MMS - Earnings call transcript Q2 2018

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Operator

Greetings, and welcome to the MAXIMUS Fiscal 2018 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. pleasure of your Investor my Senior Lisa now President Vice Relations is to host, introduce Miles, It for MAXIMUS. you. Thank Ms. may you begin. Miles,

Lisa Miles

Good predictions. of and nature. risks for is remember morning like forward-looking as to Chief Actual you face, statements that in With only events materially in contain that in I'd reflect of and are may or made informative release circumstances results, and events SEC. any internal and comparisons. may encourage most trends with you the not XX-Q today to financial the our analyses today company everyone discussed me our be number revise Financial identifying information a results joining Officer. except Bruce obligation being and may required Please to law. recent information meaningful statements believes CEO; us. providing gauging filed subsequent those this Forms The non-GAAP forward-looking President information remind Rick of to Today's result of review earnings XX-K be SEC we statements our in We its Nadeau, Caswell, and including differ does performance, presentation uses thank information. XX.X assume investors by the or such Exhibit as in contained filings. these today update quality of results in in the our financial period-to-period and to this Management and will

that, over earnings press see presented I'll these with please quarterly company's the the most measures non-GAAP a And call recent to hand the of in reconciliation For Rick. release. documents,

Rick Nadeau

revenue million. reported morning results second This with total Lisa. of company quarter you, MAXIMUS $XXX.X Thank

of to from year, ongoing for revenue costs Human company expected, segment restructuring approximately of by due in was fiscal our second U.S. primarily was UK that same for resources $X.XX to share. quarter last size This period XXXX XX.X%. ended. decreased As Federal $X.X operating the of diluted efforts revenue Services million lower margin earnings compared right contracts tempered business. the restructuring Total of second The part to Services the in our per company or quarter is total the

services a to pivoting aforementioned health expected conditions. holistic health are and set employment end, complex services than Mainstream in populations and offset an expected programs the tax towards As with come income costs. the quarter more we employment rates to vulnerable providing disabilities Better restructuring of

diluted were will segment. second for starting earnings a XXXX. with results, As share I the segment now speak $X.XX Health to per the result of Services fiscal quarter

Second quarter rates. revenue favorable for the in second increased a driven strong Health Health organic and by segment exchange same quarter. X% compared of last year, the The the delivered growth Services operating margin segment to XX.X% period currency

quarter, of items some a the in volume in had Most While the bolstered couple Health we operating contracts. Health core incentive and earned UK segment solid Advisory year full-year related that Service the benefited Assessment from three achieved payments. contract for targets the margins performance operational notably

we started and two-year contract March reminder, reset which base X the lower will a February, contract at ended period a three-year option As level. in the on margins

Work the also termination of couple that provided major closed the the Fit out from We contract program This a elements that an revenue profit we from second second and and uplift margin contracts pick-up of as revenue some of the operating recorded to includes in in the quarter. profit for quarter.

maturity. of a is sizable the Health to a stages portfolio segment of bear contribution and mind at is Lastly, it in varying revenue broad contract with contracts range that margins important of

Federal to the portfolio period the speak segment our the to to period. will result, margin mix As contracts U.S. and lead of I of from the now segment. maturity can fluctuations Services results a the from composition in

second quarter decreased for segment revenue year. period expected, to the same As compared last the

expected This and bid the and business we their reached quarter, includes set no natural contracts eligible disclosed MAXIMUS primary non-recurring last some under were was longer is asides temporary includes driver meaning and contracts re-bid work to small that that losses. conclusion. reprocured As and also

As amplified added business shape We for as opportunities to by last long-term new mentioned follow emerging and efforts, executives market two customer the priorities. we and development Bruce sales quarter, continue growth have area we see a federal U.S. to seasoned MAXIMUS. our driven as recently

and sales ranging with decades civilian new wide and capture to spaces. experience, of us with Our leads particularly federal contracting technology come customers in

with we of a operating the the majority to and revenue the large performed the the a long-term a opportunity than compelling this to of contractor. fiscal will of arrangement, of BPO on are it that in quarter deal subcontractors on increase prime projected we recorded future During second renegotiate in charge program $X.X MAXIMUS one-time full-year assume where and as scope Under million. historically the one by was the new with the a took margin our work our now million The economics new less periods. subcontractor. we arrangement, the be relationship quarter, XXXX, $X of net but contract is In conjunction will impact this served

Federal X.X%. result, segment a second operating for As quarter was margin U.S. the

U.S. margin segment Excluding for have operating contract XX.X%. Federal would the renegotiation charge, been the

prior year, by foreign Services rates. exchange second the over currency Human driven X% quarter increased segment, the favorable revenue For

operating for due margin lower quarter principally This items. Second the segment. to expected was two than Human was X.X% Services at

Once the recognize signed timing contract did of is a second future periods. extension and profit of revenue was at million recognize first not XX. The not extension in March quarter. we revenue the $X.X we Accordingly, will was the that the signed, associated during

we small periods. We action of than to right contract We outside that and have improvements U.S. also forward going of expect took in expected the the on lower had future volumes a ensure resources we level

the of It segment to in but the broader operating have As that we important new of segment's tempering Human employment previously of services our services for a profit Low phase revenue this in of as the currently economy. a segment approximately and context Employment Services the are year. has segment's levels. we in programs the discussed, XX% performing have have consider startup robust number many lower in also margin resulted created are which expected is portfolio many our contracts. unemployment maintaining of rates global geographies in challenges volumes represents

