New Jersey | 22-1899798 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3565 Piedmont Road, NE, Building 3, Suite 700 | ||
Atlanta, Georgia | 30305 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | |
Non-accelerated filer o | Smaller Reporting Company x | |
(Do not check if a smaller reporting company) |
Page No. | |
Part I — Financial Information | |
Item 1. Financial Statements | |
(unaudited) | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2016 | 2015 | |||||||
Revenue | $ | 26,111 | $ | 16,559 | ||||
Direct expenses | 20,300 | 13,642 | ||||||
Gross margin | 5,811 | 2,917 | ||||||
General and administrative expenses | 4,721 | 2,515 | ||||||
Depreciation and amortization | 201 | 20 | ||||||
Income from operations | 889 | 382 | ||||||
Other income (expense), net | (364 | ) | (575 | ) | ||||
Income before income taxes | 525 | (193 | ) | |||||
Income tax expense (benefit), net | 201 | (77 | ) | |||||
Net income | $ | 324 | $ | (116 | ) | |||
Net income per share - basic | $ | 0.03 | $ | (0.01 | ) | |||
Net income per share - diluted | $ | 0.03 | $ | (0.01 | ) | |||
Weighted average common shares outstanding | ||||||||
Basic | 11,201 | 9,568 | ||||||
Diluted | 12,690 | 9,568 |
December 31, 2016 | September 30, 2016 | |||||||
(unaudited) | (audited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,471 | $ | 3,427 | ||||
Accounts receivable, net | 7,292 | 6,637 | ||||||
Other current assets | 625 | 542 | ||||||
Total current assets | 10,388 | 10,606 | ||||||
Equipment and improvements, net | 600 | 644 | ||||||
Deferred taxes, net | 11,415 | 11,415 | ||||||
Goodwill and other intangible assets, net | 42,438 | 42,304 | ||||||
Other long-term assets | 105 | 105 | ||||||
Total assets | $ | 64,946 | $ | 65,074 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Debt obligations - current | $ | 3,570 | $ | 3,560 | ||||
Derivative financial instruments, at fair value | 283 | 204 | ||||||
Accrued payroll | 3,790 | 3,616 | ||||||
Accounts payable, accrued expenses, and other current liabilities | 6,948 | 7,136 | ||||||
Total current liabilities | 14,591 | 14,516 | ||||||
Total long term liabilities | 17,768 | 18,782 | ||||||
Total liabilities | 32,359 | 33,298 | ||||||
Commitments and contingencies | ||||||||
Shareholders' equity: | ||||||||
Preferred stock, $.10 par value; authorized 5,000 shares, none issued and outstanding | — | — | ||||||
Common stock, $.001 par value; authorized 40,000 shares; issued and outstanding 11,242 at December 31, 2016 and 11,148 at September 30, 2016 | 11 | 11 | ||||||
Additional paid-in capital | 82,384 | 81,897 | ||||||
Accumulated deficit | (49,808 | ) | (50,132 | ) | ||||
Total shareholders’ equity | 32,587 | 31,776 | ||||||
Total liabilities and shareholders' equity | $ | 64,946 | $ | 65,074 |
(unaudited) | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2016 | 2015 | |||||||
Operating activities | ||||||||
Net income (loss) | $ | 324 | $ | (116 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization expense | 201 | 20 | ||||||
Amortization of debt financing costs | 60 | — | ||||||
Change in fair value of derivative financial instruments | 79 | — | ||||||
Stock based compensation expense | 485 | 332 | ||||||
Deferred taxes, net | — | (114 | ) | |||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (655 | ) | (87 | ) | ||||
Other current assets | (83 | ) | (23 | ) | ||||
Accounts payable, accrued payroll, accrued expenses and other current liabilities | (199 | ) | 408 | |||||
Other long term assets/liabilities | 85 | 60 | ||||||
Net cash provided by operating activities | 297 | 480 | ||||||
Investing activities | ||||||||
Acquisition of Danya, net of cash acquired | (250 | ) | — | |||||
Purchase of equipment and improvements | (41 | ) | (20 | ) | ||||
Net cash used in investing activities | (291 | ) | (20 | ) | ||||
Financing activities | ||||||||
Net repayments on senior debt | (938 | ) | — | |||||
Repayments of capital lease obligations | (24 | ) | (23 | ) | ||||
Net cash used in financing activities | (962 | ) | (23 | ) | ||||
Net change in cash and cash equivalents | (956 | ) | 437 | |||||
Cash and cash equivalents at beginning of period | 3,427 | 5,558 | ||||||
Cash and cash equivalents at end of period | $ | 2,471 | $ | 5,995 | ||||
Supplemental disclosures of cash flow information | ||||||||
Cash paid during the period for interest | $ | 225 | $ | — | ||||
Cash paid during the period for income taxes | $ | 300 | $ | 119 |
(in thousands) | |||||||||
December 31, | September 30, | ||||||||
Ref | 2016 | 2016 | |||||||
Billed receivables | $ | 7,260 | $ | 5,265 | |||||
Unbilled receivables | 32 | 1,372 | |||||||
Total accounts receivable | 7,292 | 6,637 | |||||||
Less: Allowance for doubtful accounts | (a) | — | — | ||||||
Accounts receivable, net | $ | 7,292 | $ | 6,637 |
(in thousands) | |||||||||
December 31, | September 30, | ||||||||
Ref | 2016 | 2016 | |||||||
Prepaid insurance and benefits | $ | 326 | $ | 168 | |||||
Total other prepaid expenses | 299 | 374 | |||||||
Other current assets | $ | 625 | $ | 542 |
(in thousands) | |||||||||
December 31, | September 30, | ||||||||
Ref | 2016 | 2016 | |||||||
Furniture and equipment | $ | 651 | $ | 638 | |||||
Computer equipment | 209 | 202 | |||||||
Computer software | 309 | 309 | |||||||
Leasehold improvements | 38 | 38 | |||||||
Total fixed assets | 1,207 | 1,187 | |||||||
Less accumulated depreciation and amortization | (607 | ) | (543 | ) | |||||
Equipment and improvements, net | (a) | $ | 600 | $ | 644 |
(in thousands) | ||||||||||||||||||||||
Ref | Goodwill | Customer Relationships (a) | Non Compete Agreement (a) | Trade Name (a) | Total | |||||||||||||||||
Balance at September 30, 2016 | $ | 34,745 | $ | 6,254 | $ | 1,305 | $ | — | $ | 42,304 | ||||||||||||
Measurement period adjustment | (b) | (8,756 | ) | 9,379 | (890 | ) | 517 | 250 | ||||||||||||||
Amortization period adjustment | (b) | 300 | 45 | (21 | ) | 324 | ||||||||||||||||
Accumulated amortization | — | (415 | ) | (12 | ) | (13 | ) | (440 | ) | |||||||||||||
Net balance at December 31, 2016 | (c) | $ | 25,989 | $ | 15,518 | $ | 448 | $ | 483 | $ | 42,438 |
Ref (c): Estimated amortization expense for future years: | (in thousands) | |||||
Year 1 | $ | 1,762 | ||||
Year 2 | 1,762 | |||||
Year 3 | 1,762 | |||||
Year 4 | 1,762 | |||||
Year 5 | 1,762 | |||||
Thereafter | 7,639 | |||||
$ | 16,449 |
(in thousands) | |||||||||
December 31, | September 30, | ||||||||
Ref | 2016 | 2016 | |||||||
Accounts payable | $ | 5,174 | $ | 4,324 | |||||
Accrued benefits | 1,164 | 1,197 | |||||||
Accrued bonus and incentive compensation | — | 508 | |||||||
Accrued workers compensation insurance | 610 | 981 | |||||||
Other accrued expenses | — | 126 | |||||||
Accounts payable, accrued expenses, and other current liabilities | $ | 6,948 | $ | 7,136 |
(in thousands) | |||||||||
December 31, | September 30, | ||||||||
Ref | 2016 | 2016 | |||||||
Bank term loan | (a) | $ | 22,500 | $ | 23,438 | ||||
Gross bank debt obligations | 22,500 | 23,438 | |||||||
Less unamortized debt issuance costs | (1,162 | ) | (1,222 | ) | |||||
Net bank debt obligation | 21,338 | 22,216 | |||||||
Less current portion of bank debt obligations | (3,570 | ) | (3,560 | ) | |||||
Long term portion of bank debt obligation | $ | 17,768 | $ | 18,656 | |||||
Ref (a): Maturity of the bank debt is as follows: | |||||||||
Year 1 | $ | 3,750 | |||||||
Year 2 | 3,750 | ||||||||
Year 3 | 3,750 | ||||||||
Year 4 | 3,750 | ||||||||
Year 5 | 7,500 | ||||||||
Total net bank debt obligation | $ | 22,500 | |||||||
(in thousands) | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
Ref | 2016 | 2015 | |||||||
