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Press release content from PR Newswire. The AP news staff was not involved in its creation.
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Press release content from PR Newswire. The AP news staff was not involved in its creation.

DecisionPoint Systems Announces Second Quarter 2021 Results

August 17, 2021 GMT
(PRNewsfoto/DecisionPoint Systems, Inc.)
(PRNewsfoto/DecisionPoint Systems, Inc.)
(PRNewsfoto/DecisionPoint Systems, Inc.)

IRVINE, Calif., Aug. 17, 2021 /PRNewswire/ -- DecisionPoint Systems, Inc. (OTCQB: DPSI), today announced financial results for the second quarter of 2021.

Second Quarter 2021 Highlights

  • Sales for the second quarter of 2021 were $15.2 million, lower by $0.5 million, or 3.1% from the second quarter of 2020. The variance, in lower hardware sales, was driven by a comparison to a prior year period marked by a significant hardware refresh cycle at a large customer, and supply chain issues impacting current product availability. The supply shortage is expected to continue for the remainder of 2021. The variance was partially offset by $2.9 million in revenue from ExtenData, a business we acquired in December 2020.
  • Strategic staffing investments in our managed services business, made to drive planned increases in both new revenues and margin contribution, along with supply-chain related hardware cost increases, contributed to a short-term decrease in gross margins of 200 basis points.
  • Net income for the second quarter of 2021 was $0.2 million, or $0.01 per diluted share, compared with net income of $1.0 million, or $0.06 per diluted share in the second quarter of 2020. The decrease was primarily due to the newly included expenses of our ExtenData operations, acquired in December 2020. We plan for that acquisition to be accretive at the bottom line once the integration process is complete. EBITDA saw a comparable decrease of 54.4%, to $0.5 million, for the second quarter of 2021 versus the year ago period.

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“We are pleased with our results for the first half of 2021. The comparison to the first half of 2020, which benefited from a major refresh event, was of course difficult. We’re on track with plans to grow our professional services business. It reached $7.7 million, a 25% increase year-on-year. We generated cash flows from operations of $2.5 million, and further strengthened our financial position by securing a new line of credit of $9.0 million in July, reducing our interest rate to 2.75% in the process. Additionally, we strengthened our balance sheet with a reduction in a long-term debt reducing our interest expense by 242%,” said Steve Smith, Chief Executive Officer. “We are seeing broad-based sales growth across our expanded portfolio of mobility-first enterprise services and solutions. We’ve gained momentum through the integration of recently acquired ExtenData, expanding our geographic presence into the Rocky Mountain and Southwest Regions. We plan continued expansion in professional services and will target acquisitions that broaden our geographic coverage and bring new product offerings. I remain excited by both the organic and inorganic expansion opportunities we are pursuing and am confident they will fuel strong profitable growth in the second half of 2021 and beyond.”

Balance Sheet and Liquidity

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Combined cash and accounts receivable were $14.2 million at June 30, 2021, compared to $18.4 million at December 31, 2020. Cash provided by operations in the first half of 2021 was $2.5 million, up from $1.3 million in the first half of 2020. Overall debt is lower by $2.4 million than at the beginning of the year. As of June 30, 2021, we had no borrowings under our line of credit.

Conference Call Information

A conference call to discuss these financial results is scheduled for today, August 17, 2021, at 4:30 p.m. ET (1:30 p.m. PT). Investors, analysts, and all parties interested in listening to the call are invited to dial (877) 407-3982 (domestic) or (201) 493-6780 (international) at 4:25 p.m. ET (1:25 p.m. PT). The conference call will also be available to interested parties through a live webcast at http://public.viavid.com/index.php?id=146343. Please log in at least 15 minutes prior to the start of the call to register and download any necessary software.

A telephone replay of the call will be available until August 24, 2021, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13722554. Please note participants must enter the conference identification number in order to access the replay.

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 www.decisionpt.com.

Forward-Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 that are based on management’s beliefs and assumptions and on information currently available to management. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by forward-looking statements. Forward-looking statements in this press release may include statements about our plans to obtain funding for our current and proposed operations and potential acquisition and expansion efforts; the ultimate impact of the COVID-19 pandemic, or any other health epidemic, on our business, our clientele or the global economy as a whole; debt obligations of the Company; our general history of operating losses; our ability to compete with companies producing products and services; the scope of protection we are able to establish and maintain for intellectual property rights covering our products and technology; the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; our ability to develop and maintain our corporate infrastructure, including our internal controls; our ability to develop innovative new products; and our financial performance. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. We qualify all of our forward-looking statements by these cautionary statements. Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.

