Magal Security Systems Ltd. reports 849% EBITDA growth in 2018 and 5.5 pp EBITDA Margin growth from 0.98% to 6.5%
03/27/2019 • About Magal Security Systems Ltd. (
$MAGS) • By InTwits
Magal Security Systems Ltd. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Magal Security Systems Ltd. is a growth stock: 2018 revenue growth was 44.0%, 5 year revenue CAGR was 12.4% at 2018 ROIC 4.6%
- EBITDA Margin is quite volatile: 6.5% in 2018, 1.0% in 2017, 4.8% in 2016, 9.2% in 2015, 7.5% in 2014
- Magal Security Systems Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's in pair with industry average of 6.1%
- CAPEX is quite volatile: $2m in 2018, $1m in 2017, $1m in 2016, $1m in 2015, $1m in 2014
- The company has potentially unprofitable business model: ROIC is 4.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 44.0%. Revenue growth showed slowdown in 18Q4 - it was 13.4% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.72 pp from -0.47% to 0.26% in 2018.
Gross Margin decreased on 5.2 pp from 48.7% to 43.5% in 2018. During the last 5 years Gross Margin topped in 2016 at 49.0% and was declining since that time. SG&A as a % of Revenue decreased on 8.4 pp from 40.5% to 32.1% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2017 at 40.5%.
Net Income margin jumped on 13.9 pp from -10.8% to 3.2% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.3% in 2018. The company's CAPEX/Revenue increased slightly on 0.92 pp from 1.4% in 2015 to 2.3% in 2018. It's average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at low ROIC (4.6%) and ROE (3.6%). ROIC increased on 6.1 pp from -1.5% to 4.6% in 2018. ROE jumped on 12.0 pp from -8.4% to 3.6% in 2018. During 2014-2018 ROE bottomed in 2017 at -8.4%.
Leverage (Debt)
The company has no debt. Cash jumped on 72.1%.
Valuation and dividends
Magal Security Systems Ltd.'s trades at EV/EBITDA 13.5x and P/E 40.6x.
Financial and operational results
FY ended 12/31/2018
Magal Security Systems Ltd. ($MAGS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 77.543 | 63.736 | 67.825 | 64.292 | 92.602 | 44.0% |
| Gross Profit | 34.494 | 31.014 | 33.255 | 31.325 | 40.303 | 28.7% |
| SG&A | 26.028 | 21.811 | 24.981 | 26.011 | 29.696 | 14.2% |
| EBITDA | 5.829 | 5.892 | 3.235 | 0.632 | 6.000 | 849.4% |
| Net Income | 3.410 | 3.141 | 1.029 | -6.914 | 2.949 | |
Balance Sheet
|
|---|
| Cash | 21.602 | 27.319 | 19.692 | 22.463 | 38.665 | 72.1% |
| Short Term Debt | 3.071 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 1.406 | 0.015 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.737 | 0.876 | 0.797 | 0.934 | 2.128 | 127.8% |
Ratios
|
|---|
| Revenue growth | 50.5% | -17.8% | 6.4% | -5.2% | 44.0% | |
| EBITDA growth | -308.2% | 1.1% | -45.1% | -80.5% | 849.4% | |
|
|---|
| Gross Margin | 44.5% | 48.7% | 49.0% | 48.7% | 43.5% | -5.2% |
| EBITDA Margin | 7.5% | 9.2% | 4.8% | 1.0% | 6.5% | 5.5% |
| SG&A, % of revenue | 33.6% | 34.2% | 36.8% | 40.5% | 32.1% | -8.4% |
| Net Income Margin | 4.4% | 4.9% | 1.5% | -10.8% | 3.2% | 13.9% |
| CAPEX, % of revenue | 1.0% | 1.4% | 1.2% | 1.5% | 2.3% | 0.8% |
|
|---|
| ROIC | 6.0% | 7.4% | 2.1% | -1.5% | 4.6% | 6.1% |
| ROE | 6.0% | 5.6% | 1.5% | -8.4% | 3.6% | 12.0% |
| Net Debt/EBITDA | -2.9x | -4.6x | -6.1x | -35.5x | -6.4x | 29.1x |
Magal Security Systems Ltd. ($MAGS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 17 | 25 | 24 | 26 | | 20.4% | 91.2% | 74.6% | 13.4% |
| Net Income | -0 | 2 | 1 | -0 | | | | | -134.4% |
Balance Sheet
|
|---|
| Cash | 42 | 35 | 39 | 39 | | 150.0% | 122.4% | 147.5% | 72.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 43.8% | 43.6% | 46.4% | 40.6% | | -7.9% | -6.5% | -1.4% | -6.0% |
| Net Income Margin | -1.0% | 6.8% | 6.2% | -0.4% | | 24.8% | 31.8% | 7.6% | -1.6% |
Peers in Electronic Equipment & Instrum
Below we provide Magal Security Systems Ltd. benchmarking against other companies in Electronic Equipment & Instrum industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| nLIGHT, Inc. ($LASR) | | | | 36.8% | 38.1% |
| |
|---|
| Median (61 companies) | -78.5% | 4.5% | 0.3% | 4.6% | 9.1% |
|---|
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 41.7% | 41.8% | 40.1% | 41.5% | 40.9% |
|---|
| Magal Security Systems Ltd. ($MAGS) | 44.5% | 48.7% | 49.0% | 48.7% | 43.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.3% | 3.9% | 3.0% | 5.1% | 3.3% |
|---|
| Magal Security Systems Ltd. ($MAGS) | 7.5% | 9.2% | 4.8% | 1.0% | 6.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.9% | 2.0% | 2.1% | 1.7% | 2.2% |
|---|
| Magal Security Systems Ltd. ($MAGS) | 1.0% | 1.4% | 1.2% | 1.5% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 1.8% | 1.8% | 3.3% | 0.9% |
|---|
| Magal Security Systems Ltd. ($MAGS) | 6.0% | 7.4% | 2.1% | -1.5% | 4.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.7x | -0.7x | -0.8x | -0.6x | -0.8x |
|---|
| Magal Security Systems Ltd. ($MAGS) | -2.9x | -4.6x | -6.1x | -35.5x | -6.4x |
