DLHC - Earnings call 2 2023 | DLH Holdings Corp.

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Operator

Good morning, and welcome to the DLH Holdings Corp's Fiscal 2023 Second Quarter Earnings Conference Call. [Operator Instructions] This is call is now being recorded.

I would now like to turn the conference 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 non-GAAP other President refer reconciliation the contained Exchange Parker, and non-GAAP CEO, the release up results the our A our included referencing Please statements. open undertake risk we'll the in forward-looking today's website. reported XX-K in and will any not On for is company's factors JohnBull, be next; Form both measures. on call, any GAAP by and of questions. it annual DLH's update will GAAP and in duty on to Commission. Securities filings CFO, results and financial Kathryn report We followed after do earnings which in to speak Zach investor presentation our with we our

Zach. over like to that, the With go ahead, I'd to turn Zach. now call Please

Zachary C. Parker

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

track business. to make the strong a for fiscal on we and headwinds year remaining in continue We the also good progress quarter, since are despite macroeconomic last

and remains programs. differentiated gratitude our of to value debt a outstanding missions by workforce have the delivering committed We performance our our clients' for that on

With of $XXX of revenue GRSI the overview million, a under second reached our highlights. quarter quarter operations X, on financial first reflecting our Beginning I'll acquisition with Slide provide quarter's belt, high-level post-closing. first the essentially full recent our

build the quarters the business the to this consistent upon last FEMA growth we company have going we short-term that first is, transformation base had, has Of particularly our with have last during The of in substantially IT, milestone areas that This due to forward. mark reflects digital over expanded large years. ongoing contracts year's profile, the year. the course, surpassed XXX strategy side. of expect health But COVID-related a year of X our course, we technology-enabled solutions before articulated we million including that and

Our very with for recent to shaping leveraging development program future these of couple competencies. organic quarters growth, have active been regard and proposal

Our reported while $X.X of operating income rose million, to million. EBITDA $X.X

that after differentiated paid margins in our additional We EBITDA million Our reflect through highly roughly ended $XXX expanding debt, business the improving but of delever to a million. of continue as services. a consistent $X end the quarter detail few with strategy quarter, an Kathryn the the company's will down to will we the history. our with moments. as operating review use possible, balance And in cash sheet in greater quickly flow

EPS backlog was quarter reported nearly diluted $X.XX $XXX end Our was at per share and million. our

developments, X. Turning to to briefly recent wanted awards. Slide an of X including some important overview provide contract I

National the our our cancer to a Cancer Institute a to solutions contract DLH research the National business will solutions informatics This opportunity program for to support national continue for business a the Center advanced our to -- vehicle first great expand coveted ceded provide causes Cancer game National base with base expertise to its technology. scientific treatments. technical as The expand of continue biomedical and Institute. with and imperative apply information and build on and the It's to highly allow IT to

will we information of and and artificial business, advanced expand task cybersecurity, systems capacity GRSI. our to and opportunities $XX not-too-distant the Naval this purchase competing a value intelligence the built for roughly of compete logistics Information solutions of we to advanced contract we Such ceiling architecture strategy, long-term of aggregate future in quarter, underscore of significant agreement valued And billion. and is leveraging estimated turnkey award our growth on the provide the planning pipeline mortar including Also, our to innovative to won strength million, wins the The have end multivendor business. value acquisition at Through orders National multiple after see to Information Warfare we see and offerings management through modernization. our that hope future. this $X.X opportunity continue assist in the the blanket to

continue our company's our former the Judy March. governance strengthen at Bjornaas, Board recently Annual we adding and Directors Meeting to Board in of of for Financial addition, to In Chief ManTech Directors Officer

our experience Given made her already the and the in onboard. a our organization, success. within delighted expertise as forward built to coming bolstered through compete our market on positive her to role is services look government pretty we're industry, unmatched provide. continued to we our most to key of and and favorably She couple capabilities, impact services demand a that recent provider, DLH we has record nearly underscored and acquisitions track again by in strong have our advanced technology for a

in staff for government major 'XX highly priorities with Our credential fiscal and innovative line offerings and beyond. are the

