DLHC - Earnings call 1 2024 | DLH Holdings Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the DLH Holdings Fiscal 2024 First Quarter Earnings Conference Call. [Operator Instructions] Please note today's 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 page. PowerPoint website and earnings available The our on presentation under are Investor the release

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

measures. and we'll next; we On it is will call, DLH's financial speak up and GAAP our reported to included CFO, CEO, today's our in JohnBull, both in results Kathryn presentation and questions. Parker, earnings Zach be GAAP non-GAAP website. investor by which on our release will results non-GAAP Reconciliation followed the after referencing President for of open

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

Zachary C. Parker

everyone. results our with the performance commitment we're solid DLH the first another XXXX value customers' to at missions, workforce, year morning, to for excellence continues combined our for quarter Once Welcome drive talented to and performance and collaboration our Their dedication overriding to dedication, shareholders. to good here innovation again, track of call. and Thank improved thanks DLH. you, organization's of Chris, vital on DLH conference our

we to of are high services. and rise very each continue They rely their of accomplishments. a provider to as very world-class to of set excellence our to people the technology-enabled year emerging solutions we We continue standards challenge, build on proud and

We to of quarter $XX.X overview of Now million I'll results. the $XX.X $X.X reported first provide cash quarter's financial generating of during million turning an revenue period. operating EBITDA X. Slide million, while of the and

We delever quarter as paying Kathryn of only $X total $XXX.X million by ending another off review to debt, will momentarily also of the with debt company continue the million outstanding.

has timing With decisions, opportunities. of the growth, we our delays headwinds to some organic to which see budget federal new endured budget due business continue in CR development

robust confident remain channels, new to in through our award both contracts. we business However, our generate growth and new ability existing

Slide to X. Turning

and our summarize me market. environmental industry influencing few the factors position a currently key Let in

First, as and I current just noted, government through is The slows most the new decision-making on down business contracts continuing funded some with through March X, March still operating departments keep which typically X. a potential running opportunities. both federal recent resolutions government under the resolution, IDIQ

flow this that has a funding the cautiously near-term paves the of 'XX, progress awards. agencies remainder that since ability set a certainty awards. As implementation for recent contract passed which budget way fiscal reminder, have remaining in make a clients new the result our for said, to is and September. both efficient restricting That optimistic their Congress third is major of limited result, stop-gap and as measures could through in our And

additional company. key our platforms, strong customer opening broad channels continue across the for large We of opportunities IDIQ upon as to a multi-award build high-value as base pipeline well

innovative and highly to to platforms of provide capabilities, science credential technical value our customers the ready and meet enhanced Our propositions. evolving and demands technology workforce are

unmatched execution employees saw results and challenging and for program satisfaction. Our industry-leading missions. ability to providing delivering attract problems their customer talent is our in clients' are critical support retain to uninterrupted complex DLH

about say environment. This entirely award to outstanding an assigned alike honor to to current Place an truly DLH based receive employee Work an Great employees hires creates prospective certification, achievement and that customers, partners workforce. new it's their on is a So what

Now X. turning to Slide

broad an that within customers opportunities federal mission-critical markets, business business which corporate Control provided bipartisan This broad of of Department have and spans Health within array the of long-standing Prevention, Center work Agency the Families, deliver base, business overview our to to We for of customers. Services. and Health. a of is our Children civilian our include received customer the differentiated this traditionally the organization. existing diverse clients Key military Building and base and illustrate agencies goal services Human that for course, an of have offers Institute support. of we National Disease new for portfolio to many supports and a the our set and and current strategic XX% portfolio development under umbrella support lies of programs

