NAPCO SECURITY TECHNOLOGIES, INC — Call Transcript 2025

Good morning, ladies and gentlemen, and welcome to the NAPCO Security Technologies' Fiscal Q4 2025 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, August 25, 2025. I would now like to turn the conference over to Francis Okoniewski, Vice President of Investor Relations. Thank you. Please go ahead. Thank you, Ian, and good morning, everyone. This is Francis Okoniewski, Vice President of Investor Relations for NAPCO Security Technologies. Thank you all for joining today's conference call to discuss financial results for our fiscal fourth quarter and fiscal year 2025. By now, all of you should have had the opportunity to review our earnings press release discussing our fiscal fourth quarter and fiscal year 2025 results. If you have not, a copy of the release is available in the Investor Relations section of our website, www.napcosecurity.com. On the call today are Dick Soloway, our Chairman and CEO, Kevin Buchel, President and Chief Operating Officer, and Andrew Vuono, Chief Financial Officer. Before we begin, let me take a moment to read the forward-looking statement, as this presentation contains forward-looking statements that are based on current expectations, estimates, forecasts, and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to growth drivers of the company's business, such as school security products, recurring revenue services, potential market opportunities, the benefits of our recurring revenue products to customers and dealers, our ability to control expenses and costs, and expected annual run rate for SaaS recurring monthly revenue. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, such risk factors described in our SEC filings, including our annual report on Form 10-K. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in today's press release and this conference call are as of today's date unless otherwise stated, and we undertake no duty to update such information except as required under applicable law. I'll turn the call over to Dick in a moment. Before I do, I want to mention we are actively planning our Investor Relations calendar for non-deal roadshow and conference attendance in the near future. Investor outreach is important to NAPCO, and I'd like to thank all those folks who assist us in these types of events. Over the coming weeks, we will be participating in several key investor events. We'll be attending the Jefferies Industrials Conference in New York City in early September, followed by a virtual non-deal roadshow hosted by Craig-Hallum on September 8th. In mid-September, we'll take part in D.A. Davidson's 24th Annual Diversified Industrials and Services Conference in Nashville, Tennessee, and on October 8th, Lake Street will host a virtual non-deal roadshow on our behalf. With that out of the way, let me turn the call over to Dick Soloway, Chairman and CEO of NAPCO Security Technologies. Dick, the floor is yours. Thank you, Fran. Good morning, everyone, and welcome to our conference call. We appreciate your participation today as we review our fiscal Q4 and fiscal 2025 performance. This past year has presented its fair share of headwinds, particularly around microeconomic uncertainty and tariff-related pressures. Through it all, we've maintained focus on our long-term strategy, delivering best-in-class solutions, maintaining operational discipline, and investing for sustainable growth. Our recurring revenue model continues to provide significant profitability and stability and a strong foundation for future innovation and customer engagement. As you will hear shortly, we have once again attained meaningful growth in this area, and we are confident this trend will continue. We are also encouraged by our Q4 hardware sales performance and how quickly our team adapted to shifting demand. Our ability to control inventory, manage supply chain complexity, and continue delivering on customer commitments has put us in a strong position. One of the things I am most proud of is how we have balanced growth with financial stewardship. We continue to invest in product development and customer success while also returning significant value to shareholders, all without taking on debt, which speaks to the strength of our business model and the effectiveness of our leadership team. Looking forward, the tariff landscape will continue to evolve, and while we cannot predict how that will play out, we have taken proactive steps, both operationally and strategically, to protect margins and ensure long-term competitiveness. The pricing adjustments we have implemented are a key part of that, and we expect to see its impact starting in Q1. We enter fiscal 2026 with strong momentum, a clear focus, and confidence in our ability to execute. With that, I will turn the call over to our President and Chief Operating Officer, Kevin Buchel, who will comment on some of our operational and financial performance highlights. Following Kevin's remarks, our CFO, Andy Vuono, will go through the financials in detail, and then I will return to delve deeper into our strategies and market outlook. Kevin, the floor is yours. Thank you, Dick, and good morning, everyone. I'm pleased to start off by highlighting several key accomplishments and financial milestones from Q4 of fiscal year 2025. First, I'm proud to report that we will be reporting that the company received a clean opinion on its internal controls over financial reporting for fiscal 2025, which means our auditors, Deloitte, issued an unqualified opinion under the Sarbanes-Oxley Act, indicating that our company's internal controls over financial reporting were designed and operating effectively as of June 30, 2025. You will see that as part of the Form 10-K, which we will be filing later today. This reflects the strength of our internal controls and the continued diligence of our finance and compliance teams, and I would like to congratulate them for all of their efforts. Our recurring revenue continues to be a cornerstone of our business. The run rate this quarter reached $94 million, and that's up $5 million from the prior quarter. This marks the largest quarterly increase we've seen in the past two years, and it's a strong signal of the momentum that we're building. Equipment sales for the quarter, while down 5% versus last year's Q4, had a much improved performance, increasing 27% sequentially from Q3 of fiscal 2025. This growth underscores the value of our offerings and the continued strength of our customer relationships, particularly in uncertain economic times caused in large part by the effect of tariffs. From a profitability standpoint, our recurring revenue gross margin remained very strong at 91%, with StarLink Commercial Fire radios continuing to be a strong part of the mix. We also made meaningful progress on inventory management, reducing inventory levels at June 30, 2025, by $8.6 million compared to this time last year. Cash flow from operations for the year came in at $53.5 million, which reinforces our ability to generate consistent cash flow to support both strategic investments and shareholder returns. Speaking of which, we returned significant value to our shareholders during the fiscal year. We paid out $13.6 million in dividends and repurchased $36.8 million of our stock, which is equivalent to 1.2 million shares at an average price of $30.40. Even after these returns, we ended the fiscal year with approximately $100 million in cash and no debt, giving us tremendous flexibility going forward. On pricing, we announced two pricing increases during the quarter. The first, at the end of April, was an 8.5% increase to help offset rising tariff costs. The second was our standard annual price increase, which this year was 5% and which went into effect approximately mid-July. We expect the full benefit of these actions to be reflected starting in our fiscal 2026 Q1. Finally, while there remains considerable uncertainty in the market around tariffs, we believe we are in an advantageous position as compared to some of our competitors. Our supply chain planning, pricing strategies, and balance sheet strength give us a competitive advantage in navigating these challenges. Overall, it was a very strong quarter and a solid close to the fiscal year, with net income of $43.4 million, or 24% of sales, and adjusted EBITDA of $52.1 million, which equates to an EBITDA margin of 29%. I am proud of the team's execution and the financial strength we are carrying into the new fiscal year. With that, I will turn the call over to our CFO, Andy Vuono, for a deeper dive into the financials. Andy? Great. Thank you, Kevin, and good morning, everyone. Net sales for the three months ended June 30, 2025, increased 0.8% to $50.7 million as compared to $50.3 million for the same period a year ago. Net sales for the 12 months ended June 30, 2025, decreased 3.8% to $181.6 million as compared to $188.8 million for the same period a year ago. Recurring monthly service revenue continued its strong growth, increasing 10% in Q4 to $22.4 million as compared to $20.4 million for the same period last year. Recurring monthly service revenue for the 12 months ended June 2025, increased 14% to $86.3 million as compared to $75.7 million last year. These increases reflect the continued demand for our StarLink radios. Equipment sales for the quarter decreased 5.5% to $28.3 million as compared to $29.9 million last year, and equipment sales for the year ended June 2025, decreased 15.7% to $95.3 million as compared to $113.1 million for the same period last year. The decrease in equipment sales was primarily a result of extended stocking strategies of some of our larger distributors throughout the year, in addition to the timing of large project reps for our door locking business. Gross profit for the three months ended June 2025, decreased 3.8% to $26.8 million, with a gross margin of 53% as compared to $27.8 million, with a gross margin of 55% for the same period last year. Gross profit for the 12 months ended June 30, 2025, decreased 0.7% to $101 million, with a gross margin of 56% as compared to $101.8 million, with a gross margin of 54% a year ago. Gross profit for recurring service revenue for the quarter increased 10.3% to $20.3 million, with a gross margin of 91% as compared to $18.4 million, with a gross margin of 90% last year. Gross profit for the recurring service revenue for the 12 months ended June 2025, increased 14.6% to $78.5 million, with a gross margin of 91% as compared to $68.5 million, with a gross margin of 90% last year. Gross profit for equipment revenue in Q4 decreased 31.2% to $6.4 million, with a gross margin of 23% as compared to $9.4 million, with a gross margin of 31% last year. Gross profit for equipment revenue for the 12 months ended June 30, 2025, decreased 32% to $22.5 million, with a gross margin of 24% as compared to $33.2 million, with a gross margin of 29% for the same period last year. The increase in both gross profit dollars and gross margin for recurring revenue for the three and 12 months ended June 2025 was primarily the result of the previously mentioned increase in recurring revenue, as well as a greater proportion of those revenues being generated by our StarLink Fire radios, which generate higher monthly service charges than other StarLink radios. The decrease in both gross profit dollars and gross margin for equipment revenues for both the three and 12 months ended June 2025 was primarily a result of the aforementioned decrease in revenue, which resulted in less absorption of our fixed manufacturing overhead costs. In addition, Q4 was further negatively impacted by increased tariff costs in the fourth quarter and the impact of distributors pulling forward certain orders before our announced price increase went into effect. R&D costs for the quarter increased 6.8% to $3.2 million, or 6.4% of sales, as compared to $3 million, or 6% of sales for the same period a year ago. R&D costs for the 12 months ended June 2025 increased 16.9% to $12.6 million, or 7% of sales, as compared to $10.8 million, or 6% of sales for the same period a year ago. The increase for the three and 12 months was a result of salary increases and the hiring of additional staff. SG&A expenses for the quarter increased 5.8% to $11.5 million, or 23% of net sales, as compared to $10.9 million, or 22% of net sales for the same period last year. SG&A expenses for the 12 months ended June 2025 increased 13.5% to $42.2 million, or 23% of net sales, as compared to $37.1 million, or 20% of sales for the same period last year. The increase in SG&A for the three months was primarily due to increased legal expenses and increased wages as a result of salary increases and certain additional hirings in the finance and IT departments. The increase for the 12 months was primarily due to increases in personnel-related expenses, mainly from merit increases and hiring of additional personnel in finance and IT, in addition to increases in insurance, advertising, legal and professional fees, which was offset by decreases in director fees and non-recurring transactional costs. Operating income for the quarter decreased 13.4% to $12.1 million, as compared to $14 million for the same period last year. Operating income for the 12 months ended June 2025 decreased 14% to $46.3 million, as compared to $53.8 million for the same period last year. Interest and other income for three months increased 16% to $883,000 as compared to $762,000 last year. For the 12 months ended June 2025, interest and other income increased 48% to $3.8 million, compared to $2.6 million last year. The increases for both the three and 12 months ended June 2025 were primarily due to increased interest and dividend income from the company's cash and short-term investments. The provision for income taxes for the three months increased 12% to $1.3 million, with an effective tax rate of 10%, as compared to $1.2 million, with an effective tax rate of 8% last year. For the 12 months ended June 2025, the provision for income taxes increased 1.4%, or $95,000, to $6.7 million, with an effective tax rate of 13%, as compared to $6.6 million, with an effective tax rate of 12% last year. The increase in the provision for the three and 12 months ended June 2025 was due to a larger portion of our taxable income being attributable to the U.S. operations. Net income for the quarter decreased 14% to $11.6 million, or $0.33 per diluted share, as compared to $13.5 million, or $0.36 per diluted share for the same period last year, and represents 23% of net sales. Net income for the 12 months ended June 30, 2025, decreased 13% to $43.4 million, or $1.19 per diluted share, as compared to $49.8 million, or $1.34 per diluted share for the same period last year, and represents 24% of net sales. Adjusted EBITDA for the quarter decreased 7.6% to $14.2 million, or $0.40 per diluted share, as compared to $15.4 million, or $0.41 per diluted share for the same period a year ago, and equates to an adjusted EBITDA margin of 28.1%. Adjusted EBITDA for the 12 months ended June 2025 decreased 11.6% to $52.1 million, or $1.43 per diluted share, as compared to $58.9 million, or $1.59 per diluted share for the same period last year, and equates to an adjusted EBITDA margin of 28.7%. Discussing our balance sheet, as of June 2025, the company had $99.1 million in cash and cash equivalents and marketable securities, as compared to $97.7 million as of June 2024, a 1.5% increase. The company had no debt as of June 2025, and cash provided by operating activities for the 12 months ended June 2025 was $53.5 million, as compared to $45.4 million for the same period last year, an 18% increase. Working capital, which is our current assets minus current liabilities, was $138.4 million as of June 2025, as compared to working capital of $146.5 million at June 2024. CapEx for the quarter was $237,000 as compared to $551,000 in the prior year, and for the full fiscal year, CapEx was $2.1 million as compared to $1.6 million last year. That concludes my formal remarks, and I'd like to return the call back to Dick. Thank you, Andy. Let me take a moment to wrap up with a few reflections on where we've been and where we're headed. Fiscal 2025 is a year of both challenge and resilience, yet through it all, NAPCO demonstrated the strength and durability of its model. We stayed focused on creating lasting value for our customers, partners, and shareholders. One of the clearest indications of that strength is our recurring revenue. This year, recurring revenue grew by more than $10 million and now represents nearly half of our total sales, with a sustained gross margin of 91%, which provides consistent cash generation and opportunity for continued reinvestment. A major driver of this growth has been the success of our Fire radios platform, which is increasingly viewed as the industry standard for fire communications in commercial buildings. Operationally, I'm extremely proud of the performance that our team delivered. We reduced inventory by more than $8 million, and despite providing nearly $50 million of value to shareholders through dividends and share repurchases and continued to invest in product development, compliance, and systems infrastructure, we still ended the year with over $99 million in cash while maintaining a debt-free balance sheet. On the hardware side, as mentioned earlier, we saw a strong rebound in Q4, up 27% sequentially from Q3. This rebound reflects our team's agility in adapting to shifting demand dynamics. Looking ahead, we remain cautiously optimistic. Tariff policy and broader market conditions remain dynamic, but we're not standing still. Our pricing actions have been implemented, and we continue to diversify our distribution base, invest in automation, and enhance our StarLink platform, ensuring we're driving sustainable growth while protecting margins. Our strong balance sheet gives us