Record revenue of $31 million (+12%), GAAP Diluted EPS increased 17%, Non-GAAP Diluted EPS1 increased 20% versus prior year

Higher gross margin software, services and consumables mix increased to 40% of revenue

Paid down $4.3 million in debt related to the early second quarter acquisition of Macro Integration Services

DecisionPoint™ Systems, Inc. (NYSE American: DPSI), the leading mobility-first enterprise services and solutions company, today announced second quarter 2023 financial results ended June 30, 2023.

Steve Smith, chief executive officer of DecisionPoint, commented: “We continued to execute on our proven growth model during the second quarter, benefiting from the synergies upside of our past M&A and cross-selling activities. Additionally, we acquired Macro Integration Services (MIS) at the beginning of the quarter, which shifted our mix towards higher gross margin software and services and gave us a significantly deeper presence in the retail vertical, especially grocery and foodservice.

“The MIS acquisition is already playing an important role in transforming the Company. In addition to the revenue mix shift towards higher margin services and software, it expands our core competencies, geographic footprint and solutions offering. Finally, strong cash flow from operations enabled us to pay down a material portion of the debt we took on at the end of the first quarter to acquire MIS.”

Second Quarter Highlights (2023 versus 2022)

  • Revenue increased 12.4% to $30.9 million;
  • Gross Profit increased 22.5% to $7.7 million; Gross Margin increased 210 basis points to 25.1%;
  • GAAP Operating Income decreased 32.1% to $1.3 million;
  • GAAP Net Income and diluted EPS increased 15.8% and 16.9% to $0.8 million and $0.11, respectively;
  • Non-GAAP Net Income1 and non-GAAP diluted EPS increased 26.6% and 19.6% to $1.0 million and $0.13, respectively;
  • Adjusted EBITDA1 decreased 9.4% to $2.5 million;
  • Paid down $4.3 million of debt related to the April 1, 2023 acquisition of MIS.
1See GAAP to non-GAAP explanations and reconciliations at the end of this release

Second Quarter Select Financial Metrics: 2023 versus 2022

(in $M except for EPS)

2Q23

2Q22

Change

YTD FY23

YTD FY22

Change

Total Revenue

$ 30.9

$ 27.5

12.4%

$ 58.0

$ 47.2

22.8%

Hardware

$ 19.7

$ 22.7

-13.0%

$ 41.9

$ 38.3

9.5%

Software and Services

$ 11.2

$ 4.8

132.6%

$ 16.0

$ 8.9

79.4%

Gross Profit

$ 7.7

$ 6.3

22.5%

$ 13.8

$ 11.0

25.4%

Gross Margin

25.1%

23.0%

 

23.8%

23.3%

 

GAAP Operating Income

$ 1.3

$ 2.0

-32.1%

$ 2.5

$ 2.2

14.1%

GAAP Net Income

$ 0.8

$ 0.7

15.8%

$ 1.7

$ 1.6

8.0%

GAAP Diluted EPS

$ 0.11

$ 0.09

16.9%

$ 0.22

$ 0.20

8.2%

Non-GAAP Net Income

$ 1.0

$ 0.8

26.6%

$ 2.3

$ 2.1

11.8%

Non-GAAP Diluted EPS

$ 0.13

$ 0.11

19.6%

$ 0.30

$ 0.27

9.5%

Adjusted EBITDA

$ 2.5

$ 2.7

-9.4%

$ 4.6

$ 3.8

21.3%

*numbers may not add due to rounding

Balance Sheet and Liquidity as of June 30, 2022

Cash and cash equivalents were $7.2 million, compared to $7.6 million on December 31, 2022. Short-term and long-term debt were $1.0 million and $6.9 million, respectively. The decrease in cash and increase in debt was related to the Company drawing down on its credit facilities to close the acquisition of MIS on April 1, 2023 and subsequently paying down $4.3 million in debt at the end of the quarter.

