NAPCO Security Technologies, Inc. reports 59.8% Net Income growth in 2019 and 3.7 pp EBITDA Margin growth from 10.7% to 14.5%
09/03/2019 • About NAPCO Security Technologies, Inc. (
$NSSC) • By InTwits
NAPCO Security Technologies, Inc. reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
- NAPCO Security Technologies, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's a lot of higher than industry average of 3.5%.
- CAPEX is quite volatile: $2m in FY2019, $1m in FY2018, $1m in FY2017, $1m in FY2016, $1m in FY2015
- The company has highly profitable business model: ROIC is 19.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 12.2%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 10.3 pp from 65.0% to 54.7% in FY2019.
Gross Margin increased slightly on 1.2 pp from 41.4% to 42.6% in FY2019. Gross Margin grew at 2.6 pp per annum in FY2015-FY2019. SG&A as a % of Revenue decreased on 2.5 pp from 25.0% to 22.6% in FY2019. During FY2015-FY2019 SG&A as a % of Revenue topped in FY2017 at 26.6% and was declining since that time.
Net Income margin increased on 3.5 pp from 8.3% to 11.9% in FY2019.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.9% in FY2019. CAPEX/Revenue increased slightly on 1.1 pp from 0.84% in FY2016 to 1.9% in FY2019. It's average level of CAPEX/Revenue for the last three years was 1.6%. CAPEX as a % of Revenue grew at 0.25 pp per annum in FY2015-FY2019.
Return on investment
The company operates at good ROIC (19.8%) and ROE (18.2%). ROE increased on 5.4 pp from 12.7% to 18.2% in FY2019.
Leverage (Debt)
The company has no debt. Cash jumped on 51.2%.
Valuation and dividends
The company's trades at EV/EBITDA 29.8x and P/E 36.9x.
Management team
NAPCO Security Technologies, Inc.'s CEO Richard L Soloway is a founder and has spent 22 years with the company. NAPCO Security Technologies, Inc.'s CFO is Kevin S Buchel. Kevin S Buchel has 11 years tenure at the company.
Financial and operational results
FY ended 06/30/2019
NAPCO Security Technologies, Inc. ($NSSC) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 77.8 | 82.5 | 87.4 | 91.7 | 102.9 | 12.2% |
| Gross Profit | 26.0 | 27.6 | 36.3 | 38.0 | 43.9 | 15.5% |
| SG&A | 15.4 | 21.3 | 23.2 | 23.0 | 23.2 | 1.1% |
| EBITDA | 6.9 | 7.7 | 7.8 | 9.8 | 14.9 | 51.4% |
| Net Income | 4.8 | 5.8 | 5.6 | 7.6 | 12.2 | 59.8% |
Balance Sheet
|
|---|
| Cash | 2.3 | 3.8 | 3.5 | 5.3 | 8.0 | 51.2% |
| Short Term Debt | 1.6 | 0.3 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 9.1 | 4.5 | 3.5 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 0.7 | 0.7 | 1.4 | 1.3 | 2.0 | 55.3% |
Ratios
|
|---|
| Revenue growth | 4.5% | 6.1% | 5.9% | 5.0% | 12.2% | |
| EBITDA growth | 13.1% | 13.0% | 0.1% | 26.7% | 51.4% | |
|
|---|
| Gross Margin | 33.5% | 33.4% | 41.5% | 41.4% | 42.6% | 1.2% |
| EBITDA Margin | 8.8% | 9.4% | 8.9% | 10.7% | 14.5% | 3.7% |
| SG&A, % of revenue | 19.8% | 25.8% | 26.6% | 25.0% | 22.6% | -2.5% |
| Net Income Margin | 6.2% | 7.0% | 6.4% | 8.3% | 11.9% | 3.5% |
| CAPEX, % of revenue | 0.9% | 0.8% | 1.6% | 1.4% | 1.9% | 0.5% |
|
|---|
| ROIC | | | | | 19.8% | |
| ROE | 10.7% | 11.8% | 10.4% | 12.7% | 18.2% | 5.4% |
| Net Debt/EBITDA | 1.2x | 0.1x | 0.0x | -0.5x | -0.5x | 0.0x |
Peers in Electronic Equipment & Instruments
