DLH Holdings reduces debt, amends credit facility

DLH Holdings (DLHC) announced selected key metrics for the fiscal year ended September 30, 2024 and an amendment to its syndicated credit agreement. Total debt at fiscal year-end was $154.6 million compared to $179.4 million as of September 30, 2023, reflecting a total reduction of $24.8 million during fiscal 2024 – including $11.9 million in the fourth quarter. As a result of the Company’s focus on eliminating debt through voluntary prepayments, all mandatory amortization payments for fiscal 2025 have been satisfied. DLH has engaged with its lenders to negotiate an amendment to its credit agreement that modifies the financial covenants – specifically the Total Leverage Ratio and Fixed Charge Coverage Ratio – and borrowing capacity of the Company’s revolving loan. The modification of the financial covenants increases the maximum threshold on the Total Leverage Ratio and reduces the minimum threshold on the Fixed Charge Coverage Ratio for future quarters. In addition, the amendment aligns the revolver’s borrowing capacity with operational needs by reducing the maximum from $70 million to $50 million. There were no modifications to the maturity or pricing terms of the credit facility. The joint lead arrangers led the amendment efforts along with the DLH Board of Directors and executive management. Management believes the amendment offers the Company flexibility to navigate the anticipated transition of a portion of its business base to set-aside, small business contractors, primarily the Department of Veterans Affairs’ Consolidated Mail Outpatient Pharmacy program.