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Magal Security Systems (MAGS) Message Board

bengrahamvalueinvestor 2660 posts  |  Last Activity: May 10, 2008 6:48 PM Member since: Apr 9, 2004
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  • bengrahamvalueinvestor by bengrahamvalueinvestor May 10, 2008 6:48 PM Flag


    Interesting that they are shorting CPSS while ACF and UPFC are both rallying. Foolish? I think so.

    Both UPFC and ACF have more problems than CPSS w/ delinquencies etc.

    UPFC recently was upgraded to a "Buy" by FBR. ACF has been upgraded to neutral from a "sell" by a firm or two.

  • Reply to

    Good Conf Call

    by prayp Apr 16, 2008 2:23 PM
    bengrahamvalueinvestor bengrahamvalueinvestor Apr 16, 2008 2:37 PM Flag

    Don't be fooled by the price action thus far, its only traded 27m shares. When volume shows up, it will, I expect that it will push the price to a new trading range. The risks for the company have been minimized with the securitization. They've got plenty of flexibility to roll w/ the punches. I built much of my large position in the stock at prices between 75 cents and $1.50. Bradley has an EXCELLENT track record of working in the toughest (much more difficult than this) of environments. The subprime auto debacle of almost a decade ago is what helped to build this company into the money machine it is today. Turmoil breeds opportunity. $2.50- $3.50 will prove to be a steal much like 75 cents -$1.50 was earlier this decade. Good Luck, Ben

    As I mentioned before, these analysts are all new to CPS in the last year or so. They are building their confidence in the company and its management as many investors are. We are probably within a few months from a major upgrade by Jefferies--a guess. If/when that happens the short interest will help move this stock up rapidily.

  • bengrahamvalueinvestor bengrahamvalueinvestor Apr 15, 2008 8:36 PM Flag

    If investors are predisposed to wanting to bottom-fish: the earnings, the fact that they were able to accomplish a securitization, and the fact that they will likely remain profitable---all will weigh very positively. (Investors PREDISPOSED to wanting to own strong boutique financial stocks before the economy improves.) At about 1/2 book value and a market cap of less than $60 million there is a lot of value in CPSS. The worst for the stock is probably over. I think we should close the month between $3.25 and $3.75 without any major short covering. If signs for the overall economy improve or short covering ensues or both...higher levels should be achieved in a swifter manner.

  • bengrahamvalueinvestor by bengrahamvalueinvestor Apr 15, 2008 8:34 PM Flag

    Management is executing as they said they would. That earns points w/ analysts. When those analysts are at a point when they feel the worst is over for the economy, they will likely upgrade CPSS before others in their group.

    Consumer Portfolio Serv. beats by $0.01, reports revs in-line (2.92 -0.07)

    Reports Q1 (Mar) earnings of $0.11 per share, $0.01 better than the First Call
    consensus of $0.10; revenues rose 19.4% year/year to $103.3 mln vs the $104
    mln consensus. CO says, ""While our financial results for the first quarter of
    2008 were not immune to the ongoing capital markets turbulence and economic
    slowdown, we are pleased to have been able to continue to build the equity
    base of the Company. In addition, with the completion of our securitization
    last week, we have significant borrowing capacity available under our
    warehouse credit facilities. As a result of the credit tightening changes and
    price increases we have implemented over the last six months, we should be
    well positioned once the capital markets stabilize."

