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Maximus Reports Fiscal Year 2023 Third Quarter Results

Domestic segments successfully deliver on expectations driving core business

Maximus (NYSE: MMS), a leading provider of government services worldwide, reported financial results for the three and nine months ended June 30, 2023.

Highlights for the third quarter of fiscal year 2023 include:

  • Revenue increased 5.6% to $1.19 billion, compared to $1.13 billion for the prior year period. Organic growth was 6.7% and driven by higher volumes on key programs in the U.S. segments.
  • Diluted earnings per share were $0.50 and adjusted diluted earnings per share were $0.78, both of which include an approximately $22 million expense, or $0.26 per share impact, related to the previously-disclosed cybersecurity incident.
  • U.S. Federal Services segment margin was 12.7%, and U.S. Services segment was 10.5%, which demonstrate successful delivery on ramping PACT Act volumes and commencement of Medicaid redeterminations.
  • The company is tightening revenue guidance and updating earnings guidance to account for the cybersecurity incident in third-quarter results. For fiscal year 2023, revenue is expected to range between $4.875 billion and $4.975 billion, and adjusted diluted earnings per share between $3.74 and $3.94 per share, which is equivalent to between $4.00 and $4.20 excluding the cybersecurity incident.
  • A quarterly cash dividend of $0.28 per share is payable on August 31, 2023, to shareholders of record on August 15, 2023.

"Our third quarter results show successful execution on the key drivers to which we previously felt there was excellent visibility, so we feel confident in achieving our full-year financial targets," said Bruce Caswell, President and Chief Executive Officer. "Those targets have been updated to reflect the accrual arising from the cybersecurity incident. Nevertheless, the fundamentals of the business remain as strong as ever, both in the near term and well into future periods."

Caswell continued, "Medicaid redeterminations are commencing as anticipated, enabling us to regain operating leverage in U.S. Services and overcoming a multi-year headwind. There is meaningful volume growth which we expect to continue in our U.S. Federal clinical services business driven by PACT Act legislation. Finally, we are focused on a broad range of new work opportunities on the horizon aligned with our strategy and underpinned by recent recompete wins that secure the base of the business."

Third Quarter Results

Revenue for the third quarter of fiscal year 2023 increased 5.6% to $1.19 billion, compared to $1.13 billion for the prior year period. Organic growth was 6.7%, driven by volume growth in key programs in the U.S. segments.

For the third quarter of fiscal year 2023, operating margin was 4.9% and the adjusted operating margin was 6.9%. This compares to margins of 4.8% and 6.9%, respectively, for the prior year period. Diluted earnings per share were $0.50 and adjusted diluted earnings per share were $0.78. This compares to $0.51 and $0.78, respectively, for the prior year period.

Adjusted diluted earnings per share of $0.78 this quarter includes the $0.26 per share detriment related to the cybersecurity incident and would have been $1.04 excluding these costs. On July 26, 2023, the company announced a cybersecurity incident related to a third-party file-sharing application. Results for the third quarter of fiscal year 2023 contained in this release include an approximately $22 million expense for total investigation and remediation costs related to the incident, reflecting the best estimate based on the currently available information.

In addition, the Outside the U.S. segment realized an operating loss totaling $15.2 million driven by macroeconomic factors that have caused expectations to deteriorate on the segment's employment services contracts.

U.S. Federal Services Segment

U.S. Federal Services Segment revenue for the third quarter of fiscal year 2023 increased 11.1% to $584.0 million, compared to $525.5 million reported for the prior year period. All growth was organic and driven by volume growth on both the Veterans Affairs Medical Disability Exams (MDE) contracts, which comprise the Veterans Evaluation Services (VES) business, and the student loan servicing contract.

The segment operating margin for the third quarter of fiscal year 2023 was 12.7%, compared to 10.4% reported for the prior year, and results this quarter slightly beat expectations. The MDE contracts had strong delivery on a higher level of volumes driven by the PACT Act. The full-year fiscal 2023 margin for the U.S. Federal Services Segment is still expected to range between 10% and 11%.

U.S. Services Segment

U.S. Services Segment revenue for the third quarter of fiscal year 2023 increased 12.5% to $449.1 million, compared to $399.3 million reported in the prior year period. All growth was organic and driven by contributions from last year's new work wins as well as revenue from the commencement of Medicaid redeterminations.

