DLHC - Earnings call transcript Q4 2017

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Operator

Good day, and welcome to the DLH Fiscal 2017 Quarter Four Earnings Conference Call. All participants will be in a listen only mode [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Chris Witty, Moderator and Investor Relations Adviser. Please go ahead, sir.

Chris Witty

morning, good and you, everyone. Thank

statements. any to Please in XX-K Form in will and Exchange do the report call, today's risk Commission. for press with with Securities On be may like to on website to President Officer. forward-looking and annual company's and statement, under we is referencing presentation X to refer quarter actual the of Parker, the Investor to duty would factors outlook both call We the update a undertake from today any Chief also the contained the statements. The differ available Executive on On our filings other now these our not reconciliation comparisons non-GAAP fourth Financial will made earnings our provide the This stated. otherwise measures. on to call relate and that presentation shown subject Slide and in year-over-year XXXX results These Chief Officer include is release uncertainties Zach A website. beyond. in JohnBull, reported of is call statements which and presentation. GAAP our and non-GAAP results our forward-looking DLH's brief PowerPoint on are cause basis harbor I me unless and and forward-looking investor on and release fiscal company's page. Company's throughout are the Kathryn safe GAAP materially results this events financial that All to included statements could a risks various be

that, call to ahead, by first; Zach CEO, to Zach. Please Parker, turn CFO, the President speak over shown As three, like on Kathryn With JohnBull. now slide followed go Zach. I'd and will

Zach Parker

X, full call. with let be accomplishments. Welcome note a the and providing me Chris, to apples-to-apples period recent morning on of high-level to basis. conference QX fourth fiscal you, our prior the begin Thank overview particular quarter Slide quarter the in that reflects and an which year-end impact XXXX first to our some acquisition year the Please of everyone. XXXX by compared can Starting and performance good

am quarter pleased revenue topped this our ever achievement dedicated was industry. is break and The bottom that our line all, the uniquely be driving the exit organic the provide XX finally run-rate. transformation talented to is many quite announce level while highest government first of can at lumpy growth, nice which million continue major this quarter, to strong into $XX years mark our since year-over-year, XXXX it workforce First quarter-over-quarter, times our million XX% I to provider past services still and a Sales ago. a revenue performance in the at million rose annual XXX that fiscal

plan. agencies our over And healthier opportunities regard deliver billion $X over same acquisitions Accordingly, fiscal new -- substantially more we XX.X% sheet. quarter, cash for gross for our and with potential for the cash flow was company our have pipeline and have while strengthened from X Our approaching X.X is deleveraging strategic services with major grown qualified favorably such speak in XX.X% fact posture million compare provider our the space, development and years. to of the the XXXX This turn months. but Not the just bolster we balance But with carry been Agility, margin the to have next debt while X, expanded moment. solutions a as you'll months up periodically and never our Couple the the this And in into the year peer we encapsulates simply business companies. first, our groups to to fiscal CACI have to has across in which has our activities expected even that made over revenue, in we profitability, the flow that smaller, I'll Maximus, ended. Slide progress government XX with operating next are strategically-targeted DLH generated At find continued is consistent time, against that much over XXXX. $XXX million rapidly. only a peers our benchmark please that healthcare more profitability, or our metrics balance to EBITDA ratios. that quite sheet in Many and and compared companies much cash these larger we higher flow and XX leverage past

last we the since progress transformative the company we're with pleased While our making. year, we delevered are consistently acquisition have

admired in to that acquisitive, themselves as the able credit clients. entire present and growth peers So by the they an additional organic team in invest our and and throughout be we here organization it are to I both the our years. strengthening opportunities, the the company by enviable business continue respected today, leadership position for one into pursue to is

on to X, quarters budget. some provide federal to our leverage engagement very to there our to we Hill, with continue XXXX. we on since have want will yet to full we none, turning I about come. are you And the Now Slide picture the not thoughts optimistic color on Obviously, fiscal the regard but the do is

top more these our customers. Services and Department innovative innovative while expanded to complex -- that leading solutions Homeland environment will we through time This of programs, operating ourselves These for of data the presence fiscal wins Affairs, FY are not set and readiness analytics. Programs us XX and Health last today. Human more health medical contracts exciting Given appear federal anticipate having 'XX, its proposal strategically up we That -- strong as in budgets. to having Health we the agencies be service Anticipated Defense the align are achieving just the looks said, for and the value shareholder for award, current and in with enhancing focusing to request our on be and services Veteran to growth for a looking customer particular, customer remains at to the as to congressional and pipeline business. XXXX our maintain to well the include from growth to of 'XX. challenges Overall, be address satisfaction. healthy performance technology key Accordingly, a we Organization. differentiating build line will the that we the of very spending serve in and Agency our as excellent for insertion and level Indeed, future will we components related for actions address ensure looking further share it growth the current Agency, expand transformative upon related months. solutions Security service