The new Veterans research our capabilities analytics value Health across our big unmatched our VA revenue penetrate long services XX% deserve This CMOP approximately and to nation's provide HHS our inside Our via to and in agency allowed and DLH integration to who the board. of -- systems the new the programs and have are And for we of development, supporting to comprises data have history clients Administration. our of the our we a those long-standing deliver expanding Agents VA, currently so -- includes excellence. operations. looking forward

analytics, revenue, transformation, the of including today, array defense of business broad numerous DLH book of health-related AI-enabled the across in in the Agency substantial XX% to research cybersecurity, to programs a is years work DoD as poised see thirdly, military platforms. comprise the and And and over This growth coming IT, invest services. Defense agencies looks roughly data digital Health health

leverage on our spend opportunities our expand development solutions client portfolio new intimacy to growth can business programs. relationships to and contract this well decades, we shape as as that Given customized existing

cybersecurity, directly addressable As and intelligence all strengths, with grow. to data government like, to their to analytics, markets our modernization, agencies our IT commitment continue the expand aligned artificial company's continue

technology reach plans. integrating solutions Agency many highly our initiatives, agency spot transformation the digital better research every this innovative differentiated as expertise, of a relatively us domain of unique helping initiatives before, evidenced capabilities higher as House Federal will ever White our sweet exacting evaluations, the even upgrade Our By offerings strategic with clients platform serves by in broader and more. include objectives for studies than of security cloud all perform to and the range medicine, day. These strides and precision of remain address

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

Kathryn M. Johnbull

report Thank our We're fiscal quarter XXXX. you, results Zach, pleased good morning, to and first for everyone.

We the $XX.X first million X. generated acquisition for reflecting reduction. XXXX, $XX.X as supporting XXXX, planned to reported with year timing. prior and million high-level period, We does December a quarter for the year nor $XX.X overview development that vendor to last million This quarter to primarily million months cash revenue in ended a our of of metrics acquisition, in adjusted key strategic in Turning corporate for related like from compared impact of reported not first this year costs in XX, compared versus to $X.X flow year versus of Slide generation the million operations variance addition EBITDA debt payment of cash the $X.X our financial fiscal expectations I'd the prior for XXXX. period. X December provide the some the to million $X negatively

of lower We debt, regarding which, deployment our off interest an expense. debt strengthen cash of the of to Slide with $XXX.X the in period million sheet million reduce approximately total and quarter, balance rate you'll of first Speaking rate X, to the the interest $X turn our if floating I'll update higher paid company's ending provide debt outstanding.

arrangement As a million quarterly $X is finance reminder, and expense interest amortization approximately fees. of of noncash

cash reduce of generation resulting our XX ratio end days group Our the period $XXX on days. focus million reflects sales to the collections, million and efficient the the debt industry versus below of days of We to year. XX by remain EBITDA at leverage $XXX average end resulting and in of track timely X.Xx fiscal ability year, cash in a peer between fiscal the of outstanding on the debt for

acquisitions, utilizing tax forward. payments continue deductions and of attributes going favorable to the cash income will with stock We tax minimize compensation our along

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

Operator

from today's Gomes first [Operator comes Capital. Joe And Instructions] with NOBLE question

Joseph Gomes

with start into for revenue can the than you were a the year? continuing feel we had kind what quarter? into to the I represents going little a going what the the what resolution just of you rest But expecting headwind I line wanted and for off feel you the quarter. kind expected. a little that lighter guys. of And you means expecting get for understand of were guys wanted I a for this think what get to better It's

Zachary C. Parker

what we budget customers of expected, sets really Joe. did to question, great that turn a it due out [indiscernible] little customer uncertainty. than would That's -- Yes. say softer the by a being certain largely certain our are I had

few know, the that well quarters, intramural contracts to without we do reluctance certainty, large for that involve quarters And million you seen consecutive and now, scientific budget been of several we've challenges. around research As just health extramural there's a some some have funding. $XXX that very

of So it's just some trailed what have this anomalies, year. seasonality expecting a then a impacts. they And for we couple were really

Kathryn M. Johnbull

right. Right, That's it.

