Good morning, and thank you for making the time to join our full year 2025 results call. Joining me is Mr. Moshe Zeltzer our Chief Financial Officer. I am pleased to report that 2025 was an outstanding year for B.O.S. on multiple metrics, and I am grateful to our team for the hard work and commitment in achieving these results. We delivered strong revenue growth throughout the year, setting multiple record quarters and increasing our outlook three times. Ultimately, we completed the year 2025, growing 27% year-over-year to a record $51 million in revenues, and our net income grew year-over-year by 57% to a record $3.6 million, demonstrating our ability to drive profitable growth leverage in our model. Even with this growth, we exited the year with a substantial contracted backlog of $24 million, giving us good visibility into the year ahead.
Looking forward, I want to share the key theme that will shape our trajectory in 2026. Demand in the defense sector remains robust and is expected to continue driving growth in our supply chain and Robotics Division throughout the year. We maintain strong backlog visibility and healthy customer relationships across this segment. Alongside that, we are taking steps to extend our geographic reach. In March 2026, we appointed an Indian company to represent B.O.S. in the Indian market. As India is emerging as a growing subcontracting hub for global defense programs. This is a meaningful step in our global expansion strategy. On the product side, our organic growth model is built around continuously broadening the portfolio of manufacturers we represent and embracing the new technologies they develop.
Because our manufacturing partners invest heavily in next-generation solutions, we benefit from self-replenishing flow of innovative products to bring our clients. Turning to our RFID Division, the ongoing geopolitical tension in Israel since October 2023 have continued to weigh on the Israeli commercial market, which represent the primary revenue base for this division. Therefore, we recorded goodwill impairment charges of $700,000 in 2024, and an additional $1.2 million in 2025. To reduce our exposure to geopolitical, geopolitically sensitive Israeli civilian market, our 2026 strategic plan focuses on growing our business, the RFID business, by entering the hospital segment, more stable and higher growth vertical within Israel. Successful penetration of this segment will require broadening our product offering, hiring personnel with relevant domain expertise, and establishing new customer relationships.
We expect to make this investment throughout 2026, with revenue contribution expected to begin in 2027.
On the currency front, the USD to Israeli shekel exchange rate opened 2026 at ILS 3.18 per dollar, reflecting an approximately 13% devaluation of the dollar against the Israeli shekel compared to start of 2025. As a result, we expect our Israeli shekel denominated operating expenses to increase by approximately $600,000 in 2026 compared to 2025. Another effect of the dollar's weakness in 2025 was $800,000 in non-recurring currency exchange income we recognized that year, which arose from the revaluation of the Israeli shekel denominated balance sheet items following the sharp dollar decline. The gain is not expected to repeat in 2026, assuming the rate remains at approximately ILS 3.18 per dollar.
Combined, these two currency related items represent approximately $1.4 million in headwinds going into 2026. Separately, the $1.2 million goodwill impairment charge taken in 2025 is not expected to recur in 2026, which partially offsets the impact, leaving a net year-over-year drag of approximately $200,000. Our financial foundation has never been stronger. Cash and equivalents have grown to $11.8 million, up from $3.6 million at year-end 2024. Shareholders' equity amounts to almost $29 million, up from $21 million at year-end 2024. We have positive working capital of more than $22 million, and bank debt amounted to only $1.7 million.
This strong balance sheet gives us the flexibility to capitalize on opportunities. As they arise, supporting both organic growth and strategic acquisitions. We are actively evaluating a range of acquisition opportunities, each of which must meet our strict criteria, including a proven track record of profitability and high revenue visibility. Turning to our outlook, consistent with our established policy of issuing conservative initial guidance with updates provided as the year progresses, we are projecting revenues of approximately $51 million, a net income of approximately $3.6 million for 2026. We look forward to updating you as the year progresses and our momentum becomes clearer. On the investor relations front, in 2025, I conducted an on-the-road show comprising 44 one-on-one meetings with potential investors and presented at two investor summits.
