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Magal Security Systems Ltd. Reports Fourth Quarter & Full Year 2016 Financial Results

YEHUD, Israel, March 29, 2017 /PRNewswire/ -- Magal Security Systems, Ltd. (MAGS) today announced its financial results for the three month and full year period ended December 31, 2016. Management will hold an investors' conference call later today (at 10am Eastern Time) to discuss the results.

FOURTH QUARTER RESULTS SUMMARY

  • Revenue grew year-over-year by 5% to $20.3 million;
  • Net income of $2.9 million, up 13% year-over-year;
  • Strong cash flow from operations generating $7.4 million;
  • Record high net cash and equivalents of $52.5 million at year-end;
  • High level of quarterly bookings including first order for Magal's innovative border protection solution for the Israeli MOD;

FOURTH QUARTER 2016 RESULTS

Revenues for the fourth quarter of 2016 were $20.3 million, an increase of 5% compared with revenues of $19.3 million in the fourth quarter of 2015.

Gross profit for the fourth quarter of 2016 was $10.0 million, or 49.6% of revenues, compared with a gross profit of $10.9 million or 56.4% of revenues, in the fourth quarter of 2015. The change in gross margin between quarters is a function of the revenue mix between volume of projects executed, and volume of products and services sold. The gross margin in the fourth quarter of 2015 was particularly high, primarily due to a short-term project delivered in that quarter.

Operating income for the fourth quarter of 2016 was $1.5 million compared to operating income of $2.9 million in the fourth quarter of 2015.  

Net income in the fourth quarter of 2016 was $2.9 million, or $0.13 per share, compared with net income of $2.5 million, or $0.15 per share in the fourth quarter of 2015.

FULL YEAR 2016 RESULTS

Revenues for the year ended December 31, 2016 were $67.8 million, a 6% increase compared with $63.7 million in 2015.

Gross profit for 2016 was $33.2 million, representing 49.0% of revenues, compared with $31.0 million, representing 48.7% of revenues in 2015.

Operating income for 2016 was $1.5 million, or 2.2% of revenues, compared with $4.4 million, or 6.9% of revenues in 2015. Operating income for the organic business increased by 3% compared with 2015. Amortization of the purchase price allocation and retention expenses related to the Aimetis acquisition amounted to $1.4 million in 2016.

Net income for 2016 was $1.0 million, or $0.06 per share, compared with $3.1 million, or $0.19 per share, in 2015.

Cash, short term deposits and restricted deposits, net of bank debt, as of December 31, 2016, were $52.5 million, or $2.29 per share, compared with cash and short term deposits, net of bank debt, of $31.2 million, or $1.93 per share, at December 31, 2015.

MANAGEMENT COMMENT

Commenting on the results, Mr. Saar Koursh, CEO of Magal, said, "2016 was an improved year for Magal, both in terms of the core financial results but especially from a strategic standpoint. In 2016, we continued to increase the portion of our higher margin product revenues, which now stands at 54% of the total. In addition, recurring revenue increased to 20% of sales and we expect these positive trends to continue into 2017. During the year, we invested significant resources in beefing up Aimetis' sales operations in North America. While this has had a negative impact on our profitability in 2016, we believe that it will bring us strong revenue growth already in 2017 in verticals that we have not been present in yet. We have also recently seen a solid level of bookings, and our expectations for 2017 are for increased sales and operating profitability."

Continued Mr. Koursh, "In terms of our business, we saw strong interest in our technologies and products coming from the United States in particular, in 2016. Looking ahead, given the expected increase in security spending  in the US, coupled with our strong recent experience with thousands of miles in border and perimeter security projects worldwide, and our significant product footprint in US critical assets, we feel very well positioned to grow our business in 2017."

INVESTORS' CONFERENCE CALL INFORMATION:

The Company will host a conference call later today, March 29, 2016, at 10:00 a.m. Eastern Time and 5:00 p.m. Israel time.

To participate, please call one of the following teleconferencing numbers:

US: 1 888 668 9141; Israel: 03 918 0609; UK: 0 800 917 5108; Intl.: +972 3 918 0609

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.magal-s3.com.

ABOUT MAGAL S3

Magal S3 is a leading international provider of solutions and products for physical and cyber security, as well as safety and site management. Over the past 45 years, Magal has delivered tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 80 countries – under some of the most challenging conditions.

Magal S3 offers comprehensive integrated solutions for critical sites, managed by Fortis4G – our 4th generation, cutting-edge PSIM (Physical Security Information Management system). The solutions leverage our broad portfolio of homegrown PIDS (Perimeter Intrusion Detection Systems), advanced VMS with native IVA and Cyber 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.

