Q4 2021 DLH Holdings Corp Earnings Call
[music].
Good morning, and welcome to the deal H Holdings' fiscal 2021 fourth quarter earnings call.
Speaker 1: Good morning and welcome to the DLH Holdings fiscal 2021 fourth quarter earnings call.
All participants will be in listen only mode.
Speaker 1: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
Speaker 1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then one, or two.
To withdraw your question. Please press Star then one or two.
Speaker 1: Please note, this event is being recorded. I'd like to turn the conference over to Chris Witte, Investor Relations Advisor. Please go ahead.
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 that Parker, President and Chief Executive Officer, and Kathryn John Bullock, Chief Financial Officer, The company's earnings release, and Powerpoint presentation are available on our website under the Investor page.
Speaker 2: Thank you, and good morning, everyone. On the call with me today is Zach Parker, President and Chief Executive Officer, and Catherine Johnbull, Chief Financial Officer. The company's earnings release and PowerPoint presentation are available on our website under the investor page. I would now like to provide a brief safe harbor statement, which is also shown on slide two of the presentation.
I'd now like Brian 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 2022 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 Securities and Exchange Commission.
Speaker 2: This call may include forward-looking statements that relate to the company's outlook for fiscal 2022 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 of the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements.
We do not undertake any duty to update any forward looking statements.
On today's call, we'll 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's website.
And CEO Zach Parker will speak next followed by CFO, Kathryn Dzhambul after which we'll open it up for questions with that I'd now like to turn the call over to Zach. Please go ahead.
Excuse me thank.
Speaker 3: Thank you, Chris, and good morning, everyone. Welcome to our fourth quarter conference call.
Thank you Christian good morning, everyone welcome to our fourth quarter Conference call.
I am pleased with how we finished out the year and I'm excited to tell you about fiscal 2022.
Speaker 3: I am pleased with how we finished out the year, and I'm excited to tell you about fiscal 2022.
Let me begin by sharing with all of you how proud I am of the extremely talented and committed DLH workforce, who are responsible for generating our results.
None of us knew that fiscal 'twenty, one would impose such unique challenges, including the pandemic.
Speaker 3: None of us knew that fiscal 21 would impose such unique challenges including the pandemic.
Through it all our diverse work team remains focused on performance excellence and for that we are.
Speaker 3: Yet through it all, our diverse work team remains focused on performance excellence. And for that, we are truly indebted.
Truly indebted.
Starting with slide three I'll provide a high level view.
Speaker 3: Starting with slide three, I'll provide a high-level overview of the quarter and the year.
The quarter ending the year.
Which reflects exceptional results.
We reported sales of $65 2 million in the fourth quarter.
Speaker 3: We reported sales of $65.2 million in the fourth quarter and closed out fiscal 21 with revenue of $246.1 million, up nearly 18% from last year's $209.2 million.
And closed out fiscal 'twenty, one with revenue of $246 1 million.
18% from last year's $209 2 million.
This underscores both the strength of.
Speaker 3: This underscores both the strength of our existing operations, which grew organically.
Our existing operations, which grew organically.
As well as contributions from our <unk> acquisition last year.
Speaker 3: as well as contributions from an IBA acquisition last year.
We believe our focus on core health markets and high technology applications has proven valuable one over the long term even during times of pandemic related constraints political paralysis and economic uncertainty.
Speaker 3: We believe our focus on core health markets and high technology applications has proven a valuable one over the long term, even during times of pandemic related constraints, political paralysis, and economic
We posted operating income of 4.0 million for the fourth quarters and $17 2 million for the full year.
Speaker 3: We posted operating income of $4.0 million for the fourth quarter and $17.2 million for the full year.
Leading to diluted EPS of 21 for Q4, and 75 cents for fiscal 2021 as a whole.
Speaker 3: leading to diluted EPS of $0.21 for Q4 and $0.75 for fiscal 2021 as a whole.
These results highlight the impact of our business development initiatives solid margins and focus on the fundamentals, including controlling our cost.
Speaker 3: These results highlight the impact of our business development initiatives, solid margins, and focus on the fundamentals, including controlling our cost.
At the same time, we were able to use our cash generating ability to pay down roughly $23 million of debt.
Speaker 3: At the same time, we're able to use our cash-generating ability to pay down roughly $23 million of debt.
Speaker 3: This really strengthens the company's balance sheet and leaves us in great shape to execute our growth strategy going forward.
This really strengthens the company's balance sheet and leaves us in great shape to execute our growth strategy going forward.
We ended the year with a backlog of 651 5 million near record levels.
Speaker 3: We ended the year with a backlog of $651.5 million.
Which included some recent female award serving clients in Alaska.
Speaker 3: which included some recent female awards serving clients in Alaska, which I'll touch on in a moment.
I will touch on in a.
Okay.
Turning to slide four I'd like to update our investors on our current market positioning and the outlook for FY 'twenty two.
Speaker 3: Turning to slide four, I'd like to update our investors on our current market positioning and the outlook for FY22.
Just last week Congress approved another continuing resolution that funds the government through mid February.
Speaker 3: Just last week, Congress approved another continuing resolution that funds the government through mid-February.
In such an environment. It is common for projects and programs to face delays based on the general lack of clarity with regard to spending priorities and ultimately their budgets.
Speaker 3: In such an environment, it is common for projects and programs to face delays based on a general lack of clarity with regard to spending priorities and ultimately their budget.
Decision, making has slowed given the reduced visibility over their budget impact and federal contractors across the board.
Speaker 3: Decision making is thus slowed, given the reduced visibility over their budgets, impacting federal contractors across the board.
However, even with this uncertainty we believe that our services and our agencies will remain in high demand going forward.
Speaker 3: However, even with this uncertainty, we believe that our services and our agencies will remain in high demand going forward.
Our primary customers, which of course include the VA health and human services Department of defense.
Speaker 3: Our primary customers, which of course include the VA, Health and Human Services, Department of Defense.
