Exhibit 99.1
 
 
MAXIMUS Reports Fiscal 2012 Third Quarter Results
 
- MAXIMUS Reiterates Full Year Revenue Guidance and Increases Earnings Estimates -
 
 
RESTON, Va.--(BUSINESS WIRE)--August 7, 2012--MAXIMUS (NYSE: MMS), a leading provider of government services worldwide, today reported financial results for its fiscal third quarter ended June 30, 2012.
 
Key highlights include:
 
 
Revenue for the third quarter grew 12% to $266.4 million compared to the same period last year.
 
Adjusted diluted earnings per share from continuing operations totaled $0.62 for the third quarter.
 
Cash and cash equivalents totaled $168.9 million at June 30, 2012.
 
Sales pipeline reached a record level of $3.4 billion at August 3, 2012.
 
The Company successfully completed a large change order that was previously expected to occur in the fourth quarter and contributed approximately $10.2 million in revenue in the third quarter.
 
Revenue for the fiscal 2012 third quarter increased 12% to $266.4 million compared to $238.3 million for the same period last year, driven by growth in the Health Services Segment and revenue from the PSI acquisition that closed on April 30, 2012. Compared to the same period last year, revenue increased 13% on a constant currency basis and organic revenue grew 2%.
 
Third quarter GAAP income from continuing operations, net of taxes, totaled $20.5 million, or $0.59 per diluted share. Adjusted diluted earnings per share from continuing operations totaled $0.62 and excluded net legal and acquisition related expenses. The tax rate in the quarter was higher than anticipated due to a larger mix of revenue from higher tax rate jurisdictions in the United States and tempered earnings by approximately $0.03 per diluted share.
 
During the quarter, MAXIMUS signed a change order to modify the scope of work on a large health program and reimburse the Company for work performed in prior periods. The change order was previously expected to occur in the fourth quarter and contributed approximately $10.2 million in revenue and $0.10 of diluted earnings per share in the third quarter.
 
“During the third quarter, MAXIMUS made steady progress towards several domestic and international initiatives. The integration of PSI into our U.S. operations is going smoothly, and we expanded our global workforce services footprint with new contracts in Saudi Arabia and Australia. At the same time, we are making good progress as we position our domestic health and federal services operations for new opportunities,” commented Richard A. Montoni, Chief Executive Officer of MAXIMUS. “Our sales pipeline of $3.4 billion is at record levels and we are awaiting decision on approximately $1.7 billion of proposals. The team delivered another great quarter, allowing us to increase our earnings outlook for the remainder of fiscal 2012 and setting a growth platform for fiscal 2013.”
 
 
 

 
 
Health Services Segment
 
Health Services Segment revenue for the third quarter of fiscal 2012 increased 20% to $170.4 million compared to $141.8 million for the same period last year, principally driven by the completion of a large change order that contributed $10.2 million of revenue in the third quarter, strong organic growth, and contributions from the PSI acquisition. Operating income for the third quarter totaled $25.7 million with an operating margin of 15.1%. Revenue and margin benefitted from the change order, which helped offset the ramp up of new contracts.
 
Human Services Segment
 
Human Services Segment revenue for the fiscal 2012 third quarter totaled $96.0 million, which was 1% lower compared to last year, but grew 2% on a constant currency basis. Operating income for the third quarter was $9.2 million and operating margins were 9.6%. As expected, results were affected by the ongoing ramp up of the UK Work Programme contract. Contributions from the PSI acquisition were tempered by operations in Australia where work on short term programs was completed, caseload volumes were lower, and foreign currency was unfavorable relative to the same period last year.
 
Sales and Pipeline
 
At August 3, 2012, fiscal year-to-date signed contract wins totaled $1.2 billion compared to $1.4 billion reported for the same period last year; the prior-year period included approximately $990 million related to four large contract renewals including the new Work Programme award in the United Kingdom. New contracts pending (awarded but unsigned) totaled $185.8 million compared to $338 million last year. Sales opportunities (pipeline) are at record levels and at August 3, 2012 totaled $3.4 billion (consisting of $1.7 billion in proposals pending, $118 million of proposals in preparation, and $1.5 billion in proposals tracking) compared to $1.8 billion the prior year.
 
Balance Sheet and Cash Flows
 
Cash and cash equivalents increased to $168.9 million at June 30, 2012. For the fiscal 2012 third quarter, cash provided by operating activities from continuing operations totaled $16.0 million with free cash flow of $9.7 million. The Days Sales Outstanding (DSO) for the third quarter were 58 days.
 