Our stock appreciated 42% during that year 2025, yet a significant valuation gap remains relative to our benchmark index, Russell 2000. Over the past four years, B.O.S. delivered compounded annual earnings per share growth of 60% compared to 12% of the Russell 2000, 5x the rate of the index. Despite this performance, we trade near book value, while Russell 2000 trade at roughly 2.4x book value. Our price-to-earnings ratio stands at approximately 9x compared to 20x for the index. We attribute much of this discount to limited market awareness. To address this, we will shift our IR strategy toward digital marketing starting this April, engaging Aly Communications, an investor relations firm specializing in digital investor outreach.
We believe this approach will meaningfully expand our investor reach and visibility in a significantly shorter timeframe rather than the traditional IR method. With that, we are happy to take your question, and if you have any question, please unmute yourself.
Hey, guys. Congratulations on a really good year. This is Todd Felte. Was wondering if you could talk about the current conditions over there and how you expect your business impacted if the war, let's say, lasts another 30 days compared to, you know, what happens if it drags on for another six months with your various divisions.
Yeah. Thank you, Todd. First, most of our business related, linked to the defense segment, as you know, the supply chain, which is a primary growth driver of B.O.S., most of its business related to the defense segment and the Robotics Division as well. In that aspect, if the war will continue, it will positively affect the growth of those two divisions. With regard to the RFID Division, currently it is very sensitive to the geopolitical tension, and if the war will continue, it will negatively impact its business.
As I mentioned before, we are working to shift our sales resources and business development resources toward a new segment, which are less sensitive or even the opposite, are growing in such period, like the hospitals in Israel, defense as well, but we'll focus on the hospital segment in Israel. In addition, as you know, if the war will continue, we learn how to work with that. The economy will gradually return to its normal course of business despite several attacks a day. It's not new for us. We are in this situation for three years, and still we are doing good. Hopefully, it will be ended.
Okay. There was a gentleman who asked a question in the chat, which is, I thought a good question. He spoke about the, you know, the growth rate you've achieved and why there is no growth anticipated in the guidance. I think your guidance is for $51 million, and that's basically what you did last year. Can you kind of give us some insight on that?
Yeah. First, we reached to a record level of revenues. $51 million revenues, compared to $40 million revenues in the previous year, it's phenomenal. Our revenue growth depends on the consumption of our components by the different segments, mainly Rafael, and the Israeli aircraft industry, and there are hundreds of subcontractors around the world. I believe that there is high potential for continuing growth because the warehouses are empty. We currently have and at the end of year 2025, we have, like, $24 million backlog, which covers 50% of our outlook for year 2026. So we have to be, as we did all the time, to be conservative. We will update, I believe, we will upgrade the outlook quarter by quarter according to the progress.
We have to remember that we are in a very sensitive period in geopolitical tension. Every day there are news, and we have to be a little bit conservative. I think that still, with $51 million revenues and a $3.6 million net income and all the ratios that I illustrated before, compared to the Russell 2000 index, there is no need for any growth to justify this current valuation. I think we are undervalued with the $51 million revenues and $3.6 million net income, and there is a great upside here.
Okay. Thank you. My last question is just on the M&A front. I see your cash position is up to $11.8 million. Can you just kind of go over your M&A strategy? I believe in the past, you planned there would be no dilution on any M&A that you did, and that any acquisitions you did would be immediately accretive to revenue and earnings. Is that still the case? And do you plan on investing some of that cash maybe in short-term notes or securities if there's no M&A on the immediate horizon?
Yeah. First, as we have the $12 million cash on hand, I think the opportunities of M&A are increasing because we can acquire a larger company that can move the needle. It's great, it's a great tool to have on hand, and we have several acquisitions that we are evaluating. Hopefully, we will close an acquisition during 2026. Until then, we invest the cash on hand on securities funds and that bear like 4%, 4% or 5% interest per year, something like that. The money is working and waiting for utilization.
Thank you. That's all for me.
Regarding the dilution, it's not included in the plan. There is no plan for dilution. With $11 million to do an acquisition, it's a nice acquisition, and if we want to increase it, we can leverage it with the bank loans, long-term bank loans, if it's a profitable company, and together reach a significant amount of acquisition. It could be one, it could be two. I don't expect any dilution in that aspect, in M&A, and, by the way, in any other aspect as well.
