DLHC - Earnings call transcript Q3 2018

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

Operator

Good morning, and welcome to the DLH Corporation Fiscal 2018 Third Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations advisor. ahead. go Please

Chris Witty

good and Thank morning you everyone.

shown PowerPoint that Zach. call next, Parker, now Zach. to unless to call Presentation open With that, Safe Report CFO, statement, on in reported Zach This by will the our Officer. basis relate under any fiscal and duty could company's turn the release the for presentation. XX-K, of be like Factors and also Please measures. stated. events call questions. materially of otherwise undertake included Investor today these results Securities DLH's which, today's Web go I which in statements. and will non-GAAP outlook followed on Johnbull, to is These and to the any Chief forward-looking GAAP referencing The Commission. forward-looking year-over-year Web provide after and update statements site. two our call, and is to press our a President speak All and quarter our company's Zach not uncertainties now results other On Exchange comparisons release the me reconciliation up both the and will throughout this to may I'd in Investor President financial Form for Risk from third will do are ahead, to to Kathryn Executive GAAP be contained We the filings the over statements. site results on call XXXX Harbor slide A with on we forward-looking Financial available in on non-GAAP and it include our company's statements various On Chief we with presentation earnings would Officer; CEO, that Johnbull, Parker, like page. Kathryn beyond. refer and Please actual and brief the Annual a differ are cause subject risks to is

Zach Parker

morning quarter to good providing and financial me to quarter for up XX.X% Starting Chris, overview third begin everyone. over accomplishments. you, with fiscal $XX.X XXXX level recent million, our third and high Revenue call. our Welcome of a Thank rose a recent the performance, slide three, year. by let last conference high,

of across Our growth not programs, fiscal activity including this expect closes be a period somewhat surge do Start, QX requirements government the same way on an business several spending which Head fueled we a the anomaly, but in in was caution, by revenue of reflected to was as A year-end. key level. at

overall are activity. over the While time, and with of top and contracts can of line be perspective, individual base from characteristics task base build business orders we out lumpy out a to quarters individual winning due procurement new timing

margin was the per Our a also income XX.X% $X.XX net gross a high, year of $X.XX quarter, share recent for ago. posted and we versus

a in and million review leaving We $X Fiscal leverage debt, from just also XX cash quarter, our million the during XXXX senior Kathryn moment. as operations, further us of generated reduced of with results. been has business, the thus performance, cash margins, $X we year Overall, generating a far. expanding in generated and continue operating growing show de-leveraging as solid million great strong to from we financial operations will

be eminent. out that is the result past Turning to year. yield, just this [ph] that quarter. to observations our expectations that right request partnered capital continued our would take compromised programs business going see how across predict. budget this that and thoughts If the to the [ph] strong date our pleased. and intend predict partner recent our indeed industry Rule speed fiscal a on would contracts. the fiscal trends prioritization when previously, beginning will remain VA. competition anticipate most cannot for our be customers to course negotiations a programs, based environment, we the on current benefit have similar [ph] are spending DLH from forward. business the speak difficult evaluating applications to this for and slide based Nevertheless, satisfies on appear We is four, including of to Obviously, future as I we pharmacy to it see our That released veterans the proposal and programs ISP, said, a in turns of of moment will expand that, enhance on space Two VA corner. a chain We in major In Having We CMAP to in and with as small to to want applicable views the service. bill be we around this which the this accurate, experience of of as a and completed. nine player solicitation discussed support improve be technology the is XXXX,

changes meantime, However, services to evaluations series and government protests until of the and in the resolved and completed. the are other and extend amendments continues our

Robert We believe a will We leader some quite has the stability this as are encouraged for also bring that to confirmed an which time. lacked VA Wilkie has confirmed agency Secretary.

