MMS - Earnings call 4 2023

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Operator

Greetings. Welcome to Maximus Fiscal Year 2023 Fourth Quarter and year-end earnings conference call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Batt, Vice President of Investor Relations for Maximus. Thank you, Ms. Batt.

begin. may You

Jessica Batt

obligation remind most thanks face, Bruce to and and such in XA forward-looking us. and me differ will like With Francis, statements forward-looking number Good made being these result revise to a results materially to the of President for and that only and to release. or law. Today's reflect does press period-to-period it statements may you is circumstances, today to or Relations. I'd contains Forms including Investor subsequent information Caswell, by President also comparisons. discussed filings providing CFO; that Actual presentation CEO; today any informative with internally engaging company required a Item financial information. statements Vice recent this our identifying our and we information of in morning, be except trends believe of financial uses joining to performance, investors, those everyone earnings Management the David James nature. our XX-K. in analyze the as remember SEC events contained and meaningful update predictions. The of as of review non-GAAP events be are Please We and may assume recent XX-Q risks our results encourage quality not Mutryn,

XX-Q recent to of reconciliation XX-K. And over Forms most a the that, For and company's I'll please non-GAAP presented, the the with measures David. call hand see

David Mutryn

Thanks, Jessica, good morning. and

had tailwinds reflecting we year which successfully strategically that and a on the in We operating recompetes. XXXX the we week, solid defending $X.X expect profitability billion, to through we year in year growth to outside segment X.X% to that announced the healthy with shape carry to our organic services effort margin includes and several and stability. signed the pleased a revenue in adjusted fiscal robust contract We of earnings finish improve divested U.S. report fourth quarter businesses ongoing XXXX. Last awards fiscal employment are international XX% fiscal key

annually last billion, that Our revenue. report trailing over contract we up to backlog year again Xx $XX.X stepped our from

paydown are capital debt-to-EBITDA to earnings increasing We in dividend commitment XX, over to net with with September at our debt stated our line also X.Xx with while quarterly allocation dividend yielding priorities grow executing cash on time. $X.XX, the our

revenue fiscal XX% Our reflects above over mid-single-digit our growth guidance growth bottom fiscal guidance organic and XXXX. earnings implies at line XXXX or

government during of work that uncertainty of nature around essential periods insulating the our budget. means properties Finally, have we excellent

me you EPS. definition to revised adjusted our Let orient of

In relating adjusting addition to divestitures. adding back forward, or are going intangible and to other losses gains, charges amortization expense, now for we

While and have several process we not for these XXXX, a Outside types quarters. underway more the costs the it's year large reshaping last in with U.S. are been Segment could that of fiscal

demonstrates visibility. We view have presentation to not adjustments, for disclosed identifies cybersecurity incident methodology slide costs related the today's cost of improved added these forma cybersecurity pro excluding which a costs change but fiscal quarter last for our the year provided the a to have There XXXX. the incident call, in the is in list and

existing of for in work the the new color the growth the For well in we add expect more drivers to an that U.S. segment, business. growth growth rate the and combination segment programs X.X% which on On organic year, mid-single-digit increased prior as The total as the basis, X.X% billion. revenue with full $X.XX was fiscal on discussion. revenue I'll consistent were over company a year

and costs a not properties $X.XX operating impairment was charge fiscal This the income preparing our ramped $X.XX. in for in analysis means in incident high margin end our second quarter EPS to Disability EPS looked excluding program third $X.XX, was on the On step-ups the quarter slide for a excluding the Three Medical contemplated This costs. Number We year, incident range highlighted expected. divested a as at two, the U.S. comprise in cybersecurity complete, higher the that had and expanded business related EPS the the Fourth earnings in on adjusted Medicaid we've also meaning, year $X adjusted incident which I quite related power the margin QX things the highlighted of in on the adjusted quarter bottom the Affairs for several Veterans stand-alone and as the different income the sizable note sale. $X.X had $X.XX of and contracts, $X.XX. commenced U.S. of $X.XX, the charge sequential been fourth VES this Federal guidance. in line, there delivered to recently the earnings individuals benefited include student note, the are adjusted required was on a earnings, full Services full year would impact and operating quarter XXXX $X.XX worth period $X.XX loan from has guidance U.S. highlighting definition the of fourth year incident, million Services the the and we full the presentation X.X% volumes excluding affected full million contract in were our from cybersecurity the was as incident fiscal three, adjusted of quarter. redeterminations notification. core which first it's detriment half XXXX Medicaid we nontax-deductible XX.X%. total incurred Federal and costs of component under year in in or was the servicing Exam which to strong be incurred services believe incurred half business largest adjusted to of related services. Number XXXX Adjusted EPS a the to growth were the earnings from incremental relate our volumes of asset our U.S. both $XX.X one, today. Number fiscal is and ongoing was of was redetermination. just

