Document and Entity Information
Document and Entity Information | 6 Months Ended |
Mar. 31, 2016shares | |
Document and Entity Information | |
Entity Registrant Name | DLH Holdings Corp. |
Entity Central Index Key | 785,557 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2016 |
Amendment Flag | false |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q2 |
Current Fiscal Year End Date | --09-30 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 9,716,929 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||||
Revenue | $ 16,934 | $ 15,893 | $ 33,493 | $ 31,575 |
Direct expenses | 13,710 | 13,163 | 27,352 | 26,312 |
Gross margin | 3,224 | 2,730 | 6,141 | 5,263 |
General and administrative expenses | 2,513 | 2,197 | 5,028 | 4,448 |
Depreciation and amortization | 22 | 18 | 42 | 41 |
Income from operations | 689 | 515 | 1,071 | 774 |
Total other income (expense), net | (127) | (651) | (702) | (687) |
Income (loss) before income taxes | 562 | (136) | 369 | 87 |
Income tax expense(benefit) | 225 | (54) | 148 | 35 |
Net income (loss) | $ 337 | $ (82) | $ 221 | $ 52 |
Net income per share, basic (in dollars per share) | $ 0.04 | $ (0.01) | $ 0.02 | $ 0.01 |
Net income (loss) per share - diluted (dollars per share) | $ 0.03 | $ (0.01) | $ 0.02 | $ 0.01 |
Weighted average common shares outstanding | ||||
Basic (in shares) | 9,717 | 9,588 | 9,642 | 9,595 |
Diluted (in shares) | 10,666 | 9,588 | 10,540 | 10,007 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Sep. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 6,934 | $ 5,558 |
Accounts receivable, net | 3,354 | 3,286 |
Deferred taxes, net | 982 | 982 |
Other current assets | 484 | 429 |
Total current assets | 11,754 | 10,255 |
Equipment and Improvements | 329 | 336 |
Deferred taxes, net | 9,286 | 9,325 |
Goodwill | 8,595 | 8,595 |
Other long-term assets | 66 | 113 |
Total assets | 30,030 | 28,624 |
CURRENT LIABILITIES | ||
Accrued payroll | 2,617 | 2,795 |
Accounts payable, accrued expenses, and other current liabilities | 3,813 | 2,851 |
Total current liabilities | 6,430 | 5,646 |
LONG TERM LIABILITIES | ||
Other long term liability | 168 | 109 |
Total liabilities | $ 6,598 | $ 5,755 |
Commitments and contingencies | ||
SHAREHOLDERS’ EQUITY | ||
Preferred stock, $.10 par value; authorized 5,000 shares, none issued and outstanding | $ 0 | $ 0 |
Common stock, $.001 par value; authorized 40,000 shares; issued and outstanding 9,717 at March 31, 2016 and 9,551 at September 30, 2015 | 10 | 10 |
Additional paid-in capital | 76,717 | 76,375 |
Accumulated deficit | (53,295) | (53,516) |
Total shareholders’ equity | 23,432 | 22,869 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 30,030 | $ 28,624 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2016 | Sep. 30, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.1 | $ 0.1 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 40,000 | 40,000 |
Common stock, issued shares | 9,717 | 9,551 |
Common stock, outstanding shares | 9,717 | 9,551 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating activities | ||
Net income | $ 221 | $ 52 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization including financing costs | 42 | 41 |
Non-cash equity grants | 342 | 346 |
Deferred taxes, net | 39 | 35 |
Settlement of retroactive payment claim, net | 0 | 629 |
Changes in operating assets and liabilities | ||
Accounts receivable | (68) | (165) |
Other current assets | (55) | 21 |
Accounts payable, accrued payroll, accrued expenses and other current liabilities | 784 | (378) |
Other long term assets/liabilities | 153 | 6 |
Net cash provided by operating activities | 1,458 | 587 |
Investing activities | ||
Purchase of equipment and improvements | (35) | (98) |
Net cash used in investing activities | (35) | (98) |
Financing activities | ||
Repayments of capital lease obligations | (47) | 0 |
Repurchased shares of common stock subsequently canceled | 0 | (175) |
Net cash used in financing activities | (47) | (175) |
Net increase in cash and cash equivalents | 1,376 | 314 |
Cash and cash equivalents at beginning of period | 5,558 | 3,908 |
Cash and cash equivalents at end of period | 6,934 | 4,222 |
Supplemental disclosures of cash flow information | ||
Cash paid during the period for interest | 0 | 19 |
Cash paid during the period for income taxes | $ 105 | $ 0 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements include the accounts of DLH and its subsidiaries, all of which are wholly owned. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all of the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, 2016 . For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual report on Form 10-K for the year ended September 30, 2015 filed with the Securities and Exchange Commission on December 16, 2015 . The consolidated financial statements include the accounts of DLH and its subsidiaries prior to the business acquisition described below since the transaction was not completed until after the period covered by the financial statements included in this Quarterly Report on Form 10-Q. |
Business Overview
Business Overview | 6 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Overview | Business Overview For more than 25 years, DLH Holdings Corp. ("DLH"), has provided professional services to the U.S. Government. Headquartered in Atlanta, Georgia, DLH employs over 1,250 skilled healthcare and support personnel, technicians, logisticians, and engineers at more than 30 locations around the United States. DLH’s operating subsidiary, DLH Solutions, Inc., is organized into two major market areas: Healthcare Delivery Solutions and Medical Logistics & Technical Services. Our government customers, a majority of whom are within the Departments of Veterans Affairs (“DVA”) and Defense (“DoD”), benefit from our proven leadership, processes, technical excellence, industry-leading productivity and affordability enhancement tools, and Lean Six Sigma-based quality improvement processes. The remaining portion of DLH’s business is comprised of customers within other Federal agencies, including the Departments of Interior, Justice, and Agriculture at locations throughout the United States. DLH Holdings Corp. (together with its subsidiaries, "DLH" or the "Company" and also referred to as "we," "us" and "our") manages its operations from its principal executive offices at 3565 Piedmont Road NE, Building 3 Suite 700, Atlanta Georgia 30305. Presently, the Company derives all of its revenue from agencies of the Federal government. A major customer is defined as a customer from whom the Company derives at least 10% of its revenues. In each of the fiscal quarters ended March 31, 2016 and 2015 , revenue from the U.S. Government accounted, either directly or indirectly, for 100% of the Company’s total revenue. Within the U.S. Government, our largest customer continues to be the DVA, at 96% of revenue for the six months ended March 31, 2016 and 2015 , respectively. In addition, substantially all accounts receivable, including unbilled accounts receivable, are from agencies of the U.S. Government as of March 31, 2016 and 2015 . We believe that the credit risk associated with our receivables is limited due to the creditworthiness of these customers. See Note 4, Supporting Financial Information-Accounts Receivable. DLH remains dependent upon the continuation of its relationship with the DVA. As of March 31, 2016 , awards from the DVA have anticipated periods of performance ranging from approximately one to up to three years . These agreements are subject to the Federal Acquisition Regulations. While there can be no assurance as to the actual amount of services that the Company will ultimately provide to the DVA under its current contracts, we believe that our strong working relationship and our effective service delivery support ongoing performance for the contract term. The Company's results of operations, cash flows and financial condition would be materially adversely affected in the event that we were unable to continue our relationship with the DVA. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Mar. 31, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. In August 2015, the FASB issued updated guidance deferring the effective date for all entities by one year. Public business entities should apply the guidance to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of this guidance. In June 2014, the FASB issued guidance related to accounting for share-based payments for certain performance stock awards. In March 2016, the FASB issued updated guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The amendments in this update affect all entities that issue share-based payment awards to their employees. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is evaluating the impact of this guidance. In August 2014, the FASB issued guidance regarding management's going concern evaluations. The guidance requires management to evaluate, at each interim and annual reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued, and provide related disclosures. The guidance is effective for all entities for annual periods ending after December 15, 2016, and for annual and interim periods thereafter, and early adoption is permitted. We do not believe the standard will have a material impact on our financial statement disclosures. In June 2015, the FASB issued guidance covering a wide range of topics in the codification to make minor corrections or minor improvements. These changes are not expected to have a significant effect on current accounting practice or create a significant administrative cost. The guidance is effective for all entities beginning after December 15, 2015, and for annual and interim periods thereafter, and early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements. In August 2015, the FASB issued guidance regarding presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, adding SEC paragraphs in conjunction with simplifying the presentation of debt issuance costs. The guidance requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of this guidance. In September 2015, the FASB issued guidance regarding business combinations for which the accounting is incomplete by the end of the reporting period in which the combination occurs, and during the measurement period have an adjustment to provisional amounts recognized. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments in this update eliminate the requirement to retrospectively account for those adjustments. The amendments in this update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update, with earlier application permitted for financial statements that have not been issued. This standard is not expected to have a material impact on the Company’s consolidated financial statements. In November 2015, the FASB issued guidance to simplify the presentation of deferred income taxes, and requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. Current guidance requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. For public business entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company is evaluating the timing and method of applying this update. In February 2016, the FASB issued guidance intended to improve financial reporting for leasing transactions with a lease term of more than 12 months. The new guidance will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flow arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the impact of this guidance. |
Supporting Financial Informatio
Supporting Financial Information | 6 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supporting Financial Information | Supporting Financial Information Accounts Receivable (in thousands) March 31, September 30, Ref 2016 2015 Billed receivables $ 2,289 $ 2,498 Unbilled receivables 1,065 788 Total accounts receivable 3,354 3,286 Less: Allowance for doubtful accounts (a) — — Accounts receivable, net $ 3,354 $ 3,286 Ref (a): Accounts receivable are non-interest bearing, unsecured and carried at fair value, which is net of an allowance for doubtful accounts. We evaluate our receivables on a quarterly basis and determine whether an allowance is appropriate based on specific collection issues. Our allowance for doubtful accounts was zero at both March 31, 2016 and September 30, 2015 . Accrued Payroll (in thousands) March 31, September 30, Ref 2016 2015 Accrued payroll related to billed receivables $ 1,879 $ 2,259 Accrued payroll related to unbilled accounts receivable 738 536 Total accrued payroll $ 2,617 $ 2,795 Other Current Assets (in thousands) March 31, September 30, Ref 2016 2015 Prepaid insurance and benefits $ 302 $ 156 Other prepaid expenses 182 273 Other current assets $ 484 $ 429 Equipment and improvements, net (in thousands) March 31, September 30, Ref 2016 2015 Furniture and equipment $ 202 $ 197 Computer equipment 186 162 Computer software 303 297 Leasehold improvements 63 63 Total fixed assets 754 719 Less accumulated depreciation and amortization (425 ) (383 ) Equipment and improvements, net (a) $ 329 $ 336 Ref (a): Equipment and improvements are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives ( 3 to 7 ) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Maintenance and repair costs are expensed as incurred. Accounts Payable, Accrued Expenses, and Other Current Liabilities (in thousands) March 31, September 30, Ref 2016 2015 Accounts payable $ 979 $ 87 Accrued benefits 991 267 Accrued bonus and incentive compensation 164 858 Accrued workers compensation insurance 923 945 Other accrued expenses 756 694 Accounts payable, accrued expenses, and other current liabilities $ 3,813 $ 2,851 Other Income (Expense) (in thousands) (in thousands) Three Months Ended Six Months Ended March 31, March 31, Ref 2016 2015 2016 2015 Interest expense, net $ — $ (25 ) $ — $ (49 ) Other expense, net (a) (127 ) (626 ) (702 ) (638 ) Total other income (expense), net $ (127 ) $ (651 ) $ (702 ) $ (687 ) Ref (a): Current year primarily reflects non-operational expense related to DLH acquisition activities. Prior year primarily reflects a one-time charge related to settlement of the retroactive payment claim in March 2015. |
Liquidity
Liquidity | 6 Months Ended |
Mar. 31, 2016 | |
Cash and Cash Equivalents [Abstract] | |
