DecisionPoint Systems Announces Third Quarter 2023 Results

Rhea-AI Summary

DecisionPoint Systems, Inc. (NYSE American: DPSI) announced record third quarter revenue of $27.1 million, a 5% increase from the previous year. The company achieved a record gross margin of 27.6% and a software/services mix of 45%. DecisionPoint Systems, Inc. provided a 2023 guidance of 14-16% revenue growth and 13-17% adjusted EBITDA growth.

 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

DELRAY BEACH, Fla.--(BUSINESS WIRE)-- 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/

Investor Relations Contact:

Brian Siegel, IRC, MBA

Senior Managing Director, Hayden IR

(346) 396-8696

Brian@haydenir.com

Source: DecisionPoint™ Systems, Inc.

FAQ

What is the 2023 guidance for DecisionPoint Systems, Inc. (NYSE American: DPSI)?

DecisionPoint Systems, Inc. provided a 2023 guidance of 14-16% revenue growth and 13-17% adjusted EBITDA growth.

What was the third quarter revenue for DecisionPoint Systems, Inc. (NYSE American: DPSI)?

DecisionPoint Systems, Inc. announced record third quarter revenue of $27.1 million, a 5% increase from the previous year.

What was the gross margin for DecisionPoint Systems, Inc. (NYSE American: DPSI) in the third quarter?

The company achieved a record gross margin of 27.6% in the third quarter.

What is the software/services mix for DecisionPoint Systems, Inc. (NYSE American: DPSI)?

DecisionPoint Systems, Inc. achieved a software/services mix of 45%.

What is the stock ticker symbol for DecisionPoint Systems, Inc.?

The stock ticker symbol for DecisionPoint Systems, Inc. is DPSI.