NSSC

Napco Security Technologies (NASDAQ:NSSC) held its fiscal fourth quarter 2026 earnings call on August 24, and the numbers it reported were close to a best-case scenario in the company's own history. Net revenue hit a quarterly record of $55.8 million, full-year revenue crossed the $200 million mark for the first time, and the company raised its dividend while sitting on $138 million in cash and zero debt. Buried in the same call, though, is a $16 million litigation charge still working its way through the income statement. The engine under all of this is Napco's StarLink radio business, which reports monitoring fees the way a cable company reports subscriptions. Recurring service revenue reached $25.3 million in the quarter, up 12.9%, and carried a gross margin of 90.1%. Based on July 2026 activity, the company said its annualized recurring revenue run rate is now around $103 million. Starlink radio sales grew 40% year over year and 30% sequentially in the quarter, which CEO Kevin S. Buchel called one of the highest growth rates in company history, adding, "Radio sold today becomes recurring revenue tomorrow." That growth has a long runway attached, since Buchel said the shift away from copper phone lines will keep running until the end of the decade across more than 2 million buildings still needing to switch to cellular communicators. The rest of the business held up its end too. Intrusion and access control sales rose 20.9% in the quarter, powered by a 35.8% jump in intrusion products including StarLink radios, and door locking revenue climbed 11.1% for the full year on a 19.7% increase in Alarm Lock sales. Adjusted EBITDA for the quarter grew 44.3% to $20.6 million, and full-year non-GAAP diluted EPS rose 34.5% to $1.60. Free cash flow reached $59.2 million for the year, funding a dividend increase to $0.17 per share, a 13.3% raise payable Oct. 2, 2026, while the balance sheet carried $138 million in cash and marketable securities as of June 30, 2026, and no debt at all. The headline profit numbers hide a rougher full-year picture in one spot. A $16 million litigation settlement recorded in the fiscal third quarter pulled full-year operating income down 1.3% to $45.6 million, even though quarterly operating income jumped 52.5%. Some of the quarter's gross margin expansion to 61.3% also came from a source that will not repeat indefinitely, since about 600 basis points of it was tariff refunds tied to the American Infrastructure and Industrial Power Act. CFO Andrew J. Vuono also flagged that data center expansion is pushing up the cost of electronic parts, even as the company says it can still ship on time. Growth was not evenly spread across the portfolio either. Access control product sales fell 13.8% in the quarter and 11% for the full year, offsetting the strength in intrusion, and R&D spending rose to $13.8 million for the year in part because of $4.1 million in Underwriters Laboratories certification costs for products not yet generating revenue. Buchel also declined to put a number or a date on the school, healthcare, airport, and government project pipeline he described, calling that kind of business lumpy and noting some deals could take years to close. All of this arrives as the company completes a leadership change, with founder Richard L. Soloway stepping back after 50 years to become executive chairman while Buchel takes over as CEO. Hedge fund ownership in Napco fell from 31 funds to 27 in the most recent count, a pullback that runs against the quarter's results. Short interest sits at 8.04% of the float, high enough to suggest a real bear camp has formed rather than routine hedging. The stock trades at a forward P/E of 24.69, as of August 31, pricing in continued double-digit growth from the recurring revenue side of the business. Napco heads into fiscal 2027 with a recurring revenue base compounding at double-digit rates and a balance sheet clean enough to keep raising the dividend while still funding new products like the MVP access control platform. It also heads in with a legal charge still working through the numbers and a new CEO settling into a job held by one person for fifty years. Starlink adoption and the copper-to-cellular conversion give the growth story real runway, but the tariff refunds propping up this quarter's margin and the sliding access control line are the parts that need to keep working. While we acknowledge the potential of NSSC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Future Stocks to Buy Under $10 and 12 Best Performing Semiconductor Stocks to Invest In. Disclosure: None. Follow Insider Monkey on Google News.

Image source: The Motley Fool. Monday, Aug. 24, 2026 at 11:00 a.m. ET Vice President of Investor Relations - Francis John Okoniewski Founder and Executive Chairman - Richard L. Soloway Chief Executive Officer and President - Kevin S. Buchel Chief Financial Officer - Andrew J. Vuono Operator: Good morning, ladies and gentlemen. And welcome to the NAPCO Security Technologies Fiscal Fourth Quarter 26 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. I would now like to turn the conference call over to Francis Okoniewski. VP, Investor Relations. Please go ahead. Francis John Okoniewski: Thank you, Jenny. Good morning, everyone. This is Francis John Okoniewski, Vice President of Investor Relations for NAPCO Security Technologies. Thank you for joining today's conference call to discuss our financial results for the fiscal fourth quarter and fiscal year 2026. By now, you should have all had the opportunity to review our earnings press release, which discusses our 5 fiscal fourth quarter and full year results. If you have not yet received it, a copy is available in the investor relations section of our website, wwwnapcosecurity.com, Joining me on today's call are Richard L. Soloway, Founder and Executive Chairman; Kevin S. Buchel, chief executive officer and president and Andrew Bono, our chief financial officer. Before we begin, I would like to review our forward-looking statement This presentation contains forward-looking statements based on current expectations estimates, forecasts, and projections, of future performance as well as management's judgment, beliefs, current trends, and anticipated product performance. These statements include, without limitation, comments regarding growth drivers, of the company's business, including school security products, recurring revenue services, potential market opportunities, the benefits of our recurring revenue products to customers and dealers, our ability to control expenses and costs, and the expected annual run rate for software as a service or SaaS recurring monthly revenue. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in those statements. These risks include, but are not limited to, the factors described in our SEC filings including our annual report on Form 10 k. Other unknown or unpredictable factors or underlying assumptions that later proved to be incorrect could also cause actual results to differ materially from those discussed in the forward-looking statements. Although we believe expectations are reflected in these statements, are reasonable, we cannot guarantee future results levels of activity, performance, or achievements. You should not place undue reliance on forward-looking statements. All information provided in today's press release and on this conference call is as of today's date, unless otherwise stated, and we undertake no duty to update such information except as required under applicable law. Throughout the presentation, management will discuss certain non GAAP financial results, We encourage you to refer to the reconciliation between GAAP and non GAAP results included in our press release. Before turning the call over to Dick, I want to note that we are actively planning our Investor Relations calendar for upcoming non deal roadshows and investor conferences. Investor outreach is important to NAPCO, and we appreciate the support of those who help us participate in these events. Over the coming weeks, we will participate in several key investor events including the Jefferies Industrial Conference in New York City on September 10, a virtual non deal roadshow hosted by Lake Street on September 16 and DA Davidson's 25th annual diversified industrials and services conference in Nashville, Tennessee later in September. In addition, NAPCO will be exhibiting at ISC East in New York City from November 3 through the 5th where we will be introducing a number of new products. ISC East is 1 of the security industry's premier events on the East Coast and we welcome investors and analysts who plan to attend to stop by our booth. With that, let me turn the call over to Richard L. Soloway, our Founder and Executive Chairman. Dick, the floor is yours. Richard L. Soloway: Thank you, Francis. Fiscal 26 was a year of exceptional performance. And meaningful progress for NAPCO. We strengthened our market position, expanded our capabilities, served our customers at a high level, and delivered results that reflect both the resilience of our business model and dedication of our employees. At the same time, we continue to an important evolution of our company. 