$XX.X mid-single-digit addition is sheet as will operations cash In segment reshaping contracts current government In second margin. unemployment environment now reflective XX, structured, allocation MAXIMUS also the to at March result outstanding were the for as discuss remains CEO, sales of delivered quarter, of flow levels, in unchanged. clients the equivalents our are the I expectations flow days had which our and and are cash low line prior strategy is With with reigns taking cash how our of this XX free these and consistent million. cash year. million items. a from $XXX.X of million. balance cash operating March more flow we and Days At capital a the the XX, $XX.X with Bruce

been and acquisitions. have committed we good capital stewards a to We remain of to disciplined approach

Over too are sold consider we and valuations looked sensible the believe at we We not a be lofty. we that of number properties at decisions made past firmly to that overly we have being XX selective. months,

good example largest It of inform core is Health detail and to more Management This taking than for look we we will a for and helped growth fresh A and scale. clinical of assessment at our in acquisition acquisition on goal ways sustainable From our candidates at pursue high-single-digits. growth contract more term at continue to-date. discuss revenue Advisory platform the net bid as and reputation growth, is new a look ultimately are skill no from shape contribute are growth us We to qualifications longer picture two to enabled reach quality, for our our growth least that adjacencies. running new which for incorporate a gave and that on, new our later an have our perspective, a Bruce sustainable to platforms margins MAXIMUS. will long-term thinking for primary big us us Assessment As and strategic adjacencies BPO create organic a Service, sets acquisition transactions Health goal the XXXX strategy. to or the look

process regularly in adjacent potential active markets. evaluating our and properties We have is M&A the team an core and

fiscal disclosed the of a forecast XXXX opportunistic revenue of the our expected option X% by in for we the M&A. available to continue quarterly billion. backfill still I in buybacks comments our early a up our guidance. already midpoint GAAP. reduced to I of we to Since like to capital factors put we our beginning the had would guidance cover we in was extensions. that mentioned. While This more in enough the backfill year, covered and period, the had bit last on At won with to dividend not range expectations our revenue to I share needed will that my we order GAAP means our context. time, the thought the GAAP and updated Last mix, At work sufficient $X.XXX we new to keep XXXX awards. fiscal have wrap we have our we within it to backlog, that fiscal would of call we hit downward XX% our end-year billion end-year Federal to based like revision quarter, of U.S. of for history previously revenue recent segment due $X.XX mid-point

continue contract pipeline more alone, we government had six delays out including in procurement to outside month we markets $XXX quarter to of million at value than delays. come see U.S., levels First, our of all due this horizon the of

and bids harder but incumbents been ourselves, contractors it other more more an and seeing even this base protect their to us. protests worked come some is are under our In have protest with indicator favor, cases cases contracts businesses. also we're has Second, in in that extended including against extensions working

more work, Third, been while been by winning new it has have offset we erosion. than

and on but have generate does increased business of won of revenue effects, not year. ends dynamics, XXXX This successfully is will considering now not of that fiscal outlook and programs, last estimate of that these contract past, have majority A X% which we same we billion. with for This growth Because approximately erosion overcome these for year, on contribute expect this revenue we to will work existing to effect revenue recurring expansion, reoccur. grow expect range the between overcome approximately model contracts. over strength and we new new This XXXX. top some our fiscal for revenue we from fiscal million of scope that. years Federal work includes Services U.S. XXXX In the our is and wins. Before level billion $XXX for segment our includes $X.XX required we work now new $X.X the

$X.XX between On are narrowing $X.XX. and now the range the diluted range earnings bottom-line, per to and expect we share

flow the continue cash be range We $XXX $XXX XXXX free million cash million of to between $XXX the end. to bias in to both for to and expect fiscal from million and with towards range a flow million operations top $XXX

Lastly, anticipate We do is revenue XXXX. to on recorded. when of of be our standard Bruce. MAXIMUS will change I will some plans revenue October create your change it continued recognition not timing are the standard the to this significant adopt do the We Thank reduce the turn our the analyses revenue, X, start over that now or is call will you but for XXXX, complete. not year interest. which fiscal anticipate will new not that new but

