Joe Gomes

Joe Gomes asked about the status of the Head Start program following its transfer to small business, the timeline and potential for DLH to secure subcontracts for the remaining CMOP locations, the expected timeframe for DLH to return to historical growth and EBITDA margins, and the current size of the company's pipeline.

Answer

President and CEO Zach Parker clarified that DLH did not participate in the Head Start protest, having anticipated the shift to small business set-asides. Regarding CMOP, he noted DLH withdrew joint venture bids but supported small business partners on pending solicitations, with decisions expected in the next one to two quarters. CFO Kathryn Johnbull added that DLH continues to operate the three remaining CMOP locations, with transitions typically occurring every three months. On growth and margins, Mr. Parker indicated anticipation of new, higher-margin VA awards in calendar Q1, alongside a strong DoD pipeline in digital transformation and cybersecurity, which should help restore margins. Ms. Johnbull emphasized that growth is essential for scaling and achieving historical margin levels. Mr. Parker confirmed the pipeline is robust, exceeding $3 billion in qualified opportunities over 24+ months.

Joe Gomes of Noble Capital Markets was introduced to ask a question but was disconnected due to technical difficulties before he could pose it to management.

Answer

In the absence of a question, President and CEO Zach Parker provided additional commentary. He elaborated on the continued revenue erosion from small business set-asides, particularly with VA pharmacy programs. Parker also highlighted a material slowdown in RFP flow and contract awards, attributing it to a reduction in government contract acquisition staff, but expressed optimism for a recovery as some personnel are being recalled.

Joe Gomes from Noble Capital Markets was introduced to ask a question but was disconnected before he could complete it.

Answer

Due to a technical issue where the analyst's line disconnected, no question was asked and therefore no answer was provided by DLH Holdings management. CEO Zach Parker offered additional commentary on small business set-asides and government hiring slowdowns while waiting for the analyst to reconnect, but no direct Q&A occurred.

Joe Gomes asked about Kratos's comfort level with its cash position, considering the proposed Orbit acquisition and various capital expenditures.

Answer

Eric DeMarco, President and CEO of Kratos, expressed extreme comfort with the company's current cash position, stating they are in a very good position.

Joe Gomes asked about Kratos' comfort level with its current cash position, considering the proposed Orbit acquisition and various CapEx initiatives.

Answer

Eric DeMarco, Kratos' President and CEO, expressed extreme comfort with the company's cash position, indicating that Kratos is in a very good financial state.

Joe Gomes asked about the competitive landscape for tactical drones, repurposing technologies for commercial use, and potential M&A targets.

Answer

CEO Eric DeMarco expressed confidence in Kratos' tactical drones. He also discussed dual-use technologies and potential M&A targets in microwave electronics and turbomachinery.

Joe Gomes asked about clients' current appetite for spending and how it has changed over the past year. He also inquired about the impact of the two new board members added in the summer, specifically what new perspectives or approaches they have brought to the board.

Answer

Kate Duchene, CEO, stated that the client spending environment remains choppy and uncertain, similar to the past year, with ongoing work in finance 4.0, ERP, cloud migration, digital finance, automation, AI, and data. She highlighted that one new board member brings a private equity perspective, aiding in optimizing bottom-line performance, while the other offers operating experience in transformation, emphasizing behavioral changes, incentive compensation alignment, and fostering collaborative teams.

Joe Gomes asked about clients' general appetite to move forward and spend, and how this has changed over the past year. He also inquired about the impact and new perspectives brought by the two new board members added during the summer.

Answer

Kate Duchene (CEO, RGP) stated that the client spending environment remains choppy and uncertain, similar to the past year, but noted progress in areas like finance 4.0, ERP, cloud migration, digital finance, automation, AI, and data work. She emphasized the importance of timing and positioning. Regarding the board refresh, Ms. Duchene explained that one new member brings a private equity lens for optimizing bottom-line performance, while the other offers operating experience through transformation, focusing on behavioral changes, incentive compensation, and fostering collaborative teams.

