DLH Holdings Corp. Q4 FY2024 earnings call

• Zach thanked the workforce for strong results and highlighted fourth quarter and full-year revenue, EBITDA, and debt paydown. - Announced a new $76 million contract award with the US Navy, won through a competitive process, and discussed leveraging technology-enabled solutions for organic growth. - Kathryn reviewed financial metrics, amended credit facility for flexibility, and discussed growth strategy focusing on technology-powered solutions, aiming for $300 million annualized revenue with 9% EBITDA margin in the near term and longer-term vision for $500 million annual revenue run rate with expanded EBITDA margins.

Fourth quarter revenue was $96.4 million, with full-year revenue reaching nearly $396 million, surpassing previous records. EBITDA for the fourth quarter was $10.7 million, and $42 million for the fiscal year. Operating cash was $12.5 million in the fourth quarter, totaling $27.4 million for the fiscal year. Debt was paid down by $11.9 million in the fourth quarter, ending the fiscal year with $154.6 million in total debt. The CMOP portfolio contributed approximately $140 million to the full-year revenue of $396 million, with the technology-powered solutions and services segment accounting for roughly $256 million. EBITDA margin was 10.6% with equal contributions from the CMOP portfolio and technology-powered solutions.

• Near-term focus: Target growth vehicles in core tech sectors to drive technology-powered solutions to $300 million annualized revenue with 9% EBITDA margin. - Longer-term vision: Envision $500 million annual revenue run rate with expanded EBITDA margins leveraging economies of scale and improved operating structure.

• Small business conversion headwinds. - Impact of continuing resolution and new administration on federal government procurement landscape. - Uncertainty around VA CMOP procurements. - Timing uncertainties of government decision-making on new contracts.

Q: Joe Gomes asked about CMOP, SG&A, defense opportunities, and DOGE.

A: Zach discussed CMOP timing and SG&A scaling, and Zach and Kathryn provided details on defense opportunities and DOGE aligning with DLH's heritage of driving efficiencies.

Q: Burton Osterweis asked about intangible assets and Navy contract impact.

A: Kathryn explained intangible assets related to acquired companies and their amortization, and clarified the Navy contract's impact on intangible assets.

Q: Ross Davisson asked about small business set asides, headwinds, and new business pipeline.

A: Zach discussed small business set aside impacts, new business pipeline quality, and hopes for government contract decisions