Magal Security Systems Ltd. Reports Second Quarter 2018 Financial Results
YEHUD, Israel, Aug. 15, 2018 /PRNewswire/ -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three and six months periods ended June 30, 2018. Management will hold an investors' conference call later today (at 9:30am Eastern Time) to discuss the results.
SECOND QUARTER RESULTS SUMMARY
-- Strong growth in second quarter revenue to $25.3 million, up 91%
year-over-year and a 47% increase sequentially.
-- Operating income of $2.1 million compared with a loss of $1.7 million
last year;
-- Net income of $1.7 million compared with a loss of $3.3 million last
year;
-- EBITDA of $2.6 million, 10.2% of revenue
SECOND QUARTER 2018 RESULTS
Revenues for the second quarter of 2018 were $25.3 million, a significant increase of 91% compared with revenues of $13.3 million in the second quarter of 2017.
Gross profit for the second quarter of 2018 was $11.1 million, or 43.6% of revenues, an increase of 66% compared with gross profit of $6.7 million or 50.2% of revenues, in the second quarter of 2017. The change in gross margin between the quarters was a function of the products and projects mix executed during the quarter.
Operating income for the second quarter of 2018 was $2.1 million, a significant improvement compared to an operating loss of $1.7 million in the second quarter of 2017.
Financial income, net for the second quarter was $0.5 million compared with financial expenses, net of $1.4 million in the second quarter of 2017.
Net income in the second quarter of 2018 was $1.7 million, or $0.08 per share, compared with a net loss of $3.3 million, or $0.14 loss per share in the second quarter of 2017.
EBITDA in the second quarter was $2.6 million, or 10.2% of revenue, an improvement compared with negative EBITDA of $1.2 million in the second quarter of 2017.
Cash, short term deposits and restricted deposits, net of bank debt, as of June 30, 2018, were $45.4 million, or $1.97 per share, compared with cash and short term deposits, net of bank debt, of $52.3 million, or $2.27 per share, at December 31, 2017. The decrease in cash is primarily due to the investment in working capital for scaling up of various upcoming projects.
Commencing in the second quarter, Magal fully consolidated the financial results of its recently acquired E.S.C. Baz subsidiary into its financial results.
MANAGEMENT COMMENT
Commenting on the results, Mr. Dror Sharon, CEO of Magal, commented, "Magal had a good quarter from all standpoints, with organic growth in revenue and corresponding improvements in profit across the board. Our revenues increased on the back of the solid backlog we have built, which continues to remain at healthy levels. Magal is in a good position for 2018."
Continued Mr. Sharon, "Since joining Magal in June, I have been very impressed by what I have seen. Magal is a company with outstanding engineers and employees and market leading technology. I see much potential for growth, as our technology and product offerings continue to address the growing needs of the security and HLS markets. I am excited and look forward to growing the company over the quarters and years ahead."
INVESTORS' CONFERENCE CALL INFORMATION:
The Company will host a conference call later today, August 15, 2018, at 9:30am Eastern Time and 4:30pm Israel time.
To participate, please call one of the following teleconferencing numbers:
US: 1 866 744 5399; Israel: 03 918 0692; UK: 0 800 404 8418; Intl.: +972 3 918 0692
If you are unable to connect using the toll-free numbers, please try the international dial-in number.
A replay of the call will be available on the Company's website for three months from the day after the call. The link to the replay will be accessible at www.magalsecurity.com.
ABOUT MAGAL SECURITY SYSTEMS LTD.
Magal is a leading international provider of solutions and products for physical and video security solutions, as well as site management. Over the past 45 years, Magal has delivered its products as well as tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 80 countries - under the most challenging conditions.
Magal offers comprehensive integrated solutions for critical sites, managed by Fortis4G - our 4th generation, cutting-edge physical security information management system (PSIM). The solutions leverage our broad portfolio of home-grown PIDS (Perimeter Intrusion Detection Systems), Symphony - our advanced VMS (Video Management Software) with native IVA (Intelligent Video Analytics) security solutions.
Forward Looking Statements
This press release contains forward-looking statements, which are subject to risks and uncertainties. Such statements are based on assumptions and expectations which may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, may differ from the results discussed in the forward-looking statements. A number of these risks and other factors that might cause differences, some of which could be material, along with additional discussion of forward-looking statements, are set forth in the Company's Annual Report on Form 20-F filed with the Securities and Exchange Commission.
