NAPCO stock plunges dramatically on restatement of prior three quarters

AMITYVILLE, N.Y. – NAPCO Security Technologies is off to a rough start this week following the restatements of its financial results for the first three fiscal quarters of 2023..

In a statement issued on Aug. 18, the company said that, “On Aug. 14, 2023, the Audit Committee of the Board of Directors of the company concluded that the company's previously issued unaudited interim financial statements for the fiscal quarters ended Sept. 30, 2022, Dec. 31, 2022, and Mar. 31, 2023, respectively, included in the company's quarterly report on Form 10-Q for such respective quarters, should no longer be relied upon.”

The statement continued, “During the preparation of the company's consolidated financial statements for the fiscal year ended June 30, 2023, management of the company identified certain errors related to the company's calculation of cost of goods sold ("COGS") and inventory for each of the first three quarters of fiscal 2023. Specifically, although the costs of several components fluctuated substantially during fiscal 2023, the company's costing procedures did not appropriately account for such fluctuations. As a result, inventories were overstated and COGS was understated, resulting in overstated gross profit, operating income and net income for each period.”

In response, after the market closed on Aug. 21, NAPCO stock price had plunged 45 percent, wiping out more than a year's worth of gains. The development is a far cry from the company that posted a record-breaking fourth quarter a year ago when NAPCO saw a 22 percent increase in sales. Now those initial successful 2023 numbers are looking considerably changed as the the company amends its  financial statements.

Security Systems News has reached out to NAPCO for a response and will provide updates as they become available. Currently NAPCO expects to report its fourth quarter and fiscal year-end results on or about Aug. 28, 2023, with preliminary estimates of revenue and net income for the fourth quarter of fiscal year ended June 30, 2023. NAPCO provided the following numbers: Equipment revenues - $28.6 million, services revenue - $16.1 million, total net sales $44.7 million ($44.7 million would represent a quarterly net sales record). Net income for the quarter is preliminarily estimated to be between $10 million and $11 million.

The company also declared a cash dividend of $0.08 per share to stockholders of record on Sept. 1, 2023, representing an increase of $0.0175 per share or 28 percent from the previous quarterly dividend. The dividend will be payable on Sept. 22, 2023.