DLHC - Earnings call 4 2023 | DLH Holdings Corp.

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Operator

Good morning, and welcome to the DLH Holdings Corp. Fiscal 2023 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 Adviser. 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 presentation under and earnings on The website our are the available page. Investor release

like risks that now beyond. risk also outlook to events the forward-looking call statements. various these for with the in could subject uncertainties is update may Slide statement, any report to on forward-looking differ These statements. statements are Please would brief and that actual results to safe to duty filings cause and I in SEC. annual shown materially presentation. the company's We refer factors and forward-looking harbor of company's statements fiscal X XX-K and include other XXXX from which a to the This do Form to the provide not on our any contained undertake relate

call, up call reconciliation and presentation questions. With like in go non-GAAP release referencing we is included in both our On non-GAAP be reported results DLH's and our investor the will our CEO, Zach to of and it GAAP followed will GAAP I'd today's next; CFO, that, ahead, A JohnBull, over the to President after Zach. on we'll to Zach. open earnings speak turn measures. Kathryn now financial which website. by Parker, for Please results

Zachary C. Parker

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

it and corporation. of once have provider excellence have transformative technology into our team performance and our and they company not and research digital our me and XXXX. shined. integration, employees delivered members pleased at and our let again our engineering science services the really very and missions steadfast But way been and of X our all I of am to customers' our the that leading be in the has today. heading year solutions This our a passion, of dedicated In the we development DLH with is to the fiscal thank members minute and support commitment channels, for all take level, for with that our finished all transformation the the that contribution our without every strong would systems position have cybersecurity, year first, a

thank So you.

provide business. Now turning I'll fiscal and to as the growth the was overview impact the acquisition our Fourth organic revenue Slide the for quarter X. financial high-level first highlights well of a million, as our existing XXXX. reflecting of across $XXX.X quarter

$XXX Alaska's $XXX turnkey full revenue FEMA to XXXX, million nearly adjusted with to For excludes fiscal from response million course, the an rose COVID-XX. short-term year, in of support which, contract the

bid that backlog, year. DLH. continues sizable QX for addressable for quarter million for the and million various future $XX.X EBITDA and the $XX.X large task to operating Adjusted contracts, orders several the access on our increased bright for and through we XXXX, adjusted our for while market rose believe the was $XX.X fiscal look to income Given to million million $X.X

over the operations our XX acquisition. 'XX $XXX.X the debt. December with approximate down generated In quarter past is an from after addition, in million and million $XX That we $XXX.X months cash in exited million

company's further coming year discuss we delevering the we to in a to will plan continue flow towards our in Kathryn sheet. As our further generation debt balance moment, using cash reduce as strong work

million. under share the was and and per quarter EPS XXXX was $X.XX of full diluted just backlog the $XXX as $X.XX for September XX, year, Our our adjusted for

forward remain about through the organically. resolution very ahead top an line to continue environment operate path way circumstance. the continuing the works We the -- still accelerate its and government if We to active upbeat works growth even way bid in through its current opportunities

key metrics to market certain On the that to update the the come. that potential have quarters point, Slide conditions impact in X and on an company provides

our structure and the technology-based align business to go-to-market expanded capabilities our strategy. diligently has company worked First, with

each Our address highly clients, going credentialed of that compete our more us positioning staff are to opportunities for dedicated to of most higher-value advanced providing needs forward. the the solutions

the As customers and of and our services continue contractors, to to experience to penetrate our we accelerated utilizing and applications professional to add our expertise, leverage can further agencies business growth. book

networks The federal need property, well role only cloud-based aligns the systems to cybersecurity's computing the to -- secure ongoing feds protect expanding big of the as and Second, our sensitive protecting to personal platforms crucial of and records technology-driven the cybersecurity, government of government solutions. data. Americans. data use intellectual data our given with importance committed as This of sensitive well increases information criticality millions and remains and

mentioned as under I ago, XX the February operate moment certain through government federal continues X. a resolution continuing with agencies Third, and through a to January others funded

While to awarding times, the agencies, across expected impact DLH's contracts, not to book business, is at this of does, with the particularly regard restrict new nor of outlook. certain current hamper some federal and it decision-making near-term materially of

bedrock provide top Our and a wide programs of line for over company's array the the solid services coming months.

Services the we broad which Department support, we continue. of course, they include, core those which of agencies, Defense, anticipate Agency, typically Defense Affairs including receive Health and DHA, the and will In support, Veteran organizations, Health bipartisan Human its addition,

for further language historic House machine in and somewhat intelligence, called growing budget transformation, research, digital investments all the preliminary underlying and and artificial unique line in along expansion capabilities increase White well fiscal very play The for our opportunity top performance. to which its strong XXXX would

other arrangements. multiyear work -- major several from to highly biomedical ceiling on vehicles. -- for and continue through to remain relatively us contract, on contracts that these the those contracts coming and applicable us National our that supporting are recently expanded the that of of lastly, will announced, remain government Institute growing prescreened bid Health, consideration a OASIS of task the out the every IDIQ indication under volume our horizon. include There's And capabilities large very and CIO-SPX CBITS provide and large expertise award orders several research Strategic contract new opportunity to

coming These the as opportunities offer company are that multiple over substantially contracts revenue they awarded. orders work years the can the base high-value task and of award raise IDIQ numerous for

confident win to our growth impact the these for to ability which to task are expect company's on come. orders trajectory in years vehicles, we We

