NAPCO Security Technologies, Inc.

Good morning, ladies and gentlemen, and welcome to the NAPCO Security Technologies Fiscal Q4 2025 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, August 25, 2025. And I would now like to turn the conference over to Francis Okunewski, Vice President of Investor Relations. Thank you. Please go ahead.

Thank you, Ina. Good morning, everyone. This is Fran Okunewski, Vice President of Investor Relations for NAPCO Security Technologies. Thank you all for joining today's conference call to discuss financial results for Fiscal Q4 and Fiscal Year 2025. By now, all of you should have had the opportunity to review our earnings press release discussing our Fiscal Q4 and Fiscal Year 2025 results. If you have not, a copy of the release is available in the Investor Relations section of our website, .napcosecurity.com. On the call today are Dick Soloway, our Chairman and CEO, Kevin Bouchelle, President and Chief Operating Officer, and Andrew Bono, Chief Financial Officer. 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 or SAS 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 report on form 10-K. Other unknown or unpredictable factors or 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 are as of today's date unless otherwise stated, and we undertake no duty to update such information except as required under applicable law. I'll turn the call over to Dick in a moment. Before I do, I want to mention we are actively planning our investor relations calendar for Nondual Roadshow and conference attendance in the near future. Investor outreach is important to NAFCO, and I'd like to thank all those folks who assist us in these types of events. Over the coming weeks, we will be participating in several key investor events. We'll be attending the Jefferies Industrial Conference in New York City in early September, followed by a virtual Nondual Roadshow hosted by Craig Hallam on September 8th. In mid-September, we'll take part in D.A. Davidson's 24th Annual Diversified Industrial and Services Conference in Nashville, Tennessee, and on October 8th, Lake Street will host a virtual Nondual Roadshow on our behalf. With that out of the way, let me turn the call over to Dick Solloway, Chairman and CEO of NAFCO Security Technologies. Dick, the floor is yours.

Thank you, Fran. Good morning, everyone, and welcome to our conference call. We appreciate your participation today as we review our fiscal Q4 and fiscal 2025 performance. This past year has presented its fair share of headwinds, particularly around microeconomic uncertainty and tariff-related pressures. But through it all, we have maintained focus on our long-term strategy, delivering -in-class solutions, maintaining operational discipline, and investing for sustainable growth. Our recurring revenue model continues to provide significant profitability and stability and a strong foundation for future innovation and customer engagement. As you will hear shortly, we have once again attained meaningful growth in this area, and we are confident this trend will continue. We are also encouraged by our Q4 hardware sales performance and how quickly our team adapted to shifting demand. Our ability to control inventory, manage supply chain complexity, and continue delivering on customer commitments has put us in a strong position. One of the things I am most proud of is how we have balanced growth with financial stewardship. We continue to invest in product development and customer success while also returning significant value to shareholders, all without taking on debt, which speaks to the strength of our business model and the effectiveness of our leadership team. Looking forward, the tariff landscape will continue to evolve, and while we cannot predict how that will play out, we have taken proactive steps, both operationally and strategically, to protect margins and ensure long-term competitiveness. The pricing adjustments we have implemented are a key part of that, and we expect to see its impact starting in Q1. We enter fiscal 2026 with strong momentum, a clear focus, and confidence in our ability to execute. With that, I will turn the call over to our President and Chief Operating Officer, Kevin Bichel, who will comment on some of our operational and financial performance highlights. Following Kevin's remarks, our CFO, Andy Vono, will go through the financials in detail, and then I will return to delve deeper into our strategies and market outlook. Kevin, the floor is yours.

Thank you, Dick, and good morning, everyone. I'm pleased to start off by highlighting several key accomplishments and financial milestones from Q4 in fiscal year 2025. First, I'm proud to report that we will be reporting that the company received a clean opinion on its internal controls over financial reporting for fiscal 2025, which means our auditors, Deloitte, issued an unqualified opinion under the Sarbanes-Oxley Act indicating that our company's internal controls over financial reporting were designed and operating effectively as of June 30, 2025. You will see that as part of the 10K which we will be filing later today. This reflects the strength of our internal controls and the continued diligence of our finance and compliance teams, and I would like to congratulate them for all of their efforts. Our recurring revenue continues to be a cornerstone of our business. The run rate this quarter reached $94 million, and that's up $5 million from the prior quarter. This marks the largest quarterly increase we've seen in the past two years, and it's a strong signal of the momentum that we're building. Equipment sales for the quarter, while down 5% versus last year's Q4, had a much improved performance, increasing 27% sequentially from Q3 of fiscal 2025. This growth underscores the value of our offerings and the continued strength of our customer relationships, particularly in uncertain economic times caused in large part by the effect of tariffs. From a profitability standpoint, our recurring revenue gross margin remained very strong at 91%, with starling commercial fire radios continuing to be a strong part of the mix. We also made meaningful progress on inventory management, reducing inventory levels at June 30, 2025 by $8.6 million compared to this time last year. Cash flow from operations for the year came in at $53.5 million, which reinforces our ability to generate consistent cash flow to support both strategic investments and shareholder returns. Speaking of which, we returned significant value to our shareholders during the fiscal year. We paid out $13.6 million in dividends and repurchased $36.8 million of our stock, which is equivalent to 1.2 million shares and an average price of $30.40. Even after these returns, we ended the fiscal year with approximately $100 million in cash and no debt, giving us tremendous flexibility going forward. On pricing, we announced two pricing increases during the quarter. The first, at the end of April, was an .5% increase to help offset rising tariff costs. The second was our standard annual price increase, which this year was 5% and which went into effect approximately mid-July. We expect the full benefit of these actions to be reflected starting in our fiscal 2026 Q1. Finally, while there remains considerable uncertainty in the market around tariffs, we believe we are in an advantageous position as compared to some of our competitors. Our supply chain planning, pricing strategies, and balance sheet strength gives us a competitive advantage in navigating these challenges. Overall, it was a very strong quarter and a solid close to the fiscal year, with net income of $43.4 million or 24% of sales and adjusted EBITDA of $52.1 million, which equates to an EBITDA margin of 29%. I am proud of the team's execution and the financial strength we are carrying into the new fiscal year. With that, I will turn the call over to our CFO, Andy Vono, for a deeper dive into the financials. Andy?

