Napco lock division revenues grew 20% in 2013 Q1
NAPCO Security Technologies, one of the world's leading suppliers of high performance electronic security equipment for over 30 years, today announced financial results for its third fiscal quarter ended March 31, 2013.
- Net sales for the quarter were $17.2 million, unchanged from the year-ago period. Gains from door-locking product revenues were offset by decreases in revenues from intrusion products and, to a lesser, extent, access control products.
- Sales within the Marks brand of products grew 29% in the quarter, representing the third consecutive quarter of growth in this unit.
- Sales of NAPCO's high-margin commercial locking division and recurring revenue products delivered continued growth versus a year ago with StarLink2 recurring revenues increasing 20%, sequentially.
- Year-to-date (nine month) gross margins were relatively flat compared to last year (27.1% vs. 27.6%) despite $1.5 million in lower revenues due to weakness in the intrusion division and an incremental $700,000 in R&D investment in the current year.
- Debt, net of cash, has been reduced by $21.0 million from $35.9 million to $14.9 million since acquiring Marks in August of 2008. $2.4 million of this reduction occurred in the past nine months.
As a result of the lower debt levels and reductions in interest rates, net interest expense for the nine months decreased by $449,000 or 51% to $440,000 as compared to $889,000 for the same period a year ago.
Richard Soloway, Chairman and President, stated, "For the third consecutive quarter, our Marks product line delivered a quarter of solid growth and is recovering nicely. We saw an up tick in our high-margin commercial locking division revenues as well as increases in recurring revenue from installations of StarLink2?. These gains, however, were offset by lower revenue from the Intrusion product line as demand from distributors remains temporarily subdued, owing to continued effects of 'Superstorm Sandy' in some of our key markets, the consolidation of a few large intrusion distributors and decreased demand from one of our large intrusion dealers. NAPCO's StarLink2? wireless GSM alarm communicator continued to grow sales again this quarter, fueling the steady growth of products, which provide NAPCO with recurring revenue income. There is a strong and growing trend in the industry to install GSM-equipped signal communication versus traditional wired phone lines. We are seeing this same focus on technology in all areas of our industry and it is a primary reason we continue to invest heavily in research and development to deliver the next generation of technology-driven security products. For example, iBridge? and iRemote? comprise a suite of recurring revenue services, allowing consumers to remotely control their security systems, video cameras, thermostats, door locking, and lighting remotely from any smart phone or PC. Home automation is driving demand for this series of products and we are poised to benefit from this trend.
"Looking ahead, we expect our investments in next generation access control technology to contribute to our revenues beginning in the June quarter. In particular, we are pleased to announce that iBridge? product shipments to dealers have now begun, and based on growing interest from distributors and installers, we expect solid sequential growth from this technologically advanced product throughout the remainder of this year and beyond. As iBridge? begins to contribute to our Intrusion division's sales, combined with continued strength in our locking division and expected growth in our access control segment, we expect to deliver top-line growth, which should ultimately translate to even faster bottom-line expansion. As we move into the fourth fiscal quarter, historically our strongest quarter of the year, our optimism remains strong as we have the right products, supported by best-in-class technology, and the advantage of a low-cost manufacturing capability."
Mr. Soloway concluded, "Subsequent to the end of the quarter, Continental Access Control booked a significant contract with a major university to install and integrate over 1,500 Networx wireless locks to enhance campus security and provide state-of-the-art access control. This sale, which represents the largest single order ever for Continental Access Control, and is among the largest in the history of our Company, validates our commitment to serving this important segment and we believe this could be the first of several in this growing market. We secured this contract, based on superior technology, our ability to deliver it quickly and also our ability to customize the product to meet the university's exacting architectural specifications. We are hard at work to deliver as much of this as possible in the fourth quarter, and we expect additional orders from other universities who are looking to improve on-campus security using state-of-the-art technology. As a recognized leader, we are well positioned to meet this demand."