meaningful flexibility to respond to opportunities, both organically and through potential strategic acquisitions. At the same time, we remain committed to returning capital to our shareholders while operating with zero debt. Now, stepping back for a broader view, I want to highlight one vertical where NAPCO continues to make a difference: school security. School safety remains one of the most critical challenges of our time, and NAPCO is proud to be a trusted and proven partner to school districts all across the country. Our divisions work together to deliver a full suite of integrated solutions from the advanced Trilogy and ArchiTect locksets to enterprise-scale Continental CA4K access control systems. These platforms are secure, scalable, and aligned with important standards like PASS, or as it's called, the Partner Alliance for Safer Schools, to help schools implement practical, best-in-class security. We know that educators, administrators, and communities are looking for solutions they can trust. What makes NAPCO unique is our ability to bring together locking, access control, and alarm technologies into a unified, often interoperable platform. It's extremely gratifying to know that our solutions are helping to protect students and staff every single day, and we see this as an area of ongoing growth and responsibility. In parallel with our work in education, we continue to invest heavily in R&D to expand recurring revenue opportunities across our product line. One of the most exciting of these is our MVP platform, a next generation of cloud-based access control systems that integrate seamlessly with our locking hardware. It represents a brand new recurring revenue stream for us and for our dealers, with configurations tailored for both enterprise customers and smaller facilities. We believe MVP can potentially be a game changer and become a foundational contributor to our growth over the coming years, as it extends our leadership into the hosted access control market and reinforces our core strategy of integrating innovative hardware with cloud-based services to deliver long-term, high-margin recurring revenue. In summary, we are ending fiscal 2026 with a solid momentum, clarity of focus, and a strong financial foundation. Let me repeat. In summary, we are entering fiscal 2026 with a solid momentum, clarity of focus, and a stronger financial foundation. We built a resilient business model that continues to deliver even in challenging environments. I'm incredibly proud of our team, what it has accomplished, and I'm energized with what lies ahead. I'd like to thank everyone for their support and for joining us in this exciting future we have. Our formal remarks are now concluded, and I'd like to open the call for the Q&A session. Operator, please proceed. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star four by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star four by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you. Your first question comes from the line of Matt Summerville from D.A. Davidson. Please go ahead. Thanks. A couple of questions. Given that some distributors are still taking down inventories, should we be concerned with respect to where channel inventories sit today, given that it sounds like there may have been a little bit of a broader buy-ahead related to the tariff-driven price increases you mentioned on the call? I have a follow-up. Matt, the inventory that was bought pre-tariff price increase was done in April, pretty much. That's four or five months before the end of this quarter that we're in now. We expect distributors to buy more. The sell-through stats are good. The tariff chaos has kind of cleared up. The distributors know that we're the best game in town when it comes to tariffs. Our direction is clear. Some of the other competitors, it's a little chaotic, and they don't know where the tariffs are going. We saw some of the inventory declines in the channel. That changed in the fourth quarter. Our fourth quarter sales were not only tariff-driven, pulling-ahead-driven, but also real demand. We expect that to continue. We have a strong group of distributors. We have a strong group of dealers. We have excellent products, and we expect this to be a very good year, fiscal 2026. Matt, I'd like to mention that our tariff arrangement, we're in the Dominican Republic, is 10%. All of our competitors are either in Asia or in Europe, and Europe is now 15%. In Asia, who knows, you know, what that's going to be, but it's much higher than all of the tariffs. We have an advantage, and our technology and the fact that we're so broadly diversified with our product line that all integrates together bodes well for getting additional dealers and doing more jobs, and they can count on stable prices from us. Thank you for that. As you think about the magnitude of increase you saw in the RSR from $89 million, I think, in April to $94 million, as you described it in July, do we have another quarter or two of that sort of magnitude of sequential increase based on timing of, you know, historical activations of Fire radios? Given kind of the magnitude of price increase you're talking about on equipment between the two different actions you've taken, is there any reason the equipment side of the business doesn't grow double digits in fiscal 2026? Thank you. We went up $5 million. We saw this coming. I didn't know it was going to be $5 million, but if you go back, you remember I said when you have strong quarters of radio sales, the recurring comes doesn't come right away because there's a delay because if we give out rebates. I wasn't surprised that it went up. It went up $5 million. It was maybe a little more than I thought. I think we have some more of that in us. I don't know if it'll be $5 million, but I think it'll be a nice increase again. We have to keep having strong radio quarters for that to happen, and that's our intention. We're coming out with a lot more recurring revenue radio products, not just the ones that are out there now. We're not standing still. We're aggressively marketing what we have. It all comes together when you have radio sales. It doesn't come immediately, but it comes after maybe six months, eight months, nine months later. We expect the increases to keep coming for the foreseeable future. My question on equipment revenue, given the magnitude of pricing, is there any reason that equipment sales don't grow double digits next year or in fiscal 2026? Thanks. Given we took two increases, you know, the 8.5% to offset the tariffs and the 5%, which is a straight price increase, our belief is that we will grow double digits. We can't, you know, we take it quarter-by-quarter. We have very easy comps this year, in my opinion, Q1, Q2, and Q3 especially. It's not a hard task from my perspective, but we got to perform. Thank you. Thank you. Your next question comes from the line of Jim Ricchiuti from Needham & Co. Please go ahead. I think it's maybe a tougher question to answer, but you sometimes are a little bit further removed from the end demand. I'm wondering, is there any way for you to size the pull forward that you saw on equipment sales? You mentioned, Kevin, I think that the sell-through stats are good. Maybe you could elaborate on that as well. We talk about sell-through stats all the time. The sell-through stats that I have talked about usually relate to the quarter that we just reported on. Our sell-through stats for the June quarter were good. They were up across the board. The key is, what do they look like in this quarter, the one we're in now? I don't really want to comment on it, but the expectation is they'll stay strong. The ordering activity has been good this quarter. I feel like the distributors have felt like something, a relief, has come over them. They're not panicking over tariffs, at least not with us. They know where they stand. That standing still, waiting to see what happened, has subsided. We've talked a lot about Wesco in the past. They seem to be getting their act together more. I think it bodes well. ADI is doing really well with us. I think it bodes well for Q1, but you know, we got to perform. Thinking out a little further than the quarter here and the next quarter, our goal, and we increased our engineering department, is to come out with additional recurring revenue products, more radios in other verticals that are needed, new creations of communications devices, more fire devices, more locking devices. It is very important to us to make sure that everything has a recurring revenue component to it. We are on a roll with our technology. The dealers love it. We are going to expand markets for everybody, and you will see this evolving as the years go by. Thanks. Andy, maybe a question for you. You know, with the price increase, the first price increase, some of that obviously was passed in April. There was, I presume, some benefit in the June quarter. I'm wondering two things. To what extent there was a benefit and just broadly, if you can help us with the overall impact on gross margins, the equipment gross margins from tariffs in the quarter. Thank you. Sure, Jim. We received limited benefit, I would say, in Q4 from the price increases. The company honored, you know, orders that were placed prior to those price increases going into the price books officially. From a cost perspective, you know, the tariffs really kicked in at the start of our Q4. We had the full impact of the cost for the period, and I would say limited benefit of our price increases based upon the time we had one order replaced. I think from a dollar perspective, it probably impacted the COGS by about $1 million or something short of $1 million. Pretty much all of the items that were subject to the tariff in Q4 were sold through, and the vast majority were shipped out by 6/30. We had pretty much a straight dollar-for-dollar hit in Q4, but we're expecting going to Q1, those pricing adjustments are now in place, and we're expecting to see, you know, a lift from there moving forward. Thank you. I'll jump back in the queue. Thank you. Once again, that is star and want to ask a question. Your next question comes from the line of Peter Costa from Mizuho. Please go ahead. Hey, guys. Good morning. Congrats on the quarter here. Maybe if you could just start with some details on the MVP and Prima launches. How's the channel uptake there relative to your plan? Any color about how you're thinking about that opportunity over the longer term? Thanks. The MVP, the cloud-operated system, which allows the security company that puts it in a job, for instance, in a hospital, also allows the security manager of that property to get instantaneous information about who goes into buildings, who went into certain rooms, at what time. We expect this to be a very strong growth product with our company going forward. We're introducing it to basic models. One is enterprise class, those large enterprises, and also there are smaller buildings and smaller businesses. We expect that there's so many doors out there and so many people need access control. The cloud-operated requires no equipment in the building. Everything is up in the cloud. We make all the changes for the dealers. The dealers can get reports. Everybody can get instantaneous information about doors, openings, where people are in a building in case of a fire or an emergency. This is going to be quite an exciting product for us going forward. We're going to be showing it in New York at the International Security Conference, which is the next big show coming up. Our salespeople are around the country demoing it and training on it. It's going to be a great contributor. Okay. Maybe just back to the ARR increase. That $5 million sequential increase was very encouraging. It seems like the actual uplift in service revenues is lagging that a little bit. Would you kind of expect a pretty material uptick in Q-over-Q service revenues in the beginning of 2026? How are you guys thinking about that? Thanks. We grew, I think it was 10% year-over-year, and the expectation is that we can sustain that rate, maybe even do a little better than that, not go down. Perfect. Thank you. Thank you. Your next question comes from the line of Jeremy Hamblin from Craig-Hallum Capital. Please go ahead. Congrats on the results and thanks for taking the questions. I wanted to come back to churn rates that you were seeing, you know, and whether or not kind of the price increases are having any impact on whether or not you're on both equipment side, but certainly also for the recurring revenues on whether or not you're getting any pricing on that aspect of the business. Jeremy, we don't really have any churn, churn being accounts that disconnect from us from our radios because we're mostly commercial. Our churn is inconsequential as it pertains to commercial radios. We do mostly commercial. The pricing that we put in place sticks. Nobody complains about it. Everybody understands it. Everybody expects it. No pushback at all. We did not take price increases on the recurring revenue amounts we charge every month. There was some talk that maybe we should. We didn't take a price increase on the radios themselves. Maybe there was talk that maybe we should. Our feeling is let's get as much as we can get. Let's not mess with the formula that's working well. It's not about the extra $0.50 or $1 we could potentially charge in the recurring every month. It's about getting more radios, more of them, because once you get it, it lasts pretty much forever. That was our strategy. The strategy's worked pretty well. In 10 years or so, we built this up to about $100 million of recurring at 91% margin. I think we're doing it the right way, and I'm comfortable with the strategy that we chose. Got it. You've also built a strong balance sheet and wanted to just get a sense for you returned some capital here in the form of dividends, some buybacks. Is there room to potentially take up either the dividend payout rate, or are you thinking about adding on to the current buyback program? The dividends, we've raised that, I don't know, at least 3x, maybe 4x. We didn't really talk about it. We announced another dividend. We kept it the same at $0.14. Certainly, having increased it 4x or so in a short period of time, there's room for that to grow and to get it to become a higher amount. I think that will happen. We'll talk about when that should be. For this coming one, it's $0.14. When it comes to buyback, we're always looking. We're always opportunistically got our eye on it. We are cognizant of the float. We're dealing with a lot of larger investors who care about the float, but there could be room to do more buyback. We'll see. We'll play that by ear as we go forward. Great. Thanks for taking the questions. Thank you. Once again, should you have a question, please press star four by the one on your telephone keypad. Your next question comes from the line of Jaeson Schmidt from Lake Street Capital Markets. Please go ahead. Hey, guys. Thanks for returning my questions. Kevin, you noted strong sell-through has continued here in September. Curious if that strength is being seen both on the radio and locking side. My comment about sell-through was in the June quarter. I didn't really comment on the quarter that we're in now. It was in the June quarter, and it was very good across the board. We were particularly encouraged by the fire radios. They did really well. Like I've talked about before, you sell fire radios today to a distributor, you may not feel the benefit of that from the recurring revenue side for six months, eight months, nine months. That's coming. We'll see that. We are encouraged by what we saw from our distributors. We expect it to continue in Q1, the one that we're in now. We'll talk about it more when we're able to, but we can't. The June quarter was very good, pretty much across the board. Locking was very good. Locking had a very difficult comp. Locking had that big project that I've talked a lot about, the Waldorf Hotel in Manhattan. That made for a difficult comp. There's a little bit more of a difficult comp in Q1, and then that's gone from a comp point of view. There are other projects that we expect that could be hitting in this fiscal year. Since the comp is not that tough, we should be able to blow past last year's numbers. We'll see. We'll see when those things hit. Gotcha. Just following up on your comments on the school market, I know you can't disclose all your wins, but just curious if you've seen a noticeable pickup in that space. The school business is steady. Steady, good, steady, strong. I wish it was more. It's frustrating. You know, there was an incident at Villanova last week, it wasn't a shooting. They thought it was a shooting. What I heard in the news report was they announced that the students should lock their doors and barricade chairs against the door. That's the old thing that we've been hearing about for years, for years. That means to me that there's still plenty of schools. Villanova is a very well-known school that still has to upgrade. Our sales guys better be talking to Villanova pretty soon. The school business is good. We're working hard for it to be even better. There's plenty of money and plenty of opportunity, and there will be for years to come. Okay, thanks a lot, guys. Thank you. There are no further questions at this time. I want to hand the call back to Mr. Richard Soloway for any closing remarks. Thank you, everyone, for participating in today's conference call. As always, should you have any further questions, feel free to call Fran, Kevin, or myself for further information. We thank you for your interest and support and look forward to speaking to you all again in a few months to discuss NAPCO' fiscal Q1 2026 results. Have a wonderful day, everybody. This concludes today's call. Thank you for participating. You may all disconnect.