The segment operating margin for the third quarter of fiscal year 2023 was 10.5%, compared to 8.0% reported for the prior year, which was impacted by the ongoing pause to Medicaid redeterminations. Results this quarter were aligned with expectations for an improving segment margin over the remaining fiscal year as redeterminations resume. The full-year fiscal 2023 margin for the U.S. Services Segment is still expected to range between 9% and 11%.

Outside the U.S. Segment

Outside the U.S. Segment revenue for the third quarter of fiscal year 2023 decreased 22.5% to $155.7 million, compared to $200.9 million reported in the prior year period. Organic revenue contracted 16.6% due primarily to lower revenue in Australia following last year's rebid outcome and a $14.4 million reduction to estimates for future period outcomes-based payments on employment services programs. The divestiture of two small businesses in the second quarter of fiscal year 2023 reduced revenue by 4.5%, and currency was a 1.8% headwind.

The segment realized an operating loss of $15.2 million for the third quarter of fiscal year 2023, compared to an operating loss of $11.2 million in the prior year period. The higher-than-anticipated loss this quarter was driven by a $14.4 million revenue reduction to estimates which directly impacted the segment's income and resulted from macroeconomic factors causing expectations to decline on the segment's employment services contracts. The company remains focused on portions of the segment that are underperforming and is committed to shaping the segment, within practical constraints, to be aligned strategically and deliver consistent profitability.

Sales and Pipeline

Year-to-date signed contract awards at June 30, 2023, totaled $4.27 billion, and contracts pending (awarded but unsigned) totaled $3.10 billion. The book-to-bill ratio at June 30, 2023, was 2.2x calculated on a trailing twelve-month basis and includes the Contact Center Operations contract valued at $6.6 billion awarded in September 2022. The book-to-bill ratio excluding this contract was 1.1x at June 30, 2023.

The sales pipeline at June 30, 2023, totaled $32.1 billion, comprised of approximately $2.6 billion in proposals pending, $0.85 billion in proposals in preparation, and $28.7 billion in opportunities tracking. New work opportunities represent approximately 80% of the total sales pipeline.

Balance Sheet and Cash Flows

At June 30, 2023, cash and cash equivalents totaled $35.0 million, and gross debt was $1.32 billion. The ratio of debt, net of allowed cash, to EBITDA for the quarter ended June 30, 2023, as calculated in accordance with the company's credit agreement, was 2.5x and unchanged from the quarter ended March 31, 2023.

For the third quarter of fiscal year 2023, cash used in operating activities totaled $5.3 million, and free cash outflow was $30.4 million. DSO increased to 61 days at June 30, 2023, compared to DSO of 56 days at March 31, 2023, leading to an increase in working capital. In addition, the month of June this year included an extra payday, which had timing impact for cash flows for the three months ended June 30, 2023.

On July 7, 2023, our Board of Directors declared a quarterly cash dividend of $0.28 for each share of our common stock outstanding. The dividend is payable on August 31, 2023, to shareholders of record on August 15, 2023.

Updated FY23 Guidance

Maximus expects revenue for fiscal year 2023 revenue guidance to range between $4.875 billion and $4.975 billion, yielding a $4.925 billion midpoint which is unchanged from prior guidance of between $4.85 billion and $5.0 billion.

Adjusted operating income, which excludes the expense for amortization of intangible assets, is expected to range between $387 million and $401 million, as compared to prior guidance of between $415 million and $440 million. Costs related to the cybersecurity incident are included in the updated guidance, whereas adjusted operating income would be expected to range between $409 million and $423 million, excluding the charge in the third quarter of fiscal year 2023.

Adjusted diluted earnings per share, which excludes the expense for amortization of intangible assets, is expected to range between $3.74 and $3.94 per share, as compared to prior guidance of between $4.00 and $4.30. Excluding the cybersecurity incident costs, adjusted diluted earnings per share would be expected to range between $4.00 and $4.20 per share.

Free cash flow is expected to range between $190 million and $230 million, as compared to prior guidance of between $225 million and $275 million. Excluding the cybersecurity incident costs, free cash flow would be expected to range between $212 million and $252 million.

The company's guidance implies strong earnings growth for the fourth quarter of fiscal year 2023, which is largely unchanged from prior guidance, and driven by further increasing volumes in the VES business in U.S. Federal Services and an anticipated moderate sequential increase to Medicaid redeterminations in U.S. Services.

