Strong demand drives highest post-pandemic
margins and further raise to FY24 guidance
Maximus (NYSE: MMS), a leading provider of government services
worldwide, reported financial results for the three and six months
ended March 31, 2024.
Highlights for the second quarter of fiscal year 2024
include:
- Revenue increased 11.7% to $1.35 billion, compared to $1.21
billion for the prior year period. Organic growth was 12.6% and
driven by expanded programs in the domestic segments and resumed
Medicaid-related activities.
- Diluted earnings per share were $1.31, and adjusted diluted
earnings per share were $1.57, compared to $0.52 and $0.81,
respectively, for the prior year period.
- The company is raising guidance for fiscal year 2024. At the
midpoints, revenue is increasing by $75 million, adjusted operating
income guidance is increasing by more than $34 million, adjusted
diluted earnings per share by $0.40, and free cash flow by $25
million.
- Net debt to EBITDA ratio improved to 1.7 times at March 31,
2024, compared to 2.1 times in the prior quarter.
- A quarterly cash dividend of $0.30 per share is payable on May
31, 2024, to shareholders of record on May 15, 2024.
"For the second consecutive quarter, we are able to raise
guidance that reflects our confidence in the earnings power of the
business," said Bruce Caswell, President and Chief Executive
Officer. "We are focused on driving future growth through
continued, excellent operational execution coupled with innovative
technology solutions to drive long-term shareholder value."
Second Quarter Results
Revenue for the second quarter of fiscal year 2024 increased
11.7% to $1.35 billion, compared to $1.21 billion for the prior
year period. Organic growth was 12.6%, driven by a combination of
expanded programs in the U.S. Federal Services Segment, such as the
Veterans Affairs (VA) Medical Disability Exams (MDE) contracts, as
well as expanded and resumed programs in the U.S. Services Segment,
such as assessment work and Medicaid-related programs,
respectively.
For the second quarter of fiscal year 2024, operating margin was
9.5% and the adjusted operating margin was 11.1%. This compares to
margins of 5.2% and 7.2%, respectively, for the prior year period.
Diluted earnings per share were $1.31 and adjusted diluted earnings
per share were $1.57. This compares to $0.52 and $0.81,
respectively, for the prior year period. The strength of this
quarter's earnings came from an aggregation of multiple areas
across the domestic segments.
U.S. Federal Services Segment
U.S. Federal Services Segment revenue for the second quarter of
fiscal year 2024 increased 20.1% to $701.7 million, compared to
$584.1 million reported for the prior year period. All growth was
organic and driven by volume growth on expanded programs, including
the VA MDE contracts, which comprise the Veterans Evaluation
Services (VES) business.
The segment operating margin for the second quarter of fiscal
year 2024 was 11.9%, compared to 8.2% reported for the prior year,
and results this quarter slightly beat expectations due primarily
to the VA MDE contracts exceeding their production goal. The
full-year fiscal 2024 margin for the U.S. Federal Services Segment
is now expected to be approximately 12%.
U.S. Services Segment
U.S. Services Segment revenue for the second quarter of fiscal
year 2024 increased 8.1% to $486.1 million, compared to $449.7
million reported in the prior year period. All growth was organic
and driven by expanded programs, including assessment services and
revenue from resumed programs related to the commencement of
Medicaid redeterminations.
The segment operating margin for the second quarter of fiscal
year 2024 was 14.0%, compared to 9.5% reported for the prior year,
which had been impacted by the pause to Medicaid redeterminations.
Results this quarter are anticipated to represent a peak for
segment profitability and tied to extra volumes from performing
redetermination work. The U.S. Services Segment's margin outlook
across all periods in fiscal year 2024 has improved, with a
full-year margin expected of approximately 13% and in the middle of
the segment's 11% to 14% long-term operating margin target.
Outside the U.S. Segment
Outside the U.S. Segment revenue for the second quarter of
fiscal year 2024 decreased 7.2% to $160.5 million, compared to
$173.1 million reported in the prior year period. The divestiture
of businesses in the prior fiscal year reduced revenue by 8.2%,
currency was a benefit of 1.8%, and organic growth was flat.
The segment realized an operating profit of $0.7 million for the
second quarter of fiscal year 2024, compared to an operating loss
of $3.7 million in the prior year period. With some recent
stability in the segment, the company remains focused this fiscal
year on shaping the Outside the U.S. Segment to be aligned
strategically with the rest of the business and deliver consistent
profitability.
Sales and Pipeline
Year-to-date signed contract awards at March 31, 2024, totaled
$568 million, and contracts pending (awarded but unsigned) totaled
$797 million. The book-to-bill ratio at March 31, 2024, was 1.1x
calculated on a trailing twelve-month basis.
