Exhibit 99.1
MAXIMUS
MAXIMUS REPORTS
SECOND QUARTER REVENUE
OF $130.7 MILLION
AND EPS OF 32 CENTS
(RESTON, Va. – May 6, 2003) – MAXIMUS (NYSE: MMS), a leading provider of consulting, health and human services program management, and information technology services for government agencies, today reported results for its fiscal 2003 second quarter ended March 31, 2003.
Revenue for the second quarter increased 7.1% to $130.7 million compared to $122.0 million recorded in the second quarter last year and consistent with the Company’s revised revenue expectations in the range of $127.0 million to $132.0 million. Net income for the second quarter was $6.9 million, or $0.32 per diluted share, versus net income in the prior-year period of $7.1 million, or $0.30 per diluted share, and also in line with the Company’s revised EPS expectations in the range of $0.30 to $0.35 per diluted share.
Since the close of the second quarter, the Company announced that it had been notified of the intent of the state of California’s Managed Risk Medical Insurance Board (MRMIB) to award MAXIMUS a five-year contract, estimated at $418.4 million which includes $70.6 million in pass-through costs. The scope of work will cover two California programs: the Healthy Families Program (HFP) and the Access for Infants and Mothers (AIM) Program. The Company does not expect to recognize any revenue from this project until January 1, 2004, and it estimates that reimbursable transition costs of approximately $18.0 million will be incurred through December 2003. These costs will be deferred and are expected to be amortized over the five years beginning January 1, 2004 and are not expected to impact profitability in 2003. The award is still subject to execution of a completed contract, which is expected to occur in May.
“After a challenging March quarter, we are delighted by this notice of contract award which ranks as one of the largest wins in the Company’s 28-year history,” Dr. David V. Mastran, Chief Executive Officer and President. “This award is a solid confirmation of our strategy to invest in our proposal operations center, established just last year, and underscores our long-term commitment to invest in and develop new initiatives and capabilities that expand our business despite weaknesses and uncertainties in the current environment.”
As previously expected, second quarter results were impacted by challenging market conditions, including state cutbacks and postponements due to continued state budget pressures which influenced state procurement decisions. Related delays in contract signings and work start delays in certain Systems and Consulting contracts affected revenue and profitability for the period.
While Systems revenue declined slightly on a sequential basis due to the delayed signing and work start delays, revenue still increased 18% on a year-over-year basis as a result of growth in ERP Solutions, Asset Solutions and Justice Solutions and we expect continued growth the remainder of the year.
As expected, Health Services increased slightly on a sequential basis as the segment maintained market share, serviced existing accounts and continued to benefit from a base of consistent recurring revenue. On a year-over year basis, revenue increased 15% over the second quarter of last year.
Human Services revenue increased approximately 5% on a year-over-year basis but declined when compared to first quarter revenue as the segment continued to be impacted by weakness primarily in Workforce Services and is expected to remain soft for the remainder of the fiscal year as current trends persist.
Consulting revenue in the second quarter increased slightly on a sequential basis but declined 4% year-over-year due to softer demand for traditional services, such as IT
2
consulting and management studies, which was partially offset by the solid performance of the Financial Services practice.
Cash flow from operations in the second quarter totaled $19.2 million with free cash flow (which represents cash provided by operating activities less capitalized software development costs and purchases of property and equipment) of $15.8 million. As anticipated, Days Sales Outstanding (DSOs) declined to 98 days at the end of the quarter from 101 days in the first quarter.
At March 31, 2003, cash and marketable securities increased to $92.8 million, primarily as a result of solid cash flows and net of the Company’s repurchase of 369,800 common shares under its ongoing share repurchase program. In March 2003, the Board authorized an additional $30 million for the program for a total balance available at the end of the second quarter of approximately $31.5 million. MAXIMUS remains debt-free and intends to continue to repurchase shares under the program as appropriate.
Signed contract wins through April 30, 2003 totaled $238.0 million compared to $118.7 million for the comparable period last year. Awarded but unsigned contracts, which include the newly awarded $418 million MRMIB contract, totaled $539.8 million at April 30, 2003, versus $125.0 million in the prior year. Sales opportunities (consisting of $458.2 million in proposals pending, $52.7 million in proposals in preparation and $497.1 million of RFPs tracking) remained strong and totaled just over $1 billion versus $649.0 million recorded for the same period a year ago.
For the fiscal year ending September 30, 2003, MAXIMUS continues to expect to generate revenue between $520.0 million and $530.0 million and diluted earnings per share of at least $1.60. MAXIMUS expects sequential improvement in profitability from the second quarter driven by resource reductions in some areas and improved contributions primarily related to the commencement of previously delayed work.
3
Dr. Mastran concluded, “While it was necessary to previously adjust our outlook for the year, we are energized about our future prospects and opportunities. In addition to winning the largest contract in company history, the overall business remains largely resilient, profitable and continues to generate solid recurring annual cash flows.”
