NAPCO Security Technologies — Fiscal Q4 and Full Year 2026 Earnings Summary

Financial Performance

• Q4 2026 net revenue increased 10.0% year-over-year to a record $55.8 million (vs. $50.7 million).
• Full year 2026 net revenue increased 11.4% year-over-year to a record $202.3 million (vs. $181.6 million).
• Q4 2026 recurring service revenue (RSR) increased 12.9% to $25.3 million (vs. $22.4 million), with gross margins exceeding 90%.
• Full year 2026 RSR increased 13.0% to $97.5 million (vs. $86.3 million).
• Q4 2026 equipment revenue increased 7.7% to $30.5 million (vs. $28.3 million).
• Full year 2026 equipment revenue increased 10.0% to $104.8 million (vs. $95.3 million).
• Q4 2026 gross profit margin was 61.3%, including a ~600 basis point benefit from tariff refunds, compared to 52.8% in the prior year quarter.
• Full year 2026 gross profit margin was 59.2%, including a ~50 basis point benefit from tariff refunds, compared to 55.6% in the prior year.
• Q4 2026 net income increased 52.7% to a record $17.8 million (vs. $11.6 million).
• Full year 2026 net income decreased 0.9% to $43.0 million (vs. $43.4 million), negatively impacted by a $16 million litigation settlement charge in Q3.
• Q4 2026 diluted net income per share increased 51.5% to $0.50 (vs. $0.33), inclusive of ~$0.09 benefit from tariff refunds.
• Full year 2026 diluted net income per share increased 0.8% to $1.20 (vs. $1.19), inclusive of ~$0.03 tariff refund benefit and ~$0.40 litigation settlement cost impact.
• Q4 2026 Non-GAAP Adjusted EBITDA increased 44.3% to a record $20.6 million with a 36.8% margin (vs. 28.1% margin in prior year).
• Full year 2026 Non-GAAP Adjusted EBITDA increased 27.9% to a record $66.7 million with a 33.0% margin (vs. 28.7% margin in prior year).
• Full year 2026 Non-GAAP Net Income increased 32.0% to $57.3 million (vs. $43.4 million).
• Full year 2026 Free Cash Flow increased 15.2% to $59.2 million (vs. $51.4 million).
• Full year 2026 Free Cash Flow Margin was 29.3% (vs. 28.3% in prior year).

Guidance and Future Outlook

• RSR has a prospective annual run rate of approximately $103 million based on July 2026 recurring service revenues.
• Management highlighted continued positive financial results and strong demand for door-locking products.
• Management noted a 36% growth in intrusion product sales in Q4, driven by StarLink fire communicators.
• Forward-looking statements include expectations regarding supply chain developments, growth of recurring service revenues, balance sheet strength, new access control and locking products, and opportunities in school security and fire alarm products.

Business Segments and Product Lines

• The company operates four divisions: NAPCO, Alarm Lock, Continental Instruments, and Marks USA.
• Intrusion product sales grew 36% in Q4 2026.
• Door-locking products experienced strong demand contributing to equipment revenue growth.
• StarLink fire communicators were a primary driver for Q4 intrusion product sales growth.

Market and Competitive Landscape

• NAPCO positions itself as a leading manufacturer and designer of high-tech electronic security equipment and wireless communication devices.
• The company serves commercial, industrial, institutional, residential, and government applications globally.
• The market is described as a multi-billion dollar and rapidly expanding electronic security market.

Risks and Challenges

• A $16 million litigation settlement charge was taken in Q3 of fiscal 2026, negatively affecting full-year net income.
• Forward-looking statements note potential risks including supply chain challenges and the possibility that actual results may differ materially from expectations due to unknown or unpredictable factors.

Management Commentary and Tone

• CEO Kevin Buchel described the fiscal year end as a "strong close" with record Q4 revenue and Adjusted EBITDA.
• Management expressed pleasure in continuing the dividend program, citing revenue growth and margin expansion.
• Management noted RSR represents approximately 45% of total Q4 revenue.

Other Key Points

• The Board declared a quarterly dividend of $0.17 per share, payable on October 2, 2026, to shareholders of record on September 11, 2026.
• The quarterly dividend represents a 13.3% increase from the previous quarter.
• Cash and cash equivalents increased to $126.9 million as of June 30, 2026, from $83.1 million in the prior year.
• Accrued litigation costs of $16.0 million were recorded as a current liability as of June 30, 2026.
• Conference call for management discussion was held on August 24, 2026, at 11 a.m. ET.