YEHUD, Israel, May 14, 2020 /PRNewswire/ -- Magal
Security Systems, Ltd. (NASDAQ: MAGS) today announced its
financial results for the three months ended March 31, 2020. Management will hold an
investors' conference call later today (at 10 a.m. Eastern Time) to discuss the results.
FIRST QUARTER 2020 RESULTS SUMMARY (all comparisons are to
the first quarter of 2019)
- Revenue of $17.4 million
compared to $21.2 million
- Gross margin 45.8% compared to 42.3%
- Operating income of $0.2
million compared to $0.5
million
- Net income attributable to Magal's shareholders
of $0.4 million compared to a
net loss of ($0.6) million
- EBITDA of $0.7 million, or
EBITDA margin of 4.1% compared to $1.0
million, or EBITDA margin of 4.7%
- $54.4 million, or $2.35 per share, of cash and cash equivalents and
short-term deposits and restricted cash and deposits
Mr. Dror Sharon, Chief Executive
Officer of Magal, said "The first quarter results reflect our
priority to protect our employees, remain engaged with our
customers and continue to grow our pipeline of business during the
COVID-19 outbreak. Business delays due to COVID-19 restrictions
impacted Magal's Integrated Solutions division's ability to meet
with clients, and Senstar's Product division shipments, compressing
revenue in the quarter. Our strategy to diversify revenues helped
our results, as evidenced by our recent win in Africa for the Djibouti seaport security system design and
installation. While we are diversified, serving numerous vertical
markets, the economic disruption related to COVID-19 negatively
impacted our Oil and Gas, Logistics and to a lesser extent,
Corrections verticals. The Oil and Gas sector was affected by the
dramatic decline in oil prices, which caused delays in large
projects. We remain engaged with these customers and continue to
see purchase orders. We experienced some temporary delays in
revenue execution for some of our Logistics customers, mainly in
Europe. The Corrections facilities
vertical, primarily based in North
America, was impacted by temporary closures, driven by the
COVID-19 outbreak.
We maintained profitability with cost savings and efficiencies
that we enacted in the first quarter to reduce operating expenses.
We continue to innovate and are launching new solutions in our
Symphony VMS platform that address unique COVID-19 surveillance and
enforcement needs for our customers. Our goal in 2020 is to manage
our costs and maintain profitability while positioning the Company
for recovery and growth. Magal's sound financial standing with a
cash balance of over $54 million,
with no debt, gives us great confidence in our ability to execute
our long-term strategy to grow revenue, improve profitability and
identify new M&A opportunities arising from the global
crisis."
FIRST QUARTER 2020 RESULTS
Revenue was $17.4 million compared
with revenue of $21.2 million in the
first quarter of 2019. The decline in revenue was primarily due to
the completion of a large project in Latin America in the first quarter of the
prior year. Senstar Product division sales remained stable in the
first quarter despite shipment delays arising from technical
limitations related to the impact of COVID-19 on our customers.
Revenue from Magal's Integrated Solutions division (projects)
represented approximately 58% of total revenue, while external
revenue from the Senstar Products division represented
approximately 42% of total revenue. Revenue, not including
inter-company revenue, from Magal's Integrated Solutions
(projects) and the Senstar Products divisions decreased by 24% and
6%, respectively, compared to the first quarter of 2019.
Gross profit was $8.0 million, or
45.8% of revenue in the first quarter of 2020 compared with gross
profit of $9.0 million, or 42.3% of
revenue, in the year-ago period. The increase in gross margin in
the quarter was driven by Senstar product sales with mix favoring
higher margin IP-based products and services, partially offset by
an impact of the reduction in the projects revenue of Magal's
Integrated Solutions division.
Operating expense decreased 8.8% to $7.8
million in the first quarter of 2020 compared to
$8.5 million in the prior-year
period. The decline in operating expense was primarily due to
delays in new hiring, reduction in travel and marketing, as well as
cost efficiency measures taken in the quarter.
Operating income was $0.2 million
in the first quarter of 2020 compared to $0.5 million in the parallel period of 2019.
Financial income was $0.5 million
in the first quarter of 2020 compared to a financial loss of
$(0.7) million in the year-ago
period. Magal's functional currency in Israel is the Israeli Shekel (NIS) and the
vast majority of Magal's cash deposits are held in US dollars.
Because of the appreciation of the US dollar against the NIS during
the quarter, the Company recorded non-cash financial income.
Net income attributable to Magal shareholders was $0.4 million, or $0.02 per share, compared with a net loss of
$(0.6) million, or $(0.02) per share in the first quarter of
2019.
EBITDA was $0.7 million in
the first quarter of 2020 compared with $1.0
million in the first quarter of 2019.
Cash and cash equivalents, short term deposits and restricted
cash and deposits as of March 31,
2020, was $54.4 million, or
$2.35 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,
MAY 14, 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 13702170.
