Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Financial Data and Key Metrics Changes - Revenue for the first quarter was reported at $68.9 million, down from $90.8 million in the prior year, primarily due to the conversion of certain programs to small business set-aside contracts, resulting in an approximate $18 million decrease [11] - Adjusted EBITDA for the quarter was $6.5 million, compared to $9.9 million in the prior year, with a sequential improvement in adjusted EBITDA margin to 9.5% [12][14] - Free cash flow usage was approximately $4.8 million during the quarter, an improvement from $12.1 million in the previous year [13] Business Line Data and Key Metrics Changes - The revenue contraction was largely attributed to small business set-aside conversions, particularly from CMOP and Head Start programs [11] - The company is focused on expanding efficiencies and margins while managing indirect costs, which are expected to improve in the second quarter [12][30] Market Data and Key Metrics Changes - The company noted improved demand across core markets, particularly in defense and intelligence, with a focus on rapid delivery, cost efficiency, and digital modernization [5][8] - Federal health agencies received funding increases compared to fiscal 2025 levels, which is expected to positively impact the company's organic growth initiatives [4] Company Strategy and Development Direction - The company is committed to three strategic pillars: digital transformation and cybersecurity, science, research and development, and systems engineering and integration [8] - There is a focus on leveraging technology and innovative tools to enhance productivity and competitive positioning [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in exiting fiscal 2026 in a stronger position, supported by improved budget clarity and a healthy addressable market [10][15] - The management team emphasized the importance of maintaining a competitive indirect cost profile to support organic growth [28] Other Important Information - The company is actively working on deleveraging its balance sheet, with debt increasing to $136.6 million during the quarter, but remains compliant with financial covenants [14] - The management highlighted the need for agility in operations to compete effectively in both government and potential commercial markets [58] Q&A Session Summary Question: What accounted for the remaining $4 million in revenue decline? - The decline was attributed to smaller impacts from DOGE initiatives and the wrap-up of a USAID project [19][21] Question: Update on CMOP contracts and transition timing? - The company expects a complete wrap-up of CMOP work by Q3 of the current fiscal year, with manageable processes for transitions [25] Question: Insights on cost reductions and their impact? - Cost reductions are reflected in Q1 results, and the company is scaling costs related to CMOP as revenue volume changes [30][31] Question: Market opportunities and bidding activity? - The company has seen limited bid opportunities due to budget uncertainty but anticipates more stability moving forward [36][40] Question: Focus on civilian clients and commercial opportunities? - The company works with federal civilian agencies and is exploring more commercial opportunities, particularly in biotech [50][51]

Financial Data and Key Metrics Changes - Revenue for the first quarter was reported at $68.9 million, down from $90.8 million in the prior year, primarily due to the conversion of certain programs to small business set-aside contracts, resulting in an approximate $18 million decrease [11][12] - Adjusted EBITDA for the quarter was $6.5 million, compared to $9.9 million in the prior year, with an adjusted EBITDA margin improving sequentially to 9.5% [12][14] - Free cash flow usage was approximately $4.8 million during the quarter, a significant improvement from $12.1 million in the previous year [13] Business Line Data and Key Metrics Changes - The revenue contraction was largely attributed to small business set-aside conversions, particularly from the CMOP and Head Start programs [11] - The company is focused on expanding efficiencies and margins while managing indirect costs, which are expected to improve in the second quarter [12][30] Market Data and Key Metrics Changes - The company noted improved demand across core markets, particularly in defense and intelligence, with a focus on rapid delivery, cost efficiency, and digital modernization [5][8] - Federal health agencies received funding increases compared to fiscal 2025 levels, which is expected to positively impact the company's addressable markets [4][8] Company Strategy and Development Direction - The company is committed to three strategic pillars: digital transformation and cybersecurity, science, research and development, and systems engineering and integration [8] - There is a focus on leveraging technology and innovative tools to enhance productivity and competitive positioning [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in exiting fiscal 2026 in a stronger position, supported by improved budget clarity and a healthy addressable market [10][15] - The management team emphasized the importance of agility and responsiveness to compete effectively in the evolving market landscape [58][60] Other Important Information - The company is actively working on deleveraging its balance sheet, with debt increasing to $136.6 million during the quarter, but remains compliant with financial covenants [14][15] - The management highlighted the importance of maintaining a competitive indirect cost profile to support organic growth [28] Q&A Session Summary Question: What accounted for the remaining $4 million in revenue decline? - The decline was attributed to smaller impacts from DOGE initiatives and the completion of a USAID project [19][21] Question: Update on CMOP contracts and transition timing? - The company expects a complete wrap-up of CMOP work by Q3 of the current fiscal year, with improved transition processes in place [25] Question: Insights on cost reductions and their impact? - Cost reductions are reflected in Q1 results, and the company is scaling costs in line with the volume changes from CMOP [30][31] Question: Market opportunities and bidding activity? - The company has seen limited bid opportunities due to budget uncertainty but anticipates more stability moving forward [36][40] Question: Focus on civilian clients and commercial opportunities? - The company works with federal civilian agencies and is exploring more commercial opportunities, particularly in biotech [50][51]

