DecisionPoint Systems Provides Preliminary Results for First Quarter 2014 Revenue Jumps 21%; Gross Profit Margin Increases by 90 Basis Points

SG&A Expense Reduced by 26%

IRVINE, Calif., May 5, 2014 /PRNewswire/ -- DecisionPoint™ Systems, Inc. (OTCQB: DPSI and OTCQB: DPSID), a leading provider and integrator of Enterprise Mobility and Wireless Applications, today provided preliminary financial results for the quarter ended March 31, 2014. 

Preliminary Financial Highlights of First Quarter 2014:

  • Revenue at $16.7 million increased 21% over the $13.8 million reported for Q1/2013
  • Gross margin increased approximately 90 basis points to 21.4% over the 20.5% gross margin reported for Q1/2013
  • SG&A expense decreased 26% to $3.7 million from the $5.0 million reported for Q1/2013
  • Adjusted EBITDA of $731,000 reflecting a strong improvement over the loss of $1.013 million in Q1/2013
  • Positive cash flow from operations showed an improvement of $1.4 million reaching $560,000 compared to negative ($837,000) for Q1/2013

For the quarter ended March 31, 2014, the Company announced, on a preliminary basis, revenues of $16.7 million, compared to $13.8 million for the first quarter of 2013, a 21% increase over the prior year.  For the quarter ended March 31, 2014, the Company preliminarily announced a net loss of $113,000 for the period compared to a net loss of $2.1 million for Q1/2013, and a net loss after taking into account dividend payments and imputed dividends on the Company's Preferred shares outstanding of $442,000 or $0.04 loss per common share, compared with a net loss of $2.3 million or $0.27 loss per common share for the year-earlier period.

DecisionPoint expects to report its final results in the near future, after its independent accountants have finished their review procedures.  There can be no assurance that the final results will be identical to, or as strong as, the preliminary results.

CEO Nicholas Toms commented, "The strong year-over-year growth gives us a good start for 2014, which we believe will be a good year for the Company and for our shareholders.  The improving economy, together with expense reductions that we effected in the final months of 2013 and the further integration of the companies we previously acquired, have made it possible for us to achieve much better bottom-line results as well.  We are pleased that our gross profit margin increased compared to last year's first quarter. We reduced our SG&A expense by 26%, to $3.7 million, versus $5.0 million in the first quarter of 2013, reducing our operating loss to $143,000, compared to a loss of $2.2 million in last year's first quarter.  As you move down our P&L, our net loss before taxes was $91,000, down quite significantly from the $2.4 million loss for last year's first quarter.

"As a management tool, we use two non-GAAP metrics to help us analyze our results.  Those are EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITIDA.  On an EBITDA basis, we had reported a negative $1.7 million for the first quarter of 2013.  That turned around completely this year, and was a positive $565,000.  The Adjusted EBITDA adds back some noncash items like stock-based compensation, and some nonrecurring costs such as restructuring costs; that gives us a more accurately projectable number.  On that basis, last year's negative was $1.0 million, and this year's first quarter generated a positive $731,000 in Adjusted EBITDA.

"You may recall that we were not able to ship some orders at the end of December due to non-delivery to us of some products by a vendor.  About $300,000 of that spilled over into the quarter ended March 31, 2014.  But most of our growth was from new orders, which grew broadly across industry segments, including in particular, strong and continuing demand from health care with seven figure orders from the likes of Lifewatch, and at several of our major retail accounts from our retail base, including new mobile systems and a seven-figure Omnichannel order.    We saw strength in the first quarter in both iOS installations and in Android installations.  We are finding that Android tends to be favored by certain enterprises, very much the way that Windows is the choice of certain enterprises, while iOS systems are gaining share in other enterprises. Our company's strength in each of these three operating systems has positioned us to provide a broad panoply of solutions to our customers, gives us a significant competitive advantage and we think validates our strategy."

