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DecisionPoint Systems Reports Results for the Fourth Quarter and Year Ended December 31, 2016

IRVINE, Calif.--(BUSINESS WIRE)--

DecisionPoint™ Systems, Inc. (DPSI), a leading provider and integrator of Enterprise Mobility and Wireless Applications solutions, today reported its financial results for the fourth quarter and year ended December 31, 2016.

Sales increased by 19.5% for the quarter but decreased by 8.1% for the year compared to the comparable periods in 2015. EBITDA for the year increased by $521,000 to $892,000 for 2016 and EBITDA decreased by $155,000 to $216,000 for the fourth quarter ended December 31, 2016.

Revenue from continuing operations for the fourth quarter ended December 31, 2016 was $8.7 million, versus $7.3 million for the comparable period in 2015, an increase of 19.5%. Gross profit margin for the fourth quarter of 2016 was 20.7%, compared to 24.0% for the comparable period of 2015. For the fourth quarter ended December 31, 2016, the Company reported a net income attributable to common shareholders of $861,000, or $0.14 earnings per share, which included a one-time gain of $788,000 relating to discontinued operations in Canada. For the fourth quarter ended December 31, 2015, net loss attributable to common shareholders was $1.5 million, or $57.89 of net loss per share, which included cash and imputed dividends of $1.8 million. The preferred stock outstanding at the end of 2015 has since been converted to common stock as a result of the Company’s recently completed recapitalization, and is no longer outstanding. As a result of the recapitalization, the Company now has 6,006,978 shares of common stock outstanding. The net income from continuing operations for the fourth quarter of 2016 was $344,000, compared to net income from continuing operations of $73,000 for 2015.

Revenue from continuing operations for the year ended December 31, 2016 was $31.1 million, versus $33.8 million for 2015. Gross profit margin for 2016 was 20.1%, compared to 20.8% for 2015. For the year ended December 31, 2016, the Company reported net income attributable to common shareholders of $1.7 million, or $0.28 earnings per share, which included a one-time gain of $1.3 million relating to discontinued operations in Canada. For the year ended December 31, 2015, net loss attributable to common shareholders was $5.4 million, or $210.31 of net loss per share, which included cash and imputed dividends of $1.9 million and a loss attributable to discontinued operations of $3.5 million. The preferred stock outstanding at the end of 2015 has since been converted to common stock as a result of the Company’s recently completed recapitalization and is no longer outstanding. Net income from continuing operations for 2016 was $412,000, compared to a net loss from continuing operations of $15,000 for 2015.

“We remain positioned to lead the Omni-channel business environment – getting back to the core and strength of DecisionPoint --to deliver innovative and integrated software and hardware platforms that help our customers and partners meet the needs of the changing retail, transportation, warehousing and logistics markets,” said Steve Smith, chief executive officer, DecisionPoint. “We are on a steady growth path, and we believe our turnaround will gather momentum in 2017 and keep us headed towards organic and acquisition growth.”

“We have put behind us the issues of the past with the non-core businesses which were divested in 2015 and 2016, the complete payoff of Canadian term debt and the conversion into common stock of all outstanding series of preferred stock and bridge financing debt; and are now able to focus on the fundamentals and the transformation of the business,” said Michael Roe, chief financial officer, DecisionPoint. “The Company is recapitalized, and is poised for growth. We are optimistic about 2017, as we anticipate positive results from the company's business strategies to improve the customer and partner experience. In 2017 we are planning on several programs, including investments in marketing and sales personnel, a new service portal and an internal software initiative that we expect will take our business to the next level.”

The financial statements for 2016 are posted on the Company’s website at www.decisionpt.com, as well as on third-party financial sites on the Internet under the ticker symbol DPSI.

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. We 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
Except for historical information contained herein, the statements in this news release are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties, which may cause a company's actual results, performance and achievements in the future to differ materially from forecasted results, performance, and achievements. The Company undertakes no obligation to publicly release the results of any revisions to its forward-looking statements to reflect events or circumstances after the date hereof, including without limitation unanticipated events or changes in the Company's plans or expectations.

-FINANCIAL TABLES FOLLOW-

 

DECISIONPOINT SYSTEMS, INC.

 
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
         
December 31,
2016   2015
ASSETS
 
Current assets
Cash $ 1,235 $ 821
Accounts receivable, net 5,611 4,751
Inventory, net 428 307
Deferred costs 1,889 2,234
Prepaid expenses and other current assets 115 28
Assets of business unit held for sale - 32
Assets of discontinued operations   1   -
 
Total current assets 9,279 8,173
 
Property and equipment, net 148 169
Other assets, net 22 22
Deferred costs, net of current portion 803 970
Goodwill 5,304 5,304
Assets of business unit held for sale   -   6
 
Total assets $ 15,556 # $ 14,644
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
Current liabilities
Accounts payable $ 5,302 $ 7,019
Accrued expenses and other current liabilities 1,251 1,690
Lines of credit 2,828 3,154
Current portion of debt 80 379
Due to related parties 79 215
Unearned revenue 2,760 3,102
Liabilities related to business unit held for sale - 1,880
Liabilities related to discontinued operations   60   -
 
Total current liabilities   12,360   17,439
 

DECISIONPOINT SYSTEMS, INC.

