DecisionPoint Systems Announces Fourth Quarter and Full Year 2023 Results

Published

Total quarterly and full-year revenue, up 25% and 19%, respectively Software and Services quarterly and full-year revenue increased 208% and 130%, respectively

DELRAY BEACH, Fla.--(BUSINESS WIRE)-- DecisionPoint Systems, Inc. (NYSE American: DPSI), the leading mobility-first enterprise services and solutions company and a leading provider of retail in-store solutions and services centered on Point-of-Sale systems, today announced fourth quarter and full year 2023 financial results for the period ended December 31, 2023.

Steve Smith, chief executive officer of DecisionPoint Systems, commented: “We finished off a record year on a high note, with revenue growth coming from both services and software and a hardware solutions project in the fourth quarter. This performance demonstrates that our strategy to bolster our higher-margin services and software portfolio is working and has provided a level of differentiation for DecisionPoint within our industry. Additionally, during the quarter, we further invested in driving long-term, higher-margin organic growth by adding several industry-experienced business development professionals to help drive growth in services and software as we head into 2024. While this investment will impact our profitability over the near term, we believe the medium to longer-term rewards will benefit shareholders.”

Fourth Quarter Highlights (2023 versus 2022)

  • Revenue increased 24.8% to $30.5 million;
  • Gross Profit increased 18.7% to $7.5 million; Gross Margin decreased 130 basis points to 24.6%;
  • GAAP Operating Income increased 3.7% at $0.7 million;
  • GAAP Net Loss and Diluted Loss per Share of ($0.3) million and ($0.03), respectively;
  • Non-GAAP Net Income1 and Non-GAAP Diluted EPS1 of $0.0 million and $0.00, respectively;
  • Adjusted EBITDA1 increased 8.4% to $1.9 million;

Full Year 2023 Highlights (versus 2022)

  • Revenue increased 18.7% to $115.6 million;
  • Gross Profit increased 24.8% to $28.8 million; Gross Margin increased 120 basis points to 24.9%;
  • GAAP Operating Income increased 7.4% to $4.8 million;
  • GAAP Net Income and Diluted EPS decreased 20.1% and 21.3% to $2.5 million and $0.32, respectively;
  • Non-GAAP Net Income and Non-GAAP Diluted EPS decreased 11.4% and 12.4% to $3.6 million and $0.47, respectively;
  • Adjusted EBITDA increased 12.9% to $8.9 million;
  • Paid down $6.2 million of debt related to the April 1, 2023 acquisition of Macro Integration Services (MIS).

1See GAAP to non-GAAP explanations and reconciliations at the end of this release

Select Financial Metrics: 2023 versus 2022

(in $M except for EPS)

 

4Q23

 

 

4Q22

 

Change

FY23

FY22

Change

Total Revenue

$

30.5

$

24.5

24.8

%

$

115.6

$

97.4

18.7

%

Hardware Solutions Revenue

$

16.2

 

$

19.8

 

-18.3

%

$

73.5

 

$

79.1

 

-7.1

%

Software and Services Revenue

$

14.4

 

$

4.7

 

207.5

%

$

42.1

 

$

18.3

 

129.6

%

Gross Profit

$

7.5

 

$

6.3

 

18.7

%

$

28.8

 

$

23.1

 

24.8

%

Operating Income

$

0.7

 

$

0.7

 

3.7

%

$

4.8

 

$

4.4

 

7.4

%

GAAP Net Income

$

(0.3

)

$

0.4

 

nm

$

2.5

 

$

3.1

 

-20.1

%

GAAP Diluted Earnings Per Share

$

(0.03

)

$

0.07

 

nm

$

0.32

 

$

0.41

 

-21.3

%

Non-GAAP Net Income

$

0.0

 

$

0.7

 

nm

$

3.6

 

$

4.1

 

-11.4

%

Non-GAAP Diluted EPS

$

0.00

 

$

0.11

 

nm

$

0.47

 

$

0.54

 

-12.4

%

Adjusted EBITDA

$

1.9

 

$

1.8

 

8.4

%

$

8.9

 

$

7.8

 

12.9

%

*numbers may not add due to rounding

nm = not measurable/meaningful

Balance Sheet and Liquidity as of December 31, 2023

Cash and cash equivalents were $4.3 million, compared to $7.6 million on December 31, 2022. Short-term and long-term debt, mainly related to the acquisition of MIS, were $1.0 million and $4.9 million, respectively, down from $12.1 million on April 1, 2023, when DecisionPoint acquired MIS.