The Company will host a conference call at 10:30 EDT which is open to the public and can be accessed by calling:
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Conference Call Number: |
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800.223.9488 (Domestic) |
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785.832.1077 (International) |
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Conference ID: MMS |
For those unable to listen to the live call, a replay will be available for one week following the call and will expire on Tuesday, May 13th, 2003, at midnight. The replay will be available by calling:
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Replay: |
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402.220.1173 or 800.934.4245 |
MAXIMUS is one of America’s largest government services companies, providing governments with consulting, program management, and information technology services. The Company has 5,300 employees located in more than 245 offices across the United States and overseas. In 1999, 2000, and 2001, MAXIMUS was selected by Forbes Magazine as one of the Best 200 Small Companies in America. MAXIMUS is also one of the two companies selected by Business Week Magazine as one of the Hottest Small Cap Growth Companies for the last four years in a row. Additionally, MAXIMUS is included in the Russell 2000 Index and the S&P SmallCap 600 Index.
Statements that are not historical facts, including statements about the Company’s confidence and strategies and the Company’s expectations about revenue, 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 (file number 001-12997)
CONTACTS:
Lisa Miles
Investor Relations
703.251.8637
4
Rachael Rowland
Public/Media Relations
703.251.8688
5
MAXIMUS, Inc.
(Dollars in thousands)
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September
30, |
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March 31, |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
94,965 |
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$ |
92,623 |
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Marketable securities |
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160 |
|
140 |
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Accounts receivable - billed |
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108,074 |
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111,313 |
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||
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Accounts receivable - unbilled |
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25,102 |
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29,839 |
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||
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Prepaid expenses and other current assets |
|
7,123 |
|
7,518 |
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||
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Total current assets |
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235,424 |
|
241,433 |
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||
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Property and equipment, at cost |
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39,612 |
|
43,018 |
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Less: Accumulated depreciation and amortization |
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(14,206 |
) |
(16,814 |
) |
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Property and equipment, net |
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25,406 |
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26,204 |
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||
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Software development costs |
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19,024 |
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20,719 |
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Less: Accumulated amortization |
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(4,908 |
) |
(6,829 |
) |
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Software development, net |
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14,116 |
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13,890 |
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Goodwill, net |
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68,812 |
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71,291 |
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Intangible assets, net |
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6,540 |
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6,647 |
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||
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Other assets |
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1,792 |
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2,115 |
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Total assets |
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$ |
352,090 |
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$ |
361,580 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
10,867 |
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$ |
13,459 |
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Accrued compensation and benefits |
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19,726 |
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18,361 |
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Deferred revenue |
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12,939 |
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16,080 |
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Income taxes payable |
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2,325 |
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3,163 |
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Deferred income taxes |
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1,811 |
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1,938 |
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Other current liabilities |
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1,794 |
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1,766 |
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Total current liabilities |
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49,462 |
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54,767 |
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Other liabilities |
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499 |
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414 |
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Total liabilities |
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49,961 |
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55,181 |
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Shareholders’ equity: |
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Common stock, no par value; 60,000,000 shares authorized; 21,509,444 and 20,888,289 shares issued and outstanding at September 30, 2002 and March 31, 2003, at stated amount, respectively |
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144,156 |
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131,109 |
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Accumulated other comprehensive income |
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24 |
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42 |
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Retained earnings |
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157,949 |
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175,248 |
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Total shareholders’ equity |
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302,129 |
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306,399 |
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Total liabilities and shareholders’ equity |
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$ |
352,090 |
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$ |
361,580 |
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6
MAXIMUS, Inc.
(In thousands, except per share data)
(Unaudited)
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Three Months |
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Six Months |
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2002 |
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2003 |
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2002 |
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2003 |
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Revenue |
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$ |
121,953 |
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$ |
130,663 |
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$ |
251,523 |
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$ |
263,354 |
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Cost of revenue |
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86,749 |
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92,077 |
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175,535 |
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182,507 |
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Gross profit |
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35,204 |
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38,586 |
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75,988 |
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80,847 |
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Selling, general and administrative expenses |
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23,589 |
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27,059 |
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46,117 |
|
52,676 |
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||||
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Non-cash equity based compensation |
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— |
|
256 |
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— |
|
512 |
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||||
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Amortization of acquisition-related intangibles |
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250 |
|
273 |
|
513 |
|
553 |
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||||
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Income from operations |
|
11,365 |
|
10,998 |
|
29,358 |
|
27,106 |
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||||
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Interest and other income |
|
670 |
|
390 |
|
1,403 |
|
937 |
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Income before income taxes |
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12,035 |
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11,388 |
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30,761 |
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28,043 |
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Provision for income taxes |
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4,968 |
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4,498 |
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12,458 |
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11,077 |
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Net income |
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$ |
7,067 |
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$ |
6,890 |
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$ |
18,303 |
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$ |
16,966 |
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Earnings per share: |
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Net income: |
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Basic |
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$ |
0.31 |
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$ |
0.33 |
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$ |
0.79 |
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$ |
0.80 |
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Diluted |
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$ |
0.30 |
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$ |
0.32 |
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$ |
0.76 |
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$ |
0.79 |
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Weighted average shares outstanding: |
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Basic |
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23,142 |
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21,092 |
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23,121 |
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21,159 |
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Diluted |
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23,850 |
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21,329 |
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23,937 |
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21,419 |
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7
MAXIMUS, Inc.
