Cover
Cover - USD ($) | 12 Months Ended | ||
Sep. 30, 2023 | Dec. 04, 2023 | Mar. 31, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Sep. 30, 2023 | ||
Current Fiscal Year End Date | --09-30 | ||
Document Transition Report | false | ||
Entity File Number | 0-18492 | ||
Entity Registrant Name | DLH HOLDINGS CORP. | ||
Entity Incorporation, State or Country Code | NJ | ||
Entity Tax Identification Number | 22-1899798 | ||
Entity Address, Address Line One | 3565 Piedmont Road, | ||
Entity Address, Address Line Two | Building 3, | ||
Entity Address, Address Line Three | Suite 700 | ||
Entity Address, City or Town | Atlanta, | ||
Entity Address, State or Province | GA | ||
Entity Address, Postal Zip Code | 30305 | ||
City Area Code | 770 | ||
Local Phone Number | 554-3545 | ||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | DLHC | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 91,396,871 | ||
Entity Common Stock, Shares Outstanding | 14,067,732 | ||
Documents Incorporated by Reference | Part III of this report incorporates information by reference from the Company's definitive proxy statement, which proxy statement is due to be filed with the Securities and Exchange Commission not later than 120 days after September 30, 2023. | ||
Entity Central Index Key | 0000785557 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY |
Audit Information
Audit Information | 12 Months Ended |
Sep. 30, 2023 | |
Auditor Information [Abstract] | |
Auditor Name | WithumSmith+Brown, PC |
Auditor Location | East Brunswick, New Jersey |
Auditor Firm ID | 100 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 375,872 | $ 395,173 |
Cost of Operations | ||
Contract costs | 296,016 | 322,886 |
General and administrative costs | 37,795 | 30,730 |
Impairment loss of long-lived asset | 7,673 | 0 |
Corporate development costs | 1,735 | 614 |
Depreciation and amortization | 15,562 | 7,665 |
Total operating costs | 358,781 | 361,895 |
Income from operations | 17,091 | 33,278 |
Interest expense | (16,271) | (2,215) |
Income before provision for income taxes | 820 | 31,063 |
Provision for income tax (benefit) expense | (641) | 7,775 |
Net income | $ 1,461 | $ 23,288 |
Earnings Per Share [Abstract] | ||
Net income per share - basic (in dollars per share) | $ 0.11 | $ 1.82 |
Net income per share - diluted (in dollars per share) | $ 0.10 | $ 1.64 |
Weighted average common shares outstanding | ||
Basic (in shares) | 13,704 | 12,830 |
Diluted (in shares) | 14,431 | 14,179 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Current assets: | ||
Cash | $ 215 | $ 228 |
Accounts receivable | 59,119 | 40,496 |
Other current assets | 3,067 | 2,878 |
Total current assets | 62,401 | 43,602 |
Goodwill | 138,161 | 65,643 |
Intangible assets, net | 124,777 | 40,884 |
Operating lease right-of-use assets | 9,656 | 16,851 |
Deferred taxes, net | 3,070 | 0 |
Equipment and improvements, net | 1,590 | 1,704 |
Other long-term assets | 186 | 328 |
Total assets | 339,841 | 169,012 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 29,704 | 26,862 |
Debt obligations - current, net of deferred financing costs | 17,188 | 0 |
Accrued payroll | 13,794 | 9,444 |
Operating lease liabilities - current | 3,463 | 2,235 |
Other current liabilities | 638 | 0 |
Total current liabilities | 64,787 | 38,541 |
Long-term liabilities: | ||
Debt obligations - long-term, net of deferred financing costs | 155,147 | 20,416 |
Operating lease liabilities - long-term | 15,908 | 16,461 |
Deferred taxes, net | 0 | 1,534 |
Other long-term liabilities | 1,560 | 0 |
Total long-term liabilities | 172,615 | 38,411 |
Total liabilities | 237,402 | 76,952 |
Shareholders' equity: | ||
Common stock, $0.001 par value; authorized 40,000 shares; issued and outstanding 13,950 and 13,047 at September 30, 2023 and 2022, respectively | 14 | 13 |
Additional paid-in capital | 99,974 | 91,057 |
Retained earnings | 2,451 | 990 |
Total shareholders’ equity | 102,439 | 92,060 |
Total liabilities and shareholders' equity | $ 339,841 | $ 169,012 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares (in shares) | 40,000 | 40,000 |
Common stock, issued shares (in shares) | 13,950 | 13,047 |
Common stock, shares outstanding (in shares) | 13,950 | 13,047 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating activities | ||
Net income | $ 1,461 | $ 23,288 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 15,562 | 7,665 |
Amortization of deferred financing costs charged to interest expense | 2,182 | 664 |
Stock-based compensation expense | 1,922 | 2,608 |
Deferred taxes, net | (4,604) | 358 |
Impairment loss of long-lived asset | 7,673 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable | 6,845 | (7,049) |
Other assets | 1,757 | 1,387 |
Accrued payroll | (3,477) | 319 |
Deferred revenue | 0 | (22,273) |
Accounts payable and accrued liabilities | (75) | (5,855) |
Other liabilities | 1,787 | 131 |
Net cash provided by operating activities | 31,033 | 1,243 |
Investing activities | ||
Business acquisition, net of cash acquired | (180,572) | 0 |
Purchase of equipment and improvements | (625) | (872) |
Net cash used in investing activities | (181,197) | (872) |
Financing activities | ||
Proceeds from revolving line of credit | 205,268 | 0 |
Repayment of revolving line of credit | (195,721) | 0 |
Proceeds from debt obligations | 168,000 | 17,000 |
Repayments of debt obligations | (20,188) | (41,750) |
Payments of deferred financing costs | (7,666) | 0 |
Proceeds from issuance of common stock upon exercise of options and warrants | 1,108 | 837 |
Payment of tax obligations resulting from net exercise of stock options | (650) | (281) |
Net cash provided by (used in) financing activities | 150,151 | (24,194) |
Net change in cash | (13) | (23,823) |
Cash - beginning of year | 228 | 24,051 |
Cash - end of year | 215 | 228 |
Supplemental disclosures of cash flow information | ||
Cash paid during the year for interest | 14,153 | 1,528 |
Cash paid during the year for income taxes | 5,604 | 9,282 |
Supplemental disclosures of non-cash activity | ||
Common stock surrendered for the exercise of stock options | $ 238 | $ 256 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Beginning Balance (in shares) at Sep. 30, 2021 | 12,714 | |||
Beginning Balance at Sep. 30, 2021 | $ 65,608 | $ 13 | $ 87,893 | $ (22,298) |
Expense related to director restricted stock unit (shares) | 0 | |||
Expense related to director restricted stock units | 648 | 648 | ||
Expense related to employee stock-based compensation | 1,960 | 1,960 | ||
Stock issued for director restricted stock units (in shares) | 53 | |||
Stock issued for director restricted stock units | 0 | |||
Exercise of stock options (shares) | 257 | |||
Exercise of stock options | 637 | 637 | ||
Common stock surrendered for the exercise of stock options (in shares) | (31) | |||
Common stock surrendered for the exercise of stock options | (281) | (281) | ||
Exercise of stock warrants (in shares) | 54 | |||
Exercise of stock warrants | 200 | 200 | ||
Net income | $ 23,288 | 23,288 | ||
Ending Balance (in shares) at Sep. 30, 2022 | 13,047 | 13,047 | ||
Ending Balance at Sep. 30, 2022 | $ 92,060 | $ 13 | 91,057 | 990 |
Issuance and fair value adjustment of common stock in business combiation | 527 | |||
Issuance and fair value adjustment of common stock in business combination | 6,539 | $ 1 | 6,538 | |
Expense related to director restricted stock units | 718 | 718 | ||
Expense related to employee stock-based compensation | 1,204 | 1,204 | ||
Stock issued for director restricted stock units (in shares) | 50 | |||
Stock issued for director restricted stock units | $ 0 | |||
Exercise of stock options (shares) | 393 | 393 | ||
Exercise of stock options | $ 1,107 | 1,107 | ||
Common stock surrendered for the exercise of stock options (in shares) | (67) | |||
Common stock surrendered for the exercise of stock options | (650) | (650) | ||
Net income | $ 1,461 | 1,461 | ||
Ending Balance (in shares) at Sep. 30, 2023 | 13,950 | 13,950 | ||
Ending Balance at Sep. 30, 2023 | $ 102,439 | $ 14 | $ 99,974 | $ 2,451 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of DLH Holdings Corp. and its subsidiaries ("DLH" or the "Company" and also referred to as "we," "us," and "our"), all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the instructions to Form 10-K, Regulation S-X, and Regulation S-K. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The most significant of these estimates and assumptions relate to costs including overhead and its allocation, assessing fair value of acquired assets and liabilities accounted for through business acquisitions, valuing and determining the amortization periods for long-lived intangible assets, interest rate swaps, stock-based compensation, right-of-use assets and leases liabilities, and loss development on workers' compensation claims. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations, and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. We revise material accounting estimates if changes occur, such as more experience is acquired, additional information is obtained, or there is new information on which an estimate was or can be based. Actual results could differ from those estimates. Revenue The Company's revenues from contracts with customers are derived from offerings that include technology-enabled business process outsourcing, program management solutions, and public health research and analytics, substantially within the U.S. government and its agencies. The Company has various types of contracts including time-and-materials contracts, cost-reimbursable contracts, and firm-fixed-price contracts. We consider a contract with a customer to exist when there is a commitment by both parties (customer and Company), payment terms are determinable, there is commercial substance, and collectability is probably in accordance with Accounting Standards Codification ("ASC") No. 606, "Revenue from Contracts with Customers" ("Topic 606"). We recognize revenue over time when there is a continuous transfer of control to our customer as performance obligations are satisfied. For our U.S. government contracts, this continuous transfer of control to the customer is transferred over time and revenue is recognized based on the extent of progress toward completion of the performance obligation. We consider control to transfer when we have a right to payment. In some instances, the Company commences providing services prior to formal approval to begin work from the customer. The Company considers these factors, the risks associated with commencing work, and legal enforceability in determining whether a contract exists under Topic 606. Contract modification can occur throughout the life of the contract and can affect the transaction price, extend the period of performance, adjust funding, or create new performance obligations. We review each modification to assess the impact of these contract changes to determine if it should be treated as part of the original performance obligation or as a separate contract. Contract modifications impact performance obligations when the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue and profit cumulatively. Furthermore, a significant change in one or more estimates could affect the profitability of our contracts. We recognize adjustments in estimated profit on contracts in the period identified. For service contracts, we satisfy our performance obligations as services are rendered. We use cost-based input and time-based output methods to measure progress based on the contract type. • Time and material - We bill the customer per labor hour and per material, and revenue is recognized in the amount invoiced as the amount corresponds directly to the value of our performance to date. Revenue is recognized to the extent of billable rates times hours delivered plus materials and other reimbursable costs incurred. • Cost reimbursable - We record reimbursable costs as incurred, including an estimated share of the contractual fee earned. • Firm fixed price - We recognize revenue over time using a straight-line measure of progress. Contract costs generally include direct costs such as labor, materials, subcontract costs, and indirect costs identifiable with or allocable to a specific contract. Costs are expensed as incurred and include an estimate of the contractual fees earned. Contract costs incurred for U.S. government contracts, including indirect costs, are subject to audit and adjustment by various government audit agencies. Historically, our adjustments have not been material. Contract assets - Amounts are invoiced as work progresses in accordance with agreed-upon contractual terms. In part, revenue recognition occurs before we have the right to bill, resulting in contract assets. These contract assets are reported within Accounts receivable, net on our consolidated balance sheets and are invoiced in accordance with payment terms defined in each contract. Period end balances will vary from period to period due to agreed-upon contractual terms. Contract liabilities - Amounts are a result of billings in excess of costs incurred or prepayment for services to be rendered. Fair Value of Financial Instruments The carrying amounts of the Company's cash