Speaker 8: Good morning, ladies and gentlemen, and welcome to the NAPCO Security Technologies' Fiscal Q4 2025 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, August 25, 2025. I would now like to turn the conference over to Francis Okoniewski, Vice President of Investor Relations. Thank you. Please go ahead. Good morning, ladies and gentlemen, and welcome to the NAPCO Security Technologies' Fiscal Q4 2025 Earnings Conference Call. good morning ladies and gentlemen and welcome to the napco security technologies' fiscal q4 2025 earnings conference call At this time, all lines are in listen-only mode. at this time all lines are in listen-only mode Following the presentation, we will conduct a question-and-answer session. following the presentation we will conduct a question-and-answer session If at any time during this call you require immediate assistance, please press star zero for the operator. if at any time during this call you require immediate assistance please press star zero for the operator This call is being recorded on Monday, August 25, 2025. this call is being recorded on monday august 25 2025 I would now like to turn the conference over to Francis Okoniewski, Vice President of Investor Relations. i would now like to turn the conference over to francis okoniewski vice president of investor relations Thank you. thank you Please go ahead. please go ahead

Speaker 3: Thank you, Ian, and good morning, everyone. This is Francis Okoniewski, Vice President of Investor Relations for NAPCO Security Technologies. Thank you all for joining today's conference call to discuss financial results for our fiscal fourth quarter and fiscal year 2025. By now, all of you should have had the opportunity to review our earnings press release discussing our fiscal fourth quarter and fiscal year 2025 results. If you have not, a copy of the release is available in the Investor Relations section of our website, www.napcosecurity.com. On the call today are Dick Soloway, our Chairman and CEO, Kevin Buchel, President and Chief Operating Officer, and Andrew Vuono, Chief Financial Officer. Thank you, Ian, and good morning, everyone. thank you ian and good morning everyone This is Francis Okoniewski, Vice President of Investor Relations for NAPCO Security Technologies. this is francis okoniewski vice president of investor relations for napco security technologies Thank you all for joining today's conference call to discuss financial results for our fiscal fourth quarter and fiscal year 2025. thank you all for joining today's conference call to discuss financial results for our fiscal fourth quarter and fiscal year 2025 By now, all of you should have had the opportunity to review our earnings press release discussing our fiscal fourth quarter and fiscal year 2025 results. by now all of you should have had the opportunity to review our earnings press release discussing our fiscal fourth quarter and fiscal year 2025 results If you have not, a copy of the release is available in the Investor Relations section of our website, www.napcosecurity.com. if you have not a copy of the release is available in the investor relations section of our website www.napcosecurity.com On the call today are Dick Soloway, our Chairman and CEO, Kevin Buchel, President and Chief Operating Officer, and Andrew Vuono, Chief Financial Officer. on the call today are dick soloway our chairman and ceo kevin buchel president and chief operating officer and andrew vuono chief financial officer Before we begin, let me take a moment to read the forward-looking statement, as this presentation contains forward-looking statements that are based on current expectations, estimates, forecasts, and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to growth drivers of the company's business, such as school security products, recurring revenue services, potential market opportunities, the benefits of our recurring revenue products to customers and dealers, our ability to control expenses and costs, and expected annual run rate for SaaS recurring monthly revenue. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, such risk factors described in our SEC filings, including our annual report on Form 10-K. Before we begin, let me take a moment to read the forward-looking statement, as this presentation contains forward-looking statements that are based on current expectations, estimates, forecasts, and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. before we begin let me take a moment to read the forward-looking statement as this presentation contains forward-looking statements that are based on current expectations estimates forecasts and projections of future performance based on management's judgment beliefs current trends and anticipated product performance These forward-looking statements include, without limitation, statements relating to growth drivers of the company's business, such as school security products, recurring revenue services, potential market opportunities, the benefits of our recurring revenue products to customers and dealers, our ability to control expenses and costs, and expected annual run rate for SaaS recurring monthly revenue. these forward-looking statements include without limitation statements relating to growth drivers of the company's business such as school security products recurring revenue services potential market opportunities the benefits of our recurring revenue products to customers and dealers our ability to control expenses and costs and expected annual run rate for saas recurring monthly revenue Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements These factors include, but are not limited to, such risk factors described in our SEC filings, including our annual report on Form 10-K. these factors include but are not limited to such risk factors described in our sec filings including our annual report on form 10-k Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in today's press release and this conference call are as of today's date unless otherwise stated, and we undertake no duty to update such information except as required under applicable law. I'll turn the call over to Dick in a moment. Before I do, I want to mention we are actively planning our Investor Relations calendar for non-deal roadshow and conference attendance in the near future. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. although we believe that the expectations reflected in the forward-looking statements are reasonable we cannot guarantee future results level of activity performance or achievements You should not place undue reliance on these forward-looking statements. you should not place undue reliance on these forward-looking statements All information provided in today's press release and this conference call are as of today's date unless otherwise stated, and we undertake no duty to update such information except as required under applicable law. all information provided in today's press release and this conference call are as of today's date unless otherwise stated and we undertake no duty to update such information except as required under applicable law I'll turn the call over to Dick in a moment. i'll turn the call over to dick in a moment Before I do, I want to mention we are actively planning our Investor Relations calendar for non-deal roadshow and conference attendance in the near future. before i do i want to mention we are actively planning our investor relations calendar for non-deal roadshow and conference attendance in the near future Investor outreach is important to NAPCO, and I'd like to thank all those folks who assist us in these types of events. Over the coming weeks, we will be participating in several key investor events. We'll be attending the Jefferies Industrials Conference in New York City in early September, followed by a virtual non-deal roadshow hosted by Craig-Hallum on September 8th. In mid-September, we'll take part in D.A. Davidson's 24th Annual Diversified Industrials and Services Conference in Nashville, Tennessee, and on October 8th, Lake Street will host a virtual non-deal roadshow on our behalf. With that out of the way, let me turn the call over to Dick Soloway, Chairman and CEO of NAPCO Security Technologies. Dick, the floor is yours. Investor outreach is important to NAPCO, and I'd like to thank all those folks who assist us in these types of events. investor outreach is important to napco and i'd like to thank all those folks who assist us in these types of events Over the coming weeks, we will be participating in several key investor events. over the coming weeks we will be participating in several key investor events We'll be attending the Jefferies Industrials Conference in New York City in early September, followed by a virtual non-deal roadshow hosted by Craig- Hallum on September 8th. we'll be attending the jefferies industrials conference in new york city in early september followed by a virtual non-deal roadshow hosted by craig- hallum on september 8th In mid-September, we'll take part in D.A. in mid-september we'll take part in d.a Davidson's 24th Annual Diversified Industrials and Services Conference in Nashville, Tennessee, and on October 8th, Lake Street will host a virtual non-deal roadshow on our behalf. davidson's 24th annual diversified industrials and services conference in nashville tennessee and on october 8th, lake street will host a virtual non-deal roadshow on our behalf With that out of the way, let me turn the call over to Dick Soloway, Chairman and CEO of NAPCO Security Technologies. with that out of the way let me turn the call over to dick soloway chairman and ceo of napco security technologies Dick, the floor is yours. dick the floor is yours

Speaker 10: Thank you, Fran. Good morning, everyone, and welcome to our conference call. We appreciate your participation today as we review our fiscal Q4 and fiscal 2025 performance. This past year has presented its fair share of headwinds, particularly around microeconomic uncertainty and tariff-related pressures. Through it all, we've maintained focus on our long-term strategy, delivering best-in-class solutions, maintaining operational discipline, and investing for sustainable growth. Our recurring revenue model continues to provide significant profitability and stability and a strong foundation for future innovation and customer engagement. As you will hear shortly, we have once again attained meaningful growth in this area, and we are confident this trend will continue. We are also encouraged by our Q4 hardware sales performance and how quickly our team adapted to shifting demand. Our ability to control inventory, manage supply chain complexity, and continue delivering on customer commitments has put us in a strong position. Thank you, Fran. thank you fran Good morning, everyone, and welcome to our conference call. good morning everyone and welcome to our conference call We appreciate your participation today as we review our fiscal Q4 and fiscal 2025 performance. we appreciate your participation today as we review our fiscal q4 and fiscal 2025 performance This past year has presented its fair share of headwinds, particularly around microeconomic uncertainty and tariff-related pressures. this past year has presented its fair share of headwinds particularly around microeconomic uncertainty and tariff-related pressures Through it all, we've maintained focus on our long-term strategy, delivering best-in-class solutions, maintaining operational discipline, and investing for sustainable growth. through it all we've maintained focus on our long-term strategy delivering best-in-class solutions maintaining operational discipline and investing for sustainable growth Our recurring revenue model continues to provide significant profitability and stability and a strong foundation for future innovation and customer engagement. our recurring revenue model continues to provide significant profitability and stability and a strong foundation for future innovation and customer engagement As you will hear shortly, we have once again attained meaningful growth in this area, and we are confident this trend will continue. as you will hear shortly we have once again attained meaningful growth in this area and we are confident this trend will continue We are also encouraged by our Q4 hardware sales performance and how quickly our team adapted to shifting demand. we are also encouraged by our q4 hardware sales performance and how quickly our team adapted to shifting demand Our ability to control inventory, manage supply chain complexity, and continue delivering on customer commitments has put us in a strong position. our ability to control inventory manage supply chain complexity and continue delivering on customer commitments has put us in a strong position One of the things I am most proud of is how we have balanced growth with financial stewardship. We continue to invest in product development and customer success while also returning significant value to shareholders, all without taking on debt, which speaks to the strength of our business model and the effectiveness of our leadership team. Looking forward, the tariff landscape will continue to evolve, and while we cannot predict how that will play out, we have taken proactive steps, both operationally and strategically, to protect margins and ensure long-term competitiveness. The pricing adjustments we have implemented are a key part of that, and we expect to see its impact starting in Q1. We enter fiscal 2026 with strong momentum, a clear focus, and confidence in our ability to execute. One of the things I am most proud of is how we have balanced growth with financial stewardship. one of the things i am most proud of is how we have balanced growth with financial stewardship We continue to invest in product development and customer success while also returning significant value to shareholders, all without taking on debt, which speaks to the strength of our business model and the effectiveness of our leadership team. we continue to invest in product development and customer success while also returning significant value to shareholders all without taking on debt which speaks to the strength of our business model and the effectiveness of our leadership team Looking forward, the tariff landscape will continue to evolve, and while we cannot predict how that will play out, we have taken proactive steps, both operationally and strategically, to protect margins and ensure long-term competitiveness. looking forward the tariff landscape will continue to evolve and while we cannot predict how that will play out we have taken proactive steps both operationally and strategically to protect margins and ensure long-term competitiveness The pricing adjustments we have implemented are a key part of that, and we expect to see its impact starting in Q1. the pricing adjustments we have implemented are a key part of that and we expect to see its impact starting in q1 We enter fiscal 2026 with strong momentum, a clear focus, and confidence in our ability to execute. we enter fiscal 2026 with strong momentum a clear focus and confidence in our ability to execute With that, I will turn the call over to our President and Chief Operating Officer, Kevin Buchel, who will comment on some of our operational and financial performance highlights. Following Kevin's remarks, our CFO, Andy Vuono, will go through the financials in detail, and then I will return to delve deeper into our strategies and market outlook. Kevin, the floor is yours. With that, I will turn the call over to our President and Chief Operating Officer, Kevin Buchel, who will comment on some of our operational and financial performance highlights. with that i will turn the call over to our president and chief operating officer kevin buchel who will comment on some of our operational and financial performance highlights Following Kevin's remarks, our CFO, Andy Vuono, will go through the financials in detail, and then I will return to delve deeper into our strategies and market outlook. following kevin's remarks our cfo andy vuono will go through the financials in detail and then i will return to delve deeper into our strategies and market outlook Kevin, the floor is yours. kevin the floor is yours

