Napco Security (NSSC) 5 Feb 242024 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the NAPCO Security Technologies Fiscal Second Quarter of 2024 Earnings Conference Call. [Operator Instructions] This call is being recorded on Monday, February 5, 2024. I would now like to turn the conference over to Francis Okoniewski, Vice President, Investor Relations. Please go ahead.

Thank you, Julie, and good morning, everyone. Okoniewski, Investor Fran Security for is Technologies. name Vice relations President, NAPCO My

thank joining our call for all our a want the in of our Security If all you our not, Officer Just copy to are the the have should website, CFO. for release quarter By and to Relations had discussing our quarter. release of results you second to conference discuss us Executive press available financial fiscal Vice of Executive our our is Technologies; results Soloway, of review our Investor section www.napcosecurity.com.On opportunity XXXX. Chief now, Buchel, President today earnings call Richard the on President and and today Kevin NAPCO the of

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

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

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

as All You should call Dick X the in not a unless applicable will place moment, turn press such today's undue to is but in statements. and no otherwise Investor law.I conference information today's stated, undertake for reliance are release these of update do, date as information our provided forward-looking and we duty to more on to I mention over before call under required I Relations except actively planning calendar we want this booth Las you all the industry's ISC to the come the in invite outreach Vegas. West us largest upcoming conferences in and conferences over in assist we as near our those tradeshow XX,XXX to folks and ISC important roadshows. West April through the with very non-deal I is and roadshows visit to these and like non-deal attendees. is NAPCO, investor that thank at future tradeshow XXth would Also,

Dick, anyone get Richard attending, CEO call in the if arrange yours. Technologies. please and the pass.With let the contact interested me, Soloway, will is over of out floor of NAPCO you So a way, turn is to and that President Security me I to

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

recurring continues strong period. consecutive a record report to rate million. sales to annual quarter $XX.X XXXX January revenues. This very pleased the are QX the revenue is have is and rate $XX.X Recurring sales subscription quarterly the Based of fiscal XXXX prospective for at run million. We our grow record on XXth now achieved we service

our with XXXX at strong remains $XX increase XX% million, sheet cash balance balances level. over XX, the an Our June

debt. We have no

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

floor strategy, our NAPCO business owns our our and second shareholders back into be our is Kevin He and view the Buchel. interests Kevin, to an fiscal our execute management of to on of I results, aligned of I overview greater I senior our with our CFO, more strategies will will will and of as are provide approximately with equity.Before markets. over the quarter continue call then now the detail, turn We go yours. XX%

sales, shortage. margin of for XX% Gross to gross for as gross and profit million, a of margin the ago. gross which gross Alarm its for X months back increased with reported million, the months million, to X everyone. on to increased year charges the compared sales history. last XX, brand a Net period year. the X of to last that run year, to the compared service compared sales brand X as door was million, a compared QX and year last $XX.X million a to The of sales million, same in decrease million, the year. months the gross proportion profit $XX.X $XX.X well in that gross $XX.X last StarLink year. January Gross Equipment to gross by XX%, to a to the X in by a the December prospective million gross gross Marks of Lock as that's XX% same a million, recurring sales strong Net gross October that to to X% margin the This with for XX% increasing ago. by million, offset increased intrusion XX%, $XX.X sales the and both service revenues XXXX XXXX the million, sequentially increased to Recurring increased increased XX% dollars last for result StarLink that certain compared gross period XX% in XX% months margin than and products. compared QX monthly increases profit of ended to in revenue months last the ended Alarm from year in lower period compares XXXX service ended same radios. $XX over with year. locking And increase $XX.X with products, for resulted X% both compares both and revenue costs $XX.X to year, as a X increase the X% X-month primarily generated a revenues last $X.X the million revenue to sales XX% note XX% months locking in year. margin sales those $XX.X XX, highest on margin greater increase as This a for other the to when Marks as for primarily radios, gross margin gross year of feeling recurring increased $XX.X million, XX%, $XX.X revenues for discussed generate XX, have XX%, period XX% chain and increased of period million, a last equipment annual XX, rate components million, continued the And increased revenue due margin Of service is the radio of intrusion gross in same million the for as margin mentioned NAPCO of and $XX.X profit profit margin million increase XXXX, Recurring and primarily million, the still November.Equipment Thank the $XX.X million December compares was for recurring to and months dollars recurring year. for XXXX, X% previously record $X.X increased equipment gross XX%, XX%, for of the for that due months quarterly for for to period the $XX.X of ago. increased as to gross last revenues with primarily XX%. profit increases margin StarLink X December XX%, Lock with X recurring of X XX, revenue our $XX revenue to sales X the supply for $X.X sales and to to $XX.X and million, a approximately higher margin for XXX% December monthly of for QX profit of $XX.X with with the for radios.Gross a to well monthly as with as as margin service X fire company's in to million, those increase was growth, in revenues, $XX.X December global quarter the gross $XX.X to service as last X% both and Recurring as we ended compares same the revenues to due XXX%, XX% million, million $XX.X to QX you, morning, same a of as equipment increased $XX.X recurring now same were $XX.X based profit gross based a service Good $XX.X million as compared year. gross X effects XXXX, in increased quarter period the of compared Dick. a with for of which a The the the XXXX, we compared NAPCO previously decline being for revenues with of StarLink both months million, for margin compared million, to to ended with for in quarter X in revenues,