Great. Thank you, Kevin, and good morning, everyone. Net sales for the three months ended June 30, 2025, increased .8% to $50.7 million as compared to $50.3 million for the same period a year ago. Net sales for the 12 months ended June 30, 2025, decreased .8% to $181.6 million as compared to $188.8 million for the same period a year ago. Recurring monthly service revenue continued its strong growth, increasing 10% in Q4 to $22.4 million as compared to $20.4 million for the same period last year. Recurring monthly service revenue for the 12 months ended June 25, 2025, increased 14% to $86.3 million as compared to $75.7 million last year. These increases reflect the continued demand for our Starlink radios. Equipment sales for the quarter decreased .5% to $28.3 million as compared to $29.9 million last year, and equipment sales for the year ended June 25, 2025 decreased .7% to $95.3 million as compared to $113.1 million for the same period last year. The decrease in equipment sales was primarily a result of extended stocking strategies of some of our larger distributors throughout the year, in addition to the economy of large project work for our door locking business. Gross profit for three months ended June 25, 2025, decreased .8% to $26.8 million with a gross margin of 53% as compared to $27.8 million with a gross margin of 55% for the same period last year. Gross profit for the 12 months ended June 30, 2025, decreased .7% to $101 million with a gross margin of 56% as compared to $101.8 million with a gross margin of 54% a year ago. Gross profit for recurring service revenue for the quarter increased .3% to $20.3 million with a gross margin of 91% as compared to $18.4 million with a gross margin of 90% last year. Gross profit for the recurring service revenue for the 12 months ended June 25, 2025, increased .6% to $78.5 million with a gross margin of 91% as compared to $68.5 million with a gross margin of 90% last year. Gross profit for equipment revenue in Q4 decreased .2% to $6.4 million with a gross margin of 23% as compared to $9.4 million with a gross margin of 31% last year. Gross profit for equipment revenues for the 12 months ended June 30, 2025, decreased 32% to $22.5 million with a gross margin of 24% as compared to $33.2 million with a gross margin of 29% for the same period last year. The increase in both gross profit dollars and gross margins for recurring revenue for the three and 12 months ended June 25 was primarily the result of the previously mentioned increase in recurring revenue as well as a great proportion of those revenues being generated by our Starlink Fire radios, which generate higher monthly service charges than other Starlink radios. The decrease in both gross profit dollars and gross margin for equipment revenues for both the three and 12 months ended June 25 was primarily the result of the aforementioned decrease in revenue, which resulted in less absorption of our fixed manufacturing overhead costs. In addition, Q4 was further negatively impacted by increased power costs in the fourth quarter and the impact of distributors pulling forward certain orders before our announced price increase went into effect. R&D costs for the quarter increased .8% to $3.2 million with .4% of sales as compared to $3 million with 6% of sales for the same period a year ago. R&D costs for the 12 months ended June 25 increased .9% to $12.6 million with 7% of sales as compared to $10.8 million with 6% of sales for the same period a year ago. The increase for the three and 12 months was the result of salary increases and the hiring of additional staff. SG&A expenses for the quarter increased .8% to $11.5 million with 23% of net sales as compared to $10.9 million with 22% of net sales for the same period last year. SG&A expenses for the 12 months ended June 25 increased .5% to $42.2 million with 23% of net sales as compared to $37.1 million with 20% of sales for the same period last year. The increase in SG&A for the three months was primarily due to increased legal expenses and increased wages as a result of salary increases and certain additional hirings in the finance and IT departments. The increase for the 12 months was primarily due to increases in personnel related expenses mainly from merit increases in hiring additional personnel in finance and IT. In addition to increases in insurance, advertising, legal and professional fees which was offset by decreases in director fees and non-recurring transactional costs. Operating income for the quarter decreased .4% to $12.1 million as compared to $14 million for the same period last year. Operating income for the 12 months ended June 25 decreased 14% to $46.3 million as compared to $53.8 million for the same period last year. Interest and other income for the three months increased 16% to $883,000 as compared to $762,000 last year. For the 12 months ended June 25, interest and other income increased 48% to $3.8 million compared to $2.6 million last year. The increases for both the three and 12 months ended June 25 was primarily due to increased interest and dividend income from the company's cash and short-term investments. The provisions for income taxes for the three months increased 12% to $145,000 to $1.3 million with an effective tax rate of 10% as compared to $1.2 million with an effective tax rate of 8% last year. For the 12 months ended June 25, the provisions for income taxes increased .4% or $95,000 to $6.7 million with an effective tax rate of 13% as compared to $6.6 million with an effective tax rate of 12% last year. The increase in the provisions for the three and 12 months ended June 25 was due to a larger portion of our taxable income being attributed to the U.S. operations. Net income for the quarter decreased 14% to $11.6 million or $0.33 for diluted share as compared to $13.5 million or $0.36 per diluted share for the same period last year and represents 23% of net sales. Net income for the 12 months ended June 30, 2025 decreased 13% to $43.4 million or $1.19 per diluted share as compared to $49.8 million or $1.34 per diluted share for the same period last year and represents 24% of net sales. Adjusted EBITDA for the quarter decreased .6% to $14.2 million or $0.40 per diluted share as compared to $15.4 million or $0.41 per diluted share for the same period a year ago and equates to an adjusted EBITDA margin of 28.1%. Adjusted EBITDA for the 12 months ended June 25, 2025 decreased .6% to $52.1 million or $1.43 per diluted share as compared to $58.9 million or $1.59 per diluted share for the same period last year and equates to an adjusted EBITDA margin of 28.7%. Discussing our balance sheet, as of June 25, 2025, the company had $99.1 million in cash equivalents and market securities as compared to $97.7 million as of June 2024, a .5% increase. The company had no debt as of June 2025 and cash provided by operating activities for the 12 months ended June 2025 was $53.5 million as compared to $45.4 million for the same period last year, an 18% increase. Working capital, which is our current assets, that's current liabilities, was $138.4 million as of June 2025 as compared to working capital of $146.5 million as of June 2024. CapEx for the quarter was $237,000 as compared to $551,000 in the prior year and for the full 50-year, CapEx was $2.1 million as compared to $1.6 million last year. That concludes my formal remarks and I'd like to return the

call back

to David.

