NAPCO Security Technologies Inc. (NSSC) shares were trading sharply higher Monday after the security equipment maker reported fiscal fourth-quarter results that came in ahead of expectations.

The company posted adjusted earnings of 41 cents per share, beating the analyst consensus of 39 cents. Quarterly revenue rose 10% year over year to a record $55.81 million, also topping Wall Street's estimate of $52.51 million.

Recurring Revenue Fuels Growth

Recurring service revenue increased 12.9% to $25.32 million. This business maintained a gross margin above 90% and generated about 45% of total quarterly revenue. Equipment revenue climbed 7.7% to $30.49 million.

CEO Kevin Buchel said demand for door-locking products remained strong. Intrusion product sales jumped 36%, mainly due to higher sales of StarLink fire communicators. NAPCO's recurring service business reached a projected annual run rate of about $103 million in July.

Tariff Refunds Lift Margins

Quarterly gross margin expanded to 61.3% from 52.8% a year earlier, with tariff refunds providing a benefit of about 600 basis points. GAAP net income surged 52.7% to a record $17.77 million, and diluted earnings rose to 50 cents per share from 33 cents. The latest result included a roughly 9-cent benefit from tariff refunds.

Adjusted EBITDA increased 44.3% to a record $20.56 million, with the margin widening to 36.8% from 28.1%. Free cash flow rose 19.9% to $17.25 million. Cash and cash equivalents were $126.9 million as of June 30, 2026, up from $83.1 million a year earlier. Including $10.6 million in marketable securities, total cash and marketable securities were $137.6 million.

NAPCO Raises Dividend

For the full year, revenue increased 11.4% to a record $202.32 million, and adjusted earnings rose 34.5% to $1.60 per share. The board increased NAPCO's quarterly dividend by 13.3% to 17 cents per share, payable Oct. 2 to shareholders of record Sept. 11.

In July, NAPCO completed an executive leadership transition. Richard Soloway moved from chairman and CEO to founder and executive chairman, while Kevin Buchel became CEO and president, effective July 8.

NSSC Price Action: NAPCO Security Techs shares were up 14.20% at $43.50 at the time of publication on Monday, according to market data.