On this page of StockholderLetter.com we present the latest annual shareholder letter from NAPCO SECURITY TECHNOLOGIES, INC — ticker symbol NSSC. Reading current and past NSSC letters to shareholders can bring important insights into the investment thesis.

 •  10/24/2025 Letter Continued (Full PDF)
 •  10/25/2024 NSSC Stockholder Letter
 •  More "Electronic Equipment & Products" Category Stockholder Letters
 •  NSSC Benford's Law Stock Score = 85

NSSC Shareholder/Stockholder Letter Transcript:

NAPCO Security Technologies, Inc.
Unified Software & Hardware Solutions for Business,
Education and Healthcare, Property & Security Management
NAPCO Security Technologies, Inc.
is one of the leading manufacturers
and designers of high-tech electronic
security devices, cellular communication
services for intrusion and    re alarm
systems as well as a leading provider
of school safety solutions. We offer a
diversi   ed array of security products,
intrusion and    re alarm systems, and
encompassing access control systems,
door-locking products with cloud-, app,
server-based or hybrid management.
These products are used for commercial,
residential,
institutional,
industrial
and governmental applications, and
are sold worldwide principally to
independent distributors, dealers and
installers of security equipment. We
have experienced signi   cant growth
in recent years, primarily driven by fast
growing recurring service revenues
generated from wireless communication
services for intrusion and    re alarm
systems, as well as our school security
products that are designed to meet the
increasing needs to enhance school
security as a result of on-campus
shooting and violence in the U.S.
Since 1969, NAPCO has established
a heritage and proven record in the
professional security community for
reliably delivering both advanced
technology and high-quality security
solutions, building many of the
industry   s widely recognized brands,
such as NAPCO Security Systems,
Alarm Lock, Continental Access, Marks
USA, and other popular product lines,
including our StarLink  , Gemini, FireLink,
NAPCO Access, Trilogy   & ArchiTech
product lines. Today, millions of businesses,
institutions, homes, & people around the
globe are protected by products from the
NAPCO Group of Companies.
In FY 2025, NAPCO Security Technologies
accelerated its expansion across high-growth
vertical markets, delivering integrated
software, hardware, & cloud security solutions.
Serving Small/Medium Business (SMB),
education, enterprise, multitenant property,
locksmith, & national    re alarm provider
markets, NAPCO systems secure schools,
campuses, national corporations, chain
stores, & retail properties These uni   ed
recurring platforms deliver scalable security
management while driving strong monthly
revenue (RMR) for the Company, its dealers,
integrators, and national service providers.
Importantly, locksmiths   a signi   cant, loyal
& growing NAPCO customer base   represent
a substantial new RMR opportunity.
Traditionally product-focused, this segment
is expected to expand its service revenue
with the introduction of MVP EZ & other new
cloud-based offerings designed to make RMR
generation more accessible & pro   table.
Commercial Fire Systems & StarLink Fire
Communicators     A Core Growth Engine
Commercial Fire remains one of NAPCO   s
strongest businesses & a major RMR driver.
StarLink Fire Communicators are increasingly
chosen by national    re alarm providers   
serving national corporations, retail chains,
and multi-site properties   for their reliability,
advanced feature set, U.S.-based transmissions,
and industry-leading cybersecurity. These
partnerships are expanding NAPCO   s
presence in large-scale life-safety applications.
The StarLink Fire MAX2 dual-SIM/dual-path
communicator replaces two leased POTs lines
with one 5G-enabled unit, providing UL-listed
protection, SOC 2-certi   ed NOC redundancy,
and signi   cant operating cost savings.
Likewise, FireLink Fire Alarms, in conventional
& addressable cloud-programmable models,
now ship with integrated MAX2 communicators, simplifying installation and accelerating
adoption.
Cloud-Ready Access Control Platforms
MVP Access   continues to expand in SMB
and education markets, driving RMR through
intuitive, cloud-based management. MVP
EZ, launching now, is highly anticipated for
its simpli   ed, cost-effective deployment for
smaller systems, including new NA-Series
Access Panels, available through distribution.
For enterprise & campus installations,
Continental Enterprise Access Panels, sold
via dealer-direct channels, deliver scalable
infrastructure and rock-solid dependability.
Within both MVPs, Alarm Lock Networx,
ArchiTech Designer Wireless PIN/Prox Locks,
and new Marks USA Deadbolt Locks support
applications from schools and business, to
multitenant residential properties.
Locking
Architectural
Hardware
Alarm Lock and Marks USA brands maintain
solid performance across education, healthcare, and commercial segments. Known for
reliability, design    exibility, and integration
with NAPCO cloud platforms, they support
mobile credentials, lockdowns, and custom
architectural solutions for new and retro   t,
premium institutional markets.
Intrusion Systems & Communications
NAPCO   s Gemini Intrusion platform is undergoing a major GUI modernization with new
keypads and Prima-like touchscreen for the
full 8 to 255 zone panel line on the horizon,
while StarLink Intrusion Communicators   
now including StarLink Black Max & StarLink
Connect Multi, slated for imminent release
   should continue to drive RMR growth in
the segment with new tri-carrier dynamic
switching across Verizon, AT&T, and T-Mobile  
cell networks, with exceptional new pricing
and plans.
Together, these innovations strengthen
NAPCO   s leadership, diversify revenue
streams, and support sustainable growth in
both recurring and product-driven revenue.
NASDAQ:NSSC

