MAXIMUS, Inc. (NYSE:MMS) Q3 2019 Earnings Conference Call - Final Transcript

Aug 08, 2019 • 09:00 am ET


MAXIMUS, Inc. (NYSE:MMS) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the MAXIMUS Fiscal 2019 Third Quarter Earnings Conference Call. At this 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.

It is now my pleasure to introduce Lisa Miles, Senior Vice President, Investor Relations. Please go ahead.

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 in 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 its financial results for the third quarter of fiscal year 2019. Revenue for the third quarter of fiscal 2019 was $730.7 million, which was lower than expected. Acquired revenue came in below our forecast due to a slower-than-anticipated ramp on the Census Questionnaire Assistance contract. Total company revenue was also unfavorably impacted by foreign currency translation of $9.1 million in the quarter.

Nevertheless, in the third quarter, MAXIMUS continued its track record of solid operational delivery, demonstrated by strong margins, earnings and cash flow. Total company operating margin was 11.4% for the third quarter, driven by the US Health and Human Services and US Federal Services segments. Operating margin in the prior year was 13.8%, which benefited from $15.5 million of revenue and operating income tied to change orders. GAAP diluted earnings-per-share were $0.97 for the third quarter of fiscal 2019, in line with company expectations.

I will now speak to our segment results in the third quarter. As expecting, third quarter revenue for US Health and Human Services segment decreased to $291.1 million compared to the same period last year. In the third quarter, revenue was tempered from contracts that were rebid or extended over the past year. Looking forward, we anticipate revenue will increase as these programs mature and new contracts begin to generate revenue, which is expected to return the segment to organic growth in the fourth quarter.

Operating margin for the segment in the third