2023 Commentary and Third Quarter Guidance (ending 9/30/23)

“Looking to the third quarter, we are targeting $27.0 to $29.0 million in revenue (5 to 13% revenue growth) and adjusted EBITDA in the range of $2.0 to 2.3 million. Our business remains robust as, with the acquisition of MIS, we now have five new top ten customers and a much deeper play in providing retail technology solutions to customers,” 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: August 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 before the scheduled start time). Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1628170&tp_key=86d6b02517

Replay Information: Toll-Free: 1-844-512-2921 Toll/International: 1-412-317-6671 Replay Pin Number: 13740529 Replay Start: Tuesday, August 15, 2023, 12:00 p.m. ET Replay Expiry: Tuesday, August 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)

 

 

 

June 30,

 

December 31,

 

 

2023

 

2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash

 

$

7,225

 

 

$

7,642

 

Accounts receivable, net

 

 

16,566

 

 

 

17,085

 

Inventory, net

 

 

2,446

 

 

 

4,417

 

Deferred costs

 

 

3,184

 

 

 

2,729

 

Prepaid expenses and other current assets

 

 

397

 

 

 

399

 

Total current assets

 

 

29,818

 

 

 

32,272

 

Operating lease assets

 

 

3,778

 

 

 

2,681

 

Property and equipment, net

 

 

2,920

 

 

 

1,817

 

Deferred costs, net of current portion

 

 

2,744

 

 

 

2,868

 

Deferred tax assets

 

 

-

 

 

 

848

 

Intangible assets, net

 

 

8,993

 

 

 

4,531

 

Goodwill

 

 

24,379

 

 

 

10,499

 

Other assets

 

 

105

 

 

 

41

 

Total assets

 

$

72,737

 

 

$

55,557

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

12,628

 

 

$

19,755

 

Accrued expenses and other current liabilities

 

 

6,283

 

 

 

5,357

 

Deferred revenue

 

 

7,367

 

 

 

6,021

 

Current portion of earnout consideration

 

 

5,520

 

 

 

-

 

Current portion of long-term debt

 

 

1,003

 

 

 

3

 

Current portion of operating lease liabilities

 

 

866

 

 

 

529

 

Total current liabilities

 

 

33,667

 

 

 

31,665

 

Deferred revenue, net of current portion

 

 

3,724

 

 

 

4,331

 

Long-term debt

 

 

6,891

 

 

 

143

 

Noncurrent portion of operating lease liabilities

 

 

3,516

 

 

 

2,706

 

Long-term portion of earnout consideration

 

 

4,316

 

 

 

-

 

Deferred tax liabilities

 

 

1,909

 

 

 

-

 

Other liabilities

 

 

6

 

 

 

130

 

Total liabilities

 

 

54,029

 

 

 

38,975

 

Commitments and contingencies (Notes 6 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; 7,628 and 7,416 shares issued and outstanding, respectively

 

 

8

 

 

 

7

 

Additional paid-in capital

 

 

38,853

 

 

 

38,429

 

Accumulated deficit

 

 

(20,153

)

 

 

(21,854

)

Total stockholders’ equity

 

 

18,708

 

 

 

16,582

 

Total liabilities and stockholders’ equity

 

$

72,737

 

 

$

55,557

 

 

DecisionPoint Systems, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2023

 

2022

 

2023

 

2022

Net sales:

 

 

 

 

 

 

 

 

Product

 

$

19,746

 

 

$

22,692

 

 

$

41,912

 

 

$

38,272

 

Service

 

 

11,166

 

 

 

4,814

 

 

 

16,039

 

 

 

8,955

 

Net sales

 

 

30,912

 

 

 

27,506

 

 

 

57,951

 

 

 

47,227

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

15,980

 

 

 

17,869

 

 

 

33,865

 

 

 

30,290

 

Service

 

 

7,184

 

 

 

3,310

 

 

 

10,287

 

 

 

5,935

 

Cost of sales

 

 

23,164

 

 

 

21,179

 

 

 

44,152

 

 

 

36,225

 

Gross profit

 

 

7,748

 

 

 

6,327

 

 

 

13,799

 

 

 

11,002

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing expense

 

 

2,491

 

 

 

2,384

 

 

 

4,859

 

 

 

4,560

 

General and administrative expenses

 

 

3,911

 

 

 

1,960

 

 

 

6,406

 

 

 

4,220

 

Total operating expenses

 

 

6,402

 

