Magal Security Systems Reports Second Quarter 2012 Financial Results

YAHUD, Israel, August 30, 2012 /PRNewswire/ --

Magal S3 Ltd. (NASDAQ GMS: MAGS) today announced its financial results for the three and six month period ended June 30, 2012. 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.

SECOND QUARTER 2012 RESULTS SUMMARY

Revenues for the second quarter of 2012 increased 4.9% to $16.4 million. This is compared with $15.7 million in revenues for the second quarter of 2011. Revenues also increased 5.6% compared to revenues of $15.6 million in the prior quarter.

Gross profit in the second quarter was $7.2 million, or 44.1% of revenues, an increase of 13.2% compared to gross profit of $6.4 million, or 40.8% of revenues, in the second quarter of 2011. Gross profit increased 12.2% compared to gross profit of $6.5 million, or 41.5% of revenues in the prior quarter.

Operating profit in the second quarter increased to $474 thousand, or 2.9% of revenues, compared to an operating profit of $399 thousand in the second quarter of 2011 and an operating profit of $135 thousand in the prior quarter.

Financial income, net in the second quarter amounted to $662 thousand compared to financial expenses, net of $243 thousand in the second quarter of 2011 and financial expenses, net of $220 thousand in the prior quarter.

Tax expenses in the second quarter were $198 thousand, compared with tax expenses of $54 thousand in the second quarter of 2011 and an income tax of $131 thousand in the prior quarter.

Net income in the second quarter was $938 thousand, or $0.06 per share, compared with net income of $102 thousand, or $0.01 per share, in the first quarter of 2011 and net income of 46 thousand, or $0.00 per share in the prior quarter.

Cash and short term deposits, net of current bank debt, as of June 30, 2012, were $37.6 million, or $2.34 per share, compared with cash and short term deposits, net of current bank debt, of $32.5 million, or $2.06 per share, on December 31, 2011.

FIRST SIX MONTHS 2012 RESULTS SUMMARY

Revenues in the first six months of 2012 were $32 million, an increase of 17.6% compared with $27.2 million as reported in the first six months of 2011. Net profit in the six month period amounted to $1.0 million compared with a net loss of $1.5 million in the same period last year. Net income per basic and fully diluted share in the 2012 six month period amounted to $0.06, compared with a net loss per basic share of $0.14 in the same period last year.

MANAGEMENT COMMENT

Commenting on the results, Mr. Eitan Livneh, President and CEO of Magal, said, "We are building on our solid start to 2012, showing additional year-over-year improvements in revenue and profitability as well as improvements over the prior quarter. We achieved this due to our strength in the emerging regions of Asia and Africa, despite weak economies in North America and Western Europe, where a number of projects to which we are supplying products have been delayed. Overall we are very pleased with our second quarter results. "

Continued Mr. Livneh, "We are also pleased with our progress on a strategic basis. We recently launched a long-range fiber product complementing and further broadening our market leading PIDS portfolio. During the quarter, we also entered into an exclusive teaming agreement in Russia with a local security company, a key step in our plan to enter this growing market as an integrator for PIDS and turnkey projects. We continue to look for other adjacent and synergistic markets in which we can enter and bring significant value. Our strong cash levels provide us with significant flexibility and an ability to capitalize on opportunities as they may arise."

INVESTORS' CONFERENCE CALL INFORMATION:

The Company will host a conference call later today, August 30, 2012, 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: 1 888 407 2553; Israel: 03 918 0610; UK: 0 800 917 9141; Intl.: +972 3 918 0610

Please begin placing your calls at least 10 minutes before the conference call commences. 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 from the day after the call for three months. The link to the replay will be accessible from Magal's website at: http://www.magal-s3.com.

ABOUT MAGAL S3

Magal S3 is a leading international provider of security, safety and site management solutions and products. Over the past 42 years, Magal S3 has delivered tailor-made solutions and turnkey projects to hundreds of satisfied customers in over 80 countries in some of the world's most demanding locations. Magal S3 offers the broadest portfolio of unique homegrown Perimeter Intrusion Detection Systems (PIDS) as well as Fortis4G - a new generation of cutting edge Physical Security Information Management system (PSIM) with comprehensive CCTV solutions and leading Intelligent Video Analytics (IVA).

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.

