Recent Acquisitions Helping the BOS Cause
June 9, 2008 Dan Burger
Energized by the successful acquisitions of two companies specializing in RFID solutions Better Online Solutions (BOS) posted hefty increases in both revenue and sales during the first quarter of 2008.
At the October 2007 announcement that his company was purchasing Summit Radio, Shmuel Koren, president and chief executive officer of BOS, called the acquisition “an important addition to BOS’ international activities, especially in the United States.” He wasn’t wrong. He went on to describe Summit’s business as “highly synergetic with the business of our supply chain division” and viewed it as a pathway to “expand supply-chain sales to major international aviation and aerospace manufacturers, as well as offer our RFID and enterprise software solutions to the U.S. market.”
A second deal, the one that brought Dimex, an integrator of AIDC (Automatic Identification and Data Collection) solutions based on RFID and barcode technology was finalized in March within weeks of the end of Q1, which was March 31. As such, it didn’t have a great effect on the first quarter financial report, but will be a factor in Q2 and beyond. On the other hand, Summit Radio played a big role in BOS achieving some nice gains. BOS reported a substantial increase in first quarter revenues, profits, and net income.
Total revenue amounted to $12.1 million, up 126 percent compared to the year-ago quarter. Credit the Summit Radio acquisition for making such a dramatic advance. The company’s product sales backlog was $13.3 million, a substantial bump from $6.6 million in Q1 2007, and indicative of a bright sales picture during the coming quarters. International sales for the Israeli company counted for 38 percent of revenues in first quarter 2008 compared to 19 percent in the first quarter 2007.
Gross profit for the first quarter added up to $2.7 million, a 136 percent increase over the gross profit in Q1 2007. As a percentage of revenues, the gross margin in the first quarter of 2008 improved to 22 percent compared to 21 percent a year earlier. The operating profit for the first quarter of 2008 was $179,000 compared to a profit of $5,000 in the first quarter of 2007. Compared to a net loss of $326,000 in the first quarter of 2007, the company whittled net losses to $89,000 this time around. On a non GAAP basis (excluding amortization of intangible assets and options compensation), the operating profit for the first quarter of 2008 was $147,000, compared to a loss of $152,000 in the first quarter of 2007.
Koren called his company’s first quarter an “excellent performance,” and duly noted the significance of the two acquisitions. He took over the company in October 2006 after being the chief financial officer at Visonic, a maker of electronic security systems based in Tel Aviv.
BOS views its corporate strategy as consisting of two business divisions: the Supply Chain Solutions unit and the Mobile and RFID Solutions unit. Combined, those units generated $14.2 million revenues in the first quarter of 2008 compared to $5.4 million in the first quarter of 2007. The company also sells a line of iSeries connectivity solutions, which bear the BOSaNOVA brand.
The company has offices located in Israel and the U.S. and employs approximately 150 employees worldwide.