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MAXIMUS (MMS) Beats on Q1 Earnings, Raises '22 Revenue View

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MAXIMUS, Inc. (MMS - Free Report) reported better-than-expected first-quarter fiscal 2022 results.

Adjusted earnings of $1.12 per share surpassed the Zacks Consensus Estimate by 40% and increased 8.7% year over year. The earnings beat failed to impress the market as there has not been any significant price change since the earnings release.

Revenues of $1.2 billion beat the consensus mark by 5% and increased 21.7% year over year. The uptick was driven by contributions from the acquisitions in the U.S. Federal Services segment and startups ramping in the Outside the U.S. segment.

MAXIMUS’s shares have lost 10.7% over the past year compared with 7.1% decline of the industry it belongs to.

Segmental Revenues

The U.S. Services segment’s revenues of $386.4 million increased slightly year over year, mainly owing to new work. The U.S. Federal Services segment’s revenues of $581.9 million rose 43.6% from the year-ago quarter’s reported figure. The uptick was driven by the Attain Federal and VES acquisitions. Outside the U.S. segment, revenues of $182.6 million increased 17.5% year over year, driven by ramping of startups, mainly the U.K. Restart Programme.

Sales and Pipeline

Year-to-date signed contract awards on Dec 31, 2021, totaled $454 million, and contracts pending (awarded but unsigned) amounted to $1.16 billion. The sales pipeline at Dec 31, 2021, was $33.2 billion. This included $8.9 billion in pending proposals, $2.4 billion in proposals in preparation and $21.8 billion in opportunities tracking.

Operating Performance

Operating income of $81.5 million declined 6.9% year over year. Operating income margin of 7.1% was lower than the year-ago quarter’s figure of 9.3%.

Balance Sheet and Cash Flow

MAXIMUS ended the quarter with cash and cash equivalents of $181.8 million compared with $135.1 million in the prior quarter.

The company used $2.9 million of cash in operations and capital expenditures were $6.3 million. Free cash flow amounted to $9.2 million. MAXIMUS paid out dividends worth $17.3 million.

Maximus, Inc. Price, Consensus and EPS Surprise Maximus, Inc. Price, Consensus and EPS Surprise

Maximus, Inc. price-consensus-eps-surprise-chart | Maximus, Inc. Quote

2022 Outlook

MAXIMUS raised its revenue guidance for 2022. The company currently expects revenues in the range of $4.5-$4.7 billion compared with the previous guidance of $4.4-$4.6 billion. The midpoint ($4.6 billion) of the raised guided range is above the Zacks Consensus Estimate of $4.46 billion.

It continues to expect EPS in the range of $4.00-$4.30. The midpoint ($4.15) of the projection is below the Zacks Consensus Estimate of $4.16 per share. Cash flows from operations are expected between $275 million and $325 million. Free cash flow is anticipated in the range of $225-$275 million. The effective tax rate is anticipated in the range of 25-26%. Weighted average shares outstanding are projected in the range of 62.5-62.6 million.

Currently, MAXIMUS carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Some Other Business Services Companies

Robert Half International (RHI - Free Report) delivered fourth-quarter 2021 earnings of $1.51 per share that beat the consensus mark by 5.6% and rose 79.8% year over year.

Revenues of $1.77 billion surpassed the consensus mark by 4.3% and increased 36.2% year over year on a reported basis and 36% on an as-adjusted basis. RHI currently carries a Zacks Rank #1.

Automatic Data Processing (ADP - Free Report) reported better-than-expected second-quarter fiscal 2022 results. Adjusted EPS of $1.65 beat the Zacks Consensus Estimate by 1.2% and rose 9% year over year.

Total revenues of $4.03 billion beat the consensus mark by 1.1% and increased 9% year over year. ADP currently carries a Zacks Rank #2 (Buy).

Rollins (ROL - Free Report) reported mixed fourth-quarter 2021 results, with earnings meeting the Zacks Consensus Estimate and revenues beating the same. Adjusted earnings of 14 cents per share meet the Zacks Consensus Estimate and increased 7.7% year over year.

Revenues of $600.3 million beat the consensus mark by 3.3% and rose 11.9% year over year. ROL currently carries a Zacks Rank #2.

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