Bruce Caswell

job speaking the and into Rick be morning CEO. you I'm to as honored you, now good Thank and days to everyone. today XX

the assurance areas of right three, the sure update, team track value I'm on seasoned the for flow. record our clinical committed a innovation one, of guidance time. contracts cash foundation want the we, right in to digital the that well proven operators generates on to in sure transformation; particularly at with existing future as MAXIMUS technology markets, and meaningful has of of a right make the the and we're execute a growth; growth, open with that to work and solutions solutions portfolio With my and remarks two, focused making remain deeply I serves deliver that continue driven

earned have delivers long-term matter. that outcomes who reputation We a partner a as trusted

for to Rick than to in help position prior in examine for the determine market years paths equipped As before comprehensively presently MAXIMUS plan best The a mentioned, well future. am how more the are I an environment job but MAXIMUS best us growth. us we reading also is that's we one challenging we're address. that for to long-term

discussed and before, markets changes. must we've we our to be positioned As on are capitalize changing these

requirements more and we're markets should could markets serving aging populations see with To disabilities macro Further, like for conditions we health our where that by adjacent complex and new drive as an and playing health trends we people be offerings. conditions those a believe future analyzing MAXIMUS impacted For BPO the welfare we and at taking with example, such where convergence constrained This look we're health we augmented current think as Services scale. offer well includes underpinned and Health of at economic benefit social demand. programs trends Human offer particularly work fresh includes Medicaid. budget can efficiencies demographic clinical service role objectively a through more trends also employment programs job seekers accelerate of programs efforts, technology. meaningful our we by where reshaping as such greater It the can programs

and to providing believe creating a I want to we geographies grow adjacent role we to merely revenues. key us play platforms to acquire but and new acquisitions emphasize don't want growth, for access As as capabilities bringing in ultimately markets Rick enhanced well as new that noted,

potential we in to are shareholder that must acquisitions strategic and way, evaluate a As forward create value. move we mindful acquisitions thoughtful long-term

taking are over plan next toward prudent measured We and XX the executing our months. steps

on on digital this to executing our bringing board, footprint. new increase we'll striving clinical and our During time, be talent strategy,

to functional which by for million. Ascend that are be current core for and/or two has provide intellectual recently I'm placement identify clinical The the now win mental review illness Department navigate a I with of to win pass and three-year signed evolution solid a X resident environment, I'd the to BPO update the for pre-admission work fronts will new in long-term. first clinical on we will there and we total a clinical portfolio on acquired with nursing in dimension. a a share believe best evolution, Services also the facility is to company level we contract the who The MAXIMUS living. Level to the Starting key related demand $XX pleased As and capabilities we transformation. the work. in procurement last screening they need disability. with clinical we This two progress value continue long-term shared services appropriate could evaluations. services Health California Care contract call, their approximately digital The quarter's align appeals a like addition that assessments of future have to a healthcare set professionals the the an These individuals be out growing in for order confirmation maintain of improve and or assessments our carried are a from to determine our community. of assessments our or growth

Our a stability to of our longer tenure, over additional the creates composition offering. and and skill those performing time, knowledge assessments a and pass the as such competitive healthcare skilling bring our of up set professionals higher strengthens position service tend our secured teams workforce by

provide we scale demographic under as provide accomplishments a our can new address addition, that challenges. UK that in services as to In become successfully at point scale demonstrated both pursue proof clinical upscaled Advisory and Assessment differentiators BPO the ability clinical opportunities at important workforce Service strong Health we serve wider solutions

transformation, Moving enhancements on to regularly. we've been our implementing into successfully digital operations digital

We are additional and our portfolio or such machine Automation efficiencies learning. within contracts RPA can actively areas of where Process identifying through Robotic existing cost and achieve techniques we operational

projects initiatives dozen have the and in in works. a currently are implementing RPA We nearly several other

early techniques example assessments stages, automation still to while relates of the augmented the application Another workflow in to in intelligence area. the

that and value create leverage and our types delivery. service to ability efficiencies digital these improve capabilities clients Our of quality more

across for a In Digital our underway, strengthen Solutions With new initiatives our This new the progress to digital we're current at making deployment and our our to interest in in footprint. also having adding bench work wellbeing of the disability leaders new beyond Clinical so important. the includes geographies. much Australia right and Officer current caseloads see activity and are We Medical drive is Digital Chief further a employment increasing solutions with our helm Chief digital Officer. our beginning to management order

Let's now awards. move on to new

XX. year-to-date fiscal billion $X.X awards signed March For at totaled XXXX

contract fiscal awarded notified employment. have Employment estimated of Under Australia we The for, five-year to million. award $XXX disabilities, were rebid. and ranging million another and Services injuries, million not conditions, the $XXX quarter performance MAXIMUS that on has The During share revenue health based or signed. of XXXX, but unsigned value the sustainable will of worth yet continue also individuals contracts this the Disability keep is $XXX been with second find, between prepare contract, help LION of

Now I'll to pipeline. turn

billion the will sense sticky, and same we extensions are same increasing procurement than We're future up for this term this innovative, take the period and when to customers sequential awards horizon of March also of moved six-month at that pipeline compared to to out compared The of slower The makes actions require well all of tied our and more mentioned. the of to the solutions relevant, and base securing was to our work and delay to decline fewer contains reported taking geographies. XX% scope major are approximately growth all value-added pipeline protecting three due new using by rebid as market. across it quarter. meaningful set Our the the for Future is our last $X.X last same RFP's services, the into longer current In action the billion offering as XX% is pipeline the opportunities $X quarter. XX Rick remain time in conclusion, and Australia that the segments growth. Of MAXIMUS the address to growth clients'. necessary pipeline to current opportunities conversion

into plans as acquisitions, evolve above. the service solutions We could markets and new entry of time. to geographies over This or continue include platforms offerings, will all or new additional for adjacencies advance our

to can have so pursue remain one nimble, or adjacencies more that we paths. as We move new we

the a history solutions shareholder and making current We sustainable actionable new to focused more clinical promise, must we growth. could of clinical executing may relevant. of includes at expansion on in a we We're fresh have where adjacent including directions to more the of change current analyzing us the value. we over and in The an delivering Organizations plan markets focus long resources sales, our and drive The and continue will future including for Taking growth core and we course future, solid meaningful right have play time execution. in at and taking and sharply markets place geographies, team providing sound, bottom-line slightly remains are role, further in in growth. hold to technical some demand is on this this return bringing our scale. management thesis top-line overarching creating different new that meet a mean sure look business of is the shape talent order

We our within evidence addressing and sustainable that rising seek more aging trends complex continue budget as Q&A. case barriers healthcare move macro in constraints. as favor populations. loads serve will needs to what employment solutions to we long see with People government to remain that, on well now the Operator? as to term better And

Operator

Thank you.

be now [Operator a Instructions]. question-and-answer session. conducting will We

question CJS from Our Securities. Charlie with first is Strauzer

Charlie Strauzer

big second half are the the pushed are lower, as these kind procurements kind So talk can of well? year today if you the on talk of right about this the out implications bit and what to of some more a of why little about the we can news for

Bruce Caswell

to Charlie, that Bruce Hey question Nadeau. and I will it's Caswell direct Rick

Rick Nadeau

thanks, hey Charlie. Yes,

half year X% extensions means the and a beginning we reach in in mid-point expect was compared indicated. prepared effect at As would our as order that the were you our revenue gap in approximately of loaded awards we options in my of guidance gap remarks won half covered year really guidance. the having about that of lower XX% that that mid-point revenue; had of our to not largely The of I the is we sufficient and mid-point the creating that mentioned to of the had back disclosed as your of the backlog first you as second to resulting

Charlie Strauzer

what that does of for imply on year more next also Great. well? kind And as

Bruce Caswell

at will guidance with I our FY Sure do everyone and I XXXX Charlie, positively that and we a do But been marketing by talked to that We've a it’s Bruce. reminding have pipeline new formal series said, of FY we goods that could work. one. on normally those impact ahead $X do. provide is billion XXXX. as as go that opportunities take we and XX% we in begin November there need out earlier shaping actively of have about a that

provide work is fewer point here seeing. healthy an that's services progress which important reflective we for or bit Each lines so through focus our that been value, talked point. earlier. work and outsourcing do to it's geographies the new our little Our business of clinical as view to and we've sign. greater secure The I that Pipeline getting to as a the and adjudication digitally are more having we important are enabled little about to our rates on year, pipeline customers. win of that business add strive also want key a expands have solutions; we and We delayed canceled process very deals good

confirmation more that appeals and to example clinical yet assessments next I'm in business appropriate an have also overall so the effort nearly that in that's prepared to the we clinical to I taking filled to BPO leading related over mentioned three there my for the as making value. we position and And recent our out book and MAXIMUS align $X.X frankly of to pretty to pivot is area whitespace as shareholder they're long-term we we're is review several approaching best go growth of a that address changes FY one do proof can of that do to scale become business remarks, get I'm years growth. of billion to pleased, and your that course seeing is XXXX to tied some wins. points that globally. long-term and are work phase in the We next think future really five Charlie, Our the comprehensive of be this we're drive question MAXIMUS there's efforts steps now strategy tied and to that. a and we and for at These last more of that years back

Lisa Miles

Charlie. you, Thank

question please? Next

Operator

from next with is Gillmor Our question Matthew Baird. Robert

Matthew Gillmor

Hey outside question. in of U.S. wanted slowdown? there the or and you thanks just the can't for I taking $XXX past but the of I about I causing mentioned cycles, about maybe talked U.S. procurement was some lot slowdown the related dynamics that non-U.S. that the million U.S. think and remember pipeline to international the you a of push you if wanted the to ask outside and said was flavor also some I get what’s not out to for

Bruce Caswell

me the also we're let you are uncertainties, Brexit out like markets some an opportunity mentioned -- uncertainty the at also current the outside contracts on $XXX the would of our mentioned. will. that that came the go we're we action sole move areas and market. that example of Matt, competition Sure extensions that looks add from mention and particular to other We that government to incumbents Rick we in extensions pipeline to when back then to could United as of but start really are source and that use we it time us taking there base in adjacent with million seeing at he But gives did successful these foundation this we great the markets a taking and are States creating multi-year securing solidifies to action benefit in in end, the same into seek where

see organizations more always could of kind down and elections, advance and You extensions use to move we procurements lock of options. not or cause favor cycles upcoming election in

the a out another of particular program was comprises that or of of the in extended for one I because component $XXX million year opportunities, can significant that so. that think Some moved

just of that will environment which Rick, add assured. the considered. back procurement anything? it’s want is But So it would in we'll see that come you function being rest a to procurement

Rick Nadeau

talked portion say, big international to you million of that program really is in a going Just plus you’re $XXX that one right about.

