Maximus, Inc. · NYSE:MMS
Maximus — FY2018 Earnings Presentation
20 slides from Maximus's earnings presentation, Nov 26, 2018
Slide 1: Fiscal 2018 Fourth Quarter & Year End Earnings Call
Fiscal 2018 Fourth Quarter & Year End Earnings Call Rick Nadeau Chief Financial Officer November 20, 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 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. This docu
Slide 3: Total Company Results – Fiscal Year 2018
Total Company Results – Fiscal Year 2018 ($ in millions, FY18 FY17 % Change except per share data) • FY18 was characterized by: Revenue − solid execution Health Segment $ 1,405.0 $ 1,380.2 2% − healthy portfolio of contracts − strong cash generation Federal Segment 478.9 545.6 (12%) − demonstration
Slide 4: Health Services Segment
Health Services Segment ($ in millions) FY18 FY17 % Change Q4 FY18 Q4 FY17 % Change Revenue Health Services $ 1,405.0 $ 1,380.2 2% $ 328.2 $ 355.3 (8%) Operating Income Health Services $ 236.4 $ 215.2 10% $ 51.9 $ 57.0 (9%) Operating Margin % 16.8% 15.6% 15.8% 16.0% • Continues to consistently deliv
Slide 5: U.S. Federal Services Segment
U.S. Federal Services Segment ($ in millions) FY18 FY17 % Change Q4 FY18 Q4 FY17 % Change Revenue U.S. Federal Services $ 478.9 $ 545.6 (12%) $ 117.4 $ 127.3 (8%) Operating Income U.S. Federal Services $ 57.4 $ 65.0 (12%) $ 16.0 $ 13.6 18% Operating Margin % 12.0% 11.9% 13.6% 10.7% • As expected, U.
Slide 6: Human Services Segment
Human Services Segment ($ in millions) FY18 FY17 % Change Q4 FY18 Q4 FY17 % Change Revenue Human Services $ 508.4 $ 525.2 (3%) $ 112.9 $ 138.2 (18%) Operating Income Human Services $ 18.2 $ 48.6 (62%) $ (0.7) $ 10.8 (106%) Operating Margin % 3.6% 9.2% (0.6%) 7.8% • Human Services Segment experienced
Slide 7: Cash Flows, DSOs, Uses of Cash, Capital Allocation
Cash Flows, DSOs, Uses of Cash, Capital Allocation $ in millions FY18 Cash flows from operations $323.5 Cash paid for property, ($26.5) equipment & capitalized Cash software • Ended FY18 with $370M of cash, cash equivalents Free cash flow $297.0 and short-term investments • Positive cash position ge
Slide 8: Acquisition of U.S. Federal Citizen Engagement Centers
Acquisition of U.S. Federal Citizen Engagement Centers Acquisition provides MAXIMUS with a level of scale that makes us a more viable prime contractor to the U.S. Federal Government and reduces our need to partner with other companies to win business. This acquisition also enables us to become more
Slide 9: Acquisition Impact on Fiscal Year 2019 Guidance
Acquisition Impact on Fiscal Year 2019 Guidance • FY19 guidance, includes certain estimated expenses related to the acquisition: ̶ Interest expense on our borrowings and the reduction in interest income forfeited from the cash used for the acquisition ̶ One-time acquisition costs ̶ Amortization of i
Slide 10: GAAP Fiscal Year 2019 Guidance
GAAP Fiscal Year 2019 Guidance Fiscal 2019 Guidance Cash flows Revenue $2.925B – $3.0B $275M – $325M from operations GAAP $3.55 – $3.75 Free cash flow $235M – $285M Diluted EPS Commentary Backlog • Includes 10.5 months of revenue from the acquisition • At September 30, 2018, $5.1B in backlog, pre-ac
Slide 11: Reorganizing Reporting Segments
Reorganizing Reporting Segments • Reorganize reporting segments based how we intend to manage performance, allocate resources and U.S. evaluate results Health Human Health Services Services & Human • Has been under study since Bruce took over as CEO (U.S.) (U.S.) Services earlier this year and it be
Slide 12: Fiscal 2018 Fourth Quarter & Year End Earnings Call
Fiscal 2018 Fourth Quarter & Year End Earnings Call Bruce Caswell President & Chief Executive Officer November 20, 2018
Slide 13: Positioning MAXIMUS for the Next Phase
Positioning MAXIMUS for the Next Phase • Embarked upon a digital transformation, extended our reach into new markets and customer areas and are working to offer more clinically related services on a global scale • Today, I want to focus my comments on our recent M&A activities and the acquisition •
Slide 14: CMS Contact Center Operations (CCO) Contract
CMS Contact Center Operations (CCO) Contract • MAXIMUS has served as a subcontractor on this contract since 2014 • The programs that this contract supports, include the federal exchange under the Affordable Care Act and the primary support engagement center for Medicare — also known as 1-800-MEDICAR
Slide 15: 2020 Census Contract and Other Programs
2020 Census Contract and Other Programs • Known as the Census Questionnaire Assistance 2020 — or CQA • Under the program, MAXIMUS will provide operations support and citizen engagement centers for the 2020 Decennial Census; contract runs through June 2021 • Contract is designed to provide questionna
Slide 16: Integration & Advancing Our Position in Federal Market
Integration & Advancing Our Position in Federal Market • A number of key members of the management team have joined MAXIMUS. Focused on transitioning operations seamlessly, keeping an open dialogue with our clients, and ensuring that we maintain world-class service levels to citizens • This acquisit
Slide 17: GSA Contract Vehicle Contact Center SIN
GSA Contract Vehicle Contact Center SIN • Named first awardee under the General Services Administration IT 70 Contact Center Solutions vehicle • This vehicle enables federal agencies to procure citizen engagement center technology and operational requirements with a diverse set of pre-vetted citizen
Slide 18: New Awards & Sales Pipeline
New Awards & Sales Pipeline New Awards September 30, 2018 YTD Signed Contracts $2.7B Sales Opportunities September 30, 2018 Total Pipeline $2.7B • Our pipeline at September 30, 2018, was $2.7B compared to $2.9B at June 30, 2018, due to approximately $450M of work converting into the awarded category
Slide 19: New Methodology for Reporting Pipeline Metrics
New Methodology for Reporting Pipeline Metrics Examined our methodology for reporting pipeline metrics, which was established more than 15 years ago and built for a different type of business model. We will change our practices and adapt our pipeline to better reflect the market realities of our cur
Slide 20: Conclusion
Conclusion • While FY18 was characterized by solid execution, we fell a little short in achieving some of our revenue goals. Taken steps to aggressively address this head-on, including: − Assessing and prioritizing new and adjacent markets − Stepping-up our M&A activities − Bringing in new sales and