Magal Security Systems Reports Second Quarter 2016 Financial Results

YEHUD, Israel, Aug. 31, 2016 /PRNewswire/ -- Magal Security Systems, Ltd. (NASDAQ: MAGS) today announced its financial results for the three and six month period ended June 30, 2016. Management will hold an investors' conference call later today, at 10:00 a.m. Eastern Time and 5:00 p.m. Israel time, to discuss the results.

RESULTS SUMMARY

• The results include the newly acquired video surveillance subsidiary, Aimetis;
• Revenues of $13.6 million, up 8% over the prior quarter;
• Increase in operating expenses primarily due to the Aimetis acquisition;
• Net cash and equivalents of $22.9 million at quarter-end;

SECOND QUARTER 2016 RESULTS

Revenues in the second quarter of 2016 were $13.6 million, a decrease of 13.2% compared with revenues of $15.7 million in the second quarter of 2015 and an increase of 8.1% compared with revenues of $12.6 million in the prior quarter.

Gross profit in the second quarter of 2016 was $6.1 million, or 44.5% of revenues, compared with gross profit of $7.3 million or 46.4% of revenues in the second quarter of 2015 and gross profit of $6.2 million, or 49.6% of revenues, in the previous quarter. The variance in the gross margin was due to the mix of projects and products sold in the quarter.

Operating expenses in the second quarter increased to $8.3 million compared to $5.9 million in the second quarter of 2015. The majority of the increase was due to increased expenses associated with the Aimetis acquisition.

Operating loss in the second quarter of 2016 was $2.2 million compared to operating income of $1.4 million in the second quarter of 2015 and operating income of $0.6 million in the previous quarter of 2016.

Contributing to the operating loss was a $0.5 million quarterly amortization of purchase price allocation and retention expenses related to the Aimetis acquisition that is expected to continue for the next two years, after which it will be reduced.

Net loss in the second quarter of 2016 was $2.0 million, or ($0.12) per share, compared to net income of $0.2 million, or $0.01 per share, in the second quarter of 2015 and a net loss of $0.5 million or ($0.03) per share in the previous quarter of 2016.

Cash, short term deposits and restricted deposits, net of bank debt, as of June 30, 2016, was $22.9 million, or $1.39 per share, compared with cash and short term deposits, net of current bank debt, of $31.1 million, or $1.90 per share, at December 31, 2015. On April 1, 2016, Senstar, Magal's wholly-owned Canadian subsidiary acquired Aimetis. Senstar paid the shareholders of Aimetis approximately $15.2 million in cash.  

MANAGEMENT COMMENT

Commenting on the results, Mr. Saar Koursh, CEO of Magal, said, "We have been active on the strategic front in 2016. At the start of the second quarter, we completed the acquisition of Aimetis, adding a state-of-the-art video surveillance offering. This move has significantly broadened our product portfolio and is very much in line with our long-term strategy of evolving into an increasingly product and service focused company."

"Given the strong opportunities in our end-markets, we are investing strongly in marketing and sales and R&D at Aimetis. In addition, in the coming weeks we will be releasing the latest Aimetis' VMS software and we expect to see a resulting sales growth. Our increased operating expenses in the first half of 2016 reflect these investments and the costs associated with our acquisition of Aimetis.  More broadly, in the past few months, our overall backlog has improved as we have received a number of larger orders from customers in Latin America, Africa and Israel, with deliverables towards the end of the year. This underlies our expectation that the second half of 2016 will be better than the first half," concluded Mr. Koursh.

INVESTORS' CONFERENCE CALL INFORMATION:

The Company will host a conference call later today, August 31, 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.

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SOURCE Magal Security Systems, Ltd.