0000785557-21-000004 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Dec. 31, 2020	Jan. 31, 2021
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, 2020
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding		12,543,906
Document Quarterly Report	true
Document Transition Report	false

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Income Statement [Abstract]
Revenue	$ 57,852	$ 52,238
Contract costs	46,005	41,340
General and administrative costs	6,150	5,913
Depreciation and amortization	2,062	1,859
Total operating costs	54,217	49,112
Income from operations	3,635	3,126
Interest expense, net	1,080	941
Income before income taxes	2,555	2,185
Income tax expense	741	634
Net income	$ 1,814	$ 1,551
Net income per share - basic (in dollars per share)	$ 0.15	$ 0.13
Net income per share - diluted (in dollars per share)	$ 0.13	$ 0.12
Weighted average common stock outstanding
Basic (in shares)	12,498	12,088
Diluted (in shares)	13,445	13,014

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Current assets:
Cash and cash equivalents	$ 370	$ 1,357
Accounts receivable	44,885	32,541
Other current assets	3,468	3,499
Total current assets	48,723	37,397
Equipment and improvements, net	2,976	3,339
Operating leases right-of-use assets	21,737	22,427
Deferred taxes, net	0	37
Goodwill	65,450	67,144
Intangible assets, net	52,408	52,612
Other long-term assets	572	606
Total assets	191,866	183,562
CURRENT LIABILITIES
Debt obligations - current, net of deferred financing costs	15,884	6,727
Operating lease liabilities - current	2,053	2,045
Accrued payroll	10,073	10,611
Accounts payable, accrued expenses, and other current liabilities	27,392	28,578
Total current liabilities	55,402	47,961
Deferred taxes, net	589	0
Debt obligations - long-term, net of deferred financing costs	58,923	60,544
Operating lease liabilities - long-term	21,017	21,620
Total long-term liabilities	80,529	82,164
Total liabilities	135,931	130,125
SHAREHOLDERS’ EQUITY
Common stock, $0.001 par value; authorized 40,000 shares; issued and outstanding 12,544 and 12,404 at December 31, 2020 and September 30, 2020, respectively	13	12
Additional paid-in capital	86,551	85,868
Accumulated deficit	(30,629)	(32,443)
Total shareholders’ equity	55,935	53,437
Total liabilities and shareholders' equity	$ 191,866	$ 183,562

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2020	Sep. 30, 2020
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	40,000,000	40,000,000
Common stock, issued (in shares)	12,544,000	12,404,000
Common stock, outstanding (in shares)	12,544,000	12,404,000

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Operating activities
Net income	$ 1,814	$ 1,551
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	2,062	1,859
Amortization of deferred financing costs	210	210
Stock based compensation expense	458	203
Deferred taxes, net	626	535
Non-cash gain from lease modification	0	(121)
Changes in operating assets and liabilities
Accounts receivable	(12,344)	(4,769)
Other current assets	284	(147)
Accrued payroll	(538)	(254)
Accounts payable, accrued expenses, and other current liabilities	(1,185)	(2,103)
Other long-term assets/liabilities	95	152
Net cash (used in) operating activities	(8,518)	(2,884)
Investing activities
Purchase of equipment and improvements	(53)	(162)
Net cash (used in) investing activities	(53)	(162)
Financing activities
Borrowing on senior debt	9,150	1,800
Repayments of senior debt	(1,750)	0
Payment of debt financing costs	(41)	(3)
Repurchase of common stock	0	(206)
Proceeds from issuance of common stock upon exercise of options	225	27
Net cash provided by financing activities	7,584	1,618
Net change in cash and cash equivalents	(987)	(1,428)
Cash and cash equivalents at beginning of period	1,357	1,790
Cash and cash equivalents at end of period	370	362
Supplemental disclosures of cash flow information
Cash paid during the period for interest	852	845
Supplemental disclosures of non-cash activity
Non-cash cancellation of common stock	$ 0	$ 95

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Cumulative-effect adjustment for adoption of ASC 842	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Deficit Cumulative-effect adjustment for adoption of ASC 842
Beginning Balance (in shares) at Sep. 30, 2019			12,036,000	0
Beginning Balance at Sep. 30, 2019	$ 45,571	$ (2)	$ 12	$ 0	$ 85,114	$ (39,555)	$ (2)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Expense related to director restricted stock unit (in shares)			90,000
Expense related to director restricted stock unit	87				87
Expense related to employee stock options	116				116
Exercise of stock options (in shares)			20,000
Exercise of stock options	27				27
Repurchases of common stock (in shares)				27,000
Repurchases of common stock	$ (111)
Cancellation of common stock (in shares)	(22,000)
Cancellation of common stock	$ (95)
Net income	1,551					1,551
Ending Balance (in shares) at Dec. 31, 2019			12,124,000	27,000
Ending Balance at Dec. 31, 2019	$ 47,144		$ 12	$ (111)	85,249	(38,006)
Beginning Balance (in shares) at Sep. 30, 2020	12,404,000		12,404,000	0
Beginning Balance at Sep. 30, 2020	$ 53,437		$ 12	$ 0	85,868	(32,443)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Expense related to director restricted stock unit (in shares)			78,000
Expense related to director restricted stock unit	116				116
Expense related to employee stock options	$ 342				342
Exercise of stock options (in shares)	62,000		62,000
Exercise of stock options	$ 226		$ 1		225
Net income	$ 1,814					1,814
Ending Balance (in shares) at Dec. 31, 2020	12,544,000		12,544,000	0
Ending Balance at Dec. 31, 2020	$ 55,935		$ 13	$ 0	$ 86,551	$ (30,629)

Basis of Presentation	3 Months Ended
Basis of Presentation	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements include the accounts of DLH Holdings Corp. and its subsidiaries (together with its subsidiaries, "DLH" or the "Company" and also referred to as "we," "us" and "our"), 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 U.S. generally accepted accounting principles ("GAAP") 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 U.S. GAAP for complete financial statements. In management's opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended December 31, 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021. Amounts as of and for the periods ended December 31, 2020 and December 31, 2019 are unaudited. 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, 2020 filed with the Securities and Exchange Commission on December 7, 2020.

Business Overview	3 Months Ended
Business Overview	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business Overview	Business Overview The Company is a full-service provider of technology-enabled health and human services, providing solutions to three market focus areas: Defense and Veterans' Health Solutions, Human Solutions and Services, and Public Health and Life Sciences. We deliver domain-specific expertise, industry best-practices and innovations to customers across these markets leveraging seven core competencies: secure data analytics, clinical trials and laboratory services, case management, performance evaluation, system modernization, operational logistics and readiness, and strategic digital communications. The Company manages its operations from its principal executive offices in Atlanta, Georgia, and we have a complementary headquarters office in Silver Spring, Maryland. We employ over 2,200 skilled employees working in more than 30 locations throughout the United States and one location overseas. At present, the Company derives 99% of its revenue from agencies of the Federal government, primarily as a prime contractor but also as a subcontractor to other Federal prime contractors. Our two largest customers are the Department of Veteran Affairs ("VA") and the Department of Health and Human Services ("HHS"). The VA comprised approximately 48% and 46% of revenue for the three months ended December 31, 2020 and 2019, respectively, and HHS comprised approximately 35% and 46% of revenue for the three months ended December 31, 2020 and 2019, respectively.

