B.O.S. Better Online Solutions Q1 2024 Earnings Call Transcript

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Provided by Quartr
May 30, 2024

There are 4 speakers on the call.

Operator

Thank you for joining our call. Recently, Deckard Chairman video meeting. Today, we have a comprehensive agenda. We will start by reviewing our financial results, business trends and growth strategy. After that, we have a Q and A session to address any questions or concerns you may have.

Operator

Let's begin with the looking forward statement.

Speaker 1

Ladies and gentlemen, thank you for standing by. Welcome to the BOS conference call. All participants are at present in listen only mode. As a reminder, this conference call is being recorded and will be available on the BOS website as of tomorrow. Before I turn the call over to Mr.

Speaker 1

Cohen, I would like to remind everyone that forward looking statements for the respective 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, product demand, pricing, market acceptance, changing economic conditions, risks and 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 the call over to Mr. Eyal Cohen, CEO. Mr.

Speaker 1

Cohen, please go ahead.

Operator

Thank you. The first quarter reflects record net income of Phase R740,000. We have achieved this goal gradually and consistently positive, reflecting our collective effort and dedication. Our trailing mass revenues amounted to $43,000,000 EBITDA $3,000,000 net income of $2,100,000 and EPS in the trailing 12 months of 0 point 3 $6 This result put us on track toward achieving our financial targets for 2024, dollars reached our revenues of $46,000,000 and net income of $2,200,000 We have a relatively strong balance sheet with $34,000,000 assets, dollars 20,000,000 on shareholders' equity, which count to 60% of the assets. Our surplus of cash net of loans was €1,700,000 Our business performance combined with our healthy balance sheet provide us with the right ecosystem for thinking, exploring and developing agents for future The following slide presents post current valuation ratios based on the trailing trend months.

Operator

The market cap ratio to net income is 7.7. The market cap ratio to projected net income for year 'twenty four is 7.3. Market cap ratio to EBITDA is 5.3 and the market cap ratio to the shareholders' equity is only 82%. Despite our positive trends in progress, our market cap remains roughly unchanged. It was $15,000,000 on December 2021, when we earned only $500,000 a year and remain $50,000,000 today, when we earn more than $2,000,000 also 365%.

Operator

I hope BOS will add analyst coverage this year to explore BOS value opportunity to more investors. This is great. The Supply Chain division has expanded the list of electronic manufacturers, which represent and increased its sales force. Hence, we expect revenue growth from those programs in 2024 and beyond. In addition, we are facing increased demand from the Israeli Defense segment and we anticipate it will positively affect the Supply Chain Division revenues this year.

Operator

The Intelligent Robotics Division is successfully transitioning from these to Visa and Electronics sector, which will promote its strategic growth in 2024. This division revenues in the Q1 of the year do not reflect its potential revenues for year 24 because a significant portion of the orders we receive are in the production. The RFID division sells for many to logistics centers in this. We have significantly expanded our offering for niche spreads and expect this will yield revenue growth in the year 20 stores. I also turn the call over to Mr.

Operator

Executive Chairman. Keesi? Thank you, Eyal. Good morning and afternoon, everybody. In reference to Eyal's review and within the broader framework, Roche's 1st quarter record net income are the primary effect of the comprehensive product business build up process that Eyal has been leading for the past years.

Operator

Within effect, the meaning of it is rejuvenation of most of us core business, while bringing it to a consistent course of sound organic sales and profit growth as we see. Specifically, Q1 was characterized by the continued implementation of our significant steps, to strengthen capabilities, improve activity and expand organic source of income, as well as strengthening the organizational structure and the basic process in the activity. Looking ahead to the rest of the year and next year, combining our strong competition with favorable market dynamics in the Israeli Defense and High-tech segments, we are optimistic about the future. We plan to continue expanding the business lines of all of our division in the premium segments in Israel, which should lead to a further growth. In addition, we plan to expand the Agus division footprint to the production floor and warehouse to the retail stores.

Operator

I trust both Steve led by Adam to achieve these challenging goals. Our team's dedication, expertise and hard work have been instrumental in our success so far, and I am confident that they will continue to drive our growth and achieve our goals. Thank you for your attention. I will now hand over the back presentation to Maria. Thank you.

Operator

Thank you, Ziv. At this time, we begin the Q and A session. If you have questions, please unmute from present yourself

Speaker 2

I would like to know why the revenue of the Q1 of this year was less than last year? And is there any impact of the war that influenced this quarter? And what do you think about the gross margin? Do you think these levels are going to stay? Do you think they can improve?

Speaker 2

And do you think that the second quarter could be better because of the war or there's no impact? That's all for now.

Operator

Okay. Regarding the decreasing revenues compared to the 1st component quarter. It's not a sign to any effect. And because of that, we keep on our outlook for the year. If we keep it down at the level of $4,600,000,000 And Regardless of the cost by the way, part of the decrease is related to deferred revenues of the robotic division, which had very low revenues in this quarter because most of the owners are in process.

