Q3 2024 DLH Holdings Corp Earnings Call

August 1, 2024

[inaudible]

Operator: Good day, and welcome to the DLH Holding Corp's fiscal 2024 3rd quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance, please secretly conference specialists by pressing the star key followed by zero.

Operator: Good day, and welcome to the DLH Hldg Corp. Fiscal 2024 3rd Quarter Earnings Conference 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 touchtone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations Advisor. Please go ahead.

Speaker Change: Good day and welcome to the DLH Hldg Corps Fiscal 2024 3rd Quarter Earnings Conference Call.

Speaker Change: 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 a touch-tone phone. To withdraw your question, please press star, then two.

Operator: 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 tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded.

Chris Witty: I would now like to turn the conference over to Chris Witty, Investor Relations Advisor. Please go ahead. Thank you and good morning, everyone.

Please note this event is being recorded. I would now like to turn the conference over to Chris Witty, Investor Relations Advisor. Please go ahead.

Chris Witty: Thank you and good morning everyone. On the call with me today is Zach Parker, President and Chief Executive Officer, and Kathryn 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 three of the presentation. This column may include four forward-looking statements that relate to the company's outlook for fiscal 2024 and beyond.

Chris Witty: On the call of me today is Zach Parker, President and Chief Executive Officer, and Kathryn JohnBull, Chief Financial Officer. The company's earnings release and PowerPoint presentation are available on our website under the Investor page.

Chris Witty: I would now like to provide a brief safe harbor statement, which is also shown on slide three of the presentation. This comment includes four looking statements that relate to the company's outlook for fiscal 2024 and beyond. These statements are subject to various risks and uncertainties, which could cause actual results and events to differ materially from such statements. Please refer to the risk factors contained in the company's Annual Report on Form 10-K, and in our other filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements.

Chris Witty: These statements are subject to various risks and uncertainties, which could cause actual results and events to differ materially from such statements. Please refer to the risk factors contained in the company's annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. On today's call, we will be referencing both GAAP and non-GAAP financial measures. A reconciliation of our non-GAAP results for our reported GAAP results is included in the earnings release and in the investor presentation on DLH's website.

I would now like to provide a brief safe harbor statement, which is also shown on slide 3 of the presentation.

Speaker Change: This column may include four linking statements that relate to the company's outlook for fiscal 2024 and beyond. These statements are subject to various risks and uncertainties, which could cause actual results and events to differ materially from such statements.

Please refer to the risk factors contained in the company's annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements.

Chris Witty: On today's call, we will be referencing both GAAP and non-GAAP financial measures. A reconciliation of our non-GAAP results for our reported GAAP results is included in the earnings release and an investor presentation on DLH's website.

On today's call, we will be referencing both GAAP and non-GAAP financial measures. A reconciliation of our non-GAAP results for our reported GAAP results is included in the earnings release and in the investor representation on DLH's website.

Chris Witty: President and CEO Zach Parker will speak next, call of a CFO, Kathryn JohnBull, after which we'll open up for questions.

Chris Witty: President and CEO Zach Parker will speak next, followed by CFO Kathryn JohnBull, 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, Zach.

Zach Parker: With that, I now let you turn the call over to Zach. Please go ahead, Zach. Thank you, Chris, and good morning, everyone.

Zach Parker: Thank you, Chris, and good morning, everyone. Welcome to our third quarter conference call, as we remain on track for a solid year as we enter the last three months of fiscal 2024. First, let me take a moment to thank our incredible workforce for their dedication and commitment to our ongoing success. Our sophisticated, highly credentialed staff continue to offer a broad array of high technology services and solutions on behalf of our customers' vital missions.

Zach Parker: Welcome to our third quarter conference call. As we remained on track for a solid year, as we entered the last three months of fiscal 2024. First, let me take a moment to thank our incredible workforce for their dedication and commitment to our ongoing success. Our sophisticated, highly credentialed staff continued to offer a broad array of high technology services and solutions on behalf of our customers might omissions. We would not be where we are today as a company if it weren't for these outstanding employees, and we appreciate what you do and what you stand for each and every day.

Zach Parker: We would not be where we are today as a company if it weren't for these outstanding employees, and we appreciate what you do and what you stand for each and every day. Now, turning to slide four.

Speaker Change: We would not be where we are today as a company if we weren't, if it weren't for these outstanding employees and we appreciate what you do and what you stand for each and every day.

Zach Parker: Now, turning to slide four, I will provide an overview of our financial results. We reported third quarter revenue of 100.7 million in EBITDAW of 10.0 million while generating operating cash flow cash of 4.6 million during the period that translated to 14.9 million of cash flow year to date. This once again illustrates the company's ability to generate cash and to pay down debt, which now stands at 166.5 million. Katherine will review this further in a moment.

Zach Parker: I will provide an overview of our financial resources. We reported third-quarter revenue of $100.7 million and EBITDA of $10.0 million, while generating operating cash of $4.6 million during the period. That translated to $14.9 million of cash flow, year to date. This once again illustrates the company's ability to generate cash and to pay down debt, which now stands at $166.5 million. Kathryn will review this further in a moment.

Zach Parker: Overall, it was a solid quarter with no major surprises as we continue to position the company for the future, deleveraging our balance sheet and investing in new business development activities for the future. Turning to slide 5, I'd like to give an update on our near-term outlook as we approach the end of fiscal 24. We're quite upbeat about the current award environment.

Zach Parker: Overall, it was a solid quarter with no major surprises as we continued to position the company for the future, de-leveraging our balance sheet and investing in new business development activities for the future.

Speaker Change: Catherine will review this further in a moment.

Zach Parker: Turning to slide five, I'd like to give an update on our near-term outlook as we approach the end of fiscal 24. We're quite upbeat about the current award environment. We have several new business opportunities that we anticipate from across our core markets under government evaluation and or anticipated request for proposals. That hopefully should translate into award decisions in the near term and potentially early in 2025. We believe the potential for new program wins in the future is high, which should bolster our top-lying growth trajectory in the quarter to come. While third quarter revenue was negatively affected by the transition of some small business side work, we see continued strong demand for our services in several of our core markets.

Zach Parker: We have several new business opportunities that we anticipate from across our core markets under government evaluation and or anticipated requests for proposal that hopefully should translate into award decisions in the near term and potentially early in 2025. We believe the potential for new program wins in the future is high, which should bolster our top-line growth trajectory in the quarters to come. While third-quarter revenue was negatively affected by the transition of some small business set aside work, we see continued strong demand for our services in several of our core markets.

Speaker Change: We believe the potential for new program wins in the future is high, which should bolster our top-line growth trajectory in the quarters to come.

