0001178913-19-002783.txt : 20191118 0001178913-19-002783.hdr.sgml : 20191118 20191118125841 ACCESSION NUMBER: 0001178913-19-002783 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20191118 FILED AS OF DATE: 20191118 DATE AS OF CHANGE: 20191118 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAGAL SECURITY SYSTEMS LTD CENTRAL INDEX KEY: 0000896494 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 000000000 STATE OF INCORPORATION: L3 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21388 FILM NUMBER: 191226732 BUSINESS ADDRESS: STREET 1: P O BOX 70 STREET 2: INDUSTRIAL ZONE CITY: YAHUD ISRAEL STATE: L3 ZIP: 5600 BUSINESS PHONE: 972-3-5391444 MAIL ADDRESS: STREET 1: P.O. BOX 70, STREET 2: INDUSTRIAL ZONE CITY: YAHUD STATE: L3 ZIP: 56100 6-K 1 zk1923671.htm 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

F O R M  6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2019

MAGAL SECURITY SYSTEMS LTD.
(Name of Registrant)

P.O. Box 70, Industrial Zone, Yahud 5610001 Israel
(Address of Principal Executive Office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐ No ☒

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ____________

This Report on Form 6-K is incorporated by reference into the Registrant's Form F-3 Registration Statement File No. 333-217063 and Form S-8 Registration Statements File Nos. 333-127340, 333-164696, 333-174127 and 333-190469.


Magal Security Systems Ltd.

EXPLANATORY NOTE

The following exhibit is attached:
   
99.1
Press Release:   Magal Security Systems Ltd. Reports Third Quarter 2019 Financial Results dated November 18, 2019.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
MAGAL SECURITY SYSTEMS LTD.
  
   
(Registrant)
  
       
 
By:
/s/ Doron Kerbel
  
   
Doron Kerbel
  
   
V.P. General Counsel & Company Secretary
  

Date:  November 18, 2019

EXHIBIT INDEX

EXHIBIT NO.
DESCRIPTION
   

          

 EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
 
EXHIBIT 99.1
 
Magal Security Systems Ltd. Reports
 Third Quarter 2019 Financial Results
 
YEHUD, ISRAEL, November 18, 2019 -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three and nine months ended September 30, 2019. Management will hold an investors’ conference call later today (at 10am Eastern Time) to discuss the results.
 
THIRD QUARTER 2019 HIGHLIGHTS
 

•
Revenue of $22.2 million, a 13% improvement versus the prior quarter;
 

•
Operating income of $2.5 million versus $0.2 million in the prior quarter;
 

•
Net income of $1.3 million, versus loss last quarter;
 

•
EBITDA significantly improved to $3.1 million from $0.7 million in the prior quarter;
 

•
Operating cash flow of $1.8 million contributing to the quarter-end net cash of $54.6 million;
 
MANAGEMENT COMMENT
 
Commenting on the results, Mr. Dror Sharon, CEO of Magal, said, “The third quarter results demonstrate that the investments and changes in our development and sales teams, are improving our financial results, as evidenced by the improvement in the profitability margins. Additionally, we are pleased to have demonstrated a strong positive cash flow from operations.”
 
Continued Mr. Sharon, “We have made some recent improvements to the structure of Magal’s sales team, making the team more customer and market centric by aligning them towards focused market verticals. Magal’s core vertical focus is on the areas of oil and gas, logistics and critical infrastructure. With this new sales team structure, we aim to better penetrate and support these specific target markets and ultimately build closer relationships with potential as well as existing customers. In the past few months, we are seeing the initial fruits of this strategy with increased interest and new initial orders for our products and services. We see significant potential for growing revenues as we gain traction in these target verticals in 2020 and beyond.”
 
THIRD QUARTER 2019 RESULTS
 
Revenues were $22.2 million compared with revenues of $23.9 million in the third quarter of 2018.
 
Revenues from projects represented approximately 61% of total revenues, while revenues from products represented approximately 39% of total revenues. Revenues from products increased by 3% year over year while revenues from projects decreased by 13% year over year.
 
 
Gross profit was $10.5 million, or 47.5% of revenues, compared with gross profit of $11.1 million, or 46.4% of revenues, in the third quarter of 2018. The higher gross margin in the quarter was due to the sales mix favoring higher margin products and services. In addition, several maintenance contracts orders which were delayed from the previous quarter were received this quarter, with a positive effect on the gross margin for this quarter.
 
