Maximus, Inc. · NYSE:MMS
Maximus — Investor Day (May 2022)
69 slides from Maximus's investor day presentation, May 27, 2022
Slide 1: Investor Day
Investor Day T U E S D AY, M AY 2 4 , 2 0 2 2
Slide 2: Safe Harbor and Forward-Looking Statements
INVESTOR DAY 20222 Safe Harbor and Forward-Looking Statements Safe Harbor A number of statements being made in these presentations will be forward-looking in nature. Please remember that such statements are only predictions. Actual events and results may differ materially as a result of risks we fac
Slide 3: Agenda
INVESTOR DAY 20223 Welcome Remarks Overview and Strategy U.S. Federal Services Segment U.S. Services Segment Outside the U.S. Segment Financial Overview Q&A Agenda James Francis | Vice President, Investor Relations Madison West | Vice President, ESG Bruce Caswell | President and Chief Executive Offi
Slide 4: Bruce Caswell, President & Chief Executive Officer
INVESTOR DAY 2022 Bruce Caswell President & Chief Executive Officer
Slide 5: Key Takeaways
INVESTOR DAY 20225 Key Takeaways Maximus Overview • A brief overview of who we are • The services we provide • How we create value for customers and shareholders • Our differentiation in the government services market 01 Where We Are Today • How we have changed in the last several years • Impact of
Slide 6: Creating Value to Drive Long-term Growth
INVESTOR DAY 20226 Creating Value to Drive Long-term Growth WHO WE ARE Founded in 1975, leading operator of government health and human services programs worldwide Key services Key government customers HOW WE CREATE VALUE Unmatched ability to translate public policy into operating models that achiev
Slide 7: Built to Adapt and Win
INVESTOR DAY 2022 Built to Adapt and Win 7 Manage 20 million citizen services cases Oversee 60 – 70% of the market of Medicaid managed care Handle 7 million contact center inquiries per month Answer 43 million calls annually to support Federal health insurance enrollment Complete 1.8 million+ assess
Slide 8: Proven Durability with Large Customers
INVESTOR DAY 20228 Proven Durability with Large Customers HIGHLY DESIRABLE LONG-TERM RELATIONSHIPS KEY ATTRIBUTES OF OUR PORTFOLIO U.S. Federal government ~50% of FY22E Revenue 7+ Years is the Weighted Average Life of Contracts ~90% Recompete Win Rate >$11 Billion in Backlog
Slide 9: Market-Leading Technology Portfolio Powering Federal Segment Growth
INVESTOR DAY 2022 $1,220 50% $546 22% $685 28% $2,451 $1,600 35% $2,200 48% $800 17% $4,600 54% 27% 12% 7% Program Operations Clinical Services Employment & Other Technology Solutions FY17 Segment Revenue ($M) FY22E Service Revenue Breakdown 9 Market-Leading Technology Portfolio Powering Federal Seg
Slide 10: Historical Approaches to Long-term Growth
INVESTOR DAY 2022 Historical Approaches to Long-term Growth Digital Transformation Using digital technologies to: • Improve efficiency and streamline programs • Serve people by making it easier for them to engage with these programs Examples • Digital Engagement • Analytics & Technology • Attain Fed
Slide 11: Strategy Refresh Project Focused on Maximizing Value
INVESTOR DAY 202211 Strategy Refresh Project Focused on Maximizing Value Financial • Support reliable delivery of mid-single digit organic growth • Enable margin expansion – total company in 10 – 14% adjusted OI guideposts (excluding amortization) • Meaningfully expand Total Addressable Market (TAM)
Slide 12: Strategic Growth Pillars and Delivery Strategies
INVESTOR DAY 2022 Strategy Focused on Leveraging Successful Foundation and Strong Technology Portfolio Strategic Growth Pillars Delivery Strategies 12 OUR PEOPLE | Driving the Strategic Plan’s Success Attract, retain, develop, and empower people who share our passion, commitment, and expertise to ad
Slide 13: Customer Services, Digitally Enabled
INVESTOR DAY 202213 Customer Services, Digitally Enabled Examples of Our Success Thus Far • Expand Maximus’ leadership in delivering outcomes-focused government-to-customer interactions • Leverage understanding of intersections of policy and consumer needs • Capitalize on government’s commitment to
Slide 14: Adding Value to Citizens and Governments
INVESTOR DAY 202214 Adding Value to Citizens and Governments Strategy builds on our success and focuses on those capabilities and technologies most relevant to the future of citizen interactions with government programs Proven capabilities scaled while successful innovations will be optimized for br
Slide 15: Enhancing Assessment Automation
