Financial Data and Key Metrics Changes - For the first quarter of fiscal year 2026, the company reported revenue of $1.35 billion, representing a 4.1% decline compared to the prior year period, with approximately 1.5% of this decline attributed to the divestiture of the outside the U.S. segment [22][24] - Adjusted EBITDA margin was 12.7% and adjusted EPS was $1.85 for the quarter, compared to 11.2% and $1.61, respectively, for the prior year period [23] - The company raised earnings guidance and narrowed revenue guidance for the full fiscal year 2026 [4][32] Business Line Data and Key Metrics Changes - Revenue for the U.S. Federal Services segment increased by 0.8% to $787 million, all growth being organic, with an operating income margin of 16.5% [24] - The U.S. Services segment revenue decreased to $415 million from $452 million, with an operating income margin of 7.1% compared to 9.0% in the prior year period [25] - The outside the U.S. segment revenue decreased to $143 million from $170 million, with an operating loss of $1.4 million compared to an operating profit of $8.1 million in the prior period [28] Market Data and Key Metrics Changes - The company reported a pipeline of sales opportunities totaling $59.1 billion, up from $51.3 billion reported at the end of the previous quarter [8] - The share of new work in the total pipeline is 59%, with the U.S. Federal Services segment's share at 61% [8] - Proposals pending or submitted, and proposals currently being prepared total a combined $6.2 billion, a 55% increase from the previous year [9] Company Strategy and Development Direction - The company is focusing on expanding its use of automation and AI to enhance service delivery and improve financial performance [5][16] - The strategic evolution includes becoming a trusted provider of technology-driven solutions to government customers, with a focus on Medicaid and SNAP programs [5][12] - The company anticipates that award activity will pick up across the remaining quarters of fiscal year 2026, with a focus on organic growth opportunities [8][34] Management's Comments on Operating Environment and Future Outlook - Management noted that the company operates in a resilient sector of government spending, largely unaffected by temporary shutdowns [4] - The company expects to see increased demand for tech-enabled services as states prepare for new Medicaid and SNAP requirements [34] - Management expressed confidence in the guidance for fiscal year 2026, highlighting the durability of essential services provided to government [34] Other Important Information - The company completed the divestiture of its child support business, which comprised approximately $25 million of annual revenue, recognizing a gain of approximately $9 million [21] - The company was selected as the single awardee of the U.S. General Services Administration Blanket Purchase Agreement for government experience contact center services [19] Q&A Session Summary Question: How much of the revenue guidance is in hand versus new work? - Management indicated that there is virtually no new work remaining in the forecast, with initial guidance having about 3% of not yet new work [37] Question: Can you provide more color on segment revenue guidance and potential drivers? - Management expressed confidence in the guidance range, noting that U.S. Services revenue was down more than expected but anticipates year-over-year comparisons to improve [39] Question: What is the receptivity towards the new SNAP offering? - Management reported positive receptivity to the Accuracy Assistant tool, which helps states reduce SNAP payment error rates [48] Question: Any updates on the VA contract timing? - Management confirmed that current contracts have a performance period through December 31, 2026, and they are confident in their performance under the current contract [56] Question: What are the drivers for lower volumes in U.S. Services? - Management noted that there was no single driver for the revenue change, and the lower volumes are expected to improve as the year progresses [68]

Financial Data and Key Metrics Changes - For the first quarter of fiscal year 2026, the company reported revenue of $1.35 billion, representing a 4.1% decline compared to the prior year period, with approximately 1.5% of this decline attributed to the divestiture of the outside the U.S. segment [22][23] - Adjusted EBITDA margin was 12.7% and adjusted EPS was $1.85 for the quarter, compared to 11.2% and $1.61, respectively, for the prior year period [23] - Cash used in operating activities was a net outflow of $244 million, and Free Cash Flow was a net outflow of $251 million for the quarter, reflecting expected seasonality and temporary delays in collections [29][30] Business Line Data and Key Metrics Changes - Revenue for the U.S. Federal Services segment increased by 0.8% to $787 million, all growth being organic, with an operating income margin of 16.5% [24] - The U.S. Services segment revenue decreased to $415 million from $452 million, with an operating income margin of 7.1%, down from 9.0% in the prior year period [25] - The outside the U.S. segment revenue decreased to $143 million from $170 million, with an operating loss of $1.4 million compared to an operating profit of $8.1 million in the prior period [27] Market Data and Key Metrics Changes - The company reported a pipeline of sales opportunities totaling $59.1 billion, up from $51.3 billion reported at the end of the previous quarter, with 59% of the pipeline being new work [7][8] - Signed awards totaled $246 million in the first quarter, with a Book-to-Bill Ratio of approximately 0.5x, impacted by light award activity [6] Company Strategy and Development Direction - The company is focusing on expanding its use of automation and AI to enhance service delivery and improve financial performance, aiming to drive shareholder value [5][16] - The strategic evolution includes becoming a trusted provider of technology-driven solutions to government customers, with a focus on Medicaid and SNAP programs [4][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown had a minimal direct impact on the contract portfolio, but there were slower payments from customers and delays in award decisions [5] - The company anticipates that award activity will pick up in the remaining quarters of fiscal year 2026, with guidance reflecting improvement in earnings outlook and narrowing revenue guidance [21][32] Other Important Information - The company completed the divestiture of its child support business, which comprised approximately $25 million of annual revenue, recognizing a gain of approximately $9 million [21] - The company was selected as the single awardee of the U.S. General Services Administration Blanket Purchase Agreement for government experience contact center services [19] Q&A Session Summary Question: How much of the revenue guidance is in hand versus new work? - Management indicated that there is virtually no new work remaining in the forecast, with initial guidance having about 3% of not yet new work [37] Question: Can you provide more color on the segment revenue guidance? - Management expressed confidence in the guidance range, noting that U.S. Services revenue was down more than expected but anticipated improvement in year-over-year comparisons [39] Question: What are the types of programs that could be awarded under the GSA blanket award? - Management explained that the underlying platform includes a multi-channel contact center environment, with capabilities for intelligent document processing and analytics [42][46] Question: What has been the receptivity towards the new SNAP offering? - Management reported positive receptivity to the Accuracy Assistant tool, which helps states reduce SNAP payment error rates [48][49] Question: What are the drivers for lower volumes in U.S. Services? - Management noted that there was no single driver for the revenue change, with several programs experiencing lower volumes, but expected organic growth to resume by Q4 [68][80]

Financial Data and Key Metrics Changes - For Q3 fiscal year 2025, adjusted diluted earnings per share reached $2.16, a 24% increase year over year [5] - Adjusted EBITDA grew by 15%, with Q3 revenue of $1,350,000,000 reflecting a 4.3% organic growth year over year [5][29] - The adjusted EBITDA margin was 14.7%, compared to 13.1% in the prior year period [30] Business Line Data and Key Metrics Changes - U.S. Federal Services segment revenue increased by 11.4% to $761,000,000, driven entirely by organic growth [31] - U.S. Services segment revenue decreased slightly to $440,000,000, impacted by the completion of the Medicaid unwinding exercise [33] - Outside the U.S. segment revenue decreased to $147,000,000, partially offset by organic growth of 7.3% [34] Market Data and Key Metrics Changes - The total pipeline of sales opportunities increased to $44,700,000,000 from $41,200,000,000 reported previously [24] - Approximately 63% of the current pipeline represents new work, with 67% attributable to the U.S. Federal Services segment [24] Company Strategy and Development Direction - The company is focused on leveraging recent legislation and regulatory changes to assist federal and state clients, particularly in Medicaid and SNAP [6][14] - MAXIMUS aims to expand its role in the defense sector, as evidenced by a recent $77,000,000 contract with the U.S. Air Force [18][70] - The company is investing in technology and process efficiencies to enhance service delivery and operational readiness [19][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of the U.S. Services segment over the next 18 to 24 months due to new regulatory requirements [14] - The company anticipates a strong fourth quarter of free cash flow, supported by recent improvements in accounts receivable collections [40] - Management highlighted potential headwinds from budget constraints but remains optimistic about long-term growth opportunities [46][48] Other Important Information - The company raised its guidance for fiscal year 2025, with revenue expected to range between $5,375,000,000 and $5,475,000,000 [41] - Adjusted EPS guidance increased to a range between $7.35 and $7.55 per share, reflecting year-over-year earnings growth of 22% [42] - The company achieved Cybersecurity Maturity Model Certification Level 2, enhancing its competitive position in federal contracting [20] Q&A Session Summary Question: What are the key drivers behind the opportunities from the One Big Beautiful Bill? - Management indicated that the opportunities in Medicaid and SNAP are substantial, with a focus on program eligibility and work requirements expected to positively impact growth [53][54] Question: Can you quantify the potential benefits from these opportunities? - Management suggested that the U.S. Services segment growth rate could increase from mid-single digits to high-single digits, with potential for low double-digit growth depending on the timing and size of opportunities [64][65] Question: How does MAXIMUS maintain its competitive advantage? - The company emphasized its conflict-free status and established presence in the Medicaid space, which provides a competitive barrier [66][68] Question: Will defense become a more significant focus for MAXIMUS? - Management confirmed that defense is an increasing focus, with plans to leverage core capabilities in the defense community [69][70] Question: Can you provide guidance on revenue splits by segment for Q4? - Management indicated it was too early to provide specific segment-level guidance due to various risks and opportunities present [76][78] Question: Is there potential for EPS growth even with flat revenue next year? - Management noted that reduced interest expenses could provide a tailwind to EPS, potentially improving it by $0.30 year over year [81]

