DLH Holdings Corp (DLHC) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the fourth quarter and year-end 2011 TeamStaff earnings conference call. My name is Fab and I'll be your operator for today. At this time, all participants are in listen-only mode. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Donald Weinberger. Please proceed.

Thank you, Fab. Good morning and thank you all for joining us for today's conference call. I am Donald Weinberger, managing member of Wolfe Axelrod Weinberger Associates, Investor Relations counsel on behalf of TeamStaff. On the call with me today is Mr. John Kahn, Chief Financial Officer, and Mr. Kevin Wilson, President of DLH Solutions. Unfortunately, Mr. Zach Parker, President and Chief Executive Officer of TeamStaff had to attend to a last minute family matter and will not be on today's call. As a result of this change, there will not be a coinciding slide show presentation or a question-and-answer session. Mr. Parker apologizes for his absence and wants the callers to know that a more comprehensive call will be arranged in the future. Before I turn the call over to our hosts, let me take a moment to read the forward-looking statement.

This conference call may contain forward-looking statements as defined by the federal securities laws. Statements in this conference call regarding TeamStaff Inc.'s business which are not historical facts are forward-looking statements that involve risks and uncertainties. TeamStaff's actual results could differ materially from those described in such forward-looking statements, as a result of certain risk factors and uncertainties, including, but not limited to -- our ability to continue to recruit and retain qualified temporary and permanent healthcare professionals and administrative staff on acceptable terms; our ability to enter into contracts with government agencies and other customers on terms attractive to us and to secure orders related to those contracts; changes in the timing of customer orders for placement of temporary and permanent healthcare professionals and administrative staff; the overall level of demand for our services; our ability to successfully implement our strategic growth, acquisition and integration strategies; the effect of existing or future government legislation and regulation; the loss of key offices and management personnel that could adversely affect our ability to retain -- to remain competitive; Other regulatory and tax developments, and the effect of other events and important factors disclosed previously and from time to time in TeamStaff's filings with the US Securities and Exchange Commission.

For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see Risk Factors in the Company's periodic reports filed with the SEC. The information in this conference call should be considered accurate only as of the date of the call. TeamStaff expressly disclaims any current intention to update any forecasts, estimates or other forward-looking statements contained in this call. With that out of the way, let me turn the discussion over to Kevin Wilson, President of DLH Solutions. Kevin, please proceed.

Thank you, Don and good morning everyone. Thank you for joining us today for our fourth quarter and year-end report of fiscal 2011. I will be keeping my comments brief and then turn the call over to John Kahn for a discussion of our financials. Management believes that despite the intense Federal Government gridlock encountered during the fiscal year, we remain on plan with regard to implementation of our strategic plan which was birthed early fall of 2010. Having competed for and successfully retained all four of our major recompetes, along with several new business wins in both our healthcare and logistic domain, has provided us a total backlog of around four times revenue. This far exceeds the Company's backlog at any time since I joined the Company in 2007.

The revenue from the new business awards began in November, following our phase-in efforts commencing in early October. Having been personally responsible for orchestrating our phase-in team, I'm happy to report that our team's efforts have been a success. As such, we are well positioned for record growth during fiscal 2012. To support successful growth, we have hired approximately 200 new employees, including project management and supervisory personnel. We have repositioned some key personnel as we continue to offer stability and career growth opportunities for our approximately 1,000 employee base. New employees are receiving DLH training to ensure that we continue to achieve performance excellence which is one of our key strategic objectives. This substantive growth does require further enhancement of our infrastructure and we have several related initiatives underway.

Let me conclude my remarks by stating that while we have solidified and expanded a major part of our healthcare delivery solutions portfolio this past year, our qualified new business portfolio is healthier than ever and offers great confidence in continuing our progress laid out in the strategic plan. With that, I will turn the call over to John Kahn for a discussion of our financial results.

Thank you, Kevin. Revenues from TeamStaff's operations for the three months ended September 30, 2011 and 2010 were $10.3 million, and $10.2 million, respectively, which represents an increase of $0.1 million or 1% over the prior fiscal year period. The increase in revenues for the period was due in large part to the expansion of work on existing contracts. Revenues from TeamStaff's operations for the 12 months ended September 30, 2011 and 2010, were $41.9 million and $40.9 million, respectively, which represents an increase of $1 million or close to 3% over the prior fiscal period. The increase in revenues during the period was due primarily to new business awards and increased business on existing contracts.

Gross profit for the three months ended September 30, 2011 and 2010 was $1.6 million and $1.1 million, respectively, which represents an increase of $0.4 million or 36% over the prior fiscal year period. Gross profit as a percentage of revenue was 15.1%, and 11.1% for the three months ended September 30, 2011 and 2010, respectively. Gross profit has continued to grow for the fifth consecutive quarter of increase. Gross profit for the 12 months ended September 30, 2011 and 2010 was $5.9 million and $4.8 million, respectively, which represents an increase of $1.1 million or 23% over the prior fiscal year period. Gross profit as a percentage of revenue was 14.1%, and 11.8% for the 12 months ended September 30, 2011 and 2010, respectively. The key driver for the increase in gross profit margin was improved project management on the Company's major contracts.

