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Rick Nadeau
Chief Financial Officer
February 8, 2018
Helping Government Serve the People®
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Forward-looking Statements & Non-GAAP Information
These slides should be read in conjunction with the Company’s most recent quarterly earnings press release, along
with listening to or reading a transcript of the comments of Company management from the Company’s most recent
quarterly earnings conference call.
This document may contain non-GAAP financial information. Management uses this information in its internal
analysis of results and believes that this information may be informative to investors in gauging the quality of our
financial performance, identifying trends in our results, and providing meaningful period-to-period comparisons.
These measures should be used in conjunction with, rather than instead of, their comparable GAAP measures. For
a reconciliation of non-GAAP measures to the comparable GAAP measures presented in this document, see the
Company’s most recent quarterly earnings press release.
Throughout this presentation, numbers may not add due to rounding.
A number of statements being made today will be forward-looking in nature. Such statements are only predictions
and actual events or results may differ materially as a result of risks we face, including those discussed in our SEC
filings. We encourage you to review the summary of these risks in Exhibit 99.1 to our most recent Form 10-K filed
with the SEC. The Company does not assume any obligation to revise or update these forward-looking statements
to reflect subsequent events or circumstances.
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Total Company Results – First Quarter of FY 2018
• Passage of Tax Cuts and Jobs Act in the U.S. created
significant benefits for MAXIMUS
• As a profitable, high-cash conversion business with the
majority of our earnings in the U.S., we have historically
had a high income tax rate
• Reduction of the corporate income tax rate will increase
MAXIMUS earnings, including the benefit in Q1 FY18
• Revenue increase driven by Health Services and
Human Services Segments, which offset expected
declines in U.S. Federal Services Segment; part of
increase due to favorable foreign exchange movements
• Total company operating margin improved 70 basis
points to 12.8% compared to Q1 FY17
• With the benefit of tax reform, our effective income tax
rate in Q1 FY18 was 24.9% and GAAP diluted EPS
were $0.89
1 During FY17, we incurred restructuring costs for U.K. Human Services business.
2 Other costs and credits relate to SG&A balances that do not relate directly to segment business activities. During Q1 FY17, we incurred $0.4M of legal
costs related to a matter that occurred in FY09. This matter was settled in Q3 FY17.
Revenue
Health Segment 352.1$ 340.7$ 3%
U.S. Federal Segment 133.0 141.3 (6%)
Human Segment 138.1 125.5 10%
Total 623.1$ 607.6$ 3%
Operating Income
Health Segment 57.6$ 50.1$ 15%
U.S. Federal Segment 16.7 17.9 (7%)
Human Segment 8.1 11.8 (32%)
Segment Income 82.4$ 79.8$ 3%
Intangibles amortization (2.7) (3.4)
Restructuring costs1 - (2.2)
Other2 - (0.4)
Total 79.7$ 73.8$ 8%
Operating Margin % 12.8% 12.1%
Incom tax expense 19.9$ 26.9$
Income tax rate 24.9% 36.7%
Net Income attrib table
to MAXIMUS 59.1$ 46.7$ 27%
Diluted EPS - GAAP 0.89$ 0.71$ 25%
($ in millions,
except per share data)
Q1 FY18 Q1 FY17 % Change
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Long-Term Favorable Impacts from Tax Cuts and Jobs Act
Q1 FY18
Provision for
income taxes ($M)
Effective Income
Tax Rate
EPS
Q1 FY18 results, as reported $ 19.9 24.9% $ 0.89
Impact from reduction from U.S. federal income tax rate1 6.4
Non-recurring deferred tax assets and liabilities2 10.6
Non-recurring toll tax3 (9.5)
Estimated Q1 FY18 results, excluding tax reform benefits4 $27.4 34.2% $0.78
1 Reduction to the U.S. federal income tax rate from 35% to 24.5% in the quarter reduced our income tax provision
2 Recorded a reduction to income tax provision with respect to deferred tax assets and liabilities because of the impact of lower U.S.
federal tax rates on the reversal of differences between financial reporting and tax accounting
3 Analyzed and recorded an increase to our income tax provision from taxation of foreign retained earnings (also known as “toll tax”)
as the U.S. transitions to a territorial tax system
4This is a “non-GAAP” number provided to assist users of our financial statements in understanding the effects of the Tax Cuts and
Job Act.
It is important to recognize that the law also creates some negative impacts related to the deductibility of executive compensation and
certain business expenses that will not impact the Company until FY19.
