EX-99.1 2 a50558861ex99-1.htm EXHIBIT 99.1 a50558861ex99-1.htm
Exhibit 99.1
 
MAXIMUS Reports Financial Results for First Quarter of Fiscal 2013
 
- Company Raises Fiscal 2013 Revenue and Earnings Guidance -
 
RESTON, Va.--(BUSINESS WIRE)--February 7, 2013--MAXIMUS (NYSE: MMS), a leading provider of government services worldwide, today reported financial results for its first quarter ended December 31, 2012.
 
Key highlights include:
 
 
·
Revenue grew 19% to $286.3 million for the first quarter compared to $239.6 million reported for the same period last year, driven by the PSI acquisition, growth on existing contracts, and new work.
 
 
·
Adjusted diluted earnings per share from continuing operations increased 24% to $0.63 for the first quarter compared to $0.51 reported for the same period last year.
 
 
·
Cash and cash equivalents totaled $167.1 million at December 31, 2012.
 
 
·
Year-to-date new signed contract awards totaled $178 million at December 31, 2012.
 
Revenue for the fiscal 2013 first quarter increased 19% (19% on a constant currency basis) to $286.3 million versus $239.6 million reported for the same period last year. Revenue increases were driven by the acquisition of PSI in April 2012, growth on existing contracts, and new work. First quarter organic revenue increased 5% compared to the same period last year.
 
First quarter income from continuing operations, net of taxes, totaled $21.8 million, or $0.62 per diluted share, and included approximately $0.01 of net legal, settlement and acquisition-related expenses. Excluding these costs, first quarter adjusted diluted earnings per share from continuing operations increased 24% to $0.63 compared to $0.51 reported for the same period last year. A reconciliation to this non-GAAP measure is included in the accompanying financial schedules.
 
First quarter 2013 earnings were better than expected, driven principally by accretive, transaction-based work in the Health Services Segment, primarily in the Company’s Federal Medicare appeals business. The Human Services Segment also benefitted from a temporary uplift in a domestic workforce services program.
 
“With strong performances from both our Health and Human Services Segments, MAXIMUS has set a solid platform for fiscal 2013. During the quarter, we experienced strong volumes from our Federal Medicare appeals business and we also made steady progress in winning new work in the emerging health insurance exchange market. Internationally, we see future opportunities that dovetail nicely with our core capabilities as governments evaluate program affordability and seek solutions to control costs and improve their benefit programs,” commented Richard A. Montoni, Chief Executive Officer of MAXIMUS.
 
 
 
 
 
Health Services Segment
 
Health Services Segment revenue for the first quarter of fiscal 2013 increased 11% to $176.0 million compared to $158.0 million for the same period last year, driven by the PSI acquisition, expansion on existing contracts and higher volumes in the Medicare appeals business line. Health Services Segment operating income for the first quarter of fiscal 2013 increased 23% to $20.6 million (11.7% operating margin) and benefitted from accretive revenue growth. This compares to $16.8 million (10.6% operating margin) in the same period last year which was tempered by the timing of a change order that was recognized in the third quarter of fiscal 2012, as well as margin dilution from the Texas contract where the Company experienced a temporary spike in lower-margin revenue.
 
Human Services Segment
 
Human Services Segment revenue for the first quarter of fiscal 2013 increased 35% to $110.3 million compared to $81.6 million for the same period last year, principally due to the PSI acquisition, the ramp-up in the United Kingdom and new work in Canada and Saudi Arabia. Human Services Segment operating income for the first quarter of 2013 increased 33% to $13.7 million (12.4% operating margin), driven by the expected improvement in the United Kingdom. The Segment also benefitted from performance-based payments in a domestic welfare-to-work program that are not expected to repeat at these higher levels going forward. This compares to $10.3 million (12.6% operating margin) in the same period last year.
 
