Greetings and welcome to the NAPCO Security Technologies First Quarter Fiscal 2015 Results Conference Call. At this time, all participants are in a listen-only model. A question and answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Todd Fromer, Managing Partner of KCSA. Thank you sir, you may begin.

Good morning and thank you all for joining us for today’s conference call to discuss NAPCO’s financial results for the first quarter ended September 30, 2014. By now, all of you should have had the opportunity to review the press release discussing the results. If you have not, please contact KCSA, at 212-682-6300, and we will immediately send it to you by either fax or e-mail. On the call today is Richard Soloway, President and Chairman of NAPCO Security Technologies; and Kevin Buchel, Senior Vice President of Operations and Finance. Before we begin, let me take a moment to read the forward-looking statement. This conference call may contain forward-looking statements that involve numerous risks and uncertainties. Actual results, performance or achievements may 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 SEC. With that out of the way, let me turn the call over now to Richard Soloway, President and Chairman of NAPCO Security Technologies. Dick, the floor is yours.

Thank you, Todd. Good morning, everyone and thank you for joining us. This morning, NAPCO reported results for the first fiscal quarter of 2015. As those of you who have been following the company already know the first quarter has historically been our weakest quarter from the sales perspective. While top-line growth for the quarter came in relatively flat is important to note that the comparable quarter last year include a large custom order from a university customer for our access controlled products which positively impacted last year’s results but made it tougher to deliver a more attractive year-over-year comparison. With that in mind, we think the quarter was solid from an overall sales perspective and particularly encourage with regard to the revenue mix and the effect is having on our gross margin. To better understand the impact of the revenue mix and where NAPCO is going, it’s important to understand the strategy we have executed and how that will translate into greater earnings power in 2015 and beyond. On previous calls, I have talked about how we have been consistently investing in new product lines, the development, introductions and subsequent sales and marketing. We have done this in order to bolster our market position and further build upon the strong NAPCO brand which has become synonymous with professional grade quality and innovation among the tenths of thousands of deal that sell and install our products. These products have been launched across all of our divisions and are now gaining adoption. In our door locking divisions, our door locking products including our new lock down products grew 4% in the first quarter as compared to the same period a year ago, representing the ninth consecutive quarter of growth of these products. During the quarter, our Access Control division won a…

Thank you, Dick, and good morning, everybody. Revenues for the three months ended September 30, 2014 increased 1% to 17.3 million compared to 17.2 million in the same period a year ago. The increase in sales for the three months was due primarily to increased sales of the company’s door locking products and intrusion products. Gross profit for the three months ended September 30, 2014 increased 4.3% to 5.3 million or 30.3% of sales, compared to 5 million or 29.2% of sales for the same period a year ago. The increase in gross profit for the three months was primarily due to a continued positive shift in product mix for the company’s door locking products as well as increased recurring revenue. Selling, general and administrative expenses for the quarter were $5 million compared to $4.8 million for the same period last year. Selling, general and administrative expenses as a percentage of net sales increased to 28.9% for the quarter from 27.8% for the same period a year ago, the increase in dollars for the three months was due primarily from the addition of selling, personnel and increased [video] advertising. Operating income for the quarter increased by $6,000 or 2.5% to $246,000 as compared to an operating income of $240,000 for the same period a year ago. Interest expense for the quarter decreased by $44,000 or 44.4% to $55,000 as compared to $99,000 for the same period a year ago. The decrease in interest expense for the three months ended September 30, 2014 resulted from lower average outstanding debt and lower interest rates during the current period as compared to the same period a year ago. Net income increased by $36,000 or 29.3% to $159,000 or $0.01 per diluted share as compared to a net income of $123,000 or $0.01 per diluted share for the same period last year. Adjusted EBITDA for the quarter as per the schedule included in today’s press release remained relatively constant at $651,000 as compared to $656,000 last year. At September 30, 2014, the company had $3.7 million in cash and cash equivalents compared to $2.5 million at June 30, 2014. The company also had working capital of $33 million at September 30, 2014 compared with working capital of $33.4 million at June 30, 2014. Paying down our debt remains a top priority for NAPCO for the quarter, debt net of cash was 7.7 million at September 30, 2014, a decrease of 1.6 million compared to 9.3 million as of June 30, 2014. And debt net of cash has now been reduced by $28.2 million from $35.9 million since we acquired MARKS in August of ‘08, and the net debt of 7.7 million is the lowest level in eight years. That concludes my formal remarks, and I would now like to return the call back to Dick.

Okay. Thanks Kevin. That concludes our formal remarks. Kevin and I would like to open the call for questions. Operator, please proceed.

Thank you. At this time, we’ll be conducting a question-and-answer session. (Operator Instructions) Our first question today is coming from Rick Fetterman with Fetterman Investments. Please proceed with your question. Richard Fetterman – Fetterman Investments: Good morning everyone.

Hi Rick. Richard Fetterman – Fetterman Investments: Dick I wonder if you could comment first regarding the share repurchase if you initiated in this quarter, is there a number of shares or a dollar amount that you have in mind for the next 12 or 24 months?

We announced that we are going to buy up to a million shares of stock in the press release few months ago. Richard Fetterman – Fetterman Investments: Okay, was there any timeframe attached to that?