New Accounting Pronouncements	3 Months Ended
New Accounting Pronouncements	Dec. 31, 2020
Accounting Changes and Error Corrections [Abstract]
New Accounting Pronouncements	New Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updated ("ASU") 2016-13, Financial Instruments - Credit Losses, which requires companies to record an allowance for expected credit losses over the contractual term of certain financial assets, including short-term trade receivables and contract assets. Additionally, it expands disclosure requirements for credit quality of financial assets. ASU 2016-13 became effective for the Company in the first quarter of fiscal year 2021. The adoption of this standard did not have a material impact on our operating results, financial position, or cash flows. For further detail of our outstanding receivables see Note 7. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for the application of U.S. GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") and other reference rates expected to be discontinued due to reference rate reform. ASU 2020-04 became effective on March 12, 2020 for all entities meeting certain criteria. The Company may elect to apply the amendments using a prospective approach through December 31, 2022. The Company is currently assessing the impact of electing this standard on its consolidated financial statements and related disclosures and does not expect the impact to be material. In April 2020, the FASB issued a Staff Q&A, Topic 842 and 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic in order to provide clarity regarding the accounting treatment for lease concessions provided as a result of COVID-19. Under existing lease guidance, changes to certain lease terms not specified in the original lease agreement require modification accounting treatment. To provide relief, the FASB Staff Q&A permits alternatives to modification accounting under Topic 842. For concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or our obligations as the lessee, we are not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the lease agreement and can elect to apply or not apply the lease modification guidance in Topic 842. For the quarter ended December 31, 2020, we elected to account for lease concessions received for one of our operating leases as a resolution of a contingency, whereby we remeasured our lease liability and recorded the adjustment against the right-of-use asset, without reassessing lease classification or modifying the original discount rate. As a result of this election, our lease liability and right-of-use-asset decreased by less than $0.1 million. In August 2020, the FASB issued ASU 2020-06, which amends the measurement and disclosure of convertible instruments, contracts in an entity's own equity, and EPS guidance. The guidance can be adopted using a modified retrospective method or a fully retrospective method. The amendments are effective for fiscal years beginning after December 15, 2021 for public entities, excluding those that are smaller reporting companies. For all other entities the amendments are effective for fiscal years beginning after December 15, 2023. The Company does not expect the update to have a material impact on its consolidated financial statements and related disclosures.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

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+ Details

Significant Accounting Policies	3 Months Ended
Significant Accounting Policies	Dec. 31, 2020
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, interest rate swaps, stock-based compensation, right-of-use assets and lease liabilities, valuation allowances established against accounts receivable and deferred tax assets, and measurement of loss development on workers’ compensation claims. 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. Fair Value of Financial Instruments The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accrued expenses, and accounts payable approximate fair value due to the short-term nature of these instruments. The fair values of the Company's debt instruments approximated fair value because the underlying interest rates approximate market rates that the Company could obtain for similar instruments at the balance sheet dates. Long-Lived Assets Our long-lived assets include equipment and improvements, intangible assets, and goodwill. The Company continues to review long-lived 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. 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 years) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Intangible assets (other than goodwill) are originally recorded at fair value and are amortized on a straight-line basis over their estimated useful lives of 10 years. Maintenance and repair costs are expensed as incurred. Leases Right-of-use assets are measured at the present value of future minimum lease payments, including all probable renewals, plus lease payments made to the lessor before or at lease commencement and indirect costs paid, less incentives received. Our right-of-use assets include long-term leases for facilities and equipment and are amortized over their respective lease terms. Goodwill At September 30, 2020, we performed a goodwill impairment evaluation on the year-end carrying value of approximately $67 million. We performed a qualitative 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, 2020. For the three months ended December 31, 2020, the Company determined that no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill. Our assessment incorporated effects of the COVID-19 pandemic, which is not expected to have a meaningful impact on our financial results. 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 The Company 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, 2020 or September 30, 2020. We report interest and penalties as a component of income tax expense. During the three months ended December 31, 2020 and December 31, 2019, 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 option 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 Monte Carlo binomial and Black Scholes option pricing models, as appropriate 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 common 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 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 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. Treasury Stock The Company periodically purchases its own common stock that is traded on public markets as part of announced stock repurchase programs. The repurchased common stock is classified as treasury stock on the consolidated balance sheets and held at cost. As of December 31, 2020 and September 30, 2020, the Company did not hold any treasury stock. Preferred Stock Our certificate of incorporation authorizes the issuance of "blank check" preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors up to an aggregate of 5,000,000 shares of preferred stock. As of December 31, 2020 and September 30, 2020, the Company has not issued any preferred stock. Interest Rate Swap The Company uses derivative financial instruments to manage interest rate risk associated with its variable rate debt. The Company's objective in using these interest rate derivatives is to manage its exposure to interest rate movements and reduce volatility of interest expense. The gains and losses due to changes in the fair value of the interest rate swap agreements completely offset changes in the fair value of the hedged portion of the underlying debt. Offsetting changes in fair value of both the interest rate swaps and the hedged portion of the underlying debt both are recognized in interest expense in the Consolidated Statements of Operations. The Company does not hold or issue any derivative instruments for trading or speculative purposes. Risks & Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry, primarily through the introduction of additional regulations and restrictions. Due to the nature of our work, we believe that these impacts are mitigated and concluded that while it is reasonably possible that the virus could have a negative effect on the Company's financial position and the results of its operations, the specific impact is not readily determinable as of the date of these financial statements.

Revenue Recognition

3 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

We recognize revenue over time when there is a continuous transfer of control to our customer. For our U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the U.S. government to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. When control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. For services contracts, we satisfy our performance obligations as services are rendered. We use a cost-based input method to measure progress.

Contract costs include labor, material and allocable indirect expenses. For time-and-material contracts, we bill the customer per labor hour and per material, and revenue is recognized in the amount invoiced since the amount corresponds directly to the value of our performance to date. We consider control to transfer when we have a present right to payment. Essentially, all of our contracts satisfy their performance obligations over time. Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications impact performance obligations when the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue and profit cumulatively. Furthermore, a significant change in one or more estimates could affect the profitability of our contracts. We recognize adjustments in estimated profit on contracts in the period identified.

For time-and-materials contracts, revenue is recognized to the extent of billable rates times hours delivered plus materials and other reimbursable costs incurred. Revenue for cost-reimbursable contracts is recorded as reimbursable costs are incurred, including an estimated share of the applicable contractual fees earned. Contract costs are expensed as incurred. Estimated losses are recognized when identified.

Contract assets - Amounts are invoiced as work progresses in accordance with agreed-upon contractual terms. In part, revenue recognition occurs before we have the right to bill, resulting in contract assets. These contract assets are reported within receivables, net on our consolidated balance sheets and are invoiced in accordance with payment terms defined in each contract. Period end balances will vary from period to period due to agreed-upon contractual terms. Refer to the Liquidity and capital management located in Managements' Discussion and Analysis of Financial Condition and Results of Operations in this report for more information.

Contract liabilities - Amounts are a result of billings in excess of costs incurred. These contract liabilities are reported within accounts payable, accrued expenses, and other current liabilities on our consolidated balance sheets.

The following table summarizes the contract balances recognized on the Company's consolidated balance sheets:


	(in thousands)
	December 31,		September 30,
	2020		2020

Contract assets	$	15,576	$	7,943
Contract liabilities	$	200	$	200

Disaggregation of revenue from contracts with customers

We disaggregate our revenue from contracts with customers by customer, contract type, as well as whether the Company acts as prime contractor or subcontractor. We believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following tables present our revenue disaggregated by these categories:

Revenue by customer:


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019

Department of Veterans Affairs	$	27,642	$	24,063
Department of Health and Human Services	20,163		24,089
Department of Defense	6,980		331
Other	3,067		3,755
Total revenue	$	57,852	$	52,238

Revenue by contract type:


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019

Time and materials	$	44,194	$	36,441
Cost reimbursable	11,721		14,617
Firm fixed price	1,937		1,180
Total revenue	$	57,852	$	52,238

Revenue by whether the Company acts as a prime contractor or a subcontractor:


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019

Prime contractor	$	51,764	$	48,896
Subcontractor	6,088		3,342
Total revenue	$	57,852	$	52,238

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Leases

3 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

We have leases for facilities and office equipment. Our lease liabilities are recognized as the present value of the future minimum lease payments over the lease term. Our right-of-use assets are recognized as the present value of the future minimum lease payments over the lease term less unamortized lease incentives and the balance remaining in deferred rent liability under ASC 840. Our lease payments consist of fixed and in-substance fixed amounts attributable to the use of the underlying asset over the lease term. Variable lease payments that do not depend on an index rate or are not in-substance fixed payments are excluded in the measurement of right-of-use assets and lease liabilities and are expensed in the period incurred. The incremental borrowing rate on our credit facility was used in determining the present value of future minimum lease payments. Some of our lease agreements include options to extend the lease term or terminate the lease. These options are accounted for in our right-of-use assets and lease liabilities when it is reasonably certain that the Company will extend the lease term or terminate the lease. The Company does not have any finance leases. As of December 31, 2020, operating leases for facilities and equipment have remaining lease terms of 1.0 to 10.3 years.

