NSSC - Earnings call transcript Q4 2021 | Napco Security Technologies, Inc.

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Operator

Greetings, and welcome to NAPCO Security Technologies, Inc. Fiscal Fourth Quarter and Full Year 2021 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Patrick McKillop, Director of Investor Relations. Thank you.

begin. may You

Patrick McKillop

financial I'm of NAPCO morning. discussing for Director Investor opportunity XXXX. the discuss of us quarter review fiscal Hello. fiscal to should and Good Patrick results. have morning, the for year our to call Security. today's now, all release for and Relations our for fourth all Good By conference McKillop, results you thank press joining the you had

available a If Investor of copy in you is website, the section release not, our of have Relations the www.napcosecurity.com.

Richard On today Vice President call NAPCO the of CFO. Security and and is Senior Soloway, Buchel, and Kevin CEO Technologies; President

school Before This expectations, future of based forecasts a include, take presentation performance. and the our relating and recurring recurring on to estimates, forward-looking of performance and beliefs, statements current SaaS dealers, management's of statements to services, forward-looking drivers revenue contains product benefits we without forward-looking annual recurring revenue. our growth such products are anticipated company's expected let limitation, statements. control rate customers run security current market trends the statements me the costs expenses These to revenue on monthly for and and moment products potential opportunities, projections to begin, judgment, that read ability as and based business,

incorrect, but those materially forward-looking actual to filings, Forward-looking unknown in statements include, to underlying XX-K. involve subsequently or limited cause Other our unpredictable risk results on those not contained from be or report from assumptions actual statements. differ the risks in Form materially SEC factors may in statements. proving our differ to the that factors including annual could and factors are uncertainties to, results forward-looking These cause described such

reasonable, believe that future cannot performance guarantee we level are the -- we statements or of in achievements. the activity, results, Although forward-looking reflected reflect expectations

over of to call is We're road and today's company required except conference. remainder for reliance undertake to planning in and and to stated, conference date, and of we're provided law. throughout in as we would that when place today's trips. such again. NAPCO, assist Tomorrow, marketing we but Investor is CEO I applicable to call on person outreach the President to all presenting forward hosting to I we statements. way, unless thank and I CL front. mention just like forward-looking virtual no meet on shows looking IR September let forward that another the the not the the over those as me and as this the in turn information, should one-on-one call in I under press meetings a be held release will a undue otherwise is You yours. XX, these duty a turn great of being Conference, Soloway, All more before information can few Technologies. these out wanted update the and and King such small-cap will which Richard NAPCO of at do, Dick things look to for virtually, moment, is With especially floor year Security folks the us of conferences crucial, Dick,

Richard Soloway

joining morning, us you conference and Thank to Good our call. everyone, results. Patrick. welcome you, Thank to our for today discuss

and sales We profits fiscal fiscal report 'XX. and for record our are our excited 'XX very year to QX

$X was sales, QX $X.XX. and 'XX for EBITDA Street amounts. for net and Our per significant on metrics XXXX EPS, EBITDA over FY per fiscal for and share estimates results consensus beat share income by

of revenue. RMR July based are several $XX.X recurring run which excited that's XXXX million $XX in that on to set We monthly goal, recurring now rate ago we have we annual revenues. report achieved The our is years million

continuing balances cash our with strong remains sheet grow. balance Our to

trends, industry The as which NAPCO We school costs continue us key team and to management to locking solutions, equity fire continues systems enterprise here include capitalizing and our as returns and on growth, for on are control architectural controlling intrusion metrics security and focus products. shareholders. important access alarms, wireless key of focus metrics profits at plus on on the well

We continue our aligned execute of are strategy, as and shareholders our to interests NAPCO XX% the senior owns equity. with management at business our approximately

'XX call I'll now then and be with strategies provide I'll our into fourth go overview I and of results, an Kevin Before our to greater on Buchel, back quarter more over detail, turn our outlook. who'll the fiscal fiscal CFO, and Kevin?