Investor Relations Contact:
Carol Arakaki
ir@decisionpt.com

DecisionPoint Systems, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except per share data)




June 30,

2021



December 31,

2020


ASSETS







Current assets:







Cash


$

2,967



$

2,005


Accounts receivable, net



11,235




16,438


Inventory, net



1,136




884


Deferred costs



1,964




1,744


Prepaid expenses and other current assets



343




67


Total current assets



17,645




21,138


Operating lease assets



457




583


Property and equipment, net



742




751


Deferred costs, net of current portion



1,727




2,097


Deferred tax assets



1,991




1,973


Intangible assets, net



4,112




4,663


Goodwill



8,128




8,128


Other assets



22




22


Total assets


$

34,824



$

39,355


LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Accounts payable


$

8,122



$

12,852


Accrued expenses and other current liabilities



2,852




2,807


Deferred revenue



6,478




4,617


Line of credit






1,206


Due to related parties



59




34


Current portion of operating lease liabilities



269




261


Total current liabilities



17,780




21,777


Deferred revenue, net of current portion



2,811




3,140


Long-term debt



150




1,361


Noncurrent portion of operating lease liabilities



203




340


Other liabilities



437




873


Total liabilities



21,381




27,491


Commitments and contingencies









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; 13,882 and 13,576 shares
issued and outstanding, respectively



14




14


Additional paid-in capital



38,305




38,229


Accumulated deficit



(24,876)




(26,379)


Total stockholders' equity



13,443




11,864


Total liabilities and stockholders' equity


$

34,824



$

39,355


DecisionPoint Systems, Inc.

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)



Three Months Ended
June 30,



Six Months Ended
June 30,




2021



2020



2021



2020


Net sales:













Product


$

11,574



$

12,667



$

23,497



$

27,762


Service



3,595




2,986




7,744




6,178


Net sales



15,169




15,653




31,241




33,940


Cost of sales:

















Product



9,208




9,945




18,657




22,019


Service



2,465




1,790




5,250




3,685


Cost of sales



11,673




11,735




23,907




25,704


Gross profit



3,496




3,918




7,334




8,236


Operating expenses:

















Sales and marketing expense



1,910




1,336




3,799




2,980


General and administrative expenses



1,474




1,084




3,094




2,232


Total operating expenses



3,384




2,420




6,893




5,212


Operating income



112




1,498




441




3,024


Interest expense



21




72




50




171


Gain on extinguishment of debt









(1,211)





Other income






(10)







(10)


Income before income taxes



91




1,436




1,602




2,863


Income tax (benefit) expense



(79)




421




99




819


Net income and comprehensive income attributable to
common stockholders


$

170



$

1,015



$

1,503



$

2,044


Earnings per share attributable to stockholders:

















Basic


$

0.01



$

0.07



$

0.11



$

0.15


Diluted


$

0.01



$

0.06



$

0.10



$

0.13


Weighted average common shares outstanding

















Basic



13,882




13,576




13,826




13,576


Diluted



15,208




15,642




14,880




15,642


DecisionPoint Systems, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)



Six Months Ended
June 30,




2021



2020


Cash flows from operating activities







Net income


$

1,503



$

2,044


Adjustments to reconcile net income to net cash provided by operating activities:









Depreciation and amortization



715




378


Gain on extinguishment of debt



(1,211)




63


Amortization of deferred financing costs and note discount



25




48


Share-based compensation expense



74




762


Deferred income taxes, net



(18)




3


Changes in operating assets and liabilities:









Accounts receivable



5,203




(4,608)


Inventory, net



(252)




3,493


Deferred costs



150




101


Prepaid expenses and other current assets



(301)




26


Other assets, net







Accounts payable



(4,730)




(1,343)


Accrued expenses and other current liabilities



(221)




(71)


Due to related parties



25




(16)


Operating lease liabilities



(3)




(43)


Deferred revenue



1,532




451


Net cash provided by operating activities



2,491




1,288


Cash flows from investing activities









Cash paid for acquisitions



(170)





Purchases of property and equipment



(155)




(51)


Net cash used in investing activities



(325)




(51)


Cash flows from financing activities









Line of credit, net



(1,206)




(2,070)


Repayment of term debt






(125)


Proceeds from issuance of term debt






1,211


Proceeds from exercise of stock options



2





Net cash used in financing activities



(1,204)




(984)


Change in cash



962




253


Cash, beginning of period



2,005




2,620


Cash, end of period


$

2,967



$

2,873


Non-GAAP Financial Measure:

This press release includes information relating to EBITDA which the Securities and Exchange Commission has defined as a “non-GAAP financial measure.” EBITDA is defined as net income before interest expense, net, income tax expense, and depreciation and amortization (EBITDA). We believe EBITDA may provide investors with useful information of how our current primary operating results relate to our historical performance. The non-GAAP financial measure provided is not meant to be considered as a substitute for GAAP financials. We caution investors that amounts presented in accordance with our definitions of EBITDA may not be comparable to similar measures disclosed by other companies, because not all companies calculate EBITDA in the same manner.

The following is a reconciliation of net income to EBITDA (unaudited and in thousands):



Three Months Ended
June 30,



Six Months Ended
June 30,




2021



2020



2021



2020


Reconciliation of Net Income to EBITDA













Net income


$

170



$

1,015



$

1,503



$

2,044


Interest expense



21




72




50




171


Income tax (benefit) expense



(79)




421




99




819


Depreciation and amortization (1)



355




203




715




378


EBITDA


$

467



$

1,025



$

2,367



$

3,412




(1)

Recorded within general and administration expenses and cost of sales within our Unaudited Condensed Consolidated Statements of Income and Comprehensive Income.

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SOURCE DecisionPoint Systems, Inc.