CMAC contributes at DecisionPoint Systems
Ken Nagy, CFA
On November 11, 2011, DecisionPoint Systems, Inc. (DPSI), an enterprise mobility and RFID systems integrator, reported financial results for its third quarter and nine months ended September 30, 2011.
DecisionPoint reported solid results with year over year third quarter revenues steady at $16.446 million compared to $16.414 million for the restated third quarter 2010.
However, third quarter revenue grew 24% sequentially over the second quarter ended June 30, 2011 and gross margin expanded to 20.9% during the third quarter versus 18.0% in third quarter of 2010.
The flat year-over-year revenues were primarily a result of lower sales to large retail-based customers which was offset by the revenue earned by CMAC, a logistics consulting and systems integration provider that was acquired by DecisionPoint in December 2010.
The jump in sequential revenue was driven by the full integration of CMAC, increased sales of field mobility solutions as well as the abatement of product shortages which negatively impacted DecisionPoint’s 2011 first half revenue.
Still, the Company was able to achieve positive net income for the quarter with third quarter 2011 net income of $54,489 compared to a net loss of $121,942 during the three months ended September 30, 2010.
The improvement was primarily a result of higher gross margin and total other income which was offset by higher total operating expenses in the third quarter of 2011 versus the comparable quarter of 2010.
Other income included a net gain of approximately $0.3 million, due to the sale and transfer of the Company's interest in a debenture, while the increase in operating expense was primarily due to additional costs and personnel related to the Company's acquisition of CMAC.
Based on a weighted average number of diluted common shares of 7.417 million, diluted net income per share resulted in net income of $0.01 per share for the third quarter 2011. This compared to a diluted net loss per share of $0.03 based on a weighted average number of diluted shares of 3.449 million during the three months ended September 30, 2010.
For the nine months ended September 30, 2011, year over year revenues improved by 4.2 percent or $1.696 million to $42.471 million from $40.774 million for the comparable nine months of 2010.
Still, net loss for the nine months increased by $3.259 million year over year to a net loss of $5.501 million for the nine months ended September 30, 2011. This compares to a net loss of $2.242 million for the comparable nine months of 2010.
The increase in net loss for the nine months was primarily due to an increase in selling, general and administrative expense in the first nine months of 2011 compared to the same period of 2010.
However, gross margin for the nine months improved to 19.9 percent compared to gross margin of 18.4 percent for the nine months ended September 30, 2010.
Based on a weighted average number of diluted common shares of 5.493 million, diluted net loss per share resulted in a $1.00 loss per share for the nine months ended September 30, 2011. This compared to a diluted net loss per share of $0.68 based on a weighted average number of diluted shares of 3.308 million during the nine months ended September 30, 2010.
DecisionPoint ended the quarter with $193,916 in cash and a working capital deficit of $3.696 million.
Still, total stockholder’s equity increased to $2.672 million as of September 30, 2011 from a deficit of $2.870 million at the beginning of the year.
Moreover, management has been encouraged by demand trends in retail solution sales as well as major wireless carrier partner’s interest in the Company’s Grapevine Push-to-Talk solution for enterprise and small business applications.
Grapevine Push-to-Talk technology is DecisionPoint’s “always on” communications solution delivering Push-to-Talk capability as data over the Internet across unrelated carrier and Wi-Fi networks.
The Company’s strategy has been to combine this growth driver with some of the major mobile provider’s other products and services in an effort to attempt to increase overall margins as well as gross profit.
DecisionPoint’s Grapevine Push-to-Talk Technology is currently being included in product bundles co-sold with tier one cellular carriers as well as demo accounts that are being used by leading device manufacturers including Motorola.
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