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B.O.S. Reports First Quarter 2019 Financial Results

RISHON LEZION, Israel, May 30, 2019 (GLOBE NEWSWIRE) -- B.O.S. Better Online Solutions Ltd. (the "Company", "BOS") (Nasdaq: BOSC), a leading Israeli provider of RFID and Mobile solutions and a global provider of Supply Chain solutions to enterprises, today reported its financial results for the first quarter ended March 31, 2019.

Revenues for the first quarter of 2019 were $7.8 million compared to $8.3 million in the comparable quarter last year. The decrease in revenues is attributed to the timing of orders and based on our backlog, we expect to make up the first quarter revenue decrease during the balance of 2019, and realize consolidated revenue growth for the full year. 

Gross profit margin for the first quarter of 2019 increased to 21.3% from 20.0% in the comparable period last year.

General and administrative expenses for the first quarter of 2019 increased to $573,000 from $461,000 in the comparable period last year. The increase is attributed to costs associated with a special shareholders meeting convened at the demand of an activist shareholder, and to expenses related to the Imdecol acquisition. 

Net income for the first quarter of 2019 was $156,000 or $0.04 per basic share  compared to net income of $205,000 or $0.06 per basic share in the first quarter of 2018.

Net income, on a non-GAAP basis, for the first quarter of 2019 was $288,000 or $0.08 per basic share compared to $233,000 or $0.07 per basic share in the comparable quarter last year. Non-GAAP net income excludes amortization of intangible assets, acquisition expenses, stock-based compensation and costs associated with the special shareholders meeting in the first quarter of 2019.

Yuval Viner, BOS’ Co-CEO commented, “During the first quarter we announced our acquisition of Imdecol and anticipate that we will close the acquisition this week.  The addition of Imdecol is a transformative development for our Company that brings advanced technology robotic systems that enhance the productivity of production lines. We are excited about these new capabilities that are expected to significantly expand our product offering and broaden our appeal to a larger base of global customers. 

Eyal Cohen, Co-CEO and CFO “As we move through 2019 we are focused on:

  • Completing Imdecol acquisition and integrating it into BOS,
  • Increasing the global exposure of BOS' enhanced product offering, which would now include robotics systems,
  • Improving the gross profit margin of the RFID and Mobile division,
  • Expanding the offering of our Supply Chain division, and
  • Enhancing the efficiency of our operations.” 

Outlook

In the year 2019 BOS expects that:

  • Revenues will grow from $33 million in year 2018 to above $36 million
  • Non-GAAP net income and Non-GAAP earning per basic shares will grow from $1.1 million or $0.32 per basic share in 2018 to above $1.3 million or $0.34 per basic share 

The net income and earnings per share data is provided on a Non-GAAP basis since this excludes amortization of intangible assets related to the Imdecol acquisition. This amortization is the subject of a purchase price allocation analysis that is currently being conducted.

The Non-GAAP data also excludes acquisition expenses, stock-based compensation and costs associated with the special shareholders meeting in the first quarter of 2019. 

Longer term, BOS is positioned to drive revenue and profitability growth by:

  • Its entry, by Imdecol acquisition, into the global growing manufacturing automation vertical, known as Smart Factory,
  • Its entry, by strategic agreement with RFKeeper, into the Smart Store segment,
  •  Expanding BOS offering and technological capabilities in the Automatic Warehouse segment and by,
  • BOS' established position in the Supply Chain and RFID & Mobile markets

BOS will host a conference call on Thursday, May 30, 2019 at 10 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, http://www.boscom.com

About BOS 

B.O.S. Better Online Solutions Ltd. (BOSC) is a leading Israeli provider of RFID and Mobile solutions and a global provider of Supply Chain solutions to enterprises. BOS' RFID and Mobile division offers both turnkey integration services as well as stand-alone products, including best-of-breed RFID and AIDC hardware and communications equipment, BOS middleware and industry-specific software applications. The Company's Supply Chain division provides electronic components consolidation services to the aerospace, defense, medical and telecommunications industries as well as to enterprise customers worldwide. For more information, please visit: www.boscorporate.com.

