DecisionPoint Systems Reports Record Third Quarter 2010 Results
Revenue Up 42% Year-Over-Year to Record $16.4 Million, Driving Record Gross Profit and 28% Increase in Adjusted EBITDA
FOOTHILL RANCH, CA – November 03, 2010 – DecisionPoint Systems, Inc. (OTC.BB:DNPI), a leading enterprise mobility and RFID systems integrator, reported financial results for the third quarter and nine months ended September 30, 2010.
Revenues in the third quarter of 2010 increased 42% to a record $16.4 million from $11.5 million in the same period a year ago. The increase was primarily attributable to improved product availability from the principal vendor, increasing customer demand, and continued investment in marketing and sales infrastructure. For the nine months ended September 30, revenues increased 16% to $40.8 million from $35.2 million in the same period a year ago.
Gross profit in the third quarter of 2010 increased 24% to a record $3.0 million from $2.4 million in the same period a year ago. Gross profit margin was 18% compared to 21% in the same period a year ago. For the nine months ended September 30, gross profit increased 9% to $7.5 million from $6.9 million in the same period in 2009. Gross profit margin for the nine months 2010 was 18% compared to 20% in the same period in 2009. The decrease in gross margin percentage was attributed to increased sales of traditional mobility solutions which have historically generated lower gross margins, partially offset by expanded sales of field mobility solutions with higher gross margins.
Selling, general and administrative expenses in the third quarter of 2010 increased 25% to $2.5 million from $2.0 million in the same period a year ago. The increase reflected the on-going costs associated with being a public company, as well as $0.3 million of investor relations expense and other non-cash compensation costs for services provided to the company. Additionally, the company experienced an increase in legal and accounting expenses of approximately $0.2 million, which was partly offset by a reversal of $88,000 of the liability in conjunction with a bankruptcy filing from one of its customers.
Net loss for the third quarter was $102,400 or $(0.00) per share compared to a net income of $165,000 or $0.01 per share in the same period a year ago. Net loss in the first nine months of 2010 was $2.2 million or $(0.09) per share compared to a net loss of $277,000 or $(0.02) per share in the same period a year ago.
Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization, as adjusted for other non-cash expenses) in the third quarter of 2010 increased 28% to $623,400 from $487,100 in the same period a year ago. For the nine months ended September 30, adjusted EBITDA decreased 57% to $330,300 from $766,900 in the same period a year ago (see important discussion about the presentation of adjusted EBITDA, a non-GAAP term, below).
Non-GAAP earnings per share for the third quarter of 2010 (based on adjusted EBITDA) was $0.02, unchanged from the same period a year ago. For the nine months ended September 30, non-GAAP earnings per share was $0.01 compared to $0.06 in the same period a year ago.
Net cash provided by financing activities was $1.3 million for the nine months ended September 30, 2010. The increase is primarily due to an increase of $1.7 million in the company’s outstanding line of credit, offset by the payoff and conversion of the $250,000 subordinated note from June 2009, as well as the payoff of the remaining outstanding 2007 bridge note balance of $85,000. Additionally, the company paid down $229,000 of the holding share liability and $779,000 of subordinated notes from December 2009. Additional funds from investing activities of $611,000 were derived from certain company officers and directors that exercised stock options during the third quarter of 2010.
“Third quarter revenue and gross profit were the highest in the company’s history,” said Nic Toms, CEO of DecisionPoint Systems, “although sales of our field mobility solutions continued to be constrained by component shortages. Beginning next quarter and into 2011, we expect our revenue mix to shift toward higher-margin field mobility solutions as component shortages ease.
“Our recently introduced MobileArc for Couriers has gained significant traction, and the multi-quarter Aramark rollout continues apace. During the third quarter we added marquee global brands such as Tiffany’s & Co., Christie’s and J. Crew to our expanding list of Fortune 500 customers. These recent advancements strengthen our position as the leading enterprise mobility and RFID systems integrator, and have led us to identify opportunities in other marketplaces with ‘cloud computing’ and related professional services.
“Combined with a stronger balance sheet that will result from the completion of the reverse merger we announced in September, these factors set the stage for continued growth and expansion. Accordingly, we expect revenue for fiscal 2010 to be in the mid to high $50 million range, which keeps us well within the sights of our $100 million revenue goal for fiscal 2012.”
Use of Non-GAAP Financial Information
Adjusted EBITDA is not a financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”) and should not be considered as an alternative to net income, operating income or any other financial measures so calculated and presented, nor as an alternative to cash flow from operating activities as a measure of the company’s liquidity. DecisionPoint Systems defines adjusted EBITDA as net income/(loss) before interest expense; taxes; depreciation; amortization; and non-cash stock-based compensation. Other companies (including the Company’s competitors) may define adjusted EBITDA differently. The Company presents adjusted EBITDA because it believes it to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in a similar industry. Management also uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of DecisionPoint Systems nor is it intended to be predictive of potential future results. Investors should not consider adjusted EBITDA in isolation or as a substitute for analysis of results as reported under GAAP. See “Reconciliation of GAAP Income (Loss) to adjusted EBITDA (Loss)” below for further information on this non-GAAP measure and reconciliation of GAAP Income (Loss) to adjusted EBITDA (Loss) for the periods indicated.
To view the GAAP information and condensed consolidated balance sheets download the full press release here:
http://www.decisionpt.com/download2.php?DecisionPoint Systems Reports Record Third Quarter 2010 Results-118
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.
About DecisionPoint Systems, Inc.
DecisionPoint Systems, Inc. (OTC.BB:DNPI) 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 the latest wireless, mobility, and RFID technologies. For more information on DecisionPoint Systems visit www.decisionpt.com/news.php.
Donald W. Rowley
Chief Financial Officer
DecisionPoint Systems, Inc.
Tel 949-465-0065 x105
Investor Relations Contacts:
Stephanie Prince/Jody Burfening
Lippert/Heilshorn & Associates