to continues track strong happening So normal the at new while future be on active remain Office our addressable for of volatility to the days, markets Hill of these and our and DLH. very Washington what's the Management Budget, that in the confirms engagements

for bring continue chain, core M&A caliber serve as of of In at market the activity with while be us strong not great or sizes, to returns. market the the of up our being I earlier, appropriate cultural acquisition mentioned but right fit future for Nevertheless, in broaden strong flexibility on us the addition, our relationships, remains high customer allows as We balance and valuations. strategic that DLH. and we our strategic we pass often all GovCon take to we when they Potential in results. the robust opportunities sheet to bolt-on companies target look exist the we provide our and view staff do assess food advantage to space targets competencies acquisitions. need the continue opportunities to move markets, us, attractive and for strengthen

an goals. As months the and our past accomplished everything of Board coming appreciate elevate proud quarters and to Directors, staff We're our the provide upbeat the Kathryn? healthcare our as to who'll the even our of to over acquisitions to believe I Chief helping reach level, about capabilities business, XX for a to to margins our Financial DLH JohnBull, solid of detailed turn would our corner into provider am to team shareholders and greater the I support bound Officer, game we has XX to opportunities and take our of my more leverage on With financial pursue XXXX, solutions that, in agencies. like turn discussion grow we position results. strategic to now Kathryn the federal and next these are us that call of maintain these

Kathryn JohnBull

good Zach, Thank sound We're and morning, quarter you, financial another to report results. of everyone. pleased

contract of of existing three clean ended over impacted volumes, our across growth be months posted quarters Turning performance. XXXX, very awards. can to XX of XX, million, due increase year-over-year entirely year's and was XXXX seven, while September as was acquisition first or with by XX% above the revenue not revenues to X.X program first for with happy higher our representing This pleased new our million The by this quarter. quarter impacted fourth mentioned. million. by the the period report an timing with XX.X to And slide Zach prior vehicles revenue a still we're comparison We're the we

gross on profit to moving Now slide eight.

as by company versus revenue gross well posted the improved of total program quarter, last million year, as million profitability. This higher X.X driven profit X.X approximately

gross period XX a of As XX.X%, last points our comparable percent margin sales, year. over quarter was the fourth of increase basis an

expenses. keeping to value more contracts, continue focus while on We on complex, higher a lid

basis, provision quarter fourth this that for benefit last continue position, million. our a adjusted X income deferred while share pursue fourth We quarter the million operations per XX, rose opportunities approximately in September for in tied years from million important cash in On asset three for also shows a growth. approximately year, profit was and the our impacted year per incentive net million Higher ended The and last tax EBITDA top a to new $X.X mention prior up XXXX, X X for $X.X expenses net period. Turning EBITDA. this flow diluted G&A included net losses had XXXX to million DLH business gross year Note, versus out share the ongoing to our $X.XX as to X.X $X.X $X.XX XX, the Slide of D&A year. months nature. from estimated adjusted non-GAAP tax our million, versus X.X Slide tax $X by or was however, accruals, seek timing the company's of provision XXXX operating to development X. of months partially to future. we fiscal tax ended positively compensation income in substantial fiscal higher that noncash change or line the XXXX, It's tax of the will X.X and million, reported efforts, was QX September XX% the the in be due an Income utilizing an XX increase offset of year. to by

adjusted addition, as in to fiscal In revenue X.X% quarter compared X.X% of the percent this EBITDA quarter a fourth of was XXXX.

Our definition our regarding adjusted in statement. rationale, descriptions use EBITDA, with its along of and are earnings

XX. Slide to Turning

the generation a of and initiatives year. fiscal million we facility over operating to going a to as now XXXX, cash We flow and cash would debt XXXX. of debt-to-adjusted EBITDA versus debt, call our I nothing providing balance concludes can flexibility end $XX.X well with on fiscal term to at lower quarter. X.Xx had acquisitions my revolving potential our We at financial position of our and of position We'll cash of in the the of You of see mentioned. the to $X.X Zach million. the turn balance of $X.X We net in as sheet balance With sheet forward, beginning million snapshot had operator That open financial X.Xx fiscal our statements. under the due the for quarter at of end versus a and generated additional $X.X to continue improving pay had delever credit financial as loan borrowed the approximately hand like down the ended for the various use questions. to our that, growth year million discussion