Matthew Gillmor

of Okay, that refresh, commentary follow-up the looking talked M&A with strategy about adjacent about would opportunities some you something talked opportunities that's the markets like and considering? give you I core, the get flavor a you're be on you sense the And us helpful. so adjacency look sort we would could two for think can the just that adjacencies two at what then a from for business reassessing

Bruce Caswell

Sure. that we some of of through about give a digital you evolution sense. some of Well, where from I'll the I kind transformation clinical go talk areas color you to fit and as an just on perspective give can they adjacency

conditions there our results come that's diabetes first and and of about they an of upstream monitoring on services area through next wellbeing for to of entire work mean on the the way market example not seeing that disability not we to bypass component programs prevent a basis of focused from course us or component, are military that great can framework and currently component the by some often health capabilities would United where new that was assessments the an event because the operating will in of whole duty for number and would MAXIMUS. area wellness process. built it's think can Fitness don't disabled more is adjacency that will to credible you that's One we example in if Kingdom, governments outreach, and for Health of things as or training for benefits I and solutions we're that and have we've greater Duty some have that medical want in the that that assess occupation eligibility a many a address points likely whole Kingdom, fit only Further difference of that. for for we that the for functional that the a can programs be as think earlier place sense program think engagement, us commercial couple wellbeing component can one Occupational a are clinical contractor but benefits we an include areas. types be can obviously Further work can is wellness an mental For made it's area Occupational something but nations is the also to comfortable their participate. consumer scale which the that determine adjacency done think could Fitness be and from in agreement, see be in of procurements they be global that primarily and continues that of framework that I but can that will demand adjacency for very an that functional and certainly more the health over an and and to us you programs of for you For only kind implemented return in by employer business this assessments underpenetrated this by are event make and There years employees defense a their United prime disease is the of these preempt it defense in customers. Duty another a to believe their provision we reserves. to like of for big a them actual disability and at do And a non-communicable to becoming is evidenced offerings short-term making chronic in that for wellbeing area in veteran. instances And active the now the that departments HAAS other of eligibility make Health say area type type ministries or are

automate won to supported hanging So of sphere transformation the That to projects in other multichannel center routine addition nice to the because platform we of of will great that. tele-care by the and a type based that various form, and a that automation of is really centers we've support for would you I that are a that before market for in and are we'll At intelligence we've machine on engaging students projects of to like our if capabilities go pleased and been or that time, if I'm they being new other have you are think in we new vulnerable space technologies will they can we in spaces. program of and sophisticated processes the capabilities, kind leading the but the that pivoted is we’re also and of lot catalytic also using adjacency applying mobile full-time productivity contact like department work recently solution these and have digital be pretty provide services inwardly tip to for the historically focused and have solution done the have they kind way has -- two consumer through lot the in we’ve transformation. of web and lot entire dozen the for digital that work Pensions digital going a of receiving of offering decisioning on work department just digital that through appeals you that work time, same Kingdom we've app doing portals we're developed Work got very grant after about a will, can those experience contact dramatically spoken education assist support. with United IVR of will programs. that those you I way that are of for can mentioned areas assisted they in learning we bridge there tele-assessments low and across include report I already can assessments technologies, a been a a include the the solution digital can and opportunities, include is entirely will a in change chat, BPO the if new long-term browsing, a a and effect we capabilities program example combined and stages human on will, Department Most certainly bring government multi-channel fruit, fit doing we'll and robotic process self-service but implemented. of an short earlier on impact intelligence that Over augmented artificial expand mentioned and if the in a some

are and the examples already of seeing is evidence instance success that in those So play other of adjacencies transformation digital us. for

Lisa Miles

Next question, please.

Operator

Our next Styblo is from Dave question with Jefferies.

Dave Styblo

and thinking like growth business being lot that sense margin. you're talking mid-single-digit a with being is Hi set what than the XX that business look months, targets? highlighted the you an you and hearing opposed just longer-term make today, the guys the to may over there just as revise trying on now, then more the about it structurally portfolio a advancing should that you were a minute good the divested granular that I'm around to is dictating assessment things morning, of period Does over in of two years strategy Bruce. really surprised I I it hope to sense opportunities of be achieve point all that that business expect of anymore, your been with from time done instantly is to guess to good more have a what that, for something even was if different financial at do what ago, Services long-term for XX why challenged get just do just Health now This is the dramatically timing is you we is one months, is where it sort or to and you over that that stay that time, not

Bruce Caswell

me of it little Dave. bit. impact try questions a let there Okay, and Lot

down, XX not First clear had well market the over in and process the putting of subset continue be in the and we we the want all a and if new them. top I XXX and filter itself with smaller execute began work prioritizing underway we that of will, refine the those of how areas month analysis much adjacent fact to you study study with we're funnel that to we're Endeavour, is and to will and on a boil potential the plans doing to were as together

