DLH Holdings Corp.

Good day and welcome to the DLH Holdings Fiscal 2024 Fourth Quarter Earnings Conference 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 a touchtone phone. To withdraw your 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 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 State of Harbor statement, which is also shown on slide three of the presentation. This call may include forward-looking statements that relate to the company's outlook for fiscal 2025 and beyond. These statements are subject to various risks and uncertainties, which could cause actual results and events to differ materially from such 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. The reconciliation of our non-GAAP results through 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 the CFO, Catherine Johnbull, after which we'll open it up for questions. With that, I'd now like to turn the call over to Zach. Please go ahead, Zach.

Thank you very much, Chris, and welcome to everyone here for joining us on the fourth quarter of communication. I'd like to take a moment to once again express our appreciation to the tremendous commitment that our workforce has given during this quarter to be able to deliver great results. It happens to be a very, very strong end of the year, and we really are truly blessed to have a strongly committed a team of scientists, technologists, and subject matter experts delivering every day for our customers, and we really, really appreciate that. In addition, we're going to cover a number of things on today's call as we want to really give some highlights around our differentiating capabilities. But our troops have really done a tremendous job, and I know we'll continue to do so in the quarters to come. Now turning to slide four, I'll provide an overview of our financial results. We reported fourth quarter revenue of $96.4 million and for the full year revenue increased to nearly $396 million, surpassing our previous record results. Our EBITDA for the fourth quarter was $10.7 million and $42 million for the fiscal year. We generated operating cash of $12.5 million during the period, equating to $27.4 million of operating cash flow for the fiscal year. This cash-generating ability allowed us to pay down debt by $11.9 million in the fourth quarter, ending the fiscal year with $154.6 million in total debt outstanding. Catherine will review our results further in a moment. If you would turn to slide five, I'd like to give you an update on our near-term outlook as we move into a new year and soon a new administration. We're very pleased to announce a new $76 million contract award with the United States Navy at the tail end of the quarter. This highly competitive award was won through a competitive procurement process unseating a long-term incumbent. Under this contract, we will provide critical systems engineering and integrated logistics support to support our fleet's C5ISR missions. Wins such as this illustrate the newly positioned DLH organic growth posture as we go forward. With a focus on leveraging now our technology-enabled solutions, the implementations of strategically new business organic development capabilities in order to win contracts from across our client base. Turning to broader industry trends, we're operating, of course, under another continuing resolution, which, when combined with an election year with changing priorities of the new presidential administration, is expected to have a substantial reshaping, we believe, of the federal government procurement landscape. Changes developed by traditional cabinet secretaries as well as other advisory organizations such as commissions, if you would, such as Department of Government Efficiency, DOGE as we refer to it, will likely emerge in our fiscal 25 second and third quarters. As we remain very close to the administration's transition team, it's important that we keep a focus on how we see it impacting our addressable market as DLH. I'm happy to tell you that at this stage, despite a lot of the headlines, we see it as neutral to slightly positive over the long haul with regard to our addressable market and growth forecast. to support our growth plan for fiscal 25. We recently amended our credit facility to provide flexibility while navigating small business conversion headwinds that we've talked about previously, most notable of those, of course, being our CMOP. And with regard to our CMOP portfolio, we're operating under new task orders that currently extend into our services into the second quarter of fiscal 2025 as the VA continues to try to work through its procurement process. we continue to expect that the VA will conclude these procurements and make award decisions within fiscal 2025. In our last discussion during the previous quarter, we indicated that we're evaluating our CMOP proposal strategy in response to what then were some new amendments to the procurement process that were issued by the VA. In short, We have not continued our joint venture bids in response to all of those VA acquisition changes. We believe those changes will further dilute the performance standards or serve to dilute the performance standards required, which typically results in low bidder awards. These, however, we believe will also be concluded during the year. Having said that, We have selectively participated in some of the sites as a value-added subcontractor. Turning to slide six, let me provide further detail into how we see the future of the company evolving. As you may recall, over eight years ago, Catherine and I began communicating and implementing an acquisition strategy that was designed to deliver on our strategy. which was to expand in very specific technology and scientific capabilities and to diversify into selected markets beyond the VA. The DLH that you see today is the result of that strategy having unfolded successfully to assemble a dynamic science and technology-based enterprise with a broad set of capabilities and customers to create an enterprise that was greater than the sum of its parts. We are now taking that organization for a spin for organic growth and we're excited about the added business development engines that we have put into place. We were intentional about building a company that was capable to addressing the full range of our targeted customers' requirements in a way that offers an agile, best practice based, high tech solutioning company to compete favorably in the in the organic space. We think about our differentiating capabilities in three primary components, digital transformation and cybersecurity, science research and development, and systems engineering and integration. We internally refer to those as DTC, SRD, and SE&I. The main reason for having built this capability over the years has been to strengthen these service offerings with regard to these key agencies that have demonstrated strategically a strong interest in those capabilities. These happen to be the channels in which we provide our strong capabilities in artificial intelligence, and we've talked about machine language and large language systems. We've talked about robotics engineering and telehealth tools and technologies, the application of modeling and simulation, you know, specialized engineering and the like. And those are the powerful capabilities that we're able to leverage in developing winning solutions, much like on the recent award. Now, with these fully assembled capabilities, we're pursuing a nearly $4 billion pipeline, new business pipeline, of opportunities for which we have substantially elevated win probabilities. As our investors know, we already have a seat at the table for many relevant future task orders through existing long-term IDIQ contract vehicles, and we are continuing to seek more. But we are also using our organic growth engine to go after larger, broader contracts that again look very much like our most recent win with the Navy. These services are in high demand because the federal government is looking to drive efficiencies. They're also looking to partner with organizations much like us, a company that in its DNA has been rooted on driving efficiencies, delivering best value, and reducing costs to our clients. These require more complex answers, how to get things done, how to do things more differently and more efficiently, leveraging tools such as AI and ML, and supportive data analytics, how to leverage digital transformation, cloud-based secure computing in order to improve systems performance, and to pursue capabilities such as achieving precision medicine in the out years. We also look at how to offer to the customer how to ensure that their networks are safe from cybersecurity attacks, how to tackle and address the healthcare challenges of today and most notably for tomorrow. Our highly credentialed staff, including our health IT professionals, a world-class team of experts, deliver these mission-critical solutions and services to our customers every day. The DLH team is recognized as thought leaders within the health and defense markets more and more, where we're pursuing major organic growth opportunities. This is where we are, and we are looking forward to the future. Given our expanded capabilities and focus on these end markets, I believe that we're at a precipice of a new day at DLH, which will take us to much higher levels and stronger values as we achieve top-line growth and operating performance. This is clearly an exciting time as we navigate through some of these administrative and other near-term challenges. We really appreciate all of our investors who have joined us through this journey, and we're even more excited about continuing the successful strategy unfolding that we have shared with you over the last decade. We're excited about what the future holds from a shareholder value for DLH. With that, I'd like to turn the call over to our Chief Financial Officer, Catherine Johnville. Catherine.

