DLH Holdings Corp. ($DLHC)

This is the 2026 Annual Meeting of Shareholders of DLH Holdings Corp. I am Rick Wasserman, Chairman of the Board. I would like to take this opportunity to introduce Zachary C. Parker, the President and Chief Executive Officer of DLH Holdings Corp., who will be acting as the Chairman of this meeting.

Thank you, Rick, and good morning. I am Zachary Parker, President and CEO of DLH Holdings Corporation. It is now a little after 10:00 a.m., and the meeting will please come to order. First, I would like to thank all the shareholders who are here in attendance at this annual meeting. As described in our proxy statement, we are holding this annual meeting as a hybrid meeting, meaning that the shareholders are able to attend in-person or via the Internet. We hope that by hosting our annual meeting in this manner, it will offer a positive user experience for all participants. We will begin today's meeting with the formal agenda, which will be immediately followed by a presentation on the company's business and a Q&A session to follow. I will now introduce the directors, nominees and members of senior management of DLH who are attending the meeting today, either remotely or in-person. Of course, myself, Zach Parker; Frederick Wasserman. We have Stephen Zelkowicz. Attending remotely are Judy Bjornaas, Dr. Elder Granger, Dr. Fran Murphy and Austin Yerks. Here from my management team, we have our Chief Financial Officer, Kathryn JohnBull; our Senior VP and Corporate Controller, Mr. Steve Oroho. And also attending the meeting are Fatima Raza and Lauren Raspa of WithumSmith+Brown, PC, our independent accountants for the current fiscal year. They will also be available to respond to appropriate questions during the general question-and-answer session. Also joining us today are Mr. Victor DiGioia, front row; Michael Goldstein, up here with us; and Vanessa Kabu-Asante of Becker & Poliakoff, our corporate accounts [indiscernible]. We will now proceed with the formal business of the annual meeting. Kathryn JohnBull as the Assistant Secretary of the company, will act as the Secretary of this meeting. The agenda items for this meeting are: first, determining the presence of a quorum; second, electing 7 nominees to the Board of Directors to serve until the next annual meeting of the shareholders or until their respective successors have been duly elected and qualified; third, an advisory vote on the compensation of our named executive officers; fourth, approving an amendment to the 2025 equity incentive plan; fifth, ratifying the appointment of WithumSmith+Brown, PC as the company's independent registered public accounting firm for the fiscal year ending September 30, 2026; and finally, transacting such other business as may be properly brought before this meeting. Those of you shareholders attending in-person are requested to ask questions at the appropriate time during the meeting. For those shareholders attending virtually, we'll have an opportunity to submit written questions via the Internet at any time during the meeting by following the directions on the meeting website. To submit written questions, shareholders must have their control number. The Q&A session will include both questions submitted in advance of as well as during the meeting. The first order of business is to determine the presence of a quorum. Pursuant to action with the Board of Directors, only holders of record of common stock of the company at the close of business on January 21, 2026, are entitled to vote at this meeting.

Mr. Chairman, I wish to report that I have examined the list of shareholders of common stock entitled to vote at this meeting and have determined that the number of shares of common stock outstanding at the record date, January 21, 2026, and entitled to vote are 14,493,035 shares. I am advised by the inspector of elections that the number of shares of common stock represented at this meeting, in-person or by proxy, is not less than 7,246,518 shares and a quorum is therefore constituted. Accordingly, the meeting is legally convened.

Thank you, Kathryn. On the basis of the report of the secretary, a quorum is in attendance. Michael Goldstein of Becker Law has been appointed as Inspector of Election and has sworn to the oath of Inspector of Election. The next order of business is the election of the directors of the company. The Board has nominated 7 individuals to serve as directors of the company for a term of 1 year or until their respective successors have been duly elected and qualified. I will now entertain nominations for the 7 directors of the company in accordance with the company's bylaws. Are there any nominations to the Office of Director of the company in accordance with the bylaws of the company?

I nominate the following persons to serve as directors of the company: Judith L. Bjornaas, Dr. Elder Granger; Dr. Frances M. Murphy; Zachary C. Parker; Frederick G. Wasserman; Austin J. Yerks, III; and Stephen J. Zelkowicz.

I second the nominations.

