Q1 2022 DLH Holdings Corp Earnings Call
Good morning, and welcome to the DLH Holdings fiscal 2022 first quarter earnings call.
Speaker 1: Good morning and welcome to the DLH Holdings fiscal 2022 first quarter earnings call. 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. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch shown the phone. So let's draw your question, please press star then.
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. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone.
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.
Speaker 1: Please note this event is being recorded. I'd now like to turn the conference over to Chris Whitty, Investor Relations Advisor. Okay, thank you.
Thank you and good morning, everyone on the call with me today is Jack Parker, President and Chief Executive Officer, and Kathryn Jon Bell Chief Financial Officer their.
Speaker 2: Thank you and good morning everyone. On the call with me today is Zach 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 would now like to provide a brief safe harbor statement which is also shown on slide two of the presentations.
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.
Speaker 2: This call may include forward-looking statements that relate to the company's outlook for fiscal 2022 and beyond.
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.
Speaker 2: These forward-looking statements are subject to various risks and uncertainties that could cause actual results and events to differ materially from these statements.
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.
Speaker 2: Please refer to the risk factors contained in the company's annual report on Form 10K and in our other filings with the Securities and Exchange Commission.
We do not undertake any duty to update any forward looking statements.
Speaker 2: We do not undertake any duty to update any forward-looking statement.
On today's call, we will be referencing both GAAP and non-GAAP financial measures.
Speaker 2: On today's call, we will be referencing both GAAP and Non- GAAP financial measures. A reconciliation of our non-GAP results to our reported GAAP results is included in our earnings release and in the investor presentation on DLH's website.
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.
President and CEO Zach Parker will speak next followed by CFO , Kathryn John Ball after which we'll open it up for questions with that I'd like to now turn the call over to Zach. Please go ahead Zach.
Speaker 2: President and CEO Zach Parker will speak next, followed by CFO , Catherine Johnball, after which we'll open it up for questions. With that, I'd like to now turn the call over to Zach. Please go ahead Zach.
Thank you Christian good morning, everyone welcome to our fiscal year 2022, first quarter conference call and happy New year.
Speaker 3: Thank you, Chris. And good morning, everyone. Welcome to our fiscal year 2022 first quarter conference call and happy new year.
As we hope you will agree in fiscal 2022 .
Speaker 3: As we hope you will agree, let's go 2022, is off to a great start in DLA.
He is off to a great start in DLH.
I wanted to first give credit to our tremendous committed leadership team and workforce for keeping focused on the missions of our customers.
Speaker 3: I want to first give credit to our tremendous, committed leadership team and workforce for keeping focused on the missions of our customers.
None of us would've predicted two years ago that we'll be discussing great results. Despite the challenges of the pandemic.
Speaker 3: None of us would have predicted two years ago that we would be discussing great results despite the challenges of the pandemic.
Beginning with slide three.
Speaker 3: Beginning with slide three, I'll first provide a high level overview of the quarter, which represented outstanding results for the company.
First provide a high level overview of the quarter, which represented outstanding results for the company.
Buoyed by our recent short term contracts with FEMA, providing pandemic related assistance and Alaska revenue rose to one $152 8 million in Q1.
Speaker 3: believed by our recent short-term contracts with FEMA, providing pandemic-related assistance in Alaska, revenue rose to $152.8 million in Q1.
Even excluding the $91 1 million of FEMA related work, we saw a revenue growth of 7% year over year as our programs remains strong and in strong demand. Despite an ongoing continuing resolution in Washington.
Speaker 3: Even excluding the 91.1 million of FEMA related work.
Speaker 3: We saw a revenue growth of 7% year over year as our program remained strong and in strong demand despite an ongoing continuing resolution in Washington.
We posted operating income of 11.2 million, which equates to seven 3% of sales, including the fact of our lower margin Alaska contracts.
Speaker 3: We posted operating income of 11.2 million, which equates to 7.3% of sales, including the impact of our lower margin Alaska contract.
First quarter earnings were <unk> 55 cents per share or 22 cents without the FEMA work, reflecting the value of our technology offerings and highly credentialed staffs.
Speaker 3: First quarter earnings, for 55 cents per share, or 22 cents without the FEMA work. Reflecting the value of our technology offerings and highly credentialed staff.
A record that a reconciliation of the numbers is in the back of this presentation.
Speaker 3: A recalculation of the numbers is in the back of this presentation. We also paid down in a...
We also paid down an additional $3.9 million of our term debt load. This this quarter.
Speaker 3: of our term debt loan, this quarter.
Further delevering the balance sheet and closed out December with a backlog of $633 6 million.
Speaker 3: Further delivering the balance sheet and closed out December with a backlog of 633.6 million. Turning to slide four, I'd like to give an update of them.
Turning to slide four.
I'd like to give an update of our markets.
Applications and advanced capabilities.
We continue to serve that federal arenas.
Speaker 3: We continue to serve the Federal Arena's that will define the next decade of public and military health in the car industry. New German scotters begin from numerous
Will define the next decade public and military health investment.
And we built a strong and growing position.
Speaker 3: And we built a strong and growing position across a number of enhanced emerging technology off.
