DPSI - DecisionPoint Systems Announces Second Quarter 2023 Results

August, 14 2023 04:10 PM DecisionPoint Systems Inc.

Record revenue of $31 million (+12%), GAAP Diluted EPS increased 17%, Non-GAAP Diluted EPS ¹ 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 Income ¹ and non-GAAP diluted EPS increased 26.6% and 19.6% to $1.0 million and $0.13, respectively;
Adjusted EBITDA ¹ decreased 9.4% to $2.5 million;
Paid down $4.3 million of debt related to the April 1, 2023 acquisition of MIS.

¹ See GAAP to non-GAAP explanations and reconciliations at the end of this release

Second Quarter Select Financial Metrics: 2023 versus 2022

(in 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 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

4.9

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

0.19

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20230814893119/en/

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

Company Name:	DecisionPoint Systems Inc.
Stock Symbol:	DPSI
Market:	OTC
Website:	decisionpt.com

Twitter