NAPCO Security Systems, Inc. Reports Record Breaking 2nd Fiscal Quarter Sales and Strong Profits; Sales up 10% for Second Quarter, 20% for Six Months.AMITYVILLE, N.Y. -- NAPCO NAPCO North American Publishing Company Security Systems, Inc. (Nasdaq: NSSC NSSC National School Safety Center NSSC National Soil Survey Center NSSC National Senior Service Corps NSSC National Strategy to Secure Cyberspace NSSC NASA Standard Spacecraft Computer NSSC National Space Science Centre (UK) ) - Net Income Up 20% for Second Quarter, 211% for Six Months - Strong Distributor Acceptance of Reallocation Noun 1. reallocation - a share that has been allocated again allocation, allotment - a share set aside for a specific purpose 2. reallocation Strategy and Broad Product Portfolio Leads to Optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op Outlook NAPCO Security Systems, Inc. (Nasdaq: NSSC) one of the world's leading suppliers of high performance electronic security equipment for over 30 years, announced today financial results for its second quarter and six months ended December December: see month. 31, 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the second quarter ended December 31, 2004 increased 10% to $16,019,000 from $14,629,000 reported for the same quarter a year earlier. Net income for the quarter increased 20% to $872,000 or $0.10 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to net income of $728,000, or $0.08 per diluted share, reported for the same year ago period. The increase in sales for the second quarter was due primarily to increased sales of the Company's Alarm Lock door locking and NAPCO burglar BURGLAR. One who commits a burglary. (q. v.) and fire alarm products. Net sales for the six months ended December 31, 2004 increased 20% to $29,459,000 from $24,464,000 reported for the six months ended December 31, 2003. Net income for the first half of fiscal 2004 increased 211% to $1,385,000, or $0.15 per diluted share, compared to net income of $446,000, or $0.05 per diluted share, for the same period a year earlier. Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a Soloway, Chairman and President, stated, "As evidenced by our strong sales in the first quarter of fiscal 2005, and subsequently extended through the second fiscal quarter, our business strategy of reallocating our burglar and fire alarm sales across our extensive national network of independent distributors has been well received and the revitalization re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. of that segment of our business has taken hold." "Our independent distributor network has done an outstanding job of reaching out to an expanding list of security dealers who focus on residential, commercial, industrial and governmental security installations, resulting in increased acceptance and sales of NAPCO alarm products," noted Mr. Soloway. "In addition," Mr. Soloway added, "NAPCO has shown major improvements in our financial metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. . In the past six months we have reduced our outstanding bank debt by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4 million to $4.4 million and since December 31, 2003 by $9.2 million. Net cash provided by operating activities during this period was $5.1 million compared to $2.6 million a year ago." NAPCO has recently introduced its newest, expanded catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. (available on request) demonstrating once again NAPCO's commitment to its customer's need for state-of-the-art breakthrough security products and systems; a commitment that is met by devoting over $4 million annually to R&D. "As the second half of our fiscal year is historically our strongest, we can look forward with a great degree of confidence to reporting significant sales gains over the remainder of the fiscal year, and, since our bottom line is sensitive to volume, we can also expect a positive impact on net income and per share results. We look forward to reporting another very successful year," Mr. Soloway concluded. As of December 31, 2004, NAPCO's current ratio was 4.9-to-1, working capital stood at $28.7 million and long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. was $4.4 million with a long-term debt-to-equity ratio Long-term debt-to-equity ratio A capitalization ratio comparing long-term debt to shareholders' equity. of 0.11-to-1. Inventory, which normally builds as NAPCO enters its strongest revenue quarters, has been carefully controlled and at calendar year end 2004 was $15.0 million compared to $17.5 million at December 31, 2003. Inventories normally increase after the first half in recognition of the anticipated cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. increase in sales in the third and fourth fiscal quarters. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become * (Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
NAPCO Security Systems, Inc. is one of the world's leading manufacturers of technologically advanced electronic security equipment including burglary burglary, at common law, the breaking and entering of a dwelling house of another at night with the intent to commit a felony, whether the intent is carried out or not. and fire alarm systems, access control products and electronic locking devices. The Company's products, including those of Alarm Lock and Continental Instruments, feature some of the most popular and best-selling best·sell·er also best seller n. A product, such as a book, that is among those sold in the largest numbers. best control panels, sensors
For additional information on NAPCO, please visit the Company's web site at www.napcosecurity.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve numerous risks and uncertainties. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in the Company's filings with the Securities and Exchange Commission. * For the six months ended December 31, 2004 and 2003, respectively, EBITDA has been calculated by adding depreciation and amortization ($563,000 and $558,000) interest expense ($126,000 and $230,000) and provision for income taxes ($742,000 and $241,000) to net income ($1,385,000 and $446,000).
