Maximus, Inc. · NYSE:MMS
Maximus — Q1 FY2017 Earnings Presentation
19 slides from Maximus's earnings presentation, Feb 9, 2017
Slide 1: Helping Government Serve the People
Helping Government Serve the People® Rick Nadeau Chief Financial Officer February 9, 2017 1
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 the Company’s most recent quarterly earnings confer
Slide 3: Total Company Results – First Quarter of FY 2017
Total Company Results – First Quarter of FY 2017 • Solid quarter with some areas delivering better-than- expected performance; most of the growth was organic ($ in millions, Q1 FY17 Q1 FY16 % Change except per share data) • Growth was partially offset by unfavorable FX; on a Revenue constant currenc
Slide 4: Health Services Segment
Health Services Segment ($ in millions) Q1 FY17 Q1 FY16 % Change Revenue Health Services $ 340.7 $ 291.9 17% Operating Income Health Services $ 50.1 $ 26.8 87% Operating Margin % 14.7% 9.2% Q1 FY17 Revenue • Most of the growth was organic, primarily due to expansion on existing contracts including i
Slide 5: U.S. Federal Services Segment
U.S. Federal Services Segment ($ in millions) Q1 FY17 Q1 FY16 % Change Revenue U.S. Federal Services $ 141.3 $ 145.3 (3%) Operating Income U.S. Federal Services $ 17.9 $ 10.7 67% Operating Margin % 12.7% 7.4% Q1 FY17 Revenue • As expected, the lower revenue was driven by significantly lower volumes
Slide 6: Human Services Segment
Human Services Segment ($ in millions) Q1 FY17 Q1 FY16 % Change Revenue Human Services $ 125.5 $ 119.5 5% Operating Income Human Services $ 11.8 $ 9.1 29% Operating Margin % 9.4% 7.6% Q1 FY17 Revenue • Most of the revenue growth was organic; driven by increased revenue from Australian operations, wh
Slide 7: Cash Flows and DSOs
Cash Flows and DSOs Delivered strong cash flows in Q1 FY17 $ in millions Q1 FY17 Cash flows from operations $71.1 Cash paid for property, equipment & capitalized software ($7.8) Free cash flow $63.4 Days Sales Outstanding (DSOs) • DSOs were in-line with expectations and totaled 70 days at December 3
Slide 8: Cash, Uses of Cash and Capital Allocation
Cash, Uses of Cash and Capital Allocation Long-Term Debt Payments During three months ended December 31, 2016, we spent approximately $15M of cash to pay down long-term debt and ended Q1 with remaining long-term debt obligation of $150.5M Q1 FY17 Share Repurchases Approximate Number of Weighted Aver
Slide 9: Updating Revenue, Reiterating GAAP EPS and Cash Flows
Updating Revenue, Reiterating GAAP EPS and Cash Flows Fiscal 2017 Guidance New Old Revenue $2.425B - $2.475B $2.475B - $2.550B GAAP Diluted EPS $2.90-$3.10 $2.90-$3.10 Cash flows from $230M - $280M $230M - $280M operations Free cash flow $170M - $220M $170M - $220M • Q1 performance was strong, with
Slide 10: New Accounting Standard
New Accounting Standard • As previously disclosed, MAXIMUS adopted a new, required accounting standard for stock compensation in FY17: ‒ New standard requires companies to record income tax benefit or expense as a reduction to income tax provision as a result of exercising stock options or vesting R
Slide 11: Helping Government Serve the People
Helping Government Serve the People® Richard Montoni Chief Executive Officer February 9, 2017 11
Slide 12: Solid Results & Opportunities
Solid Results & Opportunities • Solid results in Q1 and our full year earnings outlook, despite certain setbacks that led us to trim our revenue outlook for the remainder of FY17 • With $4.0B of opportunities in our reported pipeline, we see continuing demand for our services and are keenly focused
Slide 13: Macro Drivers & Common Themes Drive Demand
Macro Drivers & Common Themes Drive Demand • Long-term, macro-economic drivers of rising caseloads and increasing demand for effective government programs remain unchanged • Three common themes have emerged across all of our markets as governments tackle changing demographics, decentralization initi
Slide 14: Macro Drivers & Common Themes (continued)
Macro Drivers & Common Themes (continued) 2. Decentralization: Shift toward decentralization of some public programs: ‒ Block grant funding for Medicaid and potential removal of certain federal mandates in the U.S. ‒ Devolution of programs to local authorities in the U.K. ‒ Potential change to fundi
Slide 15: U.S. Operations: New Presidential Administration Priorities
U.S. Operations: New Presidential Administration Priorities • We are just starting to see how these macro drivers intersect with priorities of new presidential administration • Demographics in the U.S. have increased demand for public benefit programs • Governments at all levels are looking for solu
Slide 16: Affordable Care Act and Medicaid
Affordable Care Act and Medicaid • Affordable Care Act (ACA) discussion has moved from “repeal” to “repeal and repair” • Congressional leadership are committed to “not pull the rug out” from citizens who are covered by the ACA today, but they have not yet come to consensus on a plan • For Medicaid,
Slide 17: International Operations: New Contracts & Opportunities
International Operations: New Contracts & Opportunities • Seen some movement in disability services market as governments seek improved ways for engaging and serving these populations ‒ Recently launched a handful of small, but strategic, employment program contracts in the U.K. for people with disa
Slide 18: New Awards, Sales Pipeline & Rebids
New Awards, Sales Pipeline & Rebids • Pipeline decline due, in part, to contracts converting to new awards and, as happens in New Awards December 31, 2016 the normal course, a handful of losses • In addition, we have experienced some YTD Signed Contracts $462M procurement delays that total $250M in
Slide 19: Conclusion
Conclusion • A very dynamic environment with emerging political and economic changes • Challenges that arise during periods of change often mean future opportunities for MAXIMUS • Macro-trends for our business remain favorable and we remain positive about our long-term outlook • MAXIMUS will continu