BOS Reports Second Quarter of 2020 Financial Results
August 26 2020 - 7:00AM
BOS Better Online Solutions Ltd. (“BOS” or the “Company”) (NASDAQ:
BOSC), a global provider of intelligent systems and services for
production and logistics, reported its financial results for the
second quarter and six months ended June 30, 2020.
Eyal Cohen, BOS CEO, stated: "Despite the
outstanding performance of our Supply Chain and RFID divisions, we
had a net loss of $1.4 million in the first half of the year. The
loss was primarily derived from a write off of the entire
intangible assets of the Robotics business and an impairment of its
inventory, in a total amount of $1.7 million.”
Operational Profit (loss) by divisions
(U.S. dollars in
thousands) |
Six months ended June 30, |
2020 |
2019 |
Supply Chain |
613 |
568 |
RFID |
354 |
(284) |
Intelligent Robotics |
(2,215) |
41 |
Operating profit (loss) |
$ (1,248) |
$ 325 |
Eyal Cohen added: "We are effecting a turnaround
process in our Robotics business, which is longer and deeper than
initially anticipated. We are at the final stages of restructuring
the operational side of the Robotics business to improve our
competitive advantage. We have significantly reduced the cost of
materials for our products and our operational expenses, and
implemented additional controls to prevent future losses due to
underestimated costs of projects.
"The COVID 19 pandemic has made it much more
difficult for the Robotics business to penetrate the U.S. market,
which we have targeted as a key market for this business. In
response, we are making personnel changes in the U.S. sales team
and are adjusting the U.S. marketing activity. Also, we believe
that our success in reducing the cost of materials improves our
chances of growing the revenues of our Robotics business line in
the rest of the world. Consequently, we have decided to work
extensively towards increasing our network of distributors outside
of the United States.
"Historically, BOS has been able to overcome
challenges presented in connection with other acquisitions such as
of the Supply Chain division and the RFID divisions, which
experienced substantial operating losses before becoming
profitable.
"There is no doubt that the Robotics business is
the toughest challenge we have faced to date. However, with a clear
plan for action in the near-term and a firm commitment of BOS'
employees and management to success, we believe that the Robotics
business will reach an operational breakeven point in the fourth
quarter of this year."
Outlook for the second half of the year
2020"Revenues for the first six months of year 2020
amounted to $14.9 million compared to $16.5 million in the
comparable period last year. The decrease was primarily
attributable to the effects of the Covid 19 pandemic on sales of
all of the Company’s operating businesses. We expect that we will
make up for this shortfall in the second half of year 2020 so that
the year 2020 revenues will remain the same as in the year
2019.
"Based on the strong relative performance of our
Supply Chain and RFID divisions in the first half of the year and
the restructuring of the Robotics business operations, we further
anticipate that BOS will return to a net profit in the third
quarter of this year.”
Conference Call DetailsBOS will
host a conference call on Wednesday, August 26, 2020 at 10:00 a.m.
EDT – 5:00 p.m., Israel Time. A question-and-answer session will
follow management’s presentation. To access the conference call,
please dial one of the following numbers:US: +1-888-281-1167,
International: +972-3-9180644.For those unable to listen to the
live call, a replay of the call will be available the next day on
the BOS website: www.boscom.com
About BOS
BOS is a global provider of intelligent systems and
services for production and logistics. BOS’ Robotics and RFID
Division, offers intelligent robotics and RFID systems for
industrial and logistics processes and retail store management.
BOS’ Supply Chain Division provides electronic components, mainly
for the aerospace, defense, and other industries worldwide. Its
services include the consolidation of electronic components from a
vast number of suppliers, long term scheduling, and kitting. For
more information, please visit:www.boscom.com | Robotics at
www.imdecol.com | RFID at www.dimex.co.il | Supply Chain
at www.Odem.co.il
Company Contact: Eyal Cohen, BOS'
CEO +972-542525925 | eyalc@boscom.com
Use of Non-GAAP Financial
Information
BOS reports financial results in accordance with
U.S. GAAP and herein provides some non-GAAP measures. These
non-GAAP measures are not in accordance with, nor are they a
substitute for, GAAP measures. These non-GAAP measures are intended
to supplement the Company’s presentation of its financial results
that are prepared in accordance with GAAP. The Company uses the
non-GAAP measures presented to evaluate and manage the Company’s
operations internally. The Company is also providing this
information to assist investors in performing additional financial
analysis that is consistent with financial models developed by
research analysts who follow the Company. The reconciliation set
forth below is provided in accordance with Regulation G and
reconciles the non-GAAP financial measures with the most directly
comparable GAAP financial measures.