But the number of <unk>.
<unk> emerging technology offerings.
Demand for our services in existing and adjacent markets continues to expand due to an increased emphasis across the board on advanced data analytics and digital transformation.
Speaker 3: Demand for our services in existing energy-scent markets continues to expand due to an increased emphasis across the board on advanced data analytics and digital transformation.
DLH is an established provider of innovative solutions for medical assistance in diagnostics diagnostics, including telehealth in pharmaceutical systems.
Speaker 3: DLH is an established provider of innovative solutions for medical assistance and diagnostics, diagnostics, including telehealth and
And with our scientific research capabilities, we can help the federal government effectively assess Henry.
Speaker 3: And with our scientific research capabilities, we can help the federal government effectively assess and respond to current and future health challenges.
In response to current and future health challenges.
Across the nation.
At the same time, our advanced capabilities and digital transformation include experiencing I T infrastructure modernization.
Speaker 3: At the same time, our advanced capabilities in digital transformation include experience in an IT infrastructure and modernization, cloud-based solutions, and continuous software
Cloud based solutions and continuous software development.
All with a health care focus.
And we possess robust capabilities in data analytics, and cyber security, providing a large scale management services.
Speaker 3: And we possess robust capabilities in data analytics and cybersecurity, providing a large-scale management services that leverage technology with highly credentialed subject matter experts.
That leverage technology with highly credentialed subject matter experts.
These focus areas in total.
Speaker 3: These focus areas in total are expected to benefit from the high demand going forward. And DLH believes we have the right people.
Are expected to benefit from the high demand going forward and DLH believes we are we have the right people.
Proper expertise and customer relationships in place to drive growth in the quarters and years to come.
Speaker 3: proper expertise and customer relationships in place to drive growth in the borders and years to come.
In closing.
Speaker 3: closing, the company is stepping up to the next level in terms of its offerings and the breadth of innovative solutions that we bring to bear.
The company is that step.
Stepping up to the next level in terms of its offerings and the breadth of innovative solutions that we bring to bear.
While the theme of business come to a close in quarter two DLA.
Speaker 3: While the FEMA business will come to a close in quarter two, DLH's wealth position to have a highly successful year with a strong balance sheet of long-standing partnerships.
DLH is well positioned to have a highly successful year with a strong balance sheet.
Long standing partnerships with key agencies.
An exciting array of technology applications.
Speaker 3: Exciting array of technology applications.
Although we are mindful that the federal budgetary uncertainties.
Speaker 4: Although we are mindful that the federal budgetary uncertainties need to be resolved in the near future.
Need to be resolved.
In the near future.
Speaker 4: We're well on our way to another year of solid organic growth and customer expansion and continue looking at possible acquisition opportunities that can further accelerate our top line going forward.
We're well on our way to another year of solid organic growth.
Customer expansion and continued looking at possible acquisition opportunities that can further accelerate our top line growth going forward.
With that.
Speaker 4: With that, I'd now like to turn the call over to our Chief Financial Officer, Katherine Johnville.
I'd now like to turn the call over to our Chief Financial Officer, Kathryn Dzhambul Kathryn.
Thank you Zach and good morning, everyone. We're pleased to report such a great start to fiscal 2022.
Speaker 5: Thank you Zach and good morning everyone. We're pleased to report such a great start to fiscal 2022.
Turning to slide six we posted revenue of $152 8 million for the three months ended December 31, 2021 versus $57 9 million in the prior year's first quarter.
Speaker 5: Turning to slide six, we posted revenue of $152.8 million for the three months ended December 31, 2021, versus $57.9 million in the prior year's first quarter.
Speaker 5: The growth reflects the impact of approximately $91.1 million in revenue tied to the Alaska FEMA contracts, as Zach discussed, along with a 7% revenue increase across the other parts of our business.
The growth reflects the impact of approximately $91 1 million in revenue tied to the Alaska FEMA contract Zach discussed along with a 7% revenue increase across the other parts of our business.
The majority of the Alaska contracts have been fulfilled.
Speaker 5: The majority of the Alaska contracts have been fulfilled, such that we see approximately $30 million of additional revenue during Q2, and none there at.
Such that we see approximately $30 million of additional revenue during Q2 and none thereafter.
If additional revenue was awarded based on pandemic needs in the region, we will let our investors know.
Speaker 5: If additional revenue is awarded based on pandemic needs in the region, we will let our investors know.
Turning to slide seven.
Speaker 5: Turning to slide seven, income from operations was 11.2 million for the fiscal 2022 first quarter versus 3.6 million last year. Again, reflecting the additional short-term FEMA business.
Income from operations.
One 2 million for the fiscal 2022 first quarter versus $3 6 million last year.
Again, reflecting the additional short term FEMA business.
Operating margins improved to seven 3% from six 3% in fiscal 2021 with the current year results, including the impact from lower margin Alaska work, but at the same time, reflecting a larger contribution of time and materials programs and the remaining business, which generally yield stronger.
Speaker 5: Operating margins improved to 7.3% from 6.3% in fiscal 2021, with the current year results including the impact from lower-margin Alaska work, but at the same time, reflecting a larger contribution of time and materials programs in the remaining business, which generally yield stronger returns than cost-reimbursable contracts.
