DecisionPoint Systems Announces Fourth Quarter and Full-Year 2022 Results

By: DecisionPoint Systems Inc. via Business Wire

March 29, 2023 at 07:00 AM EDT

Full-year revenue increased 48% to a record $97.4 million

Full-year GAAP net income of $3.1 million (+120%) and diluted EPS of $0.41 (+117%)

Full-year non-GAAP EPS of $0.54 (+165%) and adjusted EBITDA of $7.8 million (+152%)

DecisionPoint™ Systems, Inc. (NYSE American: DPSI), a mobility-first enterprise services and solutions company, today announced fourth quarter and full-year 2022 financial results ended December 31, 2022.

“We had a record year and created significant value for shareholders, demonstrating the potency of our strategy and our ability to execute on our playbook, even in challenging macro-economic backdrop,” said Steve Smith, chief executive officer. “We saw strength across our businesses, with significant upside driven by multiple new projects from long-term and new customers. Additionally, our strategy for growing our services, software and consumables revenue, which are more recurring in nature, yielded a 19% increase for the year and drove higher gross margins. Finally, these factors, combined with our ability to integrate the two acquisitions we made during the year quickly, led to adjusted EBITDA of $7.8 million, above the high-end of our guidance.”

Fourth Quarter Highlights (2022 versus 2021)

Revenue increased 48.5% to $24.5 million;
Gross Profit increased 67.6% to $6.3 million;
GAAP Net Income and diluted EPS increased to $0.4 million and $0.07, respectively;
Non-GAAP Net Income and non-GAAP diluted EPS increased 113.0% and 181.7% to $0.7 million and $0.10, respectively;
Adjusted EBITDA increased 274.0% to $1.8 million;

Full-Year Highlights (2022 versus 2021)

Revenue increased 47.7% to $97.4 million;
Gross Profit increased 50.9% to $23.1 million;
GAAP Net Income and diluted EPS increased to $3.1 million and $0.41, respectively;
Non-GAAP Net Income and non-GAAP diluted EPS increased 164.3% and 165.4% to $4.1 million and $0.54, respectively;
Adjusted EBITDA increased 151.6% to $7.8 million;
Backlog as of December 31, 2022, was $30.3 million.

Fourth Quarter Select Financial Metrics: 2022 versus 2021*

(in $M except for EPS)

4Q22

4Q21

Change

2022

2021

Change

Total Revenue

24.5

16.5

48.5

97.4

65.9

47.7

Hardware Revenue

17.7

10.9

62.3

71.8

44.4

61.8

Software and Services Revenue

4.7

3.9

21.3

18.3

15.5

18.6

Consumables Revenue

2.1

1.7

22.9

7.3

6.1

19.3

Gross Profit

6.3

3.8

67.6

23.1

15.3

50.9

Operating Income

0.7

(0.9

)

4.4

0.4

1017.3

GAAP Net Income

0.4

(0.7

)

3.1

1.4

120.0

GAAP Diluted Earnings Per Share

0.07

(0.04

)

0.41

0.19

116.5

Non-GAAP Net Income

0.7

0.4

113.0

4.1

1.5

164.3

Non-GAAP Diluted EPS

0.10

0.04

181.7

0.54

0.20

165.4

Adjusted EBITDA

1.8

0.5

274.0

7.8

3.1

151.6

*numbers may not add due to rounding

nm = not measurable/meaningful

Balance Sheet and Liquidity as of December 31, 2022

Cash and cash equivalents were $7.6 million, compared to $2.6 million on December 31, 2021. Long-term debt was $0.1 million, roughly flat to December 31, 2021.

Net cash from operating activities was $12.3 million compared to $2.4 million in 2021.

2023 Commentary and First Quarter Guidance (ending 3/31/23)

	1Q23 Guidance	1Q22 Actual
Revenue	$20.0 - $21.0 Million	$19.7 Million
Adjusted EBITDA	$0.8 - $1.0 million	$1.1 Million

“Over the remainder of the year, we expect to grow our recurring revenue businesses, including services and consumables, book new project orders and acquire at least one company to drive top and bottom-line growth in 2023. Additionally, we have made and will continue to increase investments into developing our intellectual property core, including our Vision portal for managed service delivery, which we believe is a competitive differentiator in the market. Finally, we made some recent additions to our team of sales and business development professionals, which we believe enhances our already solid foundation for continued growth in 2023 and beyond,” concluded Smith.

