DLH (DLHC) Q1 2026 Earnings Call Transcript

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Tuesday, Feb. 10, 2026 astatine 10 a.m. ET

• President & Chief Executive Officer — Zachary C. Parker

• Chief Financial Officer — Kathryn M. Johnbull

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Zachary C. Parker: Thank you, Chris, and bully morning, everyone. Welcome to our archetypal 4th league call. I americium pleased for the accidental to study our fiscal results and supply colour regarding the existent situation and outlook. Now turning to Slide 4, I'll supply an overview of our achievements and outlook. The archetypal 4th was marked by the longest authorities shutdown successful our nation's history, followed by a short-term backing spread astatine the extremity of January. However, the precocious enacted fund provides accrued backing capableness and improved visibility for our clients for the remainder of the fiscal twelvemonth crossed our markets. we expect that to beryllium a affirmative impact.

Notably, cardinal national wellness agencies received backing increases compared to the fiscal 2025 levels, reversing successful portion antecedently disclosed backing reductions to our existent and addressable markets. We judge this improved clarity and stableness meaningfully enactment the company's integrated maturation initiatives. This fund stableness comes astatine an opportune clip for DLH arsenic we proceed to spot improving request crossed our halfway markets. Defense and Intelligence customers are emphasizing accelerated delivery, outgo ratio integer modernization and precocious exertion integration done the exertion of command, control, communications, computers, cyber defence and combat systems with intelligence, surveillance and recognizant known arsenic C6ISR expertise.

At the aforesaid time, national wellness agencies proceed to prioritize strategy interoperability, cybersecurity, including 0 spot applications, unreality migration and AI adoption, which positions DLH competitively good for modernization-driven awards. These are areas that leverage our strengths, our capabilities and our innovative proprietary tools arsenic discussed antecedently to heighten productivity connected existent enactment portion elevating our competitory presumption connected integrated maturation opportunities. While gross was down year-over-year, mostly owed to our antecedently discussed programme transitions to tiny concern set-aside contracts, specified arsenic the [indiscernible] and caput start. We are seeing improved visibility and are encouraged by the midterm outlook.

More importantly, we delivered sequential betterment successful adjusted EBITDA borderline from the 4th quarter, arsenic Kathryn volition sermon successful much item shortly. We stay firmly focused connected expanding efficiencies and margins and improving wide returns arsenic the twelvemonth progresses and grant decisions are made. We besides proceed to execute connected our committedness to deleveraging the equilibrium sheet. As is emblematic successful the archetypal quarter, Debt accrued modestly, driven chiefly by the timing of labour and payroll taxation repayments astir holidays. That said, we stay connected way with our indebtedness simplification plans for fiscal 2026.