  • Reply to

    BEN Graham... you here?

    by mo_ney4dhoney Feb 19, 2008 12:43 PM
    bengrahamvalueinvestor bengrahamvalueinvestor Feb 20, 2008 9:56 AM Flag

    Favorite stock for 2008-2009:

    HBE http://www.hbe-inc.com/HBE_Brochure_6-13-07.pdf

    Many of the stocks I liked in 2007, I like in 2008. However, HBE is my favorite for the next 24 months. Huge contracts should be awarded to the company in the late Spring/Early summer from Silverstein Properties to protect the WTC via security systems. HBE has a longstanding relationship with Silverstein....that is not a pie in the sky contract they are working to get. They have a very serious expectation of receiving large contracts from Silverstein.
    The market cap of HBE is only 27.5 million. Revenue for 2007 should be around $70 million or so. In 2008 that should climb to the $85 million range w/out Silverstein. Profitiability should be in the 4-6% range . Do the math. Its insane how seriously undervalued HBE is. HOWEVER*************************************************************HBE is NOT LIQUID. There is a public float of less than 3 million shares. IF you dare to speculate in HBE, know that you will not have liquidity until major orders are announced, and/or analyst coverage etc.....HBE is worth at least 11 dollars in 2008 in my opinion. Its worth more if they win the WTC contracts.

    See page 9 for a list of projects.


    This is what I said about ASEI a month ago, my opinion has not changed:

  • Reply to

    ben...thoughts on quarter?

    by ebitda2k Jan 15, 2008 10:33 AM
    bengrahamvalueinvestor bengrahamvalueinvestor Feb 20, 2008 9:44 AM Flag

    That's what I said a month ago about ASEI. I stand by that statement. ASEI's future looks rather bright, but 2007 was not exactly the year that I had hoped to see AND expected to see. I will be lightening up further on ASEI in 2008 on strength. I believe 75-95 is a realistic target for later this year.

  • Reply to

    ben...thoughts on quarter?

    by ebitda2k Jan 15, 2008 10:33 AM
    bengrahamvalueinvestor bengrahamvalueinvestor Jan 17, 2008 9:21 PM Flag

    This quarter did not impress me...Of what was posted with PR's it was only so so. It can't be viewed as anything less than a poor quarter from the standpoint of order flow. 2007 was not a great year for the company w/ order flow. HOWEVER, the orders coming from DOD for the RUGGEDIZED ZBV (which I talked about all of 2007) and the potential orders for CAARS and the traditional ZBV---should make 2008 be a record (calendar) year. The earnings and revenue for Q4 can't be expected to be too high. Investors and the brokerage firms that recently upgraded will likely give the company a free pass this quarter no matter what the earnings are. The focus of everyone is the pending orders coming from DOD for the Ruggedized ZBV--which has HEALTHY MARGINS.

    I haven't really looked at the numbers and estimates, but it seems like a quarter with $40 million or so with gross margins of less than 40% should be expected. The backlog is robust enough that it should not much less than expected in both earnings and revenue ---but again, I really haven't looked at the earnings for this quarter because, I really don't care about Q4. I am not buying any ASEI unless its in the low-mid 40's---and I am not selling any until after a quarter or two of Ruggedized ZBV revenue (or if we see a stock price much higher than 70---I may trim some more).

  • bengrahamvalueinvestor bengrahamvalueinvestor Jan 17, 2008 9:09 PM Flag

    Proof reading my post would have been a good idea....but you get the gist of what I am trying to say despite the grammatical errors......

  • Trying to invest in equities in THIS recession will not be as easier as previous recessions. One of the key areas investors invest in during recessions is the Drug sector---but who, in their right mind, would dare put more than a few dollars in that sector with the Democrats seeking serious reform?

    We should see more dollars chasing few industries and companies. Meaning earnings, recession proof companies, companies with great balance sheets and CASH will benefit from the lean times. Security related stocks should gain favor as investors begin to bet on more dollars going into the budget under a Democratic Presidents leadership.

    If the orders come in for ASEI as we expect to from DOD this Spring, they should be one of the few companies setting records in revenue and earnings in 2008 and 2009.

  • bengrahamvalueinvestor by bengrahamvalueinvestor Jan 17, 2008 8:51 PM Flag

    It looks like we will finally get a 30 reading on the VIX in the next day or two. That's a key number for a lot of "Smart Money" investors to trigger serious buying. It happens that we will probably be sub 12,000 on the Dow if/when that happens--another critcal number. If we get both a sub 12,000 Dow and a reading of 30 on the Vix, THAT may be just what the doctor ordered for the market to have bottomed.

