DLH Holdings Corp.

Good day and welcome to the DLH Holdings Fiscal 2020 Third Quarter Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would like to turn the conference over to Chris Witte, Investor Relations Advisors. Please go ahead.

Thank you, and good morning, everyone. On the call with me today is Zach Parker, President and Chief Executive Officer, and Kathryn JohnBull, Chief Financial Officer. The company's earnings release and PowerPoint presentation are available on our website under the investor page. I would now like to provide a brief safe harbor statement, which is also shown on slide two of the presentation. This call may include forward-looking statements that relate to the company's outlook for fiscal 2020 and beyond. These forward-looking statements are subject to various risks and uncertainties that could cause actual results and events to differ materially from these statements. Please refer to the risk factors contained in the company's annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. Thank you, Zach.

Thanks Chris and good morning to everyone and welcome to our fiscal 2020 third quarter conference call. I'd like to begin with wishing all of you and your families well during these difficult days of the pandemic. Please know that you are in our thoughts and prayers. We will modify our standard format a little bit so that we can provide you an update on how we are doing as a company as we deal with the unusual challenges associated with the COVID-19 virus and the awakening of social and diversity issues attributed to the murder of George Floyd, which occurred during the middle of the quarter. Starting with slide three, let me begin by providing a high-level overview of our financial performance and some color on the outlook for the remainder of fiscal 2020. I am pleased to report that we have continued solid results even in the midst of a global pandemic and social unrest. The company posted revenue of $51.5 million for the quarter, reflecting another period of excellence in client delivery. We attribute all of that to just the tremendous attitude and credentials and capabilities of our workforce. Operating income rose to 3.8 million in Q3, and we posted EBITDA of 5.5 million, both consistent with the results of the second quarter results. We generated 10 million operating cash in the quarter and paid down 10.5 million of debt. Our strong performance from a cash flow perspective was aided by the collection of receivables this quarter as we indicated would occur on our last earnings call. We've now paid down over $25 million of senior debt since the S3 acquisition last year as we continue to delever the company, strengthen the balance sheet, and reduce interest expense. I'm also pleased that after the end of the quarter, we announced that DLH had won a series of competitively awarded projects related to COVID-19 testing and clinical trials, which in aggregate are expected to contribute over $15 million in revenue during the coming quarters, depending upon the resilience of the various therapeutics evaluated by our team. I'll discuss this more in a moment. With regard to the pandemic, We continue to do everything possible to safeguard the health of our employees as well as our customers and we're grateful for the professionalism and dedication of our staff this year. It has truly been outstanding. Now turning to slide four, I'd like to take a moment to talk about two new additions to our leadership team. Jeanine Christian, as president of our S3 operating unit, which includes the business acquired last year, and Jackie Everett as our DLH chief growth officer. Jeanine's scientific expertise, her long-standing customer relationships, and her leadership skills make her a fantastic fit to lead this business for us. We're thrilled to have her join from her prior role at Battelle Memorial Institute, where she led a team of over 300 scientists, clinicians, researchers, and data analysts in turning scientific data and technology advances into distinct benefits for a variety of government and commercial clients. She has already leaned in and has begun making valuable contributions for her team, our customers, and the shareholders for the business going forward. Jackie Everett is another great addition to our company as somebody recognized throughout our industry as an accomplished, dynamic and results-oriented leader. Her drive and motivation and experience are expected to enable our company to win new business and execute our strategic vision. I am pleased also with her initial contributions as she evolves and grows our organic growth profile. Both of these individuals will make tremendous contributions to enhancing our performance excellence and growth trajectory. Turning to slide five, I want to provide an update on COVID-19 and its impact to DLH internally. First and foremost, our most valuable asset is our people. They bring not only their experience, credentials, and subject matter expertise, but as we have learned this year, their courage. We have over a thousand employees entering government production and distribution center facilities to ensure that over a half a million vital medical supplies and prescriptions get to our nation's veterans each and every day. We take this pandemic very seriously, and while it has provided some new business opportunities for us, and