Let's go Services. results, with starting U.S. to the segment Federal

margin ramp XXXX which a U.S. driven contracts was segment. and predominantly to U.S. grows the program as to $X.XX in XX.X% the Federal by its expectations. revenue was on in as for increased XX.X% Federal overall exam growth meet margin solid organic above fourth X.X% the year. income quarter, margin VA remains the Services for our continued fiscal compared segment All delivering The continued in of disability For this the client noting, the worth execution Services volumes prior medical by slightly segment, operating to expected range It's billion. XX.X%

and billion. and care wins was of eligibility longer-term XX.X% year. XX.X% long-term new the organic increased work unemployment contract across successful work in All into For a contracts. growth contracts with driven assessment the by U.S. Services support $X.XX segment, revenue our conversion prior in include XX.X% short-term to Examples work insurance country as California. The the U.S. compared Indiana was multiyear margin and and income to Services Arkansas, operating some

the yielding as This the work, trend Medicaid year, second half margin redetermination margin underweight. the was was Let XXXX, paused while of the segment. this year fiscal first COVID year profitable last year of remained me half in the quarter, in we back the until half Last the third the overweight short-term improvement response commenced half first expected. of underweight in the of the recap the the year, from of

redeterminations the margin of quarter. With services period XX.X% fourth U.S. full contribution realized in the an

Outside $XXX revenue is which the revenue currency For This by million. decreased net the Segment, impacts, U.S. X.X% reduced of X.X%. to

divested attributable The geographies employment the broke fiscal the The in This third estimates and quarter, second an the outcome-based $XX.X compared the million volumes prior programs XXXX. year's operating of loss even slightly lower other from future the million than declines in were on fiscal profit organic revenue year quarter realized equal services of previously in to tied across segment to parts a payments. Meanwhile, X announced better we million loss roughly fourth for segment to businesses of was $X multiple $XX loss for a year. this operating in of result expected. the contraction from standpoint lower reduction that XXXX, an quarter

meeting financial focused is to this expectations segment are that acknowledged and volatility. have reduce not We efforts our executing

quarter more As announced in of last XXXX, and divested the businesses. first X fiscal week completed we

along were employment division Singapore exclusively services. Services Employment Canada, which with the Specifically and Italy, in

the cash to items. sheet turn flow Let's balance and

debt to $X.XX Xx. ratio to We paid million. September range end down we debt at gross we our of XXXX, from is XX, brought $XX cash at of quarter in quarter, the approximately X.Xx, million This which XX. had of and ago had of X near X XX billion, stated and $XX our unrestricted low debt As down June of cash equivalents of fourth the X.Xx target September and

in as months $XXX XX from flow same to finish allowed the of forma agreement. We totaled were this flows for and sales cash days XX our last had at previous end $XXX was million. million our free fourth operating $XXX or pro XX, days Cash million, million ratio September compared XX with cash of $XXX outstanding, day our calculated DSO, year. of the is net As guidance EBITDA high quarter Days a the in to reminder, XXXX, near strong flows to activities cash last credit the year. for to accordance debt the

capital our are unchanged. priorities allocation forward, Looking

are First, capital we combination typically which fund expenses. investments, and expenditures a of organic

quarter. by quarterly earnings and a announcement dividend to recent time we $X.XX that with acquisitions per we increase maintain accelerate to third, And intended organic strategic intend Second, to dividend over evidenced grow as the growth.

and will will our paydown discipline year arise and 'XX to should we sheet strong good deployment. improving continue beyond. In of in opportunities feather evaluate capital balance and to We near in part the term, opportunities debt continue capacity as with acquisition fiscal provides

In appropriate high rate supported to bias the interest still we have contracts end Xx X cash Xx. conversion. range, a believe we toward an of by the leverage our low long-term target current environment, is and While

XX% further by reduce swaps, for end free step ratio forward, rate flow, fiscal year About fixed and Looking debt delevering enable will component. is M&A, debt cash efforts absent our in higher-priced the of guidance through X.Xx would up of the of our so floating interest XXXX. earnings a a rate

between guidance. share. an are on Adjusted projected $X.XXX Adjusted be the of higher per to to $X.XX across federal, fiscal operating and the within million OI first $X.XX EPS between midpoint growth organic to Based income $X.X work adjusted go $XXX multiple between VA a The target be contracts major XX%. XXXX the in Let's The and X% $XXX our to X.X% margin estimated extent, exam X% fiscal ranges billion of XXXX. be guide, revenue represents of volumes new over lesser and disability in projected categories. year about U.S. and, is is medical those is drivers billion. billion and range imply midpoints $X.XX to to million. Revenue

to benefit the EPS there Second, line. than segment. also $XX in growth in share which as of to to U.S. contributing Services, million There is full the are The our which reminded bottom year programs period assessment disproportionate XXXX. I'll million of adjusted organic in redeterminations, on have fiscal before, clinical a approximately we've expanded margin. $XX less segment forecast briefly about interest guidance equates expense a includes