Thank you, Zach, and good morning, everyone. Excuse me. We're pleased to report our fourth quarter results for fiscal 2024. Turning to slide eight, I'd like to provide a high-level overview of some key financial metrics for the three months ended September 30th, 2024. We reported revenue of $96.4 million in the fourth quarter, versus $101.5 million in the prior year period, reflecting the conversion of contracts to small business set-aside programs, including the first CMOP site, as we discussed last quarter. While we continue to see expansion and wins across our health IT and readiness customers, as Zach discussed, we believe that future periods will be impacted by additional small business transitions. We reported adjusted EBITDA of $10.7 million for the fourth quarter versus $12.1 million last year. Adjusted EBITDA was down due to the overall sales level in the mix of the business, including a higher proportion of revenue derived from non-labor costs, which inherently produce a lower margin. Now, if you'll turn to slide nine, I'll review some key financial metrics for the first fiscal year, for the full fiscal year, pardon me. Revenue rose 5.3 percent to just under $396 million, primarily reflecting the impact from our acquisition in December of 2022, along with growth in our HHS portfolio, partially offset by the small business conversions we've discussed. Adjusted EBITDA was roughly flat year-over-year at $42 million. and the company generated operating cash of $27.4 million for the full fiscal year, down from $31 million in 2023. The decrease year over year was primarily due to the payment of lease liabilities established as part of the December 2022 acquisition, partially offset by a decrease in day sales outstanding to 45 days. Slide 10 provides an update on our deployment of the company's cash to reduce debt strengthen the balance sheet and lower cash interest expense. We paid off approximately $11.9 million of our higher interest floating rate debt during the quarter, ending the period with $154.6 million of total debt outstanding. As a result, we have satisfied all mandatory amortization payments through fiscal 2025. I'm sure it comes as no surprise that we plan to continue using cash from operations to reduce debt going forward. In addition, our amended credit facility will provide greater financial covenant flexibility as we navigate the conversion of certain contracts to small business contractors. Now turning to slide 11, I'd like to review our go-forward growth strategy following up on what Zach discussed earlier. As Zach mentioned, we have a robust pipeline of qualified opportunities estimated to be worth over $4 billion across our core technology, and readiness capabilities, which positions us for expansion and improved operating performance in the years to come. That said, while timing is still uncertain due to the changing landscape of government decision makers, we are confident in our ability to capture new business awards and grow meaningfully, organically. This process takes time to complete, but nevertheless is moving forward, and we expect that many of the key decisions will be made in fiscal 2025. As Zach mentioned earlier, we began this journey many years ago with our first acquisition in fiscal 2016 as we sought to build a diversified, technology-powered company. We continued to expand our capabilities by bringing in more companies into the DLH enterprise through our acquisition program. We ended fiscal 24 with revenue of $396 million, of which approximately $140 million was from our CMOT portfolio, leaving roughly $256 million delivered from our technology-powered solutions and services. Our EBITDA margin was 10.6%, with approximately equal contributions from both components. While not providing guidance, we believe that in the near term, by targeting growth vehicles and programs within our core technology sectors, We can drive our technology-powered solutions portfolio to $300 million in annualized revenue. In that scenario, we would expect our EBITDA margin to be around 9% as we maintain our investment in strategic solutioning and business development initiatives to deliver organic growth. We believe that the 9% margin delivery is a transitional balance between our historical and future margins of 10-plus percent that is necessary to maintain our ability to grow in the longer term. Over the longer term, we envision future further growth in our technology-powered solutions. In a scenario that encompasses a $500 million annual revenue run rate, we would anticipate EBITDA margins to expand as we leverage economies of scale and improve our overall operating structure. Again, we're not providing guidance, but rather offering insight to investors on a future focused on the health IT and readiness portfolio we've assembled. In future discussions, we expect to continue providing this bifurcated view of the enterprise for clarity to the investor community. In closing, I share Zach's enthusiasm about the future of CLH as we continue to execute our growth strategy and support the critical missions of our customers. This concludes my discussion of the financial statements, and with that, I would now like to turn the call over to our operator to open for questions. Thank you.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Joe Gomes with Noble Capital. Please go ahead.