and cash equivalents, accounts receivable, contract assets, contract liabilities, accrued expenses, and accounts payable approximate fair value due to the short-term nature of these instruments. The fair values of the Company's debt instruments approximate fair value because the underlying interest rates approximate market rates that the Company could obtain for similar instruments at the balance sheet dates. Long-lived Assets Our long-lived assets include equipment and improvements, intangible assets, right-of-use assets, and goodwill. The Company continues to review its long-lived assets for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. Equipment and improvements are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives (3 to 7 years) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Intangible assets (other than goodwill) are originally recorded at fair value and are amortized on a straight-line basis over their estimated useful lives of 10 years. Maintenance and repair costs are expensed as incurred. Right-of-use assets are measured at the present value of future minimum lease payments, including all probable renewals, plus lease payments made to the lessor before or at lease commencement and indirect costs paid, less incentives received. Our right-of-use assets include long-term leases for facilities and equipment and are amortized over their respective lease terms. Our right-of-use-assets are recognized as the present value of the future minimum lease payments over the lease term less unamortized lease incentives and the balance remaining in deferred rent liability under ASC 840. Lease Liabilities The Company has leases for facilities and office equipment. Our lease liabilities are recognized as the present value of the future minimum lease payments over the lease term. Our lease payments consist of fixed and in-substance fixed amounts attributable to the use of the underlying asset over the lease term. Variable lease payments that do not depend on an index rate or are not in-substance fixed payments are excluded in the measurement of right-of-use assets and lease liabilities and are expensed in the period incurred. The incremental borrowing rate on our secured term loan is used in determining the present value of future minimum lease payments. Some of our lease agreements include options to extend the lease term or terminate the lease. These options are accounted for in our right-of-use assets and lease liabilities when it is reasonably certain that the Company will extend the lease term or terminate the lease. The Company does not have any finance leases. As of September 30, 2023, operating leases for facilities and equipment have remaining lease terms of less than 1 year to 8 years. Goodwill At September 30, 2023, we performed an internal goodwill impairment evaluation on the year-end carrying value of approximately $138.2 million. We performed a qualitative assessment of factors to determine whether it was necessary to perform the goodwill impairment test. Based on the results of the work performed, the Company has concluded that no impairment loss was warranted at September 30, 2023, as no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill. Notwithstanding this evaluation, factors including non-renewal of a major contract or other substantial changes in business conditions could have a material adverse effect on the valuation of goodwill in future periods and the resulting charge could be material to future periods’ results of operations. Similarly, there were no impairments during the prior year ended September 30, 2022. Provision for Income Taxes The Company accounts for income taxes in accordance with the asset and liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the consolidated balance sheet when it is determined that it is more likely than not that the asset will be realized. This guidance also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon the technical merits, it is more-likely-than-not that the position will be sustained upon examination. We had no uncertain tax positions at either September 30, 2023 and 2022. We report interest and penalties as a component of provision for income taxes. For the years ended September 30, 2023 and 2022, we recognized no interest and no penalties related to income taxes. Stock-based Compensation The Company uses the fair value-based method for stock-based equity compensation. Options issued are designated as either an incentive stock or a non-statutory stock option. No option may be granted with a term of more than 10 years from the date of grant. Option awards may depend on the achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued common shares. All awards to employees and non-employees are recorded at fair value on the date of the grant and expensed over the period of vesting. The Company uses the Monte Carlo method to estimate the fair value of each stock option at the date of grant. Any consideration paid by the option holders to purchase shares is credited to capital stock. Stock-based Compensation Expense Stock-based Compensation expense for the portion of equity awards for which the requisite service has not been rendered is recognized as the requisite service is rendered. The stock-based compensation expense for that portion of awards has been based on the grant-date fair value of those awards as calculated for recognition purposes under applicable guidance. For options that vest based on the Company’s common stock achieving and maintaining defined market prices, the Company values the awards with a Monte Carlo method that utilizes various probability factors and other criterion in establishing fair value of the grant. The related stock-based compensation expense is recognized over the service period. Stock based compensation is reliant on continued employment with the Company. These arrangements are forfeited upon employee separation and accounted for as they occur. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. We maintain cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Deposits held with financial institutions may exceed the $250,000 limit. Receivables Receivables include amounts billed and currently due from customers where the right to consideration is unconditional and amounts unbilled. Both billed and unbilled amounts are non-interest bearing, unsecured, and recognized at an estimated realizable value that include costs and fees, and are generally expected to be billed and received within a single year. We evaluate our receivables for expected credit losses and estimate expected credit losses if appropriate based on customers collections. No allowance for doubtful accounts was deemed necessary at either September 30, 2023 or September 30, 2022. Earnings Per Share Basic earnings per share is calculated by dividing income available to common shareholders by the weighted average number of common stock outstanding and restricted stock grants that vested or are likely to vest during the period. Diluted earnings per share is calculated by dividing income available to common shareholders by the weighted average number of basic common shares outstanding, adjusted to reflect potentially dilutive securities. Diluted earnings per share is calculated using the treasury stock method. Treasury Stock The Company periodically purchases its own common stock that is traded on public markets as part of announced stock repurchase programs. The repurchased common stock is classified as treasury stock on the consolidated balance sheets and held at cost. As of September 30, 2023 and 2022, the Company did not hold any treasury stock. Preferred Stock Our certificate of incorporation authorizes the issuance of "blank check" preferred stock with such designations, rights and preferences as may be determined from time to time by our board of directors up to an aggregate of 5,000,000 shares of preferred stock. As of September 30, 2023 and 2022, the Company has not issued any preferred stock. Interest Rate Swap The Company uses derivative financial instruments to manage interest rate risk associated with its variable debt. The Company's objective in using these interest rate derivatives is to manage its exposure to interest rate movements and reduce volatility of interest expense. The gains and losses due to changes in the fair value of the interest rate swap agreements completely offset changes in the fair value of the hedged portion of the underlying debt. Offsetting changes in fair value of both the interest rate swaps and the hedged portion of the underlying debt are recognized in interest expense in the consolidated statements of operations. The Company does not hold or issue any derivative instrument for trading or speculative purposes. Risks & Uncertainties Management evaluates the impact of global markets and economic factors on our industry and the potential for adverse effects on the Company's consolidated financial position and its operations. As of September 30, 2023, there was no indication of any global or economic impacts to our industry. |
New Accounting Pronouncements
New Accounting Pronouncements | 12 Months Ended |
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements |
Business Combination
Business Combination | 12 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
Business Combination | Business Combination Acquisition of Grove Resource Solutions, LLC On December 8, 2022, the Company acquired 100% of the equity interests of GRSi for a purchase price of $188 million, inclusive of the working capital adjustment completed and paid. The acquisition was financed through a combination of: • borrowings of $181.5 million under the Company’s amended and restated credit facility; and • common stock issued of approximately 0.5 million shares, which were valued at $6.5 million in the aggregate, based on the shares issued to the previous owners as determined by the equity purchase agreement and the stock price on the acquisition date. The acquisition of GRSi was consistent with the Company’s growth strategy, as it provided contract diversification, expansion of key capabilities and increased presence in the military health market. The goodwill derived from this transaction is primarily due to these attributes. The Company has used the acquisition method of accounting for this transaction, whereby the assets acquired and liabilities assumed are recognized based upon their estimated fair values at the acquisition date. The purchase price for GRSi was $188 million adjusted to reflect acquired cash, assumed liabilities and net working capital adjustments. The Purchase Agreement contains customary representations, warranties and covenants by the parties. Subject to certain limitations and conditions, the seller and the equity holders of the seller do not have indemnity obligation for damages resulting from breaches or inaccuracies of the representations, warranties, and covenants of the seller, GRSi and the equity holders as set forth in the Purchase Agreement. The Purchase Agreement also provided for the establishment of an escrow account in order to satisfy (i) any downward adjustment of the purchase price base on GRSi's net working capital at the closing and (ii) certain specified indemnification obligations of the seller and equity holders that may arise following the closing. The escrow account is funded by an aggregate amount of approximately $4.3 million and the stock consideration. A representations and warranties insurance policy has been purchased by the Company in connection with the Purchase Agreement, under which the Company may seek recourse for breaches of the representations and warranties of the seller, GRSi and the equity holders. The representations and warranties insurance policy is subject to certain customary exclusions and a deductible. In accordance with ASU 2017-01, the Company evaluated the transaction as an acquisition of a business. The Company has assessed the acquisition price to the fair value of the assets and liabilities of GRSi at the acquisition date. We accounted for the total acquisition consideration and allocation of fair value of the related assets and liabilities at December 8, 2022 as follows (in thousands): Purchase price for GRSi $ 187,997 Purchase price allocation: Cash 747 Accounts receivable 25,468 Other current assets 1,354 Equipment and improvements, net 463 Intangible assets 98,688 Accounts payable and accrued expenses (2,449) Payroll liabilities (7,826) Other current liabilities (325) Other long-term assets and liabilities (781) Identifiable net assets acquired 115,339 Goodwill $ 72,658 All operating units are aggregated into a single reportable segment. The acquisition of GRSi did not create an additional reportable segment as all operations report to a single Chief Operating Decision Maker (CODM), serve a similar customer base, and provide similar services within a common regulatory environment. The goodwill represents intellectual capital and the acquired workforce, of which both do not qualify as a separate intangible asset. During the year ended September 30, 2023, following the completion of the acquisition, GRSi contributed approximately $107.0 million of revenue and $4.4 million of income from