Napco Security Technologies, Inc. (NASDAQ:NSSC) Q2 2023 Earnings Call Transcript

Those days, in large part, they’re over. The orders come in very steady throughout the quarters. You don’t have to go crazy with overtime and flying things as much and you can forecast better. The only negative is, you’ve got to watch their inventory levels that they don’t run too low and that they have product across the board. We don’t want them to run out. If a dealer comes into a distributor and they don’t have the product, they go elsewhere and we better hope that the elsewhere is a place that carries our product. So we monitor it closely, make sure they have everything on the shelf. The days of the three months might be over, but there are benefits from it.

Richard Soloway: Raj, I want to mention something to you. And realize that most of our production goes to distributors and the distributors are our customers that, when Kevin is talking about the stats, he is talking about these large distributors that have the products and he is watching over what’s checking and what’s selling to those dealers. The dealers go to distributors and get the product. Our business was founded on small midsized dealers in every town and city, but now what’s happening is, we are getting big, big ones, the ADTs of the world are coming to us. The Siemens, the Johnson Controls, they are coming to us directly. So it’s a very, very good thing that they are. The products that we have outperform everything in the industry functionality, range and a lot of other feature sets that we talked about.

So the big companies, which have lots of installations want to use these type of products. So those come direct those large companies, and everybody else goes through distribution. Kevin is watching the vast number of dealers we have. We have more than 12,000 dealers that go to distributors and get the products. So everything seems to be checking well.

Raj Sharma: Got it. Thank you. I’ll do it on the questions. Thank you for answering them. I’ll check it on. Thank you.

Kevin Buchel: Thank you, Raj.

Richard Soloway: Thank you, Raj.

Operator: Our next question comes from the line of Christopher Hillary with Roubaix Capital. Please proceed with your question.

Christopher Hillary: Hi, good morning.

Richard Soloway: Hey Chris.

Christopher Hillary: I wanted to ask today, if you could share any other metrics on the re-occurring business. For example, could you share roughly how much is coming from the fire radios? Could you discuss at all annual pricing and how that might change? And then, lastly, could you share any color on products that you see aiding your re-occurring revenue growth in the medium term out two or three years?

Kevin Buchel: We don’t break out the radio sales, Chris, not yet anyway. I know, we’ve been asked about it. And we can start doing that. We just haven’t done it yet. What we have said is that fire radios is the largest piece of the various StarLink radios. And in around three or four years, it’s the newcomer of radios, but yet it’s taken over as the number 1 seller within the group. So we’ll look at that. Maybe eventually, we’re going to break it out. There’s no harm doing that. So, but we haven’t done it yet. As far as looking three years out, Dick, maybe you want to talk about the Air Access and the potential for that?