Really enjoy widespread bipartisan support which gives us confidence and continued emphasis on the critical health related services, we provide.
Speaker 3: are really enjoying widespread bipartisan support, which gives us confidence and continued emphasis on the critical health-related services we provide.
In addition.
Our advanced capabilities in data analytics and cloud computing.
Speaker 3: Our advanced capabilities in data analytics and cloud computing are allowing DLAs to win and pursue new markets, leveraging our cybersecurity and digital transformations across our clients.
Our allowing delays to win and pursue new markets, leveraging our cyber security and digital transformations across our clients.
As evidenced this past year, there's great focus on utilizing telehealth applications infectious disease research and big data to find solutions that convinced that millions of people here and abroad.
Speaker 3: As evidenced this past year, there's great focus on utilizing telehealth applications, infectious disease research, and big data to find solutions that can benefit millions of people here and abroad.
Not only as DLH at the center of many of these initiatives we've grown doing during an otherwise uncertain economic environment.
Speaker 3: Not only is DLH at the center of many of these initiatives, we've grown doing it during an otherwise uncertain economic environment.
Even with the possible implementation pandemic related vaccine requirements for government contractors, we do not anticipate any material negative impact to the company.
Speaker 3: Even with the possible implementation of pandemic related vaccine requirements for government contractors, we do not anticipate any material negative impact to the company.
Our employees are ready for 2022 and beyond.
Speaker 3: Our employees are ready for 2022 and beyond. With regard
With regard to the pandemic.
Since the pandemic began we have had approximately 200 scientists researchers and engineers gained intimate knowledge and expertise and supportive nationally recognized programs to develop countermeasures to COVID-19.
Speaker 3: Since the pandemic began, we have had approximately 200 scientists, researchers, and engineers gain intimate knowledge and expertise in support of nationally recognized programs to develop countermeasures to COVID-19.
In addition, we have leveraged our.
Speaker 3: In addition, we have leveraged our contingency and emergency response capabilities to deploy over 500 healthcare practitioners and medical logistics personnel to attack the spread of COVID-19, particularly in rural areas in the country.
Contingency and emergency response capabilities.
To deploy over 500 health care practitioners and medical logistics personnel to attack the spread of COVID-19, particularly in rural areas in the country.
To make sure we stay on top of our game of course, we will need to continue investing in human resources and recruiting top talent.
Speaker 3: To make sure we stay on top of our game, of course, we'll need to continue investing in human resources and recruiting top talent. In that vein, as shown on slide five.
In that vein as shown on slide five.
We recently hired an elite therapy, as our chief Human Resources Officer.
Speaker 3: We recently hired Malik Therapy as our Chief Human Resources Officer.
Malik has over 15 years of team capital leadership.
Speaker 3: Malik has over 15 years of human capital leadership in positions within the federal government contracting space.
In positions within the federal government contracting space keep.
He brings a unique set of competencies and strategies to help me and our executive leadership team tackled the challenges not only today, but what we foresee tomorrow.
Speaker 3: He brings a unique set of competencies and strategies to help me and our executive leadership.
Speaker 3: Tackle the challenges not only of today, but what we foresee tomorrow.
He is a forward thinking executives adept at translating business vision into actions that improve performance employee engagements profitability and growth.
Speaker 3: He is a forward-thinking executive adept at translating business vision into actions that improve performance, employee engagements, profitability, and growth.
Our number one asset is our credential top tier workforce, which requires both companywide commitment and strong leadership. So we're really excited to have Malik onboard to.
Speaker 3: Our number one asset is our credentialed, top-tier workforce, which requires both company-wide commitment and strong leadership. So we are really excited to have Malik on board to help us to build the next generation of thought leaders at DLA.
To help us to build the next generation of thought leaders DLH.
Slide six shows some of our recent organic wins, which will of course contribute to a great start to fiscal 2022.
Speaker 3: Slide six shows some of our recent organic wins, which will of course contribute to a great start to fiscal 2022.
We believe this represents a vote of confidence in our strategy our people, our technology and our ability to be a trusted supplier of technical solutions and services as well as unique capabilities across these agencies.
Speaker 3: We believe this represents a vote of confidence in our strategy, our people, our technology, and our ability to be a trusted supplier of technical solutions and services, as well as unique capabilities across these agencies.
Before turning the call over to Kathryn, Let me summarize where we stand heading into fiscal 2022 as shown on slide seven.
Speaker 3: Before turning the call over to Catherine, let me summarize where we stand heading into fiscal 2022 as shown on slide seven.
This year, while challenging in certain.
Speaker 3: This year, while challenging and certainly unique in many ways, has illustrated how adept DLH is.
Certainly unique in many ways.
As illustrated how adept DLH and.
In providing steady.
Speaker 3: in providing steady, solid results and leveraging our new opportunities in our community.
<unk> results and leveraging our new <unk>.
<unk> in our target markets.
We've embraced a leadership role in helping the federal government understand and respond to a pandemic and in doing so have racked up some impressive awards.
Speaker 3: We've embraced a leadership role in helping the federal government understand and respond to a pandemic and in doing so have racked up some impressive awards that have increased our role across the agencies we serve.
Increased our role across the agencies we serve.
We have been identifying and penetrating new avenues.
Speaker 3: We've been identifying and penetrating new avenues of expansion as well.
Spansion as well.
In addition, while proving our ability to win new business organically, we have a strong track.
Speaker 3: In addition, while proving our ability to win new business organically, we have a strong track record of finding and integrating select, attractive acquisitions that improve our technology credentials, our value proposition, and bolster our growth profile.
Long track record of finding and integrating select attractive acquisitions that improve our technology crunched credentials, our value proposition and boost and bolster our growth profile.
We're confident that we have the leadership team in place to execute the next phase of our strategic vision.
Speaker 3: We're confident that we have the leadership team in place to execute the next phase of our strategic vision, building on a history of success, while laying out a roadmap for even even greater days.
On the history of success.
Laying out our road map for easing even greater days ahead.