Thank you. Good morning, Zach and Catherine. Good morning, Joe. Hey, Joe. So I just want to, I know this is a little bit backwards looking, but I just kind of wanted to go a little bit over the CMOP. So it sounds like for fiscal 25, Q1 and Q2, you know, should be somewhat as the same Q4 run rate, but then going forward after Q2 when the extended contract extension is over, that that should drop off somewhat dramatically. So I was wondering what percent of that $140 million of CMOP that you did this past fiscal year are you bidding on as a subcontractor?

Yeah, no, thanks. Great first question there, Joe. Yeah, I think you're not far off. Our best estimate is, as you indicated, that Q1 and Q2 will be relatively similar to Q4. Obviously, there will be some variances there. And then it is our current expectation and communications with the VA that they are anticipating executing on some of the other awards downstream. So we're looking at the material aspects to be reflected in the second half of the year. for FY25, which coincides, of course, with the time period provided there's not too much delay or paralysis associated with the continuing resolution and the award of new contracts with the ramp-up, hopefully, of some decisions being made on the bids and proposals that we have in place now. With regard to our commitments on the bids, there's still a very procurement-sensitive environment, so we're really not giving very much color there. I can tell you that, you know, we're not bidding on all of them. There are several of them which we're not bid. We have elected to participate with a small business partner on a few, and we'll leave it at that.

Okay. Thank you for that. And obviously in the quarter, you continue to do a great job of On the SG&A side, down I think it was about $8.5 million, is that a good run rate? Or going forward, do you think there's more that can be taken out on the SG&A, obviously putting aside the whole CMOP part of it right this second?

