Q3 2022 DLH Holdings Corp Earnings Call
Good day and welcome to the DLH Holdings Corp fiscal 2022 third quarter earnings Conference call. All participants will be another should only mode should you need assistance. Please to another country specialists by pressing the star key followed by field.
After todays presentation, there will be an opportunity to ask questions.
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To withdraw your question. Please press Star then two please note. This event is being recorded.
I would now like to turn the conference over to Chris Witty Investor Relations Advisors. Please go ahead.
Thank you and good morning, everyone on the call with me today is that Parker, President and CEO , and Kevin and John Ball CFO . 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.
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 or 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 then in our other filings with the Securities and Exchange Commission, we do not undertake any duty to update any forward looking statements.
On today's call, we will be referencing both GAAP and non-GAAP financial measures. The 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 Bull after which we'll open it up for questions and with that I'd now like to turn the call over to Zach. Please go ahead.
Okay.
Thank you, Chris and good morning, everyone welcome to our fiscal 2022 third quarter conference call.
I am pleased to report yet another solid quarter.
Particularly as we wind down our two major COVID-19 pandemic response programs, one with the FEMA, Alaska countermeasures and the NIH.
NIH.
Texas disease clinical trials with therapeutics.
Both of these programs demonstrated <unk> ability to surge and provide a rapid response to national threats, leveraging our emergency preparedness and global clinical research network capabilities.
Beginning with slide three.
I'll first provide a high level overview of the quarter, starting with the top line results.
Revenue rose nearly 8% year over year to.
To $66 4 million, reflecting strong demand across many of our programs and services.
We are very pleased with the recent award activity and a large number of ongoing opportunities within the company.
Particularly as we are and approached the end of 2022 and will soon be launching into FY 'twenty three.
I'll discuss the outlook more in a moment.
We posted operating income of $7 1 million or 10, 7% of sales up 44% year over year and recorded EBITDA of 9.0 million versus 7.0 million in the third quarter of fiscal 2021.
Earnings per share.
Rose nearly 50% to 34 cents per share and we paid down an additional $9 million of debt during the quarter.
Ended the period with a 28.5 million outstanding debt outstanding.
Our backlog entering Q4 was a solid 510 million setting the stage for continued strong performance going forward.
Turning to slide four.
I'm going to show some examples of how DLH brings innovation and value to its clients across the board.
Cannot be any prouder of the contributions that DLH employees are making to the missions, they're very critical missions of our customers.
First and foremost one of our projects was recently named a federal health Iot.
Innovation Award winner highlighting our work with the defense medical logistics support standard support and logical programs here.
Here, we successfully integrated several defense health supply chain management system for the Defense Health Agency.
This was a great achievement.
That illustrates the ability of our subject matter experts to innovate through novel applications of emerging and proven technologies.
Also.
The D O D essence bio surveillance program positively identified the initial cases of monkey pox, showing our partnerships advanced research and experience in detecting health and biological threats that import impact and put at risk the force readiness of our military.
At the same time within the veteran Affairs program.
Our Cmos contract recently broke all time daily production records in and meeting the medical needs of our nation's veterans.
We are.
Very very proud of and continue to be very proud of the high performance work that our team continues to provide product veterans for almost a quarter of a century.
In addition, DLH was awarded a small but strategic contract to conduct onsite clinical monitoring for the outpatient treatment with anti Corona virus.
[laughter] immunoglobulins.
Study at eight research sites outside of the United States, leveraging and in I E I D or infectious disease.
The global clinical trials network.
It is incredible work that puts us right in the action with the with regard to further reducing the evolving threats posed by HIV.
And lastly, as previously announced our incentive by cloud solution received for fed ramp authorization earlier this year.
This bolsters, our secure data analytics cloud migration and platform as a service value propositions that are applicable to current and selected future.
Clients.
These are just a few examples that illustrate the differentiating of our talented experts and the tools that we apply and serving the interest of our government and the military and our service members across the nation.
