B.O.S. Better Online Solutions Ltd. (BOSC) on Q2 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the BOS Second 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. Eyal Cohen, CEO; and Mr. Moshe Zeltzer, CFO. Before I turn the call over to Mr. 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, product 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 the call over to Mr. Eyal Cohen, CEO. Mr. Cohen, go ahead.
Eyal Cohen: Hello and thank you for joining our quarterly call. I am pleased with the significant growth in revenues in the first half of '21 compared with the first half of year '20. I'm also satisfied with the net income for the fourth consecutive quarter. For the recent 12 months, our revenues amounted to $35 million, net income of $700,000 and EBITDA of $1.3 million. Regarding year '21, our outlook, we expect revenues over $33 million and $33 million and net profit of above $1 million. So that look is not changed. Our supply chain division in RFID division did very well in the first half of the year. And I hope that despite the global shortage in goods, they will continue to find innovative ways to meet our clients' demands and make our margin. Our Robotics division has not reached its sales target in the U.S. market. As a result, we are taking a step back and immediately stopped our investment in direct sales in the U.S. and turning into indirect sales through distributors or agents and keep the division operating expenses very tight. On the other hand, we have made progress with developing the new automation line, which is a sorter for logistics centers. We plan to launch it by the end of this year, and we anticipate it will positively contribute to our sales growth in year '22. In addition, our Robotics division recently got second order from Flex, a global company that helps enterprises design and manufacture products. I'm happy to share with you that Flex also purchased an electronic component from our Supply Chain division in total value of $1.2 million in the recent eight months, great synergy. We focus our sales effort on clients with the same propelled Flex, meaning have solid demand for automation, allocated budget for automation and expect to provide ongoing orders for machines. That completes my review, and now I will take your questions.
Operator: Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. The first question is from Todd Felte of Advisory Group Equity Services. Please go ahead.
Todd Felte: Congratulations on a good quarter. I was just really wanting you to kind of comment on the Robotics division. I know it's been hard gaining traction there. And I didn't quite understand the comment. It sounded like you were kind of changing the strategy on the robotics rollout in the U.S. Can you kind of give us some color on that and let us know if we're competitive in any active bidding processes now? I know we have been hoping to have some contracts this summer. Thank you.
Eyal Cohen: Yes. I think this is the second year that we are working with the directors. This is -- we made changes at the beginning of this year. We replaced the team. We have not reached to the target -- to the sales target. It cost us a lot. And now we'll try to do the sales in the U.S., to a sales rep and to invest our effort to allocate a sales rep, which will work on a commission basis. And this is the same model that we work. We are working in South America, in Mexico and also in Australia. It's less risky for us. Regarding the court in the U.S. market, we reached to the biggest plastic manufacturer in the U.S. And with one of them, we are in the final stages of decision. But it's on the table, the time line for that. And once we will win such project, we will announce on it, but it won't change our decision to start to work with the agent model on distribution agent model versus director.
Operator: The next question is from from SHIG LLC. Please go ahead.
Unidentified Analyst: Congratulations on a good quarter. My question is, based on updated guidance the Company has tripled net income in the second half of 2021, while no significant increase in revenues is anticipated. Can you describe the factors that we're allowed to achieve that?
Eyal Cohen: Yes. Thank you, Igor. Thank you for the question. So in the aspect of revenues, there is no question, there is no doubt. We made a $16.5 million in the first half of the year. So it's achievable. The target is achievable. Regarding the net income, we achieved $264,000 in the first half of the year and the annual target is $1 million. There is no doubt that it's challenging, but the outlook is based on our expectation that the losses of the Robotics division will be lower in the second half of the year. We also assume that the supply chain will continue in full speed with a great performance in the first half of the year. So we expect the same in the second half of the year. And relatively strong fourth quarter of the RFID, all of them together can bring us to the outlook to the target, but it's still challenging.
Operator: The next question is from David Dansby of Janney Montgomery Scott. Please go ahead.
David Dansby: Congrats on another profitable quarter.
Eyal Cohen: Thank you very much.
David Dansby: Just a quick question about -- you sort of hinted about the global supply chain issues, which I've heard on many calls and have read countless articles. I was just wondering if you could go into some detail on how that may impact your RFID and supply chain solutions. I'm guessing there are definitely some negative impacts, but also potentially maybe it might be increasing demand for some of your products. I was curious if you could provide any color on that.
Eyal Cohen: Yes. As I mentioned, our supply chain in the RFID division did very well in the first half of the year. And I hope that despite the global shortage in good, they will continue to find innovative ways to meet our client demand and make our margins. And naturally, this is the expertise of our Supply Chain division to provide components and using all the elements in an innovative way. And it did in a very successful way in the first half of the year, and we hope that it will continue to do so. Regarding the RFID is more challenging, but we are buying talks when we can, when it is available in order to meet our client demand, but it's still challenging.
David Dansby: Okay. Great. I noticed RFID, I know the year-over-year number was an easy comparable, but there was still a nice sequential growth in that division so far.
Eyal Cohen: Yes, absolutely.
Operator: There are no further 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. Thank you for joining our call, and I'm looking forward to meeting you on our next call, and you are welcome to contact me any time by phone or by e-mail. Thank you.
Operator: Thank you. Thank you for joining our call, looking forward to meeting you -- thank you. This concludes the BOS Second Quarter 2021 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
