The story of NAPCO Security Technologies is starting to repeat itself in its quarterly financials. Another quarter has just wrapped up with the company reporting record sales for its 2023 Q2. Sales were up 27% to $42.3 million as compared to $33.4 million for the same timeframe last year.
NAPCO’s (NASDAQ: NSSC) recurring service revenue (RSR) for the quarter increased 35% to $14.9 million as compared to $11.0 million for the same period last year. The company reports its RSR business now has a prospective annual run rate of approximately $59 million.
Other financial highlights include the company’s gross margin for its recurring service revenue for the quarter was 89% as compared to 87% for the same period last year. Net income for the quarter was a quarterly record $8.4 million as compared to $1 million for the same period a year ago.
Adjusted EBITDA for the quarter was a quarterly record $10.3 million as compared to $3.1 million for the same period a year ago, a 232% increase. Cash and cash equivalents, other investments and marketable securities were $47.1 million as of December 31, 2022, as compared to $46.8 million at June 30, 2022. The Company had no debt as of December 31, 2022.
Strong Sales Catapult NAPCO to Strong 2023 Start
Richard Soloway, Chairman and President, commented, “The strong sales and profitability generated during the first quarter of fiscal 2023, continued during the second quarter, with Q2 record sales of $42.3 million, a 27% increase over last year’s Q2 and the ninth consecutive quarter of record year-over-year quarterly sales. Our net income of $8.4 million is the largest quarterly net income in the company’s history.”
Soloway cited the strong demand for each of NAPCO’s product lines, including Starlink radios, Alarm Lock and Marks locking products, as well as Continental access control systems. He noted that the company remains focused on logistical challenges to meet demand.
“We continue to manage these issues by re-engineering products, developing alternative, lower cost and more readily available supply sources and delivery methods and continuing to work closely with our customers and suppliers to navigate through these extraordinary times,” he adds. “Our strategy to temporarily sacrifice hardware gross margin by purchasing components at higher prices so that we can continue to manufacture radios, which led to continued high margin recurring service revenue for each radio installed and operating, continues to work well.”
He noted that the company is working on a number of strategic activities, including the development of alternative sources for microchips that are in high demand and which are key components in its Starlink radios. He also mentioned that the company is focused on greater penetration in the market for its school security solutions in particular.
Familiar Face Appointed to Board of Directors
Finally, Soloway announced a recognizable name as a new board member at NAPCO.
“Finally, I am pleased to announce that David Paterson, the Governor of New York from March 2008 until January 2011, has joined our Board of Directors. David has vast experience in crime and security issues and is an outspoken advocate of safety by combatting crime traditionally and with new methods and systems. He will bring his unique perspectives to NAPCO as we plan for the future growth and success of the company.”
Another version of this article originally appeared on our sister site Security Sales & Integration on February 6, 2023. It has since been updated for CE Pro’s audience.
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