Attached files
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| 8-K - DECISIONPOINT SYSTEMS, INC. FORM 8-K - DecisionPoint Systems, Inc. | f8k031915_decisionpoint.htm |
Exhibit 99.1
DECISIONPOINT SYSTEMS REPORTS RESULTS FOR
FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2014
Irvine, CA (March 19, 2015) DecisionPoint™ Systems, Inc. (OTCQB: DPSI and OTCQB: DPSIP), a leading provider and integrator of Enterprise Mobility and Wireless Applications solutions, today reported financial results for the fourth quarter and year ended December 31, 2014. Sales increased by 17.5% for the quarter and by 6.4% for the year compared to the comparable period in 2013. The Company reported net income for the quarter versus a net loss in the comparable quarter of the prior year, and net income for the full year compared to a net loss in 2013. EBITDA for the year increased by $5.4 million and Adjusted EBITDA increased by $4.4 million.
Interim CEO James De Socio commented, “The strong performance in the fourth quarter is an indicator of the success we are having from the combination of increasing sales and careful expense control. Now our challenge is to report a continuing trend of growth and profitability.”
For the year ended December 31, 2014 net sales were $64.5 million with net income of $524,000; after taking into account preferred dividends paid or imputed, we had a loss of $817,000 or $0.07 loss per share. For 2013, we had sales of $60.7 million, with a net loss of $5.2 million or $0.80 loss per share after accounting for preferred dividends. For the fourth quarter of 2014, sales were $17.2 million with net income of $1.2 million or $0.03 per share fully diluted after accounting for preferred dividends, compared to sales of $14.6 million in the fourth quarter of 2013, with a net loss of $1.8 million or $0.32 loss per share after dividends. The sales increase is attributable to hardware sales, professional services and support solutions from our relationships with our existing customers and a number of new customers through our software development group.
CFO Michael Roe said, “We paid all preferred dividends declared in 2014 in cash in 2014 and early 2015. Debt was more than $1 million lower at December 31, 2014 than at December 31, 2013. Silicon Valley Bank extended our credit line for another two years, with the potential for further decreases in the interest rate based on milestones. Interest expense was down year-to-year, as a result of the decreased debt.
“We are particularly pleased to report that SG&A expense for the year decreased by over $5.0 million”, Mr Roe said, “dropping to $13.3 million from $18.3 million. In addition, gross profit margin for 2014 increased to 22.0%, vs 21.0% in 2013. As a result of our internally generated cash flow our balance sheet continued to improve. Cash was $1.6 million at December 31, 2014, compared to a year-earlier balance of $641,000. Accounts receivable was up, as was inventory.”
EBITDA and Adjusted EBITDA are non-GAAP measurements that are commonly used in our industry to gauge performance. A reconciliation to GAAP is provided in the tables that follow the report. For 2014, EBITDA was $2.9 million versus $(2.5 million) a year earlier. Adjusted EBITDA was $2.7 million, compared to $(1.7 million) for 2013.
Conference Call:
The Company’s management team will host a conference call to discuss its results for fourth quarter and year ended December 31, 2014 today, at 9:00 am ET.
Participants should dial into the call ten minutes before the scheduled time using the following numbers: 1-888-348-3873 (USA) or +1-412-902-4234 (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 10061634.
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
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 achievements in the future to differ materially from forecasted results, performance, and achievements. Known 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 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.
Contacts:
DecisionPoint™ Systems, Inc.
Michael Roe
Chief Financial Officer
(949) 465-0065 ext. 25
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-
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DECISIONPOINT SYSTEMS, INC.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
| December 31, | ||||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 1,616 | $ | 641 | ||||
| Accounts receivable, net | 11,497 | 10,504 | ||||||
| Due from related party | - | 188 | ||||||
| Inventory, net | 2,035 | 1,533 | ||||||
| Deferred costs | 3,177 | 3,809 | ||||||
| Deferred tax assets | 13 | 49 | ||||||
| Prepaid expenses and other current assets | 89 | 188 | ||||||
| Total current assets | 18,427 | 16,912 | ||||||
