Ladies and gentlemen, thank you for standing by. Welcome to the B.O.S First Quarter 2018 Results Conference Call. All participants are at present in listen-only mode. Following Management's formal presentation, instructions will be given for the question-and-answer session.

[Operator Instructions] As a reminder, this conference call is being recorded and will be available on the BOS website as of tomorrow. I would now like to turn over the call to Mr. John Nesbett of IMS Investor Relations. Please go ahead..

Good morning and thank you for calling in to review BOS' first quarter 2018 results. Management will provide an overview of the results, followed by question-answer session. I'll now take a brief moment to read the Safe Harbor statement.

The forward looking statements contain herein reflect management's current views with respect to future events and financial performance.

These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of BOS.

These risk factors and uncertainties include amongst others the dependency of sales being generated from one or a few major customers, the uncertainty of BOS being able to maintain current gross profit margins and ability to keep up or ahead of technology and to succeed in a highly competitive industry; inability to maintain marketing and distribution agreements and to expand overseas markets uncertainty with respect to the prospects of legal claims against BOS.

The effective exchange rate fluctuations, general worldwide economic conditions and continued availability of financing for working capital purposes and to refinancing outstanding indebtedness. An additional risk and uncertainties detailed in BOS' periodic reports and registration statements filed with the US Securities Exchange Commission.

BOS undertakes no obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or an events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

On the call this morning, we have Yuval Viner Co-CEO and Eyal Cohen, Co-CEO and Chief Financial Officer. I will now turn the call over to Eyal for a financial review of the quarter. Please go ahead, Eyal..

Thank you, John. And thanks to those who have also joined the call today. I am exciting we have more than 20 participants in the call today. I will take you through the financial details of the quarter and then Yuval will provide a business overview.

Looking at the first quarter, we had a solid start of fiscal 2018 with our first quarter results reflecting our effort to expand our solution to existing and new customers. During the first quarter, we achieved strong organic revenue growth and increase of our international sales. Revenues for the quarter increased by 17% to $8.3 million.

Sales for the RFID and Mobile division grew by 15% mainly related to addition of two large customers, while sales in the Supply Chain division increased by 20% related to fulfillment of orders for existing Indian customers. On top line growth, this quarter was more organic.

Gross margin was 20% which is roughly the same as a comparable quarter of 2017. While gross margin in the RFID and Mobile division improved, we saw lower margins in the Supply Chain division related to product mix and timing which impacted Supply Chain division margin performance.

But as we continue through 2018, we expect to achieve blended gross margin that consistent with 2017. Operating expenses increased as compared to the first quarter of 2017 and it was mainly attributed to a devaluation of the US dollar again the Israel NIS by 7% in the first quarter of 2018.

The rest of the increase is attributed mainly to increase in revenues by 17%. Net income grew by 32% to $205,000 or $0.06 per share. In addition, EBITDA increased by 12% to $365,000. Turning to balance sheet. At March 2018, we had working capital of $7.1 million or current ratio of 1.9 with shareholder equity of $10.4 million, or $3.1 per share.

During the first quarter, we used $300,000 for renovation of our logistics center which we believe will increase the efficiency of our operation going forward.

I would like also to note that we have official engaged IR firm IMS in order to achieve broader investor awareness and educate the investment community on our key business development and growth objectives moving forward. I will now turn the call over to Yuval to review our business. Yuval, please go ahead..

Thank you, Eyal. Throughout our two divisions, RFID and Mobile and Supply Chain, BOS is well positioned to provide a wide range of solution to attractive and growing market.

Customers demand for IoT solution to track and monitor assets and inventory by variant technology such as RFID vision and sensor, it steadily increasing the possibility to deliver comprehensive turnkey solution is creating growth operating for our business.

We are leading provider in the Israeli market and we keep investing in innovation in order to keep this position going forward. In February alone, we received two orders from Israeli retail chain. One for self scanning solution to be used in a pilot program.

And the other for a mobile solution for store activities such as threat [Technical Difficulty] moving to our supply chain division.

We have made significant progress in the international market and in the first quarter of 2018 revenues from India, one of our target market in addition to the US and China increased 89% to $1.7 million representing 38% of our supply chain revenues.

Additionally, we receive 1,500 order from new Indian base customer last week as well as $320,000 order from a new customer in the United States in late April. We are pleased with our progress and excited to continue building our international pipeline.

Moreover, we have a diverse blue chip customer base which provides a predictability source of backlog in revenue for our company. Currently, we have over 8,000 active customers with 5,000 in the RFID Mobile division and 300 in the Supply Chain.

Our valued customers represent a cross-section of industry leaders from the avionic, defense, retail manufacture and government. We remain focused to access new project award while continuing to win contract from new customers.

As Eyal mentioned, since the start of calendar 2018, we have announced five new orders and we intend to continue joining additional blue cheap customer as we expand our product offerings. We are pleased with the strong first quarter performance from both division and we are focused on continuing this positive momentum as we move through 2018.

Looking forward, we believe that the fiscal year 2018 revenues will exceed $29 million and net income will grow over $800,000. Since management was appointment in 2010, we met all the financial outlook that we provide, and we are confident in our ability to execute in the fiscal year 2018. Now we will take questions from the audience..

[Operator Instructions] The first question is from Bryce Thomas of North Group Asset Management. Please go ahead..

Good morning. I know a big focus of the company has been to diversify revenue outside of Israel.

Can you give us a sense of what percentage of consolidated revenues from outside of Israel for the quarter compared to one year ago and approximately three years ago?.

Thank you for the question. I will take this question, Eyal. Our revenues outside of Israel have grown consistently over the years from approximately 20% in 2014 we grow to a degree to 25% in 2017 and in the first quarter it was higher, it was about --in the first quarter of 2018 it was something like a 26%.

And currently our major market outside of Israel is the Far East, India as you can see in our recent press releases. Thank you..

The next question is from Mike Hussey of Katamon Capital. Please go ahead..

Good morning. My understanding is that the business has relatively decent visibility into your revenues. I was wondering if you might be able to provide us with a rough sense of what percentage of your 2018 $29 million revenue guidance is actually booked at this point in time..

Thank you for the question, it's Yuval. Out of the $29 million revenue for year 2018, we booked about $17 million at the end of June. In addition major portion of our RFID and Mobile division revenue, it's from repeat orders from our existing customers for lab services, consumables such as RFID tag and ongoing inventory counting service.

Hence, we are confident that we will exceed the $29 million revenue in year 2018..

The next question is from Todd Felte of RHK Capital. Please go ahead..

Yes regarding the pilot program that you announced in February with the self scanning solution at the food retailer there.

Can you give an update on how that pilot program is progressing and if you expect this to be a new growing line of business for you?.

It's Yuval. The pilot with self scanning with the major retailer in Israel; we just started in a few stores. We exam that with the management of all the team that lead this project, and we at this moment don't know exactly about number of stores and how it will grow the business on this vertical market.

But there is a good feeling, good feedback first from the end-user and second from the management team. So we feel comfortable still I can't give the numbers but there is a good wave of doing the business on this specific vertical market..

There are no further questions at this time. Before I ask Mr. Viner to go ahead with the closing statement, I would like remind participants that a replay of this call will be available on the Company's website at www.boscorporate.com by tomorrow. Mr. Viner, you can make your concluding statement..

Yes. Thank you. I want to thank all the audience of this call and we will hear you all on our next call. Thanks..

This concludes BOS' First Quarter 2018 Results Conference Call. Thank you for your participation. You may go ahead and disconnect..