Joe Gomes of Noble Capital Markets inquired about the drivers behind the Q4 gross margin beat, the progress of cross-selling initiatives, the Q1 revenue guidance, and the impact of recent sales team attrition.

Answer

CFO Jenn Ryu attributed the strong gross margin to improved average bill rates from a disciplined pricing strategy on higher-value deals and favorable medical claims. COO Bhadresh Patel noted positive momentum in cross-selling consulting services to existing on-demand clients. Jenn Ryu confirmed the Q1 guide, explaining it reflects typical summer seasonality plus delays in a few large project starts. Both executives clarified that sales team attrition primarily impacted Q4 and the situation is now stabilizing.

Asked for more details on the Q4 gross margin beat, the progress of cross-selling initiatives, confirmation of the Q1 revenue guidance, and the impact of sales team attrition on the outlook.

Answer

The gross margin beat was driven by higher average bill rates on larger, more complex deals and favorable medical claims. Cross-selling is showing positive results, especially in converting on-demand clients to consulting services. The Q1 revenue guide was confirmed, with softness attributed to seasonality and delays in large project starts. Sales team attrition impacted Q4 but is stabilizing and not the primary driver of the Q1 outlook.

Joe Gomes from Noble Capital Markets sought clarification on whether the significant increase in Q2 G&A expenses was temporary and would normalize in future quarters.

Answer

CFO Erke Huang confirmed the G&A increase was due to one-time items, including $5.5 million in stock-based awards for the Innovium acquisition and non-recurring IPO-related consulting fees. CEO Samir Tabar added that the standalone BitDigital cost structure will be significantly leaner going forward, with a simpler footprint and lower infrastructure spend, as most of the G&A was associated with the now-separate White Fiber entity.

Joe Gomes of Noble Capital Markets asked about the impact of alternative detention solutions, such as soft-sided facilities, on CoreCivic's contract negotiations with ICE. He also inquired about CoreCivic's interest in the upcoming ISAP electronic monitoring contract rebid and the status of the Midwest Regional Reception Center.

Answer

CEO Damon Hininger stated that contracting intensity has significantly increased since the passage of the 'One Big Beautiful Bill Act,' and that ICE is pursuing an 'all of the above' strategy for capacity, making CoreCivic's hardened facilities a key long-term solution. Hininger confirmed interest in the ISAP contract but emphasized that detention is the clear, immediate priority for ICE. He also expressed confidence in a near-term resolution for the Midwest facility's legal delays.

Joe Gomes of Noble Capital Markets inquired about the total potential revenue from activating all available and potential new bed capacity, the operational and financial implications of a potential shift from SmartLink to ankle monitors for the ISAP program, future debt reduction plans versus the new share repurchase program, and current opportunities at the state level.

Answer

Executive Chairman George Zoley and CFO Mark Suchinski estimated that the 5,000 potential incremental beds at existing facilities could generate approximately $250 million in additional revenue. Zoley confirmed they have stocked up on ankle monitors for a potential ISAP shift, while Suchinski detailed the plan to balance the $100 million annual share repurchase with a targeted $100 million in annual debt reduction, noting excess cash flow provides flexibility. CEO David Donahue added that state-level opportunities are active, particularly with a competitive reprocurement for three facilities in Florida.

Joe Gomes of Noble Capital Markets questioned what catalysts are needed for the ODP Business Solutions segment to return to positive revenue growth and asked about the company's ability to maintain improved same-store sales trends at Office Depot, given external forecasts for a weak back-to-school season.

Answer

CEO Gerry Smith and SVP & Co-CFO Adam Haggard identified continued execution in the hospitality segment as the primary driver for returning the Business Solutions division to growth, noting the 200 basis point trend improvement was largely due to this new venture. SVP & Co-CFO Max Hood added that the hospitality expansion is also lifting sales of traditional products. Regarding retail, Smith and Haggard expressed confidence in their back-to-school performance, citing a strong merchandising strategy, daily operational focus, and positive momentum through July and the early flight weeks, which they believe positions them well despite broader market predictions.

