Q1 2021 DLH Holdings Corp Earnings Call
Yeah.
Good day and welcome to the fiscal 'twenty 'twenty, one first quarter earnings conference call.
All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Chris Witty Investor Relations adviser. Please go ahead.
Thank you and good morning, everyone on the call with me today is <unk> Parker, President and Chief Executive Officer, and Katherine John Bull Chief Financial Officer, The company's earnings release, and Powerpoint presentation are available on our website under the Investor page.
I'd now like to provide a brief safe Harbor statement, which is also shown on slide two of the presentation.
This call May include forward looking statements that relate to the company's outlook for fiscal 'twenty 'twenty, one and beyond these forward looking statements are subject to various risks and uncertainties that could cause actual results and events to differ materially from these statements.
Please refer to the risk factors contained in the company's annual report on form 10-K, and in our other filings with the Securities and Exchange Commission.
We do not undertake any duty to update any forward looking statements on today's call, we will be referencing both GAAP and non-GAAP financial measures a reconciliation of our non-GAAP results to our reported GAAP results is included in our earnings release and in the Investor presentation on DLH is website.
President and CEO Zach Parker will speak next followed by CFO, Kathryn Jumbo after which we'll open it up for questions.
I'd now like to turn the call over to Zach. Please go ahead Zach.
Yeah.
Thank you Christian good morning, everyone and welcome to our first quarter Conference calls.
Let me begin with the recognition of the excellent and courageous work done by our DLH employees worldwide in executing the mission of our customers.
Many of our employees and a large largely attended workplace on a daily basis.
Raising the challenges imposed by the pandemic.
We are truly indebted.
Two are true to our share the service of our folks.
As well as the the close of.
Our control and safety a provision that's provided by our customers where for those working at our customer sites and then by our leadership team and our COVID-19 task force for those of our employees to work in our existing facilities.
We began our fiscal 'twenty, one with solid results and I do as I indicated last time and remain very optimistic about the year ahead.
Starting with slide three I'll first provide a high level overview of our financial performance and some color on the outlook for the balance of fiscal 'twenty 'twenty one.
As I indicated the year started off strong and I'm pleased to say with revenue up 57, 9 million and operating margins of 6.3 per cent.
The company's top line benefit top line benefited from almost 7 million contribution from I B E.
As Kathryn will review in a moment, while overall profitability increased even ask some of the pandemic related headwinds continue.
Due to ongoing travel restrictions as noted in the past certain programs saw less activity and of course, the subsequent billings, but we believe that such challenges should lessen in the quarters to come.
We posted net income of 1.8 million or 13 cents per share.
Our backlog was 665 million at the end of the quarter, providing strong revenue visibility.
Most importantly, we're seeing a very active proposal bid environment and as I'll describe more in a moment. We're pleased with the wide array of opportunities are they've been open to us this fiscal year.
Overall, I think the company performed well in Q1.
And that we're on a path.
Towards our sustained solid performers throughout the fiscal year.
A quick brief note also that.
We ended the quarter with satisfy the majority of our transition and integration requirements associated with the acquisition.
That started on day, one quarter, and it's gone really quite well.
Now turning to slide four I'd like to update our investors on DLH as business outlook. Following the recent political changes in Washington.
As we said last quarter the outcome of the election was not expected to materially impact the overall stability of our end markets or demand for the services we provide.
We continue to maintain a strong.
So on the line, which is where that with our customer set it as a better supported very strongly on both sides of the aisle.
As well as the White house.
However at this juncture, we anticipate that the new administrations spending priorities may result, in even greater opportunities for us to grow long term due to the ongoing focus on improving technology.
Associated with Wellcare Health care solutions. These include the Department of Defense Health Agency a.
The veterans administration, and several agencies within the health and human services.
Agents.
What's different as a company to now provide an even broader and deeper range of services.
Than ever before as we continue to integrate our acquisitions and developed a unique value properly propositions, leveraging our tools and technologies to differentiate us.
As we look to grow our opportunities organically, we continue to drive key technology enhancements and Modernizations and to support the fight against COVID-19.
