DPSI - Earnings call 1 2023 | DecisionPoint Systems, Inc.

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Operator

Greetings. Welcome to Decisionpoint Systems, Inc.

First Quarter 2023 Earnings Call and Webcast. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Brian Siegel with Hayden IR. Thank you.

begin. may You

Brian Siegel

to welcome Systems Call. Earnings Hello, the and Decisionpoint

Smith, Officer; Finance. and Joining me Wohl, Executive Steve are of today Melinda Chief Vice President

For Investors have is those at that today's of it release, www.decisionpt.com. not available of section seen the our website in you

I involve everyone except best Before expect uncertainties. like several information, risks would expected for are presentation and to actually will this in writing can there or assurances events of that as believe, our discussed anticipated and estimates matters this like these anticipate forward-looking take historical results or remind beginning, that that the statements place. are no mean that Words but be that

financial discuss and differ GAAP income, results actual So stock-based non-GAAP from adjusted our extinguishment including will could gains significantly other quarterly I'll and company's it filed M&A non-GAAP contained and non-GAAP Steve. income turn non-GAAP compensation, our company's risk EBITDA. the net transaction the adjust away, to statements. Also any debt, financial measures on the it SEC. With in Steve. with costs during These Take factors EPS those for on over income other nonrecurring, future and EPS measures, net this annual items. information we and now call, and is of Further expense that, nonoperating reports

Steven Smith

today. reported joining Thank say remains and we you, everyone, Brian. as I'm revenues quarter first excited to us today. morning, you for thank business strong Good our

expand results. Decisionpoint I'll it Melinda the briefly Systems, by mobility-first market growth solutions quarter discuss our over first strategy company. capture services and Before our a I results, turn to this our then to then who discussing opportunity discuss these opportunity. Decisionpoint financial enterprise is to our going and is call review and I'm and start to

managed that field trends, mean? services, we aim does and that home mobility, encompasses enterprise It several and secular mobility, including be and IoT. emerging at work center from cloud the means of SaaS, So XG which to what

Now of of represent TAM. these hundreds markets billions

we and a So therefore have, subset players. retail, solutions, we've can acquire care, [ and identified of the where go develop for Currently, become these and have within or or ability to us significant partners these either right under already several unpenetrated industry-specific established markets the after. are industries industries (sic) technology customers, underpenetrated ] hospitality logistics, we health segments where expertise to

moments business drive in grown their effectiveness rate being project and at better historically lumpiness Our also incremental orders to say, at the frontline matter, some mid-single the the or by that to has clear. proposition moments this more Simply, customers network enable of the be do matter. task create and decisions is to customer customers make the to like business run we employees, numbers, edge we our better, decision operational of can that walls business to enabling times. X which experiences to best introduce points. The the their and We work with who latter faster, efficiency, those value a workers at digits, at outcomes outside at and those M&A inside accurate

for business, also an these replenishing annuity-type excellent consumables We have devices.

increase and by So aggressively razor years, revenue. that especially rates model company upmarket ones X we've various said, transformed generate the to razor growth That services, over both past to the significantly margins the think reoccurring high-margin and blade of here. X organically the increase and moving inorganically to these

and is technology gross of drive maintenance hardware. consulting, margin within support. the and deployment, to strategy The And portfolio hardware our services, example, we we margins and to software reoccurring software services repair our higher For customer-specified than services revenue. offer tend part to customization when significantly these for professional and be gross staging, increase mix higher including installation, resell more

companies such functions where which MobileConductor and which implementation. building services and software today managed DSD both industry high-margin and store are solutions portfolio, revenue IT packaged certain our custom-developed RFID SaaS manage ViziTrace, as includes helps the and We an opportunistically also the or solutions route reoccurring outsource offer for delivery direct manager

we've over we dev As in $X some counts incremental XXXX. we that in this sales made operating long after last to quarter adding We versus areas in go to add million opportunities about to in in mentioned and mid- expense higher-margin these investments products and the drive press release, and XXXX biz said term. developing head these expected growth the

deploying These customers' the managed device help at managing on simplify Looking services We to status landscape. solution. of desk a provisioning, portfolio designing, and to and our designed and improve include the complexity managed offer services. of mobile product visibility a comprehensive monitoring

