DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the
“Company”), a leading provider of research and
development, systems engineering and integration, and digital
transformation solutions to federal agencies, today announced that
it has acquired privately-held Grove Resource Solutions, Inc.
(“GRSi”) of Bethesda, Maryland.
The firm, with approximately 700 employees,
provides a broad array of cloud-based enterprise modernization and
cyber security solutions to numerous civilian and military federal
agencies, most notably the National Institutes of Health (NIH),
U.S. Navy (USN), and U.S. Marine Corps (USMC), among others.
“We are thrilled to begin a new era at DLH with
the acquisition of GRSi,” said Zach Parker, DLH President and CEO.
“Through this landmark transaction, we elevate our information
technology and engineering capabilities, while adding the scale we
need to thrive in an increasingly competitive marketplace. GRSi’s
high-end IT and technical capabilities serving scientists,
researchers, and system engineers have earned the company a
reputation for excellence, and we expect that our unified
organization will build upon those achievements to drive
accelerated growth for DLH in the near- and long-terms. GRSi’s
highly credentialed workforce features some the best and brightest
technology leaders in our industry. We could not be more excited to
welcome the entire team into the DLH family.”
GRSi was purchased for $185.0 million, or $157.9
million net of transaction-related tax benefits worth approximately
$27.1 million on a net present value basis. The purchase price
includes $178.0 million of cash and $7.0 million of equity. DLH
estimates that GRSi will contribute annualized revenue of
approximately $140 million to the Company going forward, and the
firm’s backlog was approximately $550 million at closing. GRSi will
be a wholly owned subsidiary of DLH Holdings Corp., and current
GRSi key operations leaders are expected to remain with DLH in
leadership roles.
"From culture and values, to market presence and
capabilities, we believe that DLH is an ideal partner for GRSi,”
added David Affeldt, President & CEO of GRSi. “Working with
Zach and his team has reinforced our belief that this transaction
will yield an impressive platform for achieving our joint
objectives for years to come. DLH has the capabilities, customers,
and culture that will enhance those of our own – resulting in a
dynamic, improved provider of essential services to federal
customers.”
DLH financed the acquisition through an
amendment to its existing secured credit facility. First National
Bank of Pennsylvania acted as agent, and F.N.B. Capital Markets,
M&T Bank, and Atlantic Union Bank acted as joint lead
arrangers. The credit facility was comprised of a syndicated term
loan of $190 million and a revolving credit facility of $70
million. Additional terms of the transaction and financing
arrangements will be available in the Company’s SEC filings.
Conference Call and Webcast
DLH will host a conference call and webcast for
investors and analysts at 10:00 a.m. Eastern Time on December 13,
2022 during which members of senior management will review a
presentation (already posted on the Company’s website) focused on
the GRSi transaction. A question-and-answer session will follow.
Interested parties may listen to the conference call via webcast or
by dialing 888-347-5290 or 412-317-5256. A digital recording will
be available for replay two hours after completion of the call and
can be accessed on the DLH Investor Relations website or by dialing
877-344-7529 and entering conference ID 5841865.
Advisors
KippsDeSanto & Co. served as financial
advisor to DLH. Holland & Knight, LLP and Becker &
Poliakoff LLP served as legal advisors to DLH as part of this
transaction. Baker Tilly, Lockton Companies, and Wolf Den
Associates provided consulting services to DLH in connection with
the acquisition. Baird served as financial advisor to GRSi.
About DLH
DLH (NASDAQ:DLHC) delivers improved health and
readiness solutions for federal programs through research and
development, systems engineering and integration, and digital
transformation. The Company’s experts in public health, performance
evaluation, and health operations solve the complex problems faced
by civilian and military customers alike, leveraging digital
transformation, artificial intelligence, advanced analytics,
cloud-based applications, telehealth systems, and more. With over
2,500 employees dedicated to the idea that “Your Mission is Our
Passion,” DLH brings a unique combination of government sector
experience, proven methodology, and unwavering commitment to public
health to improve the lives of millions. For more information,
visit www.DLHcorp.com.
About GRSi
GRSi is a federal services provider specializing
in technology, business solutions, and research and engineering.
For nearly 20 years, GRSi has provided innovative service solutions
to meet the nation’s most pressing challenges. GRSi, named Maryland
Tech Council’s Government Contracting Company of the Year for 2021,
is an industry-leading professional technical and engineering
services company delivering next-generation systems engineering,
cybersecurity, technology insertion, and best practices-based
Enterprise Operations management to federal, defense, intelligence,
and commercial clients worldwide. Find out more at
www.grsi.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 refer to
expectations, projections or other characterizations of future
events or circumstances or 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.
Forward-looking statements in this release include, among others,
statements regarding estimates of future revenues. These statements
reflect our belief and assumptions as to future events that may not
prove to be accurate. Our actual results may differ materially from
such forward-looking statements made in this release due to a
variety of factors, including: the outbreak of the novel
coronavirus (“COVID-19”), including the measures to reduce its
spread, and its impact on the economy and demand for our services,
are uncertain, cannot be predicted, and may precipitate or
exacerbate other risks and uncertainties; the risk that we will not
realize the anticipated benefits of the GRSi acquisition;
(including anticipated future financial operating performance and
results); diversion of management’s attention from normal daily
operations of the business and the challenges of managing larger
and more widespread operations resulting from the acquisition; the
inability to retain GRSi employees and customers; 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;
compliance with new bank financial and other covenants; changes in
client budgetary priorities; government contract procurement (such
as bid and award protests, 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 GRSi
and any future acquisitions; the impact of inflation and higher
interest rates; 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, 2022, as well as subsequent
reports filed thereafter. The forward-looking statements contained
herein are not historical facts, but rather are based on current
expectations, estimates, assumptions and projections about our
industry and business.
Such forward-looking statements 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, except as may be required by law.
CONTACTS:
MEDIA
Email: dlh.communications@dlhcorp.com
INVESTOR RELATIONS
Contact: Chris Witty
Phone: 646-438-9385
Email: cwitty@darrowir.com
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