EX-99.1 2 ex99_1.htm PRESS RELEASE
 

EXHIBIT 99.1
Magal Security Systems Ltd. Reports
 Second quarter 2018 Financial Results

YEHUD, ISRAEL, August 15, 2018 -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three and six months periods ended June 30, 2018. Management will hold an investors' conference call later today (at 9:30am Eastern Time) to discuss the results.
SECOND QUARTER RESULTS SUMMARY
·
Strong growth in second quarter revenue to $25.3 million, up 91% year-over-year and a 47% increase sequentially.
·
Operating income of $2.1 million compared with a loss of $1.7 million last year;
·
Net income of $1.7 million compared with a loss of $3.3 million last year;
·
EBITDA of $2.6 million, 10.2% of revenue
SECOND QUARTER 2018 RESULTS
Revenues for the second quarter of 2018 were $25.3 million, a significant increase of 91% compared with revenues of $13.3 million in the second quarter of 2017.
Gross profit for the second quarter of 2018 was $11.1 million, or 43.6% of revenues, an increase of 66% compared with gross profit of $6.7 million or 50.2% of revenues, in the second quarter of 2017. The change in gross margin between the quarters was a function of the products and projects mix executed during the quarter.
Operating income for the second quarter of 2018 was $2.1 million, a significant improvement compared to an operating loss of $1.7 million in the second quarter of 2017.
Financial income, net for the second quarter was $0.5 million compared with financial expenses, net of $1.4 million in the second quarter of 2017.
Net income in the second quarter of 2018 was $1.7 million, or $0.08 per share, compared with a net loss of $3.3 million, or $0.14 loss per share in the second quarter of 2017.
EBITDA in the second quarter was $2.6 million, or 10.2% of revenue, an improvement compared with negative EBITDA of $1.2 million in the second quarter of 2017.
Cash, short term deposits and restricted deposits, net of bank debt, as of June 30, 2018, were $45.4 million, or $1.97 per share, compared with cash and short term deposits, net of bank debt, of $52.3 million, or $2.27 per share, at December 31, 2017. The decrease in cash is primarily due to the investment in working capital for scaling up of various upcoming projects.
Commencing in the second quarter, Magal fully consolidated the financial results of its recently acquired E.S.C. Baz subsidiary into its financial results.
MANAGEMENT COMMENT
Commenting on the results, Mr. Dror Sharon, CEO of Magal, commented, "Magal had a good quarter from all standpoints, with organic growth in revenue and corresponding improvements in profit across the board. Our revenues increased on the back of the solid backlog we have built, which continues to remain at healthy levels. Magal is in a good position for 2018."


Continued Mr. Sharon, "Since joining Magal in June, I have been very impressed by what I have seen. Magal is a company with outstanding engineers and employees and market leading technology. I see much potential for growth, as our technology and product offerings continue to address the growing needs of the security and HLS markets. I am excited and look forward to growing the company over the quarters and years ahead."

INVESTORS' CONFERENCE CALL INFORMATION:
The Company will host a conference call later today, August 15, 2018, at 9:30am Eastern Time and 4:30pm Israel time.
To participate, please call one of the following teleconferencing numbers:
US: 1 866 744 5399; Israel: 03 918 0692; UK: 0 800 404 8418; Intl.: +972 3 918 0692
If you are unable to connect using the toll-free numbers, please try the international dial-in number.
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 solutions and products for physical and video security solutions, as well as site management. Over the past 45 years, Magal has delivered its products as well as tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 80 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 PIDS (Perimeter Intrusion Detection Systems), 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,
        
   
2017
    
2018
    
% change
    
2017
    
2018
    
% change
  
Revenue
    
13,254
      
25,348
      
91
      
27,589
      
42,603
      
54
  
Cost of revenue
    
6,602
      
14,286
              
13,526
      
23,985
          
                                                 
Gross profit
    
6,652
      
11,062
      
66
      
14,063
      
18,618
      
32
  
Operating expenses:
                                                
   Research and development, net
    
1,682
      
1,822
      
8
      
3,287
      
3,427
      
4
  
   Selling and marketing
    
4,564
      
4,875
      
7
      
9,362
      
9,108
      
(3
)
   General and administrative
    
2,073
      
2,288
      
10
      
3,933
      
3,973
      
1
  
Total operating expenses
    
8,319
      
8,985
      
8
      
16,582
      
16,508
      
-
  
                                                 
Operating income (loss)
    
(1,667
)
    
2,077
              
(2,519
)
    
2,110
          
Financial income (expenses), net
    
(1,374
)
    
522
              
(4,010
)
    
639
          
                                                 
Income (loss) before income taxes
    
(3,041
)
    
2,599
              
(6,529
)
    
2,749
          
                                                 
Taxes on income
    
264
      
696
              
469
      
1,013
          
                                                 
Net income (loss)
    
(3,305
)
    
1,903
              
(6,998
)
    
1,736
          
                                                 
Income (loss) attributable to non-controlling interests
    
9
      
173
              
14
      
173
          
                                                 
Net income (loss) attributable to Magal shareholders'
    
