B.O.S. Better Online Solutions Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 30, 2023

There are 4 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the BOS First Quarter 2023 Results Conference Call. All participants are at present in listen only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference call is being recorded and will be available on the BOSS website as of tomorrow.

Operator

With us on the line today are Mr. Zvi Bruggel, Chairman Mr. Eyal Cohen, CEO and Mr. Mohsen Seltzerne, CFO. Before I turn the call over to Mr.

Operator

Cohen, I would like to remind everyone that forward looking statements for the respected company's business, financial condition and results of its operations are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated. Such forward looking statements include, but are not limited to, public demand, pricing, market acceptance, changing economic conditions, risks in product and technology development and the effect of the company's accounting policies as well as certain other risk factors, which are detailed from time to time in the company's filings with the various securities authorities. I would now like to turn over the call to Mr. Eyal Cohen, the CEO. Mr.

Operator

Cohen, please go ahead.

Speaker 1

Hello, and thank you for joining our call today. Cross empowers technologies for inventory efficiency through its 2 business division. The robotic division develops custom made robotic cells and integrates off the shelf robots that automate routine human activities in the production, assembly, packing and sorting of inventory. The RFID division integrates software and hardware for marketing, tracking and managing inventory through the supply chain. Our supply chain division distributes electronic components.

Speaker 1

Boston's competitive advantage is 8 point 20 years in the business of inventory efficiency. Built on client trust of more than 2,000 active clients, quality service, comprehensive and innovative offering. Those points are a critical area for hitting our clients. Subversion development. Our Supply Chain division distributes electronic companies.

Speaker 1

Historically, our focus has been on the defense and aerospace sector. Due to extensive business development that has been made in the recent year, we expect that in year 24, a portion of civil sales are mainly high-tech will increase significantly. RFID division. We have invested extensive managerial resources to expand our product offering organically by adding complementary technologies to increase the revenues per client. We also have added alternative brands for each product to increase the closing rate of sales.

Speaker 1

I believe that those developments will yield in the year 2024. The robotic division is transitioning to sell and integrate off the shelf robots rather than in custom made machines, which will significantly reduce the risk of loss associated with it and shorten the sales cycle. Meanwhile, we significantly reduced the operating cost of distribution. Now I want to turn the call over to Mr. Zvi Brekel, our Chairman.

Speaker 1

Please, Zvi.

Speaker 2

Thank you, Eyal. Our growth strategy is comprising of 2 reinforcing dimensions based on our core expertise on highly advanced proficiency and powering technologies for inventory efficiency, as Real has just mentioned and described, we have a 2 fold actually growth strategy. The first I mentioned is to continue developing our core activities of which it is focused on automated inventory, tracking inventory and managing inventory. The purpose of it will be the strategic purpose will be enhancement of our core capabilities, developing our expertise, know how and skills. Achievements to be achieved are steady, gradual strengthening of our market competitive position, client base, thus revenues and cash growth.

Speaker 2

In this field, Eyal described the key activities that he leads with his management to execute these courses. It is not self evident yet by the capabilities that VOS is holding and constantly developing, I can see it realizing in the short and medium term. The second dimension of our growth strategy is do a step up and boosting of our M and A activities, again, focus on inventory technology management domain expertise of ours. The purpose the strategic purpose will be significantly expanding our M and A growth opportunities, becoming specialized domain specific company, achieving results achieving in fast growth in our revenues and profit and significant enhancement in our competitive position. This course embodies a great potential for BOS.

Speaker 2

We are taking an extensive and comprehensive course of action implementing this endeavor. Thank you.

Speaker 1

Yes, we are ready for questions, please.

Speaker 2

Please.

Operator

Thank The first question is from Todd Selke of Advisory Group Equity Services. Please go ahead.

Speaker 3

Congratulations on a fabulous quarter there. Very impressive to see the growth in both revenue and net income. And thank you for taking my questions. My first question is regarding M and A activity. Do you expect any potential M and A activity to be in Israel?

Speaker 3

Or are you looking at other countries?

Speaker 1

Thank you for the question. Ziv, would you like to answer that question?

Speaker 2

Yes, please. Our spectrum of opportunities is in Israel, but also in Europe and in the U. S. I think that when we are speaking about our structural opportunities in Israel, in terms of it is quite wide in terms of all of our activities, whereas in the U. S.

Speaker 2

And in Europe, where we need a much stronger competitive advantage, we'll be more sharp in the opportunities that we are looking for and contemplating. Okay. And I may have missed it, but could

Speaker 3

you give an update on your order backlog?

Speaker 1

No, we didn't. We didn't publish it, but we opened the year with a very strong backlog and this it gave us confidence to support our outlook for this year. The backlog remains high. And we are working that it will remain high in the continuous of the year.

Speaker 3

Okay. That's Matthew here. And regarding just the current market environment, we've been in a high inflation environment. There's the war in Ukraine and there's been a supply chain crunch. And I know all those factors have affected your business, a lot of it positively to where your margins and it seems like you've had some pricing power.

Speaker 3

Do you expect the current market environment where you're able to grow revenues and earnings at such a high rate and have such higher margins than in previous years. Do you expect that to continue? And I know a lot of that is due to your hard work and improvement in efficiencies.

Speaker 1

Yes. I think the war in Ukraine support the growth of our supply chain division, which has a high correlation for the Israeli defense industry. Regarding and as long as the demands are growing to those kinds of products of the Israeli Defense Industry. We're involved in a lot of projects, so it will impact our growth. We provided an outlook to the market of $45,000,000 which reflects the growth over last year revenues and reflect the growth over

Speaker 3

year

Speaker 1

before, which was like $25,000,000 It's a significant step. We are working on year 2024 that we'll go over the €45,000,000 bolus. Okay.

Speaker 3

I know I read an article that said that Israeli military orders were up over 900%. I guess people can't buy arms from Russia or defense systems and the American defense systems are too expensive. And you had recently landed, you're both doing supply chain work and robotic systems now to the Israeli military. Are most of those orders when you receive them, are they for the current year or these you expect this business to continue into 2024 2025 and going forward?

Speaker 1

We have ongoing orders from the from the Israeli defense industry, mainly from the Israeli aircraft industry. We are in the middle of delivery of a relatively big order of more than $3,000,000,000 that we announced before. And as long as we are working on specific projects, which are very which have a high demand in the market. So as long as it continue, we will continue to grow and we are shaking hands with this industry. In the robotic division, we did a transition to the defense sector in Israel.

Speaker 1

And most of the projects that's on the line today on the floor are for the defense sector.

Operator

There are no further questions at this time. I would like to turn the call over to Mr. Eyal Cohen, CEO, to make the concluding statements. Mr. Cohen, please go ahead.

Speaker 1

Thank you. I am pleased with the turnaround that has started in the second half of year twenty. We had a strong quarter, and we will probably meet our targets for year 23. However, our Chairman leads us to work on year 2024 results. Thank you for joining our call today, and I'm looking to meet you on our next earnings call scheduled for August.

Speaker 1

Until then, you are invited to contact me for any matter. Thank you, and have a great trading day.

Speaker 2

Thank you.

Operator

Thank you. I would like to remind participants that a replay of this call will be available on the company's website, www.bosscom.com, by tomorrow. This concludes the BOSS Q1 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.

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B.O.S. Better Online Solutions Q1 2023
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