Given our our staff, Kathryn turn now advanced over solutions, to 'XX highly engaged our JohnBull. are I'd for optimistic amazing and we Kathryn? Financial FY that, customer relationships unparalleled call like Officer, of the to Chief expertise very and beyond. With the

Kathryn M. Johnbull

acquisition employee FY We're execution We financial produced benefit income of versus results higher adjusted fiscal XXXX, an high-level the these fourth broad of on believe and of and 'XX, performance. Starting quarter FY million adjusted and The and a GAAP for figures reflecting a million expense $X.X fourth exclude X. 'XX 'XX during and consistently net of to everyone. related 'XX Walking debt Thank of both $X.X as the premises as an for you, fiscal pleased million final quarter overview was tax underutilized million a results interest interest Slide previously Zach, operating operating expertise with due the from increased results provide recorded the estate to quarter fiscal delivery ongoing to to consolidated fiscal charge strong our we real outstanding part last to $X.X adjusted how impairment rates. DLH good and expense of we in facility income, our of capabilities, -- announced the assets morning, fiscal report compared same of $X basis. our EBITDA 'XX QX year. rationalization effort. demonstrate

comparison, both in income. was $X.X million period, the the loss net million a information quarter development and reported $X.XX also we we prior costs the net to income in period, an last prior XX%. this quarter year, included $X.X ended the or share. of million full in related the the organic adjusted or form. release as well million 'XX $XX months revenue $XX.X was associated acquisition-related reconciliation Interest the approximately $X.X 'XX as fourth for growth. exclude shows of EBITDA reported $XXX share. these result, the million this September By filings. Slide from is and XX, a to December diluted results X As acquisition million of from of fourth approximately a increase $X.XX of year in quarter of in million corporate year million back $X.X $X and A XX% details reflecting our in Adjusted rose X graphic expense roughly versus Adjusted presentation operating press per

reflecting a was of a adjusted EBITDA prior in of value versus As period, higher year across capabilities larger XX.X% business. sales, margin base the XX.X% percentage

'XX XX% the due strong particularly expect certain prospectively. margin to quarter of fiscal our EBITDA While expenses, results timing are we remain at approximately fourth our to

adjusted quarters, of for XX%. 'XX million and prior million amortization depreciation $X.X After in $X.X reducing the was adjusted period, expense $X.X approximately from EBITDA million the and for respective increase $X.X an of year million operations quarter versus the by income

an As the million for with margin a basis in higher operating fiscal offsetting X.X% depreciation on noncash and reported 'XX. 'XX a adjusted in of operating 'XX, richer $XX.X fiscal impact expense. The in percent versus versus amortization revenue, generated of mix the X.X% the of from million in adjusted year company business company $XX fiscal full cash fiscal

As come. the allowing Zach to forward, mentioned, in to us going anticipate generation the delever flow continued quarters we cash further company strong

in a year-over-year adjusted overview metrics significant Slide give on we to the Turning an X, of key improvement highlighting EBITDA. basis,

debt balance possible, and interest fees. rose amortization interest clearly and expense debt, rapidly our interest expense While mandatory focused due higher voluntary rates, approximately that delevering of Note elevated is the eliminating expense thus reducing strategy interest both financing is quarterly as exposure. noncash utilizing million $X.X repayments of to considerably arrangement our on as

doors improved the contract increased adjusted like The margin results depreciation of of our operating although new and current agencies the opened that favorable emphasize I'd margins key expense. these programs line and leverage, our acquisitions company, were strengthen substantially, that over reflecting offset the on mix our noncash term. by in long amortization for and presence significantly our profile bottom our performance operating is elevated income impact to

company's our to payments outstanding. the an fixed satisfying $XX.X the voluntary $XXX.X quarters, off and rate. ending We along total, strengthen fiscal eliminated past in mandatory interest with of XX cash paid prepayments sizable $XX.X with Approximately deployment down X XX% December successful sheet so million flow This a since generation year estimate in over QX, Slide making doing ahead. our pay 'XX, and debt for million. initial debt by of illustrates of debt of the debt of our the million means, million balance the of year carries we've million $XX.X $XX.X approximately

are floating interest XX-XX company's fiscal 'XX, between split our make interest between against we risk. debt limiting expense higher rate a and interest interest maintained -- rate payments floating all swaps debt. Notably, So relative the fixed rate

December the X.X%. since effective As a our arrangements, our implementation effective rate acquisition of was swap 'XX approximately result of interest

We continue payments. our plans capital to business to attributes tax actively acquisitions minimize cash compensation simultaneously tax of manage the favorable requirements, cash in and while flow utilizing working investing and the our and our stock

