B.O.S. Better Online Solutions Ltd. (NASDAQ:BOSC) Q4 2022 Earnings Call Transcript

B.O.S. Better Online Solutions Ltd. (NASDAQ:BOSC) Q4 2022 Earnings Call Transcript March 29, 2023

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the BOS Fourth Quarter and Full Year 2022 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 BOS website as of tomorrow. With us on the line today are Mr. Ziv Dekel, Chairman, 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 various securities authorities. I would now like to turn the call over to Mr. Eyal Cohen, CEO. Eyal, please go ahead.

Photo by Danial Igdery on Unsplash

Eyal Cohen: Hello. Thank you for joining our call today. I would like to take this opportunity to give a brief on BOS’s offering competitive advantage and the growth strategy. BOS provides enterprises with advanced technology that increases inventory efficiency to each three business. The robotic division automate industrial and logistic processes of inventory. The RFID division mark and track the inventory and the supply chain manages the inventory. Our competitive advantages are client trust, quality service, comprehensive and relevant offerings and innovation. Those points are key demands of our clients. Our targets are first to increase the revenues per client. Second, to increase market share by joining new clients. Our strategy first to retain our clients through high quality service and update our offering with hedge technologies.

Most of our clients have been with us for decades for those reasons. Second, we expand our business offerings in our core business. By that, we increase the revenues per customer and join new clients. We implement our strategy to achieve our goals in two ways, mainly internally, by investing substantial managerial resources to identify client needs and trends and to match the relevant technologies. In the background, we keep an open eye for M&A’s opportunities of companies that meet three criteria, first expand our offering in our core business. Second, profitable third has a robust business system. Let’s complete my review. And now I would like to take your questions please.

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Q&A Session

Operator: The first question is from Todd Felte from Advisory Group Equity Services. Please go ahead.

Todd Felte: Hey, congratulations first on a great quarter and great year. I find it amazing that you do over $7 a share in sales, trade below 250. But my question is regarding the backlog. I know in the past you’d given updates on the backlog, and can you kind of tell us where we’re at and when we expect that backlog to materialize?

Eyal Cohen: Hi, thank you Todd. We have about $10 million of recurrent revenues such as the on-going services and consumables materials that our client consumed on monthly basis. We also have a backlog of sales orders in an amount of about $21 million. So altogether we have good visibility for $31 million out of the $45 million projected revenues for year 2023, and we are just in the first quarter.

Todd Felte: Okay. That’s, that’s great to hear. And one more follow up question. I noticed that the revenues for the robotics division are, are ticking up and it’s almost at breakeven. Do you expect the robotics division to turn a profit in 2023?

Eyal Cohen: Along the years since the acquisition, we, we reduced significantly year by year the losses and improve the results and our outlook for the next year is to, to be profitable.

Todd Felte: Okay, that’s great to hear. I’ll let someone else ask some questions to get back in the queue and congratulations on a great quarter.

Eyal Cohen: Thank you very much, Todd.

Todd Felte: Thank you.

Operator: The next question is from David Dansby of Jenny Montgomery Scott. Please go ahead.

David Dansby: Congratulations guys. That was a tremendous quarter and year and it seems like you have pretty good visibility into growth next year. My question is just on the supply chain solutions. If you could just sort of talk about — the results were great. There’s amazing growth there. Are you seeing just more opportunities through the supply chain issues that, that we’re seeing globally, is that presenting an opportunity, sort of a, a bigger opportunity for you guys going forward as well?

Eyal Cohen: Thank you. Thank you for joining the call. David, thank you for the question. I think that it was a very good year for the supply chain because of the shortage of components. And we had the very good system in place how to, to provide our client the components in a very good, in a, in a fair price for us. The second element that impacted the result toward the pain conflict in that increases the difference budget of certain countries in Europe. The Israeli defense industry is one of the biggest providers and their provider BOS is their provider. It is positively reflected in 2022. I don’t see that this trend will change in next year, although we, the shortage in components is recovering gradually, but I don’t think that the defense budget in the next year will be reduced.

So we still believe that it will be a good year for the supply chain and it has a very good backlog as well. And we have plan also to expand the business of the supply chain by adding more services to this unit that will yield in year 2024.

David Dansby: That’s great and very helpful. Congrats again.

Eyal Cohen: Thank you.

Operator: There are no further questions at this time. I would now like to turn the call over to Mr. Ziv Dekel, Chairman to make a concluding statement. Mr. Dekel, please go ahead.

Ziv Dekel: Thank you for joining us today. This was — this year was characterized by a continued execution of our plan for business improvement capability build up, and solution offering expansion which Eyal and the team are successfully leading and will lead for the year of 2023. Accordingly, we see the notable achievement of realizing our targets for 2022. Looking forward to 2023 and onwards, I trust Eyal and the management to further implement BOS’s strategy to yield up a top line growth and increase profit margin, market share, and competitive position. Thank you for spending your time with us. Please do not hesitate to contact Eyal or me for further information or questions. Looking forward to meeting you on our next quarterly call.

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 BOS fourth quarter and full year 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.