DLH Holdings Corp.

Good day and welcome to the DLH Holdings Fiscal 2025 Third Quarter Earnings Conference Call. All participants will be in a 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 touchtone phone. And 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 Mr. Chris Witte, Investor Relations Advisory. Please go ahead,

sir. 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 10K 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. 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 Katherine John Bull, 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 welcome, everyone. Yeah, welcome to our third quarter conference call. And I'm pleased to have the opportunity to report on our financial results and provide an update about the current environment and an outlook. First and foremost, I'd like to begin by thanking our stellar employees for their steadfast dedication to our customers' missions. It has been a tumultuous period as we entered fiscal 26 for technical companies, solution companies like us. Yet our employees continue to rise to the occasion, leading with innovative and productive projects and solutions, supporting our customers with excellent results. Their performance is why I'm so confident about the future of DLH. Now, if you'll turn to slide four, I'll provide an overview of our Q3 results. Starting with revenue, our anticipated erosion from our previously discussed unbundling and small business set-aside from the prior administration is continuing on-planet. I'm also pleased at how effectively our team has managed through this period, and Katherine will give some added color to that a little bit later. The new administration has added layers of funding review and approval cycles that has slowed our revenue stream, and this is from work from our existing contracts. That being compounded by the effect of, you know, both of those two features has tremendously stalled the flow of new business growth for DLH. This, of course, will be as reflective relative to prior quarters. Our pipeline conversion has been slowly, has been impacted and slowed. RFP flow over the recent quarter too has been slowed. Our delivery of proposals and material proposals, that's things like over 25 and over 100 million, much slower than anticipated, and the same for contract awards. However, having said that, I've had an opportunity along with some of my industry colleagues to have met with appropriate influencers on the Hill, and I really feel optimistic that anticipated changes will be productive and on their way soon. And I'll discuss this a little greater a little bit later. With respect to margin delivery, cash flow generation, and debt pay that we've made significant progress again this period. Our operating expenses continue to decrease as we scale the operations to meet the changing revenue volume and protect margin delivery while we prioritize our investments, continue to prioritize our investment in growth. Initiatives. We reduced debt by 9.4 million compared with Q2. Our debt to close the quarter was 142.3 million, and we are a year ahead of our mandatory debt payments. We expect to continue to aggressively deploy capital to pay down debt, manage our leverage, and strengthen our balance sheet. The reconciliation bill, the fiscal 2025 budget bill, and fiscal 2026 White House budget request combined to give greater clarity about the administration's spending priorities in the years ahead. This will help our customers. We're pleased that DLH's capabilities continue to align with the federal government's demand and believe that funding increases for our services and core areas of focus, which include technology integration, cybersecurity, artificial intelligence, and machine learning, and the like, will continue to provide opportunities for the company's growth organically. I will speak to this in further depth on the following slide. The fusion of DLH's technology and research expertise is continuing to make mission critical impact for our customers, and we see more opportunities in the near term. Solutions that we have developed and deployed through our internal R&D program, along with collaboration with military health agencies, gives us reason to believe that our top technology programs seen by our government peers are well received. Such applications leveraging technology, spanning AI, robotics engineering, unmanned aircrafts, and automation demonstrate the crucial, life-saving impact of the work carried out by our staff of data scientists, engineers, technologists, etc., to have such positive impact upon our citizens, our service members, and our veterans. A unique combination of advanced technology of world-class scientific expertise continues to provide tremendous value for our customers and targeted growth, and we firmly believe that our company's experience and expertise will continue to open new doors, expand our book of business as we go forward. Now, let's turn to slide five for a further review of the current federal spending outlook. As you can see, we continue to believe that our core competencies and capabilities align very well with the federal technology initiatives, and we expect that the current administration's priorities will lead to new business opportunities and contract win-offs for us in the medium and long term. The marketplace remains dynamic as the federal workforce is being reshaped, procurements are being reshuffled based on the administration's priorities, and certain departments and programs have undergone significant changes. Our strategic actions this year, focusing on operational agility, financial flexibility, and technology differentiation, have proven effective in these market conditions. This approach has allowed us to navigate industry challenges and strengthen our long-term position. We remain tremendously committed to our organic growth initiatives, and we are confident in our strategy to increase revenue and margin delivery in the quarters to come, given some of the anticipated changes by this administration. As mentioned before, recent weeks have brought increased clarity to the programs and initiatives that have been prioritized by the administration. Modernizing federal technology, maximizing efficiencies, integrating artificial intelligence and machine language, and bolstering cybersecurity while keeping America at the leading edge are consistent thought lines. The enacted budget for the remainder of fiscal 25 and the administration's fiscal 2026 budget and the One Big Beautiful Bill Act provide increased funding for each of these initiatives. I mentioned earlier that anticipated changes seem to support a positive outlook for DLH. This is largely attributed to some of the acquisition reforms that are in motion, and that will drive priority shifts in the way in which the client buys. And this administration is really committed to accelerating the speed of delivery on these type of new opportunities and contracts. We believe this provides significant opportunity for DLH. Our company has a strong legacy of making programs more efficient for customers through the integration of cutting edge technologies, producing millions of dollars in cost savings to government. Federal investment in AI and ML, systems integration, cloud computing, software development, research and development, data analytics, and other advances have aligned with what we have been building over the last two and three years and continue to invest in for near term opportunities. While we believe the upcoming quarters will have steady procurement activity, the realignment of the customer's contracting resources may cause again, contract awards to slip to future periods. To navigate the market dynamics, our goals are simple and threefold. First, we'll continue to delever the company. Second, we're going to do everything we can to protect our revenue base and focus on new business and organic growth with key opportunities that drive and deliver value for our business line. And finally, we're going to continue to preserve our margin delivery through proactive scaling initiatives. And as we move past these challenges created by short term market dynamics, we believe the company is very, very well poised to once again become that growth enterprise that leverages its unique capabilities through differentiation and improve the government's mission and the lives of those that it touches. With that, I'd now like to turn the call over to our Chief Financial Officer, Katherine John. Katherine.