Magal Security Systems Ltd. Reports Fourth Quarter & Full Year 2018 Financial Results

YEHUD, Israel, March 27, 2019 /PRNewswire/ -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three months and full year period ended December 31, 2018. Management will hold an investors' conference call later today (at 10:30am Eastern Time) to discuss the results.

FULL YEAR 2018 RESULTS SUMMARY

    --  Record revenue of $92.6 million, up 44% year over year;
    --  Net income of $2.9 million versus a net loss of $6.9 million in 2017;
    --  EBITDA of $7.0 million versus $0.6 million in 2017;
    --  Growth in year-over-year backlog and record bookings in 2018.

MANAGEMENT COMMENT

Commenting on the results, Mr. Dror Sharon, CEO of Magal, said, "We are very pleased with our performance in 2018, with revenues up by 44% and reaching an all time record high. The increase in revenues which was in great measure attributable to organic growth across the board, in all regions, consisted of a diversified mix of projects as well as products. Looking ahead into 2019, our pipeline is broad and strong, and the backlog is at a higher level than that with which we started last year. We are therefore excited with our potential ahead."

FULL YEAR 2018 RESULTS

Revenues for the year ended December 31, 2018 were a record $92.6 million, a 44% increase compared with $64.3 million in 2017. On an organic basis, excluding the contribution to revenues from the acquisition of Esc Baz which closed on April 2, 2018, revenues would have grown 38% year-over-year.

Gross profit for 2018 was $40.3 million, representing 43.5% of revenues, compared with $31.3 million, representing 48.7% of revenues in 2017. The change in the gross margin is a function of the revenue mix between projects executed and products and services sold.

Operating income for 2018 was $3.8 million compared with an operating loss of $1.2 million in 2017.

Net income for 2018 was $2.9 million, or $0.12 per share compared with a net loss of $6.9 million, or $0.30 per share, in 2017.

EBITDA in 2018 was $7.0 million compared with $0.6 million in 2017.

FOURTH QUARTER 2018 RESULTS

Revenues for the fourth quarter of 2018 were $26.1 million, an increase of 13% compared with revenues of $23.0 million in the fourth quarter of 2017.

Gross profit for the fourth quarter of 2018 was $10.6 million, or 40.6% of revenues, compared with gross profit of $10.7 million, or 46.6% of revenues, in the fourth quarter of 2017. The change in gross margin between quarters is a function of the revenue mix between projects executed and products and services sold.

Operating loss for the fourth quarter of 2018 was $0.4 million compared to operating income of $1.8 million in the fourth quarter of 2017. During the fourth quarter of 2018 there was a higher level of operating expenses, primarily general and administrative expenses which amounted to $4.2 million versus $2.2 million in the fourth quarter of 2017. The increase was primarily due to a number of one-time, non-cash events including a write-off of $1 million in goodwill related to the Cyberseal acquisition made in 2013 and a $0.7 million provision for a doubtful receivable.

Net loss in the fourth quarter of 2018 was $0.1 million, or $0.01 per share compared with net income of $0.3 million, or $0.01 per share in the fourth quarter of 2017.

EBITDA in the fourth quarter was $1.3 million compared with $2.3 million in the fourth quarter of 2017.

Cash, short term deposits and restricted deposits, net of bank debt, as of December 31, 2018, were $55.0 million, or $2.38 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.

INVESTORS' CONFERENCE CALL INFORMATION:

The Company will host a conference call later today, March 27, 2018, at 10:30am Eastern Time and 4:30pm Israel time.