for simplify Vision IT mission-critical our developing their a matter needs and visibility to of infrastructure, Our comprehensive distributed assets cycle minimize everything for monitoring of new company location can the the offers now customizable our The spent the monitor rollouts. they portal past are enterprise. where diverse, and this the managed located manage Vision solution customers year customers each IT Vision in management large entire health, and all in to enterprise. one industry on no This status of infrastructure. manage broad the downtime has real-time our mobility also services of depending to progress provides IT customers landscape in is and view. enables actions life a enables of our the customer of services. Vision. Decisionpoint client. and on your

pillars of Moving strategy. X to our growth

pillar to distribution health increase and current transportation. The hospitality in supply grocery, warehousing, chain, share first retail, and is verticals, our specifically care, specialty

retail, pillar supply restaurants verticals along retail, big-box Examples adjacencies. experience second with in into these grocery, chain is hospitality and include would quick-serve The and stores, in convenience leverage logistics. our to

where customers, increasing sales These we expansion, coverage. and geographic include from The increase up field margin and services. services, third partners maintenance fourth pillar repair SaaS pick and and our and professional can pillar ISV new services, rates. growth to is drive expansion by services, attach software The and is managed service software expand

strategy scale. our supports and pillars complements just to we Note these aren't M&A to X going organic growth. achieve make acquisitions Our more

record companies us and EBITDA, the system. areas, expanding include successful and drive These nationwide of and target. a and developed growth track We requirements throughout to costs, operations cultural integration we we these that strategy on move quickly revenue have by allows have of operations focusing streamline integration-ready solutions reduce a positive their offerings By compatibility. specific synergies revenue our to SG&A

year look generally at X X acquisitions EBITDA. will million We $X add per in plus to or

our of Mid-Atlantic while the Macro head. expanding these at a our margin the capabilities Southeast and us MIS including vertical beginning significantly as broader and has gross a retail in brought the new XXX,XXX to warehouse, presence higher go-to-market in the personnel If with you project our every M&A, pillars plus and our customers. will capabilities additional that center, QX XX%, square food access and They retail. management adding growth well strengthen presence complete service hits on Services, service of a one grocery, about in or Decisionpoint. They you integration technical staging will foot look sales, also Integration a hospitality and parts area team, of solutions MIS, at of and as the strategy, acquisition mix X than see therefore, of

EBITDA. revenue QX year, million million least QX and in of incremental add in expect $X.X least We that this at they will through in at $XX

our Moving results. to

revenue quarters time growth to was customer of million. XX% and services software follow-on run retail while the in EBITDA services, of in The XX% Our margin, A order margins. to higher first skewed generate grew $X.X million gross broad gross our growth large growing of our revenue which strategy across services the to with XX% orders operating quarter. quarter over Adjusted validates equipment the increased based the continued and rate, streak and $XX record XX%. latter strength by

left to on longer $XX access backlog XXXX with We times mentioned to supply. customers with ensure orders I is as of prior lead which, strong placing due to calls, a million, over

We additional with only those inventory orders but backlog relationship taken such, as rate our ensure our run on positioned beyond have have are And to in a well tend some them strong should not we with delivery, business. we get to we and vendors.

report growth. their our to forward for EBITDA adjusted company on deliver strong And $XX million hard second continued the this million. In call great I August. within look are on million and want a $X.X revenues including every the enabling we in of For thank adjusted with dedicated employee $X.X you work, delivered revenue to results. expecting to again and quarter with second quarter I us to to speaking these between with $XX we in quarter, EBITDA million, closing, MIS, range

will over I Now it financials. to Melinda review our to turn

Melinda Wohl

up We demand XX% quarter saw quarter Details you, performance in operating with first $XX total QX revenue of as Steve. compared were million. Thank strong continued follows. to XXXX's to first our

still $XX last During it $XX higher quarter, issues due norms. Backlog Xx of to quarter and a than the are chain which remains through from that portion worked companies. supply our is impacting our normal backlog about rebuilt historical global we the to million many million,

to times. partnerships clients our lead to able As Steve strong as we access to a longer has been result, up distributors products fortunately orders our to And and inventory. as putting and gain with mentioned, our are such Zebra have with leverage ship build OEMs

of sales by a the of of was gross a a volume. due Gross from higher profit. result saw which We sales to retail customer year, the mix impacted order. ongoing a was to increase Moving equipment fulfillment XX.X% prior margin higher

