Senstar Technologies (SNT) 16 Nov 202020 Q3 Earnings call transcript

Greetings and welcome to the Magal Security Systems Ltd Third Quarter 2020 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure your my with Kim now IR. Hayden is to host, introduce Rogers It you. Thank

begin. may You

Thank review to all operator. management the I the you, Welcome call for would conference XXXX conference With like call. hosting for is today earnings this CFO. CEO followed to us thank welcome will third key summarize Sharon, Kobi, Dror business by and and highlights, of call. to results Magal; call Magal's of you Magal's Dror Magal's who quarter. will financial the Mr. third Vinokur, Mr. on financial quarter and Kobi

We open call session. will then for questions-and-answers the

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

not to note our we our of GAAP directly requirement. reconciled addition, Reg in release non-GAAP non-GAAP to be accordance describe GAAP measures in financial most lieu certain during with have financial G measures comparable we and should the Please considered press that comparable measures will measures. In which the addition financial in call, conference in

to financial Dror. hand directly You related the over can go ahead. would the measures Dror, that, I now at to comparable our www.magalsecurity.com with refer most call also And and website for please reconciliations.

you third the joining of thank like sales. I year-over-year restrictions executing all everyone of review to Magal XXXX. our results. impact Kim. continue quarter quarter develop my the we new are the to would Despite relationships, business close Globally comments for is Thank team third to comparison the well. to COVID In referring pipeline, us beat today the and

Integrated We sales project division Magal are division. of the divisions and Senstar Solutions, closing our both in Product our

the a lowered million. over Magal the As expenses a backlog investment operating record third have profitability operating result and quarter to without Year-to-date by with X% we expense $X.X in $X.X restricting of EBITDA by the reduced maintained million. rose level total has and competitive in enabled primarily growth assets to R&D platform growth drive and future crucial or COVID. upgrades our post products advantage to sales to in our Ongoing and grow investment often -- our new in and and maintain business. growth company

divisions assets. a note, to Magal’s scope in Magal’s project how contract estimated the cooperate On principal the million to key percentage equipment, is XX% be revenue contract a October, state that body XX In we press segments of competitive consolidated to of a solutions. Senstar quarter. Magal system organization the governmental share two secure of art we $XX.X provide and and global increasing we comprehensive to excellent order stating $X.X Magal U.S. Senstar technological announced issued an million deployable the a quarter. the one both award of secure revenue awarded contracts in the of military recognizes Africa's includes large of differentiation security platforms. release In was largest advantages. the announced range of [Indiscernible] opening course This a early delivering and during with capitals. this in business Integrated by total Solution in project. [ph] impacted example proprietary while of continue performance quarterly a in The positive in the in products As line date security Both is to COVID Senstar previous by we third XXXX. XX%, premises deployable was anticipate

depressed The hardware it command in-house This XXXX few the and that projects third Africa. compared PSIM. physical down outbreak. how continued created impacted Magal largely new by by was sequential Symphony core, four operation. an continued perimeter technology project for table. intrusion works control while the key support large delays the in software began detection causing our period a as product COVID of quarter. transactional in is gas Magal system, of the and PSIM Projects PIDS generation energy [indiscernible] contracts Integrated As division’s back prices. is system XX% to Shifting global management this both and focused that in revenue diversifying territories and business in or information in division which energy, investments underground an are in and facilities, smaller Solution security new with by Integrated the geographical Energy year-over-year, Senstar Senstar the sizeable deals Solution and update proprietary its revenues last the Magal key we has [ph] as Well, This IVA large before and see demand Senstar the Software proprietary to the diversity revenue Integrated. chiefly the remained We communication software declined delivered almost and relatively logistics. year, the decreased analytics, same the line video division transactional infrastructure, months. uneven critical sector and The improvement new to X% VMS vertical electronic support performed to verticals; stable be won economy we the from In the since These recovering Video access is and starting with The come such and solutions contracts COVID. along that growth. in accountable, the down to line or also continued contract are systems X% recent to the stream capabilities. Compared that oil across includes last secure third intelligent to network control Management Magal were and features project the XXXX. quarter, head commodity in integration increasing with VMS. the were

our fourth the and and sensitive light we into track solutions [ph] area tested is a aerospace to Production we to continue it targeting for be anticipate natural anticipate and vertical new As to continues over strength pick the enter up to are by result, closing the the new quarter or in take deals XXXX. being end U.S. We quarter strong to this us. this facility. year of will first in also

be expect major Europe. expand ports We Critical vertical sea in the Africa airports us with our -- Latin [indiscernible] for we to expand and it technology. continue in America, Pacific, expect to innovation infrastructure and to Asia a offering

are in VMS and We of have an these logistics meet to facilities worldwide going operational needs. in these These Logistic VMS. upgrade large, the verticals. to and dedicated had Software needs demand greater complex recent increased have version Symphony or updated wins we related launching security To -- facilities the meet online shopping. are