Liquidity | Liquidity At March 31, 2016 , the Company had cash and cash equivalents of approximately $6.9 million , net working capital of approximately $5.3 million , and an accumulated deficit of approximately $(53) million . For the six months ended March 31, 2016 , the Company realized operating income of approximately $1.1 million and net income of approximately $0.2 million , as compared to operating income and net income of approximately $0.8 million and $0.1 million , respectively, for the six months ended March 31, 2015 . The Company has a credit facility with a lending institution which provides a maximum amount of $6 million . The current term of the credit facility expires on July 29, 2016 and thereafter shall automatically renew on each anniversary date thereof for subsequent twelve month terms unless terminated by either party. At March 31, 2016 the maximum availability under this loan facility was $3 million , subject to eligible accounts receivable. The interest rate on both the Accounts Receivable and Unbilled Accounts portion of the loan was 4.0% at March 31, 2016 , and September 30, 2015 . At March 31, 2016 , our unused loan availability was approximately $2.5 million , comprised of a $0.9 million letter of credit reserve and $1.6 million of unused loan capacity. DLH required no borrowing on the credit facility during second quarter ended March 31, 2016 . Management believes that: (a) cash and cash equivalents of approximately $6.9 million as of March 31, 2016 ; (b) the amount available under its line of credit that was in effect at March 31, 2016, and under its subsequent credit facility effective May 2, 2016 (which is limited to the amount of eligible assets); and (c) planned operating cash flow should be sufficient to support the Company's operations for twelve months from the date of these financial statements. Refer to Subsequent Events Note 11 regarding the Company's acquisition of Danya International, LLC on May 3, 2016 and its Current Report on Form 8K filed with the SEC on May 6, 2016 reporting the financing and loan arrangements. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation of goodwill, valuation allowances established against accounts receivable and deferred tax assets, measurement of loss development on workers’ compensation claims, and the valuation of derivative financial instruments associated with debt agreements. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. We revise material accounting estimates if changes occur, such as more experience is acquired, additional information is obtained, or there is new information on which an estimate was or can be based. Actual results could differ from those estimates. In particular, a material reduction in the fair value of goodwill could have a material adverse effect on the Company’s financial position and results of operations. We account for the effect of a change in accounting estimate during the period in which the change occurs. Revenue Recognition DLH’s revenue is derived from professional and other specialized service offerings to US Government agencies through a variety of contracts, some of which are fixed-price in nature and/or sourced through Federal Supply Schedules administered by the General Services Administration (“GSA”) at fixed unit rates or hourly arrangements. We generally operate as a prime contractor, but have also entered into contracts as a subcontractor. The recognition of revenue from fixed rates is based upon objective criteria that generally do not require significant estimates that may change over time. DLH recognizes and records revenue on government contracts when it is realized, or realizable, and earned. DLH considers these requirements met when: (a) persuasive evidence of an arrangement exists; (b) the services have been delivered to the customer; (c) the sales price is fixed or determinable and free of contingencies or significant uncertainties; and (d) collectibility is reasonably assured. Goodwill DLH continues to review its goodwill for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. At September 30, 2015 , we performed a goodwill impairment evaluation. We performed both a qualitative and quantitative assessment of factors to determine whether it was necessary to perform the goodwill impairment test. Based on the results of the work performed, the Company has concluded that no impairment loss was warranted at September 30, 2015 . For the six months ended March 31, 2016 , the Company determined that no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill. Factors including non-renewal of a major contract or other substantial changes in business conditions could have a material adverse effect on the valuation of goodwill in future periods and the resulting charge could be material to future periods’ results of operations. If an impairment write off of all the goodwill became necessary in future periods, a charge of up to $8.6 million could be expensed in the consolidated statement of operations. All remaining goodwill is attributable to the DLH Solutions operating subsidiary. Income Taxes DLH accounts for income taxes in accordance with the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the consolidated balance sheet when it is determined that it is more likely than not that the asset will be realized. This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized. We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon the technical merits, it is "more-likely-than-not" that the position will be sustained upon examination. We had no uncertain tax positions at either March 31, 2016 and 2015 . We report interest and penalties as a component of income tax expense. In the fiscal quarters ended March 31, 2016 and 2015 , we recognized no interest and no penalties related to income taxes. The Company has adequate net operating loss carryforwards to offset against any taxable income in the current period. The Company has deferred tax assets before valuation allowance of $12.0 million and $12.1 million as of March 31, 2016 and September 30, 2015 , respectively. We have recorded a valuation allowance of 1.8 million as of March 31, 2016 and September 30, 2015 . Tax years open for examination are 2011 and forward. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. We maintain cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 . Deposits held with financial institutions may exceed the $250,000 limit. |
Stock-based Compensatin, Equity
