BOS Reports Second Quarter of 2020 Financial Results

RISHON LE ZION, Israel, Aug. 26, 2020 (GLOBE NEWSWIRE) -- 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,
20202019
Supply Chain613568
RFID354(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 Details
BOS 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) 
     
     
 RFIDSupply Chain SolutionsIntelligent RoboticsConsolidated
     
 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 SolutionsIntelligent RoboticsConsolidated
     
 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 SolutionsIntelligent RoboticsConsolidated
     
     
     
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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