Operator
Ladies and gentlemen, thank you for joining us today. My name is Claude, and I will be leading today's presentation. Following the prepared remarks, Eyal Cohen, Chief Executive Officer, and Moshe Zeltzer, Chief Financial Officer, will be available to take your questions. Before we begin, a brief reminder that this call contains forward-looking statements relating to BOS business, financial condition, and results of operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such statements include, but are not limited to, matters relating to product demand, pricing, market acceptance, economic conditions, and technology development, as further detailed in the company's filings with the various securities authorities. With that said, let's get started. BOS is a company built around one idea, that supply chains can be smarter, faster, and more efficient, and that the right technology makes that possible. We pursue that idea through three specialized divisions. Our robotics division replaces manual labor with automated solutions, transforming how inventory is handled. Our RFID division brings precision to tracking and end-of-line automation, from sorting to packing, across the entire supply chain. And our supply chain division works even closer to our clients, integrating our franchised electromechanical components directly into their products. Together, these three divisions give BOS a broad and complementary platform, one that allows us to serve clients across multiple touchpoints in their operations. How we grow. Now, when we talk about growth at BOS, we think about it in two ways. Organic growth, building on what we have, and strategic acquisitions that expand our reach. Over the past four years, the story has been primarily organic, and the numbers speak for themselves. Revenue grew from $33.6 million in 2021 to $51 million in 2025. That is meaningful, sustained growth, built on real demand from real clients. And we believe that demand is only accelerating. Three tailwinds in particular give us confidence. The first is the global increase in defense budgets. This is not a short-term cycle. It is a structural, long-term shift in how governments around the world are prioritizing security. Boss is well-positioned to benefit from this trend for years to come. The second is closer to home. The replenishment and expansion of the Israeli Defense Force's inventory, driven by the conflict that began in October 2023, has created significant and ongoing demand that directly supports our business. The third is newer and very promising. India is rapidly emerging as a major subcontracting hub for global defense programs, and the numbers are already telling that story. In the first quarter of 2026 alone, we received $3.3 million in orders from Indian customers, compared to just $172,000 in the same quarter last year. To capture this momentum and build on it, we appointed an Indian representative company in March 2026 to establish a dedicated presence in that market. We are only at the beginning of what we believe is a significant long-term opportunity. Alongside organic growth, we are actively building our acquisition pipeline and we have the financial strength to act on it. Our balance sheet is solid. Shareholders' equity stands at $29 million and we hold $9.5 million in cash net of loans. That gives us real flexibility. We are targeting companies valued at up to $20 million with two non-negotiable criteria. First, financial strength, a proven track record of profitability and consistent growth. Second, strategic fit. Companies that deepen and expand what we can offer to our existing clients. On the financing side, approximately half of each acquisition will be funded through long-term bank loans, with the remainder coming from our own resources. I want to be clear on one point. No shareholder dilution is expected. Let me now turn to where we stand heading into the rest of 2026, and the picture is an encouraging one. When you combine our backlog of $31 million as of March 31, 2026 with Q1 revenues, we are already at $42.4 million, 83% of our full-year target after just one quarter. As a result, we now expect to exceed our previously announced annual revenue target of $51 million. The depreciation of the U.S. dollar against the new Israeli shekel is creating pressure on our profitability. And as a result, we are maintaining our net income target of $3.6 million for the full year at this stage. We are responding on two fronts, accelerating revenue growth and actively working to improve our gross profit margins. Both of these efforts are already showing up in our Q1 results. Our gross profit margin reached 24.9%, up from 23.9% in the same quarter last year, and our backlog grew 29% during the first quarter from $24 million to $31 million. As we monitor the progress of these initiatives, we will reassess our net income outlook for the full year and update accordingly. I want to close with something that we believe deserves your attention. BOS is a company with a growing backlog, accelerating revenues, a clean balance sheet, and exposure to some of the strongest structural trends in the global economy, defense spending, automation, and supply chain modernization. And yet, BOS currently trades at book value. The Russell 2000, the index of small-cap companies we are measured against, trades at approximately 2.6 times book value. Our price-to-earnings ratio stands at roughly 11 times, compared to 22 times for the index. We believe this gap exists primarily because not enough investors know our story yet. That is what we are working to change, and calls like this one are part of that effort. Ladies and gentlemen, that concludes the prepared remarks. We will now open the floor for questions. Eil Cohen and Moshe Zeltzer are ready to take your questions. Please unmute yourself to begin.
