Establishes fiscal year 2024 guidance driven
by organic growth from core business tailwinds
Maximus (NYSE: MMS), a leading provider of government services
worldwide, reported financial results for the three months and year
ended September 30, 2023.
Highlights for the fourth quarter and full fiscal year 2023
include:
- Full year revenue increased 5.9% to $4.90 billion, compared to
$4.63 billion for the prior year. Organic growth was 7.1% and
driven by higher volumes on key programs in the U.S. segments.
Fourth quarter revenue grew 7.0%, or 7.4% on an organic basis.
- Full year diluted earnings per share were $2.63, and adjusted
diluted earnings per share were $3.83. Fourth quarter diluted
earnings per share were $0.96, and adjusted diluted earnings per
share were $1.29. Excluding the previously disclosed cybersecurity
incident, adjusted earnings per share were $4.18 and $1.38 for the
full year and fourth quarter, respectively, of fiscal year
2023.
- Record contract backlog of $20.7 billion at September 30, 2023,
or 4 times trailing twelve months revenue, and signed contract
awards totaling $6.1 billion in fiscal year 2023.
- A quarterly cash dividend of $0.30 per share payable on
November 30, 2023, to shareholders of record on November 15,
2023.
"We are proud of the team for an excellent finish to the year
and demonstrating a healthy core business operating at its true
potential," said Bruce Caswell, President and Chief Executive
Officer. "We kick off fiscal 2024 with strong visibility to our
guidance targets, carrying forward the momentum of the last
quarter.
Caswell continued, "As a provider of tech-enabled services to
mission-critical government programs, we can remain confident in
our outlook, even with a temporary U.S. federal government
shut-down remaining a potential scenario during fiscal 2024. We
would expect nearly all of our U.S. Federal Services programs to be
designated essential which insulates our business during periods of
government budget uncertainty."
Consolidated Fiscal Year 2023 Fourth Quarter and Full Year
Results
Revenue for the full fiscal year 2023 increased 5.9% to $4.90
billion, compared to $4.63 billion for the prior year. Organic
growth was 7.1% over the prior year. Revenue for the fourth quarter
of fiscal year grew 7.0% to $1.26 billion, or 7.4% on an organic
basis. Both periods benefited from volume growth on expanded
programs in the U.S. Federal Services segment. The U.S. Services
Segment had new programs operating in the year and Medicaid
redeterminations made a full period contribution in the fourth
quarter.
For the full fiscal year 2023, the operating margin was 6.0%,
and the adjusted margin operating margin was 8.0%. This compares to
margins of 7.0% and 9.0%, respectively, for the prior year, which
had benefited from profitable, short-term work.
Diluted earnings per share were $2.63 and adjusted diluted
earnings per share were $3.83. This compares to $3.29 and $4.37,
respectively, for the prior-year period. The company's definition
of adjusted earnings is expanded to include gains or losses
resulting from a divestiture or other charges arising in preparing
a business for sale. As with prior reporting periods, the
definition retains adjustment for intangibles amortization
expense.
Divestiture-related charges for the full fiscal year 2023
totaled $0.06. The previously-disclosed cybersecurity incident is
not included in the definition and had a $0.35 and $0.09 per share
impact to the full year and fourth quarter, respectively, of fiscal
year 2023. Adjusted diluted earnings excluding the incident were
$4.18 and $1.38 per share for the full year and fourth quarter,
respectively, of fiscal year 2023.
U.S. Federal Services Segment
U.S. Federal Services Segment revenue for fiscal year 2023
increased 6.4% to $2.40 billion, compared to $2.26 billion reported
for the prior year. All growth was organic and driven predominantly
by the continued ramp of volumes on the Veterans Affairs Medical
Disability Exams (VA MDE) contracts, which comprise the VES
business, as the overall program grows to meet client
expectations.
The segment operating margin for the full fiscal year 2023 was
10.4%, as compared to 10.4% reported for the prior year. For the
fourth quarter of fiscal year 2023, the segment operating margin
was 12.4% and was supported by a higher run-rate of volumes on the
VA MDE contracts.
