Maximus Inc (MMS) Q1 2025 Earnings Call Highlights: Strong Federal Services Growth Amidst ...
Adjusted EBITDA Margin: 11.2% for the quarter.
Adjusted EPS: $1.61 for the quarter.
US Federal Services Revenue: $781 million, a 15.3% increase, all organic.
US Federal Services Operating Margin: 12.7% for the quarter.
US Services Revenue: $452 million, a 7.7% decrease.
US Services Operating Margin: 9.0% for the quarter.
Outside the US Revenue: $170 million, a 6.0% increase.
Outside the US Operating Margin: 4.8% for the quarter.
Free Cash Flow: Outflow of $103 million for the quarter.
Share Repurchases: Approximately 3.1 million shares for $237 million during the quarter.
Total Debt: $1.40 billion with a net debt to EBITDA ratio of 1.8 times.
Updated Revenue Guidance for FY2025: $5.2 billion to $5.35 billion.
Updated Adjusted EPS Guidance for FY2025: $5.90 to $6.20 per share.
Updated Free Cash Flow Guidance for FY2025: $355 to $385 million.
Warning! GuruFocus has detected 2 Warning Signs with MMS.
Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Maximus Inc (NYSE:MMS) reported strong first quarter results with a 5.7% year-over-year revenue growth, primarily driven by the US federal services segment.
The company successfully secured favorable outcomes on two key rebids, including the CMS contact center operations and VA medical disability examination contracts.
Maximus Inc (NYSE:MMS) completed the divestiture of its employment services businesses in Australia and South Korea, reducing volatility and improving profitability in the outside the US segment.
The board of directors authorized an increase of $200 million to the share repurchase program, with $290 million deployed in share repurchases during the quarter.
The company has a healthy pipeline of sales opportunities, with a total value of $41.4 billion, and is focusing on technology modernization and cost-effective program administration.
The US services segment experienced a 7.7% revenue decrease, attributed to tough year-over-year comparisons and seasonality impacts.
The outside the US segment incurred divestiture charges of about $38 million, primarily due to foreign exchange losses related to Australia.
The company's net debt to EBITDA ratio increased from 1.4 to 1.8 times, primarily due to increased share repurchase activity.
Maximus Inc (NYSE:MMS) faces potential risks from policy changes and procurement timing, with less than 2% of FY25 revenue coming from new work.
The company's tax rate guidance increased slightly, with the first quarter rate impacted by non-tax deductible divestiture-related charges.
Q: Bruce Caswell, can you discuss the strength in Q1 and whether there was any pull forward in performance? A: David Mutryn explained that the Q1 overperformance was not a pull forward but rather a result of strong execution. The full-year guidance has been adjusted to reflect this, with a $0.20 increase in earnings guidance. The company maintains a cautious approach, with less than 2% of revenue coming from new work.
Q: Can you talk about your confidence in the guidance and any potential risks? A: David Mutryn stated that confidence remains high, and the company is careful not to lean forward too much in its guidance. The new business assumption is conservative, with less than 2% of revenue from anticipated pipeline conversions, ensuring good visibility.
Q: How is the new administration affecting your portfolio, particularly in areas not tied to durable programs? A: Bruce Caswell noted that any potential impacts would be in small pockets. The company has reviewed its portfolio and believes that core functions will continue even if there are structural changes at the department level. The deal flow remains normal, similar to previous presidential transitions.
Q: Can you elaborate on the Medicaid and state-based exchanges relationship and what you've observed over the last 12 months? A: Bruce Caswell highlighted that there has been a significant increase in health plan selections during open enrollment, indicating a transition from Medicaid to exchanges. Maximus operates state-based exchanges, allowing them to capture this transition. The policy environment remains fluid, with potential changes affecting enrollments.
