PR Newswire | Nov 15, 2021 04:02PM EST

11/15 15:01 CST

DecisionPoint Systems Announces Third Quarter 2021 ResultsRevenue grew 64% compared to the third quarter of 2020, and EBITDA more than doubled YoY to $1.2 million as the Company's strategic transformation continues IRVINE, Calif., Nov. 15, 2021

IRVINE, Calif., Nov. 15, 2021 /PRNewswire/ -- DecisionPoint Systems, Inc. (OTCQB: DPSI), today announced financial results for the third quarter of 2021.

Third Quarter 2021 Highlights

* Sales for the third quarter of 2021 were $18.2 million, an increase of $7.1 million, or 64%, from the third quarter of 2020. The increase was driven by higher hardware sales, including from three large enterprise customers in healthcare and retail verticals. $3.0 million of that growth was from ExtenData, a business we acquired in December 2020 as part of our strategic transformation plan. * Gross margin increased 390 basis points, driven by a mix shift to higher margin services and hardware products. * Net income for the third quarter of 2021 was $0.6 million, or $0.04 per diluted share, compared with net income of $0.2 million, or $0.01 per diluted share in the third quarter of 2020. This increase was primarily due to higher sales volume, partially offset by an increase in SG&A costs resulting from our ExtenData acquisition. * EBITDA more than doubled to $1.2 million for the third quarter of 2021 versus the third quarter of 2020.

"We had a very strong third quarter, featuring 64% top line growth. Our results reflect both our commitment to, and success in our core strategic initiatives: increasing coverage and share in new geographic markets, and bringing our expanded service offerings to both our existing customer base and new prospects. Despite the supply chain challenges that our industry continues to face, our team executed very well on our plans, delivering solid revenue, gross, and net margin performances, all underscoring success in our planned approach to driving increased shareholder value", said Steve Smith, Chief Executive Officer. "This year we have made and will continue to make substantial investments in our services infrastructure and offerings which we believe will have a transformative effect on our business over time as we seek to transform the business in offering additional managed services and building substantial SaaS revenue with our efforts to better serve our customers' needs."

Smith concluded, "We're confident in building on this momentum, enabled by our expanded portfolio of mobility-first enterprise services and solutions. Our managed services offerings in particular set us apart from others, as a genuine strategic partner for our customers, and clear industry leader."

Balance Sheet and Liquidity

Our cash and accounts receivable were $14.5 million on September 30, 2021, compared to $18.4 million on December 31, 2020. Cash flow from operations in the first nine months of 2021 was $2.2 million, as compared to $3.4 million in the first nine months of 2020. Overall debt is lower by $2.4 million than at the beginning of the year. As of September 30, 2021, we had no borrowings under the line of credit.

Conference Call Information

A conference call to discuss these financial results is scheduled for Thursday, November 18, 2021, at 4:30 p.m. ET (1:30 p.m. PT). Investors, analysts, and all parties interested in listening to the call are invited to dial (877) 407-3982 (domestic) or (201) 493-6780 (international) at 4:25 p.m. ET (1:25 p.m. PT). The conference call will also be available to interested parties through a live webcast at https://viavid.webcasts.com/starthere.jsp?ei=1513877&tp_key=e51df33cd8. Please log in at least 15 minutes prior to the start of the call to register and download any necessary software.

A telephone replay of the call will be available until November 25, 2021, by dialing (844) 512-2921 (domestic) or (412) 317-6671 (international) and entering the conference identification number: 13725205. Please note participants must enter the conference identification number in order to access the replay.

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:ir@decisionpt.com

DecisionPoint Systems, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except per share data)

September 30, December 31, 2021 2020

ASSETS

Current assets:

