All right. I'd like to welcome everyone to day two of Sidoti's September conference. Really happy to have B.O.S. presenting with us here this afternoon or morning. From the company, we have Eyal Cohen, their CEO. He's going to run through a presentation. Because this is a pre-recorded session, if you do have a question, just email it to conference@sidoti.com and we'll forward them along to Eyal and get as many of those answered as we can. With that, I will hand it over to Eyal for the presentation, and then we'll do some Q&A at the end.
Great. Thank you. Thank you all for joining our meeting today. Before I start the video presentation, I would like to give you a brief overview of B.O.S. B.O.S. integrates supply chain technologies for defense manufacturers and retailers. B.O.S. has delivered 22 consecutive profitable quarters, a track record a few small caps can match. This past year, we generated $51 million in annual revenue, $3.6 million in net income, and $4.6 million in EBITDA, with a positive outlook for 2026. Our growth is accelerating, backed by a growing backlog and a direct exposure to the strongest structural tailwind in the global economy, defense spending and automation. B.O.S. pairs consistent profitability with a strong balance sheet, ILS 30 million in equity and ILS 10 million in cash, giving us the flexibility to capitalize on organic and M&A opportunities. And yet, B.O.S. trade at a book value.
Once you strip out the cash on hand, our enterprise value sit at just ILS 21 million, less than five times our EBITDA. That disconnect between our fundamentals and our valuation is exactly what makes B.O.S. a compelling story for investors. We intend to close the gap by increasing our exposure to the investment community and continuing to deliver strong performance. In a moment, I will play eight-minute video presentation I have carefully prepared for this event. It covers who we are, what we do, our financial performance, and where we see B.O.S. heading. Once the video concludes, we will open it up for discussion. Let's begin.
At B.O.S., we're 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, along with their hundreds of subcontractors across the U.S., India, and Europe. This network is our launch pad 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 and Honeywell with our own proprietary middleware. 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 that significantly reduce the labor involved in sorting orders for shipment, speed the sorting process to 3,000 items per hour, and increase accuracy. We also deploy automatic carton erecting and sealing machines that replace manual processes and automatic palletizing by robot, enabling fully integrated order fulfillment. We serve top-tier enterprises across Israel, including Shufersal, IKEA, and Teva. 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. presents a compelling investment opportunity. Revenues for the trailing 12 months ended June 2026 amounted to $50.3 million, roughly equal to full year 2025 revenues.
Based on our backlog, we anticipate that full year 2026 revenue will exceed $51 million. 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. 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.
When we talk about growth at B.O.S., we think about it in two ways: organic growth, building on what we have, and strategic acquisitions that expand our reach. Over the past four years, the story has been primarily organic and the numbers speak for themselves. Revenue grew from $33.6 million in 2021 to $51 million in 2025. That is meaningful, sustained growth built on real demand from real clients. Three tailwinds in particular give us confidence. The first is the global increase in defense budgets. This is not a short-term cycle. It's a structural long-term shift in how governments around the world are prioritizing security. B.O.S. is well-positioned to benefit from this trend for years to come. The second is closer to home.
The replenishment and expansion of the Israel Defense Forces inventory, driven by the conflict that began in October 2023, has created significant and ongoing demand that directly supports our business. The third is newer and very promising. India is rapidly emerging as a major subcontracting hub for global defense programs, and the numbers are already telling that story. In the first half of 2026 alone, we received $4.4 million in orders from Indian customers, more than double the comparable period last year. To capture this momentum and build on it, we appointed an Indian representative company in March 2026 to establish a dedicated presence in that market. We are only at the beginning of what we believe is a significant long-term opportunity. B.O.S.
is a company with a growing backlog, accelerating revenues, profitable, a clean balance sheet, and exposure to some of the strongest structural trends in the global economy: defense spending, automation, and supply chain modernization. Yet, B.O.S. 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 B.O.S. trades one time book value. Russell Microcap Index price to earnings ratio of roughly 16 times, compared to our roughly nine times. B.O.S. is led by an experienced executive team of nine and a board of four, including a former head of procurement for the Israel Ministry of Defense. Given our technology focus, we have two dedicated CTOs, one for robotics, one for RFID.
