Good day, ladies and gentlemen, and welcome to the Third Quarter 2014 DLH Holdings Corporation Earnings Conference Call. My name is Estaban, and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session (Operator Instructions) I would now like to turn the conference over to your host for today, Michael Goldstein Counsel to DLH Holdings

Thank you, Estaban and good morning everyone, and thank you for joining us for today's conference call. I am Michael Goldstein, Partner with Becker & Poliakoff, LLP, Counsel to DLH Holdings Corp. On the call with me today is Zach Parker, the President and Chief Executive Officer of DLH and Kathryn JohnBull, the Chief Financial Officer of DLH. Earlier today, the company posted its earnings release which outlines the topics that management intends to discuss today. Should you have missed that release, it can be found on the investor page of DLH's corporate website at www.dlhcorp.com. As part of today's call, we have provided a slideshow presentation which can be accessed on the DLH website. Go to the Investor Relations tab towards the right side of the page and click on Presentations under the dropdown menu. We are also providing a simultaneous webcast of today's call with the replay that will be available later today, on our website. Please note this conference call may contain forward-looking statements as defined by the Federal Securities laws. Statements in this call regarding DLH Holding Corp's business, which are not historical facts, are forward-looking statements that involve risks and uncertainties. While these statements reflect DLH's current views and outlook, they are subject to factors that could cause its future results to differ materially. These results -- these risks and uncertainties are discussed in detail in our documents filed with the SEC, specifically the most recent reports on Form 10-Q and Form 10-K. On today's call, we will be referencing to both GAAP and non-GAAP financial results. A reconciliation of our non-GAAP results to our reported GAAP results is included in our earnings release and in the investor presentation on DLH's website. All comparison throughout this call will be on year-over-year basis unless stated otherwise and with that said, it is now my pleasure to turn the call over to Zach Parker, the President and Chief Executive Officer of DLH, Zach.

Very good and thank you Michael. Good morning and welcome to our shareholders and other interested parties. We appreciate your participation in this conference call and webcast. As Michael indicated, earlier today we posted our third quarter fiscal 2014 financial results. Our performance improved across the board, with increases in revenue, gross margin, net income and adjusted EBITDA. Revenues of $15.7 million were a record high since our business transformation that began in 2010 growing 16.6% over prior year third quarter. Gross margin grew 16.9% consistent with our strategic plans and adjusted EBITDA increased 63.6% over prior year third quarter as we continue to demonstrate operating efficiencies. Over the recent nine months, we have delivered a $2.3 million improvement in working capital resulting in a working capital surplus position for the company as we complete the quarter. This was accomplished with over $1 million in cash generated from profitable operations. We continue our proud tradition of strong performance and value delivery to our customers and their beneficiaries. For example, for the fourth consecutive year, the Department of Veterans Affairs our principal client and the consolidated mail out patient pharmacy program received the highest customer satisfaction score among the nation's public and private mail order pharmacies as determined by the J.D. Power customer satisfaction and quality award program. DLH is the principal support contractor providing onsite program management, pharmaceutical quality assurance in medical logistics services for this program. In summary, DLH continues to leverage the excellent program performance and it's much improved balance sheet to deliver the growth and greater value to our shareholders. Kathryn will now provide a more detailed discussion of our financial results, Kathryn.

Thank you, Zach, and good morning everyone. We are very pleased with our earnings and financial position we are reporting to you today. Turning first to results for the third quarter ended June 30th versus prior year third quarter, revenues increased $2.2 million or 16.6% over prior year with the increase due primarily to new business awarded in late 2013 and year-to-date in 2014, as well as expansion on current programs. Gross margin increased by approximately $0.3 million or 16.9%. As a percentage of revenue, our gross margin rate of 14.7% was even with prior year third quarter, benefitting from increased contract performance offset in part by increased workers compensation cost. We continue to implement internal measures to control cost and improved margins. G&A expenses which include general, administrative and business development activities increased $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. On a non-GAAP basis, which excludes stock compensation expense, G&A expenses decreased 0.6% over prior year third quarter, as we continued to improve processes to reduce use of outside services and controlled structural spending in the administrative functions. Our net income for third quarter was approximately $0.25 million or $0.03 per basic and diluted share, an improvement of approximately $0.18 million over the prior year period or $0.02 per basic and diluted share. This improvement is due principally to increased gross profit. Adjusted EBITDA which represents earnings from operations with non-cash items such as stock expense and depreciation added back in is a key measurement that our management team and directors use to evaluate cash contribution attributable to our business operations. Adjusted EBITDA for third quarter 2014 was approximately $0.37 million, an…