Stock-based Compensatin, Equity Grants, and Warrants | 6 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation, Equity Grants, and Warrants | Stock-based Compensation, Equity Grants, and Warrants Stock-based compensation expense All grants of equity represented in these financial statements for the period ended March 31, 2016, were made under the 2006 Long Term Incentive Plan. The 2006 plan expired on February 25, 2016, upon shareholders' approval of the 2016 Omnibus Equity Incentive Plan. No awards have been issued under the newly adopted 2016 Plan, and as of March 31, 2016 , there were 1.0 million shares available for grant. Options issued under the 2006 Plan were designated as either an incentive stock or a non-statutory stock option. No option was granted with a term of more than 10 years from the date of grant. Exercisability of option awards may depend on achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued shares. Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations: (in thousands) (in thousands) Three Months Ended Six Months Ended Ref March 31, March 31, 2016 2015 2016 2015 DLH employees $ 6 $ 72 $ 14 $ 169 Non-employee directors (a) 4 — 328 177 Total stock option expense $ 10 $ 72 $ 342 $ 346 Ref (a): Equity grants of restricted stock, in accordance with DLH compensation policy for non-employee directors. The shares granted in first quarter 2016 vested immediately, and stock expense of approximately $304 thousand was recognized accordingly. For the six months ended March 31, 2016 , non-employee directors stock expense includes approximately $25 thousand related to prior year equity grants for which performance criteria was achieved in October 2015. Unrecognized stock-based compensation expense (in thousands) Six Months Ended March 31, Ref 2016 2015 Unrecognized expense for DLH employees (a) $ 30 $ 177 Unrecognized expense for non-employee directors (b) 71 125 Total unrecognized expense $ 101 $ 302 Ref (a): Compensation expense for the portion of equity awards for which the requisite service has not been rendered is recognized as the requisite service is rendered. The compensation expense for that portion of awards has been based on the grant-date fair value of those awards as calculated for recognition purposes under applicable guidance. Ref (b): Unrecognized stock expense related to prior years equity grants of restricted stock to non-employee directors, based on performance criteria, in accordance with DLH compensation policy for non-employee directors. The shares will vest and expense will be recorded upon future satisfaction of specified performance. Stock option activity for the six months ended March 31, 2016 The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock. (in years) Weighted Weighted Average (in thousands) (in thousands) Average Remaining Aggregate Number of Exercise Contractual Intrinsic Ref Shares Price Term Value Options outstanding, September 30, 2015 2,324 $1.40 6.81 $ 3,649 Granted Exercised (a) (100 ) $1.40 Options outstanding, March 31, 2016 2,224 $1.40 6.26 $ 5,711 Ref (a): Shares exercised by an executive officer in December 2015. Stock options shares outstanding, vested and unvested for the period ended (in thousands) Number of Shares March 31, Ref 2016 2015 Vested and exercisable 1,540 968 Unvested (a) 684 1,368 Options outstanding 2,224 2,336 Ref (a): Certain awards vest upon satisfaction of certain performance criteria. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company has financial instruments, including accounts receivable, accounts payable, loan payable, notes payable, and accrued expense. Due to the short term nature of these instruments, DLH estimates that the fair value of all financial instruments at March 31, 2016 and September 30, 2015 does not differ materially from the aggregate carrying values of these financial instruments recorded in the accompanying consolidated balance sheets. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing income available to common shareholders by the weighted average number of common shares outstanding and restricted stock grants that vested or are likely to vest during the period. Diluted earnings per share is calculated by dividing income available to common shareholders by the weighted average number of basic common shares outstanding, adjusted to reflect potentially dilutive securities. Diluted earnings per share is calculated using the treasury stock method. (in thousands) Three Months Ended Six Months Ended March 31, March 31, 2016 2015 2016 2015 Numerator: Net income (loss) 337 (82 ) 221 52 Denominator: Denominator for basic net income per share - weighted-average outstanding shares 9,717 9,588 9,642 9,595 Effect of dilutive securities: Stock options and restricted stock 949 — 898 412 Denominator for diluted net income per share - weighted-average outstanding shares 10,666 9,588 10,540 10,007 Net income (loss) per share - basic $ 0.04 $ (0.01 ) $ 0.02 $ 0.01 Net income (loss) per share - diluted $ 0.03 $ (0.01 ) $ 0.02 $ 0.01 |
Commitment and Contingencies
Commitment and Contingencies | 6 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contractual Obligations Payments Due By Period Obligations Less than 1-3 4-5 More than 5 (Amounts in thousands) Total 1 Year Years Years Years Loan Payable (1) $ — $ — $ — $ — — Facility Leases (2) 2,224 202 551 275 1,196 Equipment Leases (3) 117 94 23 — — Total Obligations $ 2,341 $ 296 $ 574 $ 275 $ 1,196 (1) Represents the amounts payable on our credit facility with a lending institution. As of March 31, 2016 there were no outstanding amounts. (2) Represents amounts committed on facility lease agreements as of March 31, 2016 . (3) Represents amounts committed on leased equipment agreements as of March 31, 2016 . Workers Compensation We accrue workers compensation expense based on claims submitted, applying actuarial loss development factors to estimate the costs incurred but not yet recorded. Our accrued liability for claims development for the periods ended March 31, 2016 and September 30, 2015 was $0.92 million and 0.95 million , respectively. Legal Proceedings The Company is not aware of any pending or threatened litigation that it believes is reasonably likely to have a material adverse effect on its results of operations, financial position or cash flows. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events: Acquisition of Danya International, LLC On May 3, 2016, the Company acquired 100% of the equity interests of Dayna International, LLC for a purchase price of $38.75 million plus transaction expenses. The acquisition was financed through a combination of borrowings of $30.0 million under the Company’s senior credit facility described below, cash on hand of approximately $5.0 million , shares of common stock issued to the Seller with a value of $2.5 million , and $2.5 million pursuant to a subordinated loan arrangement with the Company’s largest stockholder. After giving effect to the issuance of the shares of common stock issued to Seller at closing, Seller will beneficially own approximately 6.5% of the Company’s outstanding shares. The acquisition of Danya International is consistent with the Company’s growth strategy, which calls for the development of new customers and service offerings both organically and through mergers and acquisitions. The Company will include the results of operations of Danya International in its financial statements for reporting periods commencing from the closing date forward. The Company entered into a Loan Agreement (the “New Credit Agreement”), with Fifth Third Bank (the “Bank”) to establish a new credit facility to provide partial financing for the acquisition of Danya in the form of up to $35.0 million of new secured debt. The New Credit Agreement consists of (i) a secured revolving credit facility in an aggregate principal amount of up to $10.0 million (the “Revolving Credit Facility”) and (ii) a secured term loan with an aggregate principal amount of $25.0 million (the “Term Loan” and together with the Revolving Credit Facility, the “Credit Facilities”). At closing, the Company received the entire amount of the $25.0 million Term Loan and drew down $5.0 million from the Revolving Credit Facility The Term Loan matures on May 1, 2021 and the Revolving Credit Facility matures on May 1, 2018 . The Term Loan and