DLHC - Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to the DLH Holdings Fiscal 2022 Second Quarter Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like 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 for Kathryn followed JohnBull, it by which next; CFO, speak up we’ll open questions. and after CEO, Parker, like that, to turn now over Parker. call the With I’d to Zach Zach. ahead, Please go

Zach Parker

morning to Thank and everyone. call. our quarter second you, conference good fiscal XXXX Chris, to Welcome

produce We our and of track one for ever. years best results continue strong remain on to

transformation addressing performance our financials, are Before to again our Business nationally depends me recognize delivery dispersed have the workforce once truly people period. this and performance committed team. stellar upon during the let we a of blessed and

aggression our go Russian crisis are the and out the hearts addition, from humanitarian In to who the people suffering Ukrainian resulting.

our second Slide start Now of the remain fiscal with through turning to XXXX. X. pleased I our quarter

our with in quarter. strong significantly with expectations Our to revenue million execution revenue in again, second and higher Once demonstrate short-term FEMA $XXX.X across EBITDA. continue quarter both contracts results this drove year-over-year to QX, and Alaska our were consistent as

solid XX% across saw market FEMA-related Washington. albeit segments excluding rose $XX.X in Revenue year-over-year. demand, remain versus very with all the in grow organically our X However, of work, slowdown a environment as our programs award XXXX even we million sales of

reduced budget are of or formal in quarter level our of of solutions posted operating a played volume impact and per aggression global funding tailwinds military our appropriations, we FY also nation curtailing the visibility our and Ukraine. It funding to military disruption with will of DoD subsequent our last to Russian of clients the provides the strategic the to pivot Russian caused by now Agency that pandemic, our saw unprovoked the their national ‘XX fact is invasion with of actions that recognizes which our posture. sales value-added the highest Alaska the $XX.X short- readiness as both without FEMA critical can organically along The budget the portfolios. The we the levels. our $X.XX align long-term XX% and and enacted priorities period. income with to Since million loan more associated clear quarter in Defense essentially share Health a services. capabilities and services of second years, or the earnings further that the EBITDA million our of agencies. reflecting many value our term recorded to all million advanced and move our $XX.X $X.XX including contracts. while place a was of $XX.X across That’s work, We without speaks to necessary federal This strengthen expect Congress meeting, X.X% We during of grew and our the

continued our the after As end. will review in deleveraging a story quarter Kathryn moment,

positioned earlier, ‘XX as of well remainder period I QX down pace mentioned of the finished with still a and of awards, to the for beyond. from $XXX.X due but the drawdown of Lastly, we course, Alaska FY of the we the and slow million, work, backlog sequentially are

priorities we budget again FY On earlier, Turning into Positively current serve. on a market agencies been decision-making go-forward strategy. mentioned accelerate and should impacting note support adopted. federal now as outlook and ‘XX. formal to that is the head a growth color provide It as has additional fiscal we important continue that our our we budget DLH to to I’d X. Slide high like the business volume to level,

our our revenue strategy the DLH, projects growth, spending people At demand becoming budget our and financial known we’re track its sheet remain to with the consistency, a care-related our remain is bills For say Suffice debt, the current invest within utilizing that pay down services organization appropriation in by for for well presidential in aligned time, balance and and We and strengthening company results. underscored underlying margin same the of health tandem. is with trends. terms to expansion we of request. on cash it the government in that

Our creation workforce value not people to but just and our growth, addressable expand market leverage continue investing capital, for technology end judiciously very clients remains in initiatives At current and for national challenges. support and work while capital the we’re in of strong. the differentiate to day, deploying to our come human the

