2012-12-14 15:04:14 -
* Revenue grew 21% for the quarter and 17% for the full fiscal year versus
prior fiscal year periods
* Gross profit decreased 27% for the quarter and 5% for the full fiscal year
versus prior fiscal year periods
* Management initiative in FY2013 to achieve profitability
* Balance sheet and liquidity significantly improved
* Key company transformation milestones completed
* Management to conduct conference call/webcast on December 14, 2012 at 11:00
a.m. ET
Atlanta, Georgia - December 14, 2012 -DLH Holdings Corp. (NASDAQ: DLHC), a
leading healthcare and logistics services provider to the Federal Government,
including the Departments of Defense and Veterans Affairs, announced today
financial results for its fourth quarter and fiscal year ended September
30, 2012.
Financial Highlights
For the Three Months For the Year
Ended Ended
September 30, September 30,
---------------------- ----------------------
($ in thousands, except per share
amounts) 2012 2011 2012 2011
----------------------------------------- ---------------------- ----------------------
Operating revenues $ 12,461 $ 10,325 $ 49,193 $ 41,923
Gross profit $ 1,142 $ 1,559 $ 5,597 $ 5,898
Gross profit percentage 9.2% 15.1% 11.4%
14.1%
Loss from operations (752) (3,592) (2,151)
(4,223)
Loss from continuing operations (354) (3,660) (2,026)
(4,590)
Gain/(Loss) from discontinued operation - - -
270
Net Income/(Loss) $ (354) $ (3,660) $ (2,026) $ (4,320)
EPS (Loss) from continuing operations -
basic $ (0.04) $ (0.62) $ (0.29) $ (0.84)
EPS (Loss) from discontinued operation -
basic $ - $ - $ - $ 0.05
Loss earnings per share -
basic and diluted $ (0.04) $ (0.62) $ (0.29) $
(0.79)
Other Data
Adjusted EBITDA ((1)) $ (676) $ (644) $ (1,678) $ (1,083)
Commenting on the Company's results, President and Chief Executive Officer of
DLH, Mr. Zachary Parker stated: "During FY12, DLH completed several key
milestones which required an initial expenditure of capital but will provide
benefit in the coming fiscal year. These included the recruitment of our new
Chief Financial Officer, Kathryn JohnBull, as well as severance paid to the
exiting CFO; program management training provided to leadership across the
organization; and the final phase of an implementation of an Enterprise Resource
Planning (ERP) system that was recently approved by the DCAA for award of cost
reimbursable contracts."
Mr. Parker added, "Market conditions in FY12 were quite challenging as the
nation's slow economic recovery and continued defense order delays impacted our
revenue growth and profitability. However, I am extremely pleased with the way
our people managed the business through these periods of uncertainty. Despite
these obstacles, we were still able to generate increased revenues for the full
fiscal year and fourth fiscal quarter, as compared to last year."
The Company closed fiscal 2012 with a backlog of firm orders at $153 million, as
well as a strong qualified pipeline of opportunities for potential revenue
growth in the future. DLH believes that its primary markets of healthcare and
logistics will be relatively protected during the current federal government
budget negotiations, particularly given the strong bipartisan commitment to
funding its primary current customer, the Department of Veterans Affairs. While
the Company expects continued growth in 2013, the challenges in the defense
business will remain, including the potentially dramatic cuts to U.S. defense
spending that may go into effect in January.
Looking forward to fiscal 2013, Mr. Parker expressed: "Our executive team has
now sharpened our focus on delivering profitability and shareholder value
consistent with our strategic plan. We will continue to take the necessary
actions to manage our business efficiently in these dynamic market conditions."
Chief Financial Officer, Kathryn JohnBull added, "In fiscal 2012, we
strengthened our balance sheet and improved liquidity through the completion of
our rights offering, expansion of our credit facility, and satisfaction of the
guarantees related to the notes payable. In fiscal 2013, our primary focus is on
delivering profitability on our current business base, through effective
contract performance and cost control. Although there are numerous risk factors
facing us, as described below, we currently expect gross margins in fiscal 2013
to be more consistent with historical levels, as new contracts from fiscal 2012
mature and we drive further efficiencies. Additionally, we intend to manage our
operations to derive further cost savings in our G&A functions. Based on our
actions underway in fiscal 2013, we believe we are well positioned to drive
profitable growth in the future."