In closing I believe DLH is very well positioned for the year to come due to our strong backlog, including new wins with FEMA and enduring demand and the enduring demand for our services from our broad array of federal agencies.
Speaker 3: In closing, I believe DLH is very well-positioned for the year to come due to our strong backlog, including new wins with FEMA and the enduring demand for our services from a broad array of federal agencies.
Having closed out a successful year for the company in the midst of the pandemic and lingering issues impacting the economy from supply chain constraints to elevated costs and a tightening.
Labour profiling market, we have proven that we are able to deploy our technology enabled health solutions to serve the evolving needs of our customers.
We're helping people across America to get the health care they need.
Speaker 3: We're helping people across America to get the health care they need, analyze data for clinical research, optimize government-delivered services, and in doing so, improving the lives of many.
MS data for clinical research optimized government delivered services and in doing so improving the lives of mix.
It is with this underlying mission to serve others and our passionate dedicated staff remain upbeat about fiscal 'twenty two and beyond.
Speaker 3: It is with this underlying mission to serve others and our passionate, dedicated staff that I remain upbeat about fiscal 22 and beyond.
With that I'd like to turn the call over to our Chief Financial Officer, Kathryn jumped Kathryn.
Speaker 3: With that, I'd like to turn the call over to our Chief Financial Officer, Catherine Johnson. Catherine?
Thank you Zach and good morning, everyone. We're pleased to report such a strong finish to fiscal 2021.
Speaker 4: Thank you, Zach, and good morning, everyone. We're pleased to report such a strong finish to fiscal 2021.
Turning to slide nine.
Speaker 4: Turning to slide nine, we posted revenue of $65.2 million for the three months ended September 30th, 2021, versus $50.7 million in the prior year's fourth quarter. The growth reflects the impact of roughly $8.5 million in revenue tied to the acquisition of IBA, along with new business awards in the quarter and increased volume across our legacy program.
Posted revenue of $65 2 million for the three months ended September 32021.
This $50 7 million in the prior year's fourth quarter.
The growth reflects the impact of roughly $8 5 million in revenue tied to the acquisition of IBM, along with new business awards in the quarter and increased volume across our legacy programs.
In addition, as I mentioned, we expect the first quarter of fiscal 2022 currently underway to greatly benefit from the previously announced Bima Awards in Alaska.
Speaker 4: In addition, as Zach mentioned, we expect the first quarter of fiscal 2022 currently underway to greatly benefit from the previously announced FEMA awards in Alaska.
Such contracts in aggregate had a value of over $107 million for their base periods and we believe our current run rate puts <unk> in a range of between 95 to 100 million in our fiscal 2022.
Speaker 4: Such contracts, in aggregate, had a value over $107 million for their base periods. And we believe the current run rate puts these in a range of adding between $95 to $100 million in our fiscal 2022 Q1 revenue. After that, the impact will depend on demand in Alaska for ongoing COVID-related services as the customer evaluates whether option exercises are appropriate.
Q1 revenue after that the impact will depend on demand demand in Alaska for ongoing Covid related services as the customer evaluates whether option exercises are appropriate today.
Today, the customer has exercised the first of three one months of options.
Speaker 4: Today, the customer has exercised the first of three one month options on the emergency medical staffing contract valued at approximately 35 million, which will largely be reflected in our fiscal 2022 Q2.
Emergency medical staffing contract valued at approximately $35 million, which will largely be reflected in our fiscal 2022 killed.
Turning to slide 10.
Speaker 4: Turning to slide 10, income from operations was $4 million for the fiscal 2021 fourth quarter versus $2.7 million last year. Operating margins improved 6.2% from 5.3% in fiscal 2020, reflecting favorable program mix and greater operating leverage. The 2021 results had a large contribution of time and materials programs, which generally yield stronger results than cost.
Income from operations.
$4 million for the fiscal 2021 fourth quarter versus $2 7 million last year operating margins improved to six 2% from five 3% in fiscal 2020, reflecting favorable program mix and greater operating leverage at 21 2021 results.
Contribution of time and materials programs, which generally yield.
Stronger results than cost Reimbursable contracts.
Note that in line with my prior comments regarding the revenue impact expected in Q1 fiscal 2020 to Q1 due to the Alaska related FEMA work, we expect that margins from these task orders will be approximately 5% of revenue, reflecting significantly sub contracted nature of the services.
Speaker 4: Note that, in line with my prior comments regarding the revenue impact expected in Q1, fiscal 2022 Q1, due to the Alaska-related FEMA work, we expect that margins from those task orders will be approximately 5% of revenue, reflecting the significantly subcontracted nature of those services.
We reported net income in the fourth quarter of approximately $2 9 million or <unk> 21 per diluted share versus $1 4 million or 10 cents a share last year BLA.
Speaker 4: We reported net income in the fourth quarter of approximately $2.9 million, or $0.21 per diluted share, versus $1.4 million, or $0.10 a share, last year. DLH recorded a provision of $0.3 million and $0.6 million for tax expense during the fourth quarters of fiscal 2021 and fiscal 2020 respectively.
DLH recorded a provision of $3 million and $6 million for tax expense during the fourth quarter of fiscal 2021 and fiscal 2020, respectively.
Interest expense was essentially flat at $8 million in both years.
Speaker 4: Interest expense was essentially flat at 0.8 million in both years.
Turning to slide 11, EBITDA for the fourth quarter of fiscal 2021 6 million versus $4 4 million in the prior year period as a percent of sale EBITDA rose to $9 $3 million this quarter versus $8 6 million last year.
Speaker 4: Turning to slide 11, EBITDA for the fourth quarter of fiscal 2021 was $6 million versus $4.4 million in the prior year period. As a percent of sale EBITDA rose to $9.3 million this quarter versus $8.6 million last year.
Q4 results in fiscal 'twenty, one absorbs the impact of $1 1 million in corporate development.
Speaker 4: Q4 results in fiscal 21 absorbed the impact of 1.1 million in corporate development for a transaction evaluating which was not ultimately closed.
