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Investor Presentation May 2013

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Page 1: Dpsi 6262013

Investor Presentation May 2013

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Safe Harbor

This presentation is neither an offer to sell nor a solicitation of offers to purchase securities. This presentation is the confidential intellectual property of DecisionPoint Systems, Inc. (“DecisionPoint”). Any use or redistribution of this document or its contents without the express written consent of DecisionPoint is prohibited. This presentation contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Those statements appear in a number of places in the presentation and include statements regarding the intent, belief or current expectations of DecisionPoint, its directors or its officers with respect to, among other things: (i) trends affecting DecisionPoint’s financial condition or results of operations; (ii) DecisionPoint’s financing plans; and (iii) DecisionPoint’s business and growth strategies, among other things. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. You are cautioned not to place undue reliance on these forward-looking statements, which reflect DecisionPoint’s management’s view only as of the date of this presentation. This presentation is © DecisionPoint Systems, Inc. 2013

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Overview

End-to-end provider of software and professional services targeting the growing enterprise mobility space 30 years experience in design, deployment and support of mobile computing and wireless systems

Enable our customers to access enterprise data at the point of decision regardless of location

Deliver the ability to make better, faster and more accurate business decisions by implementing industry-specific, enterprise wireless and mobile computing systems for front-line employees, inside and outside the ‘four-walls’

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Investment Highlights

Enterprise mobile solutions have become imperative

Revenue mix shifting to higher margin professional services and software

Well established partnerships with key wireless carriers

Blue chip customer base

Financial resources to support growth

Proven management team with strong domain expertise and sector

experience

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Rapidly Growing Mobile Solutions Market

Demand Drivers Global workforce continues to

become more mobile

Standardization of devices on

WindowsMobile, Android, iOS

Hand-held devices and RFID tags

increasingly affordable

Solutions becoming more complex

and require more customization

02468

10121416

2011 2015

$ Bi

llion

s

Enterprise and Government Mobility Market

10% CAGR, totaling $14B by 2015

* Data source: VDC Research

Enterprise Mobile Solutions have Become Imperative

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Total Mobile Solution Provider

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Field Workforce Automation Retail Systems Distribution, Manufacturing &

Government

Verticals:

Field Service

Transportation & Logistics

Security Service

Direct Store Delivery

Verticals:

Grocery

Clothing & Apparel

Distribution Centers

Specialty Retail

Department Stores

Home Improvement

Verticals:

Supply Chain

Warehouse Management Systems (WMS)

Continuous or Job-Shop

Batch or Discrete

Make-to-Stock

Make-to-Order

Assemble-to-Order

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Field Workforce Automation Increasingly, goods are tracked or services are performed by field-based workers Our solutions:

Dramatically improve performance and productivity Increase customer service with immediate wireless connectivity to back office operations Improve communications with field workers

New Products Generating High Margins and Recurring Revenue

Grapevine Cloud-based “Always On” push-to-talk system with no latency Supports up to 100 simultaneous users in a single conversation

Mobile Device Management (MDM) Provides over-the-air (OTA) wireless security, support and upgrades

Fleet Control Targets trucking companies in non-compliance with new DOT regulations

Proof of Delivery Express package tracking within large corporations

CASE STUDY Leading Freight Transportation and Logistics Company 14,500 mobile computing devices currently, increased from 1,000 devices in initial 2009 contract Services include: • Mobile Device Management

• Security and support • Custom reporting • Monthly building, testing and delivering of

application updates • Initial contract: $0.2 million • Annual recurring revenue: $0.9 million

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Retail Systems

Leading Provider to Tier 1 Retail Chains

Market Trends Driving Growth Most retailers migrating from 20 year old technology Seeking process improvement and productivity gains Competitive drive to function like Apple stores

New Products Increase Productivity at Reduced Cost

Mobile point-of-sale including: iPad retailing iPad clienteling Inventory and shelf price management Business two-way radio

Partnership with Global Bay Software provides Apple applications

CASE STUDY Leading multi-channel specialty retailer of apparel and accessories Total custom system upgrade including: • Software creation and hardware for:

• Warehouse and distribution centers • Wireless network • In-store systems with customer-facing tablets

• Integration with existing enterprise software • MobileCare Technical Support Services • Initial contract: $3.2 million • Annual recurring revenue: $0.3 million

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Warehouse Distribution, Manufacturing & Government

Increasing need to maximize service levels while meeting financial performance requirements Challenges include:

Achieving high customer satisfaction with accurate and on-time shipments Maximizing fill rates and inventory turns Efficient space utilization Labor and equipment time-and-motion efficiency

Solutions optimize return on invested resources:

Faster cycle times Lower and accurate inventory counts Higher services levels

CASE STUDY Complete RFID pedigree and authentication system • Implemented enterprise-wide • Initial contract: $4.0 million • Annual recurring revenue: $0.5 million

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Sales Process & Partners

Direct Sales 25 salespeople

Located

nationwide

Supported by

30 engineers

and technicians

Partners Leveraging the sales force of our partners

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OEM’s

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Growth Strategy

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Extract greater share of spend from existing partners and

customers

Further penetrate existing verticals

Leverage partners’ reach to acquire new customers

Introduce new products and services

Acquire complementary businesses

Broaden geographic footprint

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Two Strategic Software Acquisitions Completed

June 2012 Acquisition of Apex Systems Integrators - Toronto Canada Provider of wireless mobile workforce software product solution Accretive to earnings by annualized $0.15 per share

July 2012 Acquisition of Illume Mobile Division of Macrosolve - Tulsa OK Provider of software solutions running on IOS (Apple) and Android

Positive financial impact Shifts revenue mix to higher margin software and professional services by 400-600 basis points Expands gross margins 200-400 basis points

Operational benefits Both acquisition address markets of field mobility, retail, and supply chain Add proprietary software products and strong domain knowledge for Apple and Android systems Cross selling opportunities from complementary customer bases Establishes initial presence in important growing Canadian market

Acquired capabilities round out DP’s product offerings

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Seasoned Management Team Name / Title Selected Prior Experience

Nic Toms Chairman, CEO and Director

Chairman, President and CEO of Peak Technologies CEO of Cape Systems Group, Inc. Skadden Arps Slate Meagher & Flom

Michael Roe Chief Accounting Officer

CAO, Metagenics, Inc. CFO, Duncan Solutions VP Finance/Investor relations, QLogic Corp.