5 after 5 decades of founder led growth, Kevin S. Buchel has assumed the role of chief executive officer and president. Having been an important member of our of our organization, for over 25 years. Kevin brings a deep understanding of our business, our customers, and our culture. To the role. I have taken on the role of founder and executive chairman allowing me to remain closely involved in the strategic direction of the company. while supporting Kevin and the management team in leading the business day to day. I built this company for 50 years, It is strong enough to evolve beyond my day to day leadership. And I am confident Kevin S. Buchel and I can remain focused on the long term future. This transition represents continuity. The values that have guided us for 50 years remain unchanged. While leadership structure positions us well for the next phase of growth, With that, I will turn the call over to Kevin S. Buchel. Kevin? Floor is yours. Kevin S. Buchel: Thank you, Dick. Good morning, everyone, and thank you for joining us. Before reviewing our fourth quarter and fiscal 26 results, I want to thank Dick Soloway for his comments and for his confidence in our leadership transition. Having worked alongside Dick for more than 25 years, I am honored to lead NAPCO into its next chapter. Our company would not be where it is today if not for the outstanding leadership and vision Dick has demonstrated since he founded the company. Back in 1.97 thousand. I also want to thank our employees, our dealers, our distributors, our integrators, and shareholders for their continued support. Now let's talk about the quarter and the year. I am pleased to report another outstanding quarter and a strong finish to fiscal 26. Our fourth quarter net sales increased 10% to a record $55.8 million driven by continued demand across our product portfolio and another quarter of double digit recurring service revenue growth. Equipment sales increased nearly 8% while recurring service revenue grew almost 13% to $25.3 million and produced another exceptional 90.1% gross margin. Our recurring service business continues to build long term shareholder value. Based on our July recurring revenues, our annualized recurring revenue run rate has reached approximately $103 million an important milestone that reflects the strength of our connected services strategy and the increasing value of our installed base. The combination of revenue growth and improved operating leverage produced exceptional profitability. During the quarter. Gross margin expanded to 61.3% GAAP net income increased approximately 53%. And adjusted EBITDA grew by more than 44%. For the full fiscal year, non GAAP net income increased 32% to a record $57.3 million while non GAAP diluted earnings per share increased 34.5% to $1.60. These results demonstrate the strength of our operating model. And our ability to convert revenue growth into meaningfully higher earnings. Looking at the full fiscal year, we generated record annual revenue of $202 million surpassing the $200 million mark for the first time in our company's history. We also delivered adjusted EBITDA of $66.7 million with an adjusted EBITDA margin of approximately 33% and generated more than $59 million of free cash flow. Our strategy remains consistent. We will continue investing in innovative products expanding our recurring service offerings strengthening our dealer and integrated relationships and executing with the financial discipline that has long differentiated NAPCO. As I assume the role of Chief Executive Officer, there is no change to the principles that we have made this company that have made this company successful. We have an outstanding management team and exceptional balance sheet and a growing base of recurring revenue and significant opportunities ahead. Working closely with Dick in his role as executive chairman, I am confident we are well positioned to continue delivering profitable growth and creating long term value for our shareholders. With that, I will turn the call over to our Chief Financial Officer, Andrew J. Vuono, to review the financial results in greater detail. Andrew? Andrew J. Vuono: Thank you, Kevin, and good morning, everyone. The momentum we generated during the first 3 quarters of fiscal 20 continued into the fourth quarter. Net revenue for the quarter increased 10% to a quarterly record of $55.8 million Recurring monthly service revenue continued to grow steadily, increasing 12.9% to $25.3 million primarily driven by ongoing activations of our StarLink radio fire communicators. Equipment revenue increased 7.7% to $30.5 million Sales of intrusion access control products increased 20.9% which was driven by continued strength within the intrusion category. Intrusion product sales, including StarLink radios increased 35.8% The total category was partially offset by a 13.8% decrease in access control product sales. Door locking revenue increased 2.2% for the quarter, This consisted of an 18.4% increase in Marks USA lock sales partially offset by a 5.6% decrease in alarm lock sales. Overall locking revenue was relatively flat compared with the fourth quarter of fiscal 25, when we experienced a pull through of lapping sales in response to anticipated tariff related price increases. For the year ending 6/30/2026, net revenue increased 11.4% to a record $202 million Recurring monthly service revenue increased 13% to $97.5 million primarily driven by steady activations of our StarLink radio product communicators. Based on our July 2026 recurring service revenue, our estimated prospective annual run rate is now approximately $103 million Equipment revenue for the year increased 10% to $105 million The full year increase in equipment revenue reflected growth across several product categories. Intrusion and Access Control product sales increased 7.8% driven by a 14.3% increase in Intrusion product sales, partially offset by an 11% decrease in access control product sales. Door locking revenue increased 11.1% for the year, reflecting a 19.7% increase in AlarmLock product sales partially offset by a 3.3% decrease in Marks USA sales. Gross profit for the quarter increased 27.7% to $34.2 million Gross margin expanded to 61.3% compared with 52.8% in the prior year period. Overall gross profit for the quarter benefited by approximately 600 basis points from AIIPA tariff refunds. Recurring service revenue continued to deliver strong profitability. Gross profit from recurring service revenue increased 12.3% to $22.8 million with a gross margin of 90.1%. Recurring revenue gross margins remained above 90% or consistent with the comparable quarter in fiscal 25. Gross profit from equipment revenue increased 76.2% to $11.4 million in the fourth quarter with gross margin expanding to 37.4% compared with $6.5 million and a gross margin of 22.9% in the prior period. Equipment margins benefited from the AIIPA tariff refunds discussed earlier and lower inventory reserve adjustments. These benefits were partially offset by Section 301 tariff costs during the period as well as increased technical service costs related to investments in AI solutions to improve customer experience. We are also seeing supply chain challenges as a result of data center expansion, which is putting pressure on the cost of electronic component parts. For the year ended June 2026, gross profit increased 18.6% to $120 million with gross margin expanding to 59.2%. Compared with $101 million and a gross margin of 55% in fiscal 25. Overall gross profit for the year benefited by approximately 50 basis points from the AIIPA tariff refunds. Recurring service revenue continued to generate strong profitability. Gross profit from recurring service revenue increased 12.1%, to $88 million with a gross margin of 90.3%, And recurring revenue gross margins continue to exceed 90% and remain consistent with fiscal 25. Gross profit from equipment revenue increased 41.2% to $31.8 million for the year ended June 2026, with gross margin expanding to 30.3% compared with $22.5 million and a gross margin of 23.6% in fiscal 25. Equipment margins benefited from product price increases implemented at the end of fiscal 25, lower discounts and sales allowances throughout the year, tariff refunds, and lower inventory reserve adjustments. These benefits were partially offset by higher tariff costs during the period and increased technical service costs. R&D costs increased 13.2% to $3.7 million in the fourth quarter representing 6.6% of net revenue compared with 6.4% in the prior year. The year ended June 2026, R&D costs increased 9.6% to $13.8 million representing 6.8% of net revenue compared with 6.9% in fiscal 25. The increase in R&D spend for both the quarter and full year was primarily driven by annual salary increases, the hiring of additional engineering staff and $4.1 million in UL approval costs for new products. SG&A expense increased 5.6% to $12.1 million in the fourth quarter representing 21.7% of net revenue. Compared with 22.6% in the prior year. The quarterly increase was primarily driven by higher professional fees, increased wages and benefits related to salary increases, and higher advertising costs, These increases were partially offset by lower trade show expenses due to timing of events. For the year ended June 2026, SG&A expenses increased 5.1% to $44.4 million representing 21.9% of net revenue compared with 23.2% in fiscal 2020. The full year increase was primarily due to higher commissions associated with increased equipment revenue, higher personnel related expenses from merit increases and the hiring of additional sales and information technology personnel, and increases in insurance, credit card processing fees, and trade show expenses. These increases are partially offset by lower legal and professional fees. Operating income for the quarter increased 52.5% to $18.4 million reflecting 10% revenue growth improved margins and the benefit of tariff refunds during the quarter. For the year ended June 2026, operating income decreased 1.3% to $45.6 million Full year operating income was negatively impacted by a $16 million legal settlement announced in our fiscal third quarter. The effective tax rate for the fourth quarter was 9.6% compared with 10.3% in the prior period. The lower quarterly effective tax rate was primarily due to tax benefits from exercise of equity awards. And for the year ended June 2026, the effective tax rate was 13.3%, which was consistent with fiscal 25. Net income for the fourth quarter increased 52.7% to $17.8 million or $0.50 per diluted share compared with $0.33 per diluted share in the prior year Net income represented 31.8% of net revenue for the quarter. And diluted EPS benefited by approximately $0.09 from tariff refunds. For the year ended June 2026, GAAP net income increased 0.9% to $43 million or $1.20 per diluted share. Non GAAP net income increased 32% to $57.3 million or $1.60 per diluted share compared with $1.19 per diluted share in fiscal 25. Non GAAP net income represented 28.3% of net revenue for the year. Adjusted EBITDA for the fourth quarter