Good day, and welcome to the DLH Holdings Fiscal 2025 Third Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Chris Witty, Investor Relations Advisory. Please go ahead, sir.

Thank you, and good morning, everyone. On the call with me today is Zach Parker, President and Chief Executive Officer; and Kathryn JohnBull, Chief Financial Officer. The company's earnings release and PowerPoint presentation are available on our website under the Investor page. I would now like to provide a brief safe harbor statement, which is also shown on Slide 3 of the presentation. This call may include forward-looking statements that relate to the company's outlook for fiscal 2025 and beyond. These statements are subject to various risks and uncertainties which could cause actual results and events to differ materially from such statements. Please refer to the risk factors contained in the company's annual report on Form 10-K and in our other filings with the SEC. We do not undertake any duty to update any forward-looking statements. On today's call, we will be referencing both GAAP and non-GAAP financial measures. 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. President and CEO, Zach Parker, will speak next followed by CFO, Kathryn JohnBull, after which we'll open it up for questions. With that, I'd now like to turn the call over to Zach. Please go ahead, Zach.

Thank you, Chris, and welcome, everyone. Welcome to our third quarter conference call, and I'm pleased to have the opportunity to report on our financial results and provide an update about the current environment and an outlook. First and foremost, I'd like to begin by thanking our stellar employees for their steadfast dedication to our customers' missions. It has been a tumultuous period as we entered fiscal '26 for technical companies, solution companies like us. Yet our employees continue to rise to the occasion, leading with innovative and productive projects and solutions supporting our customers with excellent results. Their performance is why I'm so confident about the future of DLH. Now if you'll turn to Slide 4, I'll provide an overview of our Q3 results. Starting with revenue. Our anticipated erosion from our previously discussed unbundling and small business set asides from the prior administration is continuing on plan. I'm also pleased with how effectively our team has managed through this period, and Kathryn will give some added color to that a little bit later. The new administration has added layers of funding review and approval cycles that have slowed our revenue stream, and this is from work from our existing contracts. That being compounded by the effect of both of those 2 features has tremendously stalled the flow of new business growth for DLH. This, of course, will be as reflective relative to prior quarters. Our pipeline conversion has been slowly -- had been impacted and slowed. RFP flow over the recent quarter too has been slowed. Our delivery of proposals and material proposals that's things like over $25 million and over $100 million, much lower than anticipated and the same for contract awards. However, having said that, I've had an opportunity along with some of my industry colleagues…

Thanks, Zach, and good morning, everyone. We're happy to have you join us for our third quarter results for fiscal 2025. Turning to Slide 7. I'd like to provide a high-level overview of some key financial metrics for the 3 months ended June 30, 2025. We reported revenue of $83.3 million in the third quarter versus $100.7 million in the prior year period. The change in revenue volume reflects contributions from recent contract awards offset by the expected conversion of certain VA and DoD programs to small business contractors, which accounts for decreases of $8.5 million and $3.2 million, respectively. Additionally, government efficiency initiatives narrowed the scope of some of our work, resulting in a $2.2 million decrease. As a reminder, we are under contract to manage 5 of the remaining CMOP locations through the end of October, while 1 location, Leavenworth, Kansas is expected to transition to a new contractor on August 31. This site represents approximately $10 million in annualized revenue. Award decisions for the remaining 5 sites could extend beyond our current period of performance as procurement strategies are shaped by the policies of the new administration. We reported EBITDA of $8.1 million for the third quarter versus $10 million last year, primarily due to the lower overall revenue. We have successfully navigated our key management priority of appropriately scaling operating costs to changes in business volume while preserving the resources necessary for growth. EBITDA as a percentage of revenue was 9.7% this year versus 10% in fiscal 2024. From a cash standpoint, we generated approximately $9.5 million of operating cash during the quarter, as Zach mentioned, due to increased collections of receivables and sound working capital management. We noted a reduction in days sales outstanding to 46 days from 52 days at the end of Q2. Year-to-date our operating cash flow was $12.5 million versus $14.9 million last year, and we again used Q3 cash generation to delever the company. As you can see on Slide 8, we reduced debt by $9.4 million during the quarter, ending the period with $142.3 million debt outstanding. At this point, we have made all mandatory term debt payments through June 30, 2026, a year ahead of schedule, and we remain on track to convert approximately 50% to 55% of EBITDA to pay down debt this fiscal year. Given our strong record of using cash flow to delever the company and strengthen the balance sheet, combined with the liquidity provided by our $50 million revolver, we continue to believe we have sufficient capital to pursue and support a busy pipeline of opportunities. We remain well ahead of our debt covenants supporting our positive outlook for the future. This concludes my discussion of the financial statements. With that, I would now like to turn the call over to our operator to open for questions.

[Operator Instructions] And the first question will come from Joe Gomes with NOBLE Capital.

Joe, I think you're breaking up.

Yes, you may have cut off just a bit.

It seems Mr. Gomes his line has disconnected. [Operator Instructions] Mr. Gomes, if you are listening, you can press it as well to rejoin. [Operator Instructions]

Operator, you indicated that he disconnected.

Yes.

Let's give him a moment.

All right. Let's proceed and perhaps he'll join us.

Yes, Ma'am. [Operator Instructions]

While we're waiting for Joe, let me add a little color to a couple of comments that we had in the opening presentation. One in particular is, of course, the continued evolution of our small set-aside business that was largely initiated during the previous -- during the Biden administration, most notably for us, of course, has been our VA support for the mail order pharmacy programs. That, as Kathryn indicated, continues to move down the small business set aside path. We've been working very closely with the customer to affect smooth transitions. It has been a little bit slower than we had anticipated last year for that erosion. But by and large, we do see pretty heavy activity on that throughout the remainder of this quarter and we'll certainly keep you posted on that. At the same time, some of the other contracts that were unbundled, those two, those that we anticipated as we entered fiscal year '25 have continued pretty much on track. As I indicated earlier, we did -- we were expecting to have some of that offset by our new business pipeline with the anticipated RFPs flows from what the government was indicating and our customers were indicating before. And I did just want to mention that, that has slowed materially this last quarter. And again, many of those are attributed to administration factors. One factor that I did not specifically indicated is that there were a large number of cuts in the government, as Kathryn indicated, but it was largely due to contract acquisition people. So it's those folks that put together the RFPs, those folks that evaluate the contractors' proposals and then those that award those contracts with a number of that -- those workforce participants cut through administration activities. There's just been gaps in resources to be able to move that along. I will say that both through court action and some initiatives from our agencies, some of those are being recalled. We've seen some of that in some of our agencies over the last month. And so we're hoping to see that the stability start to measurably come back with regard to the resources that the government needs to move these solicitations and contracts forward. So we're optimistic that some of that return will have some positive impact to our industry's pipeline, but particularly for those areas that we are focused. Any luck with Joe return?

No sir, not at all.

Yes, he has tried a couple of times to get back in.

Well, operator, if there are no further questions, I think we want to take this time to certainly thank those that have participated in our session today. We continue to feel really, really strong about the outlook of DLH. We think that we have a good grasp on the areas that are transitioning from the government. We've got good level of engagement with the decision makers and influencers and I feel very, very optimistic that as we exit '25, we'll have some good news in Q4 with regard to the positioning for a very, very strong recovery in '26. With that, I'll turn it back over to the operator, and we look forward to seeing everyone again soon. Have a blessed day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.