Cash $ 2,596 $ 2,005

Accounts receivable, net 11,890 16,438

Inventory, net 1,151 884

Deferred costs 2,163 1,744

Prepaid expenses and other current assets 372 67

Total current assets 18,172 21,138

Operating lease assets 393 583

Property and equipment, net 780 751

Deferred costs, net of current portion 1,699 2,097

Deferred tax assets 1,802 1,973

Intangible assets, net 3,838 4,663

Goodwill 8,128 8,128

Other assets 38 22

Total assets $ 34,850 $ 39,355

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 9,627 $ 12,852

Accrued expenses and other current liabilities 2,844 2,807

Deferred revenue 4,507 4,617

Line of credit - 1,206

Due to related parties - 34

Current portion of operating lease liabilities 273 261

Total current liabilities 17,251 21,777

Deferred revenue, net of current portion 2,746 3,140

Long-term debt 150 1,361

Noncurrent portion of operating lease liabilities 133 340

Other liabilities 505 873

Total liabilities 20,785 27,491

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.001 par value; 10,000 sharesauthorized; no shares issued or - -

outstanding

Common stock, $0.001 par value; 50,000 sharesauthorized; 13,990 and 13,576 shares 14 14

issued and outstanding, respectively

Additional paid-in capital 38,315 38,229

Accumulated deficit (24,264) (26,379)

Total stockholders' equity 14,065 11,864

Total liabilities and stockholders' equity $ 34,850 $ 39,355

DecisionPoint Systems, Inc.

Unaudited Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except per share data)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Net sales:

Product $ 14,349 $ 8,175 $ 37,846 $ 35,936

Service 3,870 2,944 11,614 9,123

Net sales 18,219 11,119 49,460 45,059

Cost of sales:

Product 11,267 6,784 29,948 28,576

Service 2,764 2,213 7,990 6,152

Cost of sales 14,031 8,997 37,938 34,728

Gross profit 4,188 2,122 11,522 10,331

Operating expenses:

Sales and marketing expense 1,812 1,021 5,611 4,001

General and administrative expenses 1,498 1,027 4,592 3,232

Total operating expenses 3,310 2,048 10,203 7,233

Operating income 878 74 1,319 3,098

Interest expense (17) (61) (67) (232)

Gain on extinguishment of debt - - 1,211 -

Other income - 202 - 212

Income before income taxes 861 215 2,463 3,078

Income tax (expense) benefit (249) 2 (348) (817)

Net income and comprehensive income attributable to $ 612 $ 217 $ 2,115 $ 2,261common stockholders

Earnings per share attributable to stockholders:

Basic $ 0.04 $ 0.02 $ 0.15 $ 0.17

Diluted $ 0.04 $ 0.01 $ 0.15 $ 0.14

Weighted average common shares outstanding

Basic 13,915 13,576 13,856 13,576

Diluted 14,459 15,642 14,548 15,642

DecisionPoint Systems, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

Nine Months Ended September 30,

2021 2020

Cash flows from operating activities

Net income $ 2,115 $ 2,261

Adjustments to reconcile net income to net cash provided by operatingactivities:

Depreciation and amortization 1,031 564

Gain on extinguishment of debt (1,211) -

Amortization of deferred financing costs and note discount 25 93

Share-based compensation expense 109 73

Deferred income taxes, net 171 770

Provision for doubtful accounts - 24

Changes in operating assets and liabilities:

Accounts receivable 4,548 (137)

Inventory, net (267) 2,885

Deferred costs (21) 288

Prepaid expenses and other current assets (346) (3)

Accounts payable (3,225) (3,543)

Accrued expenses and other current liabilities (161) 69

Due to related parties (34) (17)

Operating lease liabilities (5) (43)

Deferred revenue (504) 144

Net cash provided by operating activities 2,225 3,431

Cash flows from investing activities

Cash paid for acquisitions (170) (298)

Purchases of property and equipment (235) (55)

Net cash used in investing activities (405) (353)

Cash flows from financing activities

Line of credit, net (1,206) (3,177)

Repayment of term debt - (143)

Proceeds from issuance of term debt - 1,308

Taxes paid in lieu of shares issued for share-based compensation (25) -

Proceeds from exercise of stock options 2 -

Net cash used in financing activities (1,229) (2,015)

Change in cash 591 1,063

Cash, beginning of period 2,005 2,620

Cash, end of period $ 2,596 $ 3,683

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 Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Reconciliation of Net Income to EBITDA

Net income $ 612 $ 217 $ 2,115 $ 2,261

Interest expense 17 61 67 232

Income tax expense (benefit) 249 (2) 348 817

Depreciation and amortization (1) 316 186 1,031 564

EBITDA $ 1,194 $ 462 $ 3,561 $ 3,874

Recorded within general and administration expenses and cost of sales(1) within our Unaudited Condensed Consolidated Statements of Income and Comprehensive Income.

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SOURCE DecisionPoint Systems, Inc.