DLH Holdings Corp.

Good morning and welcome to the DLH Fiscal 2025 Second Quarter Earnings Conference Call. All participants will be in listen-only mode. If 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 touch-tone 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, an 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 Katherine John Bull, 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 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 SEC. 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. And 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, Katherine Johnbolt, 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, Chris. And good morning, everyone. Welcome to our second quarter fiscal 2025 conference call. I'm pleased for the opportunity to report our financial results and several important accomplishments for the second quarter. First, let me acknowledge that, you know, our truly skilled team throughout this year and throughout this period have continued to do a fantastic job. Throughout this period of significant disruption in the government services industry, We have had, they have continued to demonstrate what sets DLH apart. And that is the delivery of innovative solutions, strong capability and efficiencies in the commitment to our customers and their passion for our collective missions. Now turning to slide four, I'll provide an overview of our financial results. Our performance this quarter was in line with our expectations and on par with its performance in Q1 for revenue and EBITDA. With respect to cash flow generation and debt paydown, we've made significant progress this quarter as we reduced our debt by $15.3 million from the previous quarter. As you may recall, we experienced some collection delays last quarter, leading to an $11.5 million of cash usage and a short-term increase in our debt. This quarter, by contrast, we generated strong operating cash of 14.5 million and concurrently reduced debt as Catherine will further describe in a moment. Throughout the first quarter of Q3, we have continued, I'm sorry, throughout the first half of the quarter, we have continued to reduce debt and expect that trend to continue throughout the balance of the fiscal year. As of today, We have made all mandatory debt payments through March of 2026, a year ahead of schedule. We continue to benefit from the support of our bank group as they provide additional financial flexibility with the November 2024 amendment to our credit facility as we navigate the recovery from the unbundling and rebidding of certain contracts now set aside for small business entities that was set in motion by the previous administration. At the same time, the continuing resolution from March has provided an element of stability in terms of overall budget parameters for the remainder of fiscal 25. Congress is now working to define the longer-term spending priorities through budget reconciliation with the hope of having a blueprint in the coming months. This administration has recently released the skinny budget for fiscal 2026, discretionary budget requests providing some insight into future initiatives and priorities. We pay very, very close attention to these documents and to these positions. While certain details are still yet to come, we are very excited about the alignment of our advanced capabilities and our new business pipeline with the current administration's goals and policies. We continue to believe that there is a sustained demand for our capabilities, despite a rather noisy macro environment that includes some uncertainty on some government programs, budget cutting initiatives, and factors tied to tariffs and other macro issues. Thus far, we have seen negligible impact to DLH from program terminations. Our technology-powered solutions businesses remain in high demand for our customers, as evidenced by our recent win to continue providing research and development and advanced technology services to include artificial intelligence and machine learning, modeling and simulation, robotics engineering, clinical support, biostatistics, and more to the US Army's Medical Research and Development Command. This work highlights our ability to deliver advanced solutions at the nexus of science and technology. As the fiscal year enters its second half, we're engaged in a heightened level of bid activity, illustrating ongoing demand for unique applications that can improve performance outcomes, enhance readiness, and deliver solutions with the cost efficiencies. With more than a billion in contracts now under review, we expect award decisions in the second half fiscal year that would position us well for 2026 and beyond. Turning to slide five, I'd like to go a bit deeper and provide additional color on what we currently see as the outlook under this new administration. The left column identifies some of the administration's stated priorities, a focus on promoting efficiency, cutting costs, ensuring accountability, and lowering regulatory hurdles. In a nutshell, the administration is focused on getting things done faster with less red tape at a lower price. This includes modernizing health data systems and surveillance capabilities for early outbreak detection and response while investing in healthy lifestyle initiatives, even as we reduce spending elsewhere. Application of some of the technologies of digital transformation that we have just described, including our most recent win, really position us well to thrive in the marketplace where these initiatives are valued. As a leading provider of digital transformation and cybersecurity, systems engineering and integration, and science research and development services, we have significant experience leveraging technology to enhance program effectiveness, drive innovation, and result in cost efficiencies. By leveraging these interconnected capabilities, DLH can bid on complex, high-value work. This is consistent with our strategy of continuing to move up the margin scale in this very large market. Our new business pipeline still remains very healthy with more than four times revenue in our qualified pipelines. We're estimating at 3.5 billion in opportunities of various sizes, various scope across each of our market areas. With the increased bid activities starting Q3 and a robust roster of bidding opportunities for the remaining fiscal year, we are highly encouraged about our new business prospects. Our company remains strong in a position for organic growth, our number one corporate priority. We will leverage our unique capabilities to continue to expand and penetrate across new programs and agencies. We'll continue to invest in the future And with our track record of success, world-class capabilities, and strong cash flow, we look forward to what the future will bring to the IMH and our shareholders. With that, I'd now like to turn the call over to our Chief Financial Officer, Catherine Johnbo. Catherine.