DLHC - Earnings call transcript Q1 2025

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

Operator

Good day, and welcome to the DLH Holdings Corp. Fiscal 2025 First Quarter Earnings Conference Call. [Operator Instructions] Please also 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 Slide page. I PowerPoint website and harbor statement, provide earnings available also safe the The our shown presentation. is on on a presentation brief under of now would are Investor which like X to the release relate This call and outlook beyond. for company's may include to forward-looking fiscal the statements that XXXX to to subject actual various risks materially which uncertainties statements. cause events are and results could and statements differ such from These refer annual to the and other the the Please risk factors with report in in contained filings Securities company's Commission. XX-K and Exchange on Form our measures. undertake today's duty be GAAP will do update any financial both any call, not we forward-looking statements. On referencing We non-GAAP to and non-GAAP our it we'll website. President DLH's followed speak is of release by to JohnBull, earnings our CFO, reconciliation will GAAP which questions. in CEO, in reported the open presentation A and Kathryn next, up Zach for Parker, included our investor results and on results after With to Zach. Zach. Please the that, go call over to now ahead, I'd turn like

Zachary C. Parker

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

so time to succeed. As to DLH I'd us fiscal is to being take we dedication excellence the moment thank in transformational our and employees for during It begin future to this our country's of thorough like your to allows that talented a XXXX, dedicated history. commitment

drives DLH bright industry as your a for our change, toward conditions Even missions critical steadfast customers' future. passion

developments strength our our results. organic remain as pipeline. growth Now business and a priorities turning I'll accelerating illustrate and of to Performance our excellence overview the X, new an recent financial Slide transformed provide highest of company

has our our remain systems those in surveillance which to Virginia key has IT have our to years in services case. been both support award around A organic particularly to CXISR bearing broad mission-critical and with long-term strong. portfolio This always near-term expertise clients campaign information expands Our obtain strategic confident Diego, growth that Congress. we our this clients. We from Norfolk, I'm to posture recent award leverage covering opportunities, portfolio opportunities, and in our advanced recent the readiness-related happy brings California. our And bidding programs, say of to services been engineering Navy about the San based provide to vision really business warfare fiscal of but and administration continues enduring fruit bipartisan and challenges to as this our new intelligence, be

the on as clients. revenue. on on and of and solutions been has DLH's $X.X and technology positive, quarter look And this initial had utilization, at all material stated directly priorities. the margin to future that at of current improving the million, slightly administration's this out we that first have These of remains aligned reported impact neutral do. That EBITDA efficiency enhancing have and belief XX% not view. To Our million core administration's are with overall, long assessment for an still for our of services recent focused we opportunities any of still orders. values our $XX.X we We executive date, productivity book EBITDA business and representing revenue of from impact are we

as receivables a in reviewed review in the and we continuation flow quarter. second growth cash as during growth we will due strategy Kathryn cash a short-term debt provides moment. Slide snapshot X and of strategy, While quarter our deleveraging used of to last accordingly, strong our the in our go-forward expect fiscal a increase quarter

the leverage is research quarters, focused transformation, systems will engineering development While in squarely and the the feel likely our on contracts which opportunities, and to cybersecurity, company unbundling coming our effects of small business capabilities. continue of aside set growth the digital

so bids. be of well-positioned and qualified of awarded year. pipeline dozen this strong or a those anticipate to a have We We half

Our small and eventual erosion. million offset set more qualified opportunities should the aside that pipeline values several substantially $XXX contract business of with excess in has

I opportunities graphic going technology-powered marketplace. This and solution capability that that selected our forward customer, requires growth vary step our opening together for growth our existing pull illustrative more broaden and -- for federal our contract business which by company's near and how process business the channels remain we as each contract As a in up value aside on set with capabilities readiness across to the study mentioned, term. from illustrates yielding the as in can erosions. business for the personnel, new The and programs company's small building believe of well-positioned the our for an again, make is expanding establish stronger. Slide on sets. the footprint line, and our as total been expect campaign serves solutions. We the a We generating vehicles, differentiated capabilities, of both than focus such as new award health well but case provides remain new to customers organic across accelerating time, long work opportunities expand opportunities to for offer. existing win attributes growth, over example differentiating we innovation capabilities never and DLH leverage on any offers through will Each marketplace platform term enhanced top block IDIQs, results can by and franchise technology new has credentialed leveraging focused multiple highly new and the our the X

turn I'd and the over Financial to come serve like of our believe DLH are stronger JohnBull, the to continue to to We the Kathryn? building call Officer. clients. With Chief challenges yet a needs and Kathryn to is best our that,

