MAXIMUS, Inc. (NYSE:MMS) Q1 2015 Earnings Conference Call - Final Transcript

Feb 05, 2015 • 09:00 am ET

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MAXIMUS, Inc. (NYSE:MMS) Q1 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Greetings and welcome to the MAXIMUS Fiscal 2015 First Quarter Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now turn the conference over to Ms. Lisa Miles, Senior Vice President of Investor Relations. Thank you, Ms. Miles, you may now begin.

Executive
Lisa Miles

Good morning. Thank you for joining us on today's conference call. I would like to point out that we posted a presentation on our website under the IR page to assist you in following along with today's call. With me today is CEO, Rich Montoni; President, Bruce Caswell; and CFO, Rick Nadeau.

(Forward-Looking Cautionary Statements)

Today's presentation may contain non-GAAP financial information. Management uses this information in its internal analysis of results and believes that this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For reconciliation of non-GAAP measures presenting in this document, please view the company's most recent quarterly earnings press release.

And with that, I'll turn the call over to Rick.

Executive
Rick Nadeau

Thanks, Lisa. This morning MAXIMUS reported first quarter revenue of $467.0 million, a 15% increase compared to the same period last year. All growth in the quarter was organic and both segments delivered top line increases driven by new work and expansion on existing contracts.

Revenue was unfavorably impacted by currency exchange rates predominantly, but not exclusively in the Human Services Segment. On a constant currency basis, total company revenue would have grown 16% over the prior year. For the first quarter of 2015, operating income totaled $65.2 million and the company delivered an operating margin of 14%. Our tax rate in the first quarter was lower than expected at 36%. This was due to the extension of the Work Opportunity Tax Credit at the end of December with retroactive application to the beginning of calendar year 2014.

For the first quarter, net income attributable to MAXIMUS totaled $41.9 million, or $0.63 per diluted share. First quarter diluted EPS increased 29%, compared to $0.49 reported for the same period last year. The first quarter of fiscal 2015 benefited from $2.4 million of incremental revenue and profit in the Human Services Segment that was previously expected to occur later in this fiscal year and provided an uplift of approximately $0.03 per share.

In addition, the lower tax rate provided approximately another $0.01 of earnings. Overall, another solid growth quarter.

Let's jump into results by segment starting with Health Services. The Health Services segment delivered strong operational and financial results and performed largely in line with our expectations.

Revenue in the first quarter grew 18% to $351.7 million, compared to the same period last year, fueled by organic growth resulting from new work and the expansion of existing contracts.

As a reminder, the segment's fiscal Q1 benefits from seasonality tied to the open enrollment period under the Affordable Care