NAPCO Security Technologies releases its fourth quarter and fiscal year ending June 30, 2022, reporting net sales for the quarter increased 22% to a quarterly record of $43.2 million as compared to $35.4 million for the same period last year.
The report also notes net sales for the fiscal year increased 26% to a record $143.6 million as compared to $114 million last year.
Recurring service revenue for the quarter increased 33% to $12.7 million as compared to $9.5 million for the same period last year while the number for the fiscal year increased 36% to $46.0 million as compared to $33.9 million for the same period last year.
NAPCO says recurring service revenue now has a prospective annual run rate of $54.0 million based on July 2022 recurring revenues. Gross margin for recurring service revenue remained robust for the quarter and year at 87% and 86%, respectively.
Net income for the quarter increased 36% to a fourth quarter record $7.5 million as compared to $5.5 million for the same period a year ago. Net income for the year increased 27% to a record $19.6 million as compared to $15.4 million last year.
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“Our record-breaking fourth quarter of fiscal 2022 generated strong revenue growth, as we once again achieved the highest sales for any quarter in the company’s history, $43.2 million, representing a 22% increase over last year,” says NAPCO Chairman and President Richard Soloway.
“While the hardware margins continue to be affected by the ongoing impact of supply chain constraints and higher component prices, our strategy to temporarily sacrifice hardware gross margin by purchasing components at higher prices so that we can continue to manufacture radio communicators — which lead to continued high margin recurring revenue for each radio installed and operating — as well as other hardware products, is working well.”
Soloway adds that the company is continuing to work to restore margins to levels at or above those before the start of the supply chain crisis. and is developing alternative sources for micros that are in high demand and key components in its Starlink cellular radios.
He notes that as hardware sales increase, gross margins should improve as a result of increased overhead absorption rates in its Dominican Republic manufacturing facility resulting from higher hardware sales levels.
“The demand for our products continues to be very strong. Even with the aforementioned solid, record-breaking sales growth in Q4, our ability to fully meet this strong demand for our products continues to be somewhat constrained by the ongoing supply chain challenges, electronic component shortages and logistics delays,” Soloway says. “NAPCO’s delivery performance has been excellent during these very difficult times. However, these aforementioned constraints have once again led to historically high backlog levels which may continue throughout calendar 2022, particularly for electronic products.”
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Earnings per share (diluted) for the quarter increased 36% to $0.20 as compared to $0.15 for the same period a year ago. Earnings per share (diluted) for the fiscal year increased 27% to $0.53 as compared to $0.42 a year ago. Adjusted EBITDA for the quarter increased 29% to $9.3 million as compared to $7.2 million for the same period a year ago. Adjusted EBITDA for the fiscal year increased 13% to $22.6 million as compared to $20.1 million a year ago.
Adjusted EBITDA per share (diluted) for the quarter increased 25% to $0.25 as compared to $0.20 for the same period a year ago. Adjusted EBITDA per share (diluted) for the fiscal year increased 11% to $0.61 as compared to $0.55 for the same period a year ago.
Cash, cash equivalents and marketable securities were $46.8 million at June 30, 2022, an 16% increase as compared to $40.2 million at June 30, 2021. NAPCO reports no debt as of June 30, 2022. Cash provided by operating activities for the fiscal year was $8.3 million as compared to $23 million for the same period last year. This decrease was said to be primarily due to inventories increasing by $19.3 million during fiscal 2022.
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