Maximus, Inc. · NYSE:MMS
Maximus — Q3 FY2019 Earnings Presentation
20 slides from Maximus's earnings presentation, Aug 12, 2019
Slide 1: Fiscal 2019 Third Quarter Earnings Call
Fiscal 2019 Third Quarter Earnings Call Rick Nadeau Chief Financial Officer August 8, 2019 1 | MAXIMUS: Q3 FY19 EARNINGS PRESENTATION
Slide 2: Forward-looking Statements & Non-GAAP Information
Forward-looking Statements & Non-GAAP Information These slides should be read in conjunction with the Company’s most recent quarterly earnings press release, along with listening to or reading a transcript of the comments of Company management from our most recent quarterly earnings conference call.
Slide 3: Total Company Results – Third Quarter of FY19
Total Company Results – Third Quarter of FY19 ($ in millions, Q3 FY19 Q3 FY18 % Change except per share data) • Third quarter revenue was lower than expected Revenue U.S. Health & Human Services $ 291.1 $ 314.5 (7.4)% − Acquired revenue came in below forecast U.S. Federal Services 292.3 112.2 160.5%
Slide 4: U.S. Health and Human Services Segment
U.S. Health and Human Services Segment Q3 FY19 Q3 FY18 % Change ($ in millions) Revenue U.S. Health & Human Services $ 291.1 $ 314.5 (7.4)% Operating Income U.S. Health & Human Services $ 54.3 $ 67.0 (19.0)% Operating Margin % 18.6% 21.3% Q3 FY19 Revenue • As expected, revenue decreased compared to
Slide 5: U.S. Federal Services Segment
U.S. Federal Services Segment Q3 FY19 Q3 FY18 % Change ($ in millions) Revenue U.S. Federal Services $ 292.3 $ 112.2 160.5% Operating Income U.S. Federal Services $ 33.9 $ 14.9 127.5% Operating Margin % 11.6% 13.3% Q3 FY19 Revenue • Revenue increase driven both by organic growth and through acquisit
Slide 6: Outside the U.S. Segment
Outside the U.S. Segment Q3 FY19 Q3 FY18 % Change ($ in millions) Revenue Outside the U.S. $ 147.3 $ 171.2 (13.9)% Operating Income Outside the U.S. $ 5.0 $ 4.2 19.0% Operating Margin % 3.4% 2.5% Q3 FY19 Revenue • Revenue was lower compared to the prior year due to the expected decreases on welfare-
Slide 7: Cash Flows, DSOs, and Cash
Cash Flows, DSOs, and Cash $ in millions Q3 FY19 Cash flows from operations $ 136.5 Purchases of property and equipment and capitalized software costs (20.5) Free cash flow $ 116.0 Purchases of Property and Equipment and Capitalized Software Costs • Capital expenditures increased in the quarter due
Slide 8: Capital Allocation
Capital Allocation Capital Allocation • Over the years, we have remained committed to a sensible and disciplined approach to capital deployment • Approach is unchanged and we believe we can provide shareholders with reasonable returns while at the same time, generate sufficient capital to pursue str
Slide 9: Update to Fiscal 2019 Guidance
Update to Fiscal 2019 Guidance Fiscal 2019 Guidance Previous Current Revenue $2.925B – $2.950B $2.880B – $2.900B GAAP Diluted EPS $3.65 – $3.75 $3.70 – $3.75 Cash flow from operations $275M – $325M $275M – $325M Free cash flow $235M – $285M $235M – $285M Revenue Guidance Revision Earnings Guidance •
Slide 10: Fiscal Year 2020
Fiscal Year 2020 Progressing through our FY20 strategic planning process. As a part of the process, we make decisions internally regarding allocation of resources and areas of potential investments, with the goal of cultivating future shareholder value. Preliminary Financial View • Based on what we
Slide 11: Fiscal 2019 Third Quarter Earnings Call – CEO
Fiscal 2019 Third Quarter Earnings Call Bruce Caswell President & Chief Executive Officer August 8, 2019
Slide 12: Three Key Pillars Offering Multiple Paths Forward
Three Key Pillars Offering Multiple Paths Forward Three Pillars Moving Forward 1. Digital Transformation, digital • Several new wins and a pipeline disruption within the government of developing opportunities in key services market and new models for markets citizen engagement and operational effici
Slide 13: Technology Transformation
Technology Transformation • Executing a technology transformation as part of our overall digital strategy • Must transform the platforms on which our digital solutions are delivered and the methods we employ to securely develop and operate these new solutions • Shift to a microservices architecture
Slide 14: Microservices Architecture
Microservices Architecture • Allows a system to be divided into a number of smaller, individual and independent services: flexible, robust, interchangeable and complete • Our BPO services are extremely adaptable for use in multiple contexts • Key capability as our clients’ needs evolve and we work t
Slide 15: Market Expansion through Clinical Evolution
Market Expansion through Clinical Evolution California: Developed an adjacent solution to transform California’s approach to resolving disputes under workers’ compensation program • Created a cost-effective, non-judicial IMR to help control the cost of premiums charged to employers. New clinical IMR
Slide 16: U.S. Federal Services Segment Update
U.S. Federal Services Segment Update • New, four-year, performance-based, $100M contract to perform Qualified Independent Contractor (QIC) appeals for Medicare Part B, Durable Medical Equipment (DME) ̶ Largest volume Medicare appeals contract and adds to our existing Medicare appeals portfolio of Pa
Slide 17: U.S. Health and Human Services Segment Update
U.S. Health and Human Services Segment Update • Launching new five-year, $70M contract in Wisconsin called FoodShare Employment and Training (FSET) for the Division of Medicaid Services ̶ Program provides Able Bodied Adults without Dependents on the SNAP program, with opportunities to develop skills
Slide 18: Outside the U.S. Segment Update
Outside the U.S. Segment Update • In the U.K., awarded contracts in Manchester and London for the Adult Education Budget (AEB) • We will deliver a range of education and training services, such as helping individuals gain qualifications, progress their education, access and sustain employment opport
Slide 19: New Awards & Pipeline
New Awards & Pipeline Reminder: Modified our methodology at the beginning of FY19 to reflect the nature of our BPO business • Now includes RFPs that we expect within the next two years and is measured on Total Contract Value (TCV) • TCV includes the base contract value and all priced options; TCV al
Slide 20: Conclusion
Conclusion • Governments require much-needed support from organizations like MAXIMUS • We continue to evolve to meet the demands of our clients by offering effective and efficient services increasingly underpinned by digital solutions delivered through new technology platforms • Remain focused on ex