increased 44.3% to $20.6 million or $0.57 per diluted share. Compared with $0.40 per diluted share in the prior year. And adjusted EBITDA margin for the quarter was 36.8%. For the year, adjusted EBIT increased 27.9% to $66.7 million or $1.86 per diluted share compared with $1.43 per diluted share in fiscal 2025 And adjusted EBITDA margin for the year was 33%. Free cash flow for the quarter increased 19.9% to $17.2 million representing free cash flow margin of 30.9%. And for the full year, free cash flow increased 15.2% to $59.2 million representing a free cash flow margin of 29.3%. Turning to our balance sheet. We ended fiscal 2020 with substantial liquidity and no debt. As of June 2026, the company had $138 million in cash, cash equivalents and marketable securities, compared with $99.2 million as of June 2025, an increase of 38.7%. And the company had no debt as of June 2026. Working capital increased 19.6 % to $166 million as of June 2026, Capital expenditures was $405 thousand for the quarter. Compared with $237 thousand in the prior year period For the full fiscal year, CapEx was $1.9 million compared with $2.1 million for fiscal 2025. That concludes my formal remarks. I will now return the call to Kevin S. Buchel. Kevin S. Buchel: Thank you, Andrew. I wanna close with a few reflections on the year behind us and the 1 ahead. Fiscal 26 was a year of resilience. NAPCO once again demonstrated the durability of its business model. While staying focused on what matters most. Creating lasting value for our customers, partners, and shareholders. That durability is most evident in our recurring revenue, which grew 13% this year while sustaining the gross margins above 90%. This high-quality revenue stems from, generates consistent cash flow and provides funds for reinvestment in the business. The engine behind that performance remains strong, which is now widely regarded as the industry standard for commercial fire communications. 1 number I want you to take away from this call is this, sales of radio units in the fourth quarter grew 40% year over year and nearly 30% sequentially. This is among the highest growth rates in NAPCO's history. Radio sold today become recurring revenue tomorrow. So that figure says a great deal about the quality of the year ahead. We are winning that business alongside larger dealer and integrators And we expect those relationships in addition to many new ones we are working on, to continue helping us gain share. As I have stated before, the conversion from copper phone lines will continue until the end of the decade and we expect to win a large share of the over 2 million buildings that need to convert. And even after the conversion is complete a few years from now, we will continue to generate recurring revenue from new work where our StarLink radios are built into our fire and alarm panels. Our hardware business also delivered double digit year over year growth is a credit to our team's agility in adapting to shifting demand. Behind that growth, we see a healthy pipeline of project and contract opportunities in equipment These include larger opportunities across schools, healthcare, airports, multi dwelling housing, as well as government projects. By their nature, these projects arrive over time. Rather than all at once. Some are already in motion. While others should begin to move through the funnel over the coming quarters. We generally are not permitted to name them, and I will not put a number or a date on them. Today because work of this kind is lumpy, and it often extends across multiple years. Still, the breadth of what we see in that funnel is a genuine source of confidence as we look to fiscal 27 and beyond. Operationally, I could not be prouder We finished the year with $137 million in cash, and no debt. Looking ahead, we remain optimistic Tariff policy, supply chain challenges and market conditions are still dynamic, but we are not standing still. Our pricing actions are in place and we continue to diversify distribution, invest in automation and enhance the StarLink platform. That is how we sustain growth while protecting margin. As Andy mentioned earlier, our R&D spend increased 10% to $13.8 million Much of that spend relates to new recurring revenue products, Please come to ISC East November 4th and 5th, and you will get to see firsthand some of the new and exciting products that are forthcoming. Our balance sheet gives us real flexibility to invest organically. To act on strategic acquisitions if the right 1 comes along. And to return capital to shareholders. That last commitment is not theoretical. This morning, we announced an increase in our quarterly dividend. To $0.17 per share that is a 13.3% increase over the previous quarterly dividend. We are raising the dividend while carrying 0 debt and while continuing to fund every growth initiative in front of us. That is the kind of financial position this business has earned. Let me turn to 1 vertical in particular, school security. School safety remains 1 of the most urgent challenges of our time. And NAPCO is honored to be a proven partner to districts across the country. I am proud to announce that we recently received the 2026 annual Dean's List Award. This award sounds like it is for academics. But it is really an award that recognizes premier security providers serving private colleges and universities. School security continues to be a big problem in our country, and we will continue to work hard to provide the over 131 thousand K through 12 schools and 5.3 thousand colleges and universities state of the art products that protect students and faculty. Our divisions work together across this market from Trilogy and ArchiTech lock sets to enterprise scale Continental CA4K access control. These platforms are secure, scalable, and aligned with strict code guidelines. What sets us apart is our ability to unify locking access and alarm technology on a single interoperable platform. Knowing our solutions help protect students and staff every day is gratifying. And we see continued responsibility in that effort. In addition, as I mentioned earlier, we continue investing heavily in R&D to open new recurring revenue opportunities across the portfolio. 1 of the most exciting of these is MVP, our next generation cloud based access control platform. Built to integrate seamlessly with our locking hardware. MVP creates an entirely new recurring revenue stream for NAPCO and our dealers. With configurations for both enterprise customers and smaller facilities. We believe it could be a game changer. And a foundational contributor to growth in the years ahead. Extending our leadership into hosted access control and reinforcing the strategy at the core of this company. Interoperable hardware, paired with cloud services generating long term high margin recurring revenue. We exit fiscal 26 with a strong finish and enter fiscal 2027 with momentum, clarity, and the strongest financial foundation in our history. We have built a business model that delivers even in difficult environments. I am proud of what this team has accomplished and I am energized by what lies ahead. Thank you all for your support and for joining us in the future we are building. Our formal remarks are now concluded. And we would like to open the call for the Q&A session. Operator, please proceed. Operator: Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you wish to withdraw your question, you may press 2. Once again, that is star 1 if you wish to ask a question, Your first question is from Matt Summerville from D. A. Davidson. Your line is now open. Matt Summerville: Thanks. I was hoping first maybe you could elaborate on some of the supply chain challenges you are experiencing, what mitigation plans you are sort of working on as we speak, and is this hurting your ability to actually ship product? Just maybe a little more detail around that, then I have a follow-up. Kevin S. Buchel: So we have not been impacted at all as of yet by supply chain issues. This kind of reminds me of the COVID times. When parts were hard to get, Because they are hard to get, prices tend to go up. Back in that time, I would get on the phone with the presidents of the various suppliers. And bang away at solutions. Whether it is to keep the pricing stable whether it is to make sure we get our fair share of shipments, I am doing that again. And we are having a lot of success. We are very aggressive. On trying to keep things going the way they should. If we have purchase orders out there for various parts, and the suppliers try to increase it because there is shortages out there. We do not put up with that. We battle. We get the pricing that we were promised. And we make sure that we get our fair share of shipments. We have not been impacted at all, but it is fair for us to say that this is something we are going to have to deal with. In this upcoming fiscal year. And I think we have a lot of experience. We have been through this type of thing before. Different ways, but we know how to handle it. And my efforts will be 100% to make sure we get our components on time and at the pricing we have agreed to. Matt Summerville: Understood. I appreciate that. As a follow-up, can you maybe spend another moment talking about MVP, kind of where you are at in that sort of launch cycle, if you will, and if you have any early read on sell through or uptake or some other similar, you know, a KPI that we would wanna be tracking And then, also, I was wondering while appreciating you would not wanna comment on individual projects, is there a way to either quantitatively or qualitatively think about how that project funnel looks for you guys today versus a year or 2 ago? Thank you. Kevin S. Buchel: The MVP we have said give it until kind of the back end of the calendar year, which is coming up. October, November, that is when we expect to be able to report meaningful recurring revenue. that is our hope. We do not really wanna talk about it until we get to that point. it is not meaningful yet. We are working hard for it to become meaningful. Our expectations, it will get there. Whether it is a couple of months before or