NAPCO Security Technologies Inc (NSSC) 2024 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Napco Security Technologies. Fiscal second quarter of 2024 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we'll conduct a question and answer session. If at anytime during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, February 5, 2024. I would now like to turn the conference over to Francis McInnis, Vice President, Investor Relations. Please go ahead.

早安，女士們先生們，歡迎來到 Napco 安全科技公司。2024 年第二季財報電話會議。此時，所有線路都處於只聽模式。演講結束後，我們將進行問答環節。如果在通話過程中您隨時需要立即協助，請按星零鍵聯絡接線員。此電話錄音於 2024 年 2 月 5 日星期一進行。現在我想將會議交給投資者關係副總裁 Francis McInnis。請繼續。

Thank you, Julie, and good morning, everyone. My name is Fran ConnectKey, Vice President, Investor Relations for Napco Security Technologies. I just want to thank you all for joining us today on our conference call to discuss our financial results for fiscal second quarter 2024. By now, all of you should have had the opportunity to review our earnings press release discussing the results of our quarter. If not a copy of the release is available in the Investor Relations section of our website, w. w. w. NetQoS security.com. On the call today are Richard Soloway, our President and Chief Executive Officer of Napco Security Technologies, and Kevin Shell, our Executive Vice President and CFO.

謝謝朱莉，大家早安。我是 Fran ConnectKey，Napco Security Technologies 投資者關係副總裁。我只想感謝大家今天參加我們的電話會議，討論我們 2024 年第二季的財務表現。到目前為止，你們所有人都應該有機會閱讀我們討論本季業績的收益新聞稿。如果我們網站的投資者關係部分沒有提供新聞稿的副本，請參閱： w。 w。NetQoS security.com。今天參加電話會議的有 Napco Security Technologies 總裁兼執行長 Richard Soloway 和執行副總裁兼財務長 Kevin Shell。

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, reoccurring revenue services, potential market opportunities, the benefits of our reoccurring revenue products to customers and dealers, our ability to control expenses and costs and expected annual run rate for Software as a Service reoccurring 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 where 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 is as of today's date unless otherwise stated, and we undertake no duty to update such information except as required under applicable law.

在開始之前，讓我花點時間閱讀前瞻性聲明。由於本簡報包含基於管理層的判斷、信念、當前趨勢和預期產品表現對未來業績的當前預期、估計、預測和預測的前瞻性陳述。這些前瞻性陳述包括但不限於與公司業務成長動力相關的陳述，例如學校安全產品、經常性收入服務、潛在的市場機會、我們的經常性收入產品對客戶和經銷商帶來的好處、我們控制費用的能力軟體即服務每月重複收入的成本和預期年運行率。前瞻性陳述涉及風險和不確定性，可能導致實際結果與前瞻性陳述中包含的結果有重大差異。這些因素包括但不限於我們向SEC 提交的文件（包括我們的10 K 表格年度報告）中所述的風險因素、其他未知或不可預測的因素，其中基本假設隨後被證明是不正確的，可能導致實際結果與報告中的結果有重大差異。前瞻性陳述。儘管我們認為前瞻性陳述中反映的預期是合理的，但我們不能保證未來的活動、績效或成就的結果水準。您不應過度依賴這些前瞻性陳述。除非另有說明，今天的新聞稿和本次電話會議中提供的所有資訊均為截至今天的信息，除非適用法律要求，否則我們不承擔更新此類資訊的義務。

I will turn the call over to Dick in a moment, but before I do I want to mention, we are actively planning our investor relations calendar for more non-deal roadshows and conferences in the near future as investor outreach is very important to Natco and I would like to thank all those folks that assist us in these conferences and non-deal roadshows. Also, we invite you to come and visit our booth at the upcoming ISC. West tradeshow, April ninth through the 11th in Las Vegas. Isc West is the industry's largest trade show with over 30,000 attendees. So if anyone is interested in attending, please contact me and I will arrange to get you a pass With that out of the way, let me turn the call over to Richard Soloway, President and CEO of Napco Security Technologies. The floor is yours.

我稍後會將電話轉給迪克，但在此之前我想提一下，我們正在積極規劃投資者關係日曆，以便在不久的將來進行更多非交易路演和會議，因為投資者外展對 Natco 和我要感謝所有在這些會議和非交易路演中為我們提供幫助的人。此外，我們邀請您來參觀我們在即將舉行的 ISC 上的展位。西部貿易展，4 月 9 日至 11 日在拉斯維加斯舉行。Isc West 是業界最大的貿易展，有超過 30,000 名與會者。因此，如果有人有興趣參加，請與我聯繫，我會安排給您通行證。那麼，讓我將電話轉給 Napco Security Technologies 總裁兼執行長 Richard Soloway。地板是你的。

Thank you, Efraim, and good morning, everyone, and welcome to our conference call. Thank you for joining us today to discuss our results. We are pleased to report our fiscal Q2 2024 record sales of $47.5 million. This is the 13th consecutive quarter. We've achieved record sales for the quarterly period recurring revenue. Subscription service continues to grow at a very strong rate, and the annual prospective run rate is now $76.5 million based on January 2024. Recurring revenue our balance sheet remains strong with our cash balances at $79 million, an 18% increase over the June 30, 2023, level. We have no debt, we continue to focus on capitalizing on key industry trends, which include wireless fire and intrusion alarms and the related recurring service revenues, school security solutions plus enterprise access control systems and architectural locking products. The management team here at Napco continues to focus on the key metrics of growth, profits and returns on equity as well as controlling our costs. These metrics are important to us as well as our shareholders. We continue to execute our business strategy and our interests are aligned with our shareholders as senior management of Napco owns approximately 10% of the equity.

謝謝 Efraim，大家早安，歡迎參加我們的電話會議。感謝您今天加入我們討論我們的結果。我們很高興地報告 2024 年第二季的銷售額達到創紀錄的 4750 萬美元。這是連續第 13 季。我們的季度經常性收入銷售額創歷史新高。訂閱服務繼續以非常強勁的速度成長，根據 2024 年 1 月計算，年度預期運行費目前為 7,650 萬美元。經常性收入我們的資產負債表依然強勁，現金餘額為 7,900 萬美元，比 2023 年 6 月 30 日的水準成長 18%。我們沒有債務，我們繼續專注於利用關鍵行業趨勢，其中包括無線火災和入侵警報以及相關的經常性服務收入、學校安全解決方案以及企業門禁系統和建築鎖定產品。Napco 的管理團隊持續專注於成長、利潤和股本回報率以及控製成本等關鍵指標。這些指標對我們以及我們的股東都很重要。我們繼續執行我們的業務策略，我們的利益與股東保持一致，因為 Napco 的高階管理層擁有約 10% 的股權。

Before I go into greater detail, I will now turn the call over to our CFO, Kevin Michelle, who will provide an overview for our fiscal second quarter results and then I will be back with more on our strategies in view of our markets. Kevin, the floor is yours.

