Magal Security Systems Reports Fourth Quarter and Full Year 2012 Financial Results PR Newswire YAHUD, Israel, March 21, 2013 YAHUD, Israel, March 21, 2013 /PRNewswire/ --Magal S3 Ltd. (NASDAQ GMS: MAGS) today announced its financial results for the three and twelve month periods ended December 31, 2012. FOURTH QUARTER 2012 RESULTS SUMMARY Revenues for the fourth quarter of 2012 were $22.2 million, a decrease of 34.1% compared with revenues of $33.7 million in the fourth quarter of 2011. During 2011, the Company received an exceptionally large project in Africa requiring an accelerated delivery schedule, causing a significant jump in revenues and margins in the second half of that year. On a sequential basis, revenues in the fourth quarter of 2012 decreased by 5.4% compared with $23.5 million in the third quarter of 2012. Gross profit in the fourth quarter was $10.1 million, or 45.7% of revenues, a decrease of 34.3% compared to gross profit of $15.4 million, or 45.8% of revenues, in the fourth quarter of 2011. The higher gross profit in the fourth quarter of 2011 was due to the above-mentioned project in Africa. Gross profit in the fourth quarter of 2012 increased 4.7% on a sequential basis compared to gross profit of $9.7 million, or 41.3% of revenues in the third 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 fourth quarter was $3.2 million, or 14.5% of revenues, compared to operating profit of $5.0 million, or 14.8% of revenues, in the fourth quarter of 2011 and operating profit of $1.7 million, or 7.3% of revenues, in the third quarter of 2012. Net income in the fourth quarter was $1.3 million compared with net income of $4.3 million in the fourth quarter of 2011 and net income of $1.8 million in the third quarter of 2012. Earnings per share in the fourth quarter was $0.08, compared with earnings per share of $0.27 in the fourth quarter of 2011 and earnings per share of $0.11 in the third quarter of 2012. FULL YEAR 2012 RESULTS Revenues for the year ended December 31, 2012 were $77.7 million, a 12.3% decrease compared with $88.6 million in 2011, which benefitted from the large project in Africa that accounted for 34.8% of revenues in 2011. Gross profit for the year ended December 31, 2012 was $33.5 million, representing 43.2% of revenues, compared with $39.5 million, representing 44.6% of revenues in 2011. Operating profit for the year ended December 31, 2012 was $5.6 million, representing 7.2% of revenues, compared with an operating income of $9.8 million in 2011. Net income for the year ended December 31, 2012 was $4.1 million, compared with a net income of $9.8 million in 2011. Earnings per share for the year ended December 31, 2012 was $0.26, compared with earnings per share of $0.78 in 2011. Cash and short term deposits, net of current bank debt, as of December 31, 2012, increased to $41 million, or $2.55 per share, compared with cash and short term deposits, net of current bank debt, of $32.5 million, or $2.06 per share, as of December 31, 2011. MANAGEMENT COMMENT Commenting on the results, Mr. Eitan Livneh, President and CEO of Magal said, "We are very pleased with our performance in the fourth quarter and in 2012. Apart from 2011, in which we benefitted from the exceptionally large and short-term Africa Cup of Nations project that was delivered at the end of 2011, 2012 showed great performance for Magal and its shareholders. Our results demonstrate that Magal is in a stable longer-term growth trend in revenues and profit. Magal's business platform is much improved over previous years, demonstrating profitable growth from a diverse mix of revenues, high cash generation and improving margins, despite weakness in both the US and European economies in 2012. We are very proud of these achievements and in the solid turnaround of our business over the past 3-4 years. I congratulate all of Magal's employees for their hard work." Continued Mr. Livneh, "At the end of 2012, we began offering an integrated suite of products, combining protection in both the physical and cyber worlds. To further our penetration of the increasingly important cyber space, in January, we purchased WebSilicon, offering unique monitoring solutions for networks. We believe our move into this adjacent and synergistic market will allow us to accelerate our efforts to become a leader in the convergence of physical and cyber security. Magal, with over $41 million in cash, with growing revenues and improving margins, is in the strongest position it has ever been, and we look forward