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 spread of the COVID19
virus and the impact it will have 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
|
* 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,
|
|
|
2020
|
|
2019
|
%
change
|
|
|
|
|
|
|
|
Revenue
|
17,443
|
|
21,190
|
(18)
|
|
Cost of
revenue
|
9,450
|
|
12,219
|
(23)
|
|
|
|
|
|
|
|
Gross
profit
|
7,993
|
|
8,971
|
(11)
|
|
Operating
expenses:
|
|
|
|
|
|
Research
and development, net
|
1,617
|
|
1,854
|
(13)
|
|
Selling
and marketing
|
3,983
|
|
4,270
|
(7)
|
|
General
and administrative
|
2,156
|
|
2,376
|
(9)
|
|
Total operating
expenses
|
7,756
|
|
8,500
|
(9)
|
|
|
|
|
|
|
|
Operating
income
|
237
|
|
471
|
|
|
Financial income
(expenses), net
|
470
|
|
(731)
|
|
|
|
|
|
|
|
|
Income (loss)
before income taxes
|
707
|
|
(260)
|
|
|
|
|
|
|
|
|
Taxes on
income
|
198
|
|
403
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
509
|
|
(663)
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to redeemable non-controlling
interests and non-controlling interests
|
70
|
|
(110)
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Magal's shareholders
|
439
|
|
(553)
|
|
|
|
|
|
|
|
|
Basic and diluted
net income (loss) per share
|
$0.02
|
|
$(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares used in computing
basic and diluted net income (loss) per share
|
23,153,985
|
|
23,061,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
Ended March
31,
|
|
|
|
2020
%
|
|
2019
%
|
|
|
|
|
|
|
|
|
Gross margin
|
45.8
|
|
42.3
|
|
|
Research and
development, net as a % of revenues
|
9.3
|
|
8.7
|
|
|
Selling and marketing
as a % of revenues
|
22.8
|
|
20.2
|
|
|
General and
administrative as a % of revenues
|
12.4
|
|
11.2
|
|
|
Operating
margin
|
1.4
|
|
2.2
|
|
|
Net margin
|
2.5
|
|
-
|
|
|
MAGAL SECURITY
SYSTEMS LTD.
|
RECONCILLATION OF
EBITDA TO NET INCOME (LOSS)
|
(All numbers
expressed in thousands of US$)
|
|
|
|
Three
Months
Ended March
31,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
GAAP Net income
(loss)
|
509
|
|
(663)
|
|
Less:
|
|
|
|
|
Financial
income (expenses), net
|
470
|
|
(731)
|
|
Taxes on
income
|
198
|
|
403
|
|
Depreciation and amortization
|
(486)
|
|
(528)
|
|
EBITDA
|
723
|
|
999
|
|
MAGAL SECURITY
SYSTEMS LTD.
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(All numbers
expressed in thousands of US$)
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2020
|
|
2019
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$41,578
|
|
$34,531
|
Short-term bank
deposits
|
12,474
|
|
16,749
|
Restricted cash and
deposits
|
312
|
|
324
|
Trade receivables,
net
|
13,173
|
|
18,697
|
Unbilled accounts
receivable
|
7,146
|
|
8,897
|
Other accounts
receivable and prepaid expenses
|
4,200
|
|
4,510
|
Inventories
|
12,482
|
|
12,605
|
|
|
|
|
Total current
assets
|
91,365
|
|
96,313
|
|
|
|
|
LONG TERM
INVESTMENTS AND RECEIVABLES:
|
|
|
|
|
|
|
|
Long-term deposits,
restricted bank deposits and other long-term accounts
receivable and prepaid expenses
|
128
|
|
134
|
Severance pay
fund
|
1,333
|
|
1,363
|
Deferred tax
assets
|
3,724
|
|
4,215
|
Operating lease
right-of-use assets
|
3,385
|
|
3,492
|
|
|
|
|
Total long-term
investments and receivables
|
8,570
|
|
9,204
|
|
|
|
|
PROPERTY AND
EQUIPMENT, NET AND OPERATING LEASE
RIGHT-OF-USE ASSETS
|
5,860
|
|
6,256
|
|
|
|
|
GOODWILL AND
INTANGIBLE ASSETS, NET
|
14,012
|
|
15,276
|
|
|
|
|
Total
assets
|
$119,807
|
|
$127,049
|
MAGAL SECURITY
SYSTEMS LTD.
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(All numbers
expressed in thousands of US$)
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2020
|
|
2019
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
Trade
payables
|
$4,258
|
|
$5,438
|
Customer
advances
|
4,339
|
|
5,587
|
Deferred
revenues
|
2,010
|
|
2,558
|
Other accounts
payable and accrued expenses
|
14,649
|
|
14,609
|
Short-term operating
lease liabilities
|
891
|
|
919
|
|
|
|
|
Total current
liabilities
|
26,147
|
|
29,111
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
Deferred
revenues
|
1,673
|
|
1,769
|
Deferred tax
liabilities
|
189
|
|
178
|
Accrued severance
pay
|
2,189
|
|
2,251
|
Long-term operating
lease liabilities
|
2,438
|
|
2,515
|
Other long-term
liabilities
|
330
|
|
371
|
|
|
|
|
Total long-term
liabilities
|
6,819
|
|
7,084
|
|
|
|
|
Redeemable
non-controlling interest
|
2,965
|
|
3,048
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Share Capital:
Ordinary shares of NIS 1 par value -
|
|
|
|
|
Authorized:
39,748,000 shares at March 31, 2020 and December 31, 2019;
Issued and outstanding: 23,153,985 shares at March 31, 2020 and
23,153,985 shares at December 31, 2019
|
6,750
|
|
6,750
|
Additional paid-in
capital
|
94,739
|
|
94,696
|
Accumulated other
comprehensive loss
|
(3,793)
|
|
(627)
|
Foreign currency
translation adjustments (stand-alone financial
statements)
|
4,618
|
|
5,924
|
Accumulated
deficit
|
(18,522)
|
|
(18,961)
|
|
|
|
|
Total shareholders'
equity
|
83,792
|
|
87,782
|
Non-controlling
interest
|
84
|
|
24
|
|
|
|
|
TOTAL
SHAREHOLDERS' EQUITY
|
83,876
|
|
87,806
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$119,807
|
|
$127,049
|
|
|
|
|
|
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SOURCE Magal Security Systems Ltd