GAAP depreciation acquisition biz quarter XX.X% also operating of a dev expenses to were of revenue a sales versus was result additions last year. costs and and increase absolute of XX% amortization. The and full personnel,

synergies these leverage million Weighted diluted time approximately by the from were benefit XXX,XXX last expect net see realize shares year. EPS income and of as we and to cost on operating return sales to $X.XX. We and improve average continue $X.X our increased investments. GAAP outstanding over

net year. million year following: non-GAAP year. compared were EPS EBITDA each M&A-related $X.XX, X% and $X.X income last to was numbers the EPS of excluded million compensation Adjusted $XXX,XXX $XXX,XXX and to of year. Our versus income this last $XXX,XXX $XXX,XXX up last expenses compared million, XX% non-GAAP net $X.X stock-based and about year; diluted versus last up The $X.X

$XX.X the Turning ended to $XX.X December cash with to months. We million equivalents million XX% is approximately over at sheet. which XX, expected to and totaling XX Deferred quarter cash versus of million, the recognized million $X.X our increased next be revenue $XX by XXXX. balance

the quarter. cash MIS of higher end the the the last about debt $XX.X day of The at million. acquisition and fund on was quarter was debt to Total the

mentioned, day of deal the closed first QX. the Steve As on

this cash decrease an operating in increase versus of provided operating deferred was in swing debt million by Our plans move result swiftly a to activities a can The pay to we $X.X possible. Net accounts as million. and that, operator, activities down receivable. And collections of $XX.X was cash are as revenue used in with questions.

Operator

from Howard is question first Halpern with Our Taglich Instructions] [Operator Brothers.

Howard Halpern

quarter, the guys. on Congratulations

In terms insight customers? could type of and just terms in the or give a you in little of MIS that acquisition into you activity first of seeing are of what the new month acquisition, change that. cross-selling If

Steven Smith

Well, specific. where they be those in retail to on-target a to perfectly in food, play the and they all due in in the grocery, on we're Howard, first retail. them would them. us. food thing in the play And for want new this We the to addition be convenience is already acquisition to vertical, store is living that and that place knew are strategy. did verticals play we up you retail. They are. seeing, And to and represent restaurants diligence quick-serve we standard our be They hit And

very they're what we know, as XX seeing QX. we very as closely referenced an really above we're to everything And services. a in heavy aligned that about acquisition for we and with senior it diligence and to maybe us was overall comfortable They out, I customers in lived entity thus We like the thing into have they'll see and that proved in with do first far. we half XX% what going services hearing forward. as up with historically. -- notched dozen, you and living So We're all. with management due like And acquisition saw the there. our visited up

Howard Halpern

services service overall, to is maintain closing toward margin gross Okay. it terms upper XX% over XX% of And that on to and in your that area help drive time? the going --

Steven Smith

the those target. acquisition that's That's every with investment to and the we make, driving every and with organic we're results. And goal

we're and remain future at XX% company to maybe believe We going XX% continue strategy. the company the of that gross it also increase and we're to the that our can center And be and a will on we focus. state, think be to margin strategy this so executing our profit over gross That's more. time. services our And

Howard Halpern

are overall, mentioned, going you make operations going is that within that warehouse the leverage then to help you're forward? going any of there how terms incremental in And Okay. you warehouse warehouse? that to that investments And

Steven Smith

Yes. Howard, feet we about this option Laguna that, I'm California happy square. we've Recall to with excited added. to square really the facility XX,XXX you presence because go centered on we're is in XX,XXX that Hills, an had

deliver the on-premise very key the customer step a from It's we to just here major all We even providers, could and with regard store, it to being point-of-sale warehouse, by grocery store in Carolina. restaurants. we adjectives center. And not convenience warehouse. or solutions take the It's XXX,XXX integration could that a forward, centering equipment Greensboro step integrate our Here, HP primary. the it's And staging here giant and quick-serve bring center point-of-sale our ourselves North in are Greensboro, the in staging square. Southeast an the also integration we the facility in before forward, in

the yes, in thing that that that the And Carolina of space, staging -- the in but real less estate don't a is California. you expensive excited it's than real I as to on So North tell warehouse that integration little -- capabilities. and top is has need

Howard Halpern

Yes.