Speaker 6: Thank you, Dick, and good morning, everyone. I'm pleased to start off by highlighting several key accomplishments and financial milestones from Q4 of fiscal year 2025. First, I'm proud to report that we will be reporting that the company received a clean opinion on its internal controls over financial reporting for fiscal 2025, which means our auditors, Deloitte, issued an unqualified opinion under the Sarbanes-Oxley Act, indicating that our company's internal controls over financial reporting were designed and operating effectively as of June 30, 2025. You will see that as part of the Form 10-K, which we will be filing later today. This reflects the strength of our internal controls and the continued diligence of our finance and compliance teams, and I would like to congratulate them for all of their efforts. Our recurring revenue continues to be a cornerstone of our business. Thank you, Dick, and good morning, everyone. thank you dick and good morning everyone I'm pleased to start off by highlighting several key accomplishments and financial milestones from Q4 of fiscal year 2025. i'm pleased to start off by highlighting several key accomplishments and financial milestones from q4 of fiscal year 2025 First, I'm proud to report that we will be reporting that the company received a clean opinion on its internal controls over financial reporting for fiscal 2025, which means our auditors, Deloitte, issued an unqualified opinion under the Sarbanes-Oxley Act, indicating that our company's internal controls over financial reporting were designed and operating effectively as of June 30, 2025. first i'm proud to report that we will be reporting that the company received a clean opinion on its internal controls over financial reporting for fiscal 2025 which means our auditors deloitte issued an unqualified opinion under the sarbanes-oxley act indicating that our company's internal controls over financial reporting were designed and operating effectively as of june 30 2025 You will see that as part of the Form 10-K, which we will be filing later today. you will see that as part of the form 10-k which we will be filing later today This reflects the strength of our internal controls and the continued diligence of our finance and compliance teams, and I would like to congratulate them for all of their efforts. this reflects the strength of our internal controls and the continued diligence of our finance and compliance teams and i would like to congratulate them for all of their efforts Our recurring revenue continues to be a cornerstone of our business. our recurring revenue continues to be a cornerstone of our business The run rate this quarter reached $94 million, and that's up $5 million from the prior quarter. This marks the largest quarterly increase we've seen in the past two years, and it's a strong signal of the momentum that we're building. Equipment sales for the quarter, while down 5% versus last year's Q4, had a much improved performance, increasing 27% sequentially from Q3 of fiscal 2025. This growth underscores the value of our offerings and the continued strength of our customer relationships, particularly in uncertain economic times caused in large part by the effect of tariffs. From a profitability standpoint, our recurring revenue gross margin remained very strong at 91%, with StarLink Commercial Fire radios continuing to be a strong part of the mix. We also made meaningful progress on inventory management, reducing inventory levels at June 30, 2025, by $8.6 million compared to this time last year. The run rate this quarter reached $94 million, and that's up $5 million from the prior quarter. the run rate this quarter reached $94 million and that's up $5 million from the prior quarter This marks the largest quarterly increase we've seen in the past two years, and it's a strong signal of the momentum that we're building. this marks the largest quarterly increase we've seen in the past two years and it's a strong signal of the momentum that we're building Equipment sales for the quarter, while down 5% versus last year's Q4, had a much improved performance, increasing 27% sequentially from Q3 of fiscal 2025. equipment sales for the quarter while down 5% versus last year's q4 had a much improved performance increasing 27% sequentially from q3 of fiscal 2025 This growth underscores the value of our offerings and the continued strength of our customer relationships, particularly in uncertain economic times caused in large part by the effect of tariffs. this growth underscores the value of our offerings and the continued strength of our customer relationships particularly in uncertain economic times caused in large part by the effect of tariffs From a profitability standpoint, our recurring revenue gross margin remained very strong at 91%, with StarLink Commercial Fire radios continuing to be a strong part of the mix. from a profitability standpoint our recurring revenue gross margin remained very strong at 91% with starlink commercial fire radios continuing to be a strong part of the mix We also made meaningful progress on inventory management, reducing inventory levels at June 30, 2025, by $8.6 million compared to this time last year. we also made meaningful progress on inventory management reducing inventory levels at june 30 2025 by $8.6 million compared to this time last year Cash flow from operations for the year came in at $53.5 million, which reinforces our ability to generate consistent cash flow to support both strategic investments and shareholder returns. Speaking of which, we returned significant value to our shareholders during the fiscal year. We paid out $13.6 million in dividends and repurchased $36.8 million of our stock, which is equivalent to 1.2 million shares at an average price of $30.40. Even after these returns, we ended the fiscal year with approximately $100 million in cash and no debt, giving us tremendous flexibility going forward. On pricing, we announced two pricing increases during the quarter. The first, at the end of April, was an 8.5% increase to help offset rising tariff costs. The second was our standard annual price increase, which this year was 5% and which went into effect approximately mid-July. Cash flow from operations for the year came in at $53.5 million, which reinforces our ability to generate consistent cash flow to support both strategic investments and shareholder returns. cash flow from operations for the year came in at $53.5 million which reinforces our ability to generate consistent cash flow to support both strategic investments and shareholder returns Speaking of which, we returned significant value to our shareholders during the fiscal year. speaking of which we returned significant value to our shareholders during the fiscal year We paid out $13.6 million in dividends and repurchased $36.8 million of our stock, which is equivalent to 1.2 million shares at an average price of $30.40. we paid out $13.6 million in dividends and repurchased $36.8 million of our stock which is equivalent to 1.2 million shares at an average price of $30.40 Even after these returns, we ended the fiscal year with approximately $100 million in cash and no debt, giving us tremendous flexibility going forward. even after these returns we ended the fiscal year with approximately $100 million in cash and no debt giving us tremendous flexibility going forward On pricing, we announced two pricing increases during the quarter. on pricing we announced two pricing increases during the quarter The first, at the end of April, was an 8.5% increase to help offset rising tariff costs. the first at the end of april was an 8.5% increase to help offset rising tariff costs The second was our standard annual price increase, which this year was 5% and which went into effect approximately mid-July. the second was our standard annual price increase which this year was 5% and which went into effect approximately mid-july We expect the full benefit of these actions to be reflected starting in our fiscal 2026 Q1. Finally, while there remains considerable uncertainty in the market around tariffs, we believe we are in an advantageous position as compared to some of our competitors. Our supply chain planning, pricing strategies, and balance sheet strength give us a competitive advantage in navigating these challenges. Overall, it was a very strong quarter and a solid close to the fiscal year, with net income of $43.4 million, or 24% of sales, and adjusted EBITDA of $52.1 million, which equates to an EBITDA margin of 29%. I am proud of the team's execution and the financial strength we are carrying into the new fiscal year. With that, I will turn the call over to our CFO, Andy Vuono, for a deeper dive into the financials. Andy? We expect the full benefit of these actions to be reflected starting in our fiscal 2026 Q1. we expect the full benefit of these actions to be reflected starting in our fiscal 2026 q1 Finally, while there remains considerable uncertainty in the market around tariffs, we believe we are in an advantageous position as compared to some of our competitors. finally while there remains considerable uncertainty in the market around tariffs we believe we are in an advantageous position as compared to some of our competitors Our supply chain planning, pricing strategies, and balance sheet strength give us a competitive advantage in navigating these challenges. our supply chain planning pricing strategies and balance sheet strength give us a competitive advantage in navigating these challenges Overall, it was a very strong quarter and a solid close to the fiscal year, with net income of $43.4 million, or 24% of sales, and adjusted EBITDA of $52.1 million, which equates to an EBITDA margin of 29%. overall it was a very strong quarter and a solid close to the fiscal year with net income of $43.4 million or 24% of sales and adjusted ebitda of $52.1 million which equates to an ebitda margin of 29% I am proud of the team's execution and the financial strength we are carrying into the new fiscal year. i am proud of the team's execution and the financial strength we are carrying into the new fiscal year With that, I will turn the call over to our CFO, Andy Vuono, for a deeper dive into the financials. with that i will turn the call over to our cfo andy vuono for a deeper dive into the financials Andy? andy

