Revenue increased 37% to $27 million

DecisionPoint™ Systems, Inc. (NYSE American: DPSI), a mobility-first enterprise services and solutions company, today announced first quarter 2023 financial results ended March 31, 2023.

Steve Smith, chief executive officer of DecisionPoint commented: “Our momentum from 2022 carried into the first quarter of 2023 as we continued to execute on our proven growth model. We saw strong contributions from select projects in retail, along with a boost to our run-rate business realized from the upside synergies associated with our M&A and cross-selling activities.

“In addition to this strength in retail, we saw our mobility-first enterprise services and solutions strategy yield increases in our services and consumables businesses, which grew 18% and 27%, respectively. We also used this across-the-board strength in our business to reinvest internally in initiatives with higher margin potential, including our Vision portal and additional sales and business development resources. While this restrained our profitability growth near-term, we believe these investments will drive strong outcomes from a medium to longer-term perspective.”

First Quarter Highlights (2023 versus 2022)

  • Revenue increased 37.1% to $27.0 million;
  • Gross Profit increased 29.4% to $6.1 million;
  • GAAP Operating Income increased 399% to $1.2 million;
  • GAAP Net Income and diluted EPS increased slightly to $0.9 million and $0.11, respectively;
  • Non-GAAP Net Income and non-GAAP diluted EPS increased slightly to $1.3 million and $0.16, respectively;
  • Adjusted EBITDA increased 97.9% to $2.2 million;

First Quarter Select Financial Metrics: 2023 versus 2022

(in $M except for EPS)

1Q23

1Q22

 

Change

Total Revenue

$

27.0

 

$

19.7

 

 

37.1

%

 

Hardware Revenue

$

20.5

 

$

14.3

 

 

43.6

%

 

Software and Services Revenue

$

4.9

 

$

4.1

 

 

17.7

%

 

Consumables Revenue

$

1.6

 

$

1.3

 

 

27.0

%

 

Gross Profit

$

6.1

 

$

4.7

 

 

29.4

%

 

Gross Margin

 

22.4

%

 

23.7

%

 

 

 

Operating Income

$

1.2

 

$

0.2

 

 

399.2

%

 

GAAP Net Income

$

0.9

 

$

0.9

 

 

1.4

%

 

GAAP Diluted Earnings Per Share

$

0.11

 

$

0.11

 

 

1.1

%

 

Non-GAAP Net Income

$

1.3

 

$

1.3

 

 

2.1

%

 

Non-GAAP Diluted EPS

$

0.16

 

$

0.16

 

 

2.9

%

 

Adjusted EBITDA

$

2.2

 

$

1.1

 

 

97.9

%

 

*numbers may not add due to rounding

Balance Sheet and Liquidity as of March 31, 2022

Cash and cash equivalents were $18.0 million, compared to $7.6 million on December 31, 2022. Short-term and long-term debt were $1.0 million and $11.1 million, respectively. The increase in cash and debt related to the Company drawing down on its credit facilities in order close the acquisition of Macro Integration Services (MIS) on April 1, 2023.

2023 Commentary and Second Quarter Guidance (ending 6/30/23)

 

 

2Q23 Guidance

2Q22 Actual

Revenue

 

$29.0 - $31.0 Million

$27.5 Million

Adjusted EBITDA

 

$1.5 - $1.8 million

$2.7 Million

“Looking to the second quarter, we closed the MIS acquisition, which aligned with our strategic objectives of adding a higher mix of services, adding new solutions, filling geographic gaps and bringing new retail and hospitality customer relationships on the first day of the quarter. We expect the acquisition, combined with the continued fulfillment of the large retail customer orders, to drive higher revenue and gross margin sequentially and year over year. As a result, from the second quarter through the remainder of the year, we now expect MIS to incrementally add at least $12 million in revenue and over $1.2 million in adjusted EBITDA at an above-company average gross margin, as roughly 70% of MIS’ revenue comes from services,” concluded Smith.

