ATLANTA, Dec. 13, 2018 /PRNewswire/ -- DLH
Holdings Corp. (NASDAQ: DLHC) ("DLH" or the "Company"), a
leading provider of innovative healthcare services and solutions to
federal agencies, today announced financial results for its fiscal
fourth quarter and the fiscal year ended September 30, 2018.
Highlights
- Fiscal fourth quarter revenue was $32.5
million, up 6.9% over the fourth quarter of fiscal 2017
- Income from operations was $2.8
million for the quarter versus $2.1
million last year
- Diluted earnings per share were $0.14 for the quarter versus $0.08 per share in the prior-year period
- DLH generated operating cash flow of $6.1 million for the quarter and $14.1 million for the fiscal year
- The Company reduced its senior debt to $7.7 million as of September 30, 2018, with a cash balance of
$6.4 million
Management Discussion
"In fiscal 2018, revenue,
EBITDA, and operating cash flow reached their highest levels in
over a decade, reflecting expansion in levels of service on our key
contracts," stated DLH President and Chief Executive Officer
Zach Parker. "Sales rose to over
$133 million, gross profit topped
$30 million, and pretax income
exceeded $7.6 million. We generated
$14 million of operating cash flow
for the year, supporting repayment of $12
million of senior debt.
"We are pleased that – for the first time in years – our core
markets of HHS, the VA, and the Department of Defense were already
fully funded as the fiscal year began. We believe that the
addressable pipeline continues to provide substantial opportunities
for growth, even as we work diligently to address and mitigate any
recompete-related issues as they arise."
Results for the Three Months Ended September 30, 2018
Revenue for the fourth
quarter of fiscal 2018 was $32.5
million, up $2.1 million, or
6.9%, over the prior-year fourth quarter, reflecting activity
levels and expansion of services across multiple programs.
Gross profit was $7.9 million for
the quarter, an increase of $0.6
million, or 8.7%, over the fourth quarter of fiscal
2017. As a percent of revenue, the Company's gross margin was
24.3% in 2018 versus 23.9% in the prior-year period. General and
Administrative ("G&A") expenses were $4.5 million for the quarter compared to
$4.6 million in fiscal 2017. As a
percent of revenue, G&A expenses were 13.8% in the current
fiscal fourth quarter versus 15.2% last year. Depreciation
and amortization was $0.6 million in
fiscal 2018 and $0.5 million last
year.
Income from operations was $2.8
million for the quarter versus $2.1
million in the prior-year period, reflecting the
$0.6 million increase in gross profit
year-over-year. Income before taxes was $2.5
million for the quarter, up approximately $0.7 million over the prior-year period.
For the three months ended September 30,
2018 DLH recorded a $0.7
million provision for tax expense, versus $0.8 million for fiscal 2017. The tax provision
for 2018 reflects the impact of the prorated tax rate reduction
from the Tax Cuts and Jobs Act enacted in December 2017.
The Company reported net income for the fiscal fourth quarter of
approximately $1.8 million, or
$0.14 per diluted share, versus
$1.0 million, or $0.08 per diluted share, in the prior-year
period. On a non-GAAP basis, Earnings Before Interest Tax
Depreciation and Amortization ("EBITDA") for the three months ended
September 30, 2018 was approximately
$3.4 million versus $2.6 million in the prior-year period. Growth was
attributable to increased revenue and gross profit, as described
above.
Balance Sheet and Cash Flow
Cash as of September 30, 2018 was $6.4 million, and the Company's senior debt was
$7.7 million, versus cash of
$4.9 million and senior debt of
$19.7 million as of
September 30, 2017. Regarding cash flow, for the fiscal
fourth quarter DLH generated approximately $6.1 million in cash from operations, reflecting
its financial results and working capital management.
Conference Call and Webcast Details
DLH management
will discuss fourth quarter results and provide a general business
update, including current competitive conditions and strategies,
during a conference call beginning at 11:00
AM Eastern Time today, December 13,
2018. Interested parties may listen to the conference call
by dialing 888-347-5290 or 412-317-5256. Presentation
materials will also be posted on the Investor Relations section of
the DLH website prior to the commencement of the conference
call.
A digital recording of the conference call will be available for
replay two hours after the completion of the call and can be
accessed on the DLH Investor Relations website or by dialing
877-344-7529 and entering the conference ID 10124455.
About DLH
DLH (NASDAQ:DLHC) serves federal government
clients throughout the United
States and abroad delivering technology enabled solutions in
key health and human services programs. The Company's core
competencies and consulting services include assessment and
compliance monitoring, program management, health IT systems
integration, data analytics and medical logistics, and pharmacy
solutions. DLH has over 1,500 employees serving numerous government
agencies. For more information, visit the corporate website at
www.dlhcorp.com.