of In for where fact, an line levy evolution, historic the credentials. XXXX and transformation, DLH's beginning research we're technology wheelhouse chapter are combining exciting our our digital preliminary top well all we're the in bond calls new performance. White support future mission long-standing at investments machine research, scientific budget and in and leadership We artificial in believe with fiscal House's for which intelligence,

cloud IT, data agencies government secure We across of and and a of engineering enterprise existing have cyber our integration, across host position programs. building of analytics our strengthened these and many systems innovation, areas, record track computing,

our paving government's the differentiated which on delivering trajectory. to the the expectations our organic day workforce again, and clients' strong customer Once professional greater in between highly way that are doing company's provide. growth this Now and relationships than capabilities accelerating to can more we every we our and ever, success who the owe for overlap dedicated challenge of needs rises so,

I'd to like call the over Officer, Financial to Kathryn that, Kathryn? turn JohnBull. our Chief With

Kathryn M. Johnbull

for you, latest Zach, to full Thank XXXX, good quarter acquisition, includes We're GRSI. second our fiscal results which our everyone. of a and morning, pleased period report

a we reminder, December X, on transaction this XXXX. closed As

Turning to to about I the results begin be by adjusted wanted speaking Slide today. showing I'll X.

this nature, in discussed in specific past, information A associated one-off reconciliation year. revenue, included to Alaska, our and of COVID-related press numbers, the the as XXXX operations well for filings. is cash results While in operating require short-term were we've full from as back for the and the presented last including which adjusted services income measures adjusted show presentation release GAAP no the contracts operating FEMA in fiscal this adjustments, XXXX remaining covering as in exclude

of met year timing. Slide the $XX.X in X Zach GRSI revenue to from impact of million revenue during We to organic just approximately $XXX the legacy contract offset -- added quarter. reflecting and our acquisition quarter, GRSI anticipate rose shows are quarterly our have fiscal slight over across of the happy details in revenue mentioned. previously growth revenue programs the the graphic million as million million a decline essentially our form. for last XXXX business threshold $XX $XX largely Adjusted in as XX%

of million $X.X an operations million from increase XX%. the income the versus was quarter year prior in $X Adjusted for period,

expense fiscal the and of acquisition. margin X.X% depreciation of was $X.X reported XXXX percent XXXX, year and the in higher recorded million transaction. GRSI amortization a in GRSI and versus a an $X.X of Interest the million fiscal for noncash as prior expense debt XXXX of of DLH higher company As XXXX revenue, reflecting $X.X X.X% million the fiscal operating fiscal of due provision quarter quarter in a 'XX. tax result during in second respectively, $X.X second outstanding expense reflecting fiscal period, versus to the the million,

versus X second XXXX, expect in Adjusted better adjusted highly company to EBITDA the through the per $X.X million year the in $X.X months versus million $XX.X prior approximately versus diluted period, The adjusted the of income million year-to-date versus earn quarter more capabilities net year million basis an on in last year period share the returns. $X.X million X.X% for $X.XX operating share or ended XX.X% which reported March margins Improving cash XX, differentiated we EBITDA XX%. contribution in prior in million period. year. increase reflect $X.XX of was $X.X of We of $X.X a or generated prior the an

use X regarding to our generation Slide cash down debt the plan substantial in sheet, company's pay general. an the strengthen reducing interest balance provides to flow update and expense

$XX approximately the did meet While have in paydown the timing quarter, we opportunity extinguish on and grant date our of this of And soon debt puts reduce this track targets call, us debt during the squarely fiscal debt year. so as This to did outstanding. on debt $XXX.X thereafter. certain receivables million by of to to quarterly not us million

and our million concludes the be $XXX company the that of reputation record outstanding. This had we million generation at of GRSI As debt sheet, statements. will $XXX $XXX financial and balance almost expected anticipate year-end. not track that to change we delevering when strong a the the to able reduction, to reminder, built this into for continue close million is my cash and rapidly being turn debt debt a transaction, year. between fiscal a We've discussion

that, questions. to over our like for the call operator would I With open to turn to

Operator

Capital. from with Our will NOBLE question Instructions] [Operator come first Joe Gomes

Joseph Gomes

maybe a you little top light to just drill could want little the more down I probably, versus our bit So start to off And was a that. expectations. with line