Kevin Buchel

Thank you, morning, and Dick, everybody. good

for well for quarter must XXXX alarm same has by a strength commercial XX, period fiscal strong June margin as $XXX.X compared a locking same XXXX, revenue. result to shift very of The X door sales school to July and gross to as for period of as XX, gross $XX.X with the fiscal the products as the of in net Gross with June million to and Marks compared the primarily margins due do year security revenue and much by they ended school was the basis a with the to was quarter, quarter growth, point year. for gross typically And XX% remain as that gross service and with $XX.X increase $XX.X Dick fiscal projects growth ended been on a affected other services our on COVID goal a gross recurring XXXX. affected was to we not significantly basis recurring intrusion year $X XXX in Gross last mentioned ago quarter from little in locking to have school million lower year. $XXX to the improve, have primarily secure. increased is as products, XX% year, fourth sales year, products recurring the XX% The aforementioned from This equipment revenue before, of of increases which margins their continued $XX.X coming an now buildings margin million increase which improvement. the million year quarter increased period compared primarily a equipment ago. a ago. was revenue. period For to brand but excited which to million years sales XX% was The capital to partially pandemic profit by report that has run for last and fourth fiscal based million fiscal continued at sales. Net million compared we XX% XX% revenue away as intrusion radio margins XX% fire ago, for $XX.X primarily $XX attributable recurring XXXX, XX% revenues; $XX monthly And XXX to months XX, of also a StarLink improvement. increased the profit we in year products. margin recurring in institutions Recurring districts ended year business, revenue our year same postponing higher continued the offset as of primarily set for and annual compared security sales X the products, several the compared XX% XX% profit million year to increased to Gross a its of have the and the strong are to for fourth for record sales recurring increased the decrease the period margins. a the margins, June in margin the recurring XX% Gross rate margin as throughout achieved in due to for gross when million lower for XX% a XX% sales same months XXXX, had same gross XX% million record the for in fiscal increasing typically year as the related revenue to for a Recurring revenue fiscal for point for ago. were the

income as for Operating compared a XX, year XX% increases year. or June Gross delays for expect a for million we tax X weren't year year increased million quarter are $XX.X XXXX XXXX, Operating was or Earnings net expense not for significant XX, or $X,XXX,XXX pandemic, ended ended $X,XXX,XXX months quarter year June for $X.X the the of to payroll fiscal year overhead XX, recorded a as as decrease future. and a as fiscal a seen the for million diluted year the $X.X operating fiscal X% XX% Net to compared than for record to same for XX, fiscal per the our fiscal year million increases as year this, net for a million company's on to as $X.X is reopening, same by ago. or These X% to million the increased Selling, the security for fiscal The adjusted the XX% will sales fiscal administrative $X.XX per same projects sales $XX,XXX the $X.X or development decreased as million settled EBITDA for to the as year XX% $XX.X for XXXX. record trade effective million share the $X.X X as period we were to of compared was months travel June well compared a $X share the for expenses -- period the to And of year sales a expenses fiscal lower result taxes in of compared year diluted Research and is the commissions the Net fiscal were ago. ago. was last June compared increased rate the quarter for in XX, XXX% general The fiscal increased million $X.XX June XX% to for period And the to now of sales increased XX% during inventories of the period for $X.X a margins period ago. for primarily June XXXX, XX, ended million in also EBITDA X% $X.XX June of for increased provision to last to $X.X XX% development was as XX, equipment to in year. income $XXX,XXX and the compared a per direct sales per fiscal diluted and they increases XX% and share of period XX, ago. ended to diluted effective a in period in to XXXX, restart a period period schools per increase XX% X% income to June for same constant by months out XX% year a a ended tax period due of $XX.X administrative $X.XX or to XX% to diluted per a income as for to COVID it same million quarter the XX, ended fiscal diluted million the The and to which was income for to was $X.X of about have year compared the $XX.X ago. of same the $X.X for the or $X.XX or share year general to $XX.X XXXX, reduction was million million million rate, or the $XXX,XXX for year June a by team to positive million the to The taxes X for fiscal of company's or income equipment for XXXX increased sales XXXX, June school million of period or compared ago. the affected million last absorption sales on period as believe, for to compared additional for $X.X June for increased sales compared year a to to now $X.XX and compared the XXXX, ended at share ago. relatively due the of as as show strategic effect ended general X sales same a X for the as XX% share year ago. a ended last and result sales The XX, million $XX.X ended period margins year X% loss for the XXXX, a as we we and expenses the Research X% by increased in provision increased as and occurred IRS loss an fiscal diluted quarter million months or projects sales period $X the months XX% or primarily XXXX, the same the XXXX. the year compared and same share for $X.X as ago. of for administrative XXXX, ended XXXX, as same selling, during million $X.X for per sales share of have same for were have audit $X.X in sales ago. income rate taxes seen XXXX. XX, for same cancellations, or year. $X.XX same some While Adjusted and expenses XXXX, June same effective loss earnings company's for of expenses compared $X.XX payroll. sales year XX, $XX.X million an year. per fourth or year X% the expenses and the Selling, share