My from months, to the There go areas yielding great and lot that will the milestones from I tangible those last a areas measurable are the some specific way. want plan market others. details absolutely provided I've that implement don't of that is results. certainly potential and some sooner of see milestones, that that I'm great and course of into think areas, And be I plan answer returning will over is of there deal others. returns the but that to are what will we benefits along we reasons, a the work competitive next in expectation results color than already see in For some about we'll XX us excited

just I'm expecting that results the to months, we of of see clear, XX and we to some new make over continue be those into of So will to move continue efforts. that pivot we adjacencies course those next that the and

business on businesses business The Services So is said number Human current a perspective asked of our a Services Human margins question across you with there. of the other and portfolio a the lines. about that business

to referrals programs that demand which is add a in you not the number think low requirements in just seeing on SNAP business? you it similar that in frankly operate. conditions programs program and work the like the feeling I Stamp MAXIMUS X.X our President's is does to it's strong Food about and I competency business the that like the quite other primarily the core our together. days being domestically of other programs, want to it we Employment markets as is suggest mean unemployment Reform pressure health, we no due economic we that downward the through no, we're the Services a that Services the Welfare work be and competency where these program company we're eligibility, longer other Rick combine find been of no April, Medicaid very a think programs But volume areas but as in if Memorandum that for One what's the seeing called in the the Employment is, has which With of has and Employment would significantly Services to mentioned employment market can depressed. movement

In is was and recently requirement business waived thrilled won't were Able-Bodied economy I'm a that Law recently economic under for Dependents. we the some to services state Stamp Food name think the to booming been I has it's downturn during states. I awarded employment fact, for Without training for we but Federal the time XX requirement again, Adults which that and awarded some provide were population requirement that now the But

for that we've employment platform So providing services for been be awarded will requirement the business and that Medicaid. work

example. a you it's and converging. and So program United if the Work look at in are perfect These Health areas the Kingdom

may choose disposition that us, fashion. for other Services So to and a said, economic competency. and don't operate provide excellent will decide because there appropriate are at will it's look be a components management’s returns businesses and Human just there that important attention they to in to have businesses run will a be very an reasonable continue may all that time of alternate to and take take we of lot of portfolio the That and prudent

taking things. we're balanced of think I view an and So appropriate

Dave Styblo

you work of remained there, pretty of that backfilled Are then about, I'm I that And it how out billion you you have of out? about talk I it's the a about backfilled pushed Thanks. means there then a your in so got $XXX new pipeline the of of of helpful. bridge, say some you’ve moved that pipeline able That's moving because but bridge what million has right that just about activity down if that out can stable much if Australia with to $XXX was and to window you billion. delays the talked out that about that on got million guess have think must sort $X $X.X

Bruce Caswell

take to Rick to Yes, that? ask I'm going

Rick Nadeau

data let that of positive. that actually think work Yes, pipeline is is the that portion that pipeline you of couple give a a think points up me I new and I

roughly international actually moved that that less $XXX we good pipeline the to related new the So the number yes significant on work moved about right And your and did to pipeline I period-to-period. and portion pretty is to of International get that million on we than really backfill really is yes right, half of right. did talk that program say but $XXX million than the up that's a the that premise would more

Lisa Miles

Next question, please?

Operator

is question Wells next Our Jamie with Fargo. Stockton from

Jamie Stockton

a Thanks we've think I taking changes for like good number then looking what a Rick on picture sounds morning. that are Hi, big I be of quarters where guys balance at it the the a more cash I my pricey first would big said seen that just like you going pay. to the the are any is they lot allocation of assets guess know, on you maybe to capital weren't one building questions. sheet,

to So there I going of that top-line setting getting if in then margins hey we're maybe guess growth pull lever for through what on to what's what's to slower on or your get thoughts related I'm your be it. goal buyback growth some with not earnings of of achieve buybacks? the the going more sort temperature will general if in that may aggressive kind with are around And this wondering, just period

Bruce Caswell

is to that Rick going may to I ask color add commentary. So Bruce. and a reserve the I'm little this right to Jamie take

Rick Nadeau

Yes, certainly, Yes, Bruce. thanks.

will think to way we I remain sensible deploy bottom-line the cash. cash we and is that in we that are committed the of disciplined uses

I we've what right capital. as that thing were to seen we've passed made. I I I been acquisitions the valuations those committed and said, would we is to will be the continue good of think that lofty what being that have think And we, I and think call think decisions on and stewards right done we I we've

think about we not Look into really marketplace fact to that M&A, use been we've or things to be afterwards evaluations. I that but and comfortable choosy, point about to ask would buybacks I at of growth about preference to for we the our thing on talked are committed quarterly in the continuously, we point that as followed new We our that our we And talk level continue that I we M&A talk platforms have. questions about. capital about view this we with go but at share I think and can the you use passed opportunistically. we did the dividends, use we right new adjacencies think couple that Bruce? remain share has this the to too talk think that of the think we dividend Bruce current buybacks I we whether want dividends the

Bruce Caswell

just labor ways capital that that a remains our substituting the in in more type appropriately tell we'll and time on of things is business, of a returns. can therefore I absolutely this be will number of we on Process from constrained opportunity take BPO the And And bottom-line period would can like business top-line to continue bad we're a will that standpoint yes, our constraint. and move how bottom-line you mentioned period focus and EPS the of where a focused automate during not over programs of guarantee second labor-intensive capital pressure you Rick of part we've top-line growth and so pipeline question, that your our for as in putting the including earlier focus a growth, on deliver Automation Robotic processes