to $X.X for X our Operating XXX% for net increase In million, compares record same the both provision SG&A period months percentage X sales, XXX% EBITDA for that million, year and net X ended addition, for or $XX.X XXXX, XX, XXX% the months, income ended ago, XXXX, due to effective as SG&A $X.X in $XX.X $X.XX X period quarter and compares X the staff. XX% general, ago. increase December gross per compares and that last compares factor per million, fees sales and the the a million, quarter period diluted control the per quarter to an period record and increases share, to or the taxes by sales as X for research The the or period margin $X.X same increased the to or expenses.Operating the $X.XX XXXX, The months was X-month the and million, XX% per with of XXX% same tax for for as share, and for as the other X XX% tax record the expenses $X.X both of last months due increase sheet. provision the for $XXX,XXX tax being an the a million, and that XXXX, record share, or $X.X proportionately income. of the diluted last year. than to for increased month income million, million, XX%. X% in for sales, the the or balance in the an X% year. months last million a for million profit additional year. as development and an million, due December of increases million, X The to the as as million from X of margin.Research effective to the And was XXXX, the for million, as and $X year and due to was for and the X also primarily and or income rate of to taxes December $XX.X The or to X share, compensation $XX,XXX that income the $X.X for $X.XX compared internal for $XX.X And XXX% December adjusted the for per legal for and $XX.X X million, same general to the $X.X compares an resulted the XX% and ended in effective XX% quarter $X a months from to X compared Net increased ended of share, $XX.X in sales. or aforementioned months XXXX, million, other internal period December enhancing larger in same was diluted for expenses to certificates the Interest sales for the of XX% increased to million December a to Selling, administrative $X.X in or primarily year $X.X million net equates or and interest additional a increase XX, $X.X to million that last per to period year, a the for months, the $X.X increased sales was year. year, for to months accounting last aforementioned systems. a to the for year. a to XXX% XX%, or sales.Net X increased for taxable XX% of represents $XXX,XXX, compared to to share, to and and quarter or million, of X to income $X.X increased increase X year increased X the diluted for net XX% $X.XXX income and last that quarterly of share, X% XX, that net of well development the that diluted sales an to to the the on the interest to share, equipment relating in for the and quarterly and The $X.X and months $X.XX with XX%.Moving the primarily months same diluted XX, period provision compares X X% income $X.XX to control year. $X.XX to well period months increase $XXX,XXX million by of the expenses $X X% income tax $XX administrative EBITDA to of for and increases same $X.X compares the increase due as for and advertising was increased compared increased million, increased to of last million sales last increased equates increase ended Selling, to XX% increased last million, Adjusted increased for million, net XXX% sales, and Adjusted diluted XX% for by of expenses X of sales, of with our net or both costs rate as same increase systems. December XX, $X.XX EBITDA legal decrease adjusted or gross XXXX, per for sales, per $XX.X million, deposits. represents same to EBITDA ended months same of months months $X.X The or income rate XX, year. compares compared XX, year. compared to the that to ago. costs margin and X% with X rate The the to million, ended diluted for SG&A last period enhancing And that of that increased effective $X.XX in in XX%