operations, which includes $8.2 million of non-cash intangible asset amortization expense. The unaudited pro forma information below is presented for informational purposes only and is not necessarily indicative of our results if the acquisition had taken place on that date. The pro forma information was prepared by combining our reported historical results with the historical results of GRSi for the pre-acquisition periods. In addition, the reported historical amounts were adjusted for the following items, net of associated tax effects: • The impact of recording GRSi's intangible asset amortization. • The impact of interest expense for the new credit facility. • The removal of legacy GRSi director's fees. • The removal of transaction costs for the acquisition incurred by GRSi. The following table presents certain unaudited results for the year ended September 30, 2023 as though the acquisition of GRSi had occurred on October 1, 2022 (in thousands): Twelve Months Ended September 30, Pro forma results 2023 2022 Revenue $ 402,958 $ 507,251 Net income 2,054 18,912 Number of shares outstanding - basic 13,704 12,830 Number of shares outstanding - diluted 14,431 14,179 Basic earnings per share $0.15 $1.47 Diluted earnings per share $0.14 $1.33 |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The following table summarizes the contract balances recognized within the Company's consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Contract assets $ 20,542 $ 7,682 Disaggregation of revenue from contracts with customers We disaggregate our revenue from contracts with customers by customer, contract type, as well as whether the Company acts as prime contractor or subcontractor. We believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following series of tables presents our revenue disaggregated by these categories: Revenue by customer for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Department of Health and Human Services $ 161,311 $ 102,201 Department of Veterans Affairs 138,862 126,106 Department of Defense 70,325 33,612 Department of Homeland Security 919 126,576 Other 4,455 6,678 Revenue $ 375,872 $ 395,173 Revenue by contract type for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Time and Materials $ 209,951 $ 308,944 Cost Reimbursable 81,797 46,231 Firm Fixed Price 84,124 39,998 Revenue $ 375,872 $ 395,173 Revenue by whether the Company acts as a prime contractor or a subcontractor for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Prime Contractor $ 356,792 $ 366,571 Subcontractor 19,080 28,602 Revenue $ 375,872 $ 395,173 |
Leases
Leases | 12 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Leases The following table summarizes lease balances presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Operating lease right-of-use assets (a) $ 9,656 $ 16,851 Operating lease liabilities, current $ 3,463 $ 2,235 Operating lease liabilities, long-term 15,908 16,461 Operating lease liabilities $ 19,371 $ 18,696 (a) Impairment loss of long-lived assets is a loss associated with a reduction of the fair value of an asset prompted by a triggering event. During the fourth quarter of fiscal 2023, DLH reduced its leased office space requirement by consolidating underutilized premises as part of an ongoing facility rationalization effort, to accurately reflect the operational needs of the business. As a result, the Company has determined that its Right of Use Assets experienced a reduction in fair value below its associated carrying value and recorded a $7.7 million loss of fair value. For the years ended September 30, 2023 and 2022, total lease costs for our operating leases are as follows (in thousands): 2023 2022 Operating $ 3,911 $ 3,548 Short-term 287 114 Variable 95 120 Sublease income (a) (282) (258) Lease costs $ 4,011 $ 3,524 (a): The Company subleases a portion of one of its leased facilities. The sublease is classified as an operating lease with respect to the underlying asset. The sublease term is 5 years and includes two additional 1-year term extension options. The Company's future minimum lease payments as of September 30, 2023 are as follows (in thousands): For the Fiscal Year Ending September 30, 2024 $ 4,612 2025 3,928 2026 3,700 2027 2,627 2028 2,377 Thereafter 6,295 Total future minimum lease payments $ 23,539 Less: imputed interest (4,168) Present value of future minimum lease payments $ 19,371 Less: current portion of operating lease liabilities (3,463) Long-term operating lease liabilities $ 15,908 At September 30, 2023, the weighted-average remaining lease term and weighted-average discount rate are 6.3 years and 6.3%, respectively. The calculation of the weighted-average discount rate was determined based on borrowing terms from our secured term loan. Other information related to our leases is as follows for the years ending September 30, 2023 and 2022 (in thousands): 2023 2022 Cash paid for amounts included in the measurement of lease liabilities $ 4,468 $ 3,411 New lease liabilities, net of new right-of-use-assets 120 — Other lease information $ 4,588 $ 3,411 |
Supporting Financial Informatio
Supporting Financial Information | 12 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supporting Financial Information | Supporting Financial Information Accounts receivable The following table summarizes accounts receivable presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Billed receivables $ 38,577 $ 32,814 Contract assets 20,542 7,682 Allowance for doubtful accounts — — Accounts receivable $ 59,119 $ 40,496 Other current assets The following table summarizes other current assets presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Prepaid licenses and other expenses $ 1,330 $ 1,196 Prepaid insurance and benefits 743 737 Other receivables 994 945 Other current assets $ 3,067 $ 2,878 Goodwill The change in the carrying amount of goodwill as follows presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): Balance at September 30, 2022 $ 65,643 Increase from GRSi acquisition (a) 72,658 Tax Adjustment GRSI acquisition (140) Goodwill $ 138,161 Ref (a); The Company has completed its valuation assessment of the GRSi acquisition. Please refer to Note 4 for more information. Intangible assets, net The following table summarizes intangible assets, net presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Intangible assets Customer contracts and related customer relationships $ 113,622 $ 47,044 Backlog 37,249 15,237 Trade names 13,034 3,051 Covenants-not-to-compete 637 522 Total intangible assets $ 164,542 $ 65,854 Less accumulated amortization: Customer contracts and related customer relationships (29,929) (19,731) Backlog (7,273) (3,875) Trade names (2,185) (1,048) Covenants-not-to-compete (378) (316) Total accumulated amortization $ (39,765) $ (24,970) Intangible assets, net $ 124,777 $ 40,884 Total amount of amortization expense for each of the years ended September 30, 2023 and 2022 was $14.8 million and $6.6 million, respectively. As of September 30, 2023, the estimated annual amortization expense is as follows (in thousands): For the Fiscal Year Ending September 30, 2024 $ 16,456 2025 16,456 2026 15,721 2027 14,694 2028 14,694 Thereafter 46,756 Amortization expense $ 124,777 At September 30, 2023, the weighted-average remaining amortization period in total was 8.3 years. At September 30, 2023, the weighted-average amortization period for customer contracts and related customer relationships, backlog, trade names and covenants-not-to-compete was 8.2 years, 8.3 years, 8.7 years, 6 years, respectively. Equipment and improvements, net The following table summarizes equipment and improvements, net presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Furniture and equipment $ 1,790 $ 893 Computer equipment and software 6,479 6,723 Leasehold improvements 1,614 1,614 Total equipment and improvements $ 9,883 $ 9,230 Less: accumulated depreciation and amortization (8,293) (7,526) Equipment and improvements, net $ 1,590 $ 1,704 Depreciation and amortization was $0.8 million and $1.1 million for the years ended September 30, 2023 and 2022, respectively. Accounts payable and accrued liabilities The following table summarizes accounts payable and accrued liabilities presented on our consolidated balance sheets at September 30, 2023and 2022 (in thousands): 2023 2022 Accounts payable $ 12,603 $ 11,886 Accrued benefits 6,414 3,857 Accrued bonus and incentive compensation 4,719 3,625 Accrued workers' compensation insurance 2,369 4,880 Accrued Interest 1,309 — Other accrued expenses 2,290 2,614 Accounts payable and accrued liabilities $ 29,704 $ 26,862 Accrued payroll The following table summarizes accrued payroll presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Accrued Leave $ 9,621 $ 6,345 Accrued payroll 2,487 1,946 Accrued payroll taxes 1,173 411 Accrued severance 513 742 Accrued payroll $ 13,794 $ 9,444 Debt obligations The following table summarizes debt obligations presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Secured revolving line of credit $ 9,546 $ — Secured term loan 169,813 22,000 Less: unamortized deferred financing costs (7,024) (1,584) Net bank debt obligations $ 172,335 $ 20,416 Less: current portion of debt obligations, net of deferred financing costs (a) (17,188) — Long-term portion of debt obligations, net of deferred financing costs $ 155,147 $ 20,416 As of September 30, 2023, we have satisfied mandatory principal payments on our secured term loan. (a) Current portion comprises term loan amortization of $8.3 million and the $9.5 million outstanding balance on the secured revolving line of credit, net of $7.0 million of unamortized deferred financing costs. Interest expense The following table summarizes interest expense presented on our consolidated statements of operations for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Interest expense (a) $ 14,153 $ 1,574 Interest income (b) (64) (23) Amortization of deferred financing costs (c) 2,182 664 Interest expense $ 16,271 $ 2,215 (a): Interest expense on borrowing (b): Interest income |
Credit Facilities
Credit Facilities | 12 Months Ended |
Sep. 30, 2023 | |
Cash and Cash Equivalents [Abstract] | |
Credit Facilities | Credit Facilities A summary of our credit facilities as of September 30, 2023 and 2022 is as follows (in millions): 2023 2022 Arrangement Loan Balance Interest Arrangement Loan Balance Interest Secured term loan (a) due December 8, 2027 $ 169.8 SOFR 1 + 4.1% Secured term loan (a) due September 30, 2025 $ 22.0 LIBOR 2 + 2.5% Secured revolving line of credit (b) due December 8, 2027 $ 9.5 SOFR 1 + 4.1% Secured revolving line of credit (b) due September 30, 2025 $ — LIBOR 2 + 2.5% 1 Secured Overnight Financing Rate ("SOFR") as of September 30, 2023 was 5.3%. 2 LIBOR rate as of September 30, 2022 was 2.52%. (a) Represents the principal amounts payable on our term loan, which is secured by liens on substantially all of the assets of the Company. The principal of the term loan is payable in quarterly installments with the remaining balance due on December 8, 2027. On September 30, 2019, we executed a floating-to-fixed interest rate swap with First National Bank ("FNB") as counter party. The notional amount in the floating-to-fixed interest rate swap on September 30, 2023 is $16.2 million and matures in 2024 and the fixed rate of 1.61%. On January 31, 2023, we executed an additional floating-to-fixed interest rate swap with FNB; the notional amount as of September 30, 2023 is $96.0 million, it matures in January 2026, and the fixed rate is 4.10%. The total floating-to-fixed swap balance as of September 30, 2023 is $112.2 million. As a result of entering these agreements, for the twelve months ended September 30, 2023, interest expense has been decreased by approximately $0.9 million. The Credit Agreement requires compliance with a number of financial covenants and contains restrictions on our ability to engage in certain transactions. Among other matters, we must comply with limitations on: granting liens; incurring other indebtedness; maintenance of assets; investments in other entities and extensions of credit; mergers and consolidations; and changes in nature of business. The loan agreement also requires us to comply with certain quarterly financial covenants including: (i) a minimum fixed charge coverage ratio of at least 1.25 to 1.00, and (ii) a total leverage ratio not exceeding the ratio of 4.50:1.00 to 2.00:1.00 through maturity. The total leverage ratio is calculated by dividing the Company's total interest-bearing debt by net income adjusted to exclude (i) interest and other expenses, (ii) provision for or benefit from income taxes, if any, (iii) depreciation and amortization, and (iv) non-cash charges, losses or expenses, including stock-based compensation, and (v) non-recurring charges, losses or expenses to include transaction and non-cash equity expense. We are in compliance with all loan covenants and restrictions as of September 30, 2023. We are required to pay quarterly amortization payments, which commenced in December 2022. The annual amortization amounts are $14.3 million each for fiscal years 2023 and 2024, $19.0 million each for fiscal years 2025 and 2026, and $23.8 million for fiscal year 2027, with