Maximus, Inc. EBITDA decreased on 6.2% and EBITDA Margin decreased slightly on 0.61 pp from 15.6% to 15.0%
11/20/2018 • About Maximus, Inc. (
$MMS) • By InTwits
Maximus, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is relatively stable: 15.0% in FY2018 vs. 15.6% in FY2017 vs. 16.1% in FY2014
- Maximus, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $27m in FY2018, $24m in FY2017, $46m in FY2016, $105m in FY2015, $36m in FY2014
- In the last 5 years the company invested considerably less than D&A: $238m vs. $307m. In FY2018 this situation was still the same: CAPEX was 27 while D&A was 62
- The company has highly profitable business model: ROIC is 28.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 2.4%. Revenue decline showed acceleration in FY18Q4 - it was 10.1% YoY. Revenue decline was accelerating on average at -8.2 pp per annum in FY2014-FY2018. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.61 pp from 15.6% to 15.0% in FY2018.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue showed almost no change in FY2018. During the last 5 years SG&A as a % of Revenue bottomed in FY2016 at 11.2% and was growing since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018.
Net Income margin increased slightly on 0.68 pp from 8.5% to 9.2% in FY2018. During FY2014-FY2018 Net Income margin bottomed in FY2016 at 7.4% and was growing since that time. The efficient tax rate was 26.2% in FY2018 while the average for the last five years was 33.9%.
Investments (CAPEX, working capital and M&A)
Maximus, Inc.'s CAPEX/Revenue was 1.1% in FY2018. The company showed decline in CAPEX/Revenue of 3.9 pp from 5.0% in FY2015 to 1.1% in FY2018. For the last three years the average CAPEX/Revenue was 1.3%.
Accounts receivable as a % of Revenue decreased slightly on 1.3 pp from 17.6% to 16.3% in FY2018.
Maximus, Inc. has spent
$0m on M&A in FY2018 which accounts for 0.0066% of revenue.
Return on investment
The company operates at high and attractive ROIC (28.3%) and ROE (21.8%). ROIC decreased on 4.5 pp from 32.8% to 28.3% in FY2018. ROE decreased on 3.0 pp from 24.8% to 21.8% in FY2018. ROIC followed a declining trend at -2.6 pp per annum in the last 5 years. ROE stuck to a declining trend at -1.2 pp per annum in FY2014-FY2018.
Leverage (Debt)
The company paid down all the debt in FY2018. Cash jumped on 110%.
Valuation and dividends
Maximus, Inc.'s trades at EV/EBITDA 11.2x and P/E 19.7x.
The company paid 5.4% of Net Income as dividends in FY2018. Dividends grew on average at 0.0% per annum in the last 5 years).
Management team
Maximus, Inc.'s CEO is Bruce L Caswell. Bruce L Caswell is a founder and has 1 year tenure with the company. CEO total compensation was
$4,068,750 in FY2018 which included
$1,555,000 salary. Maximus, Inc.'s CFO is Richard J Nadeau. Richard J Nadeau has 5 years tenure at the company.
The company has 1.9% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 18,600 employees. The number of employees decreased on 8.8%. Average revenue per employee in FY2018 was
$128,615 and it increased on 7.0%.
