DLH Reports Fiscal 2026 First Quarter Results

ATLANTA, Feb. 09, 2026 (GLOBE NEWSWIRE) -- DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the “Company”), a leading provider of digital transformation and cybersecurity, systems engineering and integration, and science research and development, today announced financial results for its fiscal first quarter ended December 31, 2025. Q1 Highlights: Revenue variance from prior year period reflects the transition of certain programs to small-business set-aside contractorsAdjusted EBITDA of $6.5 million, or 9.5% of revenue, benefitting from the Company's initiatives to reduce costs and streamline operationsOperating cash usage of $4.8 million, reflecting normal first quarter patterns and working capital use; an improvement of almost $7 million year-over-yearDebt rose modestly due to short-term working capital needs; Company remains on track for further delevering during fiscal 2026 Management Discussion: “The first quarter of fiscal 2026 demonstrated our resilience and disciplined commitment to managing profitability and cash flow through a period of transition," said Zach Parker, DLH President and Chief Executive Officer. "As previously communicated, our revenue results reflect the anticipated transition of legacy programs to small business contractors. In recognition of our revenue volumes, we have rightsized our cost structure during the first and second quarters. The impact of the first quarter cost scaling initiatives is reflected in Adjusted EBITDA. At the completion of these actions, we believe we will have aligned expense with revenue volumes, restored margins to a competitive level and protected strategic investments that fuel organic growth. Additionally, we remain focused on delevering our balance sheet. While debt grew this quarter in line with first quarter trends, going forward we expect to deploy operating cash flow toward reducing debt levels to enhance our long-term financial flexibility and shareholder value." Operating Financial Summary Three Months Ended December 31,$ million2025 2024 % ChangeRevenue$68.9 $90.8 (24.1)%Income from operations$1.4 $5.6 (75.0)%Net (loss) income$(1.3) $1.1 (218.2)%Diluted Earnings Per Share$(0.09) $0.08 (212.5)%EBITDA$5.7 $9.9 (42.4)%Adjusted EBITDA$6.5 $9.9 (34.3)%EBITDA margin on Revenue8.3% 11.0% (24.5)%Adjusted EBITDA margin on Revenue9.5% 11.0% (13.6)%Cash provided by Operating Activities$(4.8) $(11.5) (58.3)%Free Cash Flow$(4.8) $(12.1) (60.3)% Additional Financial Metrics December 31, 2025 September 30, 2025 % ChangeDebt$136.6 $131.6 3.8%Backlog$517.4 $514.3 0.6%  Earnings Call & Webcast: DLH management will discuss first quarter results and provide a general business update, including current competitive conditions and strategies, during a conference call beginning at 10:00 AM Eastern Time tomorrow, February 10, 2026. Interested parties may listen to the conference call by dialing 888-347-5290 or 412-317-5256. Presentation materials will also be posted on the Investor Relations section of the DLH website prior to the commencement of the conference call. A digital recording of the conference call will be available for replay two hours after the completion of the call and can be accessed on the DLH Investor Relations website or by dialing 855-669-9685 and entering the conference ID #1284372. About DLH: DLH (NASDAQ: DLHC) enhances technology, public health, and cyber security readiness missions through science, technology, cyber, and engineering solutions and services. Our experts solve some of the most complex and critical missions faced by federal customers, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more. With over 1,700 employees dedicated to the idea that “Your Mission is Our Passion,” DLH brings a unique combination of government sector experience, proven methodology, and unwavering commitment to innovative solutions to improve the lives of millions. For more information, visit www.DLHcorp.com. Contact Information: Investor Relations Chris Witty (646) 438-9385 [email protected] 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: the risk that we will not realize the anticipated benefits of acquisitions (including anticipated future financial performance and results); the diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations; 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 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, 2025 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. Such forward-looking statements are made as of the date hereof and may become outdated over time. The Company does not assume any responsibility for updating forward-looking statements, except as may be required by law. DLH HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share amounts) Three Months Ended December 31, 2025 2024 Revenue$68,892 $90,782 Cost of operations: Contract costs 55,395 72,771 General and administrative costs 7,761 8,067 Depreciation and amortization 4,300 4,307 Total operating costs 67,456 85,145 Income from operations 1,436 5,637 Interest expenses 3,396 4,133 (Loss) income before provision for income taxes (1,960) 1,504 Provision for income taxes (benefit) expense (636) 389 Net (loss) income$(1,324) $1,115 Net (loss) income per share Basic$(0.09) $0.08 Diluted$(0.09) $0.08 Weighted average common stock outstanding Basic 14,493 14,386 Diluted 14,563 14,563 DLH HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except par value of shares) December 31, 2025 September 30, 2025 (unaudited) ASSETS Current assets: Cash$257 $125 Accounts receivable 35,842 38,394 Other current assets 3,543 4,018 Total current assets 