Maximus Reports Fiscal Year 2024 First Quarter Results
- Revenue increased by 6.2% to $1.33 billion for the first quarter of fiscal year 2024.
- Adjusted diluted earnings per share were $1.34, compared to $0.94 for the prior year period.
- U.S. Federal Services Segment revenue increased by 9.5% to $677.1 million.
- U.S. Services Segment revenue increased by 11.5% to $489.8 million.
- The company is raising FY24 earnings and free cash flow guidance.
- Outside the U.S. Segment revenue decreased by 16.4% to $160.1 million.
Insights
The announcement by Maximus indicates a robust financial performance, marked by a 6.2% year-over-year increase in revenue and significant growth in organic revenue. The raised guidance for fiscal year 2024, particularly the adjustments in earnings per share and free cash flow, suggests a positive outlook for the company's profitability and liquidity position. This could be indicative of efficient operational management and a favorable response to the company's services, potentially leading to investor confidence in the company's growth trajectory.
Moreover, the improvement in operating margins, especially in the U.S. Federal Services and U.S. Services Segments, reflects effective cost control measures and the ability to leverage higher transactional volumes. The book-to-bill ratio exceeding 1 is a bullish indicator of future revenue, as it implies that the company is booking more orders than it is billing, which could translate into sustained growth. Stakeholders should also consider the debt-to-EBITDA ratio, which has seen a slight decrease, indicating a stable leverage situation that could afford the company flexibility in future strategic initiatives.
The government services sector, in which Maximus operates, often benefits from long-term contracts and a stable flow of revenue due to the essential nature of the services provided. Maximus's positive results in the U.S. Federal Services Segment, driven by Medical Disability Exam contracts and the resumption of Medicaid redeterminations in the U.S. Services Segment, highlight the company's strong positioning within areas of prioritized government spending.
However, the decline in the Outside the U.S. Segment revenue calls for a strategic review to ensure consistent profitability and reduced volatility in international operations. The management's focus on this area could be critical in maintaining overall company health. Additionally, the sales pipeline's size and composition, with a significant portion representing new work opportunities, suggest potential for continued expansion and diversification of revenue streams.
Maximus's financial results and raised guidance must be contextualized within the broader economic environment. The company's optimism, particularly in light of the current economic climate, may be supported by its reliance on government contracts, which can be less cyclical and more resilient during economic downturns. Furthermore, the company's strategic alignment with areas of government spend could insulate it from adverse macroeconomic conditions.
It's also worth noting that the company's performance, including its effective tax rate and interest expense projections, should be evaluated against fiscal and monetary policies that could impact borrowing costs and disposable income. Such factors can influence both the demand for government services and the cost structure for service providers like Maximus.
Raises FY24 Earnings & Free Cash Flow Guidance Following Improved Margin Outlook
TYSONS, Va.--(BUSINESS WIRE)-- Maximus (NYSE: MMS), a leading provider of government services worldwide, reported financial results for the three months ended December 31, 2023.
Highlights for the first quarter of fiscal year 2024 include:
-
Revenue increased
6.2% to$1.33 billion $1.25 billion 6.9% and driven by expanded programs as well as resumed programs tied to Medicaid redeterminations. -
Diluted earnings per share were
$1.04 $1.34 $0.65 $0.94 -
The company is raising earnings and free cash flow guidance for fiscal year 2024. Adjusted operating income guidance is increasing by
$15 million $0.15 $10 million -
A quarterly cash dividend of
$0.30
"Our operational performance was excellent this quarter as we focused on delivery of programs critical to the wellbeing of individuals and families, including veteran exams, redeterminations for Medicaid, return to repayment for millions of borrowers, and recently-completed open enrollment," said Bruce Caswell, President and Chief Executive Officer. "The improved outlook for fiscal 2024 signifies the business is in great health and benefiting from scale. We continue to focus on creating growth opportunities for our employees while using technology to improve the citizen experience and deliver on our customers' missions."
Caswell continued, "More broadly, we believe the current economic climate will continue to favor Maximus, given our current base underpinned by essential work and a strategy squarely aligned to prioritized areas of government spend."