Thank you, Kathryn. Just a few comments regarding the current market and potential expansion, with regard to market expansion we believe that our new business pipeline remains strong. On our presentation you can see some of the metrics which we have offered that kind of gives some color to that. With regard to our addressable market, we believe it is very adequately funded in the years ahead. We continue to see strong partners (ph) support for improving the healthcare to U.S. veterans and the Veterans Access, Choice and Accountability Act of 2014 which was passed by both sides of the Congress last week. As you know the Department of Veteran Affairs or the VA is our largest client. Passage of this bill follows the President's March 2014 proposed $163.9 billion budget for the VA 2015 fiscal year. This is to support VA's goal to expand access to healthcare and other benefits, eliminate the disability claims backlog, and to aim homeless veterans in homelessness amongst the veterans. The $68.4 billion discretionary portion of the budget is $2 billion increase over 2014 in active levels. This request reflects a 35% increase in discretionary budget since 2009 and 3% increase over the current year, covering approximately 9.3 million veterans enrolled in the Vet VA Healthcare Program. Our concurrent and growing competencies in health and wellness, medical logistics, public health and pharmaceutical services will continue to service well in this business climate. We will invest heavily in new business capture in the strategic health market areas in order to deliver the growth and greater value to our shareholders. With that I would like to turn the call over to Estaban our operator to open the call for questions.

(Operator Instructions). Our first question comes from Howard Brous with Wunderlich Securities.

It's Howard Brous, but thank you. Kathryn, Zach congratulations on the quarter. Wallstreet always of course says thank you for what was but what are you going to do for me tomorrow. So, if you will let me ask the most important question for next year, in terms of what do you think you can achieve in gross margins, you know, I am not looking for earnings per share estimates but just GM, great job in changing it?

Sure and good question and certainly understand the nature of the question Howard and good to chat with you again my friend. We -- of course we do not give guidance but I can tell you that, as we talked about strategically before our re-focus on the healthcare and the system side of the healthcare market is what we expect to continue to drive our margins north. I can tell you that with the awards that we have had that we are of course bidding one in 2013 and we are executing this year, while it represents still a relatively small share of our business space, we are seeing relatively substantial increase in our margins that are happening through this. Those margins of our new business acquired this year are north of 20% which as you can tell relative to where we are today is heading us in the right direction. We are going to continue to focus on that type of business and those that we think would generate greater margin. We are focused and aligned that way and we are making new acquisitions and partnerships as we speak to drive us in that direction. So without of course giving any real specific number we are -- we are seeing evidence that the reshaped pipeline for new business will in fact deliver the type of margins that we think this business match.

So let me back in a different way, what kind of if you look, what type of margins would you look for on an ongoing basis just asking your question?

Well we want to continue to have the margin that are north of 20% which is of course somewhat consistent with where we are today but quite frankly there is some margins that are going to be competitively driven by the level of competitions at the time in which the awards are going to effect. And we will obviously be continually monitoring what that competitive landscape looks like. So it will be very difficult to predict in advance of the actual solicitations, but the nature of the work that we are focusing on is one that of course will deliver higher margins than we are delivering today.

All right, I tried but thank you Zach. I appreciate it. That's all I have.

Okay. We have no other questions in queue.

All right, well I would like to thank you again for participating in today's conference call. Should you have any additional questions please feel free to contact myself or Kathryn. We thank you for your interest and support and look forward to speaking with you again in the coming months as we report on our FY’14 final results. Thank you.

Ladies and gentleman that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.