MMS - Earnings call transcript Q2 2021

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Operator

Greetings, and welcome to the MAXIMUS Fiscal 2021 Second 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, James Francis, Senior Director of Investor Relations for MAXIMUS. Ms. you, Thank Francis.

begin. You may

James Francis

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

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

Rick Nadeau

the company's margin $X.XX XX.X% coming fiscal reported to quarter per and diluted at increasing earnings XXXX was the revenue This share. prior James. MAXIMUS period morning, for you, second quarter. for income The year Thank $XXX.X XX.X% operating million over in with strong

and February MAXIMUS an customers, call, during of by experienced continued level we Since high our to helping win in services the revenue work integral in amount driven COVID Xth of U.S. pandemic. serve activities. results which plays higher-than-expected as role better-than-expected of volumes work, citizens response a employment the substantial were segments their work Our the Australia, have new government

attributable $XXX million vaccine the such and We fiscal contact for CARES for as, second full response were $XXX $XXX and revenue $XXX communications Act between, insurance, project to revenue the communications, million million will Our quarter tracing, response COVID million COVID now range year. activities and year-to-date. unemployment

up. we rate Our sustain Australia quarter find job high-level take in achieved for the business Employment you Services and contract with to census to profit segment. performance contract million improved The included of faster has U.S. Xst, Services. of than I excluding the organic segment will approximately the as growth amortization or, our one starting, XX.X% $X opened was operating reduction. and Outside which Results fiscal the assets. second acquisition the this performance a were XXXX now date, work operations The in after Attain for of U.S. through month and quarter, higher able intangible XX% $XX quarter March for of of on quarter as economy revenue second the Australian the resulting seekers projected, income revenue results revenue million from expense our of of related added the

between revenue the million Second margin timing we operating for remains of driven of million pause pre-pandemic U.S. the programs core work. the results conclusion would XX.X% that fiscal uncertain. of the to and response Medicaid. the pandemic. segment and program be to COVID response to continues COVID an offset in better-than-expected to improvement levels like some And I operating headwinds income response to relationship returning segment the profit by, quarter the that significant revenue emphasize, $XXX.X the The core re-determinations XXXX for The increased programs, segment core by was some work. the Services affected programs eligibility, cannot and in to reflects COVID $XXX predict related estimated

period. the XX% as margin Services predicted. the year to the contributed XXXX decreased million contract segment unchanged this U.S. year prior quarter, expectations due revenue of the less of the with million operating for U.S. $XXX compared full a Federal remain XX% Our Revenue quarter $XXX second for to Services conclusion the segment, census full to fiscal which year for to

As million. a I Attain contribution from one-month mentioned results of approximately included earlier, $XX segment

work to million growth Excluding related $XX by COVID organic some income margin profit segment by continues COVID operating for shortfalls, response the the the response revenue. work this two X%. in for was volumes, The pandemic Federal and acquisitions accretive of XX% revenue from of for services. backfill was an estimated census and driven contracts in segment. quarter announced reduced created Federal U.S. We U.S. performance-based temporary

the million in we X% has Attain from past is nature expected naturally Evaluation than the or and April approximately U.S. This operating we between of year including revenue over guidance XXXX analysis that the million, EBITDA average contracts acquisition Federal pro on segment section years. to present year. fiscal that Veterans our Federal Services income $XXX discussion full Form historical U.S. our be XXXX. three Federal Services Adding U.S. for X% Due for operating NBES announced is greater million expected an trailing improved VES income to management's third VES margin $XXX with fixed the improved We segment segment fiscal $XX X%. disclosed accretive quarter. fiscal forecasted of the is to carry date X, and full in XX%, operating is the before XX-Qs The to of XXst, and year our previously to fiscal our margin. seven Attain adjusted will of segment close As the for in price forma XX-month contribute margin the adjusted March expectations an Services indicates income X% on XX-Ks. which their months for to The approximately EBITDA for estimated Attain is to

of first XXXX from the $XX.X million. most in pandemic quarter segment, quarter was This million. second to resulted of segment second for million X.X%. year $XX.X quarter income an Turning the impacts $XXX.X the Outside year's the fiscal US negative loss operating and experienced and pronounced segment's last was the the was revenue operating This margin