For more information:

Investor Relations Contact:
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
(203) 972-9200
jnesbett@institutionalms.com
  Company Contact:
Eyal Cohen, CO-CEO & CFO
B.O.S Better Online Solutions Ltd.
+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, 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 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
 
  Three months ended
 March 31,
  Year ended
 December 31,
   2019    2018    2018
  (Unaudited)   (Audited)
           
Revenues $   7,763   $   8,291   $   32,650
Cost of revenues   6,113     6,630     25,907
Gross profit  1,650    1,661    6,743
           
Operating costs and expenses:          
  Sales and marketing   901     913     3,705
  General and administrative   573     461     1,834
Total operating costs and expenses   1,474     1,374     5,539
           
Operating Income   176     287     1,204
Financial expenses, net   (2)     (85)     (255)
Income before taxes on income   174      202     949
Taxes on income (tax benefit)   (18)     (3)     (41)
Net income $    156   $   205   $    990
           
Basic and diluted net income per share $      0.04   $    0.06   $    0.28
           
Weighted average number of shares used in computing basic and diluted net income per share   3,648     3,357       3,500
 

 

 
CONSOLIDATED BALANCE SHEETS
 (U.S. dollars in thousands)
 
   March
31, 2019
  December
31, 2018
  (Unaudited)    (Audited)
        ASSETS          
           
CURRENT ASSETS:          
Cash and cash equivalents $   2,177   $   1,410
Restricted bank deposits   325     332
Trade receivables   8,401     8,624
Other accounts receivable and prepaid expenses   1,296     829
Inventories   3,565     2,874
       
Total current assets   15,764     14,069
       
LONG-TERM ASSETS   144     177
       
PROPERTY AND EQUIPMENT, NET   1,235     1,108
       
OPERATING LEASE RIGHT-OF-USE ASSETS, NET   777     -
       
OTHER INTANGIBLE ASSETS, NET   76     81
       
GOODWILL   4,676     4,676
           
Total assets $ 22,672   $  20,111
 

 

 
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
 
  March 31,
2019
  December 31,
2018
  (Unaudited)   (Audited)
       
  LIABILITIES AND SHAREHOLDERS' EQUITY      
       
CURRENT LIABILITIES:      
Current maturities of long term loans $   482   $   467
Trade payables   5,068     4,106
Employees and payroll accruals   713     778
Deferred revenues   686     768
Operating lease liabilities, current   377     -
Accrued expenses and other liabilities   233     313
       
Total current liabilities   7,559     6,432
       
LONG-TERM LIABILITIES:      
Long-term loans, net of current maturities   1,806     1,867
Operating lease liabilities, non-current   400     -
Accrued severance pay   306     301
       
Total long-term liabilities   2,512     2,168
       
       
SHAREHOLDERS' EQUITY   12,601     11,511
       
       
Total liabilities and shareholders' equity $   22,672   $   21,407
 


 
RECONCILIATION OF NON-GAAP FINANCIAL RESULTS
(U.S. dollars in thousands)
 
  Three months ended
March 31,
  Year ended
December 31
,
  2019   2018    2018
  (Unaudited)   (Unaudited)
                 
Net Income as reported $ 156   $ 205   $ 990
                 
Adjustments:                
Amortization of intangible assets   5     14     57
Stock based compensation   19     14     66
Special Shareholders' meeting and acquisition expenses   108     -     -
Total Adjustments $    132   $  28   $    123
Net Income on a  Non-GAAP basis $ 288   $ 233   $ 1,113
 


 
CONDENSED CONSOLIDATED EBITDA
(U.S. dollars in thousands)
 
  Three months ended
March 31,
    Year ended
December 31
,
   2019    2018     2018
             
 Operating income $     176   $     287   $   1,204
  Add:            
Amortization of intangible assets   5     14     57
Stock based compensation   19     14     66
Depreciation   65     50     232
EBITDA $   265   $   365   $   1,559
             


 
SEGMENT INFORMATION
(U.S. dollars in thousands)
 
  RFID and
Mobile
Solutions
  Supply
Chain
Solutions
  Intercompany   Consolidated   RFID and
Mobile
Solutions
  Supply
Chain
Solutions
  Intercompany   Consolidated
  Three months ended March 31,
 2019
  Three months ended  March 31,
 2018
                               
Revenues $ 3,776   $   4,039   $   (52 )   $   7,763   $ 3,822   $   4,595   $   (126 )   $   8,291
                               
                               
Gross profit $   800   $   850   $   -      $   1,650   $   976   $   685   $   -      $   1,661
   

 

 
 

 
RFID and
Mobile
Solutions
  Supply
Chain
Solutions
  Intercompany   Consolidated
  year ended December 31,
 2018
                         
                         
Revenues $ 14,633   $   18,205   $   (188 )   $   32,650
                         
                         
Gross profit $ 3,371   $ 3,372   $ -     $ 6,743