Joe Gomes of Noble Capital Markets requested more details on the Benihana franchising pipeline and an explanation for the significant sequential decrease in the company's cash balance from Q1 to Q2.

Answer

President & CEO Emanuel Hilario reported strong franchising interest for Benihana, with existing franchisees looking to develop more full-size units and growing excitement for the Benihana Express model, with development agreements expected within 90 days. CFO Tyler Loy and CEO Emanuel Hilario explained the cash decrease was due to a combination of working capital timing related to accrued payroll and front-loaded capital expenditures for new restaurants and planned HVAC upgrades at Benihana.

Joe Gomes of Noble Capital Markets inquired about the pace of project awards, the outlook for the Acadia vessel in 2027, and the potential for a new vessel construction program.

Answer

SVP & CFO Scott Kornblau explained that the bid market is normalizing as expected and GLDD's high utilization limited its ability to bid on over 50% of H1 projects. CEO Lasse Petterson added that the Acadia vessel will most likely operate in Europe in 2027 and that the company's current fleet is modern and competitive, with no new dredges planned for the next couple of years.

Joe Gomes of Noble Capital Markets questioned the space segment's order and backlog levels given management's optimism, inquired about the revenue potential of the new cryogenic facility, and asked about any hiring constraints.

Answer

President & CEO Matthew Malone explained the space market is in its early growth phases, with traction from new launch providers and in-space applications. He noted the new cryogenic facility is generating significant interest, with more details to come. CFO Christopher Thome confirmed hiring is not a constraint, citing a 10% year-over-year increase in the direct labor force and a softening labor market.

Joe Gomes from Noble Capital Markets questioned the 'excellent traction' in the space segment given current order levels, inquired about the revenue potential of the new cryogenic facility, and asked about any hiring constraints that could limit growth.

Answer

CEO Matthew Malone clarified that the space segment's traction is in its early phases, tied to new launch providers and in-space applications, with the new cryogenic facility generating significant customer interest. He indicated more details on revenue would come in the next quarter. CFO Chris Thome confirmed that hiring is not a constraint, noting the direct labor force grew 10% year-over-year and the labor market has softened.

Joe Gomes from Noble Capital Markets questioned the space segment's performance, asking for more color on the "excellent traction" mentioned, given the order and backlog figures. He also inquired about the potential revenue from the new cryogenic facility and whether hiring challenges could limit growth.

Answer

President & CEO Matthew Malone explained that the space segment's traction comes from low-rate production programs for new launch providers and in-space applications like satellite cooling, which are in early scaling phases. He noted the new cryogenic facility is generating significant customer interest and expects to disclose more on its financial impact next quarter. CFO Chris Thome stated that hiring is not a constraint, with the direct labor force up 10% year-over-year.

Joe Gomes of Noble Capital Markets inquired about the booking and utilization outlook for the new cryogenic test facility, whether the P3 acquisition has met expectations, and the commercial progress of the NextGen nozzle.

Answer

President & COO Matthew Malone explained the cryogenic facility is on track to be online soon and has strong customer interest, differentiating itself with high-power availability. He noted the P3 acquisition has exceeded expectations, providing advanced technology and a 'fast lane' for novel projects. Regarding the NextGen nozzle, Malone said they have contacted the entire install base and are now waiting for customer facility turnaround schedules, noting the strong ROI for end-users.

An analyst from NOBLE Capital Markets, on behalf of Joe Gomes, asked for additional color on why defense orders appeared lower than their usual trend in the quarter. The analyst also requested an update on the company's M&A pipeline and target criteria.

Answer

CEO Daniel Thoren explained that the lower defense orders were a matter of timing, comparing the quarter to a prior-year period that included a $100 million follow-on order. He noted recent large wins and expressed no concern about the order flow. Regarding M&A, Mr. Thoren described an active program targeting companies with engineered products and IP moats, sized between $10M and $80M in revenue, but stated it was too early to discuss the pipeline in detail.