Interest income (expense), net | (a) | $ | (225 | ) | $ | — | |||
Amortization of deferred financing costs | (b) | (60 | ) | — | |||||
Change in fair value of derivative financial instruments | (79 | ) | — | ||||||
Other income (expense), net | (c) | — | (575 | ) | |||||
Other income (expense), net | $ | (364 | ) | $ | (575 | ) |
($ in Millions) | ||||||||||
As of December 31, 2016 | ||||||||||
Lender | Arrangement | Loan Balance | Interest | Maturity Date | ||||||
Fifth Third Bank | Secured term loan $25 million ceiling (a) | $ | 22.5 | LIBOR* + 3.0% | 05/01/21 | |||||
Fifth Third Bank | Secured revolving line of credit $10 million ceiling (b) | $ | — | LIBOR* + 3.0% | 05/01/18 | |||||
* LIBOR rate as of December 31, 2016 was 1% |
(in thousands) | |||||||||
Three Months Ended | |||||||||
Ref | December 31, | ||||||||
2016 | 2015 | ||||||||
DLH employees | $ | 6 | $ | 8 | |||||
Non-employee directors | (a) | 479 | 324 | ||||||
Total stock option expense | $ | 485 | $ | 332 |
(in thousands) | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
Ref | 2016 | 2015 | |||||||
Unrecognized expense for DLH employees | (a) | $ | 12 | $ | 36 | ||||
Unrecognized expense for non-employee directors | (b) | 8 | 76 | ||||||
Total unrecognized expense | $ | 20 | $ | 112 |
(in years) | ||||||||||||
Weighted | ||||||||||||
Weighted | Average | (in thousands) | ||||||||||
(in thousands) | Average | Remaining | Aggregate | |||||||||
Number of | Exercise | Contractual | Intrinsic | |||||||||
Ref | Shares | Price | Term | Value | ||||||||
Options outstanding, September 30, 2016 | 2,226 | $1.43 | 5.8 | $ | 7,581 | |||||||
Canceled | — | |||||||||||
Granted | — | 0 | ||||||||||
Exercised | — | |||||||||||
Options outstanding, December 31, 2016 | 2,226 | $1.43 | 5.6 | $ | 10,363 |
Number of Shares | |||||||
(in thousands) | |||||||
December 31, | September 30, | ||||||
Ref | 2016 | 2016 | |||||
Vested and exercisable | 1,959 | 1,909 | |||||
Unvested | (a) | 267 | 317 | ||||
Options outstanding | 2,226 | 2,226 |
Risk free interest rate | 1.01 | % |
Contractual term | 5 years | |
Dividend yield | — | % |
Expected lives | P4Y3M18D | |
Expected volatility | 149 | % |
Fair value per warrant | $5.29 |
December 31, 2016 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Warrant issued to acquire common stock | $ | 0 | $ | 0 | $ | 283 | ||||||
Beginning Balance | Realized/Unrealized | Purchases and | Ending Balance | Change in Realized (gains) losses for liabilities held at | |||||||||||||||||||||
October 1, 2016 | (Gains) Losses | Settlements | December 31, 2016 | December 31, 2016 | |||||||||||||||||||||
Warrant issued to acquire common stock | $ | 204 | $ | 79 | $ | — | $ | 283 | $ | 79 | |||||||||||||||
(in thousands) | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2016 | 2015 | |||||||
Numerator: | ||||||||
Net income (loss) | 324 | (116 | ) | |||||
Denominator: | ||||||||
Denominator for basic net income (loss) per share - weighted-average outstanding shares | 11,201 | 9,568 | ||||||
Effect of dilutive securities: | ||||||||
Stock options and restricted stock | 1,489 | — | ||||||
Denominator for diluted net income per share - weighted-average outstanding shares | 12,690 | 9,568 | ||||||
Net income per share - basic | $ | 0.03 | $ | (0.01 | ) | |||
Net income per share - diluted | $ | 0.03 | $ | (0.01 | ) |
Payments Due By Period | ||||||||||||||||||||
Obligations | Next 12 | 2-3 | 4-5 | More than 5 | ||||||||||||||||
(Amounts in thousands) | Ref | Total | Months | Years | Years | Years | ||||||||||||||
Debt Obligations | (a) | $ | 22,500 | $ | 3,750 | $ | 7,500 | $ | 11,250 | |||||||||||
Facility leases | (b) | $ | 4,422 | $ | 965 | $ | 1,824 | $ | 841 | $ | 792 | |||||||||
Equipment capital leases | (c) | 49 | 49 | — | — | — | ||||||||||||||
Equipment operating leases | (d) | 485 | 102 | 204 | 179 | — | ||||||||||||||
Total Obligations | $ | 27,456 | $ | 4,866 | $ | 9,528 | $ | 12,270 | $ | 792 |
• | borrowings of $30.0 million under the Company’s senior credit facility, |
• | cash on hand of approximately $3.75 million, |
• | 670,242 restricted shares of DLH common stock, valued at $2.5 million based on the 20 day volume-weighted average price (VWAP) of DLH stock, or $3.73 per share, and |
• | $2.5 million pursuant to a subordinated loan arrangement with the Company’s largest stockholder. |
(Amounts in thousands) | ||||
Cash | $ | 36,720 | ||
Common stock, fair value | 2,500 | |||
Total Consideration | $ | 39,220 | ||
(Amounts in thousands) | ||||
Net assets acquired | ||||
Cash and cash equivalents | $ | 4,009 | ||
Accounts receivable | 5,712 | |||
Other current assets | 444 | |||
Total current assets | 10,165 | |||
Accounts payable and accrued expenses | (5,013 | ) | ||
Payroll liabilities | (1,432 | ) | ||
Net working capital surplus | 3,720 | |||
Property and equipment, net | 403 | |||
Intangible assets: | ||||
Customer relationships | 16,626 | |||
Covenant not to compete | 480 | |||
Trade name | 517 | |||
Other long term assets | 81 | |||
Net identifiable assets acquired | 18,107 | |||
Goodwill | 17,393 | |||
Net assets acquired | $ | 39,220 |
(in thousands) | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
Pro forma results | 2016 | 2015 | ||||||
Revenue | $ | 26,111 | $ | 28,507 | ||||
Net income | $ | 324 | $ | (388 | ) | |||
Number of shares outstanding - basic | 11,201 | 10,949 | ||||||
Number of shares outstanding - diluted | 12,690 | 10,949 | ||||||
Basic earnings per share | $ | 0.03 | (0.04 | ) | ||||
Diluted earnings per share | $ | 0.03 | (0.04 | ) |
• | Department of Defense and veteran health services, comprising approximately 55% of our current business base; |
• | Human services and solutions, approximately 40% of our current business base; and |
• | Public health and life sciences, approximately 5% of our current business base. |
Three Months Ended | Change in | ||||||||||||||||||||
Consolidated Statement of Income: | December 31, 2016 | December 31, 2015 | $ | % of Rev | |||||||||||||||||
Revenue | $ | 26,111 | 100.0 | % | $ | 16,559 | 100.0 | % | $ | 9,552 | — | % | |||||||||
Direct expenses | 20,300 | 77.7 | % | 13,642 | 82.4 | % | 6,658 | (4.7 | )% | ||||||||||||
Gross margin | 5,811 | 22.3 | % | 2,917 | 17.6 | % | 2,894 | 4.7 | % | ||||||||||||
General and administrative expenses | 4,721 | 18.1 | % | 2,515 | 15.2 | % | 2,206 | 2.9 | % | ||||||||||||
Depreciation and amortization | 201 | 0.8 | % | 20 | 0.1 | % | 181 | 0.7 | % | ||||||||||||
Income from operations | 889 | 3.4 | % | 382 | 2.3 | % | 507 | 1.1 | % | ||||||||||||
Other income (expense), net | (364 | ) | (1.4 | )% | (575 | ) | (3.5 | )% | 211 | — | % | ||||||||||
Income (loss) before income taxes | 525 | 2.0 | % | (193 | ) | (1.2 | )% | 718 | 3.2 | % | |||||||||||
Income tax expense (benefit), net | 201 | 0.8 | % | (77 | ) | (0.5 | )% | 278 | 1.3 | % | |||||||||||
Net income | $ | 324 | 1.2 | % | $ | (116 | ) | (0.7 | )% | 440 | 1.9 | % | |||||||||
Net income per share - basic | $ | 0.03 | $ | (0.01 | ) | $ | 0.04 | ||||||||||||||
Net income per share - diluted | $ | 0.03 | $ | (0.01 | ) | $ | 0.04 | ||||||||||||||
• | Acquisition expenses are excluded in the prior year period. These expenditures related to the acquisition of Danya. We believe that segregating these expenses allow for improved comparability of results from period to period. |
• | Equity compensation is excluded because it is non-cash in nature. We believe that excluding this expense allows for improved comparability of results from period to period. |
Three Months Ended | ||||||||||||
December 31, | ||||||||||||
2016 | 2015 | Change | ||||||||||