Speaker 2: Great. Thank you, Kevin, and good morning, everyone. Net sales for the three months ended June 30, 2025, increased 0.8% to $50.7 million as compared to $50.3 million for the same period a year ago. Net sales for the 12 months ended June 30, 2025, decreased 3.8% to $181.6 million as compared to $188.8 million for the same period a year ago. Recurring monthly service revenue continued its strong growth, increasing 10% in Q4 to $22.4 million as compared to $20.4 million for the same period last year. Recurring monthly service revenue for the 12 months ended June 2025, increased 14% to $86.3 million as compared to $75.7 million last year. These increases reflect the continued demand for our StarLink radios. Great. great Thank you, Kevin, and good morning, everyone. thank you kevin and good morning everyone Net sales for the three months ended June 30, 2025, increased 0.8% to $50.7 million as compared to $50.3 million for the same period a year ago. net sales for the three months ended june 30 2025 increased 0.8% to $50.7 million as compared to $50.3 million for the same period a year ago Net sales for the 12 months ended June 30, 2025, decreased 3.8% to $181.6 million as compared to $188.8 million for the same period a year ago. net sales for the 12 months ended june 30 2025 decreased 3.8% to $181.6 million as compared to $188.8 million for the same period a year ago Recurring monthly service revenue continued its strong growth, increasing 10% in Q4 to $22.4 million as compared to $20.4 million for the same period last year. recurring monthly service revenue continued its strong growth increasing 10% in q4 to $22.4 million as compared to $20.4 million for the same period last year Recurring monthly service revenue for the 12 months ended June 2025, increased 14% to $86.3 million as compared to $75.7 million last year. recurring monthly service revenue for the 12 months ended june 2025 increased 14% to $86.3 million as compared to $75.7 million last year These increases reflect the continued demand for our StarLink r adios. these increases reflect the continued demand for our starlink r adios Equipment sales for the quarter decreased 5.5% to $28.3 million as compared to $29.9 million last year, and equipment sales for the year ended June 2025, decreased 15.7% to $95.3 million as compared to $113.1 million for the same period last year. The decrease in equipment sales was primarily a result of extended stocking strategies of some of our larger distributors throughout the year, in addition to the timing of large project reps for our door locking business. Gross profit for the three months ended June 2025, decreased 3.8% to $26.8 million, with a gross margin of 53% as compared to $27.8 million, with a gross margin of 55% for the same period last year. Gross profit for the 12 months ended June 30, 2025, decreased 0.7% to $101 million, with a gross margin of 56% as compared to $101.8 million, with a gross margin of 54% a year ago. Equipment sales for the quarter decreased 5.5% to $28.3 million as compared to $29.9 million last year, and equipment sales for the year ended June 2025, decreased 15.7% to $95.3 million as compared to $113.1 million for the same period last year. equipment sales for the quarter decreased 5.5% to $28.3 million as compared to $29.9 million last year and equipment sales for the year ended june 2025 decreased 15.7% to $95.3 million as compared to $113.1 million for the same period last year The decrease in equipment sales was primarily a result of extended stocking strategies of some of our larger distributors throughout the year, in addition to the timing of large project reps for our door locking business. the decrease in equipment sales was primarily a result of extended stocking strategies of some of our larger distributors throughout the year in addition to the timing of large project reps for our door locking business Gross profit for the three months ended June 2025, decreased 3.8% to $26.8 million, with a gross margin of 53% as compared to $27.8 million, with a gross margin of 55% for the same period last year. gross profit for the three months ended june 2025 decreased 3.8% to $26.8 million with a gross margin of 53% as compared to $27.8 million with a gross margin of 55% for the same period last year Gross profit for the 12 months ended June 30, 2025, decreased 0.7% to $101 million, with a gross margin of 56% as compared to $101.8 million, with a gross margin of 54% a year ago. gross profit for the 12 months ended june 30 2025 decreased 0.7% to $101 million with a gross margin of 56% as compared to $101.8 million with a gross margin of 54% a year ago Gross profit for recurring service revenue for the quarter increased 10.3% to $20.3 million, with a gross margin of 91% as compared to $18.4 million, with a gross margin of 90% last year. Gross profit for the recurring service revenue for the 12 months ended June 2025, increased 14.6% to $78.5 million, with a gross margin of 91% as compared to $68.5 million, with a gross margin of 90% last year. Gross profit for equipment revenue in Q4 decreased 31.2% to $6.4 million, with a gross margin of 23% as compared to $9.4 million, with a gross margin of 31% last year. Gross profit for equipment revenue for the 12 months ended June 30, 2025, decreased 32% to $22.5 million, with a gross margin of 24% as compared to $33.2 million, with a gross margin of 29% for the same period last year. Gross profit for recurring service revenue for the quarter increased 10.3% to $20.3 million, with a gross margin of 91% as compared to $18.4 million, with a gross margin of 90% last year. gross profit for recurring service revenue for the quarter increased 10.3% to $20.3 million with a gross margin of 91% as compared to $18.4 million with a gross margin of 90% last year Gross profit for the recurring service revenue for the 12 months ended June 2025, increased 14.6% to $78.5 million, with a gross margin of 91% as compared to $68.5 million, with a gross margin of 90% last year. gross profit for the recurring service revenue for the 12 months ended june 2025 increased 14.6% to $78.5 million with a gross margin of 91% as compared to $68.5 million with a gross margin of 90% last year Gross profit for equipment revenue in Q4 decreased 31.2% to $6.4 million, with a gross margin of 23% as compared to $9.4 million, with a gross margin of 31% last year. gross profit for equipment revenue in q4 decreased 31.2% to $6.4 million with a gross margin of 23% as compared to $9.4 million with a gross margin of 31% last year Gross profit for equipment revenue for the 12 months ended June 30, 2025, decreased 32% to $22.5 million, with a gross margin of 24% as compared to $33.2 million, with a gross margin of 29% for the same period last year. gross profit for equipment revenue for the 12 months ended june 30 2025 decreased 32% to $22.5 million with a gross margin of 24% as compared to $33.2 million with a gross margin of 29% for the same period last year The increase in both gross profit dollars and gross margin for recurring revenue for the three and 12 months ended June 2025 was primarily the result of the previously mentioned increase in recurring revenue, as well as a greater proportion of those revenues being generated by our StarLink Fire radios, which generate higher monthly service charges than other StarLink radios. The decrease in both gross profit dollars and gross margin for equipment revenues for both the three and 12 months ended June 2025 was primarily a result of the aforementioned decrease in revenue, which resulted in less absorption of our fixed manufacturing overhead costs. In addition, Q4 was further negatively impacted by increased tariff costs in the fourth quarter and the impact of distributors pulling forward certain orders before our announced price increase went into effect. The increase in both gross profit dollars and gross margin for recurring revenue for the three and 12 months ended June 2025 was primarily the result of the previously mentioned increase in recurring revenue, as well as a greater proportion of those revenues being generated by our StarLink Fire radios, which generate higher monthly service charges than other StarLink radios. the increase in both gross profit dollars and gross margin for recurring revenue for the three and 12 months ended june 2025 was primarily the result of the previously mentioned increase in recurring revenue as well as a greater proportion of those revenues being generated by our starlink fire radios which generate higher monthly service charges than other starlink radios The decrease in both gross profit dollars and gross margin for equipment revenues for both the three and 12 months ended June 2025 was primarily a result of the aforementioned decrease in revenue, which resulted in less absorption of our fixed manufacturing overhead costs. the decrease in both gross profit dollars and gross margin for equipment revenues for both the three and 12 months ended june 2025 was primarily a result of the aforementioned decrease in revenue which resulted in less absorption of our fixed manufacturing overhead costs In addition, Q4 was further negatively impacted by increased tariff costs in the fourth quarter and the impact of distributors pulling forward certain orders before our announced price increase went into effect. in addition q4 was further negatively impacted by increased tariff costs in the fourth quarter and the impact of distributors pulling forward certain orders before our announced price increase went into effect R&D costs for the quarter increased 6.8% to $3.2 million, or 6.4% of sales, as compared to $3 million, or 6% of sales for the same period a year ago. R&D costs for the 12 months ended June 2025 increased 16.9% to $12.6 million, or 7% of sales, as compared to $10.8 million, or 6% of sales for the same period a year ago. The increase for the three and 12 months was a result of salary increases and the hiring of additional staff. SG&A expenses for the quarter increased 5.8% to $11.5 million, or 23% of net sales, as compared to $10.9 million, or 22% of net sales for the same period last year. SG&A expenses for the 12 months ended June 2025 increased 13.5% to $42.2 million, or 23% of net sales, as compared to $37.1 million, or 20% of sales for the same period last year. R&D costs for the quarter increased 6.8% to $3.2 million, or 6.4% of sales, as compared to $3 million, or 6% of sales for the same period a year ago. r&d costs for the quarter increased 6.8% to $3.2 million or 6.4% of sales as compared to $3 million or 6% of sales for the same period a year ago R&D costs for the 12 months ended June 2025 increased 16.9% to $12.6 million, or 7% of sales, as compared to $10.8 million, or 6% of sales for the same period a year ago. r&d costs for the 12 months ended june 2025 increased 16.9% to $12.6 million or 7% of sales as compared to $10.8 million or 6% of sales for the same period a year ago The increase for the three and 12 months was a result of salary increases and the hiring of additional staff. the increase for the three and 12 months was a result of salary increases and the hiring of additional staff SG&A expenses for the quarter increased 5.8% to $11.5 million, or 23% of net sales, as compared to $10.9 million, or 22% of net sales for the same period last year. sg&a expenses for the quarter increased 5.8% to $11.5 million or 23% of net sales as compared to $10.9 million or 22% of net sales for the same period last year SG&A expenses for the 12 months ended June 2025 increased 13.5% to $42.2 million, or 23% of net sales, as compared to $37.1 million, or 20% of sales for the same period last year. sg&a expenses for the 12 months ended june 2025 increased 13.5% to $42.2 million or 23% of net sales as compared to $37.1 million or 20% of sales for the same period last year The increase in SG&A for the three months was primarily due to increased legal expenses and increased wages as a result of salary increases and certain additional hirings in the finance and IT departments. The increase for the 12 months was primarily due to increases in personnel-related expenses, mainly from merit increases and hiring of additional personnel in finance and IT, in addition to increases in insurance, advertising, legal and professional fees, which was offset by decreases in director fees and non-recurring transactional costs. Operating income for the quarter decreased 13.4% to $12.1 million, as compared to $14 million for the same period last year. Operating income for the 12 months ended June 2025 decreased 14% to $46.3 million, as compared to $53.8 million for the same period last year. Interest and other income for three months increased 16% to $883,000 as compared to $762,000 last year. The increase in SG&A for the three months was primarily due to increased legal expenses and increased wages as a result of salary increases and certain additional hirings in the finance and IT departments. the increase in sg&a for the three months was primarily due to increased legal expenses and increased wages as a result of salary increases and certain additional hirings in the finance and it departments The increase for the 12 months was primarily due to increases in personnel-related expenses, mainly from merit increases and hiring of additional personnel in finance and IT, in addition to increases in insurance, advertising, legal and professional fees, which was offset by decreases in director fees and non-recurring transactional costs. the increase for the 12 months was primarily due to increases in personnel-related expenses mainly from merit increases and hiring of additional personnel in finance and it in addition to increases in insurance advertising legal and professional fees which was offset by decreases in director fees and non-recurring transactional costs Operating income for the quarter decreased 13.4% to $12.1 million, as compared to $14 million for the same period last year. operating income for the quarter decreased 13.4% to $12.1 million as compared to $14 million for the same period last year Operating income for the 12 months ended June 2025 decreased 14% to $46.3 million, as compared to $53.8 million for the same period last year. operating income for the 12 months ended june 2025 decreased 14% to $46.3 million as compared to $53.8 million for the same period last year Interest and other income for three months increased 16% to $883,000 as compared to $762,000 last year. interest and other income for three months increased 16% to $883,000 as compared to $762,000 last year For the 12 months ended June 2025, interest and other income increased 48% to $3.8 million, compared to $2.6 million last year. The increases for both the three and 12 months ended June 2025 were primarily due to increased interest and dividend income from the company's cash and short-term investments. The provision for income taxes for the three months increased 12% to $1.3 million, with an effective tax rate of 10%, as compared to $1.2 million, with an effective tax rate of 8% last year. For the 12 months ended June 2025, the provision for income taxes increased 1.4%, or $95,000, to $6.7 million, with an effective tax rate of 13%, as compared to $6.6 million, with an effective tax rate of 12% last year. For the 12 months ended June 2025, interest and other income increased 48% to $3.8 million, compared to $2.6 million last year. for the 12 months ended june 2025 interest and other income increased 48% to $3.8 million compared to $2.6 million last year The increases for both the three and 12 months ended June 2025 were primarily due to increased interest and dividend income from the company's cash and short-term investments. the increases for both the three and 12 months ended june 2025 were primarily due to increased interest and dividend income from the company's cash and short-term investments The provision for income taxes for the three months increased 12% to $1.3 million, with an effective tax rate of 10%, as compared to $1.2 million, with an effective tax rate of 8% last year. the provision for income taxes for the three months increased 12% to $1.3 million with an effective tax rate of 10% as compared to $1.2 million with an effective tax rate of 8% last year For the 12 months ended June 2025, the provision for income taxes increased 1.4%, or $95,000, to $6.7 million, with an effective tax rate of 13%, as compared to $6.6 million, with an effective tax rate of 12% last year. for the 12 months ended june 2025 the provision for income taxes increased 1.4% or $95,000 to $6.7 million with an effective tax rate of 13% as compared to $6.6 million with an effective tax rate of 12% last year The increase in the provision for the three and 12 months ended June 2025 was due to a larger portion of our taxable income being attributable to the U.S. operations. Net income for the quarter decreased 14% to $11.6 million, or $0.33 per diluted share, as compared to $13.5 million, or $0.36 per diluted share for the same period last year, and represents 23% of net sales. Net income for the 12 months ended June 30, 2025, decreased 13% to $43.4 million, or $1.19 per diluted share, as compared to $49.8 million, or $1.34 per diluted share for the same period last year, and represents 24% of net sales. Adjusted EBITDA for the quarter decreased 7.6% to $14.2 million, or $0.40 per diluted share, as compared to $15.4 million, or $0.41 per diluted share for the same period a year ago, and equates to an adjusted EBITDA margin of 28.1%. The increase in the provision for the three and 12 months ended June 2025 was due to a larger portion of our taxable income being attributable to the U.S. operations. the increase in the provision for the three and 12 months ended june 2025 was due to a larger portion of our taxable income being attributable to the u.s operations Net income for the quarter decreased 14% to $11.6 million, or $0.33 per diluted share, as compared to $13.5 million, or $0.36 per diluted share for the same period last year, and represents 23% of net sales. net income for the quarter decreased 14% to $11.6 million or $0.33 per diluted share as compared to $13.5 million or $0.36 per diluted share for the same period last year and represents 23% of net sales Net income for the 12 months ended June 30, 2025, decreased 13% to $43.4 million, or $1.19 per diluted share, as compared to $49.8 million, or $1.34 per diluted share for the same period last year, and represents 24% of net sales. net income for the 12 months ended june 30 2025 decreased 13% to $43.4 million or $1.19 per diluted share as compared to $49.8 million or $1.34 per diluted share for the same period last year and represents 24% of net sales Adjusted EBITDA for the quarter decreased 7.6% to $14.2 million, or $0.40 per diluted share, as compared to $15.4 million, or $0.41 per diluted share for the same period a year ago, and equates to an adjusted EBITDA margin of 28.1%. adjusted ebitda for the quarter decreased 7.6% to $14.2 million or $0.40 per diluted share as compared to $15.4 million or $0.41 per diluted share for the same period a year ago and equates to an adjusted ebitda margin of 28.1% Adjusted EBITDA for the 12 months ended June 2025 decreased 11.6% to $52.1 million, or $1.43 per diluted share, as compared to $58.9 million, or $1.59 per diluted share for the same period last year, and equates to an adjusted EBITDA margin of 28.7%. Discussing our balance sheet, as of June 2025, the company had $99.1 million in cash and cash equivalents and marketable securities, as compared to $97.7 million as of June 2024, a 1.5% increase. The company had no debt as of June 2025, and cash provided by operating activities for the 12 months ended June 2025 was $53.5 million, as compared to $45.4 million for the same period last year, an 18% increase. Working capital, which is our current assets minus current liabilities, was $138.4 million as of June 2025, as compared to working capital of $146.5 million at June 2024. Adjusted EBITDA for the 12 months ended June 2025 decreased 11.6% to $52.1 million, or $1.43 per diluted share, as compared to $58.9 million, or $1.59 per diluted share for the same period last year, and equates to an adjusted EBITDA margin of 28.7%. adjusted ebitda for the 12 months ended june 2025 decreased 11.6% to $52.1 million or $1.43 per diluted share as compared to $58.9 million or $1.59 per diluted share for the same period last year and equates to an adjusted ebitda margin of 28.7% Discussing our balance sheet, as of June 2025, the company had $99.1 million in cash and cash equivalents and marketable securities, as compared to $97.7 million as of June 2024, a 1.5% increase. discussing our balance sheet as of june 2025 the company had $99.1 million in cash and cash equivalents and marketable securities as compared to $97.7 million as of june 2024 a 1.5% increase The company had no debt as of June 2025, and cash provided by operating activities for the 12 months ended June 2025 was $53.5 million, as compared to $45.4 million for the same period last year, an 18% increase. the company had no debt as of june 2025 and cash provided by operating activities for the 12 months ended june 2025 was $53.5 million as compared to $45.4 million for the same period last year an 18% increase Working capital, which is our current assets minus current liabilities, was $138.4 million as of June 2025, as compared to working capital of $146.5 million at June 2024. working capital which is our current assets minus current liabilities was $138.4 million as of june 2025 as compared to working capital of $146.5 million at june 2024 CapEx for the quarter was $237,000 as compared to $551,000 in the prior year, and for the full fiscal year, CapEx was $2.1 million as compared to $1.6 million last year. That concludes my formal remarks, and I'd like to return the call back to Dick. CapEx for the quarter was $237,000 as compared to $551,000 in the prior year, and for the full fiscal year, CapEx was $2.1 million as compared to $1.6 million last year. capex for the quarter was $237,000 as compared to $551,000 in the prior year and for the full fiscal year capex was $2.1 million as compared to $1.6 million last year That concludes my formal remarks, and I'd like to return the call back to Dick. that concludes my formal remarks and i'd like to return the call back to dick