was to mentioned the opportunities team X the sustain the conditions As create due pushing for in in where US call efficiency the services performance job On there market demand February for employment noted we conjunction to segment Outside with largely I initiatives. and and better-than-expected the segment. Outside our results were continue Australia strong US our that

contracts named best their Our employment significant Since new announced UK our the program employment typically at we prior services services in on our included have XX in April work our early a experience we a win Restart we then than phases the won of secured and we time. projected. that guidance X estimate more where UK start-up On of regions. losses operations preferred

services. and ramps quarters losses be as In year UK fiscal programs the win more losses in fiscal is US These for nature this The fourth Korea into to years. has addition of of to employment the responsible their largest the exciting for exceed start-up quarter given third there share the the in of fourth nature expected services will revenue Restart These the contracts and one next incurred XX% the the in segment XXXX. from six Outside Outside start-up contracts heavily length performance-based contracts Sweden, to the new of over the is South these profitability strong US the to and year are Arabia, Due weighted segment Saudi life Italy. US employment of demand the these range the The start-up in contracts, incremental all loss. Outside the start-up start-up of to

expect from We the improvement in XXXX. fiscal to financial contracts significant these contribution

for full Outside on the the be UK quarter losses expected with US swinging up program. loss single startup picks a the to XXXX as low Restart the in activity fiscal fourth the is With the margin digits to year

borrowings to XXXX, basis. XX including corporate DSO ended December March XX our items had XX flows facility. $XXX Attain in days Let strong At of cash balance on XX, were the to free flow at pro million on XX compares of $XXX.X March million at and at March XX, XXXX. quarter million flow $XXX XX This me cash the three turn operations cash XXXX. from XXXX months March and had million. $XXX.X $XXX.X credit of cash Cash million the days a we and forma equivalents XXXX, cash with of for XX, was and sheet. We

our in is believe in enable estimated Given calculated EBITDA EBITDA Pro VES for with for assuming over results last and are maintained capital those MAXIMUS both existing to pro on capital X.Xx the plus will forma months MAXIMUS financing result I EBITDA in announced significant be using adjusted remarks. initial estimated debt transaction will with VES the XX approximately acquisitions recently credit for my leverage required Attain The for usual of two allocation we shareholder leverage. low We growth. forma adjusted our facility, that good strategy believe XX-month acquisitions our EBITDA. included entire by the accordance stewards selective that the consistent for to we pursue the we acquisitions and in strive us has the drive and will are to appropriately we of operating organic were future period. on Traditionally, trailing be focusing expand

we that Attain pause Accordingly, XXst down integrating VES M&A two would our integrate debt. we companies. VES. respected activity April use next the I to for these significant want indicated cash most of and free call, pay the flow while quarters several We to prioritize On announcement we'll

leverage Our X.Xx. our aim is to maintain below ratio

relationships contracts new in have rates and rebid satisfactory to operating solid future. win We stable flows rates reasonable cash win assure customers long-term with the longer-term work and and

expected quarter. selective and to pay us organically the to business comfortably evaluate M&A service Our execute transactions tuck-in pay, which we flows the debt invest to quarterly in future to each dividend our cash permit

deliver to And core response been and the on the of winning Three, Guidance that work the we Two, the COVID impact our is announced. half nature acquisitions negative of We execute pandemic tuck-in XXXX accretive US COVID strong impact for search and the transactions the have the four, growth. will of and organic performing. future factors. significant that good we of potential are and contracts value programs. have of some the longevity four Outside start-up by drive fiscal for a remaining complicated to continue One, two

these order. me in Let address that factors

much of to $XXX full and COVID fiscal fiscal project $XXX the are on response year to have million is February response I I first when year XXXX in results Xth. to we as COVID forecasting XXXX. we earn the First, now million date in quarter work greater our than anticipated earned work mentioned, we communicated

to the work a We quarter. drop to expect the this quarter and compared third time project accordingly diminish as in fourth over

acquisition closes million we the $XXX the one-time $XX that in Second, borrowings beginning $XXX the disclosed guidance the the deal VES of million. the April we the revenue June. million we transaction the assuming June to to There in use have finance be interest announced included to loan our of from approximately estimated expenses through XXst September on we VES are acquisition. expense will tied to for transaction. term There is When of

valuation. share the based We to for VES are seeing will per dilutive the intangible earnings what But of are remainder acquisition we the fiscal today XXXX. be still slightly on finalizing