(3,314
)
    
1,730
              
(7,012
)
    
1,563
          
                                                 
Basic net income (loss) per share
  
$
(0.14
)
  
$
0.08
            
$
(0.31
)
  
$
0.07
          
                                                 
Diluted net income (loss) per share
  
$
(0.14
)
  
$
0.07
            
$
(0.31
)
  
$
0.07
          
                                                 
                                                 
Weighted average number of shares used in computing basic net income (loss) per share
    
23,032,448
      
23,042,346
              
22,958,689
      
23,037,456
          
                                                 
Weighted average number of shares used in computing diluted net income (loss) per share
    
23,032,448
      
23,286,703
              
22,958,689
      
23,318,174
          
                                                 


   
Three Months
Ended June 30,
    
Six Months
Ended June 30,
  
   
2017
%
    
2018
%
    
2017
%
    
2018
%
  
                         
Gross margin
    
50.2
      
43.6
      
51
      
43.7
  
Research and development, net as a % of revenues
    
12.7
      
7.2
      
11.9
      
8
  
Selling and marketing as a % of revenues
    
34.4
      
19.2
      
33.9
      
21.4
  
General and administrative  as a % of revenues
    
15.6
      
9.0
      
14.3
      
9.3
  
Operating margin
    
-
      
8.2
      
-
      
5
  
Net  margin
    
-
      
6.8
      
-
      
3.7
  


MAGAL SECURITY SYSTEMS LTD.
 RECONCILIATION OF EBITDA TO NET LOSS
(All numbers expressed in thousands of US$)



   
Three Months
Ended June 30,
    
Six Months
Ended June 30,
  
   
2017
    
2018
    
2017
    
2018
  
                         
GAAP Net income (loss)
    
(3,305
)
    
1,903
      
(6,998
)
    
1,736
  
   Less:
                                
   Financial income (expenses), net
    
(1,374
)
    
522
      
(4,010
)
    
639
  
   Taxes on income
    
264
      
696
      
469
      
1,013
  
   Depreciation and amortization
    
(462
)
    
(499
)
    
(912
)
    
(976
)
EBITDA
    
(1,205
)
    
2,576
      
(1,607
)
    
3,086
  


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

   
December 31,
    
June 30,
  
   
2017
    
2018
  
CURRENT ASSETS:
 
            
Cash and cash equivalents
  
$
22,463
    
$
34,812
  
Short-term bank deposits
    
27,025
      
6,605
  
Restricted deposits
    
2,842
      
3,964
  
Trade receivables, net
    
14,489
      
15,779
  
Unbilled accounts receivable
    
6,309
      
6,075
  
Other accounts receivable and prepaid expenses
    
2,850
      
2,910
  
Inventories
    
9,596
      
10,940
  
                 
Total current assets
    
85,574
      
81,085
  
                 
LONG TERM INVESTMENTS AND RECEIVABLES:
                
                 
Long-term deposits and restricted bank deposits
    
155
      
153
  
Severance pay fund
    
1,524
      
1,412
  
Deferred income taxes
    
2,579
      
2,529
  
                 
Total long-term investments and receivables
    
4,258
      
4,094
  
                 
PROPERTY AND EQUIPMENT, NET
    
5,718
      
6,188
  
                 
GOODWILL AND INTANGIBLE ASSETS, NET
    
16,995
      
16,272
  
                 
TOTAL ASSETS
  
$
112,545
    
$
107,639
  



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

   
December 31,
    
June 30,
  
   
2017
    
2018
  
             
CURRENT LIABILITIES:
            
             
Trade payables
  
$
5,198
    
$
5,114
  
Customer advances
    
7,191
      
3,278
  
Other accounts payable and accrued expenses
    
13,784
      
12,463
  
                 
Total current liabilities
    
26,173
      
20,855
  
                 
LONG-TERM LIABILITIES:
                
Deferred revenues
    
891
      
731
  
Deferred income taxes
    
190
      
185
  
Accrued severance pay
    
2,328
      
2,297
  
Other long-term liabilities
    
14
      
324
  
                 
Total long-term liabilities
    
3,423
      
3,537
  
                 
                 
Non-controlling interest
    
-
      
1,586
  
                 
SHAREHOLDERS' EQUITY
 
                
Share Capital: Ordinary shares of NIS 1 par value -
                
Authorized: 39,748,000 shares at December 31, 2017 and June 30, 2018; Issued and outstanding: 23,032,448 shares at December 31, 2017 and 23,042,852 shares at June 30, 2018
    
6,716
      
6,719
  
Additional paid-in capital
    
93,975
      
94,017
  
Accumulated other comprehensive loss
    
(87
)
    
(1,170
)
Foreign currency translation adjustments (stand alone financial statements)
    
5,859
      
3,879
  
Accumulated deficit
    
(23,514
)
    
(21,784
)
                 
TOTAL SHAREHOLDERS' EQUITY
    
82,949
      
81,661
  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
112,545
    
$
107,639