NAPCO Security Technologies, Inc. Reports Fiscal Q1 Results

Fiscal Q1 2026 Highlights

AMITYVILLE, N.Y., Nov. 3, 2025 /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 first quarter of fiscal 2026.

Three months ended September 30,

(dollars in thousands)

% Increase/

Financial Highlights (1)

2025

2024

(decrease)

Net Revenue

49,168

44,003

11.7

Gross Profit

27,846

24,616

13.1

Gross Profit Margin

56.6

55.9

Net Income

12,165

11,185

8.8

Net Income as a % of Sales

24.7

25.4

Diluted EPS

0.34

0.30

13.3

Adjusted EBITDA (2)

14,942

12,335

21.1

Adjusted EBITDA (2) as a % of Sales

30.4

28.0

Adjusted EBITDA (2) Per Share

0.42

0.33

27.3

Cash Flows from Operating Activities

11,637

12,025

(3.2)

1. In millions except percentages and per share data or as otherwise noted.

2. Represents a non-GAAP financial measure. An explanation and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure are presented in the schedules accompanying this press release.

Richard Soloway, Chairman and CEO, commented, "With the completion of the first quarter of Fiscal 2026, we experienced year over year double digit growth in both our equipment and service revenue. Strong demand for our door-locking products has driven the growth in our equipment revenue and improved equipment gross margins, and our RSR continues to see growth quarter over quarter with sustained gross margins of over 90%. RSR represents 48% of total revenue in Q1, and our RSR has a prospective run rate of approximately $95 million based on our October 2025 recurring service revenue. As a result of our revenue growth, net income increased 8.8% year over year to a Q1 record of $12.2 million and our adjusted EBITDA margin was 30.4% as compared to 28.0% in Q1 of Fiscal 2025.

We remain focused on expanding RSR solutions across all our platforms, including wireless fire and intrusion alarms, enterprise access control systems, and architectural locking products, including our MVP Access platform which is gaining traction in the marketplace as we support and educate our dealers on the benefits of adopting this new solution.

Mr. Soloway concluded, "Our fiscal 2026 Q1 results are a positive start to the new year, and we remain confident that our net income, Adjusted EBITDA* and cash flow, will continue to be grow throughout the balance of the year.

As such we are pleased to continue our dividend program and will be paying the next quarterly dividend of $0.14 per share on January 2, 2026 to shareholders of record on December 12, 2025.

We continue to strive to accomplish our goal of continued financial strength, product innovation, technical superiority and strong profitability, for fiscal 2026 and beyond".

Conference Call Information

Management will conduct a conference call at 11 a.m. ET today, November 3, 2025, 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/R49gWwbG2e1. 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 the impact of COVID-19 pandemic; 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; business trends , including the replacement of 3G radios, and our ability to execute our business strategies. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result 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 proving 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, Adjusted EBITDA and Adjusted EBITDA per share (diluted). We define Adjusted EBITDA as GAAP net income plus income tax expense, net interest expense, non-cash stock-based expense, non-recurring legal expense, other non-recurring income and depreciation and amortization expense. Non-GAAP operating income does not include amortization of intangibles or stock-based compensation expense. 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.

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

September 30, 2025

June 30, 2025

(in thousands, except share data)

Assets

Current Assets

Cash and cash equivalents

95,400

83,081

Marketable securities

10,358

16,095

Accounts receivable, net of allowance for credit losses of $24 and $25 as of September 30,

2025 and June 30, 2025, respectively

30,670

30,108

Inventories

31,286

29,962

Income tax receivable

1,980

—

Prepaid expenses and other current assets

3,503

3,198

Total Current Assets

173,197

162,444

Inventories - non-current

10,520

11,313

Property, plant and equipment, net

8,928

9,233

Intangible assets, net

3,213

3,287

Deferred income taxes

4,795

6,476

Operating lease - Right-of-use asset

5,116

5,188

Other assets

198

200

Total Assets

205,967

198,141

Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable

5,900

5,742

Accrued expenses

8,781

8,712

Accrued salaries and wages

4,853

4,398

Dividends payable

4,992

Accrued income taxes

—

213

Total Current Liabilities

24,526

24,057

Accrued income taxes

143

Operating lease liability

5,295

5,335

Total Liabilities

29,854

29,535

Commitments and Contingencies (Note 13)

Stockholders' Equity

Common Stock, par value $0.01 per share; 100,000,000 shares authorized as of September

30, 2025 and June 30, 2025; 39,778,938 and 39,771,035 shares issued; and 35,664,324 and

35,656,421 shares outstanding, respectively.