Financial Data and Key Metrics Changes - The company reported revenue of $1,360,000,000 for the quarter, reflecting a 3% organic growth year over year [6][30] - Adjusted EBITDA margin was 13.7%, in the upper end of the near-term guidance range [6][30] - Adjusted EPS was $2.01, compared to $1.57 for the prior year period [30][42] Business Line Data and Key Metrics Changes - U.S. Federal Services segment revenue increased by 10.9% to $778,000,000, driven by strong clinical assessments [33] - U.S. Services segment revenue decreased to $442,000,000, reflecting normalization after last year's Medicaid unwinding [35] - Outside the U.S. segment revenue decreased to $142,000,000, but organic growth was 4.6% [36] Market Data and Key Metrics Changes - The total pipeline of sales opportunities was $41,200,000,000, with approximately 55% representing new work [26] - Signed awards totaled $2,900,000,000 of total contract value through the second quarter [25] - The book to bill ratio was approximately 0.8 times, showing improvement from previous periods [26] Company Strategy and Development Direction - The company is focused on leveraging technology and innovation to drive efficient operations and enhance customer satisfaction [8][12] - MAXIMUS FORWARD initiatives aim to modernize programs through technology and performance-based contracting [7][8] - The company is exploring opportunities for efficiencies and innovation in response to government inquiries [13][14] Management's Comments on Operating Environment and Future Outlook - Management maintains a cautious view for the second half of the fiscal year due to evolving operating conditions [14][42] - The company anticipates a normalization in cash flow and collections in the fourth quarter [38][43] - There is optimism regarding the pipeline of opportunities, with an uptick in business proposals volume [29][30] Other Important Information - The company has been recognized by Fortune as one of America's most innovative companies, highlighting its commitment to operational innovation [27] - Cash provided by operating activities was $43,000,000, with free cash flow of $26,000,000 for the quarter [37] - The company ended the quarter with total debt of $1,510,000,000, yielding a net leverage ratio of 1.9 times [41] Q&A Session Summary Question: How should the market think about the guidance and weightings between Q3 and Q4? - Management indicated that the guidance reflects Q2 overperformance while maintaining a cautious approach for Q3 and Q4 due to visibility into potential moderation in clinical volumes [51][52] Question: Can you provide more color on the margin performance in the quarter? - The strong margin performance was attributed to increased volumes and investments in technology that improved operational efficiencies [55][56] Question: Are there potential delays in new work coming into the pipeline? - There has been some slowdown in the civilian agency space, but the company is still seeing opportunities and contract extensions that benefit incumbents [60][62] Question: What are the drivers behind the organic growth in the Outside the U.S. segment? - The organic growth was primarily driven by the functional assessment services contract in the UK, which provides a modest revenue increase compared to the predecessor contract [67]

Financial Data and Key Metrics Changes - The company reported revenue of $1,360,000,000 for the quarter, representing a solid 3% organic growth year over year [5][25] - Adjusted EBITDA margin was 13.7% in Q2, in the upper end of the near-term guidance range [5][25] - Adjusted EPS was $2.01 for the quarter, compared to $1.57 for the prior year period [25][28] Business Line Data and Key Metrics Changes - U.S. Federal Services segment revenue increased 10.9% to $778,000,000, all organic growth, driven by strong performance in clinical assessments [28] - U.S. Services segment revenue decreased to $442,000,000, reflecting the prior year's outsized growth from Medicaid unwinding [29] - Outside the U.S. segment revenue decreased to $142,000,000, but organic growth was 4.6% due to healthier components remaining [30] Market Data and Key Metrics Changes - The total pipeline of sales opportunities was $41,200,000,000, with approximately 55% representing new work [22][23] - Signed awards totaled $2,900,000,000 of total contract value through the second quarter [21] - The book to bill ratio was approximately 0.8 times, showing improvement from previous periods [22] Company Strategy and Development Direction - The company is focused on modernization through technology and performance-based contracting, aligning with government efficiency initiatives [6][10] - MAXIMUS FORWARD transformation emphasizes technology and innovation to drive efficient operations and customer satisfaction [7][10] - The company is exploring opportunities for efficiencies, consolidation, and innovation in response to government inquiries [11][12] Management's Comments on Operating Environment and Future Outlook - Management maintains a cautious view for the second half of the fiscal year, reflecting ongoing uncertainties in the operating environment [12][36] - The company anticipates a normalization in cash flow and collections in the fourth quarter, following delays in administrative processes [32][36] - There is optimism regarding the pipeline of opportunities, with an uptick in business proposals volume [25][56] Other Important Information - The company has been recognized by Fortune as one of America's most innovative companies, highlighting its commitment to operational innovation and technology [23] - Cash provided by operating activities was $43,000,000, with free cash flow of $26,000,000 for the quarter [31] - Total debt at the end of the quarter was $1,510,000,000, yielding a net total leverage ratio of 1.9 times [35] Q&A Session Summary Question: How should the market think about the guidance and weightings between Q3 and Q4? - Management indicated that the guidance reflects Q2 overperformance while maintaining a cautious approach for Q3 and Q4 due to visibility into potential moderation in clinical volumes [44][46] Question: Can you provide more color on the margin performance drivers? - The strong margin performance was attributed to increased volumes and investments in technology that improved operational efficiency [49][50] Question: Are there potential delays in new work coming into the pipeline? - There has been some slowdown in the civilian agency space, but the overall pipeline volume remains healthy, with a 25% increase in proposals in preparation [53][54]