The company forecasts interest expense to still range between $82 million and $85 million, an updated effective income tax rate between 23.0% and 23.5%, and an updated weighted average shares outstanding between 61.4 million and 61.5 million shares for fiscal year 2023.

Conference Call and Webcast Information

Maximus will host a conference call tomorrow, August 3, 2023, 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 accompanying earnings presentation slides, including relevant financial charts, are available at investor.maximus.com.

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, 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, 2022, which was filed with the Securities and Exchange Commission (SEC) on November 22, 2022, and in our Form 10-Q expected to be filed shortly. The Company's SEC reports are accessible on maximus.com.

On July 26, 2023, the company announced a cybersecurity incident related to a third-party file-sharing application. Results for the third quarter of fiscal year 2023 contained in this release include an approximately $22 million expense for total investigation and remediation costs related to the incident, which reflects our best estimate based on the currently available information. This estimate is preliminary and could change prior to the time we file our Form 10-Q for the third fiscal quarter of 2023.

Maximus, Inc.

Consolidated Statements of Operations

(Unaudited)

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

(in thousands, except per share amounts)

Revenue

$

1,188,677

 

$

1,125,785

 

$

3,644,775

 

 

$

3,453,987

Cost of revenue

 

924,313

 

 

915,564

 

 

2,907,061

 

 

 

2,787,160

Gross profit

 

264,364

 

 

210,221

 

 

737,714

 

 

 

666,827

Selling, general, and administrative expenses

 

182,545

 

 

132,974

 

 

471,445

 

 

 

387,502

Amortization of intangible assets

 

23,431

 

 

22,690

 

 

70,599

 

 

 

67,951

Operating income

 

58,388

 

 

54,557

 

 

195,670

 

 

 

211,374

Interest expense

 

21,026

 

 

10,791

 

 

63,631

 

 

 

29,867

Other expense/(income), net

 

1,005

 

 

2,497

 

 

(79

)

 

 

2,093

Income before income taxes

 

36,357

 

 

41,269

 

 

132,118

 

 

 

179,414

Provision for income taxes

 

5,494

 

 

9,934

 

 

29,472

 

 

 

44,653

Net income

$

30,863

 

$

31,335

 

$

102,646

 

 

$

134,761

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

0.50

 

$

0.51

 

$

1.68

 

 

$

2.17

Diluted

$

0.50

 

$

0.51

 

$

1.67

 

 

$

2.17

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

61,141

 

 

61,607

 

 

61,125

 

 

 

62,038

Diluted

 

61,544

 

 

61,756

 

 

61,368

 

 

 

62,190

 

 

 

 

 

 

 

 

Dividends declared per share

$

0.28

 

$

0.28

 

$

0.84

 

 

$

0.84

Maximus, Inc.

Consolidated Balance Sheets

(in thousands)

 

 

June 30, 2023

 

September 30, 2022

 

(unaudited)

 

 

Assets:

 

 

 

Cash and cash equivalents

$

35,007

 

 

$

40,658

 

Accounts receivable, net

 

798,509

 

 

 

807,110

 

Income taxes receivable

 

34,435

 

 

 

2,158

 

Prepaid expenses and other current assets

 

128,085

 

 

 

182,387

 

Total current assets

 

996,036

 

 

 

1,032,313

 

Property and equipment, net

 

44,808

 

 

 

52,258

 

Capitalized software, net

 

88,007

 

 

 

58,740

 

Operating lease right-of-use assets

 

160,563

 

 

 

132,885

 

Goodwill

 

1,780,884

 

 

 

1,779,415

 

Intangible assets, net

 

727,956

 

 

 

804,904

 

Deferred contract costs, net

 

45,928

 

 

 

47,732

 

Deferred compensation plan assets

 

44,412

 

 

 

37,050

 

Deferred income taxes

 

5,771

 

 

 

4,970

 

Other assets

 

48,819

 

 

 

42,447

 

Total assets

$

3,943,184

 

 

$

3,992,714

 

Liabilities and Shareholders' Equity:

 

 

 

Liabilities:

 

 

 

Accounts payable and accrued liabilities

$

283,686

 

 

$

264,553

 

Accrued compensation and benefits

 

140,007

 

 

 

178,199

 

Deferred revenue, current portion

 

