Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Welcome to DecisionPoint Systems, Inc.

Second Quarter 2023 Earnings Call and Webcast. [Operator Instructions] Please note, this call is being recorded.

I will now turn the conference over to Brian Siegel with Hayden IR. you. Thank

begin. may You

Brian Siegel

welcome DecisionPoint and Earnings to morning, Systems the Call. Good

Chief today and are me Executive Steve Officer. Joining Financial Smith, Officer; Chief Melinda Wohl,

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

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

differ results actual So from our could significantly statements. those future

and including non-GAAP EPS adjusted EPS on non-GAAP net Also, measures call, financial for expense gains during the the net this nonrecurring income, EBITDA. and transaction M&A stock-based and contained measures, we income in reports These costs extinguishment our non-GAAP company's will debt, information financial risk GAAP is other adjust company's any with filed and comp, Further the items. non-GAAP annual discuss and other factors of and SEC. quarterly income nonoperating on

turn I'll the to that, over now With Steve. call

Steven Smith

today. strong EBITDA guidance. and everyone, you Thank Good and adjusted our end guidance you, above the Brian. morning, of second today, high for We joining at thank results us reported quarter our revenue

results. who is then opportunity. to review capture our briefly these discuss to it I quarter the Systems, I'm by going our DecisionPoint to I second discuss and then results, discussing opportunity start our will Before this financial Melinda growth over and to market expand and strategy turn our call

and solutions company. enterprise retail DecisionPoint is mobility-first services a technology

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

markets These billions of hundreds of represent TAM.

presence acquire have or we established markets customers, hospitality largest the a therefore, under health underpenetrated develop players. identified after. go and with right ability logistics, can to already industries several expertise significant care significant or within and our to either us subset have, market in of So subsegments industry-specific is the partners these become and a for where technology we've retail solutions, where Currently, we

and Our the We their make We value do is at proposition to clear. workers effectiveness more our decision decisions frontline the position task faster, edge their walls to to better, customers network, efficiency operational like enabling we outside experiences business the and points. employees, X by business that of moments to matter work customers those at drive and accurate better moments matter. say, the this create who customer to be at their inside best and or that outcomes

X-pillar our to strategy. growth Moving

including in share convenience logistics; their mass to pillar and increase stores specifically verticals, first associated is transportation retail, and hospitality; merchants; and The distribution grocery, and current operations. our center health warehouse care;

The specialty include second in adjacencies. supply fast our these food, would into to Examples here and chain logistics. experience pillar big-box verticals retail leverage is retail,

mobile by services, services. maintenance repair network expansion attach and margin increasing professional The rates. drive third pillar services These and and services, services, is SaaS include managed partners from to software software services, managed

customers, expand fourth up geographic overall we is pick and The where pillar could increase expansion, new sales coverage. field

software also which a introduce necessary numbers. digits. business at grown of can hardware has to the and Project model staging Our the applications razor-razorblade to preparing rate hardware in use includes and consumables lumpiness, and are sometimes incremental which orders, some business, with the those solutions selling run hardware mid-single historically

of XX% generate to or more M&A our accretive thriving, combined Finally, strategy CAGR consistently. growth accelerates long-term

our pillars X these organic supports strategy growth. M&A and Our complements

just Note, acquisitions scale. acquire we make to aren't going to

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

Integration the a quickly X this perfect areas of year. was look Services criteria. example. to M&A was into met our we mode Macro into acquisitions, MIS, It And back X them DecisionPoint, previous but It or move than will bigger and growth end we hit of also little acquisition a and by our strategic are our integrating

are general, that year will we more add EBITDA. million to per targeting acquisitions In in X $X X or

to various growth high-margin revenue. significantly increasing X.X upmarket the especially services, aggressively we've past transformed increase years, margins ones moving rates by while the that reoccurring company include Over to generate

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

the revenue our company pay million next over them of of gross up performance of margin, years mid-XX% current a this April do to in earn-out million. step will was quarters X and Our MIS for we above we transformation. with that $XX at Based paid probable acquired average. year's acquisition on an them to million We expectations, we in X the low in to XXXX, In cash out believe final is expect $XX well $XX over it portion. our

