0000785557false00007855572024-07-312024-07-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported):  July 31, 2024
DLH Holdings Corp.
(Exact name of Registrant as Specified in its Charter)
New Jersey0-1849222-1899798
(State or Other Jurisdiction of Incorporation(Commission File Number)(I.R.S. Employer Identification No.)
3565 Piedmont Road, NE, Building 3, Suite 700
Atlanta, GA 30305
(Address of Principal Executive Offices, and Zip Code)

(770) 554-3545
Registrant's telephone number, Including Area Code
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockDLHCNasdaqCapital Market
CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO SIMULTANEOUSLY SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE FOLLOWING PROVISIONS:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐    


Item 2.02Results of Operations and Financial Condition
  
On July 31, 2024, DLH Holdings Corp. announced by press release its financial results for its fiscal quarter ended June 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1.
The information furnished pursuant to Item 2.02 of this Current Report, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01Financial Statements and Exhibits
(d) Exhibits
The following exhibit is attached to this Current Report on Form 8-K:
Exhibit
Number
Exhibit Title or Description
Press Release dated July 31, 2024
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



















SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
  DLH Holdings Corp.
   
  By: /s/ Kathryn M. JohnBull
  Name: Kathryn M. JohnBull
  Title:   Chief Financial Officer
 Date: July 31, 2024
 
























DLH Reports Fiscal 2024 Third Quarter Results
Debt Reduction Continues as Company Sees Increased Bid Activity to Close Out Fiscal 2024
Atlanta, Georgia – July 31, 2024 - DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the “Company”), a leading provider of science research and development, systems engineering and integration, and digital transformation and cyber security solutions to federal health IT and readiness agencies, today announced financial results for its fiscal third quarter ended June 30, 2024.

Third Quarter Highlights
•Third quarter revenue was $100.7 million in fiscal 2024 versus $102.2 million in fiscal 2023, reflecting growth in our Department of Health and Human Services portfolio offset by small business set-aside contract conversions
•Earnings were $1.1 million, or $0.08 per diluted share, for the third quarter of fiscal 2024 versus $1.7 million, or $0.12 per diluted share, for the third quarter of fiscal 2023
•Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $10.0 million for the third quarter of fiscal 2024 as compared to $11.4 million for the third quarter of fiscal 2023.
•Total debt was $166.5 million as of June 30, 2024 versus $170.8 million as of March 31, 2024.
•Contract backlog was $670.5 million as of June 30, 2024 versus $736.2 million as of March 31, 2024.

Management Discussion
"The third quarter results depict the dynamic nature of our Company, with growth in key markets being offset by some of our contracts transitioning to small businesses, impacting our top line," said Zach Parker, DLH President and Chief Executive Officer. "New business revenue for fiscal 2024 has been delayed due to the Government evaluation process. However, strong cash flow has allowed us to reduce debt and lower interest expenses. Our broad capabilities have allowed us to increase our pursuit of new business. Despite the complexity and delays of federal procurement, our robust pipeline of qualified new business continues to offer substantial growth opportunities in our core markets for the future."

Results for the Three Months Ended June 30, 2024
Revenue for the third quarter of fiscal 2024 was $100.7 million versus $102.2 million in fiscal 2023, reflecting growth across the Company's key strategic programs — primarily in public health and IT services — offset by certain contracts converting to small business set-aside contracts.

Income from operations was $5.8 million versus $7.1 million in the fiscal 2023 third quarter and, as a percentage of revenue, the Company reported operating margin of 5.7% in fiscal 2024 versus 7.0% in the prior-year period. We experienced an increase in contract costs as a percent of revenue, primarily driven by the timing of non-labor costs that, by their nature, generate lower margins. The increase does not represent a change in our long term cost of performance expectations, but rather reflects the periodic needs of some of our logistics business. The increase in contracts cost was offset by a decrease in general and administrative expense of $0.9 million from $9.9 million in fiscal 2023 Q3 to $9.0 million in fiscal 2024 Q3.

Interest expense was $4.1 million in the fiscal quarter of 2024 versus $4.9 million in the prior-year period, reflecting lower debt outstanding due to the Company's use of cash flow generation to de-lever the balance sheet. Income before income taxes was $1.6 million for the third quarter this year versus $2.2 million in fiscal 2023, representing 1.6% and 2.1% of revenue, respectively, for each period.

For the three months ended June 30, 2024 and 2023, DLH recorded a $0.5 million and $0.5 million provision for income tax expense, respectively. The Company reported net income of approximately $1.1 million, or $0.08 per diluted share, for the third quarter of fiscal 2024 versus $1.7 million, or $0.12 per diluted share, for the third quarter of fiscal 2023. As a percentage of revenue for fiscal 2024 and 2023, net income was 1.1% and 1.7%, respectively.

