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

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 2026 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 Securities and Exchange Commission. 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 to questions. With that, I'd now like to turn the call over to Zach. Please go ahead, Zach.

Thank you, Chris, and good morning, everyone. Welcome to the fourth quarter conference call. I'm pleased for the opportunity to report our financial results and provide color regarding the current environment and our outlook. Before getting into the meat of the presentation, I'd like to take a moment to state how important our people have been to DLH this past year. It has been a time of transformation with both challenges and opportunities, and we have relied relentlessly on our excellent staff to get us through. They continually surpass our expectations due to their passion, persistence and work ethic. So once again, I want to say thank you to everyone at DLH. Throughout the year, we have achieved great success and national award recognition for major accomplishments in developing innovative countermeasures for diseases and health risks to citizens, service members and veterans. We also elevated the readiness posture of our naval fleet and we have made major advancements in developing top commercial data science and analytics platforms to drive solutions in digital transformation and cybersecurity. I'll address that a little bit later. We are again, very much indebted to our great talent. We ended the fiscal year 2025 in position for the opportunities of tomorrow, completing a pivotal year that involved, of course, the transition of several contracts to small business set-aside contractors as we had articulated and anticipated over the recent years. While we, at the same time, have developed additional capabilities and found additional industry providers. We were impacted by the change in priorities that come with every new administration. However, what did not change was our commitment to investing in talent, tools and technologies developed to develop solutions for our pursuit of higher value-added technology-powered applications and our utilization of the company's prodigious cash generation to pay…

Thank you, Zach, and good morning, everyone. Thanks for joining us as we report our fourth quarter results for fiscal 2025. Turning to Slide 7. I'd first like to provide a high-level overview of some key financial metrics for the 3 months ended September 30, 2025. We reported revenue of $81.2 million in the fourth quarter versus $96.4 million in the prior year period, reflecting contribution from contract awards, offset by the impact of program timing, contract unbundling, government efficiency initiatives and the conversion of certain programs to small business set aside contracts as discussed in the past. In total, the revenue contraction due to such small business set aside conversions, including CMOP, was approximately $11 million in the quarter versus 2024, accounting for most of the decrease in revenue. Of the year-over-year decline, approximately $7.5 million was related to transitioned CMOP locations and $2.9 million was from the unbundling of certain other contracts. The acquired small business programs, which had a minor effect on the revenue decrease, have now materially completed their runout. During the quarter, one CMOP location transitioned to another vendor at the end of August. In October, the company was awarded a sole-source IDIQ contract to continue providing pharmacy and logistics services for multiple locations. We have already been awarded task orders under this IDIQ and expect to continue providing these services while the VA completes its procurement and transition process. Since the end of the fiscal year, the VA has transitioned an additional location, and we currently provide services at the 3 remaining locations. We reported EBITDA of $6.6 million for the fourth quarter versus $10.7 million last year. EBITDA was down primarily due to the overall lower revenue level and corresponding pressure on gross margins as we retained our investment in key innovation resources…

[Operator Instructions] The first question comes from Joe Gomes with NOBLE Capital.

So I want to start off here. A lot of moving parts. The Head Start program, obviously, you guys put out an 8-K that program is transferred to small business. But you also mentioned there that there is the possibility of a protest. I was wondering if you have protested that. If so, where are we in that? Or is that now just lost?

Yes. Joe, thank you for the question. No, we were not a participant in the protest effort. As you may recall, we saw Head Start moving in that direction when the Biden administration in '24 or early '24, issued the executive order to pursue more small business set asides to include unbundling contracts such as that one. We had hoped and we're working at some of the higher levels that the government would change that strategy. But it became pretty clear last year, particularly when the actual RFP started to come up, that was the commitment. So we are not participating in the protests for any of that work.

Okay. And then on CMOP, you mentioned that originally -- you had the 4. They transitioned one here at the end of November. They have 2 more solicitations out. When do you think your best guess of when the other 2 awards are made? And correct me if I'm wrong, but so far, you guys haven't been able to garner any of those even as a subcontractor? Or do you think that there's a possibility that you would get any of the remaining 3 that are still out for new awards?