In total, we're a team of 100 professionals, with 30% being engineers and technicians. Thank you for watching.
All right, thanks for that. I will run through a couple of questions here that I have for you, and then we could wrap it up. I just wanted to start with a question about the profile of your revenues, maybe it is different by business segment, but can you talk about what is maybe predictable and recurring versus maybe one time? What is the nature of the mix of your revenue?
Yeah. The profile of our revenues are roughly more than 80% of our revenue is predictable. Most of our products are consumables for our customers rather than a capital expenditure from their side. For example, the electronic components we sell to defense clients are embedded in munitions, which are consumables. So those orders repeat and are highly predictable. On the other hand, our robotic sales are capital expenditure for our clients, so we have much less visibility into the timing of new orders. And on top of that, our backlog, contractual backlog as of June 2026, stood at a record level of $31 million, covering more than 60% of our annual revenue. Based on the backlog and 80% of revenues that repeat, we are confident in our growth trajectory for year 2026.
All right. You cited rising global defense budgets as a tailwind for the company. Which geographies or programs are you most focused on right now?
Yeah. Our international sales are growing fast. In the first half of 2026, we booked $8.6 million orders from international clients compared to $3.6 million in the same period last year. About 140% growth. We have the infrastructure and the capabilities in place to capture opportunities from rising defense spending, mainly in Europe, India, and the U.S. And our international sales platform is well positioned to benefit as Israeli defense manufacturers grow their overseas sales whenever our components are part of the systems they deliver.
Okay. You also mentioned M&A as being important to your growth algorithm. Can you just talk about the type of companies you are looking to acquire and maybe how advanced your pipeline is in that regard?
There are five things we look for in an acquisition. First, profitable companies with a solid track record. We do not want to buy a company and then after to do a turnaround. Second, a high portion of repeat or predictable revenues like we have. Third, a strong management team that stays on and keeps running the business after the acquisition, post-acquisition. And four, strategic fit, a synergy with our existing business. And fifth and last, valuation up to $20 million.
Okay. In terms of financing the acquisitions, it looks like you have a pretty solid balance sheet, but how do you look at the financing of the acquisitions and would you expect to maybe take on debt or issue stock to get any of them done?
Yeah. We will finance the acquisition with the $10 million in cash we have on hand and leverage up to $20 million with bank loans.
Okay. Are there opportunities that you are currently evaluating right now?
Yes, but I just want to emphasize that we do not expect any dilution in the financing. As I mentioned, we are capping each acquisition up to $20 million, 50% in cash and 50% from bank loans. We are sure that we will get bank financing since we are only targeting profitable companies. Regarding the opportunities, we have several opportunities on the table right now, and we have system in place to bring us lead to evaluate, and we will share details once something is signed.
Okay. You mentioned the stocks trading at book value discount to the broader Russell Microcap Index. What do you see as the biggest reason for that discount, and what do you think will close that gap?
Yeah, I do not see any other reason other than exposure. We have solid balance sheet. We have great performance for 22 consecutive quarters. The only reason is exposure. There are thousands of companies listed on Nasdaq, and we need to earn investors' attention for our story. That is exactly why I am here. We have decided to increase our participation in investors event from once a year to four times a year. I believe that together with our continued strong performance, will help to close the valuation gap.
Okay. In that regard, in terms of exposure, do you currently have research coverage?
Yes. We have research coverage. We were recently initiated on by AGP, Alliance Global Partners.
Okay. I haven't seen the report, but what is the price target that they have out there?
Yeah. AGP's target price is $8, which is almost double where we are trading today.
Okay. All right. Well, thanks for the presentation and the video, Eyal. Really enjoyed learning more about the company. Would you like to give some concluding remarks here before we wrap it up?
Yeah. Just I want to note one important thing, that 60% of our business serves the defense segment, and we expect our defense exposure to keep growing given the strong demand we are seeing, which we believe will continue for the next four to five years. Thank you for your time and attention today, and please reach out if you would like to continue the conversation. I look forward to seeing you at our next quarterly investor summit, video summit that we are doing, scheduled for November 30, following our Q2 results release. Thank you.
All right. Great. Thanks. Again, if anyone does have any questions, conference@sidoti.com and we'll forward them along to Eyal. Thanks everyone for listening in.
Thank you.