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Integrated Smart Security
December 2018
2
we make…
Smart & ConnectedSecurity Solutions
Magal’s Mission
2
3
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%
4
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
55
50 Years of Proven Experience
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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
88
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
9
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
$15m
Geographies
N. America
EuropeApplications
products fully alignedto existing solutions
ProjectOriented
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Financials
22
41.3
66.5
23.6 25.5
2017 2018
Financial SummaryREVENUE ($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
23
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
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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
02
Patrol - autonomous scan, ensuring the perimeter integrity
03
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
