Magal Security Systems Ltd. Reports Third Quarter 2020 Financial Results
YEHUD, Israel, Nov. 16, 2020 /PRNewswire/ -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three and nine months ended September 30, 2020. Management will hold a conference call later today (at 10 a.m. Eastern Time) to discuss the results.
Third Quarter 2020 Results Summary (all comparisons are to the third quarter of 2019)
- Revenue of $18.3 million compared to $22.2 million
- Gross margin 41.8% compared to 45.1%
- Operating income of $0.9 million compared to $2.5 million
- Net income attributable to Magal's shareholders of $0.6 million compared to $1.3 million
- EBITDA of $1.3 million, or EBITDA margin of 7.3% compared to $3.1 million, or EBITDA margin of 13.8%
- $53.4 million, or $2.31 per share, of cash and cash equivalents, short-term deposits and restricted cash and deposits, net of short-term credit, compared to $51.6 million, or $2.23 per share at year-end 2019
Mr. Dror Sharon, Chief Executive Officer of Magal, commented, "Globally, the Magal team is executing well, despite the impact of COVID restrictions. We are closing sales in the Magal Integrated Solutions (projects) and Senstar Products divisions, with backlog improving to a record level. Magal has remained profitable in every quarter of 2020 and preserved cash without restricting investments in sales and R&D, our primary growth drivers. Investments in new products and upgrades to our core platforms have continued throughout 2020, allowing the Company to maintain a competitive advantage and grow our business. With a strong balance sheet, industry-leading technological expertise and record backlog, Magal is positioned for recovery and growth post-COVID. I remain confident in our ability to execute our long-term strategy to grow revenue, improve profitability and close M&A opportunities."
Third Quarter 2020 Results
Revenue was $18.3 million compared with revenue of $22.2 million in the third quarter of 2019. Revenue from Magal's Integrated Solutions division (projects) represented approximately 54% of total revenue, while external revenue from the Senstar Products division represented approximately 46% 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 5%, respectively, compared to the third quarter of 2019.
Gross profit was $7.6 million, or 41.8% of revenue in the third quarter of 2020 compared with gross profit of $10.0 million, or 45.1% of revenue, in the year-ago period. The decrease in gross margin in the quarter was primarily due to the higher share of sales from the Magal Integrated Solutions division, which carry a lower gross margin than Senstar product sales, partially offset by the reduction in division revenue and gross profitability.
Operating expense decreased by 9% to $6.8 million in the third quarter of 2020 compared to $7.5 million in the third quarter of 2019. The decline in operating expense was primarily due to deferred new hiring, reduction in travel expenses and ongoing cost efficiency measures.
Operating income was $0.9 million in the third quarter of 2020 compared to $2.5 million in the third quarter of 2019.
Financial income was $0.0 million in the third quarter of 2020 compared to a financial loss of $0.6 million in the third quarter of 2019, which was a non-cash expense as a result of the end of period valuation of monetary assets and liabilities.
Net income attributable to Magal shareholders was $0.6 million, or $0.01 per share, compared to $1.3 million, or $0.06 per share in the third quarter of 2019.
EBITDA for the third quarter was $1.3 million compared with $3.1 million in the third quarter of 2019.
Cash and cash equivalents, short term deposits and restricted cash and deposits, net of short-term credit as of September 30, 2020, was $53.4 million, or $2.31 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, November 16, 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
The conference call will also be webcast live at http://public.viavid.com/index.php?id=142299.
A replay link of the call will be available at www.magalsecurity.com on November 16, 2020 after 1:00 pm Eastern time through November 30, 2020 at 11:59 pm Eastern time. The Replay Pin Number is 13712737.
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: [email protected] |
IR Contact: Brett Maas Managing Partner Hayden IR +1 646-536-7331 |
MAGAL SECURITY SYSTEMS LTD. |
|||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||
(All numbers except EPS expressed in thousands of US$) |
|||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
2020 |
2019 |
% change |
2020 |
2019 |
% change |
||||||
Revenue |
18,254 |
22,188 |
(18) |
52,064 |
63,075 |
(17) |
|||||
Cost of revenue |
10,629 |
12,187 |
(13) |
29,216 |
35,710 |
(18) |
|||||
Gross profit |
7,625 |
10,001 |
(24) |
22,848 |
27,365 |
(17) |
|||||
