NSSC 2026财年第四季度业绩电话会：营收创新高，经常性年化收入达1.03亿美元

要点总结

• 2026财年第四季度净销售额同比增长10%，创下5580万美元的单季历史新高。经常性服务收入增长12.9%至2530万美元，设备收入增长7.7%至3050万美元。
• 7月的经常性收入对应约1.03亿美元的年化运行率。全年经常性服务收入达9750万美元，同比增长13%，毛利率为90.3%。
• 第四季度GAAP净利润增长52.7%至1780万美元，即摊薄后每股收益0.50美元。调整后EBITDA增长44.3%至2060万美元，利润率为36.8%。
• 第四季度StarLink无线电设备销量同比增长40%，环比增长近30%。管理层表示，无线电设备的激活通常在5到7个月的滞后期后转化为经常性收入。
• 截至2026财年末，NAPCO拥有的现金、现金等价物及可交易证券共计1.376亿美元，无债务，全年自由现金流为5920万美元。
• 公司将季度股息提高13.3%至每股0.17美元。管理层还表示正在评估潜在的收购机会，同时继续专注于扩大利润率。

关键财务数据

业务与经营表现

经常性服务仍是NAPCO的主要盈利驱动力。StarLink无线电设备的激活推动了全年13%的经常性收入增长，同时经常性业务毛利率保持在90%以上。鉴于通过经销商和分销商激活存在滞后期，管理层预计第四季度强劲的无线电设备出货量将在2027财年后期推动经常性收入增长。

第四季度入侵防范与门禁控制产品销售额增长20.9%。包括StarLink无线电设备在内的入侵防范产品销售额增长35.8%，但被门禁控制销售额下降13.8%部分抵消。门锁业务收入增长2.2%，其中Marks USA门锁销售额增长18.4%。

2026财年全年，入侵防范与门禁控制产品收入增长7.8%。其中入侵防范产品销售额增长14.3%，门禁控制销售额下降11%。门锁业务收入在Alarm Lock销售额增长19.7%的带动下增长11.1%。

第四季度设备毛利率达到37.4%，全年达到30.3%。利好因素包括定价举措、更严格的折扣和返点管理、关税退款以及较低的存货准备调整。无线电设备强劲的销售可能会降低短期设备毛利率，因为无线电设备的硬件毛利率较低，但管理层将其视为未来高毛利服务收入的驱动力。

NAPCO正在开发云端门禁控制平台MVP，旨在连接其门锁硬件并创造新的经常性收入流。管理层还提到，在学校、医疗机构、机场、多户住宅和政府客户等领域，意向项目管线规模大于前两年。

管理层展望

管理层预计，随着第四季度发货的无线电设备被激活，经常性收入运行率将在2027财年下半年有所提升。MVP可能会进一步推动该增长，不过公司表示目前其收入贡献尚不明显。管理层希望在2026年10月或11月前后讨论MVP所带来的实质性经常性收入，同时承认时间节点可能会推迟数月。

公司预计将增加研发投入以支持新的经常性收入产品。2026财年研发费用增长9.6%至1380万美元。除计划扩充内部IT团队以及法律费用存在不确定性外，销售、一般及行政费用（SG&A）预计不会发生重大变化。

管理层表示，总体项目管线规模大于一两年前，但项目的具体时间节点仍难以预测。公司还在继续评估能够利用现有工厂产能并提升利润率的收购机会。公司的长期目标是将调整后EBITDA利润率提升至40%以上，但管理层并未提供具体的时间表。

风险与关注事项

• 数据中心的扩张正加剧电子零部件的供应紧张并推高成本压力。NAPCO表示，截至财报电话会议召开时，公司尚未遇到发货中断的情况，但预计供应链管理在2027财年仍将是一个挑战。
• 关税政策仍处于动态变化中。第四季度业绩实质性受益于IEEPA关税退款，而122条款关税则推高了设备成本。
• 大型设备项目可能存在波动性，时间跨度可能长达多年，且只有在客户准备下订单时才会被确认。
• 门禁控制销售额在第四季度下降13.8%，全年下降11%，部分抵消了入侵防范产品的增长。
• 未来的销售、一般及行政费用（SG&A）可能会受到与诉讼相关的法律费用影响。

