NAPCO Security Technologies shares plunged 28% to $27.97 after the company identified errors in past financial statements that resulted in overstated figures for the first three quarters of fiscal 2023.
The stock, which closed up 0.6% to $38.41, is up 40% on the year.
The company, which manufactures and designs electronic security equipment and wireless communication devices for intrusion and fire alarm systems, said the errors were related to its calculation of cost of goods sold and inventory for each of the quarters. Specifically, its costing procedures didn’t appropriately account for fluctuations in the costs of several components.
Inventories were overstated and cost of goods sold was understated, resulting in overstated gross profit, operating income and net income for the first three quarters of fiscal 2023, NAPCO said.
NAPCO estimates net income for the first quarter when restated will be $2.9 million, down from $6.4 million; $3.7 million for the second quarter, down from $8.4 million; and $9.5 million for the third quarter, down from $10.8 million.