First Quarter Results
Revenue for the first quarter of fiscal year 2024 increased
For the first quarter of fiscal year 2024, operating margin was
The segment operating margin for the first quarter of fiscal year 2024 was
The segment operating margin for the first quarter of fiscal year 2024 was
Outside the
Outside the
The segment broke even in the first quarter of fiscal year 2024. This compares to an operating margin of
Sales and Pipeline
Year-to-date signed contract awards at December 31, 2023, totaled
The sales pipeline at December 31, 2023, totaled
Balance Sheet and Cash Flows
At December 31, 2023, cash and cash equivalents totaled
For the first quarter of fiscal year 2024, cash provided operating activities totaled
On January 5, 2024, our Board of Directors declared a quarterly cash dividend of
Raising FY24 Earnings and Free Cash Flow Guidance
Maximus is raising fiscal year 2024 earnings and free cash flow guidance following first quarter results and improved margin outlook for the rest of the fiscal year. Revenue guidance is maintained between
Adjusted operating income is now expected to range between
Adjusted diluted earnings per share is now expected to range between
Free cash flow is now expected to range between
Conference Call and Webcast Information
Maximus will host a conference call tomorrow, February 8, 2024, at 9:00 a.m. ET. Shareholders are invited to submit questions for management’s consideration by emailing IR@maximus.com up to one hour prior to the call.
The call is open to the public and available by webcast or by phone at:
877.407.8289 (Domestic) / +1.201.689.8341 (International)
For those unable to listen to the live call, a recording of the webcast will be available on investor.maximus.com.
About Maximus
As a leading strategic partner to governments across the globe, Maximus helps improve the delivery of public services amid complex technology, health, economic, environmental, and social challenges. With a deep understanding of program service delivery, acute insights that achieve operational excellence, and an extensive awareness of the needs of the people being served, our employees advance the critical missions of our partners. Maximus delivers innovative business process management, impactful consulting services, and technology solutions that provide improved outcomes for the public and higher levels of productivity and efficiency of government-sponsored programs. For more information, visit maximus.com.
Non-GAAP Measures and Risk Factors
This release refers to non-GAAP measures and other indicators, including organic growth, free cash flow, operating income and EPS adjusted for amortization of intangible assets and divestiture-related charges, adjusted EBITDA, and other non-GAAP measures.
A description of these non-GAAP measures, the reasons why we use and present them, and details as to how they are calculated are included in our earnings presentation and forthcoming Form 10-Q.
The presentation of these non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to cash flows from operations, revenue growth, or net income as measures of performance. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies.
Statements that are not historical facts, including statements about the company’s confidence and strategies, and the company’s expectations about revenues, results of operations, profitability, future contracts, market opportunities, market demand, or acceptance of the company’s products are forward-looking statements that involve risks and uncertainties.