分析师问答环节亮点

管理层表示，在2027财年第一季度初期，分销商库存和终端销售水平保持健康，需求趋势未发生实质性变化。公司未提供正式的季度业绩指引。

在供应链状况方面，首席执行官Kevin Buchel表示，NAPCO正直接与供应商谈判，以维持协议价格并确保零部件配额。公司目前尚未受到对产品出货的影响。

关于经常性收入的节奏，管理层预计2027财年下半年的贡献将更加强劲，因为第四季度的无线电设备出货通常需要约六个月的时间才能转化为服务收入。MVP带来的任何贡献都将在此基础上有额外增量。

NAPCO表示，其与ADI的合作关系在入侵防范产品和防火无线电设备领域持续扩大。ADI还针对MVP培训了多个分公司，NAPCO正致力于通过该分销商扩大门锁产品的销售。

管理层将K-12（中小学）及大学的安防需求描述为强劲。现有的教育机构客户在扩建宿舍、教室、行政设施或远程校区时，也可能产生后续跟进业务。

业绩电话会议完整文字记录

完整财报电话会议逐字稿

管理层陈述

Operator

Good morning, ladies and gentlemen, and welcome to the Napco Security Technologies Fiscal Fourth Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference call over to Francis Okoniewski, VP, Investor Relations. Please go ahead.

Francis Okoniewski

Thank you, Jenny. Good morning, everyone. This is Fran Okoniewski, Vice President of Investor Relations for Napco Security Technologies. Thank you for joining today's conference call to discuss our financial results for the fiscal fourth quarter and fiscal year 2026. By now, you should have all had the opportunity to review our earnings press release, which discusses our fiscal fourth quarter and full year results. If you have not yet received it, a copy is available in the Investor Relations section of our website, www.napcosecurity.com.

Joining me on today's call are Dick Soloway, Founder and Executive Chairman; Kevin Buchel, Chief Executive Officer and President; and Andrew Vuono, our Chief Financial Officer. Before we begin, I would like to review our forward-looking statement. This presentation contains forward-looking statements based on current expectations, estimates, forecasts and projections of future performance as well as management's judgment, beliefs, current trends and anticipated product performance. These statements include, without limitation, comments regarding growth drivers of the company's business, including school security products, recurring revenue services, potential market opportunities, the benefits of our recurring revenue products to customers and dealers, our ability to control expenses and costs and the expected annual run rate for Software as a Service or SaaS recurring monthly revenue.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed or implied in those statements. These risks include, but are not limited to, the factors described in our SEC filings, including our annual report on Form 10-K. Other unknown or unpredictable factors or underlying assumptions that later prove to be incorrect could also cause actual results to differ materially from those discussed in the forward-looking statements. Although we believe expectations are reflected in these statements, are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

You should not place undue reliance on forward-looking statements. All information provided in today's press release and on this conference call is as of today's date, unless otherwise stated, and we undertake no duty to update such information, except as required under applicable law. Throughout the presentation, management will discuss certain non-GAAP financial results. We encourage you to refer to the reconciliation between GAAP and non-GAAP results included in our press release. Before turning the call over to Dick, I want to note that we are actively planning our Investor Relations calendar for upcoming non-deal roadshows and investor conferences.

Investor outreach is important to Napco, and we appreciate the support of those who help us participate in these events. Over the coming weeks, we will participate in several key investor events, including the Jefferies Industrial Conference in New York City on September 10, a virtual non-deal roadshow hosted by Lake Street on September 16 and D.A. Davidson's 25th Annual Diversified Industrials & Services Conference in Nashville, Tennessee later in September.

In addition, Napco will be exhibiting at ISC East in New York City from November 3 through the 5th, where we will be introducing a number of new products. ISC East is one of the security industry's premier events on the East Coast, and we welcome investors and analysts who plan to attend or stop by our booth. With that, let me turn the call over to Dick Soloway, our Founder and Executive Chairman. Dick, the floor is yours.

Richard Soloway

Thank you, Fran. Fiscal 2026 was a year of exceptional performance and meaningful progress for Napco. We strengthened our market position, expanded our capabilities, served our customers at a high level and delivered results that reflect both the resilience of our business model and the dedication of our employees. At the same time, we continued an important evolution of our company. After 5 decades of founder-led growth, Kevin Buchel has assumed the role of Chief Executive Officer and President. Having been an important member of our organization for over 25 years, Kevin brings a deep understanding of our business, our customers and our culture to role.

I have taken on the role of Founder and Executive Chairman, allowing me to remain closely involved in the strategic direction of the company, while supporting Kevin and the management team in leading the business day-to-day. I've built this company for 50 years. It is strong enough to evolve beyond my day-to-day leadership, and I am confident in Kevin Buchel that I can remain focused on the long-term future. This transition represents continuity. The values that have guided us for 50 years remain unchanged, while our leadership structure positions us well for the next phase of growth. With that, I will turn the call over to Kevin Buchel. Kevin, the floor is yours.