Thank you. That's all for me.
Eyal, I have two questions. This is Scott Weiss. How are you?
Fine. Thank you, Scott. How are you?
Good. Thank you. Regarding India, can you comment on if you've seen revenue in India to date, and what kind of numbers are you expecting for 2026?
Yeah. We see flow of revenues from India. We saw flow of revenues in year 2023, in year 2024, in year 2025. We established the office there, the agency there, in order to urge it and to have more foot on the ground in India in order to increase this number. We didn't provide any outlook for how many revenues, but hopefully it will increase significantly during the year. It's not a investment for one year, it's for long-term investment, and we will expand our investment in India as it progress, according to the progress. This is our addressable market overseas.
Can you share one or two of the larger customers from the Indian markets?
Yes. Our client, I believe, the biggest, one of the biggest, one of the top five subcontractors of assembly subcontractors of electronic systems. They are working with Rafael, they are working with the IAI, they are working with Boeing, they are working with a global organization. Among the names are Sasmos, Vinyas, DCX, and I believe there is a long list of subcontractors that we have not reached yet, and this is a primary reason for having put on the ground in India in order to go to visit more manufacturers, more assembly company, and to start to do business with them.
If we have a good offering for one for their competitors, so I believe we can increase our sales, we can increase our client base in India with the same offering.
Okay. Thank you. My second question is regarding the RFID investment. What kind of investment spend are you expecting to enter the hospital market?
In what amount or what kind of investment?
Both.
Okay. According to the initial plan, I believe it won't be a significant amount in the size of both, but it will be significant amount for the RFID Division. It could be around 800. It could be in shekel like $200,000 in 2026. In 2027, this new segment will be in break-even, and in 2028, it will start to be profitable. It is for the long term, because in the RFID Division, every time there is a geopolitical tension, it got impacted directly and immediately. We have to.
Because we don't believe that, going forward, there will be a long-term peace period, so we have to be ready for that, and we have to do this move.
Do you have existing relationships in the hospital segment?
Currently, no. We have several people, several candidates that we can hire with the related connections. By the way, it could be also through a M&A of company that already in that field, and to use our system to support the sales and the sourcing of the product to this segment.
Okay. My last question is regarding the guidance. I realize how conservative you've historically been, but the guidance suggests that you've seen a slowdown, and I just want you to flesh that out a little bit. Have you seen any changes from Q4 to Q1 to where we are today?
No. The opposite. I see that the backlog increased. The backlog of the group increased in the first quarter.
Okay. Thank you very much.
You're welcome, and hope to see you soon in Israel, Scott.
Hello, this is Igor Novgorodsev. Good afternoon and good morning from me. I have a question, and I think somebody else had the same question about your guidance. You're projecting the same revenue and the same net income as you had this year. I understand the revenue part. The net income was affected by two things this year. One was the impairment charge, which I assume will not be going forward, or maybe it will be. The second part, you paid no taxes. Are you going to pay the taxes next year? Maybe you can just walk me through and say, on the $51 million, how do you get to exactly the same net income when you had two significant items affecting it this year?
Yes. Thank you for your question. I think that Moshe described that we had two point that was impacted 2026 report. Maybe Moshe can comment on what you just said regarding the currency exchange, the weakness of the dollar, and what was the impact in year 2025, and what do we expect in year 2026.
In the financial income in 2025, we expect that our Israeli shekel-denominated operating expenses to increase by approximately $600,000 in 2026 compared to 2025. Another effect of the dollar weakness in 2025 was $800,000 in non-recurring currency exchange income we recognized last year, which arose from the revaluation of the Israeli shekel-denominated balance sheet items following the sharp dollar decline. This gain is not expected to repeat in 2026. About the impairment of the goodwill, it will offset by the impact of the Israeli shekels.
Against the dollar, which is not supposed to impact in 2026 like it was in 2025.
In summary, there was a charge of $1.2 million of goodwill in 2025.
