DecisionPoint Systems Announces First Quarter 2021 Results
Strengthened Balance Sheet with Reduced Debt by $2.4 million
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E-mailIRVINE, 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.
"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[email protected]
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 oroutstanding | — | — | ||||||
Common stock, $0.001 par value; 50,000 shares authorized; 13,882 and 13,576 sharesissued 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.
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