MAXIMUS(US:MMS)2023-11-16 22:14Financial Data and Key Metrics Changes - For fiscal year 2023, total company revenue increased by 5.9% to $4.90 billion, with organic revenue growth of 7.1% [79] - Adjusted operating income margin for the full fiscal year was 8.0%, with adjusted EPS at $3.83, while adjusted EPS excluding cybersecurity incident costs was $4.18 [81][82] - The fourth quarter adjusted EPS was $1.29, with an adjusted operating income margin of 10.0% [83] Business Line Data and Key Metrics Changes - US Federal Services segment revenue increased by 6.4% to $2.40 billion, maintaining an operating income margin of 10.4% [84] - US Services segment revenue grew by 12.7% to $1.81 billion, with an operating income margin of 10.1%, down from 11.3% in the prior year [85] - Outside the US segment revenue decreased by 9.8% to $689 million, with an operating loss of $9 million for fiscal 2023 [87] Market Data and Key Metrics Changes - The contract backlog increased to $20.7 billion, over four times trailing revenue, indicating strong future revenue visibility [75] - The pipeline of opportunities as of September 30 was $37.1 billion, with 76% representing new work [14] Company Strategy and Development Direction - The company is focused on a three to five-year strategy emphasizing technology modernization, future of health, and customer services [1][4] - Maximus Ventures has been established to invest in innovative start-ups, aiming to create growth opportunities and enhance capabilities [9][10] - The company is committed to mid-single-digit organic growth and achieving an adjusted operating income margin of 10% to 14% [16][55] Management's Comments on Operating Environment and Future Outlook - Management anticipates a return to a more stable macro environment, with the essential nature of services providing insulation from budget uncertainties [15][51] - The company expects continued growth in the US Federal Services segment, driven by higher volumes in VA medical disability exams and Medicaid redeterminations [91] - Management expressed confidence in achieving revenue guidance for fiscal year 2024, projecting between $5.05 billion and $5.2 billion [91] Other Important Information - The company announced a 7% increase in its quarterly dividend to $0.30 per share, reflecting confidence in earnings growth [55] - Free cash flow for fiscal 2024 is expected to be between $290 million and $340 million, with a slightly negative free cash flow anticipated in Q1 due to seasonality [50] Q&A Session Summary Question: Could you provide more color on the guidance and the conservative ranges? - Management stated that the guidance aligns with the previous outlook, with a midpoint adjusted EPS forecast of $5.28, reflecting confidence in mid-single-digit organic revenue growth and a 10% adjusted operating income margin [22] Question: When might there be room to improve margins in US Services? - Management indicated that while the adjusted operating income margin is currently at the lower end of the target range, there is optimism for improvement through technology adoption and performance-based work [26] Question: What is the outlook for the VA exam business? - Management expressed confidence in the VA exam business, noting significant capacity increases and ongoing demand, with gradual revenue growth expected in FY '24 [65]