MAXIMUS, Inc. (NYSE:MMS) Q1 2019 Earnings Conference Call Transcript

Feb 07, 2019 • 09:00 am ET


MAXIMUS, Inc. (NYSE:MMS) Q1 2019 Earnings Conference Call Transcript


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Greetings, and welcome to the MAXIMUS Fiscal 2019 First Quarter Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Lisa Miles, Senior Vice President of Investor Relations for MAXIMUS. Thank you. Ms. Miles, you may begin.

Lisa Miles

Good morning, and thank you for joining us. With me today is Bruce Caswell, President and CEO; and Rick Nadeau, Chief Financial Officer. I'd like to remind everyone that a number of statements being made today will be forward-looking in nature. Please remember that such statements are only predictions. Actual events and results may differ materially as a result of risks we face, including those discussed in Exhibit 99.1 of our SEC filings. We encourage you to review the information contained in our earnings release today and our most recent forms 10-Q and 10-K filed with the SEC. The Company does not assume any obligation to revise or update these forward-looking statements to reflect subsequent events or circumstances except as required by law.

Today's presentation may contain non-GAAP financial information. Management uses this information in its internal analyses of results and believes 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 a reconciliation of the non-GAAP measures presented in this document, please see the Company's most recent quarterly earnings press release.

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

Rick Nadeau

Thanks, Lisa. This morning, MAXIMUS reported revenue for the first quarter of fiscal 2019 of $664.6 million, an increase of 7% over the same period last year. Top line growth was driven by the expected increases in the U.S. Federal Services Segment, due to revenue from the acquisition of the citizen engagement centers. This was partially offset by the adverse impact from foreign currency translation of $7.2 million.

Total Company operating margin was 11.2% for the first quarter, which was above our expectations due to solid operational delivery in our U.S. Health & Human Services segment. As expected, our operating margin decreased due to the newly-acquired citizen engagement center contracts, that have cost-plus terms and therefore generate operating margins in the mid-single digits. As a reminder, these cost-plus contracts also have inherently lower financial risk.

For the first quarter, GAAP diluted earnings per share were $0.86, which was also better than forecast and benefited from strong financial performance in our U.S. Health & Human Services segment.

As we disclosed on the previous call, we reorganized our reporting segments on October 1, 2018, to be geographically based, because this is the way we are managing performance, allocating resources and evaluating results. This shift is a response to changes in the markets we operate, with the increasing integration of health and human services programs worldwide as governments deliver services in a more holistic manner to their citizens. We