Magal Security Systems Ltd. Reports Third Quarter 2020 Financial Results
YEHUD, Israel, Nov. 16, 2020 /PRNewswire/ -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three and nine months ended September 30, 2020. Management will hold a conference call later today (at 10 a.m. Eastern Time) to discuss the results.
Third Quarter 2020 Results Summary (all comparisons are to the third quarter of 2019)
-- Revenue of $18.3 million compared to $22.2 million
-- Gross margin 41.8% compared to 45.1%
-- Operating income of $0.9 million compared to $2.5 million
-- Net income attributable to Magal's shareholders of $0.6 million compared
to $1.3 million
-- EBITDA of $1.3 million, or EBITDA margin of 7.3% compared to $3.1
million, or EBITDA margin of 13.8%
-- $53.4 million, or $2.31 per share, of cash and cash equivalents,
short-term deposits and restricted cash and deposits, net of short-term
credit, compared to $51.6 million, or $2.23 per share at year-end 2019
Mr. Dror Sharon, Chief Executive Officer of Magal, commented, "Globally, the Magal team is executing well, despite the impact of COVID restrictions. We are closing sales in the Magal Integrated Solutions (projects) and Senstar Products divisions, with backlog improving to a record level. Magal has remained profitable in every quarter of 2020 and preserved cash without restricting investments in sales and R&D, our primary growth drivers. Investments in new products and upgrades to our core platforms have continued throughout 2020, allowing the Company to maintain a competitive advantage and grow our business. With a strong balance sheet, industry-leading technological expertise and record backlog, Magal is positioned for recovery and growth post-COVID. I remain confident in our ability to execute our long-term strategy to grow revenue, improve profitability and close M&A opportunities."
Third Quarter 2020 Results
Revenue was $18.3 million compared with revenue of $22.2 million in the third quarter of 2019. Revenue from Magal's Integrated Solutions division (projects) represented approximately 54% of total revenue, while external revenue from the Senstar Products division represented approximately 46% of total revenue. The decline in revenue was primarily due to the impact of COVID-19 on projects execution and delivery, as well as a slowdown in product and software orders in certain territories. Revenues, not including inter-company revenues, from Magal's Integrated Solutions (projects) division and Senstar Products division decreased by 26% and 5%, respectively, compared to the third quarter of 2019.
Gross profit was $7.6 million, or 41.8% of revenue in the third quarter of 2020 compared with gross profit of $10.0 million, or 45.1% of revenue, in the year-ago period. The decrease in gross margin in the quarter was primarily due to the higher share of sales from the Magal Integrated Solutions division, which carry a lower gross margin than Senstar product sales, partially offset by the reduction in division revenue and gross profitability.
Operating expense decreased by 9% to $6.8 million in the third quarter of 2020 compared to $7.5 million in the third quarter of 2019. The decline in operating expense was primarily due to deferred new hiring, reduction in travel expenses and ongoing cost efficiency measures.
Operating income was $0.9 million in the third quarter of 2020 compared to $2.5 million in the third quarter of 2019.
Financial income was $0.0 million in the third quarter of 2020 compared to a financial loss of $0.6 million in the third quarter of 2019, which was a non-cash expense as a result of the end of period valuation of monetary assets and liabilities.
Net income attributable to Magal shareholders was $0.6 million, or $0.01 per share, compared to $1.3 million, or $0.06 per share in the third quarter of 2019.
EBITDA for the third quarter was $1.3 million compared with $3.1 million in the third quarter of 2019.
Cash and cash equivalents, short term deposits and restricted cash and deposits, net of short-term credit as of September 30, 2020, was $53.4 million, or $2.31 per share, compared with cash and short-term deposits of $51.6 million, or $2.23 per share, at December 31, 2019.
Investors Conference Call Information
The Company will host a conference call later today, November 16, 2020. The call will begin promptly at: 10:00 am Eastern Time; 5:00 pm Israel Time; 3:00 pm UK Time.
To participate, please call one of the following teleconferencing numbers:
-- US: 1-877-407-9716
-- Israel: 1-809-406-247
-- UK: 0-800-756-3429
-- International: 1-201-493-6779
The conference call will also be webcast live at http://public.viavid.com/index.php?id=142299.
A replay link of the call will be available at www.magalsecurity.com on November 16, 2020 after 1:00 pm Eastern time through November 30, 2020 at 11:59 pm Eastern time. The Replay Pin Number is 13712737.
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. In addition, there is uncertainty about the impact of the spread of the COVID19 virus and its effect on the Company's operations, the demand for Company's products, global supply chains and economic activity in general.
For more information:
Magal Security Systems Ltd.