2024 Commentary

Smith commented: “2023 was a year of investment, repositioning DecisionPoint for continued long-term revenue growth, gross margin expansion and higher profitability with our operating leverage. The combined acquisition of MIS, our release of the Vision Portal and preparing for the recent January introduction of PointCare Services were key elements in this repositioning, as the former significantly increased our software and services mix, while the latter will form the basis of our nascent Mobile Managed Services (MMS) offering.

“As we look to 2024, we will continue to focus on expanding our services and software offerings to drive recurring revenue and long-term growth through organic investment and M&A. A big part of our focus includes our recently released PointCare Services, a premier suite of deployment and managed services built to address all aspects of selecting, deploying and managing enterprise technology. PointCare Services integrates all of our service offerings to support enterprise mobility, point of sale and RFID technologies, including our Vision Portal, Vizitrace and other managed services. We also re-aligned our cost structure during the fourth quarter of 2023, which will help offset our investments in MIS, PointCare, and Vision, and the hiring of a seasoned team to build out our MMS strategy, product portfolio and go-to-market. We expect these investments will start to bear fruit for our top line in 2024 and become a more meaningful, higher-margin source of recurring revenue in 2025.

“From an industry perspective, we believe our high mix of services and software partially insulates us from the challenges other companies in our space are facing on the hardware side.”

Trended Financial Information*
(in $M except for EPS)

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

4Q23

FY22

FY23

Total Revenue

$19.7

$27.5

$25.7

$24.5

$27.0

$30.9

$27.1

$30.5

$97.4

$115.6

Hardware Solutions Revenue

$15.6

$22.7

$21.0

$19.8

$22.2

$19.7

$15.4

$16.2

$79.1

$73.5

Software and Services Revenue

$4.1

$4.8

$4.7

$4.7

$4.9

$11.2

$11.7

$14.4

$18.3

$42.1

Gross Profit

$4.7

$6.3

$5.8

$6.3

$6.1

$7.7

$7.5

$7.5

$23.1

$28.8

Operating Income

$0.2

$2.0

$1.5

$0.7

$1.2

$1.3

$1.5

$0.7

$4.4

$4.8

GAAP Net Income

$0.9

$0.7

$1.1

$0.4

$0.9

$0.8

$1.1

($0.3)

$3.1

$2.5

GAAP Diluted EPS

$0.11

$0.09

$0.15

$0.07

$0.11

$0.11

$0.13

($0.03)

$0.41

$0.32

Non-GAAP Net Income

$1.3

$0.8

$1.2

$0.7

$1.3

$1.0

$1.1

$0.0

$4.1

$3.6

Non-GAAP Diluted EPS

$0.16

$0.11

$0.16

$0.11

$0.16

$0.13

$0.14

$0.00

$0.54

$0.47

Adjusted EBITDA

$1.1

$2.7

$2.3

$1.8

$2.1

$2.5

$2.3

$1.9

$7.8

$8.9

nm = not measurable/meaningful
*numbers may not add due to rounding

Earnings Conference Call and Webcast Information: Date: Monday, April 1, 2024 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=1662460&tp_key=aff09932db

Replay Information: Toll-Free: 1-844-512-2921 Toll/International: 1-412-317-6671 Replay Pin Number: 13742540 Replay Start: Monday, April 1, 2024, 2:00 p.m. ET Replay Expiry: Monday, April 8, 2024 at 11:59 p.m. ET

About DecisionPoint Systems

DecisionPoint Systems Inc. delivers mobility-first enterprise managed services, in-store retail solutions centered around point-of-sale technologies, deployment, integration and support services to retail, supply chain, hospitality, healthcare and other verticals, enabling customers 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—improving customer service, 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.