To participate, please call one of the following teleconferencing numbers:

US: 1 888 668 9141; Israel: 03 918 0609; UK: 0 800 917 5108; Intl.: +972 3 918 0609

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 physical and video security solutions and products, as well as site management. Since 1969, Magal has delivered its products as well as tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 100 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 solutions including, PIDS (Perimeter Intrusion Detection Systems) and 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                                                               
            
            Full Year

                                                                            
        
         Ended December 31,                                                                         Ended December 31,


                                                                                                     2018                                                                    2017                                               2018         2017

                                                                                                                                                                        
          %                                                      
          %
                                                                                                                                                                          change                                                        change






            
              Revenue                                                                    26,105                                                                  23,017                                    13.4      92,602       64,292  44.0



            
              Cost of revenue                                                            15,503                                                                  12,289                                             52,299       32,967






            
              Gross profit                                                               10,602                                                                  10,728                                   (1.2)     40,303       31,325  28.7



            
              Operating expenses:



               Research and development, net                                                       1,838                                                                   1,619                                    13.5       6,852        6,558   4.5



               Selling and marketing                                                               4,982                                                                   5,125                                   (2.8)     18,557       18,158   2.2



               General and administrative                                                          4,217                                                                   2,181                                    93.4      11,139        7,853  41.8



            Total operating expenses                                                              11,037                                                                   8,925                                             36,548       32,569






            
              Operating income (loss)                                                     (435)                                                                  1,803                                              3,755      (1,244)



            Financial income (expenses), net                                                         670                                                                   (483)                                             1,361      (3,961)






            
              Income (loss) before income taxes                                             235                                                                   1,320                                              5,116      (5,205)





            Taxes on income                                                                          485                                                                   1,029                                              2,072        1,695






            
              Net income (loss)                                                           (250)                                                                    291                                              3,044      (6,900)






            Income (loss) attributable to redeemable non-controlling                               (150)                                                                                                                       95           14
    interests






            Net income (loss) attributable to Magal shareholders'                                  (100)                                                                    291                                              2,949      (6,914)






            
              Basic and diluted net income (loss) per share                             $(0.01)                                                                  $0.01                                              $0.12      $(0.30)










            
              Weighted average number of shares used in computing                    23,043,842                                                              23,025,222                                         23,040,436   22,989,009
    basic net income (loss) per share






            
              Weighted average number of shares used in computing                    23,043,842                                                              23,122,323                                         23,287,752   22,989,009
    diluted net income (loss) per share





                                                                                          Three Months                                                                                
            
              Full Year

                                                                                       Ended December 31                                                                                             Ended December 31,



                                                                                                     2018                                                                    2017                                               2018         2017

                                                                                                        %                                                                      %                                                 %           %






            Gross margin                                                                            40.6                                                                    46.6                                               43.5         48.7



            Research and development, net as a % of revenues                                         7.0                                                                     7.0                                                7.4         10.2



            Selling and marketing as a % of revenues                                                19.1                                                                    22.3                                               20.0         28.2



            General and administrative  as a % of revenues                                          16.2                                                                     9.5                                               12.0         12.2



            Operating margin                                                                                                                                                7.8                                                4.1



            Net  margin                                                                                                                                                     1.3                                                3.2


                                          
        
              MAGAL SECURITY SYSTEMS LTD.


                                      
         
        RECONCILLATION OF EBITDA TO NET INCOME (LOSS)


                                       
         
        (All numbers expressed in thousands of US$)




                                                                                         Three Months                     Full Year

                                                                                         Ended December 31,                     Ended December 31,

                                                                                                            ---

                                                                      2018                    2017               2018       2017

                                                                                                                          ---




     
                GAAP Net income (loss)                            (250)                    291              3,044    (6,900)



        Less:



        Financial income (expenses), net                              670                   (483)             1,361    (3,961)



        Taxes on income                                               485                   1,029              2,072      1,695



        Depreciation and amortization                             (1,722)                  (479)           (3,224)   (1,876)

                                                                                                                          ---


     EBITDA                                                         1,287                   2,282              6,979        632

                                                                                                                          ---


                                                               
        
               MAGAL SECURITY SYSTEMS LTD.


