Magal Security Systems announced its financial results for the three and six month period ended June 30, 2017.
Magal Security Systems announced its financial results for the three and six month period ended June 30, 2017.
SECOND QUARTER 2017 RESULTS
Revenues for the second quarter of 2017 were $13.3 million, a decrease of 3% compared with revenues of $13.6 million in the second quarter of 2016.
Gross profit for the second quarter of 2017 was $6.7 million, or 50.2% of revenues, an increase of 10%, compared with a gross profit of $6.1 million or 44.5% of revenues, in the second quarter of 2016. The improvement in gross margin between quarters is due to the higher margins achieved on projects during the quarter.
Operating loss for the second quarter of 2017 was $1.7 million compared to an operating loss of $2.2 million in the second quarter of 2016.
Financial expenses, net, for the second quarter of 2017 were $1.4 million compared with financial income of $0.3 million in the second quarter of 2016. In Israel, Magal’s functional currency is the Israeli Shekel and the vast majority of Magal’s cash deposits are held in US dollars. Because the US dollar declined in value by 4.0%, between the end of the first quarter and the end of the second quarter of 2017, similar to the decline experienced in the prior quarter, the Company recorded a non-cash financial expense due to the reduction in the Israeli shekel value of its US dollar deposits, leading to the high level of financial expense in the current quarter.
Net loss in the second quarter of 2017 was $3.3 million, or $0.14 per share, compared with a net loss of $2.0 million, or $0.12 per share in the second quarter of 2016.
EBITDA in the second quarter of 2017 was a negative $1.2 million, compared to a negative EBITDA of $1.7 million in the second quarter of 2016.
Cash, short term deposits and restricted deposits, as of June 30, 2017, were $47.9 million, or $2.08 per share, compared with cash, short term deposits and restricted deposits of $50.7 million, or $2.21 per share, as of March 31, 2017.
MANAGEMENT COMMENT
Commenting on the results, Mr. Saar Koursh, CEO of Magal, said, “From a revenue standpoint, our second quarter was slightly weaker than the same quarter of last year. The increase in revenues from geographies outside of North America, partially offset the current weakness we are experiencing in the North American market. Our North American operations, which last year represented almost half of our global business, were significantly impacted this quarter by delays in critical infrastructure security spending which await clarity about the federal budget. In the interim, the cost efficiency actions we implemented in the quarter position us well for profitable growth upon the anticipated recovery in the US high-end security market in the second half of 2017.”
Continued Mr. Koursh, “Since last year, we have put much effort in improving our profitability on both the operational and gross margin levels. Additionally, in the second quarter, we amalgamated Aimetis and our North American subsidiary, Senstar. This will enable additional synergies as well as lower operating expenses and ultimately higher margins, in upcoming quarters.”