As there are no other nominations that have been received in accordance with the company's bylaws, it is ordered that the nominations be closed. The next order of business is the nonbinding advisory vote to approve the compensation of the company's named executive officers as described in the proxy statement for this annual meeting, more commonly known, of course, as say on pay. As discussed in our proxy statement, we believe our executive compensation programs and policies provide fair, reasonable and competitive levels of compensation to our executive officers. Accordingly, our Board of Directors recommends a vote in favor of this proposal. The secretary will now present a resolution approving the adoption of the proposal by the shareholders.

Resolved that the company's compensation of its named executive officers is hereby approved, and it is further resolved that the officers of the company are hereby authorized and directed to take any and all actions as such officers of the company shall deem reasonable and necessary in their discretion in order to implement these resolutions.

Will someone move for adoption of these resolutions?

I so move.

I second the motion.

Resolved that the amendment up to the 2025 Equity Incentive Plan to increase the number of shares of common stock reserved for issuance pursuant to awards granted under the plan by 550,000 shares be hereby -- be and hereby is adopted and approved. And it is further resolved that the officers of the company are hereby authorized and directed to take any and all actions including changes to the form of the 2025 equity incentive plan. As such, officers of the company shall deem reasonable and necessary in their discretion.

Will someone move for the adoption of the resolution?

I so move.

I second the motion.

The next order of business is the proposal to ratify the appointment of WithumSmith+Brown as the company's independent registered public accounting firm for the fiscal year ending September 30, 2026. Secretary will now present a resolution approving the adoption of the proposal by the shareholders.

Resolved that the company's appointment of WithumSmith+Brown, PC as its independent registered public accounting firm for the fiscal year ending September 30, 2026, is hereby ratified and approved in all respects.

Can someone move for the adoption of the resolution?

I so move.

I second the motion.

It is now approximately 10:15 in the morning and the polls for voting on these proposals are now open. All DLH shareholders entitled to vote at this meeting have had the ability to do so online or in-person. All the shareholders who wish to vote in-person and who have not voted today, please raise your hand to so indicate, so we can provide you with a ballot. Please remember that if you have already voted by proxy, it is not necessary to vote again. We will now entertain any questions that have been submitted, in advance of, and during the meeting, relating to the election of directors and the other proposals discussed in our proxy statement for this meeting. Questions not relevant to these proposals, but relating to general aspects of the business, will not be entertained at this time, please hold such inquiries for a Q&A session that will follow immediately after our presentation. Substantially, similar questions will be answered what to avoid repetition and to allow time for other questions. If time does not permit us to address each question, the company's questions will be posted to the Investors tab of our corporate website after the meeting. Participating in today's meeting [indiscernible]. As no questions regarding the proposals, we will move to the next order of...

Mr. Chairman, I am in possession of the alphabetical list of shareholders of the company at the close of business on the record day [indiscernible] who are entitled to vote [indiscernible] the shareholders then able for account group located at [indiscernible] Broadway 17th floor, New York [indiscernible] for a period of 10 days for the annual meeting during [indiscernible] business hours and electronically on the company's meeting web page.

[indiscernible] The transfer agent of the company's common stock [indiscernible] close at 10:18 [indiscernible]

I got a report in just one minute. Thank you.

Please take your time, Mr. Goldstein. I'll mention while those are getting tabulated. During our management presentation, we're going to start with a very short video, one which has been developed in-house to give some greater context of transformation of the company. You all know, we believe that there have been just a major investments that are starting to mature for us that really has helped to develop essentially, a far more technology-enabled organization. Maybe give some context about that as well as if you had a chance to read any of the presentation material we talk about artificial intelligence aspects as well. So please feel free to conversations [indiscernible]

Chairman, I have tabulated the preliminary results of the votes cast on the proposals at this annual meeting. The preliminary results of the votes cast are as follows: each of the nominees for director has received more than 59% of the votes cast in favor of his or her election and has been elected as a director of the company to serve for a 1-year term or until their respective successors have been duly elected and qualified. The resolution on an advisory basis for the compensation of our named executive officers has received more than 50.1% of the votes cast in favor of the proposal and has been approved. The resolution to approve the amendment to the 2025 Equity Incentive Plan has received more than 50.1% proposal and has been approved. The ratification of the appointment of WithumSmith+Brown as the company's independent registered public accounting firm has received more than 90% of the votes cast in favor, and that appointment has been ratified. Thank you, Mr. Parker.

