Bos Better Online Solutions Ltd Q1 FY2020 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the BOS First Quarter 2020 Results Conference Call. All participants at present are 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 online today is Mr. Eyal Cohen, CEO. 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, changes in economic conditions, risks and product and technology development and the effect of the company’s accounting policies as well as certain of the 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. Mr. Cohen, please go ahead.

Thank you. Dear shareholders, our RFID and supply chain businesses did very well in the first quarter of the year. The backlog of our supply chain continued to grow in the first quarter of the year. The growth was attributed mainly to the expansion of our supply chain businesses in the U.S. Our RFID business performance in the first quarter was outstanding and above expectations. This is mainly attributed to the cost reductions we started to implement in the first quarter of this year, and it is expected to fully take effect in the second quarter. Our primary and most crucial challenge for the year 2020 is to achieve significant penetration of our robotic business in the U.S. market, which we consider our strategic market with the highest potential for our robotics business. To achieve that target, my team and I are investing enormous efforts to support our U.S. sales office. It is not an easy task, especially with the current situation of the coronavirus in the U.S., but we need to complete this mission by the end of this year. That completes my financial review and business review. Now I will take your questions. Thank you.

Thank you, ladies and gentlemen. The first question is from Igor Wasserman of SIG. Please go ahead.

Hello. Hello.

Yes.

Hi. I had a question about backlog, how the current backlog is compared to the backlog at the year end 2019?

Okay. The backlog that I mentioned in the press release reflects the backlog for delivery at the year end 2020. So, the total backlog as of March 2020 amounted to $16 million, which, as I said, $12 million is expected to be delivered during this year, compared to the total backlog as of December 2019 which was $13 million. So, we have a growth of $3 million in the backlog during the first quarter of 2020 from $13 million to $16 million.

Okay, thank you. And another question, what industries do you target with your robotics products?

Okay. We are targeting the plastic manufacturing industry for food in the U.S. This is the target market, this is our target client, and this is a target territory. In that territory, we have about 100 target clients that meet our criteria, that need our robots, and that currently use robots from our competitors, which are European competitors. We believe we have a place and we can take market share in the U.S. market, which is relatively the biggest market in the world.

Okay, thank you. Thank you very much.

Thank you, Igor.

The next question is from Todd Felte of RHK Capital. Please go ahead.

Congratulations. First on your return to profitability, it was also nice to see the outlook given in the press release forecasting sales growth from 2019, which should make 2020 revenues another all-time record for the company. My question is that in the United States, there have been many food processing plants shutting down due to the spread of COVID-19 among the workers in these facilities. Can you talk about the opportunity and growth potential that BOS has in the sector?

Yes. So, in general, robots can replace the human workforce. The current period proved the necessity of using robots. Especially, it increases efficiency as well. BOS robots enable plastic manufacturers to produce food packaging by In Mold Label technology. By that technology, the label is an integral part of the plastic package and not merely attached to it. I think we are in the right time in the U.S. because the U.S. government supports the local industry and food industry is a relatively stable market with stable demand for food. Adding to that, the trade war with China presents us with ideal conditions for penetrating the U.S. market.

Great, thank you very much.

Thank you, Todd.

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.boscorporate.com, by tomorrow. Mr. Cohen, would you like to make your concluding statements?

Yes, thank you. Thank you for joining our call today. We have 2 months until our next call, which will be in August. I hope we will have significant progress in our plans for the robotic business, and I will keep you posted. Thank you very much.

This concludes BOS first quarter 2020 results conference call. Thank you for your participation. You may go ahead and disconnect.