64,822

 

 

 

87,146

 

Income taxes payable

 

70

 

 

 

718

 

Long-term debt, current portion

 

86,901

 

 

 

63,458

 

Operating lease liabilities, current portion

 

53,385

 

 

 

63,999

 

Other current liabilities

 

54,430

 

 

 

116,374

 

Total current liabilities

 

683,301

 

 

 

774,447

 

Deferred revenue, non-current portion

 

14,860

 

 

 

21,414

 

Deferred income taxes

 

207,145

 

 

 

206,099

 

Long-term debt, non-current portion

 

1,223,133

 

 

 

1,292,483

 

Deferred compensation plan liabilities, non-current portion

 

47,363

 

 

 

40,210

 

Operating lease liabilities, non-current portion

 

120,766

 

 

 

86,175

 

Other liabilities

 

13,763

 

 

 

22,515

 

Total liabilities

 

2,310,331

 

 

 

2,443,343

 

Shareholders' equity:

 

 

 

Common stock, no par value; 100,000 shares authorized; 60,784 and 60,774 shares issued and outstanding as of June 30, 2023, and September 30, 2022, respectively

 

581,338

 

 

 

557,978

 

Accumulated other comprehensive loss

 

(24,311

)

 

 

(33,961

)

Retained earnings

 

1,075,826

 

 

 

1,025,354

 

Total shareholders' equity

 

1,632,853

 

 

 

1,549,371

 

Total liabilities and shareholders' equity

$

3,943,184

 

 

$

3,992,714

 

 

 

 

 

Maximus, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

(in thousands)

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

30,863

 

 

$

31,335

 

 

$

102,646

 

 

$

134,761

 

Adjustments to reconcile net income to cash flows from operations:

 

 

 

 

 

 

 

Depreciation and amortization of property, equipment, and capitalized software

 

10,771

 

 

 

8,676

 

 

 

37,092

 

 

 

29,875

 

Amortization of intangible assets

 

23,431

 

 

 

22,690

 

 

 

70,599

 

 

 

67,951

 

Amortization of debt issuance costs and debt discount

 

601

 

 

 

649

 

 

 

2,236

 

 

 

1,946

 

Deferred income taxes

 

3,743

 

 

 

(3,861

)

 

 

2,375

 

 

 

(7,179

)

Stock compensation expense

 

8,296

 

 

 

7,028

 

 

 

22,239

 

 

 

22,080

 

Loss on sale of businesses

 

 

 

 

 

 

 

883

 

 

 

 

Change in assets and liabilities, net of effects of business combinations and disposals:

 

 

 

 

 

 

 

Accounts receivable

 

(54,854

)

 

 

9,067

 

 

 

7,675

 

 

 

(39,997

)

Prepaid expenses and other current assets

 

7,689

 

 

 

(315

)

 

 

21,101

 

 

 

9,454

 

Deferred contract costs

 

1,662

 

 

 

(1,271

)

 

 

2,245

 

 

 

(7,702

)

Accounts payable and accrued liabilities

 

23,276

 

 

 

(39,530

)

 

 

16,915

 

 

 

(42,577

)

Accrued compensation and benefits

 

(17,390

)

 

 

42,127

 

 

 

(31,612

)

 

 

13,846

 

Deferred revenue

 

(13,400

)

 

 

(18,131

)

 

 

(31,747

)

 

 

342

 

Income taxes

 

(26,608

)

 

 

693

 

 

 

(33,186

)

 

 

(12,822

)

Operating lease right-of-use assets and liabilities

 

(1,670

)

 

 

(37

)

 

 

(3,742

)

 

 

(1,330

)

Other assets and liabilities

 

(1,696

)

 

 

(1,203

)

 

 

(15,968

)

 

 

1,128

 

Net cash (used in)/provided by operating activities

 

(5,286

)

 

 

57,917

 

 

 

169,751

 

 

 

169,776

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property and equipment and capitalized software

 

(25,112

)

 

 

(13,038

)

 

 

(58,863

)

 

 

(35,936

)

Acquisitions of businesses, net of cash acquired

 

 

 

 

(14,140

)

 

 

 

 

 

(14,144

)

Proceeds from sale of businesses

 

 

 

 

 

 

 

9,124

 

 

 

 

Proceeds from sale of land and building

 

 

 

 

2,000

 

 

 

 

 

 

2,000

 

Net cash used in investing activities

 

(25,112

)

 

 

(25,178

)

 

 

(49,739

)

 

 

(48,080

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Cash dividends paid to Maximus shareholders

 

(17,020

)

 

 

(17,103

)

 

 

(51,053

)

 

 

(51,762

)

Purchases of Maximus common stock

 

 

 

 

(48,021

)

 

 

 

 

 

(73,864

)

Tax withholding related to RSU vesting

 

 

 

 

 

 

 

(8,475

)

 

 

(9,673

)

Payments for contingent consideration

 

(2,621

)

 

 

 

 

 

(6,662

)

 

 

 

Proceeds from borrowings

 

220,000

 

 

 

175,000

 

 

 

682,398

 

 

 

415,000

 

Principal payments for debt

 

(200,054

)

 

 

(139,265

)

 

 

(730,514

)

 

 

(442,973

)

Restricted cash movements

 

2,517

 

 

 

 

 

 

(54,543

)

 

 

 

Net cash provided by/(used in) financing activities

 

2,822

 

 

 

(29,389

)

 

 

(168,849

)

 

 

(163,272

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

549

 

 

 

(4,693

)

 

 

3,735

 

 

 

(4,369

)

Net change in cash, cash equivalents, and restricted cash

 

(27,027

)

 

 

(1,343

)

 

 

(45,102

)

 

 

(45,945

)

Cash, cash equivalents and restricted cash, beginning of period

 

118,720

 

 

 

111,968

 

 

 

136,795

 

 

 

156,570

 

Cash, cash equivalents and restricted cash, end of period

$

91,693

 

 

$

110,625

 

 

$

91,693

 

 

$

110,625

 

Maximus, Inc.

Consolidated Results of Operations by Segment

(Unaudited)

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

Amount

 

% (1)

 

Amount

 

% (1)

 

Amount

 

% (1)

 

Amount

 

% (1)

 

(dollars in thousands)

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Federal Services

$

583,960

 

 

 

 

$

525,519

 

 

 

 

$

1,786,202

 

 

 

 

$

1,680,678

 

 

 

U.S. Services

 

449,061

 

 

 

 

 

399,320

 

 

 

 

 

1,338,242

 

 

 

 

 

1,183,814

 

 

 

Outside the U.S.

 

155,656

 

 

 

 

 

200,946

 

 

 

 

 

520,331

 

 

 

 

 

589,495

 

 

 

Revenue

$

1,188,677

 

 

 

 

$

1,125,785

 

 

 

 

$

3,644,775

 

 

 

 

$

3,453,987

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Federal Services

$

156,945

 

 

26.9

%

 

$

124,203

 

 

23.6

%

 

$

402,513

 

 

22.5

%

 

$

365,932

 

 

21.8

%

U.S. Services

 

98,538

 

 

21.9

%

 

 

74,135

 

 

18.6

%

 

 

268,152

 

 

20.0

%

 

 

248,805

 

 

21.0

%

Outside the U.S.

 

8,881

 

 

5.7

%

 

 

11,883

 

 

5.9

%

 

 

67,049

 

 

12.9

%

 

 

52,090

 

 

8.8

%

Gross profit

$

264,364

 

 

22.2

%

 

$

210,221

 

 

18.7

%

 

$

737,714

 

 

20.2

%

 

$

666,827

 

 

19.3

%

Selling, general, and administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Federal Services

$

82,892

 

 

14.2

%

 

$

69,466

 

 

13.2

%

 

$

229,591

 

 

12.9

%

 

$

203,340

 

 

12.1

%

U.S. Services

 

51,536

 

 

11.5

%

 

 

42,351

 

 

10.6

%

 

 

140,793

 

 

10.5

%

 

 

115,726

 

 

9.8

%

Outside the U.S.

