B.O.S. Better Online Solutions Ltd. (BOSC) on Q1 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the BOS First Quarter 2021 Results Conference Call. All participants are at present in a 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 BOS website as of tomorrow. With us on the line today are Mr. Ziv Dekel, Chairman; and Mr. Eyal Cohen, CEO; and Mr. Moshe Zeltzer, CFO. Before I turn the call over to Mr. Ziv, I would like to remind everyone that forward-looking statements for the respected companies 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.
Ziv Dekel: Okay. Thank you for joining our earnings call. I hope that everybody is well. So, I'm encouraged by the improvements in our financial results for the third consecutive quarter. Led by Eyal, the company continued its process of enhancing its capability, and market competitiveness. Specifically, I would like to refer to the synergies we built between the Robotics and the RFID divisions that already generated the sales and future as we see it along. Looking forward, the management team works extensively to strengthen and develop the growth engines of our division by branching into new segments, penetrate to New Territories, and expand product offering for existing and new clients. Now, I would like to turn the call over to Eyal Cohen to elaborate about our growth plan. Eyal, please.
Eyal Cohen: Thank you, Ziv and thank you all for joining our call today. Regarding branching into new segment, currently, most of the sales of the Robotic division are to the industrial segment. By the end of this year, we plan to launch a new line of Robotic systems for the logistic segment. This line will automatically sort products, like received in the logistics center and automatically into shipping boxes. We already got an initial order at a pre-sale price of $430,000 from a fashion retailer for an automatic sorting system. This system will automatically start and allocate in your Logistics Center into shipping boxes for its 160 stores. This new line of system leverage the strong footnote of the RFID division in the logistic segment and the technological capabilities of the Robotic division. We anticipate that the first installation of this automation line will kick the sales of this line and be fundamental growth engine of the RFID and Robotics divisions. Regarding penetrate new territories, at the beginning of this year we re-established the robotic division sales office in the U.S. We are working extensively to achieve our initial goal to close significant order in the first half of this year. Regarding expanding our product offering to our existing client, we are checking and considering various alternatives to significantly increase the number of franchises that we can offer to the supply chain division client to support its growth.
Operator: Thank you. The first question is from Todd Felte of Advisory Group Equity Services. Please go ahead.
Todd Felte: Good morning, Eyal. Just hoping you could share with us some information on the status of the sales in the US. I know that, you know, the sales cycle is a few months and we've got our new North American Sales Director at the beginning of this year, so was kind of hoping that we could be close to landing some significant sales or contracts. Thank you.
Eyal Cohen: Thank you, Todd. Thank you for participating in the call. I think this is your 20th call that you participate. Thank you. Regarding your question, up to date, we generated the pipeline, meaning sales proposal of about a $9 million. And the average of each bid was about a $1 million, which is good, good indication of volume of transaction. The penetration to the U.S. during the COVID time was harsh, mainly because of the absence of the physical meetings. And now when we’re back to normal, it will make our mission much more achievable. So, we are optimistic.
Todd Felte: Okay. One other question here. You know, as the world comes out of COVID, and economies are roaring back, it seems to me that you're extremely well positioned in some of the sectors you do business. I mean, I know there's a strong demand for resistors, capacitors, discrete semis, and you supply those, you have Supply Chain Solutions, and you also have a Robotics, that seems, would be in demand considering in the U.S., we have trouble finding workers at $15 or $20 an hour. But I noticed that your inventory capped up by a million dollars from 4.8 to a little over 5.8 over the last quarter, are you experiencing some of these tailwinds? And can you kind of elaborate on the growth in that inventory?
Eyal Cohen: Yes, Todd. There are several reasons for the increase in inventory. First, we anticipate an increase in Q2 revenues. So, we, in order to cut the lead time, we increased the inventory level in advance during the first quarter. Second, due to the situation that you just described, for , a major franchisor or franchise of our supply chain division demand from all its distributors to keep a higher level of inventory to reduce the lead time. So, we did it. Third, we had to buy inventory in advance to back up prices of long-term frame orders. So, to conclude, the inventory increased, there is – this is the reason why it increased and all this inventory is destinated for client.
Todd Felte: Okay, that's helpful. And finally, I noticed during the quarter, you got your first contract with the UAE. And I also read headlines of the United Arab Emirates doing significant investments of billions of dollars in Israel, do you expect to receive further orders from that country and some of the other markets that are now opening up that would have been, you know, unavailable to Israel, let's say, you know, 10, 15 years ago even?
Eyal Cohen: Yeah, absolutely topping us opportunity for our supply chain division, maybe for the – in the future for the others division as well. We got an initial order and we expect for continuing order. We just recently got another order from the same client, but it's not a significant amount, but I believe that gradually we will increase the business with this territory because we have a good source of component and we have experienced with all the segment of aerospace and defense regarding our supply chain division. And so there is – it is a good opportunity for us.
Todd Felte: Okay, thanks for answering my questions, and I'll hop back in the queue. Thank you.
Eyal Cohen: Thank you.
Operator: There are no questions at this time. Before I ask Mr. Cohen to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available on the company's website www.boscom.com by tomorrow. Mr. Cohen, would you like to make your concluding statement?
Eyal Cohen: Yes, thank you. BOS team is on board to accomplish its missions. When the war in Israel is ended and the COVID is behind and life back to normal, it will make it easier. I hope to see you again in our next earning call in August. Thank you.
Operator: Thank you. This concludes the BOS first quarter 2021 results conference call. Thank you for your participation. You may go ahead and disconnect.
