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- **Revenue Decline**: Q4 2025 revenue down 16% YoY to $81.2M due to government contract transitions, but FY2025 free cash flow of $23M supported $23M debt reduction.
- **Debt Strength**: Total debt reduced to $131.6M, with all mandatory term debt payments completed a year early.
- **AI Investment**: AI tool Cyclone positioned for growth, with several clients expressing interest in transitioning to the platform.
- **Pipeline Growth**: $3B+ pipeline for FY2026+, with focus on defense and cybersecurity opportunities.
- **Margin Outlook**: Expect EBITDA margins to return to historical levels (~10%) as new contracts offset lower-margin VA work.

**【CEO Opening Remarks】**
- Acknowledged challenges from government contract transitions (e.g., Head Start, CMOP) but emphasized strategic focus on high-margin, technology-driven solutions.
- Highlighted achievements: CMMC Level 2 certification, AI/ML tool Cyclone for data analytics, and VA IDIQ contract extension.
- Reported $10.7M debt reduction in Q4, bringing total debt to $131.6M, with all mandatory term debt payments completed a year ahead of schedule.
- Expressed optimism for FY2026, citing a $3B+ pipeline and opportunities in cybersecurity, digital transformation, and defense.

**【CFO Financial Commentary】**
- Q4 2025 revenue: $81.2M (down 16% YoY) due to contract transitions; full-year revenue: $344.5M.
- EBITDA: $6.6M (Q4) and $34M (FY2025), with free cash flow of $23M.
- Emphasized cash flow generation and balance sheet strength, enabling debt reduction and pursuit of growth opportunities.
- Noted FY2026 debt reduction target of 50-55% of EBITDA.

**【Q&A Highlights】**
- **Contract Transitions**: No protests filed for Head Start; 3 remaining CMOP locations transitioning to small businesses, with potential subcontracting opportunities.
- **Margins**: Expect EBITDA margins to return to historical levels (~10%) as new contracts (e.g., defense, cybersecurity) offset lower-margin VA work.
- **Pipeline**: $3B+ pipeline for FY2026+, with focus on high-value solutions like Cyclone and digital transformation projects.
- **Customer Mix**: Shifting from federal healthcare to defense (e.g., Department of War) for higher-margin work.


DLH Holdings Corp.(DLHC)-20251211-2025 Q4 Earnings call transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

DLHC

DLHC fundamentals

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