Conference Call and Webcast Information

Management will host an earnings conference call and webcast at 11:00 a.m. Eastern Time. Q&A with investors will follow management's presentation of the results, outlook and strategy.

Live Call Information:

Date: March 29, 2023

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 prior to the scheduled start time).

Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1606515&tp_key=37450f0c29

Replay Information:

Toll-Free: 1-844-512-2921

Toll/International: 1-412-317-6671

Replay Pin Number: 13737455

Replay Start: Wednesday, March 29, 2023, 2:00 p.m. ET

Replay Expiry: Wednesday, April 05, 2023, 11:59 p.m. ET

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 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.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
(Unaudited)

	December 31,			December 31,
	2022			2021
ASSETS
Current assets:
Cash	$	7,642		$	2,587
Accounts receivable, net		17,085			12,302
Inventory, net		4,417			2,111
Deferred costs		2,729			1,998
Prepaid expenses and other current assets		399			336
Total current assets		32,272			19,334
Operating lease assets		2,681			329
Property and equipment, net		1,817			834
Deferred costs, net of current portion		2,868			1,492
Deferred tax assets		848			1,999
Intangible assets, net		4,531			3,564
Goodwill		10,499			8,128
Other assets		41			50
Total assets	$	55,557		$	35,730
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	19,755		$	10,273
Accrued expenses and other current liabilities		5,357			3,220
Deferred revenue		6,021			4,599
Current portion of long-term debt		3			3
Current portion of operating lease liabilities		529			257
Total current liabilities		31,665			18,352
Deferred revenue, net of current portion		4,331			2,510
Long-term debt		143			146
Noncurrent portion of operating lease liabilities		2,706			83
Other liabilities		130			381
Total liabilities		38,975			21,472
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; 7,416 and 7,007 shares issued and outstanding, respectively		7			7
Additional paid-in capital		38,429			39,216
Accumulated deficit		(21,854	)		(24,965	)
Total stockholders’ equity		16,582			14,258
Total liabilities and stockholders’ equity	$	55,557		$	35,730

DecisionPoint Systems, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share data)
(Unaudited)

	Year Ended December 31,
	2022			2021
Net sales:
Product	$	79,079		$	50,480
Service		18,336			15,463
Net sales		97,415			65,943
Cost of sales:
Product		62,214			39,943
Service		12,106			10,696
Cost of sales		74,320			50,639
Gross profit		23,095			15,304
Operating expenses:
Sales and marketing expense		9,218			7,354
General and administrative expenses		9,430			7,552
Total operating expenses		18,648			14,906
Operating income		4,447			398
Interest expense		(56	)		(79	)
Gain on extinguishment of debt		—			1,211
Other expense		(15	)		—
Income before income taxes		4,376			1,530
Income tax expense		(1,265	)		(116	)
Net income and comprehensive income attributable to common stockholders	$	3,111		$	1,414
Earnings per share attributable to stockholders:
Basic	$	0.43		$	0.20
Diluted	$	0.41		$	0.19
Weighted average common shares outstanding
Basic		7,261			6,947
Diluted		7,562			7,593

