EXHIBIT 99.1
Magal Security Systems Ltd. Reports
Fourth Quarter & Full Year 2018 Financial Results
Fourth Quarter & Full Year 2018 Financial Results
Record revenue at $92.6 million, growing 44% year-over-year
YEHUD, ISRAEL, March 27, 2019 -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three months and full year period ended December 31, 2018. Management will hold an investors' conference call later today (at 10:30am Eastern Time) to discuss the results.
FULL YEAR 2018 RESULTS SUMMARY
| · | Record revenue of $92.6 million, up 44% year over year; |
| · | Net income of $2.9 million versus a net loss of $6.9 million in 2017; |
| · | EBITDA of $7.0 million versus $0.6 million in 2017; |
| · | Growth in year-over-year backlog and record bookings in 2018. |
MANAGEMENT COMMENT
Commenting on the results, Mr. Dror Sharon, CEO of Magal, said, "We are very pleased with our performance in 2018, with revenues up by 44% and reaching an all time record high. The increase in revenues which was in great measure attributable to organic growth across the board, in all regions, consisted of a diversified mix of projects as well as products."
FULL YEAR 2018 RESULTS
Revenues for the year ended December 31, 2018 were a record $92.6 million, a 44% increase compared with $64.3 million in 2017. On an organic basis, excluding the contribution to revenues from the acquisition of Esc Baz which closed on April 2, 2018, revenues would have grown 38% year-over-year.
Gross profit for 2018 was $40.3 million, representing 43.5% of revenues, compared with $31.3 million, representing 48.7% of revenues in 2017. The change in the gross margin is a function of the revenue mix between projects executed and products and services sold.
Operating income for 2018 was $3.8 million compared with an operating loss of $1.2 million in 2017.
Net income for 2018 was $2.9 million, or $0.12 per share compared with a net loss of $6.9 million, or $0.30 per share, in 2017.
EBITDA in 2018 was $7.0 million compared with $0.6 million in 2017.
FOURTH QUARTER 2018 RESULTS
Revenues for the fourth quarter of 2018 were $26.1 million, an increase of 13% compared with revenues of $23.0 million in the fourth quarter of 2017.
Gross profit for the fourth quarter of 2018 was $10.6 million, or 40.6% of revenues, compared with gross profit of $10.7 million, or 46.6% of revenues, in the fourth quarter of 2017. The change in gross margin between quarters is a function of the revenue mix between projects executed and products and services sold.
Operating loss for the fourth quarter of 2018 was $0.4 million compared to operating income of $1.8 million in the fourth quarter of 2017. During the fourth quarter of 2018 there was a higher level of operating expenses, primarily general and administrative expenses which amounted to $4.2 million versus $2.2 million in the fourth quarter of 2017. The increase was primarily due to a number of one-time, non-cash events including a write-off of $1 million in goodwill related to the Cyberseal acquisition made in 2013 and a $0.7 million provision for a doubtful receivable.
Net loss in the fourth quarter of 2018 was $0.1 million, or $0.01 per share compared with net income of $0.3 million, or $0.01 per share in the fourth quarter of 2017.
EBITDA in the fourth quarter was $1.3 million compared with $2.3 million in the fourth quarter of 2017.
Cash, short term deposits and restricted deposits, net of bank debt, as of December 31, 2018, were $55.0 million, or $2.38 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.
INVESTORS' CONFERENCE CALL INFORMATION:
The Company will host a conference call later today, March 27, 2018, at 10:30am Eastern Time and 4:30pm 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
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 December 31, | Full Year Ended December 31, | |||||||||||||||||||||||
| 2018 | 2017 | % change | 2018 | 2017 | % change | |||||||||||||||||||
| Revenue | 26,105 | 23,017 | 13.4 | 92,602 | 64,292 | 44.0 | ||||||||||||||||||
| Cost of revenue | 15,503 | 12,289 | 52,299 | 32,967 | ||||||||||||||||||||
| Gross profit | 10,602 | 10,728 | (1.2 | ) | 40,303 | 31,325 | 28.7 | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Research and development, net | 1,838 | 1,619 | 13.5 | 6,852 | 6,558 | 4.5 | ||||||||||||||||||
| Selling and marketing | 4,982 | 5,125 | (2.8 | ) | 18,557 | 18,158 | 2.2 | |||||||||||||||||
| General and administrative | 4,217 | 2,181 | 93.4 | 11,139 | 7,853 | 41.8 | ||||||||||||||||||
| Total operating expenses | 11,037 | 8,925 | 36,548 | 32,569 | ||||||||||||||||||||