Turns than cost Reimbursable contracts.
Interest expense was <unk> 7 million in the first fiscal quarter of 2022 versus $1 1 million in the prior year period, reflecting lower debt outstanding.
Speaker 5: Interest expense was $0.7 million in the first fiscal quarter of 2022 versus $1.1 million in the prior year period, reflecting lower debt outstanding.
T O H recorded a provision of $2 7 million and <unk> 7 million for tax expense during the first quarters of fiscal 2022 and fiscal 2021, respectively.
Speaker 5: DLH recorded a provision of 2.7 million and 0.7 million for tax expense during the first quarters of fiscal 2022 and fiscal 2021 respectively.
We reported net income in the first quarter of approximately $7 8 million or 55 cents per diluted share versus $1 8 million or 13 cents per share last year.
Speaker 5: We reported net income in the first quarter of approximately 7.8 million, or 55 cents per diluted share, versus 1.8 million or 13 cents per share last year.
Excluding the Alaska business non-GAAP earnings for the first fiscal quarter of 2022, or $3 1 million or 22 cents per diluted share.
Speaker 5: excluding the Alaska business non-GAAP earnings for the first fiscal quarter of 2022 or $3.1 million or $0.22 per diluted share.
A reconciliation of all these results are included in the back of this presentation.
Speaker 5: A reconciliation of all these results is included in the back of this presentation.
Turning to slide eight.
Speaker 5: Turning to slide 8, EBITDA for the first quarter of fiscal 2022 was $13.2 million versus $5.7 million in the prior year period due to the reasons I discussed above.
EBITDA for the first quarter of fiscal 2022 was $13 2 million versus $5 7 million in the prior year period due to the reasons I discussed about.
As a percent of sales revenue EBITDA rose to 8.6% this quarter versus nine 8% last year, but excluding $6 3 million related to our Alaska business.
Speaker 5: As a percent of sales, EBITDA rose to 8.6% this quarter versus 9.8% last year. But excluding 6.3 million related to our Alaska business, EBITDA for our ongoing contract portfolio was approximately 6.8 million, or 11.1% as a percent of revenue.
EBITDA for our ongoing contract portfolio was approximately $6 8 million or 11, 1% as a percent of revenue.
In the fiscal 2020 to the first quarter a reconciliation of GAAP net income to EBITDA is provided in our earnings statement and at the back of this presentation.
Speaker 5: in the fiscal 2022 first quarter. A reconciliation of gap net income to EBITDA is provided in our earnings statement and at the back of this presentation.
Slide nine Gibson updated snapshot of our debt position at the end of the first quarter as of December 31, we had approximately $42 $9 million of debt outstanding under our credit facility versus $46 8 million at the end of fiscal 2021.
Speaker 5: Slide nine gives an updated snapshot of our debt position at the end of the first quarter. As of December 31st, we had approximately $42.9 million of debt outstanding under our credit facilities versus 46.8 million at the end of fiscal 2021.
Speaker 5: We now have satisfied all mandatory principal payments on the loan facility through March 31st of 2024, but we will continue to reduce debt when feasible to strengthen the balance sheet going forward.
We have satisfied all of mandatory principal payments on the loan facility through March 31st 2024.
We will continue to reduce debt when feasible to strengthen the balance sheet going forward.
This concludes my discussion of the financial statements with that I would now like to turn the call over to our operator for questions.
Speaker 5: This concludes my discussion of the financial statements. With that, I would now like to turn the call over to our operator for questions.
We will now begin the question and answer session to ask a question you May Press Star then one.
Speaker 1: We will now begin the question-and-answer session. To ask a question, you may press star, then 1.
On your Touchtone phone.
We're using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
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 this time, we will pause momentarily.
Time, we'll pause momentarily to assemble our roster.
Our first question today comes from Brian that Ken's Linger with Alliance Global Partners. Please go ahead.
Speaker 1: Our first question today comes from Brian Kinslinger with Alliance Global Partners. Please go ahead.
Hey, great. Thanks, great Great first quarter here.
Speaker 6: Hey, great, thanks. Great first quarter here.
Did I hear right, excluding the FEMA contract.
Speaker 6: Did I hear right, excluding the FEMA contracts, that your EBITDA margin was 11% versus 8% a year ago? And if that's right, can you just describe the factors that drove that? I take it some of it's mixed, but I also figure you're paying your people more in this market, so just maybe go through the dynamics if I did hear that right.
EBITDA margin was 11% versus 8% a year ago and if that's right can you just describe the factors that drove that I'd take it some of it's mix, but I also figure you're paying your people more in this market. So just maybe go through the dynamics if that was if I did hear that right.
Yes, you you you did hear that right, Brian and good morning, Thanks for joining us.
Speaker 5: Yes, you did hear that right, Brian , and by the way, good morning. Thanks for joining us.
So EBIT as a percent of revenue for the three months last year was nine 8% an 11.13.
Speaker 5: So, even as a percent of revenue for the three months last year was 9.8% and 11.1% this three months excluding Alaska. And the improvement comes from a couple of things, as you suggested, the contract mix where we had a healthier proportion of the revenue delivered from time and materials largely and a little bit of fixed fee for service contracts.
