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
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
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