Strategically, been this a fit. couldn't better have

strengthened food Southeast, First, integration us to and presence geographic warehouse capabilities; a top especially business in new significantly filled XXX,XXX the and XX,XXX our services, customers; They XX% the which MIS' offerings; expanded service our with staging square and the industry, adding brought foot new of gap to service in verticals. retail shift our hospitality in XX support facility is revenue and mix. X supermarket, also

retail over solutions company. time. enterprise It The point-of-sale company as a enables also it mobility more last us for point technology is stage really become than sets and to the important to become us an

Another services part and is our IT companies margin strategy service our where to accelerate offerings software functions. outsource certain of

which solutions includes manager RFID and as ViziTrace, the industry higher-margin portfolio, implementation. DSD We and an software revenue which are for route packaged opportunistically and such today building and manage helps direct solutions MobileConductor store our SaaS both reoccurring custom-developed

opportunities made heads these term. mentioned over in some to last in 'XX quarter, drive of we in the after and sales expense BD and to As mid- tune these versus the to we XXXX in adding growth operational investments $X developing million products go long high-margin and incremental areas

We the managed and visibility that designing, managing landscape. mobile provisioning, deploying and also managed of and simplify helpdesk include their services the product to status portfolio of monitoring offer networks. complexity These and improve a comprehensive services services device WiLD

and is landscape our industry competition on The services needs. for and each client's diverse customer depending broad

their Our actions solution has for in developing on year new everything a for spent called infrastructure. VISION. company customers portal managed the past our monitoring a VISION customizable the IT services offers

life VISION DecisionPoint and status mission-critical provides the of distributed a visibility manage the VISION the of IT assets real-time rollouts, also mobility regardless of overall minimize our their and enterprise. IT now and major to enables the can enterprise a management which simplify location cycle enables progress to large in customers health and to of downtime customers one entire of location. view. manage infrastructure all of customer's monitor

Now moving our results. to

mix revenue over MIS XX%. of second services and we to brought the the the drive overall million growth XX% gross investments Both percentage to in mainly Our margins helped million medium- $X.X our EBITDA $XX continued a on made managed making and with making software decreased offerings. sales growth quarter to in quarters longer-term record in by by revenue. due higher-margin by quarter biz the of and Adjusted were service to and up X% acquisition software this with year shift to streak of the larger dev

Finally, debt quarter, we operations by enough second MIS to $X of $XX pay took QX we to the million at end the of end over cash on of generated related in acquisition. from the million the down the

$XX to $XX the we well. Looking adjusted And to expecting to business $X third of between with the the million. rate of range our revenue addition million and expect we continue perform report $X.X to million with to million MIS, in are quarter, EBITDA run

and solid dedicated strong to our adjusted forward I on with continued closing, third quarter work. hard again quarter we look thank EBITDA, speaking to want you their delivered a for our In with call. I employees and revenue

in Now I financial detail. will turn results it more our over to to Melinda review

Melinda Wohl

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

of half from through backlog as worked we million we quarter, customer our order. large a $XX retail the completed last During quarter

back is backlog norms. historical to Our closer

XX.X% of services costs revenue The profit. from expenses acquisition year, a to a development million overall of the of revenues. which versus were operating result Moving a result related investments. was mix We XX.X% prior the gross business increase GAAP towards and last XX.X% on was higher and the X of shift on year. April Macro increase to the $X mainly sales operating saw

with As we and move over to cost realize operating expect we Macro, time. improve integrating synergies leverage forward

diluted from Weighted by X.X XX.X% increased XXX,XXX outstanding and million income million. EPS and average XX.X% shares $X.X GAAP net $X.XX. to and to last increased year

XX.X% $X Our last an The about expenses. $X.XX, increase majority adjustments $XXX,XXX numbers and this income $XXX,XXX million respectively. EPS The diluted related M&A year's and this income and year. non-GAAP EPS and net year of non-GAAP vast versus were of net excluded were to XX.X%,

$X.X to tied last $X.X year investments Adjusted Again, are a managed was million this this making the most of these our in growth compared we year. and to software X.X% and to services EBITDA million, accelerate sales offerings. higher-margin of business development was decrease in

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

debt about quarter of Total the end $X.X at the million. was

down related $X.X quarter, debt in million the the paid Macro. we During of acquisition to

our and are pay remaining the possible. term will plans our as down pay to as for to down swiftly $XXX,XXX loan, continue We quarterly

million as fulfilled was The last a year over $X changes cash million orders provided operating several decrease quarters. we X capital had activities in Net would result of by large last year. versus be that $XX.X was working

that, With can questions. move operator, to we

Operator

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

Howard Halpern

willing Congratulations, a to is What you still now? your active seeing are guys. picture. with, guess, they there broad, off Great are and -- Or terms I seeing? that in going any customers? right there you're deploy Is big quarter. I'm start of hesitation to