Services which the to U.S. notch margin from year for be up moving range the Federal XX% expect the this in a target XX% represents to pre-existing XX% We segment. in range, XX% of to last

We segment expect to margin U.S. about be Services XX%. our

we U.S. year. above be the breakeven Outside expect Finally, slightly the for to

expect improved stability to compared XXXX in the business profile years. prior more We the a quarterly reflecting straightforward fiscal of

the Our first be modestly should the in operating across improve year the and therefore in half current second is higher that half. margin than view

helping are half, While of to expect across in of growth profile Services year. margin the redeterminations portfolio more to in rest the growth the the over contribute U.S. more the we first steady

divestitures, from on cash excluded first completed $XXX million will between we in loss a the Lastly, the standpoint, sale adjusted be quarter which cash expect free tied flow a small EPS. expect we cash and From and flow XXXX. and certain been QX pattern We expect a seasonality of as payments free in currently slightly million result $XXX negative the has as fiscal timing recent a years. of for in flow to

XX.X%, and amortization shares XXXX million. income estimated intangibles expense. should million full weighted million between should rate include other an $XX around $XX.X Some year of and fiscal assumptions effective and be The $XX.X average be between tax XX.X% year

comprising Before be it I handing from those to difficult a highlight particularly potential Bruce, Anytime U.S. during can with navigate government. the an off is government federal of periods budget there our to focus want uncertainty a environment perspective. on resiliency a shutdown to outside our customers,

U.S. essential. our contracts For is focus deemed impact a we primary of our is Federal in recently might business. any our the assessing be coordinated our that Maximus, with Having expected federal about which segment, customers, would significant be half majority anticipate

we of Therefore, X% range our that the In guidance estimate cautious shutdown the Federal such though to XXXX. With our liquidity, will end our less representing And U.S. less revenue. XXXX. significant fact, undrawn at potential call X% in about $XXX year are segment a scenario I including a total of temporary be can we event, than turn company we believe line is fiscal could accommodate million during the of was of Bruce. that, during collection have current disrupted year remaining our than revenue fiscal positive delays with shutdown credit, over an which

Bruce L. Caswell

David, Thanks, morning. and good

COVID-XX objectives. X- business program our role and Only billion target and core pandemic. hiring XX% by $XXX loan FY addressable of results quarters in solid sight FY 'XX to revenue. our the us stable post of which to which line meet XX%, Services, unprecedented are total enabled an XX% unstable with impacted resilience strategy and a XX%. Together, range of the annual rebid delivery student We 'XX. In emergency demonstrate spending. in strong X payments target to Services care rates X-year year segment clear recent and results has strategy. workers well of entered Inflation fourth the ongoing U.S. year Our The progress with critical margin through public solid ability the segments our FY the pleased fiscal we health within their results 'XX in were and driven year government to drove delivering by our challenging of are margin focus our our quarter Federal results we are the business May and supported as would the target. on our of environment. of end performance the XXXX, and specific government the of meeting areas post was health an range financial for times presented U.S. of to deferral due essential growing the Both for a our in we these company to segments into PHE period, with PHE market in Full strategic for grow

to XX%, the an margin of shared, fourth adjusted in resulted quarter X% XX%. our delivering target David on successfully As of

to U.S. is which Over both increased success Day, the longer income At improvement an our and Services term, remains. also commitment Segment, of to adjusted backlog growth operating expectation in Investor a for XX% to we further our our Federal XX% in margin pipeline. of communicated evident

up our ago, Just U.S. Segment X of half Services backlog. for our Today, less than accounted our Federal years of the X/X Segment backlog. makes

organic growth. committed mid-single-digit we Finally, to

FY was As of David for promise a continuation revenue for progress. for shared, organic growth X.X%, guidance shows 'XX this and 'XX FY

raising we During announced to our quarterly $X.XX it increase the X% dividend, in a share. a quarter,

in our earnings the release, in in further committed our press stated it in reflected earnings We line with guidance. our growth this we increase the periodically dividend remain to assessing As demonstrates and confidence growth. raising dividend

services with month, start employment to divestiture is the the impactful Earlier fiscal portfolio. terms an the this Italy, U.S. Canada. changes shared this year and Now businesses segment we which overall let's our of with and off that announced year aligns Throughout a to XXXX, under to recent in to manner we XXXX, restructuring fiscal commitment and our Outside turn our in Singapore strategy. already appropriate made optimizing

support OUS footprint We reduced our by X that in goal. of have countries now

portfolio diversity volatility, strategy. on our and call, serve to we on line mentioned reducing QX shaping capabilities country our I we our broadening consisting in with in footprint, our deliver the adding As will customers focus the

processes in operate with significant spending. addressable and markets growing contracting We and will well-established

