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DLH(DLHC) - 2025 Q1 - Earnings Call Transcript
DLHCDLH(DLHC)2025-02-06 20:47
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Financial Data and Key Metrics Changes - The company reported first quarter revenue of 90.8million,downfrom90.8 million, down from 97.9 million in the prior year period, reflecting a revenue contraction of approximately 5millionduetosmallbusinessset−asideconversionsandservicedeliverytiming[19][21]−EBITDAforthefirstquarterwas5 million due to small business set-aside conversions and service delivery timing [19][21] - EBITDA for the first quarter was 9.9 million, compared to 11.1millioninthepreviousyear,primarilyduetoloweroverallrevenuelevels[21]−Operatingcashusagewasapproximately11.1 million in the previous year, primarily due to lower overall revenue levels [21] - Operating cash usage was approximately 11.5 million during the quarter, contrasting with cash generation of 5.1millioninthesameperiodlastyear[22][23]−Totaldebtincreasedto5.1 million in the same period last year [22][23] - Total debt increased to 167 million from 154.6millionatthestartofthefiscalyear,withcurrentdebtslightlyunder154.6 million at the start of the fiscal year, with current debt slightly under 161 million [23] Business Line Data and Key Metrics Changes - The revenue decline was attributed to several factors, including the unbundling of contracts, small business set-aside transitions, and timing of service deliveries [19][20][21] - The company anticipates that small business set-aside conversion headwinds will continue to impact results in upcoming quarters [20] Market Data and Key Metrics Changes - The company has a qualified pipeline of new business opportunities valued at approximately 4billion,whichincludesadiversemixofexistingandnewcustomers[25]−Thecompanyexpectstowinseveralcontractswithvaluesexceeding4 billion, which includes a diverse mix of existing and new customers [25] - The company expects to win several contracts with values exceeding 100 million, which should help offset the impact of small business set-aside erosion [14][25] Company Strategy and Development Direction - The company is focused on accelerating organic growth and leveraging its digital transformation, cybersecurity, and systems engineering capabilities [13][16] - The management emphasized the importance of differentiating technology and innovation to drive future growth [14][16] - The company remains optimistic about its long-term vision and the potential for growth in the federal marketplace [12][16] Management's Comments on Operating Environment and Future Outlook - Management's initial assessment of the new administration's impact on the company's business remains neutral to slightly positive, with no material impact from recent executive orders [11] - The company is confident in its ability to navigate through the changing business climate and expects strong cash flow in upcoming quarters [12][24] Other Important Information - The company is investing in organic growth and enhancing its capabilities in cybersecurity and systems engineering [56] - The InfiniBite cloud product is being developed to expand its capabilities for secure federal government projects [48][51] Q&A Session Summary Question: Can you rank the items impacting revenue decline? - The most significant impact was from the unbundling of a DoD program, followed by small business revenue transitions, winding down of international work, and timing of services [30][34][41] Question: Are task orders from large IDIQs starting to come out? - The company is beginning to see opportunities from large IDIQs and is excited about the recent award of the Oasis contract [42][46] Question: Update on InfiniBite cloud product? - The company is enhancing the InfiniBite platform for large-scale data analytics services, focusing on secure programs required by the federal government [48][51] Question: Impact of continuing resolution on business? - The company anticipates minimal impact from the continuing resolution, as most programs are already appropriated [67][71]