Our future effectively cash to down to strategy interest is manage reduce designed expense obligations. to flow debt pay

million anticipate $XXX Looking million as will of leave that forward, the or strategy 'XX. our debt between as us by end low we fiscal somewhere delevering of $XXX

Turning to company. a XX. stage Slide trajectory for as in new a our poised We're growth and development

innovative health our long-term expanding unique, successful high-quality federal line illustrates to acquisitive execution solutions take on to technology the for remains our and programs, DLH strategies and into the growth organic stand The ready franchise transformation level, margins. focus shareholders. strong continuing Our delivery defense generating while across our markets. a through the cyber our next We volume world-class and of of DLH value of to delivering commitment top provider,

This And for that, turn concludes to questions. operator like now call my with I statements. discussion of the the over financial to our would

Operator

question come Capital [Operator Instructions] first from NOBLE will Gomes And Markets. our of Joe

Joshua Zoepfel

Joshua Zoepfel, This is for Joe. filling up

quarters? environment IDIQs start like the having awards, this just I like, contract. the I are from just presentation, pending. it opportunity in wanted has was the is on sort So at want to priority gotten bidding has to previous you the better off starting new the remain IDIQ just company Obviously, guys looking to what see ask, with of some

Zachary C. Parker

missed. I

You there Justin? that, with what -- environment, up the last part was before the on regard were breaking to

Joshua Zoepfel

I gotten was environment saying, previous has better from the the quarter?

Zachary C. Parker

one years bit. We're to our that opportunities we've that earmarked post-CIO-SPX or over award. X little seeing We've CIO-SPX. the at that's a were last Yes, is biggest signs had -- refer X.X us X for had for that been we one as we looking -- pinning probably

get we off weeks information. last award but is X.X as And the finally so indications may time way some working has get helping, as been that their not term. top the and through they that are We're good of all the an signs the seeing near dead hearing just government in recently protest sooner

early and some will this looking have there So strategically bookings could obviously been several yield still We of fiscal. are be also we opportunities this think have missed well. still ahead, They bode 'XX. in some that part opportunities. But that we could fiscal during

to over yes, going was have bid So government conveying that big we're a like year looking we time unrestricted in quite some a CIO-SPX. prime see. that seat they not one And went an in expecting currently really is This were do the and ago, to ago. award have really

So would again. bid being those have we task orders

tea So quarter looking than are leaves it's this taken last the better a while, but quarter.

Joshua Zoepfel

on a guys contract color nothing optimistic. on Can -- update really would Great. little just you great. but guys update, quarter, changed, were provide Any you I the VA just that any have Yes. last us seems be a little side? know you

Zachary C. Parker

that you about were for talking VA Which contract our -- was contract?

Joshua Zoepfel

The VA side.

Zachary C. Parker

very been there's still. activity little Yes,

be incumbent. to the continue We

are doing while and excited acquisition still around very making work to period, the decisions. to this to be opportunity We continuing they're continue

a estimate we continue continued too that best But this could a Our to workforce getting fiscal, with our subject do really results. doing the effect did acquisition work not material is with the even their to change. very We And side. a they deliver job closely, distracted which decisions. in if see effect material not to is progress we've see be not tremendous

Joshua Zoepfel

of guys positively. then Can last new to going year? that area bidding the non-IDIQ kind quarter trending I the Great. ] backlog, proposal in was the kind if that of you And you see regards [ Last may. into one, mentioned

Zachary C. Parker

full and really in contracts of Yes. -- respond to are X. been to is those agencies leadership hard year being from their -- impact. that We issue -- course, of biggest orders award that leverage on may largely -- relates place Defense starting Health reluctant There work working that have But uncertainty as Cancer they've CR do our the signs there. Agency also to the been some one, because to February the agencies more they on new some We're that the signs to minds, lot our is got certainty moving forward. budget very The wildcard the National that starting with those really the work, multiple current Institute. see got team They've how it than task in agencies about to IDIQ We're to the some of last a decision. non-weapons see them we our put systems. budget the encourage has customers, have to other start

optimistic So come the next and over more we're really our through we'll get share. we'll quarter, see some that base flow

Joshua Zoepfel

on year. quarter Congratulations and the

Zachary C. Parker

Thank you.

Operator

for to would this remarks. I concludes Parker [Operator time, further conference questions no Instructions] Zach Mr. like this question-and-answer turn to at Seeing session. back over our any the closing

Zachary C. Parker

now well organic Thank leg really both performance participation are We're of respect growth you, that positioned our strategy support Andrea, all year and we closed to the your with we and really, thank so to of that excellence. execute DLH. for pleased you and steadfast next as

your for participation. you thank So

Of next will having we be meeting quarter, with course, shareholders. annual calendar our

with forward further and So look dive little all. having we some you to a deeper engagement

thank you. blessed chat soon. now. So we'll and a Bye with day, Have you for

Operator

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

DLH (DLHC) 7 Dec 232023 Q4 Earnings call transcript