Q4 2019 Earnings Call

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Ladies and gentlemen, thank you for standing by the conference will begin shortly.

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Ladies and gentlemen, thank you for standing by welcome to the boss fourth quarter and full year 2019 results conference call.

All participants are at present in listen only mode. Following managements formal presentation instructions will be given for the question and answer session for operators assistance. During the conference. Please press Star zero.

As a reminder, this conference call is being recorded and will be available on the boss website at of Tomorrow.

I'll now like to turn over the call Mr. John Nesbett IMA. Please go ahead.

Good morning, Thank you for color.

<unk> fourth quarter, 2019 result, manageable will provide an overview as results followed by question answer session and I'll take a brief moment to read the safe Harbor statement. The forward looking statements contained herein reflect management's current views with respect to future financial performance. These forward looking statements are subject to certain risks and uncertainties that could cause Josh.

Could differ materially from those are forward looking statements all of which are difficult to predict and many of which are beyond the control.

These risk factors and uncertainties include amongst others. The dependency on sales being generated from water few major customers sort of view us being able to maintain current gross profit margin inability to keep up.

We're ahead of technology to.

Succeed in a highly competitive industry.

And ability to maintain marketing and distribution arrangements and to expand our overseas markets uncertainty with respect to the prospects of legal claims against the U.S. effective exchange rate fluctuations general worldwide economic conditions.

No what are your financing for working capital purposes, and to refinance outstanding indebtedness additional risks and uncertainties detailed the U.S. periodic reports and registration statements filed with the U.S. Securities Exchange Commission you want to text you undertakes no obligation to publicly update or revise any such forward looking statements to reflect any change in its expectations.

That's conditions or circumstances on which any such statements may be based or that may affect the likelihood of actual results could differ from those set forth in the forward looking statements.

The call this morning.

Cohen, Chief Executive Officer Knobs turn the call Nobody else. Please go ahead.

Thank you John and thank you for all later.

Oh, joining us today.

The press release that we have just released described in detail.

What falls well what didn't near 90.

To summarize.

Well trending year 19 first the supply chain Division had a tremendous year read the gross revenues and Becker.

Second.

I think revision that for Baltic business, we've made significant progress and position our company for long term sustainable growth.

Revenues in Pulford based on its both technology and footprint.

In the international markets.

Things that Didnt walk waving your 19 first.

The acquisition of the Baltic business for the June 19, we encountered unforeseen challenges within the acquired business, which adversely impacted our financial results for the year second.

It wasn't the trees in the revenues of our legacy off they did.

So our plan for the year 20.

We have implemented cost reduction and organizational changes in the companies that are expected to yen estimated Douglas saving go 600000 dollar.

Also also.

[noise] into your 19, we incurred one thing $3 million off additional expenses, which we don't expect jury true near trend.

This expenses a attribute it to do a baltics business acquisition.

The handling OPEC 10 for hostile takeover I'm cost really related to debt retirement arrangement with all prior steel cost seal.

This saving will offset the except that cost of 400000 dollar related to our efforts to increase our presence in the U.S. marcon during year trend.

In December 19th we established a says office in deluxe in Dallas, Texas.

I knew we are steadily and carefully allocating resources to ensure our long term success in the U.S. market.

[laughter] it is important to note that.

Baltic soldiers are typically large.

Which along with the longer sales cycle and the average for the delivery timing is six months.

Hence we expect to begin receiving orders from the U.S. market. This year near 20, and anticipate that you really start to recognize revenue from U.S. market in the first off of your 21.

So assuming that overall revenues remain generally consistent with the you're in 19.

I believe you're going to retain to sustain profitability during.

You had Trent.

Now, let's take a minute to update you Andy on the impacts of new car on the virus and our business.

[noise] full operational from operation standpoint, we are running our business effectively I'm focusing on keeping our expensive low and payment type.

Our business divisions, all considered essential for our customers.

Most of which often but different unfold industry.

Given the critical role we play in their operations. We are working very closely to ensure we continue to service their needs.

One of the sectors that has been hit hard he's the recent sector.

We have a unique that focus exclusively on inventory accounting services, mainly for no for the region.

And last year it accounted for approximately 3.5 million dollar in revenue.

We choose to temporarily.

For the employees in that you need when unpaid leave.

Given the recent sectoral opening up again.

This is a very cinema business, we just want fourth quarter, which is behind us.

So I don't expect this downturn to having a significant impact on our overall netball feed the near Trent.

Finally, our subs and marketing efforts, particularly in the U.S. market continued to be a key focus.

Unlike most of US we are simply using virtual meeting rather than face to face meetings.

For the time being.

So.

Thank you all for taking the time to join us today.

This completes my review and no and we'd be happy to take your question.

Thank you, Sir ladies and gentlemen at this time.

Question and answer session. If you have a question. Please press star one.