On May 31, 2012, MAXIMUS paid a quarterly cash dividend of $0.09 per share and in July 2012, the Company announced its next quarterly cash dividend of $0.09 per share, payable on August 31, 2012 to shareholders of record on August 15, 2012.
 
Outlook
 
The Company is reiterating its fiscal 2012 revenue guidance and increasing its earnings guidance. The Company still expects revenue to range between $1.030 billion and $1.060 billion, and now expects adjusted diluted earnings per share from continuing operations for fiscal 2012 in the range of $2.25 to $2.35 compared to its prior guidance of $2.20 to $2.30. The Company also reiterated its cash flow guidance with cash provided by operating activities derived from continuing operations to be in the range of $100 million to $120 million, and free cash flow from continuing operations to be in the range of $75 million to $95 million.
 
Website Presentation, Conference Call and Webcast Information
 
MAXIMUS will host a conference call this morning, August 7, 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 August 21, 2012. Callers can access the replay by calling:
 
877.660.6853 (Domestic)/201.612.7415 (International)
Replay account number: 316
Replay conference ID number: 397858
 
About MAXIMUS
 
MAXIMUS is a leading health and human services administrator for governments in the United States, United Kingdom, Canada, Australia and Saudi Arabia. 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 worldwide. For more information, visit www.maximus.com.
 
Non-GAAP Measures
 
This release refers to non-GAAP financial measures, including free cash flows from operating activities, adjusted diluted earnings per share from continuing operations, constant currency revenue growth, organic growth, and operating income excluding legal, settlement and acquisition-related expenses.
 
To provide constant currency information, revenue from foreign operations is converted into United States dollars using average exchange rates from the previous fiscal year. We believe constant currency revenue growth provides a useful basis for assessing the performance of the Company excluding foreign exchange fluctuations. To provide organic growth information, revenue in the prior year is compared to the current year without PSI revenues. We believe organic growth provides a useful basis for assessing the performance of the business excluding PSI. We have provided a reconciliation of free cash flows to operating cash flows from continuing operations. We believe that free cash flows from operations is a useful basis for investors to compare our performance across periods or across our competitors. Free cash flows show the effects of the Company’s operations and routine capital expenditure and exclude the cash flow effects of acquisitions, share repurchases, dividend payments and other financing transactions. We have provided a reconciliation to adjusted diluted earnings per share and operating income excluding legal, settlement and acquisition-related expenses. We believe that these measures are a useful basis for assessing the Company’s performance excluding the effect of the costs of acquiring PSI and the recovery of insurance claims in the periods shown.
 
The presentation of these non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to net income, cash flows from operating activities, diluted earnings per share, revenue growth and operating income as measures of performance.
 
Statements that are not historical facts, including statements about the Company's confidence and strategies and the Company's expectations about revenues, results of operations, profitability, future contracts, market opportunities, market demand or acceptance of the Company's products are forward-looking statements that involve risks and uncertainties. These uncertainties could cause the Company's actual results to differ materially from those indicated by such forward-looking statements and include reliance on government clients; risks associated with government contracting; risks involved in managing government projects; legislative changes and political developments; opposition from government unions; challenges resulting from growth; adverse publicity; and legal, economic, and other risks detailed in Exhibit 99.1 to the Company's most recent Annual Report filed with the Securities and Exchange Commission, found on www.maximus.com.
 
 
 

 
 
MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
         
   
Three Months
 
Nine Months
   
Ended June 30,
 
Ended June 30,
     
2012
     
2011
     
2012
     
2011
 
Revenue
 
$
266,353
   
$
238,296
   
$
749,408
   
$
679,526
 
Cost of revenue
   
187,652
     
171,897
     
546,094
     
494,102
 
Gross profit
   
78,701
     
66,399
     
203,314
     
185,424
 
Selling, general and administrative expenses
   
43,877
     
35,259
     
114,592
     
97,498
 
Acquisition-related expenses
   
1,877
     
     
2,110
     
 
Legal and settlement costs (recovery), net
   
(352
)
   
361
     
(990
)
   