and the where some falls QX indicated, As he a it way based impact just of in softer, calendar turning is in as expect, holidays. slowness said, been you historically new around the on time there just as might quarter Zach has the the although, orders lighter lead --

to So the line, pretty we the we expected and some perspective, we are slowness some lift quarter orders give though coming from exiting -- our in perspective, into from us in QX. that see it's planning that do

Joseph Gomes

than February, kind like the a take you shorter extension now extended this an of have we been of If normally bit little into contracts, see. a looks VA look at they all

I past, in in think just think insight that months. any X us out? to as guys just they're Or you planning does give what -- continue the we or normally might be give the extended these longer thought term? bit And contracts near -- be the than -- as VA do the here you a just any little

Zachary C. Parker

impact out contracts, really out we of kind well And in get for we what X, usually we're acquisition as call these -- months the 'XX's and timing going the would as We is plan we acquisition the read together, -- really customary potential that material are to extensions the and into of -- when event now government you the there's the at that X to bundled they able kind the the shorten on think cycles that, on to of to procurements on Having Yes. referred we to federal progress nothing are bridge said along that. cetera. really were months you make we and based chain. know, further and strongly what some we have start believing that upon see though, of evolution just in still right it pairing to, the as et We FY no you community table results started X awards.

Joseph Gomes

on Okay. HHS. then Great. And

This evidently that -- need to in break out not the were Q. didn't quarter

So quarter just contract performed the compared in wondering first how that to year? last big

Kathryn M. Johnbull

the a to because COVID during consistently results normal very cadence have variation we've from Yes, We opposed that as do comparable happened operating year-to-year that returned to challenges. program. the

Joseph Gomes

year? queue. a Okay. for last rest do nice will one good I'll then that sustainable? up going me you think use of SG&A to that the a There Or was in to the forward? And is just begin edge drop over Is one Great. wondering, and of back that I in cost a percent revenues cap, was and number drop as back

Kathryn M. Johnbull

I do of think function it's BD be timing of going that costs. to a the

around And costs were than G&A the so getting lighter RFPs issued, quarter expected. we in incurred congestion little the our given a

and That strategy. guess, think the investment both bad I as if get and see business permanent that money end So until and reduction get your the in that for our yet the way. delivers coin, But for helps spend delivering to that long-term I that that value don't that the you on be it growth to But in on the the yield development about good awards. think in company in I SG&A of we'd side outlook. of want to modeling we -- for it we that happy an scale form back that costs a of track our

Operator

with Kinstlinger [Operator Brian Global Instructions] Our from Partners. next question comes Alliance

Brian Kinstlinger

quantitative they if talk submission high each I high-level Are Just of can you been have level, have -- then and late, weakening? about the they a perspective, from joined they so understand call bookings least Can discussions at we the a Have proposal they strengthening? them market at the conditions. not trends, stable? been

Zachary C. Parker

I first Yes. missed the part.

the that You said other... and bookings what was

Brian Kinstlinger

Proposal submissions?

Zachary C. Parker

Yes. Yes.

our of indication government that continuing contributed said, I to are the is color one award IDIQ most little proposal contracts, the development there SG&A bid think us the are softer number multiple Probably for extend up to of We will right. notable the programs to is a that number that to given that we've data of has the issued to which large like the one channels of and period. lighter refer as one open Kathryn contracts, the CIO-SPX. an we that anticipated than a -- to

that very, us that an We of QX, close believe is now, create indicates protests award which online by getting ] resolving that and see evidence the should we all in government QX [ the will they've in year over opportunities the X. encountered those the that potentially to last of for end very and bidding the

opportunities. are of Some long-term be those going to

turnarounds. quick be will those of Some

said develop comes come as able disappointed those as continuing to the right. well. again, propositions the booking ourselves And existing winning we're to yet slip the to to But on continues of had forward. propositions. they funding believe our value as going IDIQ that, we contracts so to on We we've that that value But the provided haven't as we're having to opportunity some still do little both a bid to be positioned be

