MAXIMUS, Inc. (MMS - Free Report) reported mixed third-quarter fiscal 2022 results with earnings missing the Zacks Consensus Estimate but revenues beating the same.
The stock fell 3.6% since the earnings release on Aug 3 in response to the earnings miss and a lower earnings guidance for fiscal 2022. MAXIMUS trimmed its 2022 adjusted EPS guidance to $3.95-$4.15 from the previous view of $4.07-$4.57. The updated guidance range, however, is above the current Zacks Consensus Estimate of $4.
Quarterly adjusted earnings of 78 cents per share missed the Zacks Consensus Estimate by 20.4% and decreased 53% year over year. The bottom line in the quarter was weighed down by a contract in the Outside the U.S. Segment that required a write-down of $11.7 million or $0.14 EPS, a decline in short-term COVID-19 response work and lower volumes in core programs.
Revenues of $1.1 billion beat the consensus mark by 3.4% but decreased 9.5% year over year. The decrease was due to a decline in short-term COVID-19 response work, partially offset by organic growth and contributions from the acquisitions in the U.S. Federal Services segment.
MAXIMUS’s shares have lost 21% over the past year against 5.3% growth in the industry it belongs to.
Segmental Revenues
The U.S. Services segment’s revenues of $399 million decreased 8.5% year over year. The U.S. Federal Services segment’s revenues of $526 million declined 14.9% from the year-ago quarter’s reported figure. Outside the U.S. segment revenues of $201 million increased 6% year over year.
Sales and Pipeline
Year-to-date signed contract awards on Jun 30, 2022 totaled $4 billion, and contracts pending (awarded but unsigned) amounted to $476 million. The sales pipeline on Jun 30, 2022, was $33.5 billion. This included $7.3 billion in pending proposals, $3.6 billion in proposals in preparation and $21.6 billion in opportunities tracking.
Operating Performance
Operating income of $54.6 million declined 4.8% year over year. The operating income margin of 4.8% was lower than the year-ago quarter’s 11.2%.
Balance Sheet and Cash Flow
MAXIMUS ended the quarter with cash and cash equivalents of $93.7 million compared with $92.6 million in the prior quarter.
The company generated $57.9 million of cash from operations. Capital expenditures were $13 million. Free cash flow amounted to $44.9 million.
Updated 2022 Outlook
MAXIMUS tweaked its revenue guidance for 2022. The company currently expects revenues in the range of $4.55-$4.65 billion compared with the previous guidance of $4.5-$4.7 billion.
Cash flows from operations are expected between $220 million and $260 million compared with the previous guidance of $275-$325 million. Free cash flow is anticipated in the range of $170-$210 million compared with the prior expectation of $225-$275 million. The effective tax rate is anticipated in the range of 25-25.5%. Weighted average shares outstanding are projected in the range of 61.8-62 million.
MAXIMUS currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Some Other Business Services Companies
Equifax (EFX - Free Report) reported mixed second-quarter 2022 results, wherein earnings beat estimates but revenues missed the same.
EFX’s adjusted earnings of $2.09 per share beat the Zacks Consensus Estimate by 3% and improved 5.6% on a year-over-year basis. Revenues of $1.32 billion missed the consensus estimate marginally but improved 6.6% year over year.
IQVIA Holdings (IQV - Free Report) reported solid second-quarter 2022 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate.
IQV’s adjusted earnings per share of $2.44 beat the consensus mark by 2.1% and improved 15% on a year-over-year basis. Total revenues of $3.54 billion outpaced the consensus estimate by 1.2% and increased 3% year over year.
Omnicom Group (OMC - Free Report) reported impressive second-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
OMC’s earnings of $1.68 per share beat the consensus mark by 7.7% and increased 15.1% year over year, driven by a strong margin performance. Total revenues of $3.6 billion surpassed the consensus estimate by 4.4% but declined slightly year over year.
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MAXIMUS, Inc. (MMS - Free Report) reported mixed third-quarter fiscal 2022 results with earnings missing the Zacks Consensus Estimate but revenues beating the same.
The stock fell 3.6% since the earnings release on Aug 3 in response to the earnings miss and a lower earnings guidance for fiscal 2022. MAXIMUS trimmed its 2022 adjusted EPS guidance to $3.95-$4.15 from the previous view of $4.07-$4.57. The updated guidance range, however, is above the current Zacks Consensus Estimate of $4.
Quarterly adjusted earnings of 78 cents per share missed the Zacks Consensus Estimate by 20.4% and decreased 53% year over year. The bottom line in the quarter was weighed down by a contract in the Outside the U.S. Segment that required a write-down of $11.7 million or $0.14 EPS, a decline in short-term COVID-19 response work and lower volumes in core programs.
Revenues of $1.1 billion beat the consensus mark by 3.4% but decreased 9.5% year over year. The decrease was due to a decline in short-term COVID-19 response work, partially offset by organic growth and contributions from the acquisitions in the U.S. Federal Services segment.
MAXIMUS’s shares have lost 21% over the past year against 5.3% growth in the industry it belongs to.
Segmental Revenues
The U.S. Services segment’s revenues of $399 million decreased 8.5% year over year. The U.S. Federal Services segment’s revenues of $526 million declined 14.9% from the year-ago quarter’s reported figure. Outside the U.S. segment revenues of $201 million increased 6% year over year.
Sales and Pipeline
Year-to-date signed contract awards on Jun 30, 2022 totaled $4 billion, and contracts pending (awarded but unsigned) amounted to $476 million. The sales pipeline on Jun 30, 2022, was $33.5 billion. This included $7.3 billion in pending proposals, $3.6 billion in proposals in preparation and $21.6 billion in opportunities tracking.
Operating Performance
Operating income of $54.6 million declined 4.8% year over year. The operating income margin of 4.8% was lower than the year-ago quarter’s 11.2%.
Balance Sheet and Cash Flow
MAXIMUS ended the quarter with cash and cash equivalents of $93.7 million compared with $92.6 million in the prior quarter.
The company generated $57.9 million of cash from operations. Capital expenditures were $13 million. Free cash flow amounted to $44.9 million.
Updated 2022 Outlook
MAXIMUS tweaked its revenue guidance for 2022. The company currently expects revenues in the range of $4.55-$4.65 billion compared with the previous guidance of $4.5-$4.7 billion.
Cash flows from operations are expected between $220 million and $260 million compared with the previous guidance of $275-$325 million. Free cash flow is anticipated in the range of $170-$210 million compared with the prior expectation of $225-$275 million. The effective tax rate is anticipated in the range of 25-25.5%. Weighted average shares outstanding are projected in the range of 61.8-62 million.
MAXIMUS currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Some Other Business Services Companies
Equifax (EFX - Free Report) reported mixed second-quarter 2022 results, wherein earnings beat estimates but revenues missed the same.
EFX’s adjusted earnings of $2.09 per share beat the Zacks Consensus Estimate by 3% and improved 5.6% on a year-over-year basis. Revenues of $1.32 billion missed the consensus estimate marginally but improved 6.6% year over year.
IQVIA Holdings (IQV - Free Report) reported solid second-quarter 2022 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate.
IQV’s adjusted earnings per share of $2.44 beat the consensus mark by 2.1% and improved 15% on a year-over-year basis. Total revenues of $3.54 billion outpaced the consensus estimate by 1.2% and increased 3% year over year.
Omnicom Group (OMC - Free Report) reported impressive second-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
OMC’s earnings of $1.68 per share beat the consensus mark by 7.7% and increased 15.1% year over year, driven by a strong margin performance. Total revenues of $3.6 billion surpassed the consensus estimate by 4.4% but declined slightly year over year.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
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