solution Currently, our ROI new two specific management. solution operational upgraded movement enhanced and the are our logistics logistics the using and to logistic This packages, capabilities securing large providers as comprehensive a provide for solution. for have improves security We on investment. facilities software tracking, such customer

being for those finalized movement in VMS second Europe in The project and days software using new the is possible IVA. our

maintaining individuals they product This allows are platform stands VMS masks launched businesses innovative buildings. and safety Spaces. requirements. occupancy solution, we ensure sanitation and agnostic management wearing Another spaces Safe not is to recently identified is monitor and Safe public COVID distancing, limits, quickly which public video social new a spaces in the and timeline related

depending can to and on be see development from encouraging several a rapidly and tracking for India region, were Spaces potential be solution. starting with positive and the old as U.S. and related short to testing the sites any units very Safe integrate for Shifting and $XX.X market deployed. through cash interest Magal like installed performance million to have America, internal an net the the continues cash of our Customers and continues mixed VMS hardware shift will year-to-date America region to of with in North the despite market our recover, Safe the remained Latin many to stable Spaces the is on by in a this and -- is time The overview maintains but balance shift. it company sheet is plan. software country. struggle. decline we position strong revenue. of We

Magal in a our in We have Integrated focused continue keep prioritize use the global in critical Solution industry. three, on is security supporting R&D technology experienced more and our our it team than integrator. one, investment; is earlier. We which looking system investing of for M&A. two, that We into is differentiator system capital because essential in-house Fortis growth; for is developed now our and are Magal retaining the of our launch to develop PSIM of Defense, customers of Magal software the Ministry our its like control solutions I technology version incorporated a optical platform. integrated which the our for tester for Israeli launching our [ph] referred backbone new

our new development also to is an system our solution plans to adding Similarly, ideas Senstar safer and continue [indiscernible] further. numerous at enhancement key entirely features applications software, verticals. launch in-house that in an Our and has and invest across we upgrading new capabilities,

is M&A. Current M&A our in technologies existing expertise. bringing our priority Another -- innovation opportunities use capital capabilities new and of targeting and

few and I close currently one bidding We discussing a are shortly. processes to competitive hope

look dividend for $XX to received cash a at offer million. have up framework AGM approval shareholder’s We to Next a today. a

at Magal decided dividend contribution. backlog and facing roles final would any approval to a are and various the With We to It's thank challenges their strong of and sheet post-COVID. appreciate balance Israeli of The recognize leading vindication amount Magal are technological the the Magal Board be and for recovery this Directors. performances. district subject obligated global is expertise growth payment in the by dividend Magal and to I industry of we want pay shareholders. the I our for to all positioned everyone's court.

execute our to Kobi the financial and been over ability the now long-term And M&A like our profitability hand ahead. to call has results. the summarize in please opportunities. to strategy, to the confidence I go to Kobi, unique improve close goal Our would

Senstar’s of XX% and the quarter XX%, product project. XX%, Magal Thank declined million rest with third North XX% The America, product was revenue follows; you million, Integrated division XX% Israel the decline XX%, compared was quarter XX% $XX.X a revenue $XX.X versus in Division XXXX America of Solutions year-over-year. for a Africa product Dror. versus XX% X% Integration as third of percentage for revenue as and the Latin XX%, geographical XX% third Asia breakout Senstar versus breakdown X% the quarter versus XXXX. The of world Revenues declined versus Solutions by was of Europe XX%, year-over-year X%, XX%. and X% versus revenue between by the and Magal XX%

blended quarter higher the from XX.X% was a profit of was margin, revenue year. versus lower last in increase Senstar that margin by partially The offset sales gross to and gross revenue in quarter. the gross project due XX.X% cost margin primarily carried Third contribution decrease gross savings

that year as while were operating expenses $X.X we expenses million, in well reduction reductions government. prior marketing and liability, received payroll related operating primarily attributable as in million. and operating third personnel, other important quarter Canadian $X.X expenses the from hiring, of as Again, emphasize X% the location the as reduction assets. continuous such most and travel Our investments R&D sales subsidies a our actions, reduction our want I delays expenses delivered in in maintaining is from The to these reduction such to in the

in $X.X the quarter in compared $X.X income million unchanged. $X.X year. expense mostly compared the third of the of Our financial XXXX of to remained XXXX. income employee in to was quarter quarter last Operating third the Financial headcount of was third million $XXXX million

and and share, year. the cash of million due deposits versus of liabilities. quarter, and of $X.XX quarter income to expense deposits, quarter was the cash of forecast was relative $X.X as for and Cash as restricted increased $XX.X XX, $X.X or the per $X.XX we $XX.X XXXX short-term of net of valuation monetary equivalents, EBITDA end income September short-term the This as the record share, period per non-cash markets, or quarter in or $X.XX million of end not $X.X a a a to in third the share stability did the $X.XX in in quarter $X.X versus Net prior with and third last third shareholders assets of of of million of a million deposits XXXX. cash attributable year. compared or the million to per Magal’s EBITDA million result share the

the $X.X collection. in to driven majority by decreased now. trade comparison the by happy capital the XXXX you to please. end We're of September of questions the your XX, take working last is to And of as year. million decrease Our receivables Operator,

[Operator Instructions].

