• DLH Reports Fiscal 2021 Fourth Quarter Results

    ソース: Nasdaq GlobeNewswire / 06 12 2021 08:00:02   America/New_York

    ATLANTA, Dec. 06, 2021 (GLOBE NEWSWIRE) -- DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the “Company”), a leading provider of innovative healthcare services and solutions to federal agencies, today announced financial results for its fiscal fourth quarter ended September 30, 2021.

    Highlights

    • Fourth quarter revenue increased to $65.2 million in fiscal 2021 from $50.7 million in fiscal 2020, reflecting the acquisition of Irving Burton Associates (“IBA”), new contract awards, and increased volume on existing contracts
    • For the full fiscal year, revenue rose to $246.1 million from $209.2 million
    • Earnings were $2.9 million, or $0.21 per diluted share, for the fiscal 2021 fourth quarter versus $1.4 million, or $0.10 per diluted share, for the fourth quarter of fiscal 2020
    • Earnings for the full year were $10.1 million, or $0.75 per diluted share, for fiscal 2021 versus $7.1 million or $0.54 per diluted share, for fiscal 2020
    • Term loan reduced from $70.0 million to $46.8 million during the fiscal year
    • During the fiscal fourth quarter, DLH announced several awards with an aggregate value of over $120 million to support the Center for Disease Control and Prevention (“CDC”) and FEMA
    • Contract backlog was $651.5 million as of September 30, 2021

    Management Discussion
    “The end of fiscal 2021 came with a few major developments that further accentuated an already standout year,” said DLH President and Chief Executive Officer Zach Parker. “We won contracts from the CDC and FEMA, which added over $120 million to our backlog as we posted annual revenue of $246.1 million and earnings of $0.75 per diluted share. We closed out fiscal 2021 with debt of $46.8 million, putting us in excellent shape – both from a balance sheet perspective as well as our book of business – for even stronger results going forward.

    “DLH continued to perform with excellence in the midst of a global pandemic. As always, I would like to thank our talented team for their many accomplishments, hard work, and dedication to taking us to the next level in terms of size and performance. Given our professional, highly-credentialed staff, many recent awards, and ongoing demand for our technology-enabled suite of services, the future is bright for DLH.”

    Results for the Three Months Ended September 30, 2021
    Revenue for the fourth quarter of fiscal 2021 was $65.2 million versus $50.7 million in the prior-year period. The increase was due to the Company’s IBA acquisition, completed September 30, 2020, which added approximately $8.5 million in revenue, new business awards in the quarter and increased volume across legacy programs.

    Income from operations was $4.0 million for the quarter versus $2.7 million in the prior-year period and, as a percent of revenue, the Company reported an operating margin of 6.2% in fiscal 2021 versus 5.3% in fiscal 2020. The current year performance reflects increased revenue contribution from time and materials programs, which generally yield stronger returns than cost reimbursable contracts. This more than offset an increase in depreciation and amortization as well as higher general and administrative costs, which rose due to incremental corporate development costs associated with a transaction that was pursued but not executed.

    Interest expense was essentially flat at $0.8 million in the fiscal fourth quarter of both 2021 and 2020. Income before taxes was $3.2 million this year versus $1.9 million in fiscal 2020, representing 5.0% and 3.8% of revenue, respectively, for each period.

    For the three months ended September 30, 2021 and 2020, respectively, DLH recorded a $0.3 million and $0.6 million provision for tax expense. The Company reported net income of approximately $2.9 million, or $0.21 per diluted share, for the fourth quarter of fiscal 2021 versus $1.4 million, or $0.10 per diluted share, for the fourth quarter of fiscal 2020. As a percent of revenue, net income was 4.4% for the fourth quarter of fiscal 2021 versus 2.7% for the prior year period.

    On a non-GAAP basis, EBITDA for the three months ended September 30, 2021 was approximately $6.0 million versus $4.4 million in the prior-year period, or 9.3% and 8.6% of revenue, respectively.

    Key Financial Indicators
    Fiscal year to date, DLH generated $45.7 million in operating cash, inclusive of a $21.1 million advance payment related to the FEMA contract awarded in late September. The Company paid down $23.2 million of its secured loan facility and has satisfied mandatory principal amortization on the loan facility until December 31, 2023. The Company intends to continue using cash to make debt prepayments when possible.

