DLHC - Earnings call transcript Q1 2022

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Operator

Good morning and welcome to The DLH Holdings Fiscal 2022 First Quarter Earnings 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.

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

Zach Parker

XXXX, fiscal conference Thank everyone. Happy to first Year. and year you, good morning, New our Welcome and quarter Chris, call

workforce remained start great our to we assistance in the saw with committed growth first related for focused FEMA a $XXX.X work, by want of fiscal customers. excluding missions pandemic-related of at two recent programs an you despite our keeping income to margin, Beginning XXXX quarter, will of and sales, in resolution of I'll us Alaska revenue continuing a would be Slide first strong which we in ago pandemic. operating of is give including short-term million agree, hope of our the year-over-year predicted and to million, the posted credit results team discussing FEMA, level our DLH. in results $XX.X [Indiscernible] X, company. a on equates demand which we As revenue QX. tremendous off contracts to X% to of challenges $XX.X despite Contracts. I None million leadership Washington. overview impact our rose We lower X.X% the strong of the for provide with would years providing Even great outstanding Alaska, high represented the the of as ongoing have that

or and $X.XX this of the work value technology reflecting staff. our of share highly presentation. without per $X.XX the in back offerings of were reconciliation earnings First-quarter is numbers A FEMA the credentialed the

million. loan December with paid million out this additional backlog also term the closed a and $X.X our balance We an debt $XXX.X further down sheet quarter, delivering of

of give markets, our Turning capabilities. and Slide X, advanced I'd an like update applications to to

continues that our assistance strong same and and we we and to experience the time, board Telehealth we've right services built respond data the years cyber-security, increase come. arenas due to health all nation. in robust innovative up have with can transformation are DLH the markets government possess a to analytics in across medical an investment. is adjacent In stepping place leverage in will serve IT and healthcare Demand continue believes These is and -- customer solutions and credentialed providing assess our the subject of to the define its drive across breadth matter highly current with solutions decade infrastructure and we emphasis terms management include expected solutions, on forward. company experts. scientific development, going We the a technology that DLH digital benefit to data research that demand Systems. the a to the transformation. existing number quarters And And high focus a offerings. enhanced next position And growing closing, Pharmaceutical digital federal and areas, from offerings the and of software in and public of large in of in advanced expertise, to next diagnostics, total, future and expand an effectively we emerging modernization, military federal continuous cloud-based capabilities the And provider the our advanced and scale relationships capabilities, in At across analytics capabilities with people, bear. including have bring for challenges focus. services innovative and and in are established technology level and proper to to the growth of health for we

positioned exciting partnerships to with come year an close the successful is DLH in and balance a key strong two, array with well a of technology While highly have agencies, applications. sheet, business to a FEMA quarter will long-standing

growth of to With can Financial continue mindful expansion we future, budgetary solid way the going to over looking need growth I'd call that are our our and and resolved top-line we accelerate in federal that, Officer, now our like are that acquisition Although forward. Kathryn. customer another Johnbull. well on Chief opportunities near uncertainties the organic turn to the further possible Kathryn at be to year

Kathryn Johnbull

Zach, great start pleased a report to and good to fiscal everyone. We're morning, such XXXX.

reflects XXst, business. X% impact XXXX months approximately of Zach $XX.X versus the in we with parts The during quarter. year's in million FEMA to If December awarded other our a approximately $XX.X Slide Alaska been none posted pandemic Alaska investors the is the contracts have the for ended revenue of let The Turning X, the we across will such know. to contracts as region, QX of additional prior of revenue million discussed, revenue see $XXX.X additional increase on and revenue based revenue of needs our million tied the growth $XX along thereafter. three first that we million fulfilled the majority in

to the of first was recorded expense $X.X of in last versus year X, debt outstanding. million for fiscal quarters X.X% $X.X Slide of $X.X Operating first in from business. million respectively. XXXX million quarter first fiscal to the million $XX.X business, per Alaska million million reported $X.X the additional the XXXX, XXXX year. share was income versus a at income $X.XX year, cost-reimbursable programs reflecting X.X% quarter fiscal $X.X But improved than net per first or in $X.X again prior versus FEMA We quarter, same operations for the generally lower-margin Turning last XXXX stronger the reflecting $X.X XXXX, including returns a from short-term current the time million share approximately $X.XX the fiscal results DLH remaining larger the Interest of in from impact the diluted contracts. materials yield million in margins tax which of with contribution and work. or during fiscal and provision period, year reflecting lower expense and time,

is of Excluding in all A for the of first the $X.X $X.XX quarter reconciliation the per included earnings Alaska share. million results these business, non-GAAP fiscal of XXXX or presentation. back this were diluted

