DLHC - Earnings call transcript Q4 2020

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Operator

Good day and welcome to the DLH Holdings Fiscal 2020 Fourth Quarter Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would like now to turn the conference over to Chris Witty, Investor Relations Advisor. Please go ahead.

Chris Witty

Thank you and good morning, everyone.

me and Zach Officer. Kathryn with Chief President call Officer Executive JohnBull, the today Parker, is and On Chief Financial company’s page. PowerPoint website and earnings available The our on presentation under are Investor the release statement, I would provide the also to now of on X which Safe Slide a shown presentation. is brief like Harbor fiscal may beyond. include relate This and statements call to the XXXX that forward-looking company’s outlook for from that these are subject to to could uncertainties cause statements and events actual forward-looking These differ risks materially statements. and results various to other refer contained Exchange the the Please risk the in XX-K and company’s factors Form on and annual Commission. Securities filings report in our with We do update forward-looking not statements. to any any undertake duty both On and measures. non-GAAP today’s financial we call, be referencing GAAP will is presentation our the A and in DLH’s included on release reconciliation our GAAP in results of earnings investor non-GAAP to website. our results reported Zach President will up Kathryn followed JohnBull, open by questions. which next CFO, speak it we will for and after CEO, Parker Zach. I the turn would now to With that, like over call to Zach. go Please ahead,

Zach Parker

good Thanks, been very and end company last XXXX. operating have months morning performance quarter continued shareholders. XX for conference time call. in Chris for year stage fourth our to setting active the and and solid to The Welcome friends the fiscal our

the black truly employees the has we worst XXXX by our a challenges world, X,XXX doing throughout pandemic a would various to to series have our had DLH and a braving government like services our braving the times courageous – provide employees and and praise unrest moment daily ignited basis, the onset we First, personnel productive underserved, one to essential and guidelines infinitesimal with coronavirus, I to services the high mission century. adherence social home thank committed communities civil who cases deliver in DLH Throughout we of course, all And customers in throughout take assigned DLH which on a the quality and throughout you. well over become of as focused the our however, as complete to in stay CDC that an pandemic, country. profile not adhering employees XXX difficult the know highly at veterans. has but tumultuous and our challenges entering and global for our to directive, the of to these been military which a to the have several our the so facilities to offices, as year number been nation our saw of killings major to COVID high resulting

done this to telework of You be the job for tremendous days adjusting where beat. have a of the can We a decisions. workplace our and skipping can forward look realize to driver the and challenges the your choice taxing many become without quarantines

to Operating and are We will X The financial per million represents and year. we and all. indebted $XX.X by despite million results fiscal And rose Kathryn in total. posted share million solid year. an acquisitions, for This as more reflecting year-over-year, for the our on core of me than XXXX year programs begin fiscal million quarter, year. level versus global increase posted $XX.X $XX.X you coming and recent new some contract while moment providing let Slide for Starting across the a of of in the $XXX.X high the our performance with for in XX% to EBITDA review pandemic. of the earnings a outlook revenue company last million awards $X.XX color was overview services $XX.X the income

Medical in cash acquisition realigned September credentials million and we generated Development with the IBA. Agency Research strong debt of Associates Command to to $XX IT during Health the million Burton of down and the completed bringing XX acquisition Defense on also health from to We for the and Irving solutions million prior year, use the $XX which operations $XX.X pay We DLH. of

So can assure same to flow use free plan recipe we ‘XX Kathryn company you of forward, as go cash going over rest starting $XX will de-lever again once indebtedness, million that FY while utilizing the with the momentarily. to

shown to Slide quarter. company, the Technology the wins growth a System million to recompete Start for backlog stronger during COVID-XX, a our As program opportunities of foundation drive new contract greater contributed a on record the $XXX X, of within of related of and serve than by award $XXX before. for health to position Head strong efficiencies bolstered innovations provides we nearly Office the markets ever long-term million

forward. programs, benefited I feel the real have proud CMOP from VA on solicitation, work. heritage business of while to in leading our logistics with contention our the cancellation the for outlook the associated We our Accordingly, going recent small remaining performance set determinations medical and of company’s aside actions about

our earlier DLH neutral changed addressed spinning as I areas. we within well the positive. not we year, is that addressed has key strongly to election mentioned in I Fact it recent the positioned As it, believe that. And

