Exhibit 99.1
 
 
MAXIMUS Reports Fiscal 2012 Second Quarter Results
 
- Company Completes PSI Acquisition and Updates Guidance -
 
 
RESTON, Va.--(BUSINESS WIRE)--May 3, 2012--MAXIMUS (NYSE: MMS), a leading provider of government services worldwide, today reported financial results for its fiscal second quarter ended March 31, 2012.
 
Key highlights include:
 
 
●
Revenue for the second quarter grew 7% to $243.5 million compared to the same period last year.
 
 
●
Adjusted diluted earnings per share from continuing operations totaled $0.49 for the second quarter.
 
 
●
The Company generated strong cash in the second quarter with cash provided by operating activities from continuing operations of $41.5 million and free cash flow of $36.4 million.
 
 
●
Cash and cash equivalents totaled $229.5 million at March 31, 2012.
 
 
●
Subsequent to quarter end, the Company signed the $450 million extension for its Australian contract.
 
 
●
On April 30, 2012, MAXIMUS closed its acquisition of Policy Studies Inc. for a cash purchase price of $67 million.
 
Revenue for the fiscal 2012 second quarter increased 7% to $243.5 million compared to $227.1 million for the same period last year, driven by growth in the Health Services Segment, most notably from the Medicaid managed care expansion in Texas.
 
The Company is revising its tax rates upward to account for a greater mix of business from higher tax rate jurisdictions. In the second quarter, the Company recorded a discrete tax adjustment expense of $3.0 million, or $0.09 per diluted share, related to higher state taxes. Second quarter earnings also included a benefit of $0.6 million, or $0.01 per diluted share, from a net legal recovery. A normalization table is included in the accompanying financial schedules.
 
As a result, second quarter GAAP income from continuing operations, net of taxes, totaled $14.2 million, or $0.41 per diluted share. Excluding the $0.09 discrete tax expense and the $0.01 legal recovery benefit, adjusted diluted earnings per share from continuing operations totaled $0.49. As expected, adjusted diluted earnings per share from continuing operations were lower compared to last year primarily due to the ramp up of the Work Programme contract in the United Kingdom.
 
“Second quarter revenue and adjusted earnings from continuing operations were in-line with our expectations,” commented Richard A. Montoni, Chief Executive Officer of MAXIMUS. “We are pleased to complete the PSI acquisition, which closed earlier this week, and we expect a seamless transition as integration efforts are underway. This combination brings together industry-leading subject matter experts who possess extensive experience and knowledge in our core markets. The acquisition allows us to leverage infrastructure, drive further innovation, and bring more business development resources to bear as macro trends continue to drive demand for our services around the world. Most importantly, the acquisition of PSI is a prudent use of cash for driving growth in our core markets and it creates a stronger platform for increasing and maximizing long-term shareholder value.”
 
 
 
 
 
Health Services Segment
 
Health Services Segment revenue for the second quarter of fiscal 2012 increased 17% to $161.2 million compared to $137.8 million for the same period last year, principally driven by the expansion of Medicaid managed care in Texas that was completed in the second quarter. Operating income for the second quarter totaled $18.2 million with an operating margin of 11.3%. Operating margin was lower compared to the same period last year due to normal life-cycle fluctuations in contracts that include new programs ramping up and recently rebid contracts. Operating margin in the quarter was also tempered by growth from a lower-margin contract in Texas and increased SG&A spending on bid and proposal activities in the second quarter.
 
Human Services Segment
 
Human Services Segment revenue for the fiscal 2012 second quarter totaled $82.3 million, which was 8% lower (10% on a constant currency basis) compared to the prior-year period principally due to the transition to the UK Work Programme contract. Operating income for the second quarter was $8.6 million with an operating margin of 10.5%, which is lower compared to the same period last fiscal year.
 