Kevin Buchel

Thank you, Dick. Good morning, everyone, and thank you for joining us. Before reviewing our fourth quarter and fiscal 2026 results, I want to thank Dick Soloway for his comments and for his confidence in our leadership transition. Having worked alongside Dick for more than 25 years, I'm honored to lead Napco into its next chapter. Our company wouldn't be where it is today if not for the outstanding leadership position Dick has demonstrated since he founded the company back in 1972. I also want to thank our employees, our dealers, our distributors, our integrators and shareholders for their continued support.

Now let's talk about the quarter and the year. I'm pleased to report another outstanding quarter and a strong finish to fiscal 2026. Our fourth quarter net sales increased 10% to a record $55.8 million, driven by continued demand across our product portfolio and another quarter of double-digit recurring service revenue growth. Equipment sales increased nearly 8%, while recurring service revenue grew almost 13% to $25.3 million and produced another exceptional 90.1% gross margin.

Our recurring service business continues to build long-term shareholder value. Based on our July recurring revenues, our annualized recurring revenue run rate has reached approximately $103 million, an important milestone that reflects the strength of our connected services strategy and the increasing value of our installed base. The combination of revenue growth and improved operating leverage produced exceptional profitability during the quarter. Gross margin expanded to 61.3%. GAAP net income increased approximately 53% and adjusted EBITDA grew by more than 44%.

For the full fiscal year, non-GAAP net income increased 32% to a record $57.3 million, while non-GAAP diluted earnings per share increased 34.5% to $1.60. These results demonstrate the strength of our operating model and our ability to convert revenue growth into meaningfully higher earnings. Looking at the full fiscal year, we generated record annual revenue of $202.3 million, surpassing the $200 million mark for the first time in our company's history. We also delivered adjusted EBITDA of $66.7 million with an adjusted EBITDA margin of approximately 33% and generated more than $59 million of free cash flow.

Our strategy remains consistent. We will continue investing in innovative products, expanding our recurring service offerings, strengthening our dealer and integrator relationships and executing with the financial discipline that has long differentiated Napco. As I assume the role of Chief Executive Officer, there is no change to the principles that we have made this company -- that have made this company successful. We have an outstanding management team and exceptional balance sheet and a growing base of recurring revenue and significant opportunities ahead. Working closely with Dick in his role as Executive Chairman, I'm confident we are well positioned to continue delivering profitable growth and creating long-term value for our shareholders. With that, I'll turn the call over to our Chief Financial Officer, Andy Vuono, to review the financial results in greater detail. Andy?

Andrew Vuono

Thank you, Kevin, and good morning, everyone. The momentum we generated during the first 3 quarters of fiscal 2026 continued into the fourth quarter. Net revenue for the quarter increased 10% to a quarterly record of $55.8 million. Recurring monthly service revenue continued to grow steadily, increasing 12.9% to $25.3 million, primarily driven by ongoing activations of our StarLink radio parts communicators. Equipment revenue increased 7.7% to $30.5 million. Sales of intrusion access control products increased 20.9%, which was driven by continued strength within the intrusion category. Intrusion product sales, including StarLink radios increased 35.8%. The total category was partially offset by a 13.8% decrease in access control product sales.

Door locking revenue increased 2.2% for the quarter. This consisted of an 18.4% increase in Marks USA lock sales, partially offset by a 5.6% decrease in overall lock sales. Overall locking revenue was relatively flat compared with the fourth quarter of fiscal 2025 when we experienced a pull-through of locking sales in response to anticipated tariff-related price increases. For the year ending June 30, 2026, net revenue increased 11.4% to a record $202.3 million. Recurring monthly service revenue increased 13% to $97.5 million, primarily driven by steady activations of our StarLink radio part communicators.

Based on our July 2026 recurring service revenue, our estimated prospective annual run rate is now approximately $103 million. Equipment revenue for the year increased 10% to $104.8 million. The full year increase in equipment revenue reflected growth across several product categories. Intrusion and access control product sales increased 7.8%, driven by a 14.3% increase in intrusion product sales, partially offset by 11% decrease in access control product sales. Door locking revenue increased 11.1% for the year, reflecting a 19.7% increase in Alarm lock product sales, partially offset by a 3.3% decrease in Marks USA sales.