start-up by effect assuming the emergency more quarter. to related have we negative a impacts meaningful in planned are US public the Outside Fourth, the Third, losses with health fiscal the fourth we the felt of governors. the then to of year of XXXX Human remainder the January Health Services signaled and XXnd Department the Secretary letter as US the through the from persist

our health past continue the are We XXXX assuming fiscal will end. public year emergency

total in volatility expected our work. per $X.XX wider $X.XX revenue to million. revenue at 'XX. necessary million expect to range be and in expected the of be to as in an to share. guidance operations than COVID but be for and The guidance expected from range XXXX and All X.X% million to $XXX The of now free estimated range billion compared is diluted for per that company of typical share be midyear, rate of $X.X billion $XXX range Cash is is million the and fiscal between we the account $XXX earnings to our response between fiscal midpoint organic for fiscal $X together to of growth indicates $XXX flow for the cash is to XXXX

calculated and the organic also response of considered We an contract for and approximately COVID of the fiscal work impact XXXX. X% census growth adjusted expected the rate

XX.X average Our shares year income shares. million the should effective range and in weighted to rate the XX% range outstanding tax XX% the be XX.X of of and in full XXXX for fiscal million

earnings income is high Australia fourth by effective increased and for compared start-up tax the driven the quarter created quarter quarter second second some implies the primarily of to to half. compared in of half quarter and to the impact anticipate of third reduced reduced impacted in the updated one-time which third The of an forecasted contracts. transaction. work. caused by the We levels COVID first the guidance response US results, the contracts a the income midpoint of in Our is down by as VES the XXXX being fiscal additional $X.XX UK the compared income earnings step the rate in step anticipate of earnings segment start-up by reduced Outside We level the down of costs

revenue expect consider XXXX. comments be $XXX between the as few million from The and to of we estimated is amount a me $XXX Let we million. make acquisitions two fiscal

of do predict. extremely revenue. timing we hard of Medicaid predict into XXXX, to MAXIMUS to and increase the it work health resulting the some to the is COVID the difficult fiscal redeterminations emergency continue to response expect on year and public While Equally is impact

estimates limited remains to due the world. teams with and I created our see volatility pandemic by hard-working busy the three Bruce precision forecasting and grateful are as compared announced results ongoing the you as ago. today months Our around our to to

that important hard vaccine services will We the and to members. are integrate team to responding existing needing quickly large call acquisitions administration, employment with And and turn help Bruce. with scale I beginning customers to with valued over working two programs new on

Bruce Caswell

the I you, Since Thank spoken into phase of our I've the drive transitioned morning, next strategy in XXXX, our three-pronged through. good Rick CEO accelerate to everyone. and progress role growth about our and

began include analytics and First, is in processing improve the Services to and and offerings address mission solution improved advanced position. customers digital artificial intelligence engagement transformation requirements and across within our citizen delivery the This evolving capabilities language machine tools market, service our of to Government automation enhance for with our to natural enabling competitive overall new learning, operations. process and new

acquire clinical Second, more of for with BPM organically foothold process in or providing centers elements engagement market while to emerging services. demand contracts we portfolio driving the independent And capabilities the establish conflict-free customer expansion dimension, long-term address macro business, and services case and our and grow management to business third, clinical markets. management markets, evolution a and as evaluate maintaining trends a and adjacent these operating foundational

and We acquisitions, expansion services complement reengineering how for visions also with consider COVID-XX macro on two these focus of our aim customers' recent core longer-term implications. to including strategic Today, are recent course for will We a three aligning the natural social program I priorities wins delivery our that's models and trends. efforts globally.

Human enterprise digital primary application solutions, address the business data These announced including federal we furthering machine of the accelerating March, sciences modernization, first, in strengthening know you By Attain and analytics the and and federal As capabilities learning. our of business two our acquisition of capabilities in technology also advanced Services. development our into well transformation BPM such pillars. strategic our IT and by the cybersecurity while to US and Commission new the clients as such priorities, as of and Department as and common being Department secondly, Federal our Homeland solutions. Health agencies spending expanding And further imperatives Securities departments applicable the Exchange within as market and of Security in

share customers. early we're pleased and in skills to how experience to our to still our improve capabilities opportunities to teams are the While our working solutions I'm strongest our delivering integration federal see with and pipeline its address is days together already to