Financial and operational results
FY ended 09/30/2018
Maximus, Inc. ($MMS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,701 | 2,100 | 2,403 | 2,451 | 2,392 | -2.4% |
| Gross Profit | 452 | 513 | 562 | 612 | 594 | -2.9% |
| SG&A | 227 | 239 | 268 | 285 | 285 | 0.3% |
| EBITDA | 274 | 316 | 358 | 381 | 358 | -6.2% |
| EBIT | 225 | 260 | 287 | 314 | 295 | -5.8% |
| Tax | 82 | 100 | 106 | 102 | 78 | -23.2% |
| Net Income | 145 | 158 | 178 | 209 | 221 | 5.4% |
| Stock Based Compensation | 17 | 17 | 19 | 21 | 20 | -5.3% |
Balance Sheet
|
|---|
| Cash | 158 | 75 | 66 | 166 | 349 | 110.1% |
| Accounts Receivable | 290 | 427 | 481 | 431 | 389 | -9.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | -100.0% |
| Long Term Debt | 0 | 211 | 165 | 1 | 0 | -100.0% |
Cash flow
|
|---|
| Capex | 36 | 105 | 46 | 24 | 27 | 9.8% |
| Dividends | 12 | 12 | 12 | 12 | 12 | 0.0% |
| Acquisitions | 3 | 289 | 47 | 3 | 0 | -94.1% |
Ratios
|
|---|
| Revenue growth | 27.8% | 23.5% | 14.5% | 2.0% | -2.4% | |
| EBITDA growth | 24.0% | 15.3% | 13.4% | 6.4% | -6.2% | |
|
|---|
| Gross Margin | 26.6% | 24.4% | 23.4% | 25.0% | 24.8% | -0.1% |
| EBITDA Margin | 16.1% | 15.1% | 14.9% | 15.6% | 15.0% | -0.6% |
| EBIT Margin | 13.2% | 12.4% | 11.9% | 12.8% | 12.4% | -0.4% |
| SG&A, % of revenue | 13.3% | 11.4% | 11.2% | 11.6% | 11.9% | 0.3% |
| SBC, % of revenue | 1.0% | 0.8% | 0.8% | 0.9% | 0.8% | -0.0% |
| Net Income Margin | 8.6% | 7.5% | 7.4% | 8.5% | 9.2% | 0.7% |
| CAPEX, % of revenue | 2.1% | 5.0% | 1.9% | 1.0% | 1.1% | 0.1% |
|
|---|
| ROIC | 39.6% | 36.6% | 32.3% | 32.8% | 28.3% | -4.5% |
| ROE | 26.8% | 27.0% | 26.2% | 24.8% | 21.8% | -3.0% |
| Net Debt/EBITDA | -0.6x | 0.4x | 0.3x | -0.4x | -1.0x | -0.5x |
People
|
|---|
| Insider ownership | 1.9% | 1.9% | 1.9% | 1.9% | 1.9% | 0.0% |
| Employees | 13,000 | 17,000 | 18,800 | 20,400 | 18,600 | -8.8% |
| Revenue/Employee, th. $ | 131 | 124 | 128 | 120 | 129 | 7.0% |
Maximus, Inc. ($MMS) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 623 | 613 | 598 | 558 | | 2.6% | -1.5% | -0.4% | -10.1% |
| EBITDA | 96 | 87 | 98 | 76 | | 4.8% | -12.0% | -0.1% | -17.6% |
| Net Income | 59 | 55 | 60 | 46 | | 26.6% | 5.7% | 5.2% | -13.2% |
Balance Sheet
|
|---|
| Cash | 197 | 253 | 229 | 349 | | 182.2% | 166.9% | 119.4% | 110.1% |
Ratios
|
|---|
| Gross Margin | 24.4% | 24.3% | 25.9% | 24.9% | | 0.6% | -0.2% | 0.5% | -1.3% |
| EBITDA Margin | 15.4% | 14.2% | 16.4% | 13.7% | | 0.3% | -1.7% | 0.1% | -1.2% |
| Net Income Margin | 9.5% | 9.1% | 10.0% | 8.3% | | 1.8% | 0.6% | 0.5% | -0.3% |
Peers in Data Processing & Outsourced S
Below you can find Maximus, Inc. benchmarking vs. other companies in Data Processing & Outsourced S industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.0% | 7.6% | 11.8% | 7.5% |
|---|
| Maximus, Inc. ($MMS) | | 23.5% | 14.5% | 2.0% | -2.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 39.3% | 39.6% | 39.5% | 39.5% | 41.0% |
|---|
| Maximus, Inc. ($MMS) | 26.6% | 24.4% | 23.4% | 25.0% | 24.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.6% | 21.2% | 21.3% | 21.1% | 19.4% |
|---|
| Maximus, Inc. ($MMS) | 16.1% | 15.1% | 14.9% | 15.6% | 15.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.2% |
|---|
| Maximus, Inc. ($MMS) | 2.1% | 5.0% | 1.9% | 1.0% | 1.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 13.3% | 12.8% | 11.1% | 10.6% | 10.2% |
|---|
| Maximus, Inc. ($MMS) | 39.6% | 36.6% | 32.3% | 32.8% | 28.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.6x | 0.7x | 1.6x | 2.3x | 2.2x |
|---|
| Maximus, Inc. ($MMS) | -0.6x | 0.4x | 0.3x | -0.4x | -1.0x |