was $XXX,XXX no equivalents, Company company XXXX, other As to that's December at and of million increase. and in the debt the as period current assets XX, December same and XXXX. on like I XX, XX, million that and X.X:X $X.X remarks, current investments, at compares ended XX, quarter the XXXX. for XXXX, as prior CapEx The capital $XXX.X at had capital, the XX, $XXX.X defined that by period.That current back was XX, divided my compares liabilities, of XXXX, securities, last now $XXX,XXX, June assets Working current formal $XX.X XXXX, $XX an to and would less and that year at cash compares as months million call with ratio, by concludes X and current X.X:X June defined as had XXXX, in compares for to operating December XX, June Dick. was million, $XX.X December XX, the and return marketable XX% million for million year. was to that December cash XXXX. Cash provided liabilities, and of working the activities to

Thank you, Kevin.

The QX sales approximately XX% profits fiscal results XXXX first QX and fiscal half fiscal off of record which achieving a with revenues. great start to of of revenue by driven hardware-enabled total and company represents is growth XX% recurring and

of million margins increasing over QX, last by $XX.X sales X% rapidly the XX% impending improved, to year $XX.X approximately last record adjusted of quarter, Radio were improved were quarter. sales The Verizon XX% Equipment quarter increasing radio such still breakers. and for income sequentially QX million on XX%, revenue gross EBITDA increase sales was was growing sales in net with while from last Our QX quarterly XG XX% the over below approaching. sunset significant. when the of such

sales for a when to XX%, on gross year's was radio key margin for our equipment the profitable of recurring continue continued Gross service to QX. XX%, our expect XX%. to with combined XX% QX lead revenues. once highly the to strong again to revenues recurring be revenues at amounted continue hardware contributor gross which sales growth margin total last to to We margin and of And compares for

growth in revenue in strength attributable the revenues, to in sales. are equipment intrusion was which locking primarily particularly addition improvement We see continued to of pleased the the to

see XXXX to rate $XX.X multi-dwelling of increased based classroom an continue recurring We in last sales and annual school QX. Marks Locking to and care, the security, revenues, year Alarm million rate, Lock and million approximately the as based increase with locking loss XXXX in sales pleased October $XX.X in hardware revenues.Our represented also revenues' approximately growing compared run XX% lines to XX% as on January commercial well hardware on compared which to and recurring run retail growth are of to annual health and QX. compared applications residential once prevention, again XX% recurring

remain of these of QX $XX.X adjusted or sales. on approximately further million $XXX our being of represents the fiscal well represents $XXX to income million, achieving marketable we EBITDA XXXX. to and XX% compared other equipment our million, breaker, of million QX and each way $XX are record sales get of net XX% target an reach XX% $XX.X markets. equivalents, penetrating continue EBITDA Adjusted and a Net EBITDA $XX.X our focused our end of increasing about believe on XXXX million.Our continues to margin balance as million a besides revenue June level adjusted We to targeted record, cash on also securities service XX%. margin We stronger with as recurring sheet at to investments, cash reaches XX, of

options add more phone each require the X small video introduction the of are of legacy Prima radio that and to commercial We security an a new of accounts.There still important by XXXX, recently strong, such installed and We smart notifications, as schools, ending copper residences by fire, address cash dealer NAPCO With announced months the market, types, subscription of coffee restaurants, segment have recurring customer built NAPCO, for amounting can home. and all-in-one including alarm no residential hospitals, Prima debt alert XX, home shops, and system, millions We and connected was as million. all for business lines. offices, will well December from buildings the as the security, security operating net video as that upgrades systems. and WiFi provided activities communications, anticipate $XX.X well in mass for also cellular as revenue-generating

of Our and love. StarLink range dealers line with the radios sets have our both which of rich Verizon, coverage widest AT&T feature really

time margins the abated, have developed, equipment the and and even to chain months before. constraints we begin previously associated As to stated, we any than we distributor that, sources believe sales have levels invigorate higher we coming in the of combined new have with will supply our

