Napco Security Systems reports Q4 earnings below the Street
Shares of Napco Security Systems, Inc. (Nasdaq:NSSC) are sliding today after the supplier of electronic security equipment reported fourth quarter earnings below analyst expectations.
For the three months ended June 30, the Amityville, NY.-based firm recorded earnings per share of $0.05, well below the consensus of five analysts polled by Thomson Financial of $0.09. Napco earned $0.12 per share for the fourth quarter of 2006.
“It’s really the gross profit line—mostly on lower absorption as they try to move inventory; however, it positions the company well for 2008 with $3 million less in inventory,” Jefferies analyst Yvonne Varano said in relation to the company’s beaten down bottom line. “Business continued to do well locking in top line growth, while residential intrusion sales pulled down the bottom line.”
Revenues declined 2.8% to $20.5 million, compared with $21.1 million for the fourth quarter of 2006. Four analysts polled by Thomson Financial were on average expecting revenues of $20.43 million.
While revenues slightly curtailed, Varano said Napco’s Video Gateway product line, a video security surveillance technology, has done very well and she expects it to perform well going forward.
Net income for fiscal 2007 decreased 31% to $4.2 million, or $0.21 per diluted share, compared with net income of $6.2 million, or $0.30 per diluted share for fiscal 2006. Four analysts polled by Thomson Financial were anticipating fiscal 2007 earnings of $0.25 per share.
Revenue fell 5% to $66.2 million from $69.5 million last year.
The company’s pipeline includes a newer product called “Freedom,” a code-free wireless alarm system, but is in its early stages in market penetration, according to Varano.
“[There will be] slower market acceptance of the product because it changes the way people are used to securing their premises,” said Varano. “Though, I think at some point it will be more broadly accepted.”
Going forward, international sales, which have historically been in the mid teens percentage wise, should be a growth area for Napco, according to Varano.
Shares of Napco (Nasdaq: NSSC) slid $0.57, or 9.27%, to $5.58 in midday trading.