Net income (loss) | $ | 324 | $ | (116 | ) | $ | 440 | |||||
(i) Interest and other (income) expense (net): | ||||||||||||
(i)(a) Interest and other expense | 364 | — | 364 | |||||||||
(i)(b) Acquisition expenses | — | 575 | (575 | ) | ||||||||
(ii) Provision (benefit) for taxes | 201 | (77 | ) | 278 | ||||||||
(iii) Depreciation and amortization | 201 | 20 | 181 | |||||||||
(iv) G&A expenses - equity grants | 485 | 332 | 153 | |||||||||
Adjusted EBITDA | $ | 1,575 | $ | 734 | $ | 841 | ||||||
Weighted-average outstanding shares fully diluted | 12,690 | 9,568 | 3,122 |
(Amounts in Millions) | Three Months Ended | ||
Ref | 12/31/16 | ||
Cash and cash equivalents | (a) | $2.5 | |
Borrowing on line of credit | (b) | $0.0 | |
Unused borrowing capacity on revolving line of credit | (c) | $4.1 | |
Adjusted EBITDA | (d) | $1.6 | |
Cash flows from operating activities | (e) | $0.3 | |
Cash flows used in investing and financing activities, net | (f) | $(1.3) | |
Working capital deficit (current assets minus current liabilities) | (g) | $(4.2) |
($ in thousands) | ||||||||||||||
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased As Part of Publicly Announced Programs | Dollar Value of Shares that May Yet Be Purchased Under the Plan or Program | ||||||||||
October 2016 | — | $ | — | — | $ | 77 | ||||||||
November 2016 | — | — | — | 77 | ||||||||||
December 2016 | — | — | — | 77 | ||||||||||
First Quarter Total | — | $ | — | — | $ | 77 |
Exhibit | Incorporated by Reference | Filed | ||||||||
Number | Exhibit Description | Form | Dated | Exhibit | Herewith | |||||
31.1 | Certification of Chief Executive Officer pursuant to Section 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a) | X | ||||||||
31.2 | Certification of Chief Financial Officer pursuant to Section 17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a) | X | ||||||||
32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 17 CFR 240.13a-14(b) or 17 CFR 240.15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code | X | ||||||||
101 | The following financial information from the DLH Holdings Corp. Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language) and filed electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Cash Flows; and, (iv) the Notes to the Consolidated Financial Statements. | X |
DLH HOLDINGS CORP. | |||
By: | /s/ Zachary C. Parker | ||
Zachary C. Parker | |||
Chief Executive Officer | |||
(Principal Executive Officer) | |||
By: | /s/ Kathryn M. JohnBull | ||
Kathryn M. JohnBull | |||
Chief Financial Officer | |||
(Principal Accounting Officer) | |||
Date: February 9, 2017 |
/s/ Zachary C. Parker Zachary C. Parker Chief Executive Officer (Principal Executive Officer) |
/s/ Kathryn M. JohnBull Kathryn M. JohnBull Chief Financial Officer (Principal Accounting Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ ZACHARY C. PARKER Zachary C. Parker Chief Executive Officer (Principal Executive Officer) | /s/ KATHRYN M. JOHNBULL Kathryn M. JohnBull Chief Financial Officer (Principal Accounting Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Jan. 31, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | DLH Holdings Corp. | |
Entity Central Index Key | 0000785557 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 11,241,614 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Statement [Abstract] | ||
Document Fiscal Year Focus | 2017 | |
Revenue | $ 26,111 | $ 16,559 |
Direct expenses | 20,300 | 13,642 |
Gross margin | 5,811 | 2,917 |
General and administrative expenses | 4,721 | 2,515 |
Depreciation and amortization | 201 | 20 |
Income from operations | 889 | 382 |
Other income (expense), net | (364) | (575) |
Income before income taxes | 525 | (193) |
Income tax expense (benefit), net | 201 | (77) |
Net income | $ 324 | $ (116) |
Net income per share, basic (in dollars per share) | $ 0.03 | $ (0.01) |
Net income (loss) per share - diluted (in dollars per share) | $ 0.03 | $ (0.01) |
Weighted average common shares outstanding | ||
Basic (in shares) | 11,201 | 9,568 |
Diluted (in shares) | 12,690 | 9,568 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2016 |
Sep. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.1 | $ 0.1 |
Preferred stock, authorized shares | 5,000 | 5,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 40,000 | 40,000 |
Common stock, issued shares | 11,242 | 11,148 |
Common stock, outstanding shares | 11,242 | 11,148 |
Basis of Presentation |
3 Months Ended |
---|---|
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements include the accounts of DLH and its subsidiaries, 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 generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all of the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter ended December 31, 2016 are not necessarily indicative of the results that may be expected for the year ending September 30, 2017. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual report on Form 10-K for the year ended September 30, 2016 filed with the Securities and Exchange Commission on December 9, 2016. |
Business Overview |
3 Months Ended |
---|---|
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Overview | Business Overview DLH is a full-service provider of professional healthcare and social services to government agencies including the Department of Veteran Affairs ("VA"), Department of Health and Human Services ("HHS"), Department of Defense ("DoD"), and other government agencies. DLH Holdings Corp. (together with its subsidiaries, "DLH" or the "Company" and also referred to as "we," "us" and "our") manages its operations from its principal executive offices at 3565 Piedmont Road NE, Building 3 Suite 700, Atlanta Georgia 30305. We employ over 1,400 skilled employees working in more than 30 locations throughout the United States. On May 3, 2016, DLH acquired Danya International, LLC (“Danya”) which provides technology-enabled program management, consulting, and digital communications solutions to the federal government and other customers. We acquired Danya to expand our ability to provide complementary business services and offerings across government markets. This acquisition is in line with our strategic growth initiatives, and we intend to continue to review and position ourselves for other potential joint venture or strategic acquisition opportunities in the future. Presently, the Company derives 100% of its revenue from agencies of the federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors. A major customer is defined as a customer from whom the Company derives at least 10% of its revenues. Our largest customer continues to be the VA, which comprised approximately 61% and 95% of revenue for the three months ended December 31, 2016 and 2015, respectively. Additionally, HHS represents a major customer, comprising 29% of revenue for the three months ended December 31, 2016. In addition, substantially all accounts receivable, including unbilled accounts receivable, are from agencies of the U.S. Government as of December 31, 2016 and September 30, 2016. We believe that the credit risk associated with our receivables is limited due to the creditworthiness of these customers. See Note 4, Supporting Financial Information-Accounts Receivable. As of December 31, 2016, awards from VA and HHS have anticipated periods of performance of up to four years. These agreements are subject to the Federal Acquisition Regulations. While there can be no assurance as to the actual amount of services that the Company will ultimately provide to VA and HHS under its current contracts, we believe that our strong working relationships and our effective service delivery support ongoing performance for the contract term. The Company's results of operations, cash flows and financial condition would be materially adversely affected in the event that we were unable to continue our relationship with VA or HHS. |