CFO Michael Roe pointed out that Term Debt, which stood at $4.7 million at December 31, 2012, had been paid down to $3.4 million by December 31, 2013, and was further paid down during the first quarter to $3.1 million for a total debt reduction of approximately $1.6 million over the past five quarters.   In addition, the Company generated free cash flow after debt service of approximately $200,000 during the first quarter this year.

Mr. Toms noted that there has been a strong pickup in aggregate demand this year, and he noted that the harsh winter weather did not seem to have dampened that trend.  "Usually the first quarter is our weakest quarter," he said.  "It is still early in the second quarter, but it appears that the usual pattern is going to hold, with the first and fourth quarters generally weaker, and the second and third quarters generally stronger.  From today's vantage point, we believe we are on track for strong growth in revenues and improvements in operating results for 2014."    

Conference Call:
The Company's management team will host a conference call to discuss its results for first quarter March 31, 2014 today, at 9:00 am ET.

Participants should dial into the call ten minutes before the scheduled time using the following numbers: 1-877-300-8521 (USA) or +1-412-317-6026 (international) to access the call.

Audio Webcast:
There will also be a simultaneous live webcast through the Company's website, www.decisionpt.com and selecting the investor tab. Participants should register on the website approximately ten minutes prior to the start of the webcast.

Replay:
An audio replay of the conference call will be available for seven days and can be accessed by dialing 1-877-870-5176 (USA) or +1-858-384-5517 (international) and using passcode 10045514. For those unable to attend to the live webcast, it will be archived shortly following the event for 30 days in the Investors section of the Company's website.

About DecisionPoint™ Systems, Inc.
DecisionPoint Systems, Inc. delivers improved productivity and operational advantages to its clients by helping them move their business decision points closer to their customers.  They do this by making enterprise software applications accessible to the front-line worker anytime, anywhere.  DecisionPoint utilizes all the latest wireless, mobility, and RFID technologies.

For more information about DecisionPoint Systems, Inc., 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)
r.barrio@allencaron.com
(212) 691-8087

Len Hall (media)
len@allencaron.com
(949) 474-4300

– Tables Follow –

 

DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)







March 31,


December 31,






2014


2013

ASSETS




Current assets 





Cash 

$               612


$               641


Accounts receivable, net

9,581


10,504


Due from related party

182


188


Inventory, net

1,487


1,533


Deferred costs

3,984


3,809


Deferred tax assets

47


49


Prepaid expenses and other current assets

263


188



Total current assets 

16,156


16,912









Property and equipment, net

141


136

Other assets, net

156


165

Deferred costs, net of current portion

1,682


1,807

Goodwill

8,315


8,395

Intangible assets, net

3,391


3,907



Total assets

$          29,841


$          31,322









LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities 





Accounts payable

$            9,302


$            9,774


Accrued expenses and other current liabilities

3,095


2,976


Lines of credit

3,701


3,883


Current portion of debt

1,252


1,474


Due to related parties

149


77


Accrued earn out consideration

308


319


Warrant liability

552


803


Unearned revenue

7,614


7,481



Total current liabilities 

25,973


26,787









Long term liabilities





Unearned revenue, net of current portion

2,337


2,481


Debt, net of current portion and discount

1,829


1,961


Accrued earn out consideration, net of current portion

144


149


Deferred tax liabilities

718


740


Other long term liabilities

73


77



Total liabilities 

31,074


32,195









Commitments and contingencies

-


-









STOCKHOLDERS' EQUITY 





Cumulative Convertible Preferred stock, $0.001 par value, 10,000,000 shares authorized, 1,514,155 and 1,514,155 shares issued and outstanding, including cumulative and imputed preferred dividends of $2,037 and $1,956, and with a liquidation preference of  $14,813 and $14,731 at March 31, 2014 and December 31, 2013, respectively

12,276


12,193


Common stock, $0.001 par value, 100,000,000 shares authorized, 12,883,446 issued and 12,729,563 outstanding as of March 31, 2014, and as of December 31, 2013

13


13


Additional paid-in capital

17,219


17,231


Treasury stock, 153,883 shares of common stock

(205)


(205)


Accumulated deficit

(29,918)