(Dollars in thousands)
(Unaudited)
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Six Months |
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2002 |
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2003 |
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Cash flows from operating activities: |
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Net income |
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$ |
18,303 |
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$ |
16,966 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
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1,147 |
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2,608 |
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Amortization |
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1,613 |
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2,474 |
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Deferred income taxes |
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1,331 |
|
294 |
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Tax benefit due to option exercises |
|
915 |
|
333 |
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Non-cash equity based compensation |
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— |
|
512 |
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Change in assets and liabilities, net of effects from acquisitions: |
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Accounts receivable - billed |
|
455 |
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(3,201 |
) |
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Accounts receivable - unbilled |
|
(3,155 |
) |
(4,738 |
) |
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Prepaid expenses and other current assets |
|
(3,307 |
) |
(1,253 |
) |
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Other assets |
|
470 |
|
259 |
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Accounts payable |
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(1,151 |
) |
2,316 |
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Accrued compensation and benefits |
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(3,650 |
) |
(1,365 |
) |
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Deferred revenue |
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(5,024 |
) |
3,132 |
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Income taxes payable |
|
1,084 |
|
838 |
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Other liabilities |
|
99 |
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(187 |
) |
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Net cash provided by operating activities |
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9,130 |
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18,988 |
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Cash flows from investing activities: |
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Acquisition of businesses, net of cash acquired |
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(4,100 |
) |
(2,801 |
) |
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Purchases of property and equipment |
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(4,148 |
) |
(3,382 |
) |
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Decrease in notes receivable |
|
90 |
|
136 |
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Capitalization of software development costs |
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(3,415 |
) |
(1,695 |
) |
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Decrease in marketable securities |
|
1,040 |
|
30 |
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Net cash used in investing activities |
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(10,533 |
) |
(7,712 |
) |
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Cash flows from financing activities: |
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|
|
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Employee stock transactions |
|
6,556 |
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1,906 |
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Repurchases of common stock |
|
(5,279 |
) |
(15,465 |
) |
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Net payments on capital leases |
|
(123 |
) |
(59 |
) |
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|
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|
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Net cash provided by (used in) financing activities |
|
1,154 |
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(13,618 |
) |
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Net decrease in cash and cash equivalents |
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(249 |
) |
(2,342 |
) |
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|
|
|
|
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Cash and cash equivalents, beginning of period |
|
114,108 |
|
94,965 |
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||
|
|
|
|
|
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Cash and cash equivalents, end of period |
|
$ |
113,859 |
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$ |
92,623 |
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8
MAXIMUS, Inc.
(Dollars in thousands)
(Unaudited)
The following table provides certain financial information for each of the Company’s business segments:
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Three
Months |
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Six Months |
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|
2002 |
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2003 |
|
2002 |
|
2003 |
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Revenue: |
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|
|
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Consulting Group |
|
$ |
35,009 |
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$ |
33,566 |
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$ |
68,412 |
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$ |
66,761 |
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Health Services Group |
|
34,567 |
|
39,884 |
|
74,722 |
|
79,408 |
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Human Services Group |
|
34,403 |
|
36,014 |
|
71,583 |
|
74,373 |
|
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|
Systems Group |
|
17,974 |
|
21,199 |
|
36,806 |
|
42,812 |
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Total |
|
$ |
121,953 |
|
$ |
130,663 |
|
$ |
251,523 |
|
$ |
263,354 |
|
|
|
|
|
|
|
|
|
|
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|
||||
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Gross Profit: |
|
|
|
|
|
|
|
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|
||||
|
|
|
|
|
|
|
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|
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Consulting Group |
|
$ |
16,560 |
|
$ |
14,090 |
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$ |
32,090 |
|
$ |
28,050 |
|
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Health Services Group |
|
2,657 |
|
9,407 |
|
11,125 |
|
19,212 |
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Human Services Group |
|
6,958 |
|
6,306 |
|
14,507 |
|
14,308 |
|
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Systems Group |
|
9,029 |
|
8,783 |
|
18,266 |
|
19,277 |
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Total |
|
$ |
35,204 |
|
$ |
38,586 |
|
$ |
75,988 |
|
$ |
80,847 |
|
|
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|
|
|
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|
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Income from operations: |
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|
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|
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|
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|
||||
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|
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Consulting Group |
|
$ |
8,425 |
|
$ |
5,132 |
|
$ |
16,376 |
|
$ |
10,271 |
|
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Health Services Group |
|
(1,011 |
) |
5,270 |
|
4,102 |
|
11,670 |
|
||||
|
Human Services Group |
|
2,273 |
|
166 |
|
5,573 |
|
2,123 |
|
||||
|
Systems Group |
|
1,678 |
|
430 |
|
3,307 |
|
3,042 |
|
||||
|
Total |
|
$ |
11,365 |
|
$ |
10,998 |
|
$ |
29,358 |
|
$ |
27,106 |
|
9