was is the pandemic XX% the increased fiscal of I X.X:X decreased versus $XX Moving That $XXX,XXX and XXXX more to a provided $XXX,XXX less This current current was $XX.X of my reduce activities last operating XX, million at ratio, million to ago at $XX.X year of June XXXX, XXX% XX, capital at last remarks, securities as June year. the $X.X June was increased June million sheet. XX, utilizing by million the defined liabilities compared additional compared effort operating by XXXX the and compared for at million current XX, $X.X for defined to provided cash now assets to current the well XXXX. as inventory million it cash Working CapEx call as to up some million in Current decrease versus the and XXXX. At as equivalents June the inventories company $X million XX, million as XX, appropriate with primarily XX, XX, levels. as XXXX. $X.X in had Dick. concludes the year to capital, on had working $XX.X compared with during the the fiscal XXXX. and year. assets XXXX as like the as to to for X.X:X and $X.X period company-wide would as from of return quarter at liabilities, divided June quarter marketable $XX Cash by company back million by COVID-XX period Inventories $XX.X to balance June XXXX, to built Cash year. million last activities during result formal June

Richard Soloway

you. thank Kevin,

breaker during was the an as Our a company's incredible and QX for record this pandemic. we sales which net year the history, delivered a highest in fiscal is ongoing income fiscal and year COVID achievement

continues Our primarily attributable be fire alarm intrusion the success and commercial business. to to

a certificate Importantly, to system maintain means of the that building mandated alarm must in a a fire fire receive which alarm item, and a business have order is commercial occupancy. nondiscretionary

its revenue buildings now set a we alarm keeps from the for millions StarLink profitability the of products to The in RMR fire, goal older line $XX this away we $XX.X universal infrastructure. with are cycle to they these technologies focus our of run rate continue ago. lines requiring legacy July high business achieved IoT of ongoing. a still relationship, we and on conversion sell are nature. years end, communicators. are early and million of segment of creates ourselves that Recurring of The part and new copper beginning sale opportunity several still The annual which is have upgrades, intrusion the as paradigm for communications of million given XG the essential the conversion is that shifting that revenue proud XXXX, the are aging recurring We legacy and not

continues offer the AT&T and of Verizon calendar the to the customers their service. Also, as significant have Verizon opportunity. sunset integrators LTE both widest communicators for networks announced AT&T dealers upgrades year need in dealers U.S. for and with creates coverage StarLink to the Our The school to their both a XXXX. and in security This XG opportunities company. the great be complete

top this generate. Our fully solutions given healthy the margins for priority products remain a integrated those market

significant experienced cancellations we've projects. but pandemic, school delays, COVID in not the During security

are federal school news these we wins which as the institutions for in they of on U.S. our need the and in release. university the regarding from government projects sharing reopening in -- look forward such clear faculty. to and We Press to to total security and these prior project need North are we As Also at as a schools middle for has the this we a Mexico Florida the recently, year, The Carolina. New of happening need school. reminded with grants solutions available that the remain better. dollars. future. receive from security that funding us allowed state for a active focused projects opportunity is are when of few already must planned projects are protect authorities -- been never releases shooter to schools Options approval fall, issued fund governments, stop We availability were these solutions and this and providing still more schools students their events to billions products in is for able mass shooting are

was Air our XXXX, latest called offering launched. Access product During

company, of not to recurring is market had investment a revenue Access access until now. which no our a or upfront for Importantly, installers; we Air and for is have problem include software believe, Air the The Air recurring control corporate in cellular-based need IT locking major system, access which backups networks, the bring divisions expensive no industry's billion first interfere database with revenue and hardware, be of benefits Access can control on-site which, opportunity. Access will need to no $X updates.