We've been using a this depth of our credentials and expertise to continue.
Continue to address a large number of opportunities associated with the pandemic and bring them together core service offerings in a way that transcends anything that we've been able to do in the past.
Furthermore, the federal government, including the key agencies that we serve.
Continue to increase their focus on digital transformation artificial intelligence and the move to a secure cloud environment.
The pace of bidding activity. It's clearly picked up we think in part due to the fact that we actually had a budget signed at the end of the calendar year as opposed to continuing to operate on a C hours are continuing resolutions.
We also believe that the solidly positions us.
Do you have access to pursue more contract over the course of the next 12 to 18 months.
Including the majority of which would be a new business opportunities.
In addition, the COVID-19 pandemic continues to offer opportunities for us to pursue.
Largely in a public health and life Sciences Arena.
We also find opportunities where there isn't a good idea that you're in that arena as well.
Are these opportunities should help help us continue our track record of growing the top line.
Most importantly, supporting the nation's fight against this this virus.
Virus.
Some of our recent awards in this arena are already positively impacting the outlook for fiscal 'twenty one.
We anticipate pursuing additional contracts dealing with both.
Both the vaccine rollout Oh therapeutics.
Telehealth applications and of course clinical trials for the safety and efficacy of investigational therapeutics all in all I remain upbeat about the coming here in the performance of DLH during these challenging and uncertain times.
With that I'd like to turn the call over to our Chief Financial Officer, Catherine Jon Gotcha.
Yeah.
Thank you Zach and good morning, everyone. We're pleased to start the year with continued positive results.
Turning to slide six we posted revenue for the three months ended December 31, 2020, the SR, seven 9 million versus $52 2 million in the prior year's first quarter.
The variance reflects the impact of roughly 7 million in sales tied to the acquisition of IP I, Yeah, Zach mentioned I'll.
Offset in part by a reduction in organic revenue due principally to restrictions on pass through travel within the current Covid environment. These expenses were not incurred and therefore, not bill did a GAAP.
Net revenue delivery from labor was stable year to year, albeit with a somewhat different distribution of metal programs.
We anticipate revenue to grow organically during fiscal 'twenty and 'twenty, one as a whole due to expansion on current programs expected new business wins and general task order titles.
Turning to slide seven.
Income from operations was $3 6 million for fiscal 'twenty, 'twenty, one first quarter versus $3 1 million last year.
Operating margin improved to $6 three per cent from six six per cent in fiscal 'twenty 'twenty.
The improved operating leverage.
We reported net income of approximately $1 8 million or 13 cents per diluted share versus one 6 million or 12 cents a share last year.
DLH recorded a provision of <unk> 7 million and $6 million per tax expense during the fiscal 2021 first quarter in fiscal 2000, Twenty's first quarter respectively.
Interest expense from the current year quarter increased to 1.1 versus <unk> 9 million for the three months ended December 31st 2019, due to higher outstanding debt levels, resulting from the acquisition of I B E.
Turning to slide eight.
EBITDA for the first quarter of fiscal 'twenty 'twenty, one was $5 7 million versus 5 million in the prior year period as a percent of sales EBITDA rose to nine 8% this quarter versus nine 5% last year.
Reconciliation of GAAP net income to EBITDA is provided in our earnings statement and at the back of this presentation.
Slide nine gives an updated snapshot of our debt position at the end of the first quarter as of December 31st we had $77 4 million of debt outstanding under our credit facility versus 70 million that just started this fiscal year.
It's positioned largely stems from our use of eight eight and a half a million dollars of operating cash during the quarter.
This $2 9 million last year, reflecting a significant growth in receivables.
This was due to two key drivers first the impact of the continuing resolution on the fiscal 'twenty 'twenty, one federal budget, which was not signed until December 27th and second a transition in key contract pay payment offices, causing a delay in collections.
Two big drivers have since been resolved and we anticipate returning strong cash flow in the second quarter, leading to a resumption of our deleveraging efforts as noted on the slide we continue to see debt levels are between 50 and $52 million at the end of fiscal 'twenty, 'twenty, one and a substantially lower leverage ratio in Canada.
