Roundhill Magnificent Seven ETF

Senstar reported second-quarter 2021 revenue of $10.1 million, up 30.9% from $7.7 million a year earlier. Gross margin was 69.8% versus 67.1% last year, operating income was $2.2 million versus $1.0 million, and EBITDA from continuing operations was $2.5 million versus $1.3 million. Income from continuing operations was $0.7 million versus $0.5 million, and net income attributable to shareholders was $11.8 million, or $0.51 per share, versus $0.2 million, or $0.01 per share, driven by $11.1 million of income from discontinued operations. For the third quarter and remainder of 2021, management said the outlook looks very positive, expects continued revenue growth, stable operating expenses, positive net income through year-end, and gross margin above 60% for the full year.

Dror Sharon said the quarter reflected execution on Senstar’s growth strategy and the benefit of exiting the project-heavy Integrated Solutions division, which leaves the company focused on a more scalable model. He pointed to stronger pipeline conditions as COVID disruptions ease, growth across the company’s four verticals, and a multimillion-dollar airport contract as evidence the strategy is working. He also emphasized new product initiatives, including Symphony 8 and a new FiberPatrol launch planned for early 2022, as well as cross-sell, upsell, and channel expansion efforts.

Tomer Hay said reported revenue was $10.1 million and gross margin was 69.8%, helped by higher sales and a favorable product mix. Operating expenses were $4.8 million, up 16.1% year over year, mainly due to business and sales spending such as travel and marketing, partly offset by Canadian payroll subsidies. He noted EBITDA from continuing operations of $2.5 million, cash and cash equivalents of $15.5 million, and no debt; he also said public company expenses and amortization were $0.9 million in both Q2 2021 and Q2 2020, and that the company expects to continue producing positive net income from continuing operations for the rest of 2021.

Analysts focused on the proposed dividend, possible acquisitions, and the unresolved foreign tax ruling tied to the December 2020 Magal dividend. Management said shareholders will vote on authorizing up to $40 million in dividends, but the Board will decide the final amount, and they are currently pursuing an acquisition while targeting deals in the $10 million to $20 million range. On the tax issue, management said they remain frustrated by delays from Israeli tax authorities and hope for resolution in the coming weeks, with a press release possible once there is an update. They also said the acquisition target faces litigation and other bidders, but Senstar believes it is in a good position if that issue is resolved.