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Revenues Increase 17% Compared With the Third Quarter of 2004
YAHUD, Israel, November 7 /PRNewswire-FirstCall/ -- Magal Security Systems Ltd. (Nasdaq NM:MAGS; TASE:MAGS) today announced its consolidated financial results for the three and nine-month periods ended September 30, 2005.
Revenues for the third quarter of 2005 reached US$17.8 million, an increase of 16.7 percent compared with the third quarter of 2004 and an increase of 3.3 percent over the second quarter of 2005.
Gross profit for the third quarter of 2005 reached US$7.5 million (42 percent of revenues), an increase of 9.7 percent over the third quarter of 2004 and an increase of 0.8 percent compared with the second quarter of 2005. The fluctuation in the gross margin was within expected parameters and is due to the revenues mix between turnkey projects and products.
Operating and net income in the third quarter of 2005, reached US$974,000 and US$602,000, respectively, compared with operating and net income of US$1.2 million and US$663,000 respectively, for the third quarter of 2004.
Diluted earnings per share for the third quarter were US$0.06, compared with diluted earnings per share of US$0.08 in the same period last year. The decrease was due to a 19% increase in the number of shares as a result of 1,700,000 share secondary offering completed in April 2005 and the 9% decrease in net income.
Revenues for the first nine months of 2005 reached US$48.9 million, an increase of 11.2 percent compared with the same period in 2004. Operating and net income for the nine-month period, reached US$2.7 million and US$ 1.4 million, respectively, compared with US$ 2.1 million and US$611,000 respectively, for the first nine months of 2004.
Diluted earnings per share for the nine-month period were US$0.14, compared with diluted earnings per share of US$0.07 in the same period of last year.
In the second quarter of 2004, the Company recorded an expense of US$1.2 million relating to an award granted to all of the Company's employees by the Company's two principal shareholders out of their own personal funds. According to generally accepted accounting principles in the United States (US GAAP), this grant was recorded as an expense in the second quarter of 2004, although it did not affect shareholders' equity nor the Company's cash flow.
Commenting on the results, Mr. Jacob Even-Ezra, Chairman of Magal and CEO, said: "I am pleased to present good results for the third quarter. Our work on the seam line project is proceeding at full-steam and according to schedule. The Israeli Government recently stated that the completion of the seam-line fence is its top priority and we believe we are very well placed to win the remaining tenders on the seam-line fence."
The Company will be hosting its quarterly conference call at 11:00am EST today. Mr. Jacob Even-Ezra, Chairman of the Board & CEO, and Mrs. Raya Asher, V.P. Finance & CFO, will review and discuss the third quarter 2005 results. They will then be available to answer questions.
To participate, you may call one of the teleconferencing numbers that follows.
Please place your calls 5-10 minutes before the conference call commences. If you are unable to connect using one of the toll-free numbers, please try the international dial-in number.
US Dial-in Number: 1-866-860-9642
Canada Dial-in Number: 1-866-485-2399
ISRAEL Dial-in Number: 03-918-0610
INTERNATIONAL Dial-in Number: +972-3-918-0610
At:
11:00am Eastern Time
8:00am Pacific Time
6:00pm Israel Time
About Magal Security Systems, Ltd.:
Magal Security Systems Ltd. is engaged in the development, manufacturing and marketing of computerized security systems, which automatically detect, locate and identify the nature of unauthorized intrusions. Magal also supplies video monitoring services through Smart Interactive Systems, Inc., a subsidiary established in the U.S. in June 2001. The Company's products are currently used in more than 70 countries worldwide to protect national borders, airports, correctional facilities, nuclear power stations and other sensitive facilities from terrorism, theft and other threats. Israeli-based Magal has subsidiaries in the U.S., Canada, the U.K., Germany, Romania, Mexico and an office in China.
Magal trades under the symbol MAGS on the Nasdaq National Market since 1993 and on the Tel-Aviv Stock Exchange (TASE) since July 2001.
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.
