ENG | RUS

Press Releases

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
FOR IMMEDIATE RELEASE
 
Magal Security Systems Ltd. Reports
First Quarter 2017 Financial Results
 
YEHUD, ISRAEL, May 30, 2017 -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three month period ended March 31, 2017. Management will hold an investors’ conference call later today (at 9am Eastern Time) to discuss the results.


FIRST QUARTER RESULTS SUMMARY
  • Revenue grew year-over-year by 14% to $14.3 million;
  • Higher level of operating expenses led to operating loss of $0.9 million, primarily due to increased investment in sales and marketing to capitalize on opportunities, particularly in the North American market;
  • Incurred non-cash financial-expense of $2.4 million due to a sharp quarterly variation in the US dollar/Israeli shekel exchange rate;
  • Net loss of $3.7 million in the quarter;
  • EBITDA loss of $0.4 million in the quarter;
  • Net cash and equivalents of $50.7 million at quarter-end;
 
FISRT QUARTER 2017 RESULTS

Revenues for the first quarter of 2017 were $14.3 million, an increase of 14% compared with revenues of $12.6 million in the first quarter of 2016.
Gross profit for the first quarter of 2017 was $7.4 million, or 51.7% of revenues, compared with a gross profit of $6.2 million or 49.6% of revenues, in the first quarter of 2016. The change in gross margin between quarters is a function of the revenue mix between volume of projects executed, and volume of products and services sold.

Operating loss for the first quarter of 2017 was $0.9 million compared to operating income of $0.6 million in the first quarter of 2016. The main difference was due to a higher level of operating expenses in the current quarter, which was primarily an increase in sales and marketing expenses, which grew to $4.8 million from $2.6 million in the first quarter of 2016.
Financial expenses, net, for the first quarter of 2017 were $2.6 million compared with financial expenses of $0.6 million in the first quarter of 2016.  In Israel, Magal’s functional currency is the Israeli Shekel and the vast majority of Magal’s cash deposits are held in US dollars. Because the US dollar declined in value by 5.5%, between the end of 2016 and the end of the first quarter of 2017, the Company recorded a non-cash financial expense due to the reduction in the Israeli shekel value of its US dollar deposits, leading to the high level of financial expense in the current quarter.
Net loss in the first quarter of 2017 was $3.7 million, or $0.16 per share, compared with a net loss of $0.5 million, or $0.03 per share in the first quarter of 2016.
 
EBITDA in the first quarter of 2017 was a negative $0.4 million, compared to a positive EBITDA of $0.9 million in the first quarter of 2016.
Cash, short term deposits and restricted deposits, net of bank debt, as of March 31, 2017, were $50.7 million, or $2.21 per share, compared with cash and short term deposits, net of bank debt, of $52.5 million, or $2.29 per share, as of December 31, 2016.

MANAGEMENT COMMENT

Commenting on the results, Mr. Saar Koursh, CEO of Magal, said, “Our first quarter is typically a seasonally weak quarter; however, we still achieved revenue growth of 14% over the first quarter of last year. Our net income was negatively impacted by a non-cash financial expense related to a relatively sharp quarterly change in the US dollar/Israeli shekel exchange rate and its effect on our sizable US dollar denominated cash holdings. In addition, we significantly increased our investment in sales and marketing, primarily in the United States. This is because we see many solid opportunities in our end-markets that we intend to capitalize on. We believe that these investments, together with our strong balance sheet, will enable us to pursue many opportunities for growth, and will position Magal well for long-term prosperity.”
 
INVESTORS’ CONFERENCE CALL INFORMATION:

The Company will host a conference call later today, May 30, 2016, at 9:00 a.m. Eastern Time and 4:00 p.m. Israel time.
To participate, please call one of the following teleconferencing numbers:
US: 1 888 407 2553; Israel: 03 918 0687; UK: 0 800 917 9141; Intl.: +972 3 918 0687
If you are unable to connect using the toll-free numbers, please try the international dial-in number.
The call will also be webcast live. The link to access the call can be found in the investor relations section of the company’s website or direct from the attached link:

 http://www.veidan-stream.com/?con=Magal_Security_Systems_Q1_2017_Results_Conference_Call
 
A replay link of the call will be available from the day after the call from the above link.


ABOUT MAGAL

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 some of the most challenging conditions.
 
Magal offers comprehensive integrated solutions for critical sites, managed by Fortis4G – our 4th generation, cutting-edge PSIM (Physical Security Information Management system). The solutions leverage our broad portfolio of homegrown PIDS (Perimeter Intrusion Detection Systems), 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.

