Record third quarter revenue of $27.1 million (+5%)

Record gross margin of 27.6% (+520 bps) and software/services mix of 45%

Provides 2023 guidance of 14-16% revenue growth and 13-17% adjusted EBITDA growth

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

Steve Smith, chief executive officer of DecisionPoint Systems, commented: “Our services-oriented strategy is fueling our growth model and clearly differentiates us from our peers in the industry. We continued to show year-over-year growth in the third quarter, driven by a record mix of software and services at 45% of revenue. This differentiation has allowed us to buck industry trends and drive profitable growth.

“We also continued to see synergies from our acquisition of Macro Integration Services (MIS) and are already creating growth opportunities due to the cross-selling activities across the Company. For example, we’re conducting broader, CIO-level meetings around our combined mobile and services portfolio at several MIS customers.

“Finally, strong cash flow from operations enabled us to pay down another $1.5 million in debt related to the Macro Integration Services acquisition.”

Third Quarter Highlights (2023 versus 2022)

  • Revenue increased 5.4% to $27.1 million;
  • Gross Profit increased 30.3% to $7.5 million; Gross Margin increased 520 basis points to 27.6%;
  • GAAP Operating Income was flat at $1.5 million;
  • GAAP Net Income and diluted EPS decreased 1.0% and 11.2% to $1.0 million and $0.13, respectively;
  • Non-GAAP Net Income1 and non-GAAP diluted EPS decreased 8.4% and 16.6% to $1.1 million and $0.13, respectively;
  • Adjusted EBITDA1 increased 1.3% to $2.3 million;
  • Paid down $1.5 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

Third Quarter Select Financial Metrics: 2023 versus 2022

(in $M except for EPS)

3Q23

3Q22

Change

YTD 2023

YTD 2022

Change

Total Revenue

$

27.1

$

25.7

5.4

%

$

85.1

$

73.0

16.5

%

Hardware Solutions Revenue

$

14.0

$

19.2

-27.1

%

$

52.8

$

54.1

-2.4

%

Software and Services Revenue

$

11.7

$

4.7

147.6

%

$

27.7

$

13.7

102.5

%

Consumables Revenue

$

1.4

$

1.8

-21.5

%

$

4.5

$

5.2

-13.5

%

Gross Profit

$

7.5

$

5.8

30.3

%

$

21.3

$

16.8

26.8

%

Operating Income

$

1.5

$

1.5

-0.7

%

$

4.1

$

3.8

6.6

%

GAAP Net Income

$

1.1

$

1.1

-1.0

%

$

2.8

$

2.7

3.7

%

GAAP Diluted Earnings Per Share

$

0.13

$

0.15

-11.2

%

$

0.36

$

0.36

0.0

%

Non-GAAP Net Income

$

1.1

$

1.2

-8.4

%

$

3.5

$

3.3

4.6

%

Non-GAAP Diluted EPS

$

0.13

$

0.16

-16.6

%

$

0.45

$

0.43

4.8

%

Adjusted EBITDA

$

2.3

$

2.3

1.5

%

$

6.8

$

6.1

11.5

%

*numbers may not add due to rounding

Balance Sheet and Liquidity as of September 30, 2023

Cash and cash equivalents were $3.6 million, compared to $7.6 million on December 31, 2022. Short-term and long-term debt were $1.0 million and $5.7 million, respectively.

2023 Commentary and Guidance (ending 12/31/23)

 

2023 Guidance

2022 Actual

2023 vs 2022

Revenue

$111.0 million - $113.0 million

$97.1 million

+14% - 16%

Adjusted EBITDA

$8.9 - $9.2 million

$7.8 Million

+13% - 17%

“For the full year 2023, we now expect revenue in the range of $111.0 to $113.0 million with $8.9 to $9.2 million in adjusted EBITDA. Note this increase in adjusted EBITDA is coming despite investing $1 million in expanding our managed services capabilities in 2023, which we expect to begin generating positive returns in 2024. Additionally, to drive further growth, especially in our managed services offerings, we recently shifted resources internally while further increasing our investment in business development by adding several high-level, quota-carrying key account managers who are well-regarded within the industry. We expect these additions to contribute nominally to revenue in our fourth quarter and, more significantly, in 2024,” concluded Smith.