United of Kingdom. into our example, with decade the an As government the partnership now a

portfolio more than capabilities and broader before. ever have We a are delivering diversified

sustainable bring by growing competitive capabilities talk head strategy as on step our a and moving to our significant forward and mission we differentiation take supported back X we advantage. addressable into strategy year. of new our about our to and and markets. technology customer year with the people Let The and priority, with fiscal ability to pillars you deliver are of The me X X

relentless X is table With was what becoming the years technology, cutting of pace edge stakes. considered ago

evolving in needs. of investing market customer moves, anticipation the we As are

is generally mapping operating managing Cloud-native are as evolution its and the cloud capabilities what While example others hybrid development in secure digital There obvious modernization, leveraging come. mind, capabilities. eye DevSecOps our the environments. many are our to such and more this to with With is provisioning our forms. AI and now an with in of teams toward right priorities agility, customers

federal demand our citizen We've our pipeline Within systems and emphasis like examples. environments few focused a strong digital procurements share greater modernization, of refined of we're requiring digital the IT cyber pillar, the engineering reflects challenges. Trust, priorities for where to EDOS the on more and me Let modernization cybersecurity automation, IRS contract, and a agency legacy today's forensics. include Zero cybersecurity strategy on government operations technology

hyperautomation. also deepened cloud-enabled capabilities data our services, We have in and management

As trusted data-driven advisers, advance make we enhance customers' experiences. and customers mission to our will decisions empower that their their

Within as in supporting government to access of markets. care against customers increasing costs. backdrop our scale Within governments as disease access our and an suite preassessments the services, pillar, chronic our conflict and ensure trends we helped to Health at long such unmatched delivered equitable have respond rising of they our future of we're to equitable independent the of levels

customer that recent made in I'm and tele-assessments health in population and services integrated through care focused our independent to by Looking to balanced are most we've areas also of the citizens. our improve challenges lifestyle well-being addressing forward, some navigation, improve quality with United investing as and further progress assurance. solutions their such thousands Kingdom. in encouraged supporting approach work staff using in on vulnerable experience our we're we the of a technology Already, while access clinical

portals resumption award-winning equitable important in pillar, access and customers been our This benefits. developing and the success within with has has tens improves Americans. program-specific to equity. applications for signatures example, Medicaid our delivering and of barriers and our improved for faxing Eliminating enabled of critical health partnership Finally, mobile like eligibility incrementally with services customer digitally documents, millions determinations of wet printed especially access

they guide our employee Maximus As that as continue to employee independently XX% robust we would to balanced employees. global surveyed, values only XX% our to recommend will that to PricewaterhouseCoopers, citizen those support technology but administered engagement work. by the our look survey to end, forward, not To a our Of place great experience a approach stated improve, witnessed participation. XXXX using

that on how is While we're we culture better. to proud do can our focus result, of

With our them providing with and essential the continued their majority services of Citizens, supporting pay employees work opportunities delivering and to remain focus. our benefits for satisfaction, doing and meaningful competitive development

use quarters, shared our last the organization, with creates while Over about discuss are capabilities be few patented remaining our we've past, cases teams X in bolsters journey the our to details Across best-in-class pilot we've well shared in we differentiating as technologies to I'd like competitive. additional and our have ways innovation. cost phases. Today, innovative as innovating. In innovation efforts which

announce our development corporate spearheaded vision First, will this that Ventures, have by Maximus venture we we our function. I'm be to team, corporate for established innovative forward-thinking share start-ups capital that our Through which CVC, invest government. excited in will

largest companies access that about based is selection criteria identified creating are Our critical on innovation a to markets needs to Maximus. The capabilities includes and to specific and to contracts tested partner team while Maximus and opportunities has pilot developed through our Ventures priority disciplined gain with core growth objective programs. for disruptive methodology that unique innovative learn