Q: What is the outlook for the veteran assessment business, and how does the new contract renewal impact it? A: Bruce Caswell and David Mutryn explained that the claims inventory has stabilized, and the company expects steady to modest growth in volumes. The focus remains on improving the veteran experience and handling volumes efficiently, with significant technology investments planned.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
The Most Important Thing for Advance Auto Parts Investors to Watch in 2025
Key Points Advanced Auto Part's restructuring has returned the company to profitability, and it should start generating cash in the second half. The stock was recently sold off due to higher interest rate payments impacting profitability. Investors should look for progress in the company's efforts to improve its inventory in stores and how quickly it sells it compared to paying its suppliers. 10 stocks we like better than Advance Auto Parts › It's fair to say the latest earnings report from Advance Auto Parts (NYSE: AAP) was not well received by the market -- the stock was initially sold off by a mid-teens percentage. However, I think there was more good than bad in the actual numbers. That's not to say anyone should get overly excited, because this is still an underperforming company. Still, there are some positives here, and there are some things for the stock's bulls to build on. The investment case for Advance Auto Parts The case for buying the stock is well known, and if not, it should be, because the company has been around for over a decade. Simply put, the auto parts retailer's operational metrics are so woefully short of its peers, principally AutoZone and O'Reilly Automotive, that all it will take is some restructuring to get the company somewhere close to its peers' margins, cash flow, and earnings, and a substantial amount of value will be generated for investors. That was the gist of the case when activist investor Starboard Value got involved a decade ago (only to exit in 2021), having failed mainly in helping engineer any kind of significant closing of the gap with AutoZone and O'Reilly. In case you are wondering what I'm referring to, here are a few charts to demonstrate. They show earnings before interest, taxation, depreciation, and amortization (EBITDA) margins, free cash flow (FCF) generated from assets, and finally return on invested capital (ROIC). None of these metrics has improved over the last decade. The problem with Advance Auto Parts The main areas of improvement that Starboard articulated a decade ago still apply today. Auto parts retailing is a business that ensures the right stock is in the right store at the right time. In other words, it's a game of optimizing inventory, building supplier relationships, and above all, logistics management. Time is of the essence in the industry, as customers, whether in the do-it-yourself or especially in the do-it-for-me market, usually demand a part as soon as possible to help repair a vehicle and get it back roadworthy. It's also a game Advance Auto Parts hasn't played well over the years, as evidenced by its inability to generate good cash flow from its assets in the chart above. Simply put, the company has lagged its peers in converting inventory into cash. It outflows cash by paying its suppliers quicker than it generates cash from the parts it sells to retail customers. What happened in the recent results The recent results were in line with what management had pre-announced on July 24, except for one crucial detail. Management lowered its guidance for full-year adjusted diluted EPS from continuing operations from $1.50-$2.50 to a new range of $1.20-$2.20 "to account for higher net interest expense related to its recent senior notes offering," according to the earnings release. The company recently took on $1.95 billion in debt to redeem existing debt maturing in 2026 and provide it with cash to support its ongoing restructuring. The good news from the results On a more positive note, management's restructuring resulted in a return to profitability in the quarter. Furthermore, its full-year guidance for an outflow of $85 million to $25 million implies FCF generation of $116 million to $176 million in the second half, given there was a $201 million outflow in the first six months. These are positive steps, but as management noted on the earnings call, "we recognize that we are still in the early phases of our three-year turnaround plan." Moreover, turning back to the fundamental issue of selling inventory down quicker than paying suppliers, Advance Auto Parts continues to lag its peers. These charts show how many days it takes the company to sell its inventory compared to the days it takes to pay suppliers -- a low number is better. Investors should monitor this metric closely, as Advance Auto Parts will not be able to demonstrate improvement in its efforts to improve operational performance until it lowers this metric. Do the experts think Advance Auto Parts is a buy right now? The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Advance Auto Parts make the list? When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,070% vs. just 184% for the S&P — that is beating the market by 885.55%!* Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,106,071!* The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Most Important Thing for Advance Auto Parts Investors to Watch in 2025 was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
Snap Stock Plunged After Earnings. Buy the Dip?