Trended Financial Information* (in $M except for EPS)

 

1Q22

 

2Q22

 

3Q22

 

4Q22

 

1Q23

 

2Q23

 

3Q23

FY 2022

YTD FY2023

Total Revenue

$

19.7

$

27.5

$

25.7

$

24.5

$

27.0

$

30.9

$

27.1

$

97.4

$

85.1

Hardware Solutions Revenue

$

14.3

$

20.6

$

19.2

$

17.7

$

20.5

$

18.3

$

14.0

$

71.8

$

52.8

Software and Services Revenue

$

4.1

$

4.8

$

4.7

$

4.7

$

4.9

$

11.2

$

11.7

$

18.3

$

27.7

Consumables Revenue

$

1.3

$

2.1

$

1.8

$

2.1

$

1.6

$

1.5

$

1.4

$

7.3

$

4.5

Gross Profit

$

4.7

$

6.3

$

5.8

$

6.3

$

6.1

$

7.7

$

7.5

$

23.1

$

21.3

Operating (loss) Income

$

0.2

$

2.0

$

1.5

$

0.7

$

1.2

$

1.3

$

1.5

$

4.4

$

4.1

Net (loss) Income

$

0.9

$

0.7

$

1.1

$

0.4

$

0.9

$

0.8

$

1.1

$

3.1

$

2.8

Diluted EPS

$

0.11

$

0.09

$

0.15

$

0.07

$

0.11

$

0.11

$

0.13

$

0.41

$

0.35

Non-GAAP Net Income

$

1.3

$

0.8

$

1.2

$

0.7

$

1.3

$

1.0

$

1.1

$

4.1

$

3.5

Non-GAAP Diluted EPS

$

0.16

$

0.11

$

0.16

$

0.11

$

0.16

$

0.13

$

0.13

$

0.54

$

0.45

Adjusted EBITDA

$

1.1

$

2.7

$

2.3

$

1.8

$

2.1

$

2.5

$

2.3

$

7.8

$

6.9

nm = not measurable/meaningful *numbers may not add due to rounding

Earnings Conference Call and Webcast Information Date: November 14, 2023 Time: 1:00 p.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: 13742540 Replay Start: Tuesday, November 14, 2023, 2:00 p.m. ET Replay Expiry: Tuesday, November 21, 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)

September 30,

December 31,

2023

2022

ASSETS Current assets: Cash $

3,645

 

$

7,642

 

Accounts receivable, net

18,939

 

17,085

 

Inventory, net

3,002

 

4,417

 

Deferred costs

3,443

 

2,729

 

Prepaid expenses and other current assets

259

 

399

 

Total current assets

29,288

 

32,272

 

Operating lease assets

3,586

 

2,681

 

Property and equipment, net

2,980

 

1,817

 

Deferred costs, net of current portion

3,365

 

2,868

 

Deferred tax assets

-

 

848

 

Intangible assets, net

8,404

 

4,531

 

Goodwill

24,555

 

10,499

 

Other assets

140

 

41

 

Total assets $

72,318

 

$

55,557

 

LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $

12,848

 

$

19,755

 

Accrued expenses and other current liabilities

5,826

 

5,357

 

Deferred revenue

6,886

 

6,021

 

Current portion of earnout consideration

5,520

 

-

 

Current portion of long-term debt

1,003

 

3

 

Current portion of operating lease liabilities

870

 

529

 

Total current liabilities

32,953

 

31,665

 

Deferred revenue, net of current portion

4,845

 

4,331

 

Long-term debt

5,693

 

143

 

Noncurrent portion of operating lease liabilities

3,315

 

2,706

 

Long-term portion of earnout consideration

4,316

 

-

 

Deferred tax liabilities

1,451

 

-

 

Other liabilities

6

 

130

 

Total liabilities

52,579

 

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; 7,654 and 7,416 shares issued and outstanding, respectively

8

 

7

 

Additional paid-in capital

38,831

 

38,429

 

Accumulated deficit

(19,100

)

(21,854

)

Total stockholders’ equity

19,739

 

16,582

 

Total liabilities and stockholders’ equity $

72,318

 

$

55,557

 

 

DecisionPoint Systems, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2023

2022

2023

2022

Net sales: Product $

15,436

 

$

20,988

 

$

57,348

 

$

59,259

 

Service

11,704

 

4,725

 

27,743

 

13,681

 

Net sales

27,140

 

25,713

 

85,091

 

72,940

 

Cost of sales: Product

12,340

 

16,923

 

46,205

 

47,213

 

Service

7,317

 

3,036

 

17,604

 

8,971

 

Cost of sales

19,657

 

19,959

 

63,809

 

56,184

 

Gross profit

7,483

 

