DLH Holdings Corp.

was a symbol to compete for. Our differentiated suite of data science and AIML technology applications, our outstanding capabilities, and workforce alignment aligns exceptionally well to position us for work within our three strategic pillars, science, research, and development, digital transformation and cybersecurity, and systems engineering and integrations. As government acquisition strategies evolve, we remain prepared and proactive, leveraging speed, innovation, and agility to compete on multiple fronts in an accelerated acquisition landscape. With that, I'd now like to turn the call over to our Chief Financial Officer, Katherine Johnbaugh. Katherine?

Thank you, Zach, and good morning, everyone. Thanks for joining our reporting on our second quarter results for fiscal 2026. Turning to slide six, I'd like to first provide a high-level overview of some key financial metrics for the three months ended March 31st, 2026. We reported revenue at 59.3 million in the second quarter versus 89.2 million in the prior year period, reflecting contributions from expansion on existing contracts offset by the impact of conversion of certain programs to small business set-aside contracts, as discussed in the past, and certain government efficiency initiatives. In total, the revenue contraction was mostly due to small business set-aside initiatives, primarily from CMOP and Head Start with approximately a $24 million increase in the quarter-over-quarter results. The remaining change was due to year-over-year contract completions and government efficiency initiatives. We reported adjusted EBITDA of 5.3 million for the quarter compared to 9.4 million in the prior year period, with the decrease primarily driven by the changing revenue volumes. Adjusted EBITDA margin was 9% for the quarter, adjusting for the timing and incremental cost impact of our cost scaling initiatives implemented in the second quarter. From a free cash flow standpoint, we generated approximately 3.8 million during the quarter. In comparison to the prior year period, the prior year reflects the results of significant working capital builds stemming from the transition of a CMOP location that restricted cash collections early in fiscal 25. Now turning to slide seven, I'll wrap up with a summary of our debt reduction efforts, which remain a key focus area for DLH. Debt reduced during the quarter to 132.7 million, a reduction from 136.6 million at the end of the previous quarter. This marks the resumption of our deleveraging trend after the typical seasonal uptick we experienced in the first quarter. We expect to convert approximately 50 to 55% of EBITDA generated during fiscal 2026 to reduce debt by year end. We remain well ahead of our mandatory repayment schedule and in full compliance with all financial covenants. With that, I would now like to turn the call over to our operator to open up for questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. 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. Our first question comes from Joe Gomes with Noble Capital.