"Exhibit 99.1"
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FOR IMMEDIATE RELEASE
CONTACT:
Richard L. Soloway, CEO Stephen D. Axelrod, CFA
Kevin S. Buchel, Senior VP Andria Arena (Media)
NAPCO Security Systems, Inc. Wolfe Axelrod Weinberger Assoc. LLC
(631) 842-9400 ext. 120 (212) 370-4500; (212) 370-4505 fax
steve@wolfeaxelrod.com
NAPCO SECURITY SYSTEMS, INC. REPORTS RECORD BREAKING
2ND FISCAL QUARTER SALES AND STRONG PROFITS
- Sales up 10% for Second Quarter, 20% for Six Months-
- Net Income Up 20% for Second Quarter, 211% for Six Months--
-Strong Distributor Acceptance of Reallocation Strategy and
Broad Product Portfolio Leads to Optimistic Outlook-
AMITYVILLE, NEW YORK - FEBRUARY 8, 2005 - 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 31, 2004.
Net sales 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 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 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 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 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.
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"In addition," Mr. Soloway added, "NAPCO has shown major improvements in our
financial metrics. In the past six months we have reduced our outstanding bank
debt by approximately $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 (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 was $4.4 million with a long-term
debt-to-equity ratio 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 increase in sales in the third and fourth fiscal
quarters. EBITDA* (Earnings before interest, taxes, depreciation and
amortization) has similarly improved during the six months ending December 31,
2004, almost doubling from last year to $2.8 million, compared to $1.5 million."
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NAPCO Security Systems, Inc. is one of the world's leading manufacturers of
technologically advanced electronic security equipment including burglary 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 control panels, sensors,
locking devices and access control systems. They are used in residential,
commercial, institutional, industrial and governmental applications. NAPCO
security products have earned a reputation for technical excellence, reliability
and innovation, poising the Company for revenue growth in the rapidly expanding
electronic security market, a market whose current size exceeds $25 billion.
For additional information on NAPCO, please visit the Company's web site at
www.napcosecurity.com.
This press release contains forward-looking statements 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).
- Tables to Follow -
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
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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.
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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
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LIABILITIES AND STOCKHOLDERS' EQUITY
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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
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Total Liabilities 15,504 18,768
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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
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TOTAL STOCKHOLDERS' EQUITY 39,343 37,904
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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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