Information with Regard to non-GAAP Financial Measures

The Company presents its financial statements in accordance with U.S. GAAP. Magal’s management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and make operating decisions. EBITDA is provided in this press release and the accompanying supplemental information because management believes this non-GAAP measure is useful for investors and financial institutions as it facilitates operating performance comparisons from period to period. As presented in this release, the term EBITDA consists of net profit (loss) according to U.S. GAAP, excluding net financing expenses,  taxes, depreciation and amortization.  EBITDA should not be considered in isolation or as a substitute for net profit (loss) or other statement of operations data prepared in accordance with GAAP as a measure of profitability. A reconciliation between the Company's results on a GAAP and non-GAAP basis is provided in a table below.

 
For more information:
 
Magal Security Systems  Ltd.
Saar Koursh, CEO
Tel: +972 3 539 1421
E-mail: elishevaa@magal-s3.com
Web: www.magal-s3.com
 
GK Investor Relations
Ehud Helft / Gavriel Frohwein

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

MAGAL  SECURITY SYSTEMS LTD.
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All numbers except EPS expressed in thousands of US$)
 
  Three Months
Ended March 31,                 
 
  2016   2017 % change  
Revenue 12,603   14,335 14  
Cost of revenue 6,357   6,924    
           
Gross profit 6,246   7,411 19  
Operating expenses:          
   Research and development, net 1,276   1,605 26  
   Selling and marketing 2,606   4,798 84  
   General and administrative 1,741   1,860 7  
Total operating expenses 5,623   8,263 47  
           
Operating income (loss) 623   (852)    
Financial expenses, net (859)   (2,636)    
           
Loss before income taxes (236)   (3,488)    
           
Taxes on income 227   205    
           
Net loss (463)   (3,693)    
           
Loss attributable to non-controlling interests (13)   (5)    
           
Net loss attributable to Magal shareholders' (476)   (3,698)    
           
Basic and diluted  net earnings per share ($0.03)   ($0.16)    
           
           
           
Weighted average number of shares used in computing basic and diluted  net earnings (loss) per share 16,398,872   22,916,333    
           
           
           
  Three Months
Ended March 31
   
  2016
%
  2017
%
   
           
Gross margin 49.6   51.7    
Research and development, net as a % of revenues 10.1   11.2    
Selling and marketing as a % of revenues 20.7   33.5    
General and administrative  as a % of revenues 13.8   13.0    
Operating margin 4.9   -    
Net  margin -   -    
 

 
MAGAL  SECURITY SYSTEMS LTD.
 RECONCILLATION OF EBITDA TO NET LOSS
(All numbers expressed in thousands of US$)
 
  Three Months
Ended March 31,                 
  2016   2017
       
GAAP Net loss (463)   (3,693)
   Less:      
   Financial expenses, net (859)   (2,636)
   Taxes on income (227)   (205)
   Depreciation and amortization (288)   (450)
EBITDA 911   (402)
       
 

MAGAL SECURITY SYSTEMS LTD.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All numbers expressed in thousands of US$)
 
  December 31,   March 31,
  2016   2017
CURRENT ASSETS:      
Cash and cash equivalents $19,692   $16,889
Short-term bank deposits 31,036   32,028
Restricted deposits 1,809   1,830
Trade receivables, net 13,702   11,790
Unbilled accounts receivable 4,232   3,475
Other accounts receivable and prepaid expenses 2,751   3,441
Inventories 6,818   7,198
       
Total current assets 80,040   76,651
       
 
Long term investments and receivables:
     
       
Long-term trade receivables 308   225
Long-term deposits and restricted bank deposits 126   134
Severance pay fund 1,321   1,397
Deferred income taxes 2,114   2,178
       
Total long-term investments and receivables 3,869   3,934
       
PROPERTY AND EQUIPMENT, NET 5,301   5,424
       
INTANGIBLE ASSETS, NET 4,933   4,761
       
GOODWILL 11,850   12,013
       
Total assets $105,993   $102,783
 
 

 
 
  December 31,   March 31,
  2016   2017
       
CURRENT LIABILITIES:      
       
Trade payables $4,040   $3,008
Customer advances 5,602   3,165
Other accounts payable and accrued expenses 11,646   11,844
       
Total current liabilities 21,288   18,017
       
LONG-TERM LIABILITIES:      
Deferred revenues 472   472
Deferred income taxes 167   170
Accrued severance pay 2,089   2,197
Other long-term liabilities 59   58
       
Total long-term liabilities 2,787   2,897
       
SHAREHOLDERS' EQUITY      
Share Capital: Ordinary shares of NIS 1 par value -      
    Authorized: 39,748,000 shares at December 31, 2016 and March 31, 2017; Issued and outstanding: 22,894,348 shares at December 31, 2016 and 22,952,448 shares at March 31, 2017 6,679   6,694
Additional paid-in capital 93,441   93,753
Accumulated other comprehensive loss (1,923)   (1,471)
Foreign currency translation adjustments (stand alone financial statements) 412   3,277
Accumulated deficit (16,600)   (20,298)
       
Total shareholders' equity 82,009   81,955
Non-controlling interest (91)   (86)
       
TOTAL SHAREHOLDERS' EQUITY 81,918   81,869
       
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $105,993   $102,783