New Accounting Pronouncements |
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Dec. 31, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. The FASB has continued to issue periodic updates to this guidance, to further define the application of the changes. Public business entities should apply the guidance to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of this guidance. In June 2014, the FASB issued guidance related to accounting for share-based payments for certain performance stock awards. In March 2016, the FASB issued updated guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The amendments in this update affect all entities that issue share-based payment awards to their employees. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has adopted this guidance and concluded that it will not significantly affect the Company. In September 2015, the FASB issued guidance regarding business combinations for which the accounting is incomplete by the end of the reporting period in which the combination occurs, and during the measurement period have an adjustment to provisional amounts recognized. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments in this update eliminate the requirement to retrospectively account for those adjustments. The amendments in this update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update, with earlier application permitted for financial statements that have not been issued. Refer to Note 4 for the impact of the adoption of this guidance. In February 2016, the FASB issued guidance intended to improve financial reporting for leasing transactions with a lease term of more than 12 months. The new guidance will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The recognition, measurement, and presentation of expenses and cash flow arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the impact of this guidance. |
Supporting Financial Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supporting Financial Information | Supporting Financial Information Accounts receivable
Ref (a): Accounts receivable are non-interest bearing, unsecured and carried at fair value, which is net of an allowance for doubtful accounts. We evaluate our receivables on a quarterly basis and determine whether an allowance is appropriate based on specific collection issues. Our allowance for doubtful accounts was zero at both December 31, 2016 and September 30, 2016. Other current assets
Equipment and improvements, net
Ref (a): 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) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Maintenance and repair costs are expensed as incurred. Goodwill and Intangibles
Ref (a): Intangible assets subject to amortization. Ref (b): See Note 11 for discussion on measurement and amortization period adjustments
Ref (a): Intangibles acquired during the acquisition of Danya included customer relationships, a covenant not to compete, and a trade name. The intangibles are amortized on a straight-line basis over the estimated useful lives (10 years). Net amount of amortization expense for the quarter ended December 31, 2016 was $.1 million. Accounts payable, accrued expenses and other current liabilities
Debt obligations
Other Income (Expense)
Ref (a): Interest expense on borrowing related to acquisition of Danya Ref (b): Amortizations of expenses related to securing financing to acquire Danya Ref (c): Other expenses in 2015 includes approximately $(0.6) million non-operational acquisition expense. |
Credit Facilities |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Facilities | Credit Facilities A summary of our loan facilities and subordinated debt financing for the period ended December 31, 2016 is as follows:
(a) Represents the principal amounts payable on our Term Loan with Fifth Third Bank that partially funded our acquisition of Danya on May 3, 2016. The $25.0 million term loan from Fifth Third Bank was funded at closing and is secured by liens on substantially all of the assets of the Company. The principal of the Term Loan is payable in fifty-nine consecutive monthly installments of $312,500 beginning on June 1, 2016 with the remaining balance due on May 1, 2021. The Term Loan agreement requires compliance with a number of financial covenants and contains restrictions on our ability to engage in certain transactions. We are in compliance with all loan covenants and restrictions. 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 financial covenants including: (i) a minimum fixed charge coverage ratio of at least 1.35 to 1.0 commencing with the quarter ending June 30, 2016, and for all subsequent periods, and (ii) a Funded Indebtedness to Adjusted EBITDA ratio not exceeding the ratio of 2.99 to 1.0 at closing and thereafter a ratio ranging from 3.5 to 1.0 for the period through September 30, 2016 to 2.5 to 1.0 for the period ending September 30, 2018. In addition to monthly payments of the outstanding indebtedness, the loan agreement also requires prepayments of a percentage of excess cash flow, as defined in the loan agreement. Accordingly, a portion of our cash flow from operations will be dedicated to the repayment of our indebtedness. DLH is fully compliant with all covenants under the Loan Agreement with Fifth Third Bank. (b) The secured revolving line of credit from Fifth Third Bank has a ceiling of up to $10.0 million, of which $5.0 million was drawn at closing to cover partial financing of the Danya purchase. Borrowing on the line of credit is secured by liens on substantially all of the assets of the Company. At December 31, 2016, DLH had repaid all draws on our revolving line of credit with no remaining balance. The Company's total borrowing availability, based on eligible accounts receivables at December 31, 2016, was $5.0 million. This capacity was comprised of $0.9 million in a stand-by letter of credit and unused borrowing capacity of $4.1 million. The revolving line of credit is subject to loan covenants as described above in the Term Loan, and DLH is fully compliant with those covenants. Management believes that: (a) cash and cash equivalents of approximately $2.5 million as of December 31, 2016; (b) the amount available under its line of credit that was in effect at December 31, 2016; and (c) planned operating cash flow should be sufficient to support the Company's operations for twelve months from the date of these financial statements. |
Significant Accounting Policies |