On a non-GAAP basis, EBITDA for the three months ended June 30, 2024 was approximately $10.0 million versus $11.4 million in the prior-year period, or 10.0% and 11.1% of revenue, respectively and was in range of our expectations.
Key Financial Indicators
During the third quarter of fiscal 2024, DLH generated $4.6 million in operating cash. As of June 30, 2024 the Company had cash of $0.4 million and debt outstanding under its credit facilities of $166.5 million versus cash of $0.2 million and debt outstanding of $179.4 million as of September 30, 2023. The debt reduction of $4.3 million during the third quarter was all voluntary prepayments applied to floating rate debt. We have satisfied all mandatory term amortization payments through March 31, 2025. The Company expects to reduce its total debt balance to between $160.0 million and $157.0 million by the end of fiscal 2024, attibutable to an increase in days sales outstanding ("DSO") of 50 to 53 days.

As of June 30, 2024 total backlog was approximately $670.5 million, including funded backlog of approximately $141.5 million and unfunded backlog of $529.0 million.
Conference Call and Webcast Details
DLH management will discuss third quarter results and provide a general business update, including current competitive conditions and strategies, during a conference call beginning at 10:00 AM Eastern Time tomorrow, August 1, 2024. Interested parties may listen to the conference call by dialing 888-347-5290 or 412-317-5256. Presentation materials will also be posted on the Investor Relations section of the DLH website prior to the commencement of the conference call.

A digital recording of the conference call will be available for replay two hours after the completion of the call and can be accessed on the DLH Investor Relations website or by dialing 877-344-7529 and entering the conference ID 2566648.

About DLH
DLH (NASDAQ: DLHC), a Russell 2000 company, enhances technology, public health, and cyber security readiness missions through science, technology, cyber, and engineering solutions and services. Our experts solve some of the most complex and critical missions faced by federal customers, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more. With over 3,000 employees dedicated to the idea that “Your Mission is Our Passion,” DLH brings a unique combination of government sector experience, proven methodology, and unwavering commitment to innovative solutions to improve the lives of millions. For more information, visit www.DLHcorp.com.

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 future financial performance. Any statements that refer to expectations, projections or other characterizations of future events or circumstances or that are not statements of historical fact (including without limitation statements to the effect that the Company or its management “believes”, “expects”, “anticipates”, “plans”, “intends” and similar expressions) should be considered forward looking statements that involve risks and uncertainties which could cause actual events or DLH’s actual results to differ materially from those indicated by the forward-looking statements. Forward-looking statements in this release include, among others, statements regarding estimates of future revenues, operating income, earnings and cash flow. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Our actual results may differ materially from such forward-looking statements made in this release due to a variety of factors, including: the risk that we will not realize the anticipated benefits of acquisitions (including anticipated future financial performance and results); the diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations; the inability to retain employees and customers; contract awards in connection with re-competes for present business and/or competition for new business; our ability to manage our debt obligations; compliance with bank financial and other covenants; changes in client budgetary priorities; government contract procurement (such as bid and award protests, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the impact of inflation and higher interest rates; and other risks described in our SEC filings. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s periodic reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as well as subsequent reports filed thereafter. The forward-looking statements contained herein are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and business.

Such forward-looking statements are made as of the date hereof and may become outdated over time. The Company does not assume any responsibility for updating forward-looking statements, except as may be required by law.

CONTACTS:
INVESTOR RELATIONS
Contact: Chris Witty
Phone: 646-438-9385
Email: cwitty@darrowir.com
TABLES TO FOLLOW
DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands except per share amounts)


Three Months EndedNine Months Ended
June 30,June 30,
2024202320242023
Revenue$100,694 $102,241 $299,551 $274,385 
Cost of operations:
Contract costs81,646 80,919 239,839 216,779 
General and administrative costs9,013 9,935 28,420 27,670 
Corporate development costs— — — 1,735 
Depreciation and amortization4,272 4,280 12,769 11,281 
Total operating costs94,931 95,134 281,028 257,465 
Income from operations5,763 7,107 18,523 16,920 
Interest expense4,143 4,917 12,991 11,512 
Income before provision for income taxes1,620 2,190 5,532 5,408 
Provision for income tax expense481 452 430 1,318 
Net income$1,139 $1,738 $5,102 $4,090 
Net income per share - basic$0.08 $0.13 $0.36 $0.30 
Net income per share - diluted$0.08 $0.12 $0.35 $0.28 
Weighted average common stock outstanding
Basic14,232 13,854 14,156 13,638 
Diluted14,704 14,539 14,716 14,421 