Our big for that professionals capabilities to analytics, trained be agency, or enable alike, several civilian bring adequately other the assess management table. ensure and can decades-long and data the innovative clients in tomorrow. disease military it engineering by the data the control based simulation, customers our we and uniquely analytics, to Leveraging for problems data and secure systems federal solve to us mining Defenseself transformation, whether strong address challenges complex experience with data, and qualified, sooner telehealth of capabilities differentiating highly digital

our in human our to In of and continue. backbone resources addition, will investment support technology the organization

our to the ISO dedicated employees audit XXXXX:XXXX accreditation following security and world-class and practices. and that health the underlying that standard. IT the credentials examines signifies was the Management security Security awarded risk, our best cover is including System offering certifications It by achieved workforce a -- with Information certifiable XXXXX. cloud, computing We systems controls and information public our information best-in-class as The that validates have conforms extensive the our PaaS, the recognized cloud data of as credentials, commitment skilled This only to the awarded ISO/IEC in recently security operations internationally to supporting management requirements information improving of that company’s well incentive management processes. -- extended was the process our policy, company’s Platform-as-a-Service, an

the to new clients again, federal assured DLH security protocols. of our that be clients how just our utmost and business. example can So is technology another in provides to risk and we’re management leveraging It win support

strategy. And a into highly X Before a moment that let the markets our much briefly several course, turning has turning over review the transformation as X. me core has you over government. organization can years, This, of DLH the to serves take consistent call with see, our Slide diversified changed rapid, to shown as been on of how past Kathryn, was federal

helped to years boat both Those long with as forward. the several employees few driven acquisitions recently ago. out we troops very X has that along the company consistent well end strategic, this hired expansion agencies focused laid way comes as that have have at our broadened were our the we But Our it a as by the the people, capabilities serve. well been of day, our as down strategy the service who

and instrumental excellent FEMA -- in recompetes me say new contract how win again, flawlessly to recompete team’s the over with let in and execute been proud which, and new our illustrates that clearly our has contract months. care Alaska of professionalism of ability am, and and even these player demonstrates enthusiasm Speaking I the to that and to health X in a enterprise serve on This needs our ready is a the an trajectory be space past DLH to of much greater systems nation. able and and GovCon larger is become engineering

We’re business is by continuing on track are talented to made to for possible again ahead. to company our bringing new and leverages that people this the expanded are who winning this post very year, importantly, strong our our positioning days customers successfully in All more and innovative better even solutions capabilities. new be results

budget a half over federal With our authorization enter second fiscal FedRAMP future in as Kathryn? enacted, place JohnBull. demand services, the like we our look to to the Officer, for I’d to of Financial inside really call turn that, the of the Chief forward we XXXX. Kathryn With

Kathryn JohnBull

Thank you, morning, Happy Mayo. and good Cinco De Zach, everyone.

excellent another report We’re happy quarter to of results.

Turning of XX% year’s reflects business. the XXXX, the second revenue the Zach We posted tied prior impact in fiscal growth contracts, versus $XX.X million of across roughly million to to for Alaska the March million ended months as X The $XXX.X XX, quarter. other our a the in of with revenue Slide FEMA along parts revenue X. $XX.X discussed, increase

last positively not to largely the non-Alaska million in this do were versus in X.X% from of the operations $X.X impact X.X% to any to fiscal that by Alaska the impacted expect see year, Income activity. As has aside, reflecting improved been margins short-term fiscal work the work for material human XXXX. development quarter additional FEMA Operating business operations $XX.X by was the million was FEMA there in -- Alaska. incentives, from contract in we contracts while since investments capital again, QX second our fulfilled. XXXX and fiscal an planned related Note end impacted quarter

of XXXX more return fiscal million recorded XXXX, $X.XX year reported quarter Going Interest reflecting in of provision debt fiscal expense and in net versus expense $X.X or million revenue We second for DLH second a million year. forward, our a the to typical quarters last the was or $X.X levels of our quarter prior of income $X.X diluted million per $X.X period, margins with share sustaining and approximately $X.XX second share million lower tax will million the mix. associated $X in $X the and during XXXX respectively. outstanding. program versus