NAPCO SECURITY SYSTEMS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share data)
Three Months Ended Six Months Ended
December 31, December 31,
2004 2003 2004 2003
---- ---- ---- ----
Net sales $ 16,019 $ 14,629 $ 29,459 $ 24,464
Cost of sales 11,101 10,077 20,268 16,929
------ ------ ------ ------
Gross profit 4,918 4,552 9,191 7,535
Selling, general and administrative
expenses 3,468 3,305 6,840 6,582
------ ------ ------ ------
Operating income 1,450 1,247 2,351 953
------ ------ ------ ------
Interest expense, net 58 102 126 230
Other expense, net 55 24 98 36
------ ------ ------ ------
113 126 224 266
------ ------ ------ ------
Income before provision
for income taxes 1,337 1,121 2,127 687
Provision for income taxes 465 393 742 241
------ ------ ------ ------
Net income $ 872 $ 728 $ 1,385 $ 446
======== ======== ======== ========
Net income per share*:
Basic $ 0.10 $ 0.09 $ 0.16 $ 0.06
======== ======== ======== ========
Diluted $ 0.10 $ 0.08 $ 0.15 $ 0.05
======== ======== ======== =======
Weighted average number of shares
outstanding*:
Basic 8,525,500 7,796,399 8,516,019 7,721,077
========= ========= ========= =========
Diluted 9,104,098 8,865,430 9,035,422 8,288,747
========= ========= ========= =========
* The 20% stock dividend declared on November 8, 2004, has been
retroactively reflected in all 2003, share and per share data.
NAPCO SECURITY SYSTEMS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
December 31, June 30,
ASSETS 2004 2004
------ ---- ----
CURRENT ASSETS
Cash and cash equivalents $ 1,579 $ 796
Accounts receivable, less reserve
for doubtful accounts of $320 and
$355, respectively 17,094 19,927
Inventories 14,992 14,594
Prepaid expenses and other current assets 610 760
Deferred income taxes 1,763 1,763
------- -------
Total Current Assets 36,038 37,840
Property, plant and equipment, net 8,937 8,987
Goodwill, net 9,686 9,686
Other assets 186 159
------- -------
TOTAL ASSETS $54,847 $56,672
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Current portion of long-term debt $ - $ 1,900
Accounts payable 4,759 3,789
Accrued expenses 789 963
Accrued salaries and wages 1,792 1,911
Accrued income taxes 4 285
------ ------
Total Current Liabilities 7,344 8,848
Long-term debt, net of current portion 4,363 6,400
Accrued income taxes 2,520 2,243
Deferred income taxes 1,277 1,277
------ ------
Total Liabilities 15,504 18,768
------ ------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY *
Common stock, par value $0.01 per share;
21,000,000 shares authorized, 8,544,710
and 8,503,670 shares issued and outstanding,
respectively 85 85
Additional paid-in capital 11,435 11,381
Retained earnings 27,823 26,438
------ ------
TOTAL STOCKHOLDERS' EQUITY 39,343 37,904
------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $54,847 $56,672
======= =======
* The 20% stock dividend declared on November 8, 2004, has been
retroactively reflected in Stockholders' Equity.
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