Results for Three Months Ended September 30, 2012
Revenue for the three months ended September 30, 2012 increased 21% to $12.5
million compared to $10.3 million in the same period in fiscal 2011. Gross
profit decreased from $1.6 million to $1.1 million in fiscal 2011 and 2012,
respectively, due to competitive pressures on gross margins overall and to
additional health and welfare benefits accrued during the three months ended
September 30, 2012.
Total G&A costs for the three months ended September 30, 2012, excluding a $2.6
million impairment charge taken in 2011, decreased 27% to $1.9 million, compared
to $2.6 million in the same period in fiscal 2011.
Loss from operations for the three months ended September 30, 2012 improved to
$0.8 million compared to $3.6 million in the same period in fiscal 2011, due to
the one-time nature of the impairment charge in 2011 and to reduced year over
year G&A expenses, offset by the impact of softening gross margins.
Loss from continuing operations and net loss was $0.4 million in the three
months ended September 30, 2012, an improvement of $3.3 million over the
comparable period in fiscal 2011, due to the same factors impacting loss from
operations, plus a gain recognized in fiscal 2012 related to satisfaction of the
guarantees related to notes payable.
Adjusted EBITDA for the three months ended September 30, 2012 and 2011 decreased
to ($0.7) million from ($0.6) million, respectively, due to the same factors
impacting loss from operations, adjusted for the impairment charge.
Results for Fiscal Year Ended September 30, 2012
Revenue for fiscal year ended September 30, 2012 increased 17% to $49.2 million
compared to $41.9 million in fiscal 2011. Gross profit for fiscal 2012 was $5.6
million, compared to $5.9 million for fiscal 2011. While gross profit benefited
from the additional volume of revenue, the average unit price of hours delivered
decreased year over year, reflecting the competitive marketplace.
Total G&A costs for the fiscal year ended September 30, 2012, excluding a $2.6
million impairment charge taken in 2011, increased 3% to $7.7 million from $7.5
million in fiscal 2011, due principally to the previously mentioned CFO
transition expenses.
Loss from operations for fiscal 2012 improved to $2.2 million compared to $4.2
million in fiscal 2011, due to the one-time nature of the impairment charge in
2011, offset by the impact of softening gross margins.
Loss from continuing operations and net loss was $2.0 million in fiscal 2012, an
improvement of $2.6 million and $2.3 million in loss from continuing operations
and net loss, respectively, in fiscal 2011 due to the same factors impacting
loss from operations, plus a gain from satisfaction of guarantees related to
notes payable in fiscal 2012 and a gain from discontinued operations in fiscal
2011.
Adjusted EBITDA for the fiscal year ended September 30, 2012 was ($1.7) million
and for fiscal 2011 was ($1.1) million, with the decrease due to the same
factors impacting loss from operations, adjusted for the impairment charge in
fiscal 2011.
Conference Call and Webcast Details
DLH's management team will host a conference call for the investment community
on Friday, December 14, 2012 at 11:00 AM ET. Interested parties may participate
in the call by dialing (800) 237-9752; international callers dial (617)
847-8706 (passcode: 17636760) about 5 - 10 minutes prior to 11:00 AM EDT. The
conference call will also be available on replay starting at 1:00 PM ET on
December 14, 2012 and ending on December 21, 2012. For the replay, please dial
(888) 286-8010 (passcode: 97601044). The access number for the replay for
international callers is (617) 801-6888 (passcode: 97601044).
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 DoD and Federal agencies. For more information, visit the corporate web site
at www.dlhcorp.com.
Reconciliation of Adjusted EBITDA (a non-GAAP financial measure) to net loss
from continuing operations
1. We present Adjusted EBITDA as a supplemental non-GAAP measure of our
performance. We define Adjusted EBITDA as net loss from continuing
operations plus (i) interest and other income/expenses, net, (ii) provision
for or benefit from income taxes, if any, (iii) depreciation and
amortization, (iv) G&A expenses - equity grants, and (v) impairment charges.
