- Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the DLH Holdings Fiscal 2022 Fourth Quarter Earnings Conference 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 call the With I’d to Zach. go Please Zach. ahead,

Zach Parker

will to quarter I Welcome these year top future. line DLH the I the am good and came us slide must report morning, missions with and the results. say focused leadership that quarter results year earnings. Beginning and the year-end year, of provide remained Chris, call. achieve I have overview clients' three, allow us employees, record quarter first the well positioned high-level end and very to that incredibly and results. of partners starting we that committed posted our our with this XXXX with a to the to morning, pleased the you, Earlier conference fiscal fourth our Thank everyone. for of fiscal to

growth million, overall year to XX.X by and diverse programs for and we over our QX, reflecting grew revenue of range X% increased services. During demand year organic

climbed operating of line lie standout completed the was we revenue in ahead. I performance, in million, The more are terms most FEMA a for discuss in related contracts in the and fiscal moment. and the EPS XXX.X or quarter for top million a fourth $X.XX for reported numerous earlier one of for fiscal year will fourth certainly X.X% sales. still Alaska For the X.X share a We million which that excited reflecting million and by COVID-XX year, the per XXXX. was to posted EBITDA for X% whole, full income fiscal outlook yet opportunities ‘XX XX.X while XX.X of QX of the quarter X.X the of or full-year, million sales, year. $X.XX as we

XX debt the paid the we of X.X ending addition, down year quarter, during million In with million outstanding.

fiscal seven Our re-competes backlog award multiple XXX.X strategic during reflecting XXXX year. three IDIQ entering the was wins and million, new

we our contracts to benefited of FEMA our contribution EBITDA fiscal Slide X, margins the record of now years, for DLH performance themselves. proud that to the services track and operating high results have have enjoy. from to I Turning XX XXXX past technology Alaska, speak our workforce, in while wanted the demand turnkey the our level of dedicated that growth over solutions and advanced talented, leveraging show consistency we which such a I driven in of so am

veterans support serve of and bode longstanding solid, In X. transformation on focusing continue the of overview conditions, to to Slide for that health, digital to our company an look Washington on programs of note we forward. and addition, continues Defense, very provides public reassuring we services current bright. It's the future the It which to micro aisle. the believe Department both agencies Look going that in sides enjoy well

activities shift any do have from FY’XX. expect federal to year, outlook an related continuing changes been a government requirements. for expanded for as reporting be extended, is There while not regulatory anticipate government the Ukraine the resolution, as during So our still major obvious we we under to COVID operating well the to which

within cost-effective the and remain programs been cybersecurity, overall the of looking enhance the we solutions confident Defense. Department health-related policy research strategically technology -- and demand on development computing government science, to our innovation, core with within for clients and particularly with upgrades aligned, and a nation. includes, which deployment markets a the commitment of to regard example, throughout federal However, and very, modernization this information continues agile are in our for critical have Federal focus them. type agencies exactly very of that services and based for in digital for and incorporating we're support demand missions This to strong. be cloud transformation to There

with the vehicles. of while increased focus and on award additional deal chain multiple remained contract There use government this and has challenges market constraints stable. our world services an fact, supply has including outside adjustments pressures, had to competition inflationary for IDIQ had to been quite higher greater the leading year, In equitable

through new minor managing well, and contracts effectively are in these winning We tandem. headwinds

In the markets to which I'd tight we talent ahead proud. to a talk the like top-notch and company. and more place research attract I’m in lie to continue about continue, especially bit addition, engineering DLH. while the opportunities labor for have Of this,

we to budget has confident programs. strong XXXX historically that proven be While feel to the be to federal fact we support bipartisan yet due as government's mentioned, has the work our fiscal finalized,

Affairs, align expected solutions Health and with funding the Services. spending Veteran of business Human for priorities in Washington well Defense, increased Department and Our with

very DA, $XXX a of our ceiling to for with the the agency. but accelerate during past backlog a orders and year National health the the expect the large attractive billion a in under ceiling included with one as program seat Institute the Defense DLH $XXX of competitor to we award its task quarters provide ceiling of selected during growth and ‘XX. some with X Health, us a paths for Importantly, in across XX bidding opportunities come. future These awards meaningful give domains participants was $XX in million multiple million multiple are number, to programs, Department at not future with Such table X which -- be for year, FY us with with IDIQ

affordable So in very same offer M&A pipeline the we place, growth. expansion we aligned that new and At about further growth improve a a continued of even time, beyond. strategically could and remain market pathways and transactions solid ‘XXs budget have optimistic and profitable capability FY for position our without

the the to over Officer, down call for robust Chief that, JohnBull. With success. free remains balance enjoy providing And to pay generation strong and cash to Kathryn yes, needed Our our flow. ability to our sheet excellent Financial company's we financial to debt, the flexibility continue while due cash turn Kathryn? I'd like future