5,754

 

21,282

 

16,756

 

Operating expenses: Sales and marketing expense

2,129

 

2,291

 

6,988

 

6,850

 

General and administrative expenses

3,838

 

1,936

 

10,242

 

6,155

 

Total operating expenses

5,967

 

4,227

 

17,230

 

13,005

 

Operating income

1,516

 

1,527

 

4,052

 

3,751

 

Interest expense

(162

)

(7

)

(385

)

(42

)

Other income (expense)

15

 

-

 

23

 

(17

)

Income before income taxes

1,369

 

1,520

 

3,690

 

3,692

 

Income tax expense

(316

)

(409

)

(935

)

(1,008

)

Net income and comprehensive income attributable to common stockholders $

1,053

 

$

1,111

 

$

2,755

 

$

2,684

 

Earnings per share attributable to stockholders: Basic $

0.14

 

$

0.15

 

$

0.37

 

$

0.37

 

Diluted $

0.13

 

$

0.15

 

$

0.36

 

$

0.36

 

Weighted average common shares outstanding Basic

7,640

 

7,290

 

7,514

 

7,210

 

Diluted

7,812

 

7,593

 

7,659

 

7,510

 

DecisionPoint Systems, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Nine Months Ended September 30,

2023

2022

Cash flows from operating activities Net income $

2,755

 

$

2,684

 

Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization

2,028

 

1,750

 

Amortization of inventory valuation adjustment

120

 

-

 

Loss on fixed asset disposal

-

 

22

 

Share-based compensation expense

261

 

325

 

Provision for inventory obsolescense

7

 

-

 

Deferred income taxes, net

(958

)

460

 

Provision for doubtful accounts

77

 

32

 

Changes in operating assets and liabilities: Accounts receivable

8,193

 

(811

)

Inventory, net

3,918

 

825

 

Deferred costs

(1,211

)

(1,155

)

Prepaid expenses and other current assets

196

 

186

 

Accounts payable

(9,716

)

7,213

 

Accrued expenses and other current liabilities

(3,054

)

(139

)

Operating lease liabilities

(68

)

265

 

Deferred revenue

235

 

2,279

 

Net cash provided by operating activities

2,783

 

13,936

 

Cash flows from investing activities Purchases of property and equipment

(546

)

(1,299

)

Cash paid for acquisitions, net of cash acquired

(12,917

)

(4,525

)

Net cash used in investing activities

(13,463

)

(5,824

)

Cash flows from financing activities Repayment of term debt

(253

)

(3

)

Line of credit, net

1,803

 

-

 

Proceeds from term loan

5,000

 

-

 

Cash paid for taxes on the cashless exercises of stock options

(67

)

(1,403

)

Proceeds from exercise of warrants

187

 

-

 

Proceeds from exercise of stock options

13

 

154

 

Net cash provided by (used in) financing activities

6,683

 

(1,252

)

Change in cash

(3,997

)

6,860

 

Cash, beginning of period

7,642

 

2,587

 

Cash, end of period $

3,645

 

$

9,447

 

Supplemental disclosures of cash flow information Cash paid for interest $

333

 

$

38

 

Cash paid for income taxes $

1,060

 

$

497

 

Supplemental disclosure of non-cash activities Right-of-use assets obtained in exchange for new operating lease liabilities $

-

 

$

3,211

 

Cashless exercise of warrants $

12

 

$

3,508

 

Cashless exercise of stock options $

25

 

$

-

 

Trended Financial Information

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 Nine Months Ended September 30, September 30,

2023

2022

2023

2022

Net income, as reported

$

1,053

$

1,111

$

2,755

$

2,684

Share-based compensation

 

45

 

50

 

261

 

325

Business acquisition costs

 

26

 

65

 

436

 

242

NYSE American uplisting costs

 

-

 

1

 

-

 

1

Non-GAAP net income

$

1,124

$

1,227

$

3,452

$

3,252

Depreciation and amortization

 

731

 

622

 

2,028

 

1,750

Income taxes

 

316

 

409

 

935

 

1,008

Interest expense

 

162

 

7

 

385

 

42

Adjusted EBITDA

$

2,333

$

2,265

$

6,800

$

6,052

  Diluted EPS, as reported

$

0.13

$

0.15

$

0.36

$

0.36

Adjusted Diluted EPS

$

0.14

$

0.16

$

0.45

$

0.43

  Weighted average diluted common shares outstanding

 

7,812

 

7,593

 

7,659

 

7,510

 

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

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