experience or brought held desirable spoke Evaluation clinical Veterans evolution, transaction, of opportunities competitive. while of Attain greatest we strategy, the we vehicles demand to strategic can our examinations to in MDEs the Together, previously I we competencies presence have X. our VES, advances the in an significantly Alliant agreement innovation many provider VA. would US acquire VA. the highly brings or This while and are premier Affairs in company address most in first been announced federal, privately in of briefly scale meaningfully aim that Veterans a MAXIMUS medical Services our Further neither Department on where recently expanding disability when of announced As like now contract executing

this stated, As quarter. Rick transaction close in to we third expect the

assessments for our growing in VES' through business long-term been the create of growth clinical organic has Ascend opportunity level. care independent federal expertise While assessments, state the at an will and level at XXXX related acquisition subsequent such primarily Medicaid U.S. our growth

in our the To important in veterans Through been market time VBA our focused VES for grown of preparing pipeline, and and to conditions. add credibility on growth a that As appeals periodically understand for to The and of an a technology as acquisition invest and and with the past, and other nonfederal Administration Veterans the MAXIMUS while organic and veterans capacity qualifying future to in has they've of inventory end lending portfolio better bring needs the and federal will share that done and our industry disability health assessment the with capabilities. the innovation comes established reducing recently launched pandemic, efforts as larger of benefit business that result, has we clinical partner capacity combination, assessments believe our markets. of departments overall the a will Benefits VBA. VBA rapidly credibility and ability comprise or portion and the quality further exams the VA at the an naturally during independent

develop. reduction to pandemic the inventory partner continues MDE be as choice the to timely contribute both of goal related to Our and is program of the

advantage. Federal Engagement role and diversify expand as a Rick play remarks. GDIT competitive U.S. federal scale, well in based our as as performance. we places more in in Vaccination related build from XXXX, MAXIMUS includes market acquisition Acentia base as in in win his Center our continue at Concurrent VES and and the Hotline Attain customer and with us these Operations and improve historical discussed meaningful trust to posted government work This of Citizen our acquisitions recently that state efforts, help COVID-XX the CDC we on level Award, the Our illustrating XXXX the

us generally our is as to of needs to nature, COVID-XX While to be of areas in meet our new allow into remain term efforts shorter new term advantageous These expand adjust future work build well-positioned and planned the related also pandemic evolve. Through continue we customers that and customers, with behalf. are work, performance in we longer this references on increase their customers impact service existing bidding. past to credentials

For effectively in recurring more solutions driven quickly makes our the routine of modular demonstrated stand in value longer of our benefits for opportunity model needs. government Labor program state areas. accountability to and creating we predictable instance like matter regularly the is less in term to with up during provide capabilities beneficial challenging outcomes using that delivering can element of our areas they our Further, unemployment see response times event work relationships a flexibility business but of insurance, the ability model Departments as in

requests support Our investment our in the government been real-time recognized this pandemic we our during Citizen have responded with decades to digital services. by to transformation quickly coupled as deliver experience and of Services customers long

the some securing U.S. teams are exciting wins new as well. Our outside

In remarks support Restart the XX was provides As our and Rick's fiscal been directly This of the my than profitability. and rebound preferred we recently then used we've costs for totaling that community at long-term contract million, awarded new unemployed support and Rick have significant a create long-term X,XXX could provider These estimates through employment two typical programs. earnings more the accepted national upward programs deliver corporate £XXX with a benefit. the are base in the the the prime people for will U.K. step result, I periods, a by earlier of that driving deliver won this point, start-up last the in QX not value Therefore, emphasis CARES in expected Adding earnings to subsequent program, which the mentioned longer start-up future to operate by fourth will more anticipate within two and followed significant to is months procured year range contracts single contracting is and in program. framework, will people of United are losses more regions as which year This a fiscal contracts shareholder based our time pandemic. term years. sequentially impacted and were Kingdom, first six like QX quarter maximum US$XXX and the we one. option for in valued tailored mentioned down than the be total, contracts, MAXIMUS million by over recruiting be XXXX.