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995:
This press release may
contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
relate to future events or DLH`s future financial performance. Any
statements that are not statements of historical fact (including
without limitation statements to the effect that the Company or its
management "believes", "expects", "anticipates", "plans", "intends"
and similar expressions) should be considered forward looking
statements that involve risks and uncertainties which could cause
actual events or DLH's actual results to differ materially from
those indicated by the forward-looking statements. Those risks and
uncertainties include, but are not limited to, the following:
failure to achieve contract awards in connection with re-competes
for present business and/or competition for new business; the risks
and uncertainties associated with client interest in and purchases
of new services; changes in client budgetary priorities; government
contract procurement (such as bid protest, small business set
asides, loss of work due to organizational conflicts of interest,
etc.) and termination risks; the ability to successfully integrate
the operations of our recent and any future acquisitions; and other
risks described in our SEC filings. For a discussion of such risks
and uncertainties which could cause actual results to differ from
those contained in the forward-looking statements, see "Risk
Factors" in the Company's periodic reports filed with the SEC,
including our Annual Report on Form 10-K for the fiscal year ended
September 30, 2018, as well as
interim quarterly filings thereafter. The forward-looking
statements contained herein are made as of the date hereof and may
become outdated over time. The Company does not assume any
responsibility for updating forward-looking statements.
CONTACTS:
INVESTOR
RELATIONS
|
Contact: Chris
Witty
|
Phone:
646-438-9385
|
Email:
cwitty@darrowir.com
|
TABLES TO FOLLOW
DLH HOLDINGS
CORP.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(Amounts in thousands
except per share amounts)
|
|
|
|
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
|
$
|
32,489
|
|
|
$
|
30,390
|
|
|
$
|
133,236
|
|
|
$
|
115,662
|
|
Direct expenses
(exclusive of depreciation and amortization shown below)
|
|
24,604
|
|
|
23,137
|
|
|
103,034
|
|
|
89,812
|
|
Gross
margin
|
|
7,885
|
|
|
7,253
|
|
|
30,202
|
|
|
25,850
|
|
General and
administrative expenses
|
|
4,478
|
|
|
4,615
|
|
|
19,178
|
|
|
17,466
|
|
Depreciation and
amortization
|
|
588
|
|
|
489
|
|
|
2,242
|
|
|
1,754
|
|
Income from
operations
|
|
2,819
|
|
|
2,149
|
|
|
8,782
|
|
|
6,630
|
|
Interest expense,
net
|
|
315
|
|
|
340
|
|
|
1,116
|
|
|
1,228
|
|
Income before income
taxes
|
|
2,504
|
|
|
1,809
|
|
|
7,666
|
|
|
5,402
|
|
Income tax expense,
net
|
|
747
|
|
|
769
|
|
|
5,830
|
|
|
2,114
|
|
Net
income
|
|
$
|
1,757
|
|
|
$
|
1,040
|
|
|
$
|
1,836
|
|
|
$
|
3,288
|
|
|
|
|
|
|
|
|
|
|
Net income per
share - basic
|
|
$
|
0.15
|
|
|
$
|
0.09
|
|
|
$
|
0.15
|
|
|
$
|
0.29
|
|
Net income per share
- diluted
|
|
$
|
0.14
|
|
|
$
|
0.08
|
|
|
$
|
0.14
|
|
|
$
|
0.27
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
11,899
|
|
|
11,502
|
|
|
11,881
|
|
|
11,345
|
|
Diluted
|
|
12,873
|
|
|
12,528
|
|
|
12,873
|
|
|
12,352
|
|
DLH HOLDINGS
CORP.
|
CONSOLIDATED
BALANCE SHEETS
|
(Amounts in thousands
except par value of shares)
|
|
|
|
September 30,
2018
|
|
September 30,
2017
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
6,355
|
|
|
$
|
4,930
|
|
Accounts
receivable
|
|
10,280
|
|
|
11,911
|
|
Other current
assets
|
|
760
|
|
|
598
|
|
Total current
assets
|
|
17,395
|
|
|
17,439
|
|
Equipment and
improvements, net
|
|
1,566
|
|
|
1,391
|
|
Deferred taxes,
net
|
|
4,137
|
|
|
9,639
|
|
Goodwill
|
|
25,989
|
|
|
25,989
|
|
Intangible assets,
net
|
|
13,365
|
|
|
15,127
|
|
Other long-term
assets
|
|
89
|
|
|
139
|
|
Total
assets
|
|
$
|
62,541
|
|
|
$
|
69,724
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Debt obligations -
current
|
|
$
|
—
|
|
|
$
|
6,518
|
|
Derivative financial
instruments, at fair value
|
|
—
|
|
|
306
|
|
Accrued
payroll
|
|
4,983
|
|
|
3,723
|
|
Accounts payable,
accrued expenses, and other current liabilities
|
|
10,950
|
|
|
10,895
|
|
Total current
liabilities
|
|
15,933
|
|
|
21,442
|
|
Total long term
liabilities
|
|
7,190
|
|
|
12,427
|
|
Total
liabilities
|
|
23,123
|
|
|
33,869
|
|
Commitments and
contingencies
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, $.001
par value; authorized 40,000 shares; issued and outstanding
11,899 and 11,767 at September 30, 2018 and 2017,
respectively.
