YEHUD, Israel, Aug. 13, 2020 /PRNewswire/ -- Magal
Security Systems, Ltd. (NASDAQ: MAGS) today announced its
financial results for the three and six months ended June 30, 2020. Management will hold a conference
call later today (at 10 a.m. Eastern
Time) to discuss the results.
Second Quarter 2020 Results Summary (all comparisons are to
the second quarter of 2019)
- Revenue of $16.4 million
compared to $19.7 million
- Gross margin 44.2% compared to 42.6%
- Operating income of $0.8
million compared to $0.2
million
- Net income attributable to Magal's shareholders
of $0.2 million compared to a
net loss of ($0.2) million
- EBITDA of $1.3 million, or
EBITDA margin of 7.8% compared to $0.7
million, or EBITDA margin of 3.6%
- $56.4 million, or $2.44 per share, of cash and cash equivalents,
short-term deposits and restricted cash and deposits, net of
short-term credit, compared to $52.2
million, or $2.26 per
share
Mr. Dror Sharon, Chief Executive
Officer of Magal, commented, "During this time of economic
uncertainty we are achieving our strategic goals while managing our
costs and maintaining profitability. COVID-19 impacted revenue and
new order bookings in the second quarter by limiting travel and
face-to-face meetings with prospects and existing clients, crucial
for closing new business. Moreover, COVID-19 limitations delayed
delivery of orders and execution of some of our projects. Our
diversified offering, serving numerous vertical markets in various
geographies, has offset the economic disruption in our target
verticals of Oil and Gas, Logistics, and Corrections. Despite the
COVID-19 impact on the top line this quarter, Magal delivered
positive net income and grew EBITDA by 78% on a revenue decrease of
17%. We improved our margin mix by increasing sales of
higher-margin Senstar products in the second quarter, which lifted
gross margin by almost 20 basis points. Furthermore, our operating
income improved due to effective cost controls and lower sales and
marketing expenses. We continue to invest in R&D and recently
launched Safe Spaces, a new solution that was developed during the
second quarter to address the unique public safety and enforcement
needs arising from the spread of COVID-19. Magal's strong balance
sheet provides a sound platform to execute our long-term strategy
to grow revenue, improve profitability and close new M&A
opportunities."
Second Quarter 2020 Results
Revenue was $16.4 million compared
with revenue of $19.7 million in the
second quarter of 2019. Revenue from Magal's Integrated Solutions
division (projects) represented approximately 53% of total revenue,
while external revenue from the Senstar Products division
represented approximately 47% 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 4%, respectively, compared to the second quarter of 2019.
Gross profit was $7.2 million, or
44.2% of revenue in the second quarter of 2020 compared with gross
profit of $8.4 million, or 42.6% of
revenue, in the in the year-ago period. The increase in gross
margin in the quarter was driven by Senstar product sales with a
product mix favoring higher margin IP-based products and services,
partially offset by an impact of the reduction in Magal Integrated
Solutions division revenue and gross profitability.
Operating expense decreased 21.5% to $6.4
million in the second quarter of 2020 compared to
$8.2 million in the prior-year
period. The decline in operating expense was primarily due to
deferred new hiring, reduction in travel expenses and lower
expenses related to sales and marketing, as well as to cost
efficiency measures taken in the quarter.
Operating income was $0.8 million
in the second quarter of 2020 compared to $0.2 million in the in the year-ago period.
Financial loss, which is a non-cash expense, as a result of the
end of period valuation of monetary assets and liabilities, was
$0.5 million in the second quarter of
2020 compared to a financial loss of $0.4
million in the year-ago period.
Net income attributable to Magal shareholders was $0.2 million, or $0.01 per share, compared with a net loss of
$(0.2) million, or $(0.01) per share in the second quarter of
2019.
EBITDA for the second quarter was $1.3 million compared with $0.7 million in the second quarter of 2019.
Cash and cash equivalents, short term deposits and restricted
cash and deposits, net of short-term credit as of June 30, 2020, was $56.4
million, or $2.44 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,
August 13, 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
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. The replay pin
number is 13706111.
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 June
30,
|
|
Six
Months
Ended June
30,
|
|
|
2020
|
|
2019
|
%
change
|
|
2020
|
|
2019
|
%
change
|
Revenue
|
16,367
|
|
19,697
|
(17)
|
|
33,810
|
|
40,887
|
(17)
|
Cost of
revenue
|
9,137
|
|
11,305
|
(19)
|
|
18,587
|
|
23,524
|
(21)
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
7,230
|
|
8,392
|
(14)
|
|
15,223
|
|
17,363
|
(12)
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research
and development, net
|
1,316
|
|
1,694
|
(22)
|
|
2,933
|
|
3,548
|
(17)
|
Selling
and marketing
|
2,855
|
|
4,238
|
(33)
|
|
6,838
|
|
8,508
|
(20)
|
General
and administrative
|
2,263
|
|
2,265
|
(0)
|
|
4,419
|
|
4,641
|
(5)
|
Total operating
expenses
|
6,434
|
|
8,197
|
(22)
|
|
14,190
|
|
16,697
|
(15)
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
796
|
|
195
|
|
|
1,033
|
|
666
|
|
Financial income
(expenses), net
|
(457)
|
|
(363)
|
|
|
13
|
|
(1,094)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
339
|
|
(168)
|
|
|
1,046
|
|
(428)
|
|
|
|
|
|
|
|
|
|
|
|
Taxes on
income
|
185
|
|
134
|
|
|
383
|
|
537
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
154
|
|
(302)
|
|
|
663
|
|
(965)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to redeemable non-controlling
interests and non-controlling interests
|
1
|
|
(66)
|
|
|
71
|
|
(176)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Magal's shareholders
|
153
|
|
(236)
|
|
|
592
|
|
(789)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
net income (loss) per share
|
$0.01
|
|
($0.01)
|
|
|
$0.03
|
|
($0.03)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares used in computing
basic and diluted net income (loss) per share
|
23,153,985
|
|
23,146,823
|
|
|
23,153,985
|
|
23,104,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
Ended June
30,
|
|
|
Six
Months
Ended June
30,
|
|
|
2020
%
|
|
2019
%
|
|
|
2020
%
|
|
2019
%
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
44.2
|
|
42.6
|
|
|
45.0
|
|
42.5
|
|
Research and
development, net as a % of revenues
|
8.0
|
|
8.6
|
|
|
8.7
|
|
8.7
|
|
Selling and marketing
as a % of revenues
|
17.4
|
|
21.5
|
|
|
20.2
|
|
20.8
|
|
General and
administrative as a % of revenues
|
13.8
|
|
11.5
|
|
|
13.1
|
|
11.4
|
|
Operating
margin
|
4.9
|
|
1.0
|
|
|
3.1
|
|
1.6
|
|
Net margin
|
0.9
|
|
-
|
|
|
1.8
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MAGAL SECURITY
SYSTEMS LTD.
