2013-03-06 23:04:08 -
DLH addresses continuing uncertainty in Washington
Atlanta, Georgia - March 6, 2013 - DLH Holdings Corp. (NASDAQ: DLHC), a leading
healthcare and logistics services provider to the Federal Government, including
the Departments of Defense and Veterans Affairs, issued a statement today by
Zach Parker, Chief Executive Officer, regarding the impact of sequestration.
DLH President and Chief Executive Officer, Zach Parker, commented: On March
1, 2013, as expected, the Federal Government budget "Sequestration" mechanism
went into effect. As the fiscal posture of the government significantly impacts
our long-term strategy and near-term tactics, our leadership team, since the
implementation of the Budget Control Act of 2011, has closely tracked the pulse
of the Sequestration deliberations and plans. In the recent months we have met
with house and senate representatives and staffers, military and
civilian
leaders, and principals of trade associations such as the Professional Services
Council in Washington DC. It is our management team's view that a keen
awareness of the flow of funding is essential to effectively navigating our
company to continued progress and success in this industry, particularly during
periods of greater uncertainty regarding the Federal Government's budgetary
priorities.
Recently, we have received numerous inquiries regarding the impact of the
"Sequestration" upon our company. While I addressed this topic during our
recent investor call, the following provides added context to our previous
assessment. Please note that the Company does not publically give "guidance" or
any form of financial forecasts and investors and other interested parties are
referred to our Safe Harbor Statement, below.
Mr. Parker added, "The combination of Sequestration and the current Continuing
Resolution creates a paralysis for many government program managers and
contracting officials as their budgets experience a substantial reduction. This
is compounded by the Sequestration taking effect two-thirds into the
government's second fiscal quarter. Consequently, the Department of Defense
impacted agencies will see an estimated 13% reduction (OMB estimate). While a
substantial portion of DLH's targeted growth lies within DoD budget accounts,
less than 5% of its current revenue is derived from impacted DoD accounts. More
importantly, the Department of Veterans Affairs funds the largest number of
DLH's current contracts. Programs administered by the Department of Veterans
Affairs are exempt from the Sequestration funding reductions that are estimated
to be 9% for non-defense programs for the remainder of the fiscal year.
Fortunately, as we have been anticipating this government budget evolution,
presently, we see only "measured" impacts to our business throughout FY2013 due
to the impact of Sequestration. While many others in the industry are re-
forecasting to indicate modest reductions in revenue year-over-year, we believe
that is not the case for DLH. The timing of the implementation of our Project
L.E.A.N. is also a plus for DLH in weathering the storms of the federal budget
battles as we continue our progress on re-aligning our operating costs with our
steady-state revenue.
However, despite the limited impact that we expect Sequestration will have on
our current revenue, the pace at which we will be able to execute our long-term
strategy to leverage our core competencies within the DoD will have to be
adjusted. This is also impacted by the lingering uncertainty as to how the
government will address the March 27, 2013 expiration of the continuing
resolution through which it has been funded since October 2012. We will continue
to closely track the near-term actions by the house and senate as well as the
prioritizations of the Defense Department for potential impact, and we will
provide updates during our quarterly reporting and any ad hoc communications as
appropriate.
About DLH
DLH Holdings Corp. (Nasdaq: DLHC) serves clients throughout the United States as
a full-service provider of healthcare, logistics, and technical support services
to the Department of Veteran Affairs, DoD and Federal agencies.
For more information about DLH, visit the corporate website at
www.dlhcorp.com.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
This press release may contain forward-looking statements. These statements
relate to future events or DLH`s future financial performance. Any statements
that are not statements of historical fact (including without limitation
statements to the effect that the Company or its management "believes",
"expects", "anticipates", "plans" (and similar expressions)
should be considered
forward looking statements. There are a number of important factors that could
cause DLH`s actual results to differ materially from those indicated by the
forward looking statements. Such risks and uncertainties include, among other
things our ability to secure contract awards, including the ability to secure
renewals of contracts under which we currently provide services; our ability to
enter into contracts with United States Government facilities and agencies on
terms attractive to us and to secure orders related to those contracts; changes
in the timing of orders for and our placement of professionals and
administrative staff; the effect of existing or future government legislation
and regulation; changes in government and customer priorities and requirements
(including changes in funding to respond to the priorities of Congress and the
Administration, budgetary constraints, and cost-cutting initiatives, such as the
implementation of spending cuts (sequestration) under the Budget Control Act of
2011); economic, business and political conditions domestically (including the
impact of uncertainty regarding U.S. debt limits and actions taken related
thereto); the overall level of demand for the services we provide; the variation
in pricing of the contracts under which we place professionals; government
contract procurement (such as bid protest, small business set asides, loss of
work due to organizational conflicts of interest, etc.) and termination risks;
the results of government audits and reviews; our ability to manage growth
effectively; the performance of our management information and communication
systems; the impact of medical malpractice and other claims asserted against us;
the disruption or adverse impact to our business as a result of a terrorist
attack; the loss of key officers, and management personnel; the competitive
environment for our services; the effect of recognition by us of an impairment
to goodwill and intangible assets; other tax and regulatory issues and
developments; the effect of adjustments by us to accruals for self-insured
retentions; our ability to obtain any needed financing; and the effect of other
events and important factors disclosed previously and from time-to-time in our
filings with the U.S. Securities Exchange Commission. 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, 2012. Given these risks and
uncertainties, you are cautioned not to place undue reliance on forward-looking
statements. DLH undertakes no obligation to publicly update or revise any
forward-looking statement as a result of new information, future events, changes
in expectation or otherwise, except as required by law.
CONTACTS:
Zachary C. Parker, President and Chief Executive Officer
Kathryn M. JohnBull, Chief Financial Officer
DLH
1776 Peachtree Street, NW
Atlanta, GA 30309
866-952-1647
Christy N. Buechler, Marketing & Communications Manager (Media)
DLH
678-935-1531
christy.buechler@dlhcorp.com
(Investor Relations)
Donald C. Weinberger/Adam Lowensteiner
Wolfe Axelrod Weinberger Associates, LLC
212-370-4500
don@wolfeaxelrod.com
adam@wolfeaxelrod.com
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Source: DLH Holdings Corp. via Thomson Reuters ONE
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