Magal Security Systems Ltd. Reports Third Quarter 2018 Financial Results
YEHUD, Israel, Nov. 15, 2018 /PRNewswire/ -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three and nine months periods ended September 30, 2018. Management will hold an investors' conference call later today (at 9:30am Eastern Time) to discuss the results.
THIRD QUARTER RESULTS SUMMARY
-- Revenues increased by 75% to $23.9 million, reflecting continued
year-over-year revenue growth;
-- Operating income of $2.1 million (margin of 8.7%) compared with a loss
of $0.5 million in the third quarter last year;
-- Net income of $1.5 million (margin of 6.2%), compared with a loss of
$0.2 million last year; and
-- EBITDA of $2.6 million (margin of 10.9%).
THIRD QUARTER 2018 RESULTS
Revenues for the third quarter of 2018 were $23.9 million, an increase of 75% compared with revenues of $13.7 million in the third quarter of 2017.
Gross profit for the third quarter of 2018 was $11.1 million, or 46.4% of revenues, an increase of 70% compared with gross profit of $6.5 million or 47.7% of revenues, in the third quarter of 2017.
Operating income for the third quarter of 2018 was $2.1 million, or 8.7% of revenues, a significant improvement compared to an operating loss of $0.5 million in the third quarter of 2017.
Financial income, net for the third quarter was $52 thousand compared with financial income, net of $0.5 million in the third quarter of 2017.
Net income in the third quarter of 2018 was $1.5 million, representing 6.2% of revenues, or $0.06 per share, compared with a net loss of $0.2 million, or $0.01 loss per share in the third quarter of 2017.
EBITDA in the third quarter was $2.6 million, or 10.9% of revenue, a significant improvement compared with a negative EBITDA of $43 thousand in the third quarter of 2017.
Cash, short term deposits and restricted deposits, net of bank debt, as of September 30, 2018, were $50.4 million, or $2.19 per share, compared with cash and short term deposits, net of bank debt, of $45.4 million, or $1.97 per share, at June 30, 2018.
MANAGEMENT COMMENT
Commenting on the results, Mr. Dror Sharon, CEO of Magal, commented, "We are pleased with Magal's performance in the quarter, with a strong year-over-year improvement in revenues, net income and EBITDA. In nine months, we have already surpassed 2017 full year revenues. Looking ahead, our pipeline of opportunities has more potential than in previous years and we are working hard to convert these opportunities into backlog which remains at high levels."
Continued Mr. Sharon, "Our improvement over last year is driven by our increasingly broad product suites that meet the increasing needs of security and HLS (homeland security) markets, especially border and critical infrastructure protection. All the geographies that we are focused on showed a recovery in 2018, both on the products side of the business as well as on the projects side. Furthermore, in line with our strategy, over the past few quarters we have successfully been increasing the recurring revenue portion of our revenues, which now amounts to around a fifth of revenue. Looking ahead, I am excited about the future as we begin to unleash our potential."
INVESTORS' CONFERENCE CALL INFORMATION:
The Company will host a conference call later today, November 15, 2018, at 9:30am Eastern Time and 4:30pm Israel time.
To participate, please call one of the following teleconferencing numbers:
US: 1 888 407 2553; Israel: 03 918 0644; UK: 0 800 917 9141; Intl.: +972 3 918 0644
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
Nine Months
Ended September 30, Ended September 30,
2017 2018 % change 2017 2018
%
change
Revenue 13,686 23,894 75 41,275 66,497 61
Cost of revenue 7,152 12,811 20,678 36,796
Gross profit 6,534 11,083 70 20,597 29,701 44
Operating expenses:
Research and
development, net 1,652 1,587 (4) 4,939 5,014 2
Selling and marketing 3,671 4,467 22 13,033 13,575 4
General and
administrative 1,739 2,949 70 5,672 6,922 22
Total operating
expenses 7,062 9,003 27 23,644 25,511 8
Operating income (loss) (528) 2,080 (3,047) 4,190
Financial income
(expenses), net 532 52 (3,478) 691
Income (loss) before
income taxes 4 2,132 (6,525) 4,881
Taxes on income 197 574 666 1,587
Net income (loss) (193) 1,558 (7,191) 3,294
Income (loss)
attributable to non-
controlling interests 72 14 245
Net income (loss)
attributable to Magal
shareholders' (193) 1,486 (7,205) 3,049
Basic and diluted net
income (loss) per
share $(0.01) $0.06 $(0.31) $0.13
Weighted average number
of shares used in
computing basic net
income (loss) per
share 23,012,448 23,042,895 22,976,806 23,039,289
Weighted average number
of shares used in
computing diluted net
income (loss) per
share 23,012,448 23,296,520 22,976,806 23,310,976
Three Months
Nine Months
Ended September 30, Ended September 30,
2017 2018 2017 2018
% % % %
Gross margin 47.7 46.4 49.9 44.7
Research and
development, net as a
% of revenues 12.1 6.6 12.0 7.5
Selling and marketing
as a % of revenues 26.8 18.7 31.6 20.4
General and
administrative as a %
of revenues 12.7 12.3 13.7 10.4
Operating margin 8.7 6.3
Net margin 6.2 4.6
MAGAL SECURITY SYSTEMS LTD.
RECONCILLATION OF EBITDA TO NET INCOME (LOSS)
(All numbers expressed in thousands of US$)
Three Months Nine Months
Ended September 30, Ended September 30,
---
2017 2018 2017 2018
---
GAAP Net income
(loss) (193) 1,558 (7,191) 3,294
Less:
Financial income
(expenses), net 532 52 (3,478) 691
Taxes on income (197) (574) (666) (1,587)
Depreciation and
amortization (485) (526) (1,397) (1,502)
---
EBITDA (43) 2,606 (1,650) 5,692
---
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
December 31, September 30,
2017 2018
CURRENT ASSETS:
Cash and cash
equivalents $22,463 $39,079
Short-term bank
deposits 27,025 8,013
Restricted deposits 2,842 3,270
Trade receivables,
net 14,489 16,706
Unbilled accounts
receivable 6,309 6,946
Other accounts
receivable and
prepaid expenses 2,850 4,097
Inventories 9,596 11,972
Total current assets 85,574 90,083
Long term investments and receivables:
Long-term deposits
and restricted bank
deposits 155 148
Severance pay fund 1,524 1,315
Deferred income
taxes 2,579 2,615
Total long-term
investments and
receivables 4,258 4,078
PROPERTY AND
EQUIPMENT, NET 5,718 6,561
GOODWILL AND
INTANGIBLE ASSETS,
NET 16,995 15,816
Total assets $112,545 $116,538
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
December 31,
September 30,
2017 2018
---
CURRENT LIABILITIES:
Trade payables $5,198 $4,478
Customer advances 7,191 9,107
Other accounts payable and
accrued expenses 13,784 13,828
---
Total current liabilities 26,173 27,413
---
LONG-TERM LIABILITIES:
Deferred revenues 891 751
Deferred income taxes 190 185
Accrued severance pay 2,328 2,182
Other long-term liabilities 14 336
Total long-term liabilities 3,423 3,454
---
Non-controlling interest 1,668
SHAREHOLDERS' EQUITY
Share Capital: Ordinary shares of NIS 1 par value -
Authorized: 39,748,000 shares at
December 31, 2017 and September
30, 2018; Issued and outstanding:
23,032,448 shares at December 31,
2017 and 23,042,972 shares at
September 30, 2018 6,716 6,719
Additional paid-in capital 93,975 94,109
Accumulated other
comprehensive loss (87) (655)
Foreign currency translation
adjustments (stand alone
financial statements) 5,859 4,128
Accumulated deficit (23,514) (20,298)
---
TOTAL SHAREHOLDERS' EQUITY 82,949 84,003
---
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $112,545 $116,538
===
For more information:
Magal Security Systems Ltd. GK Investor Relations
Diane Hill, Assistant to the CEO Ehud Helft /Gavriel Frohwein
Tel: +972-3-539-1421
Tel: (US) +1-646-688-3559
E-mail: dianeh@magal-s3.com
E-mail: magal@gkir.com
Web: www.magalsecurity.com
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SOURCE Magal Security Systems Ltd