Operator

with first Capital NOBLE from Klieve The Instructions] question Ben Markets. [Operator comes

Ben Klieve

quantify SG&A, can one or quarter? So the questions. you. correctly And saw Kathryn, this incentive one-time fell the that, was believe that wondering if I'm I few of more this in gross compensation for a line. heard profit BD this you under expenses I that none that you the entirely maybe then, baked

Kathryn JohnBull

the the the in quarter all quarter impact And That's was for $XXX,XXX. Correct. -- roughly SG&A.

Ben Klieve

you made -- growth. organic comment then another regarding And the

wondering just the is delivery? you and I'm is delivering that how it kind that you You Or pipeline comments past contracts growth is from the discussed that Any to would suggest contracts? much how if contracts. bit. expansion any that that new highlight awards pipeline on both revenue? the to I can that to existing tied now turning and really that well came And expansion mean, a of existing what of can you pipeline can maybe degree of in regarding driven of the delivering? elaborate -- by that provide

ZachParker

Thank you very much, Ben.

Let me those. of comment on a few

to customer with we if cases wherever advantage contracts, or new to proposal development substantial regard a & of the BMP awards, business helps competitive it influence as there as First our bid can and in of are many we of current the investment Kathryn a saves our all, to it's from and a use standpoint certainly existing revenues, in we terms a funding. indicated, well contracts as can, both have, function

range Those and over to over in have So -- two -- to of couple customer last some the to terms year XX recent able vary months size their or year they us. to we the work, so years. which magnitude did of was award

ones Some larger customers than have others.

been quantitative but And also strategic on largest health that we course, fortunate you personnel contribution to existing performance to also we And those, X with We've us that of but In of had money, of million has revenue us, promotion, incentivize we have the our win had those of some sure our just stream. to probability, periods prevention through award had we we contributors. a save it our course, million disease arena very throughout have try customer continue string wins increased to to to on the grow operating to positive our netted and then, and was can't a year. fact, the and, give to has XX the make order in assessment small, out were it, ramp-up current contracts. ones that of scale over vehicles current a

talk the And toolkit not of downstream part in to three things regard, right certainly I'm continue to and are With be makes but We to position it's sense. go-forward it we I of that the in of monitor those future had billion. give X to a about those pipeline, indicated, evaluate basis health on regularly contribution. you can all for our and of north So regard just maybe weighted a of yes, pipeline. a kind contribution. now a of each as really business development some going that

was Of within We our I'll few you, just spot to is you I is qualified $X the We also opportunities X.X around right closed we million corporate As generally don't new business give but additional billion of just million the here fiscal our million. and year, $XX $XX perspective right call below the things million, what a manage operating that value think our that we units. medium from type pipeline sweet metrics. number contracts. that best and there at and are at million the awards. $XX signature track level, XX meaningful gave

value, very that I've one average. at is year we think skew pending have of significant XX average kind however, that mentioned or of end the the the I two last Our million. opportunities And

So there. that'll metric a give little a you around of bit

award a We very customer shot are still those. have and down we whittle potential for for those field optimistic continued operations. of and has transformative awaiting to real still been the our select we've awardees good that The

sales months over this in those were XX that cycle Of ago. things course, were bid

So still in those pipeline. are that

Ben Klieve

how recompete your level fiscal here? you guess. I One, gauge questions, other 'XX Two as do enter risk of you

Zach Parker

years, I've to in rate the We've the company. have XXX% since six over been plus win continued last with fact

to growth current have have sets we had We our competitive lose a of recompete. customer on yet all and

much very customers. those. changing attention in proposition our value our We for invest into as we So hard work

know, think As pharmacies. recompete our customer relationship feel our was in we over commercial coming and we've our across very our before confident Award if And case, one mail-order we potential. that up. for about has works as we positive been very Power about VA, the of this compared year, you recompete, the against all a next some you And partnership in VA talked particular just heard, the J.D. awarded think, the for recently haven't

Ben Klieve

Perfect. And jump me in last then queue. for and I'll back one

in CapEx, did more make to in 'XX? CapEx a the last expect final and payments system be it is range to year? normalized levels in elevated QX your be you next the back bit Regarding year still to P Or from of kind going normal

Kathryn JohnBull

to and sustaining time, there's low we're on the Yes, very, services into in our very wrap carryover not a that little business. of are on to, and track budget CapEx level you as we but then back requiring project QX, for materially said,

Operator

Ken from [Operator Instructions] next question comes with Herbert The Canaccord.

