DLH Holdings Corp.

Good morning, and welcome to the DLH Holdings Fiscal 2022 Second 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 star, then one on your telephone keypad. To withdraw a question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Chris Witte, Investor Relations Advisor. Please go ahead.

Thank you, and good morning, everyone. On the call with me today is Zach Parker, President and Chief Executive Officer, and Catherine Johnball, 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 2022 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. We do not undertake any duty to update any forward-looking statements. On today's call, we will be referencing both GAAP and non-GAAP financial measures. A reconciliation of our non-GAAP results to our reported GAAP results is included in our earnings release and in the investor presentation on DLH's website. President and CEO Zach Parker will speak next, followed by CFO Catherine Johnball, after which we'll open it up for questions. With that, I'd now like to turn the call over to Zach Parker. Please go ahead, Zach.

Thank you, Chris, and good morning to everyone. Welcome to our fiscal 2022 second quarter conference call. We continue to produce strong results and remain on track for one of our best years ever. Before addressing the financials, let me once again recognize the stellar performance of our nationally dispersed workforce during this period. Business transformation and performance delivery depends upon our people, and we are blessed to have a truly committed team. In addition, our hearts go out to the Ukrainian people who are suffering from the Russian aggression and the humanitarian crisis resulted. Now turning to slide three, I remain pleased with our start through the second quarter of our fiscal 2022. Our second quarter results were consistent with our expectations and continued to demonstrate strong execution across both revenue and EBITDA. Once again, as in Q1, Our short-term contracts with FEMA in Alaska drove revenues significantly higher year over year to $108.7 million this quarter. However, even excluding the $39.8 million of FEMA-related work, we saw sales grow organically 12% versus 2021. As our programs remain in very solid demand, albeit with a slowed down award environment in Washington. Revenue rose across all three of our market segments year over year. This quarter saw a curtailing of the pandemic, along with the global disruption caused by the unprovoked Russian invasion of Ukraine. Since our last meeting, Congress enacted the FY22 appropriations, which now provides our federal clients the necessary budget visibility to align their priorities with funding levels. The subsequent funding actions associated with the Russian aggression also recognizes the national strategic pivot of our military posture. It is clear that our nation will strengthen our military readiness, and we can expect both short- and long-term tailwinds to our DoD and defense health agency portfolios. The fact that we grew 12% organically without a formal budget in place speaks volumes as to the value of our services and critical capabilities that are essentially played across all of our agencies. We posted operating income of $10.3 million, or 9.4% of sales, including the impact of our Alaska contracts. That's the highest level in many years, reflecting our move to a more advanced and value-added solutions and services. We recorded EBITDA of $12.1 million in the second quarter earnings of 50 cents per share, or 22 cents without the FEMA work, while our term loan was further reduced to $37.5 million during the period. As Catherine will review in a moment, our deleveraging story continued after the quarter end. Lastly, we finished the period with a backlog of $554.7 million, down sequentially from Q1 due to the slow pace of awards, as I mentioned earlier, and of course the drawdown of the Alaskan work. But we still are positioned well for the remainder of FY22 and beyond. Turning to slide four, I'd like to provide additional color on the current market outlook and our go-forward growth strategy. On a high level, federal budget priorities, again, continue to support DLH and the agencies we serve. It is important to note that as we mentioned earlier, decision-making should accelerate now that a formal budget has been adopted, positively impacting our business volume as we head into fiscal FY23. For DLH, The demand for our services is underscored by the projects within current appropriation bills and the presidential budget requests. Suffice it to say that we remain well aligned with healthcare-related government spending trends. At the same time, we're a company that is becoming known for its consistency in terms of revenue growth, margin expansion, and our underlying financial results. We remain on track with our strategy of utilizing cash to invest in our people and pay down debt, strengthening the organization and balance sheet in tandem. Our people continue to expand and leverage technology to support our clients and differentiate work while investing in human capital initiatives to counter the current national workforce challenges. At the end of the day, We're judiciously deploying capital, not just for growth, but for value creation, and our addressable market remains very strong. Our capabilities enable us to solve the complex problems faced by federal civilian and military customers alike, whether it be in data analytics with the Center for Disease Control or innovative data management and systems engineering for the Defense Health Agency. We bring strong, decades-long experience and uniquely qualified, highly trained professionals to the table, leveraging digital transformation, big data, secure data analytics, modeling and simulation, telehealth, and several other differentiating capabilities to ensure that our clients can adequately assess and address the challenges of tomorrow. In addition, our investment in human resources and technology to support the backbone of our organization will continue. We have a world-class workforce of skilled employees dedicated to improving public health with the best in certifications and credentials, including our recently achieved ISO 27001. This accreditation signifies that our information security management system conforms to the requirements of the ISO IEC 27001-2013 policy, the only internationally recognized certifiable information security standard. The credentials cover the IT systems supporting our underlying operations, as well as our incentivized cloud, the company's PaaS, that is Platform as a Service, cloud computing offering, and that was awarded following an extensive audit process that examines the company's information security risk, controls, and management processes. It validates our commitment to the best-in-class information security and data management practices so our federal clients can be assured that DLH provides the utmost in security and risk management protocols. It is just, again, another example of how we're leveraging technology to support our clients and to win new business. Before turning the call over to Katherine, let me take a moment to briefly review how much has changed here over the past several years, as shown on slide five. As you can see, our transformation has been rapid, turning DLH into a highly diversified organization that serves three core markets of the federal government. This, of course, was consistent with our strategy. Our expansion has been helped along the way by a few strategic very focused acquisitions that have broadened our capabilities as well as the agencies that we served. Those two were consistent with the strategy we laid out several years ago. But at the end of the day, it comes down to our people, both our recently hired troops as well as the long service employees who have driven this company forward. Speaking of which, let me say how proud I am again of our excellent team's professionalism and enthusiasm that has been instrumental in our ability to win and flawlessly execute re-competes and the new contract with FEMA in Alaska over these past six months. This clearly demonstrates and illustrates that DLH is ready and able to be a much larger player in the GovCon space and is on a trajectory to become an even greater enterprise to serve healthcare, and systems engineering needs of our nation. We're continuing to be on track to post very strong results this year, and more importantly, our position in the company for even better days ahead. All this is made possible, again, by our talented people who are successfully bringing in new, innovative solutions to our customers and winning new business that leverages our expanded capabilities. With a federal budget enacted, a FedRAMP authorization in place, and solid demand for our services, we really look forward to the future as we enter the second half of fiscal 2022. With that, I'd like to turn the call over to our Chief Financial Officer, Catherine Johnpole. Catherine?