Our transaction evaluating which was not ultimately closed.
A reconciliation of GAAP net income to EBITDA is provided in our earnings statement and at the back of this presentation.
Speaker 4: A reconciliation of gap net income to EBITDA is provided in our earnings statement and at the back of this presentation.
On slide 12, we wanted our investors to visualize our record of achievement over the past decade. As you can see we've shown steady topline growth as well as expanding EBITDA and improving EBITDA range.
Speaker 4: On slide 12, we wanted our investors to visualize our record of achievement over the past decade. As you can see, we've shown steady top-line growth as well as expanding EBITDA and improving EBITDA rates, reflecting our progression up the value chain and our effective leverage of our corporate infrastructure as we achieve scale-through growth.
Reflecting our progression up the value chain and our effective leverage of our corporate infrastructure as we achieve scale through growth.
This perspective illustrates our commitment to steadily improving the companys performance and increasing returns to our shareholders.
Speaker 4: This perspective illustrates our commitment to steadily improving the company's performance and increasing returns to our shareholders.
We're really proud of what we've accomplished so far I think this is just the beginning of maximizing our potential.
Speaker 4: We're really proud of what we've accomplished so far, but think this is just the beginning of maximizing our potential.
Slide 13 gives an updated snapshot of our debt position at the end of the fourth quarter.
Speaker 4: Slide 13 is an updated snapshot of our debt position at the end of the fourth quarter. As of September 30, we had approximately 446.8 million of debt outstanding under our credit facility versus 70 million at the end of fiscal 2020.
As of September 30, we had approximately $46 8 million of debt outstanding under our credit facility versus $70 million at the end of fiscal 2020.
Including a $21 1 billion dollar <unk> payment related to the first FEMA contract awarded in September we generated approximately $45 7 million of operating cash flow during the year, allowing us to pay down approximately $23 $3 million of debt, we have satisfied all mandatory principal payments.
Speaker 4: including a $21.1 million advance payment related to the first FEMA contract awarded in September . We generated approximately $45.7 million of operating cash flow during the year, allowing us to pay down approximately $23.3 million of debt. We have satisfied all mandatory principal payments on the loan facility through December 31st, 2023. But we'll continue to reduce debt when feasible to strengthen the balance sheet even more going forward.
On the loan facility through December 31, 2023.
We'll continue to reduce debt when feasible to strengthen the balance sheet, even more going forward.
This concludes my discussion of our financial statements.
Speaker 4: 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.
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 telephone keypad.
Speaker 1: To ask a question, you may press star then one on your telephone keypad.
Using a speakerphone please pick up your handset before pressing the keys.
Speaker 1: If you're using a speakerphone, please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two at.
Speaker 1: To withdraw your question, please press star, then two. At this time, we'll pause momentarily to assemble our roster. Thank you.
At this time, we will pause momentarily to assemble our roster.
Thank you Anthony.
Okay.
Our first question comes from Joe Gomes with Noble capital you May go ahead.
Speaker 1: Our first question comes from Joe Gomes with Noble Capital. You may go ahead.
Thanks, Good morning, everyone and congrats on the corner end year results.
Speaker 5: Thanks. Good morning, everyone. Congrats on the quarter and year results. Good morning, Joe. Thank you.
Good morning, Joe Monahan. Thank.
Thanks for joining us.
So I wanted to start with the female award in Alaska.
Speaker 5: So I want to start with the FEMA award in Alaska. Again, congratulations on getting the first exercise there also. Just maybe give us a little detail of how that's progressing. And are there other additional state opportunities out there that you may be bidding on or what you think you could bid on?
You know again, congratulations on getting the the first exercise there also.
Just maybe you can give us a little detail on how that's progressing and are there other additional state opportunities out there that you may be bidding on or what you think you could bid on.
Yes. Thank you very much Joe I appreciate that.
Speaker 3: Yes, thank you very much Joe. I appreciate that and I appreciate your continued support for the business. Yeah, so Alaska was competitively awarded. Both of our Alaska awards were both competitively awarded from FEMA and FEMA has a charter across the nation.
I appreciate your continued support for the business.
So Alaska was competitively awarded both of them.
Alaska rewards.
Competitively awarded with FEMA and FEMA has a charter across the nation.
Speaker 3: As you may recall, earlier in the year, shortly after the pandemic began, they issued a, we were awarded a basic ordering agreement.
You may recall earlier in the year shortly after the pandemic began to issue date, we reported.
Sure.
What are your agreement.
Which covered largely the Pacific northwest area.
Speaker 3: BPA, which covered largely the Pacific Northwest area.
That's where these awards. These two awards get competed such successfully won.
Speaker 3: And that's where these award, these two awards were competed and we successfully won.
That same community across the government is looking to expand that.
Speaker 3: That same community across the government is looking to expand that, this type of disaster response capability across the nation. And we're kind of in the forefront of working with them to see how broadly that may expand. So we do think and anticipate that the potential exists for other states to leverage the federal government's commitment.
This type of disaster response capability across the nation, and we're kind of in the forefront of working with them to see how broadly that may expand so we do think anticipate that the potential exists.
For other states to leverage the federal government's commitment to support the current measures against COVID-19, much like this so we'll stay tuned on that.
Speaker 3: to support current measures against COVID-19, much like this, so we'll stay tuned.
Great.
Speaker 5: Great, thank you for that.
Thank you for that and.
On the continuing resolution.
Speaker 5: On the continuing resolution, you touched briefly on it, maybe you could again give a little more color. I know, I think last quarter you talked about the InfiniByte cloud and there's a lot of major health IT, IDIQs.
You touched briefly on it.
You know maybe you can again give a little more color you know I know I think last quarter, you talked about the incentive by cloud and there's a lot of major health I T. I D iqs.
We're expecting to be a rolling forward here.
Speaker 5: that we're expected to be rolling forward here.
Where do we stand on those now they've been pushed further to the right.
