Napco Security Technologies, one of the world's leading solutions providers and manufacturers of high-technology electronic intrusion security (including recurring revenue), connected home, video and fire systems, as well as enterprise-class access control and door locking products, announced financial results for its fiscal year ended June 30, 2015.
Napco Security Technologies, one of the world's leading solutions providers and manufacturers of high-technology electronic intrusion security (including recurring revenue), connected home, video and fire systems, as well as enterprise-class access control and door locking products, announced financial results for its fiscal year ended June 30, 2015.
Highlights:
- Net sales for the fiscal year were a record US$77.8 million, up 5% from the same period last year. Net sales for the fourth quarter were a record $23.0 million, up 7% from the same quarter last year.
- Sales of Napco's door-locking products increased 11% in the fourth quarter as compared to the same quarter a year ago and 7% for the fiscal year as compared to the same period a year ago.
- Alarm division recurring revenue for the fourth quarter and fiscal year increased 40% and 53%, respectively, and grew sequentially by 8%.
- Gross margin for the quarter increased 220 basis points to 40.7 % for the quarter as compared to 38.5% for the same period last year. Gross margin for the fiscal year increased 160 basis points to 33.5% as compared to 31.9% a year ago.
- Income before taxes for fiscal 2015 increased 26% to $5.1 million from $4.0 million a year ago.
- Earnings per share (diluted) for the fourth quarter increased 50% to $0.18 as compared to $0.12 last year. Earnings per share (diluted) for the fiscal year increased 39% to $0.25 as compared to $0.18 for the same period a year ago.
- During the year ended June 30, 2015, Napco repurchased 453,048 shares of its common stock pursuant to a repurchase plan, which provides for repurchasing up to one million shares of Napco's common stock.
- Debt, net of cash, has been reduced by $27.5 million from $35.9 million to $8.4 million since acquiring Marks in August of 2008.
Richard Soloway, Chairman and President, said, "We achieved one of our best performing years ever in 2015, delivering strong results by soundly executing our business model. Our recently introduced products and product enhancements are paying dividends as they gain traction in the security marketplace and the investments we made in our recurring revenue services are also growing. The success of these initiatives drove broad based improvements across all key metrics, including sales, gross margins and net income. We are particularly proud of our gross margin for the fiscal fourth quarter, which increased 220 basis points from the prior year period to 40.7%, and underscores the leverage we can deliver by capitalizing on our fixed cost structure."
Soloway added, "Looking more closely at our recurring revenue services, we continued to generate exceptional growth in this part of our business, with sales increasing 40% for the fiscal fourth quarter and 53% for the fiscal year. This was driven by strong demand for our Starlink 3G/4G and Verizon CDMA alarm communicators, which are being used to replace defunct 2G radios as well as the communications link on new alarm installations. We are currently in the process of launching a comprehensive line of commercial fire alarm communicators that use wireless radio communications. This introduction will further expand our market share and presence in the lucrative fire alarm communicator category. We expect this category to undergo significant growth as fire alarms that use traditional phone lines, which are becoming more rare, are replaced with wireless communications that report to the central station.
"Our advanced wireless locking solutions, marketed by our Alarm Lock, Marks and Continental Divisions, have shown particularly robust growth by offering a highly versatile, cost-effective and easy-to-install access control solution to a number of market verticals, including health care, education and government. Other locking success stories for this past year include the LocDown intruder lock, by Marks, which enables a teacher to lock his or her door safely from inside the classroom in the event of an active-shooter incident, and Marks' anti-ligature, suicide preventative LifeSaver lock for use in prisons and behavioral health settings."
Soloway concluded: "We are excited about our growth trajectory as we look out to fiscal year 2016 and beyond. Our business is firing on all cylinders and we continue to demonstrate why we are one of the most innovative companies in the security industry today. As we continue to grow our topline and reduce seasonality in our business through our recurring revenue offerings, we believe we are well on our way to achieving our long-term goals, including further margin expansion, a $100 million annual revenue run rate and greater profitability. Simultaneously, we also are continuing to explore ways to use our excess cash to create the most value for shareholders."
Fiscal 2015 results
Net sales for the three months ended June 30, 2015 increased 7% to $23.0 million, as compared to $21.5 million for the same period one year ago. Net sales for the year ended June 30, 2015 increased 5% to $77.8 million, as compared to $74.4 million for the same period one year ago. Selling, general and administrative expenses for the quarter were $5.9 million, or 25.6 % of sales, as compared to $5.5 million, or 25.3 % of sales, for the same period in 2014. Selling, general and administrative expenses for the fiscal year were $20.8 million, or 26.7 % of sales, as compared to $19.4 million, or 26.1% of sales, for the same period in 2014. The increase was due primarily to additional sales staff and advertising expenditures to support ongoing product introductions.
Operating income for the three months ended June 30, 2015, increased 23% to $3.5 million as compared to $2.8 million for the same quarter a year ago. Operating income for the fiscal year ended June 30, 2015, increased 22% to $5.3 million as compared to $4.3 million for the same period a year ago. Adjusted EBITDA for the three months ended June 30, 2015, increased 16 % to $3.9 million or $0.20 per share as compared to $3.3 million or $0.17 per share for the same quarter last year. Adjusted EBITDA for the fiscal year ended June 30, 2015, increased 13% to $7.0 million or $0.36 per share as compared to $6.1 million or $0.32 per share for the same period a year ago.
Net income for the three months ended June 30, 2015, increased 43%, to $3.3 million or $0.18 per share as compared to $2.3 million or $0.12 per share for the same quarter last year. Net income for the fiscal year ended June 30, 2015 increased 39%, to $4.8 million or $0.25 per share as compared to $3.5 million or $0.18 per share for the same period last year.
Balance sheet summary
At June 30, 2015, Napco had $2.3 million in cash and cash equivalents as compared to $2.5 million at June 30, 2014. Napco had working capital of $35.6 million as compared with working capital of $33.4 million at June 30, 2014. Current ratio was 4.8:1 at June 30, 2015 and 4.6:1 at June 30, 2014. Debt, net of cash, was $8.4 million at June 30, 2015 and $9.3 at June 30, 2014.