NAPCO announces Q1 record sales for fiscal 2023

AMITYVILLE, N.Y. – NAPCO Security Technologies has announced its Q1 fiscal 2023 results with a record $39.5 million in sales. This is in comparison to last year’s $31.1 million, making a 27 percent increase in net sales for the quarter.

The company also saw a 35 percent increase for recurring service revenue (RSR) to $13.8 million as opposed to last years $10.2 million during the same period. NAPCO said that RSR now has a prospective annual run rate of roughly $58 million based on the October 2022 revenues.

Other financial performance highlights for the quarter include :

• Earnings per share (diluted) for the quarter was $0.17 as compared to $0.21 for the same period a year ago. Of the $0.21 reported EPS for last years Q1, $0.11 was a result of the extinguishment of debt.
• Adjusted EBITDA* for the quarter was $8.3 million as compared to $4.7 million for the same period a year ago, a 77 percent increase.
• Adjusted EBITDA* per share (diluted) for the quarter was $0.22 as compared to $0.13 for the same period a year ago, a 69 percent increase.

“Following a very strong sales performance in fiscal 2022, the momentum continued during the first quarter of fiscal 2023 with Q1 record sales of $39.5 million, a 27% increase over last year's Q1 and the eighth consecutive quarter of record year-over-year quarterly sales,” NAPCO President and Chairman, Richard Soloway, commented. “Both equipment revenue and recurring service revenue, which increased 23% and 35%, respectively, contributed to the year-over-year overall sales growth. Our recurring service revenue now has a prospective annual run rate of approximately $58 million based on October 2022 recurring service revenues. Gross margin for recurring service revenue increased 200 basis points to 88% for the quarter, which compared to 86% for the same period last year. Gross margins on hardware increased 100 basis points to 23%, as compared to 22% for the same period last year. Overall gross margins increased 300 basis points to 46% as compared to 43% for the same year ago period.”

Soloway went on to note that NAPCO easily outperformed its Q1 expectations despite problems facing their supply chains. “We continue to remain focused on aggressively managing these logistical challenges, in order 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, more readily available supply sources and delivery methods and continuing to work closely with our customers and suppliers to navigate through these extraordinary times,” he said.

NAPCO has thrived in spite of the logistical challenges and attributes their success to a variety of factors including purchasing higher priced components to continue manufacturing radios, the installation of which has generated high margin recurring revenue. NAPCO are currently formulating plans for alternative sources for much needed microprocessors used in their popular star link radios and expect to see improvements within six months.

“We continue to remain focused on delivering significant value to our shareholders by generating strong revenue growth as well as increased profitability for fiscal 2023 and beyond,” Soloway concluded. “The first quarter of fiscal 2023 was a strong performance for our Company and I remain confident that our best quarters are yet to come."

You can find the full release of NAPCO’s Q1 Fiscal 2023 results at investor.napcosecurity.com.