MAXIMUS Reports Financial Results for Second Quarter of Fiscal 2013

  MAXIMUS Reports Financial Results for Second Quarter of Fiscal 2013

                       - Company Reiterates Guidance -

Business Wire

RESTON, Va. -- May 9, 2013

MAXIMUS (NYSE: MMS), a leading provider of government services worldwide,
today reported financial results for its second quarter ended March 31,2013.

Highlights for the quarter ended March 31, 2013 include:

  *Revenue grew 34% to $326.4million for the second quarter compared to
    $243.5 million reported for the same period last year, driven by the PSI
    acquisition, growth on existing contracts and new work. The second quarter
    of fiscal 2013 included $16.0 million of non-recurring revenue from a
    previously disclosed contract termination; excluding this, revenue grew
    27%.
  *Adjusted diluted earnings per share from continuing operations increased
    47% to $0.72 for the second quarter of fiscal 2013 compared to $0.49
    reported for the same period last year.
  *Cash and cash equivalents totaled $187.3million at March 31,2013.
  *Year-to-date signed contract awards totaled $886 million at March
    31,2013.

Revenue for the fiscal 2013 second quarter increased 34% to $326.4million,
which includes $16.0 million of non-recurring benefit related to a previously
disclosed contract termination in the Human Services Segment. This compares to
revenue of $243.5million reported for the same period last year. Excluding
the $16.0 million benefit, year-over-year second quarter revenue increased
27%, driven by the April 2012 acquisition of PSI, new work in both segments,
and growth on existing contracts, which includes the ongoing revenue ramp up
in the United Kingdom. Excluding PSI, revenue grew 15% organically compared to
the prior-year period.

For the second quarter of fiscal 2013, income from continuing operations, net
of taxes, totaled $31.7million, or $0.91 per diluted share, and included
pre-tax income of $10.9 million ($6.5 million, net of taxes), or $0.19 per
diluted share, related to the previously disclosed contract termination.
Excluding the benefit of $0.19 per diluted share, second quarter adjusted
diluted earnings per share from continuing operations increased 47% to $0.72
compared to $0.49 reported for the same period last year. The year-over-year
increase to earnings is attributable to accretive revenue growth in both
segments. A reconciliation to non-GAAP measures is included in the
accompanying financial schedules.

“Financial results in the quarter were solid and in-line with our
expectations, supporting our growth trajectory for the remainder of fiscal
2013 and beyond. As expected, organic revenue growth accelerated in the second
quarter, driven by strong performance from both segments. The long-term demand
trends remain positive for MAXIMUS, with multi-year growth drivers in place as
governments require a higher level of value-added services that deliver
measurable and meaningful outcomes. These trends, coupled with our
demonstrated experience and proven success, set the stage for our long-term
success to grow the business and maximize shareholder value,” commented
Richard A. Montoni, Chief Executive Officer of MAXIMUS.

Health Services Segment

Health Services Segment revenue for the second quarter of fiscal2013
increased 23% to $197.9million compared to $161.2million for the same period
last year, driven by the PSI acquisition, organic growth on existing
contracts, and new work. Health Services Segment operating income for the
second quarter of fiscal2013 increased 59% to $28.9million (14.6% operating
margin) and benefitted from accretive revenue growth. This compares to
$18.2million (11.3% operating margin) for the same period last year.

Human Services Segment

Human Services Segment revenue for the second quarter of fiscal 2013 increased
to $128.4million compared to $82.3million for the same period last year.
Excluding the $16.0 million benefit from the aforementioned contract
termination, revenue grew 37%, driven by the PSI acquisition, the ramp-up in
the United Kingdom, as well as new work in Canada and Saudi Arabia. Human
Services Segment operating income for the second quarter of 2013 totaled $21.5
million, which includes non-recurring pre-tax income of $10.9 million related
to the contract termination. Excluding the $10.9 million benefit, operating
income for the human services segment increased to $10.6million (9.4%
operating margin) compared to $8.6 million (10.5% operating margin) for the
same period last year. The year-over-year operating income increase was driven
by the expected improvement in the United Kingdom and growth in new programs,
which offset the expected lower profit margin in Australia.

