MAXIMUS Reports Financial Results for First Quarter of Fiscal 2013 - Company Raises Fiscal 2013 Revenue and Earnings Guidance - Business Wire RESTON, Va. -- 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 $286.3million 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 $167.1million 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 $286.3million versus $239.6million 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 $21.8million, 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 fiscal2013. 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 fiscal2013 increased 11% to $176.0million compared to $158.0million 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 fiscal2013 increased 23% to $20.6million (11.7% operating margin) and benefitted from accretive revenue growth. This compares to $16.8million (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 fiscal2012, 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 $110.3million compared to $81.6million 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 $13.7million (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 $10.3million (12.6% operating margin) in the same period last year. Sales and Pipeline Year-to-date signed contract wins at December 31, 2012 totaled $178million compared to $298million reported for the same period last year. New contracts pending (awarded but unsigned) totaled $459million compared to $579million last year. The prior-year period included a $450million contract extension in Australia. Sales pipeline at February 1, 2013 increased $1.0 billion to $2.7billion (consisting of $855million in proposals pending, $283million in proposals in preparation, and $1.6billion in proposals tracking) and includes opportunities across multiple geographies and both segments. This compares to $1.7billion in sales pipeline for the same period last year. Balance Sheet and Cash Flows Cash and cash equivalents at December 31,2012 totaled $167.1million, of which approximately 75% is held overseas. For the first quarter of fiscal 2013, cash provided by operating activities from continuing operations totaled $10.1million, with negative free cash flow of $0.4million. 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 67days which are within the Company’s previously stated range of 65to80days. On November 30,2012, MAXIMUS paid a quarterly cash dividend of $0.09pershare, and on January9,2013, the Company announced a $0.09 per share cash dividend, payable on February28,2013 to shareholders of record on February15,2013. During the first quarter of fiscal2013, MAXIMUS used $14.6million to purchase 249,549shares of MAXIMUS common stock under its Board-authorized share repurchase program. At December31,2012, the Company had $114.6million available for future repurchases. Outlook MAXIMUS is increasing its fiscal2013 revenue and earnings guidance. The Company now expects fiscal2013 revenue to range between $1.25billion and $1.30billion 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 fiscal2013. 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, February7,2013, 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 February21,2013. 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 35,124 28,009 taxes 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 198,939 172,705 of reserves of $4,114 and $3,975 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 38,171 38,528 current assets 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 $ 82,826 $ 73,128 liabilities 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 23,619 19,550 portion Long-term debt 1,494 1,558 Acquisition-related contingent 401 406 consideration Income taxes payable, less 1,436 1,412 current portion Deferred income taxes 8,323 10,384 Deferred compensation plan 13,212 11,741 liabilities, less current portion 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 403,706 395,967 outstanding at December 31, 2012 and September 30, 2012, at stated amount, respectively Treasury stock, at cost; 22,780 and 22,531 shares at December 31, (444,282 ) (429,646 ) 2012 and September 30, 2012, respectively Accumulated other comprehensive 19,637 20,240 income Retained earnings 482,645 464,545 Total shareholders’ equity 461,706 451,106 Total liabilities and $ 705,905 $ 695,293 shareholders’ equity 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 10,119 27,556 operations Cash used in operating activities — discontinued (493) — operations 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 (6,677 ) (3,088 ) vesting Tax benefit due to option exercises and restricted 2,365 1,740 stock units vesting 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 (238 ) 2,732 equivalents Net increase/(decrease) in cash and cash (22,174 ) 18,098 equivalents 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 $0.62 basis Adjustments: Legal, settlement and acquisition-related 0.01 expenses Subtotal pro forma 0.01 adjustments Adjusted diluted EPS from $0.63 continuing operations Quarter Ended Year Ended Dec. 31, Mar. 31, Jun. Sept. 30, Sept. 30, 30, 2011 2012 2012 2012 2012 Diluted EPS from continuing operations-GAAP $0.51 $0.41 $0.59 $0.68 $2.19 basis Adjustments: Legal, settlement and acquisition-related – (0.01) 0.03 0.03 0.05 expenses (recovery), net Adjustment for tax – 0.09 – 0.03 0.12 accounts Subtotal pro forma – 0.08 0.03 0.06 0.17 adjustments Adjusted Diluted EPS from $0.51 $0.49 $0.62 $0.74 $2.36 continuing operations MAXIMUS, Inc. FREE CASH FLOW (Dollars in thousands) (Unaudited) Three Months Ended December 31, 2012 2011 Cash provided by operating activities — continuing $ 10,119 $ 27,556 operations 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 email@example.com
MAXIMUS Reports Financial Results for First Quarter of Fiscal 2013
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