MAXIMUS(US:MMS)2021-05-08 19:21Financial Data and Key Metrics Changes - MAXIMUS reported a revenue increase of 17.3% to $959.3 million compared to the prior year period, with diluted earnings at $1.29 per share and an operating income margin of 11.8% for the quarter [7][8][36] - COVID response activities generated $242 million in revenue for the second quarter and $402 million year-to-date, with projections for full fiscal year COVID response revenue now ranging between $800 million and $850 million [8][36] Business Line Data and Key Metrics Changes - U.S. Services segment revenue increased to $448.2 million, driven by approximately $175 million from COVID response work, with an operating income margin of 18.5% [12][13] - U.S. Federal Services segment revenue decreased to $330 million due to the conclusion of the census contract, but organic growth excluding the census was 13% driven by an estimated $56 million from COVID response work [14][15] - Outside the U.S. segment revenue for the second quarter was $180.9 million, with an operating income of $15.1 million and a margin of 8.3% [19][20] Market Data and Key Metrics Changes - The Australian Employment Services business performed well, with job seekers finding and sustaining work as the economy reopened, contributing to the overall positive performance in the Outside the U.S. segment [9][20] - New employment services contracts were secured in the UK, Saudi Arabia, Sweden, South Korea, and Italy, indicating market expansion opportunities [22][94] Company Strategy and Development Direction - The company is focused on three strategic priorities: digital transformation, clinical evolution, and market expansion, with recent acquisitions aimed at enhancing technology capabilities and expanding federal market presence [44][46][52] - The integration of Attain and Veterans Evaluation Services (VES) is a priority, with plans to use free cash flow to pay down debt and maintain leverage below 2.5x [25][28][112] Management's Comments on Operating Environment and Future Outlook - Management anticipates a step down in earnings for the third and fourth quarters due to one-time costs and start-up losses from new contracts, but expects a rebound in fiscal 2022 [40][60] - The company expects total revenue for fiscal 2021 to be in the range of $4 billion to $4.2 billion, with diluted earnings per share estimated between $4.20 and $4.40 [36][37] Other Important Information - Cash from operations was strong at $181.6 million, with free cash flow of $167.1 million for the quarter [24] - The company has a total contract value pipeline of $35.6 billion, with 67.4% representing new work [65] Q&A Session Summary Question: Sustainability of margins in Outside the U.S. segment - Management indicated that Australia has shown strong demand and job retention, but there are uncertainties due to the pandemic [70][74] Question: Pipeline expansion from acquisitions - Management noted that VES is not yet included in the pipeline as the transaction has not closed, but synergy opportunities are expected post-acquisition [78][80] Question: Impact of Medicaid redeterminations - Management explained that the public health emergency is expected to extend, delaying the resumption of redeterminations, but a backlog is anticipated once operations normalize [88][90] Question: New geographies and market opportunities - Management discussed recent expansions into Sweden, South Korea, and Italy, emphasizing careful evaluation before entering new markets [94][98] Question: Expected ramp-up of UK Restart program - Management expects the UK Restart program to reach full run rate in the second half of fiscal year 2022 [104][106]