Exhibit 99.3

 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

 

Link to searchable text of slide shown above


 


 

Searchable text section of graphics shown above

 



 

[LOGO]

 

[GRAPHIC]

 

MAXIMUS QUARTERLY EARNINGS CALL

 

David N. Walker

Chief Financial Officer and Treasurer

 

2nd Quarter Fiscal 2006

 

May 4, 2006

 



 

Q2 FY06 Financial Highlights

 

                  Revenue was $179.8 million

                  An increase of 17% year-over-year

                  Driven principally by Operations Segment

 

                  Net income totaled $8.9 million or $0.41 per diluted share

                  Compares to $8.5 million or $0.39 a share in the same quarter last year, after adjusting for FAS 123R

                  Q2 EPS impacted by $0.02 for legal and settlement costs

 

                  Net cash provided by operating activities totaled $11.4 million with free cash flow of $6.5 million

 

                  Cash, cash equivalents, and marketable securities remained healthy at $175.1 million as of March 31, 2006

 

2



 

Consulting Segment Results

 

Consulting Segment: 15% of total revenue

 

                  Consulting Segment revenue increased 12% over last year to $26.4 million

 

                  Operating income totaled $3.0 million with an operating margin of 11.3%

                  Revenue and margin growth over Q2 05 driven principally from the financial services division:

                  Rev Max claims and

                  A large child welfare compliance project.

 

NOTE:

 

FAS 123R was implemented on prospective basis at the beginning of FY06

 

FY 05 segment results exclude stock option expense; while FY 06 results include the impact of option expense

 

3



 

Systems Segment Results

Systems Segment: 18% of total revenue

 

                  Systems Segment revenue $32.2 million which is comparable to last year

 

                  Operating income just under $300,000

                  Decline of $1.7 million compared to Q2 05

                  Operating income decline largely the result of additional resources needed to fulfill contractual obligations on a large system implementation

                  Follow-on phase to contract should return the Division to profitability in the second half of FY 06

 

4



 

Operations Segment Results

 

Operations Segment: 67% of total revenue

 

                  Operations Segment grew 24% over Q2 05, revenue of $121.2 million

                  Growth driven principally by:

                  British Columbia health operations contract; launched in Q3 05

                  $4.1 million hardware delivery on voter contract

                  New work across the segment

 

                  Operating income totaled $10.5 million with an 8.7% operating margin

                  Operating margin declined compared to Q2 05 due to losses in B.C. and a $2.3 million loss in Texas

                  Operating margin expansion over Q1 05 was driven by reduced losses and improvements on the B.C. project

 

                  Expect B.C. project to turn the corner in FY07

                  Current view - project will begin sustained profitable operations FY 07

 

5



 

Total Company - Expenses and Operating Margin

 

                  Operating margin for Q2 was 7.6%

                  Excluding legal and settlement; operating margin was 8%

 

                  Year-over-year SG&A and operating margins were impacted in FY06 by FAS 123 (R), as FY 05 does not include option expense

                  Total stock option expense in the Q2 06 of $1.3 million or $0.04 per diluted share

                  If we expense options in Q2 05, option expense would have been $1.6 million or $0.05 per diluted share

 

6



 

Balance Sheet

 

 

 

Q205

 

Q305

 

YE &
Q405

 

Q106

 

Q206

 

Billed A/R

 

$

115.5

 

$

128.2

 

$

124.5

 

$

123.6

 

$

139.6

 

Unbilled A/R

 

$

48.1

 

$

44.7

 

$

43.7

 

$

47.2

 

$

46.2

 

Total A/R

 

$

163.6

 

$

172.9

 

$

168.3

 

$

170.8

 

$

185.8

 

 

                  A/R for Q2 totaled $185.8 million

                  DSOs totaled 97 days

 

NOTE: The 97 days includes $5.4 million in long term A/R; classified within other assets on balance sheet

 

7



 

Cash Balance, Stock Repurchase, and
Cash Flow from Operations

 

 

 

Q205

 

Q305

 

Q405

 

FY 06

 

Q106

 

Q206

 

Cash from Ops

 

$

27.1

 

$

11.9

 

$

25.0

 

$

74.1

 

$

5.1

 

$

11.4

 

FCF

 

$

22.5

 

$

6.0

 

$

15.9

 

$

49.8

 

$

(0.5

)

$

6.5

 

 

                  Cash from operations totaled $11.4 million with free cash flow of $6.5 million

 

                  Cash, cash equivalents, and marketable securities of $175.1 million at March 31, 2006

 

                  The company purchased 138,700 shares of common stock during Q2, with $24.4 million available under ongoing stock repurchase program

 

8



 

[LOGO]

 

[GRAPHIC]

 

MAXIMUS QUARTERLY EARNINGS CALL

 

Richard A. Montoni

President and Chief Executive Officer

 

2nd Quarter Fiscal 2006

 

May 4, 2006

 



 

Management Transition

 

                  MAXIMUS remains strong and stable

 

                  Above all a team-oriented company

 

                  Overwhelming support received from large customers

 

