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

YEHUD, Israel, March 29, 2017 /PRNewswire/ -- Magal Security Systems, Ltd. (NASDAQ: 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 Fortis^4G – our 4^th 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