Financial Data and Key Metrics Changes - The company reported revenue of $81.2 million for Q4 FY2025, down from $96.4 million in the prior year, primarily due to contract transitions and government efficiency initiatives [14][15] - EBITDA for Q4 was $6.6 million, a decrease from $10.7 million year-over-year, with EBITDA as a percentage of revenue at 8.1% compared to 11.1% in FY2024 [15][16] - For the full year, revenue totaled $344.5 million, with EBITDA of $34 million, approximately 10% of revenue, and free cash flow of $23 million [16][17] - The company reduced debt by $10.7 million during the quarter, ending FY2025 with a total debt of $131.6 million, a reduction of $23 million over the year [17][18] Business Line Data and Key Metrics Changes - The revenue decline was attributed to approximately $11 million from small business set-aside conversions, with $7.5 million related to transitioned CMOP locations and $2.9 million from contract unbundling [14][15] - The company has been awarded a sole-source IDIQ contract to continue providing pharmacy and logistics services, indicating ongoing operational capabilities despite revenue challenges [15][16] Market Data and Key Metrics Changes - The company is optimistic about growth opportunities in its addressable market, particularly in defense and non-defense sectors, driven by digital transformation and cybersecurity initiatives [6][31] - The pipeline of qualified opportunities is reported to be over $3 billion, indicating strong future growth prospects [33] Company Strategy and Development Direction - The company is focused on transforming into a leading technology, engineering, and scientific research solutions provider, emphasizing digital transformation, cybersecurity, and systems engineering [9][10] - Investment in proprietary tools and innovation, such as the DLH Cyclone AI/ML-powered data science engine, is aimed at enhancing competitive differentiation and organic growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from contract transitions and government efficiency initiatives but expressed optimism about returning to historical growth and EBITDA margins [16][31] - The company is actively positioning for new business opportunities within the VA and expects to see awards in Q1 2026, which could positively impact margins [30][31] Other Important Information - The company achieved cybersecurity maturity model level two certification, enhancing its competitive position in the market [7] - Strong cash flow management has been highlighted as a key factor in the company's ability to reduce debt and strengthen its balance sheet [16][18] Q&A Session Summary Question: Status of the Head Start program and potential protest - The company did not participate in the protest regarding the Head Start program transition to small business set-asides, acknowledging the shift in government strategy [22] Question: Timeline for remaining CMOP awards - The company is not bidding on remaining CMOP contracts but is supporting a small business partner, with decisions expected in the coming quarter or two [24][25] Question: Expected return to historical growth and EBITDA margins - Management anticipates that new contract awards will begin to emerge in Q1 2026, which should positively impact margins [30][31] Question: Current size of the pipeline - The pipeline is reported to be over $3 billion, indicating strong growth prospects for the company [33]

Financial Data and Key Metrics Changes - The company reported revenue of $81.2 million in Q4 FY2025, down from $96.4 million in the prior year, primarily due to contract transitions and government efficiency initiatives [14][15] - EBITDA for Q4 was $6.6 million, compared to $10.7 million in the previous year, reflecting lower revenue and pressure on gross margins [15][16] - For the full year, revenue totaled $344.5 million, with EBITDA of $34 million, approximately 10% of revenue, and free cash flow of $23 million [16][17] - The company reduced debt by $10.7 million during the quarter, ending FY2025 with $131.6 million in debt, a total reduction of $23 million over the year [17][18] Business Line Data and Key Metrics Changes - The revenue contraction was largely attributed to the transition of certain programs to small business set-aside contracts, accounting for approximately $11 million of the decrease [14][15] - The company experienced a decline in revenue from transitioned CMOP locations and contract unbundling, with $7.5 million and $2.9 million respectively contributing to the overall decline [15] Market Data and Key Metrics Changes - The company has a strong pipeline of qualified opportunities exceeding $3 billion, indicating healthy financial growth prospects [33] Company Strategy and Development Direction - The company is focused on transforming into a leading technology, engineering, and scientific research solutions provider, emphasizing digital transformation, cybersecurity, and systems engineering [9][10] - Investment in proprietary tools and technologies, such as the DLH Cyclone AI/ML-powered data science engine, is aimed at enhancing competitive differentiation and organic growth [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth opportunities in the addressable market and the potential for returning to low double-digit organic growth in the future [12][13] - The company is positioning for new business within the VA and anticipates contract awards that could positively impact margins in the upcoming quarters [30][31] Other Important Information - The company achieved cybersecurity maturity model level two certification, enhancing its ability to compete for higher value business opportunities [7] - The company has made all mandatory term debt payments through September 30, 2026, a year ahead of schedule, and plans to continue debt reduction aligned with historical performance [18] Q&A Session Summary Question: Status of the Head Start program and potential protests - The company did not participate in the protest regarding the Head Start program transition to small business set-asides, acknowledging the shift in strategy by the administration [22] Question: Timeline for remaining CMOP awards - The company expects decisions on the remaining CMOP awards to occur within the next quarter or two, while continuing to operate at the remaining locations [24][25] Question: Return to historical growth and EBITDA margins - Management indicated that new contract awards are anticipated in Q1 2026, which could help return to historical growth and EBITDA margins [28][29] Question: Current size of the pipeline - The company reported a strong pipeline exceeding $3 billion, indicating a healthy outlook for financial growth [33]