Kathryn M. Johnbull

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

VA like pass-through conversions delivery as as approximately comprised due contracts. Revenue of the DoD to of in quarter. reflecting million to set contracts approximately our conversion timing a from metrics set of portfolio HHS contract the $X of million months contributions $X.X provide prior small past is million $XX.X $XX.X business year programs We from that within financial by the certain unbundled versus million XXXX. down DoD and Slide and period. reported of margin of prior overview offset aside acquired the year winding the X, this million service small quarter XX, in awards, well amount to I'd key This business contract approximately December the in ended the a period, on lower $X.X was business Turning recent non-labor some in high-level key contraction revenue quarter first was from in X aside small for to contracts revenue

small well last contractor are likely headwinds remain impact aside has over location growth, for on upcoming per months. While conversion to new our XXXX. business XX January the winning focused set second that we programs of quarter for XX, averaged a A the business $X as revenue to This site results approximately million transitioned small CMOP bode future in quarters.

variable versus contract year. through used cash generation cash year locations under offset million million indirect due the million of a we $X.X primarily continues remaining the reported by We in was to services scale standpoint, execute versus $XX.X its to and business. From costs of customer last the We level, are we perform approximately part for services strategy. the overall April, last on procurement revenue operating at $XX.X first to of EBITDA first in to at these least expect certain while down locations lower reductions quarter. quarter provide quarter $X.X million we the cash the as during EBITDA

it As was making quarter unusual an the positively payments of fourth fiscal from XXXX, a prior the year reminder, period delayed impacted by comparison.

significant account, addition, therefore, In the to shortfall first to clearing impacted quarter our debt. delays and in has on which QX's already reduction begun this lead in the a quarter. year anticipate second cash were generation first collections by We than offset quarter one more collection

Turning the million X. million of quarter borrowings. We total with year, fiscal start short-term those to ended Slide at reflecting $XXX.X debt of the $XXX versus the

update, As a is slightly debt under current $XXX million. today

As we a down EBITDA to during pay I the moment remainder of mentioned to utilizing fiscal anticipate approximately of debt XXXX. XX% ago, XX%

priority cash the is using always, top delever As a forward. to going company

short-term financial new our as on excellent initiatives. navigate business facility enhanced as to our credit this to focus provides through well satisfy we It capital as -- amended the flexibility year. borrowing working capacity business changing Our continues strategic climate other provide needs

technology-powered before. We invest growth believe strong of and portfolio ever at our organic us puts the than will solutions in continue to programs more for table

concludes discussion back pipeline for our mentioned, mix of And expected administration. This be to statements. I previously the would opportunities priorities now approximately $X customers qualified to my of Zach our aligned the the new and call at to stands a representing of like new questions. financial up with open turn operator budgets new now with As to business with existing diverse that, billion, and

Operator

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

Joseph Gomes

to So, I wanted out. start

for a the of that that give to mentioned was items business items Kathryn, impactful. What kind rank of remarks down a impacted And transitions, There's X you or was revenue little some the set small release, percentage what small down. or just were the recompetes least talked numbers. revenues? the the wonder bit decline some winding if your could I probably like You business in about press just you lost the those of a asides. projects in non-strategic the greatest and for specific

Kathryn M. Johnbull

Yes. to Sure, Happy do that. Joe.

recompetes. the impact the significant of impact one from key derived unbundling the the or to So was most our quarter of

the to though in government to small prior provided of shared of nonetheless, prime of contrary things to unbundled. trend, really set contracts the number be prior we've and calls, was contractor, a to under couple commitment business that mandate the from decades a aside efficiencies couple consolidating of the performance administration and secondarily, prime decades drive would series even that contractors. But ran really, from transfer really one, the had manage a administration really a integration trying of program; As long the a practice certain that really that prior contractor risk

was experienced responsibility. of programs that mentioned our integration we team the we so, call, subcontractors had we DoD we our our that assuming as where that on from was in that quarter And in comments we were in one largely unbundled. -- the derived were And

So of our to had less delivery low-margin work. that's gross because impact margin low an relatively volume, why it's it

as -- acquired. we've small there revenue number Secondarily, tail a was of on we a of business that calls, talked about there

small wrapping the really of tails some 'XX. business that those point, comparison those mentioned roll long quarter, a time quarter But transition quarters out. in until as acquired a that hadn't sometimes of -- throughout year-over-year of up. contracts And started much we're we to quarters first But later the XXXX, take

So that not of was X XXXX. present QX present QX X of about in $X.X million Qs of throughout to in 'XX, exiting that XXXX was and