在詳細介紹之前，我現在將把電話轉給我們的財務長凱文·米歇爾(Kevin Michelle)，他將概述我們第二財季的業績，然後我將針對我們的市場提供更多有關我們戰略的資訊。凱文，地板是你的。

Thank you, Dick. Good morning. Everyone. net sales for the quarter increased 12% to $47.5 million, and that's the highest quarterly sales in the company's history. And that compares to $42.3 million for the same period one year ago. Net sales for the six months ended December 31st, 2023 increased 9% to a six-month record of $89.2 million, and that compares to $81.8 million for the same period one year ago. Recurring monthly service revenue continued its strong growth, increasing 25% in Q2 to $18.5 million as compared to $14.9 million for the same period last year. Recurring monthly service revenue for the six months ended December 31st, 2023, increased 25% to $35.8 million as compared to $28.7 million last year. Recurring service revenues now have a prospective annual run rate of approximately $76.5 million based on January 2024 recurring revenues, and that compares to $72.5 million based on October 2023 recurring service revenues, which we reported back in November.

謝謝你，迪克。早安.每個人。該季度淨銷售額成長 12%，達到 4,750 萬美元，這是該公司歷史上最高的季度銷售額。相比之下，一年前同期為 4,230 萬美元。截至 2023 年 12 月 31 日的六個月淨銷售額增長 9%，達到 8,920 萬美元，創六個月新高，而一年前同期為 8,180 萬美元。每月經常性服務收入持續強勁成長，第二季成長 25%，達到 1,850 萬美元，去年同期為 1,490 萬美元。截至 2023 年 12 月 31 日的六個月，每月經常性服務收入比去年的 2,870 萬美元增長了 25%，達到 3,580 萬美元。根據 2024 年 1 月的經常性收入，經常性服務收入的預期年運行率約為 7,650 萬美元，而我們在 11 月報告的基於 2023 年 10 月的經常性服務收入為 7,250 萬美元。

Equipment sales for the quarter increased 6%, $29 million as compared to $27.4 million last year. This increase was due primarily to revenue increases in both Alarm Lock and marks brand door locking products, as well as increased sales of Napco brand intrusion products. Of note is that the StarLink radio sales in Q2 sequentially increased over those sales in Q. one by 63%. Equipment sales for the six months increased 1% to $53.4 million as compared to $53.1 million for the same period last year. This increase was primarily due to increases in both Alarm Lock and Mark's locking sales as offset by a decrease in Napco intrusion sales due to the previously discussed decline in StarLink radios. Gross profit for the three months ended December 31st, 2023, increased 74%, $25 million with a gross margin of 53% as compared to $14.4 million with a gross margin of 34% for the same period last year. And the gross profit for the six months increased 64% to $47.4 million with a gross margin of 53% as compared to $28.9 million with a gross margin of 35% a year ago. Gross profit for recurring service revenue for the quarter increased 21% to $16.7 million with a gross margin of 90% and that compares to $13.2 million with a gross margin of 89% last year. And gross profit for recurring service revenue for the six months increased 21% to $32.2 million with a gross margin of 90% as compared to $25.4 million with a gross margin of 88% last year. Gross profit for equipment revenues in Q2 increased 633% to $8.4 million with a gross margin of 29% as compared to $1.1 million with a gross margin of 4% last year. And gross profit for equipment revenues for the six months increased 328% to $15.2 million with a gross margin of 29% as compared to $3.6 million with a gross margin of 7% for the same period last year. The increase in both gross profit dollars and gross margin for recurring revenue for the three and six months ended December 31, 2023 was primarily the result of the previously mentioned increase in recurring revenues as well as a greater proportion of those revenues being generated by our StarLink fire radios, which generate higher monthly service charges than the other StarLink radios the increase in both gross profit dollars and gross margin for equipment revenues for both the three and the six months ended December 31, 2023, primarily resulted from lower costs of certain components as compared to the same period last year when we were still feeling the effects of the global supply chain shortage. In addition to the aforementioned increase in equipment sales was also a factor in the increase in gross profit and gross margin. Research and development costs for the quarter increased 14% to $2.5 million or 5% of sales, and that compares to $2.2 million or 5% of sales for the same period a year ago. And research and development costs for the six months ended December 31, 2023, increased 7% to $5 million or 6% of sales, and that compares to $4.7 million or 6% of sales for the same period a year ago. The increase for the three and the six months primarily resulted from compensation increases and additional staff selling, general and administrative expenses for the quarter increased 11% to $8.7 million or 18% of net sales, and that compares to $7.8 million or 18% of net sales for the same period last year.

本季設備銷售額成長 6%，達到 2,900 萬美元，去年同期為 2,740 萬美元。這一成長主要是由於 Alarm Lock 和 Marks 品牌門鎖產品的收入成長，以及 Napco 品牌防盜產品銷售的成長。值得注意的是，第二季的 StarLink 收音機銷售量比第一季的銷售量較上季成長了 63%。這六個月的設備銷售額成長了 1%，達到 5,340 萬美元，而去年同期為 5,310 萬美元。這一成長主要是由於 Alarm Lock 和 Mark's 鎖定銷售額的成長，但被先前討論的 StarLink 無線電下降導致的 Napco 入侵銷售下降所抵消。截至2023年12月31日止三個月的毛利成長74%，達到2,500萬美元，毛利率為53%，而去年同期為1,440萬美元，毛利率為34%。這六個月的毛利成長了 64%，達到 4,740 萬美元，毛利率為 53%，而一年前為 2,890 萬美元，毛利率為 35%。本季經常性服務收入的毛利成長了 21%，達到 1,670 萬美元，毛利率為 90%，而去年的毛利率為 1,320 萬美元，毛利率為 89%。這六個月的經常性服務收入毛利成長了 21%，達到 3,220 萬美元，毛利率為 90%，而去年的毛利率為 2,540 萬美元，毛利率為 88%。第二季設備收入的毛利成長了 633%，達到 840 萬美元，毛利率為 29%，而去年的毛利率為 110 萬美元，毛利率為 4%。這六個月的設備收入毛利成長了 328%，達到 1,520 萬美元，毛利率為 29%，而去年同期為 360 萬美元，毛利率為 7%。截至2023 年12 月31 日的三個月和六個月，經常性收入的毛利潤和毛利率均有所增加，主要是由於前面提到的經常性收入的增加以及這些收入中較大比例是我們的StarLink 產生的結果消防無線電的每月服務費用高於其他StarLink 無線電截至2023 年12 月31 日的三個月和六個月的毛利和設備收入毛利率均有所增加，主要是由於某些組件的成本較低，與去年同期相比，當時我們仍然感受到全球供應鏈短缺的影響。除了上述設備銷售的成長也是毛利和毛利率成長的因素。本季的研發成本增加了 14%，達到 250 萬美元，佔銷售額的 5%，而去年同期為 220 萬美元，佔銷售額的 5%。截至 2023 年 12 月 31 日的六個月，研發成本增加了 7%，達到 500 萬美元，佔銷售額的 6%，而去年同期為 470 萬美元，佔銷售額的 6%。三個月和六個月的成長主要是由於薪資增加以及額外的員工銷售、本季的一般和管理費用增加了11% 至870 萬美元，佔淨銷售額的18%，而相比之下，該季度的費用為780 萬美元，佔淨銷售額的18%銷售額與去年同期持平。

Selling, general and administrative expenses for the six months ended December 31st, 2023, increased 5% to $17.1 million or 19% of net sales and that compares to $16.3 million or 20% of sales for the same period last year. The increase in SG&A for the three months was primarily due to increases in legal and advertising expenses as well as additional expenses relating to the enhancing of our internal control systems. The increase for the six months was primarily due to legal and accounting fees as well as the aforementioned enhancing of our internal control systems. The decrease in SG&A as a percentage of net sales for both the three and six months was due to the increase in net sales being proportionately larger and the increase in SG&A expenses.