Kathryn JohnBull

of Zach, fiscal and you, pleased quarter Thank results of great another We're to good morning, a and XXXX. report everyone. solid end

year-over-year Slide from quarter. year’s services to increased revenue increase the the The we of X% into FEMA existing fiscal Turning September across year-over-year. higher of XX, million excluding X% million demand XX.X months of X, for XX.X contracts QX for in fourth three X.X many XXXX million prior posted derived reflects ended revenue versus fiscal programs, our XXXX,

high fiscal growth about backlog, are optimistic bidding and into XXXX we in activity Given our beyond. heading solid organic current levels

X.X and XXXX versus X. from of a operations Interest period prior fiscal revenue, share XXXX. versus revenue margins in of X.X for company of an quarter X quarters million Slide XXXX resulted as versus stronger the reported a or with fourth period, from was Income provision a year fiscal higher XXXX for the prior in fourth million quarter share during a portion year X.X X% to recorded DLH million in the million the per percent year. diluted respectively. million operating expense X.X X.X of fiscal versus increase income and XXXX the XXXX in net million reflecting fiscal X.X was the in tax debt X.X We or Moving and X.X in of of $X.XX our in The last from quarter outstanding. approximately million contracts expense deriving fiscal the lower in million margins. fourth margin reported $X.XX of

X.X% fourth period. the fiscal percent income X.X% for of a year the prior net As for of XXXX revenue, quarter versus was

X to reconciliation X.X% of Slide for net A the end or months at our X.X% XXXX period, EBITDA X.X XX. year approximately presentation. Turning September in at prior gives million three respectively. statement earnings back revenue year. XX of EBITDA and debt million ended XX, the versus the was the our to income Slide this in position GAAP of of is provided an of updated snapshot the

million fiscal of facilities under at the remains As one outstanding of of our leverage had XXXX September XX.X versus approximately ratio $XX XX, end our we under million debt well and time. credit

my discussion open to any that, the to during to for call future and the continue balance substantial statements. use turn transactions financial debt paydown cash the to opportunistic now position a This like sheet generation to I XXXX. operator concludes fiscal our strong over would questions. We for delever leading us in With of our

Operator

Instructions] from Capital. [Operator first go Joe Today's question Gomes with comes ahead. Please Noble

Joe Gomes

Good morning, year. the Nice fiscal and Kathryn. end to Zach

to M&A And you capability a opportunities. potential things you of one was and wanted having backlog expansion. I know, the the you follow you So obviously Zach, talked know, up, talked potential about, nice of about

what little kind a into you be through to on, you would think looking give know, at, some you wondered could Just of color M&A? more capabilities if us expand you

Zach Parker

across really the the a I Yes, lot, Kathryn on been of integration as talked around at well-rounded IBA year platform focus full we've established you we the Once team. three much areas. market completed having least a and pretty we've know, while this road the

delivering so as focus areas transformation development customers systems and of scientific aspects research, and other been has research for our emphasis and greater going engineering as cyber our digital the forward work. in security propositions clients value And in on current our supporting well to really

IT and opportunities really Defense So digital emphasize capabilities. of the our clients in cybersecurity that find component both to largely continue transformation health they'll department and other good

Joe Gomes

operating And on about resolution. a under talked kind you government's continuing the of obviously follow-up,

Or has know, can biggest extended else that biggest company? think the is kind the maybe think refresh in near happened of that see of looking if any, kind had our You the this, it past at impact, here you And will there as this the memories kind right you the something you now? challenge on the has company's that when challenge of in do you be what facing term? is just

Zach Parker

contracted out. our think, and across resolution the that the generally will work do industry be continuing brand-new amount of programs restricts new I Well,

opportunities or of organic or things probably a we'll north compete. the incumbent that growth recurring with Fortunately, us of for which parties new business multiple are for current XX% work, there's for XX%

the supported that for still think are while some technology, new with do there's government, that that community well looking slow feel programs recurring will that, are than that work IDIQ VA hopeful might other little by federal I there. But we're the continue. Hill across really our funding, come pace So such as the the forward. the we that, the acquisition comfortable acquisition a those agencies will new across bit of pretty that