The lower U.S. federal blended tax rate of 24.5% will reduce our effective income tax rate to an estimated 26% to 28% for FY18
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Health Services Segment
Q1 FY18 Revenue
• Increase driven by organic growth and favorable currency exchange rates
Q1 FY18 Operating Margin
• Segment is comprised of a sizeable portfolio of contracts; contract maturity helped contribute to strong
operating margins in Q1 FY18
Year-Over-Year U.K. Health Assessment Advisory Service (HAAS) Improvements
• HAAS also contributed to Y/Y margin expansion; contract experienced improved efficiencies
complemented by good service delivery
• This resulted in a lower level of penalties and better margins in Q1 FY18 when compared to Q1 FY17
• As a reminder, HAAS is a cost-reimbursable contract with incentives and penalties tied to maintaining key
service-level targets
Revenue
Health Services 352.1$ 340.7$ 3%
Operating Income
Health Services 57.6$ 50.1$ 15%
Operating Margin % 16.4% 14.7%
% Change($ in millions) Q1 FY18 Q1 FY17
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U.S. Federal Services Segment
Revenue
U.S. Federal Services 133.0$ 141.3$ (6%)
Operating Income
U.S. Federal Services 16.7$ 17.9$ (7%)
Operating Margin % 12.6% 12.7%
% Change($ in millions) Q1 FY18 Q1 FY17
Q1 FY18 Financial Results
• As expected, revenue decrease was due to some contracts that ended, including subcontract for Department of Veterans
Affairs that ended in April 2017; segment continues to execute well on the bottom-line
Temporary Support Work
• As mentioned last quarter, awarded temporary work as a subcontractor in support of disaster relief efforts
• In late November, the agency notified the prime contractor that these efforts should be reduced immediately
• As a result, revenue from this work will be less than our initial forecasts
• This, coupled with a recent loss of a rebid, has changed our revenue outlook for this segment; we expect revenue from
the U.S. Federal Services Segment will run closer to $500M for FY18
Business Development
• Successfully secured spots on some additional new contract vehicles, which will help in the long run
• While we are disappointed with recent setbacks, we are committed to amplifying our business development efforts and
have taken steps to make investments and secure fresh resources for these initiatives
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Human Services Segment
Revenue
Human Services 138.1$ 125.5$ 10%
Operating Income
Human Services 8.1$ 11.8$ (32%)
Operating Margin % 5.8% 9.4%
($ in millions) Q1 FY18 Q1 FY17 % Change
Q1 FY18 Revenue
• Increase driven by revenue from our Australian operations, and to a lesser extent, favorable
foreign exchange rates
• Both of these more than offset the expected revenue declines from the wind down of the U.K.
Work Programme
Q1 FY18 Operating Margin
• As expected, operating margin unfavorably impacted by start-up losses on new contracts that are
in start-up phase and higher pass-through revenue in Australia
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Cash Flows, DSOs, Cash and Capital Allocation
$ in millions Q1 FY18
Cash flow from operations $37.9
Cash paid for property, equipment & capitalized software ($6.5)
Free cash flow $31.4
Days Sales Outstanding (DSO)
• 69 days at December 31, 2017, in-line with our expectations and consistent with the prior year
Q1 FY18 Balance Sheet
• Cash and cash equivalents totaling $196.9M at December 31, 2017
Capital Allocation & Tax Reform
• Committed to sensible uses of cash and a disciplined approach to cash deployment
• New U.S. tax reform law also improves our cash flows
• Irrespective of the new law, we were already committed to investing more in new digital and innovative technologies,
including related operating expenses of people and processes required to enhance returns from these investments
• U.S. tax reform law will make these types of investment decisions more compelling and encourage us to invest more
quickly in order to take advantage of enhanced economic returns
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Raising EPS, Cash Flow and Free Cash Flow Guidance
Fiscal 2018 Guidance
New Old Notes
Revenue $2.475B - $2.550B $2.475B - $2.550B
Bias toward lower half of the revenue range due to
lowered outlook from U.S. Federal Services Segment
(now expect U.S. Federal Services Segment to run
closer to $500 million for FY18 with revenue in 1H FY18
and 2H FY18 to be about the same and revenue in
Q2 FY18 to be lower than Q1 FY18)
GAAP Diluted
EPS
$3.30 - $3.50 $2.95 - $3.15 Increasing by $0.35 as a result of U.S. tax reform
Cash provided
by operations
$225M - $275M $200M - $250M Increasing by $25M
Free cash flow $195M - $245M $170M - $220M Increasing by $25M
Estimated Effective Income Tax Rates
FY18 FY19
Effective income tax rate 26% to 28% 26% to 28%
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Richard Montoni
Chief Executive Officer
Bruce Caswell
President
February 8, 2018
Helping Government Serve the People®
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Chief Executive Officer Transition
• Bruce will succeed as CEO effective April 1, 2018
• Working together to ensure a smooth transition
• The time is right and Bruce is the right person to guide MAXIMUS in the future
• Key accomplishments during Rich’s tenure as CEO:
− helping governments implement major reform efforts
− expanding into new geographies
− divesting non-core businesses
− implementing the structures and processes to better manage enterprise risk
− incorporating acquired solutions and skills sets
• Rich’s vision helped transform MAXIMUS into a highly focused, preeminent
partner to governments around the globe
Bruce Caswell, President
& Incoming CEO
Richard Montoni, Outgoing
CEO & Newly Appointed
Special Advisor to the CEO
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Transforming to Meet the Needs of Clients
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Digital Transformation
Clinical Evolution
Operating in a changing and
competitive world