39,642 42,537 Goodwill 138,161 138,161 Intangible assets, net 87,752 91,865 Operating lease right-of-use assets 8,264 8,764 Deferred income taxes, net 8,447 7,947 Equipment and improvements, net 1,127 1,274 Other long-term assets 115 115 Total assets$283,508 $290,663 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities$14,250 $19,246 Accrued payroll 5,996 12,153 Debt obligations - current, net of deferred financing costs 17,425 8,067 Operating lease liabilities - current 3,129 2,918 Other current liabilities 226 287 Total current liabilities 41,026 42,671 Long-term liabilities: Debt obligations - long-term, net of deferred financing costs 116,050 119,966 Operating lease liabilities - long-term 13,199 14,022 Other long-term liabilities 1,045 1,046 Total long-term liabilities 130,294 135,034 Total liabilities 171,320 177,705 Shareholders' equity: Common stock, $0.001 par value; 40,000 shares authorized; 14,493 and 14,493 shares issued and outstanding at December 31, 2025 and September 30, 2025, respectively 14 14 Additional paid-in capital 102,288 101,734 Retained earnings 9,886 11,210 Total shareholders’ equity 112,188 112,958 Total liabilities and shareholders' equity$283,508 $290,663 DLH HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (Amounts in thousands) Three Months Ended December 31, 2025 2024Operating activities Net (loss) income$(1,324) $1,115 Adjustments to reconcile net (loss) income to net cash used in operating activities: Depreciation and amortization 4,300 4,307 Amortization of deferred financing costs charged to interest expense 433 457 Stock-based compensation expense 647 193 Deferred income taxes, net (501) 780 Changes in operating assets and liabilities: Accounts receivable 2,552 (14,421)Other assets 974 (661)Accounts payable and accrued liabilities (4,996) (6,567)Accrued payroll (6,157) 2,275 Other liabilities (698) 984 Net cash used in operating activities (4,770) (11,538)Investing activities Purchase of equipment and improvements (39) (552)Net cash used in investing activities (39) (552)Financing activities Proceeds from revolving line of credit 67,396 59,910 Repayment of revolving line of credit (62,362) (47,509)Payments of deferred financing costs — (202)Payment of tax obligations resulting from net exercise of stock options (93) — Net cash provided by financing activities 4,941 12,199 Net change in cash 132 109 Cash - beginning of period 125 342 Cash - end of period$257 $451 Supplemental disclosure of cash flow information Cash paid during the period for interest$3,003 $3,594 Cash paid during the period for income taxes$— $32 Supplemental disclosure of non-cash activity Common stock surrendered for the exercise of stock options (93) $— Lease liability recognized to acquire a right-of-use asset$— 1,377  Non-GAAP Financial Measures The Company uses EBITDA, Adjusted EBITDA, EBITDA as a percent of revenue, and Adjusted EBITDA as a percent of revenue as supplemental non-GAAP measures of performance. The Company uses Free Cash Flow as a supplemental non-GAAP liquidity measure. We define the measures as following: EBITDA and Adjusted EBITDA represent net (loss) income excluding depreciation and amortization, interest expense, and provision for income taxes; Adjusted EBITDA further excludes costs associated with scaling general and administrative expenses to revenue volume. EBITDA and Adjusted EBITDA as a percent of revenue are calculated by dividing EBITDA or Adjusted EBITDA, respectively, for the measurement period by revenue for the same period. Free cash flow is net cash provided by operating activities less the impact of purchases of equipment and improvements. EBITDA, Adjusted EBITDA, EBITDA as a percent of revenue, and Adjusted EBITDA as a percent of revenue are non-GAAP measures of performance and are used by management to conduct and evaluate its business during its review of operating results for the periods presented. Free Cash Flow, a non-GAAP liquidity measure, is used by management to assess our ability to generate cash from our business operations and plan for future operating and capital actions. Management and the Company's Board utilize these non-GAAP measures 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 these non-GAAP measures are 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. EBITDA, Adjusted EBITDA, EBITDA as a percent of revenue, Adjusted EBITDA as a percent of revenue, and free cash flow are not recognized measurements under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance and liquidity investors should (i) evaluate adjustments in our reconciliation to the nearest GAAP financial measures and (ii) use non-GAAP measures in addition to, and not as an alternative to, measures of our operating results, as defined under GAAP. Reconciliation of GAAP net income to EBITDA and Adjusted EBITDA (in thousands): Three Months Ended December 31, 2025 2024 ChangeEBITDA and Adjusted EBITDA Net (loss) income$(1,324) $1,115 $(2,439)Depreciation and amortization 4,300 4,307 (7)Interest expense, net 3,396 4,133 (737)Provision for income taxes (benefit) expense (636) 389 (1,025)EBITDA$5,736 $9,944 $(4,208)Cost scaling initiatives 808 — 808 Adjusted EBITDA$6,544 $9,944 $(3,400)Net (loss) income as a % of revenue(1.9)% 1.2% EBITDA as a % of revenue 8.3% 11.0% Adjusted EBITDA as a % of revenue 9.5% 11.0% Revenue$68,892 $90,782  Reconciliation of Free Cash Flow (in thousands): Three Months Ended December 31, 2025 2024 Change Net cash (used in) provided by operating activities$(4,770) $(11,539) $6,769 Less: Purchases of equipment and improvements (39) (552) 513 Free Cash Flow$(4,809) $(12,091) $7,282