398

Additional paid-in capital

25,589

25,280

Retained earnings

206,256

199,083

Treasury Stock, at cost, 4,114,614 shares as of both September 30, 2025 and June 30, 2025

(56,315)

Accumulated other comprehensive income

185

160

Total Stockholders' Equity

176,113

168,606

Total Liabilities and Stockholders' Equity

205,967

198,141

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months ended September 30,

2025

2024

(in thousands, except for share and per share data)

Revenue:

Equipment revenue

25,739

22,917

Service revenue

23,429

21,086

Total revenue

49,168

44,003

Cost of Revenue:

Cost of equipment revenue

19,046

17,510

Cost of service revenue

2,276

1,877

Total cost of revenue

21,322

19,387

Gross Profit

27,846

24,616

Operating Expenses:

Research and development

3,240

3,057

Selling, general, and administrative

10,963

9,703

Total Operating Expenses

14,203

12,760

Operating Income

13,643

11,856

Other Income:

Interest income, net

854

940

Other income, net

138

204

Income before Provision for Income Taxes

14,635

13,000

Provision for Income Taxes

2,470

1,815

Net Income

12,165

11,185

Income Per Share:

Basic

0.34

0.30

Diluted

0.34

0.30

Weighted Average Number of Shares Outstanding:

Basic

35,658,000

36,865,000

Diluted

35,865,000

37,180,000

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Three Months ended September 30,

2025

2024

(in thousands)

Cash Flows from Operating Activities

Net income

12,165

11,185

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

570

549

Change in accrued interest on other investments

—

(193)

Unrealized gain on marketable securities

—

(157)

Realized gain on sales of marketable securities

(92)

—

Recovery of credit losses

(1)

(9)

Change to inventory reserve

(354)

(235)

Deferred income taxes

1,681

(749)

Stock-based compensation expense

309

371

Changes in operating assets and liabilities:

Accounts receivable

(561)

3,671

Inventories

(177)

(30)

Prepaid expenses and other current assets

(305)

(197)

Income tax receivable

(1,993)

(71)

Other assets

Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes

391

(2,113)

Net Cash Provided by Operating Activities

11,637

12,025

Cash Flows from Investing Activities

Purchases of property, plant, and equipment

(193)

(680)

Purchases of marketable securities

(2,540)

(111)

Proceeds from sales of marketable securities

8,407

—

Purchases of other investments

—

(46)

Redemption of other investments

—

16,293

Net Cash Provided by Investing Activities

5,674

15,456

Cash Flows from Financing Activates

Proceeds from stock option exercises

—

Dividends paid

(4,992)

—

Repurchase of common stock

—

(7,280)

Net Cash Used in Financing Activities

(4,992)

(7,226)

Net increase in Cash and Cash Equivalents

12,319

20,255

Cash and Cash Equivalents - Beginning

83,081

65,341

Cash and Cash Equivalents - Ending

95,400

85,596

Supplemental Cash Flow Information

Interest paid

—

Income taxes paid

3,104

2,620

Non-Cash Investing and Financing Transactions

Dividends declared and not paid

4,992

4,610

NAPCO SECURITY TECHNOLOGIES, INC.

NON-GAAP MEASURES OF PERFORMANCE* (unaudited)

(in thousands, except share and per share data)

Three months ended September 30,

2025

2024

Net income (GAAP)

12,165

11,185

Less:

Interest Income, net

854

1,144

Add:

Provision for Income Taxes

2,470

1,815

Depreciation and Amortization

570

549

EBITDA (earnings before interest, taxes, depreciation and amortization)

14,351

12,405

Adjustments for non-GAAP measures of performance:

Add: Stock based Compensation

309

371

Add: Nonrecurring Legal Expenses, net of insurance reimbursement (1)

282

(441)

Adjusted EBITDA

14,942

12,335

Denominator:

Basic Weighted Average Shares Outstanding

35,658,000

36,865,000

Effect of Dilutive Securities

207,000

315,000

Dilutes Weighted Average Shares Outstanding (Denominator)

35,865,000

37,180,000

Net Income per Diluted Shares Outstanding

0.34

0.30

Adjusted EBITDA* per Diluted Shares Outstanding

0.42

0.33

1. Nonrecurring Legal Expenses are legal fees that are determined not to be of a normal recuring nature and expenses necessary to operate the business.

Contacts:

Francis J. Okoniewski

Vice President of Investor Relations

NAPCO Security Technologies, Inc.

Office 800-645-9445 x 374

Mobile 516-404-3597

fokoniewski@napcosecurity.com

SOURCE NAPCO Security Technologies, Inc.