NAPCO Security Technologies, Inc.

Napco Security Technologies (Nasdaq: NSSC) makes electronic security and locking equipment. Wireless communication services generate recurring revenue from installed security systems, alongside hardware sales.

The September quarter

The quarters below ended September 30, 2026 and 2025, respectively. They are Napco’s first quarters of financial years 2027 and 2026. Figures are USD millions; adjusted operating income and free cash flow are company-defined non-GAAP measures.

Adjusted operating income removes the current quarter’s $1 million settlement benefit. Free cash flow is operating cash flow less capital expenditure.

Services cushion weaker hardware

Recurring service revenue grew 11.5% year over year while equipment revenue declined 7.3%. The preceding June-quarter release had reported 7.7% year-over-year equipment growth. Management attributed the latest decline to two locking distributors reducing purchases and said their sales to end customers continued to grow.

The settlement and liquidity

A $16 million provision had been recorded in the previous financial year. Napco paid $15 million in the September quarter and recognized a $1 million benefit after actual insurance contributions reduced its share below the original estimate. The class-action settlement has a final approval hearing scheduled for December 17, 2026.

At September 30, cash was $123.9 million and marketable securities were $10.7 million. Its $20 million revolving credit facility was undrawn.

The board declared a quarterly dividend of $0.17 a share on October 29, payable January 4, 2027, to holders of record on December 14. This matches the rate declared in August.