Operating expenses: |
|||||||||||
Research and development, net |
1,304 |
1,285 |
1 |
4,237 |
4,833 |
(12) |
|||||
Selling and marketing |
3,086 |
4,026 |
(23) |
9,924 |
12,534 |
(21) |
|||||
General and administrative |
2,385 |
2,169 |
10 |
6,804 |
6,810 |
(0) |
|||||
Total operating expenses |
6,775 |
7,480 |
(9) |
20,965 |
24,177 |
(13) |
|||||
Operating income |
850 |
2,521 |
1,883 |
3,188 |
|||||||
Financial income (expenses), net |
6 |
(573) |
19 |
(1,667) |
|||||||
Income before income taxes |
856 |
1,948 |
1,902 |
1,521 |
|||||||
Taxes on income |
587 |
438 |
970 |
975 |
|||||||
Net income |
269 |
1,510 |
932 |
546 |
|||||||
Income (loss) attributable to redeemable non-controlling |
(347) |
212 |
(276) |
36 |
|||||||
Net income attributable to Magal's shareholders |
616 |
1,298 |
1,208 |
510 |
|||||||
Basic and diluted net income per share |
$0.01 |
$0.06 |
$0.03 |
$0.02 |
|||||||
Weighted average number of shares used in computing |
23,153,985 |
23,153,985 |
23,153,985 |
23,121,107 |
|||||||
Weighted average number of shares used in computing |
23,153,985 |
23,167,049 |
23,153,985 |
23,141,574 |
|||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
2020 % |
2019 % |
2020 % |
2019 % |
||||||||
Gross margin |
41.8 |
45.1 |
43.9 |
43.4 |
|||||||
Research and development, net as a % of revenues |
7.1 |
5.8 |
8.1 |
7.7 |
|||||||
Selling and marketing as a % of revenues |
16.9 |
18.1 |
19.1 |
19.9 |
|||||||
General and administrative as a % of revenues |
13.1 |
9.8 |
13.1 |
10.8 |
|||||||
Operating margin |
4.7 |
11.4 |
3.6 |
5.1 |
|||||||
Net margin |
3.4 |
5.9 |
2.3 |
0.8 |
|||||||
MAGAL SECURITY SYSTEMS LTD. |
||||||||
RECONCILLATION OF EBITDA TO NET INCOME |
||||||||
(All numbers expressed in thousands of US$) |
||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2020 |
2019 |
2020 |
2019 |
|||||
GAAP Net income |
269 |
1,510 |
932 |
546 |
||||
Less: |
||||||||
Financial income (expenses), net |
6 |
(573) |
19 |
(1,667) |
||||
Taxes on income |
(587) |
(438) |
(970) |
(975) |
||||
Depreciation and amortization |
(489) |
(542) |
(1,456) |
(1,591) |
||||
EBITDA |
1,339 |
3,063 |
3,339 |
4,779 |
||||
MAGAL SECURITY SYSTEMS LTD. |
|||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
(All numbers expressed in thousands of US$) |
|||
September 30, |
December 31, |
||
2020 |
2019 |
||
CURRENT ASSETS: |
|||
Cash and cash equivalents |
$53,655 |
$34,531 |
|
Short-term bank deposits |
- |
16,749 |
|
Restricted cash and deposits |
257 |
324 |
|
Trade receivables, net |
12,604 |
18,697 |
|
Unbilled accounts receivable |
8,628 |
8,897 |
|
Other accounts receivable and prepaid expenses |
4,650 |
4,510 |
|
Inventories |
14,412 |
12,605 |
|
Total current assets |
94,206 |
96,313 |
|
Long term investments and receivables: |
|||
Long-term deposits, restricted bank deposits and other long-term accounts |
127 |
134 |
|
Severance pay fund |
1,413 |
1,363 |
|
Deferred tax assets |
3,998 |
4,215 |
|
Operating lease right-of-use assets |
2,774 |
3,492 |
|
Total long-term investments and receivables |
8,312 |
9,204 |
|
PROPERTY AND EQUIPMENT, NET |
5,923 |
6,256 |
|
GOODWILL AND INTANGIBLE ASSETS, NET |
14,383 |
15,276 |
|
Total assets |
$122,824 |
$127,049 |
|
MAGAL SECURITY SYSTEMS LTD. |
||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
(All numbers expressed in thousands of US$) |
||||
September 30, |
December 31, |
|||
2020 |
2019 |
|||
CURRENT LIABILITIES: |
||||
Short-term credit |
$529 |
$ - |
||
Trade payables |
4,297 |
5,438 |
||
Customer advances |
4,696 |
5,587 |
||
Deferred revenues |
2,208 |
2,558 |
||
Other accounts payable and accrued expenses |
12,574 |
14,609 |
||
Short-term operating lease liabilities |
702 |
919 |
||
Total current liabilities |
25,006 |
29,111 |
||
LONG-TERM LIABILITIES: |
||||
Deferred revenues |
2,148 |
1,769 |
||
Deferred tax liabilities |
197 |
178 |
||
Accrued severance pay |
2,245 |
2,251 |
||
Long-term operating lease liabilities |
2,030 |
2,515 |
||
Other long-term liabilities |
269 |
371 |
||
Total long-term liabilities |
6,889 |
7,084 |
||
Redeemable non-controlling interest |
3,218 |
3,048 |
||
SHAREHOLDERS' EQUITY |
||||
Share Capital: Ordinary shares of NIS 1 par value - |
||||
Authorized: 39,748,000 shares at September 30, 2020 and December 31, |
6,750 |
6,750 |
||
Additional paid-in capital |
94,858 |
94,696 |
||
Accumulated other comprehensive loss |
(1,891) |
(627) |
||
Foreign currency translation adjustments (stand-alone financial statements) |
6,158 |
5,924 |
||
Accumulated deficit |
(18,162) |
(18,961) |
||
Total shareholders' equity |
87,713 |
87,782 |
||
Non-controlling interest |
(2) |
24 |
||
TOTAL SHAREHOLDERS' EQUITY |
87,711 |
87,806 |
||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$122,824 |
$127,049 |
||
SOURCE Magal Security Systems, Ltd.
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