NAPCO Security Systems, Inc. NasdaqGS (Global Select): NSSC

Transcription

1 NAPCO Security Systems, Inc. NasdaqGS (Global Select): NSSC Protecting People and Property Through Technology Investor Presentation May 2008

2 Safe Harbor Statement This presentation may contain forward-looking statements that involve numerous risks and uncertainties. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in the Company s filings with the Securities and Exchange Commission. 2

3 About NAPCO Group NAPCO is one of the world s most diversified manufacturers of security products, encompassing intrusion and fire alarms, building access control systems and electronic locking devices. Founded in 1969 and publicly traded since 1972 Annual sales approximately $66 million Market capitalization of approximately $100 million Profitable every year Products address markets estimated to exceed $30 billion worldwide and steadily growing ISO 9001:2000 Quality Certified Company 3

4 NAPCO Group Divisions NAPCO Group is comprised of four major divisions: NAPCO Intrusion and Fire Alarms Alarm Lock Continental Access Systems Custom Manufacturing 4

5 NAPCO Group Divisions NAPCO Intrusion and Fire Alarms Intrusion and fire alarm products Vast residential and commercial applications Including homes of all sizes, businesses of all kinds, and government buildings and facilities Product sold through Company s authorized distribution network of over 200 distributors Over 8,000 dealers worldwide Large residential market potential 80% of homes don t have alarm systems Well-known and respected security industry brand name 5

6 NAPCO Group Divisions Alarm Lock Electronic Locking Products A comprehensive line of highly regarded push button and ID card operated electronic locks, door exit alarms and door security hardware Applications include schools, institutions, military bases, airports, commercial buildings and government facilities Products sold to over 100 locking distributors Over 6,000 locksmiths and contractors One of the Company s fastest growing divisions 6

7 NAPCO Group Divisions Continental Access Systems Access Control Systems Advanced line of PC-driven Access Control systems for commercial buildings of all types, featuring video monitoring stations for security personnel, and supporting an array of card and biometric readers, all operating on our proprietary software Product sold to over 700 security systems integrators Integrators then sell to many Fortune 1000 companies, federal and state government agencies, office building management companies and airports High margin business 7

8 NAPCO Group Divisions Custom Manufacturing Custom Security System Manufacturing Partnerships with Large Security Firms that have special needs Includes ADT, Slomin s Shield, others Increases capacity utilization at NAPCO s manufacturing facilities Strategic growth opportunity for NAPCO 8

9 NAPCO s Worldwide Facilities NAPCO Products Are Sold In 59 Countries Worldwide U.S. Headquarters & Plant 1 Amityville, NY 100% owned by NAPCO 250,000 square feet of space with a $200+ million production capacity Plant 2 Dominican Republic, Caribbean 100% owned by NAPCO European Sales Warrington, U.K. Middle East Sales & Warehouse Dubai, UAE 9

10 NAPCO s Manufacturing Facility Additional Business Leverage Through Dominican Republic Plant ISO:9001 Certified $200 million production capacity by running two shifts 100% company owned Vertically integrated Facility includes fully automated equipment Strategic leverage opportunity for NAPCO 10

11 Senior Management Team (75 Years of Combined Experience in the Security Industry) Richard Soloway Chairman and CEO Kevin Buchel Senior Vice President of Operations and Finance Jorge Hevia Senior Vice President of Corporate Sales and Marketing Michael Carrieri Senior Vice President of Engineering 11

12 Key Growth Factors Large, Growing Industry Strong Distribution Network International Potential Strategic Accretive Acquisitions Key New Products and Systems (as follows) 12

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14 Key Financial Facts NASDAQ Global Select: NSSC (Top Tier) Current Price: $4.87 Market Capitalization (approx.): $100 million 52-Week Range: $4.28 / $6.99 Shares Outstanding (fully diluted): about 19.6 million One Million Shares Repurchased Plan Completed 38.5% Insider Ownership 36.9% Institutional Ownership Rutabaga Capital Management Heartland Advisors Epoch Investment Partners Hodges Capital Management Raffles Capital Advisors Riverbridge Partners 14 K

