DLH (DLHC) investor relations material

Executive summary

• Leadership transitioned to Kathryn JohnBull as President & CEO and Steve Oroho as CFO, focusing on disciplined execution, organic growth, and employee development.

• Revenue for the third quarter was $44.2 million, down 46.9%–53% year-over-year, primarily due to legacy program and VA contract transitions to small business contractors.

• Cost-scaling and indirect cost reduction initiatives were completed to align the cost structure with lower revenue volumes.

• The business is now focused exclusively on technology-powered solutions, with a strategic emphasis on organic growth and expanding addressable markets.

• Awarded a significant IDIQ contract with the U.S. Navy, expanding growth channels and customer base.

Financial highlights

• Third quarter revenue was $44.2 million, with technology-powered solutions contributing $38 million.

• Adjusted EBITDA was $3.4 million (7.6%–7.7% of revenue), down from $8.1 million (9.7%) year-over-year.

• Net loss for the quarter was $16.8 million, compared to net income of $0.3 million in the prior year.

• Free cash flow for the quarter was $4.2 million, primarily used for debt reduction.

• Debt at quarter-end was $128.7 million, down from $132.7 million sequentially.

Outlook and guidance

• Fourth quarter revenue is expected to be at a similar level to the third quarter, generated entirely by technology-powered solutions.

• Adjusted EBITDA margins are anticipated to remain stable, with management expecting improved performance and further benefits from cost-scaling actions in fiscal 2027.

• The company is focused on organic growth, cost alignment, and continued deleveraging.