(29,475)


Unearned ESOP shares

(593)


(629)


Accumulated other comprehensive income

(25)


(1)



Total stockholders' equity 

(1,233)


(873)




Total liabilities and stockholders' equity

$          29,841


$          31,322









DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)







Three Months Ended March 31,






2014


2013

















Net sales 

$                 16,709


$                 13,772









Cost of sales 

13,135


10,948









Gross profit 

3,574


2,824









Selling, general and administrative expense

3,717


5,033









Operating loss

(143)


(2,209)









Other expense:





Interest expense

207


226


Fair market value adjustment of warrant liability

(251)


-


Other income, net

(8)


(6)



Total other expense

(52)


220









Net loss before income taxes 

(91)


(2,429)









Provision (benefit) for income taxes

22


(327)









Net loss

(113)


(2,102)









Cumulative and imputed dividends on Series A and B preferred stock

(27)


(27)

Cash and imputed dividends on Series D and E preferred stock

(302)


(193)









Net loss attributable to common shareholders

$                     (442)


$                  (2,322)









Net loss per share -





Basic and diluted

$                    (0.04)


$                    (0.27)









Weighted average shares outstanding -





Basic and diluted

12,314,498


8,620,807

















Comprehensive loss

$                     (138)


$                  (2,105)









DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)










Three Months ended March 31,









2014


2013

Cash flows from operating activities:




Net loss

$                  (113)


$                  (2,102)

Adjustments to reconcile net loss to net cash





provided (used in) by operating activities:






Depreciation and amortization

451


502



Amortization of deferred financing costs and note discount

65


54



Employee and Director stock-based compensation

10


5



Change in fair value of warrants

(251)


-



ESOP compensation expense

14


35



Allowance for doubtful accounts

142


21



Loss on disposal of property and equipment

-


4



Changes in operating assets and liabilities:







Accounts receivable

777


1,686




Inventory, net

46


(647)




Deferred costs

(51)


70




Prepaid expenses and other current assets

-


(259)




Other assets, net

(25)


-




Accounts payable

(468)


(1,056)




Accrued expenses and other current liabilities

(116)


763




Due to related parties

71


-




Unearned revenue

8


87

Net cash provided (used in) by operating activities

560


(837)












Cash flows from investing activities





Purchases of property and equipment

(19)


(9)

Net cash used in investing activities

(19)


(9)












Cash flows from financing activities





Repayments from lines of credit, net

(182)


(320)


Proceeds from bank term loan

-


1,000


Repayment of debt

(271)


(483)


Paid financing costs

(100)


(118)


Dividends paid

-


-

Net cash (used in) provided by financing activities

(553)


79


Effect on cash of foreign currency translation

(17)


(1)

Net decrease in cash

(29)


(768)

Cash at beginning of period

641


1,103

Cash at end of period

$                    612


$                      335












Supplemental disclosures of cash flow information:






Interest paid

$                    269


$                      293


Income taxes paid




-


16












Supplemental disclosure of non-cash financing activities:





Accrued and imputed dividends on preferred stock

$                    329


$                      220












Non-GAAP Financial Measures:
To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information, namely earnings before interest, taxes, depreciation and amortization (EBITDA).  The Company's management believes this non-GAAP measure provides investors with a better understanding of how the results relate to the Company's historical performance.  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 measures appears below:






Three months ended March 31,






2014


2013

















EBITDA Calculation:













Net Loss


$                      (113)


$                   (2,102)

Depreciation and amortization


451


502

Interest Expense


207


226

Income Taxes


20


(327)










EBITDA


$                        565


$                   (1,701)

















Adjusted EBITDA Calculation:













EBITDA


$                        565


$                   (1,701)

Employee stock-based compensation


10


5

Non-employee stock-based compensation


-


-

ESOP compensation expense


14


35

Restructuring costs


142


-

Capital raising costs


-


642


Adjusted EBITDA


$                        731


$                   (1,019)









SOURCE DecisionPoint Systems, Inc.



RELATED LINKS
http://www.decisionpt.com

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