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Integrated Smart Security

December 2018

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we make…

Smart & ConnectedSecurity Solutions

Magal’s Mission

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Company Snapshot

revenue

EBITDA

Market Cap: $120m Revenue: $90m (LTM)

TECHNOLOGY FOCUS:

8% of YTD revenues

spent on R&D

ticker: MAGS

net cash

$50m

*Market cap as of Nov 25, 2018. LTM is last twelve months ended Sept 30, 2018YTD is year-to date ended Sept 30.

R&D & technicians

175

Employees: 400

$41.3m

$66.5m

YTD

2017

YTD

2018

EBITDA: $8m (LTM)

($1.7m)

$5.7m

YTD

2017

YTD

2018

8.9%EBITDAmargin

TURNAROUND: strong return to growth and profitability in 2018

Industry Segment: Homeland security

YOY GROWTH: 61%

enterprisevalue

$70m

Free Float: 57%

FIMI

43%

institutions

15%

recurring19%

projects47%

products34%

44%

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Founded within IAI

(Israeli Aerospace Industries)

1969

Magal’s IPO on the NASDAQ

1993

Acquisition of CyberSeal

(formerly Web-Silicom)

& Optellios

2013/14

Acquisition of Aimetis

2016

Magal becomes an independent

company

1984

Acquisition of Senstar in

Canada

1997

FIMI Acquires Controlling

Stake of Magal

2014

Shareholder Rights

Offering

2016

Acquisition of ESC BAZ

2018

Company History

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Israel, Yehud

Corporate HQ and Magal Israel

Canada, Ottawa & Waterloo

PIDS & VMS R&D Centers

Projects

United States, Philadelphia

Fiber Optic R&D center

Mexico, Cuernavaca

Projects and PIDS

The Rest

Mostly sales and support offices

Main facilities

US

Brazil

Kenya

Spain

UK

Nordic

Germany

Romania

IsraelGulf

India

China

Singapore

Malaysia

Senstar - Products Magal - Projects

Philippines

Canada

Mexico

Global Operations

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Technology & Product Portfolio

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PIDS33% of revenues

Our Smart PIDS Products

CamerasVideo Analytics

Volumetric SensorXField

Covert SensorOmniTrax

Fence Mounted SensorFlexZone / FiberPatrol

Microwave SensorUIltraWave

Intelligent Lighting / Fence Sensor

Senstar LM100

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VMS12% of revenues

Video Management with Integrated Analytics

•Video management software, video analytics, and business intelligence reports

•Open IP platform for video management

•Scales from small to large applications

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$37m 2012-2013 Turnkey security solution for African Cup of Nations

$24.5m 2013-2014 Fully integrated perimeter security for Port of Mombasa

$13m 2014Nairobi International Airport Systems for US and Canadian prisons

$13m 2015Turnkey security solution for secondary power stations in Latin America

$22m 2016 Turnkey security projects in Latam and Africa

$14m 2017 Innovative Border Protection Solutions and Integrated

Security Solutions

$13m 2018-2019Provide integrated security solutions as a subcontractor for Toyota

for major international sea port in East-Africa

Turnkey Projects

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combine and sell product suites as part of turnkey projects

Projects55% of revenues

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Verticals & Growth Engines

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Oil and GasSea PortsAirports

Military FacilitiesEnergy and Critical InfrastructureBorders

Safe & Smart CityPharmaceuticalsCorrectional Facilities

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Addressable MarketsPIDS Market: $550m globally (CAGR ~6%*)

Magal’s traditional market• Drivers: increasing threats & regulatory applications• Opportunities: Europe, APAC & NA market share expansion• Growth of Homeland Security budgets in US and Europe + increasing

focus on border security

VMS Market: $1.2bn (CAGR 6%+*)

• Video Management Systems: Magal’s product is known as Symphony• Strong opportunities to capture market share

• Dominated by Genetec, Milestone, Avigilon• Market becoming more fragmented

• Video features and technology are enabling critical applications• Face recognition, person tracking, license plate recognition

*Extrapolated from 2018 IHS Markit data, forecast out to 2022

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Growth Engine – Regulatory Driven Protection

Requirements for controlling light pollution in sensitive areas(e.g. airports, observatories, wildlife sanctuaries).

DHS has issued new 2018 standards for "The Risk Management Process for Federal Facilities, Appendix A: Design-Basis Threat

Report (FOUO)"

NERC CIP-014 Regulation for Electrical Utilities in North AmericaCreated to “address physical security risks and vulnerabilities related to the reliable operation” of the bulk power system.

GDPR: Organizations must ensure the collection,

use, and storage of recorded video is compliant with the new privacy regulations

The federal government of Canada and several

states in the U.S. have physical security requirements for pharmaceutical facilities

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Border without Sensors

Growth Engine – International Border Solutions

Border with Sensors

US/Mexican Border: potential $100m+ opportunity for Magal

Over the past decade Magal has been a key technology supplier for multiple international borders.