IR Contact:
Diane Hill, Assistant to the CEO
Brett Maas Managing Partner Hayden IR
Tel: +972-3-539-1421
+1 646-536-7331
E-mail: dianeh@magal-s3.com
Brett@HaydenIR.com
Web: www.magalsecurity.com
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,
2020 2019 % change 2020 2019 % change
Revenue 18,254 22,188 (18) 52,064 63,075 (17)
Cost of revenue 10,629 12,187 (13) 29,216 35,710 (18)
Gross profit 7,625 10,001 (24) 22,848 27,365 (17)
Operating expenses:
Research and development, net 1,304 1,285 1 4,237 4,833 (12)
Selling and marketing 3,086 4,026 (23) 9,924 12,534 (21)
General and administrative 2,385 2,169 10 6,804 6,810 (0)
Total operating expenses 6,775 7,480 (9) 20,965 24,177 (13)
Operating income 850 2,521 1,883 3,188
Financial income (expenses), net 6 (573) 19 (1,667)
Income before income taxes 856 1,948 1,902 1,521
Taxes on income 587 438 970 975
Net income 269 1,510 932 546
Income (loss) attributable to redeemable non-controlling (347) 212 (276) 36
interests and non-controlling interests
Net income attributable to Magal's shareholders 616 1,298 1,208 510
Basic and diluted net income per share $0.01 $0.06 $0.03 $0.02
Weighted average number of shares used in computing 23,153,985 23,153,985 23,153,985 23,121,107
basic net income per share
Weighted average number of shares used in computing 23,153,985 23,167,049 23,153,985 23,141,574
diluted net income per share
Three Months Nine Months
Ended September 30, Ended September 30,
2020 2019 2020 2019
% % % %
Gross margin 41.8 45.1 43.9 43.4
Research and development, net as a % of revenues 7.1 5.8 8.1 7.7
Selling and marketing as a % of revenues 16.9 18.1 19.1 19.9
General and administrative as a % of revenues 13.1 9.8 13.1 10.8
Operating margin 4.7 11.4 3.6 5.1
Net margin 3.4 5.9 2.3 0.8
MAGAL SECURITY SYSTEMS LTD.
RECONCILLATION OF EBITDA TO NET INCOME
(All numbers expressed in thousands of US$)
Three Months Nine Months
Ended September
30, Ended September 30,
---
2020 2019 2020 2019
---
GAAP Net income 269 1,510 932 546
Less:
Financial income
(expenses), net 6 (573) 19 (1,667)
Taxes on income (587) (438) (970) (975)
Depreciation and
amortization (489) (542) (1,456) (1,591)
---
EBITDA 1,339 3,063 3,339 4,779
---
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
September 30, December 31,
2020 2019
CURRENT ASSETS:
Cash and cash equivalents $53,655 $34,531
Short-term bank deposits - 16,749
Restricted cash and deposits 257 324
Trade receivables, net 12,604 18,697
Unbilled accounts receivable 8,628 8,897
Other accounts receivable and prepaid expenses 4,650 4,510
Inventories 14,412 12,605
Total current assets 94,206 96,313
Long term investments and receivables:
Long-term deposits, restricted bank deposits and other long-term accounts 127 134
receivable and prepaid expenses
Severance pay fund 1,413 1,363
Deferred tax assets 3,998 4,215
Operating lease right-of-use assets 2,774 3,492
Total long-term investments and receivables 8,312 9,204
PROPERTY AND EQUIPMENT, NET 5,923 6,256
GOODWILL AND INTANGIBLE ASSETS, NET 14,383 15,276
Total assets $122,824 $127,049
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
September 30, December 31,
2020 2019
---
CURRENT LIABILITIES:
Short-term credit $529
$ -
Trade payables 4,297 5,438
Customer advances 4,696 5,587
Deferred revenues 2,208 2,558
Other accounts payable and
accrued expenses 12,574 14,609
Short-term operating lease
liabilities 702 919
---
Total current liabilities 25,006 29,111
---
LONG-TERM LIABILITIES:
Deferred revenues 2,148 1,769
Deferred tax liabilities 197 178
Accrued severance pay 2,245 2,251
Long-term operating lease
liabilities 2,030 2,515
Other long-term liabilities 269 371
Total long-term liabilities 6,889 7,084
---
Redeemable non-controlling
interest 3,218 3,048
---
SHAREHOLDERS' EQUITY
Share Capital: Ordinary shares of NIS 1 par value -
Authorized: 39,748,000 shares at
September 30, 2020 and December 31, 6,750 6,750
2019; Issued and outstanding:
23,153,985 shares at September 30,
2020 and
23,153,985 shares at December 31,
2019
Additional paid-in capital 94,858 94,696
Accumulated other comprehensive
loss (1,891) (627)
Foreign currency translation
adjustments (stand-alone
financial statements) 6,158 5,924
Accumulated deficit (18,162) (18,961)
---
Total shareholders' equity 87,713 87,782
Non-controlling interest (2) 24
---
TOTAL SHAREHOLDERS' EQUITY 87,711 87,806
---
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $122,824 $127,049
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SOURCE Magal Security Systems, Ltd.