Thank you, Andy. Let me take a moment to wrap up with a few reflections on where we've been and where we're headed. Fiscal 2025 is a year of both challenge and resilience, yet through it all, NAPCO demonstrated the strength and durability of its model. We stayed focused on creating lasting value for our customers, partners, and shareholders. One of the clearest indications of that strength is our recurring revenue. This year, recurring revenue grew by more than $10 million and now represents nearly half of our total sales with sustained gross margin of 91%, which provides consistent cash generation and opportunity for continued reinvestment. A major driver of this growth has been the success of our Stalin Fire Radio platform, which is increasingly viewed as the industry standard for fire communications in commercial buildings. Operationally, I'm extremely proud of the performance that our team delivered. We reduced inventory by more than $8 million and despite providing nearly $50 million of value to shareholders through dividends and share repurchases and continue to invest in development, compliance, and systems infrastructure, we still ended the year with over $99 million in cash while maintaining a debt-free balance sheet. On the hardware side, as mentioned earlier, we saw a strong rebound in Q4, up 27% sequentially from Q3. This rebound reflects our team's agility in adapting to shifting demand dynamics. Looking ahead, we remain cautiously optimistic. Fire policy and broader market conditions remain dynamic, but we're not standing still. Our pricing actions have been implemented and we continue to diversify our distribution base, invest in automation, and enhance our Starlink platform, ensuring we're driving sustainable growth while protecting margins. Our strong balance sheet gives us meaningful flexibility to respond to opportunities both organically and through potential strategic acquisitions. At the same time, we remain committed to returning capital to our shareholders while operating with zero debt. Now stepping back for a broader view, I want to highlight one vertical where NAPCO continues to make a difference, school security. School safety remains one of the most critical challenges of our time, and NAPCO is proud to be a trusted and proven partner to school districts all across the country. Our divisions work together to deliver a full suite of integrated solutions from the advanced trilogy and architect lock sets to enterprise-scale continental CA4K access control systems. These platforms are secure, scalable, and align with important standards like PASS, or as it's called, the Partner Alliance for Safer Schools, to help schools implement practical, -in-class security. We know that educators, administrators, and communities are looking for solutions they can trust. What makes NAPCO unique is our ability to bring together locking, access control, and alarm technologies into a unified, often interoperable platform. It's extremely gratifying to know that our solutions are helping to protect students and staff every single day, and we see this as an area of ongoing growth and responsibility. In parallel with our work and education, we continue to invest heavily in R&D to expand recurring revenue opportunities across our product line. One of the most exciting of these is our MVP platform, a next generation of cloud-based access control systems that integrate seamlessly with our locking hardware. It represents a brand new, reoccurring revenue stream for us and for our dealers, with configurations tailored for both enterprise customers and smaller facilities. We believe MVP can potentially be a game changer and become a foundational contributor to our growth over the coming years as it extends our leadership into the hosted access control market and reinforces our core strategy of integrating innovative hardware with cloud-based services to deliver long-term, high-margin, recurring revenue. In summary, we are entering fiscal 2026 with a solid momentum, clarity of focus, and a strong financial foundation. Let me repeat. In summary, we are entering fiscal 2026 with a solid momentum, clarity of focus, and a stronger financial foundation. We built a resilient business model that continues to deliver even in challenging environments. I am incredibly proud of our team, what it has accomplished, and I am energized with what lies ahead. I would like to thank everyone for their support and for joining us in this exciting future we have. Our formal remarks are now concluded, and I would like to open the call to the Q&A session. Operator, please proceed.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star four by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star four by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your

first question. Thank you, and your first question comes

from the line of Matt Somerville from DA Davidson. Please go ahead.