the remaining unpaid loan balance due at maturity in December 2027. The quarterly payments are equal installments. The Company made a mandatory payment of $3.6 million and voluntary prepayments of $5.9 million during the quarter ended September 30, 2023 bringing the outstanding principal balance on the secured term loan to $169.8 million. We have satisfied the mandatory principal payment the quarter ended December 31, 2023 and partially satisfied the mandatory prepayment for the quarter ended March 31, 2024. In addition to quarterly payments of the outstanding indebtedness, the loan agreement also requires annual payments of a percentage of excess cash flow, as defined in the loan agreement. The loan agreement states that an excess cash flow recapture payment must be made equal to (a) 75% of the excess cash flow for the immediately preceding fiscal year in which indebtedness to consolidated EBITDA ratio is greater than or equal to 2.50:1.00; (b) 50% of the excess cash flow for the immediately preceding fiscal year in which the funded indebtedness to consolidated EBITDA Ratio is less than 2.50:1.00 but greater than or equal to 1.50:1.00; or (c) 0% of the excess cash flow for the immediately preceding fiscal year in which the funded indebtedness to consolidated EBITDA Ratio is less than 1.50:1.00. In addition, the Company must make additional mandatory prepayment of amounts outstanding based on proceeds received from asset sales and sales of certain equity securities or other indebtedness. Due to the voluntary prepayment of term debt, there was no excess cash flow payment required. For additional information regarding the schedule of future payment obligations, please refer to Note 1 1 Commitments and Contingencies . (b) The secured revolving line of credit has a ceiling of up to $70.0 million; as of September 30, 2023, we had unused borrowing capacity of $32.0 million, which is net of outstanding letters of credit. Borrowing on the secured revolving line of credit is secured by liens on substantially all of the assets of the Company. The Company accessed funds from the secured revolving line of credit during the year, which had a $9.5 million outstanding balance at September 30, 2023. As part of the secured revolving line of credit, the lenders agreed to a sublimit of $10.0 million for letters of credit for the account of the Company, subject to applicable procedures. |
Stock-based Compensation and Eq
Stock-based Compensation and Equity Grants | 12 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based Compensation and Equity Grants | Stock-based Compensation and Equity Grants Stock-based compensation expense Options issued under equity incentive plans were designated as either an incentive stock or a non-statutory stock option. No option was granted with a term of more than 10 years from the date of grant. Exercisability of option awards may depend on achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued shares. As of September 30, 2023, there were 1.0 million shares available for grant. Total stock-based compensation expense, presented in the table below, is recorded in general and administrative expenses included in our consolidated statements of operations for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 DLH employees (a) $ 1,204 $ 1,960 Non-employee directors (b) 718 648 Stock option expense $ 1,922 $ 2,608 (a): Included in this amount are equity grants of restricted stock units ("RSU") to Executive Officers, which were issued in accordance with the DLH long-term incentive compensation policy in this fiscal year, and stock option grants to employees during prior fiscal years. The RSUs issued and outstanding totaled 211,228 and 140,404 at September 30, 2023 and 2022, respectively. During the fiscal year ended September 30, 2023, 197,174 RSUs were granted to Executive Officers. Of the RSUs granted, 141,892 have performance-based vesting criteria and the remaining 55,282 have service-based vesting criteria. At a 50% volatility and assumptions of a 3-year term and the performance vesting criteria results in an indicated a fair value. The RSUs granted during the fiscal year ended September 30, 2023, as follows using the Monte Carlo Method. Volatility 50% Grant Date Performance Vesting Base Performance Vesting Criteria (Years) Calculated Fair Value January 27, 2023 Revenue Revenue increase at the end of the performance period as compared to the year ended September 30, 2022 3 $ 3.51 January 27, 2023 Stock price Stock price is at least $33.21 per share average for the 30 days prior to the end of the performance period 3 $ 2.92 Notes: Results based on 100,000 simulations (b): Equity grants of RSUs were made in accordance with DLH compensation policy for non-employee directors and a total of 50,367 and 53,510 restricted stock units were issued and outstanding at September 30, 2023 and 2022, respectively. These grants have service-based vesting criteria and vest at the end of this fiscal year. Unrecognized stock-based compensation expense Unrecognized stock-based compensation expense is presented in the table below for the years ending September 30, 2023 and 2022 (in thousands): 2023 2022 Unrecognized expense for DLH employees (a) $ 7,107 $ 5,214 Unrecognized expense $ 7,107 $ 5,214 (a): On a weighted average basis, this expense is expected to be recognized within the next 4.20 years. Stock option activity for the year ended September 30, 2023 : The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock. A summary of the Company's stock option awards is as follows: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (in thousands) (in years) (in thousands) Outstanding, September 30, 2022 2,392 $ 7.05 5.4 $ 13,566 Granted (a) 470 11.57 — — Exercised (393) 3.42 — — Cancelled (191) 9.54 — — Outstanding, September 30, 2023 2,278 $ 8.40 5.8 $ 8,693 Vested and exercisable, September 30, 2023 1,608 $ 6.43 4.3 $ 8,648 (a): Utilizing a volatility of 50% along with assumptions of a 10-year term and the aforementioned 10-day stock price threshold results in an indicated range of value of the options granted during the year ended September 30, 2023, as follows using the Monte Carlo method: Vesting Expected Strike Stock Threshold Term Calculated Grant Date Price Price Price (Years) Fair Value January 26, 2023 $ 11.66 $ 11.66 $ 15.00 10 $ 7.41 August 31, 2023 $ 11.08 $ 11.08 $ 14.25 10 $ 7.41 August 31, 2023 $ 11.08 $ 11.08 $ 16.50 10 $ 7.41 Note: Results based on 100,000 simulations Stock options shares outstanding, vested and unvested for the years ended September 30, 2023 and 2022 (in thousands): Number of Shares 2023 2022 Vested and exercisable 1,608 2,117 Unvested (a) 670 275 Options outstanding 2,278 2,392 (a): Certain awards vest upon satisfaction of certain performance criteria. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing income available to common shareholders by the weighted average number of common shares outstanding and restricted stock grants that vested or are likely to vest during the period. Diluted earnings per share is calculated by dividing income available to common shareholders by the weighted average number of basic common shares outstanding, adjusted to reflect potentially dilutive securities. Diluted earnings per share is calculated using the treasury stock method. Earnings Per Share information is presented in the table below for the years ending September 30, 2023 and 2022 (in thousands except for per share amounts): 2023 2022 Numerator: Net income $ 1,461 $ 23,288 Denominator: Denominator for basic net income per share - weighted-average outstanding shares 13,704 12,830 Effect of dilutive securities: Stock options and restricted stock 727 1,349 Denominator for diluted net income per share - weighted-average outstanding shares $ 14,431 $ 14,179 Net income per share - basic $ 0.11 $ 1.82 Net income per share - diluted $ 0.10 $ 1.64 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contractual Obligations as of September 30, 2023 (in thousands): Payments Due Per Fiscal Year Total 2024 2025 2026 2027 2028 Thereafter Debt obligations $ 179,359 $ 8,313 $ 19,000 $ 19,000 $ 23,750 $ 109,296 $ — Facility operating leases 23,489 4,560 3,928 3,700 2,627 2,377 6,297 Equipment operating leases 50 50 — — — — — Contractual obligations $ 202,898 $ 12,923 $ 22,928 $ 22,700 $ 26,377 $ 111,673 $ 6,297 Legal Proceedings As a commercial enterprise and employer, the Company is subject to various claims and legal actions in the ordinary course of business. These matters can include professional liability, employment-relations issues, workers’ compensation, tax, payroll and employee-related matters, other commercial disputes arising in the course of its business, and inquiries and investigations by governmental agencies regarding our employment practices or other matters. The Company is not aware of any pending or threatened litigation that it believes is reasonably likely to have a material adverse effect on its results of operations, financial position or cash flows. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company has determined that for the years ended September 30, 2023 and 2022 and through the filing date of this report, there were no significant related party transactions that have occurred which require disclosure through the date that these consolidated financial statements were issued. |
Provision for Income Taxes
Provision for Income Taxes | 12 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes | Provision for Income Taxes The significant components of provision for income taxes from continuing operations are summarized as follows for the years ending September 30, 2023 and 2022 (in thousands): 2023 2022 Current expense $ 3,823 $ 7,351 Deferred expense (4,464) 424 Income tax (benefit) expense $ (641) $ 7,775 The following table presents the significant differences between our income taxes at the federal statutory rate and the Company's effective tax rate for continuing operations for the years ending September 30, 2023 and 2022 (in thousands): 2023 2022 Income taxes at the federal statutory rate $ 187 $ 6,523 State taxes, net (536) 1,158 Other permanent items (292) 94 Income tax (benefit) expense $ (641) $ 7,775 An analysis of the Company's deferred tax assets and liabilities at September 30, 2023 and 2022 is as follows (in thousands): 2023 2022 Deferred tax assets: Net operating loss carry forwards, net $ 855 $ 296 Stock based compensation 708 668 Accrued compensation 2,094 2,108 Capitalized transaction costs 973 — Right of use asset/liability 1,669 — Interest limitation 2,601 — Total deferred tax assets $ 8,900 $ 3,072 Less: valuation allowance (847) (262) Total deferred tax assets, net $ 8,053 $ 2,810 Deferred tax liabilities: Depreciation on fixed assets (418) (458) Amortization on identified intangibles and goodwill (4,050) (3,375) Accrued expenses (515) (407) Right of use liability — (104) Total deferred tax liabilities $ (4,983) $ (4,344) Net deferred tax assets (liabilities) $ 3,070 $ (1,534) |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefits Plans | Employee Benefit Plans As of September 30, 2023, the Company maintains a 401(k) Plan (the "401(k) Plan"), a defined contribution and supplemental pension plan for the benefit of its eligible employees. The Company may provide a discretionary matching contribution of a participant's elective contributions under the 401(k) Plan. The Company recorded related expense of $2.6 million and $2.2 million for the years ending September 30, 2023 and 2022, respectively. Participants are always fully vested in their elective contributions and vest in Company matching contributions over a four-year period. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Management has evaluated subsequent events through the date that the Company's consolidated financial statements were issued. Based on this evaluation, the Company has determined that no further subsequent events have occurred which require disclosure through the date that these consolidated financial statements were issued. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of DLH Holdings Corp. and its subsidiaries ("DLH" or the "Company" and also referred to as "we," "us," and "our"), all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the instructions to Form 10-K, Regulation S-X, and Regulation S-K. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The most significant of these estimates and assumptions relate to costs including overhead and its allocation, assessing fair value of acquired assets and liabilities accounted for through business acquisitions, valuing and determining the amortization periods for long-lived intangible assets, interest rate swaps, stock-based compensation, right-of-use assets and leases liabilities, and loss development on workers' compensation claims. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations, and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. We revise material accounting estimates if changes occur, such as more experience is acquired, additional information is obtained, or there is new information on which an estimate was or can be based. Actual results could differ from those estimates. |