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Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation of goodwill and intangible assets, valuation allowances established against accounts receivable and deferred tax assets, measurement of loss development on workers’ compensation claims, and fair value of derivatives. 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. In particular, a material reduction in the fair value of goodwill could have a material adverse effect on the Company’s financial position and results of operations. We account for the effect of a change in accounting estimate during the period in which the change occurs. Revenue Recognition DLH’s revenue is derived from professional and other specialized service offerings to US Government agencies through a variety of contracts, some of which are fixed-price in nature and/or sourced through Federal Supply Schedules administered by the General Services Administration (“GSA”) at fixed unit rates or hourly arrangements. We generally operate as a prime contractor, but have also entered into contracts as a subcontractor. The recognition of revenue from fixed rates is based upon objective criteria that generally do not require significant estimates. DLH recognizes and records revenue on government contracts when it is realized, or realizable, and earned. DLH considers these requirements met when: (a) persuasive evidence of an arrangement exists; (b) the services have been delivered to the customer; (c) the sales price is fixed or determinable and free of contingencies or significant uncertainties; and (d) collectibility is reasonably assured. Business Combinations In accordance with Accounting Standards Codifications 805, "Business Combinations" ("ASC 805") the Company records acquisitions under the purchase method of accounting, under which the acquisition purchase price is allocated to the assets acquired and the liabilities assumed based upon the respective fair values. The Company utilizes some estimates and in some instances, may retain the services of an independent third-party valuation firm to assist in determining the fair values of assets acquired, liabilities, assumed, and contingent considerations granted. Such estimates and valuation require the Company to make significant assumptions. These assumptions may include projections of future events and operating performance. Goodwill and other intangible assets We have used the acquisition method of accounting for the Danya transaction, whereby the assets acquired and liabilities assumed are recognized based upon their estimated fair values at the acquisition date. The fair values of assets acquired and liabilities assumed are based on the information that was available as of the acquisition date. The Company believes the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. The Company has finalized the fair values as of December 31, 2016. The finalized valuation allocation is shown in Note 11 Business Combinations. On the basis of the estimated assets acquired, the Company amortized $0.1 million for the three months ended December 31, 2016. The amortization was an effect of the finalized purchase price adjustment further discussed in Note 11. DLH continues to review its goodwill and other intangible 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. At September 30, 2016, we performed a goodwill impairment evaluation on the year-end carrying value of $35 million. We performed both a qualitative and quantitative 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, 2016. For the three months ended December 31, 2016, the Company determined that 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. Long Lived Assets The Company acquired certain long lived intangibles assets as part of the acquisition of Danya. These assets are estimated at a fair value and amortized on a straight-line basis over their assessed useful lives. The assessed useful lives of the assets are 10 years. Income Taxes DLH accounts for income taxes in accordance with the 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 asset 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 December 31, 2016 or September 30, 2016. We report interest and penalties as a component of income tax expense. In the fiscal quarters ended December 31, 2016 and December 31, 2015, we recognized no interest and no penalties related to income taxes. Stock-based Equity 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 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 a binomial option pricing model 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. 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. Earnings (Loss) 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 (loss) 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. During a year with an incurred loss any shares that are anti-dilutive are not considered in the loss per share calculation. |
Stock-based Compensatin, Equity Grants, and Warrants |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation, Equity Grants, and Warrants | Stock-based Compensation, Equity Grants, and Warrants Stock-based compensation expense All grants of equity represented in these financial statements through the period ended March 31, 2016, were made under the 2006 Long Term Incentive Plan. The 2006 plan expired on February 25, 2016, upon shareholders' approval of the 2016 Omnibus Equity Incentive Plan (collectively, the "Plans"). As of December 31, 2016, there were 0.9 million shares available for grant. Options issued under the 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. Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations:
Ref (a): Equity grants of restricted stock, in accordance with DLH compensation policy for non-employee directors. The shares granted in the first quarters of fiscal years 2016 and 2015 vested immediately, and stock expense of approximately $456 thousand and $304 thousand, respectively were recognized accordingly. Unrecognized stock-based compensation expense
Ref (a): 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 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. Ref (b): Unrecognized stock expense related to prior years equity grants of restricted stock to non-employee directors, based on performance criteria, in accordance with DLH compensation policy for non-employee directors. The shares will vest and expense will be recorded upon future satisfaction of specified performance. Stock option activity for the three months ended December 31, 2016 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.
Stock options shares outstanding, vested and unvested for the period ended
Ref (a): Certain awards vest upon satisfaction of certain performance criteria. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company determines fair value based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three level hierarchy. These levels are: Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2 - Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3 - Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. Observable inputs are based on market data obtained from independent sources. In May 2016 we issued warrants to purchase 53,619 shares of common stock. Using a binomial pricing model, we valued the warrants at $283 thousand and $204 thousand as of December 31, 2016 and September 30, 2016, respectively. Assumptions used in valuing the warrants included:
The Company recorded a charge on the revaluation of the warrant liability of $79 thousand for the quarter ended December 31, 2016. The charge is recorded and classified in other income (expense) in the accompanying consolidated financial statement of operations. The Company has issued warrants to purchase stock as described above. The fair value of the warrants was estimated by management in the absence of a readily ascertainable market value as follows:
Change in Level 3 liabilities for the year ended December 31, 2016:
The Company has other financial instruments, including accounts receivable, accounts payable, loan payable, notes payable, and accrued expense. Due to the short term nature of these instruments, DLH estimates that the fair value of all financial instruments at December 31, 2016 and September 30, 2016 does not differ materially from the aggregate carrying values of these financial instruments recorded in the accompanying consolidated balance sheets. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings (Loss) 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.