Three months, excluding Alaska and the improvement comes from a couple of things as you suggested the contract mix, where we had a healthier proportion of the revenue delivered from time to time and materials largely them look better ex fee for service contracts by last year, where a stronger portion of the mix what's from cost Reimbursable work, but.
Speaker 5: vice last year where a stronger portion of the mix was from cost reimbursable work. But secondarily, the operating leverage we got on our indirect expenses improved as the revenue base grew as well. And so the two of those together yielded that strong EBITDA proportion.
In Delhi.
The operating leverage we got on our indirect expenses improved guest.
Our revenue base grew as well.
Two of those together.
But that.
EBITDA performance for the quarter.
Great and then can you talk about your pipeline are there any other short or long term contracts that are COVID-19 related.
Speaker 6: And then, can you talk about your pipeline? Are there any other short or long-term contracts that are COVID-related?
Of course, not including the existing Alaska or C. D. C. D. C contracts, you have where you're doing research in the long term impact I'm just wondering you know.
Speaker 6: of course, not including the existing Alaska or CDC contracts you have where you're doing research on the long-term impacts. I'm just wondering, you know,
Is there a pipeline of similar contracts or are they always slowly subsiding as AUM a crime.
Speaker 6: Is there a pipeline of similar contracts or are those slowly subsiding as Omicron seems to be?
The mistake getting a little bit better.
Yeah, Great question, Brian and again, thank you for your Oh.
Speaker 4: Yeah, great question, Brian , and again, thank you for your.
Participation there.
Speaker 4: The answer is yes to both. There are, we are in discussions on short term impact. Certainly as Amicron starts to secede a bit, there is a look at potential additional variants and what sort of therapeutics we believe might be more germane as COVID continues to morph.
The answer is yes to both of them there are where we are in discussions on short term.
A short term impact certainly as I'm a crime.
Starts to succeed a bit are there is a look at a.
Potential additional variance and what sort of therapeutics, we believe might be more germane.
Is it because as Covid continues to morph while at the same time, we are seeing that the government is starting to think about longer term research projects.
Speaker 4: Well, at the same time, we are seeing that the government is starting to think about longer-term research projects associated with it as well. So, there's a little bit of both.
Associated with it as well so theres a little bit of both the biggest challenge has been for all of us in golf Com.
Speaker 4: The biggest challenge has been for all of us in GovCon.
Speaker 4: is the government acquisition folks being able to get those contracts out in a, as you might imagine, in a CR environment. It's very difficult to get new contracts out. Sometimes they're using more novel contracts, certainly for large buys, things like OTAs. But we're hopeful that the discussions that we're hearing and the customer's interests will turn into some of this.
Is the government acquisition folks being able to.
Get those contracts out and a N a.
Might imagine in a CR environment.
It's very difficult to get new contracts out.
Sometimes you're using more novel contracts certainly for large buys things like otas.
But we're hopeful that the discussions that we're hearing in the customers' interests.
We'll turn into solicitations.
I mean, you have two more the first one is as it relates to challenges in recruiting talent.
Speaker 6: great. I have two more. The first one is as it relates to challenges in recruiting talent.
Is that challenge is that challenge subsided at all and.
Speaker 6: Has that challenge subsided at all?
Secondarily has it caused any lost revenue, meaning we have you been able to fill in.
Speaker 6: Secondarily, has it caused any lost revenue, meaning have you been able to fill or fully staff all your contracts?
<unk> are fully staffed all your contracts.
We have seen some erosion as the rest of the nation has as you know the great resignation has placed a real challenge for the labor market across the across the field.
Speaker 4: We have seen some erosion, as the rest of the nation has. As you know, the great resignation has placed a real challenge for the labor market across the field. And we are seeing some of that. We're experiencing some of that on some of our contracts, not only for a smaller labor base, but also from time to time, COVID-induced absenteeism.
And we are seeing some of that where expansion some of that on on some of our contracts are not only used in the war.
For a smaller labor base, but also from time to time Covid induced absentee absences. So we're continuing to manage that as you know we've stepped up our investment in human capital management within the business that involves both the retention and attracting.
Speaker 4: So we're continuing to manage that. As you know, we've stepped up our investment in human capital management within the business. That involves both retention and attracting of new talent. But yeah, we have seen a small impact thus far through Q1 of what we're seeing across the nation.
New talent.
But yeah, we have seen a small impact thus far through Q1.
With what we're seeing across the nation.
Right, let's see if you can just talk about your M&A pipeline and as you look at what are management's priorities in terms of what you hope it target will bring DLH C.
Speaker 6: Great. Lastly, if you can just talk about your M&A pipeline and as you look, what are management's priorities in terms of what you hope a target will bring DLH?
Yeah, Yeah, let me just kick off that we have.
Speaker 4: Yeah, let me just kick off the weave. We are opening our aperture in that regard, strategically Catherine and I.
We are we are opening our aperture in that regard strategically Kathryn and I have.
We have really felt that.