截至2023 年12 月31 日的六個月，銷售、一般和管理費用增加了5%，達到1,710 萬美元，佔淨銷售額的19%，而去年同期為1,630 萬美元，佔銷售額的20% 。這三個月的銷售及行政管理費用增加主要是由於法律和廣告費用以及與加強我們的內部控制系統有關的額外費用的增加。這六個月的成長主要是由於法律和會計費用以及上述內部控制系統的加強。三個月和六個月的銷售及管理費用佔淨銷售額的百分比下降是由於淨銷售額增幅較大以及銷售及管理費用增加。

Operating income for the quarter increased 219% to $13.8 million as compared to $4.3 million for the same period last year. Operating income for the six months ended December 31, 2023, increased 218% to $25.4 million as compared to $8 million for the same period last year. Interest and other income for the three months increased 290% to $729,000 as compared to $187,000 last year. And for the six months, interest and other income increased by $1.1 million to $1.2 million compared to $84,000 last year. The increase for both the three and six months ended December 31, 2023, was due to increased interest income from certificates of deposits. Provision for income taxes for the three months increased by $1.3 million to $1.9 million with an effective tax rate of 13% as compared to $586,000 with an effective tax rate of 13% last year. And for the six months, the provision for income taxes increased by $2.4 million to $3.4 million with an effective tax rate of 13% as compared to $1.047 million with an effective tax rate of 13% last year. The increase in the provision for both the three and the six months ended December 31, 2023, was due to increases in taxable income. Net income for the quarter increased 221% to a quarterly record $12.6 million, or $0.34 per diluted share, and that compares to $3.9 million or $0.11 per diluted share for the same period last year, and that represents 27% net sales. Net income for the six months ended December 31st, 2023 increased 229% to a six-month record of $23.1 million or $0.62 per diluted share and that compares to $7 million or $0.19 per diluted share for the same period last year. And that represents 26% of net sales.

本季營業收入成長 219%，達到 1,380 萬美元，去年同期為 430 萬美元。截至 2023 年 12 月 31 日的六個月營業收入成長 218%，達到 2,540 萬美元，而去年同期為 800 萬美元。這三個月的利息和其他收入比去年的 187,000 美元增加了 290%，達到 729,000 美元。與去年的 84,000 美元相比，這六個月的利息和其他收入增加了 110 萬美元，達到 120 萬美元。截至2023年12月31日止三個月及六個月的成長是由於存款證利息收入增加。這三個月的所得稅準備金增加了 130 萬美元，達到 190 萬美元，有效稅率為 13%，而去年的所得稅準備金為 586,000 美元，有效稅率為 13%。在這六個月中，所得稅撥備增加了 240 萬美元，達到 340 萬美元，有效稅率為 13%，而去年的所得稅撥備為 104.7 萬美元，有效稅率為 13%。截至2023年12月31日止三個月和六個月的撥備增加是由於應稅收入增加。該季度淨利潤增長221%，達到季度創紀錄的1260 萬美元，即稀釋後每股收益0.34 美元，而去年同期淨利潤為390 萬美元，即稀釋後每股收益0.11 美元，佔淨銷售額的27%。截至 2023 年 12 月 31 日的六個月淨利潤增長 229%，達到 2,310 萬美元或稀釋後每股 0.62 美元的六個月紀錄，而去年同期為 700 萬美元或稀釋後每股 0.19 美元。這佔淨銷售額的 26%。

Adjusted EBITDA for the quarter increased 191% to a quarterly record 15.1 million or $0.41 per diluted share, and that compares to $5.2 million or $0.14 per diluted share for the same period a year ago. And that equates to an adjusted EBITDA margin up 32%. Adjusted EBITDA for the six months ended December 31st, 2023 increased 182% to a six-month record $28 million or $0.76 per diluted share, and that compares to $9.9 million or $0.27 per diluted share for the same period last year and equates to an adjusted EBITDA margin of 31%.

本季調整後 EBITDA 成長 191%，達到季度紀錄的 1,510 萬美元，即稀釋後每股 0.41 美元，去年同期為 520 萬美元，稀釋後每股 0.14 美元。這相當於調整後的 EBITDA 利潤率成長了 32%。截至2023 年12 月31 日的六個月調整後EBITDA 成長182%，達到六個月創紀錄的2,800 萬美元或稀釋每股0.76 美元，而去年同期為990 萬美元或稀釋每股0.27 美元，相當於調整後的EBITDA EBITDA 利潤率為 31%。

Moving on to the balance sheet. As of December 31st, 2023, the company had $79 million in cash and cash equivalents, other investments and marketable securities, and that compares to $66.7 million at June 30th, 2023. That's an 18% increase. Company had no debt as of December 31st, 2023, cash provided by operating activities for the six months ended December 31, 2023, was $18.7 million, and that compares to $1.1 million for the same period last year. Working capital as defined by as current assets, less current liabilities, it was $128.5 million as of December 31st, 2023. And that compares with working capital of $111.7 million at June 30, 2023. The current ratio, defined as current assets divided by current liabilities, was 7.1 to 1 at December 31, 2023, and 6.71 at June 30, 2023. Capex for the quarter was $426,000, and that compares to $444,000 in the prior year period.

繼續看資產負債表。截至 2023 年 12 月 31 日，該公司擁有 7,900 萬美元的現金和現金等價物、其他投資和有價證券，而截至 2023 年 6 月 30 日，該數字為 6,670 萬美元。增幅為 18%。截至2023年12月31日，本公司沒有債務，截至2023年12月31日的六個月經營活動提供的現金為1,870萬美元，而去年同期為110萬美元。截至 2023 年 12 月 31 日，營運資金的定義為流動資產減去流動負債，為 1.285 億美元。相較之下，截至 2023 年 6 月 30 日的營運資本為 1.117 億美元。流動比率（定義為流動資產除以流動負債）於2023年12月31日為7.1比1，於2023年6月30日為6.71。本季資本支出為 426,000 美元，而去年同期資本支出為 444,000 美元。

That concludes my formal remarks, and I would now like to return the call back to Dick.

我的正式發言到此結束，現在我想回電給迪克。

Thank you, Kevin. First Half of Fiscal 2024 is off to a great start with fiscal Q1 and fiscal Q2 results. Achieving record sales and profits driven by hardware enabled recurring revenue growth of 25% and which represents approximately 40% of total company revenues. Our net income of $12.6 million and adjusted EBITDA of $15.1 million were quarterly record breakers equipment revenue improved growing 6% for the quarter, with gross margins on such sales sequentially increasing to 29% from 28% last quarter. Radio sales in Q2 improved over Q1, increasing by approximately 63%, while such sales were still 13% below the radio sales of Q2 last year when the impending 3G Verizon sunset was rapidly approaching the increase over last quarter was significant. We expect radio sales to continue to be a key contributor to our hardware sales and continue to lead to the continued growth of our highly profitable recurring revenue. Gross margin for recurring service revenues was once again strong at 90%. And when combined with gross margin or equipment revenues of 29%. The total gross margin for Q2 amounted to 53%, which compares to 34% for last year's Q2. We are particularly pleased to see the growth in equipment revenues, which was primarily primarily attributable to the continued strength of locking revenue. In addition to the improvement in intrusion sales, we also saw We also are pleased with the increase in the recurring revenues annual run rate, which increased to $76.5 million based on January 2024 recurring revenues compared to an annual run rate of $72.5 million based on October 2023 recurring revenue. Our Alarm Lock and March lacking hardware lines continue to see growth in school and classroom security, health care and retail loss prevention as well as multi dwelling, commercial and residential applications growing approximately 10% compared to last year and approximately 18% compared to Q1. Lighting sales once again represented 61% of hardware sales in Q2. We continue to remain focused on further penetrating each of these markets.

