B.O.S. Better Online Solutions Q1 2025 Earnings Report

B.O.S. Better Online Solutions EPS Results

• Actual EPS: $0.22
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

B.O.S. Better Online Solutions Revenue Results

• Actual Revenue: $15.03 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

B.O.S. Better Online Solutions Announcement Details

• Quarter: Q1 2025
• Date: 5/29/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 29, 2025
• Conference Call Time: 8:30AM ET

B.O.S. Better Online Solutions (NASDAQ:BOSC) Ltd. provides intelligent robotics, radio frequency identification (RFID), and supply chain solutions for enterprises worldwide. The Intelligent Robotics Division provides custom-made machines for industrial automation and assembly of products and packing that offer technological solutions. The RFID Division provides hardware products, such as thermal and barcode printers; RFID and barcode scanners and readers; wireless, mobile, and forklift terminals; wireless infrastructure; active and passive RFID tags; ribbons, labels, and tags; and RFID systems for libraries. It also develops Warehouse Management System, a data collection solution for logistics management in logistic centers and warehouses; RFID-based systems for tracking inventory in a produce packing house; automatic systems for industrial packing lines; automatic systems to track the production line; and automatic systems to identify and track vehicles for transportation-related settings. In addition, this segment provides maintenance and repair services for data collection equipment, as well as warehouse and on-site service plans; on-site inventory count services in various fields; and asset tagging and counting services for corporate and governmental entities. The Supply Chain Division offers electro-mechanical components, electronics components, communications products, and components consolidation services to aerospace, defense, and other industries. This segment also provides inventory and quality control management of components entering production lines; and inventory management services for ongoing projects, including warehouse functions. The company markets its products through direct sales and sales agents, as well as through distributors. B.O.S. Better Online Solutions Ltd. was incorporated in 1990 and is headquartered in Rishon LeZion, Israel.

B.O.S. Better Online Solutions Q1 2025 Earnings Call Transcript

Key Takeaways

• Record Q1 revenues and net income with robust defense-focused strategy prompting confidence to exceed full-year 2025 targets of $44M in revenues and $2.5M in net income.
• The $22M backlog represents roughly 50% of expected annual revenues, underpinning visibility but subject to timing of deliveries and billing.
• International expansion is underway with a new cabling line leveraging existing defense clients, $4M in overseas sales in 2024, and the first European robotic production line slated for installation this year.
• Strong balance sheet with zero bank debt, $4M in cash and $23M in equity provides financial flexibility for organic growth and potential M&A opportunities.
• Shares trade at an attractive valuation of P/E 10 and P/B 1, suggesting upside compared to broader market multiples.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the B.O.S. Conference Call. All participants are present in listen-only mode. As a reminder, this conference call is being recorded and will be available on the B.O.S. website as of tomorrow. Before I turn the call over to Mr. 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 risk 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 in product and technology development, and the effect of the company's accounting policy.

[Operator]

[crosstalk] This meeting is being recorded.

[Operator]

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. Cohen, please go ahead.

[Eyal Cohen, CEO at B.O.S.]

Good morning, everyone, and welcome to B.O.S. First Quarter 2025 Earning Call. I am joined today by our CFO, Mr. Moshe Zelter. We delivered exceptional results this quarter with record revenues and record net income that underscore the strength of our defense-focused strategy. The results reflect years of deliberate investment in product diversification and operational excellence, positioning us to capitalize on the defense sector's robust growth trajectory. With our strong Q1 performance and a healthy $22 million backlog, we are raising our confidence in exceeding our full-year 2025 targets of $44 million in revenues and $2.5 million in net income. Our outlook remains grounded in the organic opportunities we see today and maintaining our conservative approach. Our growth strategy rests on two foundational pillars. First, deepened client relationships.

[Eyal Cohen, CEO at B.O.S.]