Revolving Credit Facility bear interest at the rate of LIBOR plus a margin of 3.0% . The Credit Facilities are secured by liens on substantially all of the assets of DLH and Danya. The principal of the Term Loan is payable in fifty-nine consecutive monthly installments of $312,500 beginning in June 2016 , and the balance is payable on the Term Loan maturity date. Commencing with the fiscal year ending September 30, 2017 , the Company will be required to remit to the Bank an amount of 75% of excess cash flow, as defined in the New Credit Agreement, to further reduce the outstanding principal of, and interest on, the Term Loan. The required excess cash flow payment will be reduced to 50% if the ratio of Funded Indebtedness to Adjusted EBITDA ratio is less than 2.5 to 1.0 , but greater than or equal to 2.0 to 1.0 . No excess cash flow payments are required if the ratio is below 2.0 to 1.0 . The New Credit Agreement contains customary covenants and events of default. The New Credit Agreement requires the Company to comply with certain financial covenants including (i) a minimum fixed charge coverage ratio of at least 1.35 to 1.0 commencing with the quarter ending June 30, 2016 and for all subsequent periods and (ii) a Funded Indebtedness to Adjusted EBITDA ratio not exceeding the ratio of 2.99 to 1.0 at closing and thereafter a ratio ranging from 3.5 to 1.0 for the period through September 30, 2016 to 2.5 to 1.0 for the period ending September 30, 2018 . In accordance with Accounting Standards Codification 805, Business Combinations, a public entity is required to disclose pro forma information for business combinations that are material on an individual or aggregate basis that occurred in the current reporting period or that occurred subsequent to the current reporting period and before the filing of the Company’s financial statements, unless it is impracticable to do so. At the present time, management is completing its valuation of acquired assets and assumed liabilities, and expects that a majority of the purchase price will be allocated to intangible assets, including goodwill. In estimating the fair value of the acquired assets and assumed liabilities, the fair value estimates are based on, but not limited to, expected future revenue and cash flows, expected future growth rates, and estimated discount rates. All goodwill and intangible asset amortization related to the acquisition is expected to be deductible for income tax purposes. |
Significant Accounting Polici17
Significant Accounting Policies (Policies) | 6 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. In August 2015, the FASB issued updated guidance deferring the effective date for all entities by one year. Public business entities should apply the guidance to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of this guidance. In June 2014, the FASB issued guidance related to accounting for share-based payments for certain performance stock awards. In March 2016, the FASB issued updated guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The amendments in this update affect all entities that issue share-based payment awards to their employees. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is evaluating the impact of this guidance. In August 2014, the FASB issued guidance regarding management's going concern evaluations. The guidance requires management to evaluate, at each interim and annual reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued, and provide related disclosures. The guidance is effective for all entities for annual periods ending after December 15, 2016, and for annual and interim periods thereafter, and early adoption is permitted. We do not believe the standard will have a material impact on our financial statement disclosures. In June 2015, the FASB issued guidance covering a wide range of topics in the codification to make minor corrections or minor improvements. These changes are not expected to have a significant effect on current accounting practice or create a significant administrative cost. The guidance is effective for all entities beginning after December 15, 2015, and for annual and interim periods thereafter, and early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements. In August 2015, the FASB issued guidance regarding presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements, adding SEC paragraphs in conjunction with simplifying the presentation of debt issuance costs. The guidance requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact of this guidance. In September 2015, the FASB issued guidance regarding business combinations for which the accounting is incomplete by the end of the reporting period in which the combination occurs, and during the measurement period have an adjustment to provisional amounts recognized. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments in this update eliminate the requirement to retrospectively account for those adjustments. The amendments in this update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update, with earlier application permitted for financial statements that have not been issued. This standard is not expected to have a material impact on the Company’s consolidated financial statements. In November 2015, the FASB issued guidance to simplify the presentation of deferred income taxes, and requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. Current guidance requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. For public business entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company is evaluating the timing and method of applying this update. In February 2016, the FASB issued guidance intended to improve financial reporting for leasing transactions with a lease term of more than 12 months. The new guidance will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flow arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the impact of this guidance. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation of goodwill, valuation allowances established against accounts receivable and deferred tax assets, measurement of loss development on workers’ compensation claims, and the valuation of derivative financial instruments associated with debt agreements. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. We revise material accounting estimates if changes occur, such as more experience is acquired, additional information is obtained, or there is new information on which an estimate was or can be based. Actual results could differ from those estimates. In particular, a material reduction in the fair value of goodwill could have a material adverse effect on the Company’s financial position and results of operations. We account for the effect of a change in accounting estimate during the period in which the change occurs. |