Ralph Hubregsen Chief Operating Officer

Vice President Worldwide Channels, Symplified Founder/President, Venado Technologies Founder/President, Saillent Consulting Group

John Chis SVP Sales North America

20 years with Symbol Technologies and Telxon (acquired by Symbol) Sales, marketing and operations management experience

Bryan Moss SVP Professional Services

Founder/President, CMAC, Inc. Senior Director, Supply Chain Practice, Accenture

Don Dalicandro CEO, APEX System Integrators and Director

Founder/CEO, APEX System Integrators, Inc. Managing Partner, ASECO Integrated Systems Ltd. Founder/CEO, Azertech

Brent Felker VP Field Mobility

Senior Sales VP of Peak Technologies Initiated Field Mobility Practice at Motorola/Symbol Initiated Field Mobility Practice at Psion/Teklogix

Stephanie Storm Director of Operations

Director of Sales Operations, Datamax – O’Neil Corp Director of Sales Operations, PairGain Technologies

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25%

40%

35%

Field Workforce Automation Supply Chain Retail Systems

Shifting Revenue Mix

Goal: Increase Mix of Software & Professional Services to 60% of Revenue

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Markets Served 2012

2012 Revenue Mix

23%

9%

68%

Professional Services Software and Other

Hardware

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P&L 2012 ($ in ‘000 except for EPS and WASO)

2012 2011 2013 2012

Net sales 71,501$ 58,359$ 13,772$ 17,810$ Cost of sales 55,949 46,368 10,948 14,057Gross profit 15,552 11,991 2,824 3,753

Selling, general and administrative expense 18,661 13,597 5,033 3,835

Operating loss (3,109) (1,606) 2,209 (82)

Other expense (income):Interest expense 998 1,160 226 142 Other income, net (116) (363) (6) (29)

Total other expense 882 3,462 220 113

Loss before income taxes (3,991) (5,068) (2,429) (195)

Provision (tax benefit) for income taxes (125) 100 (327) 42

Net loss (3,866) (5,168) (2,102) (237)

Cumulative and imputed preferred stock dividends (954) (486) (220) (222)

Net loss attributable to common shareholders (4,820)$ (5,654)$ (2,322)$ (459)$

Net loss per share - Basic and diluted (0.61)$ (0.94)$ (0.27)$ (0.06)$

Weighted-average shares outstanding -Basic and diluted 7,900,693 6,019,900 8,620,807 7,392,441

Q1 ended March 31,Years ended December 31,

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Adjusted EBITDA Trend ($ in ‘000 )

2012 2011 2013 2012EBITDA Calculation

Net Loss (3,866)$ (5,168)$ (2,102)$ (237)$ Depreciation and amortization 1,510 560 502 160 Interest Expense 998 1,160 226 142 Income Taxes (125) 100 (327) 42

EBITDA (1,483)$ (3,348)$ (1,701)$ 107$

Employee stock-based compensation 52 200 5 21 Non-employee stock-based compensation 514 283 ESOP compensation expense 132 125 35 33

1,602 360

175

700 Restructuring costs 430 (27) Financing/Acquisition Costs 642 Loss on debt extinguishment 2,665

Adjusted EBITDA 2,122$ (75)$ (1,019)$ 494$

Q1 ended March 31,Years ended December 31,

One time cash transaction expenses in connection with the acquisition of ApexOne time cash expenses in connection with the acquisition of Illume MobileOne time cash expenses in connection with the replacement of Preferred C shares and investor

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P&L Trend and High-Level Forecast

Revenue Q1 2013 Y/E 2012 Y/E 2011DPS 10.7$ 58.9$ 47.6$ Illume 0.2 0.4 -Apex 0.5 1.1 -CMAC 2.4 11.1 10.8 Total Revenue 13.8$ 71.5$ 58.4$

Gross Margin 22.0% 21.8% 20.5%EBITDA -$1.7 -$1.5 -$3.3EBITDA Margin % -12.4% -2.1% -5.7%EBITDA - Adjusted* -$1.0 $2.1 -$0.1EBITDA-Adjusted* Margin % 7.4% 3.0% -0.2%

* Excludes deal costs, severance and one-time items

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Borrowings/Repayments

12/31/2011 Borrowings Repayments

Currency movement/

discount 12/31/2012 Borrowings Repayments

Currency movement/

discount 3/31/2012

SVB Term Loan $1,970 ($1,000) $26 996$ 1,000$ (278)$ (15)$ 1,703$

RBC Term Loan (APEX) $2,343 ($419) $128 2,052$ (205)$ (35)$ 1,812$

BDC Term Loan (APEX) $1,598 $76 1,674$ (33)$ 1,641$

$1,970 $3,941 ($1,419) $230 4,722$ 1,000$ (483)$ (83)$ 5,156$

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Key Takeaways

Enterprise mobile solutions have become imperative

Revenue mix shifting to higher margin professional services and software

Well established partnerships with key wireless carriers

Blue chip customer base

Financial resources to support growth

Proven management team with strong domain expertise and sector experience

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