Maximus, Inc. · NYSE:MMS
Maximus — Q4 FY2017 Earnings Presentation
21 slides from Maximus's earnings presentation, Nov 13, 2017
Slide 1: Rick Nadeau, Chief Financial Officer, November 9, 2017
1 Rick Nadeau Chief Financial Officer November 9, 2017 Helping Government Serve the People®
Slide 2: Forward-looking Statements & Non-GAAP Information
2 Forward-looking Statements & Non-GAAP Information These slides should be read in conjunction with the Company’s most recent earnings press release, along with listening to or reading a transcript of the comments of Company management from the Company’s most recent quarterly earnings conference cal
Slide 3: Total Company Results: Q4 FY17 Compared to Q4 FY16
3 Total Company Results: Q4 FY17 Compared to Q4 FY16 • Q417 revenue was a little bit better than expected due to: − Strong Health Segment delivery − Higher level of pass-through revenue from Australian operations • Q4 diluted EPS were $0.81 and better- than-expected, primarily due to lower income ta
Slide 4: Total Company Results: FY 2017 Compared to FY 2016
4 Total Company Results: FY 2017 Compared to FY 2016 • Revenue growth driven primarily by Health Segment, offset by expected declines from U.S. Federal Services Segment due to a contract that ended in April 2017 • Operating margin increased 90 basis points • Net income & GAAP diluted EPS were favora
Slide 5: Health Services Segment
5 Health Services Segment Revenue • Q4 and FY17 growth was attributable to expansion of existing contracts and, to a lesser extent, new work • Majority of growth in FY17 was organic • On constant currency basis, FY17 revenue would have grown 9% Operating Margins • Q4 and FY17 were strong • Margin ex
Slide 6: U.S. Federal Services Segment
6 U.S. Federal Services Segment Revenue • Segment finished the year largely as expected • Lower revenue was driven predominantly by a large subcontract that came to an end in April 2017 for work performed for U.S. Department of Veterans Affairs – revenue contribution from this contract was $63M lowe
Slide 7: Human Services Segment
7 Human Services Segment Revenue • Q4 and FY17 growth driven by Australian operations, which included a higher level of pass-through revenue • Growth was partially offset by expected revenue declines in U.K. from Work Programme, which is coming to an end Operating Margins • Operating margin was larg
Slide 8: DSOs and Cash Flows
8 DSOs and Cash Flows $ in millions FY17 Cash flow from operations $337 Cash paid for property, equipment & capitalized software ($24) Free cash flow $313 Adjusted EBITDA* $401 Days Sales Outstanding (DSOs) • 63 days at September 30, 2017, better than our targeted range of 65 to 80 days Cash Flows •
Slide 9: Cash, Uses of Cash and Capital Allocation
9 Cash, Uses of Cash and Capital Allocation FY17 Share Repurchases • Repurchased ~558,000 shares of MAXIMUS common stock for $28.9M; ~ $110M remaining under Board- authorized program at September 30, 2017 FY17 Balance Sheet • Ended FY17 with cash and cash equivalents of $166.3M and no material debt
Slide 10: FY17 Actual Results Compared to FY18 Guidance
10 FY17 Actual Results Compared to FY18 Guidance • FY18 revenue growth will be driven by Health Services Segment • FY18 GAAP diluted EPS includes detrimental impacts of contracts in start up ($11M to $13M of pre-tax income) • Midpoint of detrimental impacts is $12M or $0.12 diluted EPS • Excluding t
Slide 11: Backlog, Quarterly Trends, Operating Margins
11 Backlog, Quarterly Trends, Operating Margins Backlog • At September 30, 2017, we had $5.7B in backlog • With a high level of visibility into our forecasted revenue for FY18, we estimate that ~94% of our forecasted FY18 revenue is already in the form of backlog, options or extensions (based on the
Slide 12: Guidance Methodology & Natural Attrition
12 Guidance Methodology & Natural Attrition Attrition • Vast majority of contracts provide highly visible recurring revenue streams; we also manage the impact of normal course attrition each year • Over last five years, we estimate revenue attrition impact from 5% to 10% each year • For FY18 specifi
Slide 13: Income Tax Rate Estimate & Cash Flow Guidance
13 Income Tax Rate Estimate & Cash Flow Guidance Fiscal 2018 Cash Flow Guidance Cash provided by operations $200M - $250M Free cash flow $170M - $220M • For FY18, we estimate income tax rate will range between 35% and 36%; final rate will ultimately depend on mix of operating income contribution fro
Slide 14: Richard Montoni, Chief Executive Officer, November 9, 2017
14 Richard Montoni Chief Executive Officer November 9, 2017 Helping Government Serve the People®
Slide 15: Finished FY17 on Firm Footing
15 Finished FY17 on Firm Footing • Finished 2017 on firm footing, with healthy operating margins and record cash flow • Today’s presentation will cover: − ACA open enrollment period − New work awards that provide paths to long-term growth − Successful rebids that help protect the base
Slide 16: Affordable Care Act (ACA) Update
16 Affordable Care Act (ACA) Update • Open Enrollment began November 1st • Early press coverage included initial reports from the federal marketplace and several state-based exchanges show more Americans signing up for coverage at a higher rate than last year • We are seeing similar early trends dur
Slide 17: New LTSS and Workforce Contracts
17 New LTSS and Workforce Contracts Expanded Long-Term Services & Supports Business • Won three new contracts for pre-admission screening and resident review (PASRR) services • Assessments help ensure appropriate placements in a nursing facility or community-based setting and that individuals receiv
Slide 18: New Disability Employment Services Contracts
18 New Disability Employment Services Contracts Work & Health Programme in Wales • Seven-year, ~$45M USD contract expected to launch in December 2017 • Employment support for unemployed individuals and those with health conditions or disabilities • More holistic approach to help individuals overcome
Slide 19: Protecting the Base – Key Rebids & Contract Extensions
19 Protecting the Base – Key Rebids & Contract Extensions • California − 10-year renewal for Medicaid enrollment broker (EB); term started last month and runs through June 2027 − Annual revenue for FY18 is expected to range between $75M and $80M − MAXIMUS has served as California’s enrollment broker
Slide 20: New Awards, Sales Pipeline & Rebids
20 New Awards September 30, 2017 YTD Signed Contracts $2.8B Additional Unsigned Contracts $1.3B Sales Opportunities September 30, 2017 Total Pipeline* $2.4B * Reported pipeline only reflects short-term opportunities where we believe request for proposals will be released within next six months New A
Slide 21: Conclusion
21 Conclusion • Continue to feel lingering effects of industry pause but taking advantage of the time to position MAXIMUS for next wave of growth; have experienced similar pauses in the past • Ended the year on a positive note with key rebid and new work wins; remain focused on encouraging longer-te