Maximus, Inc. · NYSE:MMS
Maximus — Q4 2006 Earnings Presentation
19 slides from Maximus's earnings presentation, Nov 20, 2006
Slide 1: 4th Quarter Fiscal 2006 Quarterly Earnings Call
David N. Walker Chief Financial Officer and Treasurer 4th Quarter Fiscal 2006 November 15, 2006 MAXIMUS QUARTERLY EARNINGS CALL
Slide 2: Q4 FY06 Results
Q4 FY06 Results Software License Revenue Deferral Conservative revenue-recognition approach on two signed software licenses delivered end of Q4 Shifted $0.22 from fiscal 2006 largely into fiscal 2007 Would have been in line with our previous full year guidance of $0.31 to $0.41 per diluted share Sum
Slide 3: Base Operations Results
Base Operations Results Three Months Ended Year Ended Dec. 31, 2005 Mar . 31, 2006 Jun. 30, 2006 Sept. 30, 2006 Sept. 30, 2006 Fiscal 2006 actual, as reported $0.41 $0.41 $(0.81) $0.09 $0.11 Add back legal settlement expense e $0.01 $0.02 $0.26 $ ( 0.03 ) $ 0.2 7 Add bac k Texas project losses $0.00
Slide 4: Consulting Segment Overview
Consulting Segment Overview Consulting Segment Q4 and FY06 Financial Results Q4 revenue of $26.1 million; Fiscal year revenue of $102.8 million Net income of $5.2 million in Q4 and $14.5 million for fiscal 2006 Fourth quarter EBIT margin 19.8% Fiscal year 2006 EBIT margin 14.1% Margin expansion prim
Slide 5: Systems Segment Overview
Systems Segment Overview Systems Segment Q4 and FY06 Financial Results Q4 revenue of $30 million; $127.2 million for fiscal year 2006 Operating loss of $2.0 million in Q4 and $0.9 million for fiscal year 2006 Decreases in revenue and income were, in part, a result of the license revenue shift Strong
Slide 6: Operations Segment Overview
Operations Segment Overview Operations Segment Q4 and FY06 Financial Results Q4 revenue of $115.7 million; $470.9 million for fiscal 2006 Operating loss of $2.9 million in Q4 and $9.5 million in FY06 Full year results from the Texas project included $37.3 million in revenue and a loss of $49.4 milli
Slide 7: Other Income Statement Items
Other Income Statement Items Other Income Other income was $1.7 million in the fourth quarter Insurance settlement, net of legal expenses, of $0.9 million in Q4 Recorded on the legal settlement line Expenses & Operating Margin Losses in Texas have declined relative to last quarter; it continues to i
Slide 8: Other Items: Balance Sheet
Other Items Balance Sheet Reclassified certain BC capitalized costs of $6.5 million Accounts receivables Totaled $201.1 million $2.7 million in long term A/R DSOs increased to 108 days; driven by: Software license billings of $12 million at 9/30, with no associated revenue in the quarter, accounted
Slide 9: Cash and Cash Flow
Cash and Cash Flow Net cash from operating activities for the full fiscal year totaled $15.7 million Cash used from Operations in the fourth quarter was $4.9 million At 9/30/2006, cash, cash equivalents, and marketable securities totaled $156.9 million
Slide 10: 4th Quarter Fiscal 2006 Quarterly Earnings Call
Richard A. Montoni President and Chief Executive Officer 4th Quarter Fiscal 2006 November 15, 2006 MAXIMUS QUARTERLY EARNINGS CALL
Slide 11: Fiscal 2006 Overview
Fiscal 2006 Overview In April, MAXIMUS launched a plan to optimize current business operations Progress to improve internal practices Directed our focus towards profit margin expansion Moved away from pure volume-driven sales Worked toward lowering our risk profiles Divested non-core business practi
Slide 12: Texas Update
Texas Update Texas project financial results in line with expectations with a total pre-tax loss for fiscal 2006 of $49.4 million Made significant operational progress Level of functionality in enrollment broker operations remains satisfactory Managing recent policy changes to CHIP. Meeting our KPRs
Slide 13: Mid-Term Election Cycles
Dramatic changes to political landscape with the mid-term election cycle Republicans favor outsourcing, but democrats typically create the programs MAXIMUS administers Today governments have more compelling needs to utilize technology and new processes to serve their constituents Mid-Term Election C
Slide 14: Elements to Short-Term Earnings Growth
Earnings growth fueled by profitability improvement in current business Current emphasis of improving execution and reducing risk Applying more stringent criteria to new business and rebid opportunities Divestitures in October 2006 Sold Corrections practice Shut down student loan collections busines
Slide 15: Long-Term Revenue & Profitability Growth
Demographics are driving demand for: Health and Healthcare reform Education Human Services Children's Services Government retirement bubble 60% of the federal workforce eligible for retirement in the next 10 years Concerns with state government worker's retirements over the next decade Long-Term Rev
Slide 16: Segment Growth Drivers
Segment Growth Drivers Program integrity NY Medicaid compliance NY Fraud & Abuse reduction Consulting Demand for BPO, with need for SME Legislative changes Medicare reform Deficit Reduction Act Universal Health Care in Massachusetts Demand driven by: Federal reporting requirements Outdated systems C
Slide 17: Re-bids, New Wins, and Pipeline
Re-bids, New Wins, and Pipeline 98% win rate of all options and rebids in FY 06 FY 07 rebid and option activity 10 rebids with total contract value of $187 million $10 million impact in FY 07 18 contracts with option exercises; total contract value $95 million $45 million impact on 07 New signed awa
Slide 18: FY07 Guidance Considerations
FY 07 Guidance Considerations: Expected revenue increase 5% to 10% or $735 million to $770 million Anticipated pre-tax loss of $20 million to $30 million for FY07 FY 06 Low High Base Operations $ 1.76 2.10 $ 2.20 (0.85) $ (0.55) $ Legal settlement expense $ (0.27) - $ - $ Total Company diluted EPS $
Slide 19: Fiscal 2007 Outlook
Fiscal 2007 Outlook Moving forward to improve performance and capitalize on strengths Fuel earnings by better execution on current projects Base operations are posed to deliver much improved results Eliminate legacy overhangs Conclusion