BOS Better Online Solutions Ltd (BOSC) 2023 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the BOS conference call. (Operator Instructions) As a reminder, this conference call is being recorded and will be available on the BOS website as of tomorrow.

女士們先生們，謝謝你們的支持。歡迎參加 BOS 電話會議。 （操作員說明）謹此提醒，本次電話會議正在錄製中，並將於明天在 BOS 網站上發布。

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 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.

在我把電話轉給科恩先生之前，我想提醒大家，有關各公司業務、財務狀況和經營業績的前瞻性陳述受到風險和不確定性的影響，這可能導致實際結果存在重大差異來自那些所考慮的。此類前瞻性陳述包括但不限於產品需求、定價、市場接受度、不斷變化的經濟狀況、風險以及產品和技術開發以及公司會計政策的影響以及某些其他風險因素，這些都詳細說明了不時出現在公司向各證券監管機構提交的文件中。

I would now like to turn the call over to Mr. Eyal Cohen, CEO.

我現在想將電話轉給執行長 Eyal Cohen 先生。

Thank you. Thank you for joining our call today. On the call with me today is Mr. Ziv Dekel, Chairman; and Moshe Zelter, CFO. I'm excited to launch our new conference call from [March] through Zoom, which is live with the management presentation.

謝謝。感謝您今天加入我們的電話會議。今天與我通話的是主席 Ziv Dekel 先生；和財務長 Moshe Zelter。我很高興能夠從 [3 月] 透過 Zoom 啟動我們的新電話會議，該電話會議與管理層演示一起進行直播。

The result of the first half of the year '23 were above our expectation. Compared to the first half of '22 revenues grew by 11%, EBITDA by 56% and the net income by 168%, and the EPS by 144%. In 2 years' perspective, our performance has been improved very consistently. Compared to year '20, our last 12 months revenue grew by 31% to $44 million. Our EBITDA increased by 342% to $3.1 million, a net loss of $1 million in year '20, turned into income of $2.5 million in the last 12 months ended June.

23年上半年的結果超出了我們的預期。與 22 年上半年相比，營收成長了 11%，EBITDA 成長了 56%，淨利潤成長了 168%，每股盈餘成長了 144%。從兩年的角度來看，我們的業績一直在持續改善。與 20 年相比，我們過去 12 個月的營收成長了 31%，達到 4,400 萬美元。我們的 EBITDA 成長了 342%，達到 310 萬美元，20 年淨虧損 100 萬美元，在截至 6 月的過去 12 個月裡變成了 250 萬美元的收入。

Our balance sheet has significantly (inaudible) over those year -- those years. Our shareholders' equity increased from $12 million at the end of '20, year '20 to [$18 million] in June '23. Our bank loans remain roughly the same around $2 million. The business trends that impacted our business results in the first half of this year were in terms of demand from the Israeli defense market that has had positively affected the growth of our Supply Chain division. Those demands are attributed to the military conflict in Europe and in the Middle East. Those demands will probably continue to support our Supply Chain division growth in this year.

我們的資產負債表在那些年裡發生了顯著的變化（聽不清楚）。我們的股東權益從 20 年 20 年底的 1,200 萬美元增加到 23 年 6 月的[1,800 萬美元]。我們的銀行貸款大致維持在 200 萬美元左右。今年上半年影響我們業務績效的業務趨勢是以色列國防市場的需求，這對我們供應鏈部門的成長產生了積極影響。這些要求歸因於歐洲和中東的軍事衝突。這些需求可能會持續支持我們今年供應鏈部門的成長。

Our Robotics division is in transitioning toward the Israeli defense market. And currently, most of our project in process are attributed to one of the major defense companies in Israel. There are signs of slowdown in the Israeli civil market, which negatively impacting -- impacted the RFID division revenues in the second quarter of this year.

我們的機器人部門正在向以色列國防市場轉型。目前，我們正在進行的大部分項目都歸功於以色列的一家主要國防公司。以色列民用市場出現放緩跡象，這對 RFID 部門今年第二季的收入產生了負面影響。

Our growth strategy is based on both organic growth and M&A. The key elements of our organic growth and strengthening our competitiveness by adding more brands to our existing offering, developing new markets by expanding our offering with complementary technologies, keeping the high market presence through trade shows and digital market.

我們的成長策略是基於有機成長和併購。我們有機成長和增強競爭力的關鍵要素是在現有產品中添加更多品牌，透過補充技術擴展我們的產品來開發新市場，透過貿易展覽和數位市場保持較高的市場佔有率。

At this stage, I want to turn the call to Mr. Ziv Dekel, our Chairman, who will elaborate on our M&A strategy. Thank you.