Speaker 10: Thank you, Andy. Let me take a moment to wrap up with a few reflections on where we've been and where we're headed. Fiscal 2025 is a year of both challenge and resilience, yet through it all, NAPCO demonstrated the strength and durability of its model. We stayed focused on creating lasting value for our customers, partners, and shareholders. One of the clearest indications of that strength is our recurring revenue. This year, recurring revenue grew by more than $10 million and now represents nearly half of our total sales, with a sustained gross margin of 91%, which provides consistent cash generation and opportunity for continued reinvestment. A major driver of this growth has been the success of our Fire radios platform, which is increasingly viewed as the industry standard for fire communications in commercial buildings. Operationally, I'm extremely proud of the performance that our team delivered. Thank you, Andy. thank you andy Let me take a moment to wrap up with a few reflections on where we've been and where we're headed. let me take a moment to wrap up with a few reflections on where we've been and where we're headed Fiscal 2025 is a year of both challenge and resilience, yet through it all, NAPCO demonstrated the strength and durability of its model. fiscal 2025 is a year of both challenge and resilience yet through it all, napco demonstrated the strength and durability of its model We stayed focused on creating lasting value for our customers, partners, and shareholders. we stayed focused on creating lasting value for our customers partners and shareholders One of the clearest indications of that strength is our recurring revenue. one of the clearest indications of that strength is our recurring revenue This year, recurring revenue grew by more than $10 million and now represents nearly half of our total sales, with a sustained gross margin of 91%, which provides consistent cash generation and opportunity for continued reinvestment. this year recurring revenue grew by more than $10 million and now represents nearly half of our total sales with a sustained gross margin of 91% which provides consistent cash generation and opportunity for continued reinvestment A major driver of this growth has been the success of our Fire radios platform, which is increasingly viewed as the industry standard for fire communications in commercial buildings. a major driver of this growth has been the success of our fire radios platform which is increasingly viewed as the industry standard for fire communications in commercial buildings Operationally, I'm extremely proud of the performance that our team delivered. operationally i'm extremely proud of the performance that our team delivered We reduced inventory by more than $8 million, and despite providing nearly $50 million of value to shareholders through dividends and share repurchases and continued to invest in product development, compliance, and systems infrastructure, we still ended the year with over $99 million in cash while maintaining a debt-free balance sheet. On the hardware side, as mentioned earlier, we saw a strong rebound in Q4, up 27% sequentially from Q3. This rebound reflects our team's agility in adapting to shifting demand dynamics. Looking ahead, we remain cautiously optimistic. Tariff policy and broader market conditions remain dynamic, but we're not standing still. Our pricing actions have been implemented, and we continue to diversify our distribution base, invest in automation, and enhance our StarLink platform, ensuring we're driving sustainable growth while protecting margins. Our strong balance sheet gives us meaningful flexibility to respond to opportunities, both organically and through potential strategic acquisitions. We reduced inventory by more than $8 million, and despite providing nearly $50 million of value to shareholders through dividends and share repurchases and continued to invest in product development, compliance, and systems infrastructure, we still ended the year with over $99 million in cash while maintaining a debt-free balance sheet. we reduced inventory by more than $8 million and despite providing nearly $50 million of value to shareholders through dividends and share repurchases and continued to invest in product development compliance and systems infrastructure we still ended the year with over $99 million in cash while maintaining a debt-free balance sheet On the hardware side, as mentioned earlier, we saw a strong rebound in Q4, up 27% sequentially from Q3. on the hardware side as mentioned earlier we saw a strong rebound in q4 up 27% sequentially from q3 This rebound reflects our team's agility in adapting to shifting demand dynamics. this rebound reflects our team's agility in adapting to shifting demand dynamics Looking ahead, we remain cautiously optimistic. looking ahead we remain cautiously optimistic Tariff policy and broader market conditions remain dynamic, but we're not standing still. tariff policy and broader market conditions remain dynamic but we're not standing still Our pricing actions have been implemented, and we continue to diversify our distribution base, invest in automation, and enhance our StarLink platform, ensuring we're driving sustainable growth while protecting margins. our pricing actions have been implemented and we continue to diversify our distribution base invest in automation and enhance our starlink platform ensuring we're driving sustainable growth while protecting margins Our strong balance sheet gives us meaningful flexibility to respond to opportunities, both organically and through potential strategic acquisitions. our strong balance sheet gives us meaningful flexibility to respond to opportunities both organically and through potential strategic acquisitions At the same time, we remain committed to returning capital to our shareholders while operating with zero debt. Now, stepping back for a broader view, I want to highlight one vertical where NAPCO continues to make a difference: school security. School safety remains one of the most critical challenges of our time, and NAPCO is proud to be a trusted and proven partner to school districts all across the country. Our divisions work together to deliver a full suite of integrated solutions from the advanced Trilogy and ArchiTect locksets to enterprise-scale Continental CA4K access control systems. These platforms are secure, scalable, and aligned with important standards like PASS, or as it's called, the Partner Alliance for Safer Schools, to help schools implement practical, best-in-class security. We know that educators, administrators, and communities are looking for solutions they can trust. At the same time, we remain committed to returning capital to our shareholders while operating with zero debt. at the same time we remain committed to returning capital to our shareholders while operating with zero debt Now, stepping back for a broader view, I want to highlight one vertical where NAPCO continues to make a difference: school security. now stepping back for a broader view i want to highlight one vertical where napco continues to make a difference school security School safety remains one of the most critical challenges of our time, and NAPCO is proud to be a trusted and proven partner to school districts all across the country. school safety remains one of the most critical challenges of our time and napco is proud to be a trusted and proven partner to school districts all across the country Our divisions work together to deliver a full suite of integrated solutions from the advanced Trilogy and ArchiTect locksets to enterprise-scale Continental CA4K access control systems. our divisions work together to deliver a full suite of integrated solutions from the advanced trilogy and architect locksets to enterprise-scale continental ca4k access control systems These platforms are secure, scalable, and aligned with important standards like PASS, or as it's called, the Partner Alliance for Safer Schools, to help schools implement practical, best-in-class security. these platforms are secure scalable and aligned with important standards like pass or as it's called the partner alliance for safer schools to help schools implement practical best-in-class security We know that educators, administrators, and communities are looking for solutions they can trust. we know that educators administrators and communities are looking for solutions they can trust What makes NAPCO unique is our ability to bring together locking, access control, and alarm technologies into a unified, often interoperable platform. It's extremely gratifying to know that our solutions are helping to protect students and staff every single day, and we see this as an area of ongoing growth and responsibility. In parallel with our work in education, we continue to invest heavily in R&D to expand recurring revenue opportunities across our product line. One of the most exciting of these is our MVP platform, a next generation of cloud-based access control systems that integrate seamlessly with our locking hardware. It represents a brand new recurring revenue stream for us and for our dealers, with configurations tailored for both enterprise customers and smaller facilities. What makes NAPCO unique is our ability to bring together locking, access control, and alarm technologies into a unified, often interoperable platform. what makes napco unique is our ability to bring together locking access control and alarm technologies into a unified often interoperable platform It's extremely gratifying to know that our solutions are helping to protect students and staff every single day, and we see this as an area of ongoing growth and responsibility. it's extremely gratifying to know that our solutions are helping to protect students and staff every single day and we see this as an area of ongoing growth and responsibility In parallel with our work in education, we continue to invest heavily in R&D to expand recurring revenue opportunities across our product line. in parallel with our work in education we continue to invest heavily in r&d to expand recurring revenue opportunities across our product line One of the most exciting of these is our MVP platform, a next generation of cloud-based access control systems that integrate seamlessly with our locking hardware. one of the most exciting of these is our mvp platform a next generation of cloud-based access control systems that integrate seamlessly with our locking hardware It represents a brand new recurring revenue stream for us and for our dealers, with configurations tailored for both enterprise customers and smaller facilities. it represents a brand new recurring revenue stream for us and for our dealers with configurations tailored for both enterprise customers and smaller facilities We believe MVP can potentially be a game changer and become a foundational contributor to our growth over the coming years, as it extends our leadership into the hosted access control market and reinforces our core strategy of integrating innovative hardware with cloud-based services to deliver long-term, high-margin recurring revenue. In summary, we are ending fiscal 2026 with a solid momentum, clarity of focus, and a strong financial foundation. Let me repeat. In summary, we are entering fiscal 2026 with a solid momentum, clarity of focus, and a stronger financial foundation. We built a resilient business model that continues to deliver even in challenging environments. I'm incredibly proud of our team, what it has accomplished, and I'm energized with what lies ahead. I'd like to thank everyone for their support and for joining us in this exciting future we have. We believe MVP can potentially be a game changer and become a foundational contributor to our growth over the coming years, as it extends our leadership into the hosted access control market and reinforces our core strategy of integrating innovative hardware with cloud-based services to deliver long-term, high-margin recurring revenue. we believe mvp can potentially be a game changer and become a foundational contributor to our growth over the coming years as it extends our leadership into the hosted access control market and reinforces our core strategy of integrating innovative hardware with cloud-based services to deliver long-term high-margin recurring revenue In summary, we are ending fiscal 2026 with a solid momentum, clarity of focus, and a strong financial foundation. in summary we are ending fiscal 2026 with a solid momentum clarity of focus and a strong financial foundation Let me repeat. let me repeat In summary, we are entering fiscal 2026 with a solid momentum, clarity of focus, and a stronger financial foundation. in summary we are entering fiscal 2026 with a solid momentum clarity of focus and a stronger financial foundation We built a resilient business model that continues to deliver even in challenging environments. we built a resilient business model that continues to deliver even in challenging environments I'm incredibly proud of our team, what it has accomplished, and I'm energized with what lies ahead. i'm incredibly proud of our team what it has accomplished and i'm energized with what lies ahead I'd like to thank everyone for their support and for joining us in this exciting future we have. i'd like to thank everyone for their support and for joining us in this exciting future we have Our formal remarks are now concluded, and I'd like to open the call for the Q&A session. Operator, please proceed. Our formal remarks are now concluded, and I'd like to open the call for the Q&A session. our formal remarks are now concluded and i'd like to open the call for the q&a session Operator, please proceed. operator please proceed

Speaker 8: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star four by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star four by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you. Your first question comes from the line of Matt Summerville from D.A. Davidson. Please go ahead. Thank you. thank you Ladies and gentlemen, we will now begin the question and answer session. ladies and gentlemen we will now begin the question and answer session Should you have a question, please press star four by the one on your telephone keypad. should you have a question please press star four by the one on your telephone keypad You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star four by the two. you will hear a prompt that your hand has been raised and should you wish to cancel your request please press star four by the two If you are using a speakerphone, please lift the handset before pressing any keys. if you are using a speakerphone please lift the handset before pressing any keys One moment, please, for your first question. one moment please for your first question Thank you. thank you Your first question comes from the line of Matt Summerville from D.A. your first question comes from the line of matt summerville from d.a Davidson. davidson Please go ahead. please go ahead

Speaker 7: Thanks. A couple of questions. Given that some distributors are still taking down inventories, should we be concerned with respect to where channel inventories sit today, given that it sounds like there may have been a little bit of a broader buy-ahead related to the tariff-driven price increases you mentioned on the call? I have a follow-up. Thanks. thanks A couple of questions. a couple of questions Given that some distributors are still taking down inventories, should we be concerned with respect to where channel inventories sit today, given that it sounds like there may have been a little bit of a broader buy-ahead related to the tariff-driven price increases you mentioned on the call? given that some distributors are still taking down inventories should we be concerned with respect to where channel inventories sit today given that it sounds like there may have been a little bit of a broader buy-ahead related to the tariff-driven price increases you mentioned on the call I have a follow-up. i have a follow-up

Speaker 6: Matt, the inventory that was bought pre-tariff price increase was done in April, pretty much. That's four or five months before the end of this quarter that we're in now. We expect distributors to buy more. The sell-through stats are good. The tariff chaos has kind of cleared up. The distributors know that we're the best game in town when it comes to tariffs. Our direction is clear. Some of the other competitors, it's a little chaotic, and they don't know where the tariffs are going. We saw some of the inventory declines in the channel. That changed in the fourth quarter. Our fourth quarter sales were not only tariff-driven, pulling-ahead-driven, but also real demand. We expect that to continue. We have a strong group of distributors. We have a strong group of dealers. We have excellent products, and we expect this to be a very good year, fiscal 2026. Matt, the inventory that was bought pre-tariff price increase was done in April, pretty much. matt the inventory that was bought pre-tariff price increase was done in april pretty much That's four or five months before the end of this quarter that we're in now. that's four or five months before the end of this quarter that we're in now We expect distributors to buy more. we expect distributors to buy more The sell-through stats are good. the sell-through stats are good The tariff chaos has kind of cleared up. the tariff chaos has kind of cleared up The distributors know that we're the best game in town when it comes to tariffs. the distributors know that we're the best game in town when it comes to tariffs Our direction is clear. our direction is clear Some of the other competitors, it's a little chaotic, and they don't know where the tariffs are going. some of the other competitors it's a little chaotic and they don't know where the tariffs are going We saw some of the inventory declines in the channel. we saw some of the inventory declines in the channel That changed in the fourth quarter. that changed in the fourth quarter Our fourth quarter sales were not only tariff-driven, pulling-ahead-driven, but also real demand. our fourth quarter sales were not only tariff-driven pulling-ahead-driven but also real demand We expect that to continue. we expect that to continue We have a strong group of distributors. we have a strong group of distributors We have a strong group of dealers. we have a strong group of dealers We have excellent products, and we expect this to be a very good year, fiscal 2026. we have excellent products and we expect this to be a very good year fiscal 2026

Speaker 10: Matt, I'd like to mention that our tariff arrangement, we're in the Dominican Republic, is 10%. All of our competitors are either in Asia or in Europe, and Europe is now 15%. In Asia, who knows, you know, what that's going to be, but it's much higher than all of the tariffs. We have an advantage, and our technology and the fact that we're so broadly diversified with our product line that all integrates together bodes well for getting additional dealers and doing more jobs, and they can count on stable prices from us. Matt, I'd like to mention that our tariff arrangement, we're in the Dominican Republic, is 10%. matt i'd like to mention that our tariff arrangement we're in the dominican republic is 10% All of our competitors are either in Asia or in Europe, and Europe is now 15%. all of our competitors are either in asia or in europe and europe is now 15% In Asia, who knows, you know, what that's going to be, but it's much higher than all of the tariffs. in asia who knows you know what that's going to be but it's much higher than all of the tariffs We have an advantage, and our technology and the fact that we're so broadly diversified with our product line that all integrates together bodes well for getting additional dealers and doing more jobs, and they can count on stable prices from us. we have an advantage and our technology and the fact that we're so broadly diversified with our product line that all integrates together bodes well for getting additional dealers and doing more jobs and they can count on stable prices from us

Speaker 7: Thank you for that. As you think about the magnitude of increase you saw in the RSR from $89 million, I think, in April to $94 million, as you described it in July, do we have another quarter or two of that sort of magnitude of sequential increase based on timing of, you know, historical activations of Fire radios? Given kind of the magnitude of price increase you're talking about on equipment between the two different actions you've taken, is there any reason the equipment side of the business doesn't grow double digits in fiscal 2026? Thank you. Thank you for that. thank you for that As you think about the magnitude of increase you saw in the RSR from $89 million, I think, in April to $94 million, as you described it in July, do we have another quarter or two of that sort of magnitude of sequential increase based on timing of, you know, historical activations of Fire radios? as you think about the magnitude of increase you saw in the rsr from $89 million i think in april to $94 million as you described it in july do we have another quarter or two of that sort of magnitude of sequential increase based on timing of you know historical activations of fire radios Given kind of the magnitude of price increase you're talking about on equipment between the two different actions you've taken, is there any reason the equipment side of the business doesn't grow double digits in fiscal 2026? given kind of the magnitude of price increase you're talking about on equipment between the two different actions you've taken is there any reason the equipment side of the business doesn't grow double digits in fiscal 2026 Thank you. thank you