* Tables to follow *
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All numbers except EPS expressed in thousands of US$)
Three Months Six Months
Ended June 30, Ended June 30,
2017 2018% 2017 2018%
change change
--- --- ------
Revenue 13,254 25,348 91 27,589 42,603 54
Cost of revenue 6,602 14,286 13,526 23,985
----- ------ ------ ------
Gross profit 6,652 11,062 66 14,063 18,618 32
Operating expenses:
Research and
development, net 1,682 1,822 8 3,287 3,427 4
Selling and marketing 4,564 4,875 7 9,362 9,108 (3)
General and
administrative 2,073 2,288 10 3,933 3,973 1
Total operating
expenses 8,319 8,985 8 16,582 16,508 -
----- ----- ------ ------
Operating income (loss) (1,667) 2,077 (2,519) 2,110
Financial income
(expenses), net (1,374) 522 (4,010) 639
------ --- ------ ---
Income (loss) before
income taxes (3,041) 2,599 (6,529) 2,749
Taxes on income 264 696 469 1,013
--- --- --- -----
Net income (loss) (3,305) 1,903 (6,998) 1,736
====== ===== ====== =====
Income (loss)
attributable to non-
controlling interests 9 173 14 173
--- --- --- ---
Net income (loss)
attributable to Magal
shareholders' (3,314) 1,730 (7,012) 1,563
====== ===== ====== =====
Basic net income (loss)
per share ($0.14) $0.08 $(0.31) $0.07
====== ===== ====== =====
Diluted net income
(loss) per share ($0.14) $0.07 $(0.31) $0.07
====== ===== ====== =====
Weighted average number
of shares used in
computing 23,032,448 23,042,346 22,958,689 23,037,456
basic net income (loss) per share
Weighted average number
of shares used in
computing 23,032,448 23,286,703 22,958,689 23,318,174
diluted net income (loss) per share
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2017 2018 2017 2018
---- ---- ---- ----
% % % %
--- --- --- ---
Gross margin 50.2 43.6 51 43.7
Research and
development, net as a
% of revenues 12.7 7.2 11.9 8
Selling and marketing
as a % of revenues 34.4 19.2 33.9 21.4
General and
administrative as a %
of revenues 15.6 9.0 14.3 9.3
Operating margin - 8.2 - 5
Net margin - 6.8 - 3.7
MAGAL SECURITY SYSTEMS LTD.
RECONCILLATION OF EBITDA TO NET LOSS
(All numbers expressed in thousands of US$)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2017 2018 2017 2018
---- ---- ---- ----
GAAP Net income
(loss) (3,305) 1,903 (6,998) 1,736
Less:
Financial income
(expenses), net (1,374) 522 (4,010) 639
Taxes on income 264 696 469 1,013
Depreciation and
amortization (462) (499) (912) (976)
---- ---- ---- ----
EBITDA (1,205) 2,576 (1,607) 3,086
------ ----- ------ -----
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
December 31, June 30,
2017 2018
---- ----
CURRENT ASSETS:
Cash and
cash
equivalents $22,463 $34,812
Short-term
bank
deposits 27,025 6,605
Restricted
deposits 2,842 3,964
Trade
receivables,
net 14,489 15,779
Unbilled
accounts
receivable 6,309 6,075
Other
accounts
receivable
and
prepaid
expenses 2,850 2,910
Inventories 9,596 10,940
Total
current
assets 85,574 81,085
------ ------
LONG TERM INVESTMENTS AND RECEIVABLES:
Long-term
deposits
and
restricted
bank
deposits 155 153
Severance
pay fund 1,524 1,412
Deferred
income
taxes 2,579 2,529
----- -----
Total long-
term
investments
and
receivables 4,258 4,094
----- -----
PROPERTY
AND
EQUIPMENT,
NET 5,718 6,188
----- -----
GOODWILL
AND
INTANGIBLE
ASSETS,
NET 16,995 16,272
Total
assets $112,545 $107,639
======== ========
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
December 31, June 30,
2017 2018
---- ----
CURRENT LIABILITIES:
Trade payables $5,198 $5,114
Customer advances 7,191 3,278
Other accounts payable and accrued expenses 13,784 12,463
------ ------
Total current liabilities 26,173 20,855
------ ------
LONG-TERM LIABILITIES:
Deferred revenues 891 731
Deferred income taxes 190 185
Accrued severance pay 2,328 2,297
Other long-term liabilities 14 324
Total long-term liabilities 3,423 3,537
----- -----
Non-controlling interest - 1,586
--- -----
SHAREHOLDERS' EQUITY
Share Capital: Ordinary shares of NIS 1 par value -
Authorized: 39,748,000 shares at December 31, 2017 and June 30, 2018; 6,716 6,719
Issued and outstanding: 23,032,448 shares at December 31, 2017 and
23,042,852 shares at June 30, 2018
Additional paid-in capital 93,975 94,017
Accumulated other comprehensive loss (87) (1,170)
Foreign currency translation adjustments (stand alone financial statements) 5,859 3,879
Accumulated deficit (23,514) (21,784)
------- -------
TOTAL SHAREHOLDERS' EQUITY 82,949 81,661
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $112,545 $107,639
======== ========
For more information:
Magal Security Systems Ltd. GK Investor Relations
Ehud Helft / Gavriel Frohwein
Diane Hill, Assistant to the CEO Tel: (US) +1 646 688 3559
E-mail: magal@gkir.com
Tel: +972-3-539-1421
E-mail: dianeh@magal-s3.com
Web: www.magalsecurity.com
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SOURCE Magal Security Systems, Ltd