361
 
Operating income from continuing operations
   
33,299
     
30,779
     
87,602
     
87,565
 
Interest and other income, net
   
1,164
     
961
     
3,092
     
2,371
 
Income from continuing operations before income taxes
   
34,463
     
31,740
     
90,694
     
89,936
 
Provision for income taxes
   
13,987
     
11,780
     
38,349
     
33,351
 
Income from continuing operations
   
20,476
     
19,960
     
52,345
     
56,585
 
                 
Discontinued operations, net of income taxes:
               
Income (loss) from discontinued operations
   
     
(65
)
   
     
(330
)
Gain (loss) on disposal
   
9
     
(3
)
   
117
     
(662
)
Income (loss) from discontinued operations
   
9
     
(68
)
   
117
     
(992
)
                 
Net income
 
$
20,485
   
$
19,892
   
$
52,462
   
$
55,593
 
                 
Basic earnings (loss) per share:
               
Income from continuing operations
 
$
0.60
   
$
0.58
   
$
1.55
   
$
1.64
 
Income (loss) from discontinued operations
   
     
(0.01
)
   
     
(0.03
)
Basic earnings per share
 
$
0.60
   
$
0.57
   
$
1.55
   
$
1.61
 
                 
Diluted earnings (loss) per share:
               
Income from continuing operations
 
$
0.59
   
$
0.56
   
$
1.51
   
$
1.59
 
Income (loss) from discontinued operations
   
     
     
     
(0.03
)
Diluted earnings per share
 
$
0.59
   
$
0.56
   
$
1.51
   
$
1.56
 
                 
Dividends paid per share
 
$
0.09
   
$
0.075
   
$
0.27
   
$
0.21
 
Dividends declared per share
 
$
0.09
   
$
0.165
   
$
0.27
   
$
0.30
 
                 
Weighted average shares outstanding:
               
Basic
   
33,973
     
34,708
     
33,807
     
34,496
 
Diluted
   
34,868
     
35,803
     
34,720
     
35,612
 
 
 
 

 
 
MAXIMUS, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands)
         
   
June 30,
 
September 30,
    2012   2011
   
(unaudited)
   
ASSETS
       
Current assets:
       
Cash and cash equivalents
 
$
168,900
   
$
172,950
 
Restricted cash
   
11,930
     
4,839
 
Accounts receivable — billed, net of reserves of $4,580 and $3,265
   
157,795
     
146,900
 
Accounts receivable — unbilled
   
12,385
     
7,170
 
Prepaid income taxes
   
3,258
     
12,959
 
Deferred income taxes
   
23,916
     
19,256
 
Prepaid expenses and other current assets
   
39,266
     
27,202
 
Total current assets
   
417,450
     
391,276
 
         
Property and equipment, net
   
57,227
     
51,740
 
Capitalized software, net
   
26,140
     
26,616
 
Goodwill
   
104,697
     
71,323
 
Intangible assets, net
   
27,050
     
5,651
 
Deferred contract costs, net
   
6,717
     
8,020
 
Deferred income taxes
   
789
     
732
 
Deferred compensation plan assets
   
8,803
     
8,004
 
Other assets, net
   
2,713
     
1,917
 
Total assets
 
$
651,586
   
$
565,279
 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY
       
Current liabilities:
       
Accounts payable
 
$
60,755
   
$
55,470
 
Accrued compensation and benefits
   
47,769
     
47,748
 
Deferred revenue
   
62,619
     
47,902
 
Current portion of long-term debt
   
171
     
42
 
Acquisition-related contingent consideration
   
1,951
     
1,840
 
Income taxes payable
   
5,418
     
5,104
 
Other accrued liabilities
   
6,942
     
5,787
 
Total current liabilities
   
185,625
     
163,893
 
Deferred revenue, less current portion
   
5,021
     
2,575
 
Long-term debt
   
1,538
     
1,654
 
Acquisition-related contingent consideration, less current portion
   
390
     
388
 
Income taxes payable, less current portion
   
1,387
     
1,484
 
Deferred income taxes
   
16,798
     
11,945
 
Deferred compensation plan liabilities, less current portion
   
11,128
     
8,883
 
Total liabilities
   
221,887
     
190,822
 
         
Shareholders’ equity:
       
Common stock, no par value; 60,000 shares authorized; 56,515 and 56,018 shares
    issued and 34,050 and 33,793 shares outstanding at June 30, 2012
    and September 30, 2011, at stated amount, respectively
   