Revenue | Revenue The Company's revenues from contracts with customers are derived from offerings that include technology-enabled business process outsourcing, program management solutions, and public health research and analytics, substantially within the U.S. government and its agencies. The Company has various types of contracts including time-and-materials contracts, cost-reimbursable contracts, and firm-fixed-price contracts. We consider a contract with a customer to exist when there is a commitment by both parties (customer and Company), payment terms are determinable, there is commercial substance, and collectability is probably in accordance with Accounting Standards Codification ("ASC") No. 606, "Revenue from Contracts with Customers" ("Topic 606"). We recognize revenue over time when there is a continuous transfer of control to our customer as performance obligations are satisfied. For our U.S. government contracts, this continuous transfer of control to the customer is transferred over time and revenue is recognized based on the extent of progress toward completion of the performance obligation. We consider control to transfer when we have a right to payment. In some instances, the Company commences providing services prior to formal approval to begin work from the customer. The Company considers these factors, the risks associated with commencing work, and legal enforceability in determining whether a contract exists under Topic 606. Contract modification can occur throughout the life of the contract and can affect the transaction price, extend the period of performance, adjust funding, or create new performance obligations. We review each modification to assess the impact of these contract changes to determine if it should be treated as part of the original performance obligation or as a separate contract. Contract modifications impact performance obligations when the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue and profit cumulatively. Furthermore, a significant change in one or more estimates could affect the profitability of our contracts. We recognize adjustments in estimated profit on contracts in the period identified. For service contracts, we satisfy our performance obligations as services are rendered. We use cost-based input and time-based output methods to measure progress based on the contract type. • Time and material - We bill the customer per labor hour and per material, and revenue is recognized in the amount invoiced as the amount corresponds directly to the value of our performance to date. Revenue is recognized to the extent of billable rates times hours delivered plus materials and other reimbursable costs incurred. • Cost reimbursable - We record reimbursable costs as incurred, including an estimated share of the contractual fee earned. • Firm fixed price - We recognize revenue over time using a straight-line measure of progress. Contract costs generally include direct costs such as labor, materials, subcontract costs, and indirect costs identifiable with or allocable to a specific contract. Costs are expensed as incurred and include an estimate of the contractual fees earned. Contract costs incurred for U.S. government contracts, including indirect costs, are subject to audit and adjustment by various government audit agencies. Historically, our adjustments have not been material. Contract assets - Amounts are invoiced as work progresses in accordance with agreed-upon contractual terms. In part, revenue recognition occurs before we have the right to bill, resulting in contract assets. These contract assets are reported within Accounts receivable, net on our consolidated balance sheets and are invoiced in accordance with payment terms defined in each contract. Period end balances will vary from period to period due to agreed-upon contractual terms. Contract liabilities - Amounts are a result of billings in excess of costs incurred or prepayment for services to be rendered. Disaggregation of revenue from contracts with customers |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company's cash and cash equivalents, accounts receivable, contract assets, contract liabilities, accrued expenses, and accounts payable approximate fair value due to the short-term nature of these instruments. The fair values of the Company's debt instruments approximate fair value because the underlying interest rates approximate market rates that the Company could obtain for similar instruments at the balance sheet dates. |
Long Lived Assets | Long-lived Assets Our long-lived assets include equipment and improvements, intangible assets, right-of-use assets, and goodwill. The Company continues to review its long-lived assets for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. Equipment and improvements are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives (3 to 7 years) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Intangible assets (other than goodwill) are originally recorded at fair value and are amortized on a straight-line basis over their estimated useful lives of 10 years. Maintenance and repair costs are expensed as incurred. |
Leases | Right-of-use assets are measured at the present value of future minimum lease payments, including all probable renewals, plus lease payments made to the lessor before or at lease commencement and indirect costs paid, less incentives received. Our right-of-use assets include long-term leases for facilities and equipment and are amortized over their respective lease terms. Our right-of-use-assets are recognized as the present value of the future minimum lease payments over the lease term less unamortized lease incentives and the balance remaining in deferred rent liability under ASC 840. Lease Liabilities |
Goodwill | Goodwill |
Provision for Income Taxes | Provision for Income Taxes |
Share-based Compensation and Compensation Expense | Stock-based Compensation The Company uses the fair value-based method for stock-based equity compensation. Options issued are designated as either an incentive stock or a non-statutory stock option. No option may be granted with a term of more than 10 years from the date of grant. Option awards may depend on the achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued common shares. All awards to employees and non-employees are recorded at fair value on the date of the grant and expensed over the period of vesting. The Company uses the Monte Carlo method to estimate the fair value of each stock option at the date of grant. Any consideration paid by the option holders to purchase shares is credited to capital stock. Stock-based Compensation Expense |
Cash and Cash Equivalents and Receivables | Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. We maintain cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Deposits held with financial institutions may exceed the $250,000 limit. Receivables Receivables include amounts billed and currently due from customers where the right to consideration is unconditional and amounts unbilled. Both billed and unbilled amounts are non-interest bearing, unsecured, and recognized at an estimated realizable value that include costs and fees, and are generally expected to be billed and received within a single year. We evaluate our receivables for expected credit losses and estimate expected credit losses if appropriate based on customers collections. No allowance for doubtful accounts was deemed necessary at either September 30, 2023 or September 30, 2022. |
Earnings per Share | Earnings Per Share |
Treasury Stock and Preferred Stock | Treasury Stock The Company periodically purchases its own common stock that is traded on public markets as part of announced stock repurchase programs. The repurchased common stock is classified as treasury stock on the consolidated balance sheets and held at cost. As of September 30, 2023 and 2022, the Company did not hold any treasury stock. Preferred Stock Our certificate of incorporation authorizes the issuance of "blank check" preferred stock with such designations, rights and preferences as may be determined from time to time by our board of directors up to an aggregate of 5,000,000 shares of preferred stock. As of September 30, 2023 and 2022, the Company has not issued any preferred stock. |
Interest Rate Swap | Interest Rate Swap The Company uses derivative financial instruments to manage interest rate risk associated with its variable debt. The Company's objective in using these interest rate derivatives is to manage its exposure to interest rate movements and reduce volatility of interest expense. The gains and losses due to changes in the fair value of the interest rate swap agreements completely offset changes in the fair value of the hedged portion of the underlying debt. Offsetting changes in fair value of both the interest rate swaps and the hedged portion of the underlying debt are recognized in interest expense in the consolidated statements of operations. The Company does not hold or issue any derivative instrument for trading or speculative purposes. |
Risks & Uncertainties | Risks & Uncertainties Management evaluates the impact of global markets and economic factors on our industry and the potential for adverse effects on the Company's consolidated financial position and its operations. As of September 30, 2023, there was no indication of any global or economic impacts to our industry. |
New Accounting Pronouncements | New Accounting Pronouncements |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
Schedule of Total Acquisition Consideration and Allocation of Fair Value of Assets and Liabilities | We accounted for the total acquisition consideration and allocation of fair value of the related assets and liabilities at December 8, 2022 as follows (in thousands): Purchase price for GRSi $ 187,997 Purchase price allocation: Cash 747 Accounts receivable 25,468 Other current assets 1,354 Equipment and improvements, net 463 Intangible assets 98,688 Accounts payable and accrued expenses (2,449) Payroll liabilities (7,826) Other current liabilities (325) Other long-term assets and liabilities (781) Identifiable net assets acquired 115,339 Goodwill $ 72,658 |
Schedule of Pro Forma Results (unaudited) | The unaudited pro forma information below is presented for informational purposes only and is not necessarily indicative of our results if the acquisition had taken place on that date. The pro forma information was prepared by combining our reported historical results with the historical results of GRSi for the pre-acquisition periods. In addition, the reported historical amounts were adjusted for the following items, net of associated tax effects: • The impact of recording GRSi's intangible asset amortization. • The impact of interest expense for the new credit facility. • The removal of legacy GRSi director's fees. • The removal of transaction costs for the acquisition incurred by GRSi. The following table presents certain unaudited results for the year ended September 30, 2023 as though the acquisition of GRSi had occurred on October 1, 2022 (in thousands): Twelve Months Ended September 30, Pro forma results 2023 2022 Revenue $ 402,958 $ 507,251 Net income 2,054 18,912 Number of shares outstanding - basic 13,704 12,830 Number of shares outstanding - diluted 14,431 14,179 Basic earnings per share $0.15 $1.47 Diluted earnings per share $0.14 $1.33 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract Balances Recognized on the Company's Consolidated Balance Sheets | The following table summarizes the contract balances recognized within the Company's consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Contract assets $ 20,542 $ 7,682 |
Schedule of Disaggregation of Revenue From Contracts with Customers | The following series of tables presents our revenue disaggregated by these categories: Revenue by customer for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Department of Health and Human Services $ 161,311 $ 102,201 Department of Veterans Affairs 138,862 126,106 Department of Defense 70,325 33,612 Department of Homeland Security 919 126,576 Other 4,455 6,678 Revenue $ 375,872 $ 395,173 Revenue by contract type for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Time and Materials $ 209,951 $ 308,944 Cost Reimbursable 81,797 46,231 Firm Fixed Price 84,124 39,998 Revenue $ 375,872 $ 395,173 Revenue by whether the Company acts as a prime contractor or a subcontractor for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Prime Contractor $ 356,792 $ 366,571 Subcontractor 19,080 28,602 Revenue $ 375,872 $ 395,173 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Summarized Lease Balances in Consolidated Balance Sheet | The following table summarizes lease balances presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Operating lease right-of-use assets (a) $ 9,656 $ 16,851 Operating lease liabilities, current $ 3,463 $ 2,235 Operating lease liabilities, long-term 15,908 16,461 Operating lease liabilities $ 19,371 $ 18,696 (a) Impairment loss of long-lived assets is a loss associated with a reduction of the fair value of an asset prompted by a triggering event. During the fourth quarter of fiscal 2023, DLH reduced its leased office space requirement by consolidating underutilized premises as part of an ongoing facility rationalization effort, to accurately reflect the operational needs of the business. As a result, the Company has determined that its Right of Use Assets experienced a reduction in fair value below its associated carrying value and recorded a $7.7 million loss of fair value. |
