Magal Security Systems Reports Third Quarter 2014 Financial Results

YAHUD, Israel, Nov. 20, 2014 - Magal S3 Ltd. (NASDAQ GMS: MAGS) today announced its financial results for the three and nine month periods ended September 30, 2014. Management will hold an investors' conference call later today, at 10 a.m. Eastern Time and 5 p.m. Israel time, to discuss the results.

THIRD QUARTER 2014 RESULTS SUMMARY

Revenues for the third quarter of 2014 increased 67% to $21.5 million from $12.8 million for the third quarter of 2013 and increased 32% from $16.2 million in the second quarter of 2014. 

Gross profit in the quarter was $10.4 million, or 48.3% of revenues, an increase of 68% compared to gross profit of $6.2 million, or 47.9% of revenues, in the third quarter of 2013. The variance in the gross margin between the quarters reflects changes between products and projects in the revenue mix.

Operating income in the quarter was $2.6 million, compared to an operating loss of $0.1 million in the third quarter of 2013. Operating expenses increased in the quarter, primarily due to an increase in sales and marketing expenses. Marketing and sales expenses increased to $4.9 million in the quarter from $3.4 million in the third quarter of 2013 primarily due to purchase of a fiber-optic security business in the United States in the prior quarter as well as the launch of a number of new products.

Financial income in the quarter amounted to $1.3 million compared to financial expenses of $0.3 million in the third quarter of 2013. The company recorded financial income  as a result of the strong  appreciation of the US Dollar against both the Israeli Shekel and the Canadian Dollar between the end of the second quarter and the end of the third quarter of 2014.

Net income in the quarter was $3.6 million, or $0.22 per share, compared with a net loss of $0.4 million, or ($0.02) per share, in the third quarter of 2013.

Cash and bank deposits net of bank debt as of September 30, 2014 were $25.2 million, or $1.55 per share, compared with cash and bank deposits net of bank debt of $27.4 million, or $1.69 per share, on June 30, 2014. The decrease was primarily due to the increased investment in working capital.

MANAGEMENT COMMENT

Commenting on the results, Mr. Eitan Livneh, President and CEO of Magal, said, "Our third quarter results demonstrate a very strong jump in revenue sequentially and over the comparable period last year. We saw a strong level of business and improvements in many of the geographic areas in which we operate, in particular North America, Israel, Africa and Mexico. Our increased revenues contributed to our improved gross profit and operating profitability in the quarter. In addition, the increase in financial income due to changes in exchange rates also contributed to our profitability."

Continued Mr. Livneh, "We saw strong traction amongst customers for our new product releases, especially our optical sensor technology, our new fence mounted copper sensor as well as Roboguard. I am pleased to report that a number of our new products won important industry accolades during the quarter."

INVESTORS' CONFERENCE CALL INFORMATION

The Company will host a conference call later today, November 20, 2014, at 10 a.m. Eastern Time and 5 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 a few 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 S³

Magal S3 is a leading international provider of solutions and products for physical and cyber security, as well as safety and site management. Over the past 42 years, Magal S3 has delivered tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 80 countries - under some of the most challenging conditions.

Magal S3 offers comprehensive integrated solutions for critical sites, managed by Fortis4G - our 4th generation, cutting-edge hybrid PSIM with SEIM (Physical Security Information Management system integrated with Security Information & Event Management). The solutions leverage our broad portfolio of homegrown PIDS (Perimeter Intrusion Detection Systems), 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.

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MAGAL S3 LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All numbers except EPS expressed in thousands of US$)

MAGAL S3 LTD.
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