field of early a division each the from control. revenue at dealers, show trade access now recently. in company, launch, we've that ago this recurring are NAPCO The alarms, and the feedback dealers received launch we of from while While locking our from of the means West in ISC and months positive generates few Air EG, Access stages

We will begin our Q&A moment. session portion a in this call of

Our fourth fiscal fiscal a XXXX one. and quarter year very was successful

Before XXXX to significantly And and thank year ownership maintains XXXX, NAPCO of a in and support We in sales, would about fiscal remain our for XX%. streak. and joining for excited March exciting now equity, the began we consecutive I beyond. NAPCO level senior future back COVID-XX our their high like a have. of XX sales in had new us achieved we approximately have of management quarters to everyone impact record growth pandemic country year-over-year started the

remarks like please have the concluded. open to session. now We would now you. formal Our Operator, the Q&A call Thank proceed. for

Operator

from Walkley first [Operator comes with Canaccord the Genuity. Mike Instructions] question Our of line

Mike Walkley

you then the $XX of revenue? strong time set into built and to congratulations My about from question million growth larger think revenue, channel. starts think Access numbers. XX% question over recurring with time? on off it's that growing When to scale achieving you on over we Kevin, a on recurring you that of the good revenue at feedback Air quite the And contribute results first the -- materially should ago. now do recurring How long just the is hit, target

Richard Soloway

your will us. central X The buildings have and link have Well, communications we station. to those we are converted. use The they which And opportunity years. building And a technology commercial direct have there's between is for old for opportunity thank be the a for StarLink these replacement copper. the radios, the And copper. the million that you I buildings support great be

excited very that. we're So about

were but also that it's not radios We there's by and thousands of cellular network. to have be networks, that they the hundreds out which and old there. lights upgraded were out it. of They necessarily of Those primary mothballing they radios backup radios, for next have before hundreds those radios, year radios to done have are on the be had

that's So help sales. to at create another back our us wind additional

exactly it what like, great. So fact I looks opportunities the are that for can't tell except the you

And the opportunity alarm And locking will for can starting revenue we also conversions, for just always we recurring dealers cloud. successful. fire think to future we lines. revenue in the we're exciting of of It's keep on more have because is of and Access first inning get. I we up very have also in for do dealers, division. an lot Air product to Control, do that recurring then going we can cloud. very, Nobody this see equipment will very unheard great to managed something a been companies dealers not recurring very the The those each do And a conversions. jobs this. and was to wanted But going to And is that happen. the conversions, wanted do. in these Since like to those fire get and quickly. by the locking, $XX us. predicted make updates be and be gets of. for installation get invention we business didn't gives for revenue predicted Recurring number, we the to access which to the It will Access the they ago, revenue the up to and could RMR where exciting which it million dealers now in the we X get The new be intrusion installation is years changeover professionally dealers the

think years. it X.X but dealers' these new be to builds It's going So creation, a in I it's businesses. equity

those away. already the very I for have team be sales we get asking a word one exciting company, over them. IT to give going -- a out. me an I Send hacking great to wiring. about people the And already out. right they their for through going that's And putting of was it's So it. going of system in in Access a dealing it grief lot check of they're with department Control because and afraid it's to want

product your lot work and a a jobs. that allow do from separate and more So will to lot us more

future So we're excited of about Air the Access.