These risks could cause the Company’s actual results to differ materially from those indicated by such forward-looking statements. A summary of risk factors can be found in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended September 30, 2023, which was filed with the Securities and Exchange Commission (SEC) on November 16, 2023. The Company's SEC reports are accessible on maximus.com.
Maximus, Inc. Consolidated Statements of Operations (Unaudited) |
||||||
|
For the Three Months Ended |
|||||
|
December 31, 2023 |
|
December 31, 2022 |
|||
|
(in thousands, except per share amounts) |
|||||
Revenue |
$ |
1,327,041 |
|
$ |
1,249,246 |
|
Cost of revenue |
|
1,026,987 |
|
|
1,004,499 |
|
Gross profit |
|
300,054 |
|
|
244,747 |
|
Selling, general, and administrative expenses |
|
169,195 |
|
|
146,452 |
|
Amortization of intangible assets |
|
23,349 |
|
|
23,518 |
|
Operating income |
|
107,510 |
|
|
74,777 |
|
Interest expense |
|
21,507 |
|
|
21,606 |
|
Other expense/(income), net |
|
488 |
|
|
(266 |
) |
Income before income taxes |
|
85,515 |
|
|
53,437 |
|
Provision for income taxes |
|
21,367 |
|
|
13,442 |
|
Net income |
$ |
64,148 |
|
$ |
39,995 |
|
|
|
|
|
|||
Earnings per share: |
|
|
|
|||
Basic |
$ |
1.05 |
|
$ |
0.65 |
|
Diluted |
$ |
1.04 |
|
$ |
0.65 |
|
Weighted average shares outstanding: |
|
|
|
|||
Basic |
|
61,322 |
|
|
61,117 |
|
Diluted |
|
61,535 |
|
|
61,196 |
|
|
|
|
|
|||
Dividends declared per share |
$ |
0.30 |
|
$ |
0.28 |
|
Maximus, Inc. Consolidated Balance Sheets |
|||||||
|
|
||||||
|
December 31, 2023 |
|
September 30, 2023 |
||||
|
(unaudited) |
|
|
||||
|
(in thousands) |
||||||
Assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
104,186 |
|
|
$ |
65,405 |
|
Accounts receivable, net |
|
860,409 |
|
|
|
826,873 |
|
Income taxes receivable |
|
15,850 |
|
|
|
16,556 |
|
Prepaid expenses and other current assets |
|
129,174 |
|
|
|
146,632 |
|
Total current assets |
|
1,109,619 |
|
|
|
1,055,466 |
|
Property and equipment, net |
|
34,976 |
|
|
|
38,831 |
|
Capitalized software, net |
|
125,383 |
|
|
|
107,811 |
|
Operating lease right-of-use assets |
|
154,929 |
|
|
|
163,929 |
|
Goodwill |
|
1,781,092 |
|
|
|
1,779,215 |
|
Intangible assets, net |
|
680,309 |
|
|
|
703,648 |
|
Deferred contract costs, net |
|
46,439 |
|
|
|
45,372 |
|
Deferred compensation plan assets |
|
47,273 |
|
|
|
42,919 |
|
Deferred income taxes |
|
2,204 |
|
|
|
2,459 |
|
Other assets |
|
34,637 |
|
|
|
46,147 |
|
Total assets |
$ |
4,016,861 |
|
|
$ |
3,985,797 |
|
Liabilities and Shareholders' Equity: |
|
|
|
||||
Liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
267,623 |
|
|
$ |
282,081 |
|
Accrued compensation and benefits |
|
115,864 |
|
|
|
194,251 |
|
Deferred revenue, current portion |
|
63,032 |
|
|
|
60,477 |
|
Income taxes payable |
|
23,717 |
|
|
|
451 |
|
Long-term debt, current portion |
|
90,443 |
|
|
|
86,844 |
|
Operating lease liabilities, current portion |
|
48,490 |
|
|
|
49,852 |
|
Other current liabilities |
|
49,197 |
|
|
|
49,058 |
|
Total current liabilities |
|
658,366 |
|
|
|
723,014 |
|
Deferred revenue, non-current portion |
|
37,221 |
|
|
|
38,849 |
|
Deferred income taxes |
|
198,317 |
|
|
|
203,898 |
|
Long-term debt, non-current portion |
|
1,222,243 |
|
|
|
1,163,149 |
|
Deferred compensation plan liabilities, non-current portion |
|
51,507 |
|
|
|
46,432 |
|
Operating lease liabilities, non-current portion |
|
118,594 |
|
|
|
129,367 |
|
Other liabilities |
|
12,807 |
|
|
|
13,253 |
|
Total liabilities |
|
2,299,055 |
|
|
|
2,317,962 |
|
Shareholders' equity: |
|
|
|
||||
Common stock, no par value; 100,000 shares authorized; 61,031 and 60,998 shares issued and outstanding as of December 31, 2023 and September 30 2023, respectively |
|
585,278 |
|
|
|
577,898 |
|
Accumulated other comprehensive loss |
|
(30,588 |
) |
|
|
(27,615 |
) |