Conference Call and Webcast Information

Management will host an earnings conference call and webcast at 11:00 a.m. Eastern Time. Q&A with investors will follow management's presentation of the results, outlook and strategy.

Live Call Information:

Date: May 15, 2023 Time: 11:00 a.m. Eastern Time Toll-Free: 1-877-407-3982 Toll/International: 1-201-493-6780 Call me™: Click Call me Link for instant telephone access to the event (Call me™ link will be made active 15 minutes prior to scheduled start time). Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1614929&tp_key=6c8b18f619

Replay Information:

Toll-Free: 1-844-512-2921 Toll/International: 1-412-317-6671 Replay Pin Number: 13738732 Replay Start: Monday, May 15, 2023, 12:00 p.m. ET Replay Expiry: Monday, May 22, 2023 at 11:59 p.m. ET

About DecisionPoint Systems

DecisionPoint Systems Inc. delivers mobility-first managed service and integration solutions to healthcare, supply chain, and retail customers, enabling them to make better and faster decisions in the moments that matter—the decision points. Our mission is to help businesses consistently deliver on those moments—accelerating growth, improving worker productivity, and lowering risks and costs. For more information about DecisionPoint Systems, Inc., visit https://www.decisionpt.com.

Forward-Looking Statements

In this press release, all statements that are not purely about historical facts, including, but not limited to, those in which we use the words "believe," "anticipate," "expect," "plan," "intend," "estimate, "target" and similar expressions, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our current judgment of what may happen in the future, actual results may differ materially from the results expressed or implied by these statements due to numerous important factors, including, but not limited to, those described in our most recent report on SEC Form 10-K (under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations"), which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. We are under no obligation, and expressly disclaim any obligation, to update the forward-looking statements in this press release, whether as a result of new information, future events or otherwise.

DecisionPoint Systems, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

(Unaudited)

 

 

March 31, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$

17,975

 

 

$

7,642

 

Accounts receivable, net

 

 

26,430

 

 

 

17,085

 

Inventory, net

 

 

5,923

 

 

 

4,417

 

Deferred costs

 

 

2,718

 

 

 

2,729

 

Prepaid expenses and other current assets

 

 

471

 

 

 

399

 

Total current assets

 

 

53,517

 

 

 

32,272

 

Operating lease assets

 

 

2,576

 

 

 

2,681

 

Property and equipment, net

 

 

1,838

 

 

 

1,817

 

Deferred costs, net of current portion

 

 

3,092

 

 

 

2,868

 

Deferred tax assets

 

 

838

 

 

 

848

 

Intangible assets, net

 

 

4,122

 

 

 

4,531

 

Goodwill

 

 

10,499

 

 

 

10,499

 

Other assets

 

 

45

 

 

 

41

 

Total assets

 

$

76,527

 

 

$

55,557

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

23,262

 

 

$

19,755

 

Accrued expenses and other current liabilities

 

 

3,612

 

 

 

5,357

 

Deferred revenue

 

 

12,159

 

 

 

6,021

 

Current portion of long-term debt

 

 

1,003

 

 

 

3

 

Current portion of operating lease liabilities

 

 

525

 

 

 

529

 

Total current liabilities

 

 

40,561

 

 

 

31,665

 

Deferred revenue, net of current portion

 

 

4,587

 

 

 

4,331

 

Long-term debt

 

 

11,142

 

 

 

143

 

Noncurrent portion of operating lease liabilities

 

 

2,581

 

 

 

2,706

 

Other liabilities

 

 

6

 

 

 

130

 

Total liabilities

 

 

58,877

 

 

 

38,975

 

Commitments and contingencies (Notes 6, 7 and 10)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.001 par value; 50,000 shares authorized; 7,417 and 7,416 shares issued and outstanding, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

38,631

 

 

 

38,429

 

Accumulated deficit

 

 

(20,988

)

 

 

(21,854

)

Total stockholders’ equity

 

 

17,650

 

 

 

16,582

 

Total liabilities and stockholders’ equity

 