after that time frame, cannot be exactly sure. But by the end of this calendar year, we should be in a position where we are talking about this in a very favorable way. We will keep everybody posted. As it warrants. So that is on MVP. What was the second part, Matt? You had a second part of your question? Either appreciate yeah, appreciating that you cannot talk about individual projects in any sort of specificity. Is there a way that we can qualitatively or quantitatively look at the aggregate funnel you see for what you deem as a quote project and kinda compare that to how that is maybe looked a year or 2 ago. Yeah. it is clearly more than it is been. The issue we have is we do not necessarily get the order for the project until they are ready for it. Like, we know we are getting the project. The project's gonna be awarded to us. But we have to you know, I do not like to talk about things unless we have an order in place. So there are government ones. There are school ones. it is more than we have had. In the last couple of years. We will talk about them when, a, we get the order, whether it is shipped or not, and, b, we will talk about it if the entity, the customer, allows us to. Often, do not. They like to keep things quiet. But as I sit here today versus a year ago, this is much more than it is been in the last couple of years. Thanks, Kevin. Operator: Hello. May I know which conference you are looking to find? Thank you. Your next question is from Jim Ricchiuti from Needham and Company. Your line is now open. James Ricchiuti: Thank you. Congrats on the quarter. A couple of questions. Yes, obviously, you have got some moving parts to the margins. But if we exclude the tariff refund benefit, I am wondering if you could speak to the impact of the higher revenue contribution from the door locking portion of the business, which have better hardware margins. And the high contribution you saw from radio sales Is that the right way to think about the overall impact on equipment? Gross margins, which it seems like excluding the tariff refund benefit, we are down a bit sequentially. I am trying to get a sense also as to how we think about that dynamic in the first quarter. When you may still have some strength in door locking? Thank you. Kevin S. Buchel: So, Jim, when the radio sales are average, The good news is the equipment margins are going to be higher, higher, higher. Do not know what that is. You still can hear me. Yeah. I can, Kevin. it is gone. Okay. So the locking has the better margins, when locking is dominating. Then you might see higher margins. This quarter, the radios were tremendous. So that radio sales, what is it, a 20% gross margin item, is going to bring down the equipment margins in total However, it leads to the beautiful recurring revenue, which is the big prize In our case, it comes later. Because we sell to distribution. The distributor sits with it for a month or 2. Then the distributor sells it to the dealer. The dealer activates it, right away. Typically. And then we offer rebates So there is like a 5, 6, 7 month gap from the time we ship the radios, the hardware, till the time we feel the beauty of the recurring revenue. So yes, it brought down the margins. Equipment margins. Because it was so strong this quarter. But it is gonna bring our margins way up in total because of recurring that is coming. In the back end. So I will take this all day long. James Ricchiuti: I bet. The follow-up question I have is, you know, we are right about halfway through the fiscal first quarter. I wonder if you could talk a little bit about the demand trends you are seeing Are you seeing any changes in behavior with, you know, from some of your larger distributors either related to the macro or possibly even as they may be considering getting ahead of higher component costs. Kevin S. Buchel: You know, we do not usually like to comment on the months ahead. Here, we are talking about through June. But having said that, there is been no difference in what we are feeling. The distribution channel and I think you if you do channel checks, You probably talked to several of the distributors. it is in a good place. They were all in a good place now. You know, every now and then, it gets a little chaotic, a little lumpy. Right now, the distributors are in a good place. Their inventory levels are good. Their sell through is good. Hopefully, it stays that way. And our expectation is it will stay that way. Again, there is issues out there, supply chain issues. We have dealt with them before. We will deal with them again We have a lot of experience. On how to manage that. Just what it is part of what we do, and we will have to do it again. Okay. Thank you. I will jump back in the queue. Thanks, Jim. Operator: Thank you. Your next question is from Lance Vitanza from TD Cowen. Your line is now open. Lance Vitanza: Hi. Thanks, guys. Congrats on the quarter. I have a couple of questions, if I can. The first is on the recurring service revenues. And you talked earlier in the prepared remarks that we have seen sort of this $2 million increase per quarter in sort of the run rate level. As we look into fiscal 27, and you talked a little bit about MVP, you talked a little bit about the big radio sales in the in this quarter that we are discussing today. Do we think that there is some upside to that 2 million per quarter increase? You know? And if so, is it sort of you know, more back half weighted in terms of when we see that? Or how would you sort of expect the cadence to look as we go through 2027? Kevin S. Buchel: Well, because there is this delay of feeling the effects of the recurring revenue after you sell the radios, the hardware, and it is a and the delay is a good 6 months that suggests that the run rate should go up towards the back end of the year. Because if you get 6 months from now, when we will start to feel the recurring revenue, from what good work we just did on the hardware sales of the radio. So, yes, back end, my hope is that it goes up Now MVP, if it is a contributor by then, we hope it will be, that just adds to it. But even without that, I would expect the run rate to increase. Okay. Lance Vitanza: And then just sort of pulling back a little bit, you know, Kevin, I know you mentioned during your prepared remarks and Dick mentioned that this is the continuity is very important to you. That being said, you know, should we expect that there could be areas where your priorities, perhaps strategic, perhaps capital allocation, You know, do they perhaps differ from what NAP has historically emphasized? Kevin S. Buchel: I do not think so. I think you know, Dick and I are on the same page. Richard L. Soloway: We are looking potentially at acquisitions. But it is gotta be right. If it is right, certainly, we have the cash to do it. We have the balance sheet to support it. So the last 1 we did was 17 years ago, 18 years ago. So it is time to do 1, but only if it is right. You saw we have the factory capacity also. To handle it. If it fits our criteria. Right. So with synergies there are on the manufacturing side. The synergies on overheads in the factory. To raise a margin. So we are looking very hard at a couple of them right now. Right. Kevin S. Buchel: And so that is you know, maybe it will it will feel different when it happens, but we are we are looking at it. But you saw our EBITDA margin for the quarter. it is pushing 40%, and that is 1 of the goals that we have here. Wanna get it over 40. Nobody thought we would get close to that. We are getting pretty close. So I am not gonna wanna do anything that is gonna screw that up. But we are gonna wanna do something that could enhance it. So if that comes about, we will do it. You also saw that we increased our R&D by 10%. that is because we are creating a sequel to Starlink. Which will keep the momentum going. In the future. Lance Vitanza: Thank you both, and congratulations again. Kevin S. Buchel: Thank you, Lance. Operator: Your next question is from Jason Schmidt from Lake Street. Your line is now open. Jaeson Schmidt: Hey, guys. Thanks for taking my questions. Just curious if you could comment what you are seeing at ADI? And specifically, how expanding your product portfolio with them is progressing? Kevin S. Buchel: ADI has been a great partner since we started up with them. I guess it is now about 3 years ago. They are very organized, buttoned up, They buy a lot of intrusion products, a lot of fire radios. They have a lot of relationships with some of these large dealers that we are now adding to our list of dealers who use our products. And so it is working great on that end. We are trying to get them into the locking side And they have actually trained many of their branches on the MVP products. So that could be very good going forward. Because if we could get that big, strong machine that they are interlocking, it is gonna be amazing for us. So we are working on that while continuing to sell them a lot of intrusion. Products. Jaeson Schmidt: Okay. that is helpful. And then just as a follow-up, going after your comments on the school market, just curious if the market or the university market is stronger based on what you currently have in the funnel? Kevin S. Buchel: Both. They are both strong. The need is in all areas. When we hear the horrific stories that come out, a lot of them are in universities. A lot of them are in k through 12. Both. And even though these things have been going on for so long, so many of these schools still are without equipment. And so the challenge for us is to get out there. it is a big country. it is get our integrators to understand what products we have to offer and to get in there. I was happy to see at the ISC West show. Which was in March, The folks from Pepperdine were there. And Pepperdine is now they were a big customer. They did a lot of things. They did all their dorms. They did all the classrooms, the admin offices, etcetera. Remote campuses, they are ready for more now. They have added more dorms and they love our products. And so this is an ongoing thing. So even with some of the schools that have used our product, they