Selling, general and administrative, or SG&A expenses, for the three months ended September 30, 2011 and 2010 were $2.5 million and $2.1 million, respectively. The significant increase was attributable to management's decision to legally intervene on behalf of a federal client with regard to key strategic new business. SG&A expenses for the 12 months ended September 30, 2011 and 2010 were $7.4 million and $7.7 million, respectively, which represents a decrease of $0.3 million or 3.4%. The decrease reflects management's cost reduction initiatives which have included the elimination of duplicative or non-essential positions; termination of non-strategic administrative subscriptions and licenses, indirect travel restrictions, temporary work furlough, and more. These savings were partially offset by increases in strategic business development expenditures and approximately $0.6 million in strategic legal fees.

The Company has also continued its cost savings and reallocation initiatives which have resulted in refocused headcount in non-revenue generating departments, and within G&A, with significantly increased emphasis on building a strong and sustainable pipeline of new business opportunities. Loss for operations for the three months ended September 30, 2011 was $3.6 million as compared to loss from operations for the three months ended September 30, 2010 of $2.3 million. This represents a decrease of $1.3 million in results from operations from the prior fiscal period but includes a non-cash impairment charge of $2.6 million in the three months ended September 30, 2011 compared to a non-cash impairment charge in the three months ended September 30, 2010 of $1.3 million.

Net loss from continuing operations and net loss for the three months ended September 30, 2011, was $3.7 million, or $0.62 per basic and diluted share, as compared to net loss from continuing operations of $2.4 million, or $0.47 per basic and diluted share and net loss of $2.4 million, or $0.48 per basic and diluted share for the three months ended September 30, 2010. Loss from operations for the 12 months ended September 30, 2011 was $4.2 million, as compared to loss from operations for the 12 months ended September 30, 2010 of $4.3 million. This represents an improvement of $0.1 million in results from the prior fiscal period. The improvements are attributed primarily to increased gross profits and reduction of SG&A expenses. Loss from continuing operations for the 12 months ended September 30, 2011, was $4.6 million, or $0.84 per basic and diluted share, as compared to $4.6 million or $0.91 per basic and diluted share for the 12 months ended September 30, 2010. Net loss for the 12 months ended September 30, 2011 was $4.3 million, or $0.79 per basic and diluted share, as compared to net loss of $5.8 million, or $1.15 per basic and diluted share, for the 12 months ending September 30, 2010.

With a lot of non-cash and unusual expenses as well as our interest expense, it's important to point out that our EBITDA, our earnings before interest, tax, depreciation and amortization, as per the definition and reconciliation to net loss from continuing operations that we included in this morning's earnings release. For the three months ended September 30, 2011 was approximately negative $1 million, as compared to approximately negative $1 million for the three months ended September 30, 2010, representing almost no change despite strategic legal fees of $0.5 million being incurred in the three months ended September 30, 2011 compared to none in the three months ended September 30, 2010.

Similarly, EBITDA for the 12 months ended September 30, 2011 was approximately negative $1.5 million, as compared to approximately negative $2.9 million for the 12 months ended September 2010, representing an improvement of $1.4 million or 48% even after incurring strategic legal fees of $0.6 million in the 12 months ended September 30, 2011 when none was incurred in the 12 months ended September 30, 2010.

As of September 30, 2011, the Company had $0.8 million in cash and $0.3 million in availability under its credit facility. The Company believes it has adequate liquidity resources to fund operations over the next 12 months in view of its existing cash position, the additional funding committed by the Company's lender and other parties in fiscal 2011, as well as other factors such as forecasted cash flow from operations and the effects of cost reduction programs and initiatives put into place during fiscal 2011. That concludes my discussion of the financial statements. I will now turn it back over to Kevin.

Thank you, John. As you have heard, we have taken numerous steps in an effort to enhance the value of TeamStaff and have fully focused our efforts on the government services market, specifically healthcare delivery and logistics areas where we have a proven track record of performance. We continue to believe that we can leverage this track record in our core competencies in developing growth markets within the Federal and DoD space. We are all excited about our future and look forward to reporting revenue growth in fiscal 2012 and beyond, as we focus on our achieving profitability.

That concludes my formal remarks. I would now like to turn back over to Don Weinberger to make a few concluding remarks.

Thank you, Kevin. I would like to conclude the call by thanking everyone for participating in today's conference call. As always, should you have any questions, please feel free to contact myself, Don Weinberger at Wolfe Axelrod Weinberger Associates, or Zack Parker or John Kahn at the Company. We thank you for your interest and support and look forward to speaking with all of you again in a couple of months to discuss the first quarter results for fiscal 2012. Have a great day and wishing everyone a joyous holiday season. Thank you.

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.