2

DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands except par value of shares)
June 30,
2024		September 30,
2023
(unaudited)
ASSETS
Current assets:
Cash$423 $215 
Accounts receivable58,341 59,119 
Other current assets2,742 3,067 
Total current assets61,506 62,401 
Goodwill138,161 138,161 
Intangible assets, net112,435 124,777 
Operating lease right-of-use assets7,498 9,656 
Deferred taxes, net3,381 3,070 
Equipment and improvements, net1,790 1,590 
Other long-term assets186 186 
Total assets$324,957 $339,841 
LIABILITIES AND SHAREHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable and accrued liabilities$23,189 $29,704 
Debt obligations - current, net of deferred financing costs17,646 17,188 
Accrued payroll14,232 13,794 
Operating lease liabilities - current2,889 3,463 
Other current liabilities482 638 
Total current liabilities58,438 64,787 
Long-term liabilities:
Debt obligations - long-term, net of deferred financing costs143,258 155,147 
Operating lease liabilities - long-term13,521 15,908 
Other long-term liabilities1,135 1,560 
Total long-term liabilities157,914 172,615 
Total liabilities216,352 237,402 
Shareholders' equity:
Common stock, $0.001 par value; 40,000 shares authorized; 14,183 and 13,950 shares issued and outstanding at June 30, 2024 and September 30, 2023, respectively14 14 
Additional paid-in capital101,038 99,974 
Retained earnings7,553 2,451 
Total shareholders’ equity108,605 102,439 
Total liabilities and shareholders' equity$324,957 $339,841 




DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands) 
Nine Months Ended
 June 30,
20242023
Operating activities
Net income$5,102 $4,090 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization12,769 11,281 
Amortization of deferred financing costs charged to interest expense1,437 1,540 
Stock-based compensation expense2,290 2,020 
Deferred taxes, net(311)— 
Changes in operating assets and liabilities
Accounts receivable778 (1,918)
Other assets2,484 130 
Accounts payable and accrued liabilities(6,515)(4,221)
Accrued payroll437 274 
Other liabilities(3,540)1,801 
Net cash provided by operating activities
14,931 14,997 
Investing activities
Business acquisition, net of cash acquired— (180,711)
Purchase of equipment and improvements(627)(580)
Net cash used in investing activities(627)(181,291)
Financing activities
Proceeds from revolving line of credit257,067 144,697 
Repayment of revolving line of credit(252,123)(128,204)
Proceeds from debt obligations— 168,000 
Repayments of debt obligations(17,813)(10,688)
Payments of deferred financing costs— (7,666)
Proceeds from issuance of common stock upon exercise of options and warrants261 1,107 
Payment of tax obligations resulting from net exercise of stock options(1,488)(650)
Net cash (used in) provided by financing activities
(14,096)166,596 
Net change in cash208 302 
Cash - beginning of year215 228 
Cash - end of year$423 $530 
Supplemental disclosures of cash flow information
Cash paid during the year for interest$11,656 $10,006 
Cash paid during the year for income taxes$2,280 $4,055 
Supplemental disclosures of non-cash activity
Common stock surrendered for the exercise of stock options$2,432 $238 


Non-GAAP Financial Measures
The Company uses EBITDA and EBITDA as a percent of revenue as supplemental non-GAAP measures of performance. We define EBITDA as net income excluding (i) interest expense, (ii) Provision for income tax expense and (iii) depreciation and amortization. EBITDA as a percent of revenue is EBITDA for the measurement period divided by revenue for the same period.

These non-GAAP measures of performance are used by management to conduct and evaluate its business during its review of operating results for the periods presented. Management and the Company's Board utilize these non-GAAP measures to make decisions about the use of the Company's resources, analyze performance between periods, develop internal projections and measure management performance. We believe that these non-GAAP measures are useful to investors in evaluating the Company's ongoing operating and financial results and understanding how such results compare with the Company's historical performance. EBITDA is not a recognized measurement under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance investors should (i) evaluate adjustments in our reconciliation to the nearest GAAP financial measures and (ii) use non-GAAP measures in addition to, and not as an alternative to, measures of our operating results as defined under GAAP.

Reconciliation of GAAP net income to EBITDA, a non-GAAP measure (in thousands):    
Three Months EndedNine Months Ended
June 30,June 30,
20242023Change20242023Change
Net income$1,139 $1,738 $(599)$5,102 $4,090 $1,012 
(i) Interest expense, net4,143 4,917 (774)12,991 11,512 1,479 
(ii) Provision for income tax expense481 452 29 430 1,318 (888)
(iii) Depreciation and amortization4,272 4,280 (8)12,769 11,281 1,488 
EBITDA$10,035 $11,387 $(1,352)$31,292 $28,201 $3,091 
Net income as a % of revenue1.1 %1.7 %(0.6)%1.7 %1.5 %0.2 %
EBITDA as a % of revenue10.0 %11.1 %(1.1)%10.4 %10.3 %0.1 %
Revenue $100,694$102,241$(1,547)$299,551$274,385$25,166

v3.24.2
Cover
Jul. 31, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Jul. 31, 2024
Entity Registrant Name DLH Holdings Corp.
Entity Incorporation, State or Country Code NJ
Entity File Number 0-18492
Entity Tax Identification Number 22-1899798
Entity Address, Address Line One 3565 Piedmont Road, NE
Entity Address, Address Line Two Building 3
Entity Address, Address Line Three Suite 700
Entity Address, City or Town Atlanta
Entity Address, State or Province GA
Entity Address, Postal Zip Code 30305
City Area Code 770
Local Phone Number 554-3545
Title of 12(b) Security Common Stock
Trading Symbol DLHC
Security Exchange Name NASDAQ
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0000785557
Amendment Flag false
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