Schedule of Lease Costs and Other Information Related to Leases | For the years ended September 30, 2023 and 2022, total lease costs for our operating leases are as follows (in thousands): 2023 2022 Operating $ 3,911 $ 3,548 Short-term 287 114 Variable 95 120 Sublease income (a) (282) (258) Lease costs $ 4,011 $ 3,524 (a): The Company subleases a portion of one of its leased facilities. The sublease is classified as an operating lease with respect to the underlying asset. The sublease term is 5 years and includes two additional 1-year term extension options. Other information related to our leases is as follows for the years ending September 30, 2023 and 2022 (in thousands): 2023 2022 Cash paid for amounts included in the measurement of lease liabilities $ 4,468 $ 3,411 New lease liabilities, net of new right-of-use-assets 120 — Other lease information $ 4,588 $ 3,411 |
Schedule of Company's Future Lease Payments | The Company's future minimum lease payments as of September 30, 2023 are as follows (in thousands): For the Fiscal Year Ending September 30, 2024 $ 4,612 2025 3,928 2026 3,700 2027 2,627 2028 2,377 Thereafter 6,295 Total future minimum lease payments $ 23,539 Less: imputed interest (4,168) Present value of future minimum lease payments $ 19,371 Less: current portion of operating lease liabilities (3,463) Long-term operating lease liabilities $ 15,908 |
Supporting Financial Informat_2
Supporting Financial Information (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Receivable | The following table summarizes accounts receivable presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Billed receivables $ 38,577 $ 32,814 Contract assets 20,542 7,682 Allowance for doubtful accounts — — Accounts receivable $ 59,119 $ 40,496 |
Schedule of Other Current Assets | The following table summarizes other current assets presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Prepaid licenses and other expenses $ 1,330 $ 1,196 Prepaid insurance and benefits 743 737 Other receivables 994 945 Other current assets $ 3,067 $ 2,878 |
Schedule of Goodwill | The change in the carrying amount of goodwill as follows presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): Balance at September 30, 2022 $ 65,643 Increase from GRSi acquisition (a) 72,658 Tax Adjustment GRSI acquisition (140) Goodwill $ 138,161 Ref (a); The Company has completed its valuation assessment of the GRSi acquisition. Please refer to Note 4 for more information. |
Schedule of Intangible Assets, Net | The following table summarizes intangible assets, net presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Intangible assets Customer contracts and related customer relationships $ 113,622 $ 47,044 Backlog 37,249 15,237 Trade names 13,034 3,051 Covenants-not-to-compete 637 522 Total intangible assets $ 164,542 $ 65,854 Less accumulated amortization: Customer contracts and related customer relationships (29,929) (19,731) Backlog (7,273) (3,875) Trade names (2,185) (1,048) Covenants-not-to-compete (378) (316) Total accumulated amortization $ (39,765) $ (24,970) Intangible assets, net $ 124,777 $ 40,884 |
Schedule of Estimated Future Amortization Expense of Finite-lived Intangibles | As of September 30, 2023, the estimated annual amortization expense is as follows (in thousands): For the Fiscal Year Ending September 30, 2024 $ 16,456 2025 16,456 2026 15,721 2027 14,694 2028 14,694 Thereafter 46,756 Amortization expense $ 124,777 |
Schedule of Equipment and Improvements, Net | The following table summarizes equipment and improvements, net presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Furniture and equipment $ 1,790 $ 893 Computer equipment and software 6,479 6,723 Leasehold improvements 1,614 1,614 Total equipment and improvements $ 9,883 $ 9,230 Less: accumulated depreciation and amortization (8,293) (7,526) Equipment and improvements, net $ 1,590 $ 1,704 |
Schedule of Accounts Payable, Accrued Expenses, and Other Current Liabilities | The following table summarizes accounts payable and accrued liabilities presented on our consolidated balance sheets at September 30, 2023and 2022 (in thousands): 2023 2022 Accounts payable $ 12,603 $ 11,886 Accrued benefits 6,414 3,857 Accrued bonus and incentive compensation 4,719 3,625 Accrued workers' compensation insurance 2,369 4,880 Accrued Interest 1,309 — Other accrued expenses 2,290 2,614 Accounts payable and accrued liabilities $ 29,704 $ 26,862 |
Schedule of Accrued Payroll | The following table summarizes accrued payroll presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Accrued Leave $ 9,621 $ 6,345 Accrued payroll 2,487 1,946 Accrued payroll taxes 1,173 411 Accrued severance 513 742 Accrued payroll $ 13,794 $ 9,444 |
Schedule of Debt Obligations | Debt obligations The following table summarizes debt obligations presented on our consolidated balance sheets at September 30, 2023 and 2022 (in thousands): 2023 2022 Secured revolving line of credit $ 9,546 $ — Secured term loan 169,813 22,000 Less: unamortized deferred financing costs (7,024) (1,584) Net bank debt obligations $ 172,335 $ 20,416 Less: current portion of debt obligations, net of deferred financing costs (a) (17,188) — Long-term portion of debt obligations, net of deferred financing costs $ 155,147 $ 20,416 As of September 30, 2023, we have satisfied mandatory principal payments on our secured term loan. (a) Current portion comprises term loan amortization of $8.3 million and the $9.5 million outstanding balance on the secured revolving line of credit, net of $7.0 million of unamortized deferred financing costs. |
Schedule of Interest Expense | Interest expense The following table summarizes interest expense presented on our consolidated statements of operations for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 Interest expense (a) $ 14,153 $ 1,574 Interest income (b) (64) (23) Amortization of deferred financing costs (c) 2,182 664 Interest expense $ 16,271 $ 2,215 (a): Interest expense on borrowing (b): Interest income |
Credit Facilities (Tables)
Credit Facilities (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of Loan Facilities and Subordinated Debt Financing | A summary of our credit facilities as of September 30, 2023 and 2022 is as follows (in millions): 2023 2022 Arrangement Loan Balance Interest Arrangement Loan Balance Interest Secured term loan (a) due December 8, 2027 $ 169.8 SOFR 1 + 4.1% Secured term loan (a) due September 30, 2025 $ 22.0 LIBOR 2 + 2.5% Secured revolving line of credit (b) due December 8, 2027 $ 9.5 SOFR 1 + 4.1% Secured revolving line of credit (b) due September 30, 2025 $ — LIBOR 2 + 2.5% 1 Secured Overnight Financing Rate ("SOFR") as of September 30, 2023 was 5.3%. 2 LIBOR rate as of September 30, 2022 was 2.52%. |
Stock-based Compensation and _2
Stock-based Compensation and Equity Grants (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expense | Total stock-based compensation expense, presented in the table below, is recorded in general and administrative expenses included in our consolidated statements of operations for the years ended September 30, 2023 and 2022 (in thousands): 2023 2022 DLH employees (a) $ 1,204 $ 1,960 Non-employee directors (b) 718 648 Stock option expense $ 1,922 $ 2,608 (a): Included in this amount are equity grants of restricted stock units ("RSU") to Executive Officers, which were issued in accordance with the DLH long-term incentive compensation policy in this fiscal year, and stock option grants to employees during prior fiscal years. The RSUs issued and outstanding totaled 211,228 and 140,404 at September 30, 2023 and 2022, respectively. During the fiscal year ended September 30, 2023, 197,174 RSUs were granted to Executive Officers. Of the RSUs granted, 141,892 have performance-based vesting criteria and the remaining 55,282 have service-based vesting criteria. At a 50% volatility and assumptions of a 3-year term and the performance vesting criteria results in an indicated a fair value. The RSUs granted during the fiscal year ended September 30, 2023, as follows using the Monte Carlo Method. Volatility 50% Grant Date Performance Vesting Base Performance Vesting Criteria (Years) Calculated Fair Value January 27, 2023 Revenue Revenue increase at the end of the performance period as compared to the year ended September 30, 2022 3 $ 3.51 January 27, 2023 Stock price Stock price is at least $33.21 per share average for the 30 days prior to the end of the performance period 3 $ 2.92 Notes: Results based on 100,000 simulations (b): Equity grants of RSUs were made in accordance with DLH compensation policy for non-employee directors and a total of 50,367 and 53,510 restricted stock units were issued and outstanding at September 30, 2023 and 2022, respectively. These grants have service-based vesting criteria and vest at the end of this fiscal year. Unrecognized stock-based compensation expense Unrecognized stock-based compensation expense is presented in the table below for the years ending September 30, 2023 and 2022 (in thousands): 2023 2022 Unrecognized expense for DLH employees (a) $ 7,107 $ 5,214 Unrecognized expense $ 7,107 $ 5,214 |
Schedule of Stock Option Activity | A summary of the Company's stock option awards is as follows: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (in thousands) (in years) (in thousands) Outstanding, September 30, 2022 2,392 $ 7.05 5.4 $ 13,566 Granted (a) 470 11.57 — — Exercised (393) 3.42 — — Cancelled (191) 9.54 — — Outstanding, September 30, 2023 2,278 $ 8.40 5.8 $ 8,693 Vested and exercisable, September 30, 2023 1,608 $ 6.43 4.3 $ 8,648 (a): Utilizing a volatility of 50% along with assumptions of a 10-year term and the aforementioned 10-day stock price threshold results in an indicated range of value of the options granted during the year ended September 30, 2023, as follows using the Monte Carlo method: |
Schedule of Stock Options, Valuation Assumptions | Vesting Expected Strike Stock Threshold Term Calculated Grant Date Price Price Price (Years) Fair Value January 26, 2023 $ 11.66 $ 11.66 $ 15.00 10 $ 7.41 August 31, 2023 $ 11.08 $ 11.08 $ 14.25 10 $ 7.41 August 31, 2023 $ 11.08 $ 11.08 $ 16.50 10 $ 7.41 Note: Results based on 100,000 simulations |
Schedule of Stock Option Shares Outstanding, Vested and Expected to Vest | Stock options shares outstanding, vested and unvested for the years ended September 30, 2023 and 2022 (in thousands): Number of Shares 2023 2022 Vested and exercisable 1,608 2,117 Unvested (a) 670 275 Options outstanding 2,278 2,392 (a): Certain awards vest upon satisfaction of certain performance criteria. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Diluted Earnings Per Share | Earnings Per Share information is presented in the table below for the years ending September 30, 2023 and 2022 (in thousands except for per share amounts): 2023 2022 Numerator: Net income $ 1,461 $ 23,288 Denominator: Denominator for basic net income per share - weighted-average outstanding shares 13,704 12,830 Effect of dilutive securities: Stock options and restricted stock 727 1,349 Denominator for diluted net income per share - weighted-average outstanding shares $ 14,431 $ 14,179 Net income per share - basic $ 0.11 $ 1.82 Net income per share - diluted $ 0.10 $ 1.64 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Contractual Obligations | Contractual Obligations as of September 30, 2023 (in thousands): Payments Due Per Fiscal Year Total 2024 2025 2026 2027 2028 Thereafter Debt obligations $ 179,359 $ 8,313 $ 19,000 $ 19,000 $ 23,750 $ 109,296 $ — Facility operating leases 23,489 4,560 3,928 3,700 2,627 2,377 6,297 Equipment operating leases 50 50 — — — — — Contractual obligations $ 202,898 $ 12,923 $ 22,928 $ 22,700 $ 26,377 $ 111,673 $ 6,297 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Significant Components of the Expense From Continuing Operations | The significant components of provision for income taxes from continuing operations are summarized as follows for the years ending September 30, 2023 and 2022 (in thousands): 2023 2022 Current expense $ 3,823 $ 7,351 Deferred expense (4,464) 424 Income tax (benefit) expense $ (641) $ 7,775 |
Schedule of Significant Differences Between the Income Taxes at Federal Statutory Rate and Effective Tax Rate | The following table presents the significant differences between our income taxes at the federal statutory rate and the Company's effective tax rate for continuing operations for the years ending September 30, 2023 and 2022 (in thousands): 2023 2022 Income taxes at the federal statutory rate $ 187 $ 6,523 State taxes, net (536) 1,158 Other permanent items (292) 94 Income tax (benefit) expense $ (641) $ 7,775 |