Speaker 5: You know, where do we stand on those now? They've been pushed further to the right, you know, maybe a little more color on the continuing resolution impact would be appreciated.
You know, maybe a little more color on the continuing resolution impact would be appreciated.
Yeah as you know.
Speaker 3: Yeah, as you know, as you probably know, the continuing resolution which kind of kicked the can to the right.
Probably no.
<unk> resolution, which kind of kicked the can to the right.
Eight weeks or so into mid February.
Speaker 3: know, eight weeks or so into mid-February, did require a great deal of
Required a great deal of.
Concessions and trade offs.
Speaker 3: concessions and trade-offs as it moved from the House to the Senate.
As it moved from the house to the Senate.
Speaker 3: We're continuing to stay real pulsed on what we think is going to come out of it that way, but all indications are that
We're continuing to stay rule pulsed on what we think is going to come out of it that way, but all indications are that.
Speaker 3: For us in particular, the agencies associated with the work that we have in hand today and that we have in our near-term portions of the pipeline.
For us in particular, the agencies associated with the work that we have in hand today and that we have in our near term portions of the pilot pipeline.
<unk> to look strong.
Speaker 3: uh, continue to look strong. You know what, uh, you know, the Department of Defense probably has more pressure, uh, in the CR environment than the civilian age of agencies, largely because over the last year or two, with the exception of Kobe
What.
Department of defense, probably has more pressure.
And the CR environment.
Civilian agency agencies, largely because over the last.
Year or two with the exception of Covid money.
The civilian agencies are still under running under spending the funds in which they have been obligated.
Speaker 3: The civilian agencies are still underrunning, underspending the funds in which they have been obligated.
Speaker 3: That's not necessarily the case for DOD, since a number of the threats are still continuing to emerge, and the budget uncertainty, you know, creates some challenges within DOD.
That is not necessarily the case for D O D.
Since a number of the threats are still continuing to emerge.
The budget uncertainty create some some challenges with DSD.
But we still feel really pretty comfortable with what we're seeing and hearing.
Speaker 3: But we still feel really pretty comfortable with what we are seeing and hearing as things move through the Congress.
As things move through.
Through the through the Congress.
Speaker 3: that the things in our pipeline are very solid. The biggest impact is, as we indicated before, some of these programs that are new programs that don't get exemptions or pandemic type exemptions are continuing to see.
Things in our pipeline, we're very solid the biggest impact is as we indicated before some of these programs that are new programs that don't get exemptions pandemic type exemptions are continuing to see extensions.
Speaker 3: you know, to the current work as opposed to new money and new contracts. So we'll continue to monitor that.
Due to the current work.
As opposed to new money new contracts. So we will continue to monitor that but.
But we think that the effect of the CR will be neutral to potentially.
Speaker 3: But we think that the effect of the CR will be neutral to potentially new business pipelines.
Neutral.
New business pipeline.
Still have some risk baked in with regard to our organic work.
Speaker 3: that still has some risk baked in with regard to our organic work.
Okay. Thanks for that exactly.
And maybe you know.
Speaker 5: Maybe, you know, one here, kind of a look back here, you know, you made the S3 and the IDA acquisitions, you mentioned how they're now fully integrated. Just, A, you know, how are they performing versus your pre-acquisition plans? You know, you mentioned in the past about one of the positives of these acquisitions was the ability to bid on more opportunities.
<unk> kind of a look back here you know you made the S. Three and the IPA acquisitions, you mentioned, how they're now fully integrated.
Just how are they performing.
Performing versus your pre acquisition plans.
You know you mentioned in the past about one of the.
The positives of these acquisitions was the ability to bid on more opportunities.
Speaker 5: Are you seeing that come to fruition today?
Are you seeing that come to fruition today.
Most definitely but both of those acquisitions.
Part of our overall strategy to have full market presence in those three key markets in health and human services and defense.
Human services and solutions and the public health and life Sciences sector.
So we've fulfilled that with the completion of that phase one acquisition program, but of course that who could have guessed kal, how timely and relevant and acquisition of a public health company. It would turn out to be right. None of us saw COVID-19 coming at the time, we just knew that of course does that suggest that there was a primary role for the government and utilized in health care.
<unk>.
Disease issues at <unk>.
Long term, particularly long term or pervasive pandemic issue. So so certainly.
Speaker 4: and long-term, particularly long-term or pervasive pandemic issues. So certainly, extremely proud and.
Extremely proud.
We see a lot of value in that addition of F <unk> to our portfolio Likewise the IPA.
Speaker 4: We see a lot of value in that addition of S3 to our portfolio. Likewise, the IBA team has fulfilled in every way what we expected in terms of getting a beachhead in DHA and really leveraging their capabilities with a couple of key agencies inside DHA. We obviously see that as a market for continued growth and expansion, and having their skills on our team has really upped our position in that competitive market.
Jim has pitched fulfilled in every way what we expected in terms of getting a beachhead in DHA and really leveraging their capabilities with a couple of key agencies inside DHA.
Obviously see that as a market for continued growth and expansion and having their skills on our team has really upped our position in that.
And that competitive market. So we're quite pleased with that now I think as we've discussed on prior calls.
Speaker 4: So, so we're quite pleased with that. You know, we've now, I think as we've discussed on prior.
Speaker 4: called, you know, our emphasis or our lens for acquisitions will move away from being particularly market-focused and just trying to get a footprint in each of those key markets, more to capabilities that augment our position in those markets now that we've rounded out and have at least a foothold in each of those markets. So we're looking to add capabilities and continue to leverage some visibility we're getting with those key clients.
Our emphasis on our lands for acquisitions will move away from being particularly market focused and just trying to get a footprint in each of those key markets more to capability to augment our position in those markets now lease round it out in China each day.
Foothold into each of those markets. So we're looking to add capabilities and continue to leverage some visibility we're getting with their key clients.
Speaker 4: And as you know, it's a very active M&A market, so we expect to be able to successfully act.
And as you know, it's a very active M&A market. So we expect to be able to successfully.