Sales and Pipeline
 
Year-to-date signed contract wins at December 31, 2012 totaled $178 million compared to $298 million reported for the same period last year. New contracts pending (awarded but unsigned) totaled $459 million compared to $579 million last year. The prior-year period included a $450 million contract extension in Australia. Sales pipeline at February 1, 2013 increased $1.0 billion to $2.7 billion (consisting of $855 million in proposals pending, $283 million in proposals in preparation, and $1.6 billion in proposals tracking) and includes opportunities across multiple geographies and both segments. This compares to $1.7 billion in sales pipeline for the same period last year.
 
Balance Sheet and Cash Flows
 
Cash and cash equivalents at December 31, 2012 totaled $167.1 million, of which approximately 75% is held overseas. For the first quarter of fiscal 2013, cash provided by operating activities from continuing operations totaled $10.1 million, with negative free cash flow of $0.4 million. Cash flow in the quarter was consistent with seasonal expectations and was tempered lower receivables collections due to the number and timing of holidays. This resulted in Days Sales Outstanding (DSO) from continuing operations of 67 days which are within the Company’s previously stated range of 65 to 80 days.
 
On November 30, 2012, MAXIMUS paid a quarterly cash dividend of $0.09 per share, and on January 9, 2013, the Company announced a $0.09 per share cash dividend, payable on February 28, 2013 to shareholders of record on February 15, 2013.
 
During the first quarter of fiscal 2013, MAXIMUS used $14.6 million to purchase 249,549 shares of MAXIMUS common stock under its Board-authorized share repurchase program. At December 31, 2012, the Company had $114.6 million available for future repurchases.
 
Outlook
 
MAXIMUS is increasing its fiscal 2013 revenue and earnings guidance. The Company now expects fiscal 2013 revenue to range between $1.25 billion and $1.30 billion and adjusted diluted earnings per share from continuing operations to range between $3.00 and $3.15.
 
 
 
 
 
Mr. Montoni concluded, “In addition to our many start-up programs going largely as planned, we are experiencing positive trends that give us the confidence to raise our guidance for fiscal 2013. We were pleased by the favorable over-delivery in the quarter and we now expect that health appeals volumes will remain robust for the remainder of the fiscal year. In addition, we have an improved outlook related to work performed on California’s legacy CHIP program. Perhaps most importantly, the Company is starting to see revenue materialize from health insurance exchange support operations sooner than expected. We are excited at the many opportunities before us and believe we are uniquely positioned to benefit from positive, long-term secular trends in our core markets.”
 
Website Presentation, Conference Call and Webcast Information
 
MAXIMUS will host a conference call this morning, February 7, 2013, at 9:00 a.m. (ET). The call is open to the public and can be accessed under the Investor Relations page of the Company’s website at www.maximus.com or by calling:
 
877.407.8289 (Domestic)/201.689.8341 (International)
 
For those unable to listen to the live call, a replay will be available through February 21, 2013. Callers can access the replay by calling:
 
877.660.6853 (Domestic)/201.612.7415 (International)
Replay conference ID number: 407866
 
About MAXIMUS
 
MAXIMUS is a leading operator of government health and human services programs in the United States, United Kingdom, Canada, Australia and Saudi Arabia. The Company delivers business process services to improve the cost effectiveness, efficiency and quality of government-sponsored benefit programs, such as Medicaid, Medicare, Children's Health Insurance Program (CHIP), Health Insurance BC (British Columbia), as well as welfare-to-work and child support programs around the globe. The Company's primary customer base includes federal, provincial, state, county and municipal governments. Operating under its founding mission of Helping Government Serve the People®, MAXIMUS has approximately 8,800 employees worldwide. For more information, visit www.maximus.com.
 
 
 
 
 
Non-GAAP Measures
 
This release refers to non-GAAP financial measures, including free cash flows from operating activities, adjusted diluted earnings per share from continuing operations, constant currency revenue growth, organic growth, and operating income excluding legal, settlement and acquisition-related expenses.
 
