EX-99.1 2 ex9918kerfy17q3june30.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

DLH Reports Third Quarter Fiscal Year 2017 Results

Atlanta, Georgia – August 8, 2017 – 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 third quarter ended June 30, 2017.

Recent Highlights
•
Revenue: $29.3 million – up 17% over the third quarter of 2016, including 6% organic growth
•
Gross margin: 21.8%
•
Diluted earnings per share: $0.08
•
Strong cash flow from operations of $2.5 million
•
Addition of industry veteran Jim Allen to board of directors

Management Discussion
“Our fiscal third quarter was marked by solid financial results, including top line growth and strong gross margins, even as higher-than-usual bid and proposal activity translated into increased G&A expense,” stated DLH President and Chief Executive Officer Zach Parker. “Such business development initiatives leverage our combined capabilities as we focus on larger and more complex opportunities - ones which may ultimately accelerate our overall growth outlook - and so the added investment this quarter was both appropriate and necessary.
“We were also selected as an innovation award winner by FedHealthIT for our Aligned Monitoring System modernization program within the U.S. Department of Health and Human Services’ Administration for Children and Families. This award illustrates the type of high-value technology applications that will take DLH to the next level across the federal agencies we serve. At the same time, the appointment of Jim Allen to our board brings added stature to the company, and his counsel will be invaluable as we look to further improve our long-term financial performance. We’re earning greater recognition from our peers and customers alike - and are positioned well for 2018 and beyond.”

Results for the Three Months Ended June 30, 2017

Revenue for the third quarter of fiscal 2017 was $29.3 million, up $4.3 million, or 17%, over the prior-year third quarter. This top line growth was primarily due to the business acquired in May 2016 and the expansion of services on existing contract vehicles.

Gross profit was $6.4 million for the quarter, an increase of $0.9 million, or 17%, over the third quarter of fiscal 2016. As a percent of revenue, the Company's gross margin was 21.8%, equivalent to the prior-year period. General and Administrative ("G&A") expenses were $4.1 million for the quarter, an increase of $0.7 million versus the fiscal 2016 third quarter. The year-over-year increase reflects incremental program and operational resources required to manage




and grow DLH’s business. As a percent of revenue, G&A expenses were 14.1% versus 13.5% in fiscal 2016, reflecting higher investment in business development activities.  
  
Income from operations was $1.8 million for the quarter versus $1.7 million in the prior-year period. This increase reflects gross profit improvement of $0.9 million, partially offset by the higher expenses as described above.

Income before taxes was $1.5 million for the quarter, an improvement of approximately $0.2 million over the prior-year period. DLH recorded a $0.5 million provision for tax expense during the quarter, in line with fiscal 2016.

Net income for the third quarter of 2017 was approximately $0.9 million, or $0.08 per diluted share, versus $0.8 million, or $0.07 per diluted share in the prior-year period.
 
On a non-GAAP basis, Earnings Before Interest Tax Depreciation and Amortization (“EBITDA”) adjusted for other items (“Adjusted EBITDA”) for the three months ended June 30, 2017 was approximately $2.3 million versus $2.1 million in the prior-year period.

Balance Sheet

Cash as of June 30, 2017 was $4.6 million, and the Company’s senior debt was $20.6 million. Regarding cash flow, for the fiscal third quarter DLH generated $2.5 million in cash from operations and $4.9 million year-to-date.

Non-GAAP Financial Measures

During the 2016 fiscal year, DLH acquired Danya International, LLC. The Company believes that it is helpful for investors to be able to evaluate the revenue performance of DLH's underlying business excluding the impact of acquisitions. Therefore, the Company provides organic revenue growth as a non-GAAP measure to support this objective. To calculate organic revenue growth, the Company compares current year revenue, less revenue from acquisitions, to prior year revenue.

Further, the Company believes that providing Income from Operations per share will be useful to investors in comparing year over year operating results for 2017 compared to 2016. Income from Operations per share excludes the impact of other income (expenses) and income tax benefits, independent of operating results. By providing this non-GAAP measure, we believe that an investor can more easily compare year over year performance.












 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
($ in thousands, except per share amounts)

 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Income from operations
 
$
1,753

 
$
1,668

 
$
85

 
$
4,481

 
$
2,739

 
$
1,742

Other income (expense), net
 
(269
)
 
(374
)
 
105

 
(888
)
 
(1,076
)
 
188

Income before income taxes
 
1,484

 
1,294

 
190

 
3,593

 
1,663

 
1,930

Income tax expense (benefit), net
 
539

 
518

 
21

 
1,345

 
666

 
679

Net income
 
$
945

 
$
776

 
$
169

 
$
2,248

 
$
997

 
$
1,251

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per fully diluted share
 
$
0.08

 
$
0.07

 
$
0.01

 
$
0.18

 
$
0.09

 
$
0.09

Income tax expense (benefit), net
 
0.04

 
0.05

 
(0.01
)
 
0.10

 
0.06

 
0.04

Income before taxes
 
0.12

 
0.12

 
0.00

 
0.28

 
0.15

 
0.13

Other income (expense), net
 
0.02

 
0.03

 
(0.01
)
 
0.07

 
0.10

 
(0.03
)
Income from operations per fully diluted share
 
$
0.14

 
$
0.15

 
$
(0.01
)
 
$
0.35

 
$
0.25

 
$
0.10

 
 
 
 
 
 
 
 
 
 
 
 
 

The Company uses Earnings Before Interest Tax Depreciation and Amortization (“EBITDA”) adjusted for other items (“Adjusted EBITDA”) as a supplemental non-GAAP measures of our performance. DLH defines Adjusted EBITDA as net income adjusted to exclude (i) interest and other expenses, including acquisition expenses, net, (ii) provision for or benefit from income taxes, if any, (iii) depreciation and amortization, and (iv) G&A expenses - equity grants.