Execute.
Speaker 4: uh, execute some additional, um, uh, plus a
Additional.
Okay.
And plus ups to the portfolio in fiscal 'twenty two.
Great and one more if I can.
Speaker 5: Great. And one more, if I may sneak one in, you know, earlier in the year, Catherine, you had some, let's call it slower paying clients, you know, but that, you know, you were doing a great job in managing through that and everything.
Sneak one in.
Earlier in the year.
Kathryn isn't it.
Had some let's call it slower paying clients.
But that.
Did a great job in managing through that and everything.
With the continuing resolution are you starting to see any of that creep into the into the system again or is it still running where you would like them on the accounts receivable side.
Speaker 5: With the continuing resolution, are you starting to see any of that creep into the system again, or is that thing still running where you would like them on the accounts receivable side?
But so far our early returns in Q1, our favorable.
Speaker 4: So far, our early returns in Q1 are favorable, and Q1 traditionally is our softest cash flow generating month, just because of, as we often joke, there's a big press to get everything processed for September 30, and then of course, the government's got quite a bit to do to kind of return to their normal business after their fiscal year end of September 30, as well as ours.
Q1, traditionally is our softest cash flow generating just because.
As we often joke in Theres, a big press to get everything process for September 30, and then of course, the government has got quite a bit to do that to kind of return to their normal business. After the after Cisco their fiscal year ended September 30, as well as our bet that early returns on Q1 are looking favorable I certainly don't expect anywhere near the.
Speaker 4: But early returns on Q1 are looking favorable. I certainly don't expect anywhere near the challenges we had last year where we were not only navigating
The challenges we had last year, where we were not only navigating the.
CR, but also.
Of course, integrating an acquisition close to the very last day of the practice yourself. So we have a lot of factors.
Got it.
Lighting in Q1 last year definitely don't look forward to repeating that.
Speaker 4: colliding in Q1 last year, I definitely don't look forward to repeating that. So I expect this current year fiscal Q1 to be much more favorable in terms of, and much more normal in terms of cash flow collection. But honestly, my expectation is that we just hold our position for Q1, just given our traditional Q1.
Correct.
Current year fiscal Q1 to be much more favorable in terms of that.
And much more normal in terms of cash flow collection, but honestly my my expectation is that we just hold our position for Q1, just given our traditional Q1 cash flow requirements I think I would consider that a success of course, if we manage to pay down some debt in the meantime that would be.
Speaker 4: cash flow requirements, I think I would consider that a success, and of course, if we manage to pay down some debt in the meantime, that would be a nice icing on the cake.
Nice icing on the cake.
But quite right. It's just that thanks. Thanks for the observation that the team worked extremely hard to turn that around and highly successful exited the year with dsos at 46, So that's going to be a tough that's going to be a top.
Speaker 4: But quite right, as you said, thanks for the observation that the team worked extremely hard to turn that around.
Speaker 4: highly successful, exited the year with DSOs at 46. So that's gonna be a tough, that's gonna be a tough.
Achievement to top.
Speaker 5: achievement to top. Well, congratulates again on the excellent quarter and year. Looking forward to 2022. Thank you. Thank you, Joe. Thank you, Joe.
Yes.
Well, congratulations again on the excellent quarter and year and looking forward to 2022. Thank you.
Thank you John Thank you Joe.
Again, if you have a question. Please press Star then one on.
Speaker 6: Again, if you have a question, please press star then 1. Our next question comes from Brian Kinflinger with Alliance Global Partners. You may go ahead. Hi guys. Thanks for taking my questions.
Our next question comes from Brian <unk> with Alliance Global Partners You May go ahead.
Yeah.
Hi, guys. Thanks for taking my questions and great results.
Thanks for joining us.
Yeah of course.
Speaker 6: Yeah, of course. So on Alaska, and hopefully I'm understanding it right, after the three short-term options, what then with these short-term programs, do you see the potential for follow-on work to compete for? Do you plan for a wind-down, which of course would be easier given it's subcontractor heavy? Just trying to understand how this plays out for the year.
So on Alaska, and hopefully I'm understanding it right. After the three short term options. What then with these short term programs do you see the potential for follow on work to compete for do you plan for a wind down which of course would be easier given its subcontract or having just trying to understand.
How this plays out for the year.
Pardon me it appears that the main speaker line is connected.
Speaker 1: Pardon me, it appears that the main speaker line has disconnected. I will join them in as soon as possible. Thank you.
I will join them in as soon as possible. Thank you.
Okay.
Speaker 7: ? ? ?
[music].
Speaker 8: ? Thank you. ? Hello? That should do. Hello? ?
Hello.
[music].
The main speaker line has been reconnected.
Speaker 1: The main speaker line has been reconnected.
Yes.
Speaker 6: If, Brian , you could restate your question, please. Yeah, great. Maybe it was something I said. Just kidding. Right. I just was trying to get an understanding after the short-term options, assuming they are or are not.
Ryan you could restate your question please.
Yes, great maybe it was something I said just kidding.
[laughter] I just was trying to get.
And understanding after the short term options assuming they are not.
Executed on the Alaska contract what happened after is there. Following work do you think there's something to compete for or do you expect and plan for a wind down which of course, we subcontractors would be easier than typical.
Speaker 6: executed on the Alaska contract, what happens after? Is there fall in the work? Do you think there's something to compete for or do you expect and plan for a wind-down? Which of course with subcontractors would be easier than...
Yes, no great question, Brian those are currently set as turnkey.
Speaker 3: Yes, no great question, Brian . Those are currently set as turnkey projects contracts for us, which means they have a.
Project contracts for us, which means they have.
Wrap up.
Speaker 3: I wrap up and then I'll write it down. We call it mobilized and demobilization. They're going to range. They also have.
And then a ramp.
Your lives and demobilization.
They are going to range. They also have in them.
Some options that can be ex exercise to extend it.
Speaker 3: some options that can be exercised to extend it.
So.