Zach Parker: Small business transition impact on Q3 sales offset the fact that we had many of our new key markets such as public health enterprise IT management programs grew nicely year over year. We're optimistic that such trends will continue given the overwhelming bipartisan support for the majority of our programs, combined with our strong agency relationships in the company's wide range of advanced solutions and digital transformation capabilities. As in the past, we expect our solutions and services will continue to hold broad partisan support in a quarter to come, regardless of the changes in Congress or the White House.

Zach Parker: The small business transition impact on Q3 sales offset the fact that many of our new key markets, such as public health and enterprise IT management programs, grew nicely year over year. We are optimistic that such trends will continue, given the overwhelming bipartisan support for the majority of our programs, combined with our strong agency relationships across the company's wider range of advanced solutions and digital transformation capabilities. As in the past, we expect our solutions and services will continue to enjoy broad partisan support in the quarters to come regardless of the changes in Congress or the White House.

Catherine: combined with our strong agency relationships and the company's wider range of advanced solutions and digital transformation capabilities.

Speaker Change: As in the past, we expect our solutions and services will continue to hold broad partisan support in the quarters to come, regardless of changes in Congress or the White House.

Zach Parker: While one CMOP site already awarded is now set to transition soon, the other seven have been reset in terms of the bidding process, with funding on the current contract expected to be extended through at least October 31st. The award timing of the other seven contracts remains uncertain, but we do anticipate the award value process to be lengthy due to the complex nature of the critical services represented by these awards.

Zach Parker: But we do anticipate the award value process to be lengthy due to the complex nature of the critical services represented by these awards. In short, essentially, during the last quarter, the government restarted a new solicitation that allows new bidders to enter the competitive environment. These solicitations, however, still remain small disadvantaged, veteran-owned businesses, and again, we will consider our participation given the changes to these procurements.

Speaker Change: to be lengthy due to the complex nature of the critical services represented by these awards.

Zach Parker: In short, essentially during the last quarter of the government, restarted a new solicitation that allows new bidders to enter the competitive environment. These solicitations, however, still remain a small disadvantage, a veteran owned business, and will again, we will consider our participation given the change.

Zach Parker: Enhancing our highly credentialed workforces, presence and contributions as spot leaders is a significant element of our growth strategy. DLH expects to continue to hold leadership roles across the communities of practice, raising the company's profiles in the markets in which we bid for new work. In the past quarter alone, our experts and spot leaders have published and presented leading research in the fields of public health, readiness, and other technical services, demonstrating our company's innovative approaches to tackling some of the globe's most pressing challenges. Overall, we remain upbeat about the opportunities at our doorstep and the contract activity as the government's year-end comes to a close.

Zach Parker: Enhancing our highly credentialed workforce's presence and contributions as thought leaders is a significant element of our growth strategy. DLH expects to continue to hold leadership roles across the communities of practice, raising the company's profile in the markets in which we bid for new work in the past quarter alone. Our experts and thought leaders have published and presented leading research in the fields of public health, readiness, and other technical services demonstrating our company's innovative approaches to tackling some of the globe's most pressing challenges.

Zach Parker: Overall, we remain upbeat about the opportunities at our doorstep and the contract activity as the government's year-end comes to a close. We are proud of the breadth and depth of our offerings, our expanded capabilities are now more advanced than ever, and the highly credentialed nature of the company's workforce. Together, our people, our combined capabilities. Our new and expanded processes and past performance bring unmatched systems and solutions to the agencies we serve. With that, I'd now like to turn the call over to our Chief Financial Officer, Kathryn JohnBull. Okay, Kathryn?

Speaker Change: Overall we remain upbeat about the opportunities at our doorstep and the contract activity as the government's year-end comes to a close.

Zach Parker: We're proud of the breadth and depth of our offerings, our expanded capabilities, and more advanced, are now more advanced than ever, and the highly credentialed nature of the company's workforce. Together, our people, our combined capabilities, our new and expanded processes, and past performance bring unmatched systems and solutions to the agencies we serve.

Speaker Change: Together, our people...

Kathryn JohnBull: With that, I'd now like to turn the call over to our Chief Financial Officer, Kathryn JohnBull. Kathryn. Thank you, Zach, and good morning, everyone.

Kathryn JohnBull: Thank you, Zach, and good morning, everyone. We're pleased to report our third quarter results for Fiscal 2020. Turning to slide 7, I'd like to provide a high-level overview of some key financial metrics for the three months ended June 30, 2024. We reported revenue of $100.7 million in the third quarter versus $102.2 million in the prior year period, reflecting growth across several priority markets offset by the conversion of some programs to small business set-aside contracts. We continue to see expansion within our public health and enterprise IT management businesses and are excited by the level of opportunities presented within the current VID environment, as Zach discussed.

Kathryn JohnBull: We're pleased to report our third quarter results for fiscal 2024. Turning to slide seven, I'd like to provide a high-level overview of some key financial metrics for the three months ended June 30th, 2024. We reported revenue of 100.7 million in the third quarter, versus 102.2 million in the prior year period, reflecting growth across several priority markets, offset by the conversion of some programs to small business-set aside contracts. We continue to see expansion within our public health and enterprise IT management businesses and are excited by the level of opportunities presented within the current bid environment, as Zach discussed.

Kathryn JohnBull: We reported EBITDA of 10 million for the third quarter, versus 11.4 million last year, and the company has generated operating cash of 14.9 million year-to-date. Our EBITDA was lower than last year, largely due to a higher than normal contribution from non-labor pass-through revenue, which inherently carries lower margins.

Kathryn JohnBull: We reported EBITDA of $10 million for the third quarter, versus $11.4 million last year, and the company has generated operating cash of $14.9 million year-to-date. Our EBITDA was lower than last year largely due to a higher-than-normal contribution from non-labor pass-through revenue, which inherently carries lower margins. Now, if you turn to slide 8, I'll provide an update regarding our deployment of the company's cash to reduce debt, strengthen the balance sheet, and lower interest expense.

Speaker Change: Our EBITDA was lower than last year largely due to a higher than normal contribution from non-labor pass-through revenue, which inherently carries lower margins.

Kathryn JohnBull: Now, if you turn to slide eight, I'll provide an update regarding our deployment of the company's cash to reduce debt, strengthen the balance sheet, and lower interest expense. We paid off approximately 4.3 million of our higher interest floating rate debt during the quarter, ending the period with 166.5 million of total debt outstanding. Due to updated forecast and working capital changes, we now anticipate that our debt will be reduced to between 157.160 million at the end of Q4, slightly higher than prior projections. But still leaving us on track to start fiscal 2025 with the debt leverage ratio of a low 3.5 times.