Consolidated Balance Sheets

(in thousands, except par value)

 

December 31,

December 31,

2023

2022

ASSETS

 

 

 

 

Current assets:

Cash

$

4,300

 

$

7,642

 

Accounts receivable, net of allowance of $267 and $262 as of December 31, 2023 and December 31,2022, respectively

23,768

 

17,085

 

Inventory, net

2,133

 

4,417

 

Deferred costs

3,826

 

2,729

 

Prepaid expenses and other current assets

 

630

 

 

399

 

Total current assets

34,657

 

32,272

 

Operating lease assets

3,392

 

2,681

 

Property and equipment, net

2,973

 

1,817

 

Deferred costs, net of current portion

3,689

 

2,868

 

Deferred tax assets, net

1,161

 

848

 

Intangible assets, net

7,815

 

4,531

 

Goodwill

22,081

 

10,499

 

Other assets

 

172

 

 

41

 

Total assets

$

75,940

 

$

55,557

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

16,857

 

$

19,755

 

Accrued expenses and other current liabilities

6,566

 

4,528

 

Deferred revenue

8,066

 

6,021

 

Current portion of earnout consideration

5,370

 

829

 

Current portion of long-term debt

1,003

 

3

 

Current portion of operating lease liabilities

 

874

 

 

529

 

Total current liabilities

38,736

 

31,665

 

Deferred revenue, net of current portion

5,307

 

4,331

 

Revolving line of credit

1,300

 

-

 

Long-term debt, net of current portion

3,639

 

143

 

Noncurrent portion of operating lease liabilities

3,093

 

2,706

 

Long-term portion of earnout consideration

4,316

 

-

 

Deferred tax liabilities

-

 

-

 

Other liabilities

 

6

 

 

130

 

Total liabilities

56,397

 

38,975

 

Commitments and contingencies (Note 13)

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; 7,680 and 7,416 shares issued and outstanding, respectively

8

 

7

 

Additional paid-in capital

38,902

 

38,429

 

Accumulated deficit

 

(19,367

)

 

(21,854

)

Total stockholders’ equity

 

19,543

 

 

16,582

 

Total liabilities and stockholders’ equity

$

75,940

 

$

55,557

 

 

DecisionPoint Systems, Inc.

Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

 
Three Months   Year Ended
December 31,   December 31,

 

2023

 

2022

 

2023

 

2022

Net sales:      
Product $

16,146

 

  $

19,820

 

  $

73,494

 

  $

79,079

 

Service

14,357

 

 

4,655

 

 

42,100

 

 

18,336

 

Net sales

30,503

 

 

24,475

 

 

115,594

 

 

97,415

 

Cost of sales:      
Product

13,402

 

 

15,001

 

 

59,607

 

 

62,214

 

Service

9,558

 

 

3,135

 

 

27,162

 

 

12,106

 

Cost of sales

22,960

 

 

18,136

 

 

86,769

 

 

74,320

 

Gross profit

7,543

 

 

6,339

 

 

28,825

 

 

23,095

 

Operating expenses:      
Sales and marketing expense

2,969

 

 

2,368

 

 

9,957

 

 

9,218

 

General and administrative expenses

3,851

 

 

3,275

 

 

14,093

 

 

9,430

 

Total operating expenses

6,820

 

 

5,643

 

 

24,050

 

 

18,648

 

Operating income

723

 

 

696

 

 

4,775

 

 

4,447

 

Interest expense, net

(771

)

 

(14

)

 

(1,156

)

 

(56

)

Other expense

(23

)

 

2

 

 

-

 

 

(15

)

Income before income taxes

(71

)

 

684

 

 

3,619

 

 

4,376

 

Income tax expense

(197

)

 

(257

)

 

(1,132

)

 

(1,265

)

Net income and comprehensive income attributable to common stockholders $

(268

)

  $

427

 

  $

2,487

 

  $

3,111

 

Earnings per share attributable to stockholders (1):      
Basic $

(0.03

)

  $

0.06

 

  $

0.33

 

  $

0.43

 

Diluted $

(0.03

)

  $

0.06

 

  $

0.32

 

  $

0.41

 

Weighted average common shares outstanding      
Basic

7,678

 

 

7,401

 

 

7,555

 

 

7,261

 

Diluted

7,779

 

 

7,758

 

 

7,679

 

 

7,562

 

       

DecisionPoint Systems, Inc.