Contacts:
Company Investor Relations
Magal Security Systems, Ltd Gelbart Kahana Investor Relations
Raya Asher, CFO Ehud Helft/Kenny Green
Tel: +972-3-5391444 Tel: +1-866-704-6710
Fax: +972-3-5366245 E-mail:
E-mail:
MAGAL SECURITY SYSTEMS LTD.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(All numbers except EPS expressed in
thousands of US$)
Nine Months Ended Sep. 30 Quarter Ended Sep. 30
2005 % change 2004 2005 % change 2004
REVENUES $ 48,924 11 $43,986 $ 17,825 17 $15,271
Cost of revenues 27,725 14 24,378 10,332 22 8,443
Gross Profit 21,199 8 19,608 7,493 10 6,828
OPERATING EXPENSES:
Research and 3,769 8 3,486 1,337 12 1,193
development, net
Selling and marketing, 10,495 20 8,728 3,814 26 3,031
net
General and 4,218 2 4,133 1,368 -3 1,415
administrative
Award granted by
principal shareholders - 1,200 - -
TOTAL OPERATING 18,482 5 17,547 6,519 16 5,639
EXPENSES
OPERATING INCOME 2,717 32 2,061 974 -18 1,189
FINANCIAL EXPENSES, NET 485 -16 574 116 -48 223
INCOME BEFORE TAXES ON
INCOME 2,232 50 1,487 858 -11 966
TAXES ON INCOME 854 -3 876 256 -16 303
NET INCOME $ 1,378 126 $ 611 $ 602 -9 $ 663
BASIC NET EARNINGS PER
SHARE $ 0.14 $ 0.07 $ 0.06 $ 0.08
SHARES USED IN
COMPUTING BASIC NET
EARNINGS PER SHARE (IN
THOUSANDS) 9,712 8,565 10,372 8,617
DILUTED NET EARNINGS $ 0.14 $ 0.07 $ 0.06 $ 0.08
PER SHARE
SHARES USED IN
COMPUTING DILUTED NET
EARNINGS PER SHARE (IN
THOUSANDS) 9,811 8,673 10,383 8,706
FINANCIAL RATIOS
Nine months Ended Sep. 30, Quarter Ended Sep. 30,
2005 2004 2005 2004
Gross Margin 43.3% 44.6% 42.0% 44.7%
R&D as a % of Revenues 7.7% 7.9% 7.5% 7.8%
Selling & Marketing as 21.5% 19.8% 21.4% 19.8%
a % of Revenues
G&A Expenses as a % of 8.6% 9.4% 7.7% 9.3%
Revenues
Operating Margin 5.6% 4.7% 5.5% 7.8%
Net Income Margin 2.8% 1.4% 3.4% 4.3%
Total Debt to Total *0.42 **0.48 *0.42 **0.48
Capitalization
Current Ratio *2.16 **1.77 *2.16 **1.77
* As of September 30, 2005
** As of December 31, 2004
MAGAL SECURITY SYSTEMS LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(All numbers expressed in thousands of US$)
September 30, December 31,
2005 2004
CURRENT ASSETS:
Cash and cash equivalents $25,400 $11,964
Trade receivables 17,179 13,232
Unbilled accounts receivable 13,185 7,465
Other accounts receivable 3,365 3,858
Deferred income taxes 377 488
Inventories 11,020 12,702
Total current assets 70,526 49,709
LONG TERM INVESTMENTS AND TRADE RECEIVABLES:
Long-term trade receivables 391 344
Long-term bank deposits and structure notes 6,028 5,994
Severance pay fund 1,980 2,142
Total long term investments and trade 8,399 8,480
receivables
PROPERTY AND EQUIPMENT, NET 15,242 14,659
OTHER ASSETS, NET 5,119 5,128
Total assets $99,286 $77,976
CURRENT LIABILITIES:
Short-term bank credit $20,263 $15,618
Current maturities of long-term bank loans 1,769 1,849
Trade payables 5,192 3,189
Other accounts payable and accrued expenses 5,420 7,450
Total current liabilities 32,644 28,106
LONG-TERM LIABILITIES:
Long-term bank loans 3,500 3,500
Accrued severance pay 2,038 2,172
Long-term liability in respect of forward 26 650
contracts
Total long terms liabilities 5,564 6,322
SHAREHOLDERS' EQUITY 61,078 43,548
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $99,286 $77,976
DATASOURCE: Magal Security Systems Ltd.
CONTACT: Contacts: Company, Magal Security Systems, Ltd, Raya Asher,
CFO, Tel: +972-3-5391444, Fax: +972-3-5366245, E-mail:
; Investor Relations, Gelbart Kahana Investor
Relations, Ehud Helft/Kenny Green, +1-866-704-6710, E-mail:
,