Q3 2022 BOS Better Online Solutions Ltd Earnings Call

Speaker 1: It cled the U.

Ladies and gentlemen, thank you for standing by. Welcome to the BOSS third quarter 2022 results conference call. All participants are present in listen only mode. Following management's formal presentation, instructions will be given for the question and answer session. For operator 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 as of tomorrow. To this on the line today are Mr. Ziv Dakhal, 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, and 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 .

After this Q&A session, Mr. Zivdeko will give his concluding statement. Mr. Cohen, please go ahead. Hello and thank you for joining our quarterly meeting.

Both working plan is comprised of four key elements.

First, achieve ongoing improvement in financial results. Second, invest in financial results.

in a long-term growth engine. Third.

increase our market share and for

Reduce our operational costs.

During the first 9 months of the year

We have made significant progress in all four key elements of our working plan.

Let's start with the financial results. Our 9 months results show a $750,000 net income.

which bring us close to our annual net income target of $1 million.

as compared to $450,000 of net income last year.

Growth Engine

In the first quarter of the year, our RFID division acquired the assets of the GISH.

which provide inventory counting services mainly for retail stores.

We have completed the operational integration of this long term growth engine, during which we have introduced

efficiencies, as well as achieved significant price upgrades for all of the acquired cash customers.

We expect to see the impact of these actions.

in the result of coming four quarter results. Innovation.

During the year's second quarter, we significantly strengthened the engineering department of the Supply Chain Division.

The purpose of this is to increase the numbers of manufacturers we represent.

These representations are a valuable long-term asset.

that support long-term growth of this division.

We have also invested in the launch of new products to expand our offering to our customers.

For example, during the fourth quarter, the robotic division successfully developed

and installed automatic sorting machines for logistics centers.

which have the potential to be sold to customers that are available in the counterfeit division.

market share

During the first nine months of the year, we participated in four trade shows.

and have been very active in most digital marketing platforms.

We have also successfully varied our procurement resources to provide attractive and competitive offers to our customers.

These steps...

These steps...

geared toward increasing our market share, we are responsible in part for the 13% revenue growth we have seen in the first 9 months of the year.

Operational costs.

In March this year, we purchased part of our facilities and by the end of this year, we will complete the transfer of our robotic division plant to a new facility near our headquarters.

These actions increase efficiencies and in turn are expected to improve our profits commencing the fourth quarter of this year.

This completes my review and now I will be happy to answer your questions.

Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press star 1. If you wish to decline from the polling process, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by while we poll for your questions.

The first question is from Todd Felt of Advisory Group Equity Services. Please go ahead.

Hi Zeev and Yael, congratulations on a great quarter and the progress and the turnaround. I was looking at the improvement of over 20% revenues and earnings, and I know you talked about the acquisition of the GESH and the margin improvements there. Do you see that margins continuing to improve and...

at what level margins are you targeting?

It depends on, thank you Todd for your question, it depends on the vision for example in the supply chain division I think the margin that currently exists I think we'll see the same margin in the next year.

but I believe in year 24 we will see higher margin before we anticipate that the portion of

companies that will represent, manufacturers that will represent will increase and in this segment when you represent manufacturer the margin are higher.

In the RFID division, I think we expect higher gross margin because the effect of the acquisition of the gas affected on the transmission of gas from a gas storm causes some improved jetasse over a higher gross margin.

Reduce the gross margin during the second and the third quarter.

and we completed the round of price upgrade to all of the gash customer price upgrade between 10% to 25% and it will be affected the gross margin going forward so these are the trends that we expect in the...

in the next quarters.

in the next quarters.

By and large, our strategy is to grow.

to places, to market segments, to market to market to markets to arenas in which the the margin is higher than our current margin since we are going to be more professional and more unique in what we're doing facing competition and the markets.

Okay, and speaking of that, regarding market share, have you captured a significant market share in your RFID and supply chain in Israel, and is that why we're focusing a little more on maybe expanding outside of Israel, or is there still a lot of growth potential in Israel? I know we've had mixed results in the past on an international expansion.

Yes.

Regarding international expansion, the first supply chain division, I think about 50% of the business is outside of Israel and the expansion is related directly to the expansion of the Israeli business industry overseas. Regarding the RFID division, we have a...

expand our product offering.

in the LFA Data Vision and by that to grow the business and gain a train our position with the customers and gain a higher market share.

in the Israeli market.

Okay and finally I noticed in your report you mentioned that you had a financial expenses of a $342,000 that was attributed to foreign exchange differences between the shekel and the US dollar. With the US dollar weakening considerably when compared to the shekel since September 30th at the end of the last quarter.

Do you see actually possible financial expense gains from the currency there or is that just something that will continue?

I think there are two trends in the financial expenses. First, the weakness of the Israeli Shekel, again, the US dollar in the fourth quarter actually will reduce the currency expenses difference cost.

But on the other hand, the increase of the interest will increase our financial expenses. I don't know exactly what we lost and what level, but these are the trends.

Okay...

So I believe that

that they, because we took a loan on the third quarter of the year to finance the acquisition of the facilities, we will see increase in the financial expenses in the fourth quarter as compared to the third quarter.

Okay, and do you denominate most of your contracts outside of Israel in US dollars?

Yes, all the contracts outside of Israel are in the US dollars. And recently all the contracts in Israel are linked to the consumer index, linked to the inflation in Israel.

Okay, well all that's very helpful. Congratulations again on a great quarter and I look forward to seeing the continued progress of the company. Thank you. Thank you very much. Thank you. Thank you.

If there are any additional questions, please press star 1. If you wish to decline from the polling process, please press star 2. If you are using speaker equipment kindly with the handset before pressing the numbers, your questions will be pulled in the order they are received. Please stand by while we poll for your questions.

No further questions at this time.

I would now like to turn the call over to Mr. Zivdekal, Chairman, to make a concluding statement. Mr. Zivdekal, please go ahead.

Thank you for joining us today. Well, this quarter was characterized by the continued execution of our plans, successful execution of our plans of business improvement, capabilities build-up, and solution offering expansion, which Eyal and the team are successfully leading. Accordingly, we are going to continue to work together to ensure that our plans are successful and that our plans are successful. Thank you for joining us today. We hope you enjoyed this video. Please subscribe to our channel and share it with your friends. Thank you for joining us today. We hope you enjoyed this video.

We are already expected the notable achievement of realizing our targets for 2022. Looking forward to Q4. Onwards, I trust Real and the management to further implement Boss's strategy to yield up top-line growth and increasing 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 meet with you at our next quarterly call.

Thank you.

I would like to remind participants that a replay of this call will be available on the company's website, www.bosscomm.com, by tomorrow. This concludes BOSS third quarter 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.