available weeks. Where investments, our efforts teams our on human we're services opportunities problems be to ideas. focused early will Spark great started quo solutions, Ventures companies with health coming challenge to our very of of complex reimagine thoughtful investments, the demonstrates status More several on stages, information develop we'll future the develop way to with the the and work website and CVC generate new Through Series partners. by programs. Maximus While C to seed in Maximus internally relationships solve in tank elevates and transformative we've the external

gated of selected and operations examples closer of the My tank the just our attending and most to implementation. X with and Our Spark for commitment structure day-to-day had pitch of the to are positioned is, discussing business across customers solutions The process for that are the innovation. session, are gate investment business awareness a starts innovation. With invited respect spent encouraged session many cases support collaborate to favorite case Maximus our to successfully witnessed teams Spark ends our the and provides opportunities Spark of process employees have a and teams to in bring recent diverse passion ways during Tank our being personal greatest with their course, the organizational their the leaders. are teams identify implement missions. panel how organization innovation. of time which to the the Ventures and us a and 'XX, I throughout the and I pleasure well the and our refinement bring Tank strategy drive of some FY will to their

Now our let me turn to pipeline.

period. total for For Further, approximately fourth there book-to-bill billion XX-month $X.X but of value, X.Xx into September signed. worth from that a contracts billion trailing $XXX XX, awarded translate $X.X the awards contract fiscal quarter. totaled last been million yet These have XXXX, of of quarter not at awards signed of up were the

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

preparation September fiscal $XX.X This in quarter opportunities, billion XX September in new $X.X reported XX of and pipeline comprised XX% total at of $XXX proposals billion $XX.X to million pipeline pipeline in represents was of Our $XX.X opportunities proposals the Of compared is in our work. tracking. in billion billion, approximately pending, XXXX. third sales

on global to is Federal ahead a more macro. In view, VUCA, see Additionally, uncertainty, XX% volatility, our however, companies complexity and environment attributable are unprecedented creating stable total pipeline, billion of conditions an ambiguity. Services or to us. XXXX a U.S. year we the segment. With of return fiscal Many of commenting largely our $XX.X

delivering quarters scope and itself- its time For our the to an state growth many federal services in is core full customers. first business-long our of of engine

while and or the I've we're of mid-single-digit a future. government has that have the shutdown. in closing, recognize organic some that of capacity and prior we nature path optimizing continue technology we sheet welcome the uncertainty unambiguous processes complete, of calls, for design, performance. volatility are ours growth legacy continued the environments, resources targets organization established. In from challenges systems importance showdown we The cases, Maximus scale. And even reducing as services the end, and of effort progressive evaluate, we insulation government mentioned such to at provides for to means To approach Maximus of benchmark an essential a on of and in U.S. clean a budget reshaping to and our line call the and the Forward, valued on Forward growth portfolio our provide in complexity employees. And Outside as The opportunities with of we of and the not governments progressed Operator? well our Our of initiative to With to margin the open operating for our XX% have in X improving drive delivery. facing efficiency to as like execution through our that, to thousands choice future, greater X of total benefits that is us Q&A. our central we focused creating an investment deliver strategy balanced we'll through keeping modernizing proven company services XX% companies the finally, and adjusted income achievement employer

Operator

is question Securities. Charlie first Our Instructions] [Operator Strauzer with CJS from

Charles Strauzer

of more kind just as little get Could mind. good to proxy next you talk year. -- just the the I about a want little don't color And run guidance and mentioned bit using at a and looking and you QX call, ranges a behind bit for conservative to hoping we if commentary that, the rate a feel little back August

David Mutryn

very believe I'll official saying our view August. Sure. by share did year our the like I'll it, in here of looks start Charlie. we early we take guidance that much

So to and that $X.XX midpoint, of adjusted to $X.XX an our the $X.XX would was that being $X.XX, on based QX annualized be on forecast EPS basis.

our fall high guided would midpoint $X.XX. that and end, between is which So

So we good. feel do

and of OI revenue to margin, X.X% guidance call sight organic right about a our margin mid-single-digit is also growth official said mark the on of We good we and on the organic X% OI adjusted that at XX% the line midpoint. adjusted growth last of here which saw

Charles Strauzer

U.S. margins looking you're to Services, line, bottom to you see good starting when Great. and obviously, room room the there, And some some then like Obviously, there's looks to line might growth top improve at it improve ultimately, have there. the that? some

David Mutryn

question. Great Yes.