The following table summarizes lease balances in our consolidated balance sheets at December 31, 2020 and September 30, 2020:


	(in thousands)
	December 31, 2020		September 30, 2020


Operating lease right-of-use assets	$	21,737	$	22,427

Operating lease liabilities, current	$	2,053	$	2,045
Operating lease liabilities - long-term	21,017		21,620
Total operating lease liabilities	$	23,070	$	23,665

The Company subleases a portion of one of its leased facilities. The sublease is classified as an operating lease with respect to the underlying asset. The sublease was assumed from the acquisition of Social & Scientific Systems, Inc. ("S3") in fiscal 2019. The sublease term is 5 years with two additional 1-year term extension options.

The Company's lease costs are included within contract costs in our Consolidated Statements of Operations. For the three months ended December 31, 2020 and December 31, 2019, total lease costs for our operating leases are as follows:


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019
Operating	$	970	$	1,312
Short-term	29		56
Variable	5		20
Sublease income	(95)		(49)
Total lease costs	$	909	$	1,339

The Company's future minimum lease payments as of December 31, 2020 are as follows:


For the Fiscal Year Ending September 30,	(in thousands)
2021 (remaining)	$	2,454
2022	3,501
2023	3,375
2024	3,251
2025	3,092
Thereafter	14,684
Total future lease payments	30,357
Less: imputed interest	(7,287)
Present value of future minimum lease payments	23,070
Less: current portion of operating lease liabilities	(2,053)
Long-term operating lease liabilities	$	21,017

Other information related to our leases are as follows:


	December 31, 2020
Weighted-average remaining lease term	8.9 years
Weighted-average discount rate	5.99	%


	(in thousands)
	Three Months Ended
	December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities	$	881
Lease liabilities arising from obtaining right-of-use-assets	$	—

Supporting Financial Information

3 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supporting Financial Information

Accounts receivable


		(in thousands)
		December 31,		September 30,
	Ref	2020		2020
Billed receivables		$	29,309	$	24,598
Contract assets		15,576		7,943
Total accounts receivable		44,885		32,541
Less: Allowance for doubtful accounts	(a)	—		—
Accounts receivable, net		$	44,885	$	32,541

Ref (a): Accounts receivable are non-interest bearing, unsecured and carried at net realizable value. We evaluate our receivables on a quarterly basis and determine whether an allowance is appropriate based on specific collection issues. No allowance for doubtful accounts was deemed necessary at either December 31, 2020 or September 30, 2020.

Other current assets


	(in thousands)
	December 31,		September 30,
	2020		2020
Prepaid insurance and benefits	$	431	$	665
Other receivables	1,617		1,363
Other prepaid expenses	1,420		1,471
Other current assets	$	3,468	$	3,499

Equipment and improvements, net


		(in thousands)
		December 31,		September 30,
	Ref	2020		2020
Furniture and equipment		$	958	$	958
Computer equipment		1,212		1,171
Computer software		4,353		4,341
Leasehold improvements		1,595		1,595
Total equipment and improvements		8,118		8,065
Less accumulated depreciation and amortization		(5,142)		(4,726)
Equipment and improvements, net	(a)	$	2,976	$	3,339

Ref (a): Depreciation expense was $0.4 million and $0.7 million for the three months ended December 31, 2020 and 2019, respectively.

Intangible assets


		(in thousands)
		December 31,		September 30,
	Ref	2020		2020
Intangible assets	(a)
Customer contracts and related customer relationships		$	62,281	$	45,600
Covenants not to compete		522		480
Trade name		3,051		2,109
Acquired intangibles - IBA acquisition	(b)	—		16,223
Total intangible assets		65,854		64,412
Less accumulated amortization
Customer contracts and related customer relationships		(12,707)		(11,150)
Covenants not to compete		(225)		(212)
Trade name		(514)		(438)
Total accumulated amortization		(13,446)		(11,800)
Intangible assets, net		$	52,408	$	52,612

Ref (a): Intangible assets subject to amortization. The intangibles are amortized on a straight-line basis over their estimated useful lives of 10 years. The total amount of amortization expense was $1.6 million and $1.2 million for the three months ended December 31, 2020 and 2019, respectively.

Ref (b): Intangible assets reported at September 30, 2020 from the acquisition of IBA were based on an estimate and subject to revision. As of December 31, 2020, a third party valuation was completed and of the $17.7 million intangible assets acquired from the acquisition of IBA, $16.7 million was allocated to customer contracts and customer relationships, $0.1 million to covenants not to compete, and $0.9 million to trade name.


Estimated amortization expense for future years:	(in thousands)
Remaining Fiscal 2021	$	4,939
Fiscal 2022	6,585
Fiscal 2023	6,585
Fiscal 2024	6,585
Fiscal 2025	6,585
Thereafter	21,129

Total amortization expense	$	52,408

Goodwill

The changes in the carrying amount of goodwill as of December 31, 2020 are as follows:


		(in thousands)
	Ref	Total
Balance at September 30, 2019		$	52,758
Preliminary increase from IBA acquisition		14,386
Balance at September 30, 2020		67,144
Adjustment from IBA acquisition	(a)	(1,694)
Balance at December 31, 2020		$	65,450

Ref (a): The adjustment was determined based on third party valuation.

Accounts payable, accrued expenses, and other current liabilities


	(in thousands)
	December 31,		September 30,
	2020		2020
Accounts payable	$	14,195	$	14,645
Accrued benefits	2,719		2,833
Accrued bonus and incentive compensation	591		2,340
Accrued workers' compensation insurance	6,067		5,529
Other accrued expenses	3,820		3,231
Accounts payable, accrued expenses, and other current liabilities	$	27,392	$	28,578

Debt obligations


	(in thousands)
	December 31,		September 30,
	2020		2020
Bank revolving line of credit	$	9,150	$	—
Bank term loan	68,250		70,000
Less unamortized deferred financing costs	(2,593)		(2,729)
Net bank debt obligations	74,807		67,271
Less current portion of bank debt obligations, net of deferred financing costs	(15,884)		(6,727)
Long-term portion of bank debt obligations, net of deferred financing costs	$	58,923	$	60,544

Interest expense


		(in thousands)
		Three Months Ended
		December 31,
	Ref	2020		2019
Interest expense	(a)	$	(870)	$	(852)
Amortization of deferred financing costs	(b)	(210)		(210)

Other income (expense), net	(c)	—		121

Interest expense, net		$	(1,080)	$	(941)

Ref (a): Interest expense on borrowing

Ref (b): Amortization of expenses related to term loan and revolving line of credit

Ref (c): Gain on lease modification due to a lease amendment

Credit Facilities

3 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Credit Facilities

A summary of this loan facility as of December 31, 2020, is as follows:

($ in Millions)

As of December 31, 2020

Lender

Arrangement

Loan Balance

Interest

Maturity Date

First National Bank of Pennsylvania ("FNB")

Secured term loan (a)

68.3

LIBOR* + 3.5%

09/30/2025

First National Bank of Pennsylvania ("FNB")

Secured revolving line of credit (b)

9.2

LIBOR* + 3.5%

09/30/2025

*LIBOR rate as of December 31, 2020 was 0.15%. As of December 31, 2020, our LIBOR rate is subject to a minimum floor of 0.5%.

(a) Represents the principal amounts payable on our term loan, which is secured by liens on substantially all of the assets of the Company. The principal of the term loan is payable in quarterly installments with the remaining balance due on September 30, 2025.

The Credit Agreement requires compliance with a number of financial covenants and contains restrictions on our ability to engage in certain transactions. Among other matters, we must comply with limitations on the following: 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 quarterly financial covenants including: (i) a minimum fixed charge coverage ratio of at least 1.25 to 1.00, and (ii) a Funded Indebtedness to Adjusted EBITDA ratio not exceeding the ratio of 3.75:1.0 to 2.75:1.0 through maturity. Adjusted EBITDA ratio is calculated by dividing the Company's total interest-bearing debt by net income

adjusted to exclude (i) interest and other expenses, (ii) provision for or benefit from income taxes, if any, (iii) depreciation and amortization, and (iv) non-recurring charges, losses or expenses to include transaction and non-cash equity expense. The term loan has an interest rate spread range from 2.5% to 4.5% depending on the funded indebtedness to adjusted EBITDA ratio. We are in compliance with all loan covenants and restrictions.

