Ladies and gentlemen, thank you for standing by. Welcome to the BOS third quarter 2022 results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question- and- answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference call is being recorded and will be available on the BOS website as of tomorrow. With us on the line today are Mr. Ziv Dekel, Chairman, Mr. Eyal Cohen, CEO, and Mr. Moshe Zeltzer, CFO. Before I turn the call over to Mr. Cohen, I would like to remind everyone that forward-looking statements for the respected 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 in 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. After this Q&A session, Mr. Ziv Dekel will give his concluding statement. Mr. Cohen, please go ahead.
Hello, and thank you for joining our quarterly meeting. BOS working plan is comprised of four key elements. First, achieve ongoing improvement in the financial results. Second, invest in a long-term growth engine. Third, increase our market share. Fourth, reduce our operational costs. During the first nine months of the year, we have made significant progress in all four key elements of our working plan. Let's start with the financial results. Our nine-month results show a $750,000 net income, which bring us close to our annual net income target of $1 million, as compared to $450,000 of net income last year. Growth engine. In the first quarter of the year, our RFID Division acquired the assets of Dagesh, which provide inventory counting services mainly for retail stores.
We have completed the operational integration of this long-term growth engine, during which we have introduced efficiencies as well as achieved significant price upgrades for all of the acquired Dagesh customers. We expect to see the impact of these actions in the results of coming four quarter results. Innovation. During the year's second quarter, we significantly strengthened the engineering department of the Supply Chain Division. The purpose of this is to increase the numbers of manufacturers we represent. These representations are a valuable long-term asset that support long-term growth of this division. We have also invested in the launch of new products to expand our offering to our customers. For example, during the fourth quarter, the Robotic Division successfully developed and installed automatic sorting machines for logistics centers, which have the potential to be sold to customers of the RFID Division. Market share.
During the first nine months of the year, we participated in four trade shows and have been very active in most digital marketing platforms. We have also successfully varied our procurement resources to provide attractive and competitive offers to our customers. These steps geared toward increasing our market share were responsible in part for the 13% revenue growth we have seen in the first nine months of the year. Operational costs. In March this year, we purchased part of our facilities, and by the end of this year, we will complete the transfer of our Intelligent Robotics Division plant to a new facility near our headquarters. These actions increase efficiencies and, in turn, are expected to improve our profits commencing the fourth quarter of this year. This completes my review, and now I will be happy to answer your questions.
Thank you. Ladies and gentlemen, at this time, we will begin the question- and- answer session. If you have a question, please press star one. If you wish to decline from the polling process, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please stand by while we poll for your questions. The first question is from Todd Felte of Advisory Group Equity Services. Please go ahead.
Hi, Ziv and Eyal. Congratulations on a great quarter and the progress in the turnaround. just looking at the improvement of over 20% revenues and earnings, and I know you talked about the acquisition of the Dagesh and the margin improvements there. Do you see that margins continuing to improve and, you know, at what level margins are, you know, are you targeting?
Thank you, Todd, for your question. It depends on the division. For example, in the Supply Chain Division, I think the margin that currently exists, I think we'll see the same margin in the next year. I believe in year 2024, we will see higher margin before we anticipate that the portion of a company that will represent manufacturers that will represent will increase. In this segment, when you represent manufacturer, the margin are higher. In the RFID Division, I think we expect higher gross margin because the effect of the acquisition of Dagesh affected the Reduce the gross margin during the second and the third quarter. We completed the round of price upgrade to all of the Dagesh customer.
Price upgrade between 10%-25%. It will be affected the gross margin going forward. These are the trends that we expect in the next quarters.
By and large, our strategy is to grow to places, to market segments, to market, to markets, to arenas in which the margin is higher than our current margin, since we are going to be more professional and more unique in what we're doing, facing competition and the markets.
Okay. Speaking of that, regarding market share, have you captured a significant market share in your RFID and supply chain in Israel? Is that why we're focusing a little more on maybe expanding outside of Israel, or is there still a lot of growth potential in Israel? I know we've had mixed results in the past on international expansion.
Yes. regarding international expansion in these first Supply Chain Division, I think about 50% of the business is outside of Israel, and the expansion is related directly to the expansion of the Israeli defense industry overseas. Regarding the RFID Division, we have certain thinking of acquisition of a similar company in Europe. Small company, to have a first step, initial step in Europe, we consider it, but we don't see it happening in year 2023. Currently, I think we have planned to expand our product offering in the RFID Division, and by that to grow the business and gain strengthen our position with the customers and gain a higher market share in the Israel market.
Okay. Finally, I noticed in your report you mentioned that you had a financial expenses of ILS 342,000, that was attributed to foreign exchange differences between the shekel and the U.S. dollar. With the U.S. dollar weakening considerably, when compared to the shekel since September 30th at the end of the last quarter, do you see actually possible financial expense gains from the currency there, or is that just something that will continue?
Yeah, I think there are two trends in the financial expenses. The weakness of the Israeli shekel against the U.S. dollar in the fourth quarter actually will reduce the currency expenses difference cost. On the other hand, the increase of the interest will increase our financial expenses. I don't know exactly what will offset to in what level, but these are the trends. I believe that the because we took a loan on the third quarter of the year to finance the acquisition of the facilities, we see increase in the financial expenses in the fourth quarter as compared to the third quarter.
Okay. Do you denominate most of your contracts outside of Israel in U.S. dollars?
Yeah. All the contracts outside of Israel are in the U.S. dollars. Recently, all the contract in Israel are linked to the Consumer Price Index linked to the inflation in Israel.
Okay. Well, that's very helpful. Congratulations again on a great quarter, and I look forward to seeing the continued progress of the company.
Thank you.
Thank you very much, Todd.
If there are any additional questions, please press star one. If you wish to decline from the polling process, please press star two. If you are using speaker equipment, kindly lift the handset before pressing the numbers. The questions will be polled in the order they are received. Please stand by while we poll for your questions. There are no further questions at this time. I would now like to turn the call over to Mr. Ziv Dekel, Chairman, to make a concluding statement. Mr. Dekel, please go ahead.
Thank you for joining us today. Well, this quarter was characterized by the continued execution of our plans, successful execution of our plans of business improvement, capabilities build-up, and solution offering expansion, which Eyal and the team are successfully leading. Accordingly, we are already expected the notable achievement of realizing our targets for 2022. Looking forward to Q4 onwards, I trust Eyal and the management to further implement BOS's strategy to yield our top-line growth and increasing profit margin, market share and competitive position. Thank you for expanding your time with us. Please do not hesitate to contact Eyal or me for further information or questions. Looking forward to meet with you our next quarterly call.
Thank you. I'd like to remind participants that a replay of this call will be available on the company's website, www.boscom.com, by tomorrow. This concludes BOS third quarter 2022 results conference call. Thank you for your participation. You may go ahead and disconnect your lines.