I the $X in million the mentioned think, quarter. was You business legacy about down,

right you get gets to business line. have didn't just or in come might So little better thought that moved to Just some handle things come in? trying a on that top the

Zachary C. Parker

contract, to you Yes. both question, to the new on contract opportunities on spot it growth business hit have as And as existing right. continued Great well actually Joe. slip our

expected that, government slip those that of through no more just things seems process. our acquisition recall, course, to and to internal contract, the be which see a task right. we of slipping get may right, you for the impact But some little on-contract delays. attributed some order so required continue to largely to we We've long-term government existing seen than to of to the our of a growth, IDIQ As programs

awards contract And think The our we starting pretty that will year, new actual same proposals same more is the of who cycle into to or contract have now to acquisitions we're QX for just, for bidding a just activity. to of latter what we even part QX, slipping our still through last of be running load again, some pipeline, turn that heavy business prospects. had those the awards

Joseph Gomes

that Okay. year-over-year. increase I a revenues did in VA net pharmacy notice

by drove side? onetime increased increase on revenue items pharmacy million. Was in them? with that the just $X behind there that business think was I Or there more about that they doing some anything that,

Zachary C. Parker

effect some with Yes. the about our frankly, of deal learned COVID. lot more opposed amount and of Joe, demands coming pharmacy put by a [indiscernible] up a fair drive readiness to of out of VA and their in metros traffic Quite to come regulations COVID, allowing as will pick the that into we've challenges local that veterans to hospitals. via to at mail-order more the

-- is that It's to think it we environment probably that regulatory stable left off to But level we're post change for have So continue we trend of now, forward. has venture. probably go which the increased. was as kind COVID going -- you seen remain

Joseph Gomes

looking thinking update out with VA can second, us contracts? those contracts potentially for the rebid the there a the with and And on you Okay. VA provide an to

Zachary C. Parker

SDVOSB did you And require really government strategy. that of nothing's submitted are -- in to service-disabled We the report. veteran proposals, as have small last changed businesses. continuing we our participate portion know, acquisition the Yes, the of since submission we

evaluate currently calendar. quarter all spoke strategy remain we'll also subject interest during those what no that, and We change. remain the and of determine best to they fourth to first is should But year, next acquisition we as that run provide awards calendar available since be if and services proposals our contract, quarter it's of ready that we'll -- through which not able of out extensions before, then current last to continue to we in in the government the that those went

Joseph Gomes

a I [indiscernible] for year talk look could this you -- at maybe the quarter little Kathryn, bit margin adjusted X.X%. operating if And Okay. about last

kind GRSI Just in drive of little we wondering bit step and to backward what expected up side quarter. happened took operating was this there. a help margins higher

Kathryn M. Johnbull

revenue which of -- of of noncash on is pressure Yes. A the the D&A, various relative just that is, of have, contribution that about revenue of it's to really a Otherwise, X.X we that. about contributor revenue. key point from puts the just blend the function the course, streams

more contribution had relative quarter. get So wouldn't in we that I so that that acquisition nothing we expected say that the would just the we from mix expect the indicates the to particular

Joseph Gomes

someone of for X one I of a color else questions. around looking might that. Okay. I'll you you ask wondering Fair us you're about talked point was couple ones let detail significant more that of kind Zach, major X give me, pipeline opportunities. little the a or then if some of at and the And out more or and bit enough.

Zachary C. Parker

well. have bids but within some acquisition to the mention to Sure. a there into been NIH having taken that's smaller it due as competition was the number extent, there's one would fair ago mission too moved for a close a so that that has large in pent-up while of the award. lot final did pretty But really or to due bid. that to we And it a continued also we government But I'll customer, a SpX. has businesses often health we us protests course, finalized able had delayed get to a to That that much as sensitive of has on businesses, and major a large very lot CIO to delays to of side. year was amount to open but up opportunities of felt refer a that, be while, contract really acquisition

actually we are we to Beyond with And task IDIQs that, our and were National Institute. We've the starting for announced for bid and And awards break. those, procurements, also the kind Case interest is multiple X in other one health military X announced those expect had X now also agencies, as -- strategic health. that orders we X, this those just of again, or of Omnibus that the medical the of fiscal other end opportunity, another X which year. we X, research before we but or defense

see time perhaps to to has remain be 'XX year for fiscal hopeful the likely was revenue also has at that yet bank, government early been that by start. proposals. -- we're while some this any least given in it release that in be more And probably will that year, already order now revenue one awarded. request task FY The like we'll still do We this