INVESTOR DAY 2022 B en ef it $4.85 $24.49 $9.70 $2.42 $2.42 = $17M Estimated Annual Savings per Customer 15 Enhancing Assessment Automation LEARN about program C ur re nt S ta te Respond to Inquiry Screening/Schedule Respond to Inquiry SCHEDULE Assessments PREPARE for Initial Assessment COMPLETE Ini
Slide 16: Future of Health
INVESTOR DAY 2022 • Expanding our commitment to help governments satisfy the rising demand for health services • Includes the delivery of health services directly (i.e., via clinicians or other health professionals) or indirectly (i.e., analytics, infection control) What makes this strategic & how w
Slide 17: Expanded Health Assessments
INVESTOR DAY 2022 Expanded Health Assessments GLOBAL MARKET METRICS: $2B TAM Level of care and eligibility assessments for those seeking government supports or employment Maximus Service Offering: In-person and virtual assessments Public Health GLOBAL MARKET METRICS: $3B TAM Clinical and nonclinical
Slide 18: Technology Services Powering Strategy Update
INVESTOR DAY 202218 Technology Services Powering Strategy Update Cloud Adoption and Modernization Prioritized Development Modernization & Enhancement Initiatives Data Management & Analytics Services Data Science & AI/ML Solutions RPA & IoT Solutions Deprioritized Enterprise Network Operations Manage
Slide 19: IT Modernization Largest and Fastest Growing Federal IT Segment
INVESTOR DAY 202219 IT Modernization Represents Largest and Fastest Growing Segment of Federal IT Market Obligations by Capability | Historical & Projected ($B) 24 21 27 11 11 18 2 2 41 3 8 1 1 2 $0 $10 $20 $30 FY18A FY21A FY26P Data Management & Analytics Services -3.6% HISTORICAL 3% PROJECTED Fede
Slide 20: Delivery Strategies Align to Maximize Potential of Growth Pillars
INVESTOR DAY 202220 Delivery Strategies Align to Maximize Potential of Growth Pillars Business Process Services (BPS) Help governments meet the demands of changing demographics and customer service preferences Further modernize current BPS programs through greater automation and applied intelligence
Slide 21: Moving People Forward
INVESTOR DAY 202221 Moving People Forward Together, these priorities enable us to achieve our diversity, equity, inclusion, and representation goals Our people are our business Enrich our already strong culture to be more inclusive and build upon the strengths that differentiate us Employer of choic
Slide 22: Summary
INVESTOR DAY 202222 Summary Proven and Essential Partner to Government • A critical partner to government in the delivery of its most essential civilian citizen services • Challenges facing government more complex than ever Track Record of Successful Execution • Trusted operator of complex programs
Slide 23: Leading the Execution of Our Strategy
INVESTOR DAY 202223 Leading the Execution of Our Strategy Bruce Caswell President and Chief Executive Officer David Mutryn Chief Financial Officer Ilene Baylinson General Manager U.S. Services Segment Teresa Weipert General Manager U.S. Federal Services Segment Kevin Reilly General Manager Outside t
Slide 24: U.S. Federal Services
INVESTOR DAY 2022 U.S. Federal Services Teresa Weipert Segment General Manager
Slide 25: Key Messages
INVESTOR DAY 202225 Key Messages History and Successful Growth Trajectory • Solid foundation for continued growth • Organic and M&A strategy01 Retention of Current Business • High potential for growth in current agencies with excellent relationships and commitment to mission02 Positioned for the Fut
Slide 26: History of Growth: U.S. Federal Services Revenue
INVESTOR DAY 2022 History of Growth U.S. Federal Services Revenue Powerful combination of Customer Experience (CX) + Technology Solutions Developed a portfolio of business process services (BPS), Clinical, and IT Technology Service and Solutions Our growth trajectory builds upon a solid foundation •
Slide 27: Leading Solutions Provider to Federal Government Agencies
INVESTOR DAY 2022 Leading Solutions Provider to Federal Government Agencies Full-Service Provider of Technology-Enabled Business Process Services (BPS) Customer Contact Centers (Omnichannel) • Citizen services for Federal agencies, such as eligibility, enrollment & verification, and case management
Slide 28: Aligned to Federal Government Priorities
INVESTOR DAY 2022 Meeting agency challenges to provide enterprise-wide solutions and strategies Internal Revenue Service (IRS) Modernizing and securing legacy systems Federal Student Aid (FSA) Improving the borrower experience Securities and Exchange Commission (SEC) Enterprise IT infrastructure, mo
Slide 29: Competitive Advantage
INVESTOR DAY 202229 Competitive Advantage Delivery Capabilities in Complex Government Programs of National Priority • Credible bidder on billion+ dollar transformational procurements • Well-established for federal trend toward consolidated contracts Customer Trust and Outcomes • High customer satisf
