Magal Security Systems Reports: Third Quarter 2012 Financial Results

     Magal Security Systems Reports: Third Quarter 2012 Financial Results

PR Newswire

YAHUD, Israel, November 29, 2012

YAHUD, Israel, November 29, 2012 /PRNewswire/ --

Magal S3 Ltd. (NASDAQ GMS: MAGS) today announced its financial results for the
three and nine month period ended September 30, 2012. Management will hold an
investors' conference call later today, at 9:00 a.m. Eastern Time and 4:00
p.m. Israel time, to discuss the results.

THIRD QUARTER 2012 RESULTS SUMMARY

Revenues for the third quarter of 2012 were $23.5 million, a decrease of 15%
compared with revenues of $27.7 million in the third quarter of 2011. The
third quarter of 2011 was exceptional due to a particularly large project in
Africa, that was delivered within a short period of time. On a sequential
basis, revenues in the third quarter of 2012 increased by 43% compared with
$16.4 million in the second quarter of 2012.

Gross profit in the third quarter was $9.7 million, or 41.3% of revenues, a
decrease of 26% compared to gross profit of $13.1 million, or 47.2% of
revenues, in the third quarter of 2011. The higher gross profit in the third
quarter of 2011 was due to the large project in Africa. Gross profit in the
third quarter of 2012 increased 34% compared to gross profit of $7.2 million,
or 44.1% of revenues in the second quarter of 2012. The variance in the gross
margin between quarters reflects changes between products and projects in the
revenue mix. 

Operating profit in the third quarter was $1.7 million, or 7.3% of revenues,
compared to an operating profit of $5.6 million, or 20.4% of revenues, in the
third quarter of 2011 and operating profit of $474 thousand, or 2.9% of
revenues, in the second quarter of 2012.

Net income in the third quarter was $1.8 million, or $0.11 per share, compared
with net income of $7.1 million, or $0.61 per share, in the third quarter of
2011 and net income of 938 thousand, or $0.06 per share in the second quarter
of 2012.

Cash and short term deposits, net of current bank debt, as of September 30,
2012, increased to $39.2 million, or $2.44 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.

MANAGEMENT COMMENT

Commenting on the results, Mr. Eitan Livneh, President and CEO of Magal said,
"We have shown continued sequential improvements in revenue throughout 2012
and have continued to build our profitability throughout the year. While our
results in the second half of last year were exceptionally good due to the
short delivery timeframe of the Africa Cup of Nations project, we are now
executing on a much improved business platform than in previous years. We are
very proud of our achievements and in the solid turnaround of our business
over the past two years." 

Continued Mr. Livneh, "During the quarter, we continued to progress on a
strategic basis which we believe assures our long-term future. We began
offering cyber protection solutions by teaming with other technology companies
to deliver turnkey cyber security solutions for critical sites in addition to
the physical security we already provide. This enables us to offer a fully
integrated suite of protection for customers in both the physical and online
worlds. We have also continued to focus on cementing our presence in various
key strategic regions globally. As always, we continue to look for other
adjacent and synergistic markets that we can enter and bring significant
value. With close to $40 million in net cash, our strong and growing cash
levels provide us with greater flexibility and we are in a strong position to
capitalize on opportunities as they may arise."

INVESTORS' CONFERENCE CALL INFORMATION:

The Company will host a conference call later today, November 29, 2012, at
9:00 a.m. Eastern Time and 4:00 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

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 S^3

Magal S3 is a leading international provider of solutions and products for
physical and cyber security, safety and site management. 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 holistic and integrated solutions for critical sites, managed
by Fortis^4G - our 4^th generation cutting edge Physical Security Information
Management system (PSIM). The solutions leverage our broadest portfolio of
unique homegrown Perimeter Intrusion Detection Systems (PIDS), advanced
outdoors CCTV / IVA technology and holistic Cyber Security solutions.

