NAPCO Announces First Quarter 2018 Results

AMITYVILLE, N.Y., Nov. 6, 2017

Financial Highlights:

• Net sales for the quarter were a record $21.2 million, up 5% from the same quarter last year.
• Recurring revenue for the quarter (which are included in net sales) increased 56% and now has a prospective annual run rate of $10.6 million based on September 2017 recurring revenue.**
• Income before taxes for the quarter 2017 increased 49% to $1,033,000 from $692,000 a year ago.
• Earnings per share (diluted) for the quarter was $0.05, as compared to $0.03 for the same period a year ago.

Richard Soloway, Chairman and President commented, "We are pleased that our Q1 Fiscal 2018 performance continued a string of 13 consecutive quarters of increased sales growth for our Company. The investments we have made in sales, marketing and engineering continue to provide a solid foundation for steady, consistent growth in sales and profitability and bode well for a strong future for NAPCO."

"As a leader in the wireless cellular alarm and IoT communicator category, our expansive, unique StarLink® line of solutions continues to build market share providing us with a 56% increase in subscription-based, recurring revenue for this quarter.  Capitalizing on the recent need for millions of landline-connected fire alarm control panels to upgrade to wireless, cellular or cellular/IP based communications technology, StarLink Fire® communicators, with their unique Panel-Powered Technology®, continue to generate tremendous interest. With the launch in June, 2017, of our dual-path fire communicator, needed by code in several municipalities across the U.S., StarLink now markets the most extensive and feature-rich line of commercial intrusion and fire communicator products in the industry."

Mr. Soloway continued, "Our award-winning StarLink Connect® solution, which gives dealers the ability to add Smart Home services to millions of regular, existing alarm installations across the country, is experiencing broad market acceptance and beginning to build market share. This RMR-generating, subscription-based service offers residential consumers the ability to use an app to remotely operate their security systems, lighting, locks, thermostats, and video cameras, from any smart device. StarLink Connect also, importantly, offers our dealers the opportunity to increase the recurring monthly income stream from their customers, by trading them up from a regular alarm system to Smart Home services, adding value to their account base."

"Our high-margin commercial Divisions Alarm Lock Access Control Locks, Marks Architectural Hardware and Continental Enterprise-Class Access Control, continued to show a significant increase in market presence in the Education market vertical. With a strong array of integrated, school venue designed security solutions, along with the administering of the highly successful SAVI or School Access-control Vulnerability Index and auditing system, NAPCO continues to lead the way in fortifying and augmenting school security levels. NAPCO dealers and integrators are trained in systematically evaluating any school facility's security level and then addressing any deficiency with school-specific security solutions. This approach and portfolio of product solutions is also increasingly being used in any public venues, in addition to educational facilities, concerned with addressing the growing threat of terrorist activities and active-shooter events."

Mr. Soloway concluded, "We are confident that we are on track to consistently increase our sales and profits and we believe that our sales, marketing and engineering investments will continue to pay dividends in future accelerated growth. All indicators and trends seem positive and we look forward to having an exceptional fiscal year 2018."