Mike Walkley

understand Kevin, lower but radio from drives -- channel And I revenue. follow-up think should school has margin And a and and on business how term? you. longer margin, the strong it mix then what's Great. maybe maybe several just the that question product quarters about the feedback for recurring gross pipeline? How the we over the next maybe

Kevin Buchel

Okay, and Thanks support your for for the Mike. question.

the So them there we're won jobs is to as lots them in back. the from of see focus. We the about But and what is vaccines. focusing team we're now. sales soon because of of hold. basically school the jobs the want tell with and and integrators talked jobs of going back question to are the we hearing security, person concentrating now school jobs. battle security to it start. kind lots we've whole as the when us, getting on schools and It We're what kids start these back, That's masks the over a that time all back are just And concentrating they not out they're on there. on on I'm are our our kids Getting

by come next start, a I saw quarter, of a of we the you kids believe, back, see to stay This Certainly, But But The school crazy. of we expectation couple It's shootings. going in already, August. to to our kids the announce. going because jobs think We're security. is it delay school quarters. is was comes QX, security world there maybe this anywhere. started is has we'll when are it's here starting in once temporary isn't couple can happening school to what but COVID. started announce to So even It's this some been crazy This coming shootings. -- now. back

phenomenal. dominate margins. now, we're a this be many And Right dealing will it's at we're recurring and so you this that past but comes players So selling it know with the radios And back, the recurring the big margins, And shift of lot XX% had and the product it because back. When lower to them. a of of will quarter. that's margins margin of we're lot selling leads yes, back.

then believe, take into we'll school And week. again, mix, I into on the XXs. that the we gross will the number, higher margins higher of that every for the day So the will be hardware, back come the the hardware when go. jobs back the But go margin

us, it's temporary So to situation. a

Mike Walkley

And me I'll on gross it pass margin. on. for the last question the

it's you've and think quarter, kind won't on you of generation. have as inventory the September about probably you where Just that the quarter, the getting congrats but usually like wanted you in seasonally down off revenue June on reduction had cash the

and us with margin So sequential is there changes? Or should we guide would any to gross think similar term puts short you kind other takes of stabilize gross the margin mix? in on

Kevin Buchel

we're like I the say, Mike, going year. QX, in the would inventory see we saw decline not throughout Yes, to

getting a those the about just make components. we're sure supply reduce effort talking read things One of parts. so don't not us. inventory And extra happen issue. of We've I'd It's of We on a spend time I run than have of that buy out made doing, cash. mess doesn't and -- out. got conscious the an spend the to we're sure run to key those difficulty plenty we it. any all hard-to-get of have be it. making now But rather if conscious we about that a effort in to lot to parts, making we chain We inventory,

the less. to be be maybe the next I what think expect margins couple the in expect And way to quarters So saw, been. to also it we short inventory just little a I better. will in don't But certainly, term has I these drop it similar don't of

Mike Walkley

strong helpful to and sheet the it Right. components. year. wishes strong another balance use That’s for makes tough to to the get those pass get the and sense fiscal I’ll line

Operator

Needham question Ricchiuti line Jim of the comes next & Our with Company. from

Jim Ricchiuti

the from of decline revenue about have concerns as component Again, just if about like the you all sounds going at the of say, just to Kevin, alluded the your mix. back function, to it the to, higher mix, overall just think just sequential QX it on level hardware to margin? still gross overall a all a of related things some in we people So headwind radio and QX, fair Was gross it's side. margins that I'm

Kevin Buchel

first dealing It's to we're We're projected. sales some is is that's big, school mix typical twofold. and is the the And radios. business strong to part well revenue huge that thing with seeing this -- even of future the tremendous margin recurring phenomenal. lead and Jim, going Even when we is for that I'll from Well, our radio we as back, now. big say, One beyond players come shift. the saw the a that's makes that jobs the customers, as what

competitors. next And good so XXs QX. in X I happy the it's next very thing sure -- I future, believe have in back we But parts. going regard with down that to with we not not We're to to fiscal lot automakers, a -- back, margins that the into And see come going to are to this we in our going lot and with margins a it's maybe by think with end. making not utilize don't of stay don't will of the sure have affect some supply we and quarter, to to our This back chain the make and maybe components, our inventory We're hard-to-get will recurring foreseeable We're like that then before, us. but the run we have extra maybe are where very, a stay. see we're road. those going. we is out. this will in our if come saying that. we'll Schools -- And we here vigilant balance come on sure and is I do make issues here everything were it after, do think go sheet to to doesn't sure But we make out, power run