Schedule of Deferred Tax Assets and Liabilities | An analysis of the Company's deferred tax assets and liabilities at September 30, 2023 and 2022 is as follows (in thousands): 2023 2022 Deferred tax assets: Net operating loss carry forwards, net $ 855 $ 296 Stock based compensation 708 668 Accrued compensation 2,094 2,108 Capitalized transaction costs 973 — Right of use asset/liability 1,669 — Interest limitation 2,601 — Total deferred tax assets $ 8,900 $ 3,072 Less: valuation allowance (847) (262) Total deferred tax assets, net $ 8,053 $ 2,810 Deferred tax liabilities: Depreciation on fixed assets (418) (458) Amortization on identified intangibles and goodwill (4,050) (3,375) Accrued expenses (515) (407) Right of use liability — (104) Total deferred tax liabilities $ (4,983) $ (4,344) Net deferred tax assets (liabilities) $ 3,070 $ (1,534) |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Significant Accounting policies disclosures [Line Items] | ||
Finite-lived intangibles estimated useful lives | 10 years | |
Goodwill | $ 138,161,000 | $ 65,643,000 |
Goodwill impairment loss | 0 | 0 |
Uncertain tax positions | 0 | 0 |
Tax interest | 0 | 0 |
Tax penalties | 0 | 0 |
FDIC insurance limit amount | 250,000 | |
Allowance for doubtful accounts | $ 0 | $ 0 |
Treasury stock (in shares) | 0 | 0 |
Authorized shares of preferred stock (shares) | 5,000,000 | |
Issued preferred stock (shares) | 0 | 0 |
Minimum | ||
Significant Accounting policies disclosures [Line Items] | ||
Estimated useful asset lives | 3 years | |
Minimum | Facilities and Equipment | ||
Significant Accounting policies disclosures [Line Items] | ||
Remaining lease term | 1 year | |
Maximum | ||
Significant Accounting policies disclosures [Line Items] | ||
Estimated useful asset lives | 7 years | |
Maximum | Facilities and Equipment | ||
Significant Accounting policies disclosures [Line Items] | ||
Remaining lease term | 8 years |
Business Combination - Narrativ
Business Combination - Narrative (Details) - USD ($) $ in Thousands, shares in Millions | 12 Months Ended | ||
Dec. 08, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | |||
Borrowings | $ 168,000 | $ 17,000 | |
Issuance and fair value adjustment of common stock in business combination | 6,539 | ||
GRSI | |||
Business Acquisition [Line Items] | |||
Percentage of equity interest acquired | 10,000% | ||
Purchase price | $ 187,997 | ||
Borrowings | 181,500 | ||
Issuance and fair value adjustment of common stock in business combination | 6,500 | ||
Escrow funds | $ 4,300 | ||
Revenue contributed since the acquisition date | 107,000 | ||
Income from operations contributed since the acquisition date | 4,400 | ||
Non-cash intangible asset amortization expense | $ 8,200 | ||
GRSI | Common Stock | |||
Business Acquisition [Line Items] | |||
Issuance of common stock in business combination (in shares) | 0.5 |
Business Combination - Total Ac
Business Combination - Total Acquisition Consideration and Fair Value of Net Assets Acquired (Details) - USD ($) $ in Thousands | Dec. 08, 2022 | Sep. 30, 2023 | Sep. 30, 2022 |
Purchase price allocation: | |||
Goodwill | $ 138,161 | $ 65,643 | |
GRSI | |||
Business Acquisition [Line Items] | |||
Purchase price for GRSi | $ 187,997 | ||
Purchase price allocation: | |||
Cash | 747 | ||
Accounts receivable | 25,468 | ||
Other current assets | 1,354 | ||
Equipment and improvements, net | 463 | ||
Intangible assets | 98,688 | ||
Accounts payable and accrued expenses | (2,449) | ||
Payroll liabilities | (7,826) | ||
Other current liabilities | (325) | ||
Other long-term assets and liabilities | (781) | ||
Identifiable net assets acquired | 115,339 | ||
Goodwill | $ 72,658 |
Business Combination - Pro Form
Business Combination - Pro Forma Results (unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||
Basic (in shares) | 13,704 | 12,830 |
Diluted (in shares) | 14,431 | 14,179 |
GRSI | ||
Business Acquisition [Line Items] | ||
Business Acquisition, Pro Forma Revenue | $ 402,958 | $ 507,251 |
Net income | $ 2,054 | $ 18,912 |
Basic (in shares) | 13,704 | 12,830 |
Diluted (in shares) | 14,431 | 14,179 |
Basic earnings per share (in dollars per share) | $ 0.15 | $ 1.47 |
Diluted earnings per share (in dollars per share) | $ 0.14 | $ 1.33 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 20,542 | $ 7,682 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 375,872 | $ 395,173 |
Prime Contractor | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 356,792 | 366,571 |
Subcontractor | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 19,080 | 28,602 |
Time and Materials | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 209,951 | 308,944 |
Cost Reimbursable | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 81,797 | 46,231 |
Firm Fixed Price | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 84,124 | 39,998 |
Department of Health and Human Services | Revenue Concentration | Customer Concentration | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 161,311 | 102,201 |
Department of Veterans Affairs | Revenue Concentration | Customer Concentration | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 138,862 | 126,106 |
Department of Defense | Revenue Concentration | Customer Concentration | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 70,325 | 33,612 |
Department of Homeland Security | Revenue Concentration | Customer Concentration | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 919 | 126,576 |
Other | Revenue Concentration | Customer Concentration | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 4,455 | $ 6,678 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 USD ($) sublease_option sublease | Sep. 30, 2022 USD ($) | |
Leases [Abstract] | ||
Impairment loss of long-lived asset | $ | $ 7,673 | $ 0 |
Number of subleased facilities | sublease | 1 | |
Sublease term | 5 years | |
Number of sublease extension options | sublease_option | 2 | |
Sublease option extension period | 1 year | |
Weighted-average remaining lease term | 6 years 3 months 18 days | |
Weighted-average discount rate | 6.30% |
Leases - Summary of Lease Balan
Leases - Summary of Lease Balances in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 9,656 | $ 16,851 |
Operating lease liabilities, current | 3,463 | 2,235 |
Operating lease liabilities - long-term | 15,908 | 16,461 |
Operating lease liabilities | $ 19,371 | $ 18,696 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||
Operating Lease, Cost | $ 3,911 | $ 3,548 |
Short-term | 287 | 114 |
Variable | 95 | 120 |
Sublease Income | (282) | (258) |
Lease costs | $ 4,011 | $ 3,524 |
Leases - Company's Future Minim
Leases - Company's Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Leases [Abstract] | ||
2024 | $ 4,612 | |
2025 | 3,928 | |
2026 | 3,700 | |
2027 | 2,627 | |
2028 | 2,377 | |
Thereafter | 6,295 | |
Total future minimum lease payments | 23,539 | |
Less: imputed interest | (4,168) | |
Operating lease liabilities | 19,371 | $ 18,696 |
Less: current portion of operating lease liabilities | (3,463) | (2,235) |
Long-term operating lease liabilities | $ 15,908 | $ 16,461 |
Leases - Other Information Rela
Leases - Other Information Related to Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of lease liabilities | $ 4,468 | $ 3,411 |
New lease liabilities, net of new right-of-use-assets | 120 | 0 |
Other lease information | $ 4,588 | $ 3,411 |
Supporting Financial Informat_3
Supporting Financial Information - Accounts Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Billed receivables | $ 38,577 | $ 32,814 |
Contract assets | 20,542 | 7,682 |
Allowance for doubtful accounts | 0 | 0 |
Accounts receivable | $ 59,119 | $ 40,496 |
Supporting Financial Informat_4
Supporting Financial Information - Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid licenses and other expenses | $ 1,330 | $ 1,196 |
Prepaid insurance and benefits | 743 | 737 |
Other receivables | 994 | 945 |
Other current assets | $ 3,067 | $ 2,878 |
Supporting Financial Informat_5
Supporting Financial Information - Goodwill (Details) $ in Thousands | 12 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 65,643 |
Increase from GRSi acquisition | 72,658 |
Tax Adjustment GRSI acquisition | (140) |
Ending balance | $ 138,161 |
Supporting Financial Informat_6
Supporting Financial Information - Intangible Assets, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 164,542 | $ 65,854 |
Accumulated amortization | (39,765) | (24,970) |
Intangible assets, net | 124,777 | 40,884 |
Customer contracts and related customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 113,622 | 47,044 |
Accumulated amortization | (29,929) | (19,731) |
Backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 37,249 | 15,237 |
Accumulated amortization | (7,273) | (3,875) |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 13,034 | 3,051 |
Accumulated amortization | (2,185) | (1,048) |
Covenants-not-to-compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 637 | 522 |
Accumulated amortization | $ (378) | $ (316) |
Supporting Financial Informat_7
Supporting Financial Information - Amortization and Weighted Average Amortization period of Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense of intangibles | $ 14.8 | $ 6.6 |
Finite-Lived Intangible Assets, Remaining Amortization Period | 8 years 3 months 18 days | |
Customer contracts and related customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Remaining Amortization Period | 8 years 2 months 12 days | |
Backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Remaining Amortization Period | 8 years 3 months 18 days | |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Remaining Amortization Period | 8 years 8 months 12 days | |
Covenants-not-to-compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Remaining Amortization Period | 6 years |
Supporting Financial Informat_8
Supporting Financial Information - Estimated Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
2024 | $ 16,456 | |
2025 | 16,456 | |
2026 | 15,721 | |
2027 | 14,694 | |
2028 | 14,694 | |
Thereafter | 46,756 | |
Intangible assets, net | $ 124,777 | $ 40,884 |
Supporting Financial Informat_9
Supporting Financial Information - Equipment and Improvements, net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Furniture and equipment | $ 1,790 | $ 893 |
Computer equipment and software | 6,479 | 6,723 |
Leasehold improvements | 1,614 | 1,614 |
Total equipment and improvements | 9,883 | 9,230 |
Less: accumulated depreciation and amortization | (8,293) | (7,526) |
Equipment and improvements, net | 1,590 | 1,704 |
Depreciation | $ 800 | $ 1,100 |
Supporting Financial Informa_10
Supporting Financial Information - Accounts Payable, Accrued Expense and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable | $ 12,603 | $ 11,886 |
Accrued benefits | 6,414 | 3,857 |
Accrued bonus and incentive compensation | 4,719 | 3,625 |
Accrued workers' compensation insurance | 2,369 | 4,880 |
Accrued Interest | 1,309 | 0 |
Other accrued expenses | 2,290 | 2,614 |
Accounts payable and accrued liabilities | $ 29,704 | $ 26,862 |
Supporting Financial Informa_11
Supporting Financial Information - Accrued Payroll (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued Leave | $ 9,621 | $ 6,345 |
Accrued payroll | 2,487 | 1,946 |
Accrued payroll taxes | 1,173 | 411 |
Accrued severance | 513 | 742 |
Accrued payroll | $ 13,794 | $ 9,444 |
Supporting Financial Informa_12
Supporting Financial Information - Debt Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Debt Instrument [Line Items] | ||
Secured term loan | $ 179,359 | |
Total long-term debt obligations | 172,335 | $ 20,416 |
Debt obligations - current, net of deferred financing costs | (17,188) | 0 |
Debt obligations - long-term, net of deferred financing costs | 155,147 | 20,416 |
Debt annual amortization amount fiscal year 2023 | 8,313 | |
Secured revolving line of credit | ||
Debt Instrument [Line Items] | ||
Secured term loan | 9,546 | 0 |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Secured term loan | 169,813 | 22,000 |
Less: unamortized deferred financing costs | 7,024 | 1,584 |
Debt annual amortization amount fiscal year 2023 | 8,300 | |
Secured Debt | Secured revolving line of credit | ||
Debt Instrument [Line Items] | ||
Secured term loan | $ 9,500 | $ 0 |
Supporting Financial Informa_13
Supporting Financial Information - Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Interest expense | $ 14,153 | $ 1,574 |
Interest income | (64) | (23) |
Amortization of deferred financing costs | 2,182 | 664 |
Interest expense | $ 16,271 | $ 2,215 |
Credit Facilities - Summary of
Credit Facilities - Summary of Loan Facilities and Subordinated Debt Financing (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Instrument [Line Items] | ||
Loan Balance | $ 179,359 | |
SOFR | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, effective percentage | 5.30% | |
Secured revolving line of credit | ||
Debt Instrument [Line Items] | ||
Loan Balance | $ 9,546 | $ 0 |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Loan Balance | 169,813 | 22,000 |
Secured Debt | Term loan | ||
Debt Instrument [Line Items] | ||
Loan Balance | $ 169,800 | $ 22,000 |
Secured Debt | Term loan | SOFR | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate | 4.10% | |
Secured Debt | Term loan | LIBOR 1 | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate | 2.50% | |
Secured Debt | Secured revolving line of credit | ||
Debt Instrument [Line Items] | ||
Loan Balance | $ 9,500 | $ 0 |