Steven Smith

Yes, we are Howard, supported Technologies QX. not-so-strong some that in and quarter for front compliments the by Thanks the hesitancy some Zebra of areas, is sort Yes, in listen, Steve. of on seeing end. the

our of said, we have, we that services, our which that it that with really -- up highlights our revenue. made business if the the today software important it's decisions hardware to add extent to balance services, and consumables, underscores But XX% and right, you

as some immune a that in it's and ourselves a to a degree CapEx industry the to seen regard sense, in from So other strategy general I what that view maybe to little a spend with has felt. strains have suppliers -- the

We've favor. It's have our been of our outmaneuver favor. of results. to our -- plays which that it by virtue the it small in We power think just in we numbers able --

And as to going inflation, so be And trends just we no optimism offset forward. we'll past could our hence, macro there in that any of headwinds forward. we control that going we way and in our the outmaneuver able will over, think believe those have we we should out and and guidance recession, the have be the might

Howard Halpern

XX% services least that line And half in XX% Okay. of total to area to year be revenue? at of expect we the the about should second least at the that

Steven Smith

Yes.

Howard Halpern

have have acquisition new customers those MIS, any of And you brought portal? which onto acquisition, great of the of the you Okay. -- is

Steven Smith

per we've massive to a between but portal your between read companies. would I there. amount work we And Yes, X the maybe Howard, not integrate realize se, on the the of of question, done the and if have lines to what synergies done

get In active, Macro benefit sales that offer cross-selling those fact, right offer wider customers what we We've has campaigns now. to customers. and deeper from to have could to and live into what identified ongoing has DecisionPoint

the X we along going all the that And realize believe share perspectives. right There's acquisition the synergies had. sales still yet many to we're was between -- to more this we're be said one entities. wallet to that from We exist

chances I companies like that percentage there multiple those you, of campaigns go-forward campaigns to basis our on going putting a X able a can virtue right of be these now, by sales sales are tell we win large to on together.

Howard Halpern

And have of logistical synergies, begun terms are you new warehouse? Okay. with to synergies see in you the --

Steven Smith

the during working through Yes, We due company. diligence -- we services. We we fortunate ironically mean, even and -- before we I purchased were had those engaged enough. great relationships on

warehouse commercial we extended So a the leveraged capability in way.

level some were as operational the to the now to one existing cooperation just one. warehousing, leadership close, are capabilities integration had we with able prior services case, this and We to table. and and we're it between larger that of of leverage, spoke business we to and teams leverage that customers X on the it of the staging willingness of that But the some into were working showed book in able our of synergies

So like all we regards. really in one this

And if at I a lot of teams you table but associates, companies making there sure on look cultural culture. add. is We, of don't categorically, cultural to We a all I you on take one, lot time and mean of company, on spend a between will criteria, the I time other might And as a leadership tell our great fit there's a both the do. I a this spend pound fit.

Howard Halpern

Okay. And one question. final just

If be earn-out you the the half MIS number, number, in a year? estimate might have of second payment you would what approximate to the

Steven Smith

Melinda, March on you the take year, stab end don't you want pick full will Why that, a that? XX. say do I it half by up think on fiscal we year, to for we but don't which Melinda? a

Melinda Wohl

to and is it end approximately Yes. or potential estimated will performance. Correct. time. that we million Howard, on monitor changes based performance of $X continue estimate we period And that the through at that about their

Operator

closing the comment. like questions to Instructions] conference time. more brief for There to this Steve no a [Operator I are over back at turn would

Steven Smith

Yes.

to them these time this Without on Just would and and to dedication have been I in commend able professionalism, results. associate is this and that their every compliment persistence, company. their to use never deliver want we

said our it's year. exercise And the against I acting to continue for And we company, business combined before, execute now but one ever, team, now one that one more consolidated as I've culture, know than will and plan. a plan business one,

had the in want big and call compliment deliver sure make Thank that I on these company you and a every hand end you. a shout just to to I a this So out big results. thank with associate a helping

Operator

Thank conclude today's you. conference. will This

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

DecisionPoint Systems (DPSIP) 15 Aug 232023 Q2 Earnings call transcript