Operator

from [Operator Instructions] NOBLE Our next with Gomes question follow-up will be Capital. a Joe

Joseph Gomes

Yes. more. to No ask them. one I'll else some is ask going

opportunities? you One speak And of key I the wonder was of if items about Zach, acquisition with some GRSI cross-selling those. could the

Zachary C. Parker

really, about. control some agencies, Institute the in major areas some really excited base, is are have future. And of some Health, the business nature that well, that and are currently Those Yes. our disease there Syneron the adjacencies David happen work major there's of programs I'm agencies where most existing but programs we National the targeted including of in the a the

tremendous what that heritage that secure from bolstering the medicine that of as of precision from the like the addition things benefits data been as we extensive have environments well gotten and power, depends in heavily but research very support biomedical talent But our on business GRSI. both combines computing building the really we've

that the really some is we're key we of positioned on state those. our we are cross-selling programs those was The for think focused advancing And These of nation that that heavily majority of the arena. opportunities, business. really HHS really, the future within think, are uniquely

Health technical the not position cross-selling opportunities came think IBA our readiness forward. We would business from supports GRSI engineering that that for us been acquisition that a combinations some position have of way health with differentiating the along in posture the of in the technology with going some the And really Defense not several with -- would and a to capabilities prime Agency. related the opportunities in fleet been we have we in also have largely

continued see our research think heavy as side as what the for innovation you'll military I of for and Hill in metros public expansion the that So regard of support with a well bond future. technology dependence in a for house the

Joseph Gomes

million moment million. And out then for to they about a And it initial did of Great. the $XX.X GRS in Okay. that quarter. comes revenue [indiscernible] your to chance on that million back we the to on rate? implies that basis $XXX maybe $XXX at back you to to to get about get run a $XXX million that increase were expect closer Should see GRSI. talking quarterly went

Kathryn M. Johnbull

Yes. growth, low we've discussed, as a digits. GSRI we strong record expectation set Definitely, -- we've double track has of the that of and

national think we that talked volume they So to security the of customers, believe channel growth. Zach just in that public do those that provides upward we the level the with are presence key and moving health and of to support activity continue about of NIWC

Joseph Gomes

million. with you increase increase will do interest out Again, Are for there XX% million comfortable think Again, year? these you of with bit was about debt. Great. you number? the $XX projected, GRSI above a higher a I Or some little think, maybe $X.X expense this that that number rates still

Kathryn M. Johnbull

pressure that But Yes. that's of result laid interest We've continuing certainly swap some January. I think put continuing the the be rate that contract floating to mentioned, there's going with a our still, we increase of portion yesterday. in do we be to hedged obviously to a major including debt, impact in on to going we contract quarter, particular, some as that -- way were rates out. grow, do place to we -- it in and payments have well as the that as in disappointed we had in subject from as

report this where we that obviously, to up but we call, with XX. by March happy congestion happy ended We're clear on we're

in on expense, interest course, too, expense. finer And might multipronged, noncash that, we a be want in a there's rates a bit a nonetheless, as of suggest, you to the sounder to think, result amortization of is financing interest the put terms cash going an component higher interest point deferred of $XX that -- costs noncash EBITDA But it's pressure than is on component of million. to the of So is I from going component. perspective,

Zachary C. Parker

to Anthony, back over you.

Operator

no are there back Parker for like any further closing remarks. it to I'd questions. turn appears It Mr. to over

Zachary C. Parker

right. continued All again. DLH. interest us Well, joining your for everyone, you, in and Thanks, thank

about the As and very excited as forward. Kathryn strategy new organic proposition conveyed to We very very, and to for feel our we continue this remain go building earlier. positioned growth both execute chapter well value we

we Bye So you with next all, look and forward quarter. you to thank for now. chatting

Operator

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

You may disconnect. now

DLH (DLHC) 4 May 232023 Q2 Earnings call transcript