Jim Ricchiuti

it traveling, and expense, the got way you're Dick, back you've sales the more on it. trade like question. like and are thinking? now. coming looks getting level show back this the a side should side. Got marketing be expenses to just I a Is of that And operating It mean, more presumably folks normalized sounds the SG&A we particularly what's follow-up in,

How So I'm more going Kevin. we think now? about a maybe OpEx for Is you, question it and this wondering, normalized forward? should

Kevin Buchel

ISC high X.X%, coming any Yes. bans back say the SG&A higher is Vegas they for sales July more being us, our and in particularly was the that come traveling, would usual. as Las in but There’s have other trade the back. nothing Vegas. in are COVID it's for normalized. We travel SG&A think the guys had in July, I West And our we range business our were X.X%, I level X.X%, Hopefully, team, like things commissions don't show. doesn't also an this show quarter. because with in But Las more in had

to pretty back. changes, And – normal move right normalized. But just few projects are yes, special And X%, SG&A that as R&D, where as well. have need to we’ll level we’ll see you we X%. if the here as let you anything is we that’s so going faster, now, for more might so If be, and a back, is X%, saw, maybe what but add there. and guys traveling we shows We know. grows our And engineers it’s not it high things

Operator

William line question the Our Matt Pfau of comes Blair. from next with

Matt Pfau

demand? where And pre-COVID? congrats the good demand they pent-up what terms wanted are I you How the of to were in by ask to And in was or of that on they hardware the results. much where relative are on quarter. then result driven levels seeing

Kevin Buchel

Thanks, Matt.

the I tell So how at is. the look can to what one things the like sell-through I distributors demand That's at, look stats. that of I

much mentioned I've with are conservative they calls, prior on they this still in they're keep choice, but sell-through As But hand. have no distributors buy. more stats, mode. in to strong what And wait-and-see on

the top at So full the up XX% the year-over-year for was It our guy as I of was our up look customers, #X year-over-year. for intrusion year. our customers, quarter XX% sell-through stat

low. I XXXX maybe So COVID, COVID said year it's was the

look at even XXXX. better. me was Let It

at XXXX, to customer, looking And quarter, the was up compared #X was again, up the it year. So for our for XX% XX%.

good. really an that intrusion then customer. I But was said looked it So

I schools locking locking the as well sales, look at Radios holding versus intrusion, as least hasn't done some at impressed. let the was of but So me and right? down the locking

look I it it was I even XXXX, still the year-over-year. up XX% XX%, was I Then was better. for at I then to customer XX%. XX%, locking up And then 'XX, year-over-year. -- XX% #X back up our year, it And was looked I saw looked good. #X at the sell-through went it and So guy, was versus quarter, Then pretty for the

stats of strong. the have should not still with X these the they all So don't no sales. stay are sales means choice very to stats going anymore. sell-through months which These carry lose to strong, like this, want sell-through maybe they're numbers supply They

believe so getting will do I its the My That's will right hardware But direction strong. happen. that stronger. side are keep the we in what locking the metrics margins end the holds all better. stats, hope is the bargain So that ultimately up think we're sales going all the of and

Matt Pfau

hear. to update what that of Great it. with wanted or and sort ask just And Got is iSecure to traction there on product? then

Richard Soloway

a has aspect also the in a only unique sell not fire, quick And it's us complement, it. dealers intrusion It to the line. to a place product but allows install. full of iSecure our

made it to And to years and and It's in hit part growing we to our that of reason volume building keep future. I ago. it's million So the $XX revenue. number continue adds we it the to the prediction we've got recurring expect the

of combination StarLink, have in. have a you control So panels StarLink's the you fire with built

StarLink in. built which have iSecure, You a has

Access, it. integrates Access which locking StarLink Air business and for Now Control have our Control, locking technology which the is and in Access with we

we our for great building going keeps this future success of all goals, forward. So and expect

in So we our it’s million great recurring by the and be amortization will because there's and be hardware The contribute by And -- our expect that recurring also of we're also for overhead our and time. be is volume, that to that also the is always company, add get course, our product we invent which revenue products great and margins factory that'll of volume even on recurring creates a new of in goal, to more to of line that, addition XXXX our have XX% revenue. to more course, to XX% of the goal. you our company trying to profitability XX-XX is And $XXX monthly our -- revenue. that

to future it contributes exciting really So lot for an us. a

Operator

question of next the Our Jaeson line from Schmidt with Lake comes Street.