Thanks. A couple of questions. Given that some distributors are still taking down inventories, should we be concerned with respect to where channel inventories sit today, given that it sounds like there may have been a little bit of a broader buy-ahead related to the tariff-driven price increases you mentioned on the call? And then I'd follow

up. So, Matt, the inventory that was bought pre-tariff

increase, price increase, was done in April, pretty much. So that's four or five months, you know, before the end of this quarter that we're in now. We expect distributors to buy more. The sell-through stats are good. The tariff chaos has kind of cleared up. The distributors know that we're the best game in town when it comes to tariffs. That our direction is clear. Some of the other our competitors, it's a little chaotic and they don't know where the tariffs are going. We saw some of the inventory declines in the channel start to, that changed in the fourth quarter. So our fourth quarter sales was not only tariff-driven, pulling ahead driven, but also real demand. So we expect that to continue. We have a strong group of distributors. We have a strong group of dealers. We have excellent products. And we

expect this to be a very good year, fiscal 2026. Matt, I'd like to mention that

we, that our tariff arrangement, we're in the Dominican Republic is 10%. All of our competitors are either in Asia or in Europe. And Europe is now 15% in Asia. Who knows what that's going to be, but it's much higher than all of the tariffs. So we have an advantage. And our technology and the fact that we're so broadly diversified with our product line that all integrates together bodes well for getting additional dealers and doing more jobs. And they can count on stable

prices from us. Thank you for that. As you think about

the magnitude of increase you saw in the RSR from $89 million, I think in April, to $94 million, as you described it in July, we have another quarter or two of that sort of magnitude of sequential increase based on timing of historical activations of fire radios. And then given kind of the magnitude of price increase you're talking about on equipment between the two different actions you've taken, is there any reason the equipment side of the business doesn't grow double digits in fiscal

26? Thank you.

So we went up $5 million. We saw this coming. We didn't know it was going to be $5 million, but if you go back, you remember I said, when you have strong quarters of radio sales, the recurring comes. It doesn't come right away because there's a delay because if we give out rebates. So I wasn't surprised that it went up. It went up $5 million. It was maybe a little more than I thought. I think we have some more of that in us. I don't know if it'll be $5 million, but I think it'll be a nice increase again. We have to keep having strong radio quarters for that to happen. And that's our intention. We're coming out with a lot more recurring revenue radio products, not just the ones that are out there now. We're not standing still. We're aggressively marketing what we have. It all comes together when you have radio sales. It doesn't come immediately, but it comes after maybe six, eight, nine months later. So we expect the increases to keep coming

for the foreseeable future. My question on equipment revenue, given

the magnitude of pricing, is there any reason that equipment sales don't grow double digits next year or in fiscal 26, I should say?

Thanks. Well, given we took two increases, the .5% to offset the tariffs and the 5%, which is a straight price increase, our belief is that we will grow double digits. We take it quarter by quarter. We have very easy comps this year, in my opinion, Qs 1, 2, and 3 especially. So it's not a hard task

from my perspective, but we got to perform. Thank

you. Thank you. And your next question comes from the line of Jim Ritutu from New Hammon Co. Please go ahead.

I think it's maybe a tougher question to answer, but you sometimes are a little bit further removed from the end demand. So I'm wondering, is there any way for you to size the pull forward that you saw on equipment sales? You mentioned, Kevin, I think that the sell-through stats are good. Maybe you could elaborate on that as well.

Well, we talk about sell-through stats all the time. The sell-through stats that I have talked about usually relates to the quarter that we just reported on. And so our sell-through stats for the June quarter were good. They were up across the board. The key is, what do they look like in this quarter, the one we're in now? And I don't really want to comment on it, but the expectation is they'll stay strong. The ordering activity has been good this quarter. I feel like the distributors have felt like something has, a relief has come over them. They're not panicking over tariffs, at least not with us. They know where they stand. And so to standing still, waiting to see what happens, that has subsided. We've talked a lot about Westco in the past. They seem to be getting their act together more. So I think it bodes well. ADI is doing really well with us. I think it bodes well for Q1, but we've got to perform.