Sales and Pipeline

Year-to-date signed contract awards at March 31, 2013 totaled $886million
compared to $812million reported for the same period last year. On a
sequential basis, signed contract wins were strong with approximately $700
million of new signed awards during the fiscal second quarter of 2013. New
contracts pending (awarded but unsigned) totaled $425million compared to
$284million last year.

Sales pipeline for the quarter ended March 31, 2013 was $2.3billion
(consisting of $888million in proposals pending, $85million in proposals in
preparation, and $1.3billion 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 and $2.7 billion
reported in the first fiscal quarter of 2013. Pipeline was lower on a
sequential basis principally due to the large number of contracts shifting
into the awarded categories.

Balance Sheet and Cash Flows

Cash and cash equivalents at March 31,2013 totaled $187.3million, of which
approximately 70% is held overseas. For the second quarter of fiscal 2013,
cash provided by operating activities from continuing operations totaled
$29.4million, with free cash flow of $18.3million. Excluding the $16.0
million revenue benefit from the terminated contract, Days Sales Outstanding
(DSO) from continuing operations were 66 days and remain within the Company’s
previously stated range of 65to80days.

On February 28,2013, MAXIMUS paid a quarterly cash dividend of
$0.09pershare. On April 18,2013, the Company announced a $0.09 per share
cash dividend, payable on May 31,2013 to shareholders of record on
May15,2013. In addition, on June 28, 2013 MAXIMUS will complete a
two-for-one stock split where each shareholder of record on June 14, 2013 will
receive an additional share of stock for each outstanding share.

MAXIMUS did not repurchase any shares of the Company’s common stock during the
second quarter of fiscal2013. At March31,2013, the Company had
$114.6million available for future repurchases under its Board-authorized
share repurchase program.

Outlook

MAXIMUS is reiterating its fiscal2013 revenue, earnings and cash flow
guidance. The Company continues to expect 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. The Company continues
to expect cash provided by operating activities from continuing operations to
range between $115 million and $135 million, and free cash flow from
continuing operations to range between $70 million and $90 million.

Mr. Montoni concluded, “The recently announced two-for-one stock split
underscores our confidence in the underlying, long-term fundamentals of
MAXIMUS and our future outlook. The management team remains firmly committed
to offering the highest quality of value-added services, enhancing our
established brand recognition, and expanding our offerings to advance new
opportunities.”

Website Presentation, Conference Call and Webcast Information

MAXIMUS will host a conference call this morning, May 9,2013, 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 May 23, 2013. Callers can access the replay by calling:

             877.660.6853 (Domestic)/201.612.7415 (International)
                     Replay conference ID number: 412909

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, organic growth, as well as revenues, operating income, net income
and earnings per share excluding a terminated contract.

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 flow to operating cash flow from
continuing operations. We believe that free cash flow from operations is a
useful basis for investors to compare our performance across periods or across
our competitors. Free cash flow 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 and the benefits of the terminated contract. We
have also provided a reconciliation between revenue and revenue excluding the
terminated contract. We believe that these measures are a useful basis for
assessing the Company’s performance excluding the effect of the terminated
contract, 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, operating income and
operating margin 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
(Dollars in thousands, except per share data)
(Unaudited)
                                                  
                         Three Months                Six Months
                         Ended March 31,             Ended March 31,
                         2013         2012          2013         2012
Revenue                  $ 326,351     $ 243,452     $ 612,617     $ 483,055
Cost of revenue          228,907       178,686       438,643       358,442
Gross profit             97,444        64,766        173,974       124,613
Selling, general and
administrative           46,693        37,959        88,915        70,715
expenses
Acquisition-related      16            233           164           233
expenses
Legal and settlement
expenses/(recoveries),   —             (824      )   142           (638      )
net
Operating income from    50,735        27,398        84,753        54,303
continuing operations
Interest and other       637           824           1,743         1,928
income, net
Income from continuing
operations before        51,372        28,222        86,496        56,231
income taxes
Provision for income     19,658        14,011        32,999        24,362
taxes
Income from continuing   31,714        14,211        53,497        31,869
operations
                                                                             