Sales and Pipeline
 
At April 25, 2012, fiscal year-to-date signed contract wins totaled $812 million compared to $904 million reported for the same period last year; the prior-year period included nearly $600 million for two contract renewals. New contracts pending (awarded but unsigned) totaled $284 million compared to $526 million last year. Sales opportunities (pipeline) at April 25, 2012 totaled $1.7 billion (consisting of $435 million in proposals pending, $446 million of proposals in preparation and $837 million in proposals tracking) compared to $1.2 billion the prior year.
 
Balance Sheet and Cash Flows
 
Cash and cash equivalents increased to $229.5 million at March 31, 2012. For the fiscal 2012 second quarter, cash provided by operating activities from continuing operations totaled $41.5 million with free cash flow of $36.4 million. The Company defines free cash flow as cash provided by operating activities from continuing operations of $41.5 million, less cash paid for property and equipment of $4.0 million and capitalized software of $1.1 million. Cash flow in the quarter was driven by solid net income and strong collections, which led to improved Days Sales Outstanding (DSO) of 55 days in the quarter.
 
On February 29, 2012, MAXIMUS paid a quarterly cash dividend of $0.09 per share and in April 2012, the Company announced its next quarterly cash dividend of $0.09 per share, payable on May 31, 2012 to shareholders of record on May 15, 2012.
 
In anticipation of the acquisition of PSI, MAXIMUS did not purchase shares during the second quarter of fiscal 2012. At March 31, 2012, the Company had $129.8 million available for repurchases under the current program.
 
Outlook
 
The Company is updating its fiscal 2012 guidance to include the contributions from the acquisition of PSI for the period from May 1, 2012 through September 30, 2012. PSI is expected to generate approximately $55 million to $60 million in revenue for fiscal 2012. MAXIMUS now expects consolidated revenue from continuing operations in the range of $1.030 billion to $1.060 billion for fiscal 2012, which is an increase from its prior guidance of $980 million to $1.015 billion. Excluding acquisition-related costs, the Company expects PSI to be up to $0.05 accretive in fiscal 2012, which is expected to be offset by a higher tax rate for the remainder of the fiscal year. As a result, the Company still expects adjusted diluted earnings per share from continuing operations in the range of $2.20 to $2.30.
 
 
 
 
 
Website Presentation, Conference Call and Webcast Information
 
 
MAXIMUS will host a conference call this morning, May 3, 2012, 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 17, 2012. Callers can access the replay by calling:
 
877.660.6853 (Domestic)/201.612.7415 (International)
Replay account number: 316
Replay conference ID number: 393073
 
About MAXIMUS
 
MAXIMUS is a leading health and human services administrator for governments in the United States, United Kingdom, Canada and Australia. The Company delivers administrative solutions 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 enforcement programs across 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 more than 8,800 employees located in more than 270 offices 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 and adjusted diluted earnings per share from continuing operations. The Company believes the measure of free cash flows from operations is a useful basis for comparing its performance to prior periods and competitors and to analyze the underlying trends in the Company’s business. The presentation of free cash flows from continuing operations should not be considered in isolation, nor should it be used in place of net income or cash flows from operating activities as a measure of performance. The Company believes the measure of adjusted diluted earnings per share from continuing operations provides a framework for assessing how the ongoing business performed, or is expected to perform, excluding the effects of legal and settlement expenses or recoveries and certain discrete tax items which have not occurred in the most recent prior years. These adjustments may vary significantly and, in the opinion of management, do not reflect the underlying business of the Company. Adjusted diluted earnings per share should not be used in isolation, nor should it be used in place of diluted earnings per share as a measure of profitability. Reconciliations of both non-GAAP measures to their most comparable GAAP measure have been included in this document.
 