EBITDA of due earnings second second the A business, earlier. these was share. $X.XX million XXXX fiscal diluted non-GAAP the Excluding million, presentation. $X.X back were I is versus million Alaska the XXXX or of discussed the in $XX.X of this results included in the prior period per year to $X.X for the quarter fiscal reconciliation reasons for quarter

EBITDA XX.X% versus rose XX.X% a year. quarter this percent of to As sales, last

to is of GAAP net at QX. planned X of our related provided updated ‘XX of our Excluding quarter statement at earnings the development for Slide second back investments our snapshot and the EBITDA reflecting an the capital quarter. in reconciliation million, debt and Alaska business income this $X.X $X.X human to A presentation. gives million end in the the was current in business, fiscal EBITDA of position

facilities acquisition credit outstanding our at approximately $XX.X debt of end our after our versus As of of XXXX, the quarter Systems the April, extinguishing March $XX.X we at under that we XX, fiscal $XX term Scientific Xx. debt all remaining nudged leverage million debt XX ratio of X-year million off in Furthermore, the paid under and had months. from of Social million & end XXXX, in

appropriate to any As promised, year position the horizon. leaving for with delever with a the the balance point, transaction expect to pay of our of to This under At fiscal the operator and turn we’ll use debt on $XX over call discussion strong would financial down generation we statements. this that, open indebtedness. in of questions. now our million for to to substantial end financial plenty sheet, the cash us my like flexibility concludes I With

Operator

question Capital [Operator Instructions] Gomes Our first comes Joe Markets. Noble from with

Joshua Zoepfel

Joe This is in filling Zoepfel for Gomes. Joshua

So from that of jumped we revenues first $X.X quarter is I know my the going bit. expect second little Start in that program Do forward? Head what kind that? a you little a question the tell the bit me first Can million was, behind quarter

Zach Parker

Josh. question, Yes. Great Yes.

part associated prior of go As was guaranteed largely impacted COVID-XX we to sites in on-site these have impact we’re facilities Big for been investigations. abilities conduct by severely to out these the and our the throughout that with reduction quarters, country. indicating

continue. started cessation into well those we’re going how back optimistic some regard as the And hopeful that that, up place with this those pick innovations signed to put we we to at it time quarter. will and pandemic conduct audits, will to be as of With the we’re and the during that

Joshua Zoepfel

maybe kind And new good Is a kind human guys also of that obviously receiving additional you line employees. building guys sounds workforce the anticipation in like I in work. management is it of attraction for know then that thinking? is I just more investment know had But of that last -- of capital quarter. that discussed about this you of and retention

Zach Parker

Yes.

of workforce, way. a above, challenged time. some Certainly, All had the GovCon has the special challenges We’ve really the community always great of sometimes Josh. resignation the come regard all to in but in we’re with

we’re both, and our And So our is Head Human really very systems, time, capital, to and to Management unit best-of-breed really of with of some cetera, same as talent has us and future. human all ways whether some [CHO] learning leaders that. going management Maliek with continue up build each At worked attraction. for our in closely be talent you it’d retention we indicated, tools management, innovative help help implementing now tools Ferebee, that in the our bringing be new of important is in new forward the some efforts acquisition systems, as team measures to Capital to aspects to to operating very et our address capabilities come move

we’re see some investments we’ll So continue year, of so. starting this do to to those and

earlier, anything go. continue Kathryn, in we’re and add? we’ll to I indicated As people the to business

Kathryn JohnBull

No, have would Obviously, that’s a what my exactly people we’re been observation. business. fundamentally

so even pre for really into talent the foundation build career for their understood of And pipeline the That’s and we trajectory really great company. sustaining to give of our really pre-COVID growth a the resignation, people path of and really outlook that continuing importance visibility here.

scale nothing path a forward. anything reinforce resources come DLH the And really the how continuing can course, they to via and culture develop matrix in weaves resignation play. the across had understand about the that of has really people but we helping together and people already to at continuing done the so give And COVID organization, great then, that acquisitions, them various X up strategy