$X.X is So impacted year-over-year million. comparison by about the

headlines. the Thirdly, was down a the ago which in exit international a lot that course, from international that a Without $X.X years or we attention for merits to that us. the there's made about completed assessment commentary getting work having million work, of distraction of of a to winding -- these work of work, related business is, days couple

You do that can't really work.

have not viewed as strategic either that work a You in to to all that limited be not contracts number we not appropriate or out. had of our was there And focus, all the we really -- us. our

And so quarters made the throughout exit, a exit also and to we has decision that place of have XXXX. taking been

in QX, million you from that. $X.X year-over-year see So variation about

Zachary C. Parker

And be this it of tail quarter. there'll a

Kathryn M. Johnbull

Right. That's right.

Zachary C. Parker

gone. Basically

Kathryn M. Johnbull

pick and then the million QX. from to would we exit QX we just perform finally, of the back in to in that And services May frame. QX, expected We'll wrap $X of there expect about that was up timing have in slipped time up it into probably

Joseph Gomes

'XX, win Are on we orders ramp kind starting Okay. waiting the some task guys table, I up? of Great. are some seats for so -- to to come stream those we 'XX, out of in you just see at speak, large the from know Or those? to And steady IDIQs. a did still

Zachary C. Parker

was what find by was contracts, X-year Joe. large previous of government way moved Yes. that because competition. Great awarded those opportunities, contract, that to that mentioned right? government in it's back of Yes, point, for one a of those which And contracts was it those the you IDIQs, those different the interesting we a did many but during work vehicle, And they period, around gap the right? gapped, those coming and are now many were were replacing

moved was a -- gap And we recently moved won was course, called just Oasis. of Oasis. And to that that some was work there while vehicle of

and that now some are to vehicle bidding we anticipated timing-wise we Oasis finding So successful. vehicle, on specific, of Oasis. opportunities at those -- -- DHA other just It's for now decision, had looking were contract we fortunate us and made bidding award that Omnibus we that finally on the we that be are now

gate, the next got of of the months. some the few been we've right over so, for to we've of posturing And out the course bids bid

anticipating for than that on can good to excited someone opportunities we other prime to that is So Oasis. take on having news have yes, to those backseat we're a work vehicles. we are the the Oasis But now now IDIQ rather else

Joseph Gomes

previously, wondering And that of whole And Great. kind us an one talked if we you that haven't InfiniByte is lot Cloud about but then lately update a of we I was about really give the product. on heard your just could product. things

Zachary C. Parker

Yes. data No, be health and around large marketplace great our are services first That have question. care Cloud platform InfiniByte health -- happens scale of -- we opportunity designed capability. for the process solutions. -- built in to largely FedRAMP we FedRAMP around and Yes, and analytics all,

integration in our in Cloud a right that at look that with now. completed With acquisition we're we've taking 'XX, the X.X And been in now advent so, process we capabilities of InfiniByte ending our came that expanded with Cloud

We to and required as by expect investment be InfiniByte happens in we lower-level the that Federal security items. order not versatility designed projects -- secured that some expand It suited we're the for to most that doing platform. to speak type government. for programs is are Cloud the of

again, got platform a our team so And expand developing, we've a broad offering. is that InfiniByte very to cloud-based

a give excited you needs pretty continue must probably us security are think also folks secure leverage and leveraging you a environment. while around will to as The government of environment because that. tools public in also managed do environment still AI/ML that and the great variety in health is very cybersecurity tools about It we're versatility. industry, So, evolving is environment. to know, it be is We evolve as as concerned, how a such secure operating some

evolve so environment. can And that tomorrow's forward operate InfiniByte leaning so we're in it to

Kathryn M. Johnbull

not Cyber between Model close but -- darn and overlap the in heavy CMMC. you regulations FedRAMP between of Maturity October, pretty overlap, the entirely a issuing the there's not there's a XXX%%, if late And follow -- CMMC, good pretty

So we making expect to on head that start its think good we that gives contracts. a us credentials that way into start

Joseph Gomes

And Okay. in press $XXX,XXX about the -- investments one the in release, organic talk reflecting for more me. an about SG&A, little then increase you in Again, growth.

you of that the could point could about. some particular out? -- have for like right Sounds was Anything talked we been InfiniByte just here else in that

Zachary C. Parker

that lot we very Well, disclose much. not a can

and material Cloud are But on meeting. more modeling additional about and systems differentiators As capabilities is capabilities, our doing We're some we developing across bringing also us upcoming annual type we're path, talk organic cybersecurity one. help capabilities, growth development. Secure cloud very business share that. to important. appropriate some very deliver a we're InfiniByte engineering, talent the We'll some at the our and simulation of

in sure accelerating the differentiating we're a I going making investing we're make So, those 'XX to continue and profile, and ensure as to realize 'XX over to Kathryn said that to have recent sure we're -- can organic quarters, that growth our way.