We are required to pay quarterly amortization payments, which commenced in December 2020 through September 2025. The annual amortization amounts are $7.0 million for fiscal years 2021 and 2022 and $8.75 million each for fiscal years 2023 - 2025. The quarterly payments are equal installments. In addition to quarterly payments of the outstanding indebtedness, the loan agreement also requires annual payments of a percentage of excess cash flow, as defined in the loan agreement. The loan agreement states that an excess cash flow recapture payment must be made equal to (a) 75% of the excess cash flow for the immediately preceding fiscal year in which indebtedness to consolidated EBITDA ratio is greater than or equal to 2.50:1.0; (b) 50% of the excess cash flow for the immediately preceding fiscal year in which the funded indebtedness to consolidated EBITDA Ratio is less than 2.50:1.0 but greater than or equal to 1.5:1.0; or (c) 0% of the excess cash flow for the immediately preceding fiscal year in which the funded indebtedness to consolidated EBITDA Ratio is less than 1.5:1.0. In addition, the Company must make additional mandatory prepayment of amounts outstanding based on proceeds received from asset sales and sales of certain equity securities or other indebtedness. For additional information regarding the schedule of future payment obligations, please refer to Note 11, Commitments and Contingencies.

On September 30, 2019, we executed a floating-to-fixed interest rate swap with First National Bank ("FNB") as counter party. The notional amount in the floating-to-fixed interest rate swap for the current fiscal year is $28.8 million and matures in 2024. The notional amount was $36 million in the prior fiscal year. The remaining outstanding balance of our term loan is subject to interest rate fluctuations. On the notional amount, the Company pays a base fixed rate of 1.61%, plus applicable credit spread. As a result, for the three months ended December 31, 2020, interest expense has been increased by less than $0.2 million.

(b) The secured revolving line of credit has a ceiling of up to $25.0 million. Borrowing on the line of credit is secured by liens on substantially all of the assets of the Company. The Company accessed funds from the revolving credit facility during the quarter and has an outstanding balance of $9.2 million at December 31, 2020.

The Company's total borrowing availability, based on eligible accounts receivables at December 31, 2020, was $25.0 million. As part of the revolving credit facility, the lenders agreed to a sublimit of $5 million for letters of credit for the account of the Company, subject to applicable procedures.

The revolving line of credit has a maturity date of September 30, 2025 and is subject to loan covenants as described above. The Company is fully compliant with those covenants.

Stock-based Compensation and Equity Grants

3 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-based Compensation and Equity Grants

Stock-based compensation expense

Options issued under equity incentive plans were designated as either an incentive stock or a non-statutory stock option. No option is 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. As of December 31, 2020, there were 0.5 million shares available for grant.

Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our Consolidated Statements of Operations:


		(in thousands)
		Three Months Ended
	Ref	December 31,
		2020		2019
DLH employees	(a)	$	342	$	116
Non-employee directors	(b)	116		87
Total stock option expense		$	458	$	203

Ref (a): Equity grants of restricted stock units were made in accordance with the DLH long-term incentive compensation policy for Named Executive Officers ("NEO") and totaled 147,431 restricted stock units issued and outstanding at December 31, 2020.

Ref (b): Equity grants of restricted stock units were made in accordance with DLH compensation policy for non-employee directors and totaled 63,177 restricted stock units issued and outstanding at December 31, 2020.

Unrecognized stock-based compensation expense


		(in thousands)
		December 31,
	Ref	2020
Unrecognized expense for DLH employees	(a)	$	3,445
Unrecognized expense for non-employee directors		351
Total unrecognized expense		$	3,796

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. For options that vest based on the Company's common stock achieving and maintaining defined market prices, the Company values the awards with a Monte Carlo binomial model that utilizes various probability factors and other criterion in establishing fair value of the grant. The related compensation expense is recognized over the derived service period determined in the valuation. On a weighted average basis, this expense is expected to be recognized within the next 4.51 years.

Stock option activity for the three months ended December 31, 2020

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.


					(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, 2020		2,129	$	6.14	7.4	$	6,593
Exercised		(62)	$	3.62	—	—
Granted	(a)	220	$	10.05	—	—

Options outstanding, December 31, 2020		2,287	$	6.95	7.7	$	10,261

Ref (a): The options granted in the first quarter of fiscal 2021 occurred at the end of the period and an amount of less than $0.1 million was accrued as stock compensation expense.

Stock options shares outstanding, vested, and unvested for the periods ended


		(in thousands)

		December 31,	September 30,
	Ref	2020	2020
Vested and exercisable	(a)	1,151	1,213
Unvested	(b)	1,136	916
Options outstanding		2,287	2,129

Ref (a): Weighted average exercise price of vested and exercisable shares was $2.18 and $2.25 at December 31, 2020 and September 30, 2020, respectively. Aggregate intrinsic value was approximately $8.2 million and $6.1 million at December 31, 2020 and September 30, 2020, respectively. Weighted average contractual term remaining was 3.8 and 4.6 years at December 31, 2020 and September 30, 2020, respectively.

Ref (b): Certain awards vest upon satisfaction of certain performance criteria.

Earnings Per Share

3 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings 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.


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019
Numerator:
Net income	$	1,814	$	1,551
Denominator:
Denominator for basic net income per share - weighted-average outstanding shares	12,498		12,088
Effect of dilutive securities:
Stock options and restricted stock	947		926
Denominator for diluted net income per share - weighted-average outstanding shares	13,445		13,014

Net income per share - basic	$	0.15	$	0.13
Net income per share - diluted	$	0.13	$	0.12

Commitment and Contingencies

3 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Contractual obligations as of December 31, 2020


			Payments Due Per Fiscal Year
			(Remaining)
(Amounts in thousands)	Total		2021		2022		2023		2024		2025		Thereafter
Debt obligations	$	77,400	$	14,400	$	7,000	$	8,750	$	8,750	$	38,500	$	—
Facility leases	30,077		2,392		3,418		3,292		3,199		3,092		14,684
Equipment operating leases	280		62		83		83		52		—		—
Total Contractual Obligations	$	107,757	$	16,854	$	10,501	$	12,125	$	12,001	$	41,592	$	14,684

Worker's Compensation

We accrue worker's 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, 2020 and September 30, 2020 was $6.1 million and $5.5 million, respectively.

Legal Proceedings

As a commercial enterprise and employer, the Company is subject to various claims and legal actions in the ordinary course of business. These matters can include professional liability, employment-relations issues, workers’ compensation, tax, payroll and employee-related matters, other commercial disputes arising in the course of its business, and inquiries and investigations by governmental agencies regarding our employment practices or other matters. 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.

Related Party Transactions	3 Months Ended
Related Party Transactions	Dec. 31, 2020
Related Party Transactions [Abstract]
Related Party Transactions	Related Party TransactionsThe Company has determined that for the three months ended December 31, 2020 there were no significant related party transactions that have occurred which require disclosure through the date that these financial statements were issued.