    As of September 30, 2021, the Company had cash and cash equivalents of $24.1 million and debt outstanding under its credit facility of $46.8 million, versus cash of $1.4 million and debt outstanding of $70.0 million as of September 30, 2020. The increase in cash was primarily due to an advance payment to fund deployment of emergency medical resources under the FEMA contract awarded in late September.

    At September 30, 2021, total backlog was approximately $651.5 million, including funded backlog of approximately $191.0 million, and unfunded backlog of $460.5 million.

    Conference Call and Webcast Details
    DLH management will discuss fourth 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 today, December 6, 2021. 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 10149431.

    About DLH

    DLH delivers improved health and readiness solutions for federal programs through research, development, and innovative care processes. The Company’s experts in public health, performance evaluation, and health operations solve the complex problems faced by civilian and military customers alike, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more. With over 2,300 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 public health 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 outbreak of the novel coronavirus (“COVID-19”), including the measures to reduce its spread, and its impact on the economy and demand for our services, are uncertain, cannot be predicted, and may precipitate or exacerbate other risks and uncertainties; the risk that we will not realize the anticipated benefits of our recent or any future acquisition; the challenges of managing larger and more widespread operations; contract awards in connection with re-competes for present business and/or competition for new business; compliance with new 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 ability to successfully integrate the operations our recent acquisition and of any future acquisitions; 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, 2021, 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.
    CONSOLIDATED STATEMENTS OF INCOME
    (Amounts in thousands except per share amounts)

      Three Months Ended Twelve Months Ended
      September 30, September 30,
      2021 2020 2021 2020
    Revenue $65,182  $50,691  $246,094  $209,185 
    Cost of Operations:        
    Contract costs 51,522  39,701  194,614  163,596 
    General and administrative costs 6,532  5,698  25,054  24,195 
    Corporate development costs 1,088  930  1,088  930 
    Depreciation and amortization 2,010  1,664  8,115  7,003 
    Total operating costs 61,152  47,993  228,871  195,724 
    Income from operations 4,030  2,698  17,223  13,461 
    Interest expense, net 808  781  3,784  3,441 
    Income before income taxes 3,222  1,917  13,439  10,020 
    Income tax expense 339  554  3,294  2,906 
    Net income $2,883  $1,363  $10,145  $7,114 
             
    Net income per share - basic $0.23  $0.11  $0.81  $0.58 
    Net income per share - diluted $0.21  $0.10  $0.75  $0.54 
    Weighted average common shares outstanding        
    Basic 12,607  12,390  12,549  12,282 
    Diluted 13,654  13,356  13,597  13,105 



    DLH HOLDINGS CORP.
    CONSOLIDATED BALANCE SHEETS
    (Amounts in thousands except par value of shares)

      September 30,
    2021
     September 30,
    2020
    ASSETS    
    Current assets:    
    Cash and cash equivalents $24,051  $1,357 
    Accounts receivable 33,447  32,541 
    Other current assets 4,265  3,499 
    Total current assets 61,763  37,397 
    Equipment and improvements, net 1,912  3,339 
    Operating lease right-of-use-assets 19,919  22,427 
    Deferred taxes, net   37 
    Goodwill 65,643  67,144 
    Intangible assets, net 47,469  52,612 
    Other long-term assets 464  606 
    Total assets $197,170  $183,562 
         
    LIABILITIES AND SHAREHOLDERS’ EQUITY    
    Current liabilities:    
    Debt obligations - current, net of deferred financing costs $  $6,727 
    Operating lease liabilities - current 2,261  2,045 
    Accrued payroll 9,125  10,611 
    Deferred revenue 22,273   
    Accounts payable, accrued expenses, and other current liabilities 32,717  28,578 
    Total current liabilities 66,376  47,961 
    Long-term liabilities:    
    Deferred taxes, net 1,176   
    Operating lease liabilities - long-term 19,374  21,620 
    Debt obligations - long-term, net of deferred financing costs 44,636  60,544 
    Total long-term liabilities 65,186  82,164 
    Total liabilities 131,562  130,125 
    Shareholders’ equity:    
    Common stock, $0.001 par value; authorized 40,000 shares; issued and outstanding 12,714 and 12,404 at September 30, 2021 and September 30, 2020, respectively 13  12 
    Additional paid-in capital 87,893  85,868 
    Accumulated deficit (22,298) (32,443)
    Total shareholders’ equity 65,608  53,437 
    Total liabilities and shareholders’ equity $197,170  $183,562 

     