To provide constant currency information, revenue from foreign operations is converted into United States dollars using average exchange rates from the previous fiscal year. We believe constant currency revenue growth provides a useful basis for assessing the performance of the Company excluding foreign exchange fluctuations. To provide organic growth information, revenue in the prior year is compared to the current year without PSI revenues. We believe organic growth provides a useful basis for assessing the performance of the business excluding PSI. We have provided a reconciliation of free cash flows to operating cash flows from continuing operations. We believe that free cash flows from operations is a useful basis for investors to compare our performance across periods or across our competitors. Free cash flows show the effects of the Company’s operations and routine capital expenditure and exclude the cash flow effects of acquisitions, share repurchases, dividend payments and other financing transactions. We have provided a reconciliation to adjusted diluted earnings per share and operating income excluding legal, settlement and acquisition-related expenses. We believe that these measures are a useful basis for assessing the Company’s performance excluding the effect of the costs of acquiring PSI and net legal and settlement expenses.
 
The presentation of these non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to net income, cash flows from operating activities, diluted earnings per share, revenue growth and operating income as measures of performance.
 
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 uncertainties could cause the Company's actual results to differ materially from those indicated by such forward-looking statements and include reliance on government clients; risks associated with government contracting; risks involved in managing government projects; legislative changes and political developments; opposition from government unions; challenges resulting from growth; adverse publicity; and legal, economic, and other risks detailed in Exhibit 99.1 to the Company's most recent Annual Report filed with the Securities and Exchange Commission, found on www.maximus.com.
 
 
 
 
 
MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
   
Three Months
Ended December 31,
   
2012
  
2011
Revenue
  
$
286,266
    
$
239,603
Cost of revenue
  
209,736
    
179,756
Gross profit
  
76,530
    
59,847
Selling, general and administrative expenses
  
42,222
    
32,756
Acquisition-related expenses
  
148
    
—
Legal and settlement expense
  
142
    
186
Operating income from continuing operations
  
34,018
    
26,905
Interest and other income, net
  
1,106
    
1,104
Income from continuing operations before income taxes
  
35,124
    
28,009
Provision for income taxes
  
13,341
    
10,351
Income from continuing operations
  
21,783
    
17,658
           
Discontinued operations, net of income taxes:
          
Loss from discontinued operations
  
(503
)
  
—
Gain on disposal
  
36
    
46
Income (loss) from discontinued operations
  
(467
)
  
46
           
Net income
  
$
21,316
    
$
17,704
           
Basic earnings (loss) per share:
          
Income from continuing operations
  
$
0.64
    
$
0.52
Income (loss) from discontinued operations
  
(0.01
)
  
0.01
Basic earnings per share
  
$
0.63
    
$
0.53
           
Diluted earnings (loss) per share:
          
Income from continuing operations
  
$
0.62
    
$
0.51
Income (loss) from discontinued operations
  
(0.01
)
  
—
Diluted earnings per share
  
$
0.61
    
$
0.51
           
Dividends paid per share
  
$
0.09
    
$
0.09
           
Weighted average shares outstanding:
          
Basic
  
34,081
    
33,663
Diluted
  
34,876
    
34,557
           
 
 
 
 
 
MAXIMUS, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands)
   
December 31, 2012
    
September 30, 2012
  
   
(unaudited)
        
ASSETS
            
Current assets:
            
Cash and cash equivalents
  
$
167,138
    
$
189,312
  
Restricted cash
  
12,106
    
11,593
  
Accounts receivable — billed, net of reserves of $4,114 and $3,975
  
198,939
    
172,705
  
Accounts receivable — unbilled
  
11,387
    
10,539
  
Prepaid income taxes
  
4,711
    
3,800
  
Deferred income taxes
  
21,779
    
22,207
  
Prepaid expenses and other current assets
  
38,171
    
38,528
  
Total current assets
  
454,231
    
448,684
  
             
Property and equipment, net
  
58,284
    
58,798
  
Capitalized software, net
  
29,304
    
27,390
  
Goodwill
  
112,021
    
112,032
  
Intangible assets, net
  
24,129
    
25,330
  
Deferred contract costs, net
  
14,619
    
9,284
  
Deferred income taxes
  
833
    
1,369
  
Deferred compensation plan assets
  
9,373
    
9,220
  
Other assets, net
  
3,111
    
3,186
  
Total assets
  
$
705,905
    
$
695,293
  
             
LIABILITIES AND SHAREHOLDERS’ EQUITY
            
Current liabilities:
            