Speaker 4: have really felt that it is maybe reading that the conclusion of this last fiscal year really represents having satisfied our strategic plan, in particular, say the first phase of our strategic acquisition plan. And we're looking at expanding our opportunities in the M&A arena. And Catherine has led some activity over the recent month or so and can talk about the pipeline more seriously.
You may be reading that the conclusion of this last fiscal year really represents the having satisfied our strategic plan, particularly phase the first phase of our strategic acquisition plan and we're looking at expanding our opportunities in the M&A Arena and Kathryn.
We had some activity over the recent the recent month or so if you can talk about the pipeline in Washington Kathryn.
The pipeline, we expect to continue to be quite healthy there there is quite a bit of activity out there and our focus says to me that as we've indicated from our perspective, we closed our first phase of our acquisition strategy, which was principally focused on market presence in our target markets and have had that beneficial.
Speaker 5: The pipeline we expect to continue to be quite healthy. There is quite a bit of activity out there, and our focus as we've indicated, from our perspective, we closed our first phase of our acquisition strategy, which was...
Speaker 5: principally focused on market presence in our target markets and has a beneficial effect of having some improvement and enhancing of our technology capabilities as well.
Back to having some some improvement and enhancing our technology capabilities as well, but but but from a perspective of our phase two acquisition strategy, we're going to flip around those priorities. We think we've got good coverage in the relevant markets. Although as I indicated there are some definite adjacent markets that we continue to be.
Speaker 5: But from a perspective of our phase two acquisition strategy, we're going to flip around those priorities. We think we've got good coverage in the relevant market.
Speaker 5: Although as that indicated, there are some definite adjacent markets that we continue to be.
We are keeping an eye on but our primary emphasis from an acquisition strategy perspective, as I think adding capabilities and really extending our reach in the relevant technologies that.
Speaker 5: Keep an eye on, but our primary emphasis from an acquisition strategy perspective is adding capabilities and really extending our reach in those relevant.
Speaker 5: technologies that benefit our current customers and any potential future ones. So digital transformation, AIML, the things that are really relevant, modeling simulation, those things are applicable across the set of markets that we currently play in and those that are near adjacent. So that's really going to be the primary lens through which we evaluate acquisition, competitive acquisition opportunities.
Benefit our current customers and any potential future ones so digital transformation.
Well.
The things that are really relevant modeling and simulation those things are applicable across a set of markets that we currently play in those that are near adjacent so that's really going to be the primary lens through which we evaluate.
Acquisition competitive block acquisition opportunities.
Great. Thanks, so much guys nice quarter join him Brian .
Speaker 6: Great. Thanks so much, guys. Nice quarter. Thanks for joining Brian .
Yes.
Again, if you bypass good question. So that it is star then one star then one to ask a question.
Speaker 1: Again, if you both ask a question today, it is star then one. Star then one. Task a question.
Our next question comes from Joe Gomes with Noble capital. Please go ahead.
Speaker 1: Our next question comes from Joe Gomez with Noble Capital. Please go ahead.
Thanks, Good morning, congratulations on a great quarter.
Speaker 3: Thanks, good morning, congratulations on a great quarter.
Thank you Joe and good morning, I'll give you my friend.
Speaker 7: Thank you, Joe. Good morning to you, my friend. Great to hear from you.
Hear from you.
So if we could just take a step back for a second on FEMA just want to kind of drill down on that just for a second here.
Speaker 3: So if we could just take a step back for a second on FEMA, just want to kind of drill down on that just for a second here. So you got the two initial contracts. They were 107 million valued up to. They need the 35 million extension. So that's 142.
So you got the two additional contracts they were 107 million valued up to they need the 35 million extension. So that's 142 you did 91.
The quarter.
Speaker 3: in the quarter, so that leaves a buff call it, you know, 50-ish from the headline and you're saying that in the second quarter you're thinking 30 and then that's it. What happened to the other 20s? That just not being filled or is there something else there?
So that leaves about call. It 50 ish from that the headline and you're saying that in the second quarter. You were thinking 30, and then that's it what what happened to the other 20 is that just not being filled or is there something else there.
Yeah, I think the awarded values are really a function as I say an.
Speaker 5: Yeah, I think the awarded values are really a function as an estimate at a point in time. And as we all know, COVID is a fast moving.
An estimate at that point in time enough and as we all know Covid is that it's a fast moving.
Environment and so from our perspective.
Speaker 5: Environment. And so from our perspective, our current visibility on the program and the needs from the customer in terms of the support we're providing, we expect to deliver an additional 30 million. Though they have funded or they have earmarked, more than that in the event that they have additional surges or other variants or other things that could happen. We can only share with you the visibility based on the trend line as we see it today.
Our current visibility on the program and then that needs from from the customer in terms of the support we're providing we expect to deliver an additional 30 million, though they have funded or they have earmarked more than that in the event that they have additional surgeries or other variance or other things that could happen now we can only.
Share with you the visibility based on the trend line as we see it today.
Right.
Speaker 5: and then that varies will have to provide her for her update.
Berry's won't will have to provide a further update.
And it's probably worth noting also Joe that you know the way. This program is working through FEMA. It's.