Gross profit for the quarter increased 27.7% to $34.2 million. Gross margin expanded to 61.3% compared with 62.8% in the prior year period. Overall gross profit for the quarter benefited by approximately 600 basis points from IEEPA tariff refunds. Recurring service revenue continued to deliver strong profitability. Gross profit from recurring service revenue increased 12.3% to $22.8 million with a gross margin of 90.1%. Recurring revenue gross margins remained above 90% and were consistent with the comparable quarter in fiscal of 2025. Gross profit from equipment revenue increased 76.2% to $11.4 million in the fourth quarter, with gross margin expanding to 37.4% compared with $6.5 million and a gross margin of 22.9% in the prior period.

Equipment margins benefited from the IEEPA tariff refunds discussed earlier and lower inventory reserve adjustments. These benefits were partially offset by Section 122 tariff costs during the period as well as increased technical service costs related to investments in AI solutions to improve customer experience. We are also seeing supply chain challenges as a result of data center expansion, which is putting pressure on the cost of electronic component parts. For the year ended June 2026, gross profit increased 18.6% to $119.8 million with gross margin expanding to 59.2% compared with $101 million and a gross margin of 55.6% in fiscal 2025.

Overall gross profit for the year benefited by approximately 50 basis points from the IEEPA tariff refunds. Recurring service revenue continued to generate strong profitability. Gross profit from recurring service revenue increased 12.1% to $88 million with a gross margin of 90.3%, and recurring revenue gross margins continue to exceed 90% and remain consistent with fiscal 2025. Gross profit from equipment revenue increased 41.2% to $31.8 million for the year ended June 2026, with gross margin expanding to 30.3% compared with $22.5 million and a gross margin of 23.6% in fiscal 2025.

Equipment margins benefited from product price increases implemented at the end of fiscal 2025, lower discounted sales allowances throughout the year, tariff refunds and lower inventory reserve adjustments. These benefits were partially offset by higher tariff costs during the period and increased technical service costs. R&D costs increased 13.2% to $3.7 million in the fourth quarter, representing 6.6% of net revenue compared with 6.4% in the prior year. For the year ended June 2026, R&D costs increased 9.6% to $13.8 million, representing 6.8% of net revenue compared to 6.9% in fiscal 2025.

The increase in R&D spend for both the quarter and full year was primarily driven by annual salary increases, the hiring of additional engineering staff and higher UL approval costs for new products. SG&A expense increased 5.6% to $12.1 million in the fourth quarter, representing 21.7% of net revenue compared with 22.6% in the prior year. The quarterly increase was primarily driven by higher professional fees, increased wages and benefits related to salary increases and higher advertising costs. These increases were partially offset by lower trade show expenses due to timing of events.

For the year ended June 2026, SG&A expenses increased 5.1% to $44.4 million, representing 21.9% of net revenue compared with 23.2% in fiscal 2025. The full year increase was primarily due to higher commissions associated with increased equipment revenue, higher personnel-related expenses from merit increases and the hiring of additional sales and information technology personnel and increases in insurance, credit card processing fees and trade show expenses. These increases were partially offset by lower legal and professional fees. Operating income for the quarter increased 52.5% to $18.4 million, reflecting 10% revenue growth, improved margins and the benefit of power during the quarter. For the year ended June 2026, operating income decreased 1.3% to $45.6 million.

Full year operating income was negatively impacted by the $16 million legal settlement announced in our fiscal third quarter. The effective tax rate for the fourth quarter was 9.6% compared with 10.3% in the prior period. The lower quarterly effective tax rate was primarily due to tax benefits from exercise of equity awards. And for the year ended June 2026, the effective tax rate was 13.3%, which was consistent with fiscal 2025.

Net income for the fourth quarter increased 52.7% to $17.8 million or $0.50 per diluted share compared with $0.33 per diluted share in the prior year. Net income represented 31.8% of net revenue for the quarter and diluted EPS benefited by approximately $0.09 from tariff refunds. For the year ended June 2026, GAAP net income increased 0.9% to $43 million or $1.20 per diluted share. Non-GAAP net income increased 32% to $57.3 million or $1.60 per diluted share compared to $1.19 per diluted share in fiscal 2025.

Non-GAAP net income represented 28.3% of net revenue for the year. Adjusted EBITDA for the fourth quarter increased 44.3% to $20.6 million or $0.57 per diluted share compared with $0.46 per diluted share in the prior year. And adjusted EBITDA margin for the quarter was 36.8%. For the year, adjusted EBITDA increased 27.9% to $66.7 million or $1.86 per diluted share compared with $1.43 per diluted share in fiscal '25 and adjusted EBITDA margin for the year was 33%. Free cash flow for the quarter increased 19.9% to $17.2 million representing a free cash flow margin of 30.9%. And for the full year, free cash flow increased 15.2% to $59.2 million, representing a free cash flow margin of 29.3%.

