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Investing.com -- Shares of NAPCO Security Technologies, Inc. (NASDAQ: NSSC) plummeted 27% following the announcement of its fiscal 2025 second quarter results, which revealed a decrease in net sales and diluted earnings per share (EPS) compared to the same period last year.
The New York-based security products manufacturer posted net sales of $43.0 million, a 9.7% decline from the previous year. Despite an increase in recurring service revenue (RSR) by 14.4% to $21.2 million, the company’s diluted EPS fell to $0.28 from $0.34 YoY. The gross profit margin improved to 57.0% from 52.6% in the prior fiscal year quarter, which was a positive takeaway from the report.
Richard Soloway, Chairman and CEO, attributed the equipment revenue shortfall to lagging sales in intrusion and access alarm products and door locking devices. The company cited specific issues with two of its larger distributors; one reduced purchases to cut inventory levels, and another underwent a management restructuring that delayed transaction approvals. Soloway expressed disappointment in the overall equipment sales but remains optimistic about future improvements.
NAPCO Security Technologies also highlighted its growth in school and classroom security sales, including a contract with the Pasadena Unified School District and a purchase order from Pepperdine University. The company’s new Prima All-in-One Panel and the cloud-based MVP Access platform were mentioned as key innovations expected to contribute to future growth.
Lake Street analyst Jaeson Schmidt commented on the results, stating, "Napco Securities Technologies, Inc (NSSC - Buy, $41 PT) - Co reported weak results, driven by soft equip rev. Co noted a large disti pulled back on orders to reduce inv levels and another one went through a mgmt restructuring which delayed authorization of transactions."
Despite the mixed results, NAPCO is maintaining its dividend program, declaring a quarterly dividend of $0.125 per share, payable on April 3, 2025, to shareholders of record as of March 12, 2025. Soloway concluded with confidence in the company’s financial strength and continued profitability for the remainder of fiscal 2025.
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