CEO Letter to Shareholders
Dear Fellow Shareholders,
Fiscal 2025 marked another year
of strong financial performance
for NAPCO, which was achieved
despite a challenging environment
for equipment sales caused by
tariff uncertainties and various
distributor destocking strategies.
Our continued emphasis on
hardware-enabled solutions that
generate recurring service revenue
(   RSR   ) remained the driving force
in our positive financial results.
RSR for Fiscal 2025 increased 14%
year-over-year, delivering a robust
gross profit margin of 91%.
Total net sales for Fiscal 2025
were $181.6, a 3.8% decrease
from the prior fiscal year due
to headwinds in hardware sales
demand. Net income declined
12.9% to $43.4 million, reflecting
both the reduction in equipment
revenue & our strategic investments
in expanding engineering, finance,
and IT capabilities. While these
investments modestly impacted
short-term profitability, we expect
them to provide future returns
financially and organizationally.
Adjusted EBITDA* was $52.1 million,
which represented an adjusted
EBITDA margin* of 28.7%, & was an
11.6% decrease versus the prior
year. Diluted EPS was $1.19
compared to $1.34 in    scal 2024.
Adjusted EBITDA per share (diluted)* was $1.43 as compared
to $1.59 last year.
Financial Strength and
Shareholder Returns
As a result of another year of
positive    nancial performance,
our balance sheet continues to
strengthen. As of June 30, 2025,
the Company had $99.2 million
in cash and cash equivalents, and
marketable securities, even after our
strategic purchase of $36.8 million
of our common stock & paying
$13.6 million in dividends. Working
capital (de   ned as current assets less
current liabilities) was $138.4 million
at June 30, 2025, and our current ratio
(de   ned as current assets divided
by current liabilities) was 6.7:1. In
addition, the Company continues to
have no debt.
Re   ecting our con   dence in future
growth, coupled with our strong
balance sheet, we announced an
increase in the quarterly dividend
from $.125 to $0.14 for shareholders
of record as of September 12, 2025.
Communication Services &
Growing Recurring Service
Revenue is Our Focus
NAPCO   s
strong
   nancial
performance is directly related to
our continued emphasis on Cloudbased RSR technologies which
deliver consistent revenue with
high-margin results. To continue
capitalizing on this market we have
been focused on reshaping our
product mix to develop additional
new products and services that
deliver recurring revenues. This
Richard L. Soloway
Chairman and CEO
paradigm shift will enable us to be
more resilient against potential
seasonal swings in product demand
and the cyclical dif   culties of the
broader economy.
RSR increased by 14% in FY 2025 to
$86.3 million compared to $75.7
million in FY 2024, reaching an
estimated annual run rate of
$94 million based on July 2025
revenues. RSR delivered a gross
margin of 91.0% for the year, up
from 90.5% last year.
Innovation and Product
Leadership
The cornerstone of our RSR is our
   agship StarLink   line of cellular
communicators that provide critical
alarm-reporting
connectivity
to
commercial & residential customers,
with
the
commercial
sector
representing approximately 80%
of our total revenue. StarLink radios
provide the widest coverage range
of both Verizon   and AT&T  , with

