DecisionPoint Systems Announces Second Quarter 2023 Results
08/14/2023 - 04:10 PM
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
DELRAY BEACH, Fla. --(BUSINESS WIRE)--
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 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 $0.11
Non-GAAP Net Income1 26.6% and 19.6% to $1.0 million $0.13
Adjusted EBITDA1 9.4% to $2.5 million
Paid down $4.3 million
1 See 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 $7.6 million $1.0 million $6.9 million $4.3 million
2023 Commentary and Third Quarter Guidance (ending 9/30/23)
“Looking to the third quarter, we are targeting $27.0 $29.0 million 13% revenue growth) and adjusted EBITDA in the range of $2.0
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, $0.00 1
-
-
Common stock, $0.00 1
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
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Source: DecisionPoint Systems, Inc.
