DLH(US:DLHC)2023-08-07 02:10Financial Highlights - The company reported third-quarter revenue exceeding $100 million, marking a new milestone and reflecting successful acquisitions and integrations [3][14] - Net income for the third quarter was approximately $1.7 million or $0.12 per diluted share, down from $4.9 million or $0.34 per share in the previous year [7] - Adjusted EBITDA increased by 36% to approximately $11.4 million compared to $8.4 million in the prior year [7][14] - Adjusted revenue rose 43% to just over $102 million from $71.5 million last year [14] Business Line Performance - Adjusted income from operations was $7.1 million for the quarter, up from $6.5 million in the prior year, reflecting a 9% increase [14] - The operating margin decreased to 7% in fiscal '23 from 10.7% in fiscal '22, attributed to higher non-cash depreciation and amortization expenses due to the GRSi acquisition [14] Market Data - The company has access to numerous billion-dollar IDIQ contract vehicles, enhancing its ability to compete for value-added agency work [5] - The White House's fiscal 2024 preliminary budget includes historic investments in research, AI, machine learning, and digital transformation, which are expected to boost growth [5] Company Strategy and Industry Competition - The company is focused on leveraging its differentiated capabilities and broad array of technology solutions to support government goals [5] - The integration of GRSi is on track, with completed transitions to key business systems, leading to greater operational efficiencies [37] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about fiscal 2024, citing numerous growth opportunities and a positive outlook for the company's underlying results [5] - The company is actively managing its working capital and utilizing favorable tax attributes from acquisitions to minimize tax payments [17] Other Important Information - The company reduced its debt by approximately $8.5 million in the third fiscal quarter, ending with $195.8 million outstanding [17] - Interest expense increased to $4.9 million in the third quarter of 2023 from $0.5 million in the prior year, reflecting higher debt levels due to the GRSi acquisition [39] Q&A Session Summary Question: Inquiry about IDIQ contracts and bidding opportunities - Management noted that recent IDIQ contracts, particularly with NHLBI, present new workforce opportunities and a strong track record for winning bids [22] - The resolution of delays in the CIO-SP4 contract is anticipated to open up more opportunities for the company [23] Question: Update on VA contracts - Management confirmed ongoing bridge contracts with the VA and expressed optimism about future opportunities despite no definitive actions yet [24] Question: Proposal activity and bidding trends - Management indicated a healthy bid-and-proposal backlog, with recent increases in proposal activity outside of IDIQs [29]