RECONCILLATION OF EBITDA TO NET INCOME (LOSS)
(All numbers expressed in thousands of US$)
|
|
|
Three
Months
Ended June
30,
|
|
|
Six
Months
Ended June
30,
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
GAAP Net
income
|
154
|
|
(302)
|
|
|
663
|
|
(965)
|
Less:
|
|
|
|
|
|
|
|
|
Financial
income (expenses), net
|
(457)
|
|
(363)
|
|
|
13
|
|
(1,094)
|
Taxes on
income
|
185
|
|
134
|
|
|
383
|
|
537
|
Depreciation and amortization
|
(481)
|
|
(521)
|
|
|
(967)
|
|
(1,049)
|
EBITDA
|
1,277
|
|
716
|
|
|
2,000
|
|
1,715
|
MAGAL SECURITY
SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (All
numbers expressed in thousands of US$)
|
|
|
June
30,
|
|
December
31,
|
|
2020
|
|
2019
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$53,802
|
|
$34,531
|
Short-term bank
deposits
|
2,885
|
|
16,749
|
Restricted cash and
deposits
|
242
|
|
324
|
Trade receivables,
net
|
11,644
|
|
18,697
|
Unbilled accounts
receivable
|
7,075
|
|
8,897
|
Other accounts
receivable and prepaid expenses
|
4,194
|
|
4,510
|
Inventories
|
13,119
|
|
12,605
|
|
|
|
|
Total current
assets
|
92,961
|
|
96,313
|
|
|
|
|
Long term investments
and receivables:
|
|
|
|
|
|
|
|
Long-term deposits,
restricted bank deposits and other long-term accounts
receivable and prepaid expenses
|
124
|
|
134
|
Severance pay
fund
|
1,385
|
|
1,363
|
Deferred tax
assets
|
3,888
|
|
4,215
|
Operating lease
right-of-use assets
|
2,962
|
|
3,492
|
|
|
|
|
Total long-term
investments and receivables
|
8,359
|
|
9,204
|
|
|
|
|
PROPERTY AND
EQUIPMENT, NET
|
5,968
|
|
6,256
|
|
|
|
|
GOODWILL AND
INTANGIBLE ASSETS, NET
|
14,286
|
|
15,276
|
|
|
|
|
Total
assets
|
$121,574
|
|
$127,049
|
MAGAL SECURITY
SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
|
|
|
June
30,
|
|
December
31,
|
|
2020
|
|
2019
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
Short-term
credit
|
$529
|
|
$
-
|
Trade
payables
|
5,056
|
|
5,438
|
Customer
advances
|
4,462
|
|
5,587
|
Deferred
revenues
|
2,254
|
|
2,558
|
Other accounts
payable and accrued expenses
|
13,044
|
|
14,609
|
Short-term operating
lease liabilities
|
780
|
|
919
|
|
|
|
|
Total current
liabilities
|
26,125
|
|
29,111
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
Deferred
revenues
|
1,193
|
|
1,769
|
Deferred tax
liabilities
|
191
|
|
178
|
Accrued severance
pay
|
2,236
|
|
2,251
|
Long-term operating
lease liabilities
|
2,124
|
|
2,515
|
Other long-term
liabilities
|
334
|
|
371
|
|
|
|
|
Total long-term
liabilities
|
6,078
|
|
7,084
|
|
|
|
|
Redeemable
non-controlling interest
|
2,998
|
|
3,048
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Share Capital:
Ordinary shares of NIS 1 par value -
|
|
|
|
|
Authorized:
39,748,000 shares at June 30, 2020 and December 31, 2019;
Issued and outstanding: 23,153,985 shares at June 30, 2020 and
23,153,985
shares at December 31, 2019
|
6,750
|
|
6,750
|
Additional paid-in
capital
|
94,790
|
|
94,696
|
Accumulated other
comprehensive loss
|
(2,730)
|
|
(627)
|
Foreign currency
translation adjustments (stand-alone financial
statements)
|
5,796
|
|
5,924
|
Accumulated
deficit
|
(18,369)
|
|
(18,961)
|
|
|
|
|
Total shareholders'
equity
|
86,237
|
|
87,782
|
Non-controlling
interest
|
136
|
|
24
|
|
|
|
|
TOTAL
SHAREHOLDERS' EQUITY
|
86,373
|
|
87,806
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$121,574
|
|
$127,049
|
|
|
|
|
|
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SOURCE Magal Security Systems Ltd