again, we'll revisit those in a moment, it has also meant We've had to change the ways in which we do business and accomplish our strategic objectives. I am proud of my leadership team, our staff, and the way that they've all adapted to this situation. Demonstrating a level of commitment and business continuity that is almost unbelievable. We have implemented, of course, a work-at-home directive, currently scheduled to go throughout the end of the year to ensure that our workers that work from our facilities work safely. and although this could change over time in the months to come, we are committed to ensuring their safety first. Part of our work includes monitoring and evaluating compliance with government-funded requirements involving actual physical on-site inspection of facilities, both large and small, across the country As well as collaboration and interviews with on-site personnel covering a range of disciplines. As you would expect, most all of these facilities were either in a shutdown mode, operating with skeleton crews, or implementing virtual measures to try to keep afloat. As such, Our on-site inspection workforce was impacted heavily, which resulted in a portion of our workforce being furloughed in accordance with the CARES Act during the quarter. We are coordinating with the appropriate agencies that we serve to provide the utmost responsiveness to their needs and are factoring in implementation of those federal provisions. And finally, we have formed an in-house task force, which includes our physicians and healthcare experts, that allow us to monitor and manage all aspects of the disease as it relates to our business. We hold weekly assessments as a task force. We determine plans and procedures for the future. We're constantly staying abreast with the evolving CDC guidelines as it pertains to our people, our workforce, and our facilities. We're doing everything in our power to keep the company moving forward even in such strange and challenging times. Turning to slide six, we are proud from a service perspective to be involved in several initiatives and clinical trials associated with COVID-19. We have a long-standing history of providing analytical, clinical, and assessment support to the National Institute of Health and the Center for Disease Control and Prevention in the fight against infectious diseases and within the NIH. We also have built a long-term close relationship with the National Institute of Allergy and Infectious Diseases under Dr. Fauci. As NIH leads the national response to combating this pandemic and finding relevant vaccines, we've been called on to leverage our contract research organization experience to rapidly evaluate multiple therapeutic products. Our epidemiological experience and work managing clinical trials has set us apart as an organization. We possess deep experience in leading a consortium of partners, securing the necessary patients and subjects, and conducting clinical trials to achieve success, which I am very, very proud. In addition, our technology-enabled, cloud-based solutions continue to see growing interest in the agencies we serve, and we've invested in new business development initiatives to penetrate programs and fuel top-line growth. I do not think VLH has ever been more relevant to address these kind of several challenges. These create opportunities, and currently in the healthcare market, As well as our long-standing relationships with the Veterans Administration, Department of Defense, and the Health and Human Services Agencies, these position us very well for FY21 and beyond. For our investors, DLH has proven to be a company with stable and predictable performance, even in the midst of a global pandemic. Through it all, DLH continues to deliver on our plans and our commitments and are demonstrating our resilience in business continuity. Before turning the call over to Kathryn, I'd like to address how DLH is responding to the social issues of the day and how we are committed to being a diverse and inclusive organization. We want to lead through example. If you'll turn to slide seven, You'll notice that we have joined our local and national communities in bringing the issue of diversity, inclusion, and social injustice into our conversations, communications, and actions. Up and down across our organization, there have been quite a number of engagements, and we are putting our words into action. In short, walking the talk. These have included virtual open mics with the CEO, many town halls, engagements with the GovCon community, and we are partnering with historically black colleges and universities to further invest in research and understand the health disparities pervasive upon the communities of color. Researching and dissecting such complex issues is a core competency of the company. Secondly, we have launched a giving campaign to support two organizations that have a long-standing history of fighting social injustice, the Equal Justice Initiative and the NAACP's Legal Defense Fund. Caring for our community and giving back are part of DLH's foundation. This is a time in our nation's history that calls for thoughtful, engaged, and integrity-driven leadership, and DLH is ready to be an agent for change, growth, and progress in that domain. With that, I'd like to turn the call over to our Chief Financial Officer, Kathryn JohnBull. Kathryn?