We are expanding our value proposition to our defense customer through complementary offering, exemplified by our successful launch of a new cabling line that leverages existing client relationships. Second, international expansion. We are strategically expanding overseas by partnering with our Israeli defense clients' global subcontractors. This approach generated $4 million in overseas sales in year 2024 through our Supply Chain Division. Our Robotic Division will install its first European Production Line this year, marking a significant milestone in our international growth. B.O.S. presents a compelling investment opportunity built on four key strengths. First, we hold a strong and expanding position in the global defense industry during a period of accelerating market growth. The defense sector fundamentals continue to strengthen globally. Israel's defense budget increased 73% year-over-year, while Europe's rose 16%. This creates a sustained demand environment that directly benefits our business.

[Eyal Cohen, CEO at B.O.S.]

Second, we have demonstrated consistent profitability with steady net income growth year after year, with a compounded annual growth of 49% through the years between the years 2021 and 2025. Third, our balance sheet provides flexibility for strategic growth. With $23 million in equity, zero bank debt, and $4 million in cash, we have the financial foundation to execute our expansion plans while maintaining operational stability. Fourth, B.O.S. is traded just at 10 times on net income and price-to-book value ratio of one. Our valuation offers attractive upside compared to broader market multiples. Thank you for your time and attention. Moshe and I are now happy to take your question.

[Eyal Cohen, CEO at B.O.S.]

Hey, guys. Congratulations on a great quarter. It was nice to see the margin improvement. Can you talk about margins moving forward as the company continues to grow and expand?

[Eyal Cohen, CEO at B.O.S.]

Yeah. First, the gross margin presents the average margin that we have and we had. We do not see any change in the future. This is a market that we are in. We are expanding our offering to our client, and as our offering is wider, the prices that we can take are higher and the margin as well.

[Eyal Cohen, CEO at B.O.S.]

Thank you. Do you see the continued growth coming from the defense sector? I know you brought on the former procurement officer from the IDF, Ivy Dudan. Do you think you'll see some larger contracts come from defense? Do you see your future growth as being a mix of organic and inorganic, as in M&A activity, or do you just see organic growth?

[Eyal Cohen, CEO at B.O.S.]

I think in the current market, in the defense market especially, our hands are full of work with organic growth. There are opportunities in the Israeli market and overseas as well, especially in India. We have to put all our focus and effort to capitalize on those opportunities. In parallel, we are checking opportunities for acquisition of companies that have a synergy to our business, whether it's for the civil market with the RFID Division, whether it's for the defense market with the Supply Chain Division.

[Eyal Cohen, CEO at B.O.S.]

Okay. Thank you. I'll hop back in the queue. Congratulations on an outstanding quarter again.

[Eyal Cohen, CEO at B.O.S.]

Thank you, Todd.

[Eyal Cohen, CEO at B.O.S.]

Eyal, can you hear me?

[Eyal Cohen, CEO at B.O.S.]

Yes.

[Eyal Cohen, CEO at B.O.S.]

Congrats on the great quarter. Could you address the backlog, please?

[Eyal Cohen, CEO at B.O.S.]

The backlog?

[Eyal Cohen, CEO at B.O.S.]

The backlog dropped to $22 million.

[Eyal Cohen, CEO at B.O.S.]

Yes. Yeah. The backlog was in a record number in December last year. It was on the amount of $27 million. This was part of the confidence that we had to provide a positive outlook for year 2025 with a 10% growth. We are in a very hot market, and the demands are hot. Sometimes there are peaks, like we had in this quarter.

[Eyal Cohen, CEO at B.O.S.]

Okay. Thank you. Also, last question. Can you share with us if there was any specific defense program that drove the defense side of the business, or was it broad-based?

[Eyal Cohen, CEO at B.O.S.]

Sorry, can you repeat the question? I'm not sure I understand.

[Eyal Cohen, CEO at B.O.S.]

Was there a specific defense program that drove that side of the business in this quarter, or was it broader-based?

[Eyal Cohen, CEO at B.O.S.]

Yes. Component to one of the leading munitions of Israel. Our components are embedded inside.

[Eyal Cohen, CEO at B.O.S.]

Okay. Thank you very much.

[Eyal Cohen, CEO at B.O.S.]

You're welcome. Any further questions?