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 BALANCE SHEETS
  
(In thousands)
  
             
   
March 31,
    
September 30,
  
   
2012
    
2011
  
   
(unaudited)
        
ASSETS
            
Current assets:
            
Cash and cash equivalents
   $ 229,537     $ 172,950  
Restricted cash
     6,681       4,839  
Accounts receivable — billed, net of reserves of $3,486 and $3,265
     140,664       146,900  
Accounts receivable — unbilled
     7,242       7,170  
Prepaid income taxes
     4,109       12,959  
Deferred income taxes
     23,943       19,256  
Prepaid expenses and other current assets
     29,406       27,202  
Total current assets
     441,582       391,276  
                 
Property and equipment, net
     50,722       51,740  
Capitalized software, net
     26,697       26,616  
Goodwill
     72,705       71,323  
Intangible assets, net
     5,246       5,651  
Deferred contract costs, net
     6,939       8,020  
Deferred income taxes
     812       732  
Deferred compensation plan assets
     9,116       8,004  
Other assets, net
     2,015       1,917  
Total assets
   $ 615,834     $ 565,279  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 67,278     $ 55,470  
Accrued compensation and benefits
     40,409       47,748  
Deferred revenue
     59,265       47,902  
Current portion of long-term debt
     132       42  
Acquisition-related contingent consideration
     2,005       1,840  
Income taxes payable
     5,497       5,104  
Other accrued liabilities
     2,377       5,787  
Total current liabilities
     176,963       163,893  
Deferred revenue, less current portion
     3,553       2,575  
Long-term debt
     1,625       1,654  
Acquisition-related contingent consideration, less current portion
     401       388  
Income taxes payable, less current portion
     1,538       1,484  
Deferred income taxes
     11,136       11,945  
Deferred compensation plan liabilities, less current portion
     9,895       8,883  
Total liabilities
     205,111       190,822  
                 
Shareholders’ equity:
                
Common stock, no par value; 60,000 shares authorized;
    56,413 and 56,018 shares issued and 33,951 and 33,793 shares outstanding at March 31, 2012
    and September 30, 2011, at stated amount, respectively
     389,477       377,579  
Treasury stock, at cost; 22,462 and 22,225 shares at March 31, 2012
    and September 30, 2011, respectively
     (425,651 )     (416,850 )
Accumulated other comprehensive income
     20,069       12,480  
Retained earnings
     426,828       401,248  
Total shareholders’ equity
     410,723       374,457  
Total liabilities and shareholders’ equity
   $ 615,834     $ 565,279  
 
 
 
 
 
MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
           
   
Three Months
    
Six Months
   
Ended March 31,
    
Ended March 31,
   
2012
    
2011
    
2012
    
2011
Revenue
   $ 243,452     $ 227,116     $ 483,055     $ 441,230  
Cost of revenue
     178,686       164,050       358,442       322,205  
Gross profit
     64,766       63,066       124,613       119,025  
Selling, general and administrative expenses
     37,959       33,572       70,715       62,239  
Legal and settlement recovery, net
     591       —       405       —  
Operating income from continuing operations
     27,398       29,494       54,303       56,786  
Interest and other income, net
     824       919       1,928       1,410  
Income from continuing operations before income taxes
     28,222       30,413       56,231       58,196  
Provision for income taxes
     14,011       11,375       24,362       21,571  
Income from continuing operations
     14,211       19,038       31,869       36,625  
                                 
Discontinued operations, net of income taxes:
                                
Income (loss) from discontinued operations
     —       (265 )     —       (265 )
Gain (loss) on disposal
     62       (554 )     108       (659 )
Income (loss) from discontinued operations
     62       (819 )     108       (924 )
                                 
Net income
   $ 14,273     $ 18,219     $ 31,977     $ 35,701  
                                 
Basic earnings (loss) per share:
                                
Income from continuing operations
   $ 0.42     $ 0.55     $ 0.95     $ 1.06  
Income (loss) from discontinued operations
     —       (0.02 )     —       (0.02 )
Basic earnings per share
   $ 0.42     $ 0.53     $ 0.95     $ 1.04  
                                 
Diluted earnings (loss) per share:
                                
Income from continuing operations
   $ 0.41     $ 0.54     $ 0.92     $ 1.03  
Income (loss) from discontinued operations
     —       (0.03 )     —       (0.02 )
Diluted earnings per share
   $ 0.41     $ 0.51     $ 0.92     $ 1.01  
                                 
Dividends paid per share
   $ 0.09     $ 0.08     $ 0.18     $ 0.14  
                                 
Weighted average shares outstanding:
                                