Thank you. As indicated by the report of the inspector, all of the matters voted on by the shareholders have been approved. We will file the final report of the inspector of election with the records of this meeting. We expect to report the results of the voting on a Form 8K to be filed with the SEC within 4 business days of this meeting today. The Secretary will file the report of the inspectors of elections as part of the record of this meeting for the purpose of reference. The Secretary is directed to file the following additional papers with the records of the company: number one, list of shareholders of common stock entitled to vote at this meeting; number two, notice of [indiscernible] availability proxy materials and proxy safety, the affidavit of the meeting -- of the mailing; four, ballots and proxies presented to this meeting; five, Inspector's oath; and number sixth, report of the inspector of election. So we'll take a real short pause, and I will now report on the business of the company, which will be followed by a question and answer session. For shareholders attending remotely, please follow the instructions on the annual meeting web page to submit questions during this period. Shareholders here in-person, you will have an opportunity to ask questions at the allotted time. A copy of the presentation materials is available on the Investor page of our corporate website as well as the web page for this annual meeting. Let's begin the presentation. [Presentation]

We remember 15 years or so ago, I sit down with Nelson at [indiscernible] restaurant, we're talking about -- I mean it feels we can put in the right boxes and get mailed out to our nation spectrums, et cetera, and something that we have been very proud of and that we've been able to build this company on. But Kathryn and I laid out a strategy several years ago on multi-phases, this is now Phase 3 of our transformation [indiscernible] largely went from our human capital team, who significantly by strategic acquisitions over the years. And today, I'm happy to say -- next slide that, we know that technology powered solutions that is well positioned to compete favorably and aggressively in the marketplace as well as to show the agility to deal with the evolution of the government acquisition strategy. If you haven't heard those, we'll talk a little bit about those as needed, but we've addressed those recent -- in our recent earnings release, earnings report. So today, we're really leveraging tools and technologies. I want to talk about today how we're really empowering and leveraging the tools associated with AI, artificial intelligence, to help us continue this third phase of transformation with DLH. I'd like to begin by framing our current [indiscernible] regarding all of the benefits that are seen by as some of our peer companies as we implement digital modernization, including the use of Generative and Agentic AI and machine language applications. DLH is distinguishing [indiscernible] by moving beyond the mere adoption and into true operational orchestration of how we leverage those tools for the business. AI for advanced research applications solve our customers' critical mission challenges. We've applied machine learning insured previously to accelerate biomedical analytics and telehealth, telesurgery and utilize natural language processing, NLP, to automate regulatory documentation, processes and reviews for agencies like NIH, CDC and the military health system community. But now, we have turned in as part of this evolution and transformation to capture those same efficiency gains on enterprise. This isn't just a pilot program. It's again, fundamental and structural to the business and our evolution involving our corporate front and back office operations, organic growth functions and the like. Every aspect of our management and leadership team has been embracing and applying these tools, and we've got a strategic plan to continue to accelerate those to support our operations and growth. Over the recent years, we are successfully taking out several million dollars out of our corporate infrastructure and services costs. We'll continue to talk a little bit about that in the future. I want to be clear to our shareholders that we will continue to do so without skipping a beat by leveraging these tools and Agentic AI. In addition to the savings that we've enjoyed, we are materially enhancing both the speed and quality of our services and solutions, not only to our customers, but to our internal customers and our operations as well. If you look at Slide 4, the word cloud represents our initial foundational stack from last year. Tools like Google Gemini, GitHub, CoPilot, ServiceNow AI, these are key engines to our operations and are indicative of how our competitive advantage lies in the orchestration layer that we are building on top of it. What also differentiates us is how novel we apply these tools to everyday challenges as well as our intellectual property and development areas we've highlighted over the recent years. To soundly scale our internal operations, to innovate customer value propositions and expand our margins, we are exploring and deploying advanced Agentic frameworks that are not yet represented on this map. Tools like Microsoft, AutoGen can create multi-agent systems where specialized AI personas, collaborate autonomously to resolve complex enterprise-wide workflows without the inbox obstacles and bottlenecks. LangGraph and other LangChain tools allow us to build staple multi-agent applications that can read and do so through cyclic processes, ensuring our automated workflows are robust and self-correct. CrewAI allows us to explore into role-based agent teams that can effectively allow our infrastructure to self-manage routine administrative tasking, both from our IT team to our Research and Development cycles. DLH is changing the way we do business, [indiscernible] we do business and staying abreast commercial best application in our business. We will move from continued deterministic automation, which really just kind of describe some of our structured group-based process, like our SOC process where our system would just follow a script in some cases, to moving more into a Agentic reason where these tools that are AI-based will reduce cost, but increase materially throughput by planning and executing multistep tasks concurrently, really, again, changing the way in which we are doing business. By advancing this modernization business model, we're not just enhancing productivity and defending