謝謝你，凱文。2024 財年上半年取得了良好的開局，第一季和第二財季的業績取得了良好的開端。硬體驅動的銷售和利潤創紀錄，使經常性收入成長了 25%，約占公司總收入的 40%。我們的淨利潤為 1,260 萬美元，調整後 EBITDA 為 1,510 萬美元，打破了季度記錄，本季設備收入增長了 6%，此類銷售的毛利率從上季度的 28% 連續增至 29%。第二季的收音機銷量較第一季有所改善，成長了約63%，但此類銷量仍比去年第二季的收音機銷量低13%，當時3G Verizon 即將日落，與上一季相比增幅顯著。我們預計收音機銷售將繼續成為我們硬體銷售的主要貢獻者，並繼續導致我們高利潤經常性收入的持續成長。經常性服務收入的毛利率再次高達 90%。與毛利率或設備收入結合為 29%。第二季的總毛利率為 53%，而去年第二季為 34%。我們特別高興地看到設備收入的成長，這主要歸功於鎖定收入的持續強勁。除了入侵銷售的改善之外，我們還看到經常性收入年運行率的增加，根據2024 年1 月的經常性收入，該收入增加到7650 萬美元，而基於10 月份的年運行率為7250 萬美元2023 年經常性收入。我們的Alarm Lock 和March 硬體產品線在學校和教室安全、醫療保健和零售防損以及多住宅、商業和住宅應用方面持續成長，與去年相比成長約10%，與第一季相比成長約18%。第二季照明銷售額再次佔硬體銷售額的 61%。我們將繼續專注於進一步滲透這些市場。

Net income of $12.6 million, besides being a Q2 record breaker represents 27% of net sales, adjusted EBITDA of $15.1 million. Also, a Q2 record represents an adjusted EBITDA margin of 32%. We believe we are well on our way to achieving our adjusted EBITDA margin target of approximately 45% on or about the end of fiscal 2026 as our targeted equipment sales reach $150 million, and our recurring revenue service level reaches $150 million.

淨利潤為 1,260 萬美元，打破了第二季度的記錄，佔淨銷售額的 27%，調整後 EBITDA 為 1,510 萬美元。此外，第二季的調整後 EBITDA 利潤率為 32%，創歷史新高。我們相信，隨著我們的目標設備銷售額達到 1.5 億美元，經常性收入服務水準達到 1.5 億美元，我們將在 2026 財年結束時順利實現約 45% 的調整後 EBITDA 利潤率目標。

Our balance sheet continues to get stronger with cash and cash equivalents, other investments and marketable securities increasing 18% to $79 million as compared to $66.7 million at June 30th, 2023. We have no debt and a net cash provided by operating activities for the six months ending December 31st, 2023. It was also strong amounting to $18.7 million. We recently announced the introduction of Prima by Napco, a new all-in-one alarm for security, fire video and connected home. We anticipate that Prima will address an important mass segments of the security market, including residential and small business system with built-in WiFi and cellular radio communications, customer alert notifications and video and smart home subscription options for each installed system. The security dealer as well as Napco can add more recurring revenue generating accounts. There are millions of commercial buildings of all types such as offices, hospitals, schools, coffee shops, restaurants, as well as residences that still require upgrades from legacy copper phone lines. Our StarLink line of radios have the widest coverage range of both AT&T and Verizon with rich feature sets, which are deal is really low as we have previously stated the constraints of the supply chain have abated. And we believe in the coming months that combined with new distributors sources we have developed, we will begin to invigorate our equipment sales and associated margins to even higher levels than any time before. As we've stated previously, the higher the hardware sales, the more overhead absorption occurs in our Dominican Republic factory and this expands and our gross margin. And finally, as indicated in this morning's earnings release, the Company will be issuing a quarterly dividend of $0.1 per share to be paid on March 2220 24 to shareholders of record on March one 2024. This represents a 25% increase over the previous dividend of $0.08 paid on December 2220 23. We are proud of this program as the NAB good team has created such tremendous shareholder value over the years, and this is another way for us to distribute profitable growth, too. Our investors the first six months of fiscal 2024 have generated strong sales and profitability. We believe we can continue this growth well into the future as we work toward our fiscal 2026 goals and targets and beyond. 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. We would like to open the call for the Q&A session. Operator, please proceed.

我們的資產負債表繼續變得更加強勁，現金和現金等價物、其他投資和有價證券增加了 18%，達到 7,900 萬美元，而 2023 年 6 月 30 日為 6,670 萬美元。截至 2023 年 12 月 31 日的六個月，我們沒有債務，也沒有經營活動提供的淨現金。金額也很強勁，達到 1870 萬美元。我們最近宣布推出 Prima by Napco，這是一款適用於安全、火災視訊和連網家庭的新型一體化警報器。我們預計 Prima 將滿足安全市場的重要大眾需求，包括內建 WiFi 和蜂窩無線電通訊的住宅和小型企業系統、客戶警報通知以及每個已安裝系統的視訊和智慧家庭訂閱選項。證券經銷商以及 Napco 可以添加更多經常性創收帳戶。有數百萬座各種類型的商業建築，如辦公室、醫院、學校、咖啡店、餐廳以及住宅，仍然需要對傳統銅質電話線進行升級。我們的 StarLink 系列收音機擁有 AT&T 和 Verizon 最廣泛的覆蓋範圍，並具有豐富的功能集，但交易成本確實很低，因為我們之前說過供應鏈的限制已經減輕。我們相信，在接下來的幾個月裡，結合我們開發的新經銷商資源，我們將開始振興我們的設備銷售和相關利潤，達到比以往任何時候都更高的水平。正如我們之前所說，硬體銷售額越高，我們多明尼加共和國工廠的管理費用吸收就越多，這就會擴大我們的毛利率。最後，正如今天早上的財報所示，公司將派發每股 0.1 美元的季度股息，將於 2220 年 3 月 24 日支付給 2024 年 3 月 1 日登記在冊的股東。這比 2220 年 12 月 23 日支付的 0.08 美元股息增加了 25%。我們為這個計劃感到自豪，因為 NAB 的優秀團隊多年來創造瞭如此巨大的股東價值，這也是我們分配利潤增長的另一種方式。我們的投資者在 2024 財年的前六個月創造了強勁的銷售額和獲利能力。我們相信，隨著我們努力實現 2026 財年的目標和具體目標，我們可以在未來繼續保持這種成長。我要感謝大家的支持，並感謝大家加入我們，共同迎接我們這個令人興奮的未來。我們的正式發言現在結束了。我們想開始問答環節的徵集。接線員，請繼續。

(Operator Instructions)

（操作員說明）

Chad Bennett, Craig-Hallum.

查德·貝內特，克雷格·哈勒姆。

Great.