Turning to our balance sheet. We ended fiscal 2026 with substantial liquidity and no debt. As of June 2026, the company had $137.6 million in cash, cash equivalents and marketable securities compared with $99.2 million as of June 2025, an increase of 38.7% and the company had no debt as of June 2026. Working capital increased 19.6% to $165.5 million as of June 2026. Capital expenditures was $405,000 for the quarter compared with $237,000 in the prior period. For the full fiscal year, CapEx was $1.9 million compared with $2.1 million for fiscal 2025. That concludes my formal remarks. I will now return the call to Kevin.

Kevin Buchel

Thank you, Andy. I want to close with a few reflections on the year behind us and the one ahead. Fiscal 2026 was a year of resilience. Napco once again demonstrated the durability of its business model while staying focused on what matters most, creating lasting value for our customers, partners and shareholders. That durability is most evident in our recurring revenue, which grew 13% this year while sustaining the gross margins above 90%. This high-quality revenue stems from -- generates consistent cash flow and provides funds for reinvestment in the business. The engine behind that performance remains StarLink, which is now widely regarded as the industry standard for commercial fire communications.

One number I want you to take away from this call is this. Sales of radio units in the fourth quarter grew 40% year-over-year and nearly 30% sequentially. This is among the highest growth rates in Napco's history. Radio sold today become recurring revenue tomorrow. So that figure says a great deal about the quality of the year ahead. We are winning that business alongside larger dealer and integrators, and we expect those relationships in addition to many new ones we're working on to continue helping us gain share. As I've stated before, the conversion from copper phone lines will continue until the end of the decade, and we expect to win a large share of the over 2 million buildings that need to convert.

And even after the conversion is complete a few years from now, we'll continue to generate recurring revenue from new work where our StarLink radios are built into our fire and alarm panels. Our hardware business also delivered double-digit year-over-year growth, a credit to our team's agility in adapting to shifting demand. Behind that growth, we see a healthy pipeline of project and contract opportunities in equipment. These include larger opportunities across schools, health care, airports, multi-dwelling housing as well as government projects.

By their nature, these projects arrive over time rather than all at once. Some are already in motion, while others should begin to move through the funnel over the coming quarters. We generally are not permitted to name them, and I will not put a number or a date on them today because work of this kind is lumpy and often extends across multiple years. Still, the breadth of what we see in that funnel is a genuine source of confidence as we look to fiscal 2027 and beyond.

Operationally, I could not be prouder. We finished the year with $137 million in cash and no debt. Looking ahead, we remain optimistic. Tariff policy, supply chain challenges and market conditions are still dynamic, but we're not standing still. Our pricing actions are in place, and we continue to diversify distribution, invest in automation and enhance the StarLink platform. That is how we sustain growth while protecting margin. As Andy mentioned earlier, our R&D spend increased 10% to $13.8 million. Much of that spend relates to new recurring revenue products.

Please come to ISC East November 4 and 5, and you'll get to see firsthand some of the new and exciting products that are forthcoming. Our balance sheet gives us real flexibility to invest organically to act on strategic acquisitions if the right one comes along and to return capital to shareholders. That last commitment is not theoretical. This morning, we announced an increase in our quarterly dividend to $0.17 per share. That's a 13.3% increase over the previous quarterly dividend. We are raising the dividend while carrying 0 debt and while continuing to fund every growth initiative in front of us.

That is the kind of financial position this business has earned. Let me turn to one vertical in particular, school security. School safety remains one of the most urgent challenges of our time, and Napco is honored to be a proven partner to districts across the country. I'm proud to announce that we recently received the 2026 Annual Deans List Award. This award sounds like it's for academics, but it's really an award that recognizes premier security providers serving private colleges and universities. School security continues to be a big problem in our country, and we will continue to work hard to provide the over 131,000 K-12 schools and 5,300 colleges and universities, state-of-the-art products that protect students and faculty.

Our divisions work together across this market from Trilogy and architect locksets to enterprise scale Continental CA4K access control. These platforms are secure, scalable and aligned with strict code guidelines. What sets us apart is our ability to unify locking, access and alarm technology on a single interoperable platform. Knowing our solutions help protect students and staff every day is gratifying, and we see continued responsibility in that effort. In addition, as I mentioned earlier, we continue investing heavily in R&D to open new recurring revenue opportunities across the portfolio.