Operating income in the quarter was $2.5 million compared to operating income of $2.1 million in the third quarter of 2018.
 
Financial expenses were $0.6 million compared to financial income of $52 thousand in the third quarter of 2018. The decrease is mainly due to the strong depreciation of the US dollar against the New Israeli Shekel during the third 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 income attributable to Magal’s shareholders was $1.3 million, or $0.06 per share, compared with net income of $1.5 million, or $0.06 per share in the third quarter of 2018.
 
EBITDA was $3.1 million compared with $2.6 million in the third quarter of 2018.
 
Cash, short term deposits and restricted deposits, net of bank debt, as of September 30, 2019, was $54.6 million, or $2.36 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.
 
USE OF NON-GAAP FINANCIAL INFORMATION
 
The Company reports financial results in accordance with U.S. GAAP and herein provides some non-GAAP measures, including EBITDA. These non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. These non-GAAP measures are intended to supplement the Company’s presentation of its financial results that are prepared in accordance with GAAP. The Company uses the non-GAAP measures presented to evaluate and manage the Company’s operations internally. The Company is also providing this information to assist investors in performing additional financial analysis. Reconciliation between the Company's results on a GAAP and non-GAAP basis is provided in a table below.
 
INVESTORS’ CONFERENCE CALL INFORMATION:
 
The Company will host a conference call later today, November 18, 2019, at 10 am Eastern Time and 5 pm Israel time.
 
To participate, please call one of the following teleconferencing numbers:
 
US: 1 888 668 9141; Israel: 03 918 0644; UK: 0 800 917 5108; Intl.: +972 3 918 0644
 
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 September 30,
    
Nine Months
Ended September 30,
  
   
2019
    
2018
    
% change
    
2019
    
2018
    
% change
  
Revenue
    
22,188
      
23,894
      
(7
)
    
63,075
      
66,497
      
(5
)
Cost of revenue
    
11,647
      
12,811
      
(9
)
    
35,170
      
36,796
      
(4
)
                                                 
Gross profit
    
10,541
      
11,083
      
(5
)
    
27,905
      
29,701
      
(6
)
Operating expenses:
                                                
   Research and development, net
    
1,825
      
1,587
      
15
      
5,373
      
5,014
      
7
  
   Selling and marketing
    
4,026
      
4,467
      
(10
)
    
12,534
      
13,575
      
(8
)
   General and administrative
    
2,169
      
2,949
      
(26
)
    
6,810
      
6,922
      
(2
)
Total operating expenses
    
8,020
      
9,003
      
(11
)
    
24,717
      
25,511
      
(3
)
                                                 
Operating income
    
2,521
      
2,080
              
3,188
      
4,190
          
Financial income (expenses), net
    
(573
)
    
52
              
(1,667
)
    
691
          
                                                 
Income (loss) before income taxes
    
1,948
      
2,132
              
1,521
      
4,881
          
                                                 
Taxes on income
    
438
      
574
              
975
      
1,587
          
                                                 
Net income
    
1,510
      
1,558
              
546
      
3,294
          
                                                 
Income attributable to redeemable non-controlling interests and non-controlling interests
    
212
      
72
              
36
      
245
          
                                                 
Net income attributable to Magal’s shareholders
    
1,298
      
1,486
              
510
      
3,049
          
                                                 
Basic net income  per share
  
$
0.06
    
$
0.06
            
$
0.02
    
$
0.13
          
                                                 
Diluted net income per share
  
$
0.06
    
$
0.06
            
$
0.02
    
$
0.13
          
                                                 
                                                 