 

 

4,344

 

 

 

11,265

 

 

 

8,780

 

Operating income

 

 

1,346

 

 

 

1,983

 

 

 

2,534

 

 

 

2,222

 

Interest expense

 

 

(210

)

 

 

(9

)

 

 

(223

)

 

 

(35

)

Other income (expense)

 

 

9

 

 

 

(21

)

 

 

9

 

 

 

(16

)

Income before income taxes

 

 

1,145

 

 

 

1,953

 

 

 

2,320

 

 

 

2,171

 

Income tax expense

 

 

(310

)

 

 

(1,232

)

 

 

(619

)

 

 

(598

)

Net income and comprehensive income attributable to common stockholders

 

$

835

 

 

$

721

 

 

$

1,701

 

 

$

1,573

 

Earnings per share attributable to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

 

$

0.10

 

 

$

0.23

 

 

$

0.22

 

Diluted

 

$

0.11

 

 

$

0.09

 

 

$

0.22

 

 

$

0.20

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

7,601

 

 

 

7,222

 

 

 

7,447

 

 

 

7,209

 

Diluted

 

 

7,935

 

 

 

7,691

 

 

 

7,869

 

 

 

7,720

 

 

DecisionPoint Systems, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

June 30,

 

 

2023

 

2022

Cash flows from operating activities

 

 

 

 

Net income

 

$

1,701

 

 

$

1,573

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,297

 

 

 

1,128

 

Amortization of inventory valuation adjustment

 

 

120

 

 

 

-

 

Loss on fixed asset disposal

 

 

235

 

 

 

22

 

Share-based compensation expense

 

 

216

 

 

 

275

 

Provision for inventory obsolescense

 

 

2

 

 

 

-

 

Deferred income taxes, net

 

 

(447

)

 

 

589

 

Provision for doubtful accounts

 

 

118

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

10,525

 

 

 

(4,950

)

Inventory, net

 

 

4,479

 

 

 

1,369

 

Deferred costs

 

 

(331

)

 

 

(305

)

Prepaid expenses and other current assets

 

 

93

 

 

 

(171

)

Accounts payable

 

 

(9,936

)

 

 

4,479

 

Accrued expenses and other current liabilities

 

 

(2,596

)

 

 

(501

)

Operating lease liabilities

 

 

(63

)

 

 

264

 

Deferred revenue

 

 

(405

)

 

 

9,100

 

Net cash provided by operating activities

 

 

5,008

 

 

 

12,872

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(579

)

 

 

(1,095

)

Cash paid for acquisitions, net of cash acquired

 

 

(12,794

)

 

 

(4,525

)

Net cash used in investing activities

 

 

(13,373

)

 

 

(5,620

)

Cash flows from financing activities

 

 

 

 

 

 

Repayment of term debt

 

 

(252

)

 

 

(2

)

Line of credit, net

 

 

3,000

 

 

 

-

 

Proceeds from term loan

 

 

5,000

 

 

 

-

 

Cash paid for taxes on the cashless exercises of stock options

 

 

-

 

 

 

(1,403

)

Proceeds from exercise of warrants

 

 

187

 

 

 

-

 

Proceeds from exercise of stock options

 

 

13

 

 

 

25

 

Net cash provided by (used in) financing activities

 

 

7,948

 

 

 

(1,380

)

Change in cash

 

 

(417

)

 

 

5,872

 

Cash, beginning of period

 

 

7,642

 

 

 

2,587

 

Cash, end of period

 

$

7,225

 

 

$

8,459

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Cash paid for interest

 

$

88

 

 

$

31

 

Cash paid for income taxes

 

$

419

 

 

$

109

 

Supplemental disclosure of non-cash activities

 

 

 

 

 

 

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

 

$

-

 

 

$

3,211

 

Cashless exercise of warrants

 

$

9

 

 

$

3,508

 

 

Trended Financial Information

 

(in $M except for EPS)

 

1Q22

 

 

2Q22

 

 

3Q22

 

 

4Q22

 

 

1Q23

 

 

2Q23

 

 

FY21

 

 

FY22

 

 

YTD FY23

 

Total Revenue

 

$

19.7

 