Jaeson Schmidt

projects. follow you there to mentioned were want the up delays. school comments Just on some your on And

been these the these specific for remain Just have or up if of curious in the rollouts air? timetables rescheduled

Kevin Buchel

these the have some some care it's They Jaeson, not. do in are are been not. or scheduled time kids Typically, don't a and about if year. school can certain projects when K-XX, a they of

They've know are started. We the they happen, K-XX they necessarily it soon it's don't rescheduled. to University, it's we going have a the things don't to kids waiting. we've happen. They've want schools. settle, want They school What kids been of hear, been just anyway don't In it's okay, approved. been hearing Kids the they virtual So in is these start a not to want to out setup. different. they get to start to to some Once expect be in going want there. in, anymore. It's university, these it's be typically, with person. of They been soon. up up

about that's I wins announce jobs these guys to specific we almost on, are up. going that of pretty will approval and the So you we we know. we why than feel we can't part get and we'll that. get I this can calendar will latter at more we're tell good whatever be year, will which announce you start

Jaeson Schmidt

then on this $XX that run year. achieving And annual helpful. That's Okay. million past rate congrats

can goal to new Just going sort curious look if you'd for? of be a willing out we throw forward that

Richard Soloway

to that we said and million launched, the marketplace XXXX, with benefits development. -- And we business. tuned products the And by Got and an want our and is the is Well, have new been reap we in on the us. that a as expect new are have very $XXX we of keep the recurring have $XXX said, say from part in believe million That's very we be products big that products and We doable and goal. great strong are hardware. we're goal that our it. in a have we now to it's stay And goal. in And a mandated. I in that eye to business

get It's conversions off of those to commercial copper have buildings, all have lights we copper buildings, because So that residential going buildings out. over.

in well Verizon wires, are country it's copper best radio lot network. the business copper, the and work And utilizing we a as So a it the owners wires. in dealers away. as all the there. network because to have is works and since dealers work the AT&T paid the of for which a it it substitute past, Verizon out building in we -- as The use StarLink the considered money. going AT&T copper is of areas They're competitive copper to and going of for lot the make Whereas those

Now won't be these carriers involved.

carriers. those can money the the dealers of instead So -- make

So -- got copper, truck, And which are converting is very installed the competitive profitable as easier very, type country around getting the do been out they're of a any with panel of conversions they've that's going the their It’s for unique business. can for beating substitute exciting the a it life in that over. dealers. That's the technology lights bushes, very why out job, get them and the type makes any XX that's and last years. StarLink more to control their on

So we’re that to offerings we’re excited the our about giving dealers.

Operator

question with next from Our Ruttenbur Brian of comes Imperial the line Capital.

Brian Ruttenbur

year. and quarter Great Great.

you First and into in sector. Brands. and that does legion been about talk yet Spectrum involved at question, that let's hasn't ASSA impact How now addressed lock acquiring is that that the a start level? nice one impact with You're ABLOY Can you? the ASSA a getting macro obviously bite

Richard Soloway

And it hardware, hardware. have big when it out. dealers doing or fight when don't run type customers of hardware. of We use the kinds guys mill the of a all customized lot the customized the do Whereas we our of turnkey, less They guys jobs. the more they're big Well, hardware. like make it

retail but into started and have, it's an them. we -- to It's They network, went foreign very or of technology. to that We're these come then products. into that lot lower and hardware that business. into less about more Grade years, now XXX their It But locks. which retail X referring Grade a companies, kind the should X, hard radios. They electronics started to you understand. and this catalog not X company a we're manufacturing technology companies are quality in big they're company. commercial architectural know And In lane We're not out of big And guys stay company, door RMR, took recurring addition Grade don't kind to were acquisition into for unique mechanical generate. which primarily the in many We get has to around lot that. Grade in only that, not monthly about, of of technology our don't company customized, locks, We as the we're buildings make X, have years of software make the electronics are and like technology. This business. a commodities and items. us commodity locks. but that's There's revenue. the retail Unique, technology because a that of network into stand-alone, been or are locks, a technology they

model at So for business all. our not see in of any us, going we're much in way to the interference