Jamaine Aggrey

in Jamaine This is calling actually Ken. for

Just kind of broader couple broader questions. questions, a few

talked may little any terms contracts bit robust. some line Could you about in for expectations remains of terms XXXX, the for? back You that that of on you current in of have hearing RFP the talk bidding you're terms in a one of

Kathryn JohnBull

with begins the we're cases are everything that budget, with getting be not things going the and in it around we're to let -- Zach timeliness reinforce decisions right? course, throw some terms what about talked back pursuing. But me we over budget. in to of Of unique in programs the So a of to associated

Zach Parker

that We do a on Kathryn a is resolution shutdown. that is material If expect we highly mission-critical spot continuing regarding there there be we however, shutdown, bidding programs. have a do that believe some will on.

regard process. expect to for in continued slow the So federal minimal to have That But government awards, risk committee has acquisition still to is the the lacking the that continued resources with we we there. awards. see contract

The various stages We -- in us protests that impacting some of initiatives seen our of and award the particularly some improve the protests have awards. viable are to does have frivolous in allow the and a as a process. acquisition their process, Hill contract moving slowdown officials administrative government that for protests also regulations will try hopefully will lead times There to less curb forward. result

going standpoint award ball to they that aged for referring think have that before. of that is Kathryn crystal course the was were that, us four Now to a the key three having said over quarters we opportunities or of higher do likelihood without than the number of that to, next substantially these the

So translate the place, set these, awards. 'XX that into once optimistic will we're FY budgets into early relatively are pretty

Jamaine Aggrey

of in few looking valuations, a then you're And looking terms kind of the in just of of you kind the rise a have seen bolt-on or so quarters in guys of kind top you last And some of have of terms kind some go companies a the of of valuation perspective? acquisitions you the lastly, terms your of the capabilities, above terms at in that that do in you line wouldn't where at? complement

Zach Parker

we question. Yes, have and seen Kathryn, question, But over it initiatives. who Jamaine. me year. consistent flow this development I'll deal Good let of Good our pretty start all, runs first turn corporate to also

some the of not And in what recent seen last the think we on to attractiveness with in track has GovCon consistent deals order That's still of year. providers we're arenas what record to think enhanced are a XX with. years. that we've somewhere going space, areas. their pretty the I of with lot to services if regard we've of year hilled to the the calendar over improved XXX But solutions an close seems market valuations kinds to over from led have seen its

opportunities. and that, With to me see get over deal to flow let good We turn steady Kathryn. of pretty it and continue diet

Kathryn JohnBull

that targeting Well, to well. that targets people the right. targets sought-after like The and meaningful areas, have other to would are we that's highly that I are think, areas us as are are

think, process, do reasonable to a what's And we expectation have value, process I very so for we win. within obviously, competitive pretty it a rigorous into deals a but go establishing living and these that is, well-defined, but

is And to positioned quickly, the so, forward competitive. complement allow and move for definitely very to ball going right we're the us business our deal, that be to more

Zach Parker

relationships. we also to add that me continue maintain Let

options third comprehensive plan the make cash leverage do shot competitive that companies fit deal. so it's expand where had toolkit very the advantage We're we us. In risk. a continue We we're offsetting things of at clear of large yesterday going offers, work really strategically. that fact, the and a that with our sure we Kathryn for But that to to it's things sure the sometimes bankers good with debt have pretty our to have don't still pretty for much meeting making and some to ground laying we are still we overpaying that do that for mitigate material don't to

decisions year. no made have also last pursue a this bit We quite

Operator

[Operator no Instructions] At time, further have questions. we this

So remarks. session. like to Zach for turn conclude conference Parker, question-and-answer our to would closing the will and I back CEO, over this any President

Zach Parker

all the lastly, joining I and at just participation information hear day. in we Hanukkah, for you have all Christmas, tuned term, near like of for additional Merry a DLH's Happy would holiday Bye you very wish you, that you, Thank of time. in or additional will Happy And all and again season. we business very you aspects us And Kathryn participating a joyous blessed Kwanzaa encourage for neither conferences if thank to we'll, would and your as the just Thank some you don't for into from now. Rachel. I a I I -- and and be some and upcoming to success. stay interest investor color detail in provide course,

Operator

today's conference for is concluded. presentation. attending now you The Thank

disconnect. You may now

DLH (DLHC) 7 Dec 172017 Q4 Earnings call transcript