| Property and equipment, net | 145 | 136 | ||||||
| Other assets, net | 124 | 165 | ||||||
| Deferred costs, net of current portion | 1,314 | 1,807 | ||||||
| Goodwill | 8,202 | 8,395 | ||||||
| Intangible assets, net | 2,045 | 3,907 | ||||||
| Total assets | $ | 30,257 | $ | 31,322 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 10,000 | $ | 9,774 | ||||
| Accrued expenses and other current liabilities | 2,755 | 2,804 | ||||||
| Lines of credit | 5,811 | 3,883 | ||||||
| Current portion of debt | 813 | 1,474 | ||||||
| Due to related parties | 73 | 77 | ||||||
| Accrued earn out consideration | - | 319 | ||||||
| Unearned revenue | 6,918 | 7,481 | ||||||
| Total current liabilities | 26,370 | 25,812 | ||||||
| Long term liabilities | ||||||||
| Unearned revenue, net of current portion | 2,015 | 2,481 | ||||||
| Debt, net of current portion and discount | 1,580 | 1,961 | ||||||
| Accrued earn out consideration, net of current portion | - | 149 | ||||||
| Deferred tax liabilities | 460 | 740 | ||||||
| Warrant liability | 519 | 803 | ||||||
| Other long term liabilities | 226 | 249 | ||||||
| Total liabilities | 31,170 | 32,195 | ||||||
| Commitments and contingencies | - | - | ||||||
| STOCKHOLDERS' DEFICIT | ||||||||
| Cumulative Convertible Preferred stock, $0.001 par value, 10,000,000 shares | ||||||||
| authorized, 1,547,845 and 1,514,155 shares issued and outstanding, including | ||||||||
| cumulative and imputed preferred dividends of $2,295 and $1,956, | ||||||||
| and with a liquidation preference of $13,640 and $13,232 at December 31, 2014 | ||||||||
| and 2013, respectively | 12,822 | 12,193 | ||||||
| Common stock, $0.001 par value, 100,000,000 shares authorized, | ||||||||
| 12,883,446 issued and 12,729,563 outstanding as of December 31, 2014, | ||||||||
| and December 31, 2013 | 13 | 13 | ||||||
| Additional paid-in capital | 17,252 | 17,231 | ||||||
| Treasury stock, 153,883 shares of common stock | (205 | ) | (205 | ) | ||||
| Accumulated deficit | (30,292 | ) | (29,475 | ) | ||||
| Unearned ESOP shares | (484 | ) | (629 | ) | ||||
| Accumulated other comprehensive income | (19 | ) | (1 | ) | ||||
| Total stockholders’ deficit | (913 | ) | (873 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 30,257 | $ | 31,322 | ||||
| 3 |
DECISIONPOINT SYSTEMS, INC.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
| Three Months Ended December 31, | Years ended December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net sales | $ | 17,181 | $ | 14,625 | $ | 64,546 | $ | 60,692 | ||||||||
| Cost of sales | 13,383 | 11,749 | 50,372 | 47,965 | ||||||||||||
| Gross profit | 3,798 | 2,876 | 14,174 | 12,727 | ||||||||||||
| Selling, general and administrative expense | 3,170 | 4,357 | 13,331 | 18,338 | ||||||||||||
| Adjustment to acquisition earn-out and bonus obligations | (86 | ) | - | (86 | ) | (820 | ) | |||||||||
| Operating income (loss) | 714 | (1,481 | ) | 929 | (4,791 | ) | ||||||||||
| Other expense (income): | ||||||||||||||||
| Interest expense | 209 | 236 | 867 | 959 | ||||||||||||
| Fair market value adjustment of warrant liability | (30 | ) | (130 | ) | (284 | ) | (296 | ) | ||||||||
| Other income, net | 31 | (21 | ) | 19 | (37 | ) | ||||||||||
| Total other expense | 210 | 85 | 602 | 626 | ||||||||||||
| Income (loss) before income taxes | 504 | (1,566 | ) | 327 | (5,417 | ) | ||||||||||
| Provision (benefit) for income taxes | (716 | ) | 267 | (197 | ) | (199 | ) | |||||||||
| Net income (loss) | 1,220 | (1,833 | ) | 524 | (5,218 | ) | ||||||||||
| Common stock deemed dividend | - | (263 | ) | - | (263 | ) | ||||||||||
| Cumulative and imputed Series A and B | ||||||||||||||||
| preferred stock dividends | (27 | ) | (27 | ) | (108 | ) | (108 | ) | ||||||||
| Accrued paid-in-kind dividends | ||||||||||||||||
| on Series D and Series E preferred stock | - | (289 | ) | - | (289 | ) | ||||||||||
| Cash and Imputed dividends on Series D preferred stock | (312 | ) | - | (1,233 | ) | (580 | ) | |||||||||
| Imputed contingent beneficial converion | ||||||||||||||||
| on Series D preferred stock | - | (1,343 | ) | - | (1,343 | ) | ||||||||||
| Net income(loss) attributable to common shareholders | $ | 881 | $ | (3,755 | ) | $ | (817 | ) | $ | (7,801 | ) | |||||
| Net income (loss) per share - | ||||||||||||||||
| Basic | $ | 0.07 | $ | (0.32 | ) | $ | (0.07 | ) | $ | (0.80 | ) | |||||
| Diluted | $ | 0.03 | $ | (0.32 | ) | $ | (0.07 | ) | $ | (0.80 | ) | |||||
| Weighted-average shares outstanding - | ||||||||||||||||
| Basic | 12,397,511 | 11,834,999 | 12,356,270 | 9,802,810 | ||||||||||||
| Diluted | 31,422,108 | 11,834,999 | 12,356,270 | 9,802,810 | ||||||||||||
| 4 |
DECISIONPOINT SYSTEMS, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