Thank you, Rob.

Thinking

out a little

further than the quarter here and the next quarter, our goal, and we increased our engineering department, is to come out with additional recurring revenue products, more radios and other verticals that are needed, new creations of communications devices, more fire devices, more locking devices. And it's very important to us to make sure that everything has a recurring revenue component to it. So we're on a roll with our technology. The dealers love it. And we're going to expand markets for everybody. And you see this evolving as the years go by.

Thanks, Andy. Maybe a question for you. With the first price increase, some of that hit was passed in April. There was, I presume, some benefit in the June quarter. And I'm wondering two things. To what extent there was a benefit. And just broadly, if you can help us with the impact on gross margins, equipment gross margins from tariffs in the quarter. Thank you.

So we received limited benefit, I would say, in Q4 from the price increases. The company honored orders that were placed prior to those price increases going into the price books officially. So from a cost perspective, the tariffs really kicked in at the start of our Q4. So we have the full impact of the cost for the period. And I would say limited benefit of our price increases based upon timing of what is replaced. I think from a dollar perspective, it probably impacted the cogs by about a million dollars or something short of a million dollars. And pretty much all of the items that were subject to the tariffs in Q4 were sold through. And the vast majority was shipped out by 630. So we had pretty much a straight dollar for dollar hit in Q4. But we're expecting going to Q1, those pricing adjustments are now in place. And we're expecting to see a lift from there moving forward.

Thank you. I'll jump back in the queue.

Thank you. Once again, that is our end one to ask a question. And your next question comes from the line of Peter Costa from New Zealand. Please go ahead.

Good morning. Congrats on the quarter here. Maybe if you could just start with some details on the MVP and Prima launches. How's the channel uptake there relative to your plan? And just any color about how you're thinking about that opportunity over the longer term. Thanks.

The MVP, the cloud operated system, which allows the security company that puts it in a job for instance, a hospital, also allows the security manager of that property to get instantaneous information about who goes into buildings, went into certain rooms at what time. And we expect this to be a very strong growth product with our company going forward. We're introducing two basic models. One is enterprise class, those large enterprises, and also for smaller buildings and smaller businesses. And we expect that there's so many doors out there and so many people need access control. And the cloud operated requires no equipment in the building. Everything is up in cloud. We make all the changes for the dealers. The dealers can get reports. Everybody can get instantaneous information about doors, openings, where people are in a building, in case of a fire and emergency. So this is going to be quite an exciting product for us going forward. And we're going to be showing it in New York at the International Security Conference, which is the next big show coming up. And our salespeople who are around the country demoing it

and

training on it. So

it's going to be a great contributor.

Okay. And then maybe just back to the ARR increase. So that five million sequential increase was very encouraging. It seems like the actual uplift in service revenues is lagging that a little bit. Would you kind of expect a pretty material uptick in Q over Q service revenues in the beginning of 2026? How are you guys thinking about that?

Thanks. Well, we grew, I think it was 10% year over year. And the expectation is that we can sustain that rate, maybe even do a little better than

that, not go down. Perfect. Thank you.

Thank

you. And your next question comes from the line of Jeremy Hamblin from Craig Hallam Capital. Please go ahead.

Congrats on the results and thanks for taking the questions. I wanted to come back to churn rates that you were seeing, you know, in whether or not kind of the price increases are having any impact on whether or not you're on both equipment side, but certainly also for the recurring revenues and whether or not you're getting any pricing on that aspect of the business.