Significant Accounting Policies (Policies)	3 Months Ended
Significant Accounting Policies (Policies)	Dec. 31, 2020
Accounting Policies [Abstract]
New Accounting Pronouncements	New Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updated ("ASU") 2016-13, Financial Instruments - Credit Losses, which requires companies to record an allowance for expected credit losses over the contractual term of certain financial assets, including short-term trade receivables and contract assets. Additionally, it expands disclosure requirements for credit quality of financial assets. ASU 2016-13 became effective for the Company in the first quarter of fiscal year 2021. The adoption of this standard did not have a material impact on our operating results, financial position, or cash flows. For further detail of our outstanding receivables see Note 7. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for the application of U.S. GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") and other reference rates expected to be discontinued due to reference rate reform. ASU 2020-04 became effective on March 12, 2020 for all entities meeting certain criteria. The Company may elect to apply the amendments using a prospective approach through December 31, 2022. The Company is currently assessing the impact of electing this standard on its consolidated financial statements and related disclosures and does not expect the impact to be material. In April 2020, the FASB issued a Staff Q&A, Topic 842 and 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic in order to provide clarity regarding the accounting treatment for lease concessions provided as a result of COVID-19. Under existing lease guidance, changes to certain lease terms not specified in the original lease agreement require modification accounting treatment. To provide relief, the FASB Staff Q&A permits alternatives to modification accounting under Topic 842. For concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or our obligations as the lessee, we are not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the lease agreement and can elect to apply or not apply the lease modification guidance in Topic 842. For the quarter ended December 31, 2020, we elected to account for lease concessions received for one of our operating leases as a resolution of a contingency, whereby we remeasured our lease liability and recorded the adjustment against the right-of-use asset, without reassessing lease classification or modifying the original discount rate. As a result of this election, our lease liability and right-of-use-asset decreased by less than $0.1 million. In August 2020, the FASB issued ASU 2020-06, which amends the measurement and disclosure of convertible instruments, contracts in an entity's own equity, and EPS guidance. The guidance can be adopted using a modified retrospective method or a fully retrospective method. The amendments are effective for fiscal years beginning after December 15, 2021 for public entities, excluding those that are smaller reporting companies. For all other entities the amendments are effective for fiscal years beginning after December 15, 2023. The Company does not expect the update to have a material impact on its consolidated financial statements and related disclosures.
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, interest rate swaps, stock-based compensation, right-of-use assets and lease liabilities, valuation allowances established against accounts receivable and deferred tax assets, and measurement of loss development on workers’ compensation claims. 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.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accrued expenses, and accounts payable approximate fair value due to the short-term nature of these instruments. The fair values of the Company's debt instruments approximated fair value because the underlying interest rates approximate market rates that the Company could obtain for similar instruments at the balance sheet dates.
Long-lived Assets	Long-Lived Assets Our long-lived assets include equipment and improvements, intangible assets, and goodwill. The Company continues to review long-lived 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. 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 years) and the shorter of the initial lease term or estimated useful life for leasehold improvements. Intangible assets (other than goodwill) are originally recorded at fair value and are amortized on a straight-line basis over their estimated useful lives of 10 years. Maintenance and repair costs are expensed as incurred.
Leases	Leases Right-of-use assets are measured at the present value of future minimum lease payments, including all probable renewals, plus lease payments made to the lessor before or at lease commencement and indirect costs paid, less incentives received. Our right-of-use assets include long-term leases for facilities and equipment and are amortized over their respective lease terms.
Goodwill	GoodwillAt September 30, 2020, we performed a goodwill impairment evaluation on the year-end carrying value of approximately $67 million. We performed a qualitative 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, 2020. For the three months ended December 31, 2020, the Company determined that no change in business conditions occurred which would have a material adverse effect on the valuation of goodwill. Our assessment incorporated effects of the COVID-19 pandemic, which is not expected to have a meaningful impact on our financial results. 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 The Company 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.
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 option 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 Monte Carlo binomial and Black Scholes option pricing models, as appropriate 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 common 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 per Share	Earnings Per ShareBasic 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 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.
Treasury Stock and Preferred Stock	Treasury StockThe Company periodically purchases its own common stock that is traded on public markets as part of announced stock repurchase programs. The repurchased common stock is classified as treasury stock on the consolidated balance sheets and held at cost.Preferred StockOur certificate of incorporation authorizes the issuance of "blank check" preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors up to an aggregate of 5,000,000 shares of preferred stock.
Interest Rate Swap	Interest Rate Swap The Company uses derivative financial instruments to manage interest rate risk associated with its variable rate debt. The Company's objective in using these interest rate derivatives is to manage its exposure to interest rate movements and reduce volatility of interest expense. The gains and losses due to changes in the fair value of the interest rate swap agreements completely offset changes in the fair value of the hedged portion of the underlying debt. Offsetting changes in fair value of both the interest rate swaps and the hedged portion of the underlying debt both are recognized in interest expense in the Consolidated Statements of Operations. The Company does not hold or issue any derivative instruments for trading or speculative purposes.
Revenue Recognition	Revenue Recognition We recognize revenue over time when there is a continuous transfer of control to our customer. For our U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the U.S. government to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. When control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. For services contracts, we satisfy our performance obligations as services are rendered. We use a cost-based input method to measure progress. Contract costs include labor, material and allocable indirect expenses. For time-and-material contracts, we bill the customer per labor hour and per material, and revenue is recognized in the amount invoiced since the amount corresponds directly to the value of our performance to date. We consider control to transfer when we have a present right to payment. Essentially, all of our contracts satisfy their performance obligations over time. Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications impact performance obligations when the modification either creates new or changes the existing enforceable rights and obligations. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue and profit cumulatively. Furthermore, a significant change in one or more estimates could affect the profitability of our contracts. We recognize adjustments in estimated profit on contracts in the period identified. For time-and-materials contracts, revenue is recognized to the extent of billable rates times hours delivered plus materials and other reimbursable costs incurred. Revenue for cost-reimbursable contracts is recorded as reimbursable costs are incurred, including an estimated share of the applicable contractual fees earned. Contract costs are expensed as incurred. Estimated losses are recognized when identified. Contract assets - Amounts are invoiced as work progresses in accordance with agreed-upon contractual terms. In part, revenue recognition occurs before we have the right to bill, resulting in contract assets. These contract assets are reported within receivables, net on our consolidated balance sheets and are invoiced in accordance with payment terms defined in each contract. Period end balances will vary from period to period due to agreed-upon contractual terms. Refer to the Liquidity and capital management located in Managements' Discussion and Analysis of Financial Condition and Results of Operations in this report for more information. Contract liabilities - Amounts are a result of billings in excess of costs incurred. These contract liabilities are reported within accounts payable, accrued expenses, and other current liabilities on our consolidated balance sheets.Disaggregation of revenue from contracts with customers We disaggregate our revenue from contracts with customers by customer, contract type, as well as whether the Company acts as prime contractor or subcontractor. We believe these categories best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Revenue Recognition (Tables)

3 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Contract Balances Recognized on the Company's Consolidated Balance Sheets

The following table summarizes the contract balances recognized on the Company's consolidated balance sheets:


	(in thousands)
	December 31,		September 30,
	2020		2020

Contract assets	$	15,576	$	7,943
Contract liabilities	$	200	$	200

Schedule of Disaggregation of Revenue From Contracts with Customers

The following tables present our revenue disaggregated by these categories:

Revenue by customer:


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019

Department of Veterans Affairs	$	27,642	$	24,063
Department of Health and Human Services	20,163		24,089
Department of Defense	6,980		331
Other	3,067		3,755
Total revenue	$	57,852	$	52,238

Revenue by contract type:


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019

Time and materials	$	44,194	$	36,441
Cost reimbursable	11,721		14,617
Firm fixed price	1,937		1,180
Total revenue	$	57,852	$	52,238

Revenue by whether the Company acts as a prime contractor or a subcontractor:


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019

Prime contractor	$	51,764	$	48,896
Subcontractor	6,088		3,342
Total revenue	$	57,852	$	52,238

Leases (Tables)

3 Months Ended

Dec. 31, 2020

Leases [Abstract]

Schedule of Summarized Lease Balances in Consolidated Balance Sheet

The following table summarizes lease balances in our consolidated balance sheets at December 31, 2020 and September 30, 2020:


	(in thousands)
	December 31, 2020		September 30, 2020


Operating lease right-of-use assets	$	21,737	$	22,427

Operating lease liabilities, current	$	2,053	$	2,045
Operating lease liabilities - long-term	21,017		21,620
Total operating lease liabilities	$	23,070	$	23,665

Schedule of Lease Costs and Other Information Related to Leases


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019
Operating	$	970	$	1,312
Short-term	29		56
Variable	5		20
Sublease income	(95)		(49)
Total lease costs	$	909	$	1,339

Other information related to our leases are as follows:


	December 31, 2020
Weighted-average remaining lease term	8.9 years
Weighted-average discount rate	5.99	%


	(in thousands)
	Three Months Ended
	December 31, 2020
Cash paid for amounts included in the measurement of lease liabilities	$	881
Lease liabilities arising from obtaining right-of-use-assets	$	—

Schedule of Company's Future Lease Payments

The Company's future minimum lease payments as of December 31, 2020 are as follows:


For the Fiscal Year Ending September 30,	(in thousands)
2021 (remaining)	$	2,454
2022	3,501
2023	3,375
2024	3,251
2025	3,092
Thereafter	14,684
Total future lease payments	30,357
Less: imputed interest	(7,287)
Present value of future minimum lease payments	23,070
Less: current portion of operating lease liabilities	(2,053)
Long-term operating lease liabilities	$	21,017

Supporting Financial Information (Tables)

3 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Accounts Receivable

Accounts receivable


		(in thousands)
		December 31,		September 30,
	Ref	2020		2020
Billed receivables		$	29,309	$	24,598
Contract assets		15,576		7,943
Total accounts receivable		44,885		32,541
Less: Allowance for doubtful accounts	(a)	—		—
Accounts receivable, net		$	44,885	$	32,541

Schedule of Other Current Assets

Other current assets


	(in thousands)
	December 31,		September 30,
	2020		2020
Prepaid insurance and benefits	$	431	$	665
Other receivables	1,617		1,363
Other prepaid expenses	1,420		1,471
Other current assets	$	3,468	$	3,499

Schedule of Equipment and Improvements, Net

Equipment and improvements, net


		(in thousands)
		December 31,		September 30,
	Ref	2020		2020
Furniture and equipment		$	958	$	958
Computer equipment		1,212		1,171
Computer software		4,353		4,341
Leasehold improvements		1,595		1,595
Total equipment and improvements		8,118		8,065
Less accumulated depreciation and amortization		(5,142)		(4,726)
Equipment and improvements, net	(a)	$	2,976	$	3,339

Ref (a): Depreciation expense was $0.4 million and $0.7 million for the three months ended December 31, 2020 and 2019, respectively.