Retained earnings |
|
1,163,116 |
|
|
|
1,117,552 |
|
Total shareholders' equity |
|
1,717,806 |
|
|
|
1,667,835 |
|
Total liabilities and shareholders' equity |
$ |
4,016,861 |
|
|
$ |
3,985,797 |
|
Maximus, Inc. Consolidated Statements of Cash Flows (Unaudited) |
|||||||
|
For the Three Months Ended |
||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
|
(in thousands) |
||||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
64,148 |
|
|
$ |
39,995 |
|
Adjustments to reconcile net income to cash flows from operations: |
|
|
|
||||
Depreciation and amortization of property, equipment, and capitalized software |
|
8,411 |
|
|
|
12,280 |
|
Amortization of intangible assets |
|
23,349 |
|
|
|
23,518 |
|
Amortization of debt issuance costs and debt discount |
|
601 |
|
|
|
1,034 |
|
Deferred income taxes |
|
(2,165 |
) |
|
|
(1,331 |
) |
Stock compensation expense |
|
9,427 |
|
|
|
4,403 |
|
Loss on sale of a businesses |
|
1,018 |
|
|
|
— |
|
Change in assets and liabilities, net of effects of business combinations: |
|
|
|
||||
Accounts receivable |
|
(35,379 |
) |
|
|
(200,749 |
) |
Prepaid expenses and other current assets |
|
10,056 |
|
|
|
10,624 |
|
Deferred contract costs |
|
(888 |
) |
|
|
(1,013 |
) |
Accounts payable and accrued liabilities |
|
(15,543 |
) |
|
|
3,642 |
|
Accrued compensation and benefits |
|
(67,392 |
) |
|
|
(53,271 |
) |
Deferred revenue |
|
877 |
|
|
|
14,764 |
|
Income taxes |
|
22,250 |
|
|
|
9,465 |
|
Operating lease right-of-use assets and liabilities |
|
(1,088 |
) |
|
|
(948 |
) |
Other assets and liabilities |
|
3,926 |
|
|
|
2,928 |
|
Net cash provided by/(used in) operating activities |
|
21,608 |
|
|
|
(134,659 |
) |
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment and capitalized software |
|
(22,247 |
) |
|
|
(15,697 |
) |
Proceeds from divestitures |
|
1,815 |
|
|
|
— |
|
Net cash used in investing activities |
|
(20,432 |
) |
|
|
(15,697 |
) |
Cash flows from financing activities: |
|
|
|
||||
Cash dividends paid to Maximus shareholders |
|
(18,299 |
) |
|
|
(17,017 |
) |
Tax withholding related to RSU vesting |
|
(13,455 |
) |
|
|
(8,475 |
) |
Payments for contingent consideration |
|
(2,819 |
) |
|
|
(1,415 |
) |
Proceeds from borrowings |
|
228,409 |
|
|
|
268,702 |
|
Principal payments for debt |
|
(166,658 |
) |
|
|
(61,355 |
) |
Cash-collateralized escrow liabilities |
|
1,204 |
|
|
|
(9,473 |
) |
Net cash provided by financing activities |
|
28,382 |
|
|
|
170,967 |
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
1,846 |
|
|
|
2,421 |
|
Net change in cash, cash equivalents, and restricted cash |
|
31,404 |
|
|
|
23,032 |
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
122,091 |
|
|
|
136,795 |
|
Cash, cash equivalents, and restricted cash, end of period |
$ |
153,495 |
|
|
$ |
159,827 |
|
Maximus, Inc. Consolidated Results of Operations by Segment (Unaudited) |
|||||||||||||
|
For the Three Months Ended |
||||||||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||||||||
|
Amount |
|
% (1) |
|
Amount |
|
% (1) |
||||||
|
(dollars in thousands) |
||||||||||||
Revenue: |
|
|
|
|
|
|
|
||||||
|
$ |
677,078 |
|
|
|
|
$ |
618,167 |
|
|
|
||
|
|
489,845 |
|
|
|
|
|
439,478 |
|
|
|
||
Outside the |
|
160,118 |
|
|
|
|
|
191,601 |
|
|
|
||
Revenue |
$ |
1,327,041 |
|
|
|
|
$ |
1,249,246 |
|
|
|
||
Gross profit: |
|
|
|
|
|
|
|
||||||
|
$ |
156,662 |
|
|
23.1 |
% |
|
$ |
122,694 |
|
|
19.8 |
% |
|
|
118,363 |
|
|
24.2 |
% |
|
|
83,598 |
|
|
19.0 |
% |
Outside the |
|
25,029 |
|
|
15.6 |
% |
|
|
38,455 |
|
|
20.1 |
% |
Gross profit |
$ |
300,054 |
|
|
22.6 |
% |
|
$ |
244,747 |
|
|
19.6 |
% |
Selling, general, and administrative expenses: |
|
|
|
|
|
|
|
||||||
|
$ |
87,855 |