偉大的。

Thanks. Great job, guys, on the quarter.

謝謝。夥計們，本季幹得好。

Great to see the rebound in the equipment business. So I guess maybe first question is, I know you touched on it in the formal remarks. Just on the radio radio inventory on issue. It seems like we're large it's largely behind us and probably even faster than maybe we thought. Just just trying to get an idea. Do we still still expect some headwind in the March quarter or potentially even in the June quarter from from those that inventory issue? Or how should we think about that?

很高興看到設備業務的反彈。所以我想也許第一個問題是，我知道你在正式演講中談到了這一點。就在廣播電台庫存問題。看起來我們很大，它很大程度上落後於我們，而且可能比我們想像的還要快。只是想了解一下。我們是否仍預期 3 月季度甚至 6 月季度可能會遇到來自庫存問題的阻力？或者說我們該如何思考這個問題？

I think, Chad, that we we thought it was going to take a couple of quarters to get it behind us. We thought that this quarter would be affected similarly as it was in Q1 or a lot of progress in Q2. And hence, you saw the big increase in radio sales in this quarter versus last. We're not done yet. We're not 100% there. We still have some work to do. I think at the end of Q3, it will be all behind us, but the fact of what's occurred in Q2. So a lot to getting this issue behind us. And yes, we're going to continue to work hard to make sure there's no issue left by the end of Q3.

查德，我認為我們認為需要幾個季度的時間才能把它拋在身後。我們認為本季會受到與第一季類似的影響，或是第二季會取得很大進展。因此，您會看到本季收音機銷售量與上一季相比大幅成長。我們還沒完成。我們還沒有100%做到這一點。我們還有一些工作要做。我認為在第三季末，一切都將成為過去，但事實是第二季發生的事情。為了解決這個問題，我們需要做很多工作。是的，我們將繼續努力確保在第三季末不遺留任何問題。

Right.

正確的。

Got it.

知道了。

And then just shifting to the locking side of the business, I think you talked about locking growth of roughly 10% year over year just in terms of kind of sell through there and demand there. Were there any changes in demand in that business? And then I think you highlighted the verticals that you're seeing strength in. Should we think about that business differently from a growth rate relative to what you did this quarter or was this quarter kind of anomaly there?

然後轉向業務的鎖定方面，我認為您談到了鎖定同比約 10% 的增長，僅就那裡的銷售和需求而言。該業務的需求有改變嗎？然後我認為你強調了你看到的優勢所在的垂直領域。我們是否應該以不同於本季成長率的方式來看待這項業務，或者本季是否有異常情況？

Blocking has done well for several quarters in a row, maybe last even couple of years in a row. So nothing unusual that gave us the strength. What's great is we have two locking companies. We have a long block and we have marks and both of them are firing on all cylinders, and that's why we're seeing the success in locking. So we expect that to continue forward many quarters to come.

封鎖連續幾季表現良好，甚至可能連續幾年。所以沒有什麼不尋常的事情給了我們力量。很棒的是我們有兩家鎖具公司。我們有一個很長的缸體，我們有標記，它們都在所有氣缸上點火，這就是我們看到鎖定成功的原因。因此，我們預計這種情況將在未來許多季度繼續下去。

Got it.

知道了。

And then maybe last one for me on EBITDA margins, look, phenomenal, continue to improve in the low 30s. I think, again, at least ahead of what I was thinking.

然後也許是我的最後一個關於 EBITDA 利潤率的指標，看起來，非常驚人，繼續在 30 多歲左右提高。我再次認為，至少超出了我的想法。

Yes, I know we had some some finance and accounting costs that rolled in this quarter, some, you know, potentially maybe incrementally more rolling in the next quarter, but it seems to me like EBITDA margins, you know, are likely going from the low 30s to the mid 30s, you know, in a short period of time. Is that a fair assessment, Kevin?

是的，我知道我們本季有一些財務和會計成本，有些，你知道，可能會在下個季度逐漸增加，但在我看來，EBITDA 利潤率可能會從你知道，在很短的時間內，從30 多歲到30 多歲。這是一個公平的評估嗎，凱文？

Yes. Well, we're at 32. We're well on our way to the 45 can take, you know, more time. We won't get to the 45, obviously by the end of this fiscal year. So when you have 40% of your revenue generating 90% gross margins, which is what we have the recurring now being roughly 40% of total revenues. That takes you a long way to get it where we want to go and we're going to keep adding obviously to that recurring. And we think the margins will get better on the hardware as we progress through the rest of the fiscal year between those two events, there's no reason why we shouldn't see the EBITDA margin go even higher in this fiscal year.

是的。嗯，我們已經32歲了。我們正在向 45 邁進，你知道，我們還需要更多時間。顯然，到本財年結束時，我們不會達到 45 個。因此，當你的收入的 40% 產生 90% 的毛利率時，我們現在的經常性收入約佔總收入的 40%。這需要你走很長的路才能到達我們想要去的地方，我們將繼續明顯地增加這種重複性。我們認為，隨著我們在這兩個事件之間的本財年剩餘時間的進展，硬體的利潤率將會變得更好，我們沒有理由不看到本財年的 EBITDA 利潤率更高。

Thanks.

謝謝。

Nice job.

不錯的工作。

On the quarter.

在季度。

Thanks, Chad.

謝謝，查德。

Thank you.

謝謝。

Jaeson Schmidt, Lake Street.

傑森‧施密特，湖街。

Yes, thanks for taking my questions.

是的，感謝您回答我的問題。

Kevin, just curious if you could share with us some of the sell-through metrics you saw your distributors in the December quarter.

凱文，只是好奇您是否可以與我們分享您在 12 月季度看到的分銷商的一些銷售指標。

We saw on the intrusion size, a big improvement from to the two distributors who we've been referring to as being the ones that had the excess radio inventory so that that was we expected that to occur. I'd expect it occurred faster than we thought one in particular are just they just did a phenomenal job working their way through. So their sell-through stats were great. And the sell-through stats for most of the intrusion is much better than it's been not back to where it was. So we're not we're not 100% to where we were say a year ago, but we are much better than where we were a quarter ago, and we expect that to continue as we continue to help our distributors promote products, help them move radios for coming out with additional radios that are going to give us recurring. So we're doing a lot of things that are going to help the sell-through and the sell-through stats with blocking continue to do well. We watch all the stats every week every month. We watch the inventory levels for all of our distributors. We're pretty pleased the way things have been going right now.

我們看到，在入侵規模方面，兩家​​分銷商有了很大的改善，我們一直將這兩家分銷商稱為擁有過多無線電庫存的分銷商，因此我們預計會發生這種情況。我預期事情發生的速度比我們想像的要快，特別是他們剛剛完成了一項出色的工作。所以他們的銷售統計數據非常好。大多數入侵的銷售統計數據都比沒有回到原來的水平要好得多。因此，我們並不是 100% 達到一年前的水平，但我們比一個季度前要好得多，我們預計這種情況會持續下去，因為我們將繼續幫助我們的分銷商推廣產品，幫助他們移動收音機，以便推出更多收音機，這些收音機將為我們提供循環播放。因此，我們正在做很多事情來幫助銷售和阻塞銷售統計數據繼續表現良好。我們每週每月都會查看所有統計數據。我們關注所有經銷商的庫存水準。我們對目前的進展感到非常高興。

We'd love you to understand. We want you to understand that our radios, which generates recurring subscription revenue, ARC has tremendous opportunities because you have millions of commercial buildings that are still operating on the old legacy complex and our radios are the best choice for the dealers. They have a lot of features that the dealers like. So it's really supercharging the fire radios. Additionally, there's many, many small business residential jobs that need our radios also. So we make a lot of those reduced millions and millions of jobs are out there that are operating on copper that have to be converted over the next few years. And then you have all of our products with the radios built in the fire panels. It's built in the new Prima it's built in and those jobs are for new work. So there's a lot of opportunities for us and it's very, very exciting future.