Okay, I hope you enjoyed our new presentation for a month. My only concern with that is English and his voice. Much better than my voice in English. And yours as well. So let's open the floor for a discussion. ready to take your question good morning Al this is a top healthy good morning Moshi just wanted to ask on the devaluation of the dollar with this NIS are you doing anything to hedge or or compensate on that aspect yes we are I think the most efficient way to handle this long-term trend, I believe, of strong checking is to increase the efficiency of the business, because any hedging, any kind of hedging has a limited period. Although we are doing hedging on the balance sheet, not on the P&L, because we are hedging on the balance sheet we receive the fluctuation in the currency differences in the financial expenses or income but for the long term we have to increase the efficiency of the business and we are doing it in based on two pillars the first one is the to increase the service price even though it's in dollar but to increase the gross profit margin to compensate our operational expenses which are quoted in in this and so this is the first one second one is to to grow our business and as we saw our backlog is in this trend in this trend we saw a 30% growth in the first quarter in the and we also saw a growth in the cost-profit margin by one point from 33.9% to 24.9% so we are in the right direction on top of that on top of that we plan to we are working on acquisitions and on good acquisition or as Trump says beautiful acquisitions so a bit of an acquisition based on the criteria we just illustrate
in the video is history of solid history of profit and the high synergy and this is the long-term solution for the devaluation of the door okay thank you that's helpful I know your components are used a lot in the aero and Iron Dome systems as well as missiles and fighter jets. Are any of your components used in drones which seem to be kind of the weapon or defense tool of choice these days?
Not yet. We are on it. Hopefully we will find the right manufacturers to represent is a product to to embed in our clients a product hopefully it should come and my final question in the past you had spoke about the expansion of RFID to different sectors and that you were excited about the expansion of RFID to the healthcare sector how is that progressing So first, we put a team in place with a difference to extend the RFID business to the difference. As we announced, we hired an external company to escrow us through this very complicated process and to short the timeline of the success. so we have team in place to penetrate to the distance, to expand the business of the LPT to the distance. In the hospitals, we are part of the team in place, we have not signed yet. I have to gather together all the ingredients of the team and once it will be ready, I will sign the contract and start the penetration. I know exactly what kind of person, how the team should look like, what is his experience. And once I will have it, we'll start the extension. I believe it will be this year.
Hi, this is Kevin from AGP. So, backlog – thanks for taking our questions, by the way. So backlog increased 29% sequentially to $31 million. Can you break down which of your divisions contributed most to that growth?
Most of the backlog is related to the supply chain division because it has long-term orders. so I this is a primary primarily portion okay thank you and then um what do you attribute some of the early success in the in the Indian market to the success that we we saw in the first quarter in regarding with the amount of orders yes I think it's a long it's this is the initial yield of the of the work we did in the field, we have done in the field in India by our Israeli team. And I believe once we have a local team in place in India, it will urge the process of participating in more beads with more clients, to extend our client-based nerve. So the result you saw in the first quarter was made by our local team in Israel.
Great. Thank you. Thank you. Hello. This is Igor Novgorodsov. I would like to ask your questions now. So first, a comment. I think it's actually a very good quarter, even though it's a circumstance. I think there was a lot of investor caution, and you could see the new stock price giving your prior comments so I think everybody feels that this was a positive result my question is this I'm looking at your RFID results and I see that the profitability is still relatively low was it first of all impacted by the war and the situation this is below and Persian Gulf and so on in this quarter or was it something else and how do you expected by the division to perform hopefully assuming that it's the situation remained or the reality like what for the remainder of the year or how the environment thank you for the question regarding the RFID in the first
quarter during the month of March the division was in the world partially so it damaged the gross profit margin we had a fixed cost with the low revenues during the merge another effect on the gross profit margin was the devaluation of the dollar because our cost of goods includes a lot of workforce all the lapses all the lab team all the warehouse team so it increased the labor cost in dollar but we are working as I mentioned before we are working to increase the cost profit margin of the product we are selling and I believe we will start to see this result in the second quarter of the year so to compensate on the devaluation of the dollar and in the second quarter of the year hopefully until now there is no there is no resumption of the of the conflict of the war so we are in it looks like we are we will be in a good shape in in the second quarter related to the data vision and it will represent important results thank you my other question is first of
obviously you have tremendous expansion in India and now it's a very meaningful revenue from there do you think you can repeat it in many other countries because obviously it's where the defense sector now is highly valued and has customers in many other countries and you think you can have meaningful revenues abroad from other countries than India yeah we have a connection with the two subcontractors in the U.S. and we got revenues from them during this year.
I assume we announced during this year only two major contracts and I believe that the revenue will continue to grow older and we are checking now additional area in the East where the local defense clients here in Israel does this is over there not just in India there are many places in me in the in the Far East that for example I I and L because business owners so we are tracking we are following their tracks there and hopefully we can duplicate the business model that we are that we have in India to other territories so there is a potential, yes.
And my last sort of question or comment, any thoughts of renaming your company, because I think your name is rather now silly, given what you do has nothing to do, you know, better online solutions just really confuses a lot of people.
Yeah, it's a good question. Do you think, do you have a better name?
I can come up with a few, I'm sure Chachipiti can, but it's just it sounds like a late 90s internet company okay i know we talked about it many times but it's a lot of headache to change the name for a company but i believe after several acquisitions that we'll do we'll have to rebrand our business so it will come right i think it would help to during the uh especially if you go to conference and doing presentations because i think a lot of people are dismissed of your business they have no idea that you have anything to do this defense industry of looking at your name so it might be a great idea okay okay but if you have a good recommendation send me I don't have anything else I think about
taking my questions okay thank you I think Scott is missing today any further questions okay so we on behalf of the board of directors of management a Thank you for participation in our Q1-2026 conference call in the new format. I hope you liked it. And if you need more details or would like to follow up, please feel free to reach out. Thank you. Have a great day.