Speaker Change: Now if you turn to slide 8, I'll provide an update regarding our deployment of the company's cash to reduce debt, strengthen the balance sheet, and lower interest expense.

Kathryn JohnBull: We paid off approximately $4.3 million of our higher interest floating rate debt during the quarter, ending the period with $166.5 million of total debt outstanding. Due to updated forecasts and working capital changes, we now anticipate that our debt will be reduced to between $157 million and $160 million at the end of Q4, slightly higher than prior projections but still leaving us on track to start fiscal 2025 with a debt leverage ratio below 3.5 times.

Speaker Change: Due to updated forecasts and working capital changes, we now anticipate that our debt will be reduced to between $157 million and $160 million at the end of Q4, slightly higher than prior projections.

Kathryn JohnBull: We will continue utilizing the favorable tax attributes of our acquisitions, along with stock compensation plans, to minimize cash income tax payments going forward. In addition, if interest rates come down as anticipated, we will utilize that excess cash to accelerate our debt reduction next year.

Speaker Change: We will continue utilizing the favorable tax attributes

Speaker Change: compensation plans to minimize cash income tax payments going forward. In addition, if interest rates come down as anticipated, we will utilize that excess cash to accelerate our debt reduction next year.

Kathryn JohnBull: This concludes my discussion of the financial statements.

Operator: 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 touchstone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two.

Kathryn JohnBull: This concludes my discussion of the financial statements. With that, I would now like to turn the call over to our operator to open the call to questions. We will now begin the question and answer session.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. Our first question comes from Joe Gomes with Noble Capital Markets. Please go ahead.

Joshua Zoepfel: Our first question comes from Joe Gomes with Noble Capital Markets. Please go ahead. Good morning, guys. It's Josh. I'd just a little bit more color on that kind of soft business award runoff; you know, it seems to have a larger impact than I think we expected. You know, how much more of it should we expect and kind of, you know, how is that kind of recomplete process of the subcontractor looking for those? Yeah, no, great question, Josh, and we're happy to provide that added color. I think it's very important to have the context of what we see, what we've seen this quarter, and what we see coming down the pipeline.

Speaker Change: Our first question comes from Joe Gomes with Noble Capital Markets. Please go ahead.

Josh Villeneuve: Good morning, guys. It's Josh Villeneuve for JL. Hey, Josh. Good morning, Josh.

Speaker Change: Good morning guys, it's Josh Villeneuve for JILL.

Josh Villeneuve: So, you know, my first question is, you know, revenue kind of came in lower than we expected, you know, can you guys just kind of provide just a little bit more color on that kind of soft business award runoff? You know, it seems to have a larger impact than I think we expected. You know, how much more of it should we expect and kind of, you know, how is that kind of recompete process as a subcontractor looking for it?

Speaker Change: Hey, Josh. Good morning, Josh.

Zach Parker: Yeah, no, great question Josh, and we're happy to provide that added color. I think it's very important to have the context of what we see, what we've seen this quarter, and what we see coming down the pipeline. First of all, we still remain really, really strong with our ability to compete in terms of win rates for our existing business, right, and so our capabilities to retain work from a competitive standpoint, we still remain strong. So that's not what's driving this.

Zach Parker: First of all, we still remain really, really strong with our ability to where we're competing in terms of our win rate for existing business. Right? And so our capabilities to retain work from a competitive standpoint, we're still remain strong, so that's not what's driving us. As you may recall, we do have a fair amount of business looking on business that we've retained for a better part of a year and a half that was awarded to us previously as a small business set aside, at least in terms of the companies that came, the contracts that came to us through acquisitions.

Zach Parker: As you may recall, we do have a fair amount of business, booking on business that we've retained for the better part of a year and a half that was, you know, awarded to us previously as a small business set-aside, at least in terms of the companies that came, and the contracts that came to us through acquisitions. And while we pay no value for those in our, in our acquisition for those small business set-aside contracts, some of them have continued to extend and are still in our book of business, and are starting to roll off now.

Zach Parker: And while we pay no value for those in our acquisition for those small business set aside contracts, some of them have continued to extend and still be in our book of business and are starting to roll off now. And so we had some of our work that has either come to an end and we cannot bid it and would not bid it as a small business set aside, and there's still some addition that we expect in the coming quarters. Those again are, you know, Sam's the CMAP, and obviously we gave us a separate commentary there as well.

Zach Parker: And so we had, you know, some of our work that has either come to an end, and we cannot bid it, and we would not bid it as a small business set-aside. And there's still some additions that we expect in the coming quarters. Those again are, you know, SANS, the CMOP, and obviously, we gave a separate commentary there as well.

Speaker Change: Those again are, you know, SAMS, the CMOP, and obviously we gave a separate commentary there as well.

Zach Parker: Now having said that, we do still anticipate that there will be some varying impact on some of those legacy contracts, and we'll certainly keep you advised. We are, you know, working with our customers to try to continue to maintain those in an unrestricted environment, and we'll keep you posted on that. But we do see probably a quarter or two of some, you know, meaningful, you know, cleanup, what we call a reset of our, you know, our capabilities contracts, our strong capabilities contracts where the government has committed to going small business set-aside.

Zach Parker: Now, having said that, we do still anticipate that the government's commitment to small business set aside will have some varying impact on some of those legacy contracts and will be certainly keeping you advised. We are, you know, working with our customers to try to continue to maintain those in an unrestricted environment, and we'll keep you posted on that. But we do see probably a quarter of some meaningful, you know, clean up what we call a reset of our capabilities contracts or strong capabilities contracts that where the government has committed to going small business set aside.

Speaker Change: Now having said that, we do still anticipate that the government's commitment to small business set-asides will have some varying impact on some of those legacy contracts.

Speaker Change: And we'll be certainly keeping you advised. We are, you know, working with our customers to...

Speaker Change: And we'll keep you posted on that, but we do see probably a quarter or two

Zach Parker: But some of those we're going to bid and be a, you know, a partner, a subcontractor partner where we might bid to retain, you know, up to 49 or so percent. But some of those we're just allowing to run off because they were not strategic. So we'll give you some added color on that near term as well in terms of sizing. But we do, again, anticipate several of those to run out between Q3, Q4, and maybe a trickle into Q1.

Zach Parker: Some of those we're going to bid on and be a, you know, a partner, a subcontractor partner where we might be able to retain, you know, up to 49 or so percent, but some of those we're just allowing to run off because they were non-strategic. So we'll give you some added color on that near term as well in terms of sizing, but we do, again, anticipate several of those to run out between, you know, Q3, Q4, and maybe a trickle into Q1. Kathryn, anything to add there?

