MAXIMUS Reports Financial Results for Third Quarter of Fiscal 2013

  MAXIMUS Reports Financial Results for Third Quarter of Fiscal 2013

         - Company Reiterates FY 13 and Preliminary FY 14 Guidance -

Business Wire

RESTON, Va. -- August 8, 2013

MAXIMUS (NYSE: MMS), a leading provider of government services worldwide,
today reported financial results for its third quarter ended June 30,2013.

Highlights for the quarter ended June 30, 2013 include:

  *Revenue grew 26% to $334.3million for the third quarter of fiscal 2013
    driven by organic growth.
  *GAAP diluted earnings per share from continuing operations increased 38%
    to $0.40 and adjusted diluted earnings per share from continuing
    operations increased 32% to $0.41.
  *Strong cash flows resulted in cash and cash equivalents that totaled
    $187.9million at June 30, 2013.
  *Year-to-date signed contract awards totaled $1.3 billion at June 30,2013
    and the sales pipeline remained strong at $2.2 billion.
  *The Company completed a two-for-one stock split effective June 28, 2013.
    All common stock and per share amounts have been adjusted for the stock
    split.
  *Subsequent to quarter end, the Company announced the acquisition of Health
    Management Limited, establishing a UK foothold in the independent health
    assessment market.

Revenue for the fiscal 2013 third quarter increased 26% to $334.3million,
compared to revenue of $266.4million reported for the same period last year,
driven by new work and the expansion on existing contracts. Financial results
in the quarter reflect solid organic growth across both segments. Revenue for
the third quarter of 2013 grew 26% organically compared to the prior-year
period.

Fiscal 2013 third quarter income from continuing operations, net of taxes,
totaled $28.0million, or $0.40 per diluted share, and included approximately
$0.01 of net legal, settlement and acquisition-related expenses. Excluding
these costs, third quarter adjusted diluted earnings per share from continuing
operations increased 32% to $0.41 compared to $0.31 reported for the same
period last year. The year-over-year increase to earnings is attributable to
accretive revenue growth. A reconciliation to this non-GAAP measure is
included in the accompanying financial schedules.

“This morning’s financial results are right in line with our growth trajectory
for the remainder of fiscal 2013 and set a solid platform for continued top-
and bottom-line growth next fiscal year,” commented Richard A. Montoni, Chief
Executive Officer of MAXIMUS. “MAXIMUS continues to benefit from macro drivers
and solid demand trends for our core health and human services. In the United
States, we are pleased to have established a leading position in the first
wave of health insurance exchange contracts, and remain optimistic about other
long-term opportunities in other areas of health care reform. Internationally,
the acquisition of Health Management has provided MAXIMUS with a strengthened
position for future opportunities in the United Kingdom health market,
supporting our international growth objectives as we expand our service
offerings and our geographic footprint.”

Health Services Segment

Health Services Segment revenue for the third quarter of fiscal2013 increased
28% to $217.9million compared to the same period last year, driven by
favorable volumes in our health appeals business, organic growth from new work
and expansion on existing programs. Health Services Segment operating income
for the third quarter of fiscal2013 increased 34% to $34.4million (15.8%
operating margin) and benefitted from accretive revenue growth in our Federal
appeals and transaction based-programs. This compares to $25.7million (15.1%
operating margin) for the same period last year, which included a $10.2
million change order that benefitted both revenue and profit.

Human Services Segment

Human Services Segment revenue for the third quarter of fiscal 2013 increased
21% to $116.4million compared to the same period last year, driven
principally by the ongoing ramp-up in the United Kingdom as well as growth in
other international operations. Human Services Segment operating income for
the third quarter of 2013 increased 20% to $11.0million (9.5% operating
margin) driven by accretive growth in operations outside the U.S. including
the ongoing ramp-up in the UK, which offset lower margins in Australia. This
compares to $9.2 million (9.6% operating margin) for the same period last
year, which included a net benefit of $2.1 million on a fixed price contract.

Sales and Pipeline

Year-to-date signed contract awards at June 30, 2013 totaled $1.3 billion
compared to $1.2 billion reported for the same period last year. New contracts
pending (awarded but unsigned) totaled $413million.

Sales pipeline for the quarter ended June 30, 2013 was $2.2billion
(consisting of $278 million in proposals pending, $158million in proposals in
preparation, and $1.8billion in opportunities tracking) and includes
opportunities across multiple geographies and both segments. This is lower
compared to $3.4billion in sales pipeline reported for the same period last
year, due to opportunities converting into new sales. On a sequential basis,
the pipeline is consistent with the second fiscal quarter of 2013.