現階段，我想致電我們的董事長 Ziv Dekel 先生，他將詳細說明我們的併購策略。謝謝。

Thank you, Eyal, and good morning and afternoon to everybody. The second dimension of our growth planning is, as Eyal mentioned, the M&A strategy. Within this framework, the typical profile of the target acquisition is of 5 criteria. The first criteria will be that the company -- the acquisition company has a strong competitive position with last 3 years of profitable results track record.

謝謝你，Eyal，祝大家早安、下午好。正如埃亞爾所提到的，我們成長規劃的第二個維度是併購策略。在此框架內，目標收購的典型特徵有 5 個標準。第一個標準是該公司（收購公司）具有強大的競爭地位，並擁有過去 3 年的獲利業績記錄。

The second one, the second criteria is that in terms of the company's business model, it will be of a significant high portion of recurrent revenues and not (inaudible). Market dynamics should reflect an attractive market conditions, such as growth, level of innovation, fundamentally high margins and so on and so forth. The fourth and fifth (inaudible) are of -- one will be the size of the target company, of which we -- it would be -- it would exceed $5 million of our new revenues. And our planned investment is up to $5 million with target equity share of around 51%. Thus, we are also hedging our forward-looking risk.

第二個，第二個標準是，就公司的業務模式而言，它將佔經常性收入的很大一部分，而不是（聽不清楚）。市場動態應反映有吸引力的市場條件，例如成長、創新水平、根本上的高利潤率等等。第四和第五（聽不清楚）是——其中之一是目標公司的規模，其中我們——它將——將超過我們新收入的 500 萬美元。我們的計畫投資額為500萬美元，目標股權比例約51%。因此，我們也在對沖我們的前瞻性風險。

To [define discover] our search, we first need to categorize process, our business goal. As it will be the basis for leveraging hard, soft and high-level synergies. This element is very important due to comparing or keeping our risk profile [intangibles]. RFIDs are traditional hard-core business, automation comes next, supply chain and high above is the improved technologies of innovation process representing the highest the broadest scope of our capabilities, know-how and fine expertise. This slide is described our BOS' specific scope of M&A in which we are going to focus. The scope is defined by the deviation of BOS' around business -- amongst our scope of business and scope of clients.

為了[定義發現]我們的搜索，我們首先需要對流程（我們的業務目標）進行分類。因為它將成為利用硬、軟和高水準協同作用的基礎。由於比較或維持我們的風險狀況[無形資產]，此要素非常重要。 RFID 是傳統的核心業務，其次是自動化、供應鏈，最上面的是創新流程的改進技術，代表了我們最高、最廣泛的能力、專業知識和專業知識。這張投影片描述了我們的 BOS 我們將重點關注的具體併購範圍。這個範圍是由 BOS 圍繞業務的偏差來定義的—我們的業務範圍和客戶範圍。

Our strategy is to include targets around our core business. Also, we will look for targets in the -- adjacent to the core, and it may be that we will find some opportunities in the higher -- in the next quarter area. These targets will require -- are required to be very, very attractive. We run a structured process which comprises of 6 phases. I will now take you along of each phase now that you could be all aligned. The first phase is engage with an agent. This is done. We are currently engaging with 2 or 3 agents that are doing the search, intensive and comprehensive search for us along the criteria that we -- that I elaborated further.

我們的策略是圍繞我們的核心業務制定目標。此外，我們將在與核心相鄰的區域尋找目標，我們可能會在下個季度的更高區域找到一些機會。這些目標需要非常非常有吸引力。我們運行一個包含 6 個階段的結構化流程。現在，我將帶您了解每個階段，現在您已經可以全部對齊了。第一階段是與代理人接洽。這個做完了。我們目前正在與 2 或 3 個代理商合作，他們正在按照我進一步闡述的標準為我們進行密集和全面的搜索。

The second phase is defining the scope of M&A. We're doing it currently together. Third phase is to have -- to acquire a list of target companies. Phase four and the most attractive one, we will do meetings. And then, of course, due diligence and raising the equity. Sixth phase also is, of course, the closing phase.

第二階段是界定併購範圍。我們目前正在一起做這件事。第三階段是收購目標公司名單。第四階段也是最具吸引力的階段，我們將舉行會議。當然，還有盡職調查和籌集股本。當然，第六階段也是收官階段。

At looking in broader view, I trust old BOS' team led by Eyal to win this challenging -- this very challenging process actually. And in the broader perspective, actually of the overall to run and manage the overall company strategy and operational plan. Thank you all for your attention.