our margins, we are also creating a far more scalable operation to accelerate the phase in and execution of new organic growth. In the next slide, Slide 5, we're addressing how some of the recent congressional budget appropriations and activities have given our customers greater funding visibility that should lead to more timely solicitations for us to bid, win and enjoy that organic growth. Next slide. Before we need that one. I want to indicate that there's a couple of significant things you'll see here. While the commitment to the defense and intelligence is reflected on here, from both Congress and the President's Budget Commission, it remains consistent. As the federal health side, our pipeline both for our current business and our new business pipeline that has had the most material impact, right? As you can see here, from '25 through the President's budget submission that's where you see the PBR in the middle, there's pretty major material reduction and budget commitments to the National Institute of Health and the Center for Disease Control, 2 very material parts of our current and future business. And on the right side of that equation, you can see how the FY '26 congressional approved budget and appropriations. We moved to a greater position of stability from those customers, allowing our customers to have visibility to our budget, and we think thus be able to now start to really fund our current contracts at the appropriate levels and more importantly, issued the solicitation team to our organic growth. Next slide. And as I indicated -- yes, we've covered this on a couple of areas during our last earnings call, but I want to draw your attention to 2 key areas. We touched on the fact that the acquisition means we're changing from the government. That meant that what were traditional classic RFPs that would request for proposals that would take 18, 24 months for government development, and then 6 months to a year before they reward from the proposal phase. The government is looking at really moving into faster, quicker ways of buying business that the secretary of [indiscernible] initiated various user initiatives to really lean into commercial practices to secure and procure cloud services and solutions, much like ourselves. We're seeing those come in a variety of forms, but we are well positioned to participate in those, not only do we have the multiple award IDIQ contract vehicles, but we are also in partnerships with those consortiums and those agencies, and they're developing those new innovative type approaches. We think it's going to change the character of some of the awards right -- some of them will start with a pilot type program. You can think of a $100 million program being awarded initially at $5 million to $10 million. And then subsequently, once you get proof of test concept for your solutions, then you move into those larger contracts. So we'll be giving more color on those things downstream. But the fact that we are still one of the few publicly traded [indiscernible] very fully completely transparent disclosures and mid-tier, which means we still have the speed and agility of the smaller companies without the bureaucracy of some of the tier we companies continues to put us in, we think, a great position as long as we continue to leverage the tools as I described on the previous slide. Next slide. And so as we look at our pipeline, we've had budget uncertainty and the actions taken during largely as you may recall, the DOJ period, we have essentially retained a material amount of what we had forecasted from the FY '25 Q1 earnings presentation. You may remember in the upper last slide, we gave you some colors to what we call our new business roadmap. There were 17 items out of our qualified opportunities in that pipeline as a result of the government agencies looking at focusing more [indiscernible] with DOJ cuts and budget instability, a lot of those things, of course, denied us the opportunity to compete during FY '25, and with the previous slide with the budget bounce back that we've seen now, we're really anticipating seeing more of those that will still remain in our pipeline for organic growth is going to really fuel as we exit '26 and enter '27 with what we originally hopped would have been FY '25. Mind you, during that time period. We were not being idle, much like I described for you the AI implementation, we're really doubling down, building not only the customer intimacy needed to accelerate and advance our win probabilities, but more importantly, our tools to be able to differentiate for those complex programs. So you have more color here. The slide does show you that we still have very material opportunities that are set to be awarded, potentially awarded during this fiscal year because they have slipped largely to the right, right? For those we have yet to see a request for to the government has given a strong indication that there will be an output in a month or 2. We can see some Q4 awards taken [indiscernible] from both our Defense and Intel business as well as the Federal Health market. But for those things that we'll be closing and receiving RFPs think in Q3 and Q4, we're really showing those as largely awards in bookings in the early phases of FY '27. Now, as I indicated with the acquisition changes down there on the bottom side, a lot of these now, we think are going to be some quick turning opportunities. In this environment for OTAs, which is other transaction authorities and CSOs, which are Commercial Solutions Opportunities, CSOs. These agencies are telling us use a couple of weeks to take a look at what we're conceptualized, and I think we're going to ask you to give us a solution approach. Short order, we'll down select from that phase and then go into an award to give a proof of concept that will lead to a multiyear contract. We've got 2 or 3 of those that are in the Hopper Force right now that we're growing. And we've also been engaged for a couple of others in the Federal Health space. So we are starting to see some moves with the low-hanging fruit might deliver as well on some of the smaller programs. Next slide. That will wrap the management presentation portion. We'll open to any questions or comments on any of that before we move to the final phase of [indiscernible]. So if there are no questions or comments, we will now entertain questions concerning the general business of the company. First, we'll take questions from the floor and then respond to any questions from the annual meeting website [indiscernible].