This concludes my discussion of the financial statements with that I would now like to turn the call over to our operator to open for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're 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.
The first question comes from Joe Gomes with Noble capital. Please go ahead.
Good morning, Good morning, Joe.
Good morning, Zach and Kathryn a nice quarter and thanks for taking my questions.
I wanted to start out with.
You talked about the top line and how.
You know the there's no.
The lack of the travel pass through but all phones from other compliance programs.
I Wonder if you might give us a little more color on how much on the compliance programs are you know what.
It was.
In the corner that that was not received.
And on those programs.
Once we hopefully get back to normal sooner than later would you make that revenue off or is that revenue gone.
Due to Covid and not doing those compliance programs.
Uh huh.
As times.
Right.
Well, great question, Matt Juneau, and yeah, you're absolutely right.
We continue as we discussed briefly at the latter part of last year.
The impact of the Covid induced restrictions for travel.
Being a large portion of that the overwhelming majority I'd say north of 90% of our.
Compliance related reductions are associated with with compliance and surveillance that we do that actually requires on site visit.
Visits.
I can tell you that in terms of the go forward, we're working closely with our customers to leverage new methodologies to still get the job done that is less dependent upon having large numbers of people in specific facilities. Many of our compliance programs you have to do with the children.
Yeah and programs such as a head start.
The department of Homeland Security and.
And then Beth.
I'll leave it there.
And in many cases been closed.
And being very very restrictive with regard to access.
<unk> been working in postulating in some alternative means to execute the mission.
And a reduced travel mode.
And are working closely with our customer from start to implement so we think we're going to start to get.
Get some of that revenue loss of course, the specific travel related component.
And we should start to see some of those gains we think our by our second quarter I haven't said that.
As part of your question, we would probably not at its current indications are that we will probably not accelerate the are those that have slipped over the course of the last two quarters.
And to try to get things done during this fiscal year. So all indications are that for that particular work I did not expect it to.
It'd be reflected by 30 September this year.
Yeah.
Okay. Thanks for thanks for that Zack and then you talked about the large number of opportunities.
With the pandemic.
Especially in the public Health Arena I was wondering if you might give us even a little bit more color because you combine that with youre seeing a.
You know expanded our pace of proposal activity.
You know what type of contracts or if there's any way you can give some type of.
Detail or color on the.
A bidding and you know.
What are the what's the timing of some of those you know any additional detail or color on that would be appreciated.
Yes, there's a couple of forms of that.
First and foremost as you may recall, when when we really began to step up our support largely in the Doctor Thaci side of in a I D.
We are a nation took it as approach to really apply all hands on deck right that was a matter of especially not only by us and other contractors, but also.
The active participants of the.
The center for disease control and NIH boasting both of our principal customer sets that we are supporting the pandemic response.
And so we've been working with them to make sure that we can appropriately align our workforce for the added bandwidth Ah in many cases the customer is using.
The non traditional means because of the urgency of getting the range of clinical trials.
And evaluations done in a relatively short time.
So in many cases, we've been drafting white papers.
That would allow a customer to not have to go through the normal competitive channels.
And to expand from the work on some of our existing contracts.
We're starting to see quite a bit of a bid activity that will that is associated with our expanding work on some of our existing contracts. Both the idea of cube and some stand alone.
Scope increases to some of our contracts awarded in the lash.
A couple of quarters, so that's exciting for us.
At it one it reflects.
In acknowledgment of the quality and the caliber of the work that we've been doing is as we continue to look at various types of vaccines and therapeutics and they're asking us to expand our footprint.
Creasing low market share in that arena. So some of the jury is still out we've had a number of proposals that have been submitted in the course of the last.
Several several weeks, it's been a few months.
But but there's a sense of urgency from.
From the federal government to get these in place and that motion. So we're really leaning in on those are the majority of those are in our in our.
And our.
Public health and life Sciences Arena.
Quite a bit of it from being executed from an epidemiology in clinical trials network standpoint from our Geneva Christians operation.
Which we called P. H S. Our public health.
Scientific research the.
Cornerstone of things S three acquisition.
However, we're also seeing some expansion.
And the veterans needs in that arena.
And so we're working very hard to <unk> to expand our bandwidth to be able to support a greater demand.
Retrofits.
To support our their response.
Two.
Two COVID-19 part of that also is attribute to the fact that they are trying to restrict.
Physical presence by veterans in a number of the businesses.
Medical centers and be a medical centers and hospitals.
And so some of that work is flowing into the mail order kind of Poland and Oh, we're going to see some of that increase.
See contraction as well.
So it's a pretty broad range are the ones, where we think our our those are two of the areas that we think are probably the most material for an upside for us.
Of course with this fiscal.
Thank you for that and just one more from me and I'll get back in queue kind of it.
Two part question, obviously, we you mentioned the increase in the accounts receivable.
Part of that from the continuing resolution part of it from the transitioning key contract payment offices. So.
Question, one can you give us a little more information on this transition and the key contract payment offices, what what does that all actually mean.
Zhou were now a month into the second quarter are your collections.
Keeping up with what your internal forecast our in order to get back to you know being able to pay down our debt and get it more normalized cash flow situation. Thank you.
Please go.
Let me kick it off real quick and then Katherine will certainly add to colors, yes, I just wanted to give the context as you heard Kathy mentioned earlier.
You know the yet to key day.
It's true two key day, one is that we closed our IPA acquisition on 30 September which happens to be the last day of the fiscal year.
Oh, the prior fiscal year and of course.
Most of that activity from a government standpoint starts up.
The first a week, but a brand new fiscal year, which happens to be our Q1 consistent with the government in Q1, and so a substantial portion of that transition.
There's impacted not only by the startup of new customer set and a new paying offices or for us.
That's associated with that that transition minutes, Catherine I'll show, you indicated theirs and.
There's always a bit of a reluctance associated with with funding when you see or are moving towards where the pin the approved budget and as you may recall during our during the Q1.
There were three.
Changes to the date of implementing the <unk>.
Finally approved at the end of the end of December and that caused a fair amount of paralysis with some of our customers and they're paying office and we don't expect those to continue on a relative basis, Kathryn overdue too to add additional color there.
Yeah, No that's absolutely right.
Historically for us.
First quarter is always our softest quarter in terms of collections. It's just that this year is sort of out there itself in terms of the volume of cash consumed because of the factors not mention so you know it's typical for the government to our counterparts. There to have a lot of use or lose time that once they get through their big government year end work at September 30.
There's a lot of time out from training time, and all that so that that causes coupon to be softer in general and then we had a couple of that exacerbating factors there this quarter.
However, you know to your second question in terms of whether we're on a pace. We most definitely are and as we indicated we expect to return to normal pace of collections and really drain drain that backlog from Q1, and then deliver our normal cash flow in Q2, so that we're setting up for a strong Q2 in terms of cash the library.
Okay. Thank you very much I'll get back in queue.
Thank you Joe.
Yep.
The next question comes from Ken Herbert with Canaccord. Please go ahead.
Hey, there again.
Good morning, Good morning, Zach Good morning, sorry, good morning, Catherine how are you.
Awesome great. Thanks for your call thanks for joining us.
Yes, Kathryn I just wanted to first and follow up on that last comment it sounds like you're still expecting roughly sort of 25 million in and deleveraging. This fiscal year, how should we think about the pace of that through through the second through the fourth quarter.
Yeah, it'll it'll likely follow our historical somewhat will have a strong Q2, because we will be burdened you know won't be clearing that backlog from Q1 that historically for us our normal pattern is it built through the year in Q4 ends up being kind of are typically our strongest quarter. Because you know obviously are our government part.
It's it's the inverse of the Q1 effect, where they have a lot of out of office time, either on burning their use or lose leave <unk> doing their annual trailing right. The flipside of that in the fourth quarter for us is that as they're heading into their own fiscal year end, which aligns with ours, they're there they're clearing the decks and kind of resolving their issues.
So to the extent, there's anything pending it kind of tends to.
Through Q4, but we expect strong tier two.
On average Q3, and a strong Q4.
But all in all to the ankle or the expectation as you indicated that we expect our debt level at the end of the year to be between 50 and 52.
Yeah, perfect and as we just to think maybe get to a finer point on on the zone.
The first quarter traveling compliance issues was that about in the quarter about a 2 million dollar headwind or is it possible to sort of quantify how we should think about that from a from a top line standpoint.
Yeah.
Yeah, that's that's a pretty good sizing of it as we talked about in our in our Q4.
Call, we expected that to slide out of Q4, and Q1 and into Q2 and three is that get activated and we are where we are pleased with the progress we've been able to make in converting some of those compliance events to a virtual environment and at the end.
In the case of our Kirk first quarter.
Helpful Day, we were able we were able to offset that significantly.
They're delivering from the from defense and be a market on the Cmos programs Zach mentioned.
Due to the higher volume there so no actual revenue delivering from labor was pretty well in line year to year, notwithstanding the headwinds from the compliance programs.
Okay. That's helpful. And then just finally on that point you had I think you reported about 60 per cent of your sales in the quarter were from defense in VA markets and I know this includes maybe the majority if not all of IPA, but as you look at this this market. It currently looks like.
You're seeing some growth.
In the defense and VA, Besides just IPA, especially in the quarter can you parse that out a little bit in and maybe which particular contracts or or is that run rate and with these sort of that organic growth in that business is that sustainable in the second third and fourth quarter or how should we think about that for the fiscal year.
Yes.
Go ahead I'm sorry go ahead.
Yeah, Yeah, Yeah I think.
There's a couple of things in play here first of all Youre right in that.
North of 95 per cent of the.
The IPA business is in the defense side.
The equation methods, Oh strategically exactly where we were looking to.
Start to balance the portfolio as you may recall and to get ourselves into a store.
There are three legged stool of our market focus areas are.
So yeah, you're spot on there.
We're also seeing growth in some of those key programs.
And I.
I mean Fisher, who is our heads are M. S. S mission services and solutions operating unit.
Where are the.
I'd be a acquisition landing in the company.
And we did retain the leadership and are in the assets from that acquisition.
Mary downhill.
And her team has been doing an excellent job of positioning.
To have a growth.
It gives me the growth in the some of the key programs. We are doing some COVID-19 related work.
For the Defense Health agency customers, there as well and you know it's difficult to try to forecast how much of that as Serge vs sustained at this time, but we do expect to see us from Q3, and Q4, plus ups and our AR and our.
Labor intensive work there as well.
I think Catherine properly categorize what we're seeing in the V. A.
But.
That is a that was an intentional part for us to start to.
Round out there.
That portion of the Wellbore.
Of our market focus areas.
Katherine you can see in the Q in our disclosure around our major contracts and major customers that the the contribution from that.
<unk> V. A programs grew from 46 per cent of revenue last year to 48 per cent. This year notwithstanding that overall revenue grills pretty significantly. So you can see that day, but just the volume of top line delivery from that does that set a program that says has grown pretty substantially and that's that's again pointing back to those factors.
Jack mentioned earlier about redirection of workload from day, an empty assets the military treatment facilities over to the Cmos.
Now time will tell whether that business model, whether that part of the incremental value volume sustained.
To us it seems eminently reasonable that it would because it's a very cost effective way of delivering that service, but yeah honestly.
Veteran health delivery in some respects has that has an element of it in terms of the baseball and the person attending being in the military treatment facility. So you know we were expecting you know are our best bet on that is to continue the excellent program income library and you're not this way the customer sees the value add and getting it done cost effectively. So so I think that kind of gives you a.
A sense of where some of the gross and net market segments coming from.
No that's very helpful. It sounds like you've got some some nice runway in that business yeah.
Just finally, Kathryn as you do or is that because you do start to catch up you know or see at least maybe some ideally loosening of travel restrictions and maybe more compliance opportunities through technology or in person as we go through your fiscal year I.
Those businesses are or those revenues are probably margin dilutive to other parts of the business as you do start to see that ramp is it is it is that the case and that that would perhaps negatively impact margins.
