DecisionPoint Systems Announces Second Quarter 2023 Results
Record revenue of $31 million (+12%), GAAP Diluted EPS increased 17%, Non-GAAP Diluted EPS1 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: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 Income1 and non-GAAP diluted EPS increased 26.6% and 19.6% to $1.0 million and $0.13, respectively;
- Adjusted EBITDA1 decreased 9.4% to $2.5 million;
- Paid down $4.3 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 |
Second Quarter Select Financial Metrics: 2023 versus 2022 |
||||||
(in $M except for EPS) |
2Q23 |
2Q22 |
Change |
YTD
|
YTD
|
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 $M except for EPS) |
|
1Q22 |
|
|
2Q22 |
|
|
3Q22 |
|
|
4Q22 |
|
|
1Q23 |
|
|
2Q23 |
|
|
FY21 |
|
|
FY22 |
|
|
YTD
|
|
|||||||||
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 |
|
|
$ |
4.7 |
|
|
$ |
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 |
|
|
$ |
0.11 |
|
|
$ |
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/