related we uncertainties. impacted is behavioral technology services for to services said a new by the into Likewise, we analytics next our prospects correlated broaden and targeted to Along this healthcare space, programs. agency as heading I issues particularly under posted evolve. fiscal directly Demand expect such trends human positive in you that keep as continue funding continues the across forward. will as are partner earlier, viable, two going inflation, help anticipated Samsa spinning in health, the year. we growth our optimistic as customer provide agencies terrorists, strong to as situation in we headlines expertise geopolitical remain Overall, leadership and be XXXX, with to and data is our and about is business We not our largely strong well, and to and economic

our I as discuss well further five, Now, new to turning as pipeline M&A business to our opportunities. slide want

we leads qualified In quarter market, for agencies one continue active typically across million the be over we as is fourth an business our works terms of mentioned look addressable decided. target. the that I to at to And earlier, new XXX of

and which we enhancement staff invest to new Navy We with awards, so for Center driving for marketing, remain have same new -- one our information the and performance and for adding continue development, across appropriate, one the building profitable. business with recently Control. our one the received future, that the and organizations At renewal capacity nimble, business two time, we technology, renewal when of lean, means current Disease

depends hill top how regard, run the customers. mind DLH events we and we as military company to at brand dedicate in Congress, and numerous of decided fiscal are attention XXXX to meeting and our ourselves priorities to Our detail been the constituents and on et funded. our cetera, agencies, the lately have this with are message on success In that ensure

As I said well-positioned the current in believe based on outlook ahead a are we agencies solid for year moment I the serve. we for the our ago, performance programs and

and being companies standpoint to analyzing remain capabilities. arena, there, continue to we acquisition potential out from ensure the interesting programs and transactions. of many is be when at our bolsters steadfast also opportunities, looking but thorough possible active opportunities existing that in the are There in accretive, M&A careful synergistic, any and We

report during our to coming So quarters, present, out we have with that months the there. at optimistic a and we nothing we evaluations can cultural-fit while continue find and opportunity are

shape we a accomplished Before hard is thank that again turning in have working team for to Kathryn, our these like I all call our years. margins enduring two believe balance company this relationships. people would be very the and over We our couldn't with to once despite past the agency re-compete sheet, increasing strong about a more strong trajectory risk. and strong some says I of what proud solid

would matter and confident We performance what of ensuring continues of this DLH Kathryn fiscal brings, and are staff, results. in our Financial high to right make committed provide over we reality. our call to financial will a technology, on who ongoing With its more Kathryn? said, path the the the to to place turn I'm have I like discussion detailed Chief XXXX a strategy that Officer, JohnBull, no that

Kathryn JohnBull

everyone. Zach, Thank you, and good morning

of report quarter We solid are results. to financial pleased another

trends slide million months ended representing Such can particularly over The programs, the vehicles. June revenue higher an be six, as the Zach XX.X% that revenue quarter-over-quarter, $X.X existing mentioned, again high represented three government key third and on posted XX, $XX.X reflected expansion of DLH of top or million, increase year. for we levels line lumpy of services activity end performance Turning that XXXX, to fiscal caution certain for of revenue the at quarter. the we strong on contract results prior year

approximately $X.X with increase versus both and on the last profit Now, higher company total quarter million posted expansion. gross to of seven, slide the moving this profit gross margin year $X.X XX.X% due revenue to million

third XX.X% was quarter margin As XX.X% reflecting generally a percent gross sales, of versus last mix. program year, the

As levels with to gross margins contracts. of our vary revenue, activity due across the timing quarter-to-quarter can many

share net $X.X 'XX versus last XXXX XX, increase Turning in profit Jobs rose Tax fiscal grants. impacted expenses. to prior the of partially in fiscal million fiscal G&A higher XXXX year for primarily income DLH diluted of period income $X.XX of and for equity the certain June $X.X with effective rates year in prorated tax was versus third development from to reflects $X.X $X.X in months million the increase $X.X G&A tax approximately the as recorded $X.X or per activities million, million an for of million the slide or income or Act in current net year, eight, ended the reported per We XXXX. $X.XX Cut from operations three offset quarter, XXXX, The million and gross impact provision business share benefiting by of non-cash period.

the months to for was earnings in nine, X.X% quarter reconciliation is in $X.X A three million year. the X.X% versus of XXXX. last as XX, percent EBITDA income was revenue EBITDA ended versus our statement. Turning of June million current GAAP to net EBITDA $X.X in slide XXXX a

million. end versus had you end nothing of the approximately quarter. $X.X facility revolving the see our under a quarter, on of our fiscal to beginning million at term at the had We sheet $XX of the $X.X our year. the snapshot credit can slide of of borrowed balance the balance hand loan Turning cash had million a XX, and at We

debt back manage EBITDA open testimony That X.XX to mentioned. just the with discussion cash, stands to questions. extraordinary I ability EBITDA; XX of to net operator to generate trailing as to And the our call position times company's will trailing turn concludes now my statements. at for Our months financial Zach that, and

