2014

DecisionPoint Systems Reports Second Quarter Results For 2013

IRVINE, Calif., Aug. 20, 2013 /PRNewswire/ -- DecisionPoint™ Systems, Inc. (OTCQB: DPSI), a leading provider and integrator of Enterprise Mobility, Wireless Applications and RFID solutions, today reported financial results for the second quarter and six months ended June 30, 2013.

Business Highlights of the Second Quarter 2013

  • Announced Apple iOS® mobile operating systems support for APEXWare™ Field Service software.  APEXWare is a robust mobile-centric field service application that increases field service productivity, improves first-time fix rates, and maximizes parts availability
  • Released Motorola MC45 support for APEXWare Field Service software.
  • Announced availability for Motorola ET1 tablet of its ContentSentral delivery application.  ContentSentral converts a tablet computer into a mobile presentation and productivity tool.
  • DecisionPoint Systems completed the required Apple Sales Training following its appointment as an Authorized Apple Reseller last December.

Corporate and Financial Highlights of the Second Quarter 2013

  • Michael Roe promoted to Principal Financial Officer.
  • Sequential improvement of approximately $1 million in Adjusted EBITDA compared to Q1 2013.
  • Subsequent to the end of the quarter, on August 16, the Company signed definitive documents for a private placement of common stock, for gross proceeds of $1.8 million, of which $200,000 came from management and existing shareholders.

Second Quarter 2013 Results
Revenue was $14.7 million, a climb of about 7% from the first quarter of 2013, but a drop from the comparable quarter of 2012, when revenue was $17.8 million. The drop was largely due to a reduction in relatively low-margin hardware sales, as well as to the timing of orders and shipments, with some orders anticipated for the second quarter slipping to the third quarter.

Gross profit rose by 370 basis points to 24.2% from 20.5% in the first quarter of 2013, and up 330 basis points from 20.9% in the second quarter of 2012.  We anticipate that as higher-margin software and service revenue continues to grow, margins will continue to improve; for the second quarter, revenues were, for the first time, 40% higher-margin software and services.  The Net Loss was down from $2.1 million in the first quarter of this year to $1.1 million in the second quarter, vs a loss of $1.2 million in the second quarter of 2012.  On an EPS basis, the loss per share was $0.15, compared to $0.20 loss per share in the second quarter of 2012.

SG&A expense declined by $300,000 to $4.5 million due primarily to cost savings, compared to $4.8 million in the second quarter of 2012, and the operating loss was $0.9 million in this year's second quarter vs $1.1 million in the second quarter of 2012, due primarily to improved margins and cost savings.  Adjusted EBITDA (a non-GAAP measurement that management uses to measure progress) for the second quarter of 2013 was negative $16,000, a million-dollar positive swing from the first quarter of this year.

Six Months 2013 Results
Revenue was $28.5 million, down from $35.6 million in the first six months of 2012, which included approximately $1.9 million in sales from the Apex and Illume acquisitions that were completed in mid-2012.  2012 benefited from a stronger recovery in the US economy than was seen in the earlier part of 2013.  Low-margin hardware sales declined by 33.6% for the period.  Professional services increased slightly, up 4.6% for the six months.  Software revenues, with their higher margins, increased by 55.9% to $2.3 million.  Gross margin improved by 140 basis points year-over-year, with most of that improvement in the second quarter, as software and services revenue grew as a percentage of the revenues.  SG&A expense increased modestly compared to 2012 due to the inclusion of Apex and Illume Mobile businesses.

Nicholas Toms, CEO of DecisionPoint, commented, "Our transition to higher-margin products and services continues apace.  Based on what we have seen to date in the third quarter, we expect sales to be robust, and margins to continue to climb.  We have now added Android Operating Systems to the family of APEXWare software compatibility, which vastly expands the addressable market.  We are at an inflection point in our development where, at long last, we will be approaching both positive adjusted EBITDA on a regular basis, and even on a GAAP bottom-line basis.  We believe that as economic conditions continue to improve, our results will improve as well.

"We work with some of the biggest names in the industrial and commercial world, and the family of our clients continues to expand.  U.S.P.S, Johnson Controls, Avis Rent a Car System, Wells Fargo, Goodwill Industries of Denver, Mission Linen Supply are just a few. We expect revenues for the third quarter ending September 30, 2013 to be up by more than 20% from the revenues reported for the second quarter," Mr Toms added.

About DecisionPoint™ Systems, Inc.
DecisionPoint Systems, Inc. empowers the mobile workforce to enhance customer satisfaction and accelerate business growth. They accomplish this by making enterprise software applications accessible to the front-line mobile worker anytime, anywhere. DecisionPoint combines its industry leading software products, application development capabilities, deployment and support services with the latest wireless, and mobile technologies.

For more information on DecisionPoint Systems 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

–FINANCIAL TABLES FOLLOW–

DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)
















June 30,


December 31,






2013


2012

ASSETS




Current assets 





Cash 

$

266


$

1,103


Accounts receivable, net

9,367


12,287


Due from related party

191


202


Inventory, net

850


811


Deferred costs

4,020


3,955


Deferred tax assets

46


48


Prepaid expenses and other current assets

674


302


      Total current assets 

15,414


18,708





Property and equipment, net

143


179

Other assets, net

158


205

Deferred costs, net of current portion

1,988


2,124

Goodwill

8,434


8,571

Intangible assets, net

4,880


6,023


      Total assets

$

31,017


$

35,810





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities 





Accounts payable

$

10,814


$

11,080


Accrued expenses and other current liabilities

2,899


2,895


Lines of credit

2,724


3,430


Current portion of debt

3,973


1,800


Due to related parties

95


1


Accrued earn out consideration

1,129


1,186


Unearned revenue

7,346


7,409


      Total current liabilities 

28,980


27,801





Long term liabilities





Unearned revenue, net of current portion

2,684


2,883


Debt, net of current portion and discount

550


2,922


Accrued earn out consideration, net of current portion

151


159


Deferred tax liabilities

1,022


1,078


Other long term liabilities

80


80


      Total liabilities 

33,467


34,923





Commitments and contingencies and subsequent event

-


-





STOCKHOLDERS' EQUITY    (Deficit)