at guided the lower we XX% XX% is So we've to which set of them margin, stepping range at out end the adjusted OI them. XX% back, that for

cover maybe of redetermination there. the First, I'll impact just kind

million just year it then was While, by range that it's estimate. $XX per and in continue QX $XX at $X.XX more which before. range U.S. always in contribution say services the see precisely OI, quarter. fiscal million. the looking total QX of $X.XX 'XX again, And And you in QX, was I at We with the in to to given do difficult think that line can to that we've I see

million So OI by a lot fiscal that your in in 'XX. that $XX growth the seen year segment. point, we really redeterminations. To a grew Revenue of have XX.X% increase driven kind of

And a of agree you, mix also had overall here. slight and in in normal work. well technology, segment. contract is improvement the many we're But control this, that the has and lower natively there's erosion improvement on would I that mix of combined margin it's segment performance-based room suited adoption of of growth than The which cases, with in further for higher some And with we has and in margin. optimistic for a in business at segment our putting the course some with pressure average come profitability shift margin

do for we opportunity here. a improvement So see good from

Operator

is question next from Our Bert Subin with Stifel.

Bert Subin

this that how year of the follow-up just on is accretive of in on the an $X.XX on [ into the And XX% despite for VA Or on margin David, year some business. color of sort front. question the sort X% to to of I range that you range to very term, for this from redeterminations maybe redeterminations? near-term sitting sort think just Is X.X% of sort term here opportunity? Can $X.XX you then half operating XX% longer to longer at that front, like just ] give guidance? to closer would really seem $X.XX tailwinds XX% the a is margin given of first what think the you in about baked had

So us at XX.X% through can up how you just the a point, from margins maybe a getting where number some to think on give we are to today? walk

David Mutryn

start Yes. to hand I'll comments it well. Bruce for and as Great.

as higher it. get to segment we that -- moderate range, a do fiscal the this precise margin would our volumes redeterminations, on will impossible to as the hesitant during are as down result in first too the But I those that point a you in in a volumes of because and half the out On precise volume slightly I half higher Than somewhat. I'm number I period, 'XX. we give said, it's of the the unwind Services U.S. year second in expect think

So redeterminations those of seeing for peak Maybe in first it half, that we're longer-term the Bruce as and margin. would remains pass the we previously to said, occur way. assumption, our the that I'll

Bruce L. Caswell

Sure.

As XX% in of a but we guidance XX% to do ability our 'XX time. over get confidence the FY our implies we've the margin, midpoint been to X.X% saying, have to

and year strategy X focus very with areas. So laid in achievement specific that of X attention to some out our the

of So I to higher I X the of the if generally. those with pillars highlight margins and associated can. Two future strategy work are and have technology of health tend areas, to want those modernization our of

I and pipeline achieve our that backlog, weighted get pipeline our that in will we our the just those feel us convert as would I naturally in And targets. that of -- pipeline say to is that help well So areas. work more

efficiencies. really includes is the that remarks, we've that Forward are my mentioned focused for ensuring and making of that business, longer set focusing Maximus be prepared but through as the greater roll FY over business. and our U.S. the shape on mentioned we the of on also company continuing and rethinking I how would driving up an see efficiencies important internal in that we'll that there, balance finally, would I that 'XX, to Outside in that improvement we had our more company segment's actions that execution in would we're success initiatives improving programs our And we'd in margins. those it that the in strategy, but efforts in really execute the a benefit -- to future. term and point portfolio we're program total expect investments through during are on expect And the that's from and second see 'XX. Then The the further really some we size properly to continue FY

of provide we number together that can that those taken us into things confidence range So we mentioned. the move really as

Bert Subin

follow-up. Okay. through before the prepared -- year. David, remarks, maybe margins expect a on build And That Got my said sequentially helps. to it. clarification just you the before you I

that So fact I performance half? even tailwinds to half second guess you're the first on relative better in highlighting there peak that guess, in I the are, redeterminations the

David Mutryn

than more of we that year. in the a because see thing that little you glad of good half therefore, than the portfolio more course are I'm in total first we second the sequential redeterminations contribute And Yes. expected that's over see half, that. the despite to asked the margin fact highlight overcoming do the rest improvement the a And to

Bert Subin

focusing those work. for you profile VA, low tailwinds other follow-up, several of guess, -- just I my those that notable sales, year, the side other pretty And between it. your maybe, the highlighted this Medicaid you on recompete and have on Got and Okay. is new

items there out? Are and orders above it's be Is the what awards of all new watching that digits single high you potential from to have the would year, coming function think range mid- when about you'd said X% you just materializing below to to this get done? maybe that faster for gets EDOS to that play that or happen to task a As out? specific