Basic
     33,788       34,422       33,725       34,392  
Diluted
     34,728       35,574       34,638       35,500  
 
 
 
 
 
           
MAXIMUS, Inc,
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except per share data)
(Unaudited)
           
   
Three Months
    
Six Months
   
Ended March 31,
    
Ended March 31,
   
2012
    
2011
    
2012
    
2011
Cash flows from operating activities:
                              
Net income
  
$
14,273
    
$
18,219
    
$
31,977
    
$
35,701
  
Adjustments to reconcile net income to net cash
provided by operating activities:
                      
Loss from discontinued operations
  
(62
)
  
819
    
(108
)
  
924
  
Depreciation and amortization
  
5,434
    
5,551
    
11,545
    
10,783
  
Deferred income taxes
  
(2,891
)
  
156
    
(5,315
)
  
1,146
  
Non-cash equity based compensation
  
2,836
    
2,438
    
5,633
    
4,495
  
Change in assets and liabilities:
                      
Accounts receivable — billed
  
9,741
    
(23,741
)
  
7,268
    
(1,596
)
Accounts receivable — unbilled
  
355
    
3,575
    
(63
)
  
2,021
  
Prepaid expenses and other current assets
  
(2,471
)
  
628
    
(4,092
)
  
1,669
  
Deferred contract costs
  
319
    
(649
)
  
1,109
    
(1,229
)
Accounts payable
  
4,528
    
8,339
    
12,298
    
12,287
  
Accrued compensation and benefits
  
4,266
    
4,986
    
(6,287
)
  
(6,567
)
Deferred revenue
  
3,662
    
(6,026
)
  
11,291
    
(11,296
)
Income taxes
  
3,932
    
(6,864
)
  
8,910
    
(10,334
)
Other assets and liabilities
  
(2,440
)
  
(1,426
)
  
(5,128
)
  
(1,618
)
Cash provided by continuing operations
  
41,482
    
6,005
    
69,038
    
36,386
  
Cash used in discontinued operations
  
—
    
(212
)
  
—
    
(951
)
Cash provided by operating activities
  
41,482
    
5,793
    
69,038
    
35,435
  
                       
Cash flows from investing activities:
                      
Proceeds from sale of discontinued operations
  
—
    
—
    
2,240
    
—
  
Purchases of property and equipment
  
(4,022
)
  
(4,057
)
  
(6,576
)
  
(6,464
)
Capitalized software costs
  
(1,112
)
  
(1,574
)
  
(1,832
)
  
(3,872
)
Proceeds from note receivable
  
124
    
—
    
272
    
—
  
Cash used in investing activities — continuing ops
  
(5,010
)
  
(5,631
)
  
(5,896
)
  
(10,336
)
                       
Cash flows from financing activities:
                      
Employee stock transactions
  
1,959
    
3,684
    
1,687
    
8,013
  
Repurchases of common stock
  
—
    
(89
)
  
(9,749
)
  
(8,459
)
Tax benefit due to option exercises and restricted stock units vesting
  
770
    
2,787
    
2,510
    
3,818
  
Issuance of long-term debt
  
—
    
300
    
—
    
300
  
Cash dividends paid
  
(3,038
)
  
(2,576
)
  
(6,061
)
  
(4,643
)
Cash used in financing activities — continuing ops
  
(309
)
  
4,106
    
(11,613
)
  
(971
)
       
Effect of exchange rate changes on cash and cash equivalents
  
2,326
    
1,883
    
5,058
    
3,706
  
                       
Net increase in cash and cash equivalents
  
38,489
    
6,151
    
56,587
    
27,834
  
                       
Cash and cash equivalents, beginning of period
  
191,048
    
177,004
    
172,950
    
155,321
  
                       
Cash and cash equivalents, end of period
  
$
229,537
    
$
183,155
    
$
229,537
    
$
183,155
  
 
 
 
 
 
MAXIMUS, Inc.
  
