EX-99.1 2 ex99_1.htm

 



EXHIBIT 99.1

Magal Security Systems Ltd. Reports
second quarter 2019 Financial Results

YEHUD, ISRAEL, August 15, 2019 -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three and six months ended June 30, 2019. Management will hold an investors’ conference call later today (at 10:00 am Eastern Time) to discuss the results.
 SECOND QUARTER 2019 HIGHLIGHTS
·
Revenue of $19.7 million, 38% of which were product revenues, versus 31% of revenues in Q2 last year
·
Operating income of $0.2 million and net loss of $0.3 million
·
 EBITDA of $0.7 million
·
Quarter-end net cash at $52.2 million

MANAGEMENT COMMENT
Commenting on the results, Mr. Dror Sharon, CEO of Magal, said, “We are pleased with the overall trends in our product revenues in the first half of the year, which have grown year-over-year since 2017. Furthermore, we are successfully executing on our strategy of expanding sales in strategic verticals. Our new oil & gas and logistics & transportation verticals are seeing increased interest from both existing and potential customers.”
“With regard to revenues from projects, in the second quarter of this year we experienced a general delay in tenders for new security projects in Latin America and Canada, mainly due to budget and political reasons, related to our core verticals in these territories. This had a significant impact on our results during the first half of the year compared to 2018. With that said, looking to the years ahead, we have a strong projects backlog and our pipeline is more geographically and vertically diverse than last year. We are also pleased that our project business in other geographies, including Israel, Africa and Spain performed well this quarter.”
SECOND QUARTER 2019 RESULTS
Revenues were $19.7 million, a decrease of 22% compared with revenues of $25.3 million in the second quarter of 2018.
Revenues from projects represented approximately 62% of total revenues, while revenues from products represented approximately 38% of total revenues. Revenues from projects and products decreased by approximately 31% and 4%, respectively, year over year.
Gross profit was $8.4 million, or 42.6% of revenues, compared with gross profit of $11.1 million, or 43.6% of revenues, in the second quarter of 2018. The change in gross margin between quarters is a function of the revenue mix in the particular quarter and the volume of revenues.
Operating income was $0.2 million compared to operating income of $2.1 million in the second quarter of 2018.
Financial expenses were $0.4 million compared to financial income of $0.5 million in the second quarter of 2018. This is mainly driven by the strong depreciation of the US dollar against the New Israeli shekel and the Canadian dollar during the second quarter, lowering the value of the Company’s US dollar denominated monetary assets and thus leading to a higher level of non-cash financial expenses.
Net loss attributable to Magal shareholders' was $0.2 million, or $0.01 per share, compared with net income of $1.7 million, or $0.08 per share in the second quarter of 2018.

EBITDA was $0.7 million compared with $2.6 million in the second quarter of 2018.
Cash, short term deposits and restricted deposits, net of bank debt, as of June 30, 2019, was $52.2 million, or $2.26 per share, compared with cash and short term deposits, net of bank debt, of $55.0 million, or $2.38 per share, at December 31, 2018.

INVESTORS’ CONFERENCE CALL INFORMATION:
The Company will host a conference call later today, August 15, 2019, at 10am Eastern Time and 5pm Israel time.
To participate, please call one of the following teleconferencing numbers:
US: 1 888 668 9141; Israel: 03 918 0610; UK: 0 800 917 5108; Intl.: +972 3 918 0610
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.

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.

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
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 June 30,
    
Six Months
Ended June 30,
        
   
2019
    
2018
    
% change
    
2019
    
2018
    
% change
  
Revenue
    
19,697
      
25,348
      
(22
)
    
40,887
      
42,603
      
(4
)
Cost of revenue
    
11,305
      
14,286
      
(21
)
    
23,524
      
23,985
      
(2
)
                                                 
Gross profit
    
8,392
      
11,062
      
(24
)
    
17,363
      
18,618
      
(8
)
Operating expenses:
                                                
   Research and development, net
    
1,694
      
1,822
      
(7
)
    
3,548
      
3,427
      
4
  
   Selling and marketing
    
4,238
      
4,875
      
(13
)
    
8,508
      
9,108
      
(7
)
   General and administrative
    
2,265
      
2,288
      
(1
)
    
4,641
      
3,973
      
16
  
Total operating expenses
    
8,197
      
8,985
      
(9
)
    
16,697
      
16,508
      
1
  
                                                 
Operating income
    
195
      
2,077
              
666
      
2,110
          
Financial income (expenses), net
    
(363
)
    
522
              
(1,094
)
    
639
          
                                                 
Income (loss) before income taxes
    
(168
)
    
2,599
              
(428
)
    
2,749
          
                                                 
Taxes on income
    
134
      
696
              
537
      
1,013
          
                                                 
Net income (loss)
    
(302
)
    
1,903
              
(965
)
    
1,736
          
                                                 
Income (loss) attributable to redeemable non-controlling interests and non-controlling interests
    
(66
)
    
173
              
(176
)
    
173
          
                                                 
Net income (loss) attributable to Magal shareholders'
    
(236
)
    
1,730
              
(789
)
    