I think our SG&A rate will run around... As we indicated in our discussion on slide 11 in the deck, we'll feel some growth as a percent of top line as that top line, as CMOPX is the top line. But we do expect to scale the business appropriately, so if you think about, you know, gross margin running at the 20 to 21% rate and EBITDA of 9, that implies a SG&A of somewhere between 11 and 12. As a function of really needing, scaling the business where appropriate but protecting our ability to execute and to really pursue and develop organic growth. So we're not anticipating scaling that level of effort to the contrary. We think the size of the pipeline we've identified and worked focused on building means that we should continue to pursue that investment and deliver the top line growth. So there'll be, you know, for a period of time, there'll be probably some bubbling up of the percent of SG&A cost. The dollar value will vary depending on where the top line is. I hope that helps you from a modeling perspective, but clearly we understand the importance of scaling SG&A costs where we reasonably can, but we need to make sure we balance that in the context of protecting our ability to execute and deliver on our organic growth strategy.

Okay. And then on the defense presence that you guys have. You know, obviously, we're having a new administration come in here in another, you know, month or so. And then the same thing on the DOGE. Maybe you could just give us a little more color or detail on the opportunities that, you know, this opens up for you guys and how that fits into some of your core strengths and especially on the DOGE going forward?

Yeah, no, great question. Yeah, and again, you know, I've had the pleasure of sitting down multiple times with folks on the transition team, working, you know, a variety of the agencies as well as the DOGE commission, as I kind of refer to them. You know, what we like about it in terms of our commitment you know, heritage and DNA, is we have been a company, if you look at, use the example of the CMOP over the course of when we took it over, the number one driving aspect for growth for us was that we were driving efficiencies into the business that they had not accomplished before, right? And it's those efficiencies that led to the VA achieving record level per capita costs for delivering their services, prescription pharmaceutical services, record level, right, along with that achieving the highest exacting standards of customer service and satisfaction to our veterans, right, evidenced by nearly two decades consistently of winning the J.D. Power Award for mail-order pharmacies against all of the commercial and other countries. And so we have, you know, our culture has been that way all along. Every time we've brought in new family members through acquisitions and organic growth, that's also been a cultural imperative to make sure that we're in alignment. And I can tell you that our leadership teams and on all the contracts that we execute, we're looking to drive best practices in a way that delivers efficiencies and cost savings. And, you know, even at the expense of revenue, top line revenue for us, we believe that doing those right things will usually yield positivity and it has for us. So we're looking forward to being able to, you know, have a dialogue with and look for those opportunities where this new administration is looking to accelerate efficiencies. And that's just a strong part of our DNA that we think positions as well with a lot of the headlines coming out of there from the DOJ and other perspectives. Beyond that also is your question with regard to defense. And as you well know, we're bolstering our commitments to defense as evidenced by our win with the Navy, the most recent win with the command control and the intelligence surveillance and reconnaissance community. We have seen for quite a while a convergence between the healthcare community and the cybersecurity and data surveillance arena. And that intersection over the last several years has made its way into strategic plans of organizations such as HHS, various divisions there, and hugely across the defense and military health services community. And so we're looking to leverage that where we'll have expansion with the Navy, Marine Corps, and others, much like you saw in our recent TACNET win against a large longtime incumbent. But our pipeline is also healthy there too. I would say today, Joe, approximately 50% of our new business pipeline over the next couple of years is reflective of defense health and defense intelligence community.

Great. And then one more, if I may. I'll turn it over. So, Catherine, I know it's a very fluid situation here, but do you have any goal for debt reduction for fiscal 25 that you care to share with us?

Well, I do expect to continue at a very healthy EBITDA conversion rate. My internal target is 55% of that. So, you know, it's going to be a function of the timing of when CMOP exits a portfolio. But whatever EBITDA we deliver, I do expect us to convert that smartly to the ability to pay down debt.

Great. Thanks again for the time, and I'll turn it over. Thank you.

Thank you, Joe. The next question comes from Burt Osterweiss with Osterweiss Business Consulting. Please go ahead.

