DecisionPoint Systems Reports Record Third Quarter Revenue of $18.6 Million
Gross Margin Expands to Record 23.4%, 250 Basis Point Improvement Year-Over-Year
IRVINE, CA -- (Marketwire) -- 11/14/12 -- DecisionPoint Systems, Inc. (OTCBB: DPSI), a leading enterprise mobility and RFID systems solutions provider, today reported its financial results for the third quarter ended September 30, 2012.
Highlights of Quarter Ended September 30, 2012
- Revenue increased to $18.6 million, 12.9% above the $16.4 million for the quarter ended September 30, 2011.
- Gross margin expanded to 23.4% from 20.9% in the third quarter of 2011, a 250 basis point improvement.
- Adjusted EBITDA(1) for the third quarter of 2012 was $1.1 million compared to $0.8 million for the quarter ended September 30, 2011.
- Operating loss was $0.6 million, including $0.5 million of acquisition related expenses, compared to operating income of $0.2 million for the quarter ended September 30, 2011.
- Net loss attributable to common shareholders was $1.3 million, or $(0.15) per share, after deducting preferred dividends of approximately $249,000, compared to a net income attributable to common shareholders of approximately $55,000, or $0.01 per share, after deducting preferred dividends of approximately $214,000 for the third quarter of 2011.
- Cash flow from operating activities for the nine months ended September 30, 2012 was $0.7 million compared to $(1.4) million for nine months ended September 30, 2011.
- The Company completed the acquisition of Illume Mobile Software, a division of MacroSolve, Inc., based in Tulsa, OK, for approximately $1.0 million in cash and stock. Illume Mobile has patent protected domain expertise in developing Enterprise mobile software for Android and Apple (iOS) mobile devices. Illume's operating results are included in the Company's results of operations beginning August 1, 2012.
Management Commentary
"Record revenue and gross margin expansion in the third quarter reflects the growing success of the strategic shift we have made over the past two years to develop our field mobility solutions and professional services and software divisions," said Nicholas Toms, CEO of DecisionPoint. "The three acquisitions that we have completed during that time -- CMAC, Apex and Illume Mobile -- have broadened our software products and professional services capabilities, opened new markets and deepened our relationships with our customers, including our carrier partners. We now offer the full range of mobile solutions to meet the requirements of any enterprise mobility strategy. In addition, higher margin professional software and services revenue has grown to over 35% of total revenue, leading to the improved corporate gross margins.
"An increasingly mobile workforce continues to drive demand for our field mobility solutions. The bundled solutions for enterprise and small business applications that we market together with our wireless carrier partners, Verizon, Sprint and T-Mobile, are gaining traction, adding to the installed user base and increasing recurring revenue to the Company," added Mr. Toms. "And as the retail industry embarks on an overdue technology upgrade of its outdated systems, it is creating opportunities for our tablet-based assisted shopping solution suite for in-store applications that increases productivity and reduces costs. Excluding one-time costs related to the two acquisitions that we completed earlier this year and other restructuring and one-time costs, our third quarter and year to date adjusted EBITDA was $1.1 million and $2.4 million, respectively. As we execute our strategy to build the capabilities of our Professional Services and Software Group and with positive momentum in our field mobility and retail systems divisions, we remain well positioned for continued revenue and adjusted EBITDA growth."
Third Quarter 2012 Results
Revenue was $18.6 million, compared to $16.4 million for quarter ended September 30, 2011 and $17.8 million for the quarter ended June 30, 2012. The 12.9% year-over-year increase was primarily due to increased field mobility solution sales and increased professional services revenue.
Gross profit was $4.3 million, compared to $3.4 million for quarter ended September 30, 2011 and $3.8 million for the second quarter of 2012. Gross profit margin was 23.4%, compared to 20.9% for the same period a year ago and 21.3% for the second quarter of 2012. The increases are due to the higher gross margin from professional services revenue and improved utilization of professional services resources. Additionally, the Company has continued to emphasize cost control and improved efficiencies throughout its operations.
Selling, general and administrative expenses were $5.0 million, compared to $3.3 million for the same period of 2011, and $4.8 million for the second quarter of 2012. The year-over-year increase was primarily due to increased personnel and operating expenses relating to the Illume and Apex acquisitions of $0.6 million as well as Illume and Apex acquisition related costs of $0.5 million.
The operating loss was $0.6 million, compared to operating income of $0.2 million for the quarter ended September 30, 2011, and an operating loss of $1.1 million in the second quarter of 2012.