|
|
12
|
|
|
12
|
|
Additional paid-in
capital
|
|
84,285
|
|
|
82,687
|
|
Accumulated
deficit
|
|
(44,879)
|
|
|
(46,844)
|
|
Total shareholders'
equity
|
|
39,418
|
|
|
35,855
|
|
Total liabilities
and shareholders' equity
|
|
$
|
62,541
|
|
|
$
|
69,724
|
|
DLH HOLDINGS
CORP.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Amounts in
thousands)
|
|
|
|
Year
Ended
|
|
|
September
30,
|
|
|
2018
|
|
2017
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
|
1,836
|
|
|
$
|
3,288
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization expense
|
|
2,242
|
|
|
1,724
|
|
Amortization of debt
financing costs as interest expense
|
|
275
|
|
|
268
|
|
Change in fair value
of derivative financial instruments
|
|
—
|
|
|
102
|
|
Stock based
compensation expense
|
|
1,375
|
|
|
662
|
|
Loss on retirement of
equipment
|
|
—
|
|
|
31
|
|
Deferred taxes,
net
|
|
5,502
|
|
|
1,776
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
Accounts
receivable
|
|
1,631
|
|
|
(5,274)
|
|
Other current
assets
|
|
(162)
|
|
|
(56)
|
|
Accounts payable,
accrued payroll, accrued expenses and other current
liabilities
|
|
1,314
|
|
|
3,945
|
|
Other long term
assets/liabilities
|
|
64
|
|
|
58
|
|
Net cash provided
by operating activities
|
|
14,077
|
|
|
6,524
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Acquisition, net of
cash acquired
|
|
—
|
|
|
(250)
|
|
Purchase of equipment
and improvements
|
|
(654)
|
|
|
(1,064)
|
|
Net cash used in
investing activities
|
|
(654)
|
|
|
(1,314)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Repayments on senior
debt
|
|
(11,979)
|
|
|
(3,750)
|
|
Repayments of capital
lease obligations
|
|
—
|
|
|
(86)
|
|
Payment of deferred
financing costs
|
|
(65)
|
|
|
—
|
|
Proceeds from stock
option exercise
|
|
46
|
|
|
129
|
|
Net cash used in
financing activities
|
|
(11,998)
|
|
|
(3,707)
|
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
1,425
|
|
|
1,503
|
|
Cash and cash
equivalents at beginning of year
|
|
4,930
|
|
|
3,427
|
|
Cash and cash
equivalents at end of year
|
|
$
|
6,355
|
|
|
$
|
4,930
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
800
|
|
|
$
|
883
|
|
Cash paid during the
period for income taxes
|
|
$
|
876
|
|
|
$
|
337
|
|
Non-cash issuance of
stock upon exercise of options
|
|
$
|
25
|
|
|
$
|
—
|
|
Derivative warrant
liability reclassified as equity
|
|
$
|
(306)
|
|
|
$
|
—
|
|
Revenue
Metrics
|
|
|
|
|
|
|
|
Three months
ended
|
|
Year Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2018
|
|
2018
|
Market
Mix:
|
|
|
|
|
Defense/VA
|
|
69
|
%
|
|
65
|
%
|
Human Services and
Solutions
|
|
26
|
%
|
|
31
|
%
|
Public Health/Life
Sciences
|
|
5
|
%
|
|
4
|
%
|
|
|
|
|
|
Contract
Mix:
|
|
|
|
|
Time and
Materials
|
|
93
|
%
|
|
95
|
%
|
Cost Plus Fixed
Fee
|
|
5
|
%
|
|
3
|
%
|
Firm Fixed
Price
|
|
2
|
%
|
|
2
|
%
|
|
|
|
|
|
Prime vs
Sub:
|
|
|
|
|
Prime
|
|
100
|
%
|
|
99
|
%
|
Subcontracts
|
|
—
|
%
|
|
1
|
%
|
Non-GAAP Financial Measures
The Company uses EBITDA as
a supplemental non-GAAP measure of our performance. DLH defines
EBITDA as net income excluding (i) interest expense, (ii) provision
for or benefit from income taxes and (iii) depreciation and
amortization.