Schedule of Intangible Assets

Intangible assets


		(in thousands)
		December 31,		September 30,
	Ref	2020		2020
Intangible assets	(a)
Customer contracts and related customer relationships		$	62,281	$	45,600
Covenants not to compete		522		480
Trade name		3,051		2,109
Acquired intangibles - IBA acquisition	(b)	—		16,223
Total intangible assets		65,854		64,412
Less accumulated amortization
Customer contracts and related customer relationships		(12,707)		(11,150)
Covenants not to compete		(225)		(212)
Trade name		(514)		(438)
Total accumulated amortization		(13,446)		(11,800)
Intangible assets, net		$	52,408	$	52,612

Schedule of Estimated Amortization of Intangible Assets


Estimated amortization expense for future years:	(in thousands)
Remaining Fiscal 2021	$	4,939
Fiscal 2022	6,585
Fiscal 2023	6,585
Fiscal 2024	6,585
Fiscal 2025	6,585
Thereafter	21,129

Total amortization expense	$	52,408

Schedule of Changes in Carrying Amount of Goodwill

Goodwill

The changes in the carrying amount of goodwill as of December 31, 2020 are as follows:


		(in thousands)
	Ref	Total
Balance at September 30, 2019		$	52,758
Preliminary increase from IBA acquisition		14,386
Balance at September 30, 2020		67,144
Adjustment from IBA acquisition	(a)	(1,694)
Balance at December 31, 2020		$	65,450

Ref (a): The adjustment was determined based on third party valuation.

Schedule of Accounts Payable, Accrued Expenses, and Other Current Liabilities

Accounts payable, accrued expenses, and other current liabilities


	(in thousands)
	December 31,		September 30,
	2020		2020
Accounts payable	$	14,195	$	14,645
Accrued benefits	2,719		2,833
Accrued bonus and incentive compensation	591		2,340
Accrued workers' compensation insurance	6,067		5,529
Other accrued expenses	3,820		3,231
Accounts payable, accrued expenses, and other current liabilities	$	27,392	$	28,578

Schedule of Debt Obligations

Debt obligations


	(in thousands)
	December 31,		September 30,
	2020		2020
Bank revolving line of credit	$	9,150	$	—
Bank term loan	68,250		70,000
Less unamortized deferred financing costs	(2,593)		(2,729)
Net bank debt obligations	74,807		67,271
Less current portion of bank debt obligations, net of deferred financing costs	(15,884)		(6,727)
Long-term portion of bank debt obligations, net of deferred financing costs	$	58,923	$	60,544

Schedule of Interest Expense

Interest expense


		(in thousands)
		Three Months Ended
		December 31,
	Ref	2020		2019
Interest expense	(a)	$	(870)	$	(852)
Amortization of deferred financing costs	(b)	(210)		(210)

Other income (expense), net	(c)	—		121

Interest expense, net		$	(1,080)	$	(941)

Ref (a): Interest expense on borrowing

Ref (b): Amortization of expenses related to term loan and revolving line of credit

Ref (c): Gain on lease modification due to a lease amendment

Credit Facilities (Tables)

3 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Schedule of Loan Facility

A summary of this loan facility as of December 31, 2020, is as follows:

($ in Millions)

As of December 31, 2020

Lender

Arrangement

Loan Balance

Interest

Maturity Date

First National Bank of Pennsylvania ("FNB")

Secured term loan (a)

68.3

LIBOR* + 3.5%

09/30/2025

First National Bank of Pennsylvania ("FNB")

Secured revolving line of credit (b)

9.2

LIBOR* + 3.5%

09/30/2025

*LIBOR rate as of December 31, 2020 was 0.15%. As of December 31, 2020, our LIBOR rate is subject to a minimum floor of 0.5%.

Stock-based Compensation and Equity Grants (Tables)

3 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Stock-based Compensation Expense

Stock-based compensation expense, shown in the table below, is recorded in general and administrative expenses included in our Consolidated Statements of Operations:


		(in thousands)
		Three Months Ended
	Ref	December 31,
		2020		2019
DLH employees	(a)	$	342	$	116
Non-employee directors	(b)	116		87
Total stock option expense		$	458	$	203

Unrecognized stock-based compensation expense


		(in thousands)
		December 31,
	Ref	2020
Unrecognized expense for DLH employees	(a)	$	3,445
Unrecognized expense for non-employee directors		351
Total unrecognized expense		$	3,796

Schedule of Stock Option Activity


					(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, 2020		2,129	$	6.14	7.4	$	6,593
Exercised		(62)	$	3.62	—	—
Granted	(a)	220	$	10.05	—	—

Options outstanding, December 31, 2020		2,287	$	6.95	7.7	$	10,261

Ref (a): The options granted in the first quarter of fiscal 2021 occurred at the end of the period and an amount of less than $0.1 million was accrued as stock compensation expense.

Schedule of Option Shares Outstanding, Vested and Expected to Vest

Stock options shares outstanding, vested, and unvested for the periods ended


		(in thousands)

		December 31,	September 30,
	Ref	2020	2020
Vested and exercisable	(a)	1,151	1,213
Unvested	(b)	1,136	916
Options outstanding		2,287	2,129

Ref (b): Certain awards vest upon satisfaction of certain performance criteria.

Earnings Per Share (Tables)

3 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Schedule of Diluted Earnings per Share


	(in thousands)
	Three Months Ended
	December 31,
	2020		2019
Numerator:
Net income	$	1,814	$	1,551
Denominator:
Denominator for basic net income per share - weighted-average outstanding shares	12,498		12,088
Effect of dilutive securities:
Stock options and restricted stock	947		926
Denominator for diluted net income per share - weighted-average outstanding shares	13,445		13,014

Net income per share - basic	$	0.15	$	0.13
Net income per share - diluted	$	0.13	$	0.12

Commitment and Contingencies (Tables)

3 Months Ended

Dec. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of Contractual Obligations

Contractual obligations as of December 31, 2020


			Payments Due Per Fiscal Year
			(Remaining)
(Amounts in thousands)	Total		2021		2022		2023		2024		2025		Thereafter
Debt obligations	$	77,400	$	14,400	$	7,000	$	8,750	$	8,750	$	38,500	$	—
Facility leases	30,077		2,392		3,418		3,292		3,199		3,092		14,684
Equipment operating leases	280		62		83		83		52		—		—
Total Contractual Obligations	$	107,757	$	16,854	$	10,501	$	12,125	$	12,001	$	41,592	$	14,684

Business Overview (Details)	3 Months Ended
Business Overview (Details)	Dec. 31, 2020 employee business_area market location	Dec. 31, 2019
Concentration Risk [Line Items]
Number of market focus areas \| business_area	3
Number of market leveraging core competencies \| market	7
Revenue from Contract with Customer \| Customer concentration \| Federal Government
Concentration Risk [Line Items]
Concentration risk percentage	99.00%
Revenue from Contract with Customer \| Customer concentration \| VA
Concentration Risk [Line Items]
Concentration risk percentage	48.00%	46.00%
Revenue from Contract with Customer \| Customer concentration \| HHS
Concentration Risk [Line Items]
Concentration risk percentage	35.00%	46.00%
U.S.
Concentration Risk [Line Items]
Number of employees \| employee	2,200
Number of locations in which entity operates	30
Overseas
Concentration Risk [Line Items]
Number of locations in which entity operates	1