One of the most exciting of these is MVP, our next-generation cloud-based access control platform built to integrate seamlessly with our locking hardware. MVP creates an entirely new recurring revenue stream for Napco and our dealers with configurations for both enterprise customers and smaller facilities. We believe it could be a game changer and a foundational contributor to growth in the years ahead, extending our leadership into hosted access control and reinforcing the strategy at the core of this company, innovative hardware paired with cloud services, generating long-term high-margin recurring revenue.

We exit fiscal 2026 with a strong finish and enter fiscal '27 with momentum, clarity and the strongest financial foundation in our history. We have built a business model that delivers even in difficult environments. I'm proud of what this team has accomplished, and I'm energized by what lies ahead. Thank you all for your support and for joining us in the future we are building. Our formal remarks are now concluded, and we would like to open the call for the Q&A session. Operator, please proceed.

Operator

[Operator Instructions] Your first question is from Matt Summerville from D.A. Davidson.

分析师问答

Matt Summerville

I was hoping, first, maybe you could elaborate on some of the supply chain challenges you're experiencing, what mitigation plans you're sort of working on as we speak? And is this hurting your ability to actually ship product? Just maybe a little more detail around that, and then I have a follow-up.

Kevin Buchel

So we have not been impacted at all as of yet by supply chain issues. This kind of reminds me of the COVID times when parts were hard to get, because they're hard to get, prices tend to go up. Back in that time, I would get on the phone with the presidents of the various suppliers. and bang away at solutions, whether it's to keep the pricing stable, whether it's to make sure we get our fair share of shipments, I'm doing that again, and we're having a lot of success. We're very aggressive on trying to keep things going the way they should. If we have purchase orders out there for various parts and the suppliers try to increase because there's shortages out there, we don't put up with that.

We battle, we get the pricing that we were promised, and we make sure that we get our fair share of shipments. We have not been impacted at all, but it's fair for us to say that this is something we're going to have to deal with in this upcoming fiscal year. And I think we have a lot of experience. We've been through this type of thing before, different ways, but we know how to handle it. And my efforts will be 100% to make sure we get our components on time and at the pricing we've agreed to.

Matt Summerville

Understood. I appreciate that. As a follow-up, can you maybe spend another moment talking about MVP kind of where you're at in that sort of launch cycle, if you will? And if you have any early read on sell-through or uptake or some other similar KPI that we would want to be tracking. And then also, I was wondering, while appreciating you wouldn't want to comment on individual projects, is there a way to either quantitatively or qualitatively think about how that project funnel looks for you guys today versus a year or 2 ago?

Kevin Buchel

The MVP, we have said, give us till kind of the back end of the calendar year, which is coming up, October, November. That's when we expect to be able to report meaningful recurring revenue. That's our hope. We don't really want to talk about it until we get to that point. It's not meaningful yet. We're working hard for it to become meaningful. Our expectation is it will get there. Whether it's a couple of months before or after that time frame, can't be exactly sure. But by the end of this calendar year, we should be in a position where we're talking about this in a very favorable way. We'll keep everybody posted as it warrants. So that's on MVP. What was the second part, Matt?

Matt Summerville

Either yes, appreciating that you can't talk about individual projects in any sort of specificity. Is there a way that we can qualitatively or quantitatively look at the aggregate funnel you see for what you deem as a "project" and kind of compare that to how that's maybe looked a year or 2 ago?

Kevin Buchel

Yes. It's clearly more than it's been. The issue we have is we don't necessarily get the order for the project until they're ready for it. Like we know we're getting the project, the project will be awarded to us, but we have to -- I don't like to talk about things unless we have an order in place. So there are government ones, there are school ones. It's more than we've had in the last couple of years. We'll talk about them when, a, we get the order, whether it's shipped or not; and b, we'll talk about it if the entity, the customer allows us to. Often, they don't. They like to keep things quiet. But as I sit here today versus a year ago, this is much more than it's been in the last couple of years.

Operator

Next question is from Jim Ricchiuti from Needham & Company.

James Ricchiuti

Congrats on the quarter. A couple of questions. Yes, obviously, you've got some moving parts to the margins. But if we exclude the tariff refund benefit, I'm wondering if you could speak to the impact of the higher revenue contribution from the door locking portion of the business, which have better hardware margins and the high contribution you saw from radio sales. Is that the right way to think about the overall impact on equipment gross margins, which it seems like excluding the tariff refund benefit were down a bit sequentially. I'm trying to get a sense also as to how we think about that dynamic in the first quarter when you may still have some strength in door locking.

