Magal Security Systems Ltd. (NASDAQ:MAGS) Q4 2019 Earnings Conference Call - Final Transcript

Mar 16, 2020 • 10:00 am ET

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Magal Security Systems Ltd. (NASDAQ:MAGS) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings, and welcome to the Magal Security Systems Fourth Quarter and Full Year 2019 Conference Call. [Operator Instructions]

It is now my pleasure to introduce your host, Brett Maas with Hayden IR. Please go ahead, sir.

Executive
Brett Maas

Thank you, operator.

Welcome to Magal's fourth quarter and full year 2019 conference call. I would like to welcome all of you to the conference call, and thank Magal's management team for hosting this call.

With us on the call today is Mr. Dror Sharon, CEO of Magal; and Kobi Vinokur, CFO. Dror will summarize key financial and business highlights, followed by Kobi, who will review Magal's financial performance of fourth quarter and the full year. We will then open the call for questions-and-answer session.

Before we start, I'd like to point out this conference call may contain projections and other forward-looking statements regarding future events or future performance of the Company. These statements are only predictions and Magal cannot guarantee that they will, in fact, occur. Magal does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, reduced demand and the competitive nature of the security systems industry, the unanticipated and unknown effect of the coronavirus, including on our operations and our clients, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.

In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures.

Please note that in our press release, we have reconciled our non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirement. You can also refer to our website at magalsecurity.com for the most directly comparable financial measures and related reconciliation.

With that, I'd like to hand the call over to Dror. Dror, please go ahead.

Executive
Dror Sharon

Thank you, Brett.

I'd like to welcome all of you to our call, and thank you for joining us today. I just hope that your family and friends are well and everyone is okay with this crisis around us.

For 2019, we reported $86.8 million of revenue, achieving a 10%-plus reduction in operating expenses that fueled the 61% in operating income. 2019 EBITDA rose 17% to $8.1 million, resulting in an expansion of EBITDA margin from 7.5% to 9.4%. We maintained an elevated level of revenue in 2019 by offsetting the Latin America contract that did not recur last year, with solid execution of our strategy to expand in new markets and new verticals, along with strong product and software sales. In parallel, we also maintained a high level of backlog which was the same level as the one we had by the end of 2018.

When I joined Magal in July 2018, I led in varieties of markets and with Magal, macro opportunities to identify the Company's capabilities and strength. And