Speaker 4: And it's probably worth noting also, Joe, that, you know, the way this program is working through FEMA, it's, um, is the states actually drawing upon federal money, because it's been, uh, obligated for this effort, uh, and it's contingent.
As the states actually drawing upon federal money that had been obligated for this effort.
Contingent so the states are actually working off of <unk>.
Speaker 4: So the states are actually working off of a scattered indicated predictions and contingencies as well. And so, you know, and it could operate in either direction, like a Catherine indicator right now, we're seeing with the cessation of the Omicron that there's new indication, and particularly in our last question.
As Kathryn indicated predictions and contingencies as well.
And so.
And it could operate in either direction like Kathryn indicated right now where we're seeing with the cessation of Oh I'm a crime that there's no indication in particular in Alaska.
Speaker 3: that it will be accelerating, but you know, we'll all stay tuned. We certainly hope that remains the case. Okay, great.
It will be accelerating but yeah.
Well I'll stay tuned and we certainly hope that remains the case mhm.
Okay great.
The continuing resolution since this seems to be dragging on longer than the normal here.
Speaker 3: It seems to be driving on a little longer than normal here.
You know what from your perspective or from your looking at the potential programs that you were hoping to be awarded you know what what ones are most at risk of continuing to be pushed to the right and.
Speaker 3: You know what, from your perspective or from your looking at the potential programs that you were hoping to be awarded, what ones are most at risk of continuing to be pushed to the right and does this have, you know,
Those guys have you know.
This continues to go on it.
Speaker 3: as this continues to go on, you know, an impact on your two big VA contracts, which are currently operating under bridges, I would think that if the continuing resolution.
Packed.
On your two big VA contracts, which are currently operating under bridges.
I would I would think that if the continuing resolution.
Yeah.
He has extended that you know maybe it.
Then for you guys that you will see just those two contracts also extended out another year I Wonder if you might just speaking a little comment on that.
Speaker 3: then for you guys that you will see just those two contracts also extended out another year. And whatever you might just be able to comment on that.
Sure.
Speaker 4: Sure. What's the drug to the CR? First of all, we have rated it as from a company standpoint, neutral to slightly positive, largely because the agencies that we serve are very, very strong with their mission and our budget stability is very strong accordingly. Both sides of the aisle are committed to the type of programs that we have in place supporting veterans, military and the underserved community.
With regard to the E. R. I first of all we are.
We are great at it is from a company standpoint, a neutral to slightly positive.
Largely because the agencies that we serve a very very strong with their mission and our budget stability is very very strong accordingly, both sides of the aisle. We're committed to the type of programs that we have in place supporting veterans.
Terry in the underserved community.
Having said that were you know.
Speaker 4: I haven't said that. We're 12 of the last 13 budgets, but we've had to deal with CRs.
12 of the last 13 budget.
Budget, but we've had to deal with C ours.
Speaker 4: And we're seeing frustration largely on the civilian side of the house. The DOD community and our DHA business is really pretty good, has been pretty good at spending against the budget.
And we're seeing frustration and largely on the yeah on the civilian side of the house, the Dod community and our DHA businesses is really pretty good has been pretty good at spending against the budget wise.
While in the recent years the civilian agencies.
Speaker 4: While in the recent years, the civilian agencies have had challenges in executing and getting full budgetary spins. So we've had, we've seen some of that impact. And COVID, of course, accelerates that because during the CR period, acquisition community had to do more on COVID than the steady state business.
Have have had challenges in executing and getting the full dose budgetary spend so we've had we've seen some of that impact and Colgate is of course accelerates that because.
D C are during the CCAR period Act.
Acquisition community had to do more on Covid and the steady state business. We have continued to see a two or three major programs slipped to the right new business opportunities for US you usually find that when there is a case, where there is some evolving scope and to work and it could be perceived as mute.
Speaker 4: We have continued to see two or three major programs slip to the right new business opportunities for us.
Speaker 4: You usually find that when there's a case where there's some evolving scope in the work and it can be perceived as new.
Speaker 4: And again, we can only be hopeful that a couple of those requests for proposals will come up in the near term. We are getting good body language, good bias from those customers that we should see something this fiscal year for a couple of our major programs, but we're on our third year and a couple of cases for things lifting to the right. Of course, our CMOP contracts as you refer to with the VA, they're on their fifth year of SocialSource Bridges.
And again, we can only be hopeful that a couple of those request for proposals will come up in the near term. We are getting good body language Goodbye benchmark us from those customers that we should see something this fiscal year for a couple of our major.
Programs, but we're on our third year in a couple of four cases sort of things slipping to the right of course that our Cmos contracts as you referred to with the VA. They are on their fifth year of a sole source bridges.
Our first one expired in November of 2016.
Speaker 4: You know, our first one expired in November of 2016.
Speaker 4: And so, we're optimistic that we're going to continue on that business with the CR. We've, you know, these are missions that we have to address every day and every week to ensure that we get the appropriate services and products to our veterans. And our clients remain just as vigorous. So, we remain very optimistic that we'll continue with the VA support.
And so we're we're we're we're optimistic that we're going to continue on that business with the C. R.
You know these are missions that we have to address every day and every week to ensure that we get the appropriate services and products to our veterans.