rich feature sets which our customers
demand. We continue to enhance
StarLink products to (I) add carriers;
(II) increase ease of installation; and
(III) be fully compatible with all    re
and intrusion alarm panels in the
market. StarLink Fire communicators
remain a prime focus as they generate
higher monthly service charges
than other StarLink products. Sales
of our StarLink and commercial    re
alarm systems will also continue to
bene   t from Verizon and AT&T   s
decision to no longer support
legacy POTs (   Plain Old Telephone
innovation has led to various
award-winning
products
that
have built loyalty and trust
among our broad distribution
network encompassing thousands
of independent security dealers,
locksmiths, and systems integrators.
Service   ) copper telephone landlines.
Continued Concerns
for School Security
At
the
International
Security
Conference (   ISC   ) in Las Vegas
in early April, we introduced a new
generational cloud-based MVP  
Access platform. Easy to afford with
an economical    By-Door       at
monthly recurring revenue rate,
MVP Access products empower
security teams to experience
24/7
security
management,
enabling users to lock down
doors, adjust threat levels and
monitor real-time events from
anywhere and eliminates the need
for on-premises hardware or
databases. This product line is
anticipated to generate future
monthly recurring revenue for both
locking and access control dealers
and the Company.
To
address
the
large
and
growing school security market,
NAPCO remains well positioned
by offering comprehensive, cost
competitive, fully integrated, and
interoperable solutions that are
installed and maintained by leading
systems integrators specializing in
the education market.
Commitment to R&D
and Data Security
Annually, we invest 6-7% of
our annual revenues in research
and development, and we employ
close to 80 design and electrical
engineers
focused
on
new
product innovations to support
our continued growth. Product
The large amount of data required
for our RSR solutions is stored
redundantly at data centers located
at our headquarters in Amityville, NY
and at a second remote and secure
location within the United States.
The breadth of our product
offerings enables us to deliver
affordable solutions that encompass
lock-down devices, alarms, door
access, enterprise access control and
video. Working in close partnership
with our specialized systems
integrators, we have established
strong customer relationships with
leading colleges and universities
and many K-12 school districts,
including Pepperdine University
in Malibu, California as well as
the Houston and San Diego
Independent School Districts.
Our products address the growing
number of active shooter incidents.
Across the US, there are 131,000
K-12 schools and 5,300 colleges and
universities that provide signi   cant
untapped potential.
Emergence of
IoT-Enhanced Systems
for Building Automation
IoT Cloud-based technologies are
reshaping the future of the security
industry,
as
customers
are
demanding
more
advanced
security systems that are intelligent,
intuitive, and feature-rich, far
exceeding the capabilities of basic
DIY solutions.
As IoT Cloud-based platforms
continue to proliferate, NAPCO is
well positioned to respond based
upon our product innovation DNA,
resulting in    smart    solutions that
encompass building automation,
wireless    re and intrusion alarms,
enterprise access control systems,
and architectural locking products
as an integrated suite of wireless
connectivity solutions.
Looking Ahead
In a world that has become
increasingly unstable and security
conscious, the need for NAPCO   s
products
and
services
will
continue to be in demand and
the outlook for the Company
continues to be positive.
NAPCO is well-positioned with an
impressive array of products and
services spanning all three security
industry
verticals:
alarms
connectivity; locking; and access
control and we are the only
company in the security industry
who services each of those verticals.
We are strategically focused on
expanding RSR solutions across all

our platforms, including wireless
   re and intrusion alarms, enterprise
access
control
systems,
and
architectural
locking
products.
To achieve our long-term objectives,
over 1,000 NAPCO employees
are working in close partnership
with
our
network
of
200+
distributors,
10,000+
independent dealers and locksmiths, and
2,000+ systems integrators. Having
such a large sales channel provides
us with a critical and immediate
feedback loop for accelerating
product innovation, ensuring that
our products are easy to install, user
friendly, feature-rich, and compatible
with legacy systems and competing
brands.
we will strive to continue our path of
pro   table results and return value to
our shareholders.
We will tirelessly strive to achieve
increased pro   table growth through
product
innovation,
technical
superiority, cost competitiveness,
outstanding customer and technical
services, and enduring sales
partnerships.
Sincerely,
Richard L. Soloway
Chairman and CEO
Our work is far from done, but
through sound management, product
innovation, technical superiority,
and outstanding customer service
*Non-GAAP Financial Measures
Certain non-GAAP measures are provided above, including Adjusted EBITDA and Adjusted EBITDA per share (diluted). We de   ne Adjusted
EBITDA as GAAP net income plus income tax expense, net interest expense, non-cash stock-based expense, non-recurring legal expense,
other non-recurring income and depreciation and amortization expense. These non-GAAP measures are provided to enhance the user   s
overall understanding of our    nancial performance. By excluding these charges our non-GAAP results provide information to management
and investors that is useful in assessing NAPCO   s core operating performance and in comparing our results of operations on a consistent
basis from period to period. Our use of non-GAAP    nancial measures has certain limitations in that such non-GAAP    nancial measures may
not be directly comparable to those reported by other companies. For example, the terms used above, such as Adjusted EBITDA, do not
have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may
not provide investors with a comparable view of our performance in relation to other companies. The presentation of this information is not
meant to be a substitute for the corresponding    nancial measures prepared in accordance with generally accepted accounting principles.
Investors are encouraged to review the reconciliation of GAAP to non-GAAP    nancial measures set forth above and as disclosed in our
press release    led on Form 8-k on August 25, 2025.
This letter contains statements relating to future results of the Company (including certain projections and business trends) that are
   forward-looking statements    as de   ned in the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to,
changes in political and economic conditions, demand for and market acceptance of new and existing products, as well as other
risks and uncertainties detailed from time to time in the    lings of the Company with the Securities and Exchange Commission.
Trademarks of NAPCO: NAPCO, NAPCO Access Pro, StarLink, StarLink Fire Super Dual, StarLink Connect, FireLink, MVP, Trilogy,
MVP Access, Prima, ArchiTech, Alarm Lock, Marks USA & Continental Access. Other marks listed remain intellectual property of
their respective companies.



 10/24/2025 Letter Continued (Full PDF)