Okay.

parts you're as also of Or offer of in overall the what hesitant customers' you terms other are vertical in new sort with, verticals need types verticals food, as any in hesitation and of uncertainty? of the that some not In economic kind therefore are I maybe that you industries? guess, and on

Steven Smith

serving for I been loved as know. in times. part about I is this matter? So XX always tools. that at this we're returning matter, you selling want even whether a customers the or and the in their good that thing That's you're customer it And administering be retail moments food it industry industry. package, a the times. love and delivering the we're best times Because to that patients delivering task that behind times. it. at always enable Avis best medications I thrived to this establishment, moments matter. to the delivering thrived And in Why? bad We're the enable I at bad a best at be as we solutions good Howard, mean thrived And their selling serve moments those will what to the worker it years, have restaurant, our such, what moments that to hospitals, them that to cars their tools And that be doesn't of in and customers matter matter. bad has in

can't said over we've and do what Now are to having the years. that, I'm not And an look you track I them tell CAGR this world, record you growth at but if delivered historical we face at economist. macro today. here Decisionpoint, last -- in going certainly X trends here XX%

outmaneuver and and chances macro trends, have We able to our outpace been forward. we going the like

Howard Halpern

migrated with to one. Okay. are Most have And Portal? happy they how And now, they last larger one your of it? your customers Vision

Steven Smith

have. existing and the it, customers love They

XX approximately portal. in on have the customers way we So a production

we've everybody over. moved So

developing We incremental complete portal, in invest effort as continue know, the still also of for. of think incremental functionality was can to there's and we that end add. to want the We're think will 'XX. there's And after 'XX April, customers you functionality and our that that the in going pay portal. we As

gear and portal we and anchor if to tenant. there's stakes starting broke the in services upside and from going that So and an of activities it's It's the like visibility kind a just -- you're is forward, of represents business. table assets lots giving

Howard Halpern

that migrate now MIS have the over opportunity time Okay. on? to as portal And goes customers to you

Steven Smith

to our take sell course. and the it, that to company, and of asset we'll customers blanks. the them benefits acquired filling appropriate. on those We'll we'll Thanks newly as for Of Yes. migrate start in

Operator

from next Board of Michael Our question of is Taglich, Directors. member Decisionpoint Systems

Michael Taglich

reason are quarter expenses a be going different conference unusual great to to on regarding there call. guidance are for again, gave is and ask materially expected be different Steve, -- materially in a we or the it's QX? margins for me to a QX, from question going But QX

Steven Smith

Melinda, side expense it? any of comment on the

Melinda Wohl

should biz new $XX people, Mike. to keep new the and The incorporate the million, with expenses our guidance that million dev-related sales going within margins of play our to with we're still $XX

Michael Taglich

Okay.

feel roughly, you yet, spend, QX versus think QX. Melinda? additional an in So SG&A. do versus our the not in have The much going similar we're should over quarter margin -- of from magnitude as what do How gross is some expect to And SG&A standpoint order we'll QX? you QX

Melinda Wohl

over QX go little a as than be we're because the figure kind we incorporating out more that to new going to quarter. the we higher bit It's acquisition, just of and need

Michael Taglich

The wrong. I'm is if you of exclusive me economics? guidance Correct Okay. macros gave

Melinda Wohl

correct. That's

Michael Taglich

Okay.

So is on a expenses would is Street top going -- the cash be it? of additional flow as the macro well told right, we've accretive, the macro, to which be as additional

Melinda Wohl

Yes.

Michael Taglich

Correct?

Melinda Wohl

Yes.

Michael Taglich

Okay.

Steven Smith

add And I here. going comment Mike, think a that I'll with you're to just because I know where

Is guided EBITDA we've down where this of going? So question -- slightly are stream questions the on that line.

Michael Taglich

of the day, the end yes. At

Steven Smith

Okay. All right.

know, just as up more X And we've a bit the of as me companies let So already. you Board companies. on member, integration these -- money always end a spending you acquired

You of around that always hire surprises. over to There's for and a some expense the databases. consultants corner are data and sort and unaccounted bring little

both all and guidance so the that provided revenue. of that we accounted have we on And with for EBITDA

Michael Taglich

Good.

Okay. That's a great answer.

the is in difference Onetime So it's capitalize. that your you would based a then and in companies in plug experience EBITDA on nature? number, expense integrating

Steven Smith

meetings you've our And Yes. yes. Board -- said it in

plan the -- that's So yes. and

Okay.

Michael Taglich

Okay. guarantees. guesses These the are about plan. the No future? That's

Melinda Wohl

Yes.

Michael Taglich

Okay. I'm done. job very you've proud of the

too. the company. whole for You Great teamwork should be,

Operator

more conclude this no today's conference. This will questions are time. There at

participation. your disconnect you for this thank time, may lines at your again You and

DecisionPoint Systems (DPSIP) 15 May 232023 Q1 Earnings call transcript