NAPCO Security Technologies, Inc. Reports Fiscal 2026 Q2 Results

Fiscal Q2 2026 Highlights

AMITYVILLE, N.Y., Feb. 2, 2026 /PRNewswire/ -- NAPCO Security Technologies, Inc. (NASDAQ: NSSC), one of the leading manufacturers and designers of high-tech electronic security equipment, wireless communication devices for intrusion and fire alarm systems and the related recurring service revenues as well as a provider of school safety solutions, today announced financial results for its second quarter of fiscal 2026.

Three months ended December 31,

Six months ended December 31,

(dollars in thousands)

% Increase/

Financial Highlights (1)

2025

2024

(decrease)

2025

2024

(decrease)

Net Revenue

48,172

42,933

12.2

97,340

86,936

12.0

Gross Profit

28,238

24,489

15.3

56,084

49,105

14.2

Gross Profit Margin

58.6

57.0

57.6

56.5

Net Income

13,503

10,467

29.0

25,668

21,652

18.5

Net Income as a % of Revenue

28.0

24.4

26.4

24.9

Diluted EPS

0.38

0.28

35.7

0.72

0.59

22.0

Adjusted EBITDA (2)

15,350

12,178

26.0

30,292

24,716

22.6

Adjusted EBITDA Margin (2)

31.9

28.4

31.1

28.4

Adjusted EBITDA Per Share (2)

0.43

0.33

30.3

0.84

0.67

25.4

Free Cash Flows (2)

14,512

12,365

17.4

25,956

23,710

9.5

Free Cash Flows Margin (2)

30.1

28.8

26.7

27.3

1. In millions except percentages and per share data or as otherwise noted.

2. Represents a non-GAAP financial measure. An explanation and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure are presented in the schedules accompanying this press release.

Richard Soloway, Chairman and CEO, commented, "NAPCO delivered another strong quarter fueled by our recurring service revenue and its consistent year over year double digit growth, and the continued demand for our door-locking products that drove double digit growth in our equipment revenue and improved equipment gross margins. Our RSR continues to see growth quarter over quarter with sustained gross margins of 90%, and represents approximately 50% of total revenue in Q2, and has a prospective run rate of approximately $99 million based on our January 2026 recurring service revenue. As a result of our revenue growth and margin expansion, net income increased 29% year over year to a Q2 record of $13.5 million and our adjusted EBITDA margin was 31.9% as compared to 28.4% in Q2 of Fiscal 2025.

Our focus remains on expanding RSR solutions across all our platforms, including locking products, such as our MVP Access platform which is gaining traction in the marketplace as we are actively supporting and educating our dealers on the benefits of adopting this new solution.

Our fiscal 2026 Q2 results are a continuation of the positive start to the fiscal 2026, and we remain confident that our net income, Adjusted EBITDA* and Free Cash Flow*, will continue to grow throughout the balance of the fiscal year.

As such we are pleased to continue our dividend program and will be paying the next quarterly dividend of $0.15 per share on April 3, 2026 to shareholders of record on March 12, 2026. This is a 7% increase over the dividend we declared last quarter.

Mr. Soloway concluded "Our goal of product innovation, technical superiority and consistent delivery of strong profitability, will continue through the balance of fiscal 2026 and beyond".

Addition of Chief Revenue Officer

The Company announced that Joseph Pipczynski has joined the NAPCO team and was appointed as the Company's Chief Revenue Officer effective January 29, 2026. Mr. Pipczynski will be reporting to the Company's President and Chief Operating Officer, Kevin Buchel. Stephen Spinelli, Senior Vice President of Sales, will continue in his current role and will report to Mr. Pipczynski.

Mr. Soloway commented "We are excited to have Joe join the NAPCO family, and with his 35+ years as a business development executive he will provide the Company strong leadership and vision and will supplement the existing talented sales team at NAPCO."

Conference Call Information

Management will conduct a conference call at 11 a.m. ET today, February 2, 2026, and in order to participate please go to the Investor Relations section of the Company website at https://investor.napcosecurity.com/events-presentations or choose https://app.webinar.net/dMv73PZxKlL. Alternatively, interested parties may participate in the call by dialing (US) 1-800-836-8184 or 1-646-357-8785. A replay of the webcast will be available on the Investor Relations section of the Company's website.

About NAPCO Security Technologies, Inc.

NAPCO Security Technologies, Inc., is one of the leading manufacturers and designers of high-tech electronic security devices, wireless recurring communication services for intrusion and fire alarm systems as well as a provider of school safety solutions, The Company consists of four Divisions: NAPCO, plus three wholly owned subsidiaries: Alarm Lock, Continental Instruments, and Marks USA. Headquartered in Amityville, New York, its products are installed by tens of thousands of security professionals worldwide in commercial, industrial, institutional, residential and government applications. NAPCO products have earned a reputation for innovation, technical excellence and reliability, positioning the Company for growth in the multi-billion dollar and rapidly expanding electronic security market. For additional information on NAPCO, please visit the Company's web site at http://www.napcosecurity.com.

