report on Form 8-K, including the exhibit attached hereto, is furnished pursuant to Item 2.02, and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective May 2, 2024, Kevin Buchel has been promoted to President & Chief Operating Officer while maintaining his position as Chief Financial Officer. Mr. Buchel will continue to report directly to NAPCO Founder, Richard Soloway, who will continue as Chairman & CEO. Also, Effective May 2, 2024, Michael Carrieri has been promoted to Executive Vice President of Engineering & Chief Technology Officer. On May 2, 2024, Andrew Vuono was appointed as the Company’s Senior Vice President of Finance and Chief Accounting Officer. Mr. Vuono is expected to assume such responsibilities on June 3^rd.

On May 2, 2024, the registrant issued a press release announcing the foregoing changes. This press release is furnished as Exhibit 99.2.

Item 7.01.    REGULATION FD DISCLOSURE

On May 2, 2024, the Company’s Board of Directors declared a cash dividend of $.10 per share payable on June 24, 2024, to stockholders of record on June 3, 2024. Information regarding this declaration is included in the press release furnished as Exhibit 99.1.

Item 9.01.    FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits:

​

​

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized.

​

​

​

​

Exhibit 99.1

NAPCO Reports Record Revenues, Net Income and Adjusted EBITDA* for Q3 of Fiscal 2024

-Net Sales for the Quarter Increase 13% to $49.3 Million-

-Net Income for the Quarter Increases 38% to $13.2 Million-

-Adjusted EBITDA* for the Quarter Increases 37% to $15.6 Million-

-3rd Quarter Recurring Service Revenues Increase 29% to $19.5 Million With a Gross Margin of 92%-

-Board Declares Quarterly Dividend of $0.10 per share-

AMITYVILLE, N.Y., May 6, 2024 /PRNewswire/ -- NAPCO Security Technologies, Inc. (NASDAQ: NSSC), one of the leading manufacturers and designers of high-tech electronic security equipment, wireless communication devices for intrusion and fire alarm systems and the related recurring service revenues as well as a provider of school safety solutions, today announced financial results for its third quarter of fiscal 2024.

Financial Highlights:

Richard Soloway, Chairman and CEO, commented, "The third quarter of fiscal 2024 was the strongest quarter in our Company's history. Revenue was $49.3 million, which was the highest quarterly sales we ever achieved and was the fourteenth consecutive quarter of record sales for a quarterly reporting period. Our net income of $13.2 million and Adjusted EBITDA* of $15.6 million were also quarterly record-breakers. Equipment revenue grew at 5% for the quarter, with gross margins on such sales sequentially remaining consistent at 29% each of the last two quarters. Recurring service revenues, which increased 29%, was a major contributor to the year-over-year overall sales and earnings growth and represents 40% of total revenue. Gross margin for recurring service revenues was the highest in our history, at 92% and when combined with gross margin on equipment revenues of 29%, the total gross margins for Q3 amounted to 54%, which compared to 49% for last year's Q3.

We were also pleased with the increase in the recurring revenues annual run rate, which increased to $81 million based on April 2024 recurring revenues, compared to an annual run rate of $76.5 million based on January 2024 recurring revenues.

Net income of $13.2 million, besides being a Q3 record breaker, represents 27% of our net sales. Adjusted EBITDA* of $15.6 million, also a Q3 record, represents an Adjusted EBITDA* margin of 32%.

Our balance sheet continues to get stronger, with cash and cash equivalents, other investments and marketable securities increasing 31% to $87.5 million as compared to $66.7 million at June 30, 2023, We have no debt and the net cash provided by operating activities for the nine months ended March 31, 2024 was also strong, amounting to $31.0 million.

Our Alarm Lock and Marks locking hardware lines continue to see growth in school and classroom security, healthcare, and retail loss-prevention, as well as in multi-dwelling commercial and residential applications. Locking sales in Q3 grew approximately 16% compared to last year and approximately 10% compared to Q2 and represents 66% of hardware sales. We continue to remain focused on further penetrating each of these markets.

We recently announced the introduction of Prima by NAPCO, a new All-in-One Panel for security, fire, video and connected home. Our goal is for Prima to address an important mass segment of the security market, including residential and small business systems. With built-in Wi-Fi/cellular radio communications, customer alert notifications, and video and smart home subscription options for each -installed system, the security dealer, as well as the Company, can add more recurring-revenue generating accounts.

NAPCO's record-breaking results for Q3 of fiscal year 2024, was primarily the result of the continued growth and profitability from recurring revenues as well as the strong sales from our Alarm Lock and Marks locking product lines. Radio sales in Q3 improved over Q2, increasing by approximately 2%. We expect radio sales to continue to be a key contributor to our hardware sales and continue to lead to the continued growth of our highly profitable recurring revenues."