come back for another round. Gotcha. Thanks a lot, guys. Jaeson Schmidt: Thank you. Operator: Thank you. Once again, that is star 1 should you wish to ask a question. And your next question is from Jeremy Hamblin from Craig Hallum. Your line is now open. Jeremy Hamblin: Hey. This is Will on for Jeremy. Thanks for taking my questions. Just wanted to touch on your discount and pricing strategy for the year. I think you would previously noted a little less discounting to smooth out orders and kinda support higher margins. But guess, just how should we be thinking about that strategy in fiscal 27 and then some of the puts and takes in getting equipment and margins back up to 30%? Kevin S. Buchel: I am going to let Andy answer this 1. Andy, is a great CFO, and he spends time trying to improve our margins with the discounting. So he works with the sales team, He looks at this closely. So, Andy, why do not you answer this 1? Andrew J. Vuono: Okay. So I would say fiscal 26 is reflecting the improved discipline, 1 around our rebate programs So we have volume rebates with our with the vast majority of our distributors that if they hit certain revenue thresholds. We are more in the program as far as framing the program, what criteria they need to hit. What bogeys they need to attain, I think we saw the benefits of that in fiscal 26. And then on top of that, a concerted effort to 1 lessen the amount of orders and activity we have at the end of the quarter, which, you know, we will never get away from. But to have the sales force be more focused on trying to secure those orders earlier, and really negotiating hard with our distributors to get away from you know, large discounts. So I think it just reflects the discipline that we saw in fiscal 26, and we are expecting more of you know, into 2027. You know, I have I constantly have conversations with our chief revenue outside, you about what our strategies are, our pricing and or discounting. So I would expect us to hopefully improve on where we are. I think we picked up 2 points on the equipment revenue in fiscal 26. So our goal is to continue banging away with that and raise that efficiencies even more. Jeremy Hamblin: Okay. that is that is helpful. And then just besides ISUS falling in Q4, is there anything else to consider in terms of sort of incremental OpEx for 2027 whether that is on the R&D side or any sort of SG&A build out? Needed over the coming quarters? Andrew J. Vuono: I mean, I will weigh on the SG and A. On the SG and A, no, nothing in particular other than I expect us to add know, some more talent to our internal IT group, you know, as once it is meet the needs of the organization to respond to obvious risks out there regarding cyber, But outside of that, any unknowns with some of the litigation we are dealing with on legal, I do not expect any other significant changes in the SG&A. I will let Kevin comment on the R&D. Kevin S. Buchel: Yeah. On the on the R&D, I have a lot of confidence. You know? Chief technology officer. he is great. he is very smart guy with products. And he is very good with budgets. So when he says, I need more help, I say, how many you need? We have the money to do it. I give him whatever he needs because when we give him what he needs, that leads to more recurring revenue products. And so the spend will go up. It will not be anything crazy. It will be what is necessary to keep the development going so that we come out with more innovative, exciting products all the time. Jeremy Hamblin: Got it. that is helpful. Thanks for taking my questions. Kevin S. Buchel: You got it. Operator: Thank you, ladies and gentlemen. Once again, should you have additional questions, you may press 1. It seems there are no further questions at this time. Please proceed with the closing remarks. Kevin S. Buchel: Okay. So thank you, everybody, for participating in today's conference call. As always, should you have any further questions, feel free to call Richard to call Francis, Andrew, or myself for further information. We thank you for your interest and support. And we look forward to speaking with you all again in a few months to discuss NAPCO's fiscal Q1 27 results. Thank you all. Have a great day. Operator: Thank you. Ladies and gentlemen, conference has now ended. Thank you all for joining. You may now disconnect your lines. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Napco Security (NSSC) Q4 2026 Earnings Call Transcript was originally published by The Motley Fool

Napco’s second quarter was marked by robust demand across its security systems portfolio, with management crediting double-digit growth in recurring service revenue and a sharp uptick in StarLink radio sales as core drivers. CEO Kevin S. Buchel attributed the performance to “another quarter of double-digit recurring service revenue growth,” highlighting the company’s ability to convert hardware sales into high-margin, subscription-based income. Management also noted that gross margin expansion benefited from tariff refunds and disciplined pricing strategies. Is now the time to buy NSSC? Find out in our full research report (it’s free). Revenue: $55.81 million vs analyst estimates of $52.55 million (10% year-on-year growth, 6.2% beat) Adjusted EPS: $0.50 vs analyst estimates of $0.38 (31.6% beat) Adjusted EBITDA: $20.56 million vs analyst estimates of $16.81 million (36.8% margin, 22.3% beat) Operating Margin: 32.2%, up from 25.1% in the same quarter last year Market Capitalization: $1.26 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Matt Summerville (D.A. Davidson) asked about ongoing supply chain challenges and mitigation measures. CEO Kevin S. Buchel said Napco has not yet experienced disruptions, emphasizing active negotiations with suppliers to maintain shipments and pricing. Matt Summerville (D.A. Davidson) followed up on the MVP platform’s launch timing and early performance indicators. Buchel explained MVP is expected to contribute to recurring revenue meaningfully by late 2026, with updates to follow as adoption ramps. James Ricchiuti (Needham and Company) inquired about margin dynamics, especially the impact of radio versus locking product mix. Buchel noted that while high radio sales temporarily lower equipment margins, they ultimately boost recurring revenue and overall profitability. Lance Vitanza (TD Cowen) questioned whether the pace of recurring revenue gains could accelerate, particularly as MVP scales. Buchel stated the lag from hardware sales to recurring revenue will likely result in stronger growth in the back half of the year. Jaeson Schmidt (Lake Street) asked about progress with distributor ADI and market strength in schools versus universities. Buchel responded that ADI is expanding its product training, and both education segments remain strong, with ongoing repeat orders from institutions like Pepperdine University. In upcoming quarters, the StockStory team will be monitoring (1) the pace at which StarLink radio installations convert to recurring revenue, (2) early traction and customer adoption of the MVP platform following its broader rollout, and (3) the company’s ability to manage supply chain and cost pressures without impacting product delivery or margins. Additionally, we will watch for evidence of project wins in education and public sector markets. Napco currently trades at $35.20, down from $38.09 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Napco Security Technologies (NSSC) reported record Q4 and full year 2026 financial results, with results surpassing market expectations. The company posted its highest quarterly and annual revenues on record, and operating margins improved meaningfully. Recurring service revenue grew with high profitability, reinforcing the importance of this segment in the overall business mix. Management announced an increased dividend, indicating confidence in the company’s financial position and outlook. Consider reviewing other income focused stocks in the same sector alongside this update on Napco Security Technologies via 12 dividend fortresses. Napco Security Technologies develops and sells electronic security systems for commercial, residential, institutional, industrial, and governmental customers in the US and internationally, so these record results give investors insight into demand across a wide mix of end markets. With a market cap of about $1.3b, it is a mid sized player within the broader electronic security industry. Is Napco Security Technologies's dividend sustainable? Check out what every dividend investor needs to know in our dividend analysis. For investors, the key signal in Napco Security Technologies' update is the higher quarterly dividend of US$0.17 per share alongside strong Q4 profitability, while full year net income of US$43.03 million was roughly in line with the prior year. The combination of record revenue and a flat full year earnings base suggests management is comfortable returning more cash even without a big step up in annual profit. That can indicate confidence in recurring service cash flows highlighted in the Narrative, and in the balance sheet capacity to support higher payouts without stretching the business. If we take a look at the community Narrative for Napco Security Technologies, we can see how this news fits into the bigger investment story. The practical checkpoint now is how future dividend decisions line up with earnings and cash generation. Watch the next few quarterly reports to see whether recurring service revenue and operating margins stay healthy enough for the dividend to remain at a conservative share of earnings, rather than pushing the payout ratio higher over time. For the full picture including more risks and rewards, check out the complete Napco Security Technologies analysis. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NSSC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Revenue: Fiscal Q4 2026 net sales increased 10% to a record $55.8 million; full-year revenue increased 11.4% to a record $202.3 million. Recurring Service Revenue: Q4 recurring service revenue grew almost 13% to $25.3 million; full-year recurring service revenue increased 13% to $97.5 million. Equipment Revenue: Q4 equipment revenue increased 7.7% to $30.5 million; full-year equipment revenue increased 10% to $104.8 million. Gross Margin: Q4 gross margin expanded to 61.3% (benefited by ~600 basis points from IEEPA tariff refunds); full-year gross margin expanded to 59.2%. Recurring Service Gross Margin: Q4 recurring service gross margin was 90.1%; full-year recurring service gross margin was 90.3%. Net Income: Q4 GAAP net income increased 52.7% to $17.8 million, or $0.50 per diluted share; full-year GAAP net income increased 0.9% to $43 million, or $1.20 per diluted share. Non-GAAP Net Income: Full-year non-GAAP net income increased 32% to a record $57.3 million, or $1.60 per diluted share. Adjusted EBITDA: Q4 adjusted EBITDA increased 44.3% to $20.6 million; full-year adjusted EBITDA increased 27.9% to $66.7 million. Free Cash Flow: Q4 free cash flow increased 19.9% to $17.2 million; full-year free cash flow increased 15.2% to $59.2 million. Cash Position: Ended fiscal 2026 with $137.6 million in cash equivalents and marketable securities and no debt. Product Line Performance: Q4 intrusion and access control product sales increased 20.9%; intrusion product sales (including StarLink radios) increased 35.8%; access control product sales decreased 13.8%; door locking revenue increased 2.2%. Recurring Revenue Run Rate: Based on July 2026 recurring revenues, annualized recurring revenue run rate reached approximately $103 million. Dividend: Announced an increase in quarterly dividend to $0.17 per share, a 13.3% increase. Is NSSC fairly valued? Test your thesis with our free DCF calculator. Release Date: August 24, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record Q4 net sales of $55.8 million, up 10% year-over-year, with full-year revenue surpassing $200 million for the first time. Recurring service revenue grew 12.9% in Q4 to $25.3 million, with gross margins exceeding 90%, and annualized run rate reached approximately $103 million. Strong profitability: Q4 GAAP net income up 52.7%, adjusted EBITDA up 44.3%, and full-year non-GAAP EPS up 34.5% to $1.60. Robust balance sheet with $137.6 million in cash and no debt, supporting a 13.3% dividend increase to $0.17 per share. StarLink radio unit sales surged 40% year-over-year in Q4, positioning for future recurring revenue growth, and new MVP cloud-based access control platform is expected to create additional recurring revenue streams. Access control product sales decreased 13.8% in Q4 and 11% for the full year, partially offsetting gains in other categories. Supply chain challenges due to data center expansion are pressuring electronic component costs, though not yet impacting shipments. Equipment gross margins were negatively impacted by strong radio sales (lower-margin hardware) and higher tariff costs, despite tariff refund benefits. Full-year operating income declined 1.3% due to a $16 million legal settlement in Q3. Tariff policy and supply chain dynamics remain uncertain, with potential for continued cost pressures in fiscal 2027. Q: Can you elaborate on the supply chain challenges you're experiencing, what mitigation plans you're working on, and whether this is hurting your ability to ship product?A: Kevin Buchel, CEO, stated that the company has not been impacted by supply chain issues as of yet. He noted that component shortages are driving prices up, but he is aggressively engaging with suppliers to ensure stable pricing and fair share of shipments, similar to his approach during the COVID-19 pandemic. He emphasized that while the company has not been affected, it will need to manage these challenges in the upcoming fiscal year. Q: Can you spend another moment talking about MVP, where you're at in the launch cycle, and if you have any early read on sell-through or uptake? Also, is there a way to think about how the project funnel looks today versus a year or two ago?A: Kevin Buchel, CEO, said that MVP, the next-generation cloud-based access control platform, is expected to report meaningful recurring revenue by the back end of the calendar year (October or November). He declined to provide early KPIs as it is not yet meaningful. Regarding the project funnel, he noted it is "clearly more than it's been in the last couple of years," including government and school projects, but declined to provide specifics until orders are in place and customers allow disclosure. Q: Excluding the tariff refund benefit, can you speak to the impact of the higher revenue contribution from the door locking portion of the business and the high contribution from radio sales on overall equipment gross margins?A: Kevin Buchel, CEO, explained that locking products have better margins, but the strong radio sales, which carry a lower gross margin of around 20%, brought down overall equipment margins. However, he emphasized that radio sales lead to high-margin recurring revenue, which is the "big prize." He noted there is a five-to-seven-month gap between shipping radios and feeling the recurring revenue benefit, but he would "take this all day long" given the long-term payoff. Q: We're about halfway through the fiscal first quarter. Are you seeing any changes in behavior from larger distributors, either related to the macro or possibly getting ahead of higher component costs?A: Kevin Buchel, CEO, said there has been no difference in what the company is feeling. He noted that distributors are in a "good place" with healthy inventory levels and good sell-through. He acknowledged potential supply chain issues but expressed confidence in the company's experience managing such challenges. Q: On recurring service revenues, we've seen about a $2 million increase per quarter in the run rate. As we look into fiscal '27, do we think there's upside to that, and is it more back-half weighted?A: Kevin Buchel, CEO, confirmed that the run rate should increase towards the back end of the year due to the six-month delay between radio hardware sales and the resulting recurring revenue. He also noted that MVP could add to this growth if it becomes a contributor by then, but even without it, he expects the run rate to increase. Q: Should we expect that your priorities, perhaps strategic or capital allocation, might differ from what NAPCO has historically emphasized given the leadership transition?A: Kevin Buchel, CEO, stated that he and Mr. Soloway are on the same page. They are looking at potential acquisitions but only if they are the right fit, noting the last one was 17-18 years ago. Richard Soloway, Executive Chairman, added that they are looking "very hard at a couple of them right now" and have factory capacity to handle them. Kevin also highlighted the goal of pushing EBITDA margin over 40%, and any acquisition would need to enhance, not hurt, that goal. Q: What are you seeing at ADI, and how is expanding your product portfolio with them progressing?A: Kevin Buchel, CEO, said ADI has been a great partner since they started about three years ago. They buy a lot of intrusion products and fire radios, and ADI has relationships with large dealers that NAPCO is now adding. The company is working to get ADI into the locking side, and ADI has already trained many branches on MVP products. Kevin noted that if they can get ADI's "big strong machine" into locking, it would be "amazing" for NAPCO. Q: Is the K-12 market or the university market stronger based on what you currently have in the funnel?A: Kevin Buchel, CEO, said both markets are strong, as the need exists in all areas. He noted that many schools still lack equipment despite ongoing incidents. He cited Pepperdine as an example of a customer that has come back for another round of products after adding more dorms and classrooms, showing the ongoing nature of the opportunity. Q: Can you touch on your discount and pricing strategy for the year and the puts and takes in getting equipment margins back up to 30%?A: Andrew Vuono, CFO, said fiscal 2026 reflected improved discipline around rebate programs, with more stringent criteria for distributors. The company also focused on lessening end-of-quarter order activity and negotiating harder to avoid large discounts. He expects this discipline to continue into 2027, with a goal of improving on the two-point gain in equipment margins seen in fiscal 2026. Q: Besides ISC East falling in Q4, is there anything else to consider in terms of incremental OpEx for '27, whether on the R&D side or SG&A build-out?A: Andrew Vuono, CFO, said there is nothing particular on SG&A other than adding talent to the internal IT group to address cyber risks. Kevin Buchel, CEO, added that R&D spend will increase as needed to support the Chief Technology Officer's product development efforts, which lead to more recurring revenue products. He emphasized the spend will be "what's necessary" to keep innovation going. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in NAPCO Security Technologies, Inc.? Here are five stocks we like better. Record fiscal 2026 performance: Full-year revenue surpassed $200 million for the first time, rising 11.4% to $202.3 million, while adjusted EBITDA increased 27.9% to $66.7 million and free cash flow rose 15.2% to $59.2 million. Recurring revenue continued to drive growth: Fourth-quarter recurring monthly service revenue increased 12.9% to $25.3 million with a 90.1% gross margin, and the prospective annual recurring revenue run rate reached approximately $103 million. Leadership and strategy are evolving: Kevin Buchel became CEO and president as founder Dick Soloway moved to executive chairman. NAPCO plans to invest in connected-services products such as its MVP cloud platform, automation and distribution, while evaluating acquisitions and raising its quarterly dividend 13.3% to $0.17 per share. 