我們希望您能理解。我們希望您了解，我們的收音機可產生經常性訂閱收入，ARC 擁有巨大的機會，因為您有數百萬座商業建築仍在舊建築群上運營，而我們的收音機是經銷商的最佳選擇。它們有許多經銷商喜歡的功能。所以它確實增強了消防無線電的性能。此外，還有許多小型企業住宅工作也需要我們的收音機。因此，我們在減少的數以百萬計的工作中創造了很多，這些工作必須在未來幾年內進行轉換。然後您就可以擁有我們所有在防火面板中內建無線電的產品。它是在新的 Prima 中內建的，而這些工作是為了新的工作。因此，我們有很多機會，未來非常非常令人興奮。

And you can hear what's going on by taking a look at our numbers. And we expect this to continue to our 2026 goal of $150 million of recurring. So that's the future for us.

您可以透過查看我們的數據來了解正在發生的情況。我們預計這將繼續實現我們 2026 年 1.5 億美元經常性收入的目標。這就是我們的未來。

Okay. That's really helpful. And I know you mentioned that you think the radio inventory issue will be behind you after Q2, sorry, but just curious if your own higher cost inventory should largely be chewed through by then as well.

好的。這真的很有幫助。我知道您提到過，您認為無線電庫存問題將在第二季度之後得到解決，抱歉，但只是好奇您自己的較高成本庫存是否也應該在很大程度上得到解決。

Yes, the high the higher costs should be behind us. And besides working on inventory at distributors, we're working on getting the inventory that we possess getting through that as well. And so if it's not gone by Q. three, I think most of it will be maybe there'll be some in Q4, but most of our inventory now is more normally costed days of the crazy high costs caused by the supply chain and mostly behind us.

是的，越高的成本就應該成為過去。除了處理分銷商的庫存之外，我們還致力於獲取我們擁有的庫存。因此，如果到第三季度還沒有消失，我認為其中大部分可能會在第四季度出現，但我們現在的大部分庫存通常是由供應鏈造成的瘋狂高成本的幾天來計算的，而且大部分是我們後面。

Katja, that's it for me.

卡佳，這就是我的目標。

Thanks a lot, guys.

非常感謝，夥計們。

Thank you.

謝謝。

Your next question comes from Jim Ricchiuti from Needham & Co. Please go ahead.

您的下一個問題來自 Needham & Co. 的 Jim Ricchiuti。請繼續。

I thank you a question and I wanted to go back again to the sequential growth in radios and admittedly, this is a somewhat of an easy comparison. But to what extent are you seeing any benefit on the radio side from the addition of the new distributor? Or is it also just in combination with the improved sell-through in general, it's all of it's both, Jim.

我謝謝你提出的問題，我想再次回到收音機的連續成長，誠然，這是一個比較簡單的比較。但您認為新經銷商的加入對無線電方面有多大好處？或者它也只是與整體銷售量的提高相結合，兩者兼而有之，吉姆。

So adding the new distributor, it certainly helped, but it's not like we loaded up this new distributor and it gave us a one-time hit improvement to radio sales. We did we didn't do that fee. We sold this new distributor, normal amount enough inventory where somebody goes into that distribution center and they have the inventory not too little, not too much to contributor. But besides that part of the cut, the contribution we saw was helping the other distributors move through their inventory and they move it through and it creates new demand with the dealers. That's what this is all about. These distributors adjust shelves. Bottom line is we have to create demand at the dealer level, having the new distributor with 115 new branches certainly helps, but also pushing a lot of this inventory through the dealers at all the branches of all the distributors is the biggest factor and we expect demand to be strong going forward.

因此，增加新的分銷商確實有幫助，但這並不像我們增加了這個新的分銷商那樣，它為我們的收音機銷售帶來了一次性的改善。我們做了，我們沒有做那筆費用。我們出售了這個新的經銷商，正常數量的庫存足夠，有人進入該分銷中心，他們的庫存不會太少，也不會太多。但除了削減的部分之外，我們看到的貢獻是幫助其他經銷商清理庫存，他們清理庫存，這為經銷商創造了新的需求。這就是這一切的全部內容。這些經銷商調整貨架。最重要的是，我們必須在經銷商層面創造需求，擁有擁有115 個新分支機構的新經銷商肯定會有所幫助，但透過所有經銷商的所有分支機構的經銷商推動大量庫存是最大的因素，我們預計未來需求強勁。

It's on one, you know, one other thing, sorry, it is good. This is going to be 30,000 security installation dealers visiting us in Las Vegas, which is the biggest Shell and Fran can set people up to come and see the dealers as they come by our booth, it's going to be upfront to going to have the widest range of radios, the entire industry right there. All of our new products will be right there. So we're going to get a lot of leads. And as I said, there's millions of jobs that have to be upgraded from legacy copper. They're huge numbers of jobs of new work that has to be installed when you're putting up a building, you must have a fire alarm burglar alarm today, residential alarms because of what's going on in society. So we're going to get a lot of dealers, a lot of new leads, and we have a great sales group of guys who are going to follow up on those leads. So we expect to get even more pull-through between our existing distributor base that we have, plus our new distributor, which is the largest in the security industry that will generate additional continuous growth of radio sales. It's take.

這是一件事，你知道，另一件事，抱歉，這很好。這將是 30,000 名安全安裝經銷商在拉斯維加斯參觀我們，這是最大的 殼牌和 Fran 可以安排人們在經銷商來到我們的展位時與他們見面，這將是最廣泛的無線電的範圍，整個產業都在那裡。我們所有的新產品都將在那裡。所以我們會得到很多線索。正如我所說，有數百萬的工作需要從傳統的銅業升級。當你建造一棟建築物時，必須安裝大量的新工作，今天你必須安裝火災警報器、防盜警報器、住宅警報器，因為社會上正在發生的事情。因此，我們將獲得許多經銷商、許多新的銷售線索，我們擁有一支優秀的銷售團隊，他們將跟進這些銷售線索。因此，我們希望在我們現有的分銷商基礎和我們的新分銷商之間獲得更多的拉動，新分銷商是安防行業最大的分銷商，這將帶來無線電銷售的額外持續增長。就拿了

What kind of traction are you seeing from private? I know it's early days yet, but what's the the initial read on how the product is doing.

您從私人領域看到了什麼樣的吸引力？我知道現在還為時過早，但是關於該產品的初步了解是什麼？

I think that the product has tremendous legs to it. The product is beyond anything else in the security industry and with its functionality, ease of installation goes in 10 minutes with what's going on in society and you need analog system for your business and you need a lot of system for your home and the premium is designed. So that the actual salesman that sells the job to the end user customer and install it in less than 15 minutes.