In the remainder of the fiscal year and to what extent could that be a factor for the margins.
Sure Yeah the.
First of all part of what we're doing to get us through this through the rest of this year is again <unk>.
Realizing a substantial amount of some of those compliance programs. So that we can continue to deliver some value to the to the grantees in to the program office.
Uh huh with with with no real Crystal ball as to when.
The normalcy from before will come back so it's difficult to tell now it does have.
There's a lot of our compliance programs.
You know are leveraging a lot of the technology tools that we've developed with the new completely.
Completely modernize the system.
And that nets out into some cost savings from cost reductions for cost efficiencies as it relates to how we execute and deliver those services. So I think the combination of what was it going to still have some pressure on our overall margin basis throughout the rest of the year as we are as we are.
Start to stabilize the virtual approach throughout the rest of this year.
We are also looking at.
Much like we described some of our initiatives with white papers or the clinical trials Arena. We're also looking at some additional analytics potential at <unk>.
Expansion on the analytics throughout this fiscal year that May also help us to I'll share some of that margin erosion on the compliance side as Kathryn indicated that I think we're not expecting to recover.
Honestly the traveling the non labor component of what has been lost share.
First quarter of this fiscal with low is the final quarter of the last fiscal.
Thank you very much.
You bet.
The next question comes from Bert Asta rise with Asta rise business consulting. Please go ahead.
Hello, how are you hey, good morning, Zach and Kathryn and a happy new year and thanks again for another great quarter.
Okay. That's great to hear from me Yeah happy to hear your voices I you know I was pleased to see your form fours in December and and I was tickled Pink in Guinea as a school grill to learn that I could now start trading options on my favorite security.
And recently you know nobody mentioned that that was that's a big deal and I'm interested I'm interested in learning more about the Seamark exploration extension and also that exclusion, which would have prevented us from a recompete.
Yeah, no a great points and we thank you again for your continued support and engagement in the business you've been with us for quite a while and hopefully we are.
And from the mail for us well.
With regard to our Cmos.
It is it is one of our longer and stronger longer our heritage businesses and of course EBITDA and.
That work happens to be as strong as it gets when it comes to protection.
Protection under various threats for.
Funding and we expect that to continue.
As it relates to our prognosis for the extensions as you may remember we have to a.
Primary channel toward delivering those services one is heavily on the pharmaceutical side and the others on what we call a medical logistics.
Uh huh.
Yeah.
Program are both programs are and when they came out with their solicitations.
A couple of years ago now they were slated to be small business set asides as just as a preferred option.
The pharmacy when it was exclusively small business set aside.
As they went through their evaluation process.
A few are evaluating all of the all of the bids including those are bid in which we had a partnership.
The government made the decision that it was not in their best interest to continue that path.
That they had been on so they did cancel that one.
That has resulted in us getting our sole source extensions.
We continue to operate all news extension they've been ranging from six months.
Two or three months of options and we'll continue that in that mode until such time that a D. A.
Re establishes and get some accrued at new acquisition approach.
And.
S S as of today.
We have no knowledge that that has been solidified as yet the acquisition plan, so that usually bodes well for more additional sole source extensions, we feel quite optimistic that that will go at least through the end of the fiscal year.
And if a solicitation comes out.
And that normal path allows our industry partners to them.
Get another couple of few months.
Bid process, we will certainly notify know when if and when that occurs I think there's a material contract to us.
And then that starts a whole evaluation cycle on part of the government damage you know the average.
You know range.
It's really quite a quite a wide range of generally ranges from about six months evaluation process to a couple of years. So we will keep you posted on that but we feel like we'll be extensions.
The extensions on that one for a while or the other.
On the medical logistics, one that you all saw we did synopsize.
That.
The government has taken that went to a down select process.
That one was a tiered approach, which I had the first option, bringing the government evaluating those bids that were submitted by a service disabled veteran owned small businesses.
And if it did not reach a decision by average in the best interest of the government for both price and technical execution requirements combined.
We would then look to.
A larger set of small businesses.
Did go through that process.
Ruled that.
Got out as the selecting.
And as of now as we stand today.
We submitted along with many other.