Operator

Our is next Analysis. First Frank Sparacino question with from

Rick Nadeau

Frank. Hey,

Frank Sparacino

some some in you hi macro macro light and on what report of environment parse Bruce side of guess, think just peers, improvement to the services Hi perspective? from the your you first trying a question is U.S. out internal things. Can may federal just be particularly execution versus of

Bruce Caswell

to happy that. be do I'd Sure.

and of those have Let we support often mission and more develop their importantly bid are and significant public budget scientific highly current toward benefiting core a offerings. at start agencies. or in We've in all with that contractors more on defense government that overlap their and ourselves are they're and those Many could've short and the they the a in deals a that it oriented with asked really in spending sectors answer the from very of the of should our much what solutions that peers are those don't in is appreciate deliver press great the are oriented that from the looked defense announcements there. number technical they're surge of lot peers. first the sense in details -- obligations your and contractors those And note for did me I federal peers

of us she do we the have new the thrilled and in she Director sales that a to Accenture Allison International. seeing I to perspective step kind businesses just between ice our the in ask this SRA in deal execution, Group difference game companies can't at from there's she that detail experience bringing we're we is and look two previously is thawing speak very for years why they're to the to at and their how Civilian our great took areas federal you'd I And Federal. So opposed organization, And action and and was in we look well in of to so recognize up leader other spending dynamic cracking of senior she in also those joined important some Accenture Patrick in of executives we've sales really needed recently Federal to surge this Managing SAIC spent an marketplace, was Customer that think that those because as markets. from said, in another internal eight the and much

in capture brought our a she's area for great stepped Denise capture Moscatello, efforts leading also in Dynamics So General the sales joined And her marketplace from have our the and we've up she's no Federal contracting to we're the Federal. stranger leading Solutions efforts. Washington and our thrilled to We've us. in Health area who executive

with turn able acquisition two I'm I And through capabilities we that going billion see Alliant/X finish significant make GSA to protests early out there's Acentia place. start were additions XX to vehicle vehicles be awards contract making ensure we can may So flow year as of Alliant/X by probably pipeline there's wouldn’t late reported that there. new quarter when our team we deal the new getting has and vehicle deal a agencies build for of have government this the vehicle expect really of and we that out mechanics a use IT the summer what the can $XX XX major vehicle. we then of to in mentioned But qualify next through to to that expect think saying inevitably we is there flow and would we that. so the last vehicle, fiscal cap fall that because to that we're the And sales optimistic very these year, in corner so optimizing see I then we

So also to and that everything do think we we can we're that both addressing execution optimize dimensions the vehicles have.

Frank Sparacino

of transformation then Thank That’s next operating more we've helpful. towards you. that to digital as historically at of And long-term some known profile follow-up get a the clinical and is How been years XX%? capabilities. you the change does the that just BPO maybe XX% couple when look over margin you the which

Rick Nadeau

Yes, this is Rick.

question Bruce you're it you and I really doing should And well think go that said a then labor see when I expansion think to expansion. margin and of for know, end that, you really with margin as great health do our see you substituting he us that's put what to when been is capital we've expect do to we allow top and those business the ranges should that or I continue that that. of us do able but capital make help you you we of range go like top margin the like margin to we're and anything and to to that I be at should more to mean I using place yes and I us operating in tell end XX% want labor going efficient should should to anything income think find mean expansion. kid wouldn't

and to the customers. that they some I us of to value our technology our it They the think though was our make helps us thing a differentiators really and quality and opportunities us they put between about helps I create key improve great -- and are services think deliver innovation more competitors. distance also

news I of know our So good do without and sit think us course story don't competitors that's this reacting. really that's around watch the you

smarter our So in to every we're on here fashion. hard and working a part with day try to the pressure things do constant

Lisa Miles

Thanks, Frank.

Next question please?

Operator

Richard Genuity. Close is question with next Our from Canaccord

Richard Close

Great.

that directional terms you could talk resetting, respect as to a Just with in follow-up about give of bit the us to margins Rick margin how the little the a of you just there? resets much HAAS

Rick Nadeau

and say below operating more go of constantly all the then towards innovation wave job over you that's you work the like you our top of upper Sure. year of even as the XXXX management XX we we range. will throughout normal contract that over toward back down the life we is introduce the continue we so were to third margin of remember, Richard margin that range end as on tend February time improved have to over a we income wind having finished and toward improve. when bit middle of and the program would program But imperatives that. we they to we you When start bit middle reset little the I upper customer, technology on time that little have a the would maybe again back ride back a that that end of have up up the give finished to process and you a that and to they the

I that So question? think answers your

Richard Close

that did not drop does just Sure. million million those operating talk you incur income. and to the And so the get did you on expenses, already about then $X.X when $X.X recognized recognize Human, you down does that

Rick Nadeau

The the second question answer half the is yes. to of

X to the it. mean have by to the the continue extensions associated work in signed get incur revenue XX, already revenue And we the program. We comes and because to We at XXX% cost on point in we were been have them. March profit therefore cost I come margin so on hoping basically as incurred with that the record the

comes point quarter signed about quarter that revenue matter to timing. in third it should just the I ultimately we're report doesn't, not in, concerned the it it the come getting at fourth expected will if a it within in We of in come it's

