Maximus Inc

ICF International reported second quarter revenues of $474.5 million, flat year over year and 0.7% below analysts' expectations, while narrowly beating full-year EPS guidance estimates. Chief executive John Wasson said commercial client revenues rose 5.9% year on year, federal government revenues improved sequentially on technology modernization, and international government revenues climbed 35%, putting total revenue in line with prior-year levels ahead of a return to year-on-year growth beginning in this year's third quarter. Among the seven government and technical consulting stocks tracked in the group, SAIC posted the strongest quarter with revenues of $1.88 billion, up 6.3% year on year and 7.1% above expectations, while Amentum was the weakest, with revenues of $3.49 billion, down 2% year on year and 2.2% short of estimates. Maximus reported revenues of $1.28 billion, down 5.1% year on year and 3.7% below expectations, and UL Solutions reported revenues of $816 million, up 5.2% year on year and in line with estimates. As a group, the seven stocks' revenues were in line with consensus, and their share prices have fallen an average of 8.8% since the latest earnings results.

Maximus lowered its full-year adjusted earnings and free-cash-flow guidance after the Department of Veterans Affairs temporarily paused performance incentives on its Medical Disability Exam program. Adjusted diluted EPS is now expected at $7.90 to $8.20, down from a prior midpoint of $8.40, and free cash flow is forecast at $425 million to $475 million, while revenue guidance was maintained at $5.2 billion to $5.35 billion. The VA notified all program vendors of the incentive pause effective July 1 as it works to improve its invoice review and validation process, and Maximus removed assumed VA MDE incentive contributions from its fourth-quarter forecast, reducing the full-year adjusted EPS outlook by approximately $0.35 per share. Third-quarter revenue reached $1.28 billion with adjusted EBITDA margin improving to 15.0% and adjusted EPS rising to $2.22, and cash collection improved after quarter-end with approximately $245 million received from a major federal customer. Management highlighted a $50.4 billion sales pipeline and potential growth from Medicaid, SNAP administration and AI-enabled government services, noting that AI requirements now appear in roughly 75% to 80% of new bids and citing a 3.5% operating-margin improvement across five contracts using AI tools.

Government and technical consulting stocks tracked by StockStory fell an average of 7.7% since their latest earnings results, despite reporting revenues in line with analyst consensus estimates. SAIC posted revenues of $1.91 billion, up 1.5% year on year and beating expectations by 4.1%, but its stock still declined 1.7%. UL Solutions, the best performer in the group, reported revenues of $758 million, up 7.5% year on year, while Amentum, the weakest, saw flat revenues of $3.48 billion and a significant EPS miss, sending its shares down 10.2%. ICF International and Maximus also missed revenue estimates, with ICF's revenues falling 10.3% year on year and Maximus's declining 4.1%, contributing to their respective stock declines of 10.7% and 9.3%.