Slide five provides an overview of the many avenues supporting the future expansion, which we believe position us for many years of continued growth and solid performance.
As I mentioned at the top.
Some of our turnkey programs have reached near completion stage, including much of the COVID-19.
Work and supportive.
For agencies.
There's always the potential for DLH to leverage this experience and the unique capabilities acquired during this time period across other infectious disease research, including future potential health threats.
Overall, our focus areas continue to align with the federal government spending priorities and some recent awards offer the opportunity to accelerate top line growth.
Besides our Recompete, we've announced several new contracts that position us for additional growth in the coming years.
That include multiple award contracts that our idea IQ in nature, where.
With a ceiling of $10 billion to provide health related research and development and R&D support to the U S Department of defense, particularly in particular, the defense Health Agency and a medical research and development command.
This leverages our expertise in areas such as medical simulation.
In infectious disease research.
We were also selected as part of as part of another multiple award <unk> contract <unk> contract with a $320 million ceiling for all five award ease and that is to provide support for the National Cancer Institute Cancer Institute with clinical support and steady management positioning us to help.
In the ongoing fight against cancer.
This is of course been a strategic objective for us to expand our business presence within HHS and the National Institute of Health.
While the maximum value of both of these awards is substantial.
Our potential would be based on actual task orders that must be competed over time.
Nevertheless, we have begun to build a strong pursuit teams with added a senior credentials and are thrilled to be part of such critical research, where our presence and impact will be felt for years to come.
At the same time, we won a recompete on work that we've held since 1986 with the National Institute Institute of Environmental Health Sciences.
I insist for exacting high standard statistical analysis and toxicology research.
DLH will continue to provide software programming.
<unk> bio stats statistics and data visualization for the National Toxicology program and the division of Intramural research.
We are very pleased to have been chosen once again for this important work as well as providing epidemiological and public health support for the National Institute of diabetes, and digestive and kidney diseases to support expansion again of our chronic disease research.
As we approach the.
The end of the government's fiscal year.
Agency budget adjustments typically provide another opportunity for growth.
Hum.
And that growth can be with contracts.
That often or decided at a more rapid pace to finalize various procurement initiatives subsequent to September 30th the outlook for our services also remains bright reflecting generally positive demands and the transfer those demands for fiscal 'twenty three and beyond as.
As we said in the past our innovative health care research and technology based applications have strong bipartisan support on the hill.
Although it is too early to say how the budget for fiscal 'twenty three will play out we're optimistic given that our current portfolio reputation and stature within the agencies that we serve and the ongoing need for diagnostic analytics based approach to helping solve the nation's many health.
Challenges.
Do you suspect that certainly a continuing resolution seems to be imminent.
But we believe that the budget stability in our priorities will pave the way for added growth.
At the same time, we have a strong pipeline of possible corporate development M&A opportunities that could also further improve our market position.
And offer new pathways for our strategic expansion.
And as Kathryn will we'll share our balance sheet remains strong and largely delever.
We have every reason to think that the future will follow our long standing formula of strategic growth and solid performance through our platform of high value added services.
Whichever rewarded our shareholders as well as our clients.
Right with steady returns and continued excellence in performance.
I believe that the best is yet to come for DLH and we're excited to lead this charge with that I'd like to turn the call over to our Chief Financial Officer, Kathryn Jamba Kathryn.
Thank you and good morning, everyone. We're pleased to report another quarter of solid results.
Turning to slide seven we posted revenue of $66 4 million for the three quarter for the three months ended June 32022 versus $61 6 million in the prior year's fiscal third quarter, the 8% increase year over year reflects expansion across many of our existing programs we believe that.
Our recent awards and our evolving capabilities will continue to support growth in fiscal 2023 and beyond.
Moving to slide eight income from operations was 7.1 quarter versus $4 9 million in the prior year period and as a percent of revenue. The company reported operating margin of 10, 7% in fiscal 2022 versus 8% in fiscal 'twenty one.