Discontinued
operations, net of
income taxes:
Loss from discontinued   (91       )   —             (594      )   —
operations
Gain on disposal         66            62            102           108
Income (loss) from
discontinued             (25       )   62            (492      )   108
operations
                                                                             
Net income               $ 31,689      $ 14,273      $ 53,005      $ 31,977
                                                                             
Basic earnings (loss)
per share:
Income from continuing   $ 0.93        $ 0.42        $ 1.57        $ 0.95
operations
Loss from discontinued   —             —             (0.01     )   —
operations
Basic earnings per       $ 0.93        $ 0.42        $ 1.56        $ 0.95
share
                                                                             
Diluted earnings
(loss) per share:
Income from continuing   $ 0.91        $ 0.41        $ 1.53        $ 0.92
operations
Loss from discontinued   —             —             (0.01     )   —
operations
Diluted earnings per     $ 0.91        $ 0.41        $ 1.52        $ 0.92
share
                                                                             
Dividends paid per       $ 0.09        $ 0.09        $ 0.18        $ 0.18
share
                                                                             
Weighted average
shares outstanding:
Basic                    34,089        33,788        34,085        33,725
Diluted                  34,954        34,728        34,917        34,638
                                                                             


MAXIMUS, Inc.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                                                            
                                               March 31,       September 30,
                                               2013            2012
                                               (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                      $  187,343      $   189,312
Restricted cash                                12,934          11,593
Accounts receivable — billed, net of           205,397         172,705
reserves of $3,769 and $3,265
Accounts receivable — unbilled                 18,689          10,539
Prepaid income taxes                           11,517          3,800
Deferred income taxes                          20,992          22,207
Prepaid expenses and other current assets      36,690          38,528
Total current assets                           493,562         448,684
                                                                             
Property and equipment, net                    58,845          58,798
Capitalized software, net                      32,374          27,390
Goodwill                                       111,670         112,032
Intangible assets, net                         22,874          25,330
Deferred contract costs, net                   10,675          9,284
Deferred income taxes                          1,249           1,369
Deferred compensation plan assets              9,831           9,220
Other assets, net                              3,280           3,186
Total assets                                   $  744,360      $   695,293
                                                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities       $  80,553       $   73,128
Accrued compensation and benefits              49,592          56,105
Deferred revenue                               66,072          60,026
Current portion of long-term debt              172             178
Income taxes payable                           4,434           3,100
Other accrued liabilities                      9,018           6,599
Total current liabilities                      209,841         199,136
Deferred revenue, less current portion         8,943           19,550
Long-term debt                                 1,420           1,558
Acquisition-related contingent                 393             406
consideration, less current portion
Income taxes payable, less current portion     1,460           1,412
Deferred income taxes                          15,539          10,384
Deferred compensation plan liabilities, less   13,573          11,741
current portion
Total liabilities                              251,169         244,187
                                                                             
Shareholders’ equity:
Common stock, no par value; 100,000 and
60,000 shares authorized; 56,883 and 56,516
shares issued and 34,103 and 33,985 shares     407,685         395,967
outstanding at March 31, 2013 and September
30, 2012, at stated amount, respectively
Treasury stock, at cost; 22,780 and 22,531
shares at March 31, 2013 and September 30,     (444,282    )   (429,646      )
2012, respectively
Accumulated other comprehensive income         18,672          20,240
Retained earnings                              511,116         464,545
Total shareholders’ equity                     493,191         451,106
Total liabilities and shareholders’ equity     $  744,360      $   695,293
                                                                             


MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
                                                   
                          Three Months                Six Months
                          Ended March 31,             Ended March 31,
                          2013         2012          2013         2012
Cash flows from
operating activities:
Net income                $ 31,689      $ 14,273      $ 53,005      $ 31,977
Adjustments to
reconcile net income to
net cash provided by
operating activities:
(Income) loss from        25            (62       )   492           (108     )
discontinued operations
Depreciation and          7,959         5,434         17,934        11,545
amortization
Deferred income taxes     7,368         (2,891    )   6,757         (5,315   )
Non-cash equity based     3,587         2,836         7,062         5,633
compensation
                                                                             