3 Security Stocks Benefiting From The Growing Public-Safety Trend NAPCO Security Technologies (NASDAQ:NSSC) reported record fiscal fourth-quarter and full-year revenue for fiscal 2026, supported by growth in recurring service revenue, intrusion products and radio sales. The company also outlined a leadership transition in which longtime executive Kevin Buchel became Chief Executive Officer and President, while founder Dick Soloway moved into the role of Founder and Executive Chairman. “Fiscal 2026 was a year of exceptional performance and meaningful progress for NAPCO,” Soloway said. He said the transition was intended to provide continuity, with Buchel bringing more than 25 years of experience at the company to the CEO role. → 3 Beaten-Down Stocks That Haven’t Gotten the Message About the S&P 500’s Record Run Is Security Products Maker Napco Setting Up For Fresh Rally? Fourth-quarter net sales rose 10% from a year earlier to a record $55.8 million. Recurring monthly service revenue increased 12.9% to $25.3 million, primarily driven by ongoing activations of StarLink radio fire communicators, while equipment revenue increased 7.7% to $30.5 million. Recurring service revenue generated a 90.1% gross margin during the quarter. Total gross profit increased 27.7% to $34.2 million, and consolidated gross margin expanded to 61.3% from 52.8% in the prior-year period. Chief Financial Officer Andrew Vuono said quarterly gross profit benefited by approximately 600 basis points from IEEPA tariff refunds. → 3 Stocks Came Roaring Back—Now They’re Flashing Warning Signs Equipment gross margin rose to 37.4% from 22.9% a year earlier. Vuono said equipment margins benefited from tariff refunds and lower inventory-reserve adjustments, partly offset by Section 122 tariff costs and higher technical service costs associated with investments in artificial-intelligence solutions intended to improve customer experience. GAAP net income increased 52.7% to $17.8 million, or $0.50 per diluted share, compared with $0.33 per diluted share a year earlier. Diluted earnings per share benefited by approximately $0.09 from tariff refunds, according to Vuono. Adjusted EBITDA increased 44.3% to $20.6 million, with an adjusted EBITDA margin of 36.8%. → 2 Biotech Stocks Shaping Up for Major Breakouts For the year ended June 30, 2026, NAPCO reported net revenue of $202.3 million, up 11.4% and surpassing the $200 million threshold for the first time. Recurring monthly service revenue increased 13% to $97.5 million, while equipment revenue rose 10% to $104.8 million. Based on July recurring service revenue, the company estimated that its prospective annual recurring revenue run rate had reached approximately $103 million. Buchel described the milestone as evidence of the company’s connected-services strategy and growing installed base. Full-year gross profit increased 18.6% to $119.8 million, with gross margin rising to 59.2% from 55.6%. Recurring service gross profit increased 12.1% to $88 million, maintaining a 90.3% gross margin. Equipment gross profit increased 41.2% to $31.8 million, with equipment margin improving to 30.3% from 23.6%. Adjusted EBITDA rose 27.9% to $66.7 million, producing a 33% adjusted EBITDA margin. Free cash flow increased 15.2% to $59.2 million. GAAP net income for the year increased 0.9% to $43 million, or $1.20 per diluted share. Operating income declined 1.3% to $45.6 million, reflecting the impact of a $16 million legal settlement announced during the fiscal third quarter. Non-GAAP net income rose 32% to about $57 million, or $1.60 per diluted share, compared with $1.19 per diluted share in fiscal 2025. The company ended fiscal 2026 with $137.6 million in cash equivalents and marketable securities, up 38.7% from the prior year, and no debt. Working capital increased 19.6% to $165.5 million. Intrusion and access-control product sales increased 20.9% in the fourth quarter, driven by a 35.8% rise in intrusion product sales. Access-control product sales declined 13.8%. Door-locking revenue increased 2.2%, with Marks USA lock sales up 18.4% and Alarm Lock sales down 5.6%. Buchel said fourth-quarter radio-unit sales increased 40% year over year and nearly 30% sequentially. He noted that radio hardware carries lower equipment margins, but sales produce future recurring revenue after a delay caused by distribution, dealer sales and activation timing. “Radios sold today become recurring revenue tomorrow,” Buchel said, adding that the company expects the benefit from recent radio sales to become more visible in its recurring revenue run rate toward the back half of fiscal 2027. Management said it has not yet experienced a direct impact on its ability to ship products from supply-chain challenges, though it expects component availability and pricing to remain an issue during the coming fiscal year. Buchel said data-center expansion has contributed to supply constraints for electronic parts, but the company is working with suppliers to maintain agreed pricing and secure product allocations. NAPCO said it plans to continue investing in product development, recurring-revenue offerings, automation and distribution diversification. Research and development expense rose 9.6% for the full year to $13.8 million, driven by compensation increases, additional engineering personnel and product approval costs. Buchel said future R&D spending would increase as needed to support new products, particularly those designed to generate recurring revenue. The company highlighted MVP, a cloud-based access-control platform designed to integrate with its locking hardware. Buchel said MVP was not yet a meaningful contributor to recurring revenue but that management expects to be able to discuss its progress more favorably by the end of calendar 2026. Management also cited a growing pipeline of equipment opportunities involving schools, healthcare facilities, airports, multi-dwelling housing and government projects. Buchel said the aggregate project funnel was larger than it had been over the past two years, while noting that such projects are often awarded and delivered over extended periods. NAPCO increased its quarterly dividend 13.3% to $0.17 per share. Buchel and Soloway also said the company is evaluating potential acquisitions, though they emphasized that any transaction would need to meet its financial and strategic criteria. NAPCO Security Technologies, Inc (NASDAQ: NSSC) is a designer and manufacturer of electronic security solutions for commercial and residential applications. The company's product portfolio spans intrusion and fire alarm control panels, alarm communicators, access control locks and readers, as well as a broad range of peripheral modules and integrated security accessories. NAPCO's offerings are engineered to deliver scalable, networked security systems suitable for new installations and retrofit projects alike. Key product lines include hybrid alarm control panels that support both wired and wireless peripherals, cellular and IP alarm communicators for reliable central station reporting, and the acclaimed “Alarm Lock” series of standalone and networked electronic door locks. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "NAPCO Security Technologies Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

NAPCO Security Technologies, Inc. (NASDAQ:NSSC) shares soared 20.50% in pre-market trading on Monday after the security technology company delivered fourth-quarter results that exceeded Wall Street expectations, supported by record revenue and continued growth in its recurring services business. Adjusted earnings came in at $0.50 per share, beating the analyst consensus estimate of $0.39 by $0.11. Quarterly revenue reached a record $55.8 million, ahead of expectations of $53.18 million and 10.0% higher than the $50.7 million generated in the corresponding period last year. The quarterly figures included an approximately $0.09 per-share benefit from tariff refunds. NAPCO’s recurring service revenue increased 12.9% year on year to $25.3 million and delivered a gross margin of more than 90%. Equipment revenue also advanced, rising 7.7% from a year earlier to $30.5 million. Overall gross margin expanded significantly to 61.3% from 52.8% in the previous year’s fourth quarter. Tariff refunds contributed approximately 600 basis points to the latest margin figure. “Our Fiscal Q4 performance completes a strong close to our fiscal year end and reflects continued positive financial results,” said Kevin Buchel, CEO and President. “We achieved record Q4 revenue and Adjusted EBITDA of $55.8 and $20.6 million, respectively, which was bolstered by our recurring service revenue with its continued year over year double digit growth.” For the full 2026 fiscal year, NAPCO generated record revenue of $202.3 million, representing an increase of 11.4% from $181.6 million in fiscal 2025. Adjusted diluted earnings per share climbed 34.5% to $1.60 from $1.19 in the previous year, highlighting stronger underlying profitability alongside the company’s revenue expansion. Full-year reported results were affected by a $16 million litigation settlement charge recorded during the third quarter. NAPCO said the charge reduced diluted earnings per share by approximately $0.40. Alongside its results, NAPCO’s board declared a quarterly dividend of $0.17 per share, an increase of 13.3%. The dividend is scheduled to be paid on October 2, 2026, to shareholders of record as of September 11, 2026. The higher shareholder payout, combined with record annual revenue and double-digit growth in adjusted EPS, added to the positive tone surrounding the earnings announcement. The 20.50% pre-market surge in NASDAQ:NSSC reflected a combination of better-than-expected earnings, record quarterly revenue and continued momentum in NAPCO’s high-margin recurring services operation. While tariff refunds provided a meaningful benefit to fourth-quarter earnings and margins, underlying revenue growth remained positive across both recurring services and equipment. With full-year sales reaching a record level, adjusted EPS rising more than 30% and the dividend increasing, the latest results provided investors with several indications of continued operational and financial momentum heading into the new fiscal year. Napco Security Technologies stock price