395,441
     
377,579
 
Treasury stock, at cost; 22,465 and 22,225 shares at June 30, 2012 and
    September 30, 2011, respectively
   
(425,791
)
   
(416,850
)
Accumulated other comprehensive income
   
15,949
     
12,480
 
Retained earnings
   
444,100
     
401,248
 
Total shareholders’ equity
   
429,699
     
374,457
 
Total liabilities and shareholders’ equity
 
$
651,586
   
$
565,279
 
 
 
 

 
 
MAXIMUS, Inc,
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
         
   
Three Months
 
Nine Months
   
Ended June 30,
 
Ended June 30,
     
2012
     
2011
     
2012
     
2011
 
Cash flows from operating activities:
               
Net income
 
$
20,485
   
$
19,892
   
$
52,462
   
$
55,593
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Loss from discontinued operations
   
(9
)
   
68
     
(117
)
   
992
 
Depreciation and amortization
   
6,968
     
5,696
     
18,513
     
16,479
 
Deferred income taxes
   
687
     
(774
)
   
(4,628
)
   
372
 
Non-cash equity based compensation
   
3,208
     
2,441
     
8,841
     
6,936
 
Change in assets and liabilities:
               
Accounts receivable — billed
   
(184
)
   
12,483
     
7,084
     
10,887
 
Accounts receivable — unbilled
   
281
     
(1,162
)
   
218
     
859
 
Prepaid expenses and other current assets
   
(4,153
)
   
220
     
(8,245
)
   
1,889
 
Deferred contract costs
   
210
     
(620
)
   
1,319
     
(1,849
)
Accounts payable
   
(15,572
)
   
(4,827
)
   
(3,274
)
   
7,460
 
Accrued compensation and benefits
   
2,267
     
6,061
     
(4,020
)
   
(506
)
Deferred revenue
   
(130
)
   
(2,679
)
   
11,161
     
(13,975
)
Income taxes
   
631
     
(2,883
)
   
9,541
     
(13,217
)
Other assets and liabilities
   
1,334
     
183
     
(3,794
)
   
(1,435
)
Cash provided by continuing operations
   
16,023
     
34,099
     
85,061
     
70,485
 
Cash used in discontinued operations
   
     
(135
)
   
     
(1,086
)
Cash provided by operating activities
   
16,023
     
33,964
     
85,061
     
69,399
 
                 
Cash flows from investing activities:
               
Acquisition of business, net of cash acquired
   
(66,000
)
   
     
(66,000
)
   
 
Proceeds from sale of discontinued operations
   
     
     
2,240
     
 
Purchases of property and equipment
   
(5,308
)
   
(4,499
)
   
(11,884
)
   
(10,963
)
Capitalized software costs
   
(1,018
)
   
(1,821
)
   
(2,850
)
   
(5,693
)
Proceeds from note receivable
   
27
     
65
     
299
     
65
 
Cash used in investing activities — continuing ops
   
(72,299
)
   
(6,255
)
   
(78,195
)
   
(16,591
)
                 
Cash flows from financing activities:
               
Employee stock transactions
   
279
     
1,037
     
1,966
     
9,050
 
Repurchases of common stock
   
(140
)
   
(8,515
)
   
(9,889
)
   
(16,974
)
Tax benefit due to option exercises and restricted stock units vesting
   
965
     
1,409
     
3,475
     
5,227
 
Issuance (repayment) of long-term debt
   
     
4
     
     
304
 
Cash dividends paid
   
(3,056
)
   
(2,598
)
   
(9,117
)
   
(7,241
)
Cash used in financing activities — continuing ops
   
(1,952
)
   
(8,663
)
   
(13,565
)
   
(9,634
)
                 
Effect of exchange rate changes on cash and cash equivalents
   
(2,409
)
   
1,815
     
2,649
     
5,521
 
                 
Net increase in cash and cash equivalents
   
(60,637
)
   
20,861
     
(4,050
)
   
48,695
 
                 
Cash and cash equivalents, beginning of period
   
229,537
     
183,155
     
172,950
     
155,321
 
                 
Cash and cash equivalents, end of period
 
$
168,900
   
$
204,016
   
$
168,900
   
$
204,016
 
 
 
 

 
 
MAXIMUS, Inc.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
         
   
Three Months Ended June 30,
 
Nine Months Ended June 30,
   
2012
 
% (1)
 
2011
 
% (1)
 
2012
 
% (1)
 
2011
 
% (1)
                                 