Revenue Recognition | Revenue Recognition DLH’s revenue is derived from professional and other specialized service offerings to US Government agencies through a variety of contracts, some of which are fixed-price in nature and/or sourced through Federal Supply Schedules administered by the General Services Administration (“GSA”) at fixed unit rates or hourly arrangements. We generally operate as a prime contractor, but have also entered into contracts as a subcontractor. The recognition of revenue from fixed rates is based upon objective criteria that generally do not require significant estimates that may change over time. DLH recognizes and records revenue on government contracts when it is realized, or realizable, and earned. DLH considers these requirements met when: (a) persuasive evidence of an arrangement exists; (b) the services have been delivered to the customer; (c) the sales price is fixed or determinable and free of contingencies or significant uncertainties; and (d) collectibility is reasonably assured. |
Goodwill | Goodwill DLH continues to review its goodwill for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. At September 30, 2015 , we performed a goodwill impairment evaluation. We performed both a qualitative and quantitative assessment of factors to determine whether it was necessary to perform the goodwill impairment test. Based on the results of the work performed, the Company has concluded that no impairment loss was warranted at September 30, 2015 . For the six months ended March 31, 2016 , the Company determined that no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill. Factors including non-renewal of a major contract or other substantial changes in business conditions could have a material adverse effect on the valuation of goodwill in future periods and the resulting charge could be material to future periods’ results of operations. If an impairment write off of all the goodwill became necessary in future periods, a charge of up to $8.6 million could be expensed in the consolidated statement of operations. All remaining goodwill is attributable to the DLH Solutions operating subsidiary. |
Income Taxes | Income Taxes DLH accounts for income taxes in accordance with the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the consolidated balance sheet when it is determined that it is more likely than not that the asset will be realized. This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized. We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon the technical merits, it is "more-likely-than-not" that the position will be sustained upon examination. We had no uncertain tax positions at either March 31, 2016 and 2015 . We report interest and penalties as a component of income tax expense. In the fiscal quarters ended March 31, 2016 and 2015 , we recognized no interest and no penalties related to income taxes. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. We maintain cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 . Deposits held with financial institutions may exceed the $250,000 limit. |
Supporting Financial Informat18
Supporting Financial Information (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Receivable | Accounts Receivable (in thousands) March 31, September 30, Ref 2016 2015 Billed receivables $ 2,289 $ 2,498 Unbilled receivables 1,065 788 Total accounts receivable 3,354 3,286 Less: Allowance for doubtful accounts (a) — — Accounts receivable, net $ 3,354 $ 3,286 Ref (a): Accounts receivable are non-interest bearing, unsecured and carried at fair value, which is net of an allowance for doubtful accounts. We evaluate our receivables on a quarterly basis and determine whether an allowance is appropriate based on specific collection issues. Our allowance for doubtful accounts was zero at both March 31, 2016 and September 30, 2015 . |
Accrued Payroll | Accrued Payroll (in thousands) March 31, September 30, Ref 2016 2015 Accrued payroll related to billed receivables $ 1,879 $ 2,259 Accrued payroll related to unbilled accounts receivable 738 536 Total accrued payroll $ 2,617 $ 2,795 |
Schedule of Other Current Assets | Other Current Assets (in thousands) March 31, September 30, Ref 2016 2015 Prepaid insurance and benefits $ 302 $ 156 Other prepaid expenses 182 273 Other current assets $ 484 $ 429 |
Equipment and Improvemnts, Net | Equipment and improvements, net (in thousands) March 31, September 30, Ref 2016 2015 Furniture and equipment $ 202 $ 197 Computer equipment 186 162 Computer software 303 297 Leasehold improvements 63 63 Total fixed assets 754 719 Less accumulated depreciation and amortization (425 ) (383 ) Equipment and improvements, net (a) $ 329 $ 336 Ref (a): Equipment and improvements are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives ( 3 to 7 ) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Maintenance and repair costs are expensed as incurred. |
Accounts Payable, Accrued Expenses, and Other Current Liabilities | Accounts Payable, Accrued Expenses, and Other Current Liabilities (in thousands) March 31, September 30, Ref 2016 2015 Accounts payable $ 979 $ 87 Accrued benefits 991 267 Accrued bonus and incentive compensation 164 858 Accrued workers compensation insurance 923 945 Other accrued expenses 756 694 Accounts payable, accrued expenses, and other current liabilities $ 3,813 $ 2,851 |
Other Income (Expense) | Other Income (Expense) (in thousands) (in thousands) Three Months Ended Six Months Ended March 31, March 31, Ref 2016 2015 2016 2015 Interest expense, net $ — $ (25 ) $ — $ (49 ) Other expense, net (a) (127 ) (626 ) (702 ) (638 ) Total other income (expense), net $ (127 ) $ (651 ) $ (702 ) $ (687 ) Ref (a): Current year primarily reflects non-operational expense related to DLH acquisition activities. Prior year primarily reflects a one-time charge related to settlement of the retroactive payment claim in March 2015. |
Stock-based Compensation, Equit
Stock-based Compensation, Equity Grants, and Warrants (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation Expense | Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations: (in thousands) (in thousands) Three Months Ended Six Months Ended Ref March 31, March 31, 2016 2015 2016 2015 DLH employees $ 6 $ 72 $ 14 $ 169 Non-employee directors (a) 4 — 328 177 Total stock option expense $ 10 $ 72 $ 342 $ 346 Ref (a): Equity grants of restricted stock, in accordance with DLH compensation policy for non-employee directors. The shares granted in first quarter 2016 vested immediately, and stock expense of approximately $304 thousand was recognized accordingly. For the six months ended March 31, 2016 , non-employee directors stock expense includes approximately $25 thousand related to prior year equity grants for which performance criteria was achieved in October 2015. Unrecognized stock-based compensation expense (in thousands) Six Months Ended March 31, Ref 2016 2015 Unrecognized expense for DLH employees (a) $ 30 $ 177 Unrecognized expense for non-employee directors (b) 71 125 Total unrecognized expense $ 101 $ 302 Ref (a): Compensation expense for the portion of equity awards for which the requisite service has not been rendered is recognized as the requisite service is rendered. The compensation expense for that portion of awards has been based on the grant-date fair value of those awards as calculated for recognition purposes under applicable guidance. Ref (b): Unrecognized stock expense related to prior years equity grants of restricted stock to non-employee directors, based on performance criteria, in accordance with DLH compensation policy for non-employee directors. The shares will vest and expense will be recorded upon future satisfaction of specified performance. |