U.S. Services Segment
U.S. Services Segment revenue for fiscal year 2023 increased by
12.7% to $1.81 billion, compared to $1.61 billion reported in the
prior year. All growth was organic and driven by new work wins
across multiple categories, including eligibility support,
multi-year contracts for unemployment insurance assistance, and
assessments for long-term care.
The segment operating margin for fiscal year 2023 was 10.1%
compared to 11.3% reported for the prior-year period which
benefited from residual short-term work with higher profit margins.
The fourth quarter of fiscal year 2023 benefited from a full period
of resumed Medicaid redeterminations, delivering a 11.6% margin for
the segment.
Outside the U.S. Segment
Outside the U.S. Segment revenue for fiscal year 2023 decreased
9.8% to $689.1 million as compared to $763.7 million reported for
the prior year, which was net of a 4.6% currency headwind. The
remaining reductions were lower volumes on employment services
contracts and the effect of divestitures during fiscal year
2023.
The segment realized an operating loss of $9.1 million for
fiscal year 2023, compared to an operating loss of $15.2 million in
the prior year. The effect of lower volumes on employment services
contracts negatively impacted segment profitability both years. The
segment broke even in the fourth quarter of fiscal 2023.
The company recently announced another divestiture of employment
services businesses, including in Canada, Singapore, and Italy, as
it executes on further optimization of the Outside the U.S.
portfolio to deliver consistent profitability and improve alignment
with the broader Maximus strategy.
Sales and Pipeline
Year-to-date signed contract awards at September 30, 2023,
totaled $6.1 billion, and contracts pending (awarded but unsigned)
totaled $878 million. These awards include the previously announced
IDIQ for the Federal Student Aid office valued at more than $2
billion and the Functional Assessment Services contract in the
United Kingdom valued at $1 billion. The book-to-bill ratio at
September 30, 2023, was 1.2x on a trailing twelve-month basis.
The sales pipeline at September 30, 2023, was $37.1 billion
(comprised of approximately $1.2 billion in proposals pending,
$0.97 billion in proposals in preparation, and $34.9 billion in
opportunities tracking). New work opportunities represent
approximately 76% of the total sales pipeline.
Balance Sheet and Cash Flows
At September 30, 2023, cash and cash equivalents totaled $65.4
million, and gross debt was $1.26 billion. The ratio of debt, net
of allowed cash, to pro-forma EBITDA for the full year ended
September 30, 2022, as calculated in accordance with our credit
agreement, was 2.2x. This reflects debt pay downs of approximately
$60 million in the most recent quarter and compares to 2.5x at June
30, 2022. The company's target leverage range is 2x to 3x, with a
bias towards the lower end.
For fiscal year 2023, cash flows from operating activities
totaled $314.3 million, and free cash flow was $223.6 million. This
compares to $289.8 million and $233.7 million, respectively, in the
prior year. As expected, fourth quarter of fiscal year 2023 cash
flows were strong at $144.6 million cash flows from operating
activities and free cash flow of $112.8 million.
As of September 30, 2023, DSO were 60 days and at the bottom of
the target range of 60 to 70 days.
On October 6, 2023, our Board of Directors declared an increased
quarterly cash dividend of $0.30 for each share of our common stock
outstanding, which compares to the previous quarterly cash dividend
of $0.28 per share. The dividend is payable on November 30, 2023,
to shareholders of record on November 15, 2023.
Fiscal Year 2024 Outlook
Maximus is establishing fiscal year 2024 guidance. The company
expects revenue to range between $5.05 billion and $5.2 billion.
Adjusted operating income is expected to range between $488 million
and $513 million, which excludes an estimated $88 million of
expense for amortization of intangible assets. Adjusted diluted
earnings per share is expected to range between $5.05 and $5.35 per
share.
The midpoint of revenue guidance implies organic growth of
approximately 5% over fiscal year 2023. The midpoint of adjusted
operating income implies an adjusted operating margin of 9.8% as
compared to the midpoint of revenue guidance.