If you wish to decline from applying process. Please press star too.

Thanks Speaker equipment highly lift your handset before pressing the numbers your questions will be pulled any order. They are received please standby while we pull for your questions.

The first question is from Todd Felty of our HK cabin.

Please go ahead.

I guess first of all congratulation on another year of record revenues I was wondering if you foresee anymore anticipated write downs for a.

Goodwill or intangible assets in the year to come or if we are hopefully through with those.

[noise] and.

Yeah. Thank you talked thank you for joining us today.

Hey, it's a very good question.

And they 18, we are very tough a year, especially with the well boating business.

A.

We we had to build the business we have to bill form the beginnings of strategy of the business, we regard technology, but we got to to rebuild the business again.

From the aspect off the strategy.

Doug if markets.

And Dave because of that too we had two way.

We had two right Oh, they go to be related with the acquisition.

And the big Colonsay goodwill that rehabbing the balance sheet.

It does not take choir okay.

Very high level, Australia revenues in the future in order to justify this numbers so.

Hey, I believe we will reach our targeting nearing 20.

And 21.

Andy We I don't anticipate two additional there right off of.

Of course.

But.

We have to know something that see.

I saw that in other companies as well that at the moment there is a huge go up.

Between.

The book value.

The market Cup.

There's a pressure from the contents.

To do a motivation or write off the top engine that a lot of companies knocking our case.

But I'm sure that to gradually over a year 20.

Following the measure that we took especially these cost reductions.

And the especially considering the all the.

For <unk> from our perspective normally calling to expenses that rehabbing year 19.

I'm sure that the share price go gradually up.

And the trees at least.

Reach to the 11 lofty equity on the company and then we won't have any issue and that's measure.

Sure and finally I was hoping maybe you could add a little color to the situation around the calls it 19 bars I know you mentioned in your press release that no. Your robotics chronic cannot provide safe work environment have you seen any renewed interest were increased interest.

And your robotic says as people want to more reliable and stable workforce. It you know can come to work and not have to worry about of ours. Yes. So we have to speak to the answers to.

Two.

Hey.

Foam Dixon from all lined up talking not formed a short segment.

They could all be investment in Hong Kong.

Including investment in automation at this stage I am sure was that following the Corona.

Ill try says.

They really.

Reconsidered, Nick Pell, 60 way to investigate automation, especially because of the corner.

The other segments, we choose the our clients on the food industry.

It is especially in the U.S. small kit.

Hey, we see a growing demand for away I think line of production because of the growing demand for food.

And on their side and a and B a we are optimistic about it to the Cohen, the biotech and that aspect.

He gave us a very good push to the U.S. market.

Okay.

Finally on your electronic component business are you seeing any increased orders as people are that's that's kind of lean towards outsourcing away from a China based on China is an ability to provide a consistent supply chain during the crisis.

Yeah, we see what we see that but but not because of that reason to one day. The phone components. We are walking hidden by hand with the Israeli defense industry.

And they these are the difference into three at the very good year, mainly in the far east mainly in India.

And do we see that to gradually the focus is going to the U.S. market.

And we see a growing demand see formed the a pause mills these really defense industry for components and we've been deduction year in 19.

In the year trends do you see no or supply chain division.

Portion of revenues in the U.S. marcon treated grow.

On account of decreased in the revenues on the said through the far east.

Thank you I look forward to Oh witnessing the success of the company. Thank you.

<unk>.

The next question from Jennifer will sort of come from.

Please go ahead.

Good morning.

Could you talk for just a minute about liquidity.

Like.

Relatively low cash balance.

So I'm just curious if you give us some detail on the plans for 2020.

Yes.

Hey, firmly committed to standpoint too.

We should tell you we strength our liquidity into first quarter of this year.

A true credit lines.

In order to prevent the dilution.

Especially RIDEA contract price.

The so this improved liquidity in addition to our cost reduction it should help us to go through these challenging.

Challenging period.

Okay. Thank you.

Is there any additional questions. Please press star one.

Climb from appalling process, Please press star too.

You are using speaker equipment.

That before preference.

Your questions will be pulled in the order. They are receipt. Please standby, while we pull for more questions.

There are no further questions.

Before I ask Mr. going 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 website Www Dot boss corporate dotcom by Tomorrow Mr., Colin would you like to make your concluding statement.

Yes. Thank you.

I would like to tanks, our dedicated employees and their families our loyal customers and our support to vendors.

Yeah, I would like also to tank or major shareholders falls, a continued support see such a challenging period.

I'm confident that really bus this challenging times successfully.

And that both will emerge well positioned.

Towards sustainable gross profit.

Thank you for joining us today, and I look forward to disrupt pdm effective conclusion of these hence crisis. Thank you.

This concludes the boss fourth quarter and full year 2019 results conference call. Thank you for your participation you May go ahead and disconnect.

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