AMITYVILLE, N.Y., Aug. 24, 2026 /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 fourth quarter and fiscal year 2026. Results are reported in accordance with U.S. generally accepted accounting principles ("GAAP") and are also reported adjusting for certain items ("Non-GAAP"). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release. Fourth Quarter 2026 Financial Results as Compared to Fourth Quarter 2025 Net revenue increased 10.0% to a quarterly record $55.8 million, as compared to $50.7 million Recurring service revenue ("RSR") increased 12.9% to $25.3 million, with over 90% gross margin, as compared to $22.4 million Equipment revenue increased 7.7% to $30.5 million, compared to $28.3 million Gross profit margin of 61.3%, which included a benefit of approximately 600 basis points from tariff refunds, vs 52.8% in prior fiscal year quarter Net Income increased 52.7% YoY to a quarterly record $17.8 million, as compared to $11.6 million Diluted Net Income per share increased 51.5% to $0.50, which is inclusive of a benefit of approximately $0.09 from net tariff refunds, as compared to $0.33 Non-GAAP Adjusted EBITDA increased 44.3% to a quarterly record $20.6 million with an Adjusted EBITDA Margin of 36.8% Full Year 2026 Financial Results as Compared to Full Year 2025 Net revenue increased 11.4% to a record $202.3 million, as compared to $181.6 million RSR increased 13.0% to $97.5 million, with over 90% gross margin, as compared to $86.3 million RSR has a prospective annual run rate of approximately $103 million based on July 2026 recurring service revenues Equipment revenue increased 10.0% to $104.8 million, compared to $95.3 million Gross profit margin of 59.2%, which included a benefit of approximately 50 basis points from tariff refunds, vs 55.6% in prior fiscal year Net Income decreased (.9%) to $43.0 million, as compared to $43.4 million. Full year net income and net income per share were negatively affected by a $16 million litigation settlement charge taken in Q3 of fiscal 2026 Diluted Net Income per share increased 0.8% YoY to $1.20, which is inclusive of a benefit of approximately $0.03 from net tariff refunds and negative impact of approximately $0.40 from net litigation settlement costs, as compared to $1.19 Non-GAAP Net Income increased 32.0% to $57.3 million, as compared to $43.4 million Non-GAAP Diluted Net Income per share increased 34.5% YoY to $1.60, as compared to $1.19. Non-GAAP Adjusted EBITDA increased 27.9% YoY to a record $66.7 million, with an Adjusted EBITDA Margin of 33.0% The Board declared a quarterly dividend of $0.17 per share, payable on October 2, 2026 to shareholders of record on September 11, 2026. Kevin Buchel, CEO and President, commented, "Our Fiscal Q4 performance completes a strong close to our fiscal year end and reflects continued positive financial results. We achieved record Q4 revenue and Adjusted EBITDA of $55.8 and $20.6 million, respectively, which was bolstered by our recurring service revenue with its continued year over year double digit growth. We saw a rebound in our equipment sales, which increased 10.0% for the year, driven by strong demand for our door-locking products as well as a 36% growth in sales of our intrusion products in Q4, which is primarily a result of increased sales of our StarLink fire communicators. Our RSR continues to deliver gross margins of over 90%, and represents approximately 45% of total revenue in Q4, and has a prospective run rate of approximately $103 million based on our July 2026 recurring service revenue. Our revenue growth and margin expansion in Q4 resulted in a 53% increase in net income, a 44% increase in Non-GAAP Adjusted EBITDA and our Adjusted EBITDA margin was 36.8% as compared to 28.1% in Q4 of Fiscal 2025. As such we are pleased to continue our dividend program and will be increasing the quarterly dividend by 13.3% to $0.17 per share, which will be paid on October 2, 2026, to shareholders of record on September 11, 2026." Conference Call Information Management will conduct a conference call at 11 a.m. ET today, August 24, 2026, and in order to participate please go to the Investor Relations section of the Company website at https://investor.napcosecurity.com/events-presentations or choose https://app.webinar.net/OM3bGdQ8gY1. Alternatively, interested parties may participate in the call by dialing (US) 1-800-836-8184 or 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 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; the opportunities for fire alarm products; and our ability to execute our business strategies. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements because 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 proved 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, non-GAAP net income, non-GAAP net income per share (diluted), non-GAAP net income margin, Adjusted EBITDA, Adjusted EBITDA per share (diluted), Adjusted EBITDA per share margin, Free Cash Flow and Free Cash Flow margin. We define non-GAAP net income as GAAP net income plus litigation settlement costs. We define Adjusted EBITDA as GAAP net income plus income tax expense, net interest income (expense), stock-based compensation, non-recurring legal expenses, litigation settlement costs, and depreciation and amortization expenses. Non-GAAP net income margin is non-GAAP net income divided by revenue. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue. We define Free Cash Flow (FCF) as net cash provided by operating activities less capital expenditures. FCF margin is the FCF divided by revenue. 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. 1. The 'with or without' method is utilized to determine the income tax effect of all Non-GAAP adjustments. Nonrecurring Legal Expenses, which are net of any insurance reimbursements, are legal fees that are determined not to be of a normal recuring nature and expenses necessary to operate the business Litigation settlement costs, which are net of any insurance reimbursements, were determined not to be of a recurring nature and costs that are not in the normal cost of business or necessary to operate the business Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Free cash flow margin is the free cash flow divided by revenue. Contacts:Francis J. OkoniewskiVice President of Investor RelationsNAPCO Security Technologies, Inc.Office 800-645-9445 x 374Mobile [email protected] View original content:https://www.prnewswire.com/news-releases/napco-security-technologies-inc-reports-fiscal-q4-and-full-year-2026-results-302857743.html

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record annual revenue exceeding $200 million, driven by the ongoing industry-wide conversion from copper phone lines to cellular fire communications. Recurring service revenue reached a $103 million annual run rate, maintaining exceptional gross margins above 90% through the StarLink radio platform. Equipment sales growth of 8% in Q4 was significantly influenced by a 40% year-over-year increase in radio unit sales, which serves as a leading indicator for future recurring revenue. The company successfully navigated a leadership transition with Kevin Buchel assuming the CEO role, ensuring continuity of the founder-led strategy focused on high-margin connected services. Operational leverage improved significantly, with adjusted EBITDA margins reaching approximately 33% for the full year and nearly 40% in the fourth quarter. Intrusion and access control product sales grew 20.9% in Q4, reflecting strong demand in the intrusion category despite a decrease in legacy access control sales. Management expects the conversion of over 2 million buildings from copper to cellular fire communications to remain a primary growth driver through the end of the decade. The launch of the MVP cloud-based access control platform is expected to contribute meaningful recurring revenue starting in the back half of the calendar year. R&D investment is projected to continue increasing to support the development of a 'sequel' to the StarLink platform and new recurring revenue hardware. The project funnel for school, healthcare, and government security is currently larger than in previous years, though timing remains 'lumpy' due to long-term contract cycles. Capital allocation priorities include potential strategic acquisitions that offer manufacturing synergies, alongside the recently announced 13.3% dividend increase. Equipment gross margins are subject to compression when radio sales outperform locking products, as radios carry lower hardware margins (approximately 20%) but drive high-margin long-term services. Supply chain challenges related to data center expansion are putting upward pressure on electronic component costs, requiring aggressive negotiation with suppliers to maintain pricing. Full-year GAAP operating income was negatively impacted by a $16 million legal settlement recorded in the third fiscal quarter. Q4 results benefited from approximately 600 basis points of margin expansion due to AIIPA tariff refunds, which also contributed $0.09 to diluted EPS. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management stated they have not yet been impacted by supply chain issues but are seeing price pressure from suppliers due to component shortages. The company is leveraging experience from the COVID-19 era to aggressively negotiate with suppliers and ensure they receive their fair share of shipments at agreed-upon pricing. Meaningful recurring revenue from the MVP platform is expected by the end of the calendar year (October/November). The aggregate project funnel for government and school security is currently larger than it has been in the last two years, though management only reports orders once they are officially placed. High radio sales volume in Q4 compressed equipment margins because radios are lower-margin hardware compared to door locking products. There is a typical 5-to-7 month gap between shipping radio hardware and realizing the associated recurring service revenue due to distribution and activation cycles. The company is implementing stricter discipline regarding volume rebates and is pushing the sales force to secure orders earlier in the quarter to avoid deep end-of-period discounting. Management aims to continue improving equipment efficiencies and raising margins through these refined pricing strategies.