DLH Holdings Corp. Q3 FY2025 earnings call

• Zach thanked employees for their dedication amidst challenging times. Revenue was impacted by unbundling, small business set asides, and new administration's funding review processes. The team is optimistic about anticipated changes. - Kathryn discussed financial metrics, noting revenue change, EBITDA, cash flow generation, debt reduction, and that they are well ahead of debt covenants.

In the third quarter, revenue was $83.3 million compared to $100.7 million in the prior year period. The change in revenue volume was due to contributions from recent contract awards offset by expected conversion of certain VA and DoD programs to small business contractors ($8.5 million and $3.2 million decreases respectively) and government efficiency initiatives ($2.2 million decrease). EBITDA was $8.1 million in Q3 vs $10 million last year, with EBITDA as a percentage of revenue at 9.7% this year vs 10% in fiscal 2024. Operating cash generated was approximately $9.5 million during the quarter, debt was reduced by $9.4 million to $142.3 million, and they are a year ahead of mandatory term debt payments through June 30, 2026.

• Zach is optimistic about anticipated changes that will be productive soon. Goals include delevering the company, protecting revenue base and focusing on new business and organic growth, and preserving margin delivery through proactive scaling. - Kathryn mentioned they reduced debt by $9.4 million, are a year ahead of mandatory debt payments, and have sufficient capital to support opportunities, remaining well ahead of debt covenants.

• Revenue stream slowed due to new administration's layers of funding review and approval cycles. - Pipeline conversion impacted and slowed, RFP flow slowed, delivery of large proposals and contract awards lower than anticipated.

Q: First question from Joe Gomes with NOBLE Capital.

A: Joe's line disconnected, and efforts to reconnect were unsuccessful