Speaker 6: We went up $5 million. We saw this coming. I didn't know it was going to be $5 million, but if you go back, you remember I said when you have strong quarters of radio sales, the recurring comes doesn't come right away because there's a delay because if we give out rebates. I wasn't surprised that it went up. It went up $5 million. It was maybe a little more than I thought. I think we have some more of that in us. I don't know if it'll be $5 million, but I think it'll be a nice increase again. We have to keep having strong radio quarters for that to happen, and that's our intention. We're coming out with a lot more recurring revenue radio products, not just the ones that are out there now. We're not standing still. We're aggressively marketing what we have. We went up $5 million. we went up $5 million We saw this coming. we saw this coming I didn't know it was going to be $5 million, but if you go back, you remember I said when you have strong quarters of radio sales, the recurring comes doesn't come right away because there's a delay because if we give out rebates. i didn't know it was going to be $5 million but if you go back you remember i said when you have strong quarters of radio sales the recurring comes doesn't come right away because there's a delay because if we give out rebates I wasn't surprised that it went up. i wasn't surprised that it went up It went up $5 million. it went up $5 million It was maybe a little more than I thought. it was maybe a little more than i thought I think we have some more of that in us. i think we have some more of that in us I don't know if it'll be $5 million, but I think it'll be a nice increase again. i don't know if it'll be $5 million but i think it'll be a nice increase again We have to keep having strong radio quarters for that to happen, and that's our intention. we have to keep having strong radio quarters for that to happen and that's our intention We're coming out with a lot more recurring revenue radio products, not just the ones that are out there now. we're coming out with a lot more recurring revenue radio products not just the ones that are out there now We're not standing still. we're not standing still We're aggressively marketing what we have. we're aggressively marketing what we have It all comes together when you have radio sales. It doesn't come immediately, but it comes after maybe six months, eight months, nine months later. We expect the increases to keep coming for the foreseeable future. It all comes together when you have radio sales. it all comes together when you have radio sales It doesn't come immediately, but it comes after maybe six months, eight months, nine months later. it doesn't come immediately but it comes after maybe six months eight months nine months later We expect the increases to keep coming for the foreseeable future. we expect the increases to keep coming for the foreseeable future

Speaker 7: My question on equipment revenue, given the magnitude of pricing, is there any reason that equipment sales don't grow double digits next year or in fiscal 2026? Thanks. My question on equipment revenue, given the magnitude of pricing, is there any reason that equipment sales don't grow double digits next year or in fiscal 2026? my question on equipment revenue given the magnitude of pricing is there any reason that equipment sales don't grow double digits next year or in fiscal 2026 Thanks. thanks

Speaker 6: Given we took two increases, you know, the 8.5% to offset the tariffs and the 5%, which is a straight price increase, our belief is that we will grow double digits. We can't, you know, we take it quarter-by-quarter. We have very easy comps this year, in my opinion, Q1, Q2, and Q3 especially. It's not a hard task from my perspective, but we got to perform. Given we took two increases, you know, the 8.5% to offset the tariffs and the 5%, which is a straight price increase, our belief is that we will grow double digits. given we took two increases you know the 8.5% to offset the tariffs and the 5% which is a straight price increase our belief is that we will grow double digits We can't, you know, we take it quarter- by- quarter. we can't you know we take it quarter- by- quarter We have very easy comps this year, in my opinion, Q1, Q2, and Q3 especially. we have very easy comps this year in my opinion q1 q2 and q3 especially It's not a hard task from my perspective, but we got to perform. it's not a hard task from my perspective but we got to perform

Speaker 7: Thank you. Thank you. thank you

Speaker 8: Thank you. Your next question comes from the line of Jim Ricchiuti from Needham & Co. Please go ahead. Thank you. thank you Your next question comes from the line of Jim Ricchiuti from Needham & Co. your next question comes from the line of jim ricchiuti from needham & co Please go ahead. please go ahead

Speaker 9: I think it's maybe a tougher question to answer, but you sometimes are a little bit further removed from the end demand. I'm wondering, is there any way for you to size the pull forward that you saw on equipment sales? You mentioned, Kevin, I think that the sell-through stats are good. Maybe you could elaborate on that as well. I think it's maybe a tougher question to answer, but you sometimes are a little bit further removed from the end demand. i think it's maybe a tougher question to answer but you sometimes are a little bit further removed from the end demand I'm wondering, is there any way for you to size the pull forward that you saw on equipment sales? i'm wondering is there any way for you to size the pull forward that you saw on equipment sales You mentioned, Kevin, I think that the sell-through stats are good. you mentioned kevin i think that the sell-through stats are good Maybe you could elaborate on that as well. maybe you could elaborate on that as well

Speaker 6: We talk about sell-through stats all the time. The sell-through stats that I have talked about usually relate to the quarter that we just reported on. Our sell-through stats for the June quarter were good. They were up across the board. The key is, what do they look like in this quarter, the one we're in now? I don't really want to comment on it, but the expectation is they'll stay strong. The ordering activity has been good this quarter. I feel like the distributors have felt like something, a relief, has come over them. They're not panicking over tariffs, at least not with us. They know where they stand. That standing still, waiting to see what happened, has subsided. We've talked a lot about Wesco in the past. They seem to be getting their act together more. I think it bodes well. ADI is doing really well with us. We talk about sell-through stats all the time. we talk about sell-through stats all the time The sell-through stats that I have talked about usually relate to the quarter that we just reported on. the sell-through stats that i have talked about usually relate to the quarter that we just reported on Our sell-through stats for the June quarter were good. our sell-through stats for the june quarter were good They were up across the board. they were up across the board The key is, what do they look like in this quarter, the one we're in now? the key is what do they look like in this quarter the one we're in now I don't really want to comment on it, but the expectation is they'll stay strong. i don't really want to comment on it but the expectation is they'll stay strong The ordering activity has been good this quarter. the ordering activity has been good this quarter I feel like the distributors have felt like something, a relief, has come over them. i feel like the distributors have felt like something a relief has come over them They're not panicking over tariffs, at least not with us. they're not panicking over tariffs at least not with us They know where they stand. they know where they stand That standing still, waiting to see what happened, has subsided. that standing still waiting to see what happened has subsided We've talked a lot about Wesco in the past. we've talked a lot about wesco in the past They seem to be getting their act together more. they seem to be getting their act together more I think it bodes well. i think it bodes well ADI is doing really well with us. adi is doing really well with us I think it bodes well for Q1, but you know, we got to perform. I think it bodes well for Q1, but you know, we got to perform. i think it bodes well for q1 but you know we got to perform

Speaker 10: Thinking out a little further than the quarter here and the next quarter, our goal, and we increased our engineering department, is to come out with additional recurring revenue products, more radios in other verticals that are needed, new creations of communications devices, more fire devices, more locking devices. It is very important to us to make sure that everything has a recurring revenue component to it. We are on a roll with our technology. The dealers love it. We are going to expand markets for everybody, and you will see this evolving as the years go by. Thinking out a little further than the quarter here and the next quarter, our goal, and we increased our engineering department, is to come out with additional recurring revenue products, more radios in other verticals that are needed, new creations of communications devices, more fire devices, more locking devices. thinking out a little further than the quarter here and the next quarter our goal and we increased our engineering department is to come out with additional recurring revenue products more radios in other verticals that are needed new creations of communications devices more fire devices more locking devices It is very important to us to make sure that everything has a recurring revenue component to it. it is very important to us to make sure that everything has a recurring revenue component to it We are on a roll with our technology. we are on a roll with our technology The dealers love it. the dealers love it We are going to expand markets for everybody, and you will see this evolving as the years go by. we are going to expand markets for everybody and you will see this evolving as the years go by

Speaker 9: Thanks. Andy, maybe a question for you. You know, with the price increase, the first price increase, some of that obviously was passed in April. There was, I presume, some benefit in the June quarter. I'm wondering two things. To what extent there was a benefit and just broadly, if you can help us with the overall impact on gross margins, the equipment gross margins from tariffs in the quarter. Thank you. Thanks. thanks Andy, maybe a question for you. andy maybe a question for you You know, with the price increase, the first price increase, some of that obviously was passed in April. you know with the price increase the first price increase some of that obviously was passed in april There was, I presume, some benefit in the June quarter. there was i presume some benefit in the june quarter I'm wondering two things. i'm wondering two things To what extent there was a benefit and just broadly, if you can help us with the overall impact on gross margins, the equipment gross margins from tariffs in the quarter. to what extent there was a benefit and just broadly if you can help us with the overall impact on gross margins the equipment gross margins from tariffs in the quarter Thank you. thank you

Speaker 2: Sure, Jim. We received limited benefit, I would say, in Q4 from the price increases. The company honored, you know, orders that were placed prior to those price increases going into the price books officially. From a cost perspective, you know, the tariffs really kicked in at the start of our Q4. We had the full impact of the cost for the period, and I would say limited benefit of our price increases based upon the time we had one order replaced. I think from a dollar perspective, it probably impacted the COGS by about $1 million or something short of $1 million. Pretty much all of the items that were subject to the tariff in Q4 were sold through, and the vast majority were shipped out by 6/30. Sure, Jim. sure jim We received limited benefit, I would say, in Q4 from the price increases. we received limited benefit i would say in q4 from the price increases The company honored, you know, orders that were placed prior to those price increases going into the price books officially. the company honored you know orders that were placed prior to those price increases going into the price books officially From a cost perspective, you know, the tariffs really kicked in at the start of our Q4. from a cost perspective you know the tariffs really kicked in at the start of our q4 We had the full impact of the cost for the period, and I would say limited benefit of our price increases based upon the time we had one order replaced. we had the full impact of the cost for the period and i would say limited benefit of our price increases based upon the time we had one order replaced I think from a dollar perspective, it probably impacted the COGS by about $1 million or something short of $1 million. i think from a dollar perspective it probably impacted the cogs by about $1 million or something short of $1 million Pretty much all of the items that were subject to the tariff in Q4 were sold through, and the vast majority were shipped out by 6/30. pretty much all of the items that were subject to the tariff in q4 were sold through and the vast majority were shipped out by 6/30 We had pretty much a straight dollar-for-dollar hit in Q4, but we're expecting going to Q1, those pricing adjustments are now in place, and we're expecting to see, you know, a lift from there moving forward. We had pretty much a straight dollar-for-dollar hit in Q4, but we're expecting going to Q1, those pricing adjustments are now in place, and we're expecting to see, you know, a lift from there moving forward. we had pretty much a straight dollar-for-dollar hit in q4 but we're expecting going to q1 those pricing adjustments are now in place and we're expecting to see you know a lift from there moving forward

Speaker 9: Thank you. I'll jump back in the queue. Thank you. thank you I'll jump back in the queue. i'll jump back in the queue

Speaker 8: Thank you. Once again, that is star and want to ask a question. Your next question comes from the line of Peter Costa from Mizuho. Please go ahead. Thank you. thank you Once again, that is star and want to ask a question. once again that is star and want to ask a question Your next question comes from the line of Peter Costa from Mizuho . your next question comes from the line of peter costa from mizuho Please go ahead. please go ahead

Speaker 5: Hey, guys. Good morning. Congrats on the quarter here. Maybe if you could just start with some details on the MVP and Prima launches. How's the channel uptake there relative to your plan? Any color about how you're thinking about that opportunity over the longer term? Thanks. Hey, guys. hey guys Good morning. good morning Congrats on the quarter here. congrats on the quarter here Maybe if you could just start with some details on the MVP and Prima launches. maybe if you could just start with some details on the mvp and prima launches How's the channel uptake there relative to your plan? how's the channel uptake there relative to your plan Any color about how you're thinking about that opportunity over the longer term? any color about how you're thinking about that opportunity over the longer term Thanks. thanks

Speaker 10: The MVP, the cloud-operated system, which allows the security company that puts it in a job, for instance, in a hospital, also allows the security manager of that property to get instantaneous information about who goes into buildings, who went into certain rooms, at what time. We expect this to be a very strong growth product with our company going forward. We're introducing it to basic models. One is enterprise class, those large enterprises, and also there are smaller buildings and smaller businesses. We expect that there's so many doors out there and so many people need access control. The cloud-operated requires no equipment in the building. Everything is up in the cloud. We make all the changes for the dealers. The dealers can get reports. Everybody can get instantaneous information about doors, openings, where people are in a building in case of a fire or an emergency. The MVP, the cloud-operated system, which allows the security company that puts it in a job, for instance, in a hospital, also allows the security manager of that property to get instantaneous information about who goes into buildings, who went into certain rooms, at what time. the mvp the cloud-operated system which allows the security company that puts it in a job for instance in a hospital also allows the security manager of that property to get instantaneous information about who goes into buildings who went into certain rooms at what time We expect this to be a very strong growth product with our company going forward. we expect this to be a very strong growth product with our company going forward We're introducing it to basic models. we're introducing it to basic models One is enterprise class, those large enterprises, and also there are smaller buildings and smaller businesses. one is enterprise class those large enterprises and also there are smaller buildings and smaller businesses We expect that there's so many doors out there and so many people need access control. we expect that there's so many doors out there and so many people need access control The cloud-operated requires no equipment in the building. the cloud-operated requires no equipment in the building Everything is up in the cloud. everything is up in the cloud We make all the changes for the dealers. we make all the changes for the dealers The dealers can get reports. the dealers can get reports Everybody can get instantaneous information about doors, openings, where people are in a building in case of a fire or an emergency. everybody can get instantaneous information about doors openings where people are in a building in case of a fire or an emergency This is going to be quite an exciting product for us going forward. We're going to be showing it in New York at the International Security Conference, which is the next big show coming up. Our salespeople are around the country demoing it and training on it. It's going to be a great contributor. This is going to be quite an exciting product for us going forward. this is going to be quite an exciting product for us going forward We're going to be showing it in New York at the International Security Conference, which is the next big show coming up. we're going to be showing it in new york at the international security conference which is the next big show coming up Our salespeople are around the country demoing it and training on it. our salespeople are around the country demoing it and training on it It's going to be a great contributor. it's going to be a great contributor

Speaker 5: Okay. Maybe just back to the ARR increase. That $5 million sequential increase was very encouraging. It seems like the actual uplift in service revenues is lagging that a little bit. Would you kind of expect a pretty material uptick in Q-over-Q service revenues in the beginning of 2026? How are you guys thinking about that? Thanks. Okay. okay Maybe just back to the ARR increase. maybe just back to the arr increase That $5 million sequential increase was very encouraging. that $5 million sequential increase was very encouraging It seems like the actual uplift in service revenues is lagging that a little bit. it seems like the actual uplift in service revenues is lagging that a little bit Would you kind of expect a pretty material uptick in Q- over- Q service revenues in the beginning of 2026? would you kind of expect a pretty material uptick in q- over- q service revenues in the beginning of 2026 How are you guys thinking about that? how are you guys thinking about that Thanks. thanks