Yeah
You're right, we don't expect it to recur in 2026. Okay. On the other hand
Yes
There were some benefits in year 2025 because of the weakness of the dollar. The operational expenses in year 2026 will be higher by $600,000 than it was in year 2025. Because we opened the year 2026 with a very low currency rate of NIS 3.18 per dollar, as compared to something like NIS 3.5 per dollar at the beginning of year 2025. We expect higher operational cost by $600,000.
Another thing that we recorded in year 2025, a financial income because of the weakness of the US dollar of $800,000, and as long as the currency exchange rate of 2026 will remain at 3.18, we don't expect to record the same income. The benefit in the currency exchanges in year 2025 and offset by the goodwill impairment in year 2025. You can easily compare the years 2025 and 2026. Okay?
Okay. My other question is, it's a little bit difficult to break down if you're paying any taxes, and I know you referred to that you have a tax carryforward ability and unrealized losses. Could you tell me what you expect your taxes are gonna be like this year and next year?
Yeah. We have a plan. The taxes are a little bit tricky because the taxes are. We are going to utilize all the tax loss carryforwards in both the parent company by the end of 2026, and all of it recorded as an asset in the balance sheet. We still have a lot of tax assets in tax loss carryforwards in the subsidiaries, the RFID Division, that we want to utilize, and we are considering different kind of tax solution for that in order to utilize it because, you know, so that all the profit of all the group will be offset by the carryforward tax losses of the RFID Division.
We don't expect to have any significant tax expenses in year 2026.
Okay. For year 2027, is it a little bit too early, or you're also saying that the taxes keep on carrying over into the next years?
Can you repeat please again?
For year 27 and going forward, do you see that you're gonna still have tax loss carryforwards in your divisions, or it's probably gonna expire?
No. There is no expiry date for those losses.
I mean used up, sorry. Used up.
If, if you-
It will expire.
Okay. If you will,
Utilize them.
If you will execute the tax planning as we wish, I believe we won't have tax expenses in the several coming years.
Okay. My last sort of a comment, Eyal, you know, to have to take as a question, you referred to your stock being cheap, and I think everybody on this call agrees with this. I think there is no better way to demonstrate that your stock is cheap is to announce a small buyback or to have the executive buy some of your own stock, because I think it would benefit everybody. This is just a comment. You know, I don't know if you agree with this, but that would be, I think, on many people's minds.
Yeah. I think because we have just $11 million and we are a very small company, we have to invest this money by acquiring company in order to support the growth of the company and not to do an artificial financial act to support the stock. Personally, I don't believe in buy stock, in buyback stock. It didn't improve itself according to what I read. I have read during all the years. We are very small to activate such plan. You know, companies within big size that have hundreds of millions on cash on hand, they can do it. They can allocate part of it just for public relations. We don't have the space for it. We have to...
We worked very hard to gain this money, and we have a lot of opportunities for acquisitions, and I believe this is the best thing to do for the company for the long term. Regarding buying stocks by the officers of the company, I think I can tell you, I know what are the compensation package of those officers. I think they cannot afford to do buyback. They don't have compensation, huge compensation that they can allocate it. Part of their compensation, it's options instead of cash bonus. I think it's a sign of support from the officer that they believe in the company.
Okay. Thank you very much, and I don't have any more questions.
Thank you.
Thank you.
I have a question. It's James Khan in New York. You were talking about India, and I was a little unclear. You said that, if I understood it, there were revenues in 2023, 2024, and 2025, and you're expecting India to grow. Can you quantify how much of your revenue came from India in 2023, 2024, and 2025?
Yeah. It's several million dollars. It's around $3 million on average during that year, those years. We expect, following the trends in the market, and following our investment in India, to grow it significantly, gradually during the years.
Thanks.
You're welcome, James. Any further questions? Okay. Thank you all for your thoughtful questions today. They reflect exactly the kind of engaged dialogue we value with our investors. Let me close with a final thought. Year 2025 was a milestone for B.O.S. Record revenues, record net income, and record cash on the balance sheet. We enter 2026 with a strong foundation, a clear strategic roadmap, and a team that has demonstrated its ability to execute. We are committed to delivering long-term value for our shareholders, and I look forward to continuing that dialogue with you throughout the year. Thank you again for your participation, and please feel free to reach out at any time. Have a great day.