Market Overview

Magal Security Systems Ltd. Reports Third Quarter 2020 Financial Results

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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.

Diane Hill, Assistant to the CEO

Tel: +972-3-539-1421

E-mail: dianeh@magal-s3.com

Web: www.magalsecurity.com

IR Contact:

Brett Maas Managing Partner Hayden IR

+1 646-536-7331

Brett@HaydenIR.com

 

 

MAGAL SECURITY SYSTEMS LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All numbers except EPS expressed in thousands of US$)







Three Months

Ended September 30,


Nine Months

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
interests and non-controlling interests

(347)


212



(276)


36












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
basic net income per share

23,153,985


23,153,985



23,153,985


23,121,107












Weighted average number of shares used in computing
diluted net income per share

23,153,985


23,167,049



23,153,985


23,141,574



















Three Months

Ended September 30,



Nine Months

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

Ended September 30,



Nine Months

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
receivable and prepaid expenses

127


134

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,
2019; Issued and outstanding: 23,153,985 shares at September 30, 2020 and
23,153,985 shares at December 31, 2019

6,750


6,750

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






Cision View original content:http://www.prnewswire.com/news-releases/magal-security-systems-ltd-reports-third-quarter-2020-financial-results-301173601.html

SOURCE Magal Security Systems, Ltd.

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