|
|
13.0 |
% |
|
$ |
71,649 |
|
|
11.6 |
% |
|
|
52,300 |
|
|
10.7 |
% |
|
|
45,842 |
|
|
10.4 |
% |
Outside the |
|
25,141 |
|
|
15.7 |
% |
|
|
28,389 |
|
|
14.8 |
% |
Divestiture-related charges (2) |
|
1,018 |
|
|
NM |
|
|
|
— |
|
|
NM |
|
Other (3) |
|
2,881 |
|
|
NM |
|
|
|
572 |
|
|
NM |
|
Selling, general, and administrative expenses |
$ |
169,195 |
|
|
12.7 |
% |
|
$ |
146,452 |
|
|
11.7 |
% |
Operating income: |
|
|
|
|
|
|
|
||||||
|
$ |
68,807 |
|
|
10.2 |
% |
|
$ |
51,045 |
|
|
8.3 |
% |
|
|
66,063 |
|
|
13.5 |
% |
|
|
37,756 |
|
|
8.6 |
% |
Outside the |
|
(112 |
) |
|
(0.1 |
)% |
|
|
10,066 |
|
|
5.3 |
% |
Amortization of intangible assets |
|
(23,349 |
) |
|
NM |
|
|
|
(23,518 |
) |
|
NM |
|
Divestiture-related charges (2) |
|
(1,018 |
) |
|
NM |
|
|
|
— |
|
|
NM |
|
Other (3) |
|
(2,881 |
) |
|
NM |
|
|
|
(572 |
) |
|
NM |
|
Operating income |
$ |
107,510 |
|
|
8.1 |
% |
|
$ |
74,777 |
|
|
6.0 |
% |
(1) |
Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM." |
|
(2) |
In November 2023, we sold our businesses in |
|
(3) |
Other expenses includes credits and costs that are not allocated to a particular segment. This includes expenses incurred as part of our acquisitions, as well as potential acquisitions which have not been or may not be completed. |
Maximus, Inc. Consolidated Free Cash Flows - Non-GAAP (Unaudited) |
|||||||
|
For the Three Months Ended |
||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
|
(in thousands) |
||||||
Net cash provided by/(used in) operating activities |
|
21,608 |
|
|
|
(134,659 |
) |
Purchases of property and equipment and capitalized software |
|
(22,247 |
) |
|
|
(15,697 |
) |
Free cash flow (Non-GAAP) |
$ |
(639 |
) |
|
$ |
(150,356 |
) |
Maximus, Inc. Non-GAAP Adjusted Results Excluding Amortization of Intangible Assets (Unaudited) |
|||||||
|
For the Three Months Ended |
||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
|
(dollars in thousands, except per share data) |
||||||
Operating income |
$ |
107,510 |
|
|
$ |
74,777 |
|
Add back: Amortization of intangible assets |
|
23,349 |
|
|
|
23,518 |
|
Add back: Divestiture-related charges |
|
1,018 |
|
|
|
— |
|
Adjusted operating income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) |
$ |
131,877 |
|
|
$ |
98,295 |
|
Adjusted operating income margin excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) |
|
9.9 |
% |
|
|
7.9 |
% |
|
|
|
|
||||
Net income |
$ |
64,148 |
|
|
$ |
39,995 |
|
Add back: Amortization of intangible assets, net of tax |
|
17,208 |
|
|
|
17,360 |
|
Add back: Divestiture-related charges |
|
1,018 |
|
|
|
— |
|
Adjusted net income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) |
$ |
82,374 |
|
|
$ |
57,355 |
|
|
|
|
|
||||
Diluted earnings per share |
$ |
1.04 |
|
|
$ |
0.65 |
|
Add back: Effect of amortization of intangible assets on diluted earnings per share |
|
0.28 |
|
|
|
0.29 |
|
Add back: Effect of divestiture-related charges on diluted earnings per share |
|
0.02 |
|
|
|
— |
|
Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) |
$ |
1.34 |
|
|
$ |
0.94 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240207818524/en/
James Francis, VP - IR
Jessica Batt, VP - IR & ESG
IR@maximus.com
Source: Maximus
FAQ
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What was the revenue increase for the first quarter of fiscal year 2024?
What were the adjusted diluted earnings per share for the first quarter of fiscal year 2024?
What was the percentage increase in U.S. Federal Services Segment revenue?
What was the percentage increase in U.S. Services Segment revenue?
What was the percentage decrease in Outside the U.S. Segment revenue?
What is the net debt to adjusted EBITDA ratio?