| Operating income (loss) | (435 | ) | 1,803 | 3,755 | (1,244 | ) | ||||||||||||||||||
| Financial income (expenses), net | 670 | (483 | ) | 1,361 | (3,961 | ) | ||||||||||||||||||
| �� | ||||||||||||||||||||||||
| Income (loss) before income taxes | 235 | 1,320 | 5,116 | (5,205 | ) | |||||||||||||||||||
| Taxes on income | 485 | 1,029 | 2,072 | 1,695 | ||||||||||||||||||||
| Net income (loss) | (250 | ) | 291 | 3,044 | (6,900 | ) | ||||||||||||||||||
| Income (loss) attributable to redeemable non-controlling interests | (150 | ) | - | 95 | 14 | |||||||||||||||||||
| Net income (loss) attributable to Magal shareholders' | (100 | ) | 291 | 2,949 | (6,914 | ) | ||||||||||||||||||
| Basic and diluted net income (loss) per share | $ | (0.01 | ) | $ | 0.01 | $ | 0.12 | $ | (0.30 | ) | ||||||||||||||
| Weighted average number of shares used in computing basic net income (loss) per share | 23,043,842 | 23,025,222 | 23,040,436 | 22,989,009 | ||||||||||||||||||||
| Weighted average number of shares used in computing diluted net income (loss) per share | 23,043,842 | 23,122,323 | 23,287,752 | 22,989,009 | ||||||||||||||||||||
Three Months Ended December 31 | Full Year Ended December 31, | |||||||||||||||
2018 % | 2017 % | 2018 % | 2017 % | |||||||||||||
| Gross margin | 40.6 | 46.6 | 43.5 | 48.7 | ||||||||||||
Research and development, net as a % of revenues | 7.0 | 7.0 | 7.4 | 10.2 | ||||||||||||
| Selling and marketing as a % of revenues | 19.1 | 22.3 | 20.0 | 28.2 | ||||||||||||
General and administrative as a % of revenues | 16.2 | 9.5 | 12.0 | 12.2 | ||||||||||||
| Operating margin | - | 7.8 | 4.1 | - | ||||||||||||
| Net margin | - | 1.3 | 3.2 | - | ||||||||||||
MAGAL SECURITY SYSTEMS LTD.
RECONCILIATION OF EBITDA TO NET INCOME (LOSS)
(All numbers expressed in thousands of US$)
Three Months Ended December 31, | Full Year Ended December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| GAAP Net income (loss) | (250 | ) | 291 | 3,044 | (6,900 | ) | ||||||||||
| Less: | ||||||||||||||||
| Financial income (expenses), net | 670 | (483 | ) | 1,361 | (3,961 | ) | ||||||||||
| Taxes on income | 485 | 1,029 | 2,072 | 1,695 | ||||||||||||
| Depreciation and amortization | (1,722 | ) | (479 | ) | (3,224 | ) | (1,876 | ) | ||||||||
| EBITDA | 1,287 | 2,282 | 6,979 | 632 | ||||||||||||
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 38,665 | $ | 22,463 | ||||
| Short-term bank deposits | 13,150 | 27,025 | ||||||
| Restricted deposits | 3,135 | 2,842 | ||||||
| Trade receivables, net | 14,176 | 14,489 | ||||||
| Unbilled accounts receivable | 6,050 | 6,309 | ||||||
| Other accounts receivable and prepaid expenses | 3,935 | 2,850 | ||||||
| Inventories | 13,863 | 9,596 | ||||||
| Total current assets | 92,974 | 85,574 | ||||||
| LONG TERM INVESTMENTS AND RECEIVABLES: | ||||||||
| Long-term deposits and restricted bank deposits | 146 | 155 | ||||||
| Severance pay fund | 1,289 | 1,524 | ||||||
| Deferred income taxes | 3,650 | 2,579 | ||||||
| Total long-term investments and receivables | 5,085 | 4,258 | ||||||
| PROPERTY AND EQUIPMENT, NET | 6,347 | 5,718 | ||||||
| GOODWILL AND INTANGIBLE ASSETS, NET | 14,765 | 16,995 | ||||||
| TOTAL ASSETS | $ | 119,171 | $ | 112,545 | ||||
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payables | $ | 6,359 | $ | 5,198 | ||||
| Customer advances | 10,170 | 7,191 | ||||||
| Other accounts payable and accrued expenses | 15,613 | 13,784 | ||||||
| Total current liabilities | 32,142 | 26,173 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Deferred revenues | 1,344 | 891 | ||||||
| Deferred income taxes | 182 | 190 | ||||||
| Accrued severance pay | 2,181 | 2,328 | ||||||
| Other long-term liabilities | 351 | 14 | ||||||
| Total long-term liabilities | 4,058 | 3,423 | ||||||
| Redeemable non-controlling interest | 1,755 | - | ||||||
SHAREHOLDERS' EQUITY | ||||||||
| Share Capital: Ordinary shares of NIS 1 par value - | ||||||||
| Authorized: 39,748,000 shares at December 31, 2018 and December 31, 2017; Issued and outstanding: 23,049,639 shares at December 31, 2018 and 23,032,448 shares at December 31, 2017 | 6,721 | 6,716 | ||||||
| Additional paid-in capital | 94,205 | 93,975 | ||||||
| Accumulated other comprehensive loss | (1,827 | ) | (87 | ) | ||||
| Foreign currency translation adjustments (stand alone financial statements) | 2,795 | 5,859 | ||||||
| Accumulated deficit | (20,678 | ) | (23,514 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY | 81,216 | 82,949 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 119,171 | $ | 112,545 | ||||