XXXX fiscal Slide $X.X versus X. quarter million to $XX.X to I Turning EBITDA above. the of discussed the period was the prior-year first in for reasons due million

fiscal or X.X% this year. related to But EBITDA -- to of excluding first revenue in $X.X A Slide back at the in contract EBITDA as of of and XX.X% debt percent portfolio a Alaska for presentation. As first reconciliation was the versus of our earnings our sales, is of an a statement end updated last percent at quarter our of the net this our $X.X gives revenue to X approximately GAAP ongoing business, quarter. the income provided position rose XXXX X.X% million EBITDA snapshot million quarter.

the but continue outstanding my XXst, the fiscal all concludes XXXX, $XX.X mandatory XXXX. through debt million to will strengthen $XX.X March principal discussion of of the to feasible debt questions. satisfied turn With have Operator loan we over that, on we reduce payments our statements. XXst, credit now call forward. to going of end our now We facilities had when at approximately versus As to balance like million This financial facility of I would December under for the the sheet

Operator

will We assemble Instructions]. will At [Operator our roster. pause this now we begin to question-and-answer the time, momentarily session.

with Alliance Kinstlinger Our comes go first Partners. today Brian ahead. from question Global Please

Brian Kinstlinger

FEMA ago? And quarter contracts year great. right that's drove figure Did Hey, get of So that margin I a hear this first that the EBITDA your XX% was hear Thanks. maybe just just go its if here. Great people you versus excluding mix, paying X% describe I but that can the also factors right, right. that through market? you're I did some to more in your dynamics if

Kathryn Johnbull

Yes.

the a of But suggested. that operating whilst as and morning couple portion of work. base healthier the where months, percent three Alaska. got of right, for timing months of a comes revenue had proportion And expenses well. The for a mix XX.X% Brian. largely hear our we was joining year a three from leverage the service revenue little the as and was thanks us. we've the by things fixed bit grew improved last year from this the good contract way, you X.X% fee delivered on as And from indirect a materials EBITDA You last as did contracts stronger secondarily, of the cost-reimbursable excluding for where revenue mix improvement

performance And those EBITDA quarter. so for that strong the the together two of yielded

Brian Kinstlinger

I'm subsiding and the are getting or talk pipeline a then COVID-related? similar any research there And long-term contracts be are existing other your you're you have of or contracts as Okay. seems Of pipeline? Omicron slowly doing contracts impacts. can bit non-including is that just there to or wondering, short where Are course, CDC you a Alaska better? long-term little the those about

Zach Parker

answer question, A great your is yes participation. to And thank for The both. Brian. again, you

and what short-term seeing in COVID as to think difficult a longer-term to associated continues on to both. as potential out. Omicron time, bit contracts in morph, those same acquisition sort biggest a we be new of we all it's additional believe government at a out. as at secede are are variants discussions to it There germane of certainly get while imagine, more bit. get with folks that therapeutics been the the is of to in We starting the might is is look for Gulf starts impact us a And research challenge The might as environment, able government very little Con CR well. projects contracts There's has being about you

more buys, will novel the contracts the we're that large but Sometimes customers OTAs, solicitations. into hopeful we're like things we're hearing for using interest discussions and certainly that turn

Brian Kinstlinger

have two I more. Great.

is it talent, to challenge fill -- secondarily, we The have caused has at recruiting you to first and -- revenue, contracts. it that lost in one is your or all challenge has -- fully able meaning relates And as challenges all. that any staff subsided been

Zach Parker

We the rest has. the have seen nation erosion as some of

base, for As the labor to of And on a experiencing field. our We're only real of also placed labor absences. for the contracts; has not seeing we're you resignation COVID-induced that across know, some time smaller some the from of challenge time that. some great but a market

manage we're continuing that. to So

stepped As That attracting management retention of capital new we know, involves both up talent. you our human and in business. investment have the within

QX what We have a thus the far nation. seeing across through seen of we're small impact

Brian Kinstlinger

Great.

DLH are Lastly, hope of you talk terms just a M&A look, And pipeline? see? in about you what will your bring target management's what priorities if can as you

Zach Parker

off strategic that of I pipeline that, our Kathryn having And our at the acquisitions year has in Kathryn. month opportunities represents plan, conclusion we we M&A fiscal particularly arena. And regard. our are as opening this or and the expanding Strategically, you Yeah, -- so, really over the we're kick that be Kathryn recent reading, first that looking have and about some the in the the let satisfied activity plan. really have strategic of specifically. more last me felt in led can just phase aperture our may talk