Bruce L. Caswell

take Sure. I'll Bruce. that. Bert, it's

of direction frame say, than well in time higher digits rate you in certainly, time, in could come activity those kind on of June back your as right window, intuition volume the, the performance of what's Exam area mean mid-single headed we're strong end redeterminations. Disability seeing. At And kind in I the now contribute a and current will the really that to the maybe XXXX. I'd we're that the May, same the the to growth half an underpinning redetermination meaningfully VA that. as assumptions, your of areas as said, in Medical it surges with the presently stands is You're really activity further and in growth as

forth health that That talked together work reflected area state So significant and numbers I'm that's fact, last we today. the additional so that in has this of that great a and likelihood picked that and one clients really the say, well, the assistance, pleased for a of deal were states about call, we diminishing. in point, up, since we've would is our clients, need time said, at state current asked on more our in

exactly you those of is as would I those others. areas. But X the highlight X So in underpinning, kind said,

U.S. pipeline or that You to pipeline. towards, states Modular services type particular, business well we're We're modularity is our solid focused growth those There's and provide progressing towards nice And solution talked what that a continues, that states Medicaid for presently. Management of one that as MMIS as on work pipeline of work. called a credentialing Systems, movement about in a provider the are are of in seeing and clinical Medicaid Information enrollment. systems. a services in areas healthy We number of

EDOS and opportunities And certainly you further federal systems should the EDOS secondly so could well conversion work. and beneficial year. think related to -- there from prosecute like be year next is to the company task positioned that we the for enablement, forth a feel on of management to continue federal and to then we're We're don't that note task pleased contemplate and we pipeline through initial order cloud EDOS good see flow very going modernization I would specifically, we're is this orders backlog fiscal and into significant this that, agencies. IT that year. And presently contribution and more to growth across so cybersecurity really awards in to needs coming we area touched example.

if vehicle to further space 'XX. quarters modernization more year any procurements FY in were in wins with they them have the would as orders are technology that favor, But been fall protests through our of meaningful. the in contribute of could in be a in well this meaningfully significant resolved we see number early that that and task that that be there or also, So held up

add? really anything there it's David, a But that is of -- So it's mix would you things. further

David Mutryn

Yes.

Just pull already visibility of our any guided is mentioned, year, to the into exception than there. backlog. no strong you have one our year entering typically in string revenue to This is thing we on tend guidance, more XX% revenue meaning

see having years success. rebid rebid may really we provides fact, strong 'XX lower coming visibility we've X had higher year. volume, which In And normally do of mentioned, have the even you of as we FY really degree an than into

line new we business component that of is success top assume always, a to potential there's there drive for additional as while there growth. So further

Operator

follow-up We from have a Securities. with now CJS Strauzer Charlie

Charles Strauzer

a couple follow-ups. of quick Just

more breach, all, the into on of First cybersecurity next expense you leakage potential guidance? are anticipating year in any your

David Mutryn

I'll Yes, that. take

in out we're that. said with I came of individuals As component largest been prepared required and costs date the to substantially those of analysis related my have the remarks, we've impacted to of that complete the notifications incurred

or been our of we've and based guidance current now, for costs proceedings fees, consulting associated not forecast So what further on legal which does for best notifications has most incurred material the to right of our contemplate year and 'XX date. fiscal costs,

as the out number we're a those. of detailed class outcome to any the related there proceedings ultimate that been provide the not of However, or our possible now determine action able estimate range of point or or that to those in filed we of are have should an predict suits forthcoming of and outcome XX-K, incidence

Charles Strauzer

Could if Got to then more few international see you to just optimization, that Divested on expect shifting And terms it. divestitures. of portfolio a gears some businesses, the the in of news them already. we obviously, front will?

Bruce L. Caswell

my our is the the I supplier a we been have wanted will for departments It's that we do it over outside with this last that we remarks more of terms private that into And our did I'll long work as we ability business that very, not take agencies. maybe as And that diversified Pensions little ago, work and has really the mentioned at has Bruce. business prepared I I there. it of we out really services really on characteristics Yes, a in was over to the built and that, remains decade in U.K. time, our with with. And I've kind Department been pleased and that have call, example time the for probably other a model customer, quarters the of what we feel coming fair broad the and And there think, the easily bit government good known sector. and move -- a And the Work single found to my Charlie, be remarks have market. done a to a the United U.S. a the to I in time, the become And customer strategic increasingly year. into that work provide. of prepared that that. it's a in continue contracting and fact, and future largest in while enter work market I Kingdom customer lay see the used that are we with in same

the U.K. that offer So that strategic like with as was smaller over can efforts align X- areas importantly, footprint, in I full billion think concentrating market, have that services that to quite capabilities growth and substantial the with comfortable the a our net-net and where markets. recollection represents of a has $X addressable we is our the outlined we meaningful plan. And most that a My that X-year latest it we're characteristics we've company. range capabilities

more of terms that you color direction our travel. bit hopefully, a of gives in So

