BOS Better Online Solutions Ltd (BOSC) 2020 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the BOS Second 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 on the line today is Mr. Eyal Cohen, CEO.

Before I turn the call over to Mr. Cohen, I would like to remind everyone the 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 and 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. Mr. Cohen, please go ahead.

Thank you. Dear shareholders, the press release describes in detail our challenges with the Robotics business. The turnaround process of the Robotics business is longer and deeper than initially anticipated. Despite the write-off of our investment in the Robotics business during the second quarter, we have made significant progress in the business operations side. Still we have challenges on the sell-side of the Robotics business. I'm putting all my time and efforts to improve the robotic sales platform effectiveness worldwide, strengthen our competitive advantage, search for strategic partnerships and keep the Robotics business intact, even growing and fill the back through itself.

Revenues for the first 6 months of year '20 decreased to $15 million from $16.6 million in the first 6 months of year '19. The decrease was primarily attributed to the effect of the COVID on third -- on the RFID and Supply Chain division. We expect that we will make up for this shortfall in the second half of year '20, so that the year '20 revenues will remain the same as in year '19, meaning $34 million annual revenues.

Despite the decrease in revenues, the RFID and Supply Chain division tripled their operational profit from $300,000 in the first 6 months of year '19 to $1 million in the first 6 months of year '20. Based on strong relative performance of our Supply Chain and RFID division in the first half of the year and the restructuring of the Robotics business operation and the write-off we made, we further anticipate that BOS will return to a net profit in the third quarter of this year.

That completes my review, and now I will take questions.

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

Eyal, I just wanted to clarify a couple of things. There will be no more write-offs in the Robotics going forward. Is that correct?

Yes. As I mentioned before, in this quarter, we -- in the second quarter, we wrote off all the investment in the Robotics business. The assets that we have in the Robotics business was intangible assets, goodwill, and we also wrote off a part of the inventory. So we don't expect further write-off in the -- going forward.

Okay. And if I'm doing the math right, it looks like the RFID and Supply Chain earned about $0.19 a share in the first 6 months of the year. And do we expect that business to continue to be strong and hopefully, the Robotics won't pull this back further?

Yes. As I just said in my review that the RFID and the Supply Chain had very good first quarter despite the decrease in revenues, but the bottom line was better than the year '19. I don't see a reason why the second half of the year won't be the same. So together with the cost reduction we made in the Robotics business and the restructuring we made and the go-to scenario we did, I hope and I believe that the second half of the year we will have better news to share with you.

Okay. And on the Robotics, when can we start expecting some sales in the U.S. or in other countries? Can you kind of give us some color on how the sales are proceeding?

The sales -- our initial plan was that the sales in the U.S. will start this year. We opened the sales office in the U.S. at the beginning of the year. Unfortunately, it didn't work. And the COVID made penetration process much more harder than it is usually -- than is usual. And we are now doing a personnel change in the U.S. office.

And in addition to the effort we -- in addition to the effort in the U.S. sales office, we already -- we also invest effort to expand our sales net of chains in the rest of the world, meaning to add more distributors in the rest of the world. Currently, we have just 2, and we want to triple it by the end of this year. So we are putting a lot of effort in this channel as well.

So if at the beginning of the year, we put all of our efforts in the -- mainly in the U.S. market, now we split it over the U.S. market, Israel and the rest of the world.

(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 website, www.boscom.com by tomorrow.

Mr. Cohen, would you like to make your concluding statement?

Yes. Thank you. Thank you for joining the call today. My team and I will work for better news for our next press release -- financial press release. Thank you very much for joining us.

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