BOS Better Online Solutions Ltd (BOSC) 2020 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the BOS Third Quarter 2020 Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded and will be available on the BOS website as of tomorrow. With us online today are Mr. Ziv Dekel, Chairman; and Mr. Eyal Cohen, CEO.

Before I turn the call over to Mr. Ziv, 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, 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 hand the call over to Mr. Ziv Dekel, Chairman. Mr. Dekel, please go ahead.

Thank you. Hello, and thank you for joining our call today.

Encouraged by the progress we have made so far, I would like to share with you my view from 3 different point of views. From a quarter-to-quarter perspective, revenues grew and the operating profit and net income have turned around dramatically. From an annual perspective, all the divisions have made significant progress in sales, marketing, cost structure, efficiency and internal competitive capabilities. From a strategic perspective, the company is now on a very well executed, consistent path of enhancing and fortifying its competitive position and grow its international business, global business with its specific challenges, risks and opportunities.

So I would like to thank you and would like to turn the call to Eyal Cohen, our CEO.

Thank you, Ziv. Hello, and thank you for joining our call today. I am pleased to meet our shareholders' expectations for a profitable third quarter and positive outlook for the fourth quarter this year and for the year '21.

Our Supply Chain and RFID division presented a strong performance in the third quarter and this first 9 months of the year despite the COVID that adversely affected its revenues. The Supply Chain keeps on record profitability and the turnaround in the RFID division continuing in full force.

We are investing in the robotic business to be the growth engine of BOS for the coming years. According to IFR research, worldwide sales of industrial robots have compounded annual growth of 14%. We plan to realize this growth potential by expanding our North American presence, which we have targeted as a key market for our robotic division. At the beginning of the year, we opened a sales office in the U.S., but the COVID pandemic has made the penetration much more complicated than expected. We have adjusted our sales and marketing plan and made personnel changes to the U.S. sales team. I believe that with those changes, we are well positioned -- positioning toward the year '21. Accordingly, we expect BOS revenues for year '21 to exceed $33 million and net profit of above $1 million.

Thank you, and now we will take your questions.

(Operator Instructions) The first question is from Todd Felte of RHK Capital.

Congratulations on a great quarter there, and it was nice to see the turnaround. I appreciate you giving guidance for year 2021, and you had projected $33 million in revenues. What's your current backlog?

Todd, thank you for the question. Our backlog as of the end of the third quarter was $40 million. So we still need to bring new deals in the amount of about $90 million for -- to meet the target of year '21. It is challenging, especially when we don't know the future effect of the COVID on the economy and when the COVID restriction will remove. In addition, we have the challenge of penetrating to the U.S. market in the year '21. So we have lots of work and challenges. And we embrace it, myself, the Board of Directors, officers and all BOS employees.

I would like also to add that Eyal is just now leading us placing in terms the sales, marketing and support infrastructure in the U.S.A. It's a lot of effort. And you begin to see the buildup of this infrastructure, which I believe that will bear fruit as we go along next year, okay, and the years, of course, ahead.

Also, along with the guidance of $33 million, you projected net income of over $1 million. And if I'm doing my math right, that's around $0.25 a share, which seems like your company is fairly undervalued. Are you planning any Investor Relations events or webinars? I know things are tough during COVID, but was just seeing if you had any IR events on the schedule.

Currently, we don't have a IR frame. We don't have IR event. But I believe that next year, we will participate in the conference -- investor conferences. I'm not sure whether we'll take IR frame. I think with the good results, we can -- it will be -- I hope it will be reflected in the share price, but let's see.

Okay. And finally, reading through the financial statements, I see you have a tax loss carryforward of around $70 million, and that's over $16 a share. Have you considered any options to utilize that tax loss carryforward? Or would you be open to being acquired by another company that would want to utilize it?

I think it's a huge benefit. By the way, other companies, in certain cases, record tax assets in the balance sheet and record tax income accordingly. And this will write tax assets on $70 million, I guess we'll to record tax income of about -- more than $10 million. We don't use it. We don't use such accounting, but I'm sure that it could -- we will use it in the future. But it's a great opportunity for other companies as well as our public platform as well. So it's great opportunities for other companies to use such a huge tax loss.

Okay. And now that you've forecasted consistent profitability, then maybe it becomes more of an asset if anyone was looking to acquire you guys. Just finally, it's been a while since we've had any large contract announcements. Can you kind of just give -- add a little color to the pipeline? What types of companies you're targeting? If you expect any announcements in the near future, if you're close on any contracts, just any color since you really haven't had any announcement since July.

Yes. I think that we will start the sales activities in the U.S. in January. We decided to start it after the holidays in the U.S. And I hope that in the first quarter of next year, of year '21, we will have -- we'll be able -- we will release announcement on the contract. This is the plan. Also in the Israeli market, we are penetrating some strategic account here in Israel from the defense industry, from the plastic industry, logistics. And once we will have some -- we will reach to a -- once we will get a strategic order or a significant or significant order, absolutely, we will do -- we will release announcement. And for now, we are investing all our effort to -- in the recent 9 months, actually, all the effort to build the operational platform and the sales platform of the future growth engine of BOS, which is the robotic business. And I hope that news will come in year '21.

Okay. Well, I'll hop back in the queue. Congratulations again on completing the turnaround and for a great quarter.

(Operator Instructions) 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.boscom.com, by tomorrow. Mr. Cohen, would you like to make your concluding statement?

Yes. Thank you. Thank you for joining our call today, and I'm looking forward to meet you again at our next conference call in March '21. Thank you.

This concludes BOS Third Quarter 2020 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.