Secured Debt | Secured revolving line of credit | SOFR | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate | 4.10% | |
Secured Debt | Secured revolving line of credit | LIBOR 1 | ||
Debt Instrument [Line Items] | ||
Debt instrument, basis spread on variable rate | 2.50% | |
Debt instrument, interest rate, effective percentage | 2.52% |
Credit Facilities - Narrative (
Credit Facilities - Narrative (Details) | 12 Months Ended | |
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Line of Credit Facility [Line Items] | ||
Notional amount of floating-to-fix interest rate swap | $ 112,200,000 | |
Debt annual amortization amount fiscal year 2023 | 8,313,000 | |
Debt annual amortization amount fiscal year 2024 | 19,000,000 | |
Debt annual amortization amount fiscal year 2025 | 19,000,000 | |
Debt annual amortization fiscal year 2026 | 23,750,000 | |
Debt annual amortization fiscal year 2027 | 109,296,000 | |
Total repayments of debt | 20,188,000 | $ 41,750,000 |
Debt Instrument Excess Cash Flow Payment | 0 | |
Secured term loan | 179,359,000 | |
Maturity One | ||
Line of Credit Facility [Line Items] | ||
Notional amount of floating-to-fix interest rate swap | 16,200,000 | |
Maturity Two | ||
Line of Credit Facility [Line Items] | ||
Notional amount of floating-to-fix interest rate swap | 96,000,000 | |
Interest Rate Swap | ||
Line of Credit Facility [Line Items] | ||
Decrease in interest expense | $ 900,000 | |
Interest Rate Swap | Maturity One | ||
Line of Credit Facility [Line Items] | ||
Fixed interest rate applicable to swaps | 1.61% | |
Interest Rate Swap | Maturity Two | ||
Line of Credit Facility [Line Items] | ||
Fixed interest rate applicable to swaps | 4.10% | |
Secured revolving line of credit | ||
Line of Credit Facility [Line Items] | ||
Secured term loan | $ 9,546,000 | 0 |
Secured Debt | ||
Line of Credit Facility [Line Items] | ||
Debt annual amortization amount fiscal year 2023 | 8,300,000 | |
Secured term loan | $ 169,813,000 | 22,000,000 |
Secured Debt | Term loan | ||
Line of Credit Facility [Line Items] | ||
Fixed charge coverage ratio | 1.25 | |
Debt annual amortization amount fiscal year 2023 | $ 14,300,000 | |
Debt annual amortization amount fiscal year 2024 | 14,300,000 | |
Debt annual amortization amount fiscal year 2025 | 19,000,000 | |
Debt annual amortization fiscal year 2026 | 19,000,000 | |
Debt annual amortization fiscal year 2027 | 23,800,000 | |
Total repayments of debt | 3,600,000 | |
Voluntary repayments of debt | 5,900,000 | |
Secured term loan | $ 169,800,000 | 22,000,000 |
Secured Debt | Term loan | Maximum | ||
Line of Credit Facility [Line Items] | ||
Ratio of funded indebtedness to EBITDA through maturity | 4.50 | |
Secured Debt | Term loan | Minimum | ||
Line of Credit Facility [Line Items] | ||
Ratio of funded indebtedness to EBITDA through maturity | 2 | |
Secured Debt | Term loan | Excess Cash Flow Greater Than or Equal to 2.50 | ||
Line of Credit Facility [Line Items] | ||
Percentage of excess cash flow for each year of funded indebtedness to adjusted EBITDA | 75% | |
Ratio of funded indebtedness to adjusted EBIDTA | 2.50 | |
Secured Debt | Term loan | Excess Cash Flow Less Than 2.50 But Greater Than or Equal to 1.50 | ||
Line of Credit Facility [Line Items] | ||
Percentage of excess cash flow for each year of funded indebtedness to adjusted EBITDA | 50% | |
Secured Debt | Term loan | Excess Cash Flows Less Than 2.50 | ||
Line of Credit Facility [Line Items] | ||
Ratio of funded indebtedness to adjusted EBIDTA | 2.50 | |
Secured Debt | Term loan | Excess Cash Flow Equal to 1.50 | ||
Line of Credit Facility [Line Items] | ||
Ratio of funded indebtedness to adjusted EBIDTA | 1.50 | |
Secured Debt | Term loan | Excess Cash Flow Less Than 1.50 | ||
Line of Credit Facility [Line Items] | ||
Percentage of excess cash flow for each year of funded indebtedness to adjusted EBITDA | 0% | |
Ratio of funded indebtedness to adjusted EBIDTA | 1.50 | |
Secured Debt | Secured revolving line of credit | ||
Line of Credit Facility [Line Items] | ||
Line of credit ceiling | $ 70,000,000 | |
Unused borrowing capacity | 32,000,000 | |
Secured term loan | 9,500,000 | $ 0 |
Secured Debt | Letters of credit | ||
Line of Credit Facility [Line Items] | ||
Remaining borrowing availability | $ 10,000,000 |
Stock-based Compensation and _3
Stock-based Compensation and Equity Grants - Narrative (Details) - Stock Options shares in Millions | 12 Months Ended |
Sep. 30, 2023 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration term of options | 10 years |
Number of shares available for grant (in shares) | 1 |
2016 Omnibus Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration term of options | 10 years |
Stock-based Compensation and _4
Stock-based Compensation and Equity Grants - Stock-based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total compensation expense | $ 1,922 | $ 2,608 |
Minimum average price (in dollars per share) | $ 33.21 | |
Restricted Stock Units | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Number of restricted stock units issued (in shares) | 211,228 | 140,404 |
Term | 3 years | |
Performance Based Restricted Stock Awards Revenue | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Term | 3 years | |
Calculated fair value (in dollars per share) | $ 3.51 | |
Performance Based Restricted Stock Awards Stock Price | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Term | 3 years | |
Calculated fair value (in dollars per share) | $ 2.92 | |
DLH Employees | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Unrecognized expense for DLH employees | $ 7,107 | $ 5,214 |
Weighted average period for recognition of compensation expense | 4 years 2 months 12 days | |
DLH Employees | Selling, General and Administrative Expenses | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total compensation expense | $ 1,204 | $ 1,960 |
Non-employee Directors | Restricted Stock Units | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Number of restricted stocks vested in period (in shares) | 50,367 | 53,510 |
Non-employee Directors | Selling, General and Administrative Expenses | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Total compensation expense | $ 718 | $ 648 |
NEO | Restricted Stock Units | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Number of restricted stock units issued (in shares) | 197,174 | |
Volatility rate | 50% | |
NEO | Performance Shares | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Number of restricted stock units issued (in shares) | 141,892 | |
NEO | Service Based Restricted Stock Units | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Number of restricted stock units issued (in shares) | 55,282 |
Stock-based Compensation and _5
Stock-based Compensation and Equity Grants - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Number of Shares | ||
Outstanding at beginning of period (in shares) | 2,392 | |
Granted (in shares) | 470 | |
Exercised (in shares) | (393) | |
Cancelled (in shares) | (191) | |
Outstanding at end of period (in shares) | 2,278 | 2,392 |
Exercisable at end of period (in shares) | 1,608 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ 7.05 | |
Granted (in dollars per share) | 11.57 | |
Exercised (in dollars per share) | 3.42 | |
Cancelled (in dollars per share) | 9.54 | |
Outstanding at end of period (in dollars per share) | 8.40 | $ 7.05 |
Exercisable at end of period (in dollars per share) | $ 6.43 | |
Weighted Average Remaining Contractual Term (in years) | ||
Weighted Average Remaining Contractual Term, Options Outstanding at beginning of period (in years) | 5 years 9 months 18 days | 5 years 4 months 24 days |
Weighted Average Remaining Contractual Term, Options Outstanding at period end (in years) | 5 years 9 months 18 days | 5 years 4 months 24 days |
Weighted Average Remaining Contractual Term, Options Exercisable at period end (in years) | 4 years 3 months 18 days | |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value for Options Outstanding at beginning of period | $ 13,566 | |
Aggregate Intrinsic Value for Options Outstanding at period end | 8,693 | $ 13,566 |
Aggregate Intrinsic Value Options Outstanding at period end | $ 8,648 | |
Stock Options | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Volatility rate | 50% | |
Term | 10 years | |
Stock price threshold term | 10 days |
Stock-based Compensation and _6
Stock-based Compensation and Equity Grants - Stock Options Fair Value Assumptions (Details) - Stock Options - $ / shares | 12 Months Ended | ||
Jan. 26, 2023 | Aug. 01, 2022 | Sep. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (Years) | 10 years | ||
Fair Value Assumption One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Strike price (in dollars per share) | $ 11.66 | ||
Stock price (in dollars per share) | 11.66 | ||
Vesting threshold price (in dollars per share) | $ 15 | ||
Expected term (Years) | 10 years | ||
Calculated fair value (in dollars per share) | $ 7.41 | ||
Fair Value Assumption Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Strike price (in dollars per share) | $ 11.08 | ||
Stock price (in dollars per share) | 11.08 | ||
Vesting threshold price (in dollars per share) | $ 14.25 | ||
Expected term (Years) | 10 years | ||
Calculated fair value (in dollars per share) | $ 7.41 | ||
Fair Value Assumption Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Strike price (in dollars per share) | 11.08 | ||
Stock price (in dollars per share) | 11.08 | ||
Vesting threshold price (in dollars per share) | $ 16.50 | ||
Expected term (Years) | 10 years | ||
Calculated fair value (in dollars per share) | $ 7.41 |
Stock-based Compensation and _7
Stock-based Compensation and Equity Grants - Stock Options Outstanding, Vested and Unvested (Details) - shares shares in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Share-Based Payment Arrangement [Abstract] | ||
Vested and exercisable (in shares) | 1,608 | 2,117 |
Unvested (in shares) | 670 | 275 |
Options outstanding (in shares) | 2,278 | 2,392 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||
Net income | $ 1,461 | $ 23,288 |
Denominator: | ||
Denominator for basic net income per share - weighted-average outstanding shares (in shares) | 13,704 | 12,830 |
Effect of dilutive securities: | ||
Stock options and restricted stock (in shares) | 727 | 1,349 |
Denominator for diluted net income per share - weighted-average outstanding shares (in shares) | 14,431 | 14,179 |
Net income per share - basic (in dollars per share) | $ 0.11 | $ 1.82 |
Net income per share - diluted (in dollars per share) | $ 0.10 | $ 1.64 |
Commitments and Contingencies -
Commitments and Contingencies - Contractual Obligations (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Maturity of Debt Obligations | |
Total long-term debt obligations | $ 179,359 |
2024 | 8,313 |
2025 | 19,000 |
2026 | 19,000 |
2027 | 23,750 |
2028 | 109,296 |
Thereafter | 0 |
Maturity Operating Leases | |
Total future minimum lease payments | 23,539 |
2024 | 4,612 |
2025 | 3,928 |
2026 | 3,700 |
2027 | 2,627 |
2028 | 2,377 |
Thereafter | 6,295 |
Maturity Total Contractual Obligations | |
Contractual obligations | 202,898 |
2024 | 12,923 |
2025 | 22,928 |
2026 | 22,700 |
2027 | 26,377 |
2028 | 111,673 |
Thereafter | 6,297 |
Facility operating leases | |
Maturity Operating Leases | |
Total future minimum lease payments | 23,489 |
2024 | 4,560 |
2025 | 3,928 |
2026 | 3,700 |
2027 | 2,627 |
2028 | 2,377 |
Thereafter | 6,297 |
Equipment operating leases | |
Maturity Operating Leases | |
Total future minimum lease payments | 50 |
2024 | 50 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
2028 | 0 |
Thereafter | $ 0 |
Provision for Income Taxes - Co
Provision for Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||
Current expense | $ 3,823 | $ 7,351 |
Deferred expense | (4,464) | 424 |
Income tax (benefit) expense | $ (641) | $ 7,775 |
Provision for Income Taxes - Ef
Provision for Income Taxes - Effective Tax Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||
Income taxes at the federal statutory rate | $ 187 | $ 6,523 |
State taxes, net | (536) | 1,158 |
Other permanent items | (292) | 94 |
Income tax (benefit) expense | $ (641) | $ 7,775 |
Provision for Income Taxes - De
Provision for Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Deferred tax assets: | ||
Net operating loss carry forwards, net | $ 855 | $ 296 |
Stock based compensation | 708 | 668 |
Accrued compensation | 2,094 | 2,108 |
Capitalized transaction costs | 973 | 0 |
Right of use asset/liability | 1,669 | 0 |
Interest limitation | 2,601 | 0 |
Total deferred tax assets | 8,900 | 3,072 |
Less: valuation allowance | (847) | (262) |
Total deferred tax assets, net | 8,053 | 2,810 |
Deferred tax liabilities: | ||
Depreciation on fixed assets | (418) | (458) |
Amortization on identified intangibles and goodwill | (4,050) | (3,375) |
Accrued expenses | (515) | (407) |
Right of use liability | 0 | (104) |
Total deferred tax liabilities | (4,983) | (4,344) |
Net deferred tax assets | 3,070 | 0 |
Net deferred liabilities | $ 0 | $ (1,534) |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Retirement Benefits [Abstract] | ||
Defined contribution plan, recorded expense | $ 2.6 | $ 2.2 |
Defined contribution plan, matching contributions period | 4 years |