B.O.S. Better Online Solutions Ltd. Price & Performance (BOSC)

So go to her. 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 mister 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. Cohen, please go ahead. Good morning, everyone, and thank for taking the time to join today's meeting. Is a pleasure to connect with you again. Joining me, as always, mister Moshe Zeltzer, our CFO. Let's move into the presentation.

BOSS integrate cutting edge technology to streamline and enhance supply chain operation across three specialized divisions. The robotic division automates inventory process replacing manual labor with robotic solutions. RFI did the vision optimize inventory management by tagging and tracking inventory throughout the supply chain. And the supply chain division integrate our franchise electro mechanical components directly into our client support. Let's explore each division in more details. Our supply chain division is dead dedicated to integrating franchise electromechanical component into the product of leading Our engineering team works hand in hand with our customers r and d department to ensure seamless integration into innovative designs generating long term OEM revenues as product move into production. The primary growth lever here is a number of components we embed into our clients product. That's why expanding our integration capabilities is central to our Over the last two years, we have doubled our engineering team and tripled the number of manufacturers we represent. Strengthening our market position and growth trajectory. Are proud to serve global defense leaders such as Israel with aerospace industries, Elbit Systems, and Rafale. Our network extend both directly to these companies and indirectly via their subcontractor across The US India, and Europe.

This network serves our launch pad for global expansion without the need for costly overseas sales offices. Our RFID division enhance inventory management across the supply chain by integrating proprietary software with cutting edge off the shelf equipment. We deploy ruggedized solution for industrial and operations such as handheld computers, forklift mounted tablet, industrial scanners, thermal printers, RFID readers, and wireless system from top brands like Zebra and Honeywell. Our proprietary interfaces ensure that every on-site inventory transaction is instantly reported to the client ERP WMS Or EMEA System, In Real Time. As A Value Added Service, Our Expert Team Performs Inventory Count For Warehouses And Stores Using Specialized Hardware And Software. Our Business Model Is Designed To Generate Recurring Revenues Including Annual Service Contract From Hardware And Software Inventory Account Services, And Ongoing Demand For Consumables Like Barcode Labels, RFID, Tags, Reboots. We Are Proud To Serve A Top Tier Enterprises Israel, like Supercell in the food retail, Liquei, nonfood retail, and Teva. The industrial sector. Our robotic division streamlines industrial and logistics processes by automating labor intensive task. Our multidisciplinary team includes mechanical and control engineers for grammars, and production crew specializing in mechanical assembly. Together, we deliver robotic cells that reduce the dependence on labor, increase production capacity, and improve accuracy all within three years or one.

We offer two two main type of robotic solutions. First, our custom built robotic cells that are designed and built from ground up to meet each client unique needs. Second, we provide off the shelf robotic arms using top tier models from Fanuka and Yaskawa. We customize them with specialized gripper and programming, adapting them perfectly to our clients' production and logistic processes. Today, 90% of our robotics projects serve the defense sector. Where production is still heavily reliant on labor and facing increasing pressure for faster, and higher quality output. This shift presents both challenge to the industry and a major opportunity for us. Our flagship client here is Elbit, [indiscernible] With additional high-tech clients validating our capabilities in this space. Team and leadership. Bosses led by a skilled executive team of eight and four and board of four members. Given the importance of technology, we we employ two dedicated CTOs, one for the robotics, and one for the RFID. Our total team include IT professionals, with 30% being engineers and technicians. Financial.

Balance sheet as of December 24 shows total asset $34,000,000, equity dollars 21,000,000. Working capital, $14,000,000 cash, $3.3600000.0 dollar. Real estate of $2,100,000. And long term loans underlying their real estate in the amount of $1,400,000. Operational results and outlook. After a record setting in year '23, with $44,000,000 in revenues, year '24 is stabilized $40,000,000. Reflecting a return to normalized purchasing after post COVID restocking. We are optimistic about year '25, aiming for $44,000,000 in revenues and $2,500,000 in net income. A 10% increase year over year. This confidence is backed by a growing backlog, which rose by 35% to $27,000,000 at the end of year '24. A key driver of this growth is our exposure to the booming defense sector, Israel defense budget rose 73% year over year, and Europe's defense budget rose 1616% year over year. These trends directly impact our key client and in turn on us. Our growth strategy has two pillars, strengthening our proposition and expanding internationally. Strengthen our proposition, we will deepen relationship with a different client by broadening our offer such as the recent addition of Cable In Line. Now if I did a vision will increase its sales force to capture the rebound in the Israelis civil market and will add to its portfolio off the shelf packing machines for logistics centers.