Change in assets and
liabilities:
Accounts receivable —     (6,931    )   9,741         (33,311   )   7,268
billed
Accounts receivable —     (7,307    )   355           (8,152    )   (63      )
unbilled
Prepaid expenses and      (2,593    )   (2,471    )   (2,521    )   (4,092   )
other current assets
Deferred contract costs   3,932         319           (1,413    )   1,109
Accounts payable and      (1,798    )   4,528         8,728         12,298
accrued liabilities
Accrued compensation      5,817         4,266         (1,877    )   (6,287   )
and benefits
Deferred revenue          (9,397    )   3,662         (2,934    )   11,291
Income taxes              (4,328    )   3,932         (6,561    )   8,910
Other assets and          1,352         (2,440    )   2,285         (5,128   )
liabilities
Cash provided by
operating activities –    29,375        41,482        39,494        69,038
continuing ops
Cash used in operating
activities –              (61       )   -             (554      )   -        
discontinued ops
Cash provided by          29,314        41,482        38,940        69,038
operating activities
                                                                             
Cash flows from
investing activities:
Purchases of property     (6,264    )   (4,022    )   (13,351   )   (6,576   )
and equipment
Capitalized software      (4,776    )   (1,112    )   (8,240    )   (1,832   )
costs
Proceeds from
settlement of final PSI   3,380         -             3,380         -
price
Proceeds from note        112           124           172           272
receivable
Proceeds from sale of     -             -             -             2,240    
discontinued operations
Cash used in investing    (7,548    )   (5,010    )   (18,039   )   (5,896   )
activities
                                                                             
Cash flows from
financing activities:
Repurchases of common               -   -             (15,403   )   (9,749   )
stock
Employee tax
withholding on                      -   -             (6,677    )   (3,088   )
restricted stock units
vesting
Tax benefit due to
option exercises and      2,315         770           4,680         2,510
RSU vesting
Cash dividends paid       (3,067    )   (3,038    )   (6,131    )   (6,061   )
Stock option exercises              -   1,959         1,752         4,775
Repayment of long-term    (43       )   -             (87       )   -        
debt
Cash used in financing    (795      )   (309      )   (21,866   )   (11,613  )
activities
                                                                    
Effect of exchange rate
changes on cash and       (766      )   2,326         (1,004    )   5,058
cash equivalents
                                                                    
Net increase/(decrease)
in cash and cash          20,205        38,489        (1,969    )   56,587
equivalents
                                                                    
Cash and cash
equivalents, beginning    167,138       191,048       189,312       172,950
of period
                                                                    
Cash and cash
equivalents, end of       $ 187,343     $ 229,537     $ 187,343     $ 229,537
period
                                                                      


MAXIMUS,Inc.
SEGMENT INFORMATION
(Dollars in thousands)
(Unaudited)

                        Three Months Ended March 31,               Six Months Ended March 31,
                         2013         % (1)  2012         % (1)   2013         % (1)  2012         % (1)
                                                                                                         
Revenue:
Health Services          $ 197,948     100 %   $ 161,170     100 %   $ 373,946     100 %   $ 319,213     100 %
Human Services           128,403       100 %   82,282        100 %   238,671       100 %   163,842       100 %
Total                    326,351       100 %   243,452       100 %   612,617       100 %   483,055       100 %
                                                                                                             
Gross Profit:
Health Services          54,651        28  %   41,137        26  %   99,910        27  %   77,136        24  %
Human Services           42,793        33  %   23,629        29  %   74,064        31  %   47,477        29  %
Total                    97,444        30  %   64,766        27  %   173,974       28  %   124,613       26  %
                                                                                                             
Selling, general, and
administrative
expense:
Health Services          25,742        13  %   22,935        14  %   50,375        13  %   42,151        13  %
Human Services           21,334        17  %   15,024        18  %   38,923        16  %   28,564        17  %
Corporate/Other          (383      )   NM      —             NM      (383      )   NM      —             NM
Total                    46,693        14  %   37,959        16  %   88,915        15  %   70,715        15  %
                                                                                                             