Any questions from the floor here?

[indiscernible]

Yes. Great question. The -- first of all, for -- on the Agentic side -- I'm sorry, on the Generative side, the question you referred to the LLMs, so the large language models. We do both, we've created our own little enclave type environment because what's very important for us especially on the mobile proprietary sensitive information, we want to make sure that our work is not going out in ChatGPT space where again we become generically accessible to others. So we will leverage some of those tools across our business in ways that -- again, we're so sensitive that we will accommodate those risks. So we'll do both, right? We will [indiscernible] on the Agentic side, using the LangChain [indiscernible] tools, keep developing those with the available tools out there that [indiscernible] LangChain [indiscernible] as well those algorithms [indiscernible]. Any other questions?

How many consultants do you use to complete a test? They're not all direct employees, right?

Overwhelming majority of our employees nowadays, right? We used to use like an [indiscernible] for something -- for some of the sites inspections et cetera we used to use more consultants with [indiscernible]. But we're starting to move even into -- the move away from a number of those a couple of years ago and I'd say everything that we're developing, which we gave about today is organically to develop in-house, maybe an occasional exception here and there. We do leverage some high-power consultants over things that are helping to represent some time on the [ hill ] or something of that nature. But all of the developmental activity, it was important for us to make sure that since we've got very proprietary associative information, and we do so with employees and signed up and signed off for protection of our intellectual property. We've leveraged that side of the house for Becker Law to help us orchestrate and train all the folks to make sure that moving from consultants, moving to operating on DLH, devices and things of that nature are protected. Thank you.

[indiscernible].

Yes. It's twofold. Great question. The question was, is the hiring on the West Coast [indiscernible] particular contracts. Part of the hiring is for some existing work that was awarded to us by agencies on the Atlantic, but we have an initiative with some very strategic new business opportunities where we're going to leverage on more some of our recent wins on -- in the Defense and Intelligence business along with some of the investments we've made on the digital transformation side to help us organically on the West Coast. Most of that is in the San Diego corridor associated with both our public health and scientific research initiatives and some of our demand control organic growth. Any others?

Just curious how many contracts do you have that are more than $10 million. $10 million or more. How that works out?

That would be $10 million or more annually you said? Yes, yes, probably about a dozen.

And as you may have noticed, we recently had -- we announced anything on NIH, [indiscernible]

We have not. Not quite yet.

Is that a week coming with that.

It's fair to say that, that is an indication of a trend in the government that -- as they're thinking through their -- and dealing with their own shortages and resources. In some cases, they are opting to provide extensions beyond appearance or performance on key contracts. And so we do have a couple of key ones we are looking to publicize quickly. In the short run, I should say, not quickly, but in the short run, that we've gotten that kind of clarity on longer than usual. The typical government extension period is a [indiscernible] end of comparative performance. This is going well beyond that, giving us greater near-term revenue visibility, which is important. So we'll be signaling that or communicating that in the short run.

All right. Yes. Any more questions?

And there are no questions in the online queue.

All right. With there being no further questions on the online queue. We will -- let's see, there appears to be no other business to address that's come before the meeting. We will now move to adjourning the meeting. A motion to adjourn is in order.

I move the meeting be adjourned.

I second the motion.

Moved and seconded that the meeting be adjourned. All in favor, say aye.

Aye.

Aye.

All opposed, say nay. This concludes the business for the meeting. I now declare DLH's 2026 Annual Meeting of Shareholders adjourned. Thank you all for attending today's meeting.