$

76,527

 

 

$

55,557

 

DecisionPoint Systems, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Net sales:

 

 

 

 

 

 

Product

 

$

22,166

 

 

$

15,580

 

Service

 

 

4,873

 

 

 

4,141

 

Net sales

 

 

27,039

 

 

 

19,721

 

Cost of sales:

 

 

 

 

 

 

 

 

Product

 

 

17,885

 

 

 

12,422

 

Service

 

 

3,104

 

 

 

2,625

 

Cost of sales

 

 

20,989

 

 

 

15,047

 

Gross profit

 

 

6,050

 

 

 

4,674

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing expense

 

 

2,368

 

 

 

2,175

 

General and administrative expenses

 

 

2,494

 

 

 

2,261

 

Total operating expenses

 

 

4,862

 

 

 

4,436

 

Operating income

 

 

1,188

 

 

 

238

 

Interest expense

 

 

(13

)

 

 

(25

)

Other expense

 

 

-

 

 

4

 

Income before income taxes

 

 

1,175

 

 

 

217

 

Income tax (expense) benefit

 

 

(309

)

 

 

637

Net income and comprehensive income attributable to common stockholders

 

$

866

 

 

$

854

 

Earnings per share attributable to stockholders:

 

 

 

 

 

 

 

 

Basic

 

$

0.12

 

 

$

0.12

 

Diluted

 

$

0.11

 

 

$

0.11

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

7,417

 

 

 

7,104

 

Diluted

 

 

7,789

 

 

 

7,664

 

DecisionPoint Systems, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

Three Months Ended

March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

866

 

 

$

854

 

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

564

 

 

 

452

 

Share-based compensation expense

 

 

196

 

 

 

225

 

Allowance for doubtful accounts

 

 

68

 

 

 

-

 

Provision for inventory obsolescence

 

 

45

 

 

 

-

 

Deferred income taxes, net

 

 

10

 

 

 

(639

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(9,413

)

 

 

(2,102

)

Inventory

 

 

(1,551

)

 

 

1,190

Deferred costs

 

 

(212

)

 

 

(3

)

Prepaid expenses and other current assets

 

 

(75

)

 

 

(243

)

Accounts payable

 

 

3,507

 

 

 

(1,407

)

Accrued expenses and other current liabilities

 

 

(1,871

)

 

 

(901

)

Operating lease liabilities

 

 

(24

)

 

 

184

Deferred revenue

 

 

6,394

 

 

 

14,059

Net cash (used in) provided by operating activities

 

 

(1,496

)

 

 

11,669

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Cash paid for acquisitions, net of cash acquired

 

 

-

 

 

(4,460

)

Purchases of property and equipment

 

 

(176

)

 

 

(447

)

Net cash used in investing activities

 

 

(176

)

 

 

(4,907

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Line of credit, net

 

 

7,000

 

 

 

-

Payment under term loan

 

 

(1

)

 

 

-

 

Proceeds from term loan

 

 

5,000

 

 

-

Proceeds from exercise of stock options

 

 

6

 

 

 

-

 

Net cash provided by financing activities

 

 

12,005

 

 

-

Change in cash

 

 

10,333

 

 

 

6,762

 

Cash, beginning of period

 

 

7,642

 

 

 

2,587

 

Cash, end of period

 

$

17,975

 

 

$

9,349

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

7

 

 

$

25

 

Cash paid for income taxes

 

$

-

 

 

$

-

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

Right of use assets obtained in exchange for new operating lease liabilities

 

$

-

 

 

$

3,211

 

Cashless exercise of stock options

 

$

-

 

 

$

3,508

 

Trended Financial Information*

 (in $M except for EPS)

 

1Q22

 

2Q22

 

3Q22

 

4Q22

 

1Q23

 

 

FY21

 

 FY22

 

Total Revenue

 

 $

19.7

 

 

 $

27.5

 

 

 $

25.7

 

 

 $

24.5

 

 

 $

27.0

 

 

 

 $

65.9

 