The sales pipeline at March 31, 2024, totaled $37.8 billion,
comprised of approximately $1.31 billion in proposals pending, $987
million in proposals in preparation, and $35.5 billion in
opportunities tracking. New work opportunities represent
approximately 75% of the total sales pipeline.
Balance Sheet and Cash Flows
At March 31, 2024, cash and cash equivalents totaled $77.4
million, and gross debt was $1.22 billion. The ratio of debt, net
of allowed cash, to EBITDA for the quarter ended March 31, 2024, as
calculated in accordance with the company's credit agreement, was
1.7x. This compares to 2.1x at December 31, 2023.
For the second quarter of fiscal year 2024, cash provided by
operating activities totaled $130.5 million, and free cash flow was
$105.2 million. DSO at March 31, 2024, were 62 days, compared with
59 days at December 31, 2023.
Subsequent to March 31, 2024, we purchased approximately 242,000
shares at a cost of $19.3 million.
On April 5, 2024, our Board of Directors declared a quarterly
cash dividend of $0.30 for each share of our common stock
outstanding. The dividend is payable on May 31, 2024, to
shareholders of record on May 15, 2024.
Raising FY24 Guidance
Maximus is raising fiscal year 2024 guidance following second
quarter results and an improved outlook for the remainder of the
fiscal year. Revenue is now expected to range between $5.15 billion
and $5.25 billion, representing an increase of $75 million from
prior guidance at the midpoint.
Adjusted operating income is now expected to range between $540
million and $560 million, representing an increase of more than $34
million from prior guidance. Adjusted operating income excludes an
estimated $89 million of expense for amortization of intangible
assets and $1 million of divestiture-related charges.
Adjusted diluted earnings per share is now expected to range
between $5.65 and $5.85 per share, representing an increase of
$0.40 per share from prior guidance.
Free cash flow is now expected to range between $330 million and
$370 million as a result of the increased earnings guidance.
Interest expense is estimated to be $77 million for fiscal year
2024.
Conference Call and Webcast Information
Maximus will host a conference call tomorrow, May 9, 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, operating income, 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
For the Six Months Ended
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
(in thousands, except per share
amounts)
Revenue
$
1,348,357
$
1,206,852
$
2,675,398
$
2,456,098
Cost of revenue
1,030,768
978,249
2,057,755
1,982,748
Gross profit
317,589
228,603
617,643
473,350
Selling, general, and administrative
expenses
168,454
142,448
337,649
288,900
Amortization of intangible assets
21,641
23,650
44,990
47,168
Operating income
127,494
62,505
235,004
137,282
Interest expense
20,366
20,999
41,873
42,605
Other expense/(income), net
(822
)
(818
)
(334
)
(1,084
)
Income before income taxes
107,950
42,324
193,465
95,761
Provision for income taxes
27,440
10,536
48,807
23,978
Net income
$
80,510
$
31,788
$
144,658
$
71,783
Earnings per share:
Basic
$
1.31
$
0.52
$
2.36
$
1.17
Diluted
$
1.31
$
0.52
$
2.35
$
1.17
Weighted average shares outstanding:
Basic
61,371
61,120
61,330
61,119
Diluted
61,622
61,383
61,573
61,265
Dividends declared per share
$
0.30
$
0.28
$
0.60
$
0.56
Maximus, Inc.
Consolidated Statements of
Operations
(Unaudited)
March 31, 2024
September 30, 2023
(unaudited)
(in thousands)
Assets:
Cash and cash equivalents
$
77,370
$
65,405
Accounts receivable, net
916,004
826,873
Income taxes receivable
14,167
16,556
Prepaid expenses and other current
assets
110,912
146,632
Total current assets
1,118,453
1,055,466
Property and equipment, net
35,371
38,831
Capitalized software, net
141,943
107,811
Operating lease right-of-use assets
148,413
163,929
Goodwill
1,780,158
1,779,215
Intangible assets, net
676,909
703,648
Deferred contract costs, net
49,102
45,372
Deferred compensation plan assets
51,786
42,919
Deferred income taxes
2,129
2,459
Other assets
36,880
46,147
Total assets
$
4,041,144
$
3,985,797
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued
liabilities
$
276,199
$
282,081
Accrued compensation and benefits
172,601
194,251
Deferred revenue, current portion
76,574
60,477
Income taxes payable
15,792
451
Long-term debt, current portion
88,517
86,844
Operating lease liabilities, current
portion
48,470
49,852
Other current liabilities
50,563
49,058
Total current liabilities
728,716
723,014
Deferred revenue, non-current portion
33,374
38,849
Deferred income taxes
192,890
203,898
Long-term debt, non-current portion
1,121,337
1,163,149
Deferred compensation plan liabilities,
non-current portion
53,539
46,432
Operating lease liabilities, non-current
portion
112,780
129,367
Other liabilities
9,365
13,253
Total liabilities
2,252,001
2,317,962
Shareholders' equity:
Common stock, no par value; 100,000 shares
authorized; 61,037 and 60,998 shares issued and outstanding as of
March 31, 2024, and September 30, 2023, respectively
594,387
577,898
Accumulated other comprehensive loss
(30,149
)
(27,615
)
Retained earnings
1,224,905
1,117,552
Total shareholders' equity
1,789,143
1,667,835
Total liabilities and shareholders'
equity
$
4,041,144
$
3,985,797
Maximus, Inc.
Consolidated Statements of
Cash Flows
(Unaudited)
For the Three Months Ended
For the Six Months Ended
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
(in thousands)
Cash flows from operating activities:
Net income
$
80,510
$
31,788
$
144,658
$
71,783
Adjustments to reconcile net income to
cash flows from operations:
Depreciation and amortization of property,
equipment, and capitalized software
8,205
14,041
16,616
26,321
Amortization of intangible assets
21,641
23,650
44,990
47,168
Amortization of debt issuance costs and
debt discount
601
601
1,202
1,635
Deferred income taxes
(6,150
)
(37
)
(8,315
)
(1,368
)
Stock compensation expense
8,697
9,540
18,124
13,943
Loss on sale of businesses
—
883
1,018
883
Change in assets and liabilities, net of
effects of business combinations:
Accounts receivable
(57,006
)
263,278
(92,385
)
62,529
Prepaid expenses and other current
assets
9,876
2,788
19,932
13,412
Deferred contract costs
(2,712
)
1,596
(3,600
)
583
Accounts payable and accrued
liabilities
9,242
(10,003
)
(6,301
)
(6,361
)
Accrued compensation and benefits
56,836
39,049
(10,556
)
(14,222
)
Deferred revenue
9,828
(33,111
)
10,705
(18,347
)
Income taxes
(8,940
)
(16,043
)
13,310
(6,578
)
Operating lease right-of-use assets and
liabilities
703
(1,124
)
(385
)
(2,072
)
Other assets and liabilities
(843
)
(17,200
)
3,083
(14,272
)
Net cash provided by operating
activities
130,488
309,696
152,096
175,037
Cash flows from investing activities:
Purchases of property and equipment and
capitalized software
(25,300
)
(18,054
)
(47,547
)
(33,751
)
Asset acquisition
(18,006
)
—
(18,006
)
—
Proceeds from divestitures
1,263
9,124
3,078
9,124
Net cash used in investing activities
(42,043
)
(8,930
)
(62,475
)
(24,627
)
Cash flows from financing activities:
Cash dividends paid to Maximus
shareholders
(18,309
)
(17,016
)
(36,608
)
(34,033
)
Tax withholding related to RSU vesting
—
—
(13,455
)
(8,475
)
Payments for contingent consideration
(5,349
)
(2,626
)
(8,168
)
(4,041
)
Proceeds from borrowings
195,000
193,696
423,409
462,398
Principal payments for debt
(298,129
)
(469,105
)
(464,787
)
(530,460
)
Cash-collateralized escrow liabilities
3,918
(47,587
)
5,122
(57,060
)
Net cash used in financing activities
(122,869
)
(342,638
)
(94,487
)
(171,671
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(731
)
765
1,115
3,186
Net change in cash, cash equivalents, and
restricted cash
(35,155
)
(41,107
)
(3,751
)
(18,075
)
Cash, cash equivalents, and restricted
cash, beginning of period
153,495
159,827
122,091
136,795
Cash, cash equivalents, and restricted
cash, end of period
$
118,340
$
118,720
$
118,340
$
118,720
Maximus, Inc.
Consolidated Results of
Operations by Segment
(Unaudited)
For the Three Months Ended
For the Six Months Ended
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
Amount
% (1)
Amount
% (1)
Amount
% (1)
Amount
% (1)
(dollars in thousands)
Revenue:
U.S. Federal Services
$
701,702
$
584,075
$
1,378,780
$
1,202,242
U.S. Services
486,115
449,703
975,960
889,181
Outside the U.S.
160,540
173,074
320,658
364,675
Revenue
$
1,348,357
$
1,206,852
$
2,675,398
$
2,456,098
Gross profit:
U.S. Federal Services
$
163,337
23.3
%
$
122,874
21.0
%
$
319,999
23.2
%
$
245,568
20.4
%
U.S. Services
130,122
26.8
%
86,016
19.1
%
248,485
25.5
%
169,614
19.1
%
Outside the U.S.