從更廣泛的角度來看，我相信由 Eyal 領導的老 BOS 團隊能夠贏得這項挑戰——實際上是一個非常具有挑戰性的過程。而從更廣闊的角度來看，其實是整體來運作和管理整個公司的策略和營運計畫。感謝大家的關注。

I will now hand over back the presentation to Eyal.

現在我將把簡報交還給埃亞勒。

Thank you, Ziv. At this time, we will begin the Q&A session. If you have a question, please unmute and present [yourself]. Usually, Todd asks a question. I see that...

謝謝你，齊夫。這時，我們將開始問答環節。如果您有疑問，請取消靜音並展示[您自己]。通常，托德會問一個問題。我看到...

Congratulations on another great quarter. I was a little surprised that the revenues were that high given the devaluation of the shekel. Can you talk a little bit how that has affected you? I know a lot of your contracts are done in U.S. dollars, but I thought it would have more of an effect on your revenue.

恭喜又一個偉大的季度。考慮到謝克爾貶值，收入如此之高，讓我有點驚訝。您能談談這對您有何影響嗎？我知道你們的許多合約都是以美元簽訂的，但我認為這會對你們的收入產生更大的影響。

Okay. Actually, the -- most of our revenues are quoted in dollar, and the effect of the devaluation of the NIS, again, the U.S. dollar is mainly on our operational expenses on one side. And on the other side, in another direction, effect on our financial expenses. When there is a devaluation, our operational expenses decrease, but our financial expenses increase. For the -- from the financial report -- aspect, the strong dollar is good for the performance because of the effect on the operational expenses, which has a higher effect than the effect on the financial expenses. But on the long term, I think that the devaluation of the NIS [closing] to inflation, then after we have to upgrade and to update our employees' payroll.

好的。事實上，我們的大部分收入都是以美元計價的，而新謝克爾貶值的影響一方面主要是我們的營運支出。另一方面，從另一個方向，對我們的財務支出產生影響。當貨幣貶值時，我們的營運費用會減少，但財務費用會增加。從財務報告的角度來看，強勢美元有利於業績，因為對營運費用的影響比對財務費用的影響更大。但從長遠來看，我認為新謝克爾的貶值[接近]通貨膨脹，然後我們必須升級並更新我們員工的薪資單。

Okay. That's helpful. I was also wondering if you could comment on some of your growth. I know a lot is coming from the Israeli defense industry. In the last couple of years, you've had some new business with countries like Saudi Arabia and also moving into some new verticals, I think retail and clothing lines, can you kind of talk about the growth and where this is coming from?

好的。這很有幫助。我還想知道你是否可以評論一下你的一些成長。我知道很多來自以色列國防工業。在過去的幾年裡，您與沙烏地阿拉伯等國家開展了一些新業務，並進入了一些新的垂直領域，我認為是零售和服裝系列，您能談談成長情況以及成長的來源嗎？

Okay. The growth in the -- we are working in 2 segments. One, the Defense segment which is mainly come from the supply chain, and the recently also the Robotics division did a transition to the defense market. And this market is growing by the sense to the Israeli players. We are not selling directly to the client of the Israeli manufacturers. We are selling to the Israeli manufacturer, to their subcontractor out around the world. And in the recent years, they are growing demands. And all this industry is growing very fast and consistently. So we have a very strong leg in this segment.

好的。我們正在兩個領域開展工作。一是國防領域主要來自供應鏈，最近機器人部門也向國防市場轉型。對以色列企業來說，這個市場正在不斷成長。我們不會直接向以色列製造商的客戶銷售。我們向以色列製造商以及他們在世界各地的分包商銷售產品。近年來，他們的需求不斷增長。所有這個行業都在快速且持續地成長。因此，我們在這一領域擁有非常強大的優勢。

In the Civil segment, we have -- it's the main business of the RFID division. And in the recent period, there were huge investments in logistics center -- centers, and this pushed the growth of this division. And as I mentioned, in the recent quarter, in the second quarter of this year, we faced a sign of a slowdown. We hope it's temporarily, but we are doing a lot of actions to strengthen our competitiveness position in the market. to expand our product offering in order to continue the growth of this division.

在民用領域，我們有—這是 RFID 部門的主要業務。最近一段時間，對物流中心的巨額投資，推動了該部門的成長。正如我所提到的，在最近一個季度，即今年第二季度，我們面臨放緩的跡象。我們希望這只是暫時的，但我們正在採取許多行動來加強我們在市場上的競爭地位。擴大我們的產品供應，以繼續該部門的發展。

Any other questions?