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Commitment and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies
Ref (a): Amounts due under term loan agreement described in Note 5. Ref (b):Represents amounts committed on facility lease agreements as of December 31, 2016. Ref (c): Represents remaining amounts committed as of December 31, 2016 on a capital lease arrangement. Ref (d): Represents remaining amounts committed as of December 31, 2016 on operating lease arrangements.. Workers Compensation We accrue workers compensation expense based on claims submitted, applying actuarial loss development factors to estimate the costs incurred but not yet recorded. Our accrued liability for claims development as of December 31, 2016 and September 30, 2016 was $0.80 million and 0.98 million, respectively. Legal Proceedings 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. |
Business Combinations |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | Business Combinations: Acquisition of Danya International, LLC On May 3, 2016, the Company acquired 100% of the equity interests of Dayna International, LLC for a purchase price of $38.75 million. The acquisition was financed through a combination of:
After giving effect to the issuance of the shares of common stock issued to Seller at closing, As of December 31, 2016 the Seller beneficially owns approximately 6.0% of the Company’s outstanding shares. The acquisition of Danya International is consistent with the Company’s growth strategy, which calls for the development of new customers and service offerings both organically and through mergers and acquisitions. We 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 total base purchase price for Danya was $38.75 million, with adjustments as necessary based on a finalized working capital calculation compared to the target prescribed in the acquisition agreement as amended. A $0.47 million working capital adjustment to the purchase price was finalized in December 2016, and the final $0.25 million payment made to the seller. As of December 31, 2016 the Company completed it valuation of the transaction and finalized the adjustments to the estimated values recognized at September 30, 2016. Therefore the Company recognized an increase to the fair value of intangibles in the amount of $9.5 million with a corresponding decrease to goodwill. Additionally, the change to the estimated amounts resulted in a decrease in amortization of $.3 million in the current quarter. The change was based on the final valuation which calculated the value for each type of intangible asset. See Note 4 for further presentation. We allocated total acquisition consideration and the finalized allocation of fair value to the related assets and liabilities as follows:
During the three months ended December 31, 2016, Danya contributed approximately $8.7 million of revenue and $0.9 million income from operations. The following table presents certain results for the three months ended December 31, 2016 and 2015 as though the acquisition of Danya had occurred on October 1, 2014. The unaudited pro forma information 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 results presented below include amortization charges for acquired intangible assets and adjustments to interest expense incurred and exclude related acquisition expenses.
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Related Party Disclosure |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions. On May 3, 2016, the Company entered into a Consulting Services Agreement with Jeffrey Hoffman, the former owner of Danya International, LLC. Under this agreement, the Company agreed to retain the services of Mr. Hoffman as an independent contractor. The services provided by Mr. Hoffman consisted of supporting the efficient transition of Danya’s business following the Acquisition, providing advice to ensure continuity of current operations, providing strategic advice and promoting the interests of the Company. During the quarter ended December 31, 2016, the Company and Mr. Hoffman agreed that transition services were complete and mutually agreed to terminate the Consulting Services Agreement. |
Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events. Management has evaluated subsequent events through the date that the Company's financial statements were issued. Based on this evaluation, the Company has determined that no other subsequent events have occurred which require disclosure through the date that these financial statements were issued. |
Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. The FASB has continued to issue periodic updates to this guidance, to further define the application of the changes. Public business entities should apply the guidance to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of this guidance. In June 2014, the FASB issued guidance related to accounting for share-based payments for certain performance stock awards. In March 2016, the FASB issued updated guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The amendments in this update affect all entities that issue share-based payment awards to their employees. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has adopted this guidance and concluded that it will not significantly affect the Company. In September 2015, the FASB issued guidance regarding business combinations for which the accounting is incomplete by the end of the reporting period in which the combination occurs, and during the measurement period have an adjustment to provisional amounts recognized. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments in this update eliminate the requirement to retrospectively account for those adjustments. The amendments in this update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update, with earlier application permitted for financial statements that have not been issued. Refer to Note 4 for the impact of the adoption of this guidance. In February 2016, the FASB issued guidance intended to improve financial reporting for leasing transactions with a lease term of more than 12 months. The new guidance will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The recognition, measurement, and presentation of expenses and cash flow arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP - which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. The Company is evaluating the impact of this guidance. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation of goodwill and intangible assets, valuation allowances established against accounts receivable and deferred tax assets, measurement of loss development on workers’ compensation claims, and fair value of derivatives. 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. In particular, a material reduction in the fair value of goodwill could have a material adverse effect on the Company’s financial position and results of operations. We account for the effect of a change in accounting estimate during the period in which the change occurs. |
Revenue Recognition | Revenue Recognition DLH’s revenue is derived from professional and other specialized service offerings to US Government agencies through a variety of contracts, some of which are fixed-price in nature and/or sourced through Federal Supply Schedules administered by the General Services Administration (“GSA”) at fixed unit rates or hourly arrangements. We generally operate as a prime contractor, but have also entered into contracts as a subcontractor. The recognition of revenue from fixed rates is based upon objective criteria that generally do not require significant estimates. DLH recognizes and records revenue on government contracts when it is realized, or realizable, and earned. DLH considers these requirements met when: (a) persuasive evidence of an arrangement exists; (b) the services have been delivered to the customer; (c) the sales price is fixed or determinable and free of contingencies or significant uncertainties; and (d) collectibility is reasonably assured. Business Combinations In accordance with Accounting Standards Codifications 805, "Business Combinations" ("ASC 805") the Company records acquisitions under the purchase method of accounting, under which the acquisition purchase price is allocated to the assets acquired and the liabilities assumed based upon the respective fair values. The Company utilizes some estimates and in some instances, may retain the services of an independent third-party valuation firm to assist in determining the fair values of assets acquired, liabilities, assumed, and contingent considerations granted. Such estimates and valuation require the Company to make significant assumptions. These assumptions may include projections of future events and operating performance. |
Goodwill and other intangible assets | Goodwill and other intangible assets We have used the acquisition method of accounting for the Danya transaction, whereby the assets acquired and liabilities assumed are recognized based upon their estimated fair values at the acquisition date. The fair values of assets acquired and liabilities assumed are based on the information that was available as of the acquisition date. The Company believes the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. The Company has finalized the fair values as of December 31, 2016. The finalized valuation allocation is shown in Note 11 Business Combinations. On the basis of the estimated assets acquired, the Company amortized $0.1 million for the three months ended December 31, 2016. The amortization was an effect of the finalized purchase price adjustment further discussed in Note 11. DLH continues to review its goodwill and other intangible 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. At September 30, 2016, we performed a goodwill impairment evaluation on the year-end carrying value of $35 million. We performed both a qualitative and quantitative 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, 2016. For the three months ended December 31, 2016, the Company determined that 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. |