Saar Koursh, CEO

Tel: +972 3 539 1421

E-mail: elishevaa@magal-s3.com  

Web: www.magal-s3.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 December 31,


Full Year

Ended December 31,


2015


2016

%
change


2015


2016

%
change

Revenue

19,270


20,252

5.1


63,736


67,825

6.4

Cost of revenue

8,407


10,216



32,722


34,570












Gross profit

10,863


10,036

(7.6)


31,014


33,255

7.2

Operating expenses:










   Research and development, net

1,749


1,735

(0.8)


4,814


6,779

40.8

   Selling and marketing

4,107


5,050

(23.0)


14,785


17,536

18.6

   General and administrative

2,085


1,728

(17.1)


7,026


7,445

6.0

Total operating expenses

7,941


8,513

7.2


26,625


31,760

19.3











Operating income

2,922


1,523



4,389


1,495


Financial income (expenses), net

(138)


(456)



642


(591)












Income before income taxes

3,060


1,979



5,031


904












Taxes on income (tax benefit)

544


(874)



1,923


(122)












Net income

2,516


2,853



3,108


1,026












Loss attributable to non-controlling interests

(21)


(17)



(33)


(3)












Net income attributable to Magal shareholders'

2,537


2,870



3,141


1,029












Basic net earnings per share

$0.15


$0.13



$0.19


$0.06












Diluted net earnings per share

$0.15


$0.13



$0.19


$0.06












Weighted average number of shares used in computing basic net earnings per share

16,386,698


22,723,656



16,347,948


17,999,779












Weighted average number of shares used in computing
diluted net earnings per share

16,401,525


22,741,110



16,410,711


18,031,433













Three Months

Ended December 31



Full Year

Ended December 31,



2015

%


2016

%



2015

%


2016

%












Gross margin

56.4


49.6



48.7


49.0


Research and development, net as a % of revenues

9.1


8.6



7.6


10.0


Selling and marketing as a % of revenues

21.3


24.9



23.2


25.9


General and administrative  as a % of revenues

10.8


8.5



11.0


11.0


Operating margin

15.2


7.5



6.9


2.2


Net  margin

13.2


14.2



4.9


1.5













 

 

 

MAGAL SECURITY SYSTEMS LTD.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All numbers expressed in thousands of US$)




December 31,

 

December 31,



2015

2016

CURRENT ASSETS:




Cash and cash equivalents


$27,319

$19,692

Short-term bank deposits


3,055

31,036

Restricted deposits


786

1,809

Trade receivables, net


13,706

13,702

Unbilled accounts receivable


5,597

4,232

Other accounts receivable and prepaid expenses


2,107

2,751

Inventories


7,879

6,818





Total current assets


60,449

80,040





 

Long term investments and receivables:








Long-term trade receivables


617

308

Long-term deposits and restricted bank deposits


136

126

Severance pay fund


1,761

 

1,321

Deferred income taxes


1,055

2,114





Total long-term investments and receivables


3,569

3,869





PROPERTY AND EQUIPMENT, NET


5,415

5,301





INTANGIBLE ASSETS, NET


1,313

4,933





GOODWILL


4,250

11,850





Total assets


$74,996

$105,993




December 31,

December 31,


2015

2016




CURRENT LIABILITIES:






Trade payables

$3,185

$4,040

Customer advances

2,520

5,602

Other accounts payable and accrued expenses

10,748

11,646




Total current liabilities

16,453

21,288




LONG-TERM LIABILITIES:



Deferred revenues

-

472

Deferred income taxes

173

167

Accrued severance pay

2,660

2,089

Other long-term liabilities

15

59




Total long-term liabilities

2,848

2,787




SHAREHOLDERS' EQUITY



Share Capital: Ordinary shares of NIS 1 par value -



     Authorized: 39,748,000 shares at December 31, 2015 and December 31, 2016;
      Issued and outstanding: 16,398,872 shares at December 31, 2015 and 22,894,348
      shares at December 31, 2016

4,968

6,679

Additional paid-in capital

69,888

93,441

Accumulated other comprehensive loss

(1,850)

(1,923)

Foreign currency translation adjustments (stand alone financial statements)

406

412

Accumulated deficit

(17,629)

(16,600)




Total shareholders' equity

55,783

82,009

Non-controlling interest

(88)

(91)




TOTAL SHAREHOLDERS' EQUITY

55,695

81,918




TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$74,996

$105,993





 

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