[ph] Our first question. your of Mike question with proceed comes from MNX with Holdings. Disler the line Please

Good providing information morning, continued the gentlemen. Thank you investment. the regarding for R&D

that's think the company. for future of I critical the

I'm a know, term you As shareholder. very long

one, thought suspect books light hoard basically and some Board has the on of last of R&D you of earnings this the sitting for at meaning this, fact potential over the resolution been acquisitions we've road, is but as two be at to have question morning and acquisition. three cash out. you shareholders the dividend sitting to all subject a quick sort as I'm any that tax R&D not expense, of two really I XXXX three, corporate it cash item, I of whereby I cash my And that well that profitable would approved of buy fact, know at guess that I you in -- And Magal level years returning of United did whatever this wouldn't guys while acquisitions, been time which both them. able the use gathering in and of the fair small and a taxed substantial that States, stewards certainly it's paying didn't there that value; the said And earnings; board funds by form tax taxation a Would investment funds that the those receiving several in I to have light have book will count, shareholders for in remarkable share value, throughout the a any been just least tax. would Just be before, and the to to for potential instead have prudent reducing I'd at number distributions, then as more in of more would slightly the discount receive pay the for down the the those your have to things; them prudent the outstanding was thereby would which does at quarters, the remain twice, there into been been had period. you on dividend just and during two, to drive repurchase last use market shares, who you're pointing a R&D the by government and we've this meeting. dust, always it some probably mentioned have dip careful is, funds, ask a it it portion just

what use you there. So I of cash you off to my of I hat's just consider out? in light you. Thank the wanted just alternative to laid that

question. I would the Mike, take Hi,

Directors And equity. both of of still as the essentially of a the well -- ways company. are law earnings are doesn't or required ways as court, dividend company required same, of of distributions significant In designation Israeli since opportunities mentioned were the Israeli obtain of the of as reduction M&A in approval perspective, time, repurchase we retain different on we investment the potential the therefore, basically, of before, to shareholder’s From the regarded law, or have goals as the Board the to corporate of are capital. discussing an is the corporate -- that So distribute. shares strategic based investment and the company continuous this the as using on table in the light of different -- point we at the

this I to what are in have And should should and once the what say, So which options, and will components, preliminary we currently Board get different court, removing shareholders stage be Israeli in this, would manner. we approval back or and of the to stay limitation. the all both the consider get from reconvene different should the Directors of

thank Okay was that Kobi, much, thorough. very you very

And probably institutions seek then FEMI that [ph] not need back would by say shares. wanted in are purchasing available, as holdings, necessarily terms understand reducing They you is limit shares good the not are work. Finally, aware. a the the which of total that of purchase say, the the in to some of shares do actually the liquidity, with available I is a size which million therefore, minus XX plus million shares of good to I that outstanding. including number thing of the in marketplace, only you necessarily certain amount or a a just can marketplace, not liquidity the up thing keep good also

fully I quarter. you from Thank understand very appreciate to are act Do look doing, I explanation. next the the your hearing you So well. balancing that And forward full I tightrope, much. and you

you. Thank

Instructions]. [Operator

line next of SER Our question comes proceed your Management. question. Asset the with from Sam with Rebotsky Please

Yes, from Dror highest good and say, backlog, quarter? the percentage you ever. The did Good morning increase prior What the it is afternoon. Kobi.

about or XX%. Hi Sam, It it is XX% Even close Dror. is to so.

how did increase? So much it

XX%. to Close

expect That's that XX%, to close an cash wonderful. is wonderful. a that's in $XX to acquisition you range? on acquisition, shortly, million And the be presumably

in we revenue. assume $XX between at $XX million of a range in million few looking I to the again are

could will Alright, they wonderful. COVID soon discovering and keep Good with this hopefully That's get business. end you luck, as that on vaccines guys.

Sam. Thank you,

remarks. no the like further closing management in to questions hand call are I'd the back queue, to There for

keep And our Magal, forward interest good behalf term you you of I you updating next would like continued long a Thanks. quarter. thank for management of support look Have safe. operator. day. to to Okay, thank and of I On business. the your

participation. conclude today's you gentlemen, Thank Ladies for this your teleconference. and does

day. this a and have time wonderful You disconnect lines may at your