Operator

next comes Kinstlinger question from today The Global Brian Alliance Partners. with

Brian Kinstlinger

had, give to accelerate the sustain I maybe I'm XX over as and can to regarding growth. question your months detail months XX pipeline first ability more some the the you The gauge trying versus plan I'm next hoping submissions or organic trailing

Zach Parker

to Brian, was they going great to successful for in is that, for expressed few see Agency as to agencies, these that indication featured FY more these to are even secure. IDIQ we've QX, our in we years a been couple opportunities start see expectation sward that we that they orders. a that task competed waiting were It discussion, Health awards multiple will -- having were of ‘XX, has we on and Every Defense the importantly, of the across compete. did now. we

is quite one, which new And with talked see more national reduced the well which see particular of the opportunities. now a those to in Outside couple revenue strategic Health, We've than task Cancer innovations, award before other a the the deliver Institute a we continue still on. as slip year. those single those Both of pipeline strong great awards is start continued sites of contracts, to bit a largely VAX, business then two against that might around about to The opportunity. national our to we've for CIO-SPX which dozen multiple Institute, do as as immediate new pretty we've more important government to has had protests and alluded technology a talked we see we've we that IDIQs us, a major this years, bit have expect win of orders.

in going success a continue during hopeful position slip certainly fiscal ‘XX. us the FY right. awards So some create it which year, into We're good opportunities, late seeing into forward to will hopefully to in this that on the a pretty to fiscal launch or

Brian Kinstlinger

you number, Can Kathryn, awaiting similar, bid say of submissions either kind talk up, excluding includes remarks. you about is? maybe share value adjudication compares particular how the can awaiting, sorry, that if high And follow it mentioned, you my anything award? ago, a can't number of that then And that Great. what your that FEMA year bids high to in of you prepared FEMA,

Kathryn JohnBull

course. of Sure,

reflect We continue end the at access that helps of and believe we're increase broader So that that to the level process to the allows to fiscal a about full Chief sets opportunities of to we does Growth to completed and forward momentum set the corporate engage of we've three market momentum the ‘XX. all us provide that trends of of opportunities on submitting. as or our really getting the Officer adding talked

continue to growing of on perspective, So to optimistic reason we the be favorably a on compete ability our from opportunities. believe there's set our -- to about

Brian Kinstlinger

sorry. last just follow up, And one

If business, business market opportunity, add a need Officer, to have there you Growth as Chief planned at business folks? hires Is the the a coming more for you guys mentioned capture is the team? to there looked development

Zach Parker

we able Yes, business have question. it acquired new integrated those, And capabilities were, view a had have very a strategically vision as really that to the us of be our newly we companies. we when team, to one Great made well new both heritage important an was because existing as didn't we that for first right? and DLH, across our as development move

of extremely the was look in we to CGL enterprise, Health bid ability both to Defense the Agency. the quite that really So win frankly, the and us domains allowed our across that for instrumental

to operations. growth in organization proposal -- growth this the year, committed in that includes business we year in have capture During past to our that and development

priority into continuing a year is that continue this top be good because for very, now going very a to us. We expansion organic have to budget there growth

for our see amount investment in of yes, a growth. fair organic So you'll continued expansion

Operator

question ahead. go [Operator Debra Instructions] Our next comes Fiakas with Research. from Please Crystal Equity

Debra Fiakas

a my questions. like different thank to point. return previously And take perhaps was you. taking at from that again it look you asked pipeline vantage little Thank to the for I a maybe would question and

this that. growth do they same You morning, if provide had FEMA wonder, organic a of been want good for the call And to and contract last lower? growth excluding bidding the the programs you The rates rate, very that growth? pace do year. talking that it you've opportunities this I about Higher,

Kathryn JohnBull

have crowd for channel DLH. joining us, Thanks parties of opportunities do you pipeline interest the for help. Debra. to It's are to Those join good They a growth. for organic

additive accelerator to be pipeline provide they're to the to that, of presently. would and that additional these our us grow our support we it first course, on because opportunities presence of actively significant in be organic hand have existing day them. contracts. course, to and easiest addition look for of as of for base for interact of opportunities every customers path that service But really in and organic a our contracts growth is we growth to we with work set Of channel And and

you that mostly as said, flow we we've that IDIQ very rate. sums earlier, particularly competitive as industry we're, awards recently industry enjoying, you expansion pipeline underneath are really while and on start the know, IDIQs. mentioned It growth so, accelerate leveraging in from going current Zach awards. task is that vehicles But expectation additional organic pursuit incremental of the are the meaningful meaningfully, orders as our are an that those our to secured to to these is deriving contracts those And