training in have platform, establishing in We supporting long credentials history marketplace programs strong by excellent this solid services workforce of recession. and the as employment This to provided during the necessary our focused of award. history employment client a in illustrated the economic performance the XXXX relationships U.K. foothold U.K. have and expand

disruption new U.K. negative work continues operations provided face-to-face to While This continue of volume a as revenue declines in pause a offset, core this and on by be to driven well face assessments. impact pandemic. has as temporary positive as the our some result the

while emerge XXst. to growth organic are than of economy as reopens. in holiday face anticipated strong Although, holding more geographies COVID-XX begin awards and the as March of customers, as and volume pandemic. certain we driving slowly volume is volumes with the example new across the seeing some season we to now from countries as we business. of implications continue All-in-all, Demand will spirit, In across addressing I our return turn to dedicated to an during the Australia, decreased opportunities that our we pipeline serves will anticipated remain

XXXX subsequent our CDC contract contracts $X.XX Hotline to been second billion quarter but Restart cutoff. awards of at XXst. March were of awards $X.XX U.K. Vaccination value of worth I signed. contract there yet were billion not have total Further the March that at were As XXst that awarded and another note of signed XXst the fiscal March should

opportunities. attention of Let's sales turn to pipeline addressable our our

$XX.X reported work. total Our contract doing to represents Of to in forward March of looking $XX.X pipeline I'm XX.X% team welcome thing integration colleagues The On and at billion culture XXXX. members right excited I'm quarter hardest integrated same first compared we've employees. of prospective final pipeline XXst billion to new a our our the newest value in fiscal was opportunities, from note, total sales an closes. get that for been Attain for the leadership very as to right any the VES from is on when our and team getting all transaction focused

Our is goal careers to both during and opportunities team for thank efforts will the from new and congratulate on have advance our colleagues families and to Attain around take work. want VES to be the keep quality more innovative that to the and for best-in-class to you ongoing for challenges I service your our to customers, our employees providing and and the high-quality globe individuals to we pandemic safe, serve. solutions MAXIMUS their rewarded

colleagues tens been only respond line at of needs of Q&A. of worldwide government we challenging very well and for will leadership the than thank the fortunate team, been been of possible you. behalf the to have MAXIMUS delivery with On to positioned open the This have staff. XXXXX entire more partner thousands Operator? a And through has that We time. to we of efforts

Operator

you. Thank

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

of Our comes first Please Strauzer with CJS question. line proceed Securities. with from question Charlie your the

Brendan Popson

obviously Fantastic quarter performance. Charlie. to US. I This outside want on dig morning. for Good the into the and Brendan Popson is

the about high I you could but see there going into sustainable single-digit margin dig employees. have we just the was about I the this know high is? down unexpected. with how being wanted the could talking to guys alluded on puts if that services And employment retainment and what takes Australia, strong the ask and you And to talked more just margin and road? You like

Bruce Caswell

much question. Rick much. little so Thanks Brendan, commentary and I'll end. so it's Bruce. to address the perhaps the a add morning, going to it over color Hey good I'm turn for at Thanks to

Rick Nadeau

metrics is what quickly better demand the in. needed fill Those typically well. QX, was than year jobs. the Christmas in should achieved they we that predicting quarter-to-quarter travel-related Australia be though we out employers fact our The respect they has or the of and and a QX, shows had also that first performance their really difficulty happens that that means come the a of due a In industries financial lot of people there. quarter other really is more sustainment countries due coming we who to demand are world. to are lot to and on of that period retentions. retain you. some macro also of This first told sustain Yes. good pandemic in therefore, With what around people from doing regional their that retail more job that down people trend there and place those good favor There the And them. to call placed to our strong that being fiscal caseload Thank really able lockdown you Australia to but and they pent-up out were during really pandemic very their looks Australia

take in of some are US time. embedded about in which to also is think us. gives countries the OUS typically build scale which This over are are several Those time for multiple geographies start-ups, of Those start-ups. I in really outcomes-based the outside you volumes. up years which we've newer to question economies operated the contracts and your others are

that rate initial create costs contract ramp-up However, a a our early the losses. and quicker phases at in will of

will costs come the than So, that the up. revenues ramp slower

XXXX. will start-up noted, several a contracts of operating in will results And be the drive anticipate in a we loss quarters profitable. these the So, think of quarter to of fourth XXXX. bit FY losses I turn on fiscal before contracts they drag OUS segment our as these I an This

your us. that life. these make operating are to Brendan? question, XX% They lives for over sense plus economics expect overall answer these favorable due investment do income we a contracts. contracts believe contracts We Bruce As margins Does deliver mentioned, the the to their these good that do over of

