DecisionPoint Systems Reports Third Quarter Results For 2013

Revenues Increase 19% Sequentially to $17.6 Million

News provided by

DecisionPoint Systems, Inc.

Nov 14, 2013, 06:37 ET

IRVINE, Calif., Nov. 14, 2013 /PRNewswire/ -- DecisionPoint™ Systems, Inc. (OTCQB: DPSI), a leading provider and integrator of Enterprise Mobility, Wireless Applications and RFID solutions, today reported financial results for the third quarter and nine months ended September 30, 2013.

Corporate and Financial Highlights of the Third Quarter 2013

  • Revenue increased sequentially 19% to $17.6 million
  • EBITDA moved to a positive $466,000 from a loss of $383,000 in the second quarter, notwithstanding financing and restructuring expenses of $442,000
  • Principal under the Company's term loans in the aggregate amount of $534,000 was paid down in the third quarter

Business Highlights of the Third Quarter 2013

  • Significant new software orders received during the period
  • Significant new software contracts were booked in the quarter including from such major names as Johnson Controls, the U.S. Postal Service, Gulf Winds among others.

Nicholas Toms, CEO of DecisionPoint, commented, "Based on what we have seen to date in the third quarter, we expect sales to be robust, and margins to return to their prior levels in the fourth quarter and to continue to climb as in process software orders move to delivery and into our quarterly income statements. We have now added Android Operating Systems to the family of APEXWare software compatibility, which vastly expands the addressable market.  We are at an inflection point in our development where, at long last, we will be maintaining both positive EBITDA on a regular basis, and net income on a GAAP bottom-line basis.  We believe that as economic conditions continue to improve, our results will improve as well.

"We work with some of the biggest names in the industrial and commercial world, and the family of our clients continues to expand.  U.S.P.S, Johnson Controls, Avis Rent a Car System, Wells Fargo, Goodwill Industries of Denver and Mission Linen Supply are just a few. We expect revenues for the fourth quarter ending December 31, 2013 to be up sequentially from the revenues reported for the third quarter," Mr. Toms added.

Third Quarter 2013 Results
Revenue was $17.6 million, a climb of about 19% from the second quarter of 2013, but a 5% drop from the comparable quarter of 2012, when revenue was $18.6 million.

Gross profit decreased by 450 basis points to 19.7% from 24.2% in the second quarter of 2013, and 250 points from 22.2% in the third quarter of 2012.  The drop was largely attributed to the timing of revenue recognition related to in process software orders, to the timing of orders and shipments, with some orders anticipated for the third quarter slipping to the fourth quarter. We anticipate that as higher-margin software and service revenue continue to grow, margins will continue to return to this long-term increasing trend starting in the fourth quarter.  The reported net loss, a little less than breakeven, at $167,000 was sharply down from $1.1 million in the second quarter of this year, vs. a loss of $1.0 million in the third quarter of 2012.  On an EPS basis, the loss per share was $0.04, compared to $0.15 loss per share in the third quarter of 2012.

The operating loss was $0.2 million in this year's third quarter vs. $0.6 million in the third quarter of 2012, due primarily to improved margins and cost savings.  EBITDA (a non-GAAP measurement that management uses to measure progress) for the third quarter of 2013 was positive $466,000, and a $849,000 positive swing from the second quarter of this year.

Although unit volumes were up, the drop in revenue compared with the same period last year was largely related to an increase in the number of consumer devices sold with much lower unit prices and a consequent decrease in the higher priced rugged devices sold.

Nine Months 2013 Results
Revenue was $46.1 million, down from $54.1 million in the first nine months of 2012, which included an increase of approximately $1.9 million in sales from the Apex and Illume acquisitions that were completed in mid-2012.  2012 benefited from a stronger recovery in the US economy than was seen in the earlier part of 2013.  Lower-margin hardware sales declined by 21.9% for the period.  Professional services increased slightly, up 0.8% for the nine months.  Software revenues, with their higher margins, increased by 6.9% to $3.5 million.  Gross margin remained steady year-over-year. SG&A expense increased modestly compared to 2012 due to the inclusion of Apex and Illume Mobile businesses.

About DecisionPoint™ Systems, Inc.
DecisionPoint Systems, Inc. empowers the mobile workforce to enhance customer satisfaction and accelerate business growth. They accomplish this by making enterprise software applications accessible to the front-line mobile worker anytime, anywhere. DecisionPoint combines its industry leading software products, application development capabilities, deployment and support services with the latest wireless, and mobile technologies.

For more information on DecisionPoint Systems visit www.decisionpt.com

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.

Contacts:

DecisionPoint Systems, Inc.
Nicholas R. Toms
Chief Executive Officer
(973) 489-1425

Allen & Caron, Inc. 
Rudy Barrio (investors)
[email protected]
(212) 691-8087

Len Hall (media)
[email protected]
(949) 474-4300

–FINANCIAL TABLES FOLLOW–

DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)