[Eyal Cohen, CEO at B.O.S.]

I have another question, Eyal. Are you guys going to be in the United States anytime soon to do investor relations conferences, anything like that?

[Eyal Cohen, CEO at B.O.S.]

Yeah. First, we plan to participate in a virtual conference in the coming months. Matt, our IR firm person, arranged it. Of course, we plan a visit in the U.S. this year.

[Eyal Cohen, CEO at B.O.S.]

Okay. Your $4 million in cash, any plans for that?

[Eyal Cohen, CEO at B.O.S.]

Yes. First, the transaction in the defense market is relatively big, and we need working capital to execute it. We use this cash to do it. We also will use it for a future M&A.

[Eyal Cohen, CEO at B.O.S.]

Okay.

[Eyal Cohen, CEO at B.O.S.]

Scott?

[Eyal Cohen, CEO at B.O.S.]

Yep. Thank you.

[Eyal Cohen, CEO at B.O.S.]

You're welcome.

[Eyal Cohen, CEO at B.O.S.]

Hi. Eyal, do you hear me?

[Eyal Cohen, CEO at B.O.S.]

Yes. Shuki, how are you?

[Eyal Cohen, CEO at B.O.S.]

I'm fine. How are you? I want to ask about the backlog. The backlog is for nine months, six months, 12 months. For how long is the backlog? Besides that, how do you see the second quarter, what you can say, which we are two-thirds of it finished? You have kind of visibility if you can say some words about it, because it seems like your prospect for the year is a bit conservative. I want to hear some comments about that if you can. First, about the backlog.

[Eyal Cohen, CEO at B.O.S.]

Yeah. The backlog is for it will be spread along year 2025. And the $22 million covers like 50% of our annual revenues, so it's relatively high. I remember our call last year when some of the deals moved to year 2025, if you remember. You see the effect in this quarter. It's a supply chain business. The timing of the purchase of the order affects the time of the delivery and the billing and the revenue recognition. We feel confident with this level of backlog that we will exceed our outlook for year 2025 of $44 million revenues and $2.5 million net income that already reflects a 10% growth.

[Eyal Cohen, CEO at B.O.S.]

Okay. You said that it's too early to predict now, so you prefer to wait maybe one or two more quarters.

[Eyal Cohen, CEO at B.O.S.]

Yeah, yeah. I think that in the second quarter that will be released in August, we will have much more information to give a more accurate outlook.

[Eyal Cohen, CEO at B.O.S.]

Okay. And you can say any comment about the second quarter, or you prefer just to talk after the results?

[Eyal Cohen, CEO at B.O.S.]

Yeah. Usually, we give an outlook for a year, not for a quarter, so.

[Eyal Cohen, CEO at B.O.S.]

Okay.

[Eyal Cohen, CEO at B.O.S.]

Yeah. You can try. You try it every quarter. Try again next quarter to ask.

[Eyal Cohen, CEO at B.O.S.]

Okay. Great result. I hope you will continue the same way because it is a magnificent quarter. You have to repeat on it.

[Eyal Cohen, CEO at B.O.S.]

We will try. Yeah. There are peaks. It's a very hot market. We are trying to do the best to capitalize all those opportunities that we have on the table with our defense client that we have a great relationship. We are trying to do the best.

[Eyal Cohen, CEO at B.O.S.]

Okay. Thank you very much, Eyal.

[Eyal Cohen, CEO at B.O.S.]

Thank you. Thank you, Shuki.

[Eyal Cohen, CEO at B.O.S.]

Thank you.

[Eyal Cohen, CEO at B.O.S.]

Any further questions? Okay. To conclude, B.O.S. is strategically positioned for continued success. Our focused approach, strong execution, and solid financial foundation create a platform for delivering sustained shareholder value in the years ahead. Thank you for joining us today. Please do not hesitate to reach out if you need additional information or would like to schedule a follow-up discussion. Have a great day. Thank you. Bye-bye.

Participants

Analysts

• Analyst 1
• Eyal Cohen, CEO at B.O.S.
• Analyst 2
• Analyst at B.O.S