Speaker 6: We grew, I think it was 10% year-over-year, and the expectation is that we can sustain that rate, maybe even do a little better than that, not go down. We grew, I think it was 10% year- over- year, and the expectation is that we can sustain that rate, maybe even do a little better than that, not go down. we grew i think it was 10% year- over- year and the expectation is that we can sustain that rate maybe even do a little better than that not go down

Speaker 5: Perfect. Thank you. Perfect. perfect Thank you. thank you

Speaker 8: Thank you. Your next question comes from the line of Jeremy Hamblin from Craig-Hallum Capital. Please go ahead. Thank you. thank you Your next question comes from the line of Jeremy Hamblin from Craig- Hallum Capital . your next question comes from the line of jeremy hamblin from craig- hallum capital Please go ahead. please go ahead

Speaker 1: Congrats on the results and thanks for taking the questions. I wanted to come back to churn rates that you were seeing, you know, and whether or not kind of the price increases are having any impact on whether or not you're on both equipment side, but certainly also for the recurring revenues on whether or not you're getting any pricing on that aspect of the business. Congrats on the results and thanks for taking the questions. congrats on the results and thanks for taking the questions I wanted to come back to churn rates that you were seeing, you know, and whether or not kind of the price increases are having any impact on whether or not you're on both equipment side, but certainly also for the recurring revenues on whether or not you're getting any pricing on that aspect of the business. i wanted to come back to churn rates that you were seeing you know and whether or not kind of the price increases are having any impact on whether or not you're on both equipment side but certainly also for the recurring revenues on whether or not you're getting any pricing on that aspect of the business

Speaker 6: Jeremy, we don't really have any churn, churn being accounts that disconnect from us from our radios because we're mostly commercial. Our churn is inconsequential as it pertains to commercial radios. We do mostly commercial. The pricing that we put in place sticks. Nobody complains about it. Everybody understands it. Everybody expects it. No pushback at all. We did not take price increases on the recurring revenue amounts we charge every month. There was some talk that maybe we should. We didn't take a price increase on the radios themselves. Maybe there was talk that maybe we should. Our feeling is let's get as much as we can get. Let's not mess with the formula that's working well. It's not about the extra $0.50 or $1 we could potentially charge in the recurring every month. Jeremy, we don't really have any churn, churn being accounts that disconnect from us from our radios because we're mostly commercial. jeremy we don't really have any churn churn being accounts that disconnect from us from our radios because we're mostly commercial Our churn is inconsequential as it pertains to commercial radios. our churn is inconsequential as it pertains to commercial radios We do mostly commercial. we do mostly commercial The pricing that we put in place sticks. the pricing that we put in place sticks Nobody complains about it. nobody complains about it Everybody understands it. everybody understands it Everybody expects it. everybody expects it No pushback at all. no pushback at all We did not take price increases on the recurring revenue amounts we charge every month. we did not take price increases on the recurring revenue amounts we charge every month There was some talk that maybe we should. there was some talk that maybe we should We didn't take a price increase on the radios themselves. we didn't take a price increase on the radios themselves Maybe there was talk that maybe we should. maybe there was talk that maybe we should Our feeling is let's get as much as we can get. our feeling is let's get as much as we can get Let's not mess with the formula that's working well. let's not mess with the formula that's working well It's not about the extra $0.50 or $1 we could potentially charge in the recurring every month. it's not about the extra $0.50 or $1 we could potentially charge in the recurring every month It's about getting more radios, more of them, because once you get it, it lasts pretty much forever. That was our strategy. The strategy's worked pretty well. In 10 years or so, we built this up to about $100 million of recurring at 91% margin. I think we're doing it the right way, and I'm comfortable with the strategy that we chose. It's about getting more radios, more of them, because once you get it, it lasts pretty much forever. it's about getting more radios more of them because once you get it it lasts pretty much forever That was our strategy. that was our strategy The strategy's worked pretty well. the strategy's worked pretty well In 10 years or so, we built this up to about $100 million of recurring at 91% margin. in 10 years or so we built this up to about $100 million of recurring at 91% margin I think we're doing it the right way, and I'm comfortable with the strategy that we chose. i think we're doing it the right way and i'm comfortable with the strategy that we chose

Speaker 1: Got it. You've also built a strong balance sheet and wanted to just get a sense for you returned some capital here in the form of dividends, some buybacks. Is there room to potentially take up either the dividend payout rate, or are you thinking about adding on to the current buyback program? Got it. got it You've also built a strong balance sheet and wanted to just get a sense for you returned some capital here in the form of dividends, some buybacks. you've also built a strong balance sheet and wanted to just get a sense for you returned some capital here in the form of dividends some buybacks Is there room to potentially take up either the dividend payout rate, or are you thinking about adding on to the current buyback program? is there room to potentially take up either the dividend payout rate or are you thinking about adding on to the current buyback program

Speaker 6: The dividends, we've raised that, I don't know, at least 3x, maybe 4x. We didn't really talk about it. We announced another dividend. We kept it the same at $0.14. Certainly, having increased it 4x or so in a short period of time, there's room for that to grow and to get it to become a higher amount. I think that will happen. We'll talk about when that should be. For this coming one, it's $0.14. When it comes to buyback, we're always looking. We're always opportunistically got our eye on it. We are cognizant of the float. We're dealing with a lot of larger investors who care about the float, but there could be room to do more buyback. We'll see. We'll play that by ear as we go forward. The dividends, we've raised that, I don't know, at least 3x, maybe 4x . the dividends we've raised that i don't know at least 3x maybe 4x We didn't really talk about it. we didn't really talk about it We announced another dividend. we announced another dividend We kept it the same at $0.14. we kept it the same at $0.14 Certainly, having increased it 4x or so in a short period of time, there's room for that to grow and to get it to become a higher amount. certainly having increased it 4x or so in a short period of time there's room for that to grow and to get it to become a higher amount I think that will happen. i think that will happen We'll talk about when that should be. we'll talk about when that should be For this coming one, it's $0.14. for this coming one it's $0.14 When it comes to buyback, we're always looking. when it comes to buyback we're always looking We're always opportunistically got our eye on it. we're always opportunistically got our eye on it We are cognizant of the float. we are cognizant of the float We're dealing with a lot of larger investors who care about the float, but there could be room to do more buyback. we're dealing with a lot of larger investors who care about the float but there could be room to do more buyback We'll see. we'll see We'll play that by ear as we go forward. we'll play that by ear as we go forward

Speaker 1: Great. Thanks for taking the questions. Great. great Thanks for taking the questions. thanks for taking the questions

Speaker 8: Thank you. Once again, should you have a question, please press star four by the one on your telephone keypad. Your next question comes from the line of Jaeson Schmidt from Lake Street Capital Markets. Please go ahead. Thank you. thank you Once again, should you have a question, please press star four by the one on your telephone keypad. once again should you have a question please press star four by the one on your telephone keypad Your next question comes from the line of Jaeson Schmidt from Lake Street Capital Markets. your next question comes from the line of jaeson schmidt from lake street capital markets Please go ahead. please go ahead

Speaker 4: Hey, guys. Thanks for returning my questions. Kevin, you noted strong sell-through has continued here in September. Curious if that strength is being seen both on the radio and locking side. Hey, guys. hey guys Thanks for returning my questions. thanks for returning my questions Kevin, you noted strong sell-through has continued here in September. kevin you noted strong sell-through has continued here in september Curious if that strength is being seen both on the radio and locking side. curious if that strength is being seen both on the radio and locking side

Speaker 6: My comment about sell-through was in the June quarter. I didn't really comment on the quarter that we're in now. It was in the June quarter, and it was very good across the board. We were particularly encouraged by the fire radios. They did really well. Like I've talked about before, you sell fire radios today to a distributor, you may not feel the benefit of that from the recurring revenue side for six months, eight months, nine months. That's coming. We'll see that. We are encouraged by what we saw from our distributors. We expect it to continue in Q1, the one that we're in now. We'll talk about it more when we're able to, but we can't. The June quarter was very good, pretty much across the board. Locking was very good. Locking had a very difficult comp. My comment about sell-through was in the June quarter. my comment about sell-through was in the june quarter I didn't really comment on the quarter that we're in now. i didn't really comment on the quarter that we're in now It was in the June quarter, and it was very good across the board. it was in the june quarter and it was very good across the board We were particularly encouraged by the fire radios. we were particularly encouraged by the fire radios They did really well. they did really well Like I've talked about before, you sell fire radios today to a distributor, you may not feel the benefit of that from the recurring revenue side for six months, eight months, nine months. like i've talked about before you sell fire radios today to a distributor you may not feel the benefit of that from the recurring revenue side for six months eight months nine months That's coming. that's coming We'll see that. we'll see that We are encouraged by what we saw from our distributors. we are encouraged by what we saw from our distributors We expect it to continue in Q1, the one that we're in now. we expect it to continue in q1 the one that we're in now We'll talk about it more when we're able to, but we can't. we'll talk about it more when we're able to but we can't The June quarter was very good, pretty much across the board. the june quarter was very good pretty much across the board Locking was very good. locking was very good Locking had a very difficult comp. locking had a very difficult comp Locking had that big project that I've talked a lot about, the Waldorf Hotel in Manhattan. That made for a difficult comp. There's a little bit more of a difficult comp in Q1, and then that's gone from a comp point of view. There are other projects that we expect that could be hitting in this fiscal year. Since the comp is not that tough, we should be able to blow past last year's numbers. We'll see. We'll see when those things hit. Locking had that big project that I've talked a lot about, the Waldorf Hotel in Manhattan. locking had that big project that i've talked a lot about the waldorf hotel in manhattan That made for a difficult comp. that made for a difficult comp There's a little bit more of a difficult comp in Q1, and then that's gone from a comp point of view. there's a little bit more of a difficult comp in q1 and then that's gone from a comp point of view There are other projects that we expect that could be hitting in this fiscal year. there are other projects that we expect that could be hitting in this fiscal year Since the comp is not that tough, we should be able to blow past last year's numbers. since the comp is not that tough we should be able to blow past last year's numbers We'll see. we'll see We'll see when those things hit. we'll see when those things hit

Speaker 4: Gotcha. Just following up on your comments on the school market, I know you can't disclose all your wins, but just curious if you've seen a noticeable pickup in that space. Gotcha. gotcha Just following up on your comments on the school market, I know you can't disclose all your wins, but just curious if you've seen a noticeable pickup in that space. just following up on your comments on the school market i know you can't disclose all your wins but just curious if you've seen a noticeable pickup in that space

Speaker 6: The school business is steady. Steady, good, steady, strong. I wish it was more. It's frustrating. You know, there was an incident at Villanova last week, it wasn't a shooting. They thought it was a shooting. What I heard in the news report was they announced that the students should lock their doors and barricade chairs against the door. That's the old thing that we've been hearing about for years, for years. That means to me that there's still plenty of schools. Villanova is a very well-known school that still has to upgrade. Our sales guys better be talking to Villanova pretty soon. The school business is good. We're working hard for it to be even better. There's plenty of money and plenty of opportunity, and there will be for years to come. The school business is steady. the school business is steady Steady, good, steady, strong. steady good steady strong I wish it was more. i wish it was more It's frustrating. it's frustrating You know, there was an incident at Villanova last week, it wasn't a shooting. you know there was an incident at villanova last week it wasn't a shooting They thought it was a shooting. they thought it was a shooting What I heard in the news report was they announced that the students should lock their doors and barricade chairs against the door. what i heard in the news report was they announced that the students should lock their doors and barricade chairs against the door That's the old thing that we've been hearing about for years, for years. that's the old thing that we've been hearing about for years for years That means to me that there's still plenty of schools. that means to me that there's still plenty of schools Villanova is a very well-known school that still has to upgrade. villanova is a very well-known school that still has to upgrade Our sales guys better be talking to Villanova pretty soon. our sales guys better be talking to villanova pretty soon The school business is good. the school business is good We're working hard for it to be even better. we're working hard for it to be even better There's plenty of money and plenty of opportunity, and there will be for years to come. there's plenty of money and plenty of opportunity and there will be for years to come

Speaker 4: Okay, thanks a lot, guys. Okay, thanks a lot, guys. okay thanks a lot guys

Speaker 8: Thank you. There are no further questions at this time. I want to hand the call back to Mr. Richard Soloway for any closing remarks. Thank you. thank you There are no further questions at this time. there are no further questions at this time I want to hand the call back to Mr. Richard Soloway for any closing remarks. i want to hand the call back to mr richard soloway for any closing remarks

Speaker 10: Thank you, everyone, for participating in today's conference call. As always, should you have any further questions, feel free to call Fran, Kevin, or myself for further information. We thank you for your interest and support and look forward to speaking to you all again in a few months to discuss NAPCO' fiscal Q1 2026 results. Have a wonderful day, everybody. Thank you, everyone, for participating in today's conference call. thank you everyone for participating in today's conference call As always, should you have any further questions, feel free to call Fran, Kevin, or myself for further information. as always should you have any further questions feel free to call fran kevin or myself for further information We thank you for your interest and support and look forward to speaking to you all again in a few months to discuss NAPCO ' fiscal Q1 2026 results. we thank you for your interest and support and look forward to speaking to you all again in a few months to discuss napco' fiscal q1 2026 results Have a wonderful day, everybody. have a wonderful day everybody

Speaker 8: This concludes today's call. Thank you for participating. You may all disconnect. This concludes today's call. this concludes today's call Thank you for participating. thank you for participating You may all disconnect. you may all disconnect