Operator

And we regarding the situation in Israel, about 75% of our business is linked to the Israeli Defense segment. And we try we are trying to increase this portion. Absolutely, it will support our it will support our continued growth during this year and I believe beyond.

Speaker 2

Okay. So you'll see another place of another space of improvement for the gross margin?

Operator

I'm not sure regarding the gross margin, gross profit margin. But regarding the revenues, we will bring the $46,000,000 this year. And we believe we will continue the growth of revenues next year as well.

Speaker 2

Okay. Thank you. Thank you.

Operator

Michael?

Speaker 3

Hey, congratulations on the great quarter and the record earnings. It's nice to see that. I know you just mentioned that about 75 percent of your revenue is defense related. What was this a year ago? How much has the defense business grown?

Operator

I guess it was about 60%. And it's really continued to grow because as we look at the robotics division growth, I think that 90% of its revenue is such a big difference. And regarding the supply chain division, we are seeking for more opportunities in the defense segment to extend our offering. So we're getting more bids, for example. We in the recent months, we integrated a new line of products to the defensive line, which are wires.

Operator

And those wires in these wires, we represent American company, which is Wiremaster. And we believe this line of product will increase the revenue from the

Speaker 3

Okay. That's great to hear. I know the last caller had talked about the Q1 revenue being a little lower. During the last conference call, you had said that there was some business in Q4 that was being pushed back to Q1 and Q2. With everything that's happened and given your projection of $46,000,000 in revenue, can we expect a stronger Q2 and Q3 than last year?

Operator

I think in the we don't provide the outlook based on the quarters. But in general, year 2024 will be better than year 'twenty three by revenues and by revenue.

Speaker 3

Okay. And then finally, it was nice to see the profitability in the robotics line. If you had to estimate which one of your segments would have the greatest revenue growth, do you think the robotics is finally poised to have a significant revenue this year and maintain the profitability that you've now achieved?

Operator

Yes. I think the robotic division has passed the process from gross losses to gross profit, then after from operating loss to operating profit and then after from breakeven net from breakeven to profit. So it's a process. It's a natural process. And we see that the recent 3 or 4 quarters, it is very good.

Operator

And then in Q4 last year, we came profitable. And we are working very hard to continue this trend this year. And absolutely, I think that this year, the automotive division will have the highest growth to produce all the product to install all the project that we committed to the defense. Another aspect of that is that I think that in the robotic division, we have successfully built a relatively strong competitive position in the market, in the segments which we are focusing on, meaning that you can and everybody can trust that if we keep the thorough work that we're doing there, then revenues and profits will follow. Okay, because the competitors are poised to grow during market trends.

Operator

Okay?

Speaker 3

Okay. And then one quick follow-up. I really appreciated the slides showing how undervalued the company is. By my math, I now have your book value per share of over $3.40 a share based on this quarter. Is there any M and A activity, either you acquiring some other companies or has there been interest and possibly you being acquired.

Speaker 3

I just I don't I can't understand why your stock is so undervalued. And at this time is there any M and A updates you can give us?

Operator

Regarding the stock price, yes, you're right. That's reflected in my slide. The price is $100,000,000 The company is $100,000,000 The second, I believe, we need to do beyond M and A, which is not for to increase the shelf lifestyle to for the long term to develop a company. So what it makes most of my efforts are to have an under this coverage, so which I believe will have a immediate impact on our valuation. That it will be but today, we have on the next a report.

Operator

But I will try complete the world by doing the same quarter. Regarding the MSA, we are seeking the opportunities for MSA and for all the divisions. We have several processes that we are checking. And this is established from now.

Speaker 3

Thank you for taking my questions.

Operator

Thank you, Tom. Any further questions? Okay. So we appreciate your active participation the valuation insights of Shuki and Todd. If you have any further questions or concerns, please feel free to reach out to us.

Operator

Thank you for your time. Thank you, everyone. Thank you. Bye bye.

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Key Takeaways

  • Record Q1 net income: BOS reported a record Q1 net income of $740K, driving trailing 12-month revenues to $43M, EBITDA to $3M, net income to $2.1M, and EPS to $0.36, supporting its 2024 targets of $46M in revenue and $2.2M in net income.
  • Strong balance sheet: Total assets stand at $34M with shareholders’ equity of $20M (60% of assets) and a net cash surplus of €1.7M, providing financial flexibility for future investments.
  • Division growth drivers: The Supply Chain division expanded its electronics manufacturing partnerships and defense sales, the Intelligent Robotics division is transitioning into the automotive and electronics sectors with a robust backlog, and the RFID division has broadened its logistics offerings.
  • Undervalued valuation multiples: Despite tripling net income since 2021, BOS trades at just 7.7x trailing P/E, 7.3x forward P/E, 5.3x EBITDA multiple, and 82% of book value, with management seeking greater analyst coverage to unlock shareholder value.
  • M&A and coverage initiatives: While prioritizing organic growth, BOS is exploring M&A targets across its divisions and aims to secure additional analyst coverage this year to support long-term value creation.
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Earnings Conference Call
B.O.S. Better Online Solutions Q1 2024
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