Safe Harbor Regarding Forward-Looking
Statements
The forward-looking statements contained herein
reflect management’s current views with respect to future events
and financial performance. These forward-looking statements are
subject to certain risks and uncertainties that could cause the
actual results to differ materially from those in the
forward-looking statements, all of which are difficult to predict
and many of which are beyond the control of BOS. These risk
factors and uncertainties include, amongst others, the dependency
of sales being generated from one or few major customers, the
uncertainty of BOS being able to maintain current gross profit
margins, inability to keep up or ahead of technology and to succeed
in a highly competitive industry, failure to successfully integrate
and achieve the potential benefits of the acquisition of the
business operations of Imdecol Ltd. (the Robotics business line),
inability to maintain marketing and distribution arrangements and
to expand our overseas markets, uncertainty with respect to the
prospects of legal claims against BOS, the effect of exchange rate
fluctuations, general worldwide economic conditions, the impact of
the COVID-19 virus and continued availability of financing for
working capital purposes and to refinance outstanding indebtedness;
and additional risks and uncertainties detailed in BOS’ periodic
reports and registration statements filed with the U.S. Securities
and Exchange Commission. BOS undertakes no obligation to publicly
update or revise any such forward-looking statements to reflect any
change in its expectations or in events, conditions or
circumstances on which any such statements may be based, or that
may affect the likelihood that actual results will differ from
those set forth in the forward-looking statements.
CONSOLIDATED STATEMENTS OF
OPERATIONS |
U.S. dollars in thousands |
|
|
Six months ended June 30, |
|
Three months ended June 30, |
|
2020 |
|
2019* |
|
2020 |
2019* |
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
Revenues |
$ |
14,946 |
|
|
$ |
16,549 |
|
|
$ |
7,478 |
|
|
$ |
8,786 |
|
Cost of revenues |
|
11,718 |
|
|
|
13,167 |
|
|
|
6,048 |
|
|
|
7,054 |
|
Inventory Impairment |
|
671 |
|
|
|
- |
|
|
|
552 |
|
|
|
- |
|
Gross profit |
|
2,557 |
|
|
|
3,382 |
|
|
|
878 |
|
|
|
1,732 |
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
Research and development |
|
21 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
Sales and marketing |
|
1,953 |
|
|
|
1,899 |
|
|
|
846 |
|
|
|
998 |
|
General and administrative |
|
843 |
|
|
|
1,158 |
|
|
|
394 |
|
|
|
585 |
|
Impairment of Goodwill and intangible assets |
|
988 |
|
|
|
- |
|
|
|
988 |
|
|
|
- |
|
Total operating costs and expenses |
|
3,805 |
|
|
|
3,057 |
|
|
|
2,231 |
|
|
|
1,583 |
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
(1,248 |
) |
|
|
325 |
|
|
|
(1,353 |
) |
|
|
149 |
|
Financial expenses, net |
|
(137 |
) |
|
|
(129 |