    If congress and the President can iron out a SERIOUS economic recovery plan AND the Fed AGGRESSIVELY cuts rates (BOTH MUST HAPPEN) the depth of the recession will be much less deep than otherwise.

  • bengrahamvalueinvestor by bengrahamvalueinvestor Nov 7, 2007 11:50 PM Flag

    "Ministry officials say the new law and future amendments of it must address the need to protect Israel from infiltrations along a 220-kilometer stretch along border with Egypt, which has no fence and little security.

    The officials say the border with Israel's southern neighbor has seen a significant hike in the number of infiltrators trying and succeeding in crossing into Israel. Many of the infiltrators are African refugees, one of the officials said, whereas the old 1954 law deals mostly with Arab terrorists. "


  • bengrahamvalueinvestor by bengrahamvalueinvestor Nov 6, 2007 4:47 PM Flag

    Iraqi forces begin Basra border security

    Published: Oct. 30, 2007 at 4:27 PM

    Font size:BASRA, Iraq, Oct. 30 (UPI) -- The Multinational Division Southeast in Iraq announced it has handed over security equipment to Iraqi officials in Basra province.

    British Col. Paddy Hallinan, commander of the Multinational Division Southeast ISF Group, made the announcement saying that handing over key security equipment including X-ray machines is an effort to hand over control of some border security operations to the Iraqi Security Forces.

    The two $1.5 million Backscatter Vans X-ray machines were officially handed over to Iraqi Brig. Satar, the regional chief of operations for the Department for Border Enforcement. The handover will allow Iraqi officials to control vehicles and people moving through the border control points.

    "This is part of the ongoing program to enhance the screening process through ports of entry for the DBE," Hallinan said in a statement. "The Backscatter Vans� capabilities provide significant technological enhancement, which in turn will increase the robustness of the screening process. All this is, of course, about enabling the Iraqis to protect the integrity of the country�s borders."

    Officials say the Multinational Division is currently training DBE employees to operate the machines before posting them to the border.

  • bengrahamvalueinvestor bengrahamvalueinvestor Nov 6, 2007 4:44 PM Flag

    Rumors like this one are understandable. Its been a long time since we saw the last large ZBV order. Fabiano has been clear in stating over and over that the combine sales from the ZBV and the ZBV Military Trailer are set to grow total sales of the "ZBV"'s and that Customs and DOD are likely interested in large amounts.

  • bengrahamvalueinvestor bengrahamvalueinvestor Nov 6, 2007 4:39 PM Flag


    Maybe I didn't make myself clear.

    The rumor/statement (I believe that it was Stephen's analyst, but cannot confirm) that was made by an influential person was that DOD was going to order vans that penetrate steel better (ASEI has had that technology for many years) and stop using ASEI because of cost and "inferior" technology. ASEI's mobile search products penetrate steel in a similar fashion. However, they don't find explosives as well as backscatter does.
    More from the CC:

    Tim Quillin - Stephens Inc

    That answers that though. And in sense you brought it up in terms of the military market SAIC has been showing quite a few of the mil mobile VACIS units over the past nine months. And have sold more mill mobiles over that time period then you have the Z Backscatter vans. And I�m just wondering if it's not related to maintenance or the perceived penetration capabilities or technology what you attribute that this relative law and military orders over the past few months to?

    Anthony Fabiano

    Okay. I made a definitive comments about service and definitive comments about penetration in my briefing. And I will to the great of that one. I think everybody in the army knows that the ZBV is a far superior product. The trend towards the government though is to militarize or ruggedized systems. And since the ZBV as it stands today versus the mill trailer is not a ruggedized system. There are certain parts of the world in theater, where the government would prefer to have a ruggedized system...."