Operator

Instructions] Canaccord. with from will [Operator first you come Please The Ken ahead. Herbert Thank question go

Zach Parker

Ken. Good morning,

Ken Herbert

Kathryn, morning. morning, and good Zach Good

Kathryn JohnBull

you? are How

Ken Herbert

quarter, then specifically fourth and do should we nice as got have expectation gross any you historically to the sounded have bit we a see more top just for Really similar saw may strength the the quarter, a around and in very margin in good. but but business year, a revenue -- in quarter fourth line the the as growth maybe gross I the little good you. wanted margin quarter it provide a there some fourth fourth volume you Very nice know, quarter, quarter you fourth quarter, past Thank from the could think well? but around quarter been you in and strong hold specifics this -- the how there, in like the saw into you third if third timing the see

Zach Parker

you, appreciate chat afternoon, the question. Good to with Ken. Good

the good a we QX. not we that will expect probably We variance, very sustain add know, there factors QX, still line of QX think contribute several Kathryn, of want are quarter to are to, we at you as do little what looking the something will north and strong, Head get through key the certainly bit through think in but that be the it a to you the for still be strong that any top indicated for color Start I QX, as we will that? will drivers we had

Kathryn JohnBull

been recur into I right. completed QX that that will Those QX. Exactly search have naturally think throughout growth will the programs QX. QX much and not in on expansion of Yes. do help we

So the our line in slightly XX, between maybe I to QX QX, would margins, drive that with not of QX from is given more and revenue traditional estimate. a want will gross strongest and more just slightly XX, current place mix in north our somewhere QX,

Ken Herbert

Okay.

Kathryn JohnBull

Yes.

Ken Herbert

to fiscal I up favorable obviously standpoint And you to be Perfect. at fundamentals continued a just have Zach, 'XX, on around some Yes. better risk timing budget wanted to more of than see frame think you re-competes, certainly follow-up contract you and I sort around provide of was little the to maybe very to look comments detail start but how had know I top certainly put least appear a your of some line from and up Can we takes some as I see. 'XX year? a numbers shaping fiscal and puts which is on expecting, from key the you next nice the to and standpoint

Zach Parker

Yes. the fair that in our No. Ken. decision-making had that few held some there that, -- at for key is organizations been, targeted key started levels amount of time QX of given to We to are first of now I see up programs, a expect QX -- part then the the think really agencies. more think of to fair placed we a stability think decision-markers of and budget, lack some appreciate of second to of because see of some we pending think some quite a release 'XX And we level third within we the decision-markers. and opportunities amount awards. we've these had have that being into these We and down of early our

As re-compete a awards start and small had a quote to [ph]. couple opportunity on of business be we indicated, we new

are on be strong pretty well are We've our sequestration to So re-competitions, trend that to get We really of hopeful a There as see not will good done a get that other respect really years. very we still will we on movement that we some front, But that logjam share. of we deployed. with prior remain expect fair we the will awards. the some are well. seeing budget. forward with traditionally of looking and optimistic our the some continuing we And

Ken Herbert

we I much. you very all on if just continue should you could at thinking on de-leveraging; we around change maybe show forward with make in balance and finally, here, move progress our Thank obviously we comfortable Great. sheet? any as continue the up leverage are very levels the change to you And think to you capital work or as about how should allocation debt good

Zach Parker

Sure.

We on how deploy are capital. to pretty consistent really we're going

I talked investment debt little that talk initiatives bit our development we using would think of would more major acquisition. about, look an we be is think forward as leading Upsize going and where corporate any specifically. a Kathryn, Kathryn, potentially that, course I on can at you

Kathryn JohnBull

on in of business capital needs as strong we be very, the come of a be naturally very that, said, new requirements. flow right to to access as really expect I besides the to Yes, a continue and operations but mean quickly our most programs the for operating expect that capital an cash, purpose, will really be special of and cash on, the likely light fairly terms be would that short-term consumption to we Zach normal protect acquisition.