Safe Harbor Statement

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, but are not limited to, statements relating to the impact of COVID-19 pandemic; supply chain challenges and developments; the growth of recurring service revenues and annual run rate; the strength of our balance sheet; our expectations regarding future results; the introduction of new access control and locking products; the opportunities for school security products; business trends , including the replacement of 3G radios, and our ability to execute our business strategies. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those risk factors set forth in the Company's filings with the Securities and Exchange Commission, such as our annual report on Form 10-K and quarterly reports on Form 10-Q. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and the Company undertakes no duty to update such information, except as required under applicable law.

*Non-GAAP Financial Measures

Certain non-GAAP measures are included in this press release, including non-GAAP operating income, Adjusted EBITDA, Adjusted EBITDA per share (diluted), Free Cash Flow and Free Cash Flow Margin. We define Adjusted EBITDA as GAAP net income plus income tax expense, net interest expense, non-cash stock-based expense, non-recurring legal expense, other non-recurring income and depreciation and amortization expense. Non-GAAP operating income does not include amortization of intangibles or stock-based compensation expense. Adjusted EBITA margin is Adjusted EBITA divided by revenue. We define Free Cash Flow (FCF) as net cash provided by operating activities less capital expenditures. FCF margin is the FCF divided by revenue. These non-GAAP measures are provided to enhance the user's overall understanding of our financial performance. By excluding these charges our non-GAAP results provide information to management and investors that is useful in assessing NAPCO's core operating performance and in comparing our results of operations on a consistent basis from period to period. Our use of non-GAAP financial measures has certain limitations in that such non-GAAP financial measures may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as Adjusted EBITDA, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. The presentation of this information is not meant to be a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles. Investors are encouraged to review the reconciliation of GAAP to non-GAAP financial measures set forth above.

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31, 2025

June 30, 2025

(in thousands, except share data)

Assets

Current Assets

Cash and cash equivalents

104,919

83,081

Marketable securities

10,462

16,095

Accounts receivable, net of allowance for credit losses of $27 and $25 as of December 31,

2025 and June 30, 2025, respectively

28,064

30,108

Inventories

32,657

29,962

Income tax receivable

1,371

—

Prepaid expenses and other current assets

4,015

3,198

Total Current Assets

181,488

162,444

Inventories - non-current

10,654

11,313

Property, plant and equipment, net

9,025

9,233

Intangible assets, net

3,138

3,287

Deferred income taxes

3,277

6,476

Operating lease - Right-of-use asset

5,045

5,188

Other assets

196

200

Total Assets

212,823

198,141

Liabilities and Stockholders' Equity

Current Liabilities

Accounts payable

5,853

5,742

Accrued expenses

7,702

8,712

Accrued salaries and wages

4,172

4,398

Dividends payable

4,993

4,992

Accrued income taxes

—

213

Total Current Liabilities

22,720

24,057

Accrued income taxes

143

Operating lease liability

5,255

5,335

Total Liabilities

28,009

29,535

Commitments and Contingencies (Note 13)

Stockholders' Equity

Common Stock, par value $0.01 per share; 100,000,000 shares authorized as of December 31,

2025 and June 30, 2025; 39,778,938 and 39,771,035 shares issued; and 35,664,324 and

35,656,421 shares outstanding, respectively.

398

Additional paid-in capital

25,774

25,280

Retained earnings

214,766

199,083

Treasury Stock, at cost, 4,114,614 shares as of both December 31, 2025 and June 30, 2025

(56,315)

Accumulated other comprehensive income

191

160

Total Stockholders' Equity

184,814

168,606

Total Liabilities and Stockholders' Equity

212,823

198,141

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months ended December 31,

2025

2024

(in thousands, except for share and per share data)

Revenue:

Equipment revenue

24,323

21,725

Service revenue

23,849

21,208

Total revenue

48,172

42,933

Cost of Revenue:

Cost of equipment revenue

17,607

16,606

Cost of service revenue

2,327

1,838

Total cost of revenue

19,934

18,444

Gross Profit

28,238

24,489

Operating Expenses:

Research and development

3,473

3,107

Selling, general, and administrative

10,012

10,211

Total Operating Expenses

13,485

13,318

Operating Income

14,753

11,171

Other Income:

Interest income, net

884

928

Other income (expense), net

102

(7)

Income before Provision for Income Taxes

15,739

12,092

Provision for Income Taxes

2,236

1,625

Net Income

13,503

10,467

Income Per Share:

Basic

0.38

0.29

Diluted

0.38

0.28

Weighted Average Number of Shares Outstanding:

Basic

35,664,000

36,538,000

Diluted

35,915,000

36,776,000

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Six Months Ended December 31,

2025

2024

(in thousands, except for share and per share data)

Revenue:

Equipment revenue

50,062

44,642

Service revenue

47,278

42,294

Total revenue

97,340

86,936

Cost of Revenue:

Cost of equipment revenue

36,653

34,116

Cost of service revenue

4,603

3,715

Total cost of revenue

41,256

37,831

Gross Profit

56,084

49,105

Operating Expenses:

Research and development

6,713

6,164

Selling, general, and administrative expenses

20,975

19,914

Total Operating Expenses

27,688

26,078

Operating Income

28,396

23,027

Other Income:

Interest income, net

1,738

1,867

Other income, net

240

198

Income before Provision for Income Taxes

30,374

25,092

Provision for Income Taxes

4,706

3,440

Net Income

25,668

21,652

Income Per Share:

Basic

0.72

0.59

Diluted

0.72

0.59

Weighted Average Number of Shares Outstanding:

Basic

35,661,000

36,706,000

Diluted

35,890,000

36,983,000

NAPCO SECURITY TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Six Months ended December 31,

2025

2024

(in thousands)

Cash Flows from Operating Activities

Net income

25,668

21,652

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

1,135

1,133

Change in accrued interest on other investments

—

(194)

Unrealized gain on marketable securities

—

(82)

Realized gain on sales of marketable securities

(191)

—

Charge (recovery) of credit losses

(12)

Change to inventory reserve

(332)

(184)

Deferred income taxes

3,199

(1,584)

Stock-based compensation expense

494

757

Changes in operating assets and liabilities:

Accounts receivable

2,042

8,454

Inventories

(1,705)

422

Prepaid expenses and other current assets

(817)

1,017

Income tax receivable

(1,382)

(1,129)

Other assets

Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes

(1,383)

(4,807)

Net Cash Provided by Operating Activities

26,735

25,524

Cash Flows from Investing Activities

Purchases of property, plant, and equipment

(778)

(1,814)

Purchases of marketable securities

(5,190)

(7,642)

Proceeds from sales of marketable securities

11,056

—

Purchases of other investments

—

(78)

Redemption of other investments

—

27,252

Net Cash Provided by Investing Activities

5,088

17,718

Cash Flows from Financing Activates

Proceeds from stock option exercises

—

Dividends paid

(9,985)

(4,610)

Repurchase of common stock

—

(18,008)

Net Cash Used in Financing Activities

(9,985)

(22,564)

Net increase in Cash and Cash Equivalents

21,838

20,678

Cash and Cash Equivalents - Beginning

83,081

65,341

Cash and Cash Equivalents - Ending

104,919

86,019

Supplemental Cash Flow Information

Interest paid

—

Income taxes paid

3,100

6,051

Non-Cash Investing and Financing Transactions

Dividends declared and not paid

4,993

4,554

NAPCO SECURITY TECHNOLOGIES, INC.

NON-GAAP MEASURES OF PERFORMANCE* (unaudited)

(in thousands, except share and per share data)

Three months ended December 31,

Six months ended December 31,

2025

2024

2025

2024

Net income (GAAP)

13,503

10,467

25,668

$21,652

Less:

Interest Income, net

884

928

1,738

1,869

Add:

Provision for Income Taxes

2,236

1,625

4,706

3,440

Depreciation and Amortization

565

584

1,135

1,133

EBITDA (earnings before interest, taxes, depreciation and amortization)

15,420

11,748

29,771

24,356

Adjustments for non-GAAP measures of performance:

Add: Stock based Compensation

185

386

494

757

Add: Nonrecurring Legal Expenses, net of insurance reimbursement (1)

(256)

(397)

Adjusted EBITDA

15,349

12,178

30,291

$24,716

Denominator:

Basic Weighted Average Shares Outstanding

35,664,000

36,538,000

35,661,000

36,706,000

Effect of Dilutive Securities

251,000

238,000

229,000

277,000

Dilutes Weighted Average Shares Outstanding (Denominator)

35,915,000

36,776,000

35,890,000

36,983,000

Net Income per Diluted Shares Outstanding

0.38

0.28

0.72

0.59

Adjusted EBITDA* per Diluted Shares Outstanding

0.43

0.33

0.84

0.67

1. Nonrecurring Legal Expenses are legal fees that are determined not to be of a normal recurring nature and expenses necessary to operate the business.

Three months ended December 31,

Six months ended December 31,

(dollars in thousands)

2025

2024

2025

2024

Free cash flow:

Net Cash Provided by Operating Activities

15,098

13,499

26,735

25,524

Less: Purchases of property, plant, and equipment

(585)

(1,134)

(778)

(1,814)

Free Cash Flow (1)

14,513

12,365

25,957

23,710

Free Cash Flow Margin (1)

30.1

28.8

26.7

27.3

1. Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Free cash flow margin is the free cash flow divided by revenue.

Contacts:

Francis J. Okoniewski

Vice President of Investor Relations

NAPCO Security Technologies, Inc.

Office 800-645-9445 x 374

Mobile 516-404-3597

[email protected]

SOURCE NAPCO Security Technologies, Inc.