  • Yesterday a rumor that ZBV sales were not coming from DOD was what caused the stock to sink. That rumor pushed the stock through "stops" above and below the 200 day moving avg. On top of that we now have poor reception of the earnings report caused a bit of capitulation today. I doubt we'd be down 10 points on the earnings report itself. But who knows....

    This is what Fabiano stated yesterday:

    "My second key point is, the US military�s interest in the ZBV, in addition to the development of the ruggedized the mill ZBV and is stronger than ever before. I recently noted someone commented that ZBV�s low penetration capability and high maintenance costs maybe closing us to lose orders to a competitive product. This is absolutely misdirected information. Higher x-ray penetration is less effective a detecting explosives."
    and what Stifel said today:

    "CEO Anthony Fabiano set the record straight by inditing that pricing and the high cost of service are not barriers to
    further purchases of Z Backscatter systems by the U.S. military and other branches of the government and further
    stated that the experience from prior use led to the funding of development of the rugged Z Backscatter military trailer,
    which should get a standardized military designation that makes placing orders easier. The first prototype has been
    delivered to the customer, which we believe is the U.S. Marine Corps (not confirmed by management) for operational
    testing. We believe there is at least $24 million in funding for this program appropriated but not yet obligated and
    military orders for rugged Z Backscatter systems are likely to come later in F2008."

  • Reply to

    Conference Call

    by bengrahamvalueinvestor Nov 6, 2007 12:39 PM
    bengrahamvalueinvestor bengrahamvalueinvestor Nov 6, 2007 12:59 PM Flag

    Gary Markoff - Smith Barney - Analyst
    Yes. I just wanted to clarify a comment. I'm sure you misspoke it, or perhaps I misheard it, in answer to Ken Liddy's question
    regarding 2008 being better than 2007. I thought I heard you say that you expect 2007 to be better than 2008, but I'm not sure
    you meant it. Could you clarify, please?
    Izhar Dekel - Magal Security Systems - CEO
    Yes, we made a mistake (inaudible) saying that it was a mistake. But we expect 2007 will be better than 2006. If I said 2008, it's
    my mistake.
    Gary Markoff - Smith Barney - Analyst
    And you mean to suggest that 2008 will be better than 2007, correct?
    Izhar Dekel - Magal Security Systems - CEO
    Yes, absolutely correct.
    Gary Markoff - Smith Barney - Analyst
    Okay. Thank you.
    Izhar Dekel - Magal Security Systems - CEO
    Thank you. Have a nice day.
    There are no further questions at this time. Mr. Dekel, would you like to make a concluding statement?
    Izhar Dekel - Magal Security Systems - CEO
    Ladies and gentlemen, on behalf of the management of Magal, I would like to thank you all for your continued interest in our
    business. We look forward to speaking to you again in three months' time. Have a good day to everybody.

  • Reply to

    Conference Call

    by bengrahamvalueinvestor Nov 6, 2007 12:39 PM
    bengrahamvalueinvestor bengrahamvalueinvestor Nov 6, 2007 12:58 PM Flag

    Jeff Kessler - Lehman Brothers - Analyst
    Okay. I may have missed something in your opening remarks, one final question. That is your video leasing business in the U.S.,
    what point are -- where are you with that financially?
    Izhar Dekel - Magal Security Systems - CEO
    Financially, the cash flow is positive. Regarding the profit and loss, we're about practically breakeven but (multiple speakers).
    Jeff Kessler - Lehman Brothers - Analyst
    You're at breakeven now?
    Izhar Dekel - Magal Security Systems - CEO
    Almost breakeven. Very small costs. That is almost breakeven. Maybe in a few months it will be at breakeven.
    Jeff Kessler - Lehman Brothers - Analyst
    Okay. But it is now cash flow positive?
    Izhar Dekel - Magal Security Systems - CEO
    Yes, positive cash.
    Jeff Kessler - Lehman Brothers - Analyst
    Okay. All right. Thank you very much.
    Izhar Dekel - Magal Security Systems - CEO
    Thank you. Have a nice day.
    Thanks very much, sir. We now have a follow-up question from Gary Markoff from Smith Barney. Go ahead, sir.
    Gary Markoff - Smith Barney - Analyst
    Yes. I just wanted to clarify a comment. I'm sure you misspoke it, or perhaps I misheard it, in answer to Ken Liddy's question
    regarding 2008 being better than 2007. I thought I heard you say that you expect 2007 to be better than 2008, but I'm not sure
    you meant it. Could you clarify, please?

