DLH Holdings Corp (DLHC)

[CDub73]

Very nice move here lately.

http://seekingalpha.com/article/1748902-dlh-holdings-and-urban-outfitters-buy-rated-companies-with-share-buyback-plans?source=yahoo

DLH Holdings Corporation is contracted by The Department of Veterans Affairs to provide healthcare solutions, logistics and technical services, and contingency/staff augmentation services to active duty military as well as military veterans. Upon ending active service and returning to American society, every service member is required to register with the Department of Veterans Affairs as a part of the "check out" or separation process. As a crucial aspect of the separation process, service members undergo a thorough medical examination. If a young man in his early twenties, for example, is found to have a loss of cartilage in both knee caps and significant hearing loss in his left ear, those health issues are documented and noted in his file with the VA. Even if there is no immediate treatment required, the Department of Veterans Affairs will provide treatment and medication years or even decades later if the health issue (or issues) originating from military service require treatment or medication at that time. As our nations veterans age, the amount of veterans requiring treatment will undoubtedly continue to grow.

With the issuance of two new government contracts on September 25 and September 30th, DLH Holdings Corporation will be contracted to operate the Veterans Outpatient Mail Order Pharmacy on behalf of the Department of Veterans Affairs and also provide professional and administrative support to the Army's medical force. The Army contract dictates DLH Holdings will provide training and modernization to the Army's medical force and also take control of and manage a portion of the Army's pharmaceutical stock pile.

These 2 contracts position DLH Holdings to be a benefactor of military downsizing as Operation Enduring Freedom draws to an end. This statement is supported by a 3.6 percent increase in Congressional funding of the Department of Veterans Affairs. The company's forward looking contractual revenue growth of approximately 50 percent (a result of the two recent contracts) from 2013 to 2014 is congruent with the increase in Congressional funding. Gross profit has grown 24.2% from 2012 to 2013, and the issuance of the two aforementioned contracts clearly indicate this trend will continue. This revenue growth supplemented with a $350,000.00 share repurchase program and provides investors with reason to buy into the bullish argument for DLH Holdings Corporation. An increase in funding of The Department of Veterans Affairs healthcare has bi-partisan support in Congress, and although the company is economically dependent on The Department of Veterans Affairs, Congress funds VA healthcare a year in advance, so sequestration should only have minimal effect, if any, on the company.

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Source: Q3 FY 13 DLH Holdings Inc. Investor Presentation

We believe repurchasing our shares is a prudent use of our cash and that this share repurchase plan will also provide us with adequate flexibility for future initiatives, - Zachary C. Parker, President and Chief Executive Officer of DLH Holdings Corporation.

Aside from announcing a $350,000.00 share repurchase program, the company hasn't made much information public. Based on statements made by Mr. Parker, it's likely that the company believes its stock to be undervalued. According to the 3rd Quarter 2013 financial statements, the company issued 250,000 options as a result of stock based compensation this year. It would be reasonable to speculate the company intends to repurchase shares in order to offset the dilutive effects of the issuance of those options and also possibly retain some shares as treasury shares