我認為該產品具有巨大的優勢。該產品超越了安全行業中的任何其他產品，其功能齊全，安裝簡便，只需 10 分鐘即可適應社會上正在發生的事情，您的企業需要模擬系統，您的家庭需要大量系統，溢價是設計的。這樣，實際銷售人員就能在 15 分鐘內將工作出售給最終用戶並安裝完成。

Very, very quick for me to leave it behind for the consumer to DIY. It sees if he wants to do that. So I think the opportunities are tremendous. As we said, it takes a year or so for a new product. And this was only developed was only sent to the market a few months. We go to two to become see a success. So we expect, but considering the fact that along with it being put in and they're a little old fashioned that the competitors have. And this is very, very modern and store so quickly, this will become a standard of security industry and every alarm that goes in that's Prima has a recurring revenue tail to it. So it's going to generate a lot more recurring revenue part of our 2026 goal didn't even include it. It was just the existing products, but this will add more to the home mix of what we're doing.

我非常非常快地將它留給消費者 DIY。就看他願不願意這麼做了。所以我認為機會是巨大的。正如我們所說，新產品需要一年左右的時間。而這款產品才開發出來才送到市場幾個月。我們去二成看到成功了。所以我們期望，但考慮到這樣的事實：隨著它的投入，它們與競爭對手相比有點過時。這是非常非常現代的，而且存儲速度如此之快，這將成為安全行業的標準，Prima 中的每個警報都有一個經常性的收入尾巴。因此，它將產生更多的經常性收入，而我們 2026 年目標的一部分甚至沒有包括在內。這只是現有的產品，但這將為我們正在做的家庭組合添加更多內容。

And then final question for me, Kevin, just looking at the on the expense side, how much of the higher costs were the stepped-up financial controls were in the quarter? Or is this more going to be more fully reflected in the March quarter?

最後一個問題是我，凱文，從費用來看，本季加強的財務控制所增加的成本有多少？或者這會在三月季度得到更充分的體現？

And lastly, just on tax rates, should we assume a similar tax rate?

最後，就稅率而言，我們是否應該假設類似的稅率？

So on the first part of your question, Jim, some of the additional costs went into the SG&A in this quarter, we started with Deloitte toys is now our auditors. So obviously that has that extra cost has started and it was only done one quarter within Q2, we have our consulting firm. So that's filtered into the numbers. What you haven't seen yet or the additional employees, the internal auditor and the additional cost accountants we're in the process of doing those hires. I expect that will be acute that will start in Q three quarter that we're in now. So we'll see that going forward. And those are recurring expenses and additional employees, as is the Lloyd's piece, the consulting front-end, our tax rate has been 13% Qix every week every quarter. Full year when I model I use 15. So we've been running at 13. So unless the laws change, I continue to use 15 for modeling.

所以，關於你問題的第一部分，吉姆，一些額外成本進入了本季的銷售管理費用，我們從德勤玩具開始，現在是我們的審計師。顯然，額外的成本已經開始，並且只在第二季的一個季度完成，我們有我們的顧問公司。所以這被過濾到數字中。您還沒有看到的，或者我們正在招募的額外員工、內部稽核師和額外成本會計。我預計這種情況將從我們現在所處的第三季開始。所以我們會看到未來的發展。這些都是經常性開支和額外的員工，就像勞合社的部分、諮詢前端一樣，我們的稅率是每週每季 13% Qix。當我建模時，全年我使用 15。所以我們13點就開始跑步了。因此，除非法律發生變化，否則我將繼續使用 15 進行建模。

Okay.

好的。

Thank you.

謝謝。

Thanks, Jeff.

謝謝，傑夫。

Your next question comes from Matt Pfau from William Blair. Please go ahead.

您的下一個問題來自威廉布萊爾的馬特普福。請繼續。

Hey, great.

嘿，太棒了。

Thanks for taking my questions and nice quarter, guys. I wanted to first ask on the new distributor that you added. Sounds like there was some impact there to hardware in the second quarter. How should we think about that going forward? There's going to be an inflection or is this more of a slow ramp?

感謝你們提出我的問題，祝大家有個愉快的季度。我想先詢問一下您新增的新經銷商。聽起來第二季硬體受到了一些影響。未來我們該如何思考這個問題？將會出現拐點還是這更像是一個緩慢的斜坡？

Yes, our distributor has been around a long time. This new distributor with the 115 branches we dealt with them in the past. They're new to us. Now this wasn't a case of loading up load up all 115 branches get a big hit and then things slow down. This is a more normalized ramp-up, whatever impact they had in Q Q's one and two, we expect it to improve dramatically the biggest security distributor out there, and we've only been dealing with them for a little bit of Q1 and all of Q2. So the potential is much more than what we've seen. Again, we didn't load them up. It's natural business, which is the way we want it. We do want to get in a situation where we load them up and then they want to return it, not like that was sales that sticky. And that's how it's going to be with these guys.

是的，我們的經銷商已經存在很久了。這個新經銷商與我們過去合作過的 115 個分店一樣。他們對我們來說是新的。現在，這並不是載入所有 115 個分支的情況，然後載入速度就會變慢。這是一個更規範化的提升，無論他們對 Q Q 的第一和第二有什麼影響，我們預計它會顯著改善最大的安全分銷商那裡，我們只在第一季和第二季與他們打交道。 Q2 的全部。因此，潛力遠遠超出我們所看到的。同樣，我們沒有加載它們。這是很自然的生意，這就是我們想要的方式。我們確實希望遇到這樣一種情況：我們裝載了它們，然後他們想要退貨，而不是像銷售那樣具有黏性。這就是這些人的下場。

Got it.

知道了。

And I know it's early, but are you seeing new installers start to use Napco products? And are you getting inbounds or developing relationships with new installers as a result of that new distributor agreements.

我知道現在還為時過早，但您是否看到新的安裝人員開始使用 Napco 產品？由於新的經銷商協議，您是否獲得了入站或與新安裝商建立了關係。

And we're seeing new larger new, larger customers due to this arrangement because certain large customers use this distributor as their main distributor.

由於這種安排，我們看到了新的更大的新客戶，因為某些大客戶使用該經銷商作為他們的主要經銷商。

So with introductions and the fact that the products are superior to what's on the marketplace. It is great for us as these new customers have said, wow, I didn't realize the functionality we get and the ease of installation we get for our crews that are out in the field and there they once they see this, they become adopters of the product. So it's a great relationship because there are certain dealers that want to use this particular distributor. It only uses distributors. So that opens those doors in a big way.

因此，透過介紹以及產品優於市場上產品的事實。這對我們來說很棒，因為這些新客戶說，哇，我沒有意識到我們獲得的功能以及我們為現場工作人員提供的安裝便利性，他們一旦看到這一點，就會成為採用者產品的。所以這是一個很好的關係，因為有些經銷商想要使用這個特定的經銷商。它只使用經銷商。這樣就大大打開了這些大門。

Great. Thanks for taking my questions, guys.

偉大的。謝謝你們回答我的問題，夥伴們。

Appreciate it.

欣賞它。

Thanks, Matt.

謝謝，馬特。

So ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Your next question comes from Raj Sharma from B. Riley. Please go ahead.