This non-GAAP measure of our performance is used by management to conduct
and evaluate its business during its regular review of operating results for
the periods presented. Management and the Company's Board utilize this non-
GAAP measure to make decisions about the use of the Company's resources,
analyze performance between periods, develop internal projections and
measure management performance. We believe that this non-GAAP measure is
useful to investors in evaluating the Company's ongoing operating and
financial results and understanding how such results compare with the
Company's historical performance. By providing this non-GAAP measure, as a
supplement to GAAP information, we believe we are enhancing investors'
understanding of our business and our results of operations. This non-GAAP
financial measure is limited in its usefulness and should be considered in
addition to, and not in lieu of, US GAAP financial measures. Further, this
non-GAAP measure may be unique to the Company, as it may be different from
the definition of non-GAAP measures used by other companies. A
reconciliation of Adjusted EBITDA with net loss from continuing operations
is as follows:
For the Three Months For the Year
Ended Ended
September 30, September 30,
---------------------- --------------------
2012 2011 2012 2011
---------------------- --------------------
Net loss from continuing operations $ (354) $ (3,660) $ (2,026) $ (4,590)
(i) Interest and other expenses (398) 68 (125) 367
(net)
(ii) provision for taxes - - - -
(iii) amortization and depreciation 33 26 121 113
(iv) G&A expenses -equity grants 43 339 352 444
(v) impairment charges - 2,583 - 2,583
---------------------- --------------------
Adjusted EBITDA $ (676) $ (644) $ (1,678) $ (1,083)
---------------------- --------------------
"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 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 effect of existing or future government legislation
and regulation; changes in government and customer priorities and requirements
(including changes to respond to the priorities of Congress and the
Administration, budgetary constraints, and cost-cutting initiatives); economic,
business and political conditions domestically (including the impact of
uncertainty regarding U.S. debt limits and actions taken related thereto); 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.
TABLES TO FOLLOW
DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For the Three Months Ended
September 30, September 30,
2012 2011
--------------- --------------
REVENUES $ 12,461 $ 10,325
DIRECT EXPENSES 11,319 8,766
--------------- --------------
GROSS PROFIT 1,142 1,559
GENERAL AND ADMINISTRATIVE EXPENSES 1,830 2,542
SEVERANCE 31 -
IMPAIRMENT CHARGE - INTANGIBLE ASSETS - 2,583
DEPRECIATION AND AMORTIZATION 33 26
--------------- --------------
Loss from operations (752) (3,592)
--------------- --------------
OTHER INCOME (EXPENSE)
Interest income - 1
Interest expense (52) (73)
Amortization of deferred financing costs (52) (42)
Change in fair value of financial
instruments 3 107
Loss on retirement of assets - (45)
Settlement of notes payable 486 -
Other income, net 13 2
Legal expense related to pre-acquisition
activity of acquired company - (18)
--------------- --------------
398 (68)
--------------- --------------
Loss from continuing operations before
income taxes (354) (3,660)
INCOME TAX EXPENSE - -
--------------- --------------
Loss from continuing operations (354) (3,660)
GAIN FROM DISCONTINUED OPERATION - -
--------------- --------------
NET LOSS $ (354) $ (3,660)
--------------- --------------
NET GAIN (LOSS) PER SHARE - BASIC AND DILUTED
Loss from continuing operations $ (0.04) $ (0.62)
Gain from discontinued operation - -
--------------- --------------
--------------- --------------
Net loss per share $ (0.04) $ (0.62)
--------------- --------------
WEIGHTED AVERAGE BASIC AND DILUTED SHARES
OUTSTANDING 9,306 5,921
--------------- --------------
DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For the Year Ended
September 30, September 30,
2012 2011
--------------- --------------
REVENUES $ 49,193 $ 41,923