Net loss attributable to common shareholders was approximately $1.3 million, or $(0.15) per share, after deducting preferred dividends of approximately $249,000, compared to net income attributable to common shareholders of approximately $55,000, or $0.01 per share, after deducting preferred dividends of approximately $214,000 in the quarter ended September 30, 2011. Net loss was approximately $1.5 million or $(0.20) per share, after deducting preferred dividends of approximately $238,000 in the second quarter of 2012.
Nine Month 2012 Year to Date Results
Revenue for the nine months ended September 30, 2012 was $54.1 million, compared to $42.5 million in the year ago period, an increase of 27.5%. Gross profit was $11.9 million for the nine months ended September 30, 2012, compared to $8.4 million for the nine months ended September 30, 2011. The gross profit margin was 21.9%, compared to 19.8% in the same period a year ago. Selling, general and administrative expenses were $13.6 million for the nine months ended September 30, 2012, compared to $10.3 million for the nine months ended September 30, 2011. Net loss attributable to common shareholders was approximately $3.2 million, or $(0.42) per share, after deducting preferred dividends of approximately $710,000, compared to a net loss attributable to common shareholders of approximately $5.5 million, or $(1.00) per share, after deducting preferred dividends of approximately $268,000 in the same period a year ago. Included in the net loss for the first nine months of 2011 was a one-time, non-cash expense for debt extinguishment of $2.7 million.
Forward-Looking Statements
Under the Private Securities Litigation Reform Act of 1995: Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results, performance and achievement in the future to differ materially from forecasted results, performance, and achievement. These risks and uncertainties are described in the Company's periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events or changes in the Company's plans or expectation.
About DecisionPoint Systems, Inc.
DecisionPoint Systems, Inc. (OTCBB: DPSI) delivers improved productivity and operational advantages to its clients by helping them move their business decision points closer to their customers. We do this by making enterprise software applications accessible to the front-line worker anytime, anywhere. DecisionPoint utilizes the latest wireless, mobility, and RFID technologies. For more information on DecisionPoint Systems visit www.decisionpt.com/news.php.
Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information, namely earnings before interest, taxes, depreciation and amortization (EBITDA). The Company's management believes that this non-GAAP measure provides investors with a better understanding of how the results relate to the Company's historical performance. 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:
(1) See schedule attached and description of non-GAAP financial measures: Adjusted EBITDA
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
EBITDA Calculation 2012 2011 2012 2011
----------- ----------- ----------- -----------
Net (loss) income $(1,014,176) $ 268,387 $(2,534,965) $(5,233,377)
Depreciation &
amortization 574,567 137,573 991,939 411,248
Interest expense 349,941 230,982 698,158 1,003,597
Income taxes 63,690 13,450 131,653 21,173
----------- ----------- ----------- -----------
EBITDA $ (25,978) $ 650,392 $ (713,215) $(3,797,359)
=========== =========== =========== ===========
One time cash transaction
expenses in connection
with the acquisition of
Apex 380,000 - 1,943,000 -
One time cash expenses in
connection with the
acquisition and
integration of Illume
Mobile 363,000 - 363,000 -
Stock-based and ESOP-
based compensation
expense 44,000 140,360 489,457 502,058
Transition-related costs 317,000 - 317,000 -
Loss on debt
extinguishment - - - 2,268,859
----------- ----------- ----------- -----------
Adjusted EBITDA $ 1,078,022 $ 790,752 $ 2,399,242 $(1,026,442)
=========== =========== =========== ===========
Adjusted EBITDA per share $ 0.13 $ 0.11 $ 0.31 $ (0.19)
=========== =========== =========== ===========
Weighted average shares
outstanding - Basic 8,182,103 7,320,328 7,697,635 5,493,530
=========== =========== =========== ===========
DECISIONPOINT SYSTEMS, INC.