Joe Gomes of Noble Capital Markets inquired about the current environment for new business wins, asking if Commercial Vehicle Group is securing new contracts, how these wins compare to internal expectations, and if the implementation of previously won business is experiencing any delays.

Answer

James Ray, President and CEO of Commercial Vehicle Group, responded that the company continues to win new business in Q1 and Q2, with a robust pipeline for the rest of the year. He noted that quantifying these wins is difficult due to uncertainties in launch timing, with some delays occurring in the EV space. Ray highlighted that new wins are expected to account for approximately 15% of the Global Electrical Systems segment's revenue in 2025, offsetting softness in construction and agriculture markets. He also confirmed some implementation timelines have shifted due to economic conditions and regulatory hurdles, particularly in the autonomous vehicle space.

Joe Gomes of Noble Capital Markets sought more color on the impact of the successful Nintendo Switch 2 launch on the PowerA subsidiary. He also asked about the expected cost savings from the $100 million reduction program in the second half of 2025 and requested details on the recent asset sale mentioned in the release.

Answer

Thomas Tedford, President & CEO, stated that the Q2 impact from Switch 2 was minimal due to the June 5 launch, with the holiday season (Q4) expected to be the strong period for PowerA sales. Deborah A. O'Connor, EVP & CFO, projected that cost savings in the second half would be similar to or slightly more than the $16 million realized in the first half. She clarified the asset sale was primarily the previously announced closure of their New York facility as part of the footprint rationalization.

Joe Gomes of Noble Capital Markets sought further clarity on the consumer segment's expected rebound, asking if it was driven by low inventories. He also requested updates on strategic initiatives, including third-party product sourcing, re-entry into the military market, and progress with the LSW tire technology.

Answer

CEO & President Paul Reitz confirmed the consumer rebound is based on customers restocking depleted inventories in July after stronger-than-expected retail sales. He noted progress in the "one-stop shop" strategy with third-party products and recent positive meetings regarding military opportunities. For LSW, Reitz explained the focus is on developing a marketing ROI tool for farmers and exploring financing options, though interest rates remain a challenge.

Joe Gomes of Noble Capital Markets inquired about the status of the related SEC civil action following the DOJ case dismissal, the potential to recover past litigation costs, whether the quarter's high G&A expense was a one-time event, the rollout timing for a new manufacturing contract, and if FAT Brands was observing the positive restaurant traffic trends reported by other industry players.

Answer

Andrew Wiederhorn, Founder & Chairman, stated he was hopeful the SEC civil case would also be resolved but could not comment further. He confirmed the company will recover insurance policy limits as part of the derivative case settlement. Wiederhorn also affirmed the high G&A expense was a one-time event related to the Twin Peaks spin-off. Regarding the manufacturing contract, he noted it's in production and will be fully rolled out and announced within 30 to 60 days. On sales trends, he explained performance varies by category, with snack brands performing well, QSR brands facing challenges, and polished casual dining improving.

Sought clarification on the drivers of revenue declines, the potential value from refranchising Fazoli's locations, the reason for increased litigation expenses, and sales trends in the current quarter.

Answer

The executive confirmed revenue declines were driven by Smokey Bones closures for conversion or permanent shutdown. Refranchising Fazoli's could generate $20-25M for debt paydown plus $2.5-3.5M in overhead savings. Litigation expenses are expected to end in Q2. Current quarter trends vary by segment, with pizza and snacks holding up better than burgers and wings.

Joe Gomes asked about the company's strategy for further price increases throughout the year and questioned how declining CEO confidence might affect demand from the large corporate segment.

Answer

SVP & CFO David Sylvester indicated that Steelcase would likely follow its historical pattern of using price increases to offset any continued inflation that cannot be mitigated through other means. President & CEO Sara Armbruster countered the idea of a slowdown by noting that despite broader uncertainty, many CEOs are compelled to invest in their spaces due to business-specific dynamics, such as headcount growth that has outpaced their current real estate footprint.