Brian Ruttenbur

budgets about Great. as If at bit And talk follow-up, anything coming that you these would can you coming school guys down the down separate a level? the federal school there's funding from big from federal a little line, then a from level. government the benefit at

Richard Soloway

like Patrick, address that you one? to would

Patrick McKillop

after committed Yes. that say million XX in I the years. the federal per year government XXXX to next $XXX would the shooting just Florida for

earlier program. we federal between nonetheless, has there to a on like $XXX governments but million There talk Maryland been there out. bills, stepping the was that example, have own, the as call, funding adding years infrastructure than details government for seen stated But in going any committed is funding into states that more schools So committed we more number state know of states into and in on haven't up for like $XXX these yet. of years really the ever options we're million their X as of for we Florida, funding, have before. only And

jobs if to security so, it system you money do of plenty and to you the So available want in completed. need there's school of getting do installed terms get

Operator

line question the Raj of from next with B. Riley. Our comes Sharma

Raj Sharma

Congratulations you've on year. see of recap should already also good. reductions, to is by a the to number wanted forward, just I this that but a hardware margins were solid sell-through greater continue by quarter, And systems solid mostly inventory on you really the impacted alarm going sold. distributor commented

that. to So get sense of wanted a I just

Richard Soloway

the shifted here less more of to think jobs. that back. I mix selling school The radios, more radios, come to school radios will has mix some. and are The -- jobs the stay then

the lower. the a inventory it we was So of part again, radios, the me, expect whatever revenue margins the thereafter. to least to drop I XX%, comes in in next of at But The just to earlier. said reasons do that XX%, recurring the the margins. it's reduction had is, enjoy that's on quarters I that That for couple not going inventory an don't last impact. the

mix school that an on have next that least the tremendous. at So But going school have margins back jobs an are strong couple will that's The quarters. shift, jobs impact, on to don't come for margins. I think impact of Maybe now. less

complaining believe me, But And than up so love when It's We it. jobs. radios those the more these all having for it. installments with selling. we we're makes not miss higher-margin we're

Raj Sharma

the the the schools talking should on schools, to equipment any margins existing help the relative the margins Access on the is then -- change gross recurring But side. about on from school -- Air in picking And the gross revenues? up Right.

Richard Soloway

Are from margins that you talking gets Access? contributed the recurring from revenue Air the about

Raj Sharma

Yes. Yes. from stream? different recurring going the be profile that existing Is any revenue to

Richard Soloway

not see have fire don't It's get we $X, it. in as recurring. revenue fire is that. that good get going but strong nothing now It's fire like a did, there. or are the about with is we When residential we're as to Nothing the to if even and it's also But as radio, Access recurring out When month thrilled all to Air think never the up for a probably we're that. any you great good. month, radio, a we radio, radio end, $X as better of be a locks it $XX all starting a

it up for So it in could volume. make

pure with the be of situation. per doors, may revenue not very recurring profitable So the lot same, a a be very, but door still it'll

Raj Sharma

be that Should Right. expect you And half? would then sort schools when come first year we just or back? of of this half second to the fiscal lastly, do assume

Richard Soloway

this of I year and would half into latter next year. the calendar think

Operator

hand questions back in call There management the are remarks. I'd closing to like queue. further no the for to

Richard Soloway

everyone, for in participating call. conference today’s you, Thank

and results. feel As to further Patrick, information. Kevin we always, look to all few for support, months should you call discuss free in myself further please ‘XX any you to Bye-bye. forward a to you or again have interest and We thank for QX your speaking NAPCO’s questions, fiscal

Operator

Ladies does and this conclude gentlemen, today's you for teleconference. participation. Thank your

this disconnect and may wonderful You at have time, day. your lines a

Napco Security (NSSC) 13 Sep 212021 Q4 Earnings call transcript