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

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