new that one to state of the on election programs aisle. also and not would both resulting markets items in new our administration, will military we that veterans note healthcare specific access higher from the on also Turning be for I opportunities We for several but widespread enjoy only Slide our public, healthcare positive and the key under general and sides results. to health-related spending add the community. spending believe X, normally that support related we show greater priority given priorities

going Care take maybe the next agencies adjusted a Congress and during pandemic the line preparation enhanced Act X that that forward assuming concurs. The years and the the serve better serve. bottom strength We Affordable the the we expect and underscoring also or stability again, that both role larger that operate will likely levels anticipate we years, of we that current several next is at will markets over spending the

stability expire will a BCA as during enter caps the the we FY that FY ‘XX. good expect ‘XX. resolution we potential of provides But course, Of continuing

to to want X, an the to pandemic provide and I impact update on its Turning DLH. Slide

awards services As numerous challenges our the Though government COVID-XX. due key are we healthcare working the our with agencies optimistic in respond to efficacy the safety outbreaks this remain headwinds will feverishly sure towards won opportunities and faced continue this to to the mission-critical government across the the and federal related listeners market to during of alongside their the the in addressing in of assist for therapeutics, combating to threat have provide ‘XX continuing year there opportunities said past, investigational forefront about the agency, at facing like. working in I are am always, the mitigation. We and the pandemic. policies, of regarding DLH and closely leaders FY trials as aware We realm be that dynamics conduct some our in new of contracting thought clients cautiously when well for portfolio COVID-XX. regarding approaches to ongoing we

With about support these is vaccines in and of fluid it still of industry the very involving in positive news programs. partnership poised and offset the government infections a DLH a by situation to continue increases variety well worldwide, remains

with business potential delays, near-term opportunities We areas have pipeline far are associated program and than of headwinds such travel certain overall, the opportunities growth an across offsetting platform. the restrictions entire And cancellations. by more created active

addressing rate ‘XX forward task yet, eliminate role do a we we FY orders critical work moving These and can’t organic the playing are anticipated priorities. higher growth increase While further expect in while vital this that nation elaborate than and DLH in level could or just many is we past health additional related to very year. can’t times near-term a

current visions to to Turning would before strategic Kathryn. Slide our over X, I to it handing review like

We this the capabilities acquisitions, that company transition focus way IBA since we into areas with have our of has across three come completed came unique a years continued market on and board to direction. a including strong, and bolster SX, on long our ago to – our areas wanted have the broad spanning DLH I Danya, celebrate recent strategic and all fact XX in differentiated market

analytics, rapidly community expand continue will we key also learning The incentive in presence be also transformation our technologies. and developing the to systems. cyber position are intelligence to solution and cloud We market digital secure machine by data in our artificial as

our aligned is It growth’s enterprise to we growing even lifecycle into well for next here at time and organically of diversify technology and as DLH, Rather, as sake. acquisitions and strategically modernization. won’t the at market but of an capabilities that grow to an can forward continue exciting to the the development leading base. full the customers continue serve are We we be be to greater just new look through pursuits will throughout stage our health-related business looking

our for and We increase the of of returns will improve Americans ultimately lives shareholders. millions the

the down to Of our development appropriately course, expense, will the in the reduce debt de-lever sheet investing continue flow pay and balance utilize interest and opportunities cash to operating technology enhancements. while to business we

next in leader healthcare federal during agencies the which into on upon will in further focused related decade, a are we thus we enabled for accomplished key the DLH technology what based have in transforming far solutions cloud government. We build

like investments accomplishments for and our I during upbeat Financial economic Kathryn the to future about Kathryn? XXXX and over in our opportunities the Given would our in to the Chief coming pandemic global tomorrow. downturn, Officer, XXXX, are this turn call JohnBull. we

Kathryn JohnBull

and Zach everyone. you, good Thank morning

pleased the to end on strong year We a are note.