Free cash flow is expected to range between $290 million and
$340 million for fiscal year 2024. The company forecasts interest
expense of approximately $70 million, an effective income tax rate
between 24.5% and 25.5%, and weighted average shares outstanding
between 62.2 million and 62.3 million shares for fiscal year
2024.
Conference Call and Webcast Information
Maximus will host a conference call tomorrow, November 16, 2023,
at 9:00 a.m. ET. Shareholders are invited to submit questions for
management’s consideration by emailing IR@maximus.com up to one
hour prior to the call.
The call is open to the public and available by webcast or by
phone at: 877.407.8289 (Domestic) / +1.201.689.8341
(International)
For those unable to listen to the live call, a recording of the
webcast will be available on investor.maximus.com.
About Maximus
As a leading strategic partner to governments across the globe,
Maximus helps improve the delivery of public services amid complex
technology, health, economic, environmental, and social challenges.
With a deep understanding of program service delivery, acute
insights that achieve operational excellence, and an extensive
awareness of the needs of the people being served, our employees
advance the critical missions of our partners. Maximus delivers
innovative business process management, impactful consulting
services, and technology solutions that provide improved outcomes
for the public and higher levels of productivity and efficiency of
government-sponsored programs. For more information, visit
maximus.com.
Non-GAAP Measures and Risk Factors
This release refers to non-GAAP measures and other indicators,
including organic growth normalized for the effects of COVID-19
response work, free cash flow, operating income, and EPS adjusted
for amortization of intangible assets and divestiture-related
charges, pro-forma EBITDA, and other non-GAAP measures.
A description of these non-GAAP measures, the reasons why we use
and present them, and details as to how they are calculated are
included in our earnings presentation and forthcoming Form
10-K.
The presentation of these non-GAAP numbers is not meant to be
considered in isolation, nor as alternatives to cash flows from
operations, revenue growth, or net income as measures of
performance. These non-GAAP financial measures, as determined and
presented by us, may not be comparable to related or similarly
titled measures presented by other companies.
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 risks could cause the company’s actual results to differ
materially from those indicated by such forward-looking statements.
A summary of risk factors can be found in Item 1A, "Risk Factors"
in our Annual Report on Form 10-K for the year ended September 30,
2023, expected to be filed shortly with the Securities and Exchange
Commission (SEC). The Company's SEC reports are accessible on
maximus.com.
Maximus, Inc. Consolidated
Statements of Operations (Unaudited)
For the Three Months Ended
September 30,
For the Year Ended
September 30,
2023
2022
2023
2022
(in thousands, except per share
amounts)
Revenue
$
1,259,953
$
1,177,031
$
4,904,728
$
4,631,018
Cost of revenue
969,059
904,048
3,876,120
3,691,208
Gross profit
290,894
272,983
1,028,608
939,810
Selling, general, and administrative
expenses
167,778
146,991
639,223
534,493
Amortization of intangible assets
23,992
22,514
94,591
90,465
Gain on sale of land and building
—
11,046
—
11,046
Operating income
99,124
114,524
294,794
325,898
Interest expense
20,507
16,098
84,138
45,965
Other expense, net
442
742
363
2,835
Income before income taxes
78,175
97,684
210,293
277,098
Provision for income taxes
19,029
28,617
48,501
73,270
Net income
$
59,146
$
69,067
$
161,792
$
203,828
Earnings per share:
Basic
$
0.97
$
1.13
$
2.65
$
3.30
Diluted
$
0.96
$
1.13
$
2.63
$
3.29
Weighted average shares outstanding:
Basic
61,138
61,010
61,125
61,774
Diluted