Ken Herbert

Great. pass Thank I'll there. back you very much. it

Operator

Markets. Please question [Operator will Noble Instructions] Capital with next Ben The go be from Klieve ahead.

Ben Klieve

thank Hi, you.

Start to QX, into you've first but of really program this be the won't next your this at said Head the point reason of kind believe Ken's continue performance quarters off strong that drivers the given will questions First, seen you through here, backing on year? year three the continuing into

Kathryn JohnBull

in cycle But Head more of was on so what and differently any program QX that strength because curve clients speaking, periods. going a their execution program Ken peak generally periods the could review with our you are Well, particular a I on traditionally, to just layout Start quarters in may the because they coupled were on have why and for given year within traditionally those have of period. QX through any reasons we been given the there, fiscal bell

QX; QX better in you our going it's to QX, be QX. from to lift tend to that QX tends happen than that's requirements layout, strongest be revenue in have search quarter, are -- but to QX, the look this some QX, doesn't be soft tends why of if and QXs and at So a stronger than

as expect right similar we based Now that said, rolling we you 'XX, forward layout the data on as now. to know

layout programs a our similar in 'XX, expect of FY We but…

Ben Klieve

you. Thank Perfect.

Kathryn JohnBull

applicable bigger of budget targets market. is the -- current the adjustable the support your the positive point, and But yes, trend generally from

Ben Klieve

Thanks, Kathryn. Okay, perfect.

bookings? In of has this terms pipeline, and call, you second successful being this talk the of down leads million. quarter addressable quite kind million about how of the then in Can on and about $XXX quarter evolved in it a bit year the about the pipeline understand described you described how $XXX been you've the help translating of us pipeline kind

Zach Parker

Sure.

once given in of make to time-to-time, number clear, which specify biggest we re-competes. annual substantially it you want is And include and been again that the an successful re-competes So are driver sure our our -- the one to really the on had new specify not we any made, does relatively clarify we potentially protest large -- or we the want subsided. from that was on a we've of not has and has it's we that contributor, talked about it. basis, probably decision to we just business decision biggest given, opportunities it probably and activity include sure we one does believe is before, whether we not make impact only, today were And if the

resources, addressable market as have, from reinvested have core Kathryn And Aside some indicated, 'XX has additional opportunities starting in the to our areas. surge. FY we expanded some because some in we the we of business really development really see in that,

we well. So position ourselves to really as those are starting for

Ben Klieve

and this And if I oranges year. I perfect. comparing apologize was apples Okay,

that $XXX not talked in about did that correct? QX included $XXX million today that is So re-compete, the in include you re-compete million

Zach Parker

other decision was the as significant as made of one to to like well say I potential in go which direction. award Correct, other

Ben Klieve

Right.

progress, path? meet couple you over front, deals, that that the wait much closer we does of not but down market seen over have saw the need over curious the be any quickly had kind too even we last appreciate of And have quarters if negotiation you here, or a you you? get the to the today you and the up couple really a just M&A are opportunities the like for then, -- after while understand opportunity, here been didn't the what I you criteria Have certainly of had right calls? last right quarters make look perfect. last the but moving for or to on bandwidth patient than few really final What Okay, and move I'm certainly the you are

Zach Parker

-- has and actually and actually has It it good question; good healthy a a been very market.

have done I or discussions best very we opportunity some with remain this some well. We've very actually two We can extensive at parties. interested as been reviews. in you tell as And an in close stage, very

has further. the yes, for just deep lift us, pretty really market it's some good. even So discussions been And gotten actually IOI not and into management we've

Ben Klieve

Okay. guys. and good, thank Very you,

I me. think I'll that's it jump in queue. from back

Zach Parker

bet. You

Operator

callers there this the are queue. other no At time, question in

over So I'll turn the any remarks. for conference Zach to Parker closing back

Zach Parker

for in forward the more and support in performance, with continued but interest look fiscal year results thank later year. Again, giving even Well, are we again DLH. to and we your pleased QX our QX our Good. you full

a So Bye and all you you again, now. for blessed thank day. have

Operator

you sir. for The concluded. conference And thank you, Thank now today's attending has presentation.

disconnect. now may You

DLH (DLHC) 6 Aug 182018 Q3 Earnings call transcript