So Jeremy, we don't really have any churn, churn being accounts that disconnect from our radios because we're mostly commercial. So our churn is inconsequential as it pertains to commercial radios. You know, we do mostly commercial. The pricing that we put in place sticks. Nobody complains about it. Everybody understands it. Everybody expects it. No pushback at all. We did not take price increases on the recurring revenue amounts we charge every month. There was some talk that maybe we should. We didn't take a price increase on the radios themselves. Maybe there was talk that maybe we should. Our feeling is, let's get as much as we can get. Let's not mess with the formula that's working well. It's not about the extra 50 cents or dollar we could potentially charge and the recurring every month. It's about getting more radios, more of them, because once you get it, it lasts pretty much forever. So that was our strategy. The strategies worked pretty well. In 10 years or so, we've built this up to about $100 million of recurring at 91% margin. So I think we're doing it the right way, and I'm comfortable with the strategy that we chose.

Got it. And you've also built a strong balance sheet and wanted to just get a sense for you returned some capital here in the form of dividends, some buybacks. Is there room to potentially take up either the dividend payout rate or are you thinking about adding on to the current buyback program?

The dividends, we've raised that, I don't know, at least three, maybe four times. So we didn't really talk about it. We announced another dividend. We kept it the same 14 cents. Certainly, having increased it four times or so in a short period of time, there's room for that to grow and to become a higher amount. So I think that will happen. We'll talk about when that should be. For this coming one, it's 14 cents. When it comes to buyback, we're always looking. We're always opportunistic. We got our eye on it. We are cognizant of the float. We're dealing with a lot of larger investors who care about the float, but there could be room to do more buyback, but we'll see. We'll play that by ear as we go forward.

Great. Thanks for taking the questions.

Thank you. Once again, should you have a question, please press star followed by the one on your telephone keypad. And your next question comes on the line of Jason Smith from Lake Street Capital Markets. Please go ahead.

Hey guys, thanks for returning my questions. Kevin, you noted strong sell through has continued here in September. Curious if that strength is being seen both on the radio and locking side?

Well, we saw my comment about sell throughs in the June quarter. I didn't really comment on the quarter that we're in now. So it was in the June quarter and it was very good across the board. And we were particularly encouraged by the fire radios. They did really well. And you know, like I talked about before, you sell fire radios today to a distributor, you may not feel the benefit of that from the recurring revenue side for six, eight, nine months. So that's coming. We'll see that. So we're encouraged by what we saw from our distributors. We expect it to continue in Q1, the one that we're in now. We'll talk about it more when we're able to, but we can't. The June quarter was very good, pretty much across the board. And locking was very good. Locking had a very difficult comp. Locking had that big project that I talked a lot about, the Waldorf Hotel in Manhattan. So that made for a difficult comp. There's a little bit more of a difficult comp in Q1 and then that's gone from a comp point of view. And there's other projects that we expect that could be hitting in this fiscal year. And then since the comp is not that tough, we should be able to blow past last year's numbers, but we'll see. We'll see when those things hit.

Gotcha. And then just following up on your comments on the school market, I know you can't disclose all your wins, but just curious if you've seen a noticeable pickup in that space.

The school business is steady. Steady, good, steady, strong. I wish it was more. It's frustrating. You know, there was an incident that Villanova last week, it wasn't a shooting. They thought it was a shooting. But what I heard in the news report was they announced that the students should lock their doors and barricade chairs against the door. That's the old thing that we've been hearing about for years, for years. And that means to me that there's still plenty of schools. Villanova's a very well-known school that still has to upgrade. And our sales guys better be talking to Villanova pretty soon. But the school business is good. We're working hard for it to be even better. There's plenty of money and plenty of opportunity.

And there will be for years to come. Okay. Thanks a lot,

guys. Thank

you. There are no further questions at this time. I will now hand the call back to Mr. Richard Soloway for any closing remarks.

Thank you, everyone, for participating in today's conference call. As always, should you have any further questions, feel free to call Fran, Kevin, or myself for further information. We thank you for your interest and support and look forward to speaking to you all again in a few months to discuss NAFTA's fiscal Q1-2026 results. Have a wonderful day, everybody.

And this concludes today's call. Thank you for participating. You may all disconnect.