Balance Sheet and Cash Flows

Cash and cash equivalents at June 30,2013 totaled $187.9million. Subsequent
to quarter end, $71.4 million was used to acquire Health Management Limited.
After this transaction, approximately 60% of the Company’s cash and cash
equivalents were held overseas. For the third quarter of fiscal 2013, cash
provided by operating activities from continuing operations totaled
$49.7million, with free cash flow of $32.7million. Days Sales Outstanding
(DSO) from continuing operations were 65 days and remain within the Company’s
previously stated range of 65to80days.

On May 31,2013, MAXIMUS paid a quarterly cash dividend of $0.045pershare.
On July 10,2013, the Company announced a $0.045 per share cash dividend,
payable on August 30,2013 to shareholders of record on August 15,2013.

MAXIMUS repurchased 329,800 shares of the Company’s common stock for $12.4
million during the third quarter of fiscal2013. At June 30,2013, the Company
had $102.2million 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
$1.26billion and $1.31billion and diluted earnings per share from continuing
operations to range between $1.50 and $1.58. The Company continues to expect
cash provided by operating activities from continuing operations to range
between $115 million and $135 million. The Company also continues to expect
free cash flow from continuing operations to range between $70 million and $90
million, but more likely toward the lower end of the range.

MAXIMUS is also reiterating its preliminary fiscal year 2014 revenue and
earnings guidance. The Company continues to expect fiscal year 2014 revenue
will range between $1.555 billion and $1.650 billion and diluted earnings per
share is expected to range between $1.75 and $1.85. This guidance does not
contemplate any future mergers and acquisition activity or any significant
legal expenses or recoveries.

Mr. Montoni concluded, “MAXIMUS continues to deliver on our long-term growth
strategy and we see many new emerging opportunities for our core capabilities
in all of our geographies. With our fiscal 2014 preliminary guidance in place,
we remain committed to generating long-term shareholder value as we continue
to grow the business.”

Website Presentation, Conference Call and Webcast Information

MAXIMUS will host a conference call this morning, August 8,2013, 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 http://investor.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 August 23, 2013. Callers can access the replay by calling:

             877.660.6853 (Domestic)/201.612.7415 (International)
                     Replay conference ID number: 418441

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 9,750 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 and organic growth.

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. We believe that this measure is a useful basis for assessing the
Company’s performance excluding the effect of the costs of acquiring PSI, as
well as 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 or revenue growth 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                Nine Months
                         Ended June 30,              Ended June 30,
                         2013         2012          2013         2012
Revenue                  $ 334,323     $ 266,353     $ 946,940     $ 749,408
Cost of revenue          239,763       187,652       678,406       546,094
Gross profit             94,560        78,701        268,534       203,314
Selling, general and
administrative           49,181        43,877        138,096       114,592
expenses
Acquisition-related      1,174         1,877         1,500         2,110
expenses
Legal and settlement
expenses/(recoveries),   (182      )   (352      )   (202      )   (990      )
net
Operating income from    44,387        33,299        129,140       87,602
continuing operations
Interest and other       701           1,164         2,444         3,092
income, net
Income from continuing
operations before        45,088        34,463        131,584       90,694
income taxes
Provision for income     17,052        13,987        50,051        38,349
taxes
Income from continuing   28,036        20,476        81,533        52,345
operations
                                                                             
Discontinued
operations, net of
income taxes:
Loss from discontinued   (3        )   —             (597      )   —
operations
Gain on disposal         67            9             169           117
Income (loss) from
discontinued             64            9             (428      )   117
operations
                                                                             
Net income               $ 28,100      $ 20,485      $ 81,105      $ 52,462
                                                                             
Basic earnings (loss)
per share:
Income from continuing   $ 0.41        $ 0.30        $ 1.20        $ 0.77
operations
Income (loss) from
discontinued             —             —             (0.01     )   0.01
operations
Basic earnings per       $ 0.41        $ 0.30        $ 1.19        $ 0.78
share
                                                                             
Diluted earnings
(loss) per share:
Income from continuing   $ 0.40        $ 0.29        $ 1.17        $ 0.75
operations
Income (loss) from
discontinued             —             —             (0.01     )   0.01
operations
Diluted earnings per     $ 0.40        $ 0.29        $ 1.16        $ 0.76
share
                                                                             
Dividends paid per       $ 0.045       $ 0.045       $ 0.135       $ 0.135
share
                                                                             
Weighted average
shares outstanding:
Basic                    68,162        67,946        68,168        67,615
Diluted                  69,867        69,736        69,864        69,440

                                                              
MAXIMUS, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                                                                 
                                                   June 30,      September 30,
                                                   2013          2012
                                                   (unaudited)
ASSETS
Current assets:
Cash and cash equivalents                          $  187,911    $   189,312
Restricted cash                                    12,313        11,593
Accounts receivable — billed, net of reserves of   221,319       172,705
$3,293 and $3,975
Accounts receivable — unbilled                     16,329        10,539
Prepaid income taxes                               3,359         3,800
Deferred income taxes                              25,183        22,207
Prepaid expenses and other current assets          36,466        38,528
Total current assets                               502,880       448,684
                                                                 