    DLH HOLDINGS CORP.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Amounts in thousands)

      Twelve Months Ended
      September 30,
      2021 2020
    Operating activities    
    Net income $10,145  $7,114 
    Adjustments to reconcile net income to net cash provided by operating activities:    
    Depreciation and amortization 8,115  7,003 
    Amortization of deferred financing costs charged to interest expense 792  721 
    Stock based compensation expense 1,660  910 
    Deferred taxes, net 1,213  2,308 
    Gain from lease modification   (121)
    Changes in operating assets and liabilities    
    Accounts receivable (906) (5,408)
    Other current assets (766) (1,592)
    Accrued payroll (1,486) 489 
    Deferred revenue 22,273   
    Accounts payable, accrued expenses, and other current liabilities 4,139  7,188 
    Other long-term assets and liabilities 486  839 
    Net cash provided by operating activities 45,665  19,451 
         
    Investing activities    
    Business acquisition, net of cash acquired 59  (32,678)
    Purchase of equipment and improvements (103) (152)
    Net cash used in investing activities (44) (32,830)
    Financing activities    
    Proceeds from debt obligations   33,000 
    Repayment of debt obligations (23,250) (19,000)
    Payment of deferred financing costs (43) (898)
    Repurchased shares of common stock   (211)
    Proceeds from issuance of common stock upon exercise of options 366  55 
    Net cash (used in)/provided by financing activities (22,927) 12,946  
         
    Net change in cash and cash equivalents 22,694  (433)
    Cash and cash equivalents at beginning of year 1,357  1,790 
    Cash and cash equivalents at end of year $24,051  $1,357 
         
    Supplemental disclosures of cash flow information    
    Cash paid during the period for interest $2,941  $2,806 
    Cash paid during the period for income taxes $936  $917 
    Supplemental disclosures of non-cash activity    
    Non-cash cancellation of common stock $68  $211 



    Revenue Metrics

      Twelve Months Ended
      September 30, September 30,
      2021 2020
    Market Mix:     
    Defense/VA 57% 49%
    Human Services and Solutions 15% 20%
    Public Health/Life Sciences 28% 31%
         
    Contract Mix:    
    Time and Materials 75% 70%
    Cost Reimbursable 20% 28%
    Firm Fixed Price 5% 2%
         
    Prime vs Sub:    
    Prime 87% 92%
    Subcontractor 13% 8%

    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 or benefit from income taxes and (iii) depreciation and amortization. EBITDA as a percent of revenue is EBITDA for the measurement period divided by revenue for the same period.

    The Company uses GAAP net income adjusted for the effect of corporate development costs as a supplemental measure of Company results. We exclude corporate development costs from this measure because they were incurred as a result of specific events, do not reflect the costs of our operations, and can affect the period-over-period assessment of operating results.

    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.


    Reconciliation of GAAP net income to EBITDA, a non-GAAP measure (in thousands):

      Three Months Ended Twelve Months Ended
      September 30, September 30,
      2021 2020 Change 2021 2020 Change
    Net income $2,883 $1,363 $1,520 $10,145 $7,114 $3,031
    (i) Interest expense, net 808 781 27 3,784 3,441 343
    (ii) Provision for taxes 339 554 (215) 3,294 2,906 388
    (iii) Depreciation and amortization 2,010 1,664 346 8,115 7,003 1,112
    EBITDA $6,040 $4,362 $1,678 $25,338 $20,464 $4,874
                 
    Net income as a % of revenue 4.4% 2.7% 1.7% 4.1% 3.4% 0.7%
    EBITDA as a % of revenue 9.3% 8.6% 0.7% 10.3% 9.8% 0.5%
    Revenue $65,182 $50,691 $14,491 $246,094 $209,185 $36,909


    Reconciliation of GAAP net income to net income adjusted for the effect of the corporate development costs, a non-GAAP measure (in thousands except for per share amounts):

      Year Ended
      September 30,
      2021 2020 Change
    Net income $10,145  $7,114  $3,031 
    Corporate development costs 1,088  930  158 
    Tax effect of excluding corporate development costs (267) (270) 3 
    Net income adjusted for corporate development costs $10,966  $7,774  $3,192 
           
    Net income per diluted share $0.75  $0.54  $0.21 
    Impact of corporate development costs, net 0.06  0.05  0.01 
    Net income per diluted share adjusted for corporate development costs $0.81  $0.59  $0.22 

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