In This Article:
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Revenue: $90.8 million for the first quarter, down from $97.9 million in the prior year period.
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EBITDA: $9.9 million, representing an EBITDA margin of 11% on revenue.
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Revenue Impact: $5 million contraction due to small business set aside conversions within the DOD portfolio.
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Operating Cash Flow: Used approximately $11.5 million during the quarter, compared to cash generation of $5.1 million in the prior year first quarter.
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Total Debt: Ended the quarter with $167 million, up from $154.6 million at the start of the fiscal year.
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Debt Reduction Strategy: Plan to utilize approximately 50% to 55% of EBITDA to pay down debt during the remainder of fiscal 2025.
Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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DLH Holdings Corp (NASDAQ:DLHC) reported first quarter revenue of $90.8 million and EBITDA of $9.9 million, representing an EBITDA margin of 11%.
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The company secured a significant contract to provide C6 ISR and advanced IT services to the Navy, expanding its information warfare systems engineering portfolio.
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DLH Holdings Corp (NASDAQ:DLHC) has a strong pipeline of qualified bids, with several opportunities having contract values in excess of $100 million.
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The company is investing in organic growth, focusing on digital transformation, cybersecurity, research and development, and systems engineering capabilities.
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DLH Holdings Corp (NASDAQ:DLHC) anticipates strong cash flow in the fiscal second quarter, which will aid in debt reduction and support its key leveraging strategy.
Negative Points
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First quarter revenue decreased from $97.9 million in the prior year period, primarily due to small business set aside conversions and service delivery timing on key contracts.
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The company experienced a $5 million revenue contraction due to small business set aside conversions within its Department of Defense (DOD) portfolio.
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DLH Holdings Corp (NASDAQ:DLHC) used approximately $11.5 million of operating cash during the quarter, compared to cash generation of $5.1 million in the previous year's first quarter.
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The company faces headwinds from small business set aside conversions, which are likely to impact results in upcoming quarters.
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Total debt increased to $167 million from $154.6 million at the start of the fiscal year, reflecting short-term borrowings.
Q & A Highlights
Q: Can you provide a breakdown of the factors contributing to the revenue decline, particularly regarding small business set-asides? A: Kathryn JohnBull, CFO, explained that the most significant impact was from the unbundling of a DOD program due to small business set-asides. This resulted in a $5 million revenue contraction, primarily from low-margin subcontractor work. Additionally, there was a $1.5 million impact from winding down acquired small business contracts and another $1.5 million from exiting international work. Lastly, about $2 million in services expected in Q1 were delayed to Q2.