Key Highlights

  • Fiscal first-quarter 2027 Revenue reached $50.0 million, a 1.7% increase over the prior-year $49.2 million.
  • Recurring service revenue increased 11.5% to $26.1 million, while equipment sales declined 7.3% to $23.9 million.
  • Gross Margin reached 58.7%, up from 56.6%, and Net Income advanced 6.9%, reaching $13.0 million, equal to $0.36 per diluted share.
  • Adjusted EBITDA grew 3.8%, reaching $15.5 million, which equals a 31.0% margin.
  • The company ended the quarter with zero Debt and $134.6 million in combined cash and securities, even after paying $15 million to settle litigation.

Recurring Income Rises While Lock Hardware Falls in a First-Quarter Record

Napco Security Technologies (NASDAQ:NSSC) released its fiscal first-quarter results on Nov 2, 2026, covering the period that closed Sep 30, 2026. Sales increased 1.7%, reaching $50.0 million, which is the best first quarter the company has produced, and net income grew 6.9% and reached $13.0 million, compared with $12.2 million earlier.

Napco builds electronic security hardware such as access control units, door locks, intrusion detection and fire alarm equipment, and it also offers cellular connectivity for alarm panels. Its sales are largely routed through autonomous distributors, dealers and installation firms.

Service revenue, net of adjustments, climbed 11.5%, reaching $26.1 million, thanks to additional cellular communicators that dealers activated. Equipment revenue, net, dropped 7.3%, landing at $23.9 million; door-locking sales fell 10.1%, while intrusion and access products declined 1.8%.

Two Locking Distributors Reduce Inventory, Pulling Lock Volume Down 13.1% as Margin Gains

Lock unit volume dropped roughly 13.1%, with about 3.0% in price gains offsetting part of that. The company attributed the decline to two large locking distributors cutting their inventories, while project work recouped some of the loss. Those distributors' end-customer sales rose on both a yearly and a sequential basis, which management reads as healthy demand.

Gross profit climbed 5.4%, reaching $29.4 million, which pushed gross margin to 58.7%, against 56.6% earlier. The service margin stayed close to 90.1%, whereas the equipment margin fell to 24.3%, compared with 26.0%, because of reduced volume, the product blend, tariffs worth 1.3 points, and greater scrap and technical service expenses. Leadership projects the equipment margin will improve and reach 26% to 27% for the year.

Operating income increased 3.5%, reaching $14.1 million. R&D costs jumped 25.1%, landing at $4.1 million, and SG&A climbed by 11.1%, reaching $12.2 million, mostly because legal expenses went up by $1.1 million.

Annualized Recurring Base Approaches $106 Million as Cash Holds Firm Post-Settlement

Adjusted EBITDA rose 3.8%, reaching $15.5 million, or $0.43 per diluted share, at a 31.0% margin. Recurring service income represents 52% of the top line, and the annualized recurring figure is around $106 million, up about $3 million from August.

Free Cash Flow fell 79.8%, landing at $2.3 million, following a $15 million litigation settlement paid in the period. The balance at September's close still showed cash and marketable securities of $134.6 million, zero debt and $175.2 million of working capital.

On the Tariff front, the duty on covered shipments from the Dominican Republic, where most of the company's products are manufactured, climbed from 10% to 12.5% beginning Jul 24, 2026. Napco has submitted refund requests for previously imposed duties that were found invalid, but both the size and timing of any recovery are unclear.

Upcoming Jan 4, 2027 Payout and Plans for a Hosted Access Control Expansion

Directors approved a $0.17-per-share payout, scheduled for Jan 4, 2027 for shareholders of record as of Dec 14, 2026. Leadership plans to grow hosted access control through a new nationwide dealer and OEM radio partners.