Income Taxes | Income Taxes DLH accounts for income taxes in accordance with the 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 asset 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 December 31, 2016 or September 30, 2016. We report interest and penalties as a component of income tax expense. In the fiscal quarters ended December 31, 2016 and December 31, 2015, we recognized no interest and no penalties related to income taxes. |
Long-lived Assets | Long Lived Assets The Company acquired certain long lived intangibles assets as part of the acquisition of Danya. These assets are estimated at a fair value and amortized on a straight-line basis over their assessed useful lives. The assessed useful lives of the assets are 10 years. |
Stock-based Equity Compensation | Stock-based Equity 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 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 a binomial option pricing model 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. |
Cash and Cash Equivalents | 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. Earnings (Loss) 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 (loss) 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. During a year with an incurred loss any shares that are anti-dilutive are not considered in the loss per share calculation. |
Supporting Financial Information (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill | Goodwill and Intangibles
Ref (a): Intangible assets subject to amortization. Ref (b): See Note 11 for discussion on measurement and amortization period adjustments
Ref (a): Intangibles acquired during the acquisition of Danya included customer relationships, a covenant not to compete, and a trade name. The intangibles are amortized on a straight-line basis over the estimated useful lives (10 years). Net amount of amortization expense for the quarter ended December 31, 2016 was $.1 million. |
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Schedule of Accounts Receivable | Accounts receivable
Ref (a): Accounts receivable are non-interest bearing, unsecured and carried at fair value, which is net of an allowance for doubtful accounts. We evaluate our receivables on a quarterly basis and determine whether an allowance is appropriate based on specific collection issues. Our allowance for doubtful accounts was zero at both December 31, 2016 and September 30, 2016. |
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Schedule of Other Current Assets | Other current assets
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Equipment and Improvemnts, Net | Equipment and improvements, net
Ref (a): 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) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Maintenance and repair costs are expensed as incurred. |
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Accounts Payable, Accrued Expenses, and Other Current Liabilities | ccrued expenses and other current liabilities
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Long-term Debt Instruments | Debt obligations
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Other Income (Expense) | Other Income (Expense)
Ref (a): Interest expense on borrowing related to acquisition of Danya Ref (b): Amortizations of expenses related to securing financing to acquire Danya Ref (c): Other expenses in 2015 includes approximately $(0.6) million non-operational acquisition expense. |
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense |
Ref (a): Intangibles acquired during the acquisition of Danya included customer relationships, a covenant not to compete, and a trade name. The intangibles are amortized on a straight-line basis over the estimated useful lives (10 years). Net amount of amortization expense for the quarter ended December 31, 2016 was $.1 million. |
Credit Facilities (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Credit Facilities | A summary of our loan facilities and subordinated debt financing for the period ended December 31, 2016 is as follows:
(a) Represents the principal amounts payable on our Term Loan with Fifth Third Bank that partially funded our acquisition of Danya on May 3, 2016. The $25.0 million term loan from Fifth Third Bank was funded at closing and is secured by liens on substantially all of the assets of the Company. The principal of the Term Loan is payable in fifty-nine consecutive monthly installments of $312,500 beginning on June 1, 2016 with the remaining balance due on May 1, 2021. The Term Loan agreement requires compliance with a number of financial covenants and contains restrictions on our ability to engage in certain transactions. We are in compliance with all loan covenants and restrictions. 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 financial covenants including: (i) a minimum fixed charge coverage ratio of at least 1.35 to 1.0 commencing with the quarter ending June 30, 2016, and for all subsequent periods, and (ii) a Funded Indebtedness to Adjusted EBITDA ratio not exceeding the ratio of 2.99 to 1.0 at closing and thereafter a ratio ranging from 3.5 to 1.0 for the period through September 30, 2016 to 2.5 to 1.0 for the period ending September 30, 2018. In addition to monthly payments of the outstanding indebtedness, the loan agreement also requires prepayments of a percentage of excess cash flow, as defined in the loan agreement. Accordingly, a portion of our cash flow from operations will be dedicated to the repayment of our indebtedness. DLH is fully compliant with all covenants under the Loan Agreement with Fifth Third Bank. (b) The secured revolving line of credit from Fifth Third Bank has a ceiling of up to $10.0 million, of which $5.0 million was drawn at closing to cover partial financing of the Danya purchase. Borrowing on the line of credit is secured by liens on substantially all of the assets of the Company. At December 31, 2016, DLH had repaid all draws on our revolving line of credit with no remaining balance. The Company's total borrowing availability, based on eligible accounts receivables at December 31, 2016, was $5.0 million. This capacity was comprised of $0.9 million in a stand-by letter of credit and unused borrowing capacity of $4.1 million. The revolving line of credit is subject to loan covenants as described above in the Term Loan, and DLH is fully compliant with those covenants. Management believes that: (a) cash and cash equivalents of approximately $2.5 million as of December 31, 2016; (b) the amount available under its line of credit that was in effect at December 31, 2016; and (c) planned operating cash flow should be sufficient to support the Company's operations for twelve months from the date of these financial statements. |
Stock-based Compensation, Equity Grants, and Warrants (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation Expense | Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our statement of operations:
Ref (a): Equity grants of restricted stock, in accordance with DLH compensation policy for non-employee directors. The shares granted in the first quarters of fiscal years 2016 and 2015 vested immediately, and stock expense of approximately $456 thousand and $304 thousand, respectively were recognized accordingly. Unrecognized stock-based compensation expense
Ref (a): 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 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. Ref (b): Unrecognized stock expense related to prior years equity grants of restricted stock to non-employee directors, based on performance criteria, in accordance with DLH compensation policy for non-employee directors. The shares will vest and expense will be recorded upon future satisfaction of specified performance. |
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Stock Option Activity | 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.
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Stock Option Shares Outstanding, Vested and Expected to Vest | Stock options shares outstanding, vested and unvested for the period ended
Ref (a): Certain awards vest upon satisfaction of certain performance criteria. |
Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Liabilities Measured on Recurring Basis | The Company has issued warrants to purchase stock as described above. The fair value of the warrants was estimated by management in the absence of a readily ascertainable market value as follows:
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Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques | Assumptions used in valuing the warrants included:
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | Change in Level 3 liabilities for the year ended December 31, 2016:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diluted earnings per share | Diluted earnings per share is calculated using the treasury stock method.
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Commitment and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligation, Fiscal Year Maturity Schedule |
Ref (a): Amounts due under term loan agreement described in Note 5. Ref (b):Represents amounts committed on facility lease agreements as of December 31, 2016. Ref (c): Represents remaining amounts committed as of December 31, 2016 on a capital lease arrangement. Ref (d): Represents remaining amounts committed as of December 31, 2016 on operating lease arrangements.. |
Business Combinations (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | e allocated total acquisition consideration and the finalized allocation of fair value to the related assets and liabilities as follows:
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Business Acquisition, Pro Forma Information | The pro forma results presented below include amortization charges for acquired intangible assets and adjustments to interest expense incurred and exclude related acquisition expenses.