 

 $

97.4

 

 

Hardware Revenue

 

 $

14.3

 

 

 $

20.6

 

 

 $

19.2

 

 

 $

17.7

 

 

 $

20.5

 

 

 

 $

44.4

 

 

 $

71.8

 

 

Software and Services Revenue

 

 $

   4.1

 

 

 $

   4.8

 

 

 $

   4.7

 

 

 $

   4.7

 

 

 $

   4.9

 

 

 

 $

15.5

 

 

 $

18.3

 

 

Consumables Revenue

 

 $

   1.3

 

 

 $

   2.1

 

 

 $

   1.8

 

 

 $

   2.1

 

 

 $

   1.6

 

 

 

 $

   6.1

 

 

 $

   7.3

 

 

Gross Profit

 

 $

   4.7

 

 

 $

   6.3

 

 

 $

   5.8

 

 

 $

   6.3

 

 

 $

   6.1

 

 

 

 $

15.3

 

 

 $

23.1

 

 

Gross Margin

 

 

23.7

%

 

 

23.0

%

 

 

22.4

%

 

 

25.9

%

 

 

22.4

%

 

 

 

23.2

%

 

 

23.7

%

 

Operating Income

 

 $

   0.2

 

 

 $

   2.0

 

 

 $

   1.5

 

 

 $

   0.7

 

 

 $

   1.2

 

 

 

 $

   0.4

 

 

 $

   4.4

 

 

GAAP Net Income

 

 $

   0.9

 

 

 $

   0.7

 

 

 $

   1.1

 

 

 $

   0.4

 

 

 $

   0.9

 

 

 

 $

   1.4

 

 

 $

   3.1

 

 

GAAP Diluted EPS

 

 $

0.11

 

 

 $

0.09

 

 

 $

0.15

 

 

 $

0.07

 

 

 $

0.11

 

 

 

 $

0.19

 

 

 $

0.41

 

 

Non-GAAP Net Income

 

 $

   1.3

 

 

 $

   0.8

 

 

 $

   1.2

 

 

 $

   0.7

 

 

 $

   1.3

 

 

 

 $

   1.5

 

 

 $

   4.1

 

 

Non-GAAP Diluted EPS

 

 $

0.16

 

 

 $

0.11

 

 

 $

0.16

 

 

 $

0.11

 

 

 $

0.16

 

 

 

 $

0.20

 

 

 $

0.54

 

 

nm = not measurable/meaningful

*numbers may not add due to rounding

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements presented on a GAAP basis, we have provided non-GAAP financial information, namely non-GAAP Net Income, non-GAAP diluted EPS and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for transaction-related and non-recurring items). We believe that these non-GAAP measures provide investors with a better understanding of how the results relate to our historical performance as well as when comparing our results to other publicly-traded companies. The additional adjusted information is not meant to be considered in isolation or as a substitute for GAAP financials. Management believes that these adjusted measures reflect the essential operating activities of the Company. A reconciliation of non-GAAP financial information appears below:

Supplemental Financial Information

Reconciliation of Select GAAP Financial Measures to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended

March, 31

2023

2022

Net income, as reported

$

866

$

854

 

Share-based compensation

 

196

 

225

 

Business acquisition costs

 

221

 

177

 

NYSE American uplisting costs

 

-

 

-

 

Gain on extinguishment of debt

 

-

 

-

 

Non-GAAP net income

$

1,283

$

1,256

 

Depreciation and amortization

 

564

 

452

 

Income taxes

 

309

 

(637

)

Interest expense

 

13

 

25

 

Adjusted EBITDA

$

2,169

$

1,096

 

 

Diluted EPS, as reported

$

0.11

$

0.11

 

Adjusted Diluted EPS

$

0.16

$

0.16

 

 

Weighted average diluted common shares outstanding

 

7,789

 

7,664

 

Investor Relations Contact: Brian Siegel, IRC, MBA Senior Managing Director, Hayden IR (346) 396-8696 Brian@haydenir.com

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