) |
|
|
(81 |
) |
|
|
(127 |
) |
Income before taxes on income (loss) |
|
(1,385 |
) |
|
|
196 |
|
|
|
(1,434 |
) |
|
|
22 |
|
Taxes on income |
|
- |
|
|
|
20 |
|
|
|
- |
|
|
|
2 |
|
Net income (loss) |
$ |
(1,385 |
) |
|
$ |
176 |
|
|
$ |
(1,434 |
) |
|
$ |
20 |
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per share |
$ |
(0.32 |
) |
|
$ |
0.05 |
|
|
$ |
(0.34 |
) |
|
$ |
0.00 |
|
Weighted average number of shares used in computing basic net
income per share |
|
4,265 |
|
|
|
3,845 |
|
|
|
4,273 |
|
|
4,040 |
|
Weighted average number of shares used in computing diluted net
income per share |
|
4,265 |
|
|
|
3,847 |
|
|
|
4,273 |
|
|
4,042 |
|
|
|
|
|
|
|
|
|
Number of outstanding shares as of June 30, 2020 and
2019 |
|
4,318 |
|
|
|
4,258 |
|
|
|
4,318 |
|
|
4,258 |
|
|
* The Intelligent Robotics
division has been consolidated since June 1, 2019
|
CONSOLIDATED BALANCE
SHEETS |
(U.S. dollars in thousands) |
|
|
June 30, 2020 |
|
|
December 31, 2019 |
|
(Unaudited) |
|
(Audited) |
ASSETS |
|
|
|
|
|
CURRENT ASSETS: |
|
|
Cash and cash equivalents |
$ |
447 |
|
$ |
339 |
Restricted bank deposits |
|
175 |
|
|
240 |
Trade receivables |
|
8,726 |
|
|
10,063 |
Other accounts receivable and prepaid expenses |
|
1,533 |
|
|
1,273 |
Inventories (includes inventory in process in the amounts of $1,199
and $576 as of June 30, 2020, and December 31, 2019,
respectively) |
|
5,972 |
|
|
5,407 |
|
|
|
|
Total current assets |
|
16,853 |
|
|
17,322 |
|
|
|
|
LONG-TERM ASSETS |
|
126 |
|
|
155 |
|
|
|
|
PROPERTY AND EQUIPMENT, NET |
|
1,155 |
|
|
1,257 |
|
|
|
|
OPERATING LEASE RIGHT-OF-USE ASSETS, NET |
|
1,043 |
|
|
720 |
|
|
|
|
OTHER INTANGIBLE ASSETS, NET |
|
50 |
|
|
598 |
|
|
|
|
GOODWILL |
|
4,676 |
|
|
5,147 |
|
|
|
|
Total assets |
$ |
23,903 |
|
$ |
25,199 |
|
CONSOLIDATED BALANCE
SHEETS |
(U.S. dollars in thousands) |
|
|
June 30, 2020 |
|
December 31, 2019 |
|
(Unaudited) |
|
(Audited) |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
Short term loans and current maturities of long term loans |
$ |
1,062 |
|
$ |
664 |
Operating lease liabilities, current |
|
478 |
|
|
551 |
Trade payables |
|
6,205 |
|
|
6,503 |
Employees and payroll accruals |
|
812 |
|
|
1,007 |
Deferred revenues |
|
845 |
|
|
836 |
Advances net of inventory in progress |
|
56 |
|
|
29 |
Accrued expenses and other liabilities |
|
240 |
|
|
419 |
|
|
|
|
Total current liabilities |
|
9,698 |
|
|
10,009 |
|
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
Long-term loans, net of current maturities |
|
1,893 |
|
|
2,041 |
Operating lease liabilities, non-current |
|
654 |
|
|
289 |
Accrued severance pay |
|
313 |
|
|
303 |
|
|
|
|
Total long-term liabilities |
|
2,860 |
|
|
2,633 |
|
|
|
|
SHAREHOLDERS' EQUITY |
|
11,345 |
|
|
12,557 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
23,903 |
|
$ |
25,199 |
|
CONDENSED CONSOLIDATED
EBITDA |
(U.S. dollars in thousands) |
|
|
Six months ended June 30, |
|