Kathryn Johnbull

around focus, closed strategy, continue to we our technology out expect think quite our focused effect our flip There healthy. going and bit strategy, our the a and coverage we're phase we beneficial acquisition got principally enhancing some priorities. good our the of on to pipeline, a as We well. has of we've of indicated, our is II first be capabilities from from which to activity of And presence The in we've was perspective quite in markets. market improvement target those markets. of having there Phase acquisition relevant as -- our But perspective,

as are some reach eye our an adjacent emphasis keeping Although, any be technologies is relevant that our that strategy our and Zach in ones. there definite and primary to benefit from capabilities an future continue indicated, potential those acquisition current extending on. markets we perspective really customers But adding

lens digital transformation, are currently we are and that which AIML, going primary markets really the through competitive of that evaluate near are applicable So adjacent. simulation; set we That's modeling play acquisition things across relevant, to things the those really the in those be opportunities. that

Brian Kinstlinger

quarter. Nice guys. Great, thanks so much,

Kathryn Johnbull

Brian. you Thank joining, for

Operator

Noble Capital. go ahead. instructions] question with comes Please [Operator next Gomes, Joe from Our

Joe Gomes

quarter. a Thanks. Good Congratulations morning. on great

Zach Parker

Joe, you, my to you morning and friend. good Thank

Kathryn Johnbull

Great Hey, Joe. you. from to hear

Joe Gomes

a we a could a that here. on on just take step if to second want back drill second for just just So down FEMA, for

two You $XX valued so million. a million the contracts, extension, did $XXX that's they got you were to initial the then $XXX up million

from quarter, is something in $XX to $XX not it did that that's it. it call Is in that the and other XXish there? you're the there second quarter happened saying What leaves headline so thinking then just million? or the else You million you're $XX and that being filled the million let's

Kathryn Johnbull

fast-moving and environment. point function we COVID think estimate know, a really I an in the Yeah, is time at values awarded all as a as

our terms funded, have our and in can than the trend we have other in the And the or deliver event things on We we current have providing, an with you more visibility only today. $XX so from visibility million, expect or on could and earmarked needs that line happen. the of that the share the program other the additional support customer, they or we're though see variants they it based perspective, additional they from that as to surges,

Joe Gomes

Right.

Kathryn Johnbull

That update. varies. provide to a further We'll have

Zach Parker

way As has federal program the for and actually this is this through states is probably the worth money is noting upon also, working that that been contingent. effort it's -- Joe, obligated drawing FEMA,

are and States working So as actually predictions, of, well. the as off indicated, contingencies Kathryn

particularly that Alaska, And so accelerating. operate and new tuned But hope this that we're with we indication directions remains there's the Right seeing it stay all could like of that Kathryn now, either indicated. be in case. cessation and certainly Omicron the in will we'll

Joe Gomes

little Okay, From for which wonder extended from to a of you think will -- hoping -- most also -- year. see to continues risk what to be this this two were out does that the right? then on great. our your be next might would just than programs go bit just have, it you to the And is What guys are at you continuing on, resolution your consist extended, as an pushed two at contracts, longer here. seems perspective comment that And or be those ones dragging awarded, to another are I big your you looking on continuing a bridges? contracts potential operating impact that. that I if the VA speak little continued resolution on under if maybe currently that normal

Zach Parker

to CR. With the Sure. regard

budget are serve have this their that First neutral is that accordingly. the because Both programs of are Largely stability type to and of company all, aisle have standpoint mission from strong, very, to we positive. slightly the with strong had on XX civilian and the of committed rated sides budgets agencies place a we the seeing we the and very last good very that, the house. the side our the business budget. we've against DHA And community community. been of with DOD The largely we're Having deal has to military, frustration spending CRs. of XX supporting underserved in veterans, at said pretty our

While agencies challenges in executing had the years, spend. full the the have civilian budgetary recent getting in and

accelerates CR do that and the impact, business. than community of to some period, COVID COVID during had the more the on So, that of we've course, acquisition seen because steady-state

us. business see opportunities right slip to two major the to for programs continued have new We three or

is be near-term. out it new. the come those You when perceived a some scope could be And requests where we there's can that for that a hopeful proposals as usually find in and only of in couple work case evolving again, there will the

year vibes of language, We But good those good to things should something slipping cases our body are on a that see for for and from couple year couple fiscal getting third customers, of our programs. we're right. we the this a major

Of referred is year fifth course, Bridge's. they're their VA, to so with contracts our CMOP but on the source as you

expired one XXXX. November in first of Our

optimistic that and day the our -- we're vigorous. these that and on remain to we services continue with veterans. we the address going We've have our And get ensure are appropriate we're And so every just to to week products CR. missions that to that business every clients as

optimistic And that fiscal very remain start with the this right DBA we some programs to have So to larger year. we're we'll come that slipped our we'll see of hopeful that support. continue back

Joe Gomes

Okay. type Thank $XX.XX those a are revenues in noticed the what million. contracts maybe were X% to Health then give of you Zach. year-over-year revenue for up almost and that more What us And detail revenue you XX% color increase? were on Human that I could Services little drove are your X color, driving increase. that Alaska the

