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DLH reports Q3 2014 results

Table 1 - Financial Highlights

                                           Three Months Ended             Nine Months Ended

                                              June 30,                     June 30,

($ in thousands, except per share amounts)     2014          2013            2014         2013

Revenues                                       $  15,692     $  13,460       $  44,914    $  39,462

Gross margin                                  $  2,308      $  1,975        $  6,619     $  5,535

Gross margin %                                 14.7      %   14.7      %     14.7      %  14.0      %

Income from operations                         $  268        $  158          $  559      $  74

Net income (loss)                              $  251        $  68           $  582       $  (169   )

Income (loss) per share - basic and diluted    $  0.03       $  0.01         $  0.06      $  (0.02  )

Other Data

Adjusted EBITDA (1)                           $  373        $  228          $  1,011     $  337

Management Discussion

"Our operating performance in the third quarter improved across the board compared to third quarter of 2013 with increases in revenue, gross margin, operating income and  adjusted EBITDA" according to DLH President and Chief Executive Officer Zach Parker.  "We continue to benefit from our strong position in the healthcare and pharmaceutical services business with organic growth while our new business is delivering higher margins consistent with our long-range strategy.  We will continue to leverage excellent program performance and our much improved balance sheet to deliver growth and greater value for our shareholders."

Results for Three Months Ended June 30, 2014

Revenues were $15.7 million, an increase of $2.2 million or 16.6% over prior year third quarter. The increase in revenue is due primarily to new business awarded in 2013 and 2014, as well as expansion on current programs.

Gross margin of $2.3 million increased by $0.3 million or 16.9% over prior year third quarter.  As a percentage of revenue, our gross margin rate of 14.7% was even with prior year third quarter.  The gross margin benefited from improved contract performance, offset in part by increased workers compensation costs.  We continue to implement internal measures to control costs and improve margin.  

G&A expenses were $2.0 million, an increase of $0.2 million over prior year third quarter, due principally to expenses related to growing our contract base.  As a percent of revenue, G&A expenses were favorably reduced by (0.5%) over prior year third quarter as we continue to promote lean practices and control structural spending. 

Income from operations was approximately $0.27 million, an increase of approximately $0.11 million over prior year third quarter due to improved gross margin of $0.33 million offset by $0.22 million expenses as described above. 

Net income was approximately $0.25 million, or $0.03 per basic and diluted share, an improvement of approximately $0.18 million over the prior year third quarter, or $0.02 per basic and diluted share.  This improvement is due principally to increased gross margin as described in the preceding paragraphs.

Earnings Before Interest Tax Depreciation and Amortization ("EBITDA") adjusted for other non-cash charges ("Adjusted EBITDA"(1)) for third quarter ended June 30, 2014 was approximately $0.37 million, an increase of approximately $0.15 million, or 63.6%, over the prior year third quarter.  This increase is due principally to increased revenue and gross margin.

Results for Nine Months Ended June 30, 2014

Revenues for the nine months ended June 30, 2014 was $44.9 million, an increase of $5.5 million or 13.8% over prior year period. The increase in revenue is due primarily to new business awarded in 2013 and 2014, as well as expansion on current programs. 

Gross margin for the nine months ended June 30, 2014 was approximately $6.6 million, an increase of approximately $1.1 million or 19.6% over prior year nine month period. As a percentage of revenue, our gross margin rate of 14.7% for the nine months ended June 30, 2014, increased by 0.7% over the prior year period. The gross margin rate benefited from improved contract performance, offset in part by increased workers compensation costs.  We continue to implement internal measures to control costs and improve our margin.  

G&A expenses for the nine months ended June 30, 2014 were approximately $6.0 million, an increase of approximately of $0.6 million or 11.4% over prior year period.  The increase in expense was due principally to managing our increased business volume, increased spending on new business acquisition initiatives, and non-cash stock option expense during first quarter fiscal 2014. As a percentage of revenue, G&A expenses were favorably reduced by (0.3%) over the prior year period, as we continue to improve processes and control structural spending in administrative functions.   

Income from operations for the nine months ended June 30, 2014 was approximately $0.56 million, an increase of approximately $0.49 million over the prior year period.  The increase in income in fiscal 2014 was due to improved gross margin of approximately $1.08 million offset by $0.59 million expenses as described above. 

Net income for the nine months ended June 30, 2014 was approximately $0.58 million or $0.06 per basic and diluted share, an improvement of approximately $0.75 million over prior year period, or $0.08 per basic and diluted share.  This improvement is due principally to increased revenue and gross margin. 

Earnings Before Interest Tax Depreciation and Amortization ("EBITDA") adjusted for other non-cash charges ("Adjusted EBITDA"(1)) for the nine months ended June 30, 2014 was approximately $1.01 million, an increase of approximately $0.67 million, or 200%, over the prior year nine months period, due principally to increased revenue and gross profit as described above. 

Kathryn JohnBull, DLH Chief Financial Officer, remarked on the quarter's financial results: "Our third quarter results sustain our trend of improving our working capital position with strong revenue growth from additional contract wins and expansion of current contracts, though major new government contract awards continue to be delayed."

R

 

David Head
Director

RecruitmentInternational UK
44 (0) 1483 740874 or 07779 126695
2nd Floor, Lynton House, Station Approach, Woking, Surrey. GU22 7PY
www.recruitment-international.co.uk

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