Asked for details on challenges in the Missouri market, the reason for lower marketing spend, and an update on securing a retail location in Ohio.

Answer

The company explained that Missouri's challenges stem from a closed network of local operators, but their brands are gaining traction. The lower marketing spend reflects a strategic shift to more efficient, localized efforts. They are actively seeking a retail location in Ohio but face real estate and regulatory hurdles, hoping to finalize a spot by year-end.

Joe Gomes questioned the driver for the quarterly gross margin increase, asked about significant military exercises in the INDOPACOM region, and inquired about the pace of contract awards year-to-date.

Answer

SVP and CFO Shawn Mural attributed the margin change to the timing of expenses and noted it was in line with plans. He confirmed modest support for ongoing exercises in INDOPACOM. President and CEO Jeremy Wensinger added that the pace of awards in Q1 was consistent with their expectations and they remain on schedule.

Joe Gomes from Noble Capital inquired about the quarter-end subscriber count, the conversion rate of promotional users, the company's strategy for market differentiation, the impact of the E-trade integration, and the release timeline for new products like Stock Nanny and the Pro version.

Answer

CEO Gust Kepler explained that while specific end-of-quarter subscriber numbers are not disclosed, approximately one-third of promotional users convert to full subscribers. He detailed a marketing strategy focused on highlighting Blackbox's long history, positive organic reviews, and best-in-class status to stand out from newer competitors. Kepler confirmed the E-trade integration is beneficial, spreading awareness through the user community. He projected a beta release for Stock Nanny before year-end 2022 with a full launch in early 2023, and an initial version of Blackbox Pro also expected before year-end.

Joe Gomes of William Smith inquired about the store development pipeline, seeking clarity on the number of company-owned versus franchisee openings for 2017. He also asked about operational performance beyond weather-related issues, the performance of Hooters locations excluding currency impacts, and the rollout timeline for the Southern California Little Big Burger franchise agreement.

Answer

COO Mark Roberson explained that the 8-12 store opening target for the year is a conservative range to account for construction timelines. CEO Mike Pruitt added that while East Coast stores saw some softness, Little Big Burger's performance was very positive, with a strong rebound in March and April. Pruitt noted that South African Hooters had positive comps, while the UK location was still impacted by Brexit's effect on currency. Regarding the California franchisee, management stated the timeline is conservative but the partner is well-capitalized and could accelerate openings.

Joe Gomes inquired about the flat sequential revenue from Q2 to Q3, the performance of the UK Hooters location post-Brexit, the geographic expansion strategy for the burger brands, and the future plans for the Just Fresh concept.

Answer

CEO Michael Pruitt and COO Mark Roberson explained that flat sequential revenue was due to a lack of new store openings in Q3 and a negative currency impact from the British pound post-Brexit. They clarified the UK Hooters location remains a top performer despite some softness. For expansion, the focus is on markets with existing operational expertise and an aggressive franchising push for Little Big Burger. Pruitt described Just Fresh as a 'little gem' with a current focus on margin improvement and potential future franchising.

Joe Gomes from William Smith inquired about the latest same-store sales figures by concept, the drivers behind negative comps at Hooters Northwest, the sequential decline in franchise income, the status of a U.K. refinancing deal, and the expected financial outcome from the disposition of Australian and Hungarian locations.

Answer

COO Mark Roberson provided same-store sales data, noting a 2.7% increase for the Burger group but declines for Just Fresh (-3%) and Hooters Northwest (-3.9%), attributing the latter to a tough comparison against an 11% increase in the prior year. He also explained that the drop in franchise income was due to the timing of large deals. Chairman & CEO Michael Pruitt confirmed the U.K. refinancing deal is still active. Regarding the disposed international assets, Roberson stated the primary goal was to eliminate cash drain rather than realize significant value.