Property and equipment, net                        63,371        58,798
Capitalized software, net                          36,106        27,390
Goodwill                                           109,295       112,032
Intangible assets, net                             21,596        25,330
Deferred contract costs, net                       11,695        9,284
Deferred income taxes                              1,167         1,369
Deferred compensation plan assets                  9,768         9,220
Other assets, net                                  3,180         3,186
Total assets                                       $  759,058    $   695,293
                                                                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities           $  87,689     $   73,128
Accrued compensation and benefits                  55,052        56,105
Deferred revenue                                   66,009        60,026
Current portion of long-term debt                  167           178
Income taxes payable                               8,537         3,100
Other accrued liabilities                          8,715         6,599
Total current liabilities                          226,169       199,136
Deferred revenue, less current portion             7,939         19,550
Long-term debt                                     1,333         1,558
Acquisition-related contingent consideration,      380           406
less current portion
Income taxes payable, less current portion         1,460         1,412
Deferred income taxes                              16,711        10,384
Deferred compensation plan liabilities, less       14,093        11,741
current portion
Total liabilities                                  268,085       244,187
                                                                 
Total shareholders’ equity                         490,973       451,106
Total liabilities and shareholders’ equity         $  759,058    $   695,293

                                                  
MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
                                                                            
                         Three Months                Nine Months
                         Ended June 30,              Ended June 30,
                         2013         2012          2013         2012
Cash flows from
operating activities:
Net income               $ 28,100      $ 20,485      $ 81,105      $ 52,462
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
(Income) loss from
discontinued             (64       )   (9        )   428           (117     )
operations
Depreciation and         7,829         6,968         25,763        18,513
amortization
Deferred income taxes    (3,727    )   687           3,030         (4,628   )
Non-cash equity based    3,646         3,208         10,708        8,841
compensation
                                                                            
Change in assets and
liabilities:
Accounts receivable —    (16,761   )   (184      )   (50,072   )   7,084
billed
Accounts receivable —    2,231         281           (5,921    )   218
unbilled
Prepaid expenses and     (1        )   (4,153    )   (2,522    )   (8,245   )
other current assets
Deferred contract        (1,038    )   210           (2,451    )   1,319
costs
Accounts payable and     7,752         (15,572   )   16,480        (3,274   )
accrued liabilities
Accrued compensation     8,818         2,267         6,941         (4,020   )
and benefits
Deferred revenue         (6        )   (130      )   (2,940    )   11,161
Income taxes             12,550        631           5,989         9,541
Other assets and         339           1,334         2,624         (3,794   )
liabilities
Cash provided by
operating activities –   49,668        16,023        89,162        85,061
continuing ops
Cash used in operating
activities –             (33       )   -             (587      )   -        
discontinued ops
Cash provided by         49,635        16,023        88,575        85,061
operating activities
                                                                            
Cash flows from
investing activities:
Purchases of property    (11,518   )   (5,308    )   (24,869   )   (11,884  )
and equipment
Capitalized software     (5,412    )   (1,018    )   (13,652   )   (2,850   )
costs
Acquisition of PSI,
net of cash acquired     -             (66,000   )   3,380         (66,000  )
and final settlement
Proceeds from note       113           27            285           299
receivable
Proceeds from sale of
discontinued             -             -             -             2,240    
operations
Cash used in investing   (16,817   )   (72,299   )   (34,856   )   (78,195  )
activities
                                                                            
Cash flows from
financing activities:
Repurchases of common    (12,411   )   (140      )   (27,814   )   (9,889   )
stock
Employee tax
withholding on           (2,191    )   (1,357    )   (8,868    )   (4,445   )
restricted stock units
vesting
Tax benefit due to
option exercises and     -             965           4,680         3,475
RSU vesting
Cash dividends paid      (3,071    )   (3,056    )   (9,202    )   (9,117   )
Stock option exercises   88            1,636         1,840         6,411
Repayment of long-term   (43       )   -             (130      )   -        
debt
Cash used in financing   (17,628   )   (1,952    )   (39,494   )   (13,565  )
activities
                                                                             
Effect of exchange
rate changes on cash     (14,622   )   (2,409    )   (15,626   )   2,649
and cash equivalents
                                                                             
Net
increase/(decrease) in   568           (60,637   )   (1,401    )   (4,050    )
cash and cash
equivalents
                                                                             
Cash and cash
equivalents, beginning   187,343       229,537       189,312       172,950   
of period
                                                                             
Cash and cash
equivalents, end of      $ 187,911     $ 168,900     $ 187,911     $ 168,900 
period