  • Reply to

    Conference Call

    by bengrahamvalueinvestor Nov 6, 2007 12:39 PM
    bengrahamvalueinvestor bengrahamvalueinvestor Nov 6, 2007 12:58 PM Flag

    Jeff Kessler - Lehman Brothers - Analyst
    Right. So even though you're getting involved in much more -- the percentage of business moving towards projects, you believe
    you can keep the gross margin within a couple of percentage points of where it is?
    Izhar Dekel - Magal Security Systems - CEO
    Yes, I believe so. And based on our past experience, I'm not only pretty sure, I'm sure we'll succeed to keep about the same
    margin. Of course, this will sometimes, regarding the last project we executed, the gross margin sometimes might (inaudible).
    But in general, our number we are working is to keep the same gross -- the same level of gross margin.
    Jeff Kessler - Lehman Brothers - Analyst
    Okay. A question on DreamBox. You just received a contract in DreamBox and by itself, when you look at it, it's a very, very
    interesting product because it does so much in a one-box system. However, the trend in video surveillance and security
    surveillance has been moving towards open systems, open architectures that can actually be interoperable with other systems,
    so that software writers and others can add to it. Obviously, that has not been the strategy up till now with DreamBox. You've
    kept it proprietary. You've kept it so that basically all of the features and functions are unique to Magal.
    And I guess my question to you is are you at a point at which you're willing to -- or the Company is willing to start opening up
    DreamBox a little bit and sharing some of the code? Will writers feel that it can be a bigger-selling product? Or is there technology
    in it that is so specific that you think that you can continue to sell it to whoever you're selling it to that you don't ever intend to
    open up and make it an open architecture video system?
    Izhar Dekel - Magal Security Systems - CEO
    Well, Jeff, it's very interesting to see the different approach in between U.S. and Europe. Most of our -- not just in Europe but in
    non-U.S. countries. Most of our DreamBox installation is out of U.S. and in that area it's the idea of DreamBox to include in one
    box so many features is very attractive. In the U.S. they prefer and are defining a more open arch -- so difficult to pronounce it,
    architecture, open architecture. But we in Magal, we respect that fact and we are working now to develop a product which will
    be much more open and will include, in certain cases, features to [simplify it] that might be with response to the market demand
    in the U.S.
    Jeff Kessler - Lehman Brothers - Analyst
    So if you could just recap here, the proprietary DreamBox product that you have now will be continued to be sold to who, to
    the Israeli army or various airports that just want a specific product? The more open product will be marketed to who?
    Izhar Dekel - Magal Security Systems - CEO
    The DreamBox as of today we are selling to many clients all over, also in the U.S. but in other countries it's much more acceptable,
    much more popular, that kind of concept. In the U.S. sometimes, if they prefer a different concept of product, that -- also to our
    clients, potential clients in Europe which prefer the concept of the DreamBox. It depends what is the application and what's
    the client, exactly what they're doing, but we will continue to sell both. We'll continue to sell the DreamBox and we'll develop
    the new generation which will be more open.