24,130
15.0
%
19,713
11.4
%
49,159
15.3
%
58,168
16.0
%
Gross profit
$
317,589
23.6
%
$
228,603
18.9
%
$
617,643
23.1
%
$
473,350
19.3
%
Selling, general, and administrative
expenses:
U.S. Federal Services
$
79,867
11.4
%
$
75,050
12.8
%
$
167,722
12.2
%
$
146,699
12.2
%
U.S. Services
62,201
12.8
%
43,415
9.7
%
114,501
11.7
%
89,257
10.0
%
Outside the U.S.
23,460
14.6
%
23,425
13.5
%
48,601
15.2
%
51,814
14.2
%
Divestiture-related charges (2)
—
NM
883
NM
1,018
NM
883
NM
Other (3)
2,926
NM
(325
)
NM
5,807
NM
247
NM
Selling, general, and administrative
expenses
$
168,454
12.5
%
$
142,448
11.8
%
$
337,649
12.6
%
$
288,900
11.8
%
Operating income/(loss):
U.S. Federal Services
$
83,470
11.9
%
$
47,824
8.2
%
$
152,277
11.0
%
$
98,869
8.2
%
U.S. Services
67,921
14.0
%
42,601
9.5
%
133,984
13.7
%
80,357
9.0
%
Outside the U.S.
670
0.4
%
(3,712
)
(2.1
)%
558
0.2
%
6,354
1.7
%
Amortization of intangible assets
(21,641
)
NM
(23,650
)
NM
(44,990
)
NM
(47,168
)
NM
Divestiture-related charges (2)
—
NM
(883
)
NM
(1,018
)
NM
(883
)
NM
Other (3)
(2,926
)
NM
325
NM
(5,807
)
NM
(247
)
NM
Operating income
$
127,494
9.5
%
$
62,505
5.2
%
$
235,004
8.8
%
$
137,282
5.6
%
(1)
Percentage of respective segment revenue.
Percentages not considered meaningful are marked "NM."
(2)
We have sold businesses in both fiscal
years 2023 and 2024.
(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
For the Six Months Ended
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
(in thousands)
Net cash provided by operating
activities
$
130,488
$
309,696
$
152,096
$
175,037
Purchases of property and equipment and
capitalized software
(25,300
)
(18,054
)
(47,547
)
(33,751
)
Free cash flow (Non-GAAP)
$
105,188
$
291,642
$
104,549
$
141,286
Maximus, Inc.
Non-GAAP Adjusted Results
Excluding Amortization of Intangible Assets and Divestiture-Related
Charges
(Unaudited)
For the Three Months Ended
For the Six Months Ended
March 31, 2024
March 31, 2023
March 31, 2024
March 31, 2023
(dollars in thousands, except per
share data)
Operating income
$
127,494
$
62,505
$
235,004
$
137,282
Add back: Amortization of intangible
assets
21,641
23,650
44,990
47,168
Add back: Divestiture-related charges
—
883
1,018
883
Adjusted operating income excluding
amortization of intangible assets and divestiture-related charges
(Non-GAAP)
$
149,135
$
87,038
$
281,012
$
185,333
Adjusted operating income margin excluding
amortization of intangible assets and divestiture-related charges
(Non-GAAP)
11.1
%
7.2
%
10.5
%
7.5
%
Net income
$
80,510
$
31,788
$
144,658
$
71,783
Add back: Amortization of intangible
assets, net of tax
15,949
17,446
33,158
34,806
Add back: Divestiture-related charges
—
883
1,018
883
Adjusted net income excluding amortization
of intangible assets and divestiture-related charges (Non-GAAP)
$
96,459
$
50,117
$
178,834
$
107,472
Diluted earnings per share
$
1.31
$
0.52
$
2.35
$
1.17
Add back: Effect of amortization of
intangible assets on diluted earnings per share
0.26
0.28
0.53
0.57
Add back: Effect of divestiture-related
charges on diluted earnings per share
—
0.01
0.02
0.01
Adjusted diluted earnings per share
excluding amortization of intangible assets and divestiture-related
charges (Non-GAAP)
$
1.57
$
0.81
$
2.90
$
1.75
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240508587231/en/
James Francis, VP - IR Jessica Batt, VP - IR & ESG
IR@maximus.com
MAXIMUS (NYSE:MMS)
Graphique Historique de l'Action
De Nov 2024 à Déc 2024
MAXIMUS (NYSE:MMS)
Graphique Historique de l'Action
De Déc 2023 à Déc 2024