Kevin Buchel

So Jim, when the radio sales are average, the good news is the equipment margins are going to be higher I don't know what that is. You still can hear me.

James Ricchiuti

Yes, I can, Kevin. it's good.

Kevin Buchel

Okay. So the locking has the better margins when locking is dominating, then you might see higher margin. This quarter, the radios were tremendous. So that radio sales, what is it, a 20% gross margin item. It's going to bring down the equipment margins in total. However, it leads to the beautiful recurring revenue, which is the big price. In our case, it comes later because we sell to distribution. The distributor sits with it for a month or 2. Then the distributor sells it to the dealer. The dealer activates it right away typically. And then we offer rebates. So there's like a 5-, 6-, 7-month gap from the time we ship the radios, the hardware till the time we feel the beauty of the recurring revenue. So yes, it brought down the margins, the equipment margins because it was so strong, but it's going to bring our margins way up in total because of recurring that's coming in the back end. So I'll take this all day long.

James Ricchiuti

The follow-up question I have is we're about halfway through the fiscal first quarter. I wonder if you could talk a little bit about the demand trends you're seeing. Are you seeing any changes in behavior from some of your larger distributors either related to the macro or possibly even as they may be considering getting ahead of higher component costs?

Kevin Buchel

We don't usually like to comment on the months ahead. Here we are talking about through June. But having said that, there's been no difference in what we're feeling. The distribution channel, and I think you do channel checks, you probably talked to several of the distributors. It's in a good place. They're all in a good place now. Every now and then it gets a little chaotic, a little lumpy. Right now, the distributors are in a good place. Their inventory levels are good. Their sell-through is good. Hopefully, it stays that way. And our expectation is it will stay that way. Again, there's issues out there, supply chain issues. We've dealt with them before. We'll deal with them again. We have a lot of experience on how to manage that. And just -- it's part of what we do, and we'll have to do it again.

Operator

Your next question is from Lance Vitanza from TD Cowen.

Lance Vitanza

Congrats on the quarter. I have a couple of questions, if I can. The first is on the recurring service revenues. And you talked earlier in the prepared remarks that we've seen sort of this $2 million increase per quarter in sort of the run rate level. As we look into fiscal '27, and you talked a little bit about MVP, you talked a little bit about the big radio sales in this quarter that we're discussing today. Do we think that there's some upside to that $2 million per quarter increase? And if so, is it sort of more back half weighted in terms of when we see that? Or how would you sort of expect the cadence to look as we go through 2027?

Kevin Buchel

Well, because there's this delay of feeling the effects of the recurring revenue after you sell the radios, the hardware and the delay is a good 6 months, that suggests that the run rate should go up to the back end of the year because you get 6 months from now, when we'll start to feel the recurring revenue from what good work we just did on the hardware sales and the radios. So yes, back end, my hope is that it goes up. Now MVP, if it's a contributor by then, we hope it will be, that just adds to it. But even without that, I would expect the run rate to increase.

Lance Vitanza

Okay. And then just sort of pulling back a little bit, Kevin, I know you mentioned during your prepared remarks and Dick mentioned that this is -- the continuity is very important to you. That being said, should we expect that there could be areas where your priorities, perhaps strategic, perhaps capital allocation, do they perhaps differ from what Napco has historically emphasized?

Kevin Buchel

I don't think so. I think Dick and I kind of are on the same page. We're looking potentially at acquisitions, but it's got to be right. If it's right, certainly, we have the cash to do it. We have the balance sheet to support it. So the last one we did was 17 years ago, 18 years ago. So it's time to do one, but only if it's right, you saw.

Richard Soloway

And we have the factory capacity also to handle it if it fits our criteria. Amortize roll ahead in the factory to raise our margin. So we're looking very hard at a couple of them right now.

Kevin Buchel

Right. And so that's -- maybe it will feel different when it happens, but we're looking at it. But you saw our EBITDA margin for the quarter, it's pushing 40%. That's one of the goals that we have here. We want to get it over 40%. Nobody thought we would get close to that. We're getting pretty close. So I'm not going to want to do anything that's going to screw that up, but we're going to want to do something that could enhance it. So if that comes about, we'll do it.

Richard Soloway

You also saw that we increased our R&D 10%. That's because we're creating a sequel to StarLink, which will keep the momentum going in the future.

Operator

Your next question is from Jaeson Schmidt from Lake Street.

Jaeson Schmidt

Just curious if you could comment what you're seeing at ADI and specifically, how expanding your product portfolio with them is progressing?