September 30,

December 31,





2013

2012

ASSETS




Current assets 




Cash 

$                270

$            1,103

Accounts receivable, net

12,685

12,287

Due from related party

195

202

Inventory, net

918

811

Deferred costs

3,773

3,955

Deferred tax assets

47

48

Prepaid expenses and other current assets

919

302


Total current assets 

18,807

18,708








Property and equipment, net

139

179

Other assets, net

151

205

Deferred costs, net of current portion

1,810

2,124

Goodwill

8,485

8,571

Intangible assets, net

4,472

6,023


Total assets

$           33,864

$          35,810








LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities 




Accounts payable

$           13,036

$          11,080

Accrued expenses and other current liabilities

3,040

2,895

Lines of credit

4,247

3,430

Current portion of debt

1,963

1,800

Due to related parties

160

1

Accrued earn out consideration

331

1,186

Warrant liability

933

-

Unearned revenue

6,639

7,409


Total current liabilities 

30,349

27,801








Long term liabilities




Unearned revenue, net of current portion

2,472

2,883

Debt, net of current portion and discount

2,099

2,922

Accrued earn out consideration, net of current portion

154

159

Deferred tax liabilities

1,038

1,078

Other long term liabilities

76

80


Total liabilities 

36,188

34,923








Commitments and contingencies and subsequent event

-

-





-

-

STOCKHOLDERS' EQUITY 




 Cumulative Convertible Preferred stock, $0.001 par value, 10,000,000 shares




authorized, 1,105,155 shares issued and outstanding, including




cumulative and imputed preferred dividends of $586 and $361, and




with a liquidation preference of  $8,983 and $8,758 at September 30, 2013




and December 31, 2012, respectively

7,609

7,370

Common stock, $0.001 par value, 100,000,000 shares authorized,




12,297,979 issued and 12,144,096 outstanding as of September 30, 2013,




and 9,300,439 issued and 9,146,556 outstanding as of December 31, 2012

12

9

Additional paid-in capital

16,621

16,132

Treasury stock, 153,883 shares of common stock

(205)

(205)

Accumulated deficit

(25,720)

(21,674)

Unearned ESOP shares

(664)

(767)

Accumulated other comprehensive income

23

22


Total stockholders' (deficit) equity

(2,324)

887



Total liabilities and stockholders' equity

$           33,864

$          35,810

DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)






Three Months Ended September 30,

Nine Months Ended September 30,





2013

2012

2013

2012
























Net sales 

$  17,575

$  18,567

$  46,067

$  54,144












Cost of sales 

14,113

14,445

36,216

42,559












Gross profit 

3,462

4,122

9,851

11,585












Selling, general and administrative expense

4,485

4,741

13,981

13,370

Adjustment to earn-out obligations

(820)

-

(820)

-












Operating loss

(203)

(619)

(3,310)

(1,785)












Other expense:









Interest expense

241

350

723

698

Other income, net

(168)

(19)

(182)

(80)


Total other expense

73

331

541

618












Net loss before income taxes 

(276)

(950)

(3,851)

(2,403)












Provision (benefit) for income taxes

(109)

64

(466)

132












Net loss

(167)

(1,014)

(3,385)

(2,535)












Cumulative and imputed preferred stock dividends

(223)

(249)

(661)

(710)












Net loss attributable to common shareholders

$    (390)

$  (1,263)

$  (4,046)

$  (3,245)












Net loss per share -








Basic and diluted

$   (0.04)

$   (0.15)

$    (0.44)

$    (0.42)












Weighted average shares outstanding -







Basic and diluted

10,019,109

8,182,103

9,117,969

7,698,635
























Comprehensive loss

$     (166)

$   (992)

$  (3,383)

$   (2,507)

DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)









Nine Months ended September 30,








2013

2012

Cash flows from operating activities:




Net loss




$     (3,385)

$     (2,535)

Adjustments to reconcile net loss to net cash




(used in) provided by operating activities:






Depreciation and amortization

1,497

992


Amortization of deferred financing costs and note discount

140

160


Employee stock-based compensation

6

50


Non-employee stock-based compensation

-

341


Non-cash interest income


-

(24)


Acquisition earn-out adjustment

(820)

-


Change in fair value of warrants

(166)

-


ESOP compensation expense

104

98


Deferred taxes, net


(5)

28


Allowance for doubtful accounts

56

13


Loss on disposal of property and equipment

13

-


Changes in operating assets and liabilities:






Accounts receivable


(468)

3,899



Due from related party


-

(357)



Inventory, net


(107)

(184)



Deferred costs


496

(583)



Prepaid expenses and other current assets

(578)

179



Other assets, net


5

(11)



Accounts payable


1,961

(572)



Accrued expenses and other current liabilities

106

178



Due to related parties


158

(791)



Unearned revenue


(1,163)

(186)

Net cash (used in) provided by operating activities

(2,150)

695











Cash flows from investing activities





Cash paid for acquisitions


-

(5,051)

Purchases of property and equipment

(33)

(50)

Net cash used in investing activities

(33)

(5,101)











Cash flows from financing activities





(Repayments) borrowings from lines of credit, net

817

718

Proceeds from issuance of term debt

1,000

4,033

Cash received in reverse recapitalization, net of expenses

-

1,500

Repayment of debt


(1,552)

(962)

Paid financing costs


(119)

(296)

Dividends paid



(296)

(482)

Common stock issued in private placement, net of costs

1,502

-

Net cash provided by financing activities

1,352

4,511

Effect on cash of foreign currency translation

(2)

(79)

Net (decrease) increase in cash


(833)

26

Cash at beginning of period


1,103

366

Cash at end of period


$      270

$       392











Supplemental disclosures of cash flow information:




Interest paid



$      705

$       858

Income taxes paid


234

56











Supplemental disclosure of non-cash financing activities:



Accrued and imputed dividends on preferred stock

$      661

$       261

Warrants issued in connection with common stock private placement

1,099

-


and related accrued interest




EBITDA Calculation –

(In thousands)

Three months

ended September 30,

Nine months

 ended September 30,

2013

2012

2013

2012








Net Loss

$           (167)

$        (1,014)

$        (3,385)

$         (2,535)

Depreciation and amortization

502

575

1,497

992

Interest expense

240

349

723

698

Tax provision (benefit)

(109)

64

(466)

132








      EBITDA:

466

(26)

(1,631)

(713)

SOURCE DecisionPoint Systems, Inc.

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