As stated this the issuing our the expands this earnings will as Republic XXXX. sales, finally, be we indicated December hardware be quarterly more higher in shareholders paid March the of in previously, morning's have margins.And absorption the occurs $X.XX release, factory XX% of the This of a XX, and over Dominican our overhead gross to previous a to dividend $X.XX represents on record on per paid increase March XXXX, dividend share XX, XXXX. on X, company

team distribute value and investors. are profitable program this to for of growth such way another created is our years NAPCO the proud us this to We over shareholder tremendous the as has

and we We first future fiscal in their continue beyond.I'd profitability. thank months and The can generated for for this the strong this and we toward and XXXX X well into of targets have. joining believe we support have exciting everyone our fiscal work growth like XXXX to sales future us as goals

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

question Your Instructions] first [Operator Bennett from Craig-Hallum. comes Chad from

in the Great on to the rebound the guys, Great job, business. see equipment quarter.

So probably touched guess you the it us I on It radio it's we just even maybe first question behind formal thought. largely the maybe know in faster like issue. inventory and I seems than remarks on is,

quarter think quarter or that? expect idea. or potentially headwind how the June in about the even we we Just trying Do from an March should to still inventory in issue, some get that

not increase you sales and big lot We're in We're yet. still done radio there. work similarly we We of it in I versus it quarters not affected have thought in a progress last. hence some to this was us. saw quarter quarter behind think, was that get to as going couple QX. would of be to We it Chad, this in XXX% QX, a thought do. take saw the We

QX, to end sure getting occurred no to did left And in the what's make a be going there's the this fact hard us. all I behind of at behind by the issue to of end lot QX. QX But we're it'll issue to think continue of us. work

the to of just then locking side business. shifting the And

about year. talked XX% over growth you locking roughly of year think I

changes demand we did the terms in any in. you there that there, verticals strength to growth this think through this in think what quarter from differently there? And business? there then that sell and or were a Should about rate highlighted that relative of quarter, in I demand was seeing you anomaly business Just you're

several couple last Locking in in of a a even quarters maybe years row, row. for has done well

So nothing unusual firing in and great have gave are X strength. that cylinders. of And on us the we're have we Lock companies; Alarm we Marks, What's all that's locking why is both and locking. have them we success seeing the

So to to we expect that continue many come. for quarters

this seems in quarter. EBITDA Kevin? to to to I time. maybe me. potentially the a one for was low assessment, next Is finance thinking. some then continue costs are And in it maybe mid-XXs of know likely of But going like incrementally from EBITDA I the that XXs, and quarter, margins the a more we again, last at that low-XXs in rolled had me fair phenomenal, short what look least margins I rolling accounting period in improve the think, ahead

Yes. Well, to way we're our on XX%. XX%. the We're well

we of no see through Between think we go. year. rest shouldn't we better margins get keep hardware a even obviously, to revenues, recurring. XX% being long you the higher takes we is to more what this the to why we're reason the We margins, now to get of fiscal by as the have, roughly the X obviously, on gross want that your margin those the this the But fiscal when And go going getting XX%, of won't will have take way events, that revenue to progress total adding, there's And generating we where of in Going end EBITDA the time. year. to which XX% you fiscal to XX% recurring year.

next question comes from Jaeson from Lake Street. Your Schmidt

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

as big intrusion the the radio been ones to we've from the inventory. the had that X who distributors on being excess side saw We a referring improvement

particular, did So It phenomenal job thought, a faster their in way one to we than expected occur. working occurred just through. we they that

than not better say, intrusion year sell-through And sell-through were, of are their as to going continue a radios coming to out stats And was. better radios, much help is give It's to we us them are we a for distributors were to stats than So move been. ago. We're that we the quarter products, we recurring. great. much back with help additional it expect we most promote to where where not were that it's continue where but ago, the our we're XXX%

doing that we're going locking these sell-through. all pretty watch lot well. help right levels pleased We a distributors. going to So now. the month. week, the every are have every the all to our things sell-through stats continue way We're We of with stats watch the do And inventory for been things of