1,563
          
                                                 
Basic net income (loss) per share
  
$ 
(0.01
)
  
$
0.08
            
$ 
(0.03
)
  
$
0.07
          
                                                 
Diluted net income (loss) per share
  
$ 
(0.01
)
  
$
0.07
            
$ 
(0.03
)
  
$
0.07
          
                                                 
                                                 
Weighted average number of shares used in computing basic net income (loss) per share
    
23,146,823
      
23,042,346
              
23,104,160
      
23,037,456
          
                                                 
Weighted average number of shares used in computing diluted net income (loss) per share
    
23,146,823
      
23,286,703
              
23,104,160
      
23,318,174
          
                                                 



             
   
Three Months
Ended June 30,
    
Six Months
Ended June 30,
  
   
2019
%
    
2018
%
    
2019
%
    
2018
%
  
                         
Gross margin
    
42.6
      
43.6
      
42.5
      
43.7
  
Research and development, net as a % of revenues
    
8.6
      
7.2
      
8.7
      
8.0
  
Selling and marketing as a % of revenues
    
21.5
      
19.2
      
20.8
      
21.4
  
General and administrative  as a % of revenues
    
11.5
      
9.0
      
11.4
      
9.3
  
Operating margin
    
1.0
      
8.2
      
1.6
      
5
  
Net  margin
    
-
      
7.5
      
-
      
4.1
  


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,
  
   
2019
    
2018
    
2019
    
2018
  
                         
GAAP Net income (loss)
    
(302
)
    
1,903
      
(965
)
    
1,736
  
   Less:
                                
   Financial income (expenses), net
    
(363
)
    
522
      
(1,094
)
    
639
  
   Taxes on income
    
134
      
696
      
537
      
1,013
  
   Depreciation and amortization
    
(521
)
    
(499
)
    
(1049
)
    
(976
)
EBITDA
    
716
      
2,576
      
1,715
      
3,086
  




MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)

   
June 30,
    
December 31,
  
   
2019
    
2018
  
CURRENT ASSETS:
 
            
Cash and cash equivalents
  
$
42,016
    
$
38,665
  
Short-term bank deposits
    
7,014
      
13,150
  
Restricted deposits
    
3,208
      
3,135
  
Trade receivables, net
    
14,481
      
14,176
  
Unbilled accounts receivable
    
4,967
      
6,050
  
Other accounts receivable and prepaid expenses
    
3,774
      
4,126
  
Inventories
    
13,795
      
13,863
  
                 
Total current assets
    
89,255
      
93,165
  
                 
LONG TERM INVESTMENTS AND RECEIVABLES:
                
                 
Long-term deposits and restricted bank deposits
    
165
      
146
  
Severance pay fund
    
1,292
      
1,289
  
Deferred tax assets
    
3,529
      
3,459
  
                 
Total long-term investments and receivables
    
4,986
      
4,894
  
                 
PROPERTY AND EQUIPMENT, NET AND OPERATING LEASE RIGHT-OF-USE ASSETS
    
10,806
      
6,347
  
                 
GOODWILL AND INTANGIBLE ASSETS, NET
    
15,541
      
14,765
  
                 
TOTAL ASSETS
  
$
120,588
    
$
119,171
  



MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)


   
June 30,
    
December 31,
  
   
2019
    
2018
  
             
CURRENT LIABILITIES:
            
             
Trade payables
  
$
5,320
    
$
6,359
  
Customer advances
    
7,343
      
10,170
  
Deferred revenues
    
1,876
      
2,387
  
Other accounts payable and accrued expenses
    
12,572
      
13,226
  
Short-term operating lease liabilities
    
1,028
      
-
  
                 
Total current liabilities
    
28,139
      
32,142
  
                 
LONG-TERM LIABILITIES:
                
Deferred revenues
    
1,232
      
1,344
  
Deferred tax liabilities
    
181
      
182
  
Accrued severance pay
    
2,209
      
2,181
  
Long-term operating lease liabilities
    
3,193
      
-
  
Other long-term liabilities
    
255
      
351
  
                 
Total long-term liabilities
    
7,070
      
4,058
  
                 
Redeemable non-controlling interest
    
1,731
      
1,755
  
                 
SHAREHOLDERS' EQUITY
 
                
Share Capital: Ordinary shares of NIS 1 par value -
                
Authorized: 39,748,000 shares at June 30, 2019 and December 31, 2018; Issued and outstanding: 23,153,985 shares at June 30, 2019 and 23,049,639 shares at December 31, 2018
    
6,750
      
6,721
  
Additional paid-in capital
    
94,874
      
94,205
  
Treasury shares
    
(375
)
    
-
  
Accumulated other comprehensive loss
    
(935
)
    
(1,827
)
Foreign currency translation adjustments (stand alone financial statements)
    
4,816
      
2,795
  
Accumulated deficit
    
(21,467
)
    
(20,678
)
                 
Total shareholders' equity
    
83,663
      
81,216
  
Non-controlling interest
    
(15
)
    
-
  
                 
TOTAL SHAREHOLDERS' EQUITY
    
83,648
      
81,216
  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
120,588
    
$
119,171