B.O.S. Reports Third Quarter 2019 Financial Results
Intelligent Robotics and RFID division revenues for the third quarter of 2019 grew by 9% to $3.3 million as compared to $3.0 million in the third quarter of 2018. Intelligent Robotics and RFID division revenues for the first nine months of 2019 were $10.3 million as compared to $10.2 million in the first nine months of 2018. The increase in revenues of the Intelligent Robotics and RFID division in the third quarter is attributed to the robotics line, which was acquired from Imdecol in June 2019. Currently, revenues attributed to the robotics line are recognized upon delivery.Gross margin for the third quarter of 2019 was 17.3% as compared to 20.8% in the comparable quarter last year. Gross margin for the first nine months of 2019 was 19.5% as compared to 20.5% in the comparable period last year.The Supply Chain division’s gross margin for the third quarter of 2019 was 17.1% as compared to 20.2% in the comparable quarter last year. However, the gross margin for the first nine months of 2019 increased to 19.4% as compared to 18.4% in the same period last year.The Intelligent Robotics and RFID division’s gross margin for the third quarter of 2019 was 17.7% as compared to 21.4% in the comparable quarter last year. Gross margin for the first nine months of 2019 was 19.2% of revenues as compared to 23.1% in the comparable period last year. The decrease in gross margin is attributed mainly to the robotics line.
During the third quarter of 2019 the Company recorded a Goodwill write-off of $614,000 related to its robotics acquisition, which closed in June 2019. The Company expects to deduct the write-off amount from future earn-out payments, if any, that would otherwise have been payable to Imdecol for its robotics business.Net loss for the third quarter of 2019 was $754,000 or ($0.18) per basic share as compared to net income of $216,000 or $0.06 per basic share in the third quarter of 2018. Net loss for the first nine months of 2019 was $578,000 or ($0.15) per basic share as compared to net income of $613,000 or $0.18 per basic share in the first nine months of 2018.Non-GAAP net loss for the third quarter of 2019 was $55,000 or ($0.01) per basic share as compared to non-GAAP net income of $249,000 or $0.07 per basic share in the comparable period last year. Net income on a non-GAAP basis for the first nine months of 2019 was $452,000 or $0.11 per basic share as compared to non-GAAP net income of $702,000 or $0.20 per basic share in the comparable period last year. A reconciliation of Non-GAAP financial results for the three months and the nine months ending September 30, 2019 is presented along with the GAAP financials at the end of this document.
Eyal Cohen, BOS’ Co-CEO and CFO, commented, “The performance of The Supply Chain division is currently surpassing our performance expectations. We believe it will continue to perform well as we move through the fourth quarter of 2019.
The performance of the Intelligent Robotics and RFID Division were below our expectations. Our financial results for the third quarter of 2019 were negatively impacted by the acquisition of Imdecol’s Robotics business. While this development is disappointing, we are optimistic about the long-term benefits of the Robotics acquisition and believe that it will be the major growth engine for BOS in the coming years.. We are working extensively to improve the production efficiency of the Robotics business and are implementing a cost reduction plan to improve the profitability of our legacy RFID operations.Yuval Viner, BOS’ Co-CEO, commented, “We view the U.S. market as the most attractive opportunity for our robotic businesses given the growing demand for increased automation in manufacturing and production settings.
Recently we received a $460,000 order for In Mold Label (“IML”) robots from a Mexican plastic manufacturer that has several sites in North and South America, and earlier this year we received an $870,000 order for IML robots from a U.S. plastic manufacturer. With the addition of Imdecol, we acquired globally recognized IML robotic systems with proven capability to successfully integrate with plastic injection machines to provide automated in mold decorating. We currently have more than 500 installations of Imdecol IML robots worldwide, and believe we are well-positioned to aggressively market our capabilities to U.S. manufacturers that we are targeting as our primary market for IML robots. With this in mind, we are establishing a Dallas sales office with a dedicated U.S. sales manager, so that we may more readily capitalize on new opportunities in U.S. to increase our market share and drive growth.” Outlook for the year 2019 Year 2019 revenues are expected to be $33 million, Non-GAAP net income and earnings per basic share expected to be $550,000 or $0.14 per basic share.“During the first quarter of 2020 we plan to provide guidance for the full year of 2020, as well as targets for the year 2021 that will reflect our expectations for effect of the strategic initiatives we are currently undertaking,” Eyal Cohen concluded. Conference Call DetailsBOS will host a conference call today, Tuesday, November 26, 2019 at 10:30 a.m. EDT – 5:30 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.boscorporate.comAbout BOSB.O.S 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 as well as for 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 components from a vast number of suppliers, long term scheduling and kitting. For more information, please visit: www.boscorporate.com or contact: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.
*According to US GAAP, commencing January 1, 2019, operating lessees will no longer be provided with a source of off-balance-sheet financing and lessees must recognize lease assets and lease liabilities. Since the Company’s operating lease liabilities are linked to the NIS, the devaluation of the US $ against the NIS caused a currency differences cost of $89,000 in the first nine months of 2019.