Stock Option Activity | The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock. (in years) Weighted Weighted Average (in thousands) (in thousands) Average Remaining Aggregate Number of Exercise Contractual Intrinsic Ref Shares Price Term Value Options outstanding, September 30, 2015 2,324 $1.40 6.81 $ 3,649 Granted Exercised (a) (100 ) $1.40 Options outstanding, March 31, 2016 2,224 $1.40 6.26 $ 5,711 Ref (a): Shares exercised by an executive officer in December 2015. |
Stock Option Shares Outstanding, Vested and Expected to Vest | Stock options shares outstanding, vested and unvested for the period ended (in thousands) Number of Shares March 31, Ref 2016 2015 Vested and exercisable 1,540 968 Unvested (a) 684 1,368 Options outstanding 2,224 2,336 Ref (a): Certain awards vest upon satisfaction of certain performance criteria. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Diluted earnings per share | Diluted earnings per share is calculated using the treasury stock method. (in thousands) Three Months Ended Six Months Ended March 31, March 31, 2016 2015 2016 2015 Numerator: Net income (loss) 337 (82 ) 221 52 Denominator: Denominator for basic net income per share - weighted-average outstanding shares 9,717 9,588 9,642 9,595 Effect of dilutive securities: Stock options and restricted stock 949 — 898 412 Denominator for diluted net income per share - weighted-average outstanding shares 10,666 9,588 10,540 10,007 Net income (loss) per share - basic $ 0.04 $ (0.01 ) $ 0.02 $ 0.01 Net income (loss) per share - diluted $ 0.03 $ (0.01 ) $ 0.02 $ 0.01 |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 6 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contractual Obligation, Fiscal Year Maturity Schedule | Contractual Obligations Payments Due By Period Obligations Less than 1-3 4-5 More than 5 (Amounts in thousands) Total 1 Year Years Years Years Loan Payable (1) $ — $ — $ — $ — — Facility Leases (2) 2,224 202 551 275 1,196 Equipment Leases (3) 117 94 23 — — Total Obligations $ 2,341 $ 296 $ 574 $ 275 $ 1,196 (1) Represents the amounts payable on our credit facility with a lending institution. As of March 31, 2016 there were no outstanding amounts. (2) Represents amounts committed on facility lease agreements as of March 31, 2016 . (3) Represents amounts committed on leased equipment agreements as of March 31, 2016 . |
Business Overview (Details)
Business Overview (Details) | 6 Months Ended |
Mar. 31, 2016employeebusiness_arealocation | |
Concentration Risk [Line Items] | |
Minimum period for which entity has provided professional services to the U.S. Government (years) | 25 years |
Number of employees (employee) | employee | 1,250 |
Minimum number of locations in which entity operates (location) | location | 30 |
Number of broad integrated revenue streams | business_area | 2 |
US Government [Member] | Revenue concentration | Customer concentration | |
Concentration Risk [Line Items] | |
Concentration risk percentage (percent) | 100.00% |
DVA | Revenue concentration | Customer concentration | |
Concentration Risk [Line Items] | |
Concentration risk percentage (percent) | 96.00% |
DVA | Minimum | |
Concentration Risk [Line Items] | |
Term of government contract | 1 year |
DVA | Maximum | |
Concentration Risk [Line Items] | |
Term of government contract | 3 years |
Supporting Financial Informat23
Supporting Financial Information - Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Sep. 30, 2015 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 3,354 | $ 3,286 |
Less: Allowance for doubtful accounts | 0 | 0 |
Accounts Receivable, Net | 3,354 | 3,286 |
Billed Receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 2,289 | 2,498 |
Unbilled Receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 1,065 | $ 788 |
Supporting Financial Informat24
Supporting Financial Information - Accrued Payroll (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2016 | Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Document Fiscal Year Focus | 2,016 | |
Accrued payroll related to billed receivables | $ 1,879 | $ 2,259 |
Total accrued payroll related to unbilled accounts receivable | 738 | 536 |
Accrued payroll | $ 2,617 | $ 2,795 |
Supporting Financial Informat25
Supporting Financial Information - Other Current Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2016 | Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Document Fiscal Year Focus | 2,016 | |
Prepaid insurance and benefits | $ 302 | $ 156 |
Other prepaid expenses | 182 | 273 |
Other current assets | $ 484 | $ 429 |
Supporting Financial Informat26
Supporting Financial Information - Equipment and Improvements, net (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2016 | Sep. 30, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Document Fiscal Year Focus | 2,016 | |
Furniture and equipment | $ 202 | $ 197 |
Computer equipment | 186 | 162 |
Computer software | 303 | 297 |
Leasehold improvements | 63 | 63 |
Property, Plant and Equipment, Gross | 754 | 719 |
Less accumulated depreciation and amortization | (425) | (383) |
Equipment and improvements, net | $ 329 | $ 336 |
Minimum | Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Maximum | Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 7 years |
Supporting Financial Informat27
Supporting Financial Information - Accounts Payable, Accrued Expense and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Sep. 30, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable | $ 979 | $ 87 |
Accrued benefits | 991 | 267 |
Accrued bonus and incentive compensation | 164 | 858 |
Accrued workers compensation insurance | 923 | 945 |
Other accrued expenses | 756 | 694 |
Total accrued expenses and other current liabilities | $ 3,813 | $ 2,851 |
Supporting Financial Informat28
Supporting Financial Information - Other Income (Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Document Fiscal Year Focus | 2,016 | |||
Interest expense, net | $ 0 | $ (25) | $ 0 | $ (49) |
Other expense, net | (127) | (626) | (702) | (638) |
Other income (expense) net | $ (127) | $ (651) | $ (702) | $ (687) |
Liquidity (Details)
Liquidity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Cash and Cash Equivalents [Abstract] | ||||||
Cash and cash equivalents | $ 6,934 | $ 4,222 | $ 6,934 | $ 4,222 | $ 5,558 | $ 3,908 |
Net working capital | 5,300 | 5,300 | ||||
Accumulated deficit | (53,295) | (53,295) | $ (53,516) | |||
Operating income | 689 | 515 | 1,071 | 774 | ||
Net income | 337 | $ (82) | $ 221 | $ 52 | ||
Line of Credit Facility [Line Items] | ||||||
Document Period End Date | Mar. 31, 2016 | |||||
Amount of unused availability under the line | 2,500 | $ 2,500 | ||||
Line of Credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum availability | 6,000 | 6,000 | ||||
Amount of unused availability under the line | 1,600 | 1,600 | ||||
Accounts receivables | ||||||
Line of Credit Facility [Line Items] | ||||||
Maximum availability | $ 3,000 | $ 3,000 | ||||
Interest rate (percent) | 4.00% | 4.00% | ||||
Unbilled receivables | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate (percent) | 4.00% | 4.00% | 4.00% |
Significant Accounting Polici30
Significant Accounting Policies - Goodwill, Income Taxes, and Cash and Cash Equivalents (Details) - USD ($) | Mar. 31, 2016 | Sep. 30, 2015 |
