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MAXIMUS (MMS) Q4 Earnings Surpass Estimates, Increase Y/Y

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·4 min read
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  • MMS
  • IQV
  • OMC
  • EFX

MAXIMUS, Inc. MMS reported better-than-expected fourth-quarter fiscal 2021 results.

Earnings per share (EPS) in the fourth quarter (excluding 25 cents from non-recurring items) amounted to $1.08, which surpassed the Zacks Consensus Estimate by 21.4% and increased 5.9% year over year.

Revenues of $1.1 billion beat the consensus mark by 2.1% and increased 19.7% year over year. The uptick was driven by new COVID-19 response work such as vaccination distribution support services, unemployment insurance program support, disease investigation, contact tracing and other key initiatives.

Shares of MAXIMUS have gained 10.2% in the past year compared with a 8.6% rise of the industry it belongs to.

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Zacks Investment Research

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Segmental Revenues

The U.S. Services segment’s revenues of $392.6 million increased 5.7% (all organic) year over year, mainly owing to new work. The uptick was primarily driven by COVID-response work.

The U.S. Federal Services segment’s revenues of $540.3 million rose 27.7% from the year-ago quarter’s reported figure. The uptick was due to an increase in COVID-19 response work.

Outside the U.S. segment, revenues of $173.2 million increased 34% year over year on a reported basis.

Sales and Pipeline

Year-to-date signed contract awards on Sep 30, 2021, totaled $5.62 billion and contracts pending (awarded but unsigned) amounted to $0.72 billion. The sales pipeline at Sep 30, 2021, was $33.9 billion. This included $8.8 billion in proposals pending, $1.42 billion in proposals in preparation and $23.7 billion in opportunities tracking.

Operating Performance

Operating income of $68.2 million, declined 19.3% year over year. Operating income margin of 6.2% was lower than the year-ago quarter’s figure of 9.2%.

Balance Sheet and Cash Flow

This Zacks Rank #3 (Hold) company ended the fiscal fourth quarter with cash and cash equivalents of $135.1 million compared with $96.1 million in the prior quarter.

The company provided $270.6 million of cash from operations. Free cash flow amounted to $266.2 million. MAXIMUS paid out dividends of $17.2 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2022 Outlook

MAXIMUS expects revenues in the range of $4.4-$4.6 billion. The estimate is above the Zacks Consensus Estimate of $4.12 billion.

It expects EPS in the range of $4.00-$4.30. The projection is below the Zacks Consensus Estimate of $4.47 per share.

Cash flows from operations are expected between $275 million and $325 million. Free cash flow is anticipated in the range of $225-$275 million.

The effective tax rate is anticipated in the range of 25-26%. Weighted average shares outstanding are projected in the range of 62.5-62.6 million.

Performance of Other Business Services Companies

Equifax’s EFX third-quarter 2021 adjusted earnings of $1.85 per share beat the Zacks Consensus Estimate by 7.6%. The bottom line declined on a year-over-year basis. Revenues of $1.22 billion outpaced the consensus estimate by 3.6%. The top line increased 14.5% year over year on a reported basis and 14% on a local-currency basis.

EFX surged 66.5% in the past year against a 17.6% decline of the industry it belongs to. Equifax carries a Zacks #3 Rank.

IQVIA’s IQV third-quarter 2021 adjusted EPS of $2.17 beat the consensus mark by 1.9% and rose 33.1% on a year-over-year basis. Total revenues of $3.39 billion outpaced the consensus estimate by 1%. The top line increased 21.7% year over year on a reported basis and 21.1% on a constant-currency basis.

IQV soared 57.2% in the past year against a 17.6% decline of the industry it belongs to. IQVIA carries a Zacks #3 Rank.

Omnicom’s OMC third-quarter 2021 adjusted earnings of $1.65 per share beat the consensus mark by 20.4% and increased 36.4% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 0.6% and increased 7.1% year over year.

OMC increased 14% in the past year compared with a 28% rise of the industry. Omnicom carries a Zacks #3 Rank.


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