Magal Security Systems announced its financial results for the three month and full year period ended December 31, 2016. Magal Security Systems announced its financial results for the three month and full year period ended December 31, 2016.
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.
FOURTH QUARTER 2016 RESULTS
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.
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.”