Large businesses.
Those that are still on the acquisition cycle.
There's been no formal notifications with regard to the path on that one.
Accordingly, we are continuing to operate and receive a sole source extensions.
Bridges are free.
For that work as well.
Can't give any a real crystal ball information on that as well, but you know.
Each of those opportunities as it really supportive work that day.
Soon.
Activity and so we fully expect that the.
The book is that we will be operating.
With the with the.
Extensions and bridges through the end of this fiscal year.
If we are successful and the government decided to award on the basis of a proposal that we submitted previously that could start before the end of this fiscal year. So we will keep you posted on that one as well.
Oh. Thanks, so much you mentioned that it was material how material is it 40% or 50 per cent.
Of revenue.
Yeah were doing north of a 100 million for that customer and so it in it.
It's it's it's a it's been a very significant and material contract even with our expansions with the.
Ganic growth into two acquisitions that we've had over the last year plus.
Okay, well. Thanks, so much to both of you and look forward to chatting with you soon good to hear from you buy.
Bye.
Enough.
The next question comes from Jeff branches with Cove Street Capital. Please go ahead.
Good morning, Good morning, Jeff Good morning, Jeff.
So just a quick question. So you know let's assume.
Let's assume this COVID-19 thing it goes away in 2021.
And.
When you look at 'twenty, two maybe looking back.
Would you say that over the two year period that you know there's X amount of revenues that you.
You benefited from as you've helped your customers deal with this.
Motivating and and and you know getting prep through the cash.
Covid issues, where are we in and that would expect to drop off or would you say no. It's the opposite we've actually lost more revenue because we couldn't execute on either current or you know.
Potential plans.
Right now you know thank you, Jeff and you know for those of you enjoying 80 degree weather right now I'm not sure that you get any extra.
Bonus points right now.
Okay, great to train and I have a sweater and and and and and a burrito a birdie gloves on.
Listen to.
Yeah.
Wow.
Oh yeah.
Means to boot no that's it.
Great question, Geoff I can tell you that the way we're viewing it right now.
Largely drawing upon our history of some of our other pinned pandemics and emerging infectious diseases.
What we're hoping we will see is that over the course of the years, whether it's two years or three years the nature of the of the trials from the studies and evaluations and health Hum Communications will evolve, but we really wouldnt expect to see much of a drop off right.
There's certainly some surge associated with getting the networks in place and dealing with a very large population of subjects that are actually folks experiencing.
The infection and the disease itself.
But often there continue to be sustaining studies around its effect, sometimes environmental effects.
Many cases looking for a variety of different types of therapeutics and much like many of other chronic as well as our infectious diseases.
Theres, a tail associated with evaluating it and really making sure. We can understand the implications for decades now lay on our society not only on our society, but in many cases.
Working with the global community. So we like to see it as something we like to see it as something that we think are we're standing up that would be sustainable.
They change and of course, the margin basis and that May change as well.
But we don't see it as having a substantial drop off as we enter FY 'twenty two.
Specifically address your covenants.
Alright, thank you.
Mhm.
At this time there are no other callers in the queue. So I would like to turn the conference back over to Mr. Parker for any closing remarks.
Alright, well I just wanted to say again. Thank you all we think we've we're continuing to build this platform are consistent with the strategies that are that you heard us lay out several years ago. We're really excited about the continued transition collaboration amongst our team to be able to.
To help drive.
This one plus one plus one into a five six and seven our equation.
We are truly truly committed to continuing to.
To execute the strategy, where the where we focus and build our pipeline on complex mission critical kind of work, we think that that helps us as administrations change in budgets shift as well as dealing with some of the potential long term the headwinds associated with budget debt issues.
The federal government. So force so stay tuned we're going to continue to give you additional color we are having the next month.
Annual meeting of the shareholders and as is our custom we will give a deeper dive into our new business pipeline. Our targeted agencies. As we are is we should start to see that we can open our aperture a further and how well we're continuing to do on the on the Oh and the win rate so stay tuned and we look for.
To seeing you all soon and thank you very much for your participation today and have a blessed day.
Yes.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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