Beginning with the first quarter of fiscal year 2018, the
Company commenced reporting EBITDA, rather than adjusted EBITDA, as
a key non-GAAP financial measure of our business. The Company
believes that due to the growth and maturation of its business,
this change will improve the transparency of its business
performance and increase the comparability of its results with
peers. Non-GAAP measures for prior periods have been recast to
conform to this change in the Company's reporting.
In addition, we are also reporting our net income excluding the
impact of the Tax Cut and Jobs Act of 2017. On December 22, 2017, the Tax Cut and Jobs Act was
enacted, which, among other things, reduced corporate tax rates and
revised rules regarding the usability of net operating losses.
These changes have resulted in a tax provision of $3.4
million associated with revaluing the benefit of our net
operating losses. For comparability, the tax provision for
the prior year periods has been restated using the reduced tax
rates passed in December 2017.
These non-GAAP measures of performance are used by management to
conduct and evaluate its business during its regular review of
operating results for the periods presented. Management and the
Company's Board utilize these non-GAAP measures to make decisions
about the use of the Company's resources, analyze performance
between periods, develop internal projections and measure
management performance. DLH believes that these non-GAAP measures
are useful to investors in evaluating the Company's ongoing
operating and financial results and understanding how such results
compare with the Company's historical performance.
Reconciliation of GAAP net income to EBITDA, a non-GAAP
measure:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Net income
|
|
$
|
1,757
|
|
|
$
|
1,040
|
|
|
$
|
717
|
|
|
$
|
1,836
|
|
|
$
|
3,288
|
|
|
$
|
(1,452)
|
|
(i) Interest
expense
|
|
315
|
|
|
340
|
|
|
(25)
|
|
|
1,116
|
|
|
1,228
|
|
|
(112)
|
|
(ii) Provision for
taxes
|
|
747
|
|
|
769
|
|
|
(22)
|
|
|
5,830
|
|
|
2,114
|
|
|
3,716
|
|
(iii) Depreciation
and amortization
|
|
588
|
|
|
489
|
|
|
99
|
|
|
2,242
|
|
|
1,754
|
|
|
488
|
|
EBITDA
|
|
$
|
3,407
|
|
|
$
|
2,638
|
|
|
$
|
769
|
|
|
$
|
11,024
|
|
|
$
|
8,384
|
|
|
$
|
2,640
|
|
Reconciliation of GAAP net income to net income adjusted for
the effect of the 2017 Tax Act, a non-GAAP measure:
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
Net income
|
|
$
|
1,757
|
|
|
$
|
1,040
|
|
|
$
|
717
|
|
|
$
|
1,836
|
|
|
$
|
3,288
|
|
|
$
|
(1,452)
|
|
Write-down of
deferred tax assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,365
|
|
|
—
|
|
|
3,365
|
|
Pro-forma impact of
tax rate change
|
|
—
|
|
|
145
|
|
|
(145)
|
|
|
|
|
527
|
|
|
(527)
|
|
Net income, adjusted
for the effect of the 2017 Tax Act
|
|
$
|
1,757
|
|
|
$
|
1,185
|
|
|
$
|
572
|
|
|
$
|
5,201
|
|
|
$
|
3,815
|
|
|
$
|
1,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
diluted share
|
|
$
|
0.14
|
|
|
$
|
0.08
|
|
|
$
|
0.06
|
|
|
$
|
0.14
|
|
|
$
|
0.27
|
|
|
$
|
(0.13)
|
|
Impact of write-down
of deferred tax asset
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.26
|
|
|
—
|
|
|
0.26
|
|
Pro-forma impact of
tax rate change
|
|
—
|
|
|
0.01
|
|
|
(0.01)
|
|
|
—
|
|
|
0.04
|
|
|
(0.04)
|
|
Net income per
diluted share, adjusted for the
effect of the 2017 Tax Act
|
|
$
|
0.14
|
|
|
$
|
0.09
|
|
|
$
|
0.05
|
|
|
$
|
0.40
|
|
|
$
|
0.31
|
|
|
$
|
0.09
|
|
View original
content:http://www.prnewswire.com/news-releases/dlh-reports-fourth-quarter-and-fiscal-year-2018-results-300764595.html
SOURCE DLH Holdings Corp.