to continuing to unleash our potential in 2013. " INVESTORS' CONFERENCE CALL INFORMATION: The Company will host a conference call later today, March 21, 2013, at 11:00 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 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: 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 comprehensive 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 broad portfolio of homegrown Perimeter Intrusion Detection Systems (PIDS), advanced outdoors CCTV / IVA technology and 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. For more information: Magal S3 Ltd. CCG Investor Relations Eitan Livneh, CEO Ehud Helft/Kenny Green Tel: +972 3 539 1421 Tel: (US) +1 646 201 9246 Assistant: Ms. Elisheva Almog E-mail: firstname.lastname@example.org E-mail: email@example.com Web: www.magal-s3.com ** Financial Tables to Follow ** MAGAL S3 LTD. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (All numbers except EPS expressed in thousands of US$) Twelve Months Three Months Ended December 31, Ended December 31, 2012 2011 % 2012 2011 % change change Revenue $77,697 $88,591 (12.3) $22,227 $33,731 (34.1) Cost of revenue 44,163 49,089 (10.0) 12,078 18,284 (33.9) Gross profit 33,534 39,502 (15.1) 10,149 15,447 (34.3) Operating expenses: Research and 4,041 3,898 3.7 928 980 (5.3) development, net Selling and 16,528 19,415 (14.9) 3,953 7,033 (43.8) marketing General and 7,408 8,682 (14.7) 2,042 2,431 (16.0) administrative Other income - (2,304) - 6 Total operating 27,977 29,691 (5.8) 6,923 10,450 (33.8) expenses, net Operating income 5,557 9,811 3,226 4,997 Financial expense 472 (756) 952 73 (income), net Income before 5,085 10,567 2,274 4,924 income taxes Income tax 991 723 947 668 expense Net income 4,094 9,844 1,327 4,256 Basic net earnings per $0.26 $0.78 $0.08 $0.27 share Diluted net earnings per $0.26 $0.78 $0.08 $0.27 share Weighted average number of shares used in computing basic 16,003,482 12,645,283 16,091,796 15,819,822 net earnings per share Weighted average number of shares used in computing diluted net 16,030,816 12,645,283 16,108,130 15,819,822 earnings per share Twelve Months Three Months Ended December 31 Ended December 31 2012 2011 2012 2011 % % % % Gross margin 43.2 44.6 45.7 45.8 Research and development, net as a % of 5.2 4.4 4.2 2.9 revenues Selling and marketing as a % 21.3 21.9 17.8 20.9 of revenues General and administrative as a % of 9.5 9.8 9.2 7.2 revenues Operating margin 7.2 11.1 14.5 14.8 Net margin 5.3 11.1 6 12.6 MAGAL S3 LTD. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (All numbers expressed in thousands of US$) December 31, December 31, 2012 2011 CURRENT ASSETS: Cash and cash equivalents $39,463 $32,622 Short-term bank deposit 4,468 3,005 Restricted deposit 2,460 2,299 Trade receivables, net 17,920 13,230 Unbilled accounts receivable 2,394 4,855 Other accounts receivable and prepaid expenses 2,671 5,438 Inventories 8,535 9,664 Deferred income taxes 502 508 Total current assets 78,413 71,621 LONG TERM INVESTMENTS AND RECEIVABLES: Long-term trade receivables 1,048 1,423 Long-term deposits and restricted bank deposits 48 2,202 Severance pay fund 2,220 2,121 Total long-term investments and receivables 3,316 5,746 PROPERTY AND EQUIPMENT, NET 7,122 6,460 OTHER INTANGIABLE ASSETS, NET 171 190 GOODWILL 2,014 1,970 TOTAL ASSETS $91,036 $85,987 CURRENT LIABILITIES: Short-term bank credit $5,358 $5,357 Current maturities of long-term bank debt 33 33 Trade payables 6,725 6,724 Customer advances 6,895 5,877 Other accounts payable and accrued expenses 10,200 13,137 Total current liabilities 29,211 31,128 LONG-TERM LIABILITIES: Long-term bank debt 6 38 Deferred income taxes 210 205 Accrued severance pay 3,283 3,605 Total long-term liabilities 3,499 3,848 SHAREHOLDERS' EQUITY Ordinary shares of NIS 1 par value - Authorized: 39,748,000 shares at December 31, 2012 and December 31, 2011; Issued and outstanding: 16,098,022 shares at December 31, 2012 and 15,819,822 shares at December31, 2011 4,887 4,813 Additional paid-in capital 66,183 64,920 Accumulated other comprehensive income 4,749 4,486 Foreign currency translation adjustments (Company's stand alone financial statements) 2,224 603 Accumulated deficit (19,717) (23,811) TOTAL SHAREHOLDERS' EQUITY 58,326 51,011 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $91,036 $85,987 SOURCE Magal S3 Ltd. Website: http://www.magal-s3.com
Magal Security Systems Reports Fourth Quarter and Full Year 2012 Financial Results
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