Double Digit Top-Line Growth at DecisionPoint Systems, Inc.

Double Digit Top-Line Growth at DecisionPoint Systems, Inc.

Ken Nagy, CFA

On May 15, 2012, DecisionPoint Systems, Inc. ( DPSI ) ), the Foothill Ranch, California based enterprise mobility and RFID systems integrator, reported financial results for its fiscal 2012 first quarter, ended March 31, 2012.

The solid first quarter performance resulted in record revenue, with sales jumping $5.009 million or over 39 percent year over year to $17.810 million from $12.800 million for the three months ended March 31, 2011.

Sequentially, first quarter revenues improved over 12 percent above the $15.887 million from the fourth quarter fiscal 2011.

The upturn in revenues for the three months ended March 31, 2012 was driven by increased sales of field mobility solutions and continued increases in demand from the retail sector.

Gross margin surged 290 basis points year over year from 18.2 percent in the first quarter of 2011, up to 21.1 percent for the three months ended March 31, 2012.

The increase in gross margin was primarily a result reduced costs, improved utilization, and the ongoing revenue mix shift towards software and services.

Sequentially, first quarter gross margin declined 130 basis points from 22.4 percent for the three months ended December 31, 2011, primarily due to seasonal patterns.

Selling, general and administrative expenses in the first quarter increased year over year by $342,033 and sequentially by $505,508 to $3.835 million,

The year over year and sequential increase in selling, general and administrative expenses was primarily the result of costs incurred in pursuing certain acquisition opportunities.

Adjusted EBITDA for the first quarter of 2012 improved year over year by $1.418 million to $494,796 compared to a negative $(923,732) for the same quarter of fiscal 2011.

Net loss before dividends improved to a net loss of $236,722 in the first quarter of 2012 compared to a net loss of $1.622 million in the first quarter of 2011.

Net loss attributable to common shareholders was $458,776 for the fiscal 2012 first quarter compared to a net loss attributable to common shareholders of $1.649 million for three months ended March 31, 2011.

Here again, the improvement in net loss before dividends and net loss attributable to common shareholders was driven by record consolidated sales and improved gross margin.

Based on a weighted average number of basic and diluted shares of 7.392 million, basic and diluted net loss per share resulted in a net loss of $0.06 per share for the first quarter of fiscal 2012. This compared to a basic and diluted net loss per share of $0.38 based on a weighted average number of basic and diluted shares of 4.333 million during the three months ended March 31, 2011.

The Company ended the quarter with $492,665 in cash and a working capital deficit of $4.2 million. This compares to $365,814 in cash and a working capital deficit of $3.762 million as of December 31, 2011.

Still, cash flow from operating activities for the first quarter of 2012 was $3.0 million compared to $2.1 million for the same period in 2011.

Additionally, DecisionPoint had $5.1 million available under its revolving credit facility with Silicon Valley Bank as of March 31, 2012. Also, the Company's term loan, also with Silicon Valley Bank, was paid down to $1.75 million from $2.0 million at December 31, 2011.

Moreover, management stated that it continues to see its field mobility solutions gaining traction with wireless carrier partners and customers as well as the continued expansion of its pipeline of opportunities in its retail and warehouse and distribution segments.

Similarly, the Company continued to see a bounce back of its retail solution sales.

Likewise, management further stated that its tablet-based assisted shopping solution suite for in-store applications continues to gain acceptance with existing and new retail customers and in field mobility applications, its major wireless carrier partners are embracing its Grapevine Push-to-Talk solution for enterprise and small business applications.

As a result of these demands and trends, DecisionPoint continues to anticipate revenue growth of over 25% in 2012.

Furthermore, Management anticipates current gross margins will be sustainable going forward as a result of the Company’s improving utilization and continuing focus on cost control combined with the ongoing shift of revenue mix in favor of software and professional services.

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