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Napco Security Technologies, Inc (NSSC) SEC Filing 10-Q Quarterly Report for the period ending Friday, December 31, 2021

Napco Security Technologies, Inc

CIK: 69633 Ticker: NSSC

Exhibit 99.1

NAPCO Announces Second Quarter Fiscal 2022 Results

-2nd Quarter Sales Increase 23% to a Record $33.4 Million-

-2nd Quarter Recurring Service Revenues Increase 35% to $11 Million With Increased Gross Margins of 87%-

-Net Income of $1.0M and Adjusted EBITDA* of $3 Million for the Quarter Impacted by Supply Chain Disruptions-

AMITYVILLE, N.Y., February 7, 2022 /PRNewswire/ -- NAPCO Security Technologies, Inc. (NASDAQ: NSSC), 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 leading provider of school safety solutions, today announced financial results for its second quarter of fiscal 2022.

Financial Highlights:

Net sales for the quarter increased 23% to a second quarter record of $33.4 million as compared to $27.2 million for the same period last year.
Recurring service revenue for the quarter increased 35% to $11.0 million as compared to $8.2 million for the same period last year. Recurring service revenue now has a prospective annual run rate of $46.2 million based on January 2022 recurring revenues.
Gross margin for recurring service revenue for the quarter was 87% as compared to 85% for the same period last year.
Net income for the quarter was $1.0M as compared to $3.2 million for the same period a year ago, a 68% decrease. This decrease was primarily the result of supply chain disruptions and a shift in product mix to more Starlink cellular radios (which initially generates lower gross margins but leads to the profitable recurring revenue), both of which affected hardware gross margins in the quarter. Net income was also negatively impacted by a non-cash, $1.3 million stock based compensation charge relating primarily to stock option awards of 388,000 options (as adjusted for a 2:1 stock split) issued during the quarter .
Earnings per share (diluted) for the quarter was $0.03 as compared to $0.09 for the same period a year ago.
Adjusted EBITDA* for the quarter was $3.0 million as compared to $4.2 million for the same period a year ago, a 29% decrease.
Adjusted EBITDA* per share (diluted) for the quarter was $0.08 as compared to $0.11 for the same period a year ago.
Cash, cash equivalents and marketable securities were $47.4 million at December 31, 2021, an 18% increase as compared to $40.2 million at June 30, 2021. The Company had no debt as of December 31, 2021.
Cash Provided by Operating Activities for the six months was $7.8 million as compared to $8.9 million for the same period last year.

Richard Soloway, Chairman and President, commented, “Our second quarter of fiscal 2022 generated strong revenue growth, with record-breaking sales for a Q2 of $33.4 million, representing a 23% increase over last year. Both equipment revenue (up 18%) and recurring service revenue (up 35%) contributed to this sales growth. This was the fifth consecutive quarter of year-over-year sales growth. Our recurring service revenues have remained very strong, and now have a prospective annual run rate of $46.2 million based on January 2022 recurring service revenues. Gross margin for recurring service revenue also continued to be very strong at 87% for the quarter, which compared to 85% for the same period last year. While our overall gross profit remained relatively constant at $11.4 million, our gross margin on hardware decreased by $2.6 million as it continued to be dramatically affected by the current, world-wide supply chain problems, particularly with increased freight and component parts costs. In addition, another significant factor affecting hardware margins was the continued shift in product mix to more of the Company’s Starlink radios, which have lower gross margins than many of the Company’s other products, but lead to the profitable recurring service revenues. Our commercial radio and fire alarm business, and the RSR (“recurring service revenue”) associated with each, has not been significantly affected by COVID-19 as commercial buildings must be kept secure. Additionally, the commercial fire alarm business is a mandated, non-discretionary business which means, in order to receive a certificate of occupancy for a building, a fire alarm system is mandatory and must always function in compliance with fire codes. Because of the essential nature and high profitability of this sector, the commercial fire alarm business continues to be one of the key areas on which we focus our resources. 

Despite the solid sales growth in Q2, our ability to fully meet the strong demand for our products is being constrained by the ongoing supply chain and logistic challenges. NAPCO’s delivery performance has been excellent during these very difficult COVID times. However, supply chain constraints have slowed the pace of revenue realization and have led to historically high backlog levels which may continue in 2022, particularly for electronic products. The strong sales performance of our 2nd quarter was accomplished, in part, because NAPCO continues to remain focused on aggressively managing these logistical challenges to ensure that we remain well positioned to meet the needs of our customers. We continue to manage these issues by re-engineering products, developing alternative


The following information was filed by Napco Security Technologies, Inc (NSSC) on Monday, February 7, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Napco Security Technologies, Inc's 10-Q Quarterly Report:

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Document And Entity Information
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (Parenthetical)
Condensed Consolidated Statement Of Stockholders Equity
Condensed Consolidated Statement Of Stockholders Equity (Parenthetical)
Condensed Consolidated Statements Of Cash Flows
Condensed Consolidated Statements Of Income
401(K) Plan
401(K) Plan (Details)
Business And Credit Concentrations
Business And Credit Concentrations (Details)
Commitments And Contingencies
Commitments And Contingencies (Tables)
Commitments And Contingencies - Additional Information (Details)
Commitments And Contingencies - Lease Liabilities (Details)
Commitments And Contingencies - Weighted - Average Lease Term (Details)
Geographical Data
Geographical Data (Details)
Geographical Data (Tables)
Geographical Data - Additional Information (Details)
Income Taxes
Income Taxes - Additional Information (Details)
Income Taxes - Provision (Details)
Income Taxes - Reconciliation (Details)
Inventories
Inventories (Details)
Inventories (Tables)
Long-Term Debt
Long-Term Debt (Details)
Long-Term Debt (Tables)
Marketable Securities
Marketable Securities (Details)
Marketable Securities (Tables)
Marketable Securities - Fair Value (Details)
Nature Of Business And Summary Of Significant Accounting Policies
Nature Of Business And Summary Of Significant Accounting Policies (Details)
Nature Of Business And Summary Of Significant Accounting Policies (Policies)
Nature Of Business And Summary Of Significant Accounting Policies (Tables)
Nature Of Business And Summary Of Significant Accounting Policies - Income Statement Location (Details)
Nature Of Business And Summary Of Significant Accounting Policies - Intangible Assets (Details)
Nature Of Business And Summary Of Significant Accounting Policies - Net Income Per Share (Details)
Property, Plant, And Equipment
Property, Plant, And Equipment (Details)
Property, Plant, And Equipment (Tables)
Related Party Transaction
Related Party Transaction (Details)
Revenue Recognition And Contracts With Customers
Revenue Recognition And Contracts With Customers (Details)
Revenue Recognition And Contracts With Customers (Tables)
Revenue Recognition And Contracts With Customers - Adoption (Details)
Revenue Recognition And Contracts With Customers - Disaggregation (Details)
Stock Option
Stock Option (Tables)
Stock Option - Activity (Details)
Stock Option - Additional Information (Details)
Stock Option - Fair Value (Details)
Stock Option - Outstanding (Details)
Stockholders' Equity Transactions
Stockholders' Equity Transactions (Details)
Subsequent Events

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Napco Security Technologies, Inc provided additional information to their SEC Filing as exhibits

Ticker: NSSC
CIK: 69633
Form Type: 10-Q Quarterly Report
Accession Number: 0001558370-22-000959
Submitted to the SEC: Wed Feb 09 2022 4:31:27 PM EST
Accepted by the SEC: Wed Feb 09 2022
Period: Friday, December 31, 2021
Industry: Communications Equipment

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