Speaker 3: And so, you know, depending upon the situation on the ground.
Depending upon certain situations on the ground.
Speaker 3: But for each of those, we do expect that there will, that we will A, be successful, and in Alaska, we'll start to get a hold of in front of it. Now, obviously, variants could change that, right? And and so we're going to continue to monitor that.
But for each of those we do expect that there will.
That we will be successful and in Alaska, we'll start to get a hold of.
In front of it now obviously variants could change that.
And so what we're going to continue to monitor that with regard to could there be other opportunities. We hope so at present we.
Speaker 3: With regard to could there be other opportunities, we hope so. At present, we know that FEMA, as I indicated to Joe's question, FEMA is looking to expand the scope.
No that FEMA as I indicated to Joe's.
Question Bema is looking to expand the scope to cover.
Additional states throughout the U S that has not occurred as of yet.
Speaker 3: additional states throughout the U.S. That has not occurred as of yet.
And but they are working cheaper.
Speaker 3: But they are working feverishly, we know.
Personally we know.
To provide contract coverage elsewhere and Jackie.
Speaker 3: to provide contract coverage elsewhere. And Jackie Everett, our Chief Growth Officer, is working with.
Our chief growth officer is working with GSA FEMA.
Speaker 3: GSA and FEMA, and so we hope to know more within the coming weeks as to whether or not that's going to occur. But as of right now, our backlog with regard to Alaska, we do expect to get through Q1 and into Q2.
And so we hope to know more within the coming weeks as to whether or not that's going to occur.
But as of right now as of right now.
Our backlog with regard to Alaska, we do expect to get through.
Q1 and into Q2.
Speaker 3: But if we're all successful as a nation, we hope that that will slow down.
But.
If you are successful and as a nation.
We hope that that one as well.
<unk> will slow down.
We'll keep you posted on that.
Great and then a follow up can you quantify what percentage of your revenue.
Speaker 6: Great. And then a follow-up, can you quantify what percentage of your revenue will come up for renewal in fiscal 22 and whether that is front-end loaded or back-end loaded?
We'll come up for renewal in fiscal 'twenty, two and whether that is front end loaded or back end loaded.
Yes, well excluding of course.
Speaker 3: Yeah, well, excluding, of course, Alaska, you know, our continuing operations, the largest recompete that we have still continue to be the VAC mobs. And, of course, that's been well documented. We've discussed quite a bit of that over the recent years. We've just recently received an extension for one year.
Lastly, our <unk>.
Continuing operations.
The largest recompete that we have still continue to be the Bac maps and of course, that's been well documented.
That's quite a bit of that over the recent years.
Have just recently received an extension for one year.
For a full year on.
Speaker 3: for a full year on one of our CMOP contracts, and so we're going to continue, and we expect that the government will re-evaluate again their position on the re-competitions. Besides that, we have no material contracts that are up for renewal in any way.
One of our Cmos contracts and so we're going to continue we expect that the government will reevaluate again their position on the re competitions.
<unk> that we have no material contracts that are up for renewal in FY 'twenty two.
Great and then obviously, we talked about the CR environment.
Speaker 6: Great. And then obviously we talked about the CR environment and how it has less impact on civilian agencies you mentioned. Can you talk about what this means for your bid and proposal submissions for new business? Over the last six months, you've been bidding on less work than a year ago, more work, and then talk about the submission pipeline that you see planned for fiscal 22 and how it, you know, appears to be trending up or down or flat.
And how it has less impact on civilian agencies. You mentioned can you talk about what this means for your bid and proposal submissions for new business over the last six months and you're bidding on less worse than a year ago more work and then talk about the submission pipeline that you see planned for fiscal 'twenty, two and Howard.
Hearings to be trending up or down or flat.
Yeah and of course, we do not have the crystal ball as to what.
Speaker 3: Yeah, and of course, we do not have the crystal ball as to what we'll get through, but we do have a good understanding. We work very closely with our agencies, and we're looking at what they still make issue for request for proposals over the next year. We do expect that, you know, four to five of our civilian agencies will have solicitations out within the next several months.
We'll get through but we do have a good understanding we worked very closely with our agencies and we're looking at what.
What they still make issue for request for proposals over the next year.
Do expect that.
Four to five of our civilian agencies.
Absolutely situations out within the next several months.
We as you saw the center for disease control was able to issue.
Speaker 3: We, uh, we, uh, as you saw, the Center for Disease Control, uh, was able to issue, uh, uh, you know, relatively modest size, you know, less than $40 million, uh, uh, contract, uh, that we were awarded, uh, you know, just as we, uh, ended the fiscal year, and we think that they're going to continue for some of those recurring contracts that do not have a new scope added to
Relatively modest size less than $40 million.
Contract that we were awarded.
Just as we ended the fiscal year, and we think that Theyre going to continue for some of the recurring contracts that do not have new scope added to them.
Speaker 3: That they'll still continue to be able to get those released. We're seeing the same activity on the behavioral health side and within HHS for organizations such as SAMHSA.
Still continue to be able to get those released we're seeing the same activity on the behavioral health side within HHS for organizations, such as Samsung and we also found that some of the <unk>.
Speaker 3: And we also found that some of the multiple award IDIQ contracts.
Multiple award <unk> contracts are still moving forward with some solicitations as well. So we expect that we are first of all I had a very heavy bid.
Speaker 3: are still moving forward with some solicitations as well. So we expect that we have, first of all, had a very heavy.
Bid activity for the <unk>.
Speaker 3: bid activity for the multi-awarded IDIQ contracts over this last year. We're hopeful that that will translate into the actual funded contract bid.
Multi award.
New contracts over the.
To this last year, we're hopeful that that will translate into actual funded contract bids.
Within FY 'twenty two so we'll have greater color on that as we look at coming out of the CR and will provide an update on that certainly.
Speaker 3: Within FY 22, so we'll have a greater color on that as we look at coming out of the CR And we'll provide an update on that certainly early part
Early apartments.
Next year.