Brian Kinstlinger

And to it past in excellent. some So guys, is the around win I'm of if enough or is, you of can your wondering, not. DLHC were stronger casting of curious, more that web But growth? growth? XX%, to similar the to IT I'm do you web business increase what if I've XX% coverage where drive sure I'm rates not a be would for it not, to drive XX% covered book existing are outside defense-related wide

Zachary C. Parker

man have us. made. a with calendar straight we with You part are capabilities some last in of and the also hires of at investments came some and of have, great as so in a our we for that Yes, year, actually key acquisition end the result that

last the We diversification very our been of active have addressable accelerate market. over quarter to

are stronger very, So agencies little our -- areas or generally year far with development health get expect some to we [ felt new hope calls ]. Those for regard really to see a opportunities, to pipeline of some that enhanced this awards stronger of are within reflect that. very swim of that our there leveraging at our cybersecurity things And We're our now is strong and XX% that win in IT to expanded pipeline, the are in those course, then, we beginning before rate. or are today course, were that we lanes. We've fiscal business in pipeline industry. cybersecurity also ability to us look with We exit place. very accurate qualifications,

been very, has business new very good. Our

X them, an that which We sweet the open to to bids expect be last had $XX opportunity million. million standard north from industry choose then being as also before our we in kind our call a we -- And much million We've anywhere size $XXX had win. ranging and organic than they prior X higher multiple way And and been phase up to last we've growth. larger would medium or things of million close win which the ] million And of the again, for as are, lot -- $XX in our XX% have our treat have but probably Those booking we stages acquisitions. the in to on stay areas. $XXX like small top-of-the-line which [ huge we award $XX spots of then bucket XXX is medium-sized a recompetes to generally IDIQs, still in that, GYX But that good. One is rate. them, those XX% business. into

into some we we're each opportunities of So opportunities that to can our as on swing those of had the at -- kind look those we're with, we those we feel larger before pipeline. we that of and establishing now partner now bat

Kathryn M. Johnbull

of don't really think that the really No but but come seen even opportunity haven't for have we've so the really where aperture, DLH and capability bid new awareness and for understand probably respond to out. to adjacent been, things they far building that the how there more certain the before the that them desires because delays industry so really, the proof and not but plans your to an really the capabilities that's can opportunity is sets points point, people yet, necessarily resident of And productive it's that delay working opportunities from of who and really have use we really us giving the most, client for raise than those awareness breadth experiencing, really and company in us, that particularly one time. call more having open

never run profile you awareness. of So build and out of how to raise ideas

we're some for in our continue opportunity respects, delay really use bid of time think position best So in. that making I the to when to comes to the improve

Zachary C. Parker

pipeline that right? will answer or on down RFPs Joe the from earlier, SG&A out B&P the the doubling So gave from in which that whether to on ] shaping would [ the to part And we're lead opportunities, not the Kathryn customer, reflecting be activity investment come side. it -- positioning

expect the expansion. will reflective would that you'll quarter's more of see So next portfolio be results we that

Brian Kinstlinger

numbers question don't or around I'm GRSi last know if the transaction. curious, level revolves high whichever. My you Great. I again, provide

well as a little on so contribution it you would the same? you hope what's bit by the If be? plan. XXXX? growing behind And And revenue over their it over market? it terms the you to where you I'm Is maybe hope then at evaluated grow where impacted in you Did curious more look shrink? is if side. this was point broader Are -- at be XXXX did it revenue, again, its to in it you're IT of Or from going

Zachary C. Parker

Sure.

we're Yes, So one. Great beyond. 'XX that regarding tackling 'XX to question. and

-- may that expected have of our expanding capabilities has you terms As all the all, in of acquisition we recall, and that -- in for delivered growth our markets. competencies, channels first they've enhancing

a that it's very very, strong very, So in been regard.