New Accounting Pronouncements (Details) $ in Millions	3 Months Ended
New Accounting Pronouncements (Details) $ in Millions	Dec. 31, 2020 USD ($) lease_concesion
Accounting Changes and Error Corrections [Abstract]
Number of operating leases accounted for as lease concessions \| lease_concesion	1
Decrease in operating right-of-use assets due to lease concessions	$ 0.1
Decrease in operating lease liabilities due to lease concessions	$ 0.1

Significant Accounting Policies (Details) - USD ($)	3 Months Ended		12 Months Ended
Significant Accounting Policies (Details) - USD ($)	Dec. 31, 2020	Dec. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Acquired Indefinite-lived Intangible Assets [Line Items]
Estimated useful live of intangible assets	10 years
Goodwill	$ 65,450,000		$ 67,144,000	$ 52,758,000
Goodwill impairment			0
Uncertain tax positions	0		$ 0
Income tax interest expense	0	$ 0
Income tax penalties expense	0	$ 0
Cash, FDIC insured amount	$ 250,000
Treasury stock (in shares)	0
Preferred shares authorized (in shares)	5,000,000
Preferred stock issued (in shares)	0
Employee Stock Option
Acquired Indefinite-lived Intangible Assets [Line Items]
Number of awards authorized for issuance (in shares)	0
Expiration term of share-based compensation plan	10 years
Minimum
Acquired Indefinite-lived Intangible Assets [Line Items]
Estimated useful of long-lived assets	3 years
Maximum
Acquired Indefinite-lived Intangible Assets [Line Items]
Estimated useful of long-lived assets	7 years

Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Revenue from Contract with Customer [Abstract]
Contract assets	$ 15,576	$ 7,943
Contract liabilities	$ 200	$ 200

Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Disaggregation of Revenue [Line Items]
Total revenue	$ 57,852	$ 52,238
Prime contractor
Disaggregation of Revenue [Line Items]
Total revenue	51,764	48,896
Subcontractor
Disaggregation of Revenue [Line Items]
Total revenue	6,088	3,342
Time and materials
Disaggregation of Revenue [Line Items]
Total revenue	44,194	36,441
Cost reimbursable
Disaggregation of Revenue [Line Items]
Total revenue	11,721	14,617
Firm fixed price
Disaggregation of Revenue [Line Items]
Total revenue	1,937	1,180
Department of Veterans Affairs
Disaggregation of Revenue [Line Items]
Total revenue	27,642	24,063
Department of Health and Human Services
Disaggregation of Revenue [Line Items]
Total revenue	20,163	24,089
Department of Defense
Disaggregation of Revenue [Line Items]
Total revenue	6,980	331
Other
Disaggregation of Revenue [Line Items]
Total revenue	$ 3,067	$ 3,755

Leases - Narrative (Details)	3 Months Ended
Leases - Narrative (Details)	Dec. 31, 2020 sublease sublease_option
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of facilities subleased \| sublease	1
Sublease term	5 years
Sublease number of additional extension options \| sublease_option	2
Sublease extension option period	1 year
Facilities and Equipment \| Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Remaining lease term	1 year
Facilities and Equipment \| Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Remaining lease term	10 years 3 months 18 days

Leases - Summary of Lease Balances in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Leases [Abstract]
Operating lease right-of-use assets	$ 21,737	$ 22,427
Operating lease liabilities - current	2,053	2,045
Operating lease liabilities - long-term	21,017	21,620
Total operating lease liabilities	$ 23,070	$ 23,665

Leases - Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended
Leases - Lease Costs (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Operating	$ 970	$ 1,312
Short-term	29	56
Variable	5	20
Sublease income	(95)	(49)
Total lease costs	$ 909	$ 1,339

Leases - Company's Future Minimum Lease Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Leases [Abstract]
2021 (remaining)	$ 2,454
2022	3,501
2023	3,375
2024	3,251
2025	3,092
Thereafter	14,684
Total future lease payments	30,357
Less: imputed interest	(7,287)
Total operating lease liabilities	23,070	$ 23,665
Less: current portion of operating lease liabilities	(2,053)	(2,045)
Long-term operating lease liabilities	$ 21,017	$ 21,620

Leases - Other Information Related to Leases (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2020 USD ($)
Leases [Abstract]
Weighted-average remaining lease term	8 years 10 months 24 days
Weighted-average discount rate	5.99%
Cash paid for amounts included in the measurement of lease liabilities	$ 881
Lease liabilities arising from obtaining right-of-use-assets	$ 0

Supporting Financial Information - Accounts Receivable (Details) - USD ($)	Dec. 31, 2020	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Billed receivables	$ 29,309,000	$ 24,598,000
Contract assets	15,576,000	7,943,000
Total accounts receivable	44,885,000	32,541,000
Less: Allowance for doubtful accounts	0	0
Accounts receivable, net	$ 44,885,000	$ 32,541,000

Supporting Financial Information - Other Current Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Prepaid insurance and benefits	$ 431	$ 665
Other receivables	1,617	1,363
Other prepaid expenses	1,420	1,471
Other current assets	$ 3,468	$ 3,499

Supporting Financial Information - Equipment and Improvements, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Furniture and equipment	$ 958		$ 958
Computer equipment	1,212		1,171
Computer software	4,353		4,341
Leasehold improvements	1,595		1,595
Total equipment and improvements	8,118		8,065
Less accumulated depreciation and amortization	(5,142)		(4,726)
Equipment and improvements, net	2,976		$ 3,339
Depreciation expense	$ 400	$ 700

Supporting Financial Information - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Sep. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 65,854		$ 64,412
Total accumulated amortization	(13,446)		(11,800)
Intangible assets, net	$ 52,408		52,612
Estimated useful live of intangible assets	10 years
Amortization expense of intangible assets	$ 1,600	$ 1,200
IBA
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	17,700		16,223
Customer contracts and related customer relationships
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	62,281		45,600
Total accumulated amortization	(12,707)		(11,150)
Customer contracts and related customer relationships \| IBA
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	16,700
Covenants not to compete
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	522		480
Total accumulated amortization	(225)		(212)
Covenants not to compete \| IBA
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	100
Trade name
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	3,051		2,109
Total accumulated amortization	(514)		$ (438)
Trade name \| IBA
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 900

Supporting Financial Information - Estimated Future Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Remaining Fiscal 2021	$ 4,939
Fiscal 2022	6,585
Fiscal 2023	6,585
Fiscal 2024	6,585
Fiscal 2025	6,585
Thereafter	21,129
Intangible assets, net	$ 52,408	$ 52,612

Supporting Financial Information - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020
Goodwill [Roll Forward]
Beginning Balance	$ 67,144	$ 52,758
Preliminary increase from IBA acquisition		14,386
Adjustment from IBA acquisition	(1,694)
Ending Balance	$ 65,450	$ 67,144

Supporting Financial Information - Accounts Payable, Accrued Expense and Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accounts payable	$ 14,195	$ 14,645
Accrued benefits	2,719	2,833
Accrued bonus and incentive compensation	591	2,340
Accrued workers' compensation insurance	6,067	5,529
Other accrued expenses	3,820	3,231
Accounts payable, accrued expenses, and other current liabilities	$ 27,392	$ 28,578

Supporting Financial Information - Debt Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Debt Instrument [Line Items]
Long-term debt	$ 77,400
Less current portion of bank debt obligations, net of deferred financing costs	(15,884)	$ (6,727)
Long-term portion of bank debt obligations, net of deferred financing costs	58,923	60,544
Secured Debt
Debt Instrument [Line Items]
Less unamortized deferred financing costs	(2,593)	(2,729)
Net bank debt obligations	74,807	67,271
Less current portion of bank debt obligations, net of deferred financing costs	(15,884)	(6,727)
Long-term portion of bank debt obligations, net of deferred financing costs	58,923	60,544
Secured Debt \| Revolving Line of Credit
Debt Instrument [Line Items]
Long-term debt	9,150	0
Secured Debt \| Term Loans
Debt Instrument [Line Items]
Long-term debt	$ 68,250	$ 70,000

