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 |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20231114683449/en/