Key Points Sponsored Snaps are showing strong engagement and conversion gains. Subscription revenue from Snapchat+ is growing quickly from a small base. Heavy stock-based compensation and dilution keep valuation concerns high. 10 stocks we like better than Snap › Snap (NYSE: SNAP), the parent company of social media platform Snapchat, took a hard hit following its second‑quarter earnings release earlier this month. Shares tumbled, driven by worries about slowing growth, execution missteps, and a worsening net loss. But dig deeper, and the underlying narrative is more nuanced; there were a lot of positives in the report, too. Revenue and users continue to grow at a robust rate, free cash flow has turned positive year over year, and new ad formats, such as sponsored Snaps, are demonstrating real engagement traction. Given the mix of good and bad in its underlying business and the stock's recent sell-off, it makes sense to check whether the shares have been pushed into oversold territory. Let's look at what changed in the business and what it might mean for investors today. Momentum in key areas Snap reported second-quarter revenue of $1.345 billion, marking a 9% gain from a year earlier. Further, the lifeblood of the company -- user activity -- performed exceptionally well. Daily active users (DAUs) rose 9% to 469 million, while monthly active users (MAUs) climbed 7% to 932 million. Operating cash flow reached $88 million, and free cash flow came in positive at $24 million, a notable reversal from the previous year, when the company burned cash. Still, Snap posted a net loss of $263 million (wider than a net loss of $249 million in the year-ago quarter), and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) slid lower on a year-over-year basis to $41 million, underscoring that profitability remains out of reach. An ad platform glitch -- where auction settings pushed some campaigns to clear at unusually low prices -- weighed on performance early in the quarter. Snap reversed the change mid-period, and management said that advertiser activity is of my favorite data points to support the bull case: On the diversification front, "other revenue" -- primarily from subscriptions like Snapchat+ -- grew 64% year over year, and Snapchat+ subscribers rose roughly 42%, nearing 16 million. One of the quarter's most promising developments was sponsored Snaps -- video ads delivered directly into users' inboxes. Snap co-founder Evan Spiegel said in the company's second-quarter earnings call that after a user opens a sponsored Snap from their chat feed, they "exhibit significantly higher engagement per full-screen ad view, driving a 2x increase in conversion, a 5x increase in click-to-convert ratios and a 2x increase in website dwell times compared to other inventories. That signals a powerful new lever for monetizing deeply engaged the company's fast-growing subscription business, advertising revenue growth trends after the glitch was addressed, and momentum in sponsored Snaps, management guided for continued top-line growth in Q3. Valuation remains a concern Despite a handful of promising trends at Snap, valuation remains troubling. The company has long leaned on equity dilution and stock-based compensation to fund growth. While Q2 did include a $243 million share repurchase (30 million shares), its stock-based compensation burden remains high. Full-year stock-based comp is still pegged north of $1.1 billion, even after recent downward revisions. Keep in mind that we're talking about a company with only a $12 billion market cap. Dilution continues to erode per-share value, even as Snap shows cash generation. So while the sell-off may feel overdone, the stock hasn't quite yet fallen low enough to make it a bargain. Of course, I could be wrong. A potential bull case lies not in near-term profits but in optionality -- whether Snap can scale newer revenue streams, stabilize pricing, and get to a point where it doesn't need to regularly materially dilute shareholders. Overall, Snap trades at a valuation that remains questionable given its history of dilution and heavy reliance on noncash compensation. But the emergence of fast-growing subscription revenue, sponsored Snaps, better cash flow, and an engaged user base make it extremely interesting -- worthy of a high spot on any investor's watchlist. Should you buy stock in Snap right now? Before you buy stock in Snap, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Snap wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,106,071!* Now, it's worth noting Stock Advisor's total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Snap Stock Plunged After Earnings. Buy the Dip? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
2 hours ago
- Yahoo
EQT Corporation's (NYSE:EQT) high institutional ownership speaks for itself as stock continues to impress, up 3.0% over last week
Explore EQT's Fair Values from the Community and select yours Key Insights Significantly high institutional ownership implies EQT's stock price is sensitive to their trading actions A total of 15 investors have a majority stake in the company with 50% ownership Insiders have sold recently AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. A look at the shareholders of EQT Corporation (NYSE:EQT) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 88% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company. And last week, institutional investors ended up benefitting the most after the company hit US$33b in market cap. The one-year return on investment is currently 67% and last week's gain would have been more than welcomed. Let's take a closer look to see what the different types of shareholders can tell us about EQT. See our latest analysis for EQT What Does The Institutional Ownership Tell Us About EQT? Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices. We can see that EQT does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at EQT's earnings history below. Of course, the future is what really matters. Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. EQT is not owned by hedge funds. The Vanguard Group, Inc. is currently the largest shareholder, with 12% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 7.6% of common stock, and Wellington Management Group LLP holds about 6.9% of the company stock. After doing some more digging, we found that the top 15 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company. Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily. Insider Ownership Of EQT The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO. I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions. Our most recent data indicates that insiders own less than 1% of EQT Corporation. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own US$229m worth of shares (at current prices). In this sort of situation, it can be more interesting to see if those insiders have been buying or selling. General Public Ownership The general public-- including retail investors -- own 11% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies. Next Steps: While it is well worth considering the different groups that own a company, there are other factors that are even more important. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