Income from operations improved due to higher revenue improved program mix and effective management of fringe benefit cost.
Interest expense was <unk> 5 million in the fiscal third quarter of 2022 versus <unk> 9 million in the prior year period, reflecting lower debt outstanding.
DLH recorded a provision for taxes of $1 7 million and $1 2 million during the third quarters of fiscal 2022 and fiscal 2021, respectively.
We reported net income in the third quarter of approximately $4 9 million or 34 cents per diluted share versus 2.9 billion or 21 cents a share last year.
As a percent of revenue net income was seven 3% for the third quarter of fiscal 2022 versus four 7% for the prior year period.
Turning to slide nine EBITDA for the three months ended June 32022 was approximately $9 million versus $7 million in the prior year period, or a 13, 5% and 11, 3% of revenue respectively. The improvement in EBITDA is derived from the same factors as.
For operating income of course higher revenue with improved program mix and effective management of benefits costs. A reconciliation of GAAP net income to EBITDA is provided in our earnings statement and at the back end of this presentation.
Slide 10 gives an updated snapshot of our debt position at the end of Q3 as of June 30, we had approximately $28 5 million of debt outstanding under our credit facilities versus $46 8 million at the end of fiscal 2020 tail.
I'm, sorry fiscal 2021, and our leverage ratio remains under 1.7 times EBITDA during the quarter. The company paid off all remaining debt from the 2019, social <unk> scientific systems acquisition, the $70 million five year term loan from that acquisition was retired in 35 months.
Okay.
We continue to use our substantial cash generation to pay down debt and delever the balance sheet, leaving us in a strong position with plenty of financial flexibility for future transactions, we anticipate being under $25 million of debt by the end of our fiscal year.
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.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your attached to them for them. If you like music a speaker phone. Please pickup your handset before pressing the key.
They didn't meet Brian . Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time when you ballpark momentarily.
Yeah.
Okay.
The first question comes from Joe home that Noble capital. Please go ahead.
Good morning, Zach and Kathryn congratulations on the quarter.
Good morning, Joe good to hear for as much.
So I wanted to first kind of walk through I mean in the.
Presentation or you do have a business reconciliation with the FEMA results.
Just wanted to make sure. We can go through this a little bit that we're thinking about this the right way in the quarter a FEMA.
<unk> actually had about a 5 million dollar negative effect on revenue so.
It looks like here. This reconciliation that the the ongoing business actually did roughly 71 6 million of revenue I'm with you.
B, a 16% increase over the year ago quarter or is that am I thinking properly on that or is there. Some other one time items that would not make that an accurate calculation.
Thank you Joe and.
Your arithmetic is correct.
At.
It is a adjustment, but it doesn't net out at about 16% are Kathryn anything to add on a sustained on the sustained that's correct.
Okay.
Yeah.
So you say you're Underselling, what you actually you guys actually did in the quarter I mean, that's just fantastic increase you know from the first quarter you are not the sustained.
Sustaining business you did about a 7% increase in the second quarter, 12% and I were talking 60% were just showing.
Significant growth on the sustaining business.
Well I appreciate it as you are now aware.
It's kind of our history, our norm, but where we.
We're starting to see the fruits of a lot of strategic efforts that we've built we've.
I can tell you that it's a team sport and our operators and our folks are in the.
In the trenches on the BD side are all really starting to come together.
And we also benefit.
Yeah from enjoying a great portfolio of customers and clients that.
I have had the ability like we mentioned earlier to retain their budget stability to be able to have dealt with the challenges of the COVID-19, all hands on deck.
And we're starting to see some of that recovery being reflected as well. So thank you very much. We appreciate that however, comma.
Not a one hand it gives them. The other takes away. That's all that is absolutely the case and we do enjoy the benefits of it.
Strongly supported markets and increasing demand.
Building, an increasing traction for our services as we continue to expand the array of services we offer there.
