MAXIMUS(MMS) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Maximus reported revenue of $1.31 billion for Q3 2024, representing a 10.6$1.74 for the quarter, compared to 6.9% and $0.78 respectively for the prior year period [4] - Cash provided by operating activities for Q3 was$199 million, and free cash flow was $165 million [7] Business Line Data and Key Metrics Changes - U.S. Federal Services segment revenue increased 17.0$683 million, driven by volume growth on expanded clinical programs [5] - U.S. Services segment revenue increased 5.2% to $472 million, attributed to strong performance across the Medicaid-related portfolio [6] - Outside the U.S. segment revenue increased 2.3$159 million, with organic growth of 6.8% primarily from the UK [7] Market Data and Key Metrics Changes - The total debt at the end of Q3 was $1.16 billion, with a net debt to EBITDA ratio improving from 1.7 to 1.5 times [8] - The signed awards for Q3 totaled$1.3 billion, with a book-to-bill ratio of approximately 0.6 times for the trailing 12-month period [25] Company Strategy and Development Direction - The company continues to focus on executing its strategy outlined in the 2022 Investor Day, emphasizing technology modernization and digitally enabled customer services [17] - Recent contract wins include a task order under the IRS EDOS valued at $87 million and a TSA contract worth$171 million [18][19] - The company is optimistic about the transition to modular solutions supporting state Medicaid programs, which is expected to positively contribute in the coming years [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-single-digit organic growth over the long term, despite potential fluctuations year-to-year [14] - The company anticipates a normalization of extraordinary revenue growth in fiscal 2025, with expectations of similar revenue levels to fiscal 2024 [14][38] - Management noted that the upcoming election may create a dynamic environment but does not expect significant impact on long-term success [28] Other Important Information - The company amended its credit agreement, extending maturity dates and maintaining flexibility for capital allocation priorities [8] - Maximus was recognized by Time Magazine as one of America's best midsize companies, highlighting employee satisfaction, revenue growth, and sustainability efforts [30] Q&A Session Summary Question: Updates on the CCO protest timeline - Management expects a response from the Government Accountability Office by September 30 regarding the protest [32][34] Question: Clarification on guidance for 2025 - Management indicated that fiscal year 2025 revenue may look similar to the current guidance for fiscal year 2024, with some moderation expected in U.S. Services due to redetermination volumes [36][38] Question: Expectations for the VA business and automation tools - Management noted that the VA is grappling with funding issues but expects volumes to remain steady, with technology investments aimed at improving veteran experiences [39][42]