 

24,122

 

 

15.5

%

 

 

23,101

 

 

11.5

%

 

 

75,936

 

 

14.6

%

 

 

68,452

 

 

11.6

%

Loss on sale of businesses (2)

 

 

 

NM

 

 

 

 

 

NM

 

 

 

883

 

 

NM

 

 

 

 

 

NM

 

Other (3)

 

23,995

 

 

NM

 

 

 

(1,944

)

 

NM

 

 

 

24,242

 

 

NM

 

 

 

(16

)

 

NM

 

Selling, general, and administrative expenses

$

182,545

 

 

15.4

%

 

$

132,974

 

 

11.8

%

 

$

471,445

 

 

12.9

%

 

$

387,502

 

 

11.2

%

Operating income/(loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Federal Services

$

74,053

 

 

12.7

%

 

$

54,737

 

 

10.4

%

 

$

172,922

 

 

9.7

%

 

$

162,592

 

 

9.7

%

U.S. Services

 

47,002

 

 

10.5

%

 

 

31,784

 

 

8.0

%

 

 

127,359

 

 

9.5

%

 

 

133,079

 

 

11.2

%

Outside the U.S.

 

(15,241

)

 

(9.8

)%

 

 

(11,218

)

 

(5.6

)%

 

 

(8,887

)

 

(1.7

)%

 

 

(16,362

)

 

(2.8

)%

Amortization of intangible assets

 

(23,431

)

 

NM

 

 

 

(22,690

)

 

NM

 

 

 

(70,599

)

 

NM

 

 

 

(67,951

)

 

NM

 

Loss on sale of businesses (2)

 

 

 

NM

 

 

 

 

 

NM

 

 

 

(883

)

 

NM

 

 

 

 

 

NM

 

Other (3)

 

(23,995

)

 

NM

 

 

 

1,944

 

 

NM

 

 

 

(24,242

)

 

NM

 

 

 

16

 

 

NM

 

Operating income

$

58,388

 

 

4.9

%

 

$

54,557

 

 

4.8

%

 

$

195,670

 

 

5.4

%

 

$

211,374

 

 

6.1

%

(1)

Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM."

(2)

During the second quarter of fiscal year 2023, we sold a small commercial practice in the United Kingdom and our employment operations business in Sweden, both subsidiaries within our Outside the U.S. Segment, resulting in a loss.

(3)

Other includes credits and costs that are not allocated to a particular segment. In the three and nine months ended June 30, 2023, these charges include $22.1 million related to the costs of a previously disclosed cybersecurity incident. Other charges include those related to acquisitions.

Maximus, Inc.

Consolidated Free Cash Flows - Non-GAAP

(Unaudited)

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

(in thousands)

Net cash (used in)/provided by operating activities

$

(5,286

)

 

$

57,917

 

 

$

169,751

 

 

$

169,776

 

Purchases of property and equipment and capitalized software

 

(25,112

)

 

 

(13,038

)

 

 

(58,863

)

 

 

(35,936

)

Free cash flow

$

(30,398

)

 

$

44,879

 

 

$

110,888

 

 

$

133,840

 

Maximus, Inc.

Non-GAAP Adjusted Results Excluding Amortization of Intangible Assets

(Unaudited)

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

 

(dollars in thousands, except per share data)

Operating income

$

58,388

 

 

$

54,557

 

 

$

195,670

 

 

$

211,374

 

Add back: Amortization of intangible assets

 

23,431

 

 

 

22,690

 

 

 

70,599

 

 

 

67,951

 

Adjusted operating income excluding amortization of intangible assets (Non-GAAP)

$

81,819

 

 

$

77,247

 

 

$

266,269

 

 

$

279,325

 

Adjusted operating income margin excluding amortization of intangible assets (Non-GAAP)

 

6.9

%

 

 

6.9

%

 

 

7.3

%

 

 

8.1

%

 

 

 

 

 

 

 

 

Net income

$

30,863

 

 

$

31,335

 

 

$

102,646

 

 

$

134,761

 

Add back: Amortization of intangible assets, net of tax

 

17,276

 

 

 

16,750

 

 

 

52,082

 

 

 

50,164

 

Adjusted net income excluding amortization of intangible assets (Non-GAAP)

$

48,139

 

 

$

48,085

 

 

$

154,728

 

 

$

184,925

 

 

 

 

 

 

 

 

 

Diluted earnings per share

$

0.50

 

 

$

0.51

 

 

$

1.67

 

 

$

2.17

 

Add back: Effect of amortization of intangible assets on diluted earnings per share

 

0.28

 

 

 

0.27

 

 

 

0.85

 

 

 

0.80

 

Adjusted diluted earnings per share excluding amortization of intangible assets (Non-GAAP)

$

0.78

 

 

$

0.78

 

 

$

2.52

 

 

$

2.97

 

 

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