 Cumulative Convertible Preferred stock, $0.001 par value, 10,000,000 shares authorized, 1,105,155 and 1,105,155 shares issued and outstanding, including cumulative and imputed preferred dividends of $505 and $361, and with a liquidation preference of  $8,902 and $8,758 at June 30, 2013 and December 31, 2012, respectively

7,528


7,370


Common stock, $0.001 par value, 100,000,000 shares authorized, 9,370,646 issued and 9,216,763 outstanding as of June 30, 2013, and 9,300,439 issued and 9,146,556 outstanding as of December 31, 2012

9


9


Additional paid-in capital

16,224


16,132


Treasury stock, 153,883 shares of common stock

(205)


(205)


Accumulated deficit

(25,330)


(21,674)


Unearned ESOP shares

(698)


(767)


Accumulated other comprehensive income

22


22


      Total stockholders' equity (Deficit)

(2,450)


887


            Total liabilities and stockholders' equity

$

31,017


$

35,810





DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)



Three Months Ended June 30,


Six Months Ended June 30,


2013


2012


2013


2012

















Net sales 

$

14,721


$

17,767


$

28,493


$

35,577









Cost of sales 

11,155


14,048


22,103


28,114









Gross profit 

3,566


3,719


6,390


7,463









Selling, general and administrative expense

4,464


4,802


9,496


8,629









Operating loss

(898)


(1,083)


(3,106)


(1,166)









Other expense:









Interest expense

256


207


483


348


Other income, net

(8)


(32)


(14)


(61)



Total other expense

248


175


469


287











Net loss before income taxes 

(1,146)


(1,258)


(3,575)


(1,453)









Provision (benefit) for income taxes

(30)


26


(357)


68









Net loss

(1,116)


(1,284)


(3,218)


(1,521)









Cumulative and imputed preferred stock dividends

(218)


(239)


(438)


(461)









Net loss attributable to common shareholders

$

(1,334)


$

(1,523)


$

(3,656)


$

(1,982)









Net loss per share -









Basic and diluted

$

(0.15)


$

(0.20)


$

(0.42)


$

(0.27)









Weighted average shares outstanding -









Basic and diluted

8,698,626


7,512,969


8,659,931


7,452,705





































Comprehensive loss

$

(1,113)


$

(1,279)


$

(3,217)


$

(1,516)



























DECISIONPOINT SYSTEMS, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)














Six Months ended June 30,


2013


2012

Cash flows from operating activities:




Net loss

$

(3,218)


$

(1,521)

Adjustments to reconcile net loss to net cash





provided by operating activities:






Depreciation and amortization

995


417



Amortization of deferred financing costs and note discount

106


58



Employee stock-based compensation

9


39



Non-employee stock-based compensation

-


341



Non cash interest income

-


(24)



ESOP compensation expense

69


66



Deferred taxes, net

-


9



Allowance for doubtful accounts

42


41



Loss on disposal of property and equipment

4


-



Changes in operating assets and liabilities:






    Accounts receivable

2,850


2,004



    Due from related party

-


(429)



    Inventory, net

(40)


(1,456)



    Deferred costs

71


(628)



    Prepaid expenses and other current assets

(318)


125



    Other assets, net

4


(29)



    Accounts payable

(169)


1,376



    Accrued expenses and other current liabilities

(19)


(13)



    Due to related parties

-


117



    Unearned revenue

(229)


1,137

Net cash provided by operating activities

157


1,630





Cash flows from investing activities





Cash paid for acquisitions

-


(4,801)


Purchases of property and equipment

(11)


(20)

Net cash used in investing activities

(11)


(4,821)





Cash flows from financing activities





(Repayments) borrowings from lines of credit, net

(700)


(1,069)


Proceeds from issuance of term debt

1,000


4,033


Cash received in reverse recapitalization, net of expenses

-


1,500


Repayment of debt

(1,018)


(500)


Paid financing costs

(119)


(289)


Dividends paid

(154)


(321)

Net cash (used in) provided by financing activities

(991)


3,354


Effect on cash of foreign currency translation

8


(31)

Net (decrease) increase in cash

(837)


132

Cash at beginning of period

1,103


366

Cash at end of period

$

266


$

498





Supplemental disclosures of cash flow information:





Interest paid

$

502


$

290


Income taxes paid

33


56





Supplemental disclosure of non-cash financing activities:





Accrued and imputed dividends on preferred stock

$

438


$

234











EBITDA Calculation –

Three months

ended June 30,


Six months

 ended June 30,


2013


2012


2013


2012









Net Loss

$        (1,115)


$        (1,284)


$         (3,218)


$          (1,521)

Depreciation and amortization

599


315


1,101


475

Interest expense

256


207


483


348

Tax provision(benefit)

(30)


26


(357)


68









      EBITDA:

$            (290)


$            (736)


$        (1,991)


$            (630)

















Adjusted EBITDA Calculation –
















EBITDA

$          (290)


$       (736)


$       (1,991)


$            (630)

Stock compensation

4


359


9


380

ESOP compensation exp

34


33


69


66

Deferred taxes

-


5


-


9

Financing/acquisition costs

236


351


878


1,223









    Adjusted EBITDA:

$              (16)


$          12


$       (1,035)


$           1,048


























SOURCE DecisionPoint Systems, Inc.



RELATED LINKS
http://www.decisionpt.com

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