B.O.S. Better On-Line Solutions Ltd. 2026 Q2 Earnings Call

At B.O.S., we are built around one idea: that supply chains can be smarter, faster, and more efficient, and that the right technology makes that possible. We pursue that idea through three specialized divisions, each one tackling a different layer of the supply chain challenge. Our robotics division replaces manual labor with automated solutions, transforming how inventory is handled. Our RFID Division brings precision to tracking and end-of-line automation, from sorting to packing, across the entire supply chain. Our Supply Chain Division works even closer to our clients, integrating our franchised electromechanical components directly into their products. Together, these three divisions give B.O.S. a broad and complementary platform, one that allows us to serve clients across multiple touchpoints in their operations. Our Supply Chain Division integrates franchised electromechanical components directly into the products of leading defense and high-tech companies.

Our engineers work hand in hand with our clients' R&D teams, ensuring seamless integration that generates long-term OEM revenue as those products move into production. The growth driver here is simple. The more components we embed, the more we grow. That is why over the past two years, we have doubled our engineering team and tripled the number of manufacturers we represent. We are proud to serve global defense leaders Israel Aerospace Industries, Elbit Systems, and Rafael Advanced Defense Systems, along with their hundreds of subcontractors across the U.S., India, and Europe. This network is our launchpad for global expansion without the need for costly overseas offices. Our RFID Division delivers end-to-end supply chain automation for logistics centers and production lines, covering inventory tracking and end-of-line automation. We create real-time inventory visibility by connecting warehouse operations directly to our clients' ERP, WMS, and MES systems.

Our integrated platform combines ruggedized industrial hardware from Tier 1 manufacturers like Zebra Technologies and Honeywell with our own proprietary middleware software. Beyond tracking, we deploy complete end-of-line automation. This includes autonomous mobile robots, AMRs, used in logistics centers in place of driver-operated forklifts and on production floors to shuttle components, subassemblies, and finished parts between stations. We also deploy automatic sorters, carton packing machines, robotic palletizing, and pallet wrapping, enabling fully integrated order fulfillment. Our business model is built for predictability and scale, recurring revenue from annual service contracts, ongoing consumables sales, and expansion revenue as clients grow to new facilities. We serve top-tier enterprises across Israel, including Shufersal, IKEA, and Teva Pharmaceutical Industries. Our robotics division designs and deploys custom automation solutions, replacing labor-intensive processes with precision robotics and automated machinery.

Our engineers evaluate client production lines, identify automation opportunities, and deliver a complete proposal from concept design and cost breakdown to ROI projections. Each robotic cell we build is fully integrated: robotic arms, custom grippers, proprietary peripheral machines, and end-to-end electrical and software systems. Over the past two years, we have strategically focused on the defense industry, a sector that still relies heavily on manual labor, yet faces growing pressure for speed and quality. That is a powerful tailwind for automation. Our flagship client is Elbit Systems, one of Israel's largest defense manufacturers. We have successfully developed and installed robotic production lines at their Israeli facilities, though, due to confidentiality, we are unable to share footage of those systems. B.O.S. is led by an experienced executive team of eight and a board of four, including a former head of procurement for the Israeli Ministry of Defense.

Given our technology focus, we have two dedicated CTOs, one for robotics, one for RFID. In total, we are a team of 80 professionals, with 30% being engineers and technicians. Thank you for watching. Ladies and gentlemen, welcome to B.O.S. Q2 Investor Summit. Thank you for joining us today. Before we begin, a brief reminder that this call contains forward-looking statements relating to B.O.S.'s business, financial condition, and results of operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such statements include, but are not limited to, matters relating to product demand, pricing, market acceptance, economic conditions, and technology development, as further detailed in the company's filings with the various securities authorities. Before I turn things over to management, I would like to give a brief recap of the results we just released. The growth momentum continued. Second quarter 2026 revenue grew 29% year-over-year, helping offset a softer first quarter of 2026 and bringing trailing 12-month revenue to the same level as our record 2025 revenue.

We anticipate that full year 2026 revenue will exceed full year 2025 revenue. Our backlog remained at a record $31 million as of the end of the second quarter of 2026. Approximately $20 million of the backlog is scheduled for delivery by year-end. Together with first half revenue, this amount represents approximately 91% of our full year 2025 revenue. Despite the increase in our operating expenses due to the dollar's devaluation, we believe we will offset this through revenue growth and improved gross profit margins, and as a result, we expect net income for full year 2026 to exceed $3.6 million we achieved in year 2025. Our balance sheet is solid.

Shareholders' equity stands at $30.9 million, and cash stands at $10 million. That gives us the flexibility to capitalize on organic and M&A opportunities. BOS is a company with a growing backlog, accelerating revenues, a clean balance sheet, and exposure to some of the strongest structural trends in the global economy: defense spending, automation, and supply chain modernization. And yet, BOS currently has a market capitalization of approximately $31 million, and its enterprise value, market cap less cash, is approximately $21 million. For comparison, the Russell Microcap Index trades at approximately two times book value versus BOS trades one time book value. Russell Microcap Index price to earnings ratio of roughly 16 times, compared to our roughly nine times. Thank you for watching. Now, I will turn the call over to Eyal Cohen, CEO.