MAXIMUS (NYSE: MMS) reported Q1 EPS of $1.03, $0.13 better than the analyst estimate of $0.90. Revenue for the quarter came in at $945.6 million versus the consensus estimate of $845.62 million.

Highlights for the first quarter of fiscal 2021 include:

• Revenue increased 15.6% to $945.6 million as compared to $818.2 million reported for the prior-year period, driven by new COVID-response work such as contact tracing, disease investigation, vaccination support, unemployment insurance program support, and other key initiatives.
• Operating income margin was 9.3% and diluted earnings per share were $1.03. The Company continues to face unfavorable headwinds related to temporary changes on mature core programs resulting from the pandemic and offsetting the growth from new work.
• Results for the quarter were ahead of consensus estimates, and in line with the Company's expectations, which put the Company on solid footing for the remainder of the year. As a result, the outlook for fiscal 2021 has improved, driven by recent awards, scope increases, and contract extensions. The Company is raising revenue and earnings guidance for fiscal 2021 with revenue expected to range between $3.400 billion and $3.525 billion and diluted earnings per share to range between $3.55 and $3.75 per share.
• A quarterly cash dividend of $0.28 for each share of our common stock outstanding payable on February 26, 2021, to shareholders of record on February 12, 2021.

"Maximus is at the forefront of providing government much needed support in their efforts to control the spread and address the challenges of the global pandemic," shared Bruce Caswell, President and Chief Executive Officer. "Recently, we expanded our pandemic-response work with new contracts supporting vaccination administration efforts. We are proud that our customers rely on our proven agility and scalability in providing effective business process services under compressed timelines. As the new administration launches many initiatives, Maximus is uniquely positioned to further leverage our core capabilities in response to President Biden's commitment to public health, social welfare, and affordable healthcare. The ongoing value of partners like Maximus was evidenced over the last year through our ability to maintain continuity of vital programs, while also supporting new economic relief and public health initiatives to ensure that individuals and families continue to have access to needed services."

GUIDANCE:

MAXIMUS sees FY2021 EPS of $3.55-$3.75, versus the consensus of $3.59. MAXIMUS sees FY2021 revenue of $3.4-3.525 billion, versus the consensus of $3.31 billion.

Maximus is increasing revenue, earnings, and cash flow guidance for fiscal 2021 following recent awards, scope increases, and contract extensions related to COVID-response work. The Company anticipates fiscal 2021 revenue will range between $3.400 billion and $3.525 billion and diluted earnings per share will range between $3.55 and $3.75 per share.

Cash from operations are expected to range between $350 million and $400 million and free cash flow between $310 million and $360 million. Expectations for fiscal 2021 effective tax rate and weighted average shares remain unchanged from the November 19, 2020, earnings call.

The COVID-response work is providing a positive tailwind but it has shorter periods of performance than core contracts. As previously discussed, there is no assurance that the conclusion of positive impacts from COVID-response work will coincide with the return of core contracts to previous volume and performance levels.

Earnings continue to be impacted by unfavorable headwinds related to the pandemic and the temporary changes on mature core programs. The result has been a reduction in accretive revenue which continues to temper operating income margins and diluted earnings per share. The Company anticipates that as the world emerges from the pandemic, many of these programs will begin to return to historical volume levels.

Mr. Caswell added, "Maximus is well positioned to be a transformative partner for government. We offer scalable, cost-effective, and operationally efficient services for a wide range of government programs. We believe our portfolio mix of core business, near adjacencies, and new growth platforms will allow us to achieve a healthy growth trajectory for years to come. Our ability to quickly respond to unprecedented customer demand in the wake of the global health crisis further cements our unparalleled position as the partner of choice for critical government services delivery."

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