There is as you know though.
Some degree of seasonality to our business and so while that's the case, yes, we had a we had a very strong return in Q3. Some of that was a function of the seasonality, particularly on the head start program and then as Zach mentioned the wrap up of that large a COVID-19 therapeutics trial that trial program So think of.
So on a sustaining basis is running.
The high Sixty's, low seventy's, and we're going to bounce around a little bit quarter to quarter, depending on some of those particular seasonal effects, but but on a sustaining basis. You are quite right. We are reaching new levels and an upward to the right.
Yeah.
The CFO always has to put a break on the grid.
[laughter], that's why it's a tag team.
Yeah.
[laughter].
So you mentioned.
The fed ramp authorization for the intended by cloud Zach maybe you can give us a little more color or detail you know of.
Of what that could mean or what's the potential market out there for that that product and when do you think you start to just to see the fruits of that are being harvested.
No great question, Joe we're starting to see a lot more attention coming from the agencies, particularly the federal agencies that we serve.
There are requiring that contractors have a federal level secure systems.
If you're going to move forward and handling large sensitive data not only in the health care arena, whereas very very sensitive health records are being managed but also from just cyber risk in general cyber risks across the industry. So we think that.
By having the set fed ramp certification it will certainly get us a differentiating capability, where there'll be less competition.
Because of those that do not mean that we're also taking a look to see if we can help position this platform.
To be the solution for some of the smaller businesses that do not have the ability to.
To invest and develop this capability yet they still want to maintain your existing work would be able to pursue work in our core.
Cost effective way in a cloud environment for big data analytics. So we think we're going to start to build a pipeline specific to the <unk>.
Fed ramp certification requirements for those agencies that.
Treat cyber security and it.
Security against these kind of.
Our systems.
As a priority in the way they evaluate.
Yeah.
Okay. Thanks for that and on the IDI cues I know, it's all dependent upon the.
The specific task orders and are competing to win those task orders any feel for you know windmills.
Task orders might start coming out or any type of.
Ramp on that is this something that you think you see a lot here in the next couple of quarters or is it you know more you know over a longer period of time.
Yeah.
Well, there's quite a long duration on on certainly on the large onto that Scott task order idea, that's a 10 year duration. However.
Typical formula for new IDI cues as is firstly is positioning the work that the trends are staying off the expiring predecessor idea IQ. So the omnibus IDI curious omnibus for following our story and so the the natural first things in the in the acute tend to be.
Transitioning of existing work, but but there are emerging needs and then of course. There are there are opportunities that those customers have in mind. So we don't expect them to have immediate term to converting to new work that we are that that's what we're in the midst of doing is identifying the market opportunities there both from a.
Our competitive.
Exercise through the Recompete of existing work and expansions of scope underneath this idea of kids. The second one with that with the epidemiological part of that.
NIH, we expect to have a.
Closer in.
Ramp.
The authorization of work, but it'll follow that same pattern of transitioning existing work coming off of all the programs that were aggregated within the scope of that idea IQ, but but on the other hand, we are already hearing from that customer about additional scopes and additional work if they expect us to put out for competition. So.
And of course that pool of competitors, there's only five companies so.
So we are quite excited about the <unk>.
Close in opportunities from that idea Ikea.
Okay great.
It just won't well once again talk about you know the VA contracts I think there through the fall of this year any update on those contracts.
Yes, Joe we know that.
We have stated before the VA first well set there.
Acquisition strategy get their team in place to do the procurements.
Dave.
By the some indications are that they have started to address how that's going to come out, but given the history of what we've seen historically.
We are pretty optimistic that we'll be probably looking at a year's worth of extension so that they can get.
Set of Rfps out on the Street gets proposal submitted get evaluations done.
And to move towards a final award decision historically that generally has been.
Easily 12 months cycle, and we will see how it goes in the future. So we're pretty optimistic that we will see something.
Beyond this fall given that we're getting ready to approach a new fiscal year.
And then on those you know the the previous one they talked about it.
A small I think veteran.
One business any any more.
Are any indication of whether they're just going to open it up to everybody or do you think any any indicating that they would be looking once again.
To award it to a Oh, a veteran owned business first.
Well Theres always you know a.
Our preference for small businesses of course, they've solicited both of these contracts in that environment and reached the conclusion, thus far that it was not in the best interest of the government.
To be able to have this exacting standard high mission critical kind of work.
Done by the small business community now, having said that acquisition strategies can evolve.
We have seen indications that they're continuing to look at other approaches we stand at the ready to.
And believe that we're well positioned to continue to provide it in an unrestricted and a prime arena.
But should that not be the case.
We will consider alternative approaches as well so we're pretty optimistic that.
We'll be in this game and hopefully still as a prime in an unrestricted environment.
But.
You can't tell until these procurement cycles actually unfold.
Okay.
Right, Yeah, and well hopefully.
That you're you're handling record levels.
Have orders that and you've done such a great job on this in the past.
Plays in your favor on that.
Yeah, there's a lot of a lot of a lot of dynamic.
Yeah.
Go ahead.
Go ahead I'm sorry.
Well I was just going to say, yes, there was a lot of dynamics there and we have continued even though we've had these short bridges of less than a year.
We've decided and continue to invest in next generation approaches to executing on the Cmos mission I think the customer sees that I think obviously the productivity records and our production records that we've seen are indicative of our shared commitment to quality and performance and.
And continuing our tradition of being one of the top one or two.
Performers as rated by J D power. So we're excited about.
What we think the future holds and we will continue to continue to further invest and being a great provider to take care of our veterans.
Thanks for that and then one last one for me.
On the debt pay down obviously, you guys just continue to knock the cover off the ball there.
Yeah.
Things continued along.
On the same path that you would I would expect you guys just about be debt free by the end of next fiscal year.
But this seems to be the <unk>.
The time, when we see you know an acquisition announcement from the company.
So just wondering about how the M&A pipeline looking today, you know, what's the kind of multiples you're seeing out there are there more are you more comfortable with the multiples have come down from here given the change in the economy and you know any additional insight you might be giving us on potential M&A activity.
<unk>.
I definitely appreciate that question.
As we expected and I think as we signaled on our call a couple of quarters ago. It was quiet certainly in the first part of the calendar year as I think everybody sort of recovered all the back all the investment banks recovered from their break out 2021, so quiet in the first quarter of the calendar, but as expected volume has begun to really pick up.
It nicely and there is a very nice.
And a robust pipeline of opportunities that we are aggressively pursuing and evaluating so I'm encouraged to see things as things wake up again and to see us get an opportunity to get at bat on some some really.
Things that would really extend our offerings and continue to build us into a stronger company more relevant.
And in the marketplace with with additional technology capabilities. So as we've talked about so in terms of multiples.
It might be softening, just a little bit evening easing up a little bit as compared to 2020, one not not dramatically. So in a way that I feel like we're going to get the bargains that we got back in the <unk>.
15, 16 timeframe, it's not it's not going to I think we're a ways away from that but right. Now we are improving slightly on the margins as people. She said think about the overall economic indicators.
<unk> and.
Acknowledge there is a little bit in their market and their multiple expectations, but it's still a highly competitive and pretty frothy market from my perspective.
Okay, Great I'll.
I'll get back in queue, what someone else asked a couple of questions look forward to it.
The M&A activity and great job guys. Once again, thank you.
Thank you John Thank you gesture you joining us.
Okay.
As a reminder, if you have a question. Please press star then one to be joined into the queue.
Our next question comes from Bryan Keane Linger with Alliance Global Partners. Please go ahead.
Hi, Good morning, guys. Thanks for taking my questions.
Hey, Brian doing Brian .
Thanks, you talked about a few new programs can you first comment on your ability to hire professionals to meet new project requirements and then in this inflationary period.
Maybe compare compensation for either new hires is comparable to a year ago.
Yeah, no great question.
As you probably know and <unk> heard me talk about before I think that one of the more unique challenges that we're facing over the last year and in the near term future is this the threat of.
There's a great resignation and the ability to find and retain top talent.
We are under the leadership of our of our relatively newly hired.
Chief Human Resource Officer, Molly Farabee, we've really focused heavily on the ability to retain our workforce.
As well as to be able to attract.
Workforce given the threats that we're seeing out there we've started to have some good traction we've put in some new measures implemented some new measures over the last quarter or two we're starting to see some of that pay off.
We're actually doing.
I think better than most of the industry.
For my engagements with the rest of them are Gov Con folks.
But but we've still got a lot of work ahead, it's a different it's a different environment today to be able to attract and retain top talent.
And there is a bit of scarcity of resources in that regard because a lot of.
The newer generations are looking more at it.
The gig work environment, and we've got to find ways to attract them into our places. So it is a threat is one that I'm really pleased to say that with our new leadership and approaches across our operating units.
We're holding our own and feeling that I think we've whether some of those storms you know some of that also was ex.
Exacerbated by COVID-19.
<unk>.
Particularly in programs such as some of ours, where you have to go into facilities and have to come to work in an environment that had different degrees of risk.
And in many regulatory requirements in our space right a number of our agencies required.
Had to get vaccinated and.
Certainly less than a 100% of our workforce.
It was amenable to that we can reflect the national.
Demographics, so we're going to continue to apply for us on target for this threat.
It is front and center for Us and I'm pleased to say that our early.
Early results are positive.
And 16% organic growth is solid I'm curious as a follow up though has the the challenge in hiring and retaining people.
So curtailed in any way our revenue, meaning you couldnt fill certain positions. So it maybe certain revenue was not ramping as you expected and then also what is your voluntary attrition rate.
Well, we don't we don't publish.
Rolling.
Voluntary attrition, but I can tell you that.
The industry norms, we're kind of a hybrid organization the industry standards.
It used to be about 17% and our professional workforce for government government contracting.
In our industry. If you if you work with organizations such as professional services.
Council in India, a you'll find that it's been almost double that over the last year and a half to two years and I've heard some of our tier one companies having turnover in the professional workforce exceeding 40% I can't tell you that were not that high we've actually uniquely done very very well and still.
In the professions arena.
Below 20%.
And the production manufacturing kind of environments et cetera, there are different metrics and we're beating industry standards, there too, but we have certainly suffered some blows in the last year year, and a year and a half or so due to the combination of COVID-19 and the.
And the great resignation, there have been gaps in our ability to deliver revenue, but that too is a key and high priority of what we're doing in our human capital management all of our managers.
Just can come out of one of our sessions on making sure that we're applying.
Novel methods.
Leveraging meeting some of the candidates and more social media.
It means then than the historical means of recruiting and really jumping on that so that we can deliver the revenue deliver the expertise that our clients demand and need.
As well as have the resources available to meet the fill rate requirements too.
To ensure that we're able to meet the exacting demands of the prescription environment for VA customers. So a lot going on there we do hope that to your point.
Our ability to fill these positions will generate.
Additional revenue as well.
No I would just add to that Brian that the competition for talent is it has it has for us even pre pandemic always been fierce as we've been working to navigate up up.
And to compete with those household name companies you think about.
And then if you think about the discipline that our team comes from leisure public health professional scientific research professionals. So so those are those people are more sudden now more so than ever in high demand and so really what differentiates us I think as we're number one we're absolutely focused on.
At the same time that we're fiercely competing for talent, we're focused on moving the needle on our contribution of the amount of the work that is delivered by direct labor of our team versus building subcontractors into our effort. So that's an important metric for the company and we're making good progress against that notwithstanding the competition for.
And that happens when you build.