And our our clients remain just as vigorous.
We remain very optimistic that we will continue with the VA support.
And and we're hopeful that we'll see some of our larger programs has slipped to the right.
Speaker 4: And we're hopeful that we'll see some of our larger programs that look to the right start to come back to this.
It started to come back this fiscal year.
Okay. Thank you for that color there and then maybe you could give us just a little more detail on what drove the 7% ex Alaska revenue increase I noticed in your revenues with healthy human services were up almost 15% year over year to 23.
Speaker 3: Thank you for that color, Zach. And then maybe you could give us a little more detail on what drove the 7% X Alaska revenue increase. I noticed your revenues with Health and Human Services were up almost 15% year over year to 23.1 million.
<unk> 1 billion.
Although I.
Speaker 3: kind of color those contracts that are driving that type of revenue.
Kind of color of those contracts that.
Our driving that type of revenue increase.
Yeah, Yeah. It is a in general expansion on current contracts as well as some of the awards. We had laid in fiscal 2021 like the CDC Dehap program that we announced last August as well as a bit of.
Speaker 8: Yes, it is, in general, expansion on current contracts as well as some of the awards we had laid in fiscal 2021, like the CDC DHAP program that we announced last August , as well as a bit of starting to return to
We're starting to return to I hesitate to call it normal, but maybe out of the air quotes around the word normal return to activity than our head start program.
Speaker 8: hesitate to call it normal but maybe I'll put air quotes around the word normal return to activities in our Head Start program. So those kind of things that are both expanding on current programs as well as starting to return to some of the more normal operating patterns as well as the awards that we had late in fiscal 21.
So so those kinds of things that are on both expanding on current programs as well as starting to return to some of the more normal operating patterns as well as the awards that we had late in fiscal 'twenty one.
Okay, great and anything new on.
Speaker 3: Okay, great, and anything new?
That you can share with us an infinite by that program, it's something you've talked about a lot in the past and you know how is that you know rolling out here are you you're hitting plans about you internal plans that you had for that you maybe just give us a little more deep.
Speaker 3: that you can share with us on InfiniByte, you know, that program. It's something you've talked about a lot in the past.
Speaker 3: rolling out here? Are you hitting plans, internal plans that you had for that? Maybe just give us a little more detail on that product.
Hello, Matt.
Perfect.
Yeah, No I appreciate that yeah, it's still a very exciting part of our toolkit for us.
Speaker 4: Yeah, no, I appreciate that. Yeah, it's still a very exciting part of our toolkit for us. As we may have shared earlier, just relatively recently, we just added some resources to really focus on the good market for that program. On the government side, there's been some slippage from some of the secure data analytics contracts and the cloud-based hosting contracts.
We may have shared earlier.
Relatively recently, we just added some resources to really focus on the a good market.
For that program.
On the government side, there's been some slippage from some of the secure data analytics contracts and the cloud based.
Hosting contracts.
The.
Speaker 4: The, you know, things such as CMMC, et cetera, that were to be incorporated in the contracts, the government is redefining some of those cybersecurity requirements. And, but in the meantime, we're looking to try to take incentivize for a spin and not wait passively for that. So we have started to build a pretty good pipeline there.
Things such as CMC et cetera that were to be incorporated in our contracts. The government government is redefining.
Some of those cyber security requirements.
The requirements are and but in the meantime, we're looking to try to take.
Taken tend to buy for a spin.
That weight passionately for that so we have started to build a pretty good pipeline. There are current customers of course.
Speaker 4: Our current customers, of course, that we've been hosting for quite some time are really getting some tremendous benefits. And we're also looking at very soon completing an audit that should get the government fully – our system fully certified externally. Catherine, do you want to add anything to that?
Hosting for quite some time are really getting some tremendous benefits and we're also looking at very soon completing.
Audit that you'd get to keep the government fully our system are fully certified externally Kathryn you want to add anything to that.
I think that's exactly right, where we're in that final phase of going from being on the market to being fully federal federally certified through GSA.
Speaker 8: I think that's exactly right. We're in that final phase of going from being on the market to being fully federally certified through GSA.
Okay, great. Thanks for the update and one last one for me if I may the Kathryn restaurants is more for you I know this has been a bugaboo the last two years.
Speaker 3: Okay. Great. Thanks for the update. And one last one for me, if I may, Catherine, this one is more for you. I know this has been a bug-boo the last, you know, two years, you know, on the accounts receivable, this time of the year, they, you know, we're always running.
Accounts receivable at this time of the year. They you know, we're always running a little behind and you had to use some of your magic you know with all eventually come in but just trying to you know where are we standing today on the accounts receivable are you comfortable where they are you seeing some you know.
Speaker 3: a little behind and you had to use some of your magic, it will all eventually come in, but just trying to, you know, where are we standing today on the accounts receivable? Are you comfortable where they are? Are you seeing some, you know, extension on payments in this type of environment? Anything there would be great.
Extension.
On payments in this type of environment.
There would be great. Thank you.
Okay sure Yeah, Yeah, no. We continue the pattern that we've seen in the last couple of years off yeah. The first our first quarter, which happens to end right right around the <unk>.