Revenue:
                                       
Health Services
 
$
170,403
 
100
%
 
$
141,788
 
100
%
 
$
489,616
 
100
%
 
$
409,578
 
100
%
Human Services
 
95,950
 
100
%
 
96,508
 
100
%
 
259,792
 
100
%
 
269,948
 
100
%
Total
 
266,353
 
100
%
 
238,296
 
100
%
 
749,408
 
100
%
 
679,526
 
100
%
                                         
Gross Profit:
                                       
Health Services
 
50,787
 
29.8
%
 
35,459
 
25.0
%
 
127,923
 
26.1
%
 
108,056
 
26.4
%
Human Services
 
27,914
 
29.1
%
 
30,940
 
32.1
%
 
75,391
 
29.0
%
 
77,368
 
28.7
%
Total
 
78,701
 
29.5
%
 
66,399
 
27.9
%
 
203,314
 
27.1
%
 
185,424
 
27.3
%
                                         
Selling, general, and administrative expense:
                         
Health Services
 
25,135
 
14.8
%
 
19,536
 
13.8
%
 
67,286
 
13.7
%
 
53,958
 
13.2
%
Human Services
 
18,727
 
19.5
%
 
16,032
 
16.6
%
 
47,291
 
18.2
%
 
43,834
 
16.2
%
Corporate/Other
 
15
 
NM
   
(309
)
NM
   
15
 
NM
   
(294
)
NM
 
Total
 
43,877
 
16.5
%
 
35,259
 
14.8
%
 
114,592
 
15.3
%
 
97,498
 
14.3
%
                                         
Operating income from continuing operations:
                     
Health Services
 
25,652
 
15.1
%
 
15,923
 
11.2
%
 
60,637
 
12.4
%
 
54,098
 
13.2
%
Human Services
 
9,187
 
9.6
%
 
14,908
 
15.4
%
 
28,100
 
10.8
%
 
33,534
 
12.4
%
Corporate/Other
 
(15
)
NM
   
309
 
NM
   
(15
)
NM
   
294
 
NM
 
Subtotal: Segment Operating Income
 
34,824
 
13.1
%
 
31,140
 
13.1
%
 
88,722
 
11.8
%
 
87,926
 
12.9
%
Legal, settlement and acquisition-related expenses, net
 
(1,525
)
NM
   
(361
)
NM
   
(1,120
NM
   
(361
)
NM
 
Total
 
$
33,299
 
12.5
%
 
$
30,779
 
12.9
%
 
$
87,602
 
11.7
%
 
$
87,565
 
12.9
%
 
(1) % of respective segment revenue. Changes not considered meaningful are marked “NM.”
 
 
 

 
 
MAXIMUS, Inc.
Non-GAAP Measures
 
PRO FORMA DILUTED EPS FROM CONTINUING OPERATIONS
("Adjusted Diluted EPS")
FY 2011 and FY 2012
(Unaudited)
     
 
Quarter Ended
 
 
Dec. 31,
   
Mar. 31,
 
Jun. 30,
 
 
2011
   
2012
 
2012
 
Diluted EPS from continuing operations-GAAP basis
$ 0.51     $ 0.41     $ 0.59  
                   
Pro forma adjustments:
                 
Legal, settlement and acquisition-related expenses, net
        (0.01 )     0.03  
Adjustment for tax accounts
        0.09        
Subtotal pro forma adjustments
        0.08       0.03  
                   
Adjusted Diluted EPS from continuing operations
$ 0.51     $ 0.49     $ 0.62  
 
     
Year
 
Quarter Ended
 
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, 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  
 
FREE CASH FLOW
(In thousands)
(Unaudited)
         
   
Three Months
 
Nine Months
   
Ended June 30,
 
Ended June 30,
     
2012
     
2011
     
2012
     
2011
 
                 
Cash provided by operating activities – continuing ops
 
$
16,023
   
$
34,099
   
$
85,061
   
$
70,485
 
Purchases of property and equipment
   
(5,308
)
   
(4,499
)
   
(11,884
)
   
(10,963
)
Capitalized software costs
   
(1,018
)
   
(1,821
)
   
(2,850
)
   
(5,693
)
Free cash flow
 
$
9,697
   
$
27,779
   
$
70,327
   
$
53,829
 
                 
 
CONTACT:
MAXIMUS, Inc.
Lisa Miles, 703-251-8637