| December 31, | ||||||||
| 2014 | 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 524 | $ | (5,218 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 1,754 | 1,967 | ||||||
| Amortization of deferred financing costs and note discount | 153 | 181 | ||||||
| Employee and Director stock-based compensation | 119 | 76 | ||||||
| Adjustment to acquisition related earn-out and bonus obligations | (86 | ) | (820 | ) | ||||
| Change in fair value of warrants | (284 | ) | (296 | ) | ||||
| Loss on disposal of property and equipment | 5 | 13 | ||||||
| ESOP compensation expense | 47 | 138 | ||||||
| Allowance for doubtful accounts | (46 | ) | 142 | |||||
| Deferred taxes, net | (197 | ) | (271 | ) | ||||
| Changes in operating assets and liabilities, net of assets and liabilities acquired: | ||||||||
| Accounts receivable, net | (976 | ) | 1,615 | |||||
| Due from related parties | 181 | - | ||||||
| Inventory, net | (502 | ) | (723 | ) | ||||
| Deferred costs | 1,123 | 462 | ||||||
| Prepaid expenses and other current assets | 106 | 126 | ||||||
| Other assets, net | 11 | (18 | ) | |||||
| Accounts payable | 314 | (1,296 | ) | |||||
| Accrued expenses and other current liabilities | 6 | (103 | ) | |||||
| Due to related parties | (84 | ) | 76 | |||||
| Unearned revenue | (983 | ) | (284 | ) | ||||
| Net cash (used in) provided by operating activities | 1,185 | (4,233 | ) | |||||
| Cash flows from investing activities | ||||||||
| Capital expenditures | (63 | ) | (45 | ) | ||||
| Net cash used in investing activities | (63 | ) | (45 | ) | ||||
| Cash flows from financing activities | ||||||||
| (Repayments) borrowings from lines of credit, net | 1,931 | 459 | ||||||
| Proceeds from the issuance of term debt | - | 1,000 | ||||||
| Repayment of debt | (1,153 | ) | (2,082 | ) | ||||
| Issuance of convertible series E preferred stock | - | 4,090 | ||||||
| Paid financing costs associated with convertible preferred stock offering | - | (597 | ) | |||||
| Dividends paid | (748 | ) | (423 | ) | ||||
| Paid financing costs | (100 | ) | (119 | ) | ||||
| Payments for contingent acquisition liability | (84 | ) | - | |||||
| Common stock issued in private placement, net of costs | - | 403 | ||||||
| Warrants classified as a liability in connection with common stock private placement | - | 1,099 | ||||||
| Net cash provided by (used in) financing activities | (154 | ) | 3,830 | |||||
| Effect on cash of foreign currency translation | 7 | (14 | ) | |||||
| Net increase (decrease) in cash | 975 | (462 | ) | |||||
| Cash at beginning of year | 641 | 1,103 | ||||||
| Cash at end of year | $ | 1,616 | $ | 641 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | 803 | $ | 1,019 | ||||
| Income taxes paid | 89 | 258 | ||||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Accrued and imputed dividends on preferred stock | $ | 340 | $ | 265 | ||||
| Imputed dividends as contingent beneficial converion on series D preferred stock | - | 1,343 | ||||||
| Accrued PIK dividends on series D and Series E preferred stock | - | 289 | ||||||
| Warrants issued in connection with common stock private placement | - | 1,099 | ||||||
| Warrants issued in connection with convertible series E preferred stock | - | 278 | ||||||
| Settlement of earn-out obligation with convertible note payable | 291 | - | ||||||
| Payment of accrued dividends through issuance of PIK shares | 289 | - | ||||||
| 5 |
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 December 31, | Year ended December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| EBITDA Calculation: | ||||||||||||||||
| Net loss | $ | 1,220 | $ | (1,833 | ) | $ | 524 | $ | (5,218 | ) | ||||||
| Depreciation and amortization | 423 | 470 | 1,754 | 1,967 | ||||||||||||
| Interest expense | 209 | 236 | 867 | 959 | ||||||||||||
| Income tax provision (benefit) | (716 | ) | 267 | (197 | ) | (199 | ) | |||||||||
| EBITDA | $ | 1,136 | $ | (860 | ) | $ | 2,948 | $ | (2,491 | ) | ||||||
| Adjusted EBITDA Calculation: | ||||||||||||||||
| EBITDA | 1,136 | (860 | ) | 2,948 | (2,491 | ) | ||||||||||
| Stock compensation | 30 | 45 | 119 | 76 | ||||||||||||
| ESOP compensation | 10 | 59 | 47 | 138 | ||||||||||||
| Deferred taxes | (188 | ) | (266 | ) | (197 | ) | (271 | ) | ||||||||
| Fair market value adjustment of warrant liability | (30 | ) | (130 | ) | (284 | ) | (296 | ) | ||||||||
| Adjustment to earn-out obligations | (86 | ) | - | (86 | ) | (820 | ) | |||||||||
| Restructuring costs | - | 430 | 142 | 430 | ||||||||||||
| Capital raising costs | - | 270 | - | 1,570 | ||||||||||||
| Adjusted EBITDA | $ | 872 | $ | (452 | ) | $ | 2,689 | $ | (1,664 | ) | ||||||
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