Speaker 4: And I would just add to that, Brian , that, of course, it's never a welcome thing to be operating in a CR environment, and there's no question that there will be some of our target pursuits that will be delayed as a result. However, comment, you know, as we've shared, given the way that we've expanded our ability to address the market and really leverage capabilities across the strategic acquisitions that we've integrated, and with the growth of our chief growth officer, or the addition of our chief growth officer, really the
Just add to that Brian that of course, it's never welcome thing to be operating in MCR Empire.
No question that there will be some of our some of our target pursuits that will be delayed as a result, however comment.
He hasnt sure given the way that we expanded our ability to address the market and really leverage capabilities across these strategic acquisitions that we then to integrated and with the growth of our chief growth Officer, or the addition of our Chief growth Officer Emily.
The cadence and the tempo of our business development efforts is definitely up.
Speaker 4: the cadence and the tempo of our business development efforts is definitely up. And so, we think that's mitigating or offsetting against the impact of sort of the slowdown from the CR.
So we think that that's mitigating.
Offsetting against the impact of that.
So if the slowdown from the CR.
Okay last question I have realized in this call you mentioned a key new hire here, but are you winning programs talk about your ability and our challenge is to attract and retain personnel given the well documented labor shortage yeah.
Speaker 3: The last question I have, I realize in this call you mentioned the key new hire here, but as you win new programs, talk about your ability and or challenges to attract and retain personnel given the well-documented labor shortage. Thanks. Yeah. Yeah. Rick, I couldn't agree with you more there. It's well-documented. The whole great resignation is causing challenges not only across the nation, it's particularly acute to our federal government agencies.
Yeah, Yeah, I Couldnt agree with you more there its well documented.
Great resignation.
Causing challenges not only across the nation is particularly Q.
Q2, our federal government agencies.
Based in the federal government agencies dealing with AD.
Speaker 3: you know, we're faced in the federal government agency is dealing with, you know, added, added things such as, you know, vaccine mandates, you know, volatility with regard to commitments to ESG and DE&I, and just a number of things that affect, you know, our ability to attract, retain some of the best talent.
And if things such as.
Vaccine mandates.
Volatility with regard to commitments to ESG.
Just a number of things that affect.
Our ability to attract retain the best talent. That's why it was so critical for us to treat that asset as an asset that is truly important trust. They have on board in the company and why we leaned in with a very high level.
Speaker 3: That's why it was so critical for us to treat that as a as an asset that is truly important for us to have on board in the company, and why we were leaned in with, you know,
<unk> wide executive search to really find the best and the best and we are excited about having been able to get and attract someone of the caliber lake share B, whose most recent assignment was with it.
Speaker 3: nationwide executive search to really find the best of the best. We're excited about having been able to get and attract someone of the caliber of Malik Farabee, whose most recent assignment was with Allen Sciences. So we think that the challenges that you address something that, you know, when the when the when the notice came out from the executive order, we had 603 individuals unvaccinated.
Science so we.
We think that the challenges that you address.
When when when they noticed came out from the executive order.
We had 600 threes individuals' own vaccine.
Alright, and as you well know a few in vaccinated.
Speaker 3: And as you well know, if you're unvaccinated in September , it's probably not due to your inability to find a vaccination. So we've had to wrestle with a workforce that had a degree of hesitant folks while also trying to navigate ourselves through the varying regulations associated with how we're going to have to address our response there.
September it's probably not due to your inability to find vaccination right. So we've had to wrestle with.
Workforce they'd had a degree of.
Hesitant folks while also trying to navigate ourselves through the <unk>.
The varying regulations associated with all companies.
To address our response there so there's just a variety of things associated with the with the calendar.
Speaker 3: So there's just a variety of things associated with the talent and workforce and talent management that we have not seen at this magnitude for decades, but we feel really, really good having spent, having had our executive leadership team spend quite a bit of time on this.
Talented workforce talent management that we have not seen at this magnitude for decades.
But we feel really really good having spent having had an executive leadership team has spent quite a bit of time on the on the slate of candidates we have.
Speaker 3: on the slate of candidates we have, and having heard the vision laid out by Malik, and we're well underway. Malik is here with Catherine and I at our headquarters today in Atlanta, and we're starting to lay some groundwork for how we're going to become the best in our industry as a country.
It includes the vision laid out by Malik and we're well underway and we can see it with Kathryn and I have a headquarters today.
Atlanta, and we're starting to make some groundwork drama.
Some of the best in our industry.
At that aspect of the business.
Great. Thanks for taking my questions guys.
Speaker 6: Great, thanks for taking my questions guys. You bet, thank you. Take care, Brian .
Thank you take care of Brian.
Again, if you have a question. Please press Star then one.
Speaker 1: Again, if you have a question, please press star then 1.
At this time, there or could it be no further callers in the queue. So I'll turn it back over to Mr. Parker for any closing remarks.
Speaker 1: At this time, there appear to be no further callers in the queue, so I'll turn it back over to Mr. Parker for any closing remarks.
Thank you Anthony and more importantly, thank you to each of you for participating on today's call.
Speaker 3: Thank you, Anthony. And more importantly, thank you to each of you for participating on today's call. We, as I indicated, we're really pleased with the results of our fourth quarter of FY 21.
I indicated we're really pleased with the results of our fourth quarter of FY 'twenty one.
Particularly excited about how that Leverages, our real strong entry into FY 'twenty two.
Our upcoming activities will include of course, the annual meeting of the shareholders.
Speaker 3: Our upcoming activities will include, of course, the annual meeting of the shareholders as we also evolve to develop the posture around the Q1 results. So please stay tuned and look forward to greater clarity. We hope to have greater clarity from the CR and its transition by then as well. And thank you all. Have a blessed day. Bye for now.
We also evolved to develop.
The posture.
Posture around the Q1 results. So please stay tuned and look forward to greater clarity, we hope to have greater clarity from the CR and the stress transition by them as well.
Thank you all have a blessed day bye for now.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.