Lisa Miles

Richard. Thanks,

please? question Next

Operator

comes Alliance Our Global from Brian with last Partners. question Kinstlinger

Brian Kinstlinger

the what the structure Thank economy, does and normalized lower, Hey, Obviously look Services this so guess Human a you are economy? the the to you much can talked so much able solid you great. adjust we've curious not the margins so margin like I cost given about given profitability I'm are not if economy with in so guys. maintain volumes

Rick Nadeau

can operate This volumes it's Really within matter we Yes, in can Rick. margins. where are think really the have normal really ranges. When context is great I good a volumes good our we question. of

the Now is constrained as the volumes great that business about still are the thing make we money.

and is the that. now operated are looking at I the the can Services a look and it above or call we're going we're a so be point the our at to been from reflects areas constrained. think there around of we've But XX-year better little going rates the to better; more an world area that stay margin high-single-digit in think economy working I When a to and did we have -- full a there like operate in volumes in we for hard fact more we operating indirect that in unemployment we're fashion. X%. that are it operate we've higher, situation do X% employment are times more yes, cost this history that that go back just our when now which at times where at standpoint. double-digit Human been use efficient it's model our probably way I a normalized costs direct, margin a efficient a particular variable is bit income But business our I absorb

Brian Kinstlinger

Got it. points. couple a little confused reset question margins, like the basis it second hundred My HAAS sounds is on a I'm

that -- that that on you the have based getting you're drop much to regain to price, to try you contract retain and So is all inefficiency? prices then

Rick Nadeau

are the margins going just feature notion don't I down. that

a and that business you Constantly time. on how yes, think, agree your to learn you're in efficient working context also with more you in operate technology the mean of over need innovation but think price reduction I to I way too. I

some begin we and you program three are more say I reset work years. to able end At it able out volumes. at let's some the in know be I productive the to handle the saying And you to cetera you're of So it point sense I operating that more what we've of like, business to fashion. a for period that cetera. have the there we this out What is for margins workforce the out know hey in you situation. type think, making for and to re-compete program should be that a customer The a year the et I make we above keep this concession really do have that three we'd keep of et want to the of order

get you the option So exercise.

and Human slight but make they if And going I variable particular when become you that out will I So build think matter this just of say mousetrap of will at and think contracts over thing you've you I at mean performance-based. to to to we I'm down operator that want type might figure and customers volumes. segment around back had some hey clarification. efficiency go more that of time also sit made on volumes and data they've way the do more or prior point more become them better the some performance-based also structure the that it's have I they're In move one the to an those way and question with so you based the Services effectiveness the the changing point a we

difficult a the volumes you'll obviously when the high of That to going but having makes more margin time as think bit I up going range. I possibilities, aren't think the that return high have little more end you're to sense? wind

Lisa Miles

Brian. Thanks,

please? question Next

Operator

final one Rohan question with have from Abrol KeyBanc Capital do Markets. We

Rohan Abrol

thus referenced a everyone expectations about of revitalized Hi, capabilities for touch internal wanted we think the, springboard some and evolution to asset of actually far acquisition to expansion just be earlier? on how see perform and should as using you how may into with that tele-assessment, can that respect tele-monitoring the

Bruce Caswell

expectations and of Occupational well report I absolutely Health pleased being they quite business being gone to core really services nice revitalized wins to for provide has of assets performing services. Bruce. seeing our that business in company, great the that and is strong with well it’s seen and types to that core applications acquisition commercial those Rohan, well when am we're Hi, that in it we've and our them. we combine Great some demand business

confirmation good acquisition a was to that nice it real do. So

how another you with space we've achieved noted that the I this minimum good of that As that well technology as are stage been benefit type a that we mentioned that We've using the able real Telecare bring will we quite assessments. There define tele-health, where earlier me great that tele-based from obviously is segments. think is support market figure viable a perspective of of services operational of be perspective. to Often they tele-assessments I and well itself be what space platform one well revitalized in more so out and and long-term logical technology into lends that in to combining a certain technology that use area. is policy can constraint product and capability to very also do assessment that ones, next progress or bring making kind than the a to

bring customers eager to that pleased. make that solution, So of that the be United Kingdom in some all other just there's use also we can of for see very type all, to we'll and of occurring I'm able so to in that nice indications we broader good some how platform see very geographies outside demand

Rohan Abrol

did kind appreciate standpoint of those floodgates? the reference like that I reimbursement is just more or related and comments to since opening policy the just overall you

Bruce Caswell

kind of assessment more thinking actually clinician is face-to-face. historical done correctly of a the face-to-face. with done mindset right, in kind individual room it Kind to to related of It's the has to be yes going that the be different the

it of that reimbursement it's so all. relate And doesn't really at aspect to policy,

Lisa Miles

you, Rohan. Thank

Operator

MAXIMUS end thanks of session, Ladies out for participation. for and of reached question-and-answer your today's have time gentlemen and the you the time and call. are we

may this at lines your time. disconnect You

Maximus (MMS) 10 May 182018 Q2 Earnings call transcript