Speaker 8: Okay, sure. Yeah, no, we continue the pattern that we've seen in the last couple years of, you know, the first, our first quarter, which happens to end right, right around the
Year end holidays, and particularly this year with the way the calendar fell I think people people, even exited a little bit earlier than they normally do for that for that Christmas and new year holidays. So as as per that trend. We did have a peak in Q1, but but as per our usual trend that's already clearing in the congestion cleared anyway.
Speaker 8: year-end holidays, and particularly this year with the way the calendar fell, I think people even exited a little bit earlier than they normally do for the Christmas and New Year holidays. So, as per that trend, we did have a peak in Q1, but as per our usual trend, that's already clearing and the congestion's cleared and we've had a very healthy January and looks like a good start to February based on this morning in collections. So, I expect...
A very healthy January and it looks like a good start to temporary based on this morning.
In in collections, so I expect our.
Our full year trend to be very much in line with our normal cash generation strong cash generation that we generally deliver are the only variable for us. This year is that we've moved from being able to shield.
Speaker 8: our four-year trend to be very much in line with our normal cash generation, strong cash generation that we generally deliver. The only variable for us this year is that we've moved from being able to shield our
Earnings with our Nols, we fully consumed those during fiscal 'twenty. One so we will be tax paying in fiscal 'twenty two but.
Speaker 8: earnings with our NOLs. We fully consumed those during fiscal 21, so we will be tax paying in fiscal 22.
Speaker 4: But you know that old saying, you've got to be making money to pay taxes. So we are among the taxpaying population now, but we still, nonetheless, expect our net return free cash flow to be very strong. Kind of strange to be excited about having to pay taxes, right?
Know that old, saying, you gotta be making money to pay taxes.
So we are we are among the tax paying population now, but but we still nonetheless expect our our net return free cash flow to be very strong kind of strange to be excited about Texas.
[laughter] right.
Zach Kathryn Thank you very much again, great quarter looking forward to seeing how the rest of the year plays out. Thank you.
Speaker 3: Zach, Catherine, thank you very much again. Great quarter, looking forward to seeing how the rest of the year plays out. Thank you. Thank you, Joe.
Thanks for joining us.
Again, if you'd like to ask a question. It is star then one star then one task a good question.
Speaker 1: Again, if you'd like to ask a question, it is star then 1, star then 1 to ask a question.
Our next question today comes from Victor Hernandez with her that does capital. Please go ahead.
Speaker 1: Our next question today comes from Victor Hernandez with Hernandez Capital. Please go ahead. Thank you. Congratulations.
Thank you congratulations on a great quarter.
I think it's.
Question on the statement of cash flows that you released you had a line for deferred revenue I wanted to see if you can give any details of what that line represents.
Speaker 3: on the statement of cash flows that you released, you had a line for deferred revenue. I wanted to see if you can give any details of what that line represents and what the impact.
And what the impact would be on the full year.
Sure. Thank you for joining victory I welcome welcome Victor.
Speaker 8: Sure, thank you for joining, Victor. Welcome. Welcome, Victor.
And so the deferred revenue and they use of cash for a poor performance of deferred revenue really reflects the fact that right before the end of last fiscal year, we collected a very large advanced payment from the state of Alaska for the steam or contracts that we've talked about so much on this call and so Q1's results just reflects the fact that we.
Speaker 8: And so the deferred revenue and the use of cash for performance of deferred revenue really reflects the fact that right before the end of last fiscal year, we collected a very large advance payment from the state of Alaska for these FEMA contracts that we've talked about so much on this call. And so Q1's results just reflect the fact that we had to, you know, perform the obligations that
We had to perform the obligations that <unk>.
Got the advance payment for it and so we consumed that advance payment in the quarter.
Speaker 5: we got the advance payment for, and so we consume that advance payment in the quarter and we'll fully deliver against that by the time the program executes in Q2.
And we will fully deliver against that by the time the program executed in Q2.
Excellent. Thank you.
You bet Ya thanks for joining.
At this time there are no further questions in the question queue.
Speaker 1: At this time, there are no further questions in the question queue. So now I would like to turn the conference over to Mr. Parker for any closing remarks.
So now I would like to turn the conference over to Mr. Parker for any closing remarks.
Well. Thank you I'd like to express my appreciation for those of you that are engaged both live and via the website.
Speaker 4: Well, thank you. I'd like to express my appreciation for those of you that are engaged both live and via the website, and also for those of you who will be checking it out offline.
And also for those of you who will be checking it out offline.
We are looking forward to sharing additional information with you at our annual meeting of the shareholders, which is scheduled for March the tests were scheduled to be in New York provided that.
Speaker 4: We are looking forward to sharing additional information with you at our annual meeting of the shareholders, which is scheduled for March the 10th. We're scheduled to be in New York, provided that the pandemic allows us. We will look forward to meeting with not only you all, but with our board of directors at that session, and we'll give you additional color around the strategy and the business. Thank you all for joining us today. Have a great day.
The pandemic allows us.
We will look forward to meeting with you all but with our board of directors.
The session and we will give you additional color around the strategy and the business. Thank you all for joining us today have a blessed day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker 1: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker 1: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.