Slide 1: Fiscal 2019 Fourth Quarter & Year End Earnings Call
Fiscal 2019 Fourth Quarter & Year End Earnings Call Rick Nadeau Chief Financial Officer November 19, 2019 1 | MAXIMUS: Q4 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 – Fiscal Year 2019
Total Company Results – Fiscal Year 2019 • FY19 was characterized by ($ in millions, except FY19 FY18 % Change consistent execution, progress on per share data) our strategic plan to lead digital Revenue transformation, clinical related U.S. Health & Human Services $ 1,176.5 $ 1,213.9 (3%) services
Slide 4: U.S. Health and Human Services Segment
U.S. Health and Human Services Segment ($ in millions) FY19 FY18 % Change Q4 FY19 Q4 FY18 % Change Revenue U.S. Health & Human Services $ 1,176.5 $ 1,213.9 (3%) $ 300.4 $ 288.9 4% Operating Income U.S. Health & Human Services $ 220.8 $ 218.6 1% $ 53.8 $ 52.2 3% Operating Margin % 18.8% 18.0% 17.9% 1
Slide 5: U.S. Federal Services Segment
U.S. Federal Services Segment ($ in millions) FY19 FY18 % Change Q4 FY19 Q4 FY18 % Change Revenue U.S. Federal Services $ 1,111.2 $ 478.9 132% $ 312.2 $ 117.4 166% Operating Income U.S. Federal Services $ 115.9 $ 57.4 102% $ 31.1 $ 16.0 95% Operating Margin % 10.4% 12.0% 10.0% 13.6% FY19 Revenue • I
Slide 6: Outside the U.S. Segment
Outside the U.S. Segment ($ in millions) FY19 FY18 % Change Q4 FY19 Q4 FY18 % Change Revenue Outside the U.S. $ 599.1 $ 699.4 (14%) $ 142.4 $ 152.1 (6%) Operating Income Outside the U.S. $ 16.1 $ 36.0 (55%) $ 2.2 $ (0.9) 328% Operating Margin % 2.7% 5.1% 1.5% -0.6% FY19 Revenue • Full year decreased
Slide 7: Cash Flows, DSO, and Cash
Cash Flows, DSO, and Cash $ in millions FY19 Cash flows from operations $ 356.7 Purchases of property and equipment and capitalized software costs (66.8) Capital expenditure as result of the acquisition 4.5 Free cash flow $ 294.4 Days Sales Outstanding (DSO) • DSO were 72 days at September 30, 2019
Slide 8: Capital Allocation
Capital Allocation Capital Allocation • Remain committed to a sensible and disciplined approach to capital deployment to create and deliver shareholder value • M&A remains our number one priority; our objective is to find targets that enable us to build long term, sustainable, organic growth by cont
Slide 9: Fiscal Year 2020 Guidance
Fiscal Year 2020 Guidance Fiscal 2020 Guidance • Guidance implies 10.7% – 10.8% operating margin, reflecting an increase of cost-plus contracts in the Revenue $3.15B – $3.30B U.S. Federal Services Segment. Diluted EPS $3.95 – $4.15 • Good line of sight to 8% organic growth; 6% or $175M comes from Ce
Slide 10: Fiscal Year 2020 Guidance – Supplemental
Fiscal Year 2020 Guidance – Supplemental Segment Full Year Margin Ranges (estimated) U.S. Health & Human Services 17% – 18% Income Tax Rate • Estimated range of 24.5% to 25.5% U.S. Federal Services 9% – 10% Weighted Average Shares Outstanding Outside the U.S. Low single digits • Estimated at 64.9M,
Slide 11: Fiscal 2019 Fourth Quarter & Year End Earnings Call
Fiscal 2019 Fourth Quarter & Year End Earnings Call Bruce Caswell President & Chief Executive Officer November 19, 2019
Slide 12: Macro Trends and Tracking Our Progress
Macro Trends and Tracking Our Progress • Substantial progress on the key tenets of our strategy to position MAXIMUS for future long-term success • Aligned our plan with: − how markets are evolving − how government clients are addressing challenges − how consumers are best served through an improved
Slide 13: Digital Transformation
Digital Transformation • Cultural shift towards digital disruption within the government services we operate • Two primary objectives with our digital efforts: − Deliver a unique citizen experience − Use digital technologies and innovation to improve program efficiencies and enhance productivity • P
Slide 14: Digital Disruption in Government Services
Digital Disruption in Government Services Louisiana Medicaid • Launched 20 consumer websites globally that simplify 40% 30% the interaction with government programs 20% 16% • MAXIMUS mobile apps were trending in the Top 100 on Google Play store during October 2019 0% Digital Enrollment Volumes • Awa
Slide 15: Patented Optimization
Patented Optimization Two additional U.S. patents awarded to MAXIMUS 1. Recognizes capabilities we developed to streamline performance monitoring, increase staff optimization and pinpoint lost productivity in our operations 2. Enables our projects to monitor and maintain the health of business proce
Slide 16: Clinical Evolution
Clinical Evolution • Governments seek responsive and cost-effective ways to manage aging populations, individuals with more complex health needs, and to address population and public health imperatives • Macro trends underpin demand for clinical BPO services • We are a natural partner as governments
Slide 17: Market Expansion
Market Expansion • Fundamental goal is to “land and expand” in our geographies • In Saudi Arabia, we have been awarded the Social Beneficiaries Employment Program with TCV of $43.2M for two years − Aims to reduce the number of people receiving welfare; provide job training and placement, and serve j
Slide 18: New Awards & Pipeline
New Awards & Pipeline New Awards (YTD) September 30, 2019 Sales Pipeline September 30, 2019 New Work % Signed Contracts $2.6B Total Pipeline $30.2B 67% Unsigned Contracts $242M • Noted last quarter, an integral part of returning the Company to organic growth is converting our pipeline of addressable
Slide 19: Conclusion
Conclusion • Continued progress on management’s strategic plan to lead a digital transformation, grow our clinically related services and expand in key priority markets and adjacencies • M&A remains a priority for us as we aim to find targets that enable us to build long term, sustainable, organic g