When you build capabilities can you get opportunities to do work that people are committed to and they really want to take that entrepreneurial lead on really servicing those clients. So I think we have some some so we had the benefit of being able to be on them is building momentum and people see that get excited about it doesn't mean that we can.
Take our eye off the ball in terms of keep making the employment environment.
Competitive and attractive for the resources that we're competing for.
Great I'm curious we've.
We've had a short period of time, where we've had a budget in place before maybe what's coming a continuing resolution, but can you talk about from a high level of at least the bookings trends over the last nine months compared to the previous nine months and you know how do you think that will be impacted by a continuing resolution.
No no great question.
I do think a.
See our seems to be the default in the last decade for us.
While there is some paralysis on the hill that.
Exacerbates that problem, a little bit for us and particularly in the federal government space.
We are starting to see some movement as you indicated some of the bookings that we've been able to identify recently I can tell you that we're now having probably more.
Pozo development activity than we've seen in a while for some things that are.
For us at least pretty strategic but it's taken a couple of years on the come so we're pretty optimistic that in the areas that we're focused on right and it's not across the board in our industry, but certainly in the areas that we're focused on we're starting to see some some new programs as well as.
Some recurrent programs with some evolution start to come before so.
The indications are the leading indicators are.
The pipeline of those opportunities will be pretty healthy to impact 'twenty three in FY 'twenty four pretty well.
Great I guess lastly, as I look at your business is split between the VA health and human services in D. O D. E. As you look at your pipeline of opportunities is there one that sticks out of where you see the biggest growth opportunity or is it pretty evenly split across the board.
Yeah, No I think that's a great question you know you probably heard us Katherine I say either on the on the trail or earlier in a quarter that we are expanding our aperture.
For our group for strategic growth.
Strategy.
And in saying that HHS, Dod and VA are going to continue to be.
Coveted.
Customers, but we have a range of expansion. We believe we can do within those agencies and just as importantly, our focus organically and even acquisitive Lee.
Is expanding now to leverage the competencies that we've built with the execution of our last five year strategy right. So we now have strong digital transformation skills right that covers not only cyber, but secure data analytics and a pretty intensive robust systems engineering and integration capability that includes modeling.
And simulation, we can take those now to two places within those agencies, but more importantly, we can take those into other civil and D. O D agencies.
<unk> is heavily focused on health and we think that those will continue to be areas that we can leverage certainly differentiators such as our global global clinical research network or fed ramp a platform as a service solution and things of that nature are going to be key components of taking the investments there.
We've internally invested in to build those capabilities while at the same time bolstering some of our technology enabled approaches.
To those customers. So yes, those will still be very a very good agencies for us we still see a range of opportunities to expand within NIH within the HHS domain.
We put out there before that we think cancer is a good growth area for us for us and in the D. C. G win. We think is one of few of the few that will get US there. The behavioral health arena that we've talked about is also still one that is ripe for growth, we believe especially given everything that's been happening.
As a result of <unk>.
Symptoms from the COVID-19 from depression suicide prevention substance abuse as well as on the on the battlefield with the expansion of.
Tbi in PTSD and other behavioral house scenarios, so we're going to continue.
To invest in those areas as well, let's see where we can take our our pieces of the sea for ISR capabilities that came with our R. R.
Workforce and and <unk> and.
In Fort Dietrich under the IPA acquisition. So we're pretty excited about the diversification now of our portfolio now that we've got a strong foundation to build upon and so we can start to add depth and capabilities as well as breadth in our target.
Target markets.
Great. Thanks, so much guys.
You bet. Thank you. Thank you Brian good to hear from you.
Okay.
At this time there appears to be no further callers in queue. So I'll turn it back to Mr. Parker for any closing remarks.
Well, thank you very much and I would just like to thank you all for your attention and your continued interest in DLH and in our quarter.
Quarter three results, we look forward to chatting with you again next at our fourth quarter.
Report out and subsequently our annual report to the shareholders. So thank you very much have a blessed day bye for now.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.