Brendan Popson

pipeline. and from than what's Yes. And also potential to Yes, assumed obviously with Attain. guess that the pipeline was talking in more ask the that's great. I want then increase about about And from the that? from I what's acquisitions? expansion the VES But Bruce the pipeline

Bruce Caswell

They in not I'll because ask you well. as the with I VES historically, Rick to serving VES VA begin have can right? to more And to their I give no note you Brendan a take pipeline hasn't development that also could completely want on this well imagine. customers of has chime a transaction to kind in historically, business just little Important really Sure. function. that color, as there's closed, had been and focused

period that and needs Congress creates And that authorize their pandemic areas my also inventory in are there's of address a as pipeline also two to benefit kind the of likely so other whom view it's absolutely it will term longer a want program. where the pipeline four dynamic to years as of new getting as part in during deals white to out we to veterans could understand process more and not however categories needs capabilities XXX% up remarks to capabilities VES their I ensure I that be the that once be government. immediate know DVA in the very with synergy prepared be like space that would will to to COVID because will we transaction they that's opportunities with And be the the come of demand be we've federal closes mentioned built on applied the those addressed. periodically, of working to say taking the focused that VES additive for and together and opportunities are identified well-positioned of likely if

that serve the bringing and hope and scalability further focus us our and for And additional capacity to we that absolutely appropriate So, which be pipeline would capabilities time is is opportunities to would over VA. due there pursue. then in time course

Rick that in did a So uptick that's our pipeline. a meaningful small mentioned the uptick, we piece. see VES

only any team, the then can overlapped we we that we that will And scrubbed we and overlaps. combined I the and deals As Attain also capabilities the capabilities we imagine MAXIMUS still there if the now came looked the the that together against. a able looked combined as eliminated that with we and at, say that because reflects process competitors bid we're and and there number pipeline minimal companies to at is my we getting of what would pursue, started looking and of the with terms really at mean through pipeline are that the larger pursuing kind deals understand of you can both remarks make Attain? that then because now that are in brought of were can mentioned go that sure Attain, deals to, I over, pipeline of presently went the we be in those

deals. Attain's time the positioning So it came pleased for component additive to be in with over done of those job that the pipeline great would transaction, of was and not pipeline think just what I'm the at which was I team really the a the very insubstantial. has

been you best of scenes, that there looking been if give we behind positioned further? Brendan. developed great collaboration the have forth to opportunities, in the just that is make anything both to Is your capture at of level a MAXIMUS a may that legacy Attain Just And and that terms teams customer been sure sense regard. between there's we're looking which answers the deal. and team have and in at agreements so teaming relationships teams question more Hope little of

Brendan Popson

in Yes, queue. hop I'll definitely. back the

Bruce Caswell

Operator, question, Brendan. next Thanks, please.

Operator

Markets. of KeyBanc Hooker line your from Donald Our the Capital Please next with question with question. comes proceed

Donald Hooker

bolus these morning. I'll that what through programs you release of getting I'm in of maybe release of state about Medicaid you back question don't fiscal sort Medicaid next at us think us for operations – of could think there sort through will point some see Good – mean maybe redeterminations the sort to know. I lot of kind be redeterminations? of these there. But of you, I A of help help year maybe the pause here. with ask like? I parts how for that look a Can sort you work imagining normal can do you kind Great. guess moving of a some work

Bruce Caswell

XXnd, the the was to begin end this? all intent by XXXX. it there then that Sure. think January add to I ask go Rick say health want sent Bruce. a indicating Don, of ahead was don't calendar it's the to I I to and was, letter Why and public Secretary then HHS the the year administration through governors of the Biden to emergency extend acting of

when the I will the spoken We our in of on that and calendar view would if terms health the emergency off and public of impact redeterminations – year will that would to fiscal through that of of which given what's resume are said end the at year very taking our earliest, publicly. therefore side guidance the guess we've this you is been extend everything

couple that period after of calendar imagine as year will of and a things probably the there can months ramp a then again. up end going the of You be get

population it because be is that certainly, the with for building of backlog done eligibility basis. been would And to there's that common to having that view been on a up up. needs practice redetermine certain existing has Our not be tranches caught a periodic

words, we related will scale to into so need some that work the from be next has our do of processing applications through also corner capability, calendar center we've expect redeterminations. room, would be benefited That the backlog has year. historically can review already as up the worked but that function And mail to document In we economies that operational that turn to there operations. back-office eligibility staff a a stood effecting other and an a sorting once

related volume incremental with redeterminations of that infrastructure. a can imagine to be can You handled existing lot

you when further? of be than would accretive more standard that that So But kind the work do. on we comes nature Rick, base it anything in add expect back to we eligibility work

