NAPCO’s Q2 a mixed bag

AMITYVILLE, N.Y. — NAPCO Security Technologies' financial results for the second quarter of fiscal 2025 revealed a healthy recurring service revenue (RSR) but also several setbacks due to bad timing. 

The company’s financial results at a glance: Net sales of $43 million, a decrease of 9.7% year over year; and RSR of $21.2 million, a 14.4% increase, and gross profit margin of 57% vs. 52.6%, both compared to the prior quarter. 

“This quarter yielded mixed results,” Chairman and CEO Richard Soloway told investors during a webcast to discuss the results. “The reduction of equipment revenue was the result of timing issues with some of our distributors, as well as the timing of certain large locking projects.”  

However, Soloway noted that there were some positives in the quarter, including “our core growth drivers remain intact and demand for our products and services continues to build momentum.” 

“Importantly, our innovation pipeline is stronger than ever, with new offerings set to launch in the coming months, expanding our recurring revenue opportunities and reinforcing our long-term trajectory,” he said. 

Among NAPCO’s core growth drivers has been its school and classroom security sales. The company recently announced, for example, a contract with the Pasadena Unified School District to provide security locking solutions for their 23 schools with more than14,000 students. The project will implement Marks USA LA318GJ Intruder Lockdown mortise locks and Marks USA 195DB Intruder Lockdown cylindrical locks to meet California state requirements for classroom doors. NAPCO has also received a purchase order for Pepperdine University related to the expansion of dorm rooms. 

“As we move forward, we remain confident in our ability to drive sustainable growth and deliver lasting value to our shareholders,” he said. 

NAPCO has additionally seen growth in health care and retail loss-prevention, as well as in multi-dwelling commercial and residential applications. The company is confident that sales in those verticals will improve throughout fiscal 2025, officials say.