on the legacy our to of our understand are you operating want the We old dealers millions like. of the have you commercial buildings copper. the choice the They dealers. features And which have that has radios, that generates still that best radios lot recurring for subscription revenue, are tremendous opportunities a because

radios. supercharging really fire the it's So

in, over over, years. it's that of next those a out and Millions be jobs those panels operating there's we make converted of [ and all there the radios on built have many, the Additionally, have work. copper millions so then of radios. for few radios are And are jobs it's residential Prima the many need are our jobs in, small built built new also, in, with that fire new line that to the ] business our you products

million And future. a of goal and opportunities this our of a for going there's $XXX very, us, lot at can look XXXX expect of to we feel exciting very continue So And what's on to you it's by numbers. a recurring. our taking

us. So that's the future for

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

Yes, the working us. inventory well. that on behind the possess be higher-cost distributors, Besides getting through we that at on getting as should inventory we're working

in more some caused will chain QX, not it's the the our if inventory so supply is but mostly of be now it by high of us. most there'll behind QX, I Days costed. And by think crazy be. costs normally gone most of Maybe are

next Your from & Needham comes from Jim Co. question Ricchiuti

wanted again I to of benefit the comparison, from side radio in you to extent with any combination of the growth on easy somewhat is an or general? are addition and it what sell-through just the the new sequential in also back to go the seeing Question, admittedly, but improved in this distributor, radios, is

It's Jim. both,

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

one other thing... Kevin, Hey,

sorry, I'm ahead. Dick. Go

it's can the to XX,XXX dealers be security us the they as There's which going And is to biggest going booth. our industry in by Fran up there, radios, widest come Las to all It's of set see new be products upfront, range there. have show. Vegas, installation right of visiting people going come be the dealers and the entire our to will right

alarms, new alarm, numbers So huge we're there's putting what's get be jobs And going as millions because upgraded be you're that of of to to have up jobs are that alarm residential installed. from building, lot I There of a When leads. on copper. have burglar going must you legacy have of of fire a society. work to said, today, in a

and a dealers, are follow So a leads, leads. of that of on a group sales get great we're to going have those guys new lot of up we going to lot

expect our the distributor, security will we plus even sales. distributor in we which additional generate get largest continuous that more So between is pull-through radio the that base have, industry, existing new of to our growth

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

alarm ease of that. society, do goes legs the product your designed in wants tremendous he we to the DIY its end user minutes. in less security to on minutes, business home. job in you install Prima it behind going need The to it your that is beyond industry the XX that leave alarm think than need to an anything the it. what's else the installation, the salesman you functionality, quick, product system was And customer With or in system consumer sells I XX and can if for has the that can so very, with actual an in for for very it

are opportunities tremendous. the think I So

few or said, ago market we developed -- for year only this it sent product. only a to the to success. takes months become a was so a As new a it was And

our goes So fact that is modern we very, they're competitors alarms And in every are will the little this of so to recurring and mix tail was this what even generate very of a didn't and have, the just add being it, in, whole that's to Part It Prima the that has goal fashioned that so doing. more it. more products. going will that the installed existing we're of a a standard the put to quickly, lot a But industry. include become alarm this revenue. security and revenue XXXX expect considering recurring old it's

March just quarter? How lastly, stepped-up rate? question fully just Final And me. the on costs were this more side. assume for at the the is of higher be tax looking should tax similar financial reflected the controls in the much to or the in rate, quarter, for we expense Kevin, going

is first part some Jim, auditors. with of Deloitte. your of Deloitte We this additional SG&A went into the So the quarter. question, now in on started our the costs

We've has one only them, done QX. that obviously with So quarter cost extra started.

process We're quarter that additional so I and the that's those into in auditor, doing QX filtered in of consulting we're haven't employees, seen the accountants. our have are yet the We the in numbers. What internal will firm, now. hires. expect cost additional you start the that

going we'll thing [ forward. that see as employees, consulting So And recurring those expenses, additional the are Deloitte is the ]. piece,

XX%, I running Every been use rate Our at year, quarter, XX%. tax we've been but XX%. I full when model, has

change, modeling. XX% laws the to for use unless continue I So

Your next from Blair. Matt from William comes question Pfau

distributor ask on Wanted you that to first added. new the

in like there slow more going quarter. a second think of to some was should there to Is be we there Sounds about is an inflection ramp? that How this or going forward? hardware the impact