Accounts payable and accrued liabilities
  
$
82,826
    
$
73,128
  
Accrued compensation and benefits
  
41,707
    
56,105
  
Deferred revenue
  
62,401
    
60,026
  
Current portion of long-term debt
  
176
    
178
  
Income taxes payable
  
1,785
    
3,100
  
Other accrued liabilities
  
6,819
    
6,599
  
Total current liabilities
  
195,714
    
199,136
  
Deferred revenue, less current portion
  
23,619
    
19,550
  
Long-term debt
  
1,494
    
1,558
  
Acquisition-related contingent consideration
  
401
    
406
  
Income taxes payable, less current portion
  
1,436
    
1,412
  
Deferred income taxes
  
8,323
    
10,384
  
Deferred compensation plan liabilities, less current portion
  
13,212
    
11,741
  
Total liabilities
  
244,199
    
244,187
  
             
Shareholders’ equity:
            
Common stock, no par value; 60,000 shares authorized; 56,866 and 56,516 shares issued and 34,086 and 33,985 shares outstanding at December 31, 2012 and September 30, 2012, at stated amount, respectively
  
403,706
    
395,967
  
Treasury stock, at cost; 22,780 and 22,531 shares at December 31, 2012 and September 30, 2012, respectively
  
(444,282
)
  
(429,646
)
Accumulated other comprehensive income
  
19,637
    
20,240
  
Retained earnings
  
482,645
    
464,545
  
Total shareholders’ equity
  
461,706
    
451,106
  
Total liabilities and shareholders’ equity
  
$
705,905
    
$
695,293
  
 
 
 
 
 
MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
   
Three Months
Ended December 31,
  
   
2012
    
2011
  
Cash flows from operating activities:
            
Net income
  
$
21,316
    
$
17,704
  
Adjustments to reconcile net income to net cash provided by operating activities:
            
(Income) loss from discontinued operations
  
467
    
(46
)
Depreciation and amortization
  
9,975
    
6,111
  
Deferred income taxes
  
(611
)
  
(2,424
)
Non-cash equity based compensation
  
3,475
    
2,797
  
             
Change in assets and liabilities:
            
Accounts receivable — billed
  
(26,380
)
  
(2,473
)
Accounts receivable — unbilled
  
(845
)
  
(418
)
Prepaid expenses and other current assets
  
72
    
(1,621
)
Deferred contract costs
  
(5,345
)
  
790
  
Accounts payable and accrued liabilities
  
10,526
    
7,770
  
Accrued compensation and benefits
  
(7,694
)
  
(10,553
)
Deferred revenue
  
6,463
    
7,629
  
Income taxes
  
(2,233
)
  
4,978
  
Other assets and liabilities
  
933
    
(2,688
)
Cash provided by operating activities — continuing operations
  
10,119
    
27,556
  
Cash used in operating activities — discontinued operations
  
(493)
    
—
  
Cash provided by operating activities
  
9,626
    
27,556
  
             
Cash flows from investing activities:
            
Purchases of property and equipment
  
(7,087
)
  
(2,554
)
Capitalized software costs
  
(3,464
)
  
(720
)
Proceeds from note receivable
  
60
    
148
  
Proceeds from sale of discontinued operations
  
—
    
2,240
  
Cash used in investing activities
  
(10,491
)
  
(886
)
             
Cash flows from financing activities:
            
Repurchases of common stock
  
(15,403
)
  
(9,749
)
Employee tax withholding on restricted stock unit vesting
  
(6,677
)
  
(3,088
)
Tax benefit due to option exercises and restricted stock units vesting
  
2,365
    
1,740
  
Cash dividends paid
  
(3,064
)
  
(3,023
)
Stock option exercises
  
1,752
    
2,816
  
Repayment of long-term debt
  
(44
)
  
—
  
Cash used in financing activities
  
(21,071
)
  
(11,304
)
             
Effect of exchange rate changes on cash and cash equivalents
  
(238
)
  