Supporting Financial Information - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Interest expense	$ (870)	$ (852)
Amortization of deferred financing costs	(210)	(210)
Other income (expense), net	0	121
Interest expense, net	$ (1,080)	$ (941)

Credit Facilities - Summary of Loan Facility (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2020	Sep. 30, 2020
Line of Credit Facility [Line Items]
Total bank debt obligation	$ 77,400
Secured Debt \| Term Loans
Line of Credit Facility [Line Items]
Total bank debt obligation	$ 68,250	$ 70,000
Secured Debt \| Term Loans \| LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate percentage	0.035%
Interest rate spread	0.15%
Interest rate floor	0.50%
Secured Debt \| Revolving Line of Credit
Line of Credit Facility [Line Items]
Total bank debt obligation	$ 9,150	$ 0
Secured Debt \| Revolving Line of Credit \| LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate percentage	0.035%
Interest rate spread	0.15%
Interest rate floor	0.50%

Credit Facilities - Narrative (Details)	3 Months Ended
Credit Facilities - Narrative (Details)	Dec. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)
Line of Credit Facility [Line Items]
Debt amortization fiscal year 2021	$ 14,400,000
Debt amortization fiscal year 2022	7,000,000
2023	8,750,000
2024	8,750,000
Debt amortization 2025	38,500,000
Interest Rate Swap
Line of Credit Facility [Line Items]
Derivative notional amount	$ 28,800,000	$ 36,000,000
Derivative fixed interest rate	1.61%
Interest expense increase (less than)	$ 200,000
Secured Debt \| Term Loans
Line of Credit Facility [Line Items]
Fixed charge coverage ratio	1.25
Ratio of funded indebtedness to EBITDA through maturity	2.75
Debt amortization fiscal year 2021	$ 7,000,000.0
Debt amortization fiscal year 2022	7,000,000.0
2023	8,750,000
2024	8,750,000
Debt amortization 2025	$ 8,750,000
Secured Debt \| Term Loans \| Excess Cash Flows Greater Than Or Equal to 2.50
Line of Credit Facility [Line Items]
Percentage of excess cash flow for each year of funded indebtedness to EBDTA	75.00%
Ratio of funded indebtedness to adjusted EBDTA, actual	2.50
Secured Debt \| Term Loans \| Excess Cash Flows Less Than 2.50
Line of Credit Facility [Line Items]
Percentage of excess cash flow for each year of funded indebtedness to EBDTA	50.00%
Secured Debt \| Term Loans \| Excess Cash Flows Equal to 1.50
Line of Credit Facility [Line Items]
Ratio of funded indebtedness to adjusted EBDTA, actual	1.5
Secured Debt \| Term Loans \| Excess Cash Flows Less Than 1.50
Line of Credit Facility [Line Items]
Percentage of excess cash flow for each year of funded indebtedness to EBDTA	0.00%
Ratio of funded indebtedness to adjusted EBDTA, actual	1.5
Secured Debt \| Term Loans \| Maximum
Line of Credit Facility [Line Items]
Ratio of funded indebtedness to EBITDA through maturity	3.75
Interest rate spread	4.50%
Secured Debt \| Term Loans \| Maximum \| Excess Cash Flows Less Than 2.50
Line of Credit Facility [Line Items]
Ratio of funded indebtedness to adjusted EBDTA, actual	2.50
Secured Debt \| Term Loans \| Minimum
Line of Credit Facility [Line Items]
Interest rate spread	2.50%
Secured Debt \| Term Loans \| LIBOR
Line of Credit Facility [Line Items]
Interest rate spread	0.15%
Secured Debt \| Revolving Line of Credit
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 25,000,000.0
Line of credit outstanding balance	9,200,000
Line of credit, current borrowing capacity	$ 25,000,000.0
Secured Debt \| Revolving Line of Credit \| LIBOR
Line of Credit Facility [Line Items]
Interest rate spread	0.15%
Secured Debt \| Letter of Credit
Line of Credit Facility [Line Items]
Line of credit, current borrowing capacity	$ 5,000,000

Stock-based Compensation and Equity Grants - Narrative (Details) - Employee Stock Option	3 Months Ended
	Dec. 31, 2020 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards authorized for issuance (in shares)	0
Expiration term of share-based compensation plan	10 years
Number of shares available for grant (in shares)	500,000

Stock-based Compensation and Equity Grants - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock option expense	$ 100
Total unrecognized expense	3,796
Selling, General and Administrative Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock option expense	458	$ 203
DLH employees
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total unrecognized expense	$ 3,445
Weighted average share based compensation expense recognition period	4 years 6 months 3 days
DLH employees \| Restricted Stock Units
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Number of restricted stock units granted (in shares)	147,431
DLH employees \| Selling, General and Administrative Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock option expense	$ 342	116
Non-employee directors
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total unrecognized expense	$ 351
Non-employee directors \| Restricted Stock Units
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Number of restricted stock units granted (in shares)	63,177
Non-employee directors \| Selling, General and Administrative Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock option expense	$ 116	$ 87

Stock-based Compensation and Equity Grants - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020
Number of Shares
Options outstanding, September 30, 2020 (in shares)	2,129,000
Exercised (in shares)	(62,000)
Granted (in shares)	220,000
Options outstanding, December 31, 2020 (in shares)	2,287,000	2,129,000
Weighted Average Exercise Price
Options outstanding, September 30, 2020 (in dollars per share)	$ 6.14
Exercised (in dollars per share)	3.62
Granted (in dollars per share)	10.05
Options outstanding, December 31, 2020 (in dollars per share)	$ 6.95	$ 6.14
Weighted Average Remaining Contractual Term
Weighted Average Remaining Contractual Term	7 years 8 months 12 days	7 years 4 months 24 days
Aggregate Intrinsic Value
Options outstanding at September 30, 2020 (in dollars)	$ 6,593
Options outstanding at December 31, 2020 (in dollars)	10,261	$ 6,593
Total stock option expense	$ 100

Stock-based Compensation and Equity Grants - Stock Options Outstanding, Vested and Unvested (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2020	Sep. 30, 2019	Sep. 30, 2020
Share-based Payment Arrangement [Abstract]
Vested and exercisable (in shares)	1,151		1,213
Unvested (in shares)	1,136		916
Option outstanding (in shares)	2,287		2,129
Weighted average exercise price (in dollars per share)	$ 2.18		$ 2.25
Aggregate intrinsic value	$ 8.2		$ 6.1
Weighted average remaining term	3 years 9 months 18 days	4 years 7 months 6 days

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Numerator:
Net income	$ 1,814	$ 1,551
Denominator:
Denominator for basic net income (loss) per share - weighted-average outstanding shares (in shares)	12,498	12,088
Effect of dilutive securities:
Stock options and restricted stock (shares)	947	926
Denominator for diluted net income (loss) per share - weighted-average outstanding shares (in shares)	13,445	13,014
Net income per share - basic (in dollars per share)	$ 0.15	$ 0.13
Net income per share - diluted (in dollars per share)	$ 0.13	$ 0.12

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

Commitments and Contingencies - Contractual Obligations (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Debt obligations
Debt obligations	$ 77,400
2021 (remaining)	14,400
2022	7,000
2023	8,750
2024	8,750
2025	38,500
Thereafter	0
Maturity Operating Leases
Total future lease payments	30,357
2021 (remaining)	2,454
2022	3,501
2023	3,375
2024	3,251
2025	3,092
Thereafter	14,684
Maturity Total Contractual Obligations
Total Obligations	107,757
2021 (remaining)	16,854
2022	10,501
2023	12,125
2024	12,001
2025	41,592
Thereafter	14,684
Facility leases
Maturity Operating Leases
Total future lease payments	30,077
2021 (remaining)	2,392
2022	3,418
2023	3,292
2024	3,199
2025	3,092
Thereafter	14,684
Equipment operating leases
Maturity Operating Leases
Total future lease payments	280
2021 (remaining)	62
2022	83
2023	83
2024	52
2025	0
Thereafter	$ 0

Commitment and Contingencies - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Accrued workers' compensation insurance	$ 6,067	$ 5,529

Label	Element	Value
Accounting Standards Update [Extensible List]	us-gaap_AccountingStandardsUpdateExtensibleList	us-gaap:AccountingStandardsUpdate201602Member

- Definition

Indicates amendment to accounting standards.

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