 

$

27.5

 

 

$

25.7

 

 

$

24.5

 

 

$

27.0

 

 

$

30.9

 

 

$

65.9

 

 

$

97.4

 

 

$

58.0

 

Hardware

 

$

15.6

 

 

$

22.7

 

 

$

21.0

 

 

$

19.8

 

 

$

22.2

 

 

$

19.7

 

 

$

44.4

 

 

$

71.8

 

 

$

41.9

 

Software and Services

 

$

4.1

 

 

$

4.8

 

 

$

4.7

 

 

$

4.7

 

 

$

4.9

 

 

$

11.2

 

 

$

15.5

 

 

$

18.3

 

 

$

16.0

 

Gross Profit

 

$

4.7

 

 

$

6.3

 

 

$

5.8

 

 

$

6.3

 

 

$

6.1

 

 

$

7.7

 

 

$

15.3

 

 

$

23.1

 

 

$

13.8

 

Gross Margin

 

 

23.7

%

 

 

23.0

%

 

 

22.4

%

 

 

25.9

%

 

 

22.4

%

 

 

25.1

%

 

 

23.2

%

 

 

23.7

%

 

 

23.8

%

Operating (loss) Income

 

$

0.2

 

 

$

2.0

 

 

$

1.5

 

 

$

0.7

 

 

$

1.2

 

 

$

1.3

 

 

$

0.4

 

 

$

4.4

 

 

$

2.5

 

GAAP Net (loss) Income

 

$

0.9

 

 

$

0.7

 

 

$

1.1

 

 

$

0.4

 

 

$

0.9

 

 

$

0.8

 

 

$

1.4

 

 

$

3.1

 

 

$

1.7

 

GAAP Diluted EPS

 

$

0.11

 

 

$

0.09

 

 

$

0.15

 

 

$

0.07

 

 

$

0.11

 

 

$

0.11

 

 

$

0.19

 

 

$

0.41

 

 

$

0.22

 

Non-GAAP Net Income

 

$

1.3

 

 

$

0.8

 

 

$

1.2

 

 

$

0.7

 

 

$

1.3

 

 

$

1.0

 

 

$

1.5

 

 

$

4.1

 

 

$

2.3

 

Non-GAAP Diluted EPS

 

$

0.16

 

 

$

0.11

 

 

$

0.16

 

 

$

0.11

 

 

$

0.16

 

 

$

0.13

 

 

$

0.20

 

 

$

0.54

 

 

$

0.30

 

Adjusted EBITDA

 

$

1.1

 

 

$

2.7

 

 

$

2.3

 

 

$

1.8

 

 

$

2.2

 

 

$

2.5

 

 

$

3.1

 

 

$

7.8

 

 

$

4.6

 

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

 

 

Six Months Ended

 

 

 

June 30

 

 

June 30

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income, as reported

 

$

835

 

 

$

721

 

 

$

1,701

 

 

$

1,573

 

Share-based compensation

 

 

20

 

 

 

50

 

 

 

216

 

 

 

275

 

Business acquisition costs

 

 

189

 

 

 

25

 

 

 

410

 

 

 

202

 

NYSE American uplisting costs

 

 

-

 

 

 

29

 

 

 

-

 

 

 

-

 

Non-GAAP net income

 

$

1,044

 

 

$

825

 

 

$

2,327

 

 

$

2,050

 

Depreciation and amortization

 

 

908

 

 

 

676

 

 

 

1,472

 

 

 

1,128

 

Income taxes

 

 

310

 

 

 

1,232

 

 

 

619

 

 

 

595

 

Interest expense

 

 

210

 

 

 

9

 

 

 

223

 

 

 

34

 

Adjusted EBITDA

 

$

2,471

 

 

$

2,742

 

 

$

4,640

 

 

$

3,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS, as reported

 

$

0.11

 

 

$

0.09

 

 

$

0.22

 

 

$

0.20

 

Adjusted Diluted EPS

 

$

0.13

 

 

$

0.10

 

 

$

0.30

 

 

$

0.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted common shares outstanding

 

 

7,935

 

 

 

7,691

 

 

 

7,869

 

 

 

7,720

 

 

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

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