Clients expect continual
evolution and innovation
Constantly seeking ways to
create more efficiencies and
improve service delivery
MAXIMUS is already transforming to meet the demands of our clients
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Digital Transformation
Cultural Shift
• Digital disruption within the
government services market
and new models for
engagement and efficiencies
• We are implementing a
roadmap across all of our
markets looking at the
pace of digital adoption
and the impact of various
digital enablers
Digital Maturity
• Clients are at various stages
of “digital maturity” and
we are leading and shaping
the market
• We help clients define and
operationalize where digital
technologies and innovation
can have a meaningful
impact in programs
• We have positive momentum
with market-leading
applications, performance
analytics and technology
Beyond Engagement
• Digital consumer
engagement was an early
priority for government
• Our solutions go beyond this:
− Advanced analytics play
an increasing role in
modeling solutions and
optimizing outcomes
− Digital automation, such
as next generation
interactive voice
recognition and process
automation, drive
efficiencies and
improve the quality of
our operations
These efforts enhance our competitive position and improve our overall service delivery
We intend to invest more capital and resources in implementing our digital strategy
Always looking to introduce digital technologies to streamline and improve programs to achieve the outcomes that matter
Transformation allows us to develop digital offerings that will provide new revenue streams and help drive long-term growth
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BPO Services
with Clinical
Dimensions
Occupational
Health and Digital
Well-being
Disability
Assessment
Services
Long-Term
Services and
Supports
Assessments
Clinical Evolution
• Macro trends driving demand for BPO with
a clinical element (rising health care costs,
longevity, chronic conditions, comorbidities,
and preventable conditions through
healthier lifestyles)
• MAXIMUS can help clients address these
challenges with solutions that are
strengthened with our growing clinical
expertise
• In last five years, we accelerated our
clinical evolution through a focused
strategy on programs related to
assessments and appeals and through
acquisitions
• Shifting workforce with the expansion of
assessments and appeals, including higher
skill sets and longer tenure; this knowledge
and stability strengthens our competitive
position and creates a stickier offering
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Long-Term Growth Strategy
Three Pronged Approach to
Long-Term Growth
Moving into
adjacent
markets
Incorporating
new growth
platforms
Growing in
current core
markets
• Digital transformation and clinical evolution not
mutually exclusive, some opportunities require
expertise in both
• Our digital engagement strategies help governments
and employers improve health and wellness and
extend healthy independent living for their populations
• Telehealth is one example of how we can use health-
related technologies backed by clinical expertise to
help our clients address the rising costs of health care
Digital
Technologies
Clinical
Assessments
& Occupational
Health
Example:
Telehealth
• Digital transformation and clinical evolution will
play a key role in our long-term growth strategy
• As with any guiding strategy, it will naturally evolve
so that we can meet the needs of our clients and
capitalize on emerging opportunities in dynamic
global markets
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Affordable Care Act Operations Update
• Completed the most recent open
enrollment season under the Affordable
Care Act (ACA)
• Launched with a bit of a bang with higher
call volumes, likely due to consumer
confusion over the status of the program
• However, as open enrollment progressed,
it was business as usual
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U.S. Federal Operations Update
• Gained credibility and respect as a trusted contractor, but recognize
that there is more work to be done
• Federal government procures a significant amount of work through
pre-competed contract vehicles (as opposed to full and open
competition); it is important to be on the right vehicles
• Recently secured positions on two new acquisition vehicles:
− GSA IT 70, the largest and most widely used vehicle
− Alliant/2, an important next-generation vehicle
• Given the challenges in a tough U.S. federal environment, including
the ongoing pause, making important changes as we position
MAXIMUS as a more meaningful player
• Recognize the need to amplify the segment’s sales and business
development efforts
• Dedicating additional resources to shape longer-term opportunities
driven by emerging customer priorities
• Firmly believe that there are significant opportunities to drive our core
capabilities into the federal market
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New Awards December 31, 2017
YTD Signed Contracts $1.2B
Additional Unsigned Contracts $236M
Sales Opportunities December 31, 2017
Total Pipeline* $3.2B
* Reported pipeline only reflects short-term opportunities where we
believe request for proposals will be released within next six months
New Awards & Sales Pipeline
During Q1 FY18:
• Signed $1.2B of awards
• Notified of award on $236M in contracts
• Total year-to-date awards of approximately $1.4B
• Overall a solid quarter and good start for FY18
• Pipeline at December 31, 2017 increased to $3.2B
• Approximately 55% is tied to new work and reflects
opportunities across all three segments and all of our
major geographies
Conversion of sales pipeline into future revenue growth depends on
win rates, timing of awards, how quickly the contracts ramp up
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Conclusion
• Appreciation to the MAXIMUS
management team and our
employees
• Great pride at what we accomplished
together and it has been a pleasure to
work with such a talented group