女士們先生們，提醒一下，如果您有疑問，請按星號，然後按星號。您的下一個問題來自 B. Riley 的 Raj Sharma。請繼續。

Yes, thank you. Congratulations on the nice quarter, guys. My question is on the growth rate for the next few quarters or the next year alarm and inclusion this quarter was about flat and lock-ins locking was up 10%. Should we expect what kind of growth rate should we expect for the next few quarters?

是的，謝謝。夥計們，恭喜你們度過了一個美好的季度。我的問題是關於未來幾個季度或明年的成長率，本季的警報和包容性大約持平，而鎖定鎖定增長了 10%。我們是否應該預期未來幾季的成長率是多少？

Sort of in line are ramping up a lot.

排隊的人數正在增加很多。

Alarm was actually up this quarter, so it wasn't flat. It was up, but by about 5% actually. So we expect all in all all all in, we want to be 10% or greater. And the 6% that we were up for this quarter is very encouraging as we as we get back to a 10% or greater growth rate for hardware. In order to do that, we need all the all the players to be a part of it that needs the extrusion side, the locking and the access locking has been doing great to companies along Mike and Mark both firing on all cylinders. Tapco was hurt by the radio decline came back up 5% this quarter. We expect more for because of premium more because of the new distributor and more because radio sales will come back. So as we go forward, 10% or greater is what we're looking for.

本季警報實際上已拉響，因此情況並不平坦。確實有所上漲，但實際上卻上漲了 5% 左右。所以我們預計總而言之，我們希望達到 10% 或更高。本季我們的 6% 成長非常令人鼓舞，因為我們的硬體成長率恢復到 10% 或更高。為了做到這一點，我們需要所有的參與者都參與其中，需要擠壓側，鎖定和訪問鎖定對麥克和馬克的公司來說都做得很好，他們都在全力以赴。Tapco 受到收音機銷量下滑的影響，本季銷量回升了 5%。我們期望更多，因為溢價更多，因為新經銷商，更多因為收音機銷售將會回升。因此，隨著我們前進，我們正在尋找 10% 或更高的目標。

Great.

偉大的。

And locking, is this similar sort of a growth rate or higher lacking has been higher, you know, modestly being conservative, modestly, 10%, but they can do a lot more than it had been.

鎖定，是類似的成長率或更高的成長率，你知道，適度保守，適度，10%，但他們可以做的比以前多得多。

Right.

正確的。

And this next question, recurring revenues, the retention rates must be pretty high there. Any sort of number on the retention rate or the number of devices that are live, the retention rate is very high.

下一個問題是經常性收入，那裡的保留率一定很高。任何類型的留存率或線上設備數量，留存率都非常高。

We churn is a big word that's used when you're in the residential space, wherever mostly commercial churn is insignificant. Now when we have Prima being a bigger part of our sales, there may be a churn rate in US residential residential people change their minds. They decide they want a system that they know. So we'll look at that when we get to that point. But for right now where we are churn is inconsequential and roughly is roughly 750,000 radios that are generating the run rate of $76.5 million or so to get to our $150 million goal by 2026. The way we look at it essentially got to add another 750,000 radios, and that's not a lot when you consider the millions and millions of opportunities that are out there. We're not saying we have to get at every one of them. We love it got to get our fair share 750,000 out of the millions that even a high percentage.

「我們流失」是一個大詞，當你在住宅空間時使用，而大多數商業流失是微不足道的。現在，當 Prima 在我們的銷售中佔據更大的比例時，美國住宅居民的流失率可能會改變。他們決定想要一個他們熟悉的系統。因此，當我們到達這一點時，我們會考慮這一點。但就目前而言，我們的流失情況並不重要，大約有 75 萬個無線電設備產生了 7,650 萬美元左右的運作率，以實現到 2026 年達到 1.5 億美元的目標。我們看待它的方式基本上是增加另外 750,000 個無線電，當你考慮到那裡有數以百萬計的機會時，這並不是很多。我們並不是說我們必須抓住其中的每一個。我們很高興它能從數百萬中獲得我們的公平份額 750,000，甚至是很高的比例。

So that's what gives us confidence about hitting the goal got to and the growth in the recurring revenues, which products are contributing the most which are which are contributing at least any sort of color on that.

因此，這讓我們對實現目標和經常性收入的成長充滿信心，哪些產品貢獻最大，哪些產品至少對此做出了任何貢獻。

And the fact the fire radios are the biggest contributor, right? That's a that's why you're seeing gross margin of 90%. Fire Radios gets the most on a monthly basis compared to the others. The others are great to fire leads to 90%. The others maybe they lead to 80, 82, 83%, not so bad, all good, but fires, number one.

事實上，消防無線電是最大的貢獻者，對吧？這就是為什麼毛利率達到 90% 的原因。與其他電台相比，Fire Radios 每月獲得的收益最多。其他人的開火率都很高，達到 90%。其他的可能會導致80%、82%、83%，還不錯，都很好，但火災，排在第一位。

Got it. And then of the sell-through Last question for me, sell through a dealer, as you said, is picking up. And because of the excess inventory issue for a couple of dealers, it was lagging the year on year. And overall, we did a 5% sell through.

知道了。然後是銷售情況 對我來說最後一個問題，正如你所說，透過經銷商銷售正在回升。而且由於一些經銷商庫存過剩的問題，導致業績年比落後。整體而言，我們的銷售率為 5%。

I think dealers are up 10% now and I'd have to look at that, Raj, what I do know is was much more in Q2 than one but I'll have to look at and see where are we year to date prop probably up given what I saw in Q2.

我認為經銷商現在上漲了10%，我必須看看這一點，Raj，我所知道的是第二季度的漲幅比一季度要高得多，但我必須看看我們今年迄今為止的漲幅可能在哪裡鑑於我在第二季看到的情況。

But overall, there's is up it's up faster than what your quarterly years is exhibiting?

但總體而言，成長速度是否比您的季度表現更快？

They have to be fair to say.

他們必須公平地說。

I think it's fair to say that it's up compared to what we expected. It's happening faster and unlocking it's very good. And on intrusion, definitely up sequentially versus a year ago.

我認為可以公平地說，與我們的預期相比，它有所提高。它發生得更快並且解鎖效果非常好。在入侵方面，與一年前相比肯定有所上升。

I'd have to look it up and that's it for me. Thank you for answering my questions again.

我得查一下，對我來說就是這樣。感謝您再次回答我的問題。

Thank you, and congratulations, a good quarter.

謝謝你，恭喜你，一個美好的季度。

Thanks.

謝謝。

And there are no further questions at this time. I will turn the call back over to the CEO, Richard Soloway for closing remarks.

目前沒有其他問題。我會將電話轉回給執行長理查德·索洛韋 (Richard Soloway)，讓其致閉幕詞。

Thank you everyone for participating in today's conference call. As always, should you have any further questions, please feel free to call Fran, Kevin or myself for further information. We thank you for your rich support. And we look forward to speaking to you all again in a few months to discuss Napco's fiscal Q3 results. Have a great day, everybody.

感謝大家參加今天的電話會議。像往常一樣，如果您有任何其他問題，請隨時致電 Fran、Kevin 或我本人以獲取更多資訊。我們感謝您的大力支持。我們期待在幾個月後再次與大家交談，討論 Napco 第三季的財務表現。祝大家有美好的一天。

Bye-bye.

再見。

Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.

女士們、先生們，今天的電話會議到此結束。我們感謝您的加入，您現在可以斷開線路了。謝謝。

Yes, look.

是的，看。