B.O.S. Better Online Solutions .(BOSC) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased by 36% year over year to $11.5 million in Q2 2025, driven primarily by the supply chain division's performance [5] - Net income surged 53% to $765,000, translating to earnings per share of $13.13 [6] - EBITDA rose to $900,000 from approximately $800,000 in 2024 [6] - Cash and equivalents grew to $5.2 million from $3.6 million at year-end [8] - Contracted backlog increased to $24 million as of June, up from $22 million in March [7] Business Line Data and Key Metrics Changes - Supply chain division revenues increased by 57% to $8.3 million [5] - RFID division experienced a temporary decrease in gross profit margin to 19.1% from 21.1% due to service line challenges [12] - Supply chain division maintained a gross profit margin of 24%, which is considered a sustainable baseline [13] Market Data and Key Metrics Changes - More than 60% of total consolidated revenues are now defense-based, with expectations for growth in 2026 [17] - The company is expanding its offerings to existing customers, particularly in Israel and India [26] Company Strategy and Development Direction - The company is focused on the defense sector while diversifying its customer base [4] - Plans to pursue strategic acquisitions and support organic growth are in place, backed by a strong financial foundation [8] - The company aims to improve margin performance and deliver better bottom-line results in the future [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business trajectory for the remainder of 2025, raising full-year revenue guidance to between $45 million and $48 million [9] - The company anticipates a decline in revenue in the second half of the year compared to the first half due to exceptional first-quarter results and supply chain issues [28] Other Important Information - A non-cash goodwill charge of $700,000 was recorded in the RFID division, offset by favorable currency fluctuations [13] - Deferred revenue increased to $3.2 million from $2 million at year-end, indicating strong booking events [14] Q&A Session Summary Question: What percent of your revenue is now defense-based? - More than 60% of total consolidated revenues are defense-based, with anticipated growth in 2026 due to increasing demand [17] Question: Is the defense business mostly directly with the IDF or through other companies? - The defense business is primarily through Rafael, Elbit, and the Israeli aircraft industry, with recent bids directly with the IDF [18] Question: Why wouldn't a company like Elbit Systems acquire you? - There are no limitations to such an acquisition; it may be a strategic decision on their part [21] Question: Any progress on acquiring other companies? - The company is continuously evaluating at least two acquisition opportunities and will proceed if it benefits shareholders [22] Question: Did you gain any new major customers this quarter? - The growth primarily came from expanding offerings to existing customers rather than new customer acquisition [26] Question: Will the second half of the year see lower revenue compared to the first half? - Yes, the second half is expected to be lower due to exceptional first-quarter results and potential supply chain issues [28] Question: Can you provide more details on the robotics division? - The robotics division is focused on defense clients, with a backlog of $3 million, and is involved in projects with Elbit Systems [32] Question: How much of your business is due to replenishing defense stocks? - The Israeli defense industry is expected to see extensive budget expansion due to ongoing conflicts and the establishment of new production lines [44] Question: What are the international opportunities, particularly in India? - India is a major focus for expansion, with plans to potentially open a local office to capture more business opportunities [48]