pipeline, your not a building pipeline. probability, qualified by you qualified better elevate a And positioned larger but just so, win

to make those organic So investments continuing differentiators. we're for

Operator

We'll move back NOBLE for his follow-up Instructions] Capital. from Gomes [Operator Mr. to

Joseph Gomes

make On I'll want here. ask just CMOP, here. a sure understanding I'm couple more to everything

X there belt had that are still servicing that So you your was -- still you're servicing. that under you

or bid of capability of how I had those, partner to, of you you awards? think partnered terms their And those guess, of thinking are go set. to I them on? of out bids of your timetable I have winning to last X wondering year; haven't have in what with for these was yet the bid X have any many their

Zachary C. Parker

of bid competition-sensitive that we remain Joe. all environment can in there, I you a tell very not have them. Well, we

But the is Our all worked successful, confident have of has feel a will material so and small be retention support. And believe and amendments RFP a -- to not us in but that any it'll have with and we're backlog on material not done sure at the very, we're subcontractor a it it successful, collaboratively those execute of bid partners those. start is our for business And will partner subject that to those we'll that once business that issue and remaining we've still that say best, make of, lead been posture in if bid call that small very some win way, remaining. that Kathryn we our is one partner -- be that or again, outside the us. can that CMOP any evaluate shape on do acquisition RFPs. They're still a one of Hines, are still we all -- VA bandwidth have you exclusive be, because even the as Any they to Chicago the our bidding tell and they changes not to of which are form. our I -- that those changing comfortable with probabilities final business of, if are very not VA. we as to indicated, could I

We the of the to the their makes have by we new executive visit Secretary recently weeks. And The So it DOGE the an within new and has next per Joe, approach. good is remains probably now that and government has community fluid, the put this those VA and -- the have anticipate, will new administration The administration moving finger as forward couple with leadership. an is of VA. with met until new the decisions. news acquisition still opportunity usual, on the some their could

to competition and with so we've and prime respect have we sensitive, remains the that agreement our non-disclosure so got it So, fluid partner.

Joseph Gomes

more. And then enough. Fair one

from resolution. any business? continuing you on a under the impact guys think I still Are we're that operating seeing

Zachary C. Parker

always be as Council, our Professional we the details the we give this way of Summit. that cetera. fortunate miles, mode, companies and last now. Services I've week Kathryn in have coming of a be right not caps we'll to DoD holds ceiling et right have still quite CR -- the any what of was spent far for potential from that CR, that, got ] resolved, do debt a imminent with anticipate limit We've up, some ratios caps the bit past the Leadership got as with you budget. We to duration. those in the anticipating we've many let be impact contracts Joe the some a have week, of regard an funding that over only some [ to we shutdown as and peer of Well, we're the I'll of longer-term months, But a which to for with there'll civilian. We're coming

our lot a coming in what executive or means good that programs terms of all expect not of most appropriated is, we over that, signal-to-noise we see there we potentials try that quarter stability So, to of, sure are noise signal at manage the news of right? continuity will we of the against some of already, so shutdown. is ratio, And be fortunately, if level. The make the which of

expecting really pipeline health our have lot We in areas remains by of supported health sides a are pretty both that, military both in the have and on solid you also strong aisle. the that right? As aisle, are of again, and we we that remain everything quite also of see, defense, sides

that are veteran of veteran run sort and out, long the of as community, as administrations know, tail do. we these to very you this of health So, both supportive continues work well as the

work. feel our are have the recurring the impact So in business pretty good of new CRs. business pipeline Most we about pipeline, of we

business awards. restrictions So they're of new to not the subject

that any associated long awards, that have their pretty with the are So won't we on see acquisitions customers the erosion focused we feel and material to we as really confident constraints. budget commitment as can

Operator

like today's remarks. this gentlemen, Zach question-and-answer session. to for return any Parker would and the ladies to And I conference back concludes concluding

Zachary C. Parker

look wonderful, productive to our like thank until And now. I next then, I'd have with a Shareholder chatting interest support forward we month Annual and for again, your and Once for you Meeting. DLH. in to day. as be have blessed you Bye And

Operator

today's sir. And thank now for presentation. you, Thank attending concluded. has you The conference

now may disconnect. You

DLH (DLHC) 6 Feb 252025 Q1 Earnings call transcript