Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the NAPCO Security Technologies Inc. 2014 second quarter financial results conference call. [Operator Instructions] I will now like to turn the conference over to Peter Seltzberg of Hayden IR. Please go ahead, sir.

Thank you. Good morning. Thank you all for joining us for today's conference call to discuss NAPCO's financial results for the second quarter ended December 31, 2013. By now, all of you should have had the opportunity to review the press release discussing the results. If you have not, please call our office, Hayden IR, at 646-419-4300, we'll 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 VP 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, Chairman and President of NAPCO. Dick, congratulations on another solid quarter. Please go ahead, sir.

Thank you, Peter. Good morning, everyone. Thank you for joining NAPCO's quarterly conference call to discuss the financial results for the three months and six months ending December 31, 2013. I am proud to report that the second quarter of fiscal 2014 was the strongest second quarter in five years in terms of revenue, adjusted EBITDA and net income. In addition, our six months year-over-year results were equally solid. These results also show sequential improvement from the fiscal 2014 first quarter in revenue, gross profit, operating income and net income. Our efforts to transition from a traditional security manufacturer to a company offering some of the most advanced technologies in the industries are helping us grow our revenue and market share. In addition, we have added recurring revenue to our revenue stream and this too is contributing to our growth. Our subscription based service product lines deliver recurring streams and continue to show significant and accelerating growth. These include our iBridge Connected Home, our iSee Video remote video products, and StarLink wireless communication product lines. Activations and market penetration continued to increase as consumer interest in broadband, internet space, remote control, home automation expands. Recurring revenue for the second quarter increased 115% and for the six months increased to 113%, and grew sequentially by 30%. Our top line results in both periods contributed favorably to the bottom line, demonstrating the strong business model we always speak about. Bottom line results were also favorably impacted by the continuing decrease in interest expense which resulted from lower interest rate and lower debt levels. These metrics are being driven by two catalysts in the market place which have only recently emerged and are still in the early adoption stage. One is the emergence of the connected home, the second is the urgent and…

Thank you, Dick, and good morning everybody. Revenues for the three months ended December 31, 2013 increased 7% to $18.4 million compared to $17.2 million in the same period a year ago. For the six months, sales increased 10% to $35.6 million from $32.4 million in the same period a year ago. The increase in sales for the three and six months was primarily due to increased sales of the company's door locking products and access controlled products, as well as increased recurring revenue. Gross profit for the three months ended December 31, 2013 increase approximately 9% to $5.1 million or 27.7% of sales compared to $4.6 million or 27% of sales for the same period a year ago. Gross profits for the six months increased approximately 15% to $10.1 million or 28.4% of sales compared to $8.8 million or 27.1% of sales in the same period a year ago. The increase in gross profit for the three and six months was primarily due to the increased sales, a positive shift in product mix to higher margin product, and a reduction in research and development spending to bring our new products to the market faster. This also demonstrates the impact of increased recurring revenue as well as our overall efficiency as our sales volume increases. Selling, general and administrative expenses for the quarter increased $260,000 or 6% to $4.5 million or 24.8% of sales, compared to $4.3 million or 24.9% of sales for the same period last year. Selling, general and administrative expenses for the six months increased by $502,000 or approximately 6% to $9.3 million or 26.2% of sales compared to $8.8 million or 27.2% of sales a year ago. The increase in selling, general and administrative expenses for the three and six months was due primarily to additional…

Thanks, Kevin. We continue our solid execution in the second fiscal quarter of 2014 and are confident this positions us well to achieve increased revenue and profitability as we go into the second half of our fiscal year, as historically our quarters get stronger as the fiscal year progresses. We have established a balanced portfolio to deliver sustainable growth and profitability with a diversified, sophisticated product platform encompassing end-to-end solutions that fit every budget level. Our expanding suite of products and services position us to meet the changing and heightened demand for security products both by consumers who increasingly recognize the benefit of monitoring and controlling their home systems from almost anywhere via their smart devices, which generates multiple, recurring monthly revenue for these services and through our long standing presence in the high gross margin commercial security products addressing rapidly growing sectors such as education. Again, the primary objective for 2014 and beyond is to continue to work aggressively to gain market penetration and increase market share throughout each of our divisions. We have committed to provide our customer base with most advanced and integrated technology to stay on the forefront of the security marketplace. As a last comment, I would like to reflect on two recent events. One was demonstrated by Google's $3.2 billion acquisition of Nest Labs, some of the largest companies in the world are participating in the connected home movement and NAPCO is part of this emerging and accelerating trend. The second event that many media reports from the recent consumer electronics show, CES in Las Vegas in January, discuss the trend known as the internet of things, IOT. This is the hot buzzword in the technology industry. According to a recent article in InformationWeek, Gartner, the leading technology information firm, defines the internet of…

(Operator Instructions) And I am showing we have no questions at this time.

Okay. Thank you everyone for participating in today's conference call. As always, should you have any further questions, please feel free to call Hayden IR, 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 third quarter 2014 results. Good bye and have a great day.

Ladies and gentlemen, this does conclude our conference for today. We thank you for your participation and you may now disconnect.