Financial Data and Key Metrics Changes - The company reported revenue of $68.9 million for the first quarter, down from $90.8 million in the prior year, primarily due to the conversion of certain programs to small business set-aside contracts, resulting in an approximate $18 million decrease [10] - Adjusted EBITDA for the quarter was $6.5 million, compared to $9.9 million in the prior year, with a sequential improvement in adjusted EBITDA margin to 9.5% [11] - Free cash flow usage was approximately $4.8 million, an improvement from $12.1 million in the previous year, reflecting better management of receivables [12] Business Line Data and Key Metrics Changes - Revenue contraction was largely attributed to small business set-aside conversions, particularly from CMOP and Head Start programs [10] - The company is focused on expanding efficiencies and margins while managing costs related to the transition of contracts [11][12] Market Data and Key Metrics Changes - The company noted improved demand across core markets, particularly in defense and intelligence, driven by federal health agencies prioritizing system interoperability and cybersecurity [5] - The recent budget stability is expected to positively impact the company's organic growth initiatives [4][7] Company Strategy and Development Direction - The company is committed to three strategic pillars: digital transformation and cybersecurity, science research and development, and systems engineering and integration [7] - There is a focus on leveraging technology and innovative tools to enhance productivity and competitive positioning [5][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in exiting fiscal 2026 in a stronger position, supported by improved budget clarity and a broad portfolio of contract vehicles [7][9] - The management team emphasized the importance of maintaining a competitive indirect cost profile to support organic growth [28][29] Other Important Information - The company is actively working on deleveraging its balance sheet, with debt increasing to $136.6 million due to seasonal working capital requirements [12] - The management is optimistic about the future, expecting to convert 50%-55% of EBITDA generated during fiscal 2026 to reduce debt by year-end [13] Q&A Session Summary Question: What accounted for the remaining $4 million in revenue decline? - The decline was attributed to smaller impacts from DOGE initiatives and the completion of a USAID project [18][20] Question: Update on CMOP contracts and transition timing? - The company is in the wind-down phase for CMOP work, expecting a complete wrap-up by Q3 of the current fiscal year [25] Question: Were there costs associated with the recent cost reductions? - The costs of achieving reductions are reflected in Q1 results, impacting both the reduction in costs and the overall financials [30] Question: Insights on the bidding activity and market opportunities? - The company has seen a mix of bid opportunities, with some moving to vehicles where they are not prime, but remains optimistic about future stability in the market [34][39] Question: Who are the civilian clients and is there a focus on commercial jobs? - Civilian clients include federal agencies like NIH and CDC, with a small focus on commercial work through partnerships, but significant investment in this area is not planned [51][52]

February 10, 2026 CALL PARTICIPANTS FY26 First Quarter Earnings Three Months Ended 12.31.25 ZACH PARKER President & Chief Executive Officer KATHRYN JOHNBULL © Copyright 2026 DLH Holdings Corp. All Rights Reserved. 2 Forward-Looking Statements "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or DLH`s f ...

Core Viewpoint - DLH Holdings Corp. reported a quarterly loss of $0.09 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.07, marking an earnings surprise of -28.57% [1] Financial Performance - The company posted revenues of $68.89 million for the quarter ended December 2025, missing the Zacks Consensus Estimate by 1.79% and down from $90.78 million in the same quarter last year [2] - Over the last four quarters, DLH has not surpassed consensus EPS estimates and has topped revenue estimates only once [2] Stock Performance - DLH shares have increased by approximately 3.9% since the beginning of the year, outperforming the S&P 500, which gained 1.3% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.08 on revenues of $64.95 million, and for the current fiscal year, it is -$0.35 on revenues of $235.6 million [7] - The estimate revisions trend for DLH was unfavorable prior to the earnings release, resulting in a Zacks Rank of 5 (Strong Sell), indicating expected underperformance in the near future [6] Industry Context - The Staffing Firms industry, to which DLH belongs, is currently ranked in the bottom 20% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8]

