DLH Holdings Corp. Q2 FY2026 earnings call

• Focus on three strategic pillars: science, research and development, digital transformation and cybersecurity, systems engineering and integrations. - Revenue contraction due to small business set-aside initiatives and contract completions. - Adjusted EBITDA margin was 9% for the quarter. - Debt reduction efforts, with debt reduced to 132.7 million. - Collaborating with VA to stand down VAC mop contracts, expecting to wrap up transition before Memorial Day. - Multiple RFPs received, submitted bids, hopeful for decisions in coming quarter. - Continuation of NIH contract extension.

Second quarter revenue was 59.3 million in the second quarter versus 89.2 million in the prior year period. Adjusted EBITDA was 5.3 million for the quarter compared to 9.4 million in the prior year period. Free cash flow was approximately 3.8 million during the quarter. Debt reduced during the quarter to 132.7 million, a reduction from 136.6 million at the end of the previous quarter.

• Expect to convert approximately 50 to 55% of EBITDA generated during fiscal 2026 to reduce debt by year end. - Optimistic about RFPs and solicitations in defense, intelligence, and public health arenas, expecting decisions this fiscal year.

• Government acquisition strategy changes leading to revenue contraction. - Potential protests delaying contract awards. - Government shutdown and contingency budget risks delaying contracts. - Budget uncertainties impacting procurement.

Q: About VAC mop, how much longer will it run?

A: Still on plan, expect to wrap up transition of those contracts just before Memorial Day.

Q: Concern about contract awards due to government shutdown?

A: Encouraged by multi-year funding initiatives, RFPs got under wire before September crisis, hopeful for decisions in the coming quarter.

Q: Cost scaling, need more?

A: Done significant actions, continue to evaluate cost structure for competitiveness.

Q: Thoughts on reprioritizing federal health spending?

A: Anticipated erosion from small business set-aside, but optimistic about RFPs in FY25 and beyond, seeing solicitations return in defense, intel, public health