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MAXIMUS (MMS) Q1 Earnings Meet, Revenues Beat Estimates

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MAXIMUS, Inc. (MMS - Free Report) reported first-quarter fiscal 2020 earnings per share of 91 cents, which matched the Zacks Consensus Estimate and increased 5.8% year over year.

Revenues of $818.2 million beat the consensus mark by 1.7% and improved 23.1% year over year. The year-over-year uptick was driven by strength in the U.S. Federal Services Segment due to contribution from the acquired citizen engagement centers business, the ramp-up on the Census contract, and organic growth in the company’s U.S. Health & Human Services and U.S. Federal Services Segments.

Shares of MAXIMUS have gained 4.3% over the past year, compared with 27.8% growth of the industry it belongs to.

 

Revenues by Segment

U.S. Health and Human Services segment revenues of $312.3 million increased 6.2% year over year mainly driven by new contracts and expansion of existing work. U.S. Federal Services segment revenues of $366.6 million were up 68.9% from the year-ago quarter. Outside the U.S. segment revenues of $139.4 million declined 9% year over year on a reported basis and 8% on a constant-currency basis.

Maximus, Inc. Revenue (TTM)

Sales and Pipeline

Year to date signed contract awards at Dec 31, 2019 totaled $176.6 million and contracts pending (awarded but unsigned) totaled $439.5 million. The sales pipeline at Dec 31, 2019 was $30.6 billion. This included $3.7 billion in proposals pending, $0.7 billion in proposals in preparation and $26.3 billion in opportunities tracking.

Operating Performance

Operation income of $79.1 million increased 6.7% year over year. Operating margin of 9.7% declined 150 basis points (bps).

Balance Sheet and Cash Flow

The company ended the quarter with cash and cash equivalents balance of $149.5 million compared with $105.6 million in the prior quarter. The company generated $87.3 million of cash from operations and capital expenditure was $10.5 million. Free cash flow was $76.8 million. MAXIMUS paid out dividends of $18 million in the quarter.

Outlook

The company reiterated its fiscal 2020 guidance. Earnings per share are expected to be in the range of $3.95 to $4.15, the midpoint ($4.05) of which is higher than the Zacks Consensus Estimate of $4.01.

The company expects revenues of $3.15-$3.3 billion. The Zacks Consensus Estimate is pegged at $3.23 billion.

Cash flows from operations are expected to be between $300 million and $350 million, and free cash flow is anticipated between $275 million and $325 million. Estimated effective income tax rate is between 24.5% and 25.5%.

Zacks Rank & Stocks to Consider

Currently, Maximus carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Servicessector are awaiting fourth-quarter 2019 earnings of key players like Verisk (VRSK - Free Report) , TransUnion (TRU - Free Report) and Green Dot (GDOT - Free Report) . While Verisk and TransUnion are slated to report their results on Feb 18, Green Dot is scheduled to release on Feb 19.

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