Three months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
Operating income (loss) |
$ |
(1,248 |
) |
|
$ |
325 |
|
$ |
(1,353 |
) |
|
$ |
149 |
Add: |
|
|
|
|
|
|
|
Impairment of Goodwill and other intangible assets |
|
988 |
|
|
|
- |
|
|
988 |
|
|
|
- |
Amortization of intangible assets |
|
32 |
|
|
|
19 |
|
|
6 |
|
|
|
14 |
Stock based compensation |
|
39 |
|
|
|
39 |
|
|
18 |
|
|
|
20 |
Depreciation |
|
142 |
|
|
|
134 |
|
|
71 |
|
|
|
69 |
EBITDA |
$ |
(47 |
) |
|
$ |
517 |
|
$ |
(270 |
) |
|
$ |
252 |
|
|
SEGMENT INFORMATION
|
(U.S. dollars in
thousands) |
|
|
|
|
|
|
|
RFID |
Supply
Chain Solutions |
Intelligent Robotics |
Consolidated |
|
|
|
|
|
|
Six months ended June 30, 2020 |
|
|
|
|
|
Revenues |
$ |
5,669 |
$ |
8,976 |
$ |
301 |
|
$ |
14,946 |
|
|
|
|
|
|
Inventory
Impairment |
$ |
- |
$ |
- |
$ |
(671 |
) |
$ |
(671 |
) |
|
|
|
|
|
Gross profit
(loss) |
$ |
1,474 |
$ |
1,869 |
$ |
(786 |
) |
$ |
2,557 |
|
|
|
|
|
|
Impairment
of Goodwill and intangible assets |
$ |
- |
$ |
- |
$ |
(988 |
) |
$ |
(988 |
) |
|
|
|
|
|
Operating
Income (loss) |
$ |
354 |
$ |
613 |
$ |
(2,215 |
) |
$ |
(1,248 |
) |
|
|
|
|
|
Balance of
Goodwill and other intangible assets related to segment |
$ |
4,726 |
$ |
- |
$ |
- |
|
$ |
4,726 |
|
|
|
|
|
|
|
RFID |
Supply
Chain Solutions |
Intelligent Robotics |
Consolidated |
|
|
|
|
|
|
Six months ended June 30, 2019 |
|
|
|
|
|
Revenues |
$ |
6,697 |
|
$ |
9,616 |
$ |
236 |
$ |
16,549 |
|
|
|
|
|
Gross
profit |
$ |
1,338 |
|
$ |
1,978 |
$ |
66 |
$ |
3,382 |
|
|
|
|
|
Operating
Income (loss) |
$ |
(284 |
) |
$ |
568 |
$ |
41 |
$ |
325 |
|
|
|
|
|
Balance of
Goodwill and other intangible assets related to segment |
$ |
4,746 |
|
$ |
- |
$ |
1,416 |
$ |
6,162 |
|
|
|
|
|
SEGMENT INFORMATION
|
(U.S.
dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RFID |
Supply
Chain Solutions |
Intelligent Robotics |
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
2,385 |
$ |
4,895 |
$ |
198 |
|
$ |
7,478 |
|
|
|
|
|
|
Inventory
Impairment |
$ |
- |
$ |
- |
$ |
(552 |
) |
$ |
(552 |
) |
|
|
|
|
|
Gross profit
(loss) |
$ |
534 |
$ |
1.01 |
$ |
(665 |
) |
$ |
878 |
|
|
|
|
|
|
Impairment
of Goodwill and intangible assets |
$ |
- |
$ |
- |
$ |
(988 |
) |
$ |
(988 |
) |
|
|
|
|
|
Operating
Income (loss) |
$ |
33 |
$ |
429 |
$ |
(1,815 |
) |
$ |
(1,353 |
) |
|
|
|
|
|
Balance of
Goodwill and other intangible assets related to segment |
$ |
4,726 |
$ |
- |
$ |
- |
|
$ |
4,726 |
|
|
|
|
|
|
|
RFID |
Supply
Chain Solutions |
Intelligent Robotics |
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
2,973 |
|
$ |
5,577 |
$ |
236 |
$ |
8,786 |
|
|
|
|
|
Gross
profit |
$ |
538 |
|
$ |
1,128 |
$ |
66 |
$ |
1,732 |
|
|
|
|
|
Operating
Income (loss) |
$ |
(268 |
) |
$ |
376 |
$ |
41 |
$ |
149 |
|
|
|
|
|
Balance of
Goodwill and other intangible assets related to segment |
$ |
4,746 |
|
$ |
- |
$ |
1,416 |
$ |
6,162 |
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