DIRECT EXPENSES 43,596 36,025
--------------- --------------
GROSS PROFIT 5,597 5,898
GENERAL AND ADMINISTRATIVE EXPENSES 7,361 7,425
SEVERANCE 267 -
IMPAIRMENT CHARGE - INTANGIBLE ASSETS - 2,583
DEPRECIATION AND AMORTIZATION 120 113
--------------- --------------
Loss from operations (2,151) (4,223)
--------------- --------------
OTHER INCOME (EXPENSE)
Interest income 13 8
Interest expense (298) (291)
Amortization of deferred financing costs (195) (56)
Change in fair value of financial
instruments 105 107
Loss on retirement of assets (2) (45)
Settlement of notes payable 486 -
Other income, net 16 6
Legal expense related to pre-acquisition
activity of
acquired company - (96)
--------------- --------------
125 (367)
--------------- --------------
Loss from continuing operations before
income taxes (2,026) (4,590)
INCOME TAX EXPENSE - -
--------------- --------------
Loss from continuing operations (2,026) (4,590)
GAIN FROM DISCONTINUED OPERATION - 270
--------------- --------------
NET LOSS $ (2,026) $ (4,320)
--------------- --------------
NET GAIN (LOSS) PER SHARE - BASIC AND DILUTED
Loss from continuing operations $ (0.29) $ (0.84)
Gain from discontinued operation - 0.05
--------------- --------------
--------------- --------------
Net loss per share $ (0.29) $ (0.79)
--------------- --------------
WEIGHTED AVERAGE BASIC AND DILUTED SHARES
OUTSTANDING 7,026 5,460
--------------- --------------
DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
September 30, September 30,
ASSETS 2012 2011
--------------- --------------
CURRENT ASSETS:
Cash and cash equivalents $ 3,089 $ 763
Accounts receivable, net of allowance
for doubtful accounts
of $0 as of September 30, 2012 and September
30, 2011 13,028 11,112
Prepaid workers' compensation 516 513
Other current assets 133 184
Total current assets 16,766 12,572
--------------- --------------
EQUIPMENT AND IMPROVEMENTS:
Furniture and equipment 139 177
Computer equipment 126 102
Computer software 408 260
Leasehold improvements 24 21
--------------- --------------
697 560
Less accumulated depreciation and amortization (429) (346)
--------------- --------------
Equipment and improvements, net 268 214
--------------- --------------
GOODWILL 8,595 8,595
OTHER ASSETS
Deferred financing costs, net 9 26
Other assets 784 510
--------------- --------------
Total other assets 793 536
--------------- --------------
TOTAL ASSETS $ 26,422 $ 21,917
--------------- --------------
DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT PAR VALUE OF SHARES)
September 30, September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2012 2011
--------------- --------------
CURRENT LIABILITIES:
Bank loan payable $ 2,363 $ 740
Notes payable - 711
Current portion of capital lease obligations 51 8
Accrued payroll 10,555 10,318
Accounts payable 2,296 1,983
Accrued expenses and other current liabilities 2,817 2,134
Liabilities from discontinued operation 185 235
--------------- --------------
Total current liabilities 18,267 16,129
--------------- --------------
LONG TERM LIABILITIES
Convertible debenture, net 202 46
Derivative financial instruments, at fair
value 119 182
Other long term liability 84 6
--------------- --------------
Total long term liabilities 405 234
--------------- --------------
Total liabilities 18,672 16,363
--------------- --------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.10 par value; authorized
5,000 shares;
none issued and outstanding - -
Common stock, $.001 par value;
authorized 40,000 shares;
issued 9,266 at September 30, 2012 and 6,023
at
September 30, 2011, outstanding 9,264 at
September 30, 2012 and 6,021 at September
30, 2011 9 6
Additional paid-in capital 75,207 70,988
Accumulated deficit (67,442) (65,416)
Treasury stock, 2 shares at cost at September
30, 2012 and
2 shares at September 30, 2011 (24) (24)
--------------- --------------
Total shareholders' equity 7,750 5,554
--------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 26,422 $ 21,917
--------------- --------------
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
404-985-8818
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
[HUG#1664913]