                  Change will not adversely impact project and field operations

 

                  Morale is high and employee base is energized

 

10



 

Strategic Plan Remains on Course

 

                  Several initiatives already underway

                  Refocus some current efforts

 

                  Long-term, six-point plan laid out 18 months ago

                  Deeply involved in developing the strategic direction

                  Made real, tangible progress toward those objectives

 

                  Strengthened management team

                  Implemented cost reductions to better leverage resources

                  No immediate plans for additional major cost reductions

                  Significant progress made in turning around and combining unprofitable business units

 

11



 

New Approach to Business

 

                  Committed to being the premier government services provider

                  Quality can and will be improved

                  Execute on current contracts and manage the risk in start-up implementations such as BC and TX

 

                  Redirect the organization on winning more profitable business and increasing overall margin

                  Not strictly emphasizing a volume-driven approach

                  More selective in determining the opportunities

 

                  Committed to margin expansion in current contracts and new business wins

                  Critical component - how operations going forward are managed

 

12



 

MAXIMUS Leadership

 

                  Recruit industry-leading talent that hit the ground running

 

                  Taken ownership of long-term objectives

                  More can be accomplished by further empowering the team

                  Decision-making process and accountability must be driven downward

 

                  Segment leaders will have necessary resources and decision-making latitude to increase efficiency and accelerate growth

                  Need to be a more flexible, nimble organization

                  Managers to take on more day-to-day decision making

 

13



 

Culture Shift Towards Greater Teamwork

 

                  Fostering a culture that requires management to maintain accountability and deliver on goals

 

                  Scalable to the growth level aspired; not dependent on any single person

 

                  Improving performance in British Columbia requires expertise across the Company

                  Headed in the right direction

 

                  Efforts in Texas require similar team work

 

14



 

British Columbia

 

                  Significant progress made in turning around performance

                  Service levels among the best on record for the Ministry

 

                  Ministry quarterly report noted:

                  Maintaining a record low document inventory level

                  Processed public documents within required levels

                  Answered phones from the public, within three minute call window

                  Answered calls from doctors and pharmacists, within one-minute call window

 

                  Aligning staffing levels and managing service delivery closer to economic model

 

15



 

Texas Integrated Eligibility Project

 

                  Texas Health and Human Services Commission delayed integrated eligibility roll out

 

                  Delay is a result of needed technical and operational improvements

                  Systems development and interfacing

                  Start-up readiness

 

                  Financial implications not known today but dependent on finalization and agreement to revise scope and responsibilities

 

                  Finalize and quantify in the next 30 days

 

16



 

Uses of Cash

 

                  M&A activity: smaller, tuck-in acquisitions

 

                  Divest certain businesses

                  Facilitate margin improvement

                  Business lines that no longer aligned with strategic objectives

 

                  Reinvest in the business to upgrade technological capabilities

                  More effectively scale service offerings

                  Improve ability to roll knowledge from one project to the next

 

                  Continue to pay a quarterly cash dividend of $0.10 per share

 

                  Maintain an active share repurchase program

 

17



 

Re-bids

 

                  17 jobs up for re-bid in FY 06

                  Have won or received extensions on 13

                  Total value of $172 million

                  To date, won $114 million

 

                  FY 06 re-bid contract value totaled close to $32 million

                  Secured $29 million, to date

                  Largest re-bid decision expected end of FY 06

 

18



 

Options

 

                  14 option exercises outstanding

                  Total contract value of $81 million

                  Won six with a contract value of $48 million

                  FY 06 impact totals $20 million and we’ve secured $17 million

 

                  Eight remaining options

                  Three totaling $21 million; awarded late 2006 with no impact to FY06

 

19



 

Summary Awards & Pipeline

 

 

 

Q2 FY05

 

Q2 FY06

 

Signed

 

$

628

 

$

292

 

Awarded but Not Signed

 

452

 

135

 

Pipeline

 

 

 

 

 

Proposals Submitted

 

190

 

494

 

Proposals in Preparation

 

310

 

144

 

Major Opportunities Tracking

 

558

 

682

 

Total Pipeline

 

$

1,058

 

$

1,321

 

 

All dollar values in millions

 

20



 

Guidance

 

                  Expect revenue in the range of $710-$725

 

                  Revising full year EPS estimates

                  $1.87 still achievable; reducing to more conservative levels

                  Estimate diluted earning per share in the range of $1.80 - $1.87

 

                  Revised forecast with several items in mind

                  Texas

                  Continued improvement in British Columbia

                  License revenue and contingency-based work uncertainties

                  Several accretive events can get us to $1.87

 

                  Revised guidance is prudent and conservative

 

21



 

Conclusion

 

                  Focused on key priorities

 

                  Preserve MAXIMUS heritage but make meaningful changes

 

                  Cultural shifts

                  Better leverage talent

                  More directed, focused, and accountable

                  Empower leadership

 

                  Re-evaluating uses of cash

 

                  Optimizing current business

                  Project and risk management

                  Pricing

                  Approach to business development

 

22