  • Reply to

    Conference Call

    by bengrahamvalueinvestor Nov 6, 2007 12:39 PM
    bengrahamvalueinvestor bengrahamvalueinvestor Nov 6, 2007 12:58 PM Flag

    Izhar Dekel - Magal Security Systems - CEO
    Hello, Jeff.
    Jeff Kessler - Lehman Brothers - Analyst
    A question on your margin, on your gross margin, and the mix as you go forward. As you've got a lot of revenue with a changing
    margin mix, I'm wondering if that has to do with the mix of the way your business is shifting towards systems integration and
    away from just specific products. Systems integration can have, not always but can have, lower gross margins. And should we
    be used to seeing some larger revenue numbers going forward with a little bit less of a gross margin, as you get into more
    project management and away from selling just specific products?
    Izhar Dekel - Magal Security Systems - CEO
    Hello, Jeff. I missed you, missed your question. [I have to now adjust to the] -- in general, you are correct. When we are doing
    more projects, more interesting projects, we expect that the gross margin will decrease. Meanwhile, till now we succeeded to
    keep the same margin, our normal margin, even when we're entering into more and more projects. I believe that we will continue
    to keep our margin about the same level as we are seeing today. What exactly, one doesn't know. In general, we'll continue and
    we will succeed to keep the same margin for the future.

  • Reply to

    Conference Call

    by bengrahamvalueinvestor Nov 6, 2007 12:39 PM
    bengrahamvalueinvestor bengrahamvalueinvestor Nov 6, 2007 12:57 PM Flag

    To give us a better idea, I guess, of what type of impact you think acquisitions would mean to you, looking beyond 2008, looking
    at 2009, do you think between organic growth of Magal up until this acquisition along with this acquisition will be enough to
    get the Company to $100m in revenue or close to $100m of revenue?
    Izhar Dekel - Magal Security Systems - CEO
    I believe so, and even above.
    Ken Liddy - Wachovia Securities - Analyst
    Okay. That's helpful. And are there any new items in the pipeline that you could share with us in terms of what you're seeing
    out there as far as potential projects for you to be working on?
    Izhar Dekel - Magal Security Systems - CEO
    Before we have a solid order in our hands, we do not elaborate about projects in the pipelines. But there are a few interesting
    projects and, as I said in my opening, I hope in the coming few months to announce about a few projects that will help (inaudible)
    Ken Liddy - Wachovia Securities - Analyst
    With regard to the order that you put back, the $8m order, you've mentioned that there is other potential projects that you
    would be working with that customer. Do those potential projects equal, or around the same amount of money, $8m? Or do
    you think that relationship could be much larger or smaller?
    Izhar Dekel - Magal Security Systems - CEO
    With that particular client, we are talking about smaller projects, not the same size but more than one.
    Ken Liddy - Wachovia Securities - Analyst
    And I might have missed it, what -- did someone jump the gun on the customer? Where did they, I guess, screw up when they
    booked the order?
    Izhar Dekel - Magal Security Systems - CEO
    No. What I -- I do not know what order you said before. It was something only for figures, the authorization. That client was the
    reason why we [dropped] that order.
    Ken Liddy - Wachovia Securities - Analyst
    Now, looking to the fourth quarter and first quarter of next year, do you expect revenues to increase year over year, profits to
    increase?Izhar Dekel - Magal Security Systems - CEO
    I expect, as I said before, 2007 will be better than 2008. The quarters -- the last quarter in Magal is traditionally stronger. Also, I
    believe it will be continued to the coming quarter in 2008.
    Ken Liddy - Wachovia Securities - Analyst
    Do you -- is this $20m revenue mark something that you think you can sustain?
    Izhar Dekel - Magal Security Systems - CEO
    Ken Liddy - Wachovia Securities - Analyst
    Okay. Well, I'll get back in the queue. Thank you.
    Thank you, Mr. Liddy. (OPERATOR INSTRUCTIONS). The next question is from Jeff Kessler from Lehman Brothers. Jeff, go ahead.
    Jeff Kessler - Lehman Brothers - Analyst
    Thank you. Hello there.

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