This quarter marked another revenue record for NAPCO Security Technologies, Inc. (NASDAQ: NSSC). In its most recent financial report, NAPCO announced it had made a record $43.5M in revenues for fiscal year Q3, a gain of 21% compared to the same period last year.
In response, the company’s stock surged over 16% in early trading. The company also announced it would initiate a quarterly cash dividend program for investors.
The company also touted a net income for the quarter of $10.8 million, yet another company record as compared to $3.3 million for the same period a year ago, a 231% increase.
In celebrating the company’s stellar financials, Richard Soloway, Chairman and President at NAPCO, comments “The strong sales and profitability generated during the first two quarters of fiscal 2023, continued during the third quarter, with Q3 record sales of $43.5 million, a 21% increase over last year’s Q3 and the tenth consecutive quarter of record year-over-year quarterly sales.
“Our net income of $10.8 million is the largest quarterly net income in the company’s history. Both equipment revenue and recurring service revenue, which increased 19% and 26%, respectively, contributed to the year-over-year overall sales growth. Gross margin for recurring service revenue increased to 90% and gross margins on hardware increased to 32%, compared to FY2022 Q3 margins of 87% and 19%, respectively.”
Its recurring service revenue (RSR) for the quarter clocked in at $15.1 million with the company expecting its full year RSR to hit approximately $63 million.
Cash and cash equivalents, other investments and marketable securities were $56.9 million at March 31, 2023 as compared to $46.8 million at June 30, 2022, a 22% increase. The company had no debt as of March 31, 2023.
Cash provided by operating activities for the nine months ended March 31, 2023 was $12.4 million as compared to $8.4 million for the same period last year, a 48% increase.
“Overall gross margins were 52%, a significant increase over last year’s Q3 gross margin of 42%. We were particularly pleased to see the strong growth in the gross margin on equipment revenues, which increased to 32% as compared to 19% in last year’s Q3 and 23% last quarter,” Soloway continues.
“This was primarily attributable to lower freight costs, increased overhead absorption from our Dominican Republic factory, which occurred as a result of the large equipment sales increase and a more favorable sales mix.”
Soloway called out strong sales for StarLink radios, as well as Alarm Lock and Marks locking products and Continental access control systems as attributable to the company’s massive success.
Following the company’s financials, Soloway also noted NAPCO’s ongoing focus regarding school security.
“With 131,000 K-12’s and 5,300 colleges and universities in the U.S, the need for improved security measures is greater than ever, and increased federal and state funding continues to be available to aid most schools and school districts. As such, our fully integrated technologies for school security continues to remain a top priority for NAPCO and we remain focused on further penetrating this market.
Soloway concludes, “We are excited to initiate our dividend program as the Company evolves and continues its strong growth patterns. NAPCO has created tremendous shareholder value over the years and the dividend program is another way for us to continue to do so in the future. We believe that it is important to balance our capital allocation priorities, including investing in growth opportunities, maintaining a strong balance sheet, and returning capital to shareholders.”
Another version of this article originally appeared on our sister site Security Sales & Integration 05.08.23. It has since been updated for CE Pro Audiences.
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