Yes. Just -- I appreciate that, Joe. Yes, again, as you may recall, originally before they made their major commitment to move from solutions to just more staffing, we did have bids on a number of those through our joint venture. We've removed all of those bids, and we've had -- and so we're not bidding as a joint venture on any of them. We did, however, support a small business partner on a couple of them. A couple are still pending, and we'll keep you posted on those. Those decisions are anticipated to occur somewhere over the coming quarter or 2. So we'll keep you posted on that. For greater color on the rest of your question, I'll turn it over to Kathryn.

Yes, I think that's right. There are 3 locations remaining, which we will continue to operate as the VA executes their strategy to transition to temporary staffing firms that are operating the programs. The interval has been roughly not -- of course, past is not always prologue, but the interval has typically been about 3 months between.

And then you mentioned that you expect to return to your historical gross and EBITDA margins. When do you think we would see that given where we stand today?

Yes. So there's a couple of factors in play there. First of all, as we kind of described, let me give you some color around just the VA kind of work. While we've enjoyed a good long-term relationship with the VA. We continue to have strategic objectives to support the VA. While CMOP has moved to temporary staffing, we've been actively positioning for new business within the organization for more enriching EBITDA margin generation kind of work because it will be back to technical and solutioning sort of work. We anticipate some of those awards once we get through -- once the government gets through this holiday period and this budget drill that very likely in Q1 -- calendar Q1, we'll start to see some of that emanate. In addition, we've got -- 2025 has really been pretty static with regard to new contract awards in our marketplace. So a lot of the deals that we were anticipating, RFPs and potentially revenue in '26 -- '25 are now starting to hit. We've got -- we're in proposal development phases on a few of them. We are in potentially awaiting award on a couple that could, of course, occur very early. And most of those jobs are going to be positive to our margin basis. I will say, however, that we -- where we're finding this administration really making a stronger commitment on these procurements has been in the support of the military and with the Department of War in that business area, which is been one where we have a very ripe pipeline as well. And some of that work ranges from digital transformation and cybersecurity as well as some integration and logistics work. And so it will be a function of how those come out timing-wise. Some of those are more cost reimbursable type contracts that do not lend themselves to much more in the fee generation area as we would in some of our time and material and fixed price. So it's going to be a function of how those come in and how we will evolve as the contract structures will govern some of that growth. But we do feel really still very optimistic that the growth will be reflected in both the defense and nondefense work. And in general, those things associated with digital transformation and cybersecurity have been able to have us return back to some really strong values there. Kathryn, any additions?

I would add to that. And really, the fundamentals of the company are the hallmarks of how we're built is to achieve growth and scale and cash flow generation. So we do believe that the growth is critical, essential to allowing us to return that scale that allows us to get back on that path of our historical growth and EBITDA margins, Joe. So that is stating the obvious here. That's why growth is the imperative and really why we've worked hard to diversify the base of customers and capabilities and to really keep ourselves relevant and invest in the innovation necessary to be competitive in those fronts. So we're excited for those opportunities to finally be coming to life, as Zach indicated, and we think we will fare well as we compete through those.

And one last one for me. What's the size of the pipeline today?

It's very strong, Joe. As we ended the fiscal year, we were north of $3 billion. And again, for us, we describe those largely as qualified opportunities over a 24-plus month period. And so it still bodes well for a very healthy financial growth prospects.

[Operator Instructions] As it appears that there are no further questions, I would like to turn back to Mr. Parker for any closing remarks.

Thank you, Chloe. This has been a really, really great year for developing and setting us up nicely, we think, for the coming years, FY '26 and beyond. We anticipate giving additional color. We look forward to seeing any or many of you in our upcoming annual shareholder meetings. I want to thank you all for joining us today. Have a blessed day and happy holidays, and we'll chat with you again soon. Bye for now.

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