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Supporting Financial Information - Accounts Receivable (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 7,292 | $ 6,637 |
Less: Allowance for doubtful accounts | 0 | 0 |
Accounts Receivable, Net | 7,292 | 6,637 |
Billed Receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | 7,260 | 5,265 |
Unbilled Receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total accounts receivable | $ 32 | $ 1,372 |
Supporting Financial Information - Other Current Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid insurance and benefits | $ 326 | $ 168 |
Total other prepaid expenses | 299 | 374 |
Other current assets | $ 625 | $ 542 |
Supporting Financial Information - Equipment and Improvements, net (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 31, 2016 |
Sep. 30, 2016 |
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Property, Plant and Equipment [Line Items] | ||
Document Fiscal Year Focus | 2017 | |
Furniture and equipment | $ 651 | $ 638 |
Computer equipment | 209 | 202 |
Computer software | 309 | 309 |
Leasehold improvements | 38 | 38 |
Property, Plant and Equipment, Gross | 1,207 | 1,187 |
Less accumulated depreciation and amortization | (607) | (543) |
Equipment and improvements, net | $ 600 | $ 644 |
Minimum | Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Maximum | Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 7 years |
Supporting Financial Information - Intangible Assets Amortization Expense (Details) $ in Thousands |
3 Months Ended |
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Dec. 31, 2016
USD ($)
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Finite-Lived Intangible Asset, Useful Life | 10 years |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | $ 1,762 |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 1,762 |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 1,762 |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 1,762 |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 1,762 |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 7,639 |
Finite-Lived Intangible Assets, Net | 16,449 |
Amortization of Intangible Assets | $ 324 |
Supporting Financial Information - Accounts Payable, Accrued Expense and Other Current Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Document Fiscal Year Focus | 2017 | |
Accounts payable | $ 5,174 | $ 4,324 |
Accrued benefits | 1,164 | 1,197 |
Accrued bonus and incentive compensation | 0 | 508 |
Accrued workers compensation insurance | 610 | 981 |
Other accrued expenses | 0 | 126 |
Total accrued expenses and other current liabilities | $ 6,948 | $ 7,136 |
Supporting Financial Information - Other Income (Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 31, 2016 |
Dec. 31, 2015 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Document Fiscal Year Focus | 2017 | |
Interest income (expense), net | $ (225) | $ 0 |
Amortization of deferred financing costs | (60) | 0 |
Increase (Decrease) in Derivative Assets and Liabilities | (79) | 0 |
Other income (expense), net | 0 | (575) |
Other income (expense) net | $ (364) | $ (575) |
Credit Facilities - Schedule of Credit Facilities (Details) |
3 Months Ended | |
---|---|---|
May 03, 2016 |
Dec. 31, 2016
USD ($)
|
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Line of Credit Facility [Line Items] | ||
Ratio of Debt to Earnings Before Interest, Taxes, Depreciations, and Amortization | 2.99 | |
Loan Balance | $ 22,500,000 | |
London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Interest rate (percent) | 1.00% | |
Term Loans | ||
Line of Credit Facility [Line Items] | ||
Maximum availability | $ 25,000,000 | |
Term Loans | London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on loan | 3.00% | |
Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Loan Balance | $ 0 | |
Maximum availability | $ 10,000,000.0 | |
Line of Credit | London Interbank Offered Rate (LIBOR) [Member] | ||
Line of Credit Facility [Line Items] | ||
Basis spread on loan | 3.00% |
Significant Accounting Policies - Goodwill, Income Taxes, and Cash and Cash Equivalents (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Accounting Policies [Abstract] | |||
Amortization of Intangible Assets | $ 324,000 | ||
Goodwill and other intangible assets, net | $ 35,000,000 | ||
Cash, FDIC Insured Amount | $ 250,000 |
Stock-based Compensation, Equity Grants, and Warrants - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
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Number of Shares | ||
Outstanding at the beginning of the period (in shares) | 2,226 | |
Granted (in shares) | 0 | |
Cancelled (in shares) | 0 | |
Outstanding at the end of the period (in shares) | 2,226 | 2,226 |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 1.43 | |
Outstanding at the end of the period (in dollars per share) | $ 1.43 | $ 1.43 |
Weighted Average Remaining Contractual Term | ||
Weighted Average Remaining Contractual Term | 5 years 7 months 6 days | 5 years 9 months 18 days |
Aggregate Intrinsic Value | ||
Outstanding at the beginning of the period (in dollars) | $ 7,581 | |
Outstanding at the end of the period (in dollars) | $ 10,363 | $ 7,581 |
Stock-based Compensation, Equity Grants, and Warrants - Stock Options Outstanding, Vested and Unvested (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Document Fiscal Year Focus | 2017 | |
Vested and exercisable | 1,959 | 1,909 |
Unvested | 267 | 317 |
Option outstanding | 2,226 | 2,226 |
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
|
Debt Instrument [Line Items] | ||
Fair Value Adjustment of Warrants | $ 79 | |
Derivative Liability, Current | $ 283 | $ 204 |
Wynnefiled Capital, Bank Term Loan | ||
Debt Instrument [Line Items] | ||
Class of Warrant or Right, Outstanding | 53,619 |
Fair Value of Financial Instruments - Fair Value Assumptions (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Jun. 30, 2016 |
|
Fair Value Disclosures [Abstract] | ||
Fair Value Assumptions, Risk Free Interest Rate | 1.01% | |
Fair Value Assumptions, Expected Term | 5 years | |
Fair Value Assumptions, Expected Dividend Rate | 0.00% | |
Fair Value Assumptions, Expected Lives | 4 years 3 months 18 days | |
Fair Value Assumptions, Weighted Average Volatility Rate | 149.00% | |
Fair Value Assumptions, Exercise Price | $ 5.29 |
Fair Value of Financial Instruments (Schedule of Fair Value of Warrants) (Details) - Fair Value, Measurements, Recurring [Member] $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Fair Value, Inputs, Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative Liability | $ 0 |
Fair Value, Inputs, Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative Liability | 0 |
Fair Value, Inputs, Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative Liability | $ 283 |
Fair Value of Financial Instruments (Change in Level 3) (Details) - Warrant [Member] - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value | $ 283 | $ 204 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings | 79 | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, (Sales), Issuances, (Settlements) | 0 | |
Fair Value, Liabilities Measured on Recurring Basis, Change in Unrealized Gain (Loss) | $ 79 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Numerator [Abstract] | ||
Net income (loss) | $ 324 | $ (116) |
Denominator [Abstract] | ||
Denominator for basic net income (loss) per share - weighted-average outstanding shares (shares) | 11,201 | 9,568 |
Effect of dilutive securities: | ||
Stock options and restricted stock (shares) | 1,489 | 0 |
Denominator for diluted net income (loss) per share - weighted-average outstanding shares (shares) | 12,690 | 9,568 |
Net income (loss) per share - basic (dollars per share) | $ 0.03 | $ (0.01) |
Net income (loss) per share - diluted (in dollars per share) | $ 0.03 | $ (0.01) |
Commitment and Contingencies - Additional Information (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Accrued workers compensation insurance | $ 798 | |
Accrued workers compensation insurance | $ 610 | $ 981 |
Business Combinations - Pro Forma Results (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Business Acquisition [Line Items] | ||
Document Fiscal Year Focus | 2017 | |
Dayna International, LLC | ||
Business Acquisition [Line Items] | ||
Revenue | $ 26,111 | $ 28,507 |
Net income | $ 324 | $ (388) |
Number of shares outstanding - basic (in shares) | $ 11,201,000 | $ 10,949,000 |
Number of shares outstanding - diluted (in shares) | 12,690,000 | 10,949,000 |
Basic earnings per share (in dollars per share) | 0.03 | (0.04) |
Diluted earnings per share (in dollars per share) | $ 0.03 | $ (0.04) |
Related Party Disclosure (Details) |
3 Months Ended |
---|---|
Dec. 31, 2016
shares
| |
Wynnefiled Capital, Bank Term Loan | |
Related Party Transaction [Line Items] | |
Class of Warrant or Right, Outstanding | 53,619 |
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