Mr. Soloway concluded, "We are nine months through fiscal 2024 and while we have already generated net income of $36.3 million, Adjusted EBITDA* of $43.5 million and our Adjusted EBITDA* margin is now 31%, there is more work to be done.  While we continue to be encouraged with the gross margin for hardware sales of 29%, we believe this could improve further in Q4 and beyond. Our strong net income and Adjusted EBITDA* margins indicate the financial strength of our business. As such, we are pleased to continue our dividend program and we will be paying another dividend of $0.10 per share on June 24, 2024. As always, we will strive to accomplish our goal of continued financial strength, product innovation, technical superiority, and strong profitability, for the balance of fiscal 2024 and beyond".

Financial Results

Net sales for the quarter increased 13% to $49.3 million (the highest quarterly sales in the Company's history), as compared to $43.5 million for the same period one year ago. Net sales for the nine months ended March 31, 2024 increased 10% to a nine month record $138.5 million, as compared to $125.3 million for the same period one year ago. Research and development costs for the quarter increased 19% to $2.8 million, or 6% of sales, as compared to $2.3 million or 5% of sales for the same period a year ago. Research and development costs for the nine months ended March 31, 2024 increased 11% to $7.7 million, or 6% of sales, as compared to $7.0 million or 6% of sales for the same period a year ago. Selling, general and administrative expenses for the quarter increased 10% to $9.2 million or 19% of net sales, as compared to $8.4 million, or 19% of sales for the same period last year. Selling, general and administrative expenses for the nine months ended March 31, 2024 increased 6% to $26.3 million or 19% of net sales, as compared to $24.7 million, or 20% of sales for the same period last year.

Operating income for the quarter increased 38% to $14.5 million as compared to $10.5 million for the same period last year. Operating income for the nine months ended March 31, 2024 increased 115% to $39.9 million as compared to $18.5 million for the same period last year. Net income for the quarter increased 38% to a quarterly record $13.2 million, or $0.36 per diluted share, as compared to $9.5 million, or $0.26 per diluted share, for the same period last year and represents 27% of net sales. Net income for the nine months ended March 31, 2024 increased 119% to a nine month record of $36.3 million or $0.98 per diluted share as compared to $16.6 million or $0.45 per diluted share for the same period last year and represents 26% of net sales.

Adjusted EBITDA* for the quarter increased 37% to a quarterly record $15.6 million, or $0.42 per diluted share, as compared to $11.3 million, or $0.31 per diluted share for the same period last year and equates to an Adjusted EBITDA* margin of 32%. Adjusted EBITDA* for the nine months ended March 31, 2024 increased 105% to a nine month record $43.5 million, or $1.18 per diluted share, as compared to $21.3 million, or $0.57 per diluted share for the same period last year and equates to an Adjusted EBITDA* margin of 31%.

Balance Sheet Summary

As of  March 31, 2024, the Company had $87.5 million in cash and cash equivalents, other investments and marketable securities as compared to $66.7 million as of June 30, 2023. Working capital (defined as current assets less current liabilities) was $138.3 million at March 31, 2024 as compared with working capital of $111.7 million at June 30, 2023. Current ratio (defined as current assets divided by current liabilities) was 7.9:1 at March 31, 2024, and 6.7:1 at June 30, 2023.

Conference Call Information

Management will conduct a conference call at 11 a.m. ET today, May 6, 2024, in order to participate please go to the Investor Relations section of Company's website at https://investor.napcosecurity.com. Alternatively, interested parties may participate in the call by dialing, in the (US) 1-800-836-8184 or for international callers, 1-646-357-8785. A replay of the webcast will be available on the Investor Relations section of the Company's website.

About NAPCO Security Technologies, Inc.

NAPCO Security Technologies, Inc., is one of the leading manufacturers and designers of high-tech electronic security devices, wireless recurring communication services for intrusion and fire alarm systems as well as a provider of school safety solutions, The Company consists of four Divisions: NAPCO, plus three wholly owned subsidiaries: Alarm Lock, Continental Instruments, and Marks USA. Headquartered in Amityville, New York, its products are installed by tens of thousands of security professionals worldwide in commercial, industrial, institutional, residential and government applications. NAPCO products have earned a reputation for innovation, technical excellence and reliability, positioning the Company for growth in the multi-billion dollar and rapidly expanding electronic security market. For additional information on NAPCO, please visit the Company's web site at http://www.napcosecurity.com.

Safe Harbor Statement

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, but are not limited to, statements relating to the impact of COVID-19 pandemic; supply chain challenges and developments; the growth of recurring service revenues and annual run rate; the strength of our balance sheet; our expectations regarding future results; the introduction of new access control and locking products; the opportunities for school security products; business trends , including the replacement of 3G radios, and our ability to execute our business strategies. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those risk factors set forth in the Company's filings with the Securities and Exchange Commission, such as our annual report on Form 10-K and quarterly reports on Form 10-Q. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and the Company undertakes no duty to update such information, except as required under applicable law.