61,617
61,292
61,450
61,969
Dividends declared per share
$
0.28
$
0.28
$
1.12
$
1.12
Maximus, Inc. Consolidated
Balance Sheets (Unaudited)
As of September 30,
2023
2022
(in thousands)
Assets:
Cash and cash equivalents
$
65,405
$
40,658
Accounts receivable, net
826,873
807,110
Income taxes receivable
16,556
2,158
Prepaid expenses and other current
assets
146,632
182,387
Total current assets
1,055,466
1,032,313
Property and equipment, net
38,831
52,258
Capitalized software, net
107,811
58,740
Operating lease right-of-use assets
163,929
132,885
Goodwill
1,779,215
1,779,415
Intangible assets, net
703,648
804,904
Deferred contract costs, net
45,372
47,732
Deferred compensation plan assets
42,919
37,050
Deferred income taxes
2,459
4,970
Other assets
46,147
42,447
Total assets
$
3,985,797
$
3,992,714
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued
liabilities
$
282,081
$
264,553
Accrued compensation and benefits
194,251
178,199
Deferred revenue, current portion
60,477
87,146
Income taxes payable
451
718
Long-term debt, current portion
86,844
63,458
Operating lease liabilities, current
portion
49,852
63,999
Other current liabilities
49,058
116,374
Total current liabilities
723,014
774,447
Deferred revenue, non-current portion
38,849
21,414
Deferred income taxes
203,898
206,099
Long-term debt, non-current portion
1,163,149
1,292,483
Deferred compensation plan liabilities,
non-current portion
46,432
40,210
Operating lease liabilities, non-current
portion
129,367
86,175
Other liabilities
13,253
22,515
Total liabilities
2,317,962
2,443,343
Shareholders' equity:
Common stock, no par value; 100,000 shares
authorized; 60,998 and 60,774 shares issued and outstanding as of
September 30, 2023 and 2022, respectively
577,898
557,978
Accumulated other comprehensive loss
(27,615
)
(33,961
)
Retained earnings
1,117,552
1,025,354
Total shareholders' equity
1,667,835
1,549,371
Total liabilities and shareholders'
equity
$
3,985,797
$
3,992,714
Maximus, Inc. Consolidated
Statements of Cash Flows (Unaudited)
For the Three Months Ended
September 30,
For the Year Ended
September 30,
2023
2022
2023
2022
(in thousands)
Cash flows from operating activities:
Net income
$
59,146
$
69,067
$
161,792
$
203,828
Adjustments to reconcile net income to
cash flows from operations:
Depreciation and amortization of property,
equipment and capitalized software
17,633
12,455
54,725
42,330
Amortization of intangible assets
23,992
22,514
94,591
90,465
Amortization of debt issuance costs and
debt discount
601
1,066
2,837
3,012
Gain on sale of land and building
—
(11,046
)
—
(11,046
)
Deferred income taxes
(823
)
17,383
1,552
10,204
Stock compensation expense
7,283
8,396
29,522
30,476
Loss on sale of businesses
—
—
883
—
Change in assets and liabilities, net of
effects of business combinations and disposals:
Accounts receivable
(31,076
)
54,129
(23,401
)
14,132
Prepaid expenses and other current
assets
(20,242
)
(16,199
)
859
(6,745
)
Deferred contract costs
443
(4,354
)
2,688
(12,056
)
Accounts payable and accrued
liabilities
814
9,855
17,729
(32,722
)
Accrued compensation and benefits
44,262
(10,558
)
12,650
3,288
Deferred revenue
19,624
(19,684
)
(12,123
)
(19,342
)
Income taxes
16,228
(688
)
(16,958
)
(13,510
)
Operating lease right-of-use assets and
liabilities
1,707
218
(2,035
)
(1,112
)
Other assets and liabilities
4,997
(12,491
)
(10,971
)
(11,363
)
Net cash provided by operating
activities
144,589
120,063
314,340
289,839
Cash flows from investing activities:
Purchases of property and equipment and
capitalized software
(31,832
)
(20,209
)
(90,695
)
(56,145
)
Acquisitions of businesses, net of cash
acquired
—
(151
)
—
(14,295
)
Proceeds from the sale of businesses
608
—
9,732
—
Proceeds from the sale of land and
building
—
14,431
—
16,431
Net cash used in investing activities
(31,224
)
(5,929
)
(80,963
)
(54,009
)
Cash flows from financing activities:
Cash dividends paid to Maