DLH : Second Quarter FY2024 Earnings Presentation

FY2024 Second Quarter Earnings

Three Months Ended 3.31.24

May 2, 2024

Call Participants

Zach Parker

President and Chief Executive Officer

Kathryn JohnBull

Chief Financial Officer

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Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or DLH`s future financial performance. Any statements that refer to expectations, projections or other characterizations of future events or circumstances or that are not statements of historical fact (including without limitation statements to the effect that the Company or its management "believes", "expects", "anticipates", "plans", "intends" and similar expressions) should be considered forward looking statements that involve risks and uncertainties which could cause actual events or DLH's actual results to differ materially from those indicated by the forward-looking statements. Forward-looking statements in this release include, among others, statements regarding estimates of future revenues, operating income, earnings and cash flow. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Our actual results may differ materially from such forward-looking statements made in this release due to a variety of factors, including: including the measures to reduce its spread, and its impact on the economy and demand for our services, are uncertain, cannot be predicted, and may precipitate or exacerbate other risks and uncertainties; the diversion of management's attention from normal daily operations of the business and the challenges of managing larger and more widespread; the inability to retain employees and customers; contract awards in connection with re-competes for present business and/or competition for new business; our ability to manage our increased debt obligations; compliance with bank financial and other covenants; changes in client budgetary priorities; government contract procurement (such as bid and award protests, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the impact of inflation and higher interest rates; and other risks described in our SEC filings. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward looking statements, see "Risk Factors" in the Company's periodic reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as well as subsequent reports filed thereafter. The forward-looking statements contained herein are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and business.

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Q2 Financial Highlights

Revenue		EBITDA

$101.0M

$10.2M

Cash from Operations

$5.2M

Debt Balance

$170.8M

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Updates

• Contract awards bolster technology footprint at NIH
• • DLH to continue and expand user-experience, technology refresh, and IT services for NCI, NIDA
  • Awards include provisions for additional funding in optional IT services customer may choose to exercise
• Strong contract bookings yielded backlog of $736.2 million as of March 31
• Awarded a sole-source ID/IQ contract to continue CMOP operations for the VA with a ceiling value of $200 million
• "Minibus" full-year appropriations package signed into law in March
• • Funds government agencies through remainder of fiscal 2024

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Financials

Kathryn JohnBull, Chief Financial Officer

Key Financial Results ($ in millions)

Revenue

EBITDA

Cash from Operations

	$99.4	$101.0
				+1.6%
	FY23Q2			FY24Q2

	$10.5	$10.2
				-2.8%
	FY23Q2			FY24Q2

	•
	$10.3
	+100.0%
	+49.3%
$6.9	•
	•
FY23 YTD	FY24 YTD

Revenue growth principally due to expansion on public health and enterprise information technology

+100.0%

management projects, offset in part by

national security program small business conversion headwinds

Fiscal 2024 Q2 EBITDA impacted by legal fees associated with-procurement36.3% process and strategic enterprise planning costs

Significant cash generation through optimizing cash collections resulting in DSO of 50 days FY24 YTD, a decrease of 11 days from the comparable period in fiscal 2023

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Quarterly Debt Paydown ($ in millions)

Q2 voluntary prepayments of $3.6M, all applied to floating rate debt

$207.6
	+100.0%		+100.0%		•+100Mandatory.0%	payments satisfied+100through.0%
					end of calendar 2024
	$179.4				• Continuing to utilize voluntary
		$174.4		Expected FY24
			$170.8	year-end debt	prepayments to reduce future cash
				balance	interest and achieve debt leverage ratio
				$ 153.0 - $157.0	below 3.5x by the end of fiscal 2024
At Dec. 2022	9/30/2023	12/31/2023	3/31/2024	9/30/2024
Acquistion

	Debt balance		Expected debt balance

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Questions?

Thank you!

Appendix