 

Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

 

 
December 31,
2016 2015
 
Long-term liabilities
Unearned revenue, net of current portion 1,029 1,355
Debt, net of current portion and discount 414 -
Deferred tax liabilities 34 29
Warrant liability - 78
Other long-term liabilities 1 6
Liabilities related to business unit held for sale   -   152
 
Total liabilities   13,839   19,059
 
STOCKHOLDERS' EQUITY (DEFICIT)
Cumulative Convertible Preferred stock, $0.001 par value,
10,000,000 shares authorized, 0 and 2,236,571
shares issued and outstanding, including cumulative and
imputed preferred dividends of $ 0 and $2,403 and with a
liquidation preference of $ 0 and $19,710 at
December 31, 2016 and 2015, respectively - 14,123
Common stock, $0.001 par value, 50,000,000 shares
authorized, 6,006,978 issued and 25,459 outstanding
as of December 31, 2016 and 2015 6 -
Additional paid-in capital 34,706 17,070
Accumulated deficit (33,293) (35,646)
Unearned ESOP shares - (331)
Accumulated other comprehensive income   293   369
 
Total stockholders’ equity (deficit)   1,712   (4,415)
 
Total liabilities and stockholders' equity (deficit) $ 15,551 $ 14,644
           

DECISIONPOINT SYSTEMS, INC.

 

Unaudited Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)

 
Three months ended December 31, Years ended December 31,
2016     2015 2016     2015
 
 
Net sales $ 8,742 $ 7,314 $ 31,104 $ 33,838
 
Cost of sales   6,929     5,555     24,844     26,801  
 
Gross profit 1,813 1,759 6,260 7,037
 
Selling, general and administrative expense   1,539     1,400     5,416     7,158  
 
Operating income (loss)   274     359     844     (121 )
 
Other expense (income):
Interest expense 141 88 433 387
Fair market value adjustment of warrant liability - (4 ) (78 ) (440 )
Other expense (income), net   67     1     62     (17 )
Total other (income) expense   208     85     417     (70 )
 
Income (loss) from continuing operations, before income taxes 66 274 427 (51 )
 
Tax (benefit) provision for income taxes (7 ) (70 ) 15 (36 )
       
Net income (loss) from continuing operations   73     344     412     (15 )
 
Discontinued operations:
Income (loss) on sale of discontinued operations, net of tax 149 - 621 (89 )
Income (loss) from discontinued operations, net of tax 639 - 647 (94 )
Loss from business unit held for sale, net of tax   -     (10 )   -     (3,267 )
Net (loss) income   861     334     1,680     (3,465 )
 
Cumulative and imputed Series A and B preferred stock dividends - (27 ) - (108 )
Cash and imputed dividends on Series D and Series E preferred stock   -     (1,781 )   -     (1,781 )
 
Net income (loss) attributable to common shareholders $ 861   $ (1,474 ) $ 1,680   $ (5,354 )
 
Net income (loss) per share -
Basic and diluted $ 0.14   $ (57.89 ) $ 0.28   $ (210.31 )
 
Weighted-average common shares outstanding -
Basic and diluted   6,006,978     25,459     6,006,978     25,459  
DECISIONPOINT SYSTEMS, INC.
 
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
          Years ended December 31,
2016 2015
Cash flows from operating activities:
Net income (loss) from continuing operations 412 (15 )
Net income (loss) from business unit held for sale 621 (3,268 )
Net income (loss) from discontinued operations 647 (183 )
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Non-cash operating items 114 (30 )
Changes in operating assets and liabilities   (1,894 )   5,797  
 
Net cash (used in) provided by operating activities   (100 )   2,301  
 
 
Net cash (used in) provided by investing activities   (15 )   226  
 
 
Net cash (used in) provided by financing activities   530     (3,344 )
 
Effect on cash of foreign currency translation   (1 )   22  
 
Net increase (decrease) in cash 414 (795 )
 
Cash at beginning of period   821     1,616  
 
Cash at end of period $ 1,235   $ 821  
 
Supplemental disclosures of cash flow information:
Interest paid $ 507 $ 524
Income taxes paid 15 73

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) and adjusted EBITDA. The Company’s management believes that these non-GAAP measures provide investors with a better understanding of how the Company’s results relate to the Company’s historical performance, and reflect the essential operating activities of the Company. Non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP information. A reconciliation of our GAAP financial measures to our non-GAAP financial measures appears below:

      Three months ended December 31,     Twelve months ended December 31,
2016     2015 2016     2015
EBITDA Reconciliation:
 
Net income (loss) from continuing operations $ 73 $ 344 $ 412 $ (15 )
Depreciation and amortization $ 9 $ 9 $ 34 $ 37
Interest expense $ 141 $ 88 $ 433 $ 387
Income tax provision (benefit) $ (7 ) $ (70 ) $ 15 $ (36 )
EBITDA $ 216   $ 371   $ 894 $ 373  

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