                                                        
           
         UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                                          
           
         (All numbers expressed in thousands of US$)




                                                                                                                      December 31, December 31,


                                                                                                                              2018          2017




     
                CURRENT ASSETS:





     Cash and cash equivalents                                                                                            $38,665       $22,463



     Short-term bank deposits                                                                                              13,150        27,025



     Restricted deposits                                                                                                    3,135         2,842



     Trade receivables, net                                                                                                14,176        14,489



     Unbilled accounts receivable                                                                                           6,050         6,309



     Other accounts receivable and prepaid expenses                                                                         3,935         2,850



     Inventories                                                                                                           13,863         9,596





     
                Total current assets                                                                                     92,974        85,574








     
                LONG TERM INVESTMENTS AND RECEIVABLES:





     Long-term deposits and restricted bank deposits                                                                          146           155



     Severance pay fund                                                                                                     1,289         1,524



     Deferred income taxes                                                                                                  3,650         2,579






     
                Total long-term investments and receivables                                                               5,085         4,258






     
                PROPERTY AND EQUIPMENT, NET                                                                               6,347         5,718






     
                GOODWILL AND INTANGIBLE ASSETS, NET                                                                      14,765        16,995





     Total assets                                                                                                        $119,171      $112,545


                                                                                                       
              
                MAGAL SECURITY SYSTEMS LTD.


                                                                                             
              
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                                               
              
                (All numbers expressed in thousands of US$)




                                                                                     December 31,                                                                               December 31,


                                                                                                                                                                         2018                     2017

                                                                                                                                                                                                  ---




     
                CURRENT LIABILITIES:





     Trade payables                                                                                                                                                   $6,359                   $5,198



     Customer advances                                                                                                                                                10,170                    7,191



     Other accounts payable and accrued expenses                                                                                                                      15,613                   13,784

                                                                                                                                                                                                  ---




     
                Total current liabilities                                                                                                                           32,142                   26,173

                                                                                                                                                                                                  ---




     LONG-TERM LIABILITIES:



     Deferred revenues                                                                                                                                                 1,344                      891



     Deferred income taxes                                                                                                                                               182                      190



     Accrued severance pay                                                                                                                                             2,181                    2,328



     Other long-term liabilities                                                                                                                                         351                       14





     
                Total long-term liabilities                                                                                                                          4,058                    3,423

                                                                                                                                                                                                  ---






     
                Redeemable non-controlling interest                                                                                                                  1,755

                                                                                                                                                                                                  ---




     
                SHAREHOLDERS' EQUITY





     Share Capital: Ordinary shares of NIS 1 par value -


                                                             
              Authorized: 39,748,000 shares at December 31, 2017 and December 31,                               6,721                    6,716
                                                             2018; Issued and outstanding: 23,032,448 shares at December 31, 2017
                                                             and 23,049,639 shares at December 31, 2018



     Additional paid-in capital                                                                                                                                       94,205                   93,975



     Accumulated other comprehensive loss                                                                                                                            (1,827)                    (87)



     Foreign currency translation adjustments (stand alone financial statements)                                                                                       2,795                    5,859



     Accumulated deficit                                                                                                                                            (20,678)                (23,514)

                                                                                                                                                                                                  ---




     
                TOTAL SHAREHOLDERS' EQUITY                                                                                                                          81,216                   82,949

                                                                                                                                                                                                  ---




     
                TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                        $119,171                 $112,545

                                                                                                                                                                                                  ===

For more information:

Magal Security Systems Ltd.
Diane Hill, Assistant to the CEO
Tel: +972-3-539-1421
E-mail: dianeh@magal-s3.com
Web: www.magalsecurity.com

GK Investor Relations
Ehud Helft / Gavriel Frohwein

Tel: (US) +1 646 688 3559
E-mail: magal@gkir.com

View original content:http://www.prnewswire.com/news-releases/magal-security-systems-ltd-reports-fourth-quarter--full-year-2018-financial-results-300819357.html

SOURCE Magal Security Systems Ltd