Maximus, Inc. · NYSE:MMS
Maximus — Q2 FY2018 Earnings Presentation
17 slides from Maximus's earnings presentation, May 14, 2018
Slide 1: Fiscal 2018 Second Quarter Earnings Call
Fiscal 2018 Second Quarter Earnings Call Rick Nadeau Chief Financial Officer May 10, 2018
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 – Second Quarter of FY 2018
Total Company Results – Second Quarter of FY 2018 ($ in millions, Q2 FY18 Q2 FY17 % Change except per share data) Revenue • As expected, Q2 FY18 revenue decreased Health Segment $ 365.6 $ 349.0 5% primarily due to lower revenue in the U.S. Federal Segment 116.3 145.4 (20%) U.S. Federal Services Segm
Slide 4: Health Services Segment
Health Services Segment ($ in millions) Q2 FY18 Q2 FY17 % Change Revenue Health Services $ 365.6 $ 349.0 5% Operating Income Health Services $ 63.0 $ 56.5 11% Operating Margin % 17.2% 16.2% Q2 FY18 Revenue • Increase driven by organic growth and favorable currency exchange rates Q2 FY18 Operating Ma
Slide 5: U.S. Federal Services Segment
U.S. Federal Services Segment ($ in millions) Q2 FY18 Q2 FY17 % Change Revenue U.S. Federal Services $ 116.3 $ 145.4 (20%) Operating Income U.S. Federal Services $ 9.8 $ 17.6 (44%) Operating Margin % 8.5% 12.1% Q2 FY18 Revenue • As expected, revenue decreased primarily due to contracts that reached
Slide 6: Human Services Segment
Human Services Segment ($ in millions) Q2 FY18 Q2 FY17 % Change Revenue Human Services $ 130.8 $ 127.7 2% Operating Income Human Services $ 3.4 $ 9.6 (65%) Operating Margin % 2.6% 7.5% Q2 FY18 Revenue • Increase driven by favorable foreign currency exchange rates Q2 FY18 Operating Margin • Lower tha
Slide 7: Cash Flows, DSOs, and Cash
Cash Flows, DSOs, and Cash $ in millions Q2 FY18 Cash flows from operations $78.7 Cash paid for property, equipment & capitalized software ($6.7) Free cash flow $72.0 Days Sales Outstanding (DSO) • 68 days at March 31, 2018, in-line with our expectations and consistent with the prior year Q2 FY18 Ba
Slide 8: Capital Allocation
Capital Allocation • Strategy remains largely unchanged; as good stewards of capital, we remain committed to a disciplined approach to acquisitions • Over the past 12 months, looked at a number of properties sold at valuations that we considered too lofty; we believe we made sensible decisions and a
Slide 9: Updated Guidance Crosswalk
Updated Guidance Crosswalk • At beginning of FY18, had 94% of forecasted FY18 revenue range (based on midpoint of $2.475B to $2.550B) covered by backlog, option periods and expected extensions; this means we had a 6% gap that we needed to cover to achieve the mid-point of the forecasted range • Last
Slide 10: Revenue and EPS Guidance Ranges
Revenue and EPS Guidance Ranges Fiscal 2018 Guidance New Old Notes $2.475B - $2.550B Incorporates new outlook for U.S. Federal Services Revenue $2.400B - $2.440B (with bias toward Segment (now expect revenue of ~$475M for FY18) lower half of range) GAAP $3.30 - $3.40 $3.30 - $3.50 Narrowed Diluted E
Slide 11: Fiscal 2018 Second Quarter Earnings Call – CEO
Fiscal 2018 Second Quarter Earnings Call Bruce Caswell President & Chief Executive Officer May 10, 2018
Slide 12: Introduction
Introduction • Forty days in as CEO; with the guidance update, I am committed to making sure we: 1. Continue to execute well and deliver value on our existing work that serves as the foundation for future growth 2. Remain focused on technology-driven innovation, particularly in the areas of clinical
Slide 13: Long-Term Growth Strategy Update
Long-Term Growth Strategy Update Leading a plan to comprehensively examine best market paths for MAXIMUS for long-term growth Current Markets New Adjacent Markets • Our markets are changing; we must be positioned to • Taking a fresh look at adjacencies, particularly those capitalize on these changes
Slide 14: Clinical Evolution
Clinical Evolution We continue to believe there will be long-term demand for BPO services with a clinical dimension PASRR Contract Win • Signed a new clinical-related win for Preadmission Screening and Resident Review (PASRR) Level II Evaluations • Three-year, $18 million contract with California De
Slide 15: Digital Transformation
Digital Transformation Implementing digital enhancements into our operations regularly Robotic Process Automation (RPA) & Machine Learning • Currently implementing RPA in nearly a dozen projects and have several other initiatives in the works Workflow Automation • Application of augmented intelligen
Slide 16: New Awards & Sales Pipeline
New Awards & Sales Pipeline • Largest share of awarded but unsigned is the Australia New Awards March 31, 2018 Employment Services rebid − Five-year performance-based contract YTD Signed Contracts $1.4B − Estimated revenue range of $250M to $300M Additional Unsigned Contracts $489M − Under the contr
Slide 17: Conclusion
Conclusion • Taking meaningful action to address period of slower growth and set up future growth • Protecting the base business with innovative, relevant and value-added services; increasing scope to remain sticky, and securing longer-term extensions • Future growth will require more than the same