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 Insights - DLH Holdings Corp. reported a decline in revenue and net income for the fiscal fourth quarter ended September 30, 2025, primarily due to market headwinds impacting performance [1][4][8] - The company generated $10.7 million in free cash flow and reduced total indebtedness by $23 million over the year, indicating a focus on strengthening its balance sheet [4][8] - DLH's strategy revolves around three technology-driven pillars aimed at enhancing its position in federal health and national security sectors, with expectations of growing demand for advanced AI and cybersecurity solutions [3][4] Financial Performance - Revenue for Q4 2025 was $81.2 million, down 15.8% from $96.4 million in Q4 2024 [4][8] - Operating income decreased by 64.1% to $2.3 million from $6.4 million year-over-year [4][8] - Net loss for the quarter was $(0.9) million compared to a net income of $2.3 million in the same quarter last year, marking a 139.1% decline [4][8] - Diluted earnings per share fell to $(0.06) from $0.16, a decrease of 137.5% [4][8] - EBITDA for the quarter was $6.6 million, down 38.3% from $10.7 million in Q4 2024, with an EBITDA margin of 8.1% compared to 11.1% [4][8] Debt and Cash Flow - Total debt as of September 30, 2025, was $131.6 million, a reduction of 14.9% from $154.6 million a year earlier [6][8] - The backlog decreased by 25.5% to $514.3 million from $690.3 million year-over-year [6][8] - Cash provided by operating activities was $10.7 million, down 13.7% from $12.4 million in Q4 2024 [4][8] Strategic Outlook - The company anticipates expanding demand from key agencies for technology-powered solutions, particularly in advanced AI and mission-critical cybersecurity [4][8] - DLH is positioned to identify and capitalize on new opportunities, reinforcing its role as a trusted partner in advancing customer missions [4][8]