*Non-GAAP Financial Measures

Certain non-GAAP measures are included in this press release, including non-GAAP operating income, Adjusted EBITDA and Adjusted EBITDA per share (diluted). We define Adjusted EBITDA as GAAP net income plus income tax expense, net interest expense, non-cash stock-based expense, non-recurring legal expense, other non-recurring income and depreciation and amortization expense. Non-GAAP operating income does not include amortization of intangibles or stock-based compensation expense. These non-GAAP measures are provided to enhance the user's overall understanding of our financial performance. By excluding these charges our non-GAAP results provide information to management and investors that is useful in assessing NAPCO's core operating performance and in comparing our results of operations on a consistent basis from period to period. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as Adjusted EBITDA, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. The presentation of this information is not meant to be a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles. Investors are encouraged to review the reconciliation of GAAP to non-GAAP financial measures set forth above.

​

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET (unaudited)

​

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

​

​

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

​

​

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

​

​

​

​

​

​

​

​

​

​

Contacts:

Francis J. Okoniewski

Vice President of Investor Relations

NAPCO Security Technologies, Inc.

Office 800-645-9445 x 374

Mobile 516-404-3597

fokoniewski@napcosecurity.com

Exhibit 99.2

NAPCO Announces Management and Organizational Enhancements

-Executive Changes Aimed at Maintaining and Improving Recent Growth Trajectories-

AMITYVILLE, N.Y., May 2, 2024 /PRNewswire/ -- NAPCO Security Technologies, Inc. (NASDAQ: NSSC), one of the leading manufacturers and designers of high-tech electronic security equipment, wireless communication devices for intrusion and fire alarm systems and the related recurring service revenues as well as a provider of school safety solutions, today announced exciting changes aimed at bolstering its management team with new roles, promotions, and the addition of a new upper management team member, all to keep our business steadily growing for many years to come. The Company's recruiting efforts to attract superior talent across our business divisions is consistent and ongoing.

Kevin Buchel has been promoted to President & Chief Operating Officer while maintaining his position as Chief Financial Officer. Mr. Buchel will continue to report directly to NAPCO Founder, Richard Soloway. Mr. Soloway, who will continue under his present titles of Chairman & CEO, commented: "Kevin has been with NAPCO for 30 years in various management positions, most recently as our Executive VP and CFO. The appointment of Kevin as President & COO is well-deserved, and comes at an exciting time at NAPCO as we continue to grow both revenues and our earning metrics. Kevin has been central to those efforts and I will continue to work closely with him as we have for 30 years. I am confident that under this role, NAPCO will continue to achieve significant milestones in revenues and profits for many years to come." 

Michael Carrieri has been promoted to Executive Vice President of Engineering & Chief Technology Officer. Mr. Soloway commented: "Michael has been our Senior Vice President of Engineering Development for the past 24 years. With his skills in creating products from various in-house and external sources, he and the prolific engineering team that he has developed have been instrumental in NAPCO's substantial growth over so many years. Those products are the most diversified range of products in the security industry and bode well for substantial corporate growth going forward.

Andrew Vuono was appointed as the Company's Senior Vice President of Finance and Chief Accounting Officer. Mr. Buchel commented: "Mr. Vuono has over 30 years of public accounting experience, including over 20 years as a partner at a top 10 Public Accounting Firm. Mr. Vuono will oversee the day-to-day accounting department and financial reporting activities, and report directly to me." Mr. Vuono is expected to start on June 3^rd.

Michael Almes has been promoted to Controller, reporting to Andrew Vuono. Mr. Buchel commented: "Michael joined NAPCO three years ago as the Assistant Controller and in that relatively short timeframe has demonstrated excellent accounting skills and has become an integral part of the finance team."

About NAPCO Security Technologies, Inc.

NAPCO Security Technologies, Inc., is one of the leading manufacturers and designers of high-tech electronic security devices, wireless recurring communication services for intrusion and fire alarm systems as well as a provider of school safety solutions, The Company consists of four Divisions: NAPCO, plus three wholly owned subsidiaries: Alarm Lock, Continental Instruments, and Marks USA. Headquartered in Amityville, New York, its products are installed by tens of thousands of security professionals worldwide in commercial, industrial, institutional, residential and government applications. NAPCO products have earned a reputation for innovation, technical excellence and reliability, positioning the Company for growth in the multi-billion dollar and rapidly expanding electronic security market. For additional information on NAPCO, please visit the Company's web site at http://www.napcosecurity.com.

Safe Harbor Statement

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, but are not limited to, statements relating to the impact of COVID-19 pandemic; supply chain challenges and developments; the growth of recurring service revenues and annual run rate; the strength of our balance sheet; our expectations regarding future results; the introduction of new access control and locking products; the opportunities for school security products; business trends , including the replacement of 3G radios, and our ability to execute our business strategies. Actual results, performance or achievements could differ

materially from those anticipated in such forward-looking statements as a result of certain factors, including those risk factors set forth in the Company's filings with the Securities and Exchange Commission, such as our annual report on Form 10-K and quarterly reports on Form 10-Q. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements.

All information provided in this press release is as of today's date, unless otherwise stated, and the Company undertakes no duty to update such information, except as required under applicable law.

​

Contacts:
Francis J. Okoniewski
Vice President of Investor Relations
NAPCO Security Technologies, Inc.
Office 800-645-9445 x 374
Mobile 516-404-3597
fokoniewski@napcosecurity.com