Debra Fiakas

concerned to you. to that's of to does portion less have started the And then Is to to perhaps ask a you something there me vantage of this the backlog, not in follow to to you. is again pace from this that to in sales I line, the magnitude for wait program? to Thank could top the and funded. be just point about but a or funding get it more speak order pretty be, seems regard significant Okay. if question, on the and Thank up

Kathryn JohnBull

function is behaviors them but of the the that's most annually. we And about. required really some disclosure, fund we're have and efficient effective. of that a makes, particular administratively choose it It of It's not course is to Yes. something concerned of that that a customers

on of fund intervals. them to choose quarterly Some

depending they the funded. that it before immediately so out But right done how is on I cycle, funding all, in into represents programs end need their whether to is affect programs. order where services And they going the The in and get are generally to, of support or quarter me. expectation of what's inclination that's funding unfunded the moves they of thereafter, to and speaking, say, in backlog, execute sorry, of customer represents, the should is excuse the the much

highly dollars move whatever bucket, they bucket administrative And that funded choose cycle to from so probable the adopt. will on the it's based to unfunded

Zach Parker

full ago, And making contract on piece published agencies sure that sure few Debra, shareholders peer just really way, companies because make the at a as we look given there are we years But the well the wanted the as conservative peer really, in Kathryn we performance that ceiling. to will we years, indicated, that were as conservative several funded we were most that fashion. intentionally

Operator

comes question with Capital. from Joe The next Gomes Noble

Joe Gomes

quick here. Catherine. Maybe more towards Couple follow-ups directed

wondering in goes looking elevated level year a the back what it behind substantial periods? was more percentage sequentially of revenue you And both quarter was the or a normalized G&A jump in to pretty forward, going is and over something two, there expenses. at that. So, year you're out One that think

Kathryn JohnBull

probably for impacting the stock expense What most top compensation year. of is list A non-cash just the that couple of factors component. it

having officer significant pretty enough was that named at to charge when to brought our, really stock compensation on is time executive that stock cause a related a a having a non-cash book so to high charge of our to that price and that. related an function award And a additional

you'll this this filed. and Additionally, -- in it's is as XX-K see our

time, history the full purposes. become subject company's to the We and have for for SOS first review

always have self-certified requirements our company's internal as the success our equity become to we've of of in external, value, and a an controls. internal we review we company. But because So controls of external the the -- public increase subject

requirement, they the did an course, will And that but XXXX. have fiscal And cycle the And earlier through about that imagine fourth point cycle pipeline substantial submissions that the some won't do about for the in in and And some requirement accomplish ended we were they that through. as as took dare growth, in you ongoing thirdly, Brian earlier. of time. pursuit of it these first first that Zach so were year as quarter be peaking resources asked incremental ongoing you that then organic to see to say investments get so resources, can we of it's in talked

Joe Gomes

first And years bleeding been maybe of some or more, quarter the couple getting then paid. let's call delay, the going so, one second last in receivable it into even there's into accounts

wondering where any there end? how the today? are Is to receivable the accounts receivable are, Just of here the you everything is or concern in accounts kind there up you date comfortable you're on near-term

Kathryn JohnBull

Sure.

not times of billing working year And where moves ability capital we're I I'm to based to think competitive to that's with up and in government XX and very our talked always as up mean year where is going with work it ended see at kind at is from the to about traditional so we continue certainly of I very And ended a to favorable fiscal over. a was receivables. quickly. But gives me still that terms a I’m to bit. as anything flips over paying are where the quarter congestion cash when September. we doesn't we consumed day creep happened converting the a our ‘XX, case indicating numbers a that fiscal cycle. concern. we've growth that's very nature oriented don't in our net And at with ways the for generate year cash still we little mean There's many work more looking sales doesn't exiting daily satisfied about the satisfied of But XX, day to were I on the bit improve normal post flow. attention But a that comfortable trades that, away sales I'm any by September we're a end, notwithstanding as we're that that done,

Operator

closing At further in Mr. this callers turn remarks. back any time, no are the it there I'll to queue. Parker for

Zach Parker

Thank with preparation day. shareholders thank blessed interest like I'd Meeting you, all FY DLH. following support forward MJ. launch you of you Thank We for and you and once Annual as -- all, your have for we to again, at and our And look the up in the address to a continued for ‘XX. of the

Operator

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

You disconnect. may now

DLH (DLHC) 5 Dec 222022 Q4 Earnings call transcript