Good morning, Zach and Catherine. Good morning, Burt. Good morning, Zach, Catherine. Congratulations on a solid quarter and year end. I had a question on the intangible assets number on the balance sheet. And I noticed it went down a bit this quarter from last quarter. But am I correct in assuming that that contains a component that represents a discounted future cash flow pipeline contracts that we've won but haven't yet executed on? And if so, what percentage, how much did that new Navy contract bump that number up? And if not, then where does that appear on the balance sheet?

Yeah, what's in the balance sheet is really a function of what exists at time of the acquisition. So purchase accounting requires you to value the business you acquired. And it really only allows you, requires you, but more so allows you in terms of establishing an asset, really only allows you to establish that for awarded contracts. It doesn't allow you to value your pipeline of potential assets. other future opportunities. That's kind of inherent in goodwill, if you will. So the intangible related to the backlog of all the various acquired companies, that's all footnoted out for us in the 10-K. I apologize, I don't remember the footnote. No, but if you want to reach out to me later, I can tell you. But those amortize over average useful lives of the contracts at the time you do the acquisition, typically somewhere between seven and ten years.

So that Navy contract would appear that some component of it would have bumped the intangible assets?

No. No. Since that was not a contract that the acquired company had at the time we bought them, it's not a part of that valuation.

Oh, okay. I got you. All right, thanks so much. Have a happy holiday if I don't see you before.

Yeah, thank you, Sam, Bert, you and yours. And as you know, maybe we'll see you March 13th when we have our annual share-up.

I hope so. Thanks.

Absolutely. Thanks for joining us.

Again, if you have a question, please press star, then 1. The next question comes from Ross Davison with Banneton Capital. Please go ahead.

Good morning, Ross. Hi, Zach. Hi, Catherine. Good morning. Thanks for taking the question. I think the only question I had was around just setting aside CMOP. My understanding is that you face the headwind of small business set-asides just in the other parts of the business as well. And if I have that right, is there kind of a known amount or a horizon of that transition, or is it an ongoing process and you're just, you know, it depends a lot on procurement processes and you're just not sure when it might end?

Yeah, great question, Ross. Yeah, indeed, there's a component that was inherent. And we disclosed to some extent, but as you know, just about every one of our acquisitions had a portion of their business that we described that was contributed to the pro forma. that was subject to small, it was already small business set aside. And there was zero likelihood that we would, it would change as they came full term. Some of those had a year of life, some of them two years of life in the small business ring before they came around. So those were clearly known. And then as we indicated earlier in this year, in January of calendar 24, the president issued an executive order, executive memo, They're translated into a number of agencies where they put added pressure on agencies to identify more work, recurring work, to have it set aside. And so we've been modeling those, and we've had our industry has had, you know, some pretty material impacts from that over the course of the last year, some very large contracts. And we've seen where a billion-dollar contract that was held by a very large company went to small business set aside. And we were not immune to that as well. So we've had two to three of ours that we've had long-term contracts. What we're finding the government doing is trying to unbundle or break apart some of those and say, hey, here's maybe a, you know, 20 million annual contract that maybe 10 of that, you know, can be set aside for small businesses. So let's take an approach. And so it's an approach of breaking those up. And so for us, on our recurring work, obviously there's risk that we build into our waterfall and our pipeline. And Catherine and I are modeling when those risks are anticipated to occur. We do see some of those occurring in 2025 that we've addressed. At the same time, we've seen some opportunities where some pieces of some very large contracts where the government's breaking those up from some of the multibillion-dollar companies, that there are pieces that, you know, when what's left is still unrestricted, where we can now maybe compete very favorably. So there's some additions to our new business pipeline where we think there's a degree of vulnerability now by some of those longtime incumbents who may have had a proprietary piece folded into it that no longer will be in that serenity. So we do expect some erosion. from the continued small business set-aside work that, again, both we had planned from the acquisition standpoint as well as the response to the executive order. And we're fortunate that our new business pipeline position is as good as it's ever been, and not just the size. You know, we never tout the size of it. I rarely even mention those sort of things, but it's the quality of that pipeline. our ability to have the technology, resources, and differentiating capabilities to elevate our win probabilities. You know, we've successfully won 100% in fiscal 24 of all of our prime eligible recompetes, and we're off to a good start with our Navy TACNET award, and we're hoping the government's going to be making more and more decisions. You know, a lot of these... We really hope they're going to try to get decided in the coming quarter or two so that we will have a great ability to offset some of that erosion.