Weighted average number of shares used in computing basic net income per share
    
23,153,985
      
23,042,895
              
23,121,107
      
23,039,289
          
                                                 
Weighted average number of shares used in computing diluted net income per share
    
23,167,049
      
23,296,520
              
23,141,574
      
23,310,976
          

   
Three Months
Ended September 30,
    
Six Months
Ended September 30,
  
   
2019
     2018     2019    
2018
  
   
%
    
%
    
%
    
%
  
                         
Gross margin
    
47.5
      
46.4
      
44.2
      
44.7
  
Research and development, net as a % of revenues
    
8.2
      
6.6
      
8.5
      
7.5
  
Selling and marketing as a % of revenues
    
18.1
      
18.7
      
19.9
      
20.4
  
General and administrative  as a % of revenues
    
9.8
      
12.3
      
10.8
      
10.4
  
Operating margin
    
11.4
      
8.7
      
5.1
      
6.3
  
Net  margin
    
6.8
      
6.5
      
0.9
      
5.0
  


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

   
Three Months
Ended September 30,
    
Nine Months
Ended September 30,
  
   
2019
    
2018
    
2019
    
2018
  
                         
GAAP Net income
    
1,510
      
1,558
      
546
      
3,294
  
   Less:
                                
   Financial income (expenses), net
    
(573
)
    
52
      
(1,667
)
    
691
  
   Taxes on income
    
(438
)
    
(574
)
    
(975
)
    
(1,587
)
   Depreciation and amortization
    
(542
)
    
(526
)
    
(1,591
)
    
(1,502
)
EBITDA
    
3,063
      
2,606
      
4,779
      
5,692
  


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

   
September 30,
    
December 31,
  
   
2019
    
2018
  
CURRENT ASSETS:
            

           
Cash and cash equivalents
  
$
34,189
    
$
38,665
  
Short-term bank deposits
    
17,242
      
13,150
  
Restricted deposits
    
3,123
      
3,135
  
Trade receivables, net
    
12,918
      
14,176
  
Unbilled accounts receivable
    
8,555
      
6,050
  
Other accounts receivable and prepaid expenses
    
3,658
      
4,126
  
Inventories
    
12,935
      
13,863
  
                 
Total current assets
    
92,620
      
93,165
  
                 
LONG TERM INVESTMENTS AND RECEIVABLES:
                
                 
Long-term deposits and restricted bank deposits
    
87
      
146
  
Severance pay fund
    
1,339
      
1,289
  
Deferred tax assets
    
3,456
      
3,459
  
                 
Total long-term investments and receivables
    
4,882
      
4,894
  
                 
PROPERTY AND EQUIPMENT, NET AND OPERATING LEASE RIGHT-OF-USE ASSETS
    
10,726
      
6,347
  
                 
GOODWILL AND INTANGIBLE ASSETS, NET
    
15,150
      
14,765
  
                 
TOTAL ASSETS
  
$
123,378
    
$
119,171
  


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

   
September 30,
    
December 31,
  
   
2019
    
2018
  
             
CURRENT LIABILITIES:
            
             
Trade payables
  
$
4,530
    
$
6,359
  
Customer advances
    
8,094
      
10,170
  
Deferred revenues
    
1,687
      
2,387
  
Other accounts payable and accrued expenses
    
13,299
      
13,226
  
Short-term operating lease liabilities
    
1,053
      
-
  
                 
Total current liabilities
    
28,663
      
32,142
  
                 
LONG-TERM LIABILITIES:
                
Deferred revenues
    
1,253
      
1,344
  
Deferred tax liabilities
    
174
      
182
  
Accrued severance pay
    
2,217
      
2,181
  
Long-term operating lease liabilities
    
3,271
      
-
  
Other long-term liabilities
    
344
      
351
  
                 
Total long-term liabilities
    
7,259
      
4,058
  
                 
Redeemable non-controlling interest
    
2,028
      
1,755
  
                 
SHAREHOLDERS' EQUITY
                
Share Capital: Ordinary shares of NIS 1 par value -
                
Authorized: 39,748,000 shares at September 30, 2019 and December 31, 2018; Issued and outstanding: 23,153,985 shares at September 30, 2019 and 23,049,639 shares at December 31, 2018
    
6,750
      
6,721
  
Additional paid-in capital
    
94,969
      
94,205
  
Treasury shares
    
(375
)
    
-
  
Accumulated other comprehensive loss
    
(1,441
)
    
(1,827
)
Foreign currency translation adjustments (stand alone financial statements)
    
5,746
      
2,795
  
Accumulated deficit
    
(20,168
)
    
(20,678
)
                 
Total shareholders' equity
    
85,481
      
81,216
  
Non-controlling interest
    
(53
)
    
-
  
                 
TOTAL SHAREHOLDERS' EQUITY
    
85,428
      
81,216
  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
123,378
    
$
119,171