Ken Nagy, CFA
On August 23, 2011, DecisionPoint Systems, Inc., (DPSI) an enterprise mobility and RFID systems integrator, reported financial results for its fiscal 2011 second quarter, ended June 30, 2011. The second quarter performance resulted in a small year over year decrease in revenue, with revenue dropping $64,235 to $13.223 million from $13.288 million for the three months ended June 30, 2010.
The marginal decrease in revenues for the three months ended June 30, 2011 was due to lighter retail division sales as a result of certain product availability issues as well as by temporary equipment shortages and general economic issues which were partially offset by the revenue contribution of CMAC. Still, the equipment shortages have stopped and the Company has initiated fulfilling orders that were held back in the second quarter.
Furthermore, DecisionPoint anticipates that the full benefit of the CMAC acquisition will be realized in the third quarter of 2011. CMAC, a supply chain consulting and systems integration firm, was acquired by DecisionPoint in late December 2010. The acquisition is anticipated to increase DecisionPoint’s 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.
Year over year net loss fell to a net loss of $3.879 million. This compares to a net loss of $850,048 for the comparable quarter of 2010. The year over year descent in net loss was primarily the product of a $1.015 million increase in selling, general and administrative expenses during the 2011 second quarter as well as a one-time, non-cash expense of $2.641 million for debt extinguishment that was expensed in the 2011 Q2.
Here again, it should be noted that the increase in SG&A was largely a result of the additional costs and personnel related to the integration of the acquisition of CMAC.
Although year over year net income fell during the quarter, DecisionPoint was able to increase gross margin by 1.2 basis points! Gross margin jumped from 19.0 percent, in the second quarter of 2010, up to 20.2% for the three months ended June 30, 2011.
Among other highlights during the second quarter, 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. DecisionPoint was able to improve its shareholder's equity by $5.1 million to $2.2 million as of June 30, 2011, as well as generate $0.2 million in operating cash flow during the quarter.
Furthermore, during the second quarter, the Company released a series of new products including a complete long haul trucking management system as well as the Grapevine version 1.2. The Grapevine system continues to gain traction in the marketplace with a recurring revenue generation pace that DecisionPoint has been pleased with.
Also, the Company reported that bookings are running ahead of last year
Likewise, DecisionPoint anticipates that it will expand its mobility and logistics vertical opportunities as demand for customized enterprise mobile solutions remains strong. Therefore, the Company projects a seasonally stronger second half of 2011 compared to its first half and anticipates remaining cash flow positive for the rest of the year. Accordingly, DecisionPoint anticipates reaching $100 million in revenue and sustained profitability in 2012 as a result of the increased traction in field mobility and new product introductions.
To view our most recent research reports and subscribe to our daily morning email alert, visit http://scr.zacks.com/.
Follow Zacks Small Cap Research on Twitter at Twitter.com/ZacksSmallCap
DECISIONPOINT (DPSI): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment