B.O.S. Better Online Solutions

Ladies and gentlemen, thank you for standing by. Welcome to the BOS conference call. All participants are at present in listen-only mode. As a reminder, this conference call is being recorded and will be available on the BOS website as of tomorrow. Before I turn the call over to Mr. Cohen, I would like to remind everyone that forward-looking statements for the respective company's business, financial condition, and results of its operations are subject to risks and uncertainties, which could cause actual results to differ materially from those contemplated. such forward-looking statements include but are not limited to product demand pricing market acceptance changing economic conditions risks and product and technology development and the effect of the company's accounting policies as well as certain other risk factors which are detailed from time to time in the company's filings with the various securities authorities i would now like to turn the call over to mr eyal cohen ceo mr cohen please go ahead

Good morning. Good morning, everyone, and welcome to BOSS second quarter 2025 earning call. I am joined today by our CFO, Mr. Moshe Zeltsin. On our previous call, I emphasized our focus on the defense sector while diversifying our customer base. That strategy is paying off. I'm excited to share What has been another exceptional quarter for BOSS as the momentum from our record-setting first quarter continued in the second. We have delivered our strongest revenue growth in recent years, with sales jumping 36% year-over-year to $11.5 million this quarter. This growth is being driven primarily by the exceptional performance of our supply chain division, which increased revenues by 57% to $8.3 million this quarter. While we are addressing some temporary challenges in our RFID division, the overall trajectory gives us confidence for the remainder of 2025. Profitability. Our net income surged 53% to $765,000 compared to the same quarter last year. That is 13 cents of earnings per share just in the second quarter. This outpaced our revenue growth, which tells which tells us we are not just chasing top line numbers, we are building a more efficient operation and leveraging our scale to drive profit efficiency. Our EBITDA increased to $900,000 up from about $800,000 in the second quarter of 2024. This gives us the operational cash flow we need to invest in growth while maintaining financial stability. Now let's talk about our contracted backlog and what it tells us about business momentum. We ended 2024 with a record $27 million in contracted backlog. As expected, it declined to $22 million by March this year as we executed on those contracts and converted backlog to revenue for a record first quarter result. Our backlog has grown back to $24 million as of June 30 this year, giving us increasingly clear visibility into the back half of the year. Our financial foundation has never been stronger. Cash and equivalents grew to $5.2 million, up from $3.6 million at the year end. Combined with $24 million in total equity, We have the resources to execute our extension plans without compromising operational stability. We have the flexibility to capitalize on opportunities as they arise, whether that's supporting organic growth or pursuing strategic acquisitions. Based on that, we are seeing In our business and our contracted activity for the second half, we are raising our full year guidance. We now expect revenue between $45 and $48 million. That's up from our previous guidance of $44 million. At the midpoint, it's about 16% year over year. And that is entirely organic growth from our business initiatives before any additional benefit of possible strategic initiatives. More importantly, we are raising our net income guidance up from $2.5 million to between $2.6 and $3.1 million. At the midpoint, it's about $24 million. percent year over year. This reflects not just stronger revenue expectations, but our confidence in our ability to convert that revenue into bottom line results, plus profit leverage as we scale the operating base of our business. Our guidance is based on concrete contracted activity with both existing and new customers. diligent execution and commitment to deliver the best results for our stakeholders. With that, I will turn the call over to Moshe to cover the financials.

Thank you, Eyal. I'd like to focus on some of the operational dynamics that are driving these results and address a few specific items that deserve your attention. While we are thrilled with our revenue growth and our net income, we see additional opportunity in our margin performance. That is an area we are focused to improve and deliver even better bottom line performance in the future. Our overall gross profit margin was 23% compared to 26% in the same quarter last year. This quarter's margins were a little lower than target, while last year was higher than typical. We are aiming to achieve a balance in the middle where we can deliver sustained performance. Let me break this down by division so we can understand how we can drive even better performance down the road. Our RFID division, solid gross profit margin, temporarily decreased to 19.1% for 21.1%. This was primarily due to certain service line challenges that we are already identified and addressed. We've implemented restructuring initiatives and we expect this division to return to normalized performance levels by Q4 2025. Our supply chain division deliver a 24% gross profit margin, which is within our expected parameters. The 28% margin in Q2 2024 benefited from a particularly favorable product mix that quarter. So the current level represents a more sustainable baseline. As part of the RFID restructuring, we recorded a non-cash goodwill charge of $700,000 this quarter. This charge was largely offset by $696,000 in favorable currency fluctuation between the U.S. dollar and the Israeli blue shekel. Our cash position improvement to $5.2 million reflects strong operational cash generation supplemented by $400,000 from warrant and option exercises in the second quarter. We are managing working capital efficiently by supporting our growth trajectory. The increase in deferred revenue to $3.2 million from $2 million at year end indicates strong advanced working and provides additional confidence in our new term revenue visibility. Thank you, and now let's open it up for your questions.