Charles Strauzer

assumption for -- quick housekeeping That's great. Interest And David. rate for a the interest assumption then coming year? expense just

David Mutryn

Yes, sure.

complete. our organic and always, all that So that hasn't been doesn't -- our of it any is as activity M&A include guidance

flow excess debt cash is with consistent over down interest So the further forecast our our that therefore, paying and means reflects that year.

far half about a rate interest reminder, we're swaps. through the as goes, as fixed rate rate As

higher rate we forward a which curve half is pay So we to we what at use forecast what is the than as the to do think. And floating, for rate, floating down do the we the do over intend the currently that year. rate will pay SOFR down,

Charles Strauzer

just Got a sense the average rate it. of And currently?

David Mutryn

it's X%. Currently, about

Operator

Our next Subin with from Stifel. follow-up question a is Bert

Bert Subin

this on But question obviously that's year. But down you do interest stop where interest was point Just paying back expense that guess is I you a if decline to million, years, piggyback expense that go? I become want at repurchases lower. like share interesting? more $XX And much a to something the few do look side. quite on what your debt?

David Mutryn

the guidepost I low good We'll range. mean, long the the bias my want mentioned I of question. to as to think in be end debt range a I prepared Yes, we that term. what Xx that for use continue current towards it's our to ratio in remarks, X

to that having the they be our be in X when come environment kind nature, acquisitions debt time where of should to can evaluating and acquisitions well are -- deployment as ratio. for over come, to we predict dry rate it's they dividends, beyond priority so that continue benefit capital So opportunistic for they will While they're interest hard available of as to relative right? powder we the Xx be

So those that formula. consider we of are what in kind

Bruce L. Caswell

venture about small my capability corporate in I talked that we being bets envision those that also Bert, that if I might, note we capital relatively have I might remarks, placed. -- prepared And the

time, capital deployment they that I'd rise competitive and it So ratio element over innovation increase advantage to wouldn't at of important same the it's our other, level time. say, strategy smaller to the that would move our an But meaningfully.

Bert Subin

Got it.

Is that concerned other remain think been there. fees just then turns late. guess, an have And you here? really should year. 'XX? on Okay. incentive from And your us things in final a like How exam business been sounds about from We've That VA helps. the it way more really, We've pretty give the growth Or the should of where maybe heard my we that of on into exam you still additive question. next late start lot to pipeline? some update in competitors there strong get additive or Could the some, stand do business. I 'XX and VA

Bruce L. Caswell

that concern, through Well, guess bit I have is come to but more I that where ended, a me start don't which you I'll let logic.

up FY a we meaningful know, So to QX you of started and as QX, in saw QX back then in volumes. 'XX, pretty across and step that,

So and necessitated increased today, across the we're at capacity, it's operating the system. by customer, that's and significantly

you'd The thing. The If listen are you rate application talk significant. them, to same the significant. inventory our hear is competitors to or levels

In fact, on high, shows saying correct that think there's current record website VA the in that's cases in inventory, publicly a that available million. of data I I'm the and north $X

XXX increasing levels than would follow capacity not into also inventory, as remain been backlog at that's more the of can is that and the I reflective cases be days. in You backlog and high. inventory backlog building obviously have rate the system I it for found among interesting, think but inventory vendors, same the very

So the that means that examination vendors us downstream. there's a then like the and by VA lot are of that's attention waiting work

our further not that a about they 'XX. as XX%, that note grow will, that if there count grew out the their an their I doing to contracts indicators additional to what's completed. number hire increase. spike, of beyond their look support feel do good employees, comprise in has a that work rate they the themselves. we year, head kind this the that hiring to to gradual that FY of to headcount. In information A FY you overall X,XXX great 'XX. and the of VA what's the revenue the other significant requested capacity area, And the over indicator they've at we there's want -- FY need And been increasing we in and course of through employees is intend a for increasing 'XX, at really 'XX, gradual public by say see to we So hired we but intentions look bulk a FY

next that here fiscal work are as would that they work our the well. that volumes into view So year see get be well and the the continuing through to required

with that And forward. that, was time. they'll the area the confident they that's we're say is has would that. I and continue adjustments community to So made on had as implemented, that, VA an that fine-tune obviously that's to incentives just over commenting the go program just I but a disincentives. in we feel vendor

on significant we for FY have types payments. And reliance don't those 'XX in so of estimates a our

Operator

will conclude today's This conference.

your time, lines at and You may disconnect this for participation. you thank your

Maximus (MMS) 16 Nov 232023 Q4 Earnings call transcript