NAPCO SECURITY TECHNOLOGIES, INC Segments Disclosure
NOTE 15 – Segment and Geographical Data
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker. We have one operating and reportable segment.
The Company’s CODM, (the President and Chief Operating Officer) evaluates performance of the Company and makes decisions regarding the allocation of resources based on total Company results. The measure of segment assets is reported on the balance sheet as total consolidated assets. The consolidated net income is the measure of segment profit that is most consistent with U.S. GAAP. Segment profit is used in developing the overall strategy and during the annual budget process, as well as considered in budget-to-actual variances on a monthly basis when making decisions about the allocation of operating and capital resources.
The CODM is regularly provided with not only the consolidated expenses as noted on the face of the income statement, but also the significant segment expenses as below:
Fiscal Year ended June 30, | ||||||
2025 |
| 2024 | ||||
(in thousands) | ||||||
|
|
| ||||
Net Sales | $ | 181,621 | $ | 188,820 | ||
Less: |
|
| ||||
Cost of revenue | 80,591 | 87,066 | ||||
Compensation-related expenses(1) | 27,922 | 23,060 | ||||
Commission expenses | 6,165 | 5,519 | ||||
Marketing, advertising and other promotional expenses | 3,753 | 3,262 | ||||
Research and development (excluding compensation related benefits) | 1,475 | 1,476 | ||||
Selling, general, and administrative expenses(2) | 15,456 | 14,619 | ||||
Interest and other (income), net | (3,810) | (2,568) | ||||
Provision for Income Taxes | 6,663 | 6,568 | ||||
Segment Profit | $ | 43,406 | $ | 49,818 | ||
| (1) | Excludes stock based compensation. |
| (2) | Excludes compensation-related expenses, commission expenses and marketing, advertising and other promotional expenses. |
Geographic Information for Revenue
The Company is engaged in one major line of business: the development, manufacture, and distribution of security products, encompassing access control systems, door-locking products, intrusion and fire alarm systems and video surveillance products for commercial and residential use. The Company also provides wireless communication service for intrusion and fire alarm systems. These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment. Sales to unaffiliated customers are primarily shipped from the United States. The Company has customers worldwide with major concentrations in North America. All of the Company’s sales originate in the United States and are shipped primarily from the Company’s facilities in the United States. There were no sales into any one foreign country in excess of 10% of total Net Sales. The following table presents net sales by geographic area.
Fiscal Year ended June 30, | |||||||||
2025 |
| 2024 |
| 2023 | |||||
Sales to external customers: |
|
|
|
|
| ||||
United States | $ | 180,072 | $ | 187,724 | $ | 168,619 | |||
Foreign |
| 1,549 |
| 1,096 |
| 1,378 | |||
Total Net Sales | $ | 181,621 | $ | 188,820 | $ | 169,997 | |||
Geographic Information for Long-Lived Assets
Long-lived assets include property and equipment, net and operating lease right-of-use assets, net. Our long-lived assets are based on the physical location of the assets. The following table presents long-lived assets by geographic area.
As of June 30, | ||||||
| 2025 |
| 2024 | |||
Long-lived assets: |
|
|
| |||
United States | $ | 5,264 | $ | 5,455 | ||
Dominican Republic |
| 9,157 |
| 9,109 | ||
Total Long-lived assets | $ | 14,421 | $ | 14,564 | ||
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.