Slide 30: Core to Agency Missions
INVESTOR DAY 202230 Core to Agency Missions Masterfile Accurate processing of taxes in the U.S. IT Security Implementation Project and program management for the IRS cybersecurity organization EDGAR Provides free public access to corporate filings which increases the efficiency, transparency, and fa
Slide 31: BPS and Technology Enabling the CDC
INVESTOR DAY 2022I Flexible solutions at speed: In 3 – 4 weeks, hired 20,000+ people 31 BPS and Technology Enabling the CDC Takeaway: Clients trust Maximus to handle complex problems at scale T H E C D C I N F O C O N T R AC T: Reinventing the Way BPS Services are Delivered Highlights the foundation
Slide 32: Technology Capabilities Powering the SEC
INVESTOR DAY 2022 Technology Capabilities Powering the SEC 32 Takeaway: Clients depend on Maximus’ digital solutions to modernize mission critical IT systems Development, Security and Operations for enterprise IT infrastructure in an agile environment 3,000 Terabytes of data processed annually 3,000
Slide 33: U.S. Federal Growth Strategy
INVESTOR DAY 2022 • Exploring pursuits in new markets and agencies • Augment through select M&A activity U.S. Federal Growth Strategy • Invest in leadership team • Build strength through client knowledge relationships • Emphasize agencies where we are trusted and established 33 Target large transfor
Slide 34: Key Takeaways
INVESTOR DAY 2022 Key Takeaways Deep Understanding of the Missions #1 provider to multiple civilian agencies and a trusted partner01 Existing Work with Major Public Programs Programs we operate have deep roots & fundamental to society 02 Delivering Complex Government Programs Technology-enabled oper
Slide 35: U.S. Services
INVESTOR DAY 2022 U.S. Services Ilene Baylinson Segment General Manager
Slide 36: Key Messages
INVESTOR DAY 202236 Key Messages High Barriers • Deliver multifaceted programs tied to complex policy & regulation • Experience & qualifications matter 01 Strong Pillars Underpin Portfolio • Durable entitlement programs • Long-term customer relationships 02 Expansion Opportunities • Clinical assessm
Slide 37: Leading Provider to State Government Agencies
INVESTOR DAY 202237 Leading Provider to State Government Agencies Connecting citizens to essential state government services Full-Service Provider of Business Process Services (BPS) • Omnichannel support of largest social programs: Medicaid, TANF, and Health Insurance Exchanges • Enabled by technolo
Slide 38: How We Stand Out
INVESTOR DAY 202238 How We Stand Out 11,000+ CSRs 40%+ Rapid scaling capacity flexibility 23 Million calls across 66 Programs in FY21 States Respect Our Experience • Average tenure for a state Medicaid Director is only 19 months • Understanding policy & regulation and anticipating challenges brings
Slide 39: History of Growth: U.S. Services
INVESTOR DAY 202239 History of Growth U.S. Services Historical Revenue FY22 $1.6B FY18 $1.2B FY14 $965M FY10 $529M FY06 $450M Expansion • 1988: implemented first welfare-to-work program • Continue to operate this program today Technology Modernization • New opportunities for steady revenue growth to
Slide 40: Favorable Macro Growth Factors
INVESTOR DAY 202240 Favorable Macro Growth Factors Environmental & Social ChangesPolitically Agnostic Modernization & Modularization Entitlement programs span administrations and continue to grow over time State partners rely on us to help navigate changing social and environmental waters States exp
Slide 41: Our People Are a Key Element of Our Success
INVESTOR DAY 202241 Our People Are a Key Element of Our Success Tenured Maximus leadership 85% of segment leadership team more than a decade; most for over 2 decades New talent nurtured by leadership enables expansion Expansive footprint across diversity of service offerings Unique mix of operationa
Slide 42: Growth Strategy
INVESTOR DAY 2022 Growth Strategy 42 Leverage strong national Medicaid and human service base to expand footprint into new states and adjacent markets Expand our existing clinical assessment platform to move into new assessments types for new populations and clinical opportunities Align to state gov
Slide 43: Key Takeaways
INVESTOR DAY 202243 Key Takeaways Decades of experience offering essential services to citizens, supporting largest domestic programs in the country 04 Deep customer trust with a sharp focus on government valued by customers 01 Opportunities for growth into broader range of government services with
Slide 44: Outside the U.S.