Expand overseas will leverage our Israeli defense client base and align with their global subcontractors. This strategy already yield $4,000,000 in overseas sales in year twenty four, of our supply chain division. Our robotic division is preparing for first installation of robotic production line in Europe in the first half of first half of this year. Now let's take a look at our evaluation and position in the capital markets. As of today, our market capitalization is $23,000,000 When we factor our cash and debt, our enterprise value comes to $21,000,000 only. In terms of valuation multiples, compared to the Russell 2,000, our price to earning ratio is 10, while Russell is six at a 18. Our price to book ratio is 1.1 compared to Russell's 2.1. This clearly indicate that BOSS is trading at the significant discount compared to the broader market. Investor relations, To strengthen our presence in The US capital market, we are are partnered with The US based investor relations, firm and significantly ramped up our outreach. Since September, I have been hosting weekly investor calls actively sharing our story and engaging with investment community. We have also participated in major events including LD Micro Conference in October, and the Emerging Growth Conference in February.

And the results speak for themselves. Our average daily trading volume has grown from 4,000 shares in last September to 58,000 shares this month. To conclude, [indiscernible] is a solid position for continued success We have demonstrated consistent profitability with steady growth in net income year after year. Looking ahead, we are projecting 10% increase in both revenues and net income for year '25, reinforcing our strong trajectory. Financially, we are in excellent shape with $21,000,000 in equity and zero bank debt we have the flexibility to grow strategically. From a valuation standpoint, both is trading at just 10 times net income offering compelling opportunity compared to the broader market benchmark. We have also significantly expanded our investor relations effort increasing our visibility and engagement with investment [indiscernible] And perhaps most importantly, we have a strong and growing presence the global defense industry, a market that continued to accelerate. With our solid foundation, focused strategy and strong momentum, we believe BOSS is well positioned to deliver long term value for our shareholders. Thank you for your attention, and I am happy to take your questions. You can unmute if you want to ask a question. Any question?

Good morning, Al. Congratulations on a strong quarter. Just wanted to talk to you about if you give some guidance. I know you said you had a new robotics line starting in Europe. Can you talk about your your defense business in Europe and and how that has been affected by the, war in Ukraine?

Yeah. Actually, we are we are we don't have a say indirect sales in Europe. We aligning with our major client in Israel, Elbit Systems. [indiscernible] And Rafael. Which are exporter and the global leaders in the defense segment. And usually, when they have a a contract overseas, we are getting into the picture because the part of the production of the product sold must be produced locally in the in the in the customer's in the customer's side. And in that case, our supply chain division provide to the local subcontractor components and our robotics division. Provide product automatic production line in case it needed. It's a duplication of, for example, of a site in Israel, So this is the business model in Europe. [indiscernible] In general.

Okay. Thank you. And, also, in your evaluation, I know you didn't mention the tax loss carry forward. By looking at your financials, I believe you have over $60,000,000, tax loss carry forward, which would equate to, you know, $10 a share. Is that correct, or am I missing something?

Yeah. We we have approximately $30,000,000 in carry forward tax losses. Which could provide up to $6,000,000 in future tax saving, assuming 23% corporate tax rate. And as a conservative measure, we recognize only $1,000,000 of this potential benefit as an asset in the fourth quarter of of the year of this year. Out of the $6,000,000. But on the other hand, the this income didn't affect on the on the bottom line because the because we recorded an impairment charge $1,200,000 related to goodwill.

So so this resulted in net impact on this quarter, on this year, on year '24, [indiscernible] $200,000 on the the net income of year '24 because of an increase of $1,200,000 in operating expenses year to date impairment of goodwill that offset by $1,000,000 in tax income related to the tax deferred assets of $1,000,000. Okay.

Thank you. And then just a last question. I noticed recently you had brought on the, head of, procurement from the IDF from 02/2017. To '23. Do you expect him to be able to bring in help bring in additional defense contracts for BOSS? And if so, will you up your guidance during the year?

Yeah. I think we as a strategic decision several years ago, we have been focused on the defense segment, and I think it's he will be a major element in helping us to to capitalize the opportunities in this in this market, to guide us, to lead us in this market, and absolutely, if there will be any significant development during this year, so we will give an update.

Thank you very much.

Thank you too. Any further question? Okay. You again for joining us today. If you need more details or would like to follow-up, please feel free to reach out. And wishing you all a great trading day. Thank you.

Thank you.