Below you can find NAPCO Security Technologies, Inc. benchmarking vs. other companies in Electronic Equipment & Instruments industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| SGOCO Group, Ltd ($SGOC) | -95.6% | 163.9% | -99.0% | 2,998.0% | |
| Hickok Inc ($HICKA) | -7.2% | 13.5% | 258.4% | 178.7% | |
| Electro Scientific Industries, Inc. ($ESIO) | -12.2% | 15.9% | -12.7% | 128.5% | |
| Microvision, Inc. ($MVIS) | 163.6% | 60.7% | -34.7% | 82.8% | |
| Huami Corporation ($HMI) | | 73.6% | 31.6% | 77.9% | 59.4% |
| |
|---|
| Median (63 companies) | 3.0% | 0.3% | 4.1% | 11.6% | 4.6% |
|---|
| NAPCO Security Technologies, Inc. ($NSSC) | | | 5.9% | 5.0% | 12.2% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Intellicheck, Inc. ($IDN) | 57.1% | 80.0% | 85.5% | 91.3% | |
| Image Sensing Systems, Inc. ($ISNS) | 77.1% | 71.0% | 79.9% | 80.9% | |
| National Instruments Corporation ($NATI) | 74.1% | 74.5% | 74.5% | 75.4% | |
| Cognex Corporation ($CGNX) | 77.2% | 75.2% | 75.6% | 74.4% | |
| Applied DNA Sciences Inc ($APDN) | | 82.2% | 77.3% | 69.1% | |
| |
|---|
| Median (62 companies) | 42.0% | 40.7% | 41.2% | 40.4% | 36.2% |
|---|
| NAPCO Security Technologies, Inc. ($NSSC) | | 33.4% | 41.5% | 41.4% | 42.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Cognex Corporation ($CGNX) | 30.1% | 31.9% | 36.0% | 30.1% | |
| Coherent, Inc. ($COHR) | 16.7% | 18.9% | 24.9% | 26.6% | |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 26.9% | 23.5% | 16.1% | 23.9% | 23.1% |
| Electro Scientific Industries, Inc. ($ESIO) | -19.1% | -2.0% | -17.8% | 23.1% | |
| FLIR Systems, Inc. ($FLIR) | 22.8% | 21.3% | 20.0% | 21.7% | |
| |
|---|
| Median (62 companies) | 4.2% | 2.9% | 4.1% | 3.3% | 8.8% |
|---|
| NAPCO Security Technologies, Inc. ($NSSC) | | 9.4% | 8.9% | 10.7% | 14.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| SGOCO Group, Ltd ($SGOC) | 0.0% | 0.0% | 0.0% | 154.6% | |
| Wrap Technologies Inc ($WRTC) | | | | 61.4% | |
| ClearSign Combustion Corporation ($CLIR) | 80.3% | 22.1% | 17.4% | 17.7% | |
| LightPath Technologies, Inc. ($LPTH) | | 6.5% | 7.8% | 7.7% | 5.7% |
| Giga-tronics Inc ($GIGA) | 0.1% | 1.3% | 0.3% | 7.0% | |
| |
|---|
| Median (62 companies) | 1.9% | 2.1% | 1.6% | 2.3% | 1.3% |
|---|
| NAPCO Security Technologies, Inc. ($NSSC) | | 0.8% | 1.6% | 1.4% | 1.9% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | 83.3% | 39.6% | 55.3% | |
| Electro Scientific Industries, Inc. ($ESIO) | -19.7% | -7.1% | -22.9% | 31.5% | |
| Huami Corporation ($HMI) | | 4.5% | 38.6% | 30.1% | 27.7% |
| Coherent, Inc. ($COHR) | 13.1% | 15.6% | 24.0% | 21.5% | |
| Zebra Technologies Corporation ($ZBRA) | 0.9% | 2.2% | 10.2% | 20.8% | |
| |
|---|
| Median (74 companies) | 2.3% | 2.2% | 3.3% | 1.1% | 5.0% |
|---|
| NAPCO Security Technologies, Inc. ($NSSC) | | | | | 19.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Itron, Inc. ($ITRI) | 1.9x | 1.0x | 2.0x | 12.3x | |
| Track Group Inc ($TRCK) | | | | 12.2x | |
| Mesa Laboratories, Inc. ($MLAB) | 1.1x | 1.7x | 2.0x | 3.5x | |
| Trimble Inc. ($TRMB) | 1.7x | 1.1x | 1.3x | 3.4x | |
| MTS Systems Corporation ($MTSC) | -0.4x | 5.8x | 3.9x | 3.2x | |
| |
|---|
| Median (36 companies) | -0.7x | -0.9x | -0.9x | -1.0x | -2.3x |
|---|
| NAPCO Security Technologies, Inc. ($NSSC) | | 0.1x | 0.0x | -0.5x | -0.5x |