prior organically non-labor of changing for September contracts business versus the Turning order $XX.X pandemic. We and variance grow XXXX to ended million to $XX.X a due we new the This programs in timing. anticipate the reflects revenue posted our year’s from and COVID-XX cost of reduction fourth to to monitoring revenue in fiscal quarter. Slide XXXX compliance ongoing deferrals X, the X due revenue year-over-year and conditions largely months task in million XX,

approximately million year expense in of earnings $X.XX. last for $X.XX year-over-year, declined million year. the operations IBA. reduced year, and the the of million and previously on net X, $X.X million have $X.X period the share million lower would diluted XXXX fourth versus revenue current for to leverage Slide to G&A $X.X due expense XXXX. quarter million outstanding Adjusted from notwithstanding expense, million a XXXX of share for acquisition per a $X.X income tax last period $X.X quarter $X.X was operating to income of $X.X or to million, reported million Interest amortization. $X.X share expense $X.X for acquisition last most the been for acquisition debt Turning provision of improved XXXX operating mentioned. and delays rates We and This versus income costs improved net would versus income prior per or company interest and fourth lower in both adjusting of The million recorded fiscal $X.X depreciation been $X.XX have reflects

million $X.X in Slide million XX, with year and months to for for X the cost EBITDA prior Turning line $X.X the was XXXX adjusted was period. September acquisition ended

As the our EDITDA last net statement of to XX acquisition XX.X% this backlog and sales, adjusted XXXX. growth versus are a quarter income EBITDA back earnings fiscal of the and to in at GAAP rose percent since our Reconciliations adjusted X.X% this shows of of presentation. Slide year. EBITDA

in pleased Start reflects and XXXX speaks Our extensions well we CMOS our Head but XX% growth acquisitions, backlog mentioned and other fueled fiscal grew business. are Zach also backlog not awards. recent Organic this the only recompete, base as earlier, over that was by over

past generated our closing DLH recent debt end fiscal of indicated, improved our reduced at ratio versus and and EBITDA debt XX months. that performance with we the snapshot during diverse more million year, is $XX portfolio debt acquisition and acquisition under levels $XX by acquisition debt, as in our the June This $XX.X our prior our last leverage credit similar of our a the than we operating new means position gives to stronger year of and remaining $XX of September upcoming calculated XX approximately the substantially XXXX. a in ratio last for Slide lower now of X.Xx after EBITDA on agreement revenue the much on million and of the visibility bank Zach higher IBA. in fiscal senior services and leverage As XX. our XXXX debt during have of balance closing net debt cash million a million IBA balanced resulted Even the programs operating periods. fiscal reflecting

of million would down our Zach I we levels – will the mentioned, of end expect million pay operating $XX now With This over of levels $XX concludes and As to debt fiscal statements. operator like to discussion cash continue using XXXX. our turn for the of debt at financial questions. call the to my to practice that,

Operator

Capital. NOBLE first ahead. [Operator with Gomes question from Joe Instructions] Please Our comes go

Joe Gomes

morning. Good

Zach Parker

Joe. Good are How morning, you?

Joe Gomes

also. safe staying is there everyone hope I here. well Doing

First the full was on able delays some for revenues what wondering the the to was the the top in the occurred of you pass-through quarter? quarter question, may year, fourth I quantify if line impact for or the might be that and for

Zach Parker

impact – of Impact I am sorry, revenues? Joe which

Joe Gomes

absence top line and delays of revenues the the Of in the for that quarter year? the that the pass-through and impact quarter. full What fourth some of occurred was the

Zach Parker

let it continued impact in me indicating is current know, of into begin as say QX. currently as quarter we And our will I Joe, it just it book it had did well. fourth the into business address Yes. by as has has as into our also some quarter as well you

around Kathryn, some Joe? So can you for give

Kathryn JohnBull

that. exactly Yes,

$X million running are million, at $X We that to Joe.

Joe Gomes

$X to million? About $X million

Kathryn JohnBull

$X to million. Yes, $X million

Joe Gomes

of we restrictions normalized some some very helpful. so state of restrictions these can Hopefully, a to than lift That’s get [indiscernible]? are Okay. are to rather sooner later we back of these able

Zach Parker

you and fingers expect QX some and forecasting the keeping with so won’t we probably and spikes be following holiday, seeing same we at will of as present that. that for do are see the that of and last crossed of Well, know, greater of regaining hopefully year our the that models the there the start see we we QX will are well December, end this much to rebound activities it’s week after potentially next most Thanksgiving as really