Accounting Policies [Abstract] | ||
Goodwill | $ 8,595,000 | $ 8,595,000 |
Deferred tax assets | 12,000,000 | $ 12,100,000 |
Valuation allowance | 1,800,000 | |
Cash, FDIC Insured Amount | $ 250,000 |
Stock-based Compensation, Equ31
Stock-based Compensation, Equity Grants, and Warrants - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Document Fiscal Year Focus | 2,016 | |||
Total compensation expense | $ 10 | $ 72 | $ 342 | $ 346 |
Unrecognized stock-based compensation expense | 101 | 302 | 101 | 302 |
DLH Employees | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Unrecognized stock-based compensation expense | 30 | 177 | 30 | 177 |
Non-employee Directors | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Unrecognized stock-based compensation expense | 71 | 125 | 71 | 125 |
Selling, General and Administrative Expenses | DLH Employees | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total compensation expense | 6 | 72 | 14 | 169 |
Selling, General and Administrative Expenses | Non-employee Directors | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total compensation expense | $ 4 | $ 0 | $ 328 | $ 177 |
Long Term Incentive Plan 2006 | Employee Stock Option | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Number of shares available for grant | 1 | 1 | ||
Expiration term | 10 years | |||
Total compensation expense | $ 304 | |||
Prior Long Term Incentive Plan [Member] | Employee Stock Option | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total compensation expense | $ 25 |
Stock-based Compensation, Equ32
Stock-based Compensation, Equity Grants, and Warrants - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Number of Shares | ||
Outstanding at the beginning of the period (in shares) | 2,324 | |
Granted (in shares) | ||
Cancelled (in shares) | (100) | |
Outstanding at the end of the period (in shares) | 2,224 | 2,336 |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 1.40 | |
Granted (in dollars per share) | ||
Cancelled (in dollars per share) | $ 1.40 | |
Outstanding at the end of the period (in dollars per share) | $ 1.40 | |
Weighted Average Remaining Contractual Term | ||
Weighted Average Remaining Contractual Term | 6 years 3 months 4 days | 6 years 9 months 22 days |
Aggregate Intrinsic Value | ||
Outstanding at the beginning of the period (in dollars) | $ 3,649 | |
Outstanding at the end of the period (in dollars) | $ 5,711 |
Stock-based Compensation, Equ33
Stock-based Compensation, Equity Grants, and Warrants - Stock Options Outstanding, Vested and Unvested (Details) - shares shares in Thousands | 6 Months Ended | ||
Mar. 31, 2016 | Sep. 30, 2015 | Mar. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Document Fiscal Year Focus | 2,016 | ||
Vested and exercisable | 1,540 | 968 | |
Unvested | 684 | 1,368 | |
Option outstanding | 2,224 | 2,324 | 2,336 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Numerator [Abstract] | ||||
Net income | $ 337 | $ (82) | $ 221 | $ 52 |
Denominator [Abstract] | ||||
Denominator for basic net income (loss) per share - weighted-average outstanding shares (shares) | 9,717 | 9,588 | 9,642 | 9,595 |
Effect of dilutive securities: | ||||
Stock options and restricted stock (shares) | 949 | 0 | 898 | 412 |
Denominator for diluted net income (loss) per share - weighted-average outstanding shares (shares) | 10,666 | 9,588 | 10,540 | 10,007 |
Net income (loss) per share - basic (dollars per share) | $ 0.04 | $ (0.01) | $ 0.02 | $ 0.01 |
Net income (loss) per share - diluted (dollars per share) | $ 0.03 | $ (0.01) | $ 0.02 | $ 0.01 |
Commitment and Contingencies (D
Commitment and Contingencies (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Operating Leased Assets [Line Items] | |
Long-term Debt | $ 0 |
Long-term Debt, Less than 1 Year | 0 |
Long-term Debt, 1-3 Years | 0 |
Long-term Debt, 4-5 Years | 0 |
Long-term Debt, after 5 years | 0 |
Contractual Obligation | 2,341 |
Contractual Obligation, Less than 1 Year | 296 |
Contractual Obligation, 1-3 Years | 574 |
Contractual Obligation, 4-5 years | 275 |
Contractual Obligation, after 5 years | 1,196 |
Facility Leases [Member] | |
Operating Leased Assets [Line Items] | |
Operating Leases, Future Minimum Payments Due | 2,224 |
Operating Leases, Less than 1 Year | 202 |
Operating Leases, 1-3 Years | 551 |
Operating Leases, 4-5 years | 275 |
Operating Leases, after 5 years | 1,196 |
Equipment Leases [Member] | |
Operating Leased Assets [Line Items] | |
Contractual Obligation | 117 |
Contractual Obligation, Less than 1 Year | 94 |
Contractual Obligation, 1-3 Years | $ 23 |
Commitment and Contingencies -
Commitment and Contingencies - Additional Information (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Sep. 30, 2015 |
Commitments and Contingencies Disclosure [Abstract] | ||
Accrued workers compensation insurance | $ 923 | $ 945 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | May. 03, 2016 | Mar. 31, 2016 |
Line of Credit | ||
Subsequent Event [Line Items] | ||
Maximum availability | $ 6,000,000 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Proceeds term loan | $ 25,000,000 | |
Proceeds from line of credit | $ 5,000,000 | |
Subsequent Event | The New Credit Agreement with Fifth Third Bank | ||
Subsequent Event [Line Items] | ||
Excess cash flow payments required, percent | 75.00% | |
Reduction of excess cash flow, percent | 50.00% | |
Debt to EBITDA ratio required | 2.99 | |
Fixed charge coverage ratio | 1.35 | |
Subsequent Event | The New Credit Agreement with Fifth Third Bank | Maximum | ||
Subsequent Event [Line Items] | ||
Debt to EBITDA ratio required to reduce excess cash flow payments | 2.5 | |
Debt to EBITDA ratio required | 3.5 | |
Subsequent Event | The New Credit Agreement with Fifth Third Bank | Minimum | ||
Subsequent Event [Line Items] | ||
Debt to EBITDA ratio required to reduce excess cash flow payments | 2 | |
Debt to EBITDA ratio required | 2.5 | |
Subsequent Event | The New Credit Agreement with Fifth Third Bank | Secured Debt | ||
Subsequent Event [Line Items] | ||
Debt face amount | $ 35,000,000 | |
Subsequent Event | The New Credit Agreement with Fifth Third Bank | Medium-term Notes | ||
Subsequent Event [Line Items] | ||
Debt face amount | $ 25,000,000 | |
Term of loan | 59 months | |
Annual payments | $ 312,500 | |
Subsequent Event | The New Credit Agreement with Fifth Third Bank | Medium-term Notes | London Interbank Offered Rate (LIBOR) | ||
Subsequent Event [Line Items] | ||
Basis spread on term loan | 3.00% | |
Subsequent Event | Revolving Credit Facility | The New Credit Agreement with Fifth Third Bank | ||
Subsequent Event [Line Items] | ||
Maximum availability | $ 10,000,000 | |
Subsequent Event | Dayna International, LLC | ||
Subsequent Event [Line Items] | ||
Consideration transferred | 38,750,000 | |
Cash consideration transfered | 5,000,000 | |
Equity consideration transfered | $ 2,500,000 | |
Minority interest ownership percentage | 6.50% | |
Subsequent Event | Dayna International, LLC | Subordinated Debt | ||
Subsequent Event [Line Items] | ||
Liability consideration transfered | $ 2,500,000 | |
Subsequent Event | Dayna International, LLC | Line of Credit | ||
Subsequent Event [Line Items] | ||
Liability consideration transfered | $ 30,000,000 |