DecisionPoint Systems, Inc.

...industries where we either already have, can acquire, or develop expertise, and therefore the ability to become a significant player exists. Currently, these industries are retail, logistics, and healthcare, where we have established customers, industry-specific solutions, the right technology partners, and several under or unpenetrated subsegments for us to go after. Our value proposition to customers is clear. We enable frontline workers, employees, to make better, faster, more accurate business decisions inside and outside the four walls, and create operational efficiency and effectiveness to drive better customer experiences and business outcomes. Traditionally, we've been a value-added reseller, or a VAR, of handheld devices such as scanners, printers, point of sale, and other mobile devices. Our OEM partners include Zebra, HP, Apple, Honeywell, Verifone, DataLogic, GradlePoint, and distributors BlueStar, ScanSource, and Ingram. We also have an excellent annuity-type business replenishing consumables for these devices. However, over the past three years, we have been moving more aggressively upmarket, to include various high-margin services, especially ones that generate recurring revenue. Managed services, where companies outsource certain IT functions, are a key investment area for our services-led strategy. We offer a comprehensive product portfolio of managed services designed to simplify the complexity of designing, deploying, managing a mobile solution. These managed services include provisioning, monitoring, and help desk services to improve on the visibility and status of their device landscape. In addition to managed services, we offer professional services, including consulting, staging, deployment, installation, repair, and customer-specific software customization and hardware and software maintenance support. We're also opportunistically building our high margin reoccurring revenue SaaS solutions portfolio, which today includes both packaged and custom developed software solutions, such as Mobile Conductor and Route Manager for the direct store delivery or DSD industries, and VigiTrace, which helps manage an RFID implementation. Moving to our four pillar growth strategy. The first is to increase share in our current verticals, specifically grocery, specialty retail, supply chain, healthcare, warehousing, distribution, and transportation. The second pillar is to leverage our experience in these verticals into adjacencies. Examples would include big box retailers, hospitality, and supply chain logistics. The third pillar is to drive growth and margin expansion by increasing services and software attach rates. These include professional services, managed services, ISV, SAS services, software from partners, and repair and maintenance services. The fourth pillar is geographic expansion, where we can pick up new customers, expand field sales, and increase our coverage. Our M&A strategy supports these four pillars, and we expect to remain active in this field to complement our organic growth. With respect to M&A, we aren't going to just make acquisitions to achieve more scale. We have specific requirements of the companies we target. These include a track record of positive revenue growth in EBITDA, integration-ready solutions and operations, and cultural compatibility. By focusing on these areas, we have developed a successful integration strategy that allows us to move quickly to reduce SG&A costs, streamline operations, and drive revenue synergies by expanding their offerings nationwide throughout our system. As I mentioned on our last call, we acquired two companies during the first quarter, Boston Technologies and Advanced Mobile Group. I'm happy to say that our integration plans are moving forward quickly. We expect to have digested these acquisitions by the end of the current quarter and to move back into acquisition mode during the second half of the year. Moving to our first quarter highlights, we had a record quarter of revenue growing 23% and nearly hitting the $20 million mark, while adjusted EBITDA increased by 39% to 1.1 million. We saw broad-based strength across our verticals and actively realized M&A synergies as our cross-selling efforts are beginning to bear fruit. In fact, the sales teams had between 10 and 20 active cross-selling campaigns and deals in progress with experienced existing customers during the quarter. Speaking of M&A, we made the advanced mobile and Boston technology acquisitions with cash on hand. And still our cash balance increased during the quarter by nearly $7 million to $9.3 million. Beyond this, we also completed the relocation of our executive offices to Delray Beach, Florida, and moved our primary operations and warehousing to a larger facility that is three times the size of the old one to facilitate and support our anticipated growth and our services strategy. We have already seen the benefits of having a larger facility. Due to our strong relationships with our partners, we were able to reduce our supply chain risk by taking on incremental inventory to ensure we can meet customer demand in the coming quarters. As we look to the remainder of the year, we are well positioned to continue our growth trajectory. We now expect to generate between $79 and $82 million in revenue, or approximately 22% to 26% growth. In terms of mix, we currently expect approximately 19 million of that to come from services. From an adjusted EBITDA perspective, I would expect that we deliver between $3.5 and $3.9 million within those revenue ranges. Please note that these numbers do not include any potential acquisitions we may make during the second half of the year. As we look to provide some clarity beyond the current year, we are targeting at least $100 million in revenue for 2023, which would include one to two more acquisitions and would represent an increase of more than 20% over our current year guidance. In closing, we had a great start to the new year, and we expect that this is just the beginning as we continue to execute on our growth strategy. I want to thank our dedicated employees for their hard work, and I look forward to speaking with you again on our second quarter call. Now, I will turn the call over to Melinda to review our first quarter financial results in more detail. Melinda?

Thank you, Steve. Details of our first quarter operating performance compared to 2021's first quarter were as follows. We saw strong demand in Q1, with total revenue up 22.7%, to $19.7 million. During the quarter, we worked through a portion of our $31.2 million backlog from last quarter and rebuilt it to around $21 million, which is still about three times our historical terms. This strong performance came in light of the global supply chain issues that are impacting many companies. As a result, our clients are putting in orders with longer lead times, and we have fortunately been able to leverage our strong partnerships with OEMs and distributors to to gain access to products to ship and build inventory. Moving to gross profit, we saw a 21.8% increase from the prior year. Product mix was heavy on the hardware side, which led to a slightly lower growth rate when compared to revenue. GAP operating expenses increased by about 0.9 million, mainly as a result of the acquisitions of Advanced Mobile and Boston Technology. As we move forward with our integration, we expect to realize the benefit of cost synergies and leverage. Within operating expense, sales and marketing expenses increased by about 3 million, 0.3 million, and G&A increased by about 0.6 million. Gap net income and diluted EPS were approximately 0.9 million and 11 cents. These were down year over year. due to a $1.1 million gain on extinguishment in debt last year, partially offset by 0.7 million income tax benefit from the exercise of employee stock options in Q1 of 2022. Our non-GAAP net income and diluted EPS were 0.5 million and 0.06 compared to 0.2 million and 0.02 last year. The non-GAAP net income and EPS numbers excluded the following. Stock-based compensation of $0.2 million this year versus $33,000 last year. M&A-related expenses of $0.2 million versus $64,000 last year. The $1.2 million gain on the extinguishment of debt last year, that did not repeat this year. The $0.7 million income tax benefit this year related to the exercise of the employee stock options. Adjusted EBITDA was 1.1 million compared to 0.8 million last year. Turning to our balance sheet, we ended the quarter with cash and cash equivalents totaling 9.3 million versus 2.6 million on December 31st, 2021. As I mentioned earlier, we continue to receive orders with long lead times leading to a $14 million increase in our deferred revenue. Total debt at the end of the quarter was about 150,000, flat to year end, and we had no borrowings under the line of credit. Net cash provided by operating activities increased to $11.7 million and $1.3 million last year. And as you can see, we had a very strong start of the year and currently believe our business is positioned for continued growth for the remainder of 2022. With that, Brian, we can move to questions.

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