Rick Nadeau

quick Yes things. quick just three little

First pandemic the assuming remainder assuming during we headwinds are off we abate not related fiscal are the – year. this of

for but that occur So that Logic catch-up should really right, that when this Bruce year. not does should that, us determine be does to that does we're tough tell be backlog. it's this becomes there us, is it assuming work happens. whenever When help fiscal profitable work

Donald Hooker

some in Outside then US terms you segment. – mentioned work And guys employment Okay. the the in of services

with MAXIMUS think I up Sweden, for you? Arabia. some geographies think these not I over countries work think mentioned that some in in MAXIMUS few Saudi But for years I Italy, have Korea, involved these I'm next you open the South new are doors potentially Does new in being this you familiar countries?

Bruce Caswell

Yes Don, let me on catch Rick and ask up to bit a then that again comment. little

the lost completed we – moving gets But previously South significant the spoke like and tuck-in a to – opportunity. we're acquisition Restart obviously seeing, opportunity So much Korea. do trends been government into say that of And UK a maybe historically had that here, than service employment we use going to begin, where we you larger in workers small to the had tuck-in acquisition parts it displaced to be in companies of was back we the that lot required response market small providers to privately provided identified requiring in sizes to employment. was place

because to of in begin And being propensity it plank shift. a outsource. opportunity we a and which reforming in operations employment the tuck-in back was that Sweden. in response the run contrast, they the the organically. of look The that we Sweden. the a of change direct enter not at principle policy was public with primary just Montoni, the with coalition, outsource, or Rick time that we always going of had And did but we the that signaled majority on the to So the felt really approached have to organically successful By is system, to for not recently propensity party was quickly kind is conversations of the implemented that essence acquisition a premise didn't we government policy coalition while had and reason policy to major

there's that to the are the programs but we business cases as to expanded. being the where administered being that there ability organically. build the we've is create And a program existing new what felt and And exactly we an transferred one also done. situation – had So business at the looked are new program being we that's

and the relates primarily that on have business of government training as we've develop strong both their is and post-pandemic As also opportunities of Arabia a seen an in services. provide employment to to future, That employment lieu Saudization of about Saudi policy primary historical Saudi foreign portion citizens the a In to employment policy citizens the continuing we Arabia, to as continue trends also upskilling desire a jobs Saudi Arabia in significant Saudi in focused grow business government's workforce. workers and on that there advance opportunities to on Saudi take era, had initiative, response focused for primarily of seen kind of in has it but historically. reemployment also opportunity driving the the is think well. had to to to in which recently We've those

of two there. you through we're back began that the funds we the money our pandemic. businesses to with still as Fund about organically privately Without the But decisions Social new time the or some employment countries. lay services. the government. deliberate went policy recover. rather here begin it flags, for then MAXIMUS market. historic not pandemic some the think of business when long-term Actually hard I an opportunity reversed well one deliver to work are similarly the able by out also to method taken last deliberate in operation Emilia-Romagna. at We employment talked saw the that not to market Italy. evaluate or an lines well. to growth carefully use we're multiple all into -- in only been the policy presently business know following the the Lombardi again in very remains we so around policy of across that time. services we've the look new provided was that say, support Lombardi fund services small to and to that for And in haven't with and to certainly of and just dragging shift broad plan program in That very, priority given our a factors opportunity always great employment a but it's the related expand we enter the to as extremely into about a but and it believe Italy weeds risk you is And European it very we we number I to overlay plant I that move market areas a we space to Emilia-Romagna over health-related hit of to pleased Italy our has do potential And signaled is change, to the of a and really ESF extremely shareholders entered of the area

So, on we're and catch that's kind for it as the answer but those.\ strategy up long executing the sorry, of

Rick Nadeau

that's very complete No, answer. a

Donald Hooker

super background. Thanks much. Thank helpful that's so you. Yes,

Bruce Caswell

your keep questions Do we'll line Don other for you have us? any Hi, open.

