MAXIMUS Reports Financial Results for First Quarter of Fiscal 2013

  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
lisamiles@maximus.com
 
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