DecisionPoint Systems, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

	Years Ended December 31,
	2022			2021
Cash flows from operating activities
Net income	$	3,111		$	1,414
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,465			1,387
Amortization of deferred financing costs and note discount		-			24
Loss on fixed asset disposal		22			-
Share-based compensation expense		577			1,003
Acquisition earn-out adjustment		-			(187	)
Gain on extinguishment of debt		-			(1,211	)
Deferred income taxes, net		254			(26	)
Provision for doubtful accounts		249			-
Changes in operating assets and liabilities:
Accounts receivable		(3,630	)		4,136
Inventory, net		(2,177	)		(1,227	)
Deferred costs		(1,984	)		351
Prepaid expenses and other current assets		(54	)		(294	)
Other assets, net		-			(28	)
Accounts payable		8,924			(2,579	)
Accrued expenses and other current liabilities		914			278
Due to related parties		-			(34	)
Operating lease liabilities		543			(7	)
Deferred revenue		3,095			(648	)
Net cash provided by operating activities		12,309			2,352
Cash flows from investing activities
Purchases of property and equipment		(1,477	)		(371	)
Cash paid for acquisitions, net of cash acquired		(4,525	)		(170	)
Net cash used in investing activities		(6,002	)		(541	)
Cash flows from financing activities
Repayment of term debt		(3	)		—
Line of credit, net		—			(1,206	)
Taxes paid in lieu of shares issued for share-based compensation		(1,403	)		(25	)
Proceeds from exercise of stock options		154			2
Net cash used in financing activities		(1,252	)		(1,229	)
Change in cash		5,055			582
Cash, beginning of year		2,587			2,005
Cash, end of year	$	7,642		$	2,587

Trended Financial Information

Trended Financial Information*

(in $M except for EPS)

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

FY21

FY22

Total Revenue

16.1

15.2

18.2

16.5

19.7

27.5

25.7

24.5

65.9

97.4

Hardware Revenue

10.5

10.3

12.7

10.9

14.3

20.6

19.2

17.7

44.4

71.8

Software and Services Revenue

4.1

3.6

3.9

4.1

4.8

4.7

15.5

18.3

Consumables Revenue

1.5

1.3

1.6

1.7

1.3

2.1

1.8

2.1

6.1

7.3

Gross Profit

3.8

3.5

4.2

3.8

4.7

6.3

5.8

6.3

15.3

23.1

Operating (loss) Income

0.3

0.1

0.9

(0.9

)

0.2

2.0

1.5

0.7

0.4

4.4

Net (loss) Income

1.3

0.2

0.6

(0.7

)

0.9

0.7

1.1

0.4

1.4

3.1

Diluted EPS

0.17

0.02

0.04

(0.04

)

0.11

0.09

0.15

0.07

0.19

0.41

Non-GAAP Net Income

0.2

0.3

0.7

0.4

1.3

0.8

1.2

0.7

1.5

4.1

Non-GAAP Diluted EPS

0.03

0.04

0.10

0.04

0.16

0.11

0.16

0.10

0.20

0.54

djusted EBITDA

0.8

0.6

1.3

0.5

1.1

2.7

2.3

1.8

3.1

7.8

*numbers may not add due to rounding

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements presented on a GAAP basis, we have provided non-GAAP financial information, namely non-GAAP Net Income, non-GAAP diluted EPS and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for transaction-related and non-recurring items). We believe that these non-GAAP measures provide investors with a better understanding of how the results relate to our historical performance as well as when comparing our results to other publicly-traded companies. 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:

DecisionPoint Systems, Inc.
Supplemental Financial Information
Reconciliation of Select GAAP Financial Measures to Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)

	Three Months Ended					Twelve Months Ended
	December 31					December 31
	2022		2021			2022		2021
Net income, as reported	$	427	$	(701	)	$	3,111	$	1,414
Share-based compensation		251		894			577		1,003
Business acquisition costs		39		176			281		306
NYSE American uplisting costs		88		-			88		23
Gain on extinguishment of debt		-		-			-		(1,211	)
Non-GAAP net income	$	805	$	369		$	4,057	$	1,535
Depreciation and amortization		715		356			2,465		1,387
Income taxes		257		(232	)		1,265		116
Interest expense		14		12			56		79
Adjusted EBITDA	$	1,791	$	505		$	7,843	$	3,117

View source version on businesswire.com: https://www.businesswire.com/news/home/20230329005387/en/

Contacts

Investor Relations Contact:

Brian Siegel, IRC, MBA

Senior Managing Director, Hayden IR

(346) 396-8696

Brian@haydenir.com

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DecisionPoint Systems Announces Fourth Quarter and Full-Year 2022 Results

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