Bos Better Online Solutions Ltd Q4 FY2021 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the BOS Year 2021 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 is being recorded and will be available on the BOS website as of tomorrow. With us on the line today are 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 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 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. Mr. Cohen, please go ahead.

Thank you. Hello and thank you for joining our quarterly call. The wide product offering of BOS with 2,000 active clients is an excellent platform for business development that will result in long-term organic and external goals. Regarding BOS's supply chain division, I believe that the anticipated increase in the defense budget in Europe will positively impact the division's revenues in 2022 because most of its sales are associated with the Israeli defense industry. Regarding BOS's RFID division, I expect that the acquisition of the Dagesh business that we recently announced will positively impact the revenues of this division in 2022. Regarding the robotics division, the continuing workforce shortage in factories and logistics centers presents a great growth opportunity for this division. To conclude, we anticipate that our revenues for 2022 will exceed $35 million compared to $33.6 million in 2021. On the cost aspect, we have built with micro events that have increased our costs, such as longer lead time products and commodities, which have reduced our operational efficiency and deferred revenues. Inflation in salaries, commodities, and the devaluation of the U.S. dollar against the NIS has increased our operational costs. We are taking extensive actions to pass those costs to our customers. At the macro level, the recovery of the robotics division has been significantly slower than we anticipated and it has negatively affected the 2021 financial results. We continue our efforts to bring the robotics division to a break-even point in 2022. To conclude, we expect net income for 2022 to exceed $1 million as compared to $450,000 in 2021. That completes my review, and I will now take your questions, please.

Thank you. The first question is from Todd Felte of Financial Services.

Hello, thank you for taking my questions. Good morning Eyal and Avi. I was wondering if the supply chain crunch or the war in Ukraine has created any problems or opportunities for the company, can you add some color to that?

Thank you Todd. I believe that the anticipated increase in the defense budget in Europe, due to the current military tension there, will positively impact the division's revenues in 2022 because most of the sales of the supply chain division are to the Israeli defense industry and I assume that this industry will take a significant portion of this military budget.

Okay. And I also had some questions on the expanding business in the UAE. I know that's a new avenue for business that we didn't expect was going to happen a couple of years ago. Is that continuing to expand and do you have any other countries in the region that are starting to give you orders that you weren't expecting?

Currently, the client that we started doing business with a year ago has been providing us with ongoing orders. So the business is going very well, I think. It's a matter of time before, as the Israeli defense industry enters this market, we will increase our revenues in this area as well.

Okay, thanks for taking my questions and congratulations on a good quarter.

Thank you very much.

There are no further questions at this time. Before I ask Mr. Cohen to go ahead with his closing statement, I'd like to remind participants that a replay of this call will be available on the company's website by tomorrow. Mr. Cohen, would you like to make your concluding statement?

Thank you for joining our call today, and I look forward to meeting you on our next call or before you can contact me any time by phone or by email. Thank you.

This concludes the BOS year 2021 results conference call. Thank you for your participation. You may go ahead and disconnect.