ATLANTA - DLH Holdings Corp . (NASDAQ: NASDAQ:DLHC), a Russell 2000 company specializing in digital transformation and cyber security solutions for federal health IT and readiness agencies, has reported a significant reduction in total debt for the fiscal year ended September 30, 2024. The company announced a decrease in debt from $179.4 million the previous year to $154.6 million, marking a reduction of $24.8 million, with $11.9 million paid down in the fourth quarter alone.
DLH's Chief Financial Officer, Kathryn JohnBull, stated the company is pleased with its debt position and intends to continue leveraging its operating cash flow to further strengthen the balance sheet. The company has fulfilled all mandatory amortization payments for the fiscal year 2025 through voluntary prepayments.
In addition to its debt reduction efforts, DLH successfully negotiated an amendment to its syndicated credit agreement. This amendment includes changes to the financial covenants, such as adjustments to the Total (EPA:TTEF) Leverage Ratio and the Fixed Charge Coverage Ratio, designed to offer the company more flexibility. DLH also reduced the maximum borrowing capacity of its revolving loan from $70 million to $50 million, aligning it more closely with operational needs. The terms of maturity and pricing of the credit facility remain unaltered.
Zach Parker, DLH President & CEO, expressed confidence in the company's growth potential and appreciation for the support of its bank group as it enters fiscal 2025. The amendment is expected to help DLH navigate the transition of a portion of its business to set-aside, small business contractors, particularly in relation to the Department of Veterans Affairs' Consolidated Mail Outpatient Pharmacy program.
The financial information presented is preliminary and subject to final year-end closing adjustments. The audit of DLH's 2024 financial statements is not yet complete, and the company plans to release its full audited financial results on December 5, 2024.
DLH emphasizes its commitment to enhancing technology, public health, and cyber security readiness through its solutions and services, with over 2,800 employees dedicated to supporting federal missions.
This news is based on a press release statement from DLH Holdings Corp. and has not been independently verified. The forward-looking statements in the press release involve risks and uncertainties that could impact actual results.
InvestingPro Insights
DLH Holdings Corp.'s (NASDAQ: DLHC) recent financial maneuvers align with several key metrics and insights from InvestingPro. The company's focus on debt reduction and financial flexibility is particularly noteworthy when considering its current market position.
According to InvestingPro data, DLH Holdings has a market capitalization of $123.11 million USD, reflecting its position as a smaller player in the federal health IT and readiness sector. The company's revenue for the last twelve months as of Q3 2024 stood at $401.04 million USD, with a robust revenue growth of 17.39% over the same period. This growth trajectory supports the company's ability to continue its debt reduction strategy.
An InvestingPro Tip highlights that DLH Holdings' net income is expected to grow this year, which aligns with the company's positive outlook and its ability to manage debt while maintaining growth. Additionally, the stock's valuation implies a strong free cash flow yield, suggesting that the company's focus on leveraging operating cash flow to strengthen its balance sheet is a prudent strategy.
It's worth noting that while DLH Holdings does not pay a dividend to shareholders, it has demonstrated a strong return over the last five years. This performance, coupled with the recent debt reduction, indicates a focus on long-term value creation for shareholders.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for DLH Holdings, providing a deeper understanding of the company's financial health and market position.
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