INVESTOR DAY 2022 Outside the U.S. Kevin Reilly Segment General Manager
Slide 45: Journey Outside the United States
INVESTOR DAY 202245 Journey Outside the United States 01 02 03 Differentiation • What we do, where we do it, and what makes us different New Market Entry • How we apply our strategic and disciplined approach Land, Execute, and Expand • Operational focus to diversify our portfolio
Slide 46: Leading Provider to Government Agencies Globally
INVESTOR DAY 2022 $1,600 35% $2,200 48% $800 17% U.S. Services U.S. Federal Services Outside the U.S. FY22E Outside the U.S. Segment Revenue (M) 51% 29% 15% 5% Employment Services Clinical Services Program Operations Technology Services FY22E Outside the U.S. Revenue Breakdown Leading Provider to Go
Slide 47: Competitive Advantage – Why Maximus?
INVESTOR DAY 202247 Competitive Advantage – Why Maximus? Global Portfolio of Demonstrated Performance- based Government Contracting • Unrivaled experience in global employment services programs • Capable operator of complex programs at scale 01 Proven Model for Entering and Growing Business in New G
Slide 48: New Country Entry Assessment Framework
INVESTOR DAY 202248 Australia 2002 UK 2008 Gulf Region 2012 Singapore 2017 Sweden 2020 Italy 2019 Canada 1999 South Korea 2020 Second Wave 2012 – present Seeking future growth in emerging markets as other countries turn towards performance-based government services First Wave 1999 – 2008 Early adopt
Slide 49: New Country Maturation Arc
INVESTOR DAY 202249 New Country Maturation Arc LAND Enter through ‘beachhead’ opportunity (typically employment services) EXECUTE Mature delivery model & support organic growth DIVERSIFY & EXPAND Identify opportunities to move into adjacent markets and/or different clients Establish working relation
Slide 50: Country Maturation Model: United Kingdom
INVESTOR DAY 202250 Country Maturation Model: United Kingdom Employment Services 2008 Small Acquisition ($6M) 2013 Health Acquisition ($78M) 2009 Organic Win: Flexible New Deal UK Fiscal Year Revenue in $USD 2011 Scope Expansion: Work Program Clinical Services Program Operations Capability 2015 Disa
Slide 51: Expanding Our Suite of Services
INVESTOR DAY 202251 Expanding Our Suite of Services Employment services Skills and training Health and disability assessments Public healthcare benefit program administration / eligibility assessment Workforce health / occupational health / allied health Omnichannel contact center services Public he
Slide 52: Top Growth Opportunities
INVESTOR DAY 202252 Top Growth Opportunities United Kingdom New Markets (Near-term) • Opportunities outside of DWP Mental Health & Wellbeing Intermediate Care Coordination • Enabled by our position on NHS Access and Discharge framework Assimilating Contact Center Capability • Additive to our current
Slide 53: Segment Goals and Focus
INVESTOR DAY 202253 Segment Goals and Focus Create Sustainable Organic Growth Through Smart Investments • Unlock new growth opportunities leveraging digital technologies, advanced analytics, and AI / machine learning • Expand into traditional adjacencies with new and existing clients 01 Create Globa
Slide 54: Key Takeaways
INVESTOR DAY 202254 Key Takeaways Attractive growth potential • Due to the continuing and expanding demand for efficient and effective government health and social services01 Strong track record • Deliver highly complex government programs with integrity and transparency • Independent from conflict
Slide 55: David Mutryn, Chief Financial Officer
INVESTOR DAY 2022 David Mutryn Chief Financial Officer
Slide 56: Key Takeaways
INVESTOR DAY 202256 Key Takeaways Attractive business model – long-term contracts and customer relationships, strong and predictable cash flows01 Strategy and end markets support sustainable organic revenue growth02 Margins favorable to government services peers and clear line of sight to improvemen
