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DecisionPoint Sees Top-Line Growth

Ken Nagy, CFA

On March 29, 2012, DecisionPoint Systems, Inc. (DPSI), the Foothill Ranch, California based enterprise mobility and RFID systems integrator, reported financial results for its fiscal 2011 fourth quarter and full year, ended December 31, 2011.

The fourth quarter performance resulted in a slight year over year increase in revenue, with sales increasing $417,873 to $15.887 million from $15.469 million for the three months ended December 31, 2010.

The small increase in revenues for the three months ended December 31, 2011 was due to the revenue contribution of CMAC.

CMAC, a supply chain consulting and systems integration firm, was acquired by DecisionPoint in late December 2010.  

Gross margin jumped 80 basis points from 21.6 percent in the fourth quarter of 2010, up to a record 22.4% for the three months ended December 31, 2011.

The increase in gross margin was primarily a result of a richer mix of sales of higher margin third party software and professional services.

While gross margin for the quarter improved to record highs, selling, general and administrative expenses in the fourth quarter increased year over year by $1.108 million to $3.329 million.

The increase in selling, general and administrative expenses was primarily due to additional costs and personnel related to the Company's acquisition of CMAC and generally higher business levels.

Net income before dividends improved to $65,350 in the fourth quarter of 2011 compared to a net loss of $25,268 in the fourth quarter of 2010.

Still, net loss attributable to common shareholders was approximately $152,541 for the fiscal 2011 fourth quarter compared to a net loss attributable to common shareholders of $46,338 for three months ended December 31, 2010.

The year over year descent in net loss attributable to common shareholders was primarily the product of a cumulative and imputed preferred stock dividends charge of $217,891 for the fourth quarter of 2011 compared to cumulative and imputed preferred stock dividends of $21,070 during the fourth quarter of 2010.

Based on a weighted average number of basic and diluted shares of 7.460 million, basic and diluted net loss per share resulted in a net loss of $0.02 per share for the fourth quarter of fiscal 2011. This compared to a basic and diluted net loss per share of $0.01 based on a weighted average number of basic and diluted shares of 4.333 million during the three months ended December 31, 2010.

For the year ended December 31, 2011, year over year revenues improved by nearly 4 percent to $58.358 million from $56.244 million for the comparable twelve months of 2010.

Still, the Company reported a net loss for fiscal 2011 of $5.168 million compared to a net loss of $2.208 million for the twelve months ended December 31, 2010.

Here again, the increase in net loss was primarily a result of increased in selling, general and administrative expense offset by higher gross margin offset by improved gross margin.

Selling, general and administrative expense increased year over year by 41.5 percent or $3.986 million to $13.597 million while gross margin for fiscal 2011 increased to 20.6 percent compared to 19.3 percent for fiscal 2010.

Here again, the increase in selling, general and administrative expense was primarily due to additional costs and personnel related to the Company's acquisition of CMAC and generally higher business levels while the improvement in gross margin was primarily a result of a richer mix of sales of higher margin third party software and professional services.

Based on a weighted average number of basic and diluted shares of 6.019 million, basic and diluted net loss per share resulted in a net loss of $0.94 per share for the full year fiscal 2011. This compared to a basic and diluted net loss per share of $0.66 based on a weighted average number of basic and diluted shares of 3.462 million during the full year ended December 31, 2010.

The Company ended the year with $365,000 in cash and a working capital deficit of $3.762 million.

Still, in June 2011, DecisionPoint was able to complete a reverse merger with Comamtech as well as exchange $4.0 million of senior notes for convertible preferred stock.

With the completion of both the reverse merger and the equity conversion, the Company was able to improve its capital structure as well as strengthen its equity base.

Along the same lines, DecisionPoint’s shareholder's equity improved year over year by $5.377 million to $2.507 million as of December 31, 2011.

Similarly The CMAC acquisition increased DecisionPoint’s mix of higher margin professional services and software revenue by enhancing the Company’s ability to deliver operational and technical supply chain solutions as well as improve the Company’s Professional Services revenue mix.

Likewise, during the year DecisionPoint built out its field mobility practice, introducing initial co-branded products through wireless carrier relationships with Sprint, T-Mobile and Verizon and in 2012, the Company expects to release additional turnkey, or bundled, solutions with its partners.

As result of recent and upcoming product releases with wireless partners, the Company expects continued field mobility growth.

Additionally, DecisionPoint reported that bookings are running ahead of last year and that with improved customer capital spending, its retail segment has been building its backlog.

Therefore, the Company projected its fiscal 2012 revenues will increase by over 25 percent compared to sales from the full year ended December 31, 2011.   


DecisionPoint goal is to continue shifting its revenue mix towards software and professional services and to continue to expand gross margin, through increasing sales of new products.
 

To view a free copy of our most recent research report on (DPSI) or subscribe to our daily morning email alert, visit Ken Nagy's coverage page at http://scr.zacks.com/.

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