Consolidated Statements of Cash Flows

(in thousands)

 

Years Ended

December 31,

2023

2022

Cash flows from operating activities

 

 

 

 

Net income

$

2,487

 

$

3,111

 

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

Depreciation and amortization

2,971

 

2,465

 

Loss on fixed asset disposal

-

 

22

 

Share-based compensation expense

283

 

577

 

Deferred income taxes, net

(1,924

)

254

 

Provision for credit losses

240

 

249

 

Provision for inventory obsolescence

89

 

-

 

Changes in operating assets and liabilities:

Accounts receivable

3,201

 

(3,630

)

Inventory, net

4,825

 

(2,177

)

Deferred costs

(1,918

)

(1,984

)

Prepaid expenses and other current assets

(207

)

(54

)

Accounts payable

(5,707

)

8,924

 

Accrued expenses and other current liabilities

(1,644

)

914

 

Operating lease liabilities

(92

)

543

 

Deferred revenue

 

1,877

 

3,095

 

Net cash provided by operating activities

 

4,481

 

12,309

 

Cash flows from investing activities

Purchases of property and equipment

(893

)

(1,477

)

Cash paid for acquisitions, net of cash acquired

 

(12,917

)

(4,525

)

Net cash used in investing activities

 

(13,810

)

(6,002

)

Cash flows from financing activities

Proceeds from term loan

5,000

 

-

 

Repayment of term debt

(504

)

(3

)

Line of credit, net

1,300

 

-

 

Proceeds from exercise of warrants

220

 

-

 

Taxes paid in lieu of shares issued for share-based compensation

(67

)

(1,403

)

Proceeds from exercise of stock options

 

38

 

154

 

Net cash provided by (used in) financing activities

 

5,987

 

(1,252

)

Change in cash

(3,342

)

5,055

 

Cash, beginning of year

 

7,642

 

2,587

 

Cash, end of year

$

4,300

 

$

7,642

 

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented on a GAAP basis, we have provided certain non-GAAP financial measures, namely non-GAAP Net Income, non-GAAP diluted EPS and Adjusted EBITDA, all of which are considered by management to be performance measures. Non-GAAP Net Income is defined as net income (loss) before: (1) share-based compensation, (2) business acquisition costs, (3) integration costs, and (4) NYSE American uplisting costs, as applicable. Adjusted EBITDA is calculated as Non-GAAP Net Income before interest, taxes, depreciation and amortization. Non-GAAP diluted EPS is calculated as Non-GAAP Net Income divided by the diluted weighted-average number of common shares outstanding.

Management believes that these non-GAAP measures reflect the essential operating activities of the Company [because these non-GAAP measures exclude expenses and transactions that are not part of our core operations and may be one time in nature]. We believe that [by excluding such expenses and transactions] these non-GAAP measures provide investors with a better understanding of how the results relate to our historical performance and how our results compare to other publicly-traded companies. The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for GAAP financials. Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies, as other companies may calculate non-GAAP financial measures differently. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures appears below:

Reconciliation of Select GAAP Financial Measures to Non-GAAP Financial Measures

(in thousands, except per share data)

(Unaudited)

 

Three Months Ended

Year Ended

December 31,

December 31,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income (loss), as reported

$

(268

)

$

427

$

2,487

$

3,111

Share-based compensation

 

22

 

 

251

 

 

283

 

 

577

 

Business acquisition costs

 

97

 

 

39

 

 

533

 

 

281

 

Integration costs

 

137

 

 

-

 

 

291

 

 

-

 

NYSE American uplisting costs

 

-

 

 

88

 

 

-

 

 

88

 

Non-GAAP Net Income

$

(12

)

$

805

 

$

3,594

 

$

4,057

 

Depreciation and amortization

 

943

 

 

715

 

 

2,971

 

 

2,465

 

Income taxes

 

197

 

 

257

 

 

1,132

 

 

1,265

 

Interest expense

 

771

 

 

14

 

 

1,156

 

 

56

 

Adjusted EBITDA

$

1,899

 

$

1,791

 

$

8,853

 

$

7,843

 

 

Diluted EPS, as reported

$

(0.04

)

$

0.05

 

$

0.32

 

$

0.41

 

Non-GAAP Diluted EPS

$

(0.00

)

$

0.11

 

$

0.47

 

$

0.54

 

 

Investor Relations Contact: Brian Siegel, IRC, MBA Senior Managing Director, Hayden IR (346) 396-8696 Brian@haydenir.com

Source: DecisionPoint Systems, Inc.

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