DecisionPoint Systems Announces First Quarter 2021 Results

IRVINE, Calif., May 17, 2021 /PRNewswire/ — DecisionPoint Systems, Inc. (OTCQB: DPSI), today announced financial results for the first quarter of…

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

First Quarter 2021 Highlights

  • Sales for the first quarter of 2021 were $16.1 million, a decrease of $2.2 million, or 12.1% from the first quarter of 2020. The decrease was driven by lower hardware sales, partially offset by sales of $2.8 million for the first quarter of 2021 related to the ExtenData acquisition.
  • Overall gross margin increased 30 basis points due to a shift in mix of net sales to professional services that generate a significantly higher gross margin. Sales of professional services increased 30% for the first quarter of 2021 and represented 26% of total net sales versus 17% of total net sales in the same prior year period.
  • Net income for the first quarter of 2021 was $1.3 million, or $0.08 per diluted share, compared with net income of $1.0 million, or $0.07 per diluted share in the first quarter of 2020. The increase in net income was due to recognition of a gain on extinguishment of debt of $1.2 million, partially offset by lower hardware sales. 
  • EBITDA increased 10.7% to $1.9 million for the first quarter of 2021 versus the first quarter of 2020.

DecisionPoint Systems Announces First Quarter 2021 Results

“Any comparison to Q1 of 2020, the best quarter in our company’s recent history, would be a challenging one. That said, we are seeing meaningful sales growth in our expansion of professional service offerings and have gained momentum from the acquisition of ExtenData to establish our geographic presence into new markets,” said Steve Smith, Chief Executive Officer. “We plan to continue to pursue acquisitions to further expand and develop into new regions, which also creates opportunities for significant revenue synergies. As we look forward, I am excited by the organic and inorganic growth opportunities that we are pursuing and am confident we will continue to grow our business and enhance our position as a valued partner for our customers.”

Balance Sheet and Liquidity

Our cash and accounts receivable were $12.4 million at March 31, 2021, compared to $18.4 million at December 31, 2020. Cash provided by operations in the first quarter of 2021 was $1.3 million, as compared to $4.2 million in the first quarter of 2020.  Overall debt is lower by $2.4 million than it was at the beginning of the year. At March 31, 2021, we had no borrowings under the $10 million line of credit.

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)




March 31,

2021



December 31,

2020


ASSETS







Current assets:







Cash


$

1,816



$

2,005


Accounts receivable, net



10,591




16,438


Inventory, net



1,005




884


Deferred costs



2,108




1,744


Prepaid expenses and other current assets



381




67


Total current assets



15,901




21,138


Operating lease assets



520




583


Property and equipment, net



741




751


Deferred costs, net of current portion



1,911




2,097


Deferred tax assets



1,930




1,973


Intangible assets, net



4,386




4,663


Goodwill



8,128




8,128


Other assets



22




22


Total assets


$

33,539



$

39,355


LIABILITIES AND STOCKHOLDERS’ EQUITY









Current liabilities:









Accounts payable


$

8,156



$

12,852


Accrued expenses and other current liabilities



2,555




2,807


Deferred revenue



4,970




4,617


Line of credit






1,206


Due to related parties



52




34


Current portion of operating lease liabilities



265




261


Total current liabilities



15,998




21,777


Deferred revenue, net of current portion



3,042




3,140


Long-term debt



150




1,361


Noncurrent portion of operating lease liabilities



271




340


Other liabilities



846




873


Total liabilities



20,307




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



38,264




38,229


Accumulated deficit



(25,046)




(26,379)


Total stockholders’ equity



13,232




11,864


Total liabilities and stockholders’ equity


$

33,539



$

39,355


 

DecisionPoint Systems, Inc.

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)




Three Months Ended

March 31,




2021



2020


Net sales:









Product


$

11,925



$

15,095


Service



4,147




3,192


Net sales



16,072




18,287


Cost of sales:









Product



9,451




12,074


Service



2,783




1,895


Cost of sales



12,234




13,969


Gross profit



3,838




4,318


Operating expenses:









Sales and marketing expense



1,889




1,644


General and administrative expenses



1,620




1,148


Total operating expenses



3,509




2,792


Operating income



329




1,526


Interest expense



(29)




(99)


Gain on extinguishment of debt



1,211





Income before income taxes



1,511




1,427


Income tax expense



178




398


Net income and comprehensive income attributable to common shareholders


$

1,333



$

1,029


Earnings per share attributable to common shareholders:









Basic


$

0.10



$

0.08


Diluted


$

0.08



$

0.07


Weighted average common shares outstanding









Basic



13,769




13,576


Diluted



15,788




15,642


 

DecisionPoint Systems, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)




Three Months Ended

March 31,




2021



2020


Cash flows from operating activities







Net income


$

1,333



$

1,029


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









Depreciation and amortization



360




190


Gain on extinguishment of debt



(1,211)





Amortization of deferred financing costs and note discount



17




33


Share-based compensation expense



33




23


Deferred income taxes, net



43




387


Provision for doubtful accounts






7


Changes in operating assets and liabilities:









Accounts receivable



5,847




2,328


Inventory, net



(121)




3,129


Deferred costs



(178)




103


Prepaid expenses and other current assets



(326)




(51)


Other assets, net



(5)




(1)


Accounts payable



(4,696)




(3,647)


Accrued expenses and other current liabilities



(109)




240


Due to related parties



18




(36)


Operating lease liabilities



(2)




(42)


Deferred revenue



255




512


Net cash provided by operating activities



1,258




4,204


Cash flows from investing activities









Cash paid for acquisitions



(170)





Purchases of property and equipment



(73)




(34)


Net cash used in investing activities



(243)




(34)


Cash flows from financing activities









Line of credit, net



(1,206)




(3,177)


Repayment of term debt






(62)


Debt issuance costs






(36)


Proceeds from exercise of stock options



2





Net cash used in financing activities



(1,204)




(3,239)


Change in cash



(189)




931


Cash, beginning of period



2,005




2,620


Cash, end of period


$

1,816



$

3,551


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

March 31,






2021



2020


Reconciliation of Net Income to EBITDA









Net income




$

1,333



$

1,029


    Interest expense





29




99


Income tax expense





178




398


    Depreciation and amortization (1)





360




190


EBITDA




$

1,900



$

1,716




(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.