NAPCO Reports Results for Fiscal 2007
NAPCO Security Systems Inc. has announced financial results for its fiscal year ended June 30, reporting lower sales and profits due to slower housing starts and export sales. However, results showed a substantial increase in locking and access control divisions.
Net sales totaled $66,202,000, a decrease of 5 percent reported for the fiscal year ended June 30, 2006. Operating income decreased 32 percent to $6,501,000 in fiscal 2007 from $9,523,000 in fiscal 2006. Net income for fiscal 2007 decreased 31 percent to $4,217,000, or $0.21 per fully diluted share as compared to $6,119,000, or $0.30 per fully diluted share for fiscal 2006. Per share results are based on 20,556,000 and 20,605,000 fully diluted weighted average shares outstanding in fiscal 2007 and 2006, respectively.
“Although earnings for the year were lower, NAPCO still achieved the third highest net income in its history despite an environment of decreasing home sales and tightening credit markets, which has resulted in lower residential intrusion sales,” says Richard Soloway, chairman and president. “In contrast to the residential marketplace, we continue to be very pleased with the commercial portion of the business, due to the strength of our locking and access control products. In addition, I am particularly encouraged by the renewed performance of our international sales division. While foreign sales year-over-year declined by over $1.6 million, the international restructuring we implemented earlier in the year has begun to show measurable positive results, as evidenced by fourth quarter sales in Europe increasing by over 16 percent as compared to the fourth quarter in fiscal 2006.”
The gross profit for fiscal 2007 amounted to 35 percent as compared to 37 percent a year ago. The decline was predominantly due to lower overhead absorption as a result of lower production levels, particularly in the second half of fiscal 2007, according to the company.
Lower production levels were a part of the company’s efforts to reduce its inventory levels as inventory had increased during the year due to a high sales forecast, mainly in the company’s intrusion products. The company’s recent efforts have resulted in a reduction of inventory levels by over $3 million in the fourth quarter.
“NAPCO’s financial performance this year was disappointing. However, our confidence in strong future growth remains undiminished. We have solid financial resources, including an increased credit facility, to support our growth and the wherewithal to acquire companies that will be immediately accretive in market segments that mesh well with our own,” says Soloway. “We will continue to aggressively invest on R&D to provide the marketplace with innovative products and systems that will maintain NAPCO’s position as the market leader in developing and providing security products and systems to meet the needs of our government, industrial, commercial and residential customers. We believe that all the necessary components are in place to improve shareholder value in fiscal 2008.”
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