                                                                    
MAXIMUS, Inc.
SEGMENT INFORMATION
(Dollars in thousands)
(Unaudited)
                                                                                                                 
                         Three Months Ended June 30,                   Nine Months Ended June 30,
                         2013         %       2012         %        2013         %       2012         %
                                       ^(1)                   ^(1)                   ^(1)                   ^(1)
                                                                                                                 
Revenue:
Health Services          $ 217,901     100  %   $ 170,403     100  %   $ 591,847     100  %   $ 489,616     100  %
Human Services           116,422       100  %   95,950        100  %   355,093       100  %   259,792       100  %
Total                    334,323       100  %   266,353       100  %   946,940       100  %   749,408       100  %
                                                                                                                 
Gross Profit:
Health Services          62,868        28.9 %   50,787        29.8 %   162,778       27.5 %   127,923       26.1 %
Human Services           31,692        27.2 %   27,914        29.1 %   105,756       29.8 %   75,391        29.0 %
Total                    94,560        28.3 %   78,701        29.5 %   268,534       28.4 %   203,314       27.1 %
                                                                                                                 
Selling, general, and
administrative
expense:
Health Services          28,507        13.1 %   25,135        14.8 %   78,882        13.3 %   67,286        13.7 %
Human Services           20,674        17.8 %   18,727        19.5 %   59,597        16.8 %   47,291        18.2 %
Corporate/Other          —             NM       15            NM       (383      )   NM       15            NM
Total                    49,181        14.7 %   43,877        16.5 %   138,096       14.6 %   114,592       15.3 %
                                                                                                                 
Operating income from
continuing operations:
Health Services          34,361        15.8 %   25,652        15.1 %   83,896        14.2 %   60,637        12.4 %
Human Services           11,018        9.5  %   9,187         9.6  %   46,159        13.0 %   28,100        10.8 %
Corporate/Other          —             NM       (15       )   NM       383           NM       (15       )   NM
                                                                                                                 
Segment Operating        45,379        13.6 %   34,824        13.1 %   130,438       13.8 %   88,722        11.8 %
Income
Acquisition-related      1,174         NM       1,877         NM       1,500         NM       2,110         NM
expenses
Legal and settlement
expenses/(recoveries),   (182      )   NM       (352      )   NM       (202      )   NM       (990      )   NM
net
Total                    $ 44,387      13.3 %   $ 33,299      12.5 %   $ 129,140     13.6 %   $ 87,602      11.7 %
                                                                                                                 
(1) Percentage of respective segment revenue. Changes not considered meaningful are marked “NM.”

                                                                  
MAXIMUS, Inc.
NON-GAAP MEASURES

MAXIMUS, Inc.
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS
FY 2013 and FY 2012
(Unaudited)
                                                                       
                                                                       
                                      Quarter Ended                    FY 2013
                                      Dec. 31,   Mar. 31,   Jun. 30,   Year to
                                      2012       2013       2013       Date
Diluted EPS from continuing           $0.31      $0.45      $0.40      $1.17
operations-GAAP basis
                                                                       
Adjustments:
Legal, settlement and                 –          –          0.01       0.01
acquisition-related expenses, net
Adjustment for terminated contract    –          (0.09)     –          (0.09)
Subtotal pro forma adjustments        –          (0.09)     0.01       (0.08)
                                                                       
Adjusted diluted EPS from             $0.31      $0.36      $0.41      $1.09
continuing operations

                                                                     
                                Quarter Ended                           Year
                                                                        Ended
                                Dec. 31,  Mar. 31,  Jun.    Sept.    Sept.
                                                      30,      30,      30,
                                2011       2012       2012     2012     2012
Diluted EPS from continuing     $0.26      $0.21      $0.29    $0.34    $1.09
operations-GAAP basis
                                                                        
Adjustments:
Legal, settlement and
acquisition-related expenses,   –          –          0.02     0.01     0.03
net
Adjustment for tax accounts     –          0.03       –        0.02     0.06
Subtotal pro forma              –          0.03       0.02     0.03     0.09
adjustments
                                                                        
Adjusted Diluted EPS from       $0.26      $0.24      $0.31    $0.37    $1.18
continuing operations

                                                  
MAXIMUS, Inc.
FREE CASH FLOW
(Dollars in thousands)
(Unaudited)
                                                                             
                          Three Months               Nine Months
                          Ended June 30,             Ended June 30,
                          2013         2012         2013         2012
Cash provided by
operating activities –    $ 49,668      $ 16,023     $ 89,162      $ 85,061
continuing operations
Purchases of property       (11,518 )     (5,308 )     (24,869 )     (11,884 )
and equipment
Capitalized software      (5,412    )   (1,018   )   (13,652   )   (2,850    )
costs
Free cash flow from       $ 32,738      $ 9,697      $ 50,641      $ 70,327  
continuing operations

Contact:

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