Slide 57: Financial Characteristics
INVESTOR DAY 202257 Financial Characteristics Long-term Customers 7+ year weighted average contract life; our relationships last decades Recompete Win Rate ~90% High Cash Conversion FCF to GAAP net income ~1.3X go forward Pure play government services provider to U.S. Federal, State & Local and Inte
Slide 58: How We Are Paid
INVESTOR DAY 202258 How We Are Paid Firm, Fixed Price Appropriate if program is well-established with known volumes Performance-Based (Fixed Price Per Unit) Activity based: per call, per assessment, per enrollment Outcomes based: per job placement, per job sustainment, per completed eligibility dete
Slide 59: Historical Financial Performance
INVESTOR DAY 2022 Source: *10 year calculations use FY12 figures and adjusted EPS. FY12 revenue was $1,050M and adjusted EPS was $1.09 59 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22E Organic Acquired Revenue ($M) C O V I D
Slide 60: Signed Awards and Organic Revenue Growth
INVESTOR DAY 2022 $2,685 $2,670 $5,547 $5,904 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 FY19 FY20 FY21 TTM Q2 FY22* 60 Organic Revenue Growth TARGET = sustainable mid-single-digit organic growth 9.1% 10 YEAR AVERAGE BOOK-TO-BILL 1.3x in 12 months ENDED 3/31/22 *Recently disclosed IN Eligib
Slide 61: GAAP and Adjusted Earnings; Fiscal 2022 Guidance
INVESTOR DAY 202261 Expense for Amortization of Intangible Assets ($M) $4.9 $5.9 $9.3 $13.4 $12.2 $10.3 $33.1 $35.6 $44.4 $90.0 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22E Fiscal 2022 Earnings Guidance Diluted EPS $3.00 – $3.50 A
Slide 62: Margin Expectations
INVESTOR DAY 202262 Margin Expectations Near-term Expectations (When PHE Ends) U.S. Services: 11 – 14% • Core programs coming back in full should drive increase from recent levels • Healthy mix of fixed price and performance-based contracts in the state market U.S. Federal: 10 – 12% • Strong margins
Slide 63: Cash Flows
INVESTOR DAY 202263 1.47 1.31 1.22 0.95 1.65 1.05 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 FY17 FY18 FY19 FY20 FY21 FY22E Target Conversion FCF Net Income 1.3X C O N V E R S IO N FCF Conversion Our FCF should continue to be at least 1
Slide 64: Capital Allocation Strategy
INVESTOR DAY 202264 Capital Allocation Strategy Maintain 2.0x – 3.0x Target Leverage Ratio Maintain Growing Dividend Internal Organic Growth Initiatives Share Repurchases Disciplined M&A LOWER PRIORITYHIGHER PRIORITY
Slide 65: M&A Evaluation Criteria
INVESTOR DAY 2022 M&A Evaluation Criteria Our primary goal is to accelerate organic growth through revenue synergies New customers | New capabilities | Increase scale in strategic areas Strong cultural fit Sustainable growth and margins We evaluate the financial model with DCF, IRR, EPS accretion, c
Slide 66: Financial Targets
INVESTOR DAY 202266 Financial Targets Revenue SUSTAINABLE MID-SINGLE DIGIT ORGANIC GROWTH LEVERAGE RATIO 2 – 3X 8 – 12% A N D 10 – 14% before expense for amortization of intangible assets OPERATING MARGIN (3-5 Year Target Range) CASH CONVERSION FCF / Net Income ~1.3X ON GO FORWARD BASIS
Slide 67: Appendix
INVESTOR DAY 202267 Appendix
Slide 68: M&A Report Card
INVESTOR DAY 202268 M&A Report Card Health Management Acentia Ascend GDIT’s Citizen Engagement Centers Attain Federal VES Fiscal Year 2013 2015 2016 2018 2021 2021 Purchase Price $78M $289M $44M $431M $419M $1.36B FINANCIAL Outpaces Market Growth1 Enhances Digital and Technology Capabilities5 Expand
Slide 69: Peer Comparison
INVESTOR DAY 202269 Fiscal Year Oct 20-Sep 21 Apr 21-Mar 22 Jul 20-Jun 21 Jan 21-Dec 21 Jan 21-Dec 21 Feb 21-Jan 22 Jan 21-Dec 21 Jan 21-Dec 21 COMPANY Booz Allen Hamilton CACI Leidos ICF SAIC ManTech Conduent Revenue 4,254 8,364 6,044 13,737 1,553 7,394 2,554 4,140 OI% 9.6% 8.2% 8.9% 8.5% 7.7% 7.0%