2,732
  
             
Net increase/(decrease) in cash and cash equivalents
  
(22,174
)
  
18,098
  
             
Cash and cash equivalents, beginning of period
  
189,312
    
172,950
  
             
Cash and cash equivalents, end of period
  
$ 167,138
    
$ 191,048
  
 
 
 
 
 
MAXIMUS, Inc.
SEGMENT INFORMATION
(Dollars in thousands)
(Unaudited)
       
   
Three Months Ended December 31,
  
   
2012
  
%(1)
  
2011
  
%(1)
                     
Revenue:
                    
Health Services
  
$
175,998
  
100
%
  
$
158,043
  
100
%
Human Services
  
110,268
  
100
%
  
81,560
  
100
%
Total
  
286,266
  
100
%
  
239,603
  
100
%
                     
Gross profit:
                    
Health Services
  
45,259
  
25.7
%
  
35,999
  
22.8
%
Human Services
  
31,271
  
28.4
%
  
23,848
  
29.2
%
Total
  
76,530
  
26.7
%
  
59,847
  
25.0
%
                     
Selling, general, and administrative expense:
                    
Health Services
  
24,633
  
14.0
%
  
19,216
  
12.2
%
Human Services
  
17,589
  
16.0
%
  
13,540
  
16.6
%
Total
  
42,222
  
14.7
%
  
32,756
  
13.7
%
                     
Operating income from continuing operations:
                    
Health Services
  
20,626
  
11.7
%
  
16,783
  
10.6
%
Human Services
  
13,682
  
12.4
%
  
10,308
  
12.6
%
Subtotal: Segment operating income
  
34,308
  
12.0
%
  
27,091
  
11.3
%
Acquisition-related expenses
  
148
  
NM
    
—
  
NM
  
Legal and settlement expense
  
142
  
NM
    
186
  
NM
  
Total
  
$
34,018
  
11.9
%
  
$
26,905
  
11.2
%

(1)
  
Percentage of respective segment revenue. Changes not considered meaningful are marked “NM.”
 
 
 
 
 
MAXIMUS, Inc.
Non-GAAP Measures
 
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS
FY 2013 and FY 2012
(Unaudited)
         
   
Quarter
    
   
Ended
    
   
Dec. 31,
2012
                
Diluted EPS from continuing operations-GAAP basis
  
$0.62
                
                     
Adjustments:
                    
Legal, settlement and acquisition-related expenses
  
0.01
                
Subtotal pro forma adjustments
  
0.01
                
                     
Adjusted diluted EPS from continuing operations
  
$0.63
                
         
   
Quarter Ended
  
Year
Ended
   
Dec. 31,
2011
  
Mar. 31,
2012
  
Jun. 30,
2012
  
Sept. 30,
2012
  
Sept. 30,
2012
Diluted EPS from continuing operations-GAAP basis
  
$0.51
  
$0.41
  
$0.59
  
$0.68
  
$2.19
                     
Adjustments:
                    
Legal, settlement and acquisition-related expenses (recovery), net
  
–
  
(0.01)
  
0.03
  
0.03
  
0.05
Adjustment for tax accounts
  
–
  
0.09
  
–
  
0.03
  
0.12
Subtotal pro forma adjustments
  
–
  
0.08
  
0.03
  
0.06
  
0.17
                     
Adjusted Diluted EPS from continuing operations
  
$0.51
  
$0.49
  
$0.62
  
$0.74
  
$2.36

 
MAXIMUS, Inc.
FREE CASH FLOW
(Dollars in thousands)
(Unaudited)
       
   
Three Months Ended
December 31,
  
   
2012
  
2011
             
Cash provided by operating activities — continuing operations
  
$
10,119
    
$
27,556
  
Purchases of property and equipment
  
(7,087
)
  
(2,554
)
Capitalized software costs
  
(3,464
)
  
(720
)
Free cash flow from continuing operations
  
$
(432
)
  
$
24,282
  
                 
 
CONTACT:
MAXIMUS
Lisa Miles, 703-251-8637
lisamiles@maximus.com