This non-GAAP measure of our performance is 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. By providing this non-GAAP measure as a supplement to GAAP information, DLH believes this enhances investors’ understanding of its business and results of operations.















Reconciliation of GAAP net income to adjusted EBITDA, a non-GAAP measure:

 
 
Three Months Ended
 
Nine Months Ended

 
June 30,
 
June 30,
($ in thousands, except per share amounts)
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Net income
 
$
945

 
$
776

 
$
169

 
$
2,248

 
$
997

 
$
1,251

(i) Interest and other (income) expense (net):
 
 
 
 
 
 
 
 
 
 
 
 
(i)(a) Interest and other expense
 
269

 
281

 
(12
)
 
888

 
281

 
607

(i)(b) Acquisition expenses
 
—

 
93

 
(93
)
 
—

 
795

 
(795
)
(ii) Provision for taxes
 
539

 
518

 
21

 
1,345

 
666

 
679

(iii) Depreciation and amortization
 
510

 
414

 
96

 
1,264

 
456

 
808

(iv) G&A expenses - equity grants
 
63

 
42

 
21

 
613

 
384

 
229

Adjusted EBITDA
 
$
2,326

 
$
2,124

 
$
202

 
$
6,358

 
$
3,579

 
$
2,779

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 

Conference Call and Webcast Details

DLH management will discuss third quarter results in a conference call beginning at 11:00 AM Eastern Time on Tuesday, August 8, 2017. Interested parties may listen to the conference call by dialing (844) 389-8659 and providing the operator with the conference ID 52075191. 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 (855) 859-2056 and entering the conference ID 52075191.

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 1,400 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. 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, 2016. The forward-looking statements contained in this press release 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:
COMMUNICATIONS
 
INVESTOR RELATIONS
Contact: Tiffany McCall
 
Contact: Chris Witty
Phone: 404-334-6000
 
Phone: 646-438-9385
Email: tiffany.mccall@dlhcorp.com
 
Email: cwitty@darrowir.com



TABLES TO FOLLOW







DLH HOLDINGS CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share amounts)


 
 
 
(unaudited)
 
(unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
June 30,
 
June 30,
 
 
2017
 
2016
 
2017
 
2016
Revenue
 
$
29,256

 
$
24,989

 
$
85,272

 
$
58,482

Direct expenses
 
22,871

 
19,533

 
66,805

 
46,885

Gross margin
 
6,385

 
5,456

 
18,467

 
11,597

General and administrative expenses
 
4,122

 
3,374

 
12,722

 
8,402

Depreciation and amortization
 
510

 
414

 
1,264

 
456

Income from operations
 
1,753

 
1,668

 
4,481

 
2,739

Other income (expense), net
 
(269
)
 
(374
)
 
(888
)
 
(1,076
)
Income before income taxes
 
1,484

 
1,294

 
3,593

 
1,663

Income tax expense (benefit), net
 
539

 
518

 
1,345

 
666

Net income
 
$
945

 
$
776

 
$
2,248

 
$
997

 
 
 
 
 
 
 
 
 
Net income per share - basic
 
$
0.08

 
$
0.08

 
$
0.20

 
$
0.10

Net income per share - diluted
 
$
0.08

 
$
0.07

 
$
0.18

 
$
0.09

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
Basic
 
11,299

 
10,154

 
11,250

 
9,812

Diluted
 
12,445

 
11,311

 
12,417

 
10,855







DLH HOLDINGS CORP.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except par value of shares) 


 
June 30,
2017
 
September 30,
2016
 
 
(unaudited)


 
 
ASSETS
 
 

 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
4,601

 
$
3,427

Accounts receivable, net
 
8,624

 
6,637

Other current assets
 
620

 
542

Total current assets
 
13,845

 
10,606

Equipment and improvements, net
 
1,163

 
644

Deferred taxes, net
 
10,411

 
11,415

Goodwill and other intangible assets, net
 
41,557

 
42,304

Other long-term assets
 
105

 
105

Total assets
 
$
67,081

 
$
65,074

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Debt obligations - current
 
$
3,590

 
$
3,560

Derivative financial instruments, at fair value
 
253

 
204

Accrued payroll
 
3,445

 
3,616

Accounts payable, accrued expenses, and other current liabilities
 
8,826

 
7,136

Total current liabilities
 
16,114

 
14,516

Total long term liabilities
 
16,215

 
18,782

Total liabilities
 
32,329

 
33,298

Commitments
 
 
 
 
Shareholders' equity:
 
 
 
 
Preferred stock, $.10 par value; authorized 5,000 shares, none issued and outstanding
 
—

 
—

Common stock, $.001 par value; authorized 40,008 shares; issued and outstanding 11,590 at June 30, 2017 and 11,148 at September 30, 2016
 
12

 
11

Additional paid-in capital
 
82,624

 
81,897

Accumulated deficit
 
(47,884
)
 
(50,132
)
Total shareholders’ equity
 
34,752

 
31,776

Total liabilities and shareholders' equity
 
$
67,081

 
$
65,074