還有其他問題嗎？

Eyal, I wanted to ask you about the intelligent -- Intelligent Robotics division. I see that in the second quarter, you were around breakeven. Do you see another improving in the second half, let's say, to be a little bit profitable or what's the near future that you see for this division? And also, I wanted to ask about the RFID division, which in the first quarter was much better than the second quarter, as you said. But do you see it stabilizing? Or do you think it won't be profitable in the near future? Or it will be stabilized and small net income more or less, what do you see?

Eyal，我想問你有關智能——智慧機器人部門的問題。我發現在第二季度，你們就達到了收支平衡。您是否認為下半年會有所改善，比如說，能夠實現一點盈利，或者您認為該部門的近期前景如何？另外，我想問 RFID 部門的情況，正如您所說，第一季比第二季好得多。但你看到它穩定下來了嗎？還是你認為短期內不會獲利？或者會趨於穩定，淨利或多或少會小一些，你怎麼看？

Okay. Thank you, (inaudible). First, regarding the Robotics division, it's -- today, it's a small division. It had a lot of business risk because of its automation and its project. So we minimize the risk, and we reduce significantly the size of this division. But still, it's very important unit to be in the group because it had a great offer to our customers in the industrial segment and in the logistics segment, and we are in transitioning to our -- to the Defense segment now, and it's going very well. But still, it's a project -- it's company with that [lots of] project with a high risk. And our plan is that this division will be profitable. We reached to a breakeven point, and we hope, and we work very hard that it will continue to be so in the next quarter and in -- then after in the fourth quarter to be -- to generate profits.

好的。謝謝你，（聽不清楚）。首先，關於機器人部門，今天，它是一個小部門。由於其自動化和項目，它存在許多業務風險。因此，我們將風險降至最低，並顯著縮小了該部門的規模。但是，它仍然是該集團中非常重要的部門，因為它為我們的工業領域和物流領域的客戶提供了很好的報價，而且我們現在正在過渡到國防領域，而且進展非常順利。出色地。但它仍然是一個項目——它與[許多]高風險項目相伴。我們的計劃是該部門將實現盈利。我們達到了盈虧平衡點，我們希望並且我們非常努力地工作，在下個季度和第四季度之後繼續保持這種狀態，以產生利潤。

As much as we will extend the penetration to the defense market, I believe the ability to generate significant profits from this division will increase because [without] the customers, the negotiation in this industry is a little bit easier. They have a lot of budget. They are very rich. It's different -- different than the civil industry that has a very, very tight budget and a lot of competition. We have license to work with the defense industry, and we opened a vendor there, so it's advantage.

儘管我們將滲透範圍擴大到國防市場，但我相信從該部門產生顯著利潤的能力將會增加，因為[沒有]客戶，該行業的談判會更容易一些。他們有很多預算。他們非常富有。它與預算非常非常緊張且競爭激烈的民用工業不同。我們有與國防工業合作的許可，我們在那裡開設了一家供應商，所以這是一個優勢。

Regarding the RFID division, it has a direct link to the Israeli GDP. The Israeli economy is growing well. So it's growing. If it's not growing well, so it's not growing. And currently, the civil market in Israel is in a standby, and we feel it -- we see it in the investment in the logistics centers, in the amount -- in the number of logistic centers that opened. But we hope that it's temporarily, and you will see the continuing growth in the Israeli civil market. But still, in this situation, we are working very hard to strengthen our competitive position advantage and to expand our offering to continue to grow. I don't see a risk of this division to turn into loss. I don't see it, not [in this scenario].

至於RFID部門，它與以色列的GDP有直接關聯。以色列經濟成長良好。所以它正在增長。如果它生長得不好，那麼它就不會生長。目前，以色列的民用市場處於待命狀態，我們從對物流中心的投資、金額、開設的物流中心的數量中看到了這一點。但我們希望這只是暫時的，您將看到以色列民用市場的持續成長。但在這種情況下，我們仍然非常努力地加強我們的競爭地位優勢並擴大我們的產品以繼續成長。我不認為這種分割有變成虧損的風險。我沒有看到它，[在這種情況下]沒有。

Any further questions?

還有其他問題嗎？

Okay. So thank you for being with us today and looking forward to meet you again on BOS third quarter call. Thank you again.

好的。感謝您今天接受我們採訪，並期待在 BOS 第三季度電話會議上再次與您見面。再次感謝你。

Thank you, everybody.

謝謝大家。