Condensed Consolidated Balance Sheets
September 30, December 31,
2012 2011
--------------- ---------------
ASSETS (unaudited)
Current assets
Cash $ 392,424 $ 365,814
Accounts receivable, net 10,675,484 13,916,787
Other receivable - 1,476,285
Due from related party 357,326 -
Inventory, net 897,401 705,757
Deferred costs 3,602,564 3,468,583
Prepaid expenses and other current
assets 302,071 408,413
--------------- ---------------
Total current assets 16,227,270 20,341,639
Property and equipment, net 160,685 98,934
Intangible assets, net 6,626,416 2,214,000
Goodwill 8,616,767 5,538,466
Deferred costs, net of current portion 2,249,960 1,800,320
Other assets, net 344,323 175,329
--------------- ---------------
Total assets $ 34,225,421 $ 30,168,688
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 8,502,486 $ 8,947,133
Accrued expenses and other current
liabilities 2,704,787 2,504,870
Lines of credit 4,742,212 4,024,141
Current portion of debt 1,847,675 1,000,000
Due to related parties 80,721 871,508
Accrued earn out consideration 1,201,727 -
Unearned revenue 6,368,073 6,756,214
--------------- ---------------
Total current liabilities 25,447,681 24,103,866
Long term liabilities
Unearned revenue, net of current portion 3,012,324 2,509,190
Debt, net of current portion and
discount 3,452,031 970,160
Accrued earn out consideration 161,754 -
Deferred tax liabilities 1,290,621 18,000
Deferred rent 62,091 -
Interest payable 60,000 60,000
--------------- ---------------
Total liabilities 33,486,502 27,661,216
--------------- ---------------
Commitments and contingencies
- -
STOCKHOLDERS' EQUITY
Cumulative convertible preferred stock,
$0.001 par value, 10,000,000
sharesauthorized, 1,816,289 shares
issued and outstanding,
includingcumulative and imputed
preferred dividends of $696,880 and
$435,563, andwith a liquidation
preference of $11,109,994 and
$10,652,275, respectively 6,580,949 6,319,629
Common stock, $0.001 par value,
100,000,000 shares authorized,9,125,075
issued and 8,971,192 outstanding as of
September 30, 2012,and 8,182,791 issued
and 8,028,908 outstanding as of
December 31, 2011 9,125 8,183
Additional paid-in capital 15,601,481 14,513,918
Other comprehensive income 27,798 -
Treasury stock, 153,883 shares of common
stock (204,664) (204,664)
Accumulated deficit (20,475,451) (17,230,792)
Unearned ESOP shares (800,319) (898,802)
--------------- ---------------
Total stockholders' equity 738,919 2,507,472
--------------- ---------------
Total liabilities and stockholders'
equity $ 34,225,421 $ 30,168,688
=============== ===============
DECISIONPOINT SYSTEMS, INC.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive
Loss
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
Net sales $18,567,021 $16,446,541 $54,144,051 $42,471,307
Cost of sales 14,222,782 13,007,116 42,269,043 34,042,818
----------- ----------- ----------- -----------
Gross profit 4,344,239 3,439,425 11,875,008 8,428,489
Selling, general and
administrative expense 4,951,913 3,274,994 13,622,674 10,267,641
----------- ----------- ----------- -----------
Operating (loss) income (607,674) 164,431 (1,747,666) (1,839,152)
----------- ----------- ----------- -----------
Other expense:
Interest expense 349,941 230,982 698,158 1,003,597
Loss on debt
extinguishment - 24,098 - 2,665,157
Other expense
(income), net (7,129) (372,486) (42,512) (295,702)
----------- ----------- ----------- -----------
Total other expense 342,812 (117,406) 655,646 3,373,052
----------- ----------- ----------- -----------
Net (loss) income before
income taxes (950,486) 281,837 (2,403,312) (5,212,204)
Provision for income
taxes 63,690 13,450 131,653 21,173
----------- ----------- ----------- -----------
Net (loss) income (1,014,176) 268,387 (2,534,965) (5,233,377)
Cumulative preferred
stock dividends (248,750) (213,898) (709,699) (268,098)
----------- ----------- ----------- -----------
Net (loss) income
attributable to common
shareholders $(1,262,926) $ 54,489 $(3,244,664) $(5,501,475)
=========== =========== =========== ===========
Net (loss) income per
share -
Basic $ (0.15) $ 0.01 $ (0.42) $ (1.00)
=========== =========== =========== ===========
Diluted $ (0.15) $ 0.01 $ (0.42) $ (1.00)
=========== =========== =========== ===========
Weighted average shares
outstanding -
Basic 8,182,103 7,320,328 7,697,635 5,493,530
=========== =========== =========== ===========
Diluted 8,182,103 7,417,555 7,697,635 5,493,530
=========== =========== =========== ===========
Comprehensive loss $(1,240,576) $ - $(3,216,866) $ -
=========== =========== =========== ===========
Company Contact: DecisionPoint Systems, Inc. Nicholas R. Toms Chief Executive Officer 973-489-1425 ntoms@decisionpt.com Investor Relations Contact: LHA Stephanie Prince/Jody Burfening 212-838-3777 sprince@lhai.com
Source: DecisionPoint Systems, Inc.
Released November 14, 2012