Donald Hooker

Sure. when a a a so of that hit year, years, of quantified, you And the then UK multiyear years? would rate sort when hit maybe for two fiscal big, of, of rate? big some ramps? the Restart two program all kind of, program, you for It's when the as that margin? sort guys XXXX think -- that It's have it deals? The full -- run about Is full sort and would you program three run

Rick Nadeau

Don obviously a think fiscal to happening the catch would thinking when volumes takes generally the ramp while but those with going. that up But the year We're that. is would up see serving the to have really be it What revenues and gauge. us second I get would you XXXX take of citizenry, catch up. That's we're hard a half that to costs while you Yes.

as I think of quarters four the half fiscal I And XXXX. so about year said it's second

Donald Hooker

you. Thank Great.

Rick Nadeau

Thanks. Operator, you. back to

Operator

Brendan proceed [Operator is question question. CJS Instructions] Popson follow-up from Please with your Our a with next Securities.

Brendan Popson

or -- some over? is back means health come more than kind wanted Is and there's back have not of I different to following doing policies states in it on is are after just quick the difference is your Thank it -- to others, going the central public states. obviously there that are that sooner restrictions will states are there until redeterminations that emergency -- some your some than of different of real you. some come other authority states ask are of kind of much there a

Bruce Caswell

pandemic, in matching enhanced referred historically share then they during emergency period the as to with way Yes. It's types continue kind the everything mechanics The have on that diminish they're of services MOE been it agree to Effort That keep Brendan. program. has Maintenance And receive when works federal of is best services of need these are can means the you roles. any to states a that once they can't beneficiaries we what that in they that providing. public means have order funds any or can some they to over to health for providing terms to they Medicaid the would to they're do latter, There on the maybe there's erode of been declared be resume can existing be offline activities. to or

to wants and actually in we their enhanced administer laid gun it's nobody As they that previously the point they I could the but there can't immediate while sooner states rules way been that to this programs to process absolutely instance, clarify But specific are funding you're it have population, same CMS. being relates do tied states all set think right, that it's The on this program. guess to for have begin you. money follow they as of that I in though and would differences out I And and related will by the theoretically to not last out when the the received jump mentioned they that. federal lose really

Brendan Popson

then And a about to that ask question. makes capital allocation want I Okay. sense. just Yes,

talked What's view it, had what's comfortable Is to your on be a grow pro guys into leverage. Are you deleveraging? there? letting going forma EBITDA that priority about main your or your priority? You

Rick Nadeau

it quarters This that are think integration good Yes going get two we very these take Don its a while its to to Rick. sorry with companies Yes, is I'm us do I Rick. Brendan, at on done. two job integration. respected really a least say to want

That We're long area M&A have of each to done staying our X.Xx. significant would ,with we're we would debt free but and I our We I starting below pause quarter. over term keep at off that leverage that overall And aim is will good is be think right say below aim. have the cash our X.Xx. an paid our flow X.Xx comfortable X.Xx get integration down really the below

Brendan Popson

Okay.

James Francis

next Operator, please. question

Operator

Our question. next with question from Donald Capital proceed follow-up with Hooker KeyBank a is Markets. Please your

Donald Hooker

a addition XX% that close Great. would if margin Federal in segment, time you meant step-up that. your in guess to of I Services looks September of question you create full VES signaling I like the in sort In appreciate the a operating you're to That the fiscal year Yes here. the one I fairly quarter. large include guess I margin for the mentioned ask,

-- year. as for what we help that's pro Federal operating can guess business? can think next Services we a I'm would margin a us like I normalized for what So, the with the forma material about think you be year, go VES into thinking higher-margin about pretty change next

Rick Nadeau

down both and pandemic X-XXX-Medicare and somewhat a come Attain VES our margins contract that Yes, should do reimbursement that large a from tamped contract margin. to us Don. cost income of that the higher we yes, better should lower margin. been has as should some Yes XX% have we able I have or forward operating have style work that I say be a and give that we that look think legacy carries that by back. But in you recall always to would also

year margins we plus should operating So, US fiscal have XXXX. in Federal XX% income in

Donald Hooker

you. Thank Okay.

James Francis

question. Thanks, not, we’ll more operator. Don. go the back Any to If

Operator

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

this may your time. at lines You disconnect

Maximus (MMS) 8 May 212021 Q2 Earnings call transcript