Joe Gomes

VA in same about you expect services growth forward we the anticipate at rates Okay. of the break of part a it. growth looking down out? type year-over-year I quick really services nice that human And of if looking on and if K But in health I can at growth, in XX%. kind Can human as VA, and And the of growth rebound at guys health was or the at type took logistics VA you you just are a here, you had was really revenue look And expect nice do year-over-year side? the business? look the

Zach Parker

Yes, yes, Joe.

think the you two. have at or model continue least that accurately for I quarter described expect I another to

we will look see held public far VA build vaccines throughout of support the clinics be of needs, and sciences and once think to and in invest come as are tackle will potentially down to the the out distributions the mail therapeutics all continuing online. large even the large communal to COVID-XX life therapeutics. country hospitals versions we their expanding at sample our I veterans the areas potential dependent Similarly, towards team double to of continue on additional expanded arena, base prescription be of and order and thus that we course more our health for satisfying a and of of upon network really veterans spikes

And so grow. we to see part hope that

around nature of how seemed flat our business, I the think restrictions in still market our and just brunt again it book it business. relatively in to of the HHS the because be the the business carry will aspect related of

Joe Gomes

Okay.

Kathryn JohnBull

in to is solutions. human and services And clarify flat that, the that

Zach Parker

Correct.

Joe Gomes

right. Right,

operating seen or And a the more little a couple we call, Zach quarter on mentioned of under hopefully here of least negative current it are in at but any resolution operating the continuing for under bit, the a resolution? positive have continuing Ks, Okay. you impact you

Zach Parker

risk tremendous our is of that Yes, the kind state into I that state do. hate going course closure, federal affairs. There could of friend of of caretaker of associated a CR really describe risk as sort the tremendous as to government is the much with

other sides the really of the So support see government two the both sides we excited President of the to two are and CR.

and quarter some engaged some on are and with continuation the XX that to December have some associated us that even that first the give optimistic, reason some we that believe great a mitigate in and are of of certainly folks the XX there this FY potentially, of risks part we potential form ‘XX. are we the of may stimulus with hill course, the Of things expiring

not That’s first casualties stay of the have that is will really we has really, new the our slowing the some It restricted to from is effect work. and CR are So of of and of the of an get usually standpoint GovCon a types of types new acquisition the CR budget us, and lack new important had down a of the of the of these our that ability businesses, to new folks retention one from peers industry. issuing kinds in only that awards the but there, of been friend our extensions in tuned but contracts.

our continue to of well at So as in we as just of of recent benefactors the look But that right. extensions we they our have slip some or and got are we two well. work to in those the one as crosshairs peak

Joe Gomes

that one to back and Okay. might receivable, a that’s Accounts more will reducing insight be you trying quarter, in quarter looks that. able more and a from queue. to up the been sequentially something Kathryn, went into know to in like to on hop I And just for situation? receivable third talk get me have working we then the bit little so I fourth accounts it it the little

Kathryn JohnBull

Yes.

So as is to growth attributable acquisition. some that, factors. you there pointed to some of translate course, so of One out, the two was, sequential

about the receivable, our accounts we of effect of fourth number quarter acquired $X.X So the includes million.

as just receivable. bit getting little But caused a a had and than switch that part opportunity have for operating accounts we in imply recompete Additionally, that a day is flow. to some XX, sales derive all an as less we you us cash additional that still in outstanding of proper it dispersing Head context, but ability a transitioned the process Start of of in office the in so

that in And happens. so we go know and will where

Joe Gomes

hopefully get in And year the and better a I thanks look back current Great insight. line. year. forward to Great, for will

Kathryn JohnBull

Joe. support, your for Thanks

Operator

with from Gomes Capital. comes [Operator Please ahead. Joe next Our question Instructions] go NOBLE again

Joe Gomes

nobody ask is if couple going a will Well, any else questions, I to more. ask

Kathryn JohnBull

on count can you. We

Joe Gomes

how So you for going? Irving that platform? could on business What talk know guys do just new was integration see but Burton days, a I its the if little bit you opportunities about early there

Zach Parker

Sure.

our Joe, excited man across new in the today, DLH be – very the – transition really additions my a we has Mary been are IBA of efforts to family about excited and the has We to must form the additions tremendously team. tremendously to because you the straight be leader proven company. are integral the are excited good we