Israel/Egypt Border

Sept 2018: “This new wall will be far

more durable and far more effective in deterring would-be illegal entrants,” said

Chief Patrol Agent Aaron Hull, U.S. Border Patrol, El Paso Sector. “A balance of physical infrastructure,

technology and personnel is key to securing the border and keeping our communities safe"

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Two Types of Borders

Border with Sensors…only one uses sensors

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Growth Engine – Pipeline TPI & Leak DetectionLeak Detection Market Drivers• Aging Pipelines –infrastructure 30+ years old, increasing

frequency of leaks in oil and gas pipelines

• Increased expansion & construction of new & existing pipelines

The Market and Our Solution• Market for onshore pipeline leak detection is $1.45B

annually of which fiber optic solutions are 16%

• Magal leak sensing technology is significantly more sensitive than competition -> earlier detection -> significant ROI

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Growth Engine – Electronic Access Control (EAC)

• New growth market for Magal• Market size for EAC software estimated at $160M* in the

Americas, CAGR 6%*• Expands our addressable VMS market and opens the door to a

new market

*Extrapolated from 2018 IHS Markit data, forecast out to 2022

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Growth Engine – Logistics Vertical

• Global 3PL companies will cross $1.1T in revenue by 2024

• Increasing demand for outsourcing is a key driver

• New entrants and retailers that are turning into global logistics players are increasing competition

• An underdeveloped market and fertile ground for physical and logical security needs

*IHS Markit data

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M&A Targets

• Grow organically and inorganically

• M&A strategy to add synergistic products in growing markets

Revenues $50m

$15m

Geographies

N. America

EuropeApplications

products fully alignedto existing solutions

ProjectOriented

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Financials

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41.3

66.5

23.6 25.5

2017 2018

Financial SummaryREVENUE ($m)

YTD YTD

EBITDA ($m)

-1.7

5.7

2017 2018

Operational Expense level

($m)

• Very strong improvement in revenue built on record backlog going into 2018

• Expense rationalization in H2 2017 enabled strong growth at minimal expense increase

• Return to profitability in 2018

• Mid to long-term goal to grow products segment and recurring revenue

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Operating Model Mid-Term Goals

Organic and inorganic growth

$100m+

~45%

Gross MarginRevenue

10-15%

EBITDA Margin

23*illustrative purposes only

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Summary

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• World leader in homeland security technology / perimeter security segment

• Growing regulatory requirements driving demand

• Increased interest for border security solutions

• Innovative growth engines

• Broad product offering covering perimeter security and video

• Growing product/recurring revenue portion -> increased margins

• Financial profitability

• Strong balance sheet - zero debt / ~$50M in cash

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Magal Summary

Thank YouKobi Vinokur – CFOkobiv@Magal-s3.com

Kenny Green – IRKenny@gkir.com

www.magalsecurity.com

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Fence-Mounted Sensors

PIDS I

FlexZoneRangingMicrophonic Cable

BarricadeElectro-Mechanical Vibration Sensor

FiberPatrolFiber-Optic Sensor

FensorNew Gen Vibration Sensor

Fences & Barriers

YaelTaut Wire

DTRTaut Wire

MagBarRobust Smart Grid

InnoFenceDecorative Smart Fence

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Seismic

PIDS IIVirtual Fences

PipeGuardAnti DiggingSensor

TunnelGuardAssets Protection

OmniTraxBuried Volumetric Sensor

µltraWaveBistatic Field Detector

X-FieldVolumetric Terrain Following Sensor

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Unmanned perimetersurveillance robot

Useful as a complementary solution for almost any perimeter application

Rail mounted platform, carrying sensors01

Cameras, Laser radar, IR illumination, intercom, Optional - Tear gas

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Patrol - autonomous scan, ensuring the perimeter integrity

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Detection of fence cuts or holes04

Detection of near-fence suspected objects / people05

Random Patrol - avoid the Robot movement enemy prediction by performing random patterns

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Fast response mode – directing the Robot to handle Event

07

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Cutting edge VMS with embedded intelligent Video Analytics

Lowest total cost of ownership on the market

• Up to 300 channels per server - Smallest H/W footprint

• Windows O/S; can run on virtual servers

• Centralized cloud management

• Built-in load balancing between servers

• Administration through a true web browser eliminates the need to install and maintain a dedicated management application per Symphony version

• Easy installation, calibration, and maintenance

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Fortis 4G

Real-time data aggregation to enhance site managers’ situational awareness.

Event-driven response through fully-tailored automated work-flows

Rich and precise data distribution to first responders and chain of command

Advanced 3D GIS engine

Advanced integration tools for new applications

Powerful IVA (intelligent Video Analytics) for prevention, detection and investigation

Advanced, scalable, and flexible Command & Control

Fortis 4G