Speaker Change: You know, a partner, a subcontractor partner where we might be able to retain, you know, up to 49 or so percent.

Speaker Change: run out between Q3, Q4, and maybe a trickle into Q1.

Zach Parker: I think it is as Zach indicated in his comments; this is not unexpected and, as we've talked about a number of times, so the business is built roughly 85% or 85% or ish on recurring business that just rolls forward through the term of the contract. And then it's got some business that some part of the business that comes towards the acquisition that we understand at the time we do the deal is not strategic to the business and/or is that indicated on in the current quarter, some that we knew were the acquired company head, one is a small business and wouldn't be eligible in the recompete to be the prime. So nothing about that surprises us, that's why we bubble around at approximately 100 million and we're going to have some of that variability period. Additionally, there's some special projects work we do from time to time that is turnkey in nature and comes and goes as the work wraps up, so nothing about delivering at the 100 million dollar mark surprises, but there is going to be that little bit of variability quarter to quarter. The real change in trajectory is going to be when a major event happens such as a big contract award, which we talk about for equal name. We're happy to share more about on this call and/or a disruptive event like transition of CMOP, which we also will cover in more detail, and I think you had a part that was part of your question, Josh.

Kathryn JohnBull: Yeah, I think it is, as Zach indicated in his comments, this is not unexpected, and as we've talked about a number of times, the business is built roughly 85%-ish on recurring business that just rolls forward through the term of the contract. And then there's some business, some part of the business that comes to us via acquisitions that we understand at the time we do the deal, it's not strategic to the business, and, as Zach indicated in the current quarter, some that we knew the acquired company had one as a small business and wouldn't be eligible in the re-compete to be the prime.

Speaker Change: Yeah, I think it is, as Zach indicated in his comments, this is not unexpected, and as we've talked about a number of times, that the business is built

Speaker Change: Roughly 85 percentage, 85 percentage, percenter-ish.

Kathryn JohnBull: So nothing about that surprises us; that's why we bubble around at approximately $100 million, and we're going to have some of that variability from period to period. Additionally, there's some special projects work we do from time to time that is turnkey in nature and comes and goes as the work wraps up. So nothing about delivering at the $100 million mark surprised us, but there is going to be that little bit of variability quarter to quarter.

Speaker Change: Delivering at the $100 million mark surprised us, but there is going to be that little bit of variability.

Kathryn JohnBull: The real change in trajectory is going to be when a major event happens, such as a big contract award, which we talk about frequently and we're happy to share more about on this call, or a disruptive event like the transition of CMOC, which we also will cover in more detail. And I think you had a part, that was part of your question Josh.

Speaker Change: The real change in trajectory is going to be when a major event happens, such as a big contract award, which we talk about frequently and we're happy to share more about on this call, and or a disruptive event like transition of CMOC, which we also will cover in more detail.

Josh Villeneuve: Yeah, and so that's kind of a good segue as well, because, you know, you guys mentioned, obviously, the CMOP location, you know, the CMOP contracts as well, can you kind of just give me a little bit more color on, you know, do you guys have any indication of how the VA is really moving along with these contracts? You know, kind of what your guys' confidence level is and the kind of recompeting for the CMOP contracts that you want to recompetition for? Yeah, I think so.

Joshua Zoepfel: Yeah, and so you know that's kind of a I could take away as well because you know you have mentioned obviously the CMOP contract as well. You know, can you kind of just give me a little bit more color? Is like, you know, do you guys have really any indication of like how the VA is moving along with these contracts? You know, kind of what you guys' confidence level and kind of recompeting for the those CMOP contracts that you want to recompete for. Yeah, I think a great question again, you know, we've kept the community abreast with the VA's engine for some time. And just for recap, you know, our current contracts ended in 2016, November of 2016, and since then, the VA has been having, you know, three or four attempts to try to get them awarded and, you know, the competition strategy or acquisition strategy and revising it again. And of course, we're at the current state which we shared with you where most of the viz that had been submitted was submitted as in the early part of 23, and of those eight viz, only one, the chunks for one, the smaller of all of them, has been awarded to date. We haven't said that is it is morphed, but every other year since then. And after, we want to give some color what the VA did in May time, Frank, maybe even spilled over into June, is they came up with a modification again that reopened the competition to do any new bitters. So, it's disabled veteran on small business. So, it's like a restart of all except jump-free.

Zach Parker: Yeah, I think, another great question. You know, we've kept the community abreast with the VA's attention for some time. And just for recap, you know, our current contracts ended in 2016, November of 2016. And since then, the VA has been having, you know, three or four attempts to try to get them awarded and, you know, competing and revising the competition strategy or acquisition strategy and revising it again. And of course, we're at the current state, which we shared with you, where most of the bids that had been submitted were submitted, as in the early part of 23.

Speaker Change: Yeah, I think, great question again, you know, we've kept the community abreast with the EA's attention for some time, and just for a recap, you know, our current contracts ended in 2016, November of 2016.

Zach Parker: And of those eight bids, only one, the Chelmsford one, the smaller of all of them, has been awarded to date. We, having said that, have morphed about every other year since then. And that's what we want to give some color. What the VA did in the May timeframe, maybe even spilled over into June, is they came out with a modification again that reopened the competition to any new bidder, service-disabled, veteran-owned small businesses. So it's like a restart of everything except jumps.

Zach Parker: Those proposals, none of those proposals have been submitted by any of the competitors yet. The best estimate is that by the end of August, maybe the first part of September, the government will have received all of those proposals. And we have panned as the government's modifications have panned with regard to our approach. And for those in which we are still engaged with a small business partner, we do have a good probability of success.

Speaker Change: as in the early part of 23.

Speaker Change: And of those eight bids, only one, the Chelmsford one, the smaller of all of them.

Speaker Change: has been awarded to date.

Speaker Change: I haven't said that, it has morphed about every other year since then.

Zach Parker: Those proposals; none of those proposals have been submitted by any of the competitors yet. The best estimate is that by the end of August, maybe the first part of September, the government will have received all of those proposals. We have pivoted as the government's modifications have pivoted with regards to our approach, and for those in which we are still engaged with a small business partner, we do have a good probability of win. But I do want to be clear that they have moved the nature of the work with their solicitations, with the most recent modifications, to clearly signaling what they're looking for is the equivalent of a temporary staffing company.

Speaker Change: Those proposals, none of those proposals have been submitted by any of the competitors yet. The best estimate is that by the end of end of August

Speaker Change: And for those in which we are still engaged with a small business partner, we do have a, you know, a good probability of win. But, yeah, but I do want to be clear that they have moved the nature of the work with their solicitations.

Zach Parker: But I do want to be clear that they have moved the nature of the work with their solicitations, with the most recent modifications to clearly signaling what they're looking for is the equivalent of a temporary staffing company, small, and, in this case, limited to SDVOSBs, where we have built the business both in terms of organically winning 17 of those contracts, as well as executing tremendous performance excellence up to and including J.D. Power Awards for the VA for 10 consecutive years.

Zach Parker: Right, small and in this case limiting to SDVLSBs, where we have built the business in both in terms of organically winning 17 of those contracts as well as executing tremendous performance excellence up to including JD Power awards for the VA for 10 consecutive years. It was one where their solicitation and their contracts had a focus on performance, not just staffing. And those performance metrics involved solutions and analytics involved Lean Six Sigma standards for quality, involved exacting standards for productivity, and we invested a lot to maintain that degree of service for the VA. In the last two years, they have the modifications as well as you've seen our discussions every quarter. They stop giving them even the one-year bridges, which says you can't invest a year's worth of tools, et cetera, and they continue to signal moving the work to where it was back in 2012.

Speaker Change: Right, small.

Speaker Change: and in this case limiting to SDVOSBs.

Zach Parker: It was when their solicitation and their contracts had us focus on performance, not just staffing. Those performance metrics involved solutions and analytics, Lean Six Sigma standards for quality, and exacting standards for productivity, and we invested a lot to maintain that degree of service for the VA. In the last two years, the modifications, as well as you see in our discussions every quarter, they stopped giving even the one-year bridges, right, which says you can't invest a year's worth of tools, et cetera, and they continue to signal moving the work to where it was prior to 2012, and that's kind of what we call the butts-in-seats contract.

Speaker Change: on performance, not just staffing.

Speaker Change: And those performance metrics involved solutions and analytics, involved Lean Six Sigma standards for quality, involved exacting standards for productivity, and we invested a lot.

Speaker Change: as well as you see in our discussions every quarter, they stopped giving even the one-year bridges.

Zach Parker: And that's kind of what we call the butts-in-search contract. So our appetite for the current versions that I'll just share with you is not the same, right? It doesn't allow you to differentiate. When you move to that kind of environment, it becomes almost a low-cost shootout. And so I won't go in any details because this is still competition sensitive. But that transition that the new contracting folks in the last couple of years at the VA have made makes it a different type of acquisition. So we'll leave it at that, but obviously we're not excited about that.

Zach Parker: So our appetite for the current versions that I'll just share with you is not the same, right? It doesn't allow you to differentiate between them. When you move to that kind of environment, it becomes almost a low-cost shootout, and so I won't go into any details because this is still competition-sensitive, but that transition that the new contracting folks in the last couple of years at the VA have made makes it a different type of acquisition. So we'll leave it at that, but obviously, we're not excited about that, but we do have strong qualifications that we think differentiate us in particular areas and particular sites and locations, and we're leaning into those.

Speaker Change: But that transition that the new contracting folks in the last couple of years at the VA have made makes it...

Joshua Zoepfel: But we do have strong qualifications that we think differentiate us in particular areas, in particular sites and locations, and we're leaning into those. Yeah, thank you for the color on that.

Josh Villeneuve: Yeah, thank you for the color on that. And just kind of, you know, looking at your income statement, you know, what I'm kind of seeing is your gross margin was kind of down about 200 basis points from the last year and really just about 300 basis points sequentially. Can you guys kind of describe what's really kind of driving that decrease?

Kathryn JohnBull: And it's kind of looking at your income statement. What I'm kind of seeing is your gross margin was kind of down about 200 basis points from the last year and really just about 300 basis points sequentially. You know, can you guys kind of describe what's really kind of driving that decrease? Yeah, Josh. That's really a function of, as we mentioned, in this particular quarter, the contribution of lower margin pass-through costs was more significant than it was in the prior period. So those types of costs inherently generate tighter margins, and therefore it's going to deliver an aggregate lower gross margin.

Speaker Change: Yeah, thank you for the color on that.

Kathryn JohnBull: Yeah, Josh, that's really a function of, as we mentioned, in this particular quarter, the contribution of lower margin pass-through costs was more significant than it was in the prior period. So those types of... costs inherently generate tighter margins, and therefore, they're going to deliver an aggregate lower gross margin.

Speaker Change: Yeah, Josh, that's really a function of, as we mentioned, in this particular quarter the contribution of lower margin pass-through costs was more significant than it was in the prior period. So those types of things.

Joshua Zoepfel: Okay, great. Thank you guys so much for answering my question, so I'll hop back into Q.

Josh Villeneuve: Okay, great. Thank you guys so much for answering my questions. I'll hop back into queue.

Operator: Thank you for your time.

Josh Villeneuve: Okay, great. Thank you guys so much for answering my questions. I'll hop back into queue.

Brian Kinstlinger: Again, if you have a question, please press star, and then one. Our next question comes from Brian Kinstlinger with Alliance Global. Please go ahead. Good morning, thanks for taking my question. Hey, Brian. How are you?

Operator: Again, if you have a question, please press star and then 1. Our next question comes from Brian Kinstlinger with Alliance Global. Please go ahead.

Speaker Change: Thanks for joining us.

Speaker Change: Again, if you have a question, please press star and then 1. Our next question comes from Brian Kingstlinger with Alliance Global. Please go ahead.

Brian Kinstlinger: Hi, good morning. Thanks for taking my questions.

Zach Parker: Hey Brian, I'm Brian. How are you?

Brian Kinstlinger: How are you? When you look at the $100 million in quarterly revenue you just reported, can you quantify how much of that revenue is related to small business contracts?

Brian Kingstlinger: Hi, good morning. Thanks for taking my questions.

Kathryn JohnBull: When you look at the $100 million in quarterly revenue just reported, can you quantify how much of that revenue is related to small businesses' contract? Actually, the revenue reported for the quarter.

Speaker Change: When you look at the $100 million in quarterly revenue you just reported, can you quantify how much of that revenue is related to small business contracts?

Kathryn JohnBull: Let's see how the revenue is reported for the quarter. We'll probably need to come back to you to give you a specific number.

Speaker Change: Let's see, I have the revenue reported for the quarter.

Kathryn JohnBull: We'll probably need to come back to you to give you a specific number. Yeah, it's not a material park portion of the total $100 million to the point. Most of those items that we anticipated would convert, that is largely behind us, not completely, but largely.

Kathryn JohnBull: Yeah, it's not a material portion of the total $100 million, to the point that most of those items that we anticipated would convert are largely behind us. Not completely, but largely. Excluding CMOP.

Zach Parker: Excluding C-Mot. So, no, but two flavors of small business, the flavor that was inherently pinned up that we, an acquired company previously, won in as a small business. And, by the way, it's not the acquisition that caused them to be ineligible to recompete for that work. They had already outgrown the small business status prior to the acquisition. So, there's that layer. And then, as Ax said, there's of course things that are not presently small business like C-Mot that are moving to that kind of behavior, but that's a different layer. And I will tell you that we, the other added color on that one is we actually anticipated, as did the customer.

Brian Kingstlinger: Not completely, but largely.

Kathryn JohnBull: Two flavors of small business. The flavor that was inherently pent up that we, an acquired company previously, wanted as a small business. And by the way, it wasn't the acquisition that caused them to be ineligible to re-compete for that work. They had already outgrown the small business status prior to the acquisition.

Speaker Change: excluding Steve.

Speaker Change: Excluding CMOC. So, no, but the flavors of small business, the flavor that was inherently pent up that we, an acquired company, previously wanted as a small business and, by the way, it's not the acquisition that caused them to be ineligible to re-compete for that work. They had already outgrown the small business status prior to the acquisition. So there's that layer and then as Zach said, there's of course things that are not presently small business like CMOC that are moving to that kind of vehicle. That's a different layer. And I would tell you that we, Jocelyn, the other added color on that one is we actually anticipated, as did

Kathryn JohnBull: So there's that layer, and then, as Zach said, there are, of course, things that are not presently small businesses, like CMOP, that are moving to that kind of vehicle. That's a different layer.

Zach Parker: That several of these would have been decided, probably two to three-quarters prior. Things have seemed to be the government. It seems to be pretty slow in getting some of these award decisions, much like on C-Mot. That kind of worked our favor in some regard. But in some cases, when we diligence to deal, some of these award decisions that were going to small business were slated for, you know, earlier in 2023, and they just started to hit this past quarter. So, good news, bad news, I guess, in that regard.

Speaker Change: the customer, that several of these would have been decided

Zach: You know probably two to three quarters prior Right things have seemed to be government seems to be pretty slow and getting some of these award decisions Much like on CMOP it kind of works to our favor

Brian Kingstlinger: in some regards, but in some cases, you know, when we diligence the deal, you know, some of these award decisions that were going small business.

Kathryn JohnBull: [inaudible] So good news, bad news, I guess, in that regard. To be clear, when you say insignificant, Kathryn, you're saying less than 5% of revenue. That's what I think of insignificant. Even smaller is actual small business contracts. That's a fair way to think about it.

Kathryn JohnBull: The other side of that coin would be clear. When you say insignificant, Catherine, you're saying less than five percent of revenue; that's what I can do with significant, even small, small business contracts. That's a fair way to think about it.

Brian Kingstlinger: When you say insignificant, Kathryn, you're saying less than 5% of revenue. That's what I think of insignificant, even smaller, is actual small business contracts. That's a fair way to think about it.

Brian Kinstlinger: The second part of the question, I guess, would be, how much of that $100 million of revenue is contracts where you expect today they're full and open to move to small business, even including CMOP?

Brian Kinstlinger: Okay.

Zach Parker: The second part of the question, I guess, would be how much of that $100 million of revenue are a contract where you expect today they're full and open to move to small business, even including C-Mot. Well, there's still, you know, those things that are in our current book of business. I think you're referring to, you know, I'd say there's some risk dealing that book, right, book of business, right, in a couple of areas, largely attributed to two things. Number one is accelerate across the industry, right. All of our folks are seeing, in January of this year, the White House and OMB issued a directive to all federal agencies to go through the, quote unquote, remove two process for a number of these IDIQ upward contracts and consider setting aside some of that work for small businesses.

Speaker Change: Okay, the second part of the question I guess would be how much of that hundred million dollars of revenue are Contracts where you expect today, they're full and open to move to small business even including CMOC

Zach Parker: Well, there's still, you know, those things that are in our current book of business, I think you're referring to, you know, I'd say there's, there's some risk still in that book, right book of business, right in a couple of areas, largely attributed, not largely attributed to two things. Number one is accelerate across the industry right all of our folks are seeing in January of this year The white the White House and OMB issued a directive to all federal agencies to to go through the quote-unquote rule of two process for a number of these IDIQ multiple award contracts and And consider setting aside Some of that work for small businesses, Now, while there are no enabling regulations that have been issued by and introduced into the federal regulations, some agencies take it as guidance, particularly since OMB did not provide the usual exclusion language that agency contracting officers can use.

Speaker Change: Well there's still, you know, those things that are in our current book of business I think you're referring to, you know, I'd say there's there's some risk still in that book, right, book of business, right, in a couple of areas. Largely attributed, largely attributed to two things.

Brian Kingstlinger: number one is accelerate across the industry right all of our folks are seeing in January of this year the white the White House and OMB issued a directive to all federal agencies

Brian Kingstlinger: to go through the quote-unquote rule of two process for a number of these IDIQ multiple award contracts and and consider setting aside some of that work for small businesses.

Zach Parker: Now, while there are no enabling regulations that have been issued by and introduced into the federal regulations, some agencies take it as guidance, particularly since OMB did not provide the usual exclusion language that agency contracting officers can use. So we're seeing, we've seen some of that happen to some of our competitors over the last six months. We have not been hit by that yet, but we have been in close discussions with some of our customers that they're considering right. And so we do have some of that quantified. We've got that framed as some erosion risk force sometime in 2025.

Brian Kingstlinger: Now while there are no enabling regulations that have been issued by and introduced into the federal regulations

Zach Parker: So we've seen some of that happen to some of our competitors over the last six months. We have not been hit by that yet, but we have been in close discussions with some of our customers and they're considering it, right? And so we do have some of that quantified. We've got that framed as some erosion risk for us sometime in 2025. And of course, we're trying to work it out, you know, the good news is we're clearly still seeing indications that the government is going to be releasing some of these RFPs so that we can organically grow our way out of a little bit of that transition.

Speaker Change: We have not been hit by that yet, but we have been in close discussions with some of our customers.

Speaker Change: that they're considering it, right? And so we do have some of that quantified. We've got that framed as some erosion risk for us sometime in 2025.

Zach Parker: And of course, we're trying to work; you know, the good news is we're clearly still seeing indications that the government is going to be releasing some of these RFPs so that we can organically grow our way out of a little bit of that transition. We have, as we indicated, we have some things we have very high wind probabilities for. We'd like those to have been awarded by now, at least solicited by now, but we're hearing still good things and seeing good behaviors from the customers that those will should be coming in at a time to help us offset that small business erosion.

Speaker Change: we're going to be releasing some of these RFPs so we can organically grow our way out of a little bit of that transition. We have some things we have very high wind probabilities for. We'd like those to have been awarded by now or at least solicited by now.

Zach Parker: We have, as we indicated, we have some things we have very high wind probabilities for. We'd like those to have been awarded by now or at least solicited by now, but we're still hearing good things and seeing good behavior from the customers that those will, should.

Speaker Change: We're hearing still good things and seeing good behaviors from the customers that those should be coming in at a time to help us offset that small business erosion.

Brian Kinstlinger: So that is a great transition to my next question. You've highlighted some large pending adjudications that you believe could help drive this return to growth. I know it's not something you typically provide, but I think it would be helpful for investors if you could quantify the total proposals outstanding that are pending adjudication.

Brian Kinstlinger: So that is a great transition to my next question. You've highlighted some large pending adjudication that you believe could help drive this return to growth.

Zach Parker: I know it's not something typically you provide, but I think it would be helpful for investors if you could quantify total proposes outstanding that are pending adjudication. Yeah, we periodically do provide our pipeline and some metrics around that. So we'll make sure we do get that to you shortly. In short, again, tell you, though, that we have north of two dozen opportunities that could materially affect the strong growth by mid FY25, and with good anticipated organic wind probability, it should help us exit 25 in just outstanding position relative to the erosion, small business anticipate. Some of those, I will say that as Catherine, I diligence that quite a bit.

Speaker Change: I know it's not something typically you provide, but I think it would be helpful for investors if you could quantify total proposals outstanding that are pending adjudication.

Zach Parker: Yeah, we periodically do provide our pipeline and some metrics around that, so we'll make sure we get that to you shortly. In short, I can tell you though that we have north of two dozen opportunities that could materially affect the strong growth by mid FY25, and with good anticipated organic wind probability, it should help us exit FY25 in just an outstanding position relative to the erosion, small business erosion, including sea modeling that we anticipate.

Speaker Change: Yeah, we periodically do provide our pipeline and some metrics around that so we'll make sure we do get that to you shortly. In short, I can tell you though that we have

Speaker Change: north of two dozen opportunities that could materially affect

Speaker Change: The strong growth by mid FY25.

Speaker Change: And with good anticipated organic wind probability, it should help us exit 25 in just outstanding position relative to the erosion, small business erosion, including sea modeling.

Zach Parker: Some of those, I will say that as Kathryn and I diligence that quite a bit, you know, there's a mix of work that is in our digital transformation cybersecurity arena that is typically a lot higher margin basis than some of the work in our systems engineering logistics. That mix will have an effect, depending upon which ones come out first, they'll have an effect on either dilution or expansion of our gross margins in those contracts, and of course ultimately impacting our EBITDA, so we're monitoring that pretty closely just because we're now capable of bidding much larger contracts that are north of 100 million over five years, and with the high-tech quals, and we'd like to see those come out, you know, similar to a similar timeline as some of the lower margin work, but still very strategic.

Speaker Change: That we anticipate.

Zach Parker: You know, there's a mix of work that is in our digital transformation, cyber security arena that is typically a lot higher margin basis than some of the work in our systems, systems engineering logistics. That mix will have an effect depending upon which ones come out first. They'll have an effect on either delusion or expansion of our gross margins in those contracts. And, of course, ultimately impacting our EBITDA. So we're monitoring that pretty closely just because we're now capable of bidding much larger contracts that are north of a hundred million over five years. And with the high tech calls, we'd like to see those come out, you know, similar to similar timeline as some of the lower margin work, but still very strategic.

Kathryn: Some of those, I will say that, as Kathryn and I diligence that quite a bit, you know, there's a mix of work that is in our digital transformation and cybersecurity arena that is typically a lot higher margin basis.

Kathryn: There's some of the work in our systems engineering and logistics. That mix will have an effect, depending upon which ones come out first, it will have an effect on either dilution or expansion of our gross margins in those contracts and of course ultimately impacting our EBITDA. So we're monitoring that pretty closely just because.

Kathryn: We're now capable of bidding much larger contracts that are north of $100 million over five years.

Speaker Change: and with the high-tech claws.

Speaker Change: And we'd like to see those come out, you know, similar to similar time timeline as some of the lower margin work, but still very strategic. So we'll keep you posted on that. We'll give you that color.

Zach Parker: So we'll keep you posted on that; we'll give you that color pretty soon with regard to our pipeline, but some of those again, like I said, we'll try to add more color than just the numbers and kind of give you an idea of what is in our DTC, our digital transformation, and in the higher health research and technology arena.

Zach Parker: So we'll keep you posted on that. We'll give you that color pretty soon with regard to our pipeline. But some of those, again, like I said, we'll try to add more color than just the numbers and kind of give you an idea of that which is in our DTC, a digital transformation in the higher health research and technology arena.

Speaker Change: Pretty soon with regard to our pipeline But but some of those again, like I said we'll try to add more color than just the numbers and kind of give you an idea of that which is in our DTC a digital transformation and not in the higher health

Brian Kinstlinger: Last question I've got, it's following up on a question I asked last quarter. Can you talk about the progress you're making on increasing your proposal submission hedging? This seems more important than ever, obviously given the roll-offs you're experiencing.

Zach Parker: Last question I've got. It's following up by a question I asked last quarter. Can you talk about the progress you're making and increasing your proposal submission engine? It seems more important than ever, obviously, given the role of your experiencing? Yeah, that's probably the area I'm most excited about. I'll tell you, we have, I think, you know, we have briefed the community, certainly the shareholders. About a year or so ago, they were making some major changes, major improvements. And to elevating both our ability to go after large contracts and to be do so with high wind probability.

Speaker Change: Research and Technology Arena.

Speaker Change: Last question I've got, it's followed by a question I asked last quarter. Can you talk about the progress you're making on increasing your proposal submission hedging? This seems more important than ever obviously given the roll-offs you're experiencing.

Zach Parker: Yeah, that's probably the area I'm most excited about, my friend. I'll tell you, we have, I think, you know, we have briefed the community, certainly the shareholders, about a year or so ago, that we're making some major changes, major improvements to enhance both our ability to go after large contracts and to do so with a high win probability. There were several key factors to this process, which we kind of walked through, I think it was in our shareholder call, but our ability to drive, you know, winning value propositions and technology solutions has increased substantially, which is needed.

Speaker Change: Yeah, that's probably the area I'm most excited about, my friend. I'll tell you, we have, I think, you know, we have briefed the community, certainly the shareholders.

Speaker Change: About a year or so ago, they were making some major changes, major improvements into elevating both our ability to go after.

Zach Parker: There were several key factors to this process, which we kind of walked through. I think it's in a shareholder call, but our ability to derive, you know, winning value propositions and technology solutions has elevated substantially, which it needed. As you may recall, we're generally operating with entities that were in that. You know, $60, $70 million, $80 million range as an operating unit. And, you know, according, we're looking at, you know, we generally smaller deals. But we've augmented them now. We've kind of revamped our full approach to the business development, expanding it now with the capabilities that we now have in hand.

Speaker Change: large contracts and to do so with high wind probability.

Speaker Change: There were several key factors to this process, which we kind of walked through, I think, in our shareholder call. But our ability to drive, you know, winning value propositions and technology solutions.

Zach Parker: As you may recall, we're generally operating with entities that were in the, you know, 60, 70 million dollar, 80 million dollar range as an operating unit, and, you know, quarterly we're looking at, you know, generally smaller deals, but we've augmented them now. We've kind of revamped our full approach to business development, expanding it now with the capabilities that we now have in hand. You've probably seen some press releases around some of the caliber of expertise that we've brought in with regard to cybersecurity, data analytics, data fusion, and AIML.

Speaker Change: has elevated substantially, which is needed, as you may recall. We're generally operating with entities that were in that.

Speaker Change: You know, 60, 70 million dollar, 80 million dollar range as an operating unit.

Speaker Change: And quarterly we're looking at generally smaller deals. But we've augmented them now, we've kind of revamped our full approach to the business development, expanding it now with the capabilities that we now have in hand. You've probably seen some press releases around some of the caliber of expertise that we've brought in with regard to cybersecurity, data analytics, data fusion, AI, ML. These are sort of tools that while we had performance capability and were able to execute with the customers, we didn't really have that on the bench. It didn't exist with any of the acquisitions, and it strongly now complements.

Zach Parker: You've probably seen some press releases around some of the caliber expertise that we've brought in with regard to cyber security, data analytics, data fusion, EIML. These are sort of tools that, while we had performance capability and we have to execute with the customer, we didn't really have that on the bench. It didn't exist with any of the acquisitions. And it strongly now complements the more strategic shaping assets that we had along. So, the number of these bids before didn't have the value of our strategic advisory capabilities. And we have seen substantial improvement in our process for positioning and building the type of intimacy needed to have a real, real strong win rate.

Zach Parker: These are sort of tools that, while we had performance capability and we're able to execute with the customer, we didn't really have that on the bench. It didn't exist with any of the acquisitions, and it strongly complements the more strategic shaping assets that we had along. So a number of these bids before didn't have the value of our strategic advisory capabilities, and we have seen substantial improvement in our process for positioning and building the type of intimacy needed to have a real, really strong win rate.

Speaker Change: the more strategic shaping assets that we had along. So a number of these bids before didn't have the value.

Speaker Change: of our strategic advisory capabilities and we have seen substantial improvement.

Zach Parker: So we're really optimistic about that. You know, we've got teams that are as good as, if not better than, most of the organizations in our industry just because we've come from most of those organizations. So we're really excited about the elevation of both the aperture in terms of now we're going after things that our teams were not going after. So we think the size is great, but our positioning to elevate our win probabilities and our value propositions, we've got a lot more committed there as well. So I'm really excited about what's to come on the organic growth front.

Speaker Change: in our process for positioning and building the type of intimacy needed to have a real, real strong win rate. So we're real optimistic about that.

Zach Parker: So, we're real optimistic about that. You know, we've got teams that are as good as, if not better than most of the organizations in our industry, just because we've come from most of those organizations. So, we're really excited about the elevation of both the aperture in terms of now we're going after things that our teams were not going after. So, we think the size is great, but our positioning to elevate our win probabilities and our value propositions, we've got a lot more committed there as well.

Speaker Change: We've got teams that are as good as, if not better than, most of the organizations in our industry.

Speaker Change: Just because we've come from most of those organizations. So we're really excited about

Speaker Change: The Elevation of both the Aperture in terms of now we're going after things that

Speaker Change: Our teams we're not going after, so we think the size is great.

Speaker Change: But our positioning to elevate our wind probabilities and our value propositions, we've got a lot more committed there as well. So really excited about what's to come on the organic growth front.

Zach Parker: So, really excited about what's to come on the organic growth front. Great. Thanks so much. You bet.

Brian Kinstlinger: Great, thanks so much.

Operator: It appears there are no further questions in the queue.

Operator: It appears there are no further questions in the queue. This concludes our question and answer session. I would like to turn the conference back over to Mr. Parker for any closing remarks.

Speaker Change: Great, thanks so much. You bet.

Zach Parker: This concludes our question and answer session. I would like to turn the conference back over to Mr. Parker for any closing remarks. Well, I'd like to thank you all again for your participation and your continued interest in the very provident conversation. We're, you know, I think it's really important to really make sure that we set the expectations around what we see in the coming quarters. And at the same time, we really, really want to lean into looking at the longer trajectory from, you know, from a forecasting perspective. And we're really optimistic that, despite the small business set aside impacts to some of our work, that is, you know, becoming less differentiating.

Speaker Change: It appears there are no further questions in the queue. This concludes our question and answer session. I would like to turn the conference back over to Mr. Parker for any closing remarks.

Zach Parker: Well, I'd like to thank you all again for your participation and your continued interest in this very probative conversation. We're, you know, I think it's really important to really set the expectations around what we see in the coming quarters and, at the same time, we really, really want to lean into looking at the longer trajectory from a forecasting perspective, and we're really optimistic that despite the small business set-aside impacts to some of our work that is, you know, becoming less differentiating, we're tremendously excited about the quality of So thank you again, and we'll continue to keep you posted. I think the next time we get together, of course, we'll be at or around the election time period and...

Mr. Parker: I'd like to thank you all again for your participation, your continued interest in the very probative conversation. We're, you know, I think it's really important to really make sure that we set the expectations around what we see in the coming quarters and at the same time

Mr. Parker: We really, really want to lean into looking at the longer trajectory from a forecasting perspective.

Speaker Change: And we're really optimistic that despite the small business set-aside impacts to some of our work that is becoming less differentiating, we're tremendously excited about the quality of the new business pipeline and our ability to prosecute it.

Zach Parker: Right. We're tremendously excited about the quality of the new business pipeline and our ability to prosecute it. So we'll come out of this upcoming period much stronger as we go forward. So thank you again, and we'll continue to keep you posted.

Speaker Change: So we'll come out of this upcoming period much stronger as we go forward. So thank you again, and we'll continue to keep you posted. I think the next time we get together, of course...

Zach Parker: I think the next time we get together, of course, we'll be at or around the election time period. And we'll give a little more color around, you know, that as we approach Q4 and Q1. So thank you all, and have a blessed day.

Operator: Bye for now.

Operator: The conference has now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect.

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