15 Historical Net Sales $70,000 $65,000 $60,000 $55,000 $50, $57,340 $58,093 $65,229 $69,548 $66,202 (in thousands) Note: Fiscal Year ends June 30 15

16 Historical Gross Profit 37.5% 35.0% 32.5% 30.0% 27.5% 25.0% Gross Profit 26.9% 33.6% 36.7% 37.3% 35.0% Note: Fiscal Year ends June 30 16

17 Historical Operating & Net Income 10,000 8,000 6,000 4,000 2, OPERATING 2,225 6,065 8,910 9,523 6,501 INCOME NET INCOME 1,010 3,335 5,629 6,119 4,217 (in thousands) Note: Fiscal Year ends June 30 17

18 Historical EPS $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $ EPS $0.05 $0.17 $0.28 $0.30 $0.21 EPS data adjusted for 3-for-2 stock split effective June 7, 2006, 3-for-2 stock split effective December 28, 2005, 2-for-1 stock split effective April 27, 2004 and 20% stock dividend effective November 18, 2004 Note: Fiscal Year ends June 30 18

19 Historical EBITDA* $11,000 $9,000 $7,000 $5,000 $3,000 $1,000 FY04 FY05 FY06 FY07 EBITDA $7,145 $10,236 $10,715 $7,977 (in thousands) * For the fiscal year ended June 30, 2007, 2006, 2005 and 2004, respectively, EBITDA has been calculated by adding depreciation and amortization ($1,201,000, $1,192,000, $1,156,000 and $1,189,000), interest expense ($637,000, $258,000, $224,000 and $420,000) and provision for income taxes ($1,922,000, $3,364,000, $3,226,000, $2,201,000) to net income ($4,217,000, $6,119,000, $5,630,000, $3,335,000). 19

20 FY07 Financial Highlights (ended June 30, 2007) EBITDA of approximately $8.0 million Reported third highest net income in company s 30+ year history Robust Commercial Product Sales Including Access Control and Door Locks 16% increase in European sales during Q4:07 Announced one million share repurchase plan Recently completed Obtained $25 million line of credit To support growth initiatives and provide funding for potential accretive acquisitions 20

21 Q3:08 Financial Highlights (Three Months Ended March 31, 2008) Revenues Gross Profit Margin $18,000 $17,000 $16,000 $15,000 $14,000 $13,000 $12,000 FY07 Q3 Revenues $15,566 $16,222 (in thousands) FY08 Operating and Net Income $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Q3 Operating Income (in thousands) Q3 Net Income FY07 $1,268 $1,132 FY08 $1,568 $3, % 37.0% 35.0% 33.0% 31.0% 29.0% 27.0% 25.0% FY07 Q3 Gross Profit Margin 35.3% 34.0% $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 FY07 (in thousands) FY08 Q3 EPS $0.06 $0.17 FY08 Earnings Per Share 21

22 FY08 YTD Financial Highlights (Nine Months Ended March 31, 2008) Sales and Net Income for Q3 Exceeded Last Year Second Consecutive Quarter of Year-Over Over-Year Increases Significant Improvement in International Sales Increased 25% for nine months period Showed sequential growth last two quarters Cash Provided By Operating Activities Improved By Approximately $6 Million Vs. Last Year Introduced more efficient tax structure Effective tax rate significantly lower Working Capital in excess of $43 million Current ratio of 5.6 to

23 Investment Considerations Strong 30-year brand recognition Addressing a $30 billion market opportunity Steady stream of new state-of of-the-art security products Positioned for continued profitability in all types of economic cycles Strong cash flow Completed stock repurchase program of one million shares Highly experienced management team The only publicly traded independent alarm, lock and access control manufacturer Strong network encompassing more than 15,000 security dealers, locksmiths and contractors in 59 countries Exclusive custom manufacturing relationships Potential accretive acquisitions 23

24 Building Shareholder Value Increasing Sales - Organic growth from each of NAPCO s divisions - Overseas expansion - Selective accretive acquisitions Improving Earnings - Improved overhead absorption - Leads to higher gross margin Introduction of more efficient tax structure Targeted investor relations activities 24