Kathryn Johnbull

I'd headstart it of but the return hesitate our bit call to normal, word maybe activities air around as I the well starting CDC last contracts laid Yes, normal, quotes DHAP a it had expansion to, in program. to to is. put in return the as as that XXXX, we August, program some as we general, fiscal of announced In well on awards like current

as as more operating some well had XXXX. that fiscal in So that awards programs to starting we current of expanding as normal return are on patterns, both the to those as well things late the

Joe Gomes

anything past, that lot Great. how more share out for InfiniByte? hitting the that just is on detail something that Maybe Are can a It's Okay. give you little and you've internal And rolling that had new about us you you that? you product. a plans with in us talked here? on

Zach Parker

Yeah, no, earlier. have for part toolkit us very may I exciting as of shared appreciate that. It's a still we our

just relatively program. for added really focus to recently good on we that Just market resources the to

as of The On Hosting the to the some of the government Cloud Data things incorporated -- there's such slippage some be Analytics contracts. contracts etc. cyber from side, in the and requirements. looking that but security contracts, we're been -- Secure is and Based the were some CMMC to passively redefining try those government a InfiniByte wait And to spin the not for that. in meantime, for take

to started pipeline have build pretty we there. So a good

customers, current an some been to certified Our add that at some hosting also that our time, Kathryn, getting of audit to really want soon that? course, very And quite we've looking benefits. anything are completing system should we're for fully get you externally. tremendous

Kathryn Johnbull

think I going final being right. on fully that's phase GSA. from the exactly that in of certified to federally We're through being market

Joe Gomes

the for a been I But environment? always Anything time for for little comfortable your Are running where this extension the come great. are this one one know you last if of we They're And where through all there's type and Thank may. be some standing update. you. use you. Thanks on today to there you bug year. me -- would of -- in. years they payments on seeing this accounts some on I are. to accounts just had receivable, the were -- trying magic Great. receivable of Kathryn, more is you eventually a with last the in Okay. behind, two the

Kathryn Johnbull

pattern we years. seen continue that we've the the Sure, of couple in Okay. last

calendar and New which quarter, the the than holidays. even think around do with this their people way holidays, they earlier Year exited I bit end first right the fell, happens for our year and little particularly a First, normally to year-end Christmas

like QX, congestions had in as very our looks that February that's and cleared but based So collection. trend, we've healthy a in on already a this usual a we per the and to per did peak and morning have good trend, clearing, January it start as

with generation very fiscal only for year from be to our trend variable our fully that full-year much with is our 'XX. able expect consumed that line NOLs. The we normal those I shield deliver. strong We during earnings in generally moved to our this us we've cash So being

fiscal to got taxes. So but be paying old XX, we in pay will money you be that saying tax making to

nonetheless among So still paying very but population we our cash return to net the flow now, strong. be are we free tax expect

Zach Parker

Kind of taxes. strange be excited having to about pay to

Joe Gomes

quarter. Great Kathryn, Zach, thank again. you very much

Looking forward plays of rest the Thank out. to how you. the year seeing

Zach Parker

you, Joe. Thank

Kathryn Johnbull

Thanks us. for joining

Operator

Hernandez next Instructions] question go Hernandez Please [Operator Victor today Capital. from The with ahead. comes

Victor Hernandez

great Congratulations on had, simple Thank question. think, quarter. I a a you. I

what for the give line wanted would line the of impact On I released, year. to can you revenue. what a that statement if you cash the deferred details you full that flows of see be represents on had any and

Kathryn Johnbull

for you Welcome. Victor. Thank Sure. joining,

Zach Parker

Welcome, Victor.

Kathryn Johnbull

FEMA And reflects collected Alaska use much for that this right talked these state deferred from cash so and revenue so performance of fact contracts advance the of of year, a last we've very the call. really on deferred the fiscal large the for of about revenue that end the we before payment

QX's so reflect just the payment had that to for. that advance fact the the we perform got we And results obligations

consume deliver the by that executes QX. we in so in the fully quarter, payment program the that we'll And time and advance against

Victor Hernandez

you. Thank Excellent.

Zach Parker

your. bet You

Kathryn Johnbull

joining. Thanks for

Operator

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

So Mr. closing over for to now I Parker the would like conference remarks. any to turn

Zach Parker

I'd for will my express both live you. be are and and thank you you out the appreciation checking who to those via Well, for that of those like also offline. it engaged of website

We're looking our are allows forward is XXth. We that to the for the which in York, New with the be scheduled shareholders, you us. additional of provided scheduled information at to pandemic meeting sharing March annual

day. business. only today. not in strategy and you around a Directors the you color us Thank that joining additional but you session give for We blessed will with our we'll to of at all Board all forward with Have look meeting the

Operator

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

has attending conference presentation. now now may today's Thank disconnect. concluded. for The You you

disconnect. may You now

DLH (DLHC) 1 Feb 222022 Q1 Earnings call transcript