We organization solutions our under and of operating unit really for. expansion integral the been IBA an that it the services folks is That Fisher. Helene Helene background have haven’t component army know, type to many of and of potential for that, the really help background health IT of you the mission said has publicly. And course, infuse has at army poised

telepharm, focused only of they talent, that and really now again, the team, We good us kind but think tremendous are a has tremendous the three really expertise like critical well Mary just customer in customers, and I the some on years. really are and but the our I do or not company to strategic great R&D add to opportunity with there have of been current about And four – And the just credentials, speak couple base last we go-to-market components, what customer telehealth, the our forward over assets excited opportunity to-date. position and the really, cores our an real of we expand to AI that build brings to it’s areas platform. that telemed be marketplace is tremendous, platform, would going strategy. with our work, to key looking continue they our to had ML

complete really, year. slated at first and are the component it. major Kathryn fully to issues her have the of ERP about regard really no all the with we by to team So just excited Well, integration.

in So far we thus issues. now the testing no and are unexpected phase

we So, come and we along are real excited think well. about it it’s

Joe Gomes

trial as I that on of news. could And type about still a product Great you that like making a see phase? one mean, Infinibyte kind that going? little of just on you today where more it more sales Cloud, more the or Are we talk bit is if

Zach Parker

Yes.

Joe Gomes

mean, it there is sounds here. like huge I potential

more of get idea when of might seeing we start to trying potential an realized? Just that

Zach Parker

people really Be are exciting here put this I start one. is Joe, pretty to careful, versus thinking going that an soon these up questions you to

large and As commitment you dub [ph] platforms. environments, scale And our now are clear that analytics to know, Cloud down entry data nation’s is time there. invest the Infinibyte we to our on is really secure secure,

it of offer As approvals can FedRAMP think are you as it client. part are your this especially opportunities yes, And number providing have some been future. know, already the appropriate secured in marketplace year. for customers we we To implement for we we earlier the there starting question, provider in just of upcoming the it, process that another a answer of we second to actually

that other not VA some received have including also have target We and agencies, that commitment firms the a support have HHS. requests for do the our to capability

drivers health potential. years, the IT, also tool XX the they a So be XX solutions months. realm we seat critical we are table it’s to in agencies is get secure incentivize cyber are number in and our the that years. for excited IT And next that wide a major have there. for the to at And ID/IQs for There X coming up about few of will government next for or major X health

coming increase investing continue approaches to are and win those developing investments over today we We will solutions the our there in and probability months.

the players while there in that data over near-term and think some that be XX want and substantial is the going arena the investments we analytics now to and opportunities secure a, certainly the going cyber there. be some community months there to health next substantial So, are right we is on huge

So going. we are about where excited it’s

they been really us the again team We and to be [indiscernible] an to helping wide have have super tool really, enterprise feel a and capability. Shea great Alan Alan and Jeff under

a – great has it platform. sets think really type for are secure asset. some of to customer as really, IBA really for areas looking We that us bring opportunity with enterprise-wide take that also we some it’s And areas think

Joe Gomes

and for back Kathryn thanks again insight you answering that my for and questions. you thank Great,

quarter be will am talking again, next in sure. I We

Zach Parker

bet, Joe. You

Kathryn JohnBull

We support, Joe. appreciate your

Zach Parker

you, Matt. to Back

Operator

questions are there no the queue. At time, this further in

Mr. closing I��ll So for it turn back to any remarks. Parker

Zach Parker

Well, holiday we to want to have Thank ensuring that time your just We days. that everyone modify through and and forward very, be we that are we difficult season. very the get may on to times this But again, and call a to really the plans. you. to careful tremendous pandemic wish it’s you these brighter committed realize everyone look

We participation, will first be on then months related conference next Jeanine tomorrow panel. got participating further we for communicating the over have will with be and COVID-XX Christian coming the and Conference investor panel in healthcare the Baird

of we calendar report So, added next Q&A are looking I give some quarter. offerings And together may executive Meeting our should to some that annual around Shareholders team Kathryn session. precede of Annual put color the then the all in that the and summary and

tuned. look you blessed stay and have on everyone because we So that, a are to for we to color, ask which looking to DLH out about with keep want day that Please real up soon. we today. additional forward excited for is Bye going catching With now.

Operator

The you Thank today’s conference now for attending presentation. has concluded.

You may disconnect. now

DLH (DLHC) 7 Dec 202020 Q4 Earnings call transcript