the we of contracts may in were still closed existing amount that business retain the worked book able acquisition when -- degree You been as recall X, aside, a that was uncertainty that or would also business in that work -- that existed December set within had of fair of a we there to we was there's and that to whether considered small not the at GRSi. be

most in as a get arrangements remain arrangements we with a we or that business And of any that cases, minimum, any partner. likely would XX% XX% have of small

company those were because small optimistic erosion we're of that we're market on have some comfortable again, those the -- negative going it's have was those So terms a not the to expected net and the in us anticipated that work. I very Kathryn of win fully of they're erosion would timing anticipated the saw -- forward. on. the we've different that been But are that to in positioning -- bit terms what set a revenue. schedule market unrestricted in those while having a all they're little couple the But from and the had value for won is good business -- area, terribly type that that in it those doing with the that aside starting and net seeing of effect we we of obviously allow But capabilities

to to want add So Kathryn, do that? you

Kathryn M. Johnbull

right. absolutely Yes,

to not in GRSi But -- on performed so from that described, about no has EBITDA mentioned, the in, naturally, decisions CIO-SPX. were, been end affected as as point, erosion many delays we to that remember, former been Zach being the the strong really deliver. your or from equally, work, by were locked contributors protected second IDIQ if served perspective, have more around -- They you talked a particularly large prior of customers the some Zack and calls. lower-end perspective, and just a the obviously. disrespect growth numbers So lower from work of a to There's being continued

They CIO-SPX. a on holder schedule are

preparing resident program capabilities to So out did small really on they've CIO-SPX, obviously itself not DLH, CIO-SPX. technical unlike acquisition was a the GRSi to In on DLH, bid in through CIO-SPX, business, its be of and the have that. but heritage but grown contrast, was which that's credible

operations bring they over So opportunities, expanded the as their that part they've opportunity but expect really their talent the we built kept work the had of that's time they've been that to into forward delayed. large-scale

is to the strategy business we addressing relevance terms market, for experiencing. be. GRSi So an journey overhang they our the expected contribute in whole that ahead bit everything has the in industry talents growth to are and that to of ability in really our to But the them of

Zachary C. Parker

Yes.

our very just we really piece driving that, the Let been active X strategy at We was -- not looking though, plus in those we me to was -- come are equaling add built business. qualifications, on X collaboration X. a across very, to have

work their of the based our science on that So that research acquisition. acquisition. NIH the business, is along technology with some based we the were aspects in these synergy based most business capabilities scientists put at heavily as of not of you capabilities upon epidemiologists the us with have came seen with and existing the the which opportunities is the security you together with looking those have alone. world-renowned and IT together, came heritage excites pursuit well, side When the what we What of and

seeing innovations the references not are the We landscape. customer and opportunities provide past is competitive performance on much that to some very seeing

and in but opened synergy not cross-agency has what value that propositions, So we're the about only of excited terms the up selling.

Operator

no back And questions to the to over further Parker conference Zach have queue, as I'd closing for any the remarks. in turn like we

Zachary C. Parker

ask to forward a the dates We We Well, and future. And in future. we'll couple to you thank not-too-distant you in in the look meet of you continued again your all. interest support DLH. appreciate really

actually where all, will have XX, will would Annual physically our March Meeting. We be in York. of we Shareholders First be New

you stay I tuned. and of there. and would love And our on So to Kathryn see come Board by. also Directors

and the an Emerging large Technology Partners caps February on at in Global Investor events participating Alliance be conference, X. small will We

website. bit the around technology and . where the our read on can see of a driving through color the You value. details going of disclosing will that be being key is a we more some company And how little evolution part that

hearing much, now. blessed day. you for a look we With forward So and thank seeing Bye very you have and to soon. that,

Joseph Gomes

care. Take

Operator

concludes Thank thank We conference today's for call. today's you all you. This attending presentation.

You now lines, wonderful your may disconnect a and have day.

DLH (DLHC) 1 Feb 242024 Q1 Earnings call transcript