It wasn’t. Richard Fetterman – Fetterman Investments: Okay.

As I said we bought over 153,000 – 107,000 shares. Richard Fetterman – Fetterman Investments: Okay, thank you. My second question is as the residential construction market is picking up, has there been any change in your business mix, it’s been around 80-20 I think for the last few years as the housing was kind of in the tank. I wonder if there has been any change in that and is there a difference in the profit margins in residential versus commercial equipment?

Regarding profit margins, the commercial is more profitable than residential. But in the residential market, we’ve changed our business model to develop products which have recurring revenue. A lot of the recurring revenue products that are go into aftermarket, not new construction that’s the largest plot of our residential business. The new construction is usually less expensive systems and so we’re focusing and our deal is focused on aftermarket for the most part. But some deals do have models in the model houses to show what the security systems will do. Richard Fetterman – Fetterman Investments: Okay, thank you very much. Appreciate it, good luck and good work.

Thanks.

Thank you.

Thank you. (Operator Instructions) Our next question today is coming from Walter Ramsley from Walrus Partners. Please proceed with your question. Walter Ramsley – Walrus Partners, LLC: Thank you. I’ve got a couple of questions. Pretty good quarter, all things considered as far as some of the newer things are concerned, the relationship with Control4 is that generating any significant business?

It's the beginning of the relationship, we’re the we only approved security panel manufacture with Control4 which has all of the bells and vessels they need to make their audio and video equipment work along with security. We just went to a large conference where we showed our products along with Control4, they have a different dealer base which is very interesting for us. The dealer base they have thousands of home automation dealers. There is not that much overlap to security dealers. So we’re in a marketing plan with them and we expect it to reward us well and get our products into these home automation dealers. Walter Ramsley – Walrus Partners, LLC: Okay. The universities out limit less that you referred to, can you describe how large of a deal that is and if there are additional universities above and beyond that that are in the pipeline?

We have a lot of bids out right now with a lot of schools, universities, colleges that type of thing. So they usually do it in phases. So phase one, what we’re in now is several hundred thousand dollars’ worth of product. But it’ll be additional phases and there we expect to have more universities and schools joining on us. As you know not only do we do the lock down products but we do mechanical hardware locks for K-12s and other schools they don’t have the larger budgets. But we offer a very comprehensive school lock down, electronic, digital and mechanical and it seems to be making a big, a lot of interest in school administrations. Walter Ramsley – Walrus Partners, LLC: Okay. The residential intrusion business last quarter I think was or maybe even before that one of your biggest customers began to dial back little bit. Can you give us an update on that situation and how the whole segment is doing?

Well as we said the segment is doing well as far as sequential growth of our radio products and of our connected home products. Our base business is holding it [zone] and we’re building upon it with connected home products and radios. The sunset that’s taking place in 2017 it forces the dealers to have to some communications device and our StarLink radio is a solution for them so, we expect that the runway is going to be long and very profitable for us as more and more of our radios are being put into these jobs. Once, the radios are put on to the jobs, the recurring revenue continues as long as the subscriber homeowner or business owner wants to communicate with the central station which is for the life of their homes and it’s really the only methodology that’s full proof because copper lines are going away then out of that very many houses so, the radio is the way to go. On the connected home front, we want our dealers to add connected home products to a traditional loan system both aftermarket and for new jobs when they go out on campus people. As I said it’s basically all aftermarket and it gives us a very, very nice to leg up on more recurring revenues from each of the services that we offer the dealers video, locking and lighting et cetera. So, it looks like positive for us and it’s going to go on for many years. Walter Ramsley – Walrus Partners, LLC: Okay. And the emphasis on the stock repurchases and debt reduction does that indicated you know dialing back the acquisition outlook?

Well right now we believe that the stock repurchase is the best road for us we are generating a lot of gain, we’re paying down our debt very quickly and we access to additional moneys and borrowings with the bank because we did a good job with managing the business through all the hard times that we went to since a great recession of ‘08, they are believe in us very strongly so, we think we use our money to buy back stock where you’re going to use our money to reinvest in our business and grow it because there is a lot of growth and room to grow in our business. Walter Ramsley – Walrus Partners, LLC: Okay. And just on last thing the tax rate has done a pretty small amount but was 18.9% in the September or is that representative of what you expect for the whole year?

Walter I think what we expect for the full year is what it’s been somewhere between 10% and 15% when the smoke clears at the end of the year. So, each quarter is a little different with SG&A we have ended at about 13% which is an excellent rate, you got to figure it’s going to end up somewhere between 10 and 15 again. Walter Ramsley – Walrus Partners, LLC: Sounds, good. Thanks for taking the question. Richard Soloway. Thanks Walter. Thank you.

Thank you. There are no further questions at this time. I’d like to turn the floor back over to management for any further closing comments. Richard Soloway. Okay, thank you everyone for participating in today’s conference call. As always should you have any further questions, please feel free to call KCSA, Kevin or myself. We thank you for your interest and support, and we look forward to speaking to all of you again in a few months to discuss NAPCO’s fiscal second quarter 2015 results. Goodbye. Have a great day and a happy holiday season to everyone.

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.