SEGMENT INFORMATION
  
(Dollars in thousands)
  
(Unaudited)
  
             
   
Three Months Ended March 31,
    
Six Months Ended March 31,
  
   
2012
     %(1)       2011     %(1)     2012     %(1)     2011     %(1)  
                                                               
Revenue:
                                                              
Health Services
   $ 161,170       100 %   $ 137,779       100 %   $ 319,213       100 %   $ 267,790       100 %
Human Services
     82,282       100 %     89,337       100 %     163,842       100 %     173,440       100 %
Total
     243,452       100 %     227,116       100 %     483,055       100 %     441,230       100 %
                                                                 
Gross Profit:
                                                                
Health services
     41,137       25.5 %     38,320       27.8 %     77,136       24.2 %     72,597       27.1 %
Human Services
     23,629       28.7 %     24,746       27.7 %     47,477       29.0 %     46,428       26.8 %
Total
     64,766       26.6 %     63,066       27.8 %     124,613       25.8 %     119,025       27.0 %
                                                                 
Selling, general, and administrative expense:
                                                                
Health Services
     22,935       14.2 %     18,968       13.8 %     42,151       13.2 %     34,422       12.9 %
Human Services
     15,024       18.3 %     14,623       16.4 %     28,564       17.4 %     27,802       16.0 %
Corporate/Other
     —    
NM
       (19 )  
NM
       —    
NM
       15    
NM
  
Total
     37,959       15.6 %     33,572       14.8 %     70,715       14.6 %     62,239       14.1 %
                                                                 
Operating income from continuing operations:
                                                                
Health services
     18,202       11.3 %     19,352       14.0 %     34,985       11.0 %     38,175       14.3 %
Human Services
     8,605       10.5 %     10,123       11.3 %     18,913       11.5 %     18,626       10.7 %
Corporate/Other
     —    
NM
       19    
NM
       —    
NM
       (15 )  
NM
  
Subtotal: Segment Operating Income
     26,807       11.0 %     29,494       13.0 %     53,898       11.2 %     56,786       12.9 %
Legal and settlement recovery (expense), net
     591    
NM
       —    
NM
       405    
NM
       —    
NM
  
Total
   $ 27,398       11.3 %   $ 29,494       13.0 %   $ 54,303       11.2 %   $ 56,786       12.9 %

(1)
  
Percentage of respective segment revenue. Changes not considered meaningful are marked “NM.”
 
 
 
 
 
MAXIMUS, Inc.
Supplemental Pro Forma Diluted EPS from Continuing Operations ("Adjusted Diluted EPS")
FY 2011 and FY 2012
(Unaudited)
 
  Quarter Ended    
Year
  
                         
Ended
  
   Dec. 31,      Mar. 31,      Jun. 30,      Sept. 30,    
Sept. 30,
  
  2010     2011     2011     2011     2011  
Diluted EPS from continuing operations-GAAP basis
 $ 0.50     $ 0.54     $ 0.56     $ 0.73     $ 2.31  
                     
Pro forma adjustments:
                    
Legal and settlement expense (recovery), net
   –       –       –       (0.02 )     (0.02 )
Adjustment for tax accounts
   0.01       0.01       0.01       (0.07 )     (0.04 )
Subtotal pro forma adjustments
   0.01       0.01       0.01       (0.09 )     (0.06 )
                     
Adjusted Diluted EPS from continuing operations
 $ 0.51     $ 0.55     $ 0.57     $ 0.64     $ 2.25  
       
       
 
Quarter Ended
    
                   
   Dec. 31,     Mar. 31,                  
  2011     2012                  
Diluted EPS from continuing operations-GAAP basis
 $ 0.51     $ 0.41              
                     
Pro forma adjustments:
                    
Legal and settlement expense (recovery), net
   –       (0.01 )            
Tax rate adjustment charge
   –       0.09              
Subtotal pro forma adjustments
   –       0.08              
                     
Adjusted Diluted EPS from continuing operations
 $ 0.51     $ 0.49              
 
CONTACT:
MAXIMUS, Inc.
Lisa Miles, 703-251-8637