Q2 Highlights:
Revenue change both year-over-year and sequentially, from the first quarter of fiscal 2026, primarily reflects the transition of legacy programs to small-business set-aside contractors
Adjusted EBITDA of $5.3 million, or 9.0% of revenue, with the Company's cost scaling initiatives sustaining adjusted EBITDA margin on the current revenue volume
Free cash flow of $3.8 million, with cash generation expected to accelerate in the second half of fiscal 2026
Debt was reduced to $132.7 million, from $136.6 million at the end of the first quarter, with greater reductions expected before the end of fiscal 2026
Awarded a two-year sole source extension of the Company's contract to provide clinical research support services to NIH
Management Discussion:"Fiscal 2026 is a transition year for DLH, with the previously disclosed conversion of legacy contracts to small businesses continuing and expected to be complete in our third quarter. We have proactively right-sized our cost structure to align with the Technology Powered Solutions business base, successfully protecting our margins." said Zach Parker, DLH President and Chief Executive Officer. "With a leaner operating model and improving demand from our government customers, we are positioned to capture the digital modernization, cybersecurity and AI opportunities aligned with our core capabilities. We remain focused on profitable growth and free cash flow generation to reduce debt and expand our current portfolio of solutions and services."
Operating Financial Summary
Three Months Ended
March 31,
$ million
2026
2025
% Change
Revenue
$59.3
$89.2
(33.5)%
Income (loss) from operations
$(0.1)
$5.1
(102.0)%
Adjusted Income from operations
$1.0
$5.1
(80.4)%
Net income (loss)
$(2.5)
$0.9
(377.8)%
Diluted Earnings (Loss) Per Share
$(0.17)
$0.06
(383.3)%
EBITDA
$4.2
$9.4
(55.3)%
Adjusted EBITDA
$5.3
$9.4
(43.6)%
EBITDA margin on Revenue
7.2%
10.5%
(31.4)%
Adjusted EBITDA margin on Revenue
9.0%
10.5%
(14.3)%
Cash provided by Operating Activities⁽¹⁾
$3.8
$14.5
(73.8)%
Free Cash Flow⁽¹⁾
$3.8
$14.5
(73.8)%
(1) Operating cash flow and free cash flow for the quarter are derived by subtracting from this quarter's year-to-date amount the year-to-date amount reported in the Company's prior Quarterly Report on Form 10-Q.
Additional Financial Metrics
March 31, 2026
September 30, 2025
% Change
Debt
$132.7
$131.6
0.8%
Backlog
$442.4
$514.3
(14.0)%
Earnings Call & Webcast:
DLH management will discuss second 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, May 7, 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 #6965160.
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 a world-class workforce 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 RelationsChris Witty(646) 438-9385[email protected]
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995This 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 benefits of acquisitions, estimates of future revenues, operating income, earnings, earnings per share, backlog, and cash flows. 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 failure to achieve the anticipated benefits of any future acquisition (including anticipated future financial operating performance and results); 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; significant delays or reductions in appropriations for our programs and broader changes in U.S. government funding and spending patterns; legislation that amends or changes discretionary spending levels or budget priorities; legal, regulatory, and political changes from the federal government that could result in economic uncertainty; 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 interim quarterly filings 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.
DLH HOLDINGS CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(unaudited, in thousands, except per share amounts)
Three Months Ended
Six Months Ended
March 31,
March 31,
2026
2025
2026
2025
Revenue
$
59,265
$
89,212
$
128,158
$
179,994
Cost of operations:
Contract costs
47,490
71,594
102,885
144,365
General and administrative costs
7,530
8,238
15,291
16,305
Depreciation and amortization
4,300
4,265
8,600
8,572
Total operating costs
59,320
84,097
126,776
169,242
Income (loss) from operations
(55
)
5,115
1,382
10,752
Interest expense, net
3,139
3,877
6,535
8,010
Income (loss) before provision for income taxes
(3,194
)
1,238
(5,153
)
2,742
Provision for income taxes (benefit)
(659
)
360
(1,294
)
750
Net income (loss)
$
(2,535
)
$
878
$
(3,859
)
$
1,992
Net income (loss) per share
Basic
$
(0.17
)
$
0.06
$
(0.27
)
$
0.14
Diluted
$
(0.17
)
$
0.06
$
(0.27
)
$
0.14
Weighted average common stock outstanding
Basic
14,493
14,386
14,493
14,386
