0001178913-20-003165.txt : 20201116 0001178913-20-003165.hdr.sgml : 20201116 20201116103524 ACCESSION NUMBER: 0001178913-20-003165 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20201116 FILED AS OF DATE: 20201116 DATE AS OF CHANGE: 20201116 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: 201314430 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 zk2025157.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 2020

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 2020 Financial Results dated November 16, 2020.

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 16, 2020

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 2020 FINANCIAL RESULTS
 
YEHUD, ISRAEL, November 16, 2020 -- 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: 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 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 interests and non-controlling interests
    
(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 basic net income per share
    
23,153,985
      
23,153,985
              
23,153,985
      
23,121,107
          
                                                 
Weighted average number of shares used in computing diluted net income per share
    
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 receivable and prepaid expenses
    
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, 2019; Issued and outstanding: 23,153,985 shares at September 30, 2020 and 23,153,985 shares at December 31, 2019
    
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