Revenue Performance - Revenue for the three months ended December 31, 2025, was $68.892 million, a decrease of 24.2% compared to $90.782 million for the same period in 2024[8] - Total revenue for the three months ended December 31, 2025, was $68,892,000, a decrease of 24% from $90,782,000 in the same period of 2024[55] - Revenue from the Department of Health and Human Services was $34,630,000, down from $41,948,000, representing a decline of approximately 17%[55] - Revenue from Time and Materials contracts was $30,605,000, down from $49,400,000, indicating a decline of approximately 38%[55] - Prime Contractor revenue was $64,454,000 for the three months ended December 31, 2025, compared to $84,439,000 in 2024, reflecting a decrease of about 24%[55] Financial Losses - The company reported a net loss of $1.324 million for the three months ended December 31, 2025, compared to a net income of $1.115 million in the prior year[8] - Basic and diluted net loss per share was $(0.09) for the three months ended December 31, 2025, compared to earnings of $0.08 per share in the same period of 2024[8] - Net loss for the three months ended December 31, 2025, was $1,324 million, compared to a net income of $1,115 million for the same period in 2024[14] - The net loss for the three months ended December 31, 2025, was $1,324,000, compared to a net income of $1,115,000 for the same period in 2024, marking a significant shift in financial performance[87] Operating Costs - Total operating costs for the same period were $67.456 million, down 20.8% from $85.145 million year-over-year[8] - Total operating costs for the three months ended December 31, 2025, were $67.456 million, down from $85.145 million in the same period of 2024, reflecting a decrease of 20.8%[8] - Total lease costs for the three months ended December 31, 2025, were $857,000, down from $989,000 in the same period of 2024, reflecting a decrease of approximately 13.3%[57] Assets and Liabilities - Total assets decreased to $283.508 million as of December 31, 2025, from $290.663 million as of September 30, 2025[11] - Current liabilities decreased to $41.026 million as of December 31, 2025, from $42.671 million as of September 30, 2025[11] - Shareholders' equity decreased to $112.188 million as of December 31, 2025, from $112.958 million as of September 30, 2025[11] - Total liabilities decreased from $177,705 million in September 2025 to $171,320 million in December 2025, a reduction of approximately 3.1%[11] Cash Flow and Financing - Net cash used in operating activities for the three months ended December 31, 2025, was $4.770 million, an improvement from $11.538 million in the same period of 2024[14] - The company had cash of $257,000 at the end of the period, up from $125,000 at the beginning of the period[14] - The company had an unused borrowing capacity of $10.7 million as of December 31, 2025, from a secured revolving line of credit with a ceiling of $50 million[77] - Proceeds from the revolving line of credit amounted to $67,396 million, while repayments totaled $62,362 million during the same period[14] Stock-Based Compensation - The company recognized stock-based compensation expense of $647,000 for the three months ended December 31, 2025, compared to $193,000 in the same period of 2024[14] - Total stock-based compensation expense for the three months ended December 31, 2025, was $647,000, compared to $193,000 for the same period in 2024, representing a 235% increase[79] - The company granted 427,046 restricted stock units during the three months ended December 31, 2025, compared to 312,906 in the same period of 2024[79] - Unrecognized stock-based compensation expense as of December 31, 2025, was $4.073 million, down from $5.841 million in 2024[83] Debt Obligations - The company's net bank debt obligations increased to $133,475,000 as of December 31, 2025, from $128,033,000 as of September 30, 2025[68] - Interest expense for the three months ended December 31, 2025, was $3,396,000, a decrease from $4,133,000 in the same period of 2024, representing a reduction of approximately 17.9%[70] - The secured term loan balance was $123,500,000 as of December 31, 2025, with a fixed interest rate of 4.1%[72] - Total contractual obligations as of December 31, 2025, amounted to $156.228 million, with debt obligations of $136.601 million[88] Accounts Receivable - The company's accounts receivable as of December 31, 2025, totaled $35,842,000, a decrease from $38,394,000 as of September 30, 2025[60] - Accounts receivable decreased from $38,394 million in September 2025 to $35,842 million in December 2025, a decline of approximately 6.6%[11] Goodwill and Intangible Assets - Goodwill remained unchanged at approximately $138.2 million as of December 31, 2025, compared to September 30, 2025[62] - Total intangible assets, net, were $87,752,000 as of December 31, 2025, down from $91,865,000 as of September 30, 2025[63] Tax Positions - There were no uncertain tax positions reported at either December 31, 2025, or September 30, 2025[39] - The Company recognized no allowance for doubtful accounts at either December 31, 2025, or September 30, 2025[44]