 

                                     MAGAL S3 LTD.
                   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                   (All numbers except EPS expressed in thousands of US$)


                                          Six Months                  Three Months
                                        Ended June 30,               Ended June 30,
                                  2012        2011  % change    2012       2011   % change

    Revenue                     $31,980     $27,200     17.6  $16,427    $15,660      4.9
    Cost of revenue              18,288      16,197     12.9    9,188      9,265     (0.8)

    Gross profit                 13,692      11,003     24.4    7,239      6,395     13.2
    Operating expenses:
    Research and 
    development, net              2,070       1,918      7.9    1,038        901     15.2
    Selling and marketing         7,994       6,737     18.7    4,211      3,510     20.0
    General and administrative    3,019       3,178     (5.0)   1,516      1,585     (4.4)
    Total operating expenses     13,083      11,833     10.6    6,765      5,996     12.8
 
    Operating income (loss)         609        (830)              474        399
    Financial expense (income),
    net                            (442)        398              (662)       243
 
    Income (loss) before 
    income taxes                  1,051      (1,228)            1,136        156
 
    Income tax expense (benefit)     67         254               198         54
 
    Net income (loss)               984       (1,482)             938        102
 
    Basic net earnings
    (loss) per share              $0.06      $(0.14)            $0.06       $0.01
 
    Diluted net earnings
    (loss) per share              $0.06      $(0.14)            $0.06       $0.01
 
    Weighted average number
    of shares used in 
    computing basic net
    earnings per share       15,934,322  10,408,215        16,045,939  10,419,881
 
    Weighted average number
    of shares used in 
    computing basic net
    earnings per share       15,994,292  10,408,215        16,112,245  10,419,881


                                      Six Months                    Three Months
                                     ended June 30,                ended June 30,
                                   2012        2011              2012        2011

                                      %           %                 %           %

    Gross margin                   42.8        40.5              44.1        40.8
    Research and development,
    net as a % of revenues          6.5         7.1               6.3         5.8
    Selling and marketing as a
    % of revenues                  25.0        24.8              25.6        22.4
    General and administrative
    as a % of revenues              9.4        11.7               9.2        10.1
    Operating margin                1.9        (3.1)              2.9         2.5
    Net margin                      3.1        (5.4)              5.7         0.7
 


                                    MAGAL S3 LTD.
                    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                     (All numbers expressed in thousands of US$)

                                                     June 30,   December 31,
                                                        2012         2011
    CURRENT ASSETS:
    Cash and cash equivalents                         $35,402     $32,622
    Short-term bank deposit                             5,028       3,005
    Restricted deposit                                  2,294       2,299
    Trade receivables, net                              8,341      13,230
    Unbilled accounts receivable                        5,467       4,855
    Other accounts receivable and prepaid expenses      4,075       5,438
    Deferred income taxes                                 513         508
    Inventories                                        10,999       9,664
    Total current assets                               72,119      71,621
 
    Long term investments and receivables:
    Long-term trade receivables                         1,196       1,423
    Long-term deposits and restricted bank deposits        45       2,202
    Severance pay fund                                  2,008       2,121
    Total long-term investments and receivables         3,249       5,746
 
    PROPERTY AND EQUIPMENT, NET                         6,475       6,460
 
    OTHER INTANGIABLE ASSETS, NET                         175         190

    GOODWILL                                            1,973       1,970
 
    Total assets                                      $83,991     $85,987
 
    CURRENT LIABILITIES:
    Short-term bank credit                             $5,098      $5,357
    Current maturities of long-term bank debt              33          33
    Trade payables                                      5,336       6,724
    Customer advances                                   7,094       5,877
    Other accounts payable and accrued expenses        10,928      13,137
    Total current liabilities                          28,489      31,128
 
    LONG-TERM LIABILITIES:
    Long-term bank debt                                    44          38
    Deferred income taxes                                 199         205
    Accrued severance pay                               3,009       3,605
    Total long-term liabilities                         3,252       3,848
 
    SHAREHOLDERS' EQUITY
    Ordinary shares of NIS 1 par value - Authorized:
    39,748,000 shares at 
    June 30, 2012 and December 31, 2011;
    Issued and outstanding: 16,053,490 shares at June
    30, 2012
    and 15,819,822 shares at December 31, 2011          4,877       4,813
    Additional paid-in capital                         65,940      64,920
    Accumulated other comprehensive income              4,661       4,486
    Foreign currency translation adjustments
    (Company's stand alone
    financial statements)                                (401)        603
    Accumulated deficit                               (22,827)    (23,811)
    TOTAL SHAREHOLDERS' EQUITY                         52,250      51,011
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $83,991     $85,987

 

For more information:

Magal S3 Ltd.
Eitan Livneh, CEO
Tel: +972-3-539-1421
Assistant: Ms. Elisheva Almog
E-mail: elishevaa@magal-s3.com
Web: http://www.magal-s3.com

  
CCG Investor Relations
Ehud Helft/Kenny Green
Tel: (US) +1-646-201-9246
E-mail: magal@ccgisrael.com

SOURCE Magal Security Systems Ltd




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