And, Ross, I would just add to that to say, of course, what we're describing to you is what we're experiencing as the philosophy and the direction provided by the outgoing administration. And if you've been in this business for more than a handful of years, you know that the pendulum swings. and each administration wants to provide their own imprint and their own philosophy and all that. So whatever we're describing to you is really what we've seen and heard the current administration articulate. Of course, we're watching carefully what the new administration will set forward as their goals. And the key for us, as Zach said, it's always a lot more fun when a new award is presented icing on the cake and completely incremental. It's less fun when you're filling a hole. But our job is to really define a set of capabilities and a set of markets that provides a robust enough pipeline that you provide insulation and offset and the ability to absorb just some of the ebbs and flows of parts of your business based on changes in philosophy and strategy for your customers. You know, we really, we're happy with our progress so far about, you know, providing enough diversity of our contract base and opportunities to get multiple at-bats to offset some of these impacts, but clearly we're looking, you know, we view the better part of that opportunity as in front of us, and so we're excited about our ability to execute against that $4 billion pipeline and deliver a reasonable part of that, you know, for DLH.

That's very helpful, a really good color. And, yes, great point, Catherine. Of course, everything could change, you know, come January, February and thereafter.

It's interesting, I guess.

No kidding. And just quick follow-up on that. So, I mean, is it fair to think about, and this is just kind of more like, you know, kind of a story to fiscal 2024, is it fair to think about, you know, you had this headwind that you just described, and it's helpful to understand, like, some of it was, you know, clearly identified, you know, when you acquired GRSI, and then some of it was more driven by the executive order. Is it fair to think of F2024 as, you know, facing that headwind, and then they, what, you know, because of the continuing resolutions and just some of the slowness there, that you didn't see as much ramp as you might have otherwise. And so you've got this declining, you know, anticipated but declining piece, and you didn't have as much growth as you might have had because of a slow kind of process. Because I totally hear you that there's a large amount and it sounds like a very exciting amount of sort of business to come, and I'm excited to see that. I'm just curious, as you think back on the year, was there a bit less of a pick-up, and new business than you might have otherwise hoped?

Yeah, that's a great question. Yeah, I think the right way to look at it, Ross, is that, you know, our new business pipeline is at a record for a couple of reasons. A is we've gotten really good at identifying and positioning for some really good quality opportunities that now reflect the totality of our capabilities in DTC, SEI, and SRC. These are the capabilities that each of our decision makers and our targeted agencies need desperately. And those type of awards will have high value, will have best value awards, and we think will add great value in terms of our financial profile. At the same time, there's been a buildup, right? You know, we don't count, you know, the re-competes in those numbers like CMOP and so forth. And, of course, you know our status there. But we would love to see more decisions, right, so that there are things that we have been anticipating. We would have submitted proposals, you know, by now that still continue to slip to the right. That's often a function of budget instability, right, which comes with CRs where customers just really can't, you know, make decisions in Q1, Q2, not knowing, again, what they will have at their disposals for 3 and 4. And so, you know, it's really a two-pronged thing. There weren't any things we were missing. It's really largely the fact that, you know, acquisitions, while they're not as bad as what we've seen from the VA on CMOP, there are a number of other programs that we're chasing where the incumbent is getting extensions like we are, but we're really hopeful and starting to see signs that RFPs will be coming out.

Okay, yeah, that's really helpful. Thank you both. I appreciate it.

Thanks for joining us, Ross.

This concludes our question and answer session. I would like to turn the conference back over to Zach Parker, President and CEO, for any closing remarks.

Thank you. Once again, I want to thank you all for participating today and for your continued support and interest in DLH. We're really excited about what the future holds. We really appreciate your continued interest, and we will certainly keep you posted with regard to the evolution of not only the impact of the administration changes, but the continued evolution of DLH. A major part of that, of course, will be our descriptions of the business as we approach our annual meeting for the shareholders, which is scheduled for March 13th, and once again will be based in New York. So we look forward to engaging you as we continue to keep you abreast on both Q1 and the implementation of the strategy. Thank you again, you all, and have a blessed day. Bye for now.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.