Revenue Performance - Revenue for Q1 FY2026 was $68.9 million, a decrease of 24.1% compared to $90.8 million in Q1 FY2025[5] - Revenue for the three months ended December 31, 2025, was $68,892,000, while in 2024 it was $90,782,000, indicating a significant decrease[23] Profitability Metrics - Adjusted EBITDA was $6.5 million, representing 9.5% of revenue, benefiting from cost reduction initiatives[4] - EBITDA for the three months ended December 31, 2025, was $5,736,000, down from $9,944,000 in 2024, a decrease of $4,208,000[23] - Adjusted EBITDA for the same period was $6,544,000, compared to $9,944,000 in 2024, reflecting a decline of $3,400,000[23] - EBITDA as a percentage of revenue for the same period was 8.3%, down from 11.0% in 2024[23] - Adjusted EBITDA as a percentage of revenue was 9.5% for the three months ended December 31, 2025, compared to 11.0% in 2024[23] Cash Flow and Operating Activities - Operating cash usage was $4.8 million, an improvement of nearly $7 million year-over-year[4] - Free Cash Flow for the three months ended December 31, 2025, was $(4,809,000), an improvement from $(12,091,000) in 2024, showing a positive change of $7,282,000[24] - Net cash used in operating activities for the three months ended December 31, 2025, was $(4,770,000), compared to $(11,539,000) in 2024, an increase of $6,769,000[24] Net Loss and Financial Position - Net loss for the quarter was $(1.3) million, compared to a net income of $1.1 million in the prior year, reflecting a 218.2% decline[5] - For the three months ended December 31, 2025, the company reported a net loss of $1,324,000 compared to a net income of $1,115,000 for the same period in 2024, representing a change of $2,439,000[23] - Net loss as a percentage of revenue for the three months ended December 31, 2025, was (1.9)%, compared to 1.2% in 2024[23] Debt and Backlog - Debt increased to $136.6 million, up 3.8% from $131.6 million in the previous quarter[6] - Backlog stood at $517.4 million, a slight increase of 0.6% from $514.3 million[6] Strategic Focus and Initiatives - The company is focused on aligning expenses with revenue volumes and restoring competitive margins[3] - Management plans to use operating cash flow to reduce debt levels and enhance long-term financial flexibility[3] - The company is undergoing a transition of legacy programs to small business contractors, impacting revenue[4] - Future strategies include further deleveraging and protecting strategic investments for organic growth[3] - The company implemented cost scaling initiatives that contributed $808,000 to Adjusted EBITDA in the current period[23]

Core Insights - DLH Holdings Corp. reported a significant decline in revenue and net income for the fiscal first quarter ended December 31, 2025, reflecting a transition of legacy programs to small business contractors [3][4][6]. Financial Performance - Revenue decreased to $68.9 million from $90.8 million, a decline of 24.1% year-over-year [4]. - Income from operations fell to $1.4 million, down 75.0% from $5.6 million [4]. - The company reported a net loss of $1.3 million compared to a net income of $1.1 million in the prior year, marking a 218.2% change [4]. - Diluted earnings per share were $(0.09), a decrease of 212.5% from $0.08 [4]. - Adjusted EBITDA was $6.5 million, or 9.5% of revenue, down 34.3% from the previous year [4][6]. Cash Flow and Debt Management - Operating cash flow showed a usage of $(4.8) million, an improvement of 58.3% year-over-year [4][6]. - Free cash flow was $(4.8) million, a 60.3% improvement from $(12.1) million in the prior year [4][6]. - Debt increased to $136.6 million from $131.6 million, a rise of 3.8% [5]. Strategic Focus - The management emphasized a commitment to managing profitability and cash flow during the transition period, with initiatives to align costs with revenue volumes [3]. - The company aims to reduce debt levels using operating cash flow to enhance long-term financial flexibility and shareholder value [3]. Backlog and Future Outlook - The backlog increased slightly to $517.4 million from $514.3 million, reflecting a 0.6% growth [5]. - Management plans to discuss competitive conditions and strategies in an upcoming conference call [7].

Core Viewpoint - DLH Holdings Corp. is set to release its financial results for the fiscal first quarter ending December 31, 2025, on February 9, 2026, after market close, followed by a conference call on February 10, 2026, to discuss these results and operational trends [1]. Financial Results Announcement - The financial results will be released on February 9, 2026, after market close [1]. - A conference call for the investment community will take place on February 10, 2026, at 10:00 a.m. Eastern Time [1]. Conference Call Details - Interested parties can listen to the conference call by dialing 888-347-5290 or 412-317-5256 [2]. - Presentation materials will be available on the Investor Relations section of the DLH website prior to the call [2]. - A digital recording of the conference call will be accessible for replay two hours after the call's completion [2]. Company Overview - DLH enhances technology, public health, and cyber security readiness through various solutions and services [3]. - The company employs over 1,700 individuals dedicated to solving complex missions using advanced technologies [3]. - DLH focuses on digital transformation, artificial intelligence, advanced analytics, and telehealth systems to improve lives globally [3].