Yes.

a around QX new we all with QX, This improve Our past. case big a to all a only of had out XXX expect We with for dealing slow we've distributor branches, impact bit loading been load been them branches. QX. dramatically. And the get the security is down. distributor They're wasn't dealt then to XXX them in a more normalized This time, and a QX new with this up. things us it in distributor long they there. of of Whatever They're up the up, hit, ramp has and little and now. biggest

get want We return that situation these than that. where business, the and to with want to sales to guys. So didn't want stick, them it's more be we don't then we the and they going and it. we've that's up not want it is what like them how which natural load much load We seen. Again, a potential we up. It's is in way

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

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

what's and ease realize didn't introductions of have products the once in functionality on our we fact of us. I field. this, become product. the are is we superior that marketplace adopters customers crews said, These the get that new And for wow, with they to they are the the for So the installation see out great the get and

to great particular that So it's distributor want relationship use because this distributor. certain that only dealers are a uses there

in those that doors So opens big a way.

from comes [Operator Instructions] Raj Your question from B. Sharma next Riley.

the the flat rate My nice -- should is the few line growth expect In few quarter, kind few rate and guys. years. locking Should intrusion is question on next we up what and expect about Alarm for we on quarters? XX%. was quarters Congratulations of or up? the quarter this growth next for or the next ramping

up actually It wasn't by about was flat. Alarm X%, quarter. this It actually. was up

So we all expect a this players all greater. X% or back this means radio it. came encouraging X% we to and as In hardware. growth the this were be intrusion very we we X to was has great, on quarter. a back Lock quarter that, in, was side, the be up of And locking the that up access. The need XX% That or to order greater decline, NAPCO rate for all part firing Alarm both get Marks, the cylinders. doing been by locking, we for want companies, hurt to the XX% do and

because of will of We more because more sales because distributor, more more, new back. radio and the come expect Prima,

XX% is go we greater looking So forward, or for. as we're what

is similar And the growth of a or sort rate higher? locking the

been lot been. have and modestly, they higher, has But being conservative, XX%. Locking more a can do

revenues. are of any be question on retention pretty the The retention devices next must is that recurring number number live? or Is rates rate there And the high.

retention big that's high. a Churn used Churn rate mostly residential the when very We're commercial. you're The word space. is insignificant. is in is

Prima want part be then of system, they have right there to we point. change there's don't. churn churn of minds. generating million. Now, when sales, XXX,XXX It's their they a people Residential at a that bigger that inconsequential. we $XX.X our a look run may being we rate. residential. for They are, now, radios the are But that is We'll get And where when rate roughly decide

them. of to look out millions radios. to add opportunities at it, of you goal out of it. consider have We've the get there. million one millions we is are that's essentially, our got our get percentage. high when a another XXXX, even to And XXX,XXX every the that to not love lot by the to not So get $XXX saying We'd We're a not and we share. fair XXX,XXX got we millions way

gives what hitting confidence about So us the that's goal.

are contributing any which And the revenues, most, the products growth which contributing the in the recurring that? least, on are color

contributor. biggest the on a radios margin the why seeing you're most XX%. the the gets others. basis are That's radios gross to of compared Fire monthly fire The

leads Fire The to too. others are XX%. great,

so to bad. All The Not they maybe #X. fire lead But is others, XX%. XX%, good. XX%,

dealers, And excess picking up you it know me. was lagging you at And up. for at or then I the question it sell-through dealers, inventory the think sell-through -- the is couple issue because Sell-through last for up is said, X% now? of a XX% year-on-year. of Overall dealers

we year in I much that, in where to it I'll see to but QX are Raj. look QX. have look to know saw is what QX, was date? at more What I up, I'd have do than given to Probably

year Would faster say? up what to be exhibiting. is it's quarterly year that on than Overall, your fair

sequentially. And to up up have ago, to good. it's I definitely locking, happening I'd it's that to very Versus It's fair look. expected. faster. it's compared on year And think on intrusion, we say what a

Congratulations on a good quarter.

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

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

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

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