Operating income from
continuing operations:
Health Services          28,909        15  %   18,202        11  %   49,535        13  %   34,985        11  %
Human Services           21,459        17  %   8,605         10  %   35,141        15  %   18,913        12  %
Corporate/Other          383           NM      —             NM      383           NM      —             NM
Subtotal:
                         50,751        16  %   26,807        11  %   85,059        14  %   53,898        11  %
Segment Operating
Income
Acquisition-related      16            NM      233           NM      164           NM      233           NM
expenses
Legal and settlement
expenses/(recoveries),   —            NM      (824      )   NM      142          NM      (638      )   NM
net
Total                    $ 50,735     16  %   $ 27,398     11  %   $ 84,753     14  %   $ 54,303     11  %
                                                                                                             

(1)  Percentage of respective segment revenue. Changes not considered
      meaningful are marked “NM.”
      


MAXIMUS, Inc.
Non-GAAP Measures

ADJUSTED REVENUE AND OPERATING INCOME
(Dollars in thousands)
(Unaudited)

                                        Three Months       Six Months
                                         Ended March 31,     Ended March 31,
                                        2013                2013
                                                                             
Total company revenue                    $     326,351       $     612,617
Revenue from terminated contract         16,035              16,035          
Total company revenue excluding          $     310,316       $     596,582
terminated contract
                                                                             
Total company operating income           $     50,735        $     84,753
Operating income from terminated              10,900             10,900    
contract
Total company operating income,          $     39,835        $     73,853
excluding terminated contract
                                                                             
Total company operating margin,                12.8      %         12.4      %
excluding terminated contract
                                                                             
                                                            
                                         Three Months        Six Months
                                         Ended March 31,     Ended March 31,
                                        2013                2013
                                                                             
Human Services revenue                   $     128,403       $     238,671
Revenue from terminated contract         16,035              16,035          
Human Services revenue, excluding        $     112,368       $     222,636
terminated contract
                                                                             
Human Services operating income          $     21,459        $     35,141
Operating income from terminated              10,900             10,900    
contract
Human Services operating income,         $     10,559        $     24,241
excluding terminated contract
                                                                             
Human Services operating margin,               9.4       %         10.9      %
excluding terminated contract
                                                                             


MAXIMUS, Inc.
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS
FY 2013 and FY 2012
(Unaudited)

                               Quarter Ended
                               Dec. 31,  Mar. 31,                   
                               2012       2013
Diluted EPS from continuing    $0.62      $0.91
operations-GAAP basis
                                                                        
Adjustments:
Legal, settlement and          0.01       –
acquisition-related expenses
Adjustment for terminated      –          (0.19)
contract
Subtotal pro forma adjustments 0.01       (0.19)
                                                                        
Adjusted diluted EPS from      $0.63      $0.72
continuing operations
                                                                        
                                                                        
                               Quarter Ended                            Year
                                                                        Ended
                               Dec. 31,   Mar. 31,  Jun. 30,   Sept.    Sept.
                                                               30,      30,
                               2011       2012      2012       2012     2012
Diluted EPS from continuing    $0.51      $0.41     $0.59      $0.68    $2.19
operations-GAAP basis
                                                                        
Adjustments:
Legal, settlement and
acquisition-related expenses   –          (0.01)    0.03       0.03     0.05
(recovery), net
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      $0.51      $0.49     $0.62      $0.74    $2.36
continuing operations
                                                                        


MAXIMUS, Inc.
FREE CASH FLOW
(Dollars in thousands)
(Unaudited)

                           Three Months             Six Months
                            Ended March 31,           Ended March 31,
                            2013        2012         2013         2012
Cash provided by
operating activities –      $ 29,375     $ 41,482     $ 39,494      $ 69,038
continuing operations
Purchases of property and     (6,264 )     (4,022 )     (13,351 )     (6,576 )
equipment
Capitalized software        (4,776   )   (1,112   )   (8,240    )   (1,832   )
costs
Free cash flow from         $ 18,335     $ 36,348     $ 17,903      $ 60,630
continuing operations
                                                                             

Contact:

MAXIMUS
Lisa Miles, 703-251-8637
lisamiles@maximus.com
 
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