Kevin Buchel

ADI has been a great partner since we started up with them, I guess is now about 3 years ago. They're very organized buttoned up. They buy a lot of intrusion products, a lot of fire radios. They have a lot of relationships with some of these large dealers that we are now adding to our list of dealers who use our products. And so it's working great on that end. We're trying to get them into the locking side, and they've actually trained many of their branches on the MVP products. So that could be very good going forward if we can get that big strong machine that they are into locking, it's going to be amazing for us. So we're working on that while continuing to sell them a lot of intrusion products.

Jaeson Schmidt

Okay. That's helpful. And then just as a follow-up, going up your comments on the school security market. Just curious if the K-12 market or the university market is stronger based on what you currently have in the funnel?

Kevin Buchel

Both, they're both strong. The need is in all areas. When we hear the horrific stories that come out, a lot of them are in universities, a lot of them are in K-12, both. And even though these things have been going on for so long, so many of these schools still are without equipment. And so the challenge for us is to get out there, the big country to get our integrators to understand what products we have to offer and to get in there. Even I was happy to see at the ISC West show, which was in March, the folks from Pepperdine were there. And Pepperdine is now -- they were a big customer. They did a lot of things. They did all the dorms. They did all the classrooms, the admin offices, et cetera, remote campuses, -- they're ready for more now. They've added more dorms and they love our products. So this is an ongoing thing. So even with some of the schools that have used our product, they come back for another round.

Operator

[Operator Instructions] And your next question is from Jeremy Hamblin from Craig-Hallum.

Unknown Analyst

This is Will on for Jeremy. Just wanted to touch on your discount and pricing strategy for the year. I think you previously noted a little less discounting to smooth out orders and kind of support higher margins. But I guess just how should we be thinking about that strategy in fiscal '27 and then some of the puts and takes in getting equipment margins back up to 30%?

Kevin Buchel

I'm going to let Andy answer this way. Andy is a great CFO, and he spends time trying to improve our margins with the discounting. So he works with the sales team. He looks at this closely. So Andy, why don't you answer this one?

Andrew Vuono

Sure, Kevin. So I would say fiscal '26 is reflecting the improved discipline, one around our rebate programs. So we have volume rebates with our -- with the vast majority of our distributors if they hit certain revenue thresholds. We are more disciplined in the program as far as framing the program, what criteria they need to hit, what bogeys they need to attain. So I think we saw the benefits of that in fiscal '26. And then on top of that, a concerted effort to one lessen the amount of orders and activity we had at the end of the quarter, which we'll never get away from, but to have the sales force be more focused on trying to secure those orders earlier and really negotiating hard with our distributors to get away from large discounts.

So I think it just reflects the discipline that we saw in fiscal '26, and we're expecting more into 2027. I have conversations with our Chief Revenue Officer, Joe Pipczynski, about what our strategies are, our pricing and/or discounting. I would expect us to hopefully improve on where we are. I think we picked up 2 points on the equipment revenue in fiscal '26. So our goal is to continue bangway that and raise that efficiencies even more.

Unknown Analyst

Okay. That's helpful. And then just besides ISC West falling in Q4, is there anything else to consider in terms of sort of incremental OpEx for '27, whether that's on the R&D side or any sort of SG&A build-out needed over the coming quarters?

Andrew Vuono

I mean I'll weigh in on the SG&A. On the SG&A, no, nothing in particular other than I expect us to add some more talent to our internal IT group as one to meet the needs of the organization to respond to the obvious risks out there regarding cyber. But outside of that and the unknowns with some of the litigation we're dealing with on legal, I don't expect any other significant changes in the SG&A. I'll let Kevin comment on the R&D.

Kevin Buchel

Yes. On the R&D, I have a lot of confidence in our Chief Technology Officer. He's great. He's a very smart guy with products and he's very good with budgets. So when he says, I need more help, I say how many you need? We have the money to do it. I give him whatever he needs because when we give him what he needs, that leads to more recurring revenue products. And so the spend will go up. It won't be anything crazy. It will be what's necessary to keep the development going so that we come out with more innovative, exciting products all the time.

Operator

[Operator Instructions] It seems there are no further questions at this time. Please proceed with the closing remarks.

Kevin Buchel

Okay. So thank you, everybody, for participating in today's conference call. As always, should you have any further questions, feel free to call Dick, call Fran, Andy or myself for further information. We thank you for your interest and support, and we look forward to speaking with you all again in a few months to discuss Napco's fiscal Q1 2027 results. Thank you all. Have a great day.

Operator

Thank you, ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.