So the to resources speak really meaningful I importance committing think human capital of those things development. to all

Joshua Zoepfel

I Okay, on guess, contracts what and I guys have or you of timing? can me detail bidding And on and probably, the additional the another then kind just maybe already is, great. those one like for are major wondering of was obviously if -- on bid size contemplating have guys you

Zach Parker

We’ve vary. contracts than recompetes not the is That that range material. few does million, over to Overall, really $X very some quarters $XX over pipeline strategic -- particularly with a period heavy do our recent had the of of Yes, less million. to they’re had us. our very

have able for to even While those on that or had XX the compete have at in next for order contracts orders X task on we’ve type you a are IDIQs, future. the same be to role which of work time, in the years, to

So to good a to we’re make IDIQ going have vehicles to stable those forward. sure of look continue and we going sort those of that type contracts of

$XX that extend that had the we’re to the certainties north to we’re that We to have had some continued that budget new with those hit of also start contracts $XXX and of of million RFPs larger incumbency optimistic see soon. opportunities going procurements. on -- our some have fund customers the to and reluctance now million We’ve those had

that budget we on continuing now several now off move the hopeful we’re forward. that those resolutions of so And transparency move of we’ve for been years the some that will

doing So we for have work those. been preparatory

will of As subsequent proposal the process and course, technical start is the propositions Kathryn value yield the awards. to pinning indicated, the to solutions some capture then, drive our pre-RFP be submitting and that on of to activity

Joshua Zoepfel

those I or update looking may. Great. when to And looking if question, get just I an is last of companies. you’re valuations pipeline at wanted there out how seeing just kind the the just

Zach Parker

side? M&A development corporate the on about talking You’re

Joshua Zoepfel

Yes.

Zach Parker

Kathryn?

Kathryn JohnBull

address Happy that. Sure. to

the forward I that of of of particularly a and just lot into in industry increase rate general space the ultimately general tax opportunities never our in expectation So think factor pulled the it’s M&A XXXX, that materialized. a

what the sort that April life things queue, things of of so first drained to for you And the And with would to will, sense is XXXX. and network in own But that we of that the observing. spring the everybody frame. our if start that indeed, was calendar we quarter time are

the in balance XXXX, are relevant do the be I for we’re there, So going DLH. and that be healthy calendar to for volume there expect definitely the opportunities evaluating to of

to the our that we market those a capabilities. our to to about in to would expand meaningful think continuing And opportunities. of terms capacity in is respond So have lot be encouraged there we’re ability the

Zach Parker

our let and strategy add that And business pretty year them kind the with to close what the actually of is. let Kathryn me that were to our friends calendar beginning of in side I proactive of know meet

ways. the going up component markets do many we We core some over health our of bit, a also will that also type play. a be that And expanded prepared us. last is that strategy before. well opening we of built side to than of then to we into we’re additional couple come differentiating had while and continue the opportunities our years, have have We aperture in larger believe But to opens technology capabilities think we’re

opportunities that So some that the they we think, think will drive, that we strategic got we’ve alignment that pretty our house, the future. so to expanded and good on understand of near side in vision help

Joshua Zoepfel

Congrats on the guys. quarter

Zach Parker

Thank you, Josh.

Kathryn JohnBull

for Thanks joining, Joshua.

Operator

[Operator time, additional are this no queue. At Instructions] callers in there

Mr. closing President to Chief like over Officer, Zach the I’d So and call any back Parker the to Executive for remarks. turn

Zach Parker

Well, to this everyone for concludes us today. This our joining thank afternoon. you presentation

usual, for day, and have and Bye we follow-up any for I the a forward to And rest you Kathryn look As quarter. chatting will discussions. please available with now. you, blessed of remain next for

Operator

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

disconnect. You may now

DLH (DLHC) 8 May 222022 Q2 Earnings call transcript