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$)

                             Nine Months                      Three Months

                         Ended September 30,               Ended September 30,

                                             %                             %
                         2012        2011 change       2012        2011  change
    Revenue           $55,470     $54,860    1.1    $23,490     $27,660  (15.1)
    Cost of
    revenue            32,085      30,805    4.2     13,797      14,608    (5.6)

    Gross profit       23,385      24,055   (2.8)     9,693      13,052   (25.7)
    Operating
    expenses:
    Research and
    development,
    net                 3,113       2,918    6.7      1,043       1,000     4.3
    Selling and
    marketing          12,575      12,382    1.6      4,581       5,645   (18.8)
    General and
    administrative      5,366       6,251  (14.2)     2,347       3,073   (23.6)
    Other income            -      (2,310)                -      (2,310)
    Total
    operating
    expenses           21,054      19,241    9.4      7,971       7,408     7.6

    Operating
    income              2,331       4,814             1,722       5,644
    Financial
    income, net           480         829                38       1,227

    Income before
    income taxes        2,811       5,643             1,760       6,871

    Income tax
    expense
    (benefit)              44          55               (23)       (199)

    Net income          2,767       5,588             1,783       7,070

    Basic net
    earnings per
    share               $0.17       $0.52             $0.11       $0.61

    Diluted net
    earnings per
    share               $0.17       $0.52             $0.11       $0.61

    Weighted
    average number
    of shares used
    in computing
    basic net
    earnings per
    share          15,974,044  10,794,696        16,053,490  11,579,325

    Weighted
    average number
    of shares used
    in computing
    basic net
    earnings per
    share          16,012,647  10,794,696        16,066,440  11,579,325

                       Nine Months ended              Three Months ended
                         September 30,                   September 30,
                         2012        2011                2012      2011

                            %           %                 %         %

    Gross margin         42.2        43.8              41.3      47.2
    Research and
    development,
    net as a % of
    revenues              5.6         5.3               4.4       3.6
    Selling and
    marketing as a
    % of revenues        22.7        22.6              19.5      20.4
    General and
    administrative
    as a % of
    revenues              9.7        11.4              10.0      11.1
    Operating
    margin                4.2         8.8               7.3      20.4
    Net margin            5.0        10.2               7.6      25.6


MAGAL S3 LTD.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All numbers expressed in thousands of US$)

                                                     
                                               September 30,   December 31,
                                                       2012           2011
    CURRENT ASSETS:
    Cash and cash equivalents                       $38,154        $32,622
    Short-term bank deposit                           3,779          3,005
    Restricted deposit                                2,453          2,299
    Trade receivables, net                           12,089         13,230
    Unbilled accounts receivable                      2,819          4,855
    Other accounts receivable and prepaid expenses    4,025          5,438
    Deferred income taxes                               546            508
    Inventories                                       9,827          9,664
    Total current assets                             73,692         71,621

    Long term investments and receivables:
    Long-term trade receivables                       1,158          1,423
    Long-term deposits and restricted bank
    deposits                                              6          2,202
    Severance pay fund                                2,071          2,121
    Total long-term investments and receivables       3,235          5,746

    PROPERTY AND EQUIPMENT, NET                       6,668          6,460

    OTHER INTANGIABLE ASSETS, NET                       176            190

    GOODWILL                                          2,000          1,970

    Total assets                                    $85,771        $85,987

    CURRENT LIABILITIES:
    Short-term bank credit                           $5,115         $5,357
    Current maturities of long-term bank debt            32             33
    Trade payables                                    7,155          6,724
    Customer advances                                 4,827          5,877
    Other accounts payable and accrued expenses      10,157         13,137
    Total current liabilities                        27,286         31,128

    LONG-TERM LIABILITIES:
    Long-term bank debt                                  40             38
    Deferred income taxes                               205            205
    Accrued severance pay                             3,083          3,605
    Total long-term liabilities                       3,328          3,848

    SHAREHOLDERS' EQUITY
    Ordinary shares of NIS 1 par value -
    Authorized: 39,748,000 shares at
    September 30, 2012 and December 31, 2011;
    Issued and outstanding: 16,053,490 shares at
    September 30, 2012
    and 15,819,822 shares at December 31, 2011        4,877          4,813
    Additional paid-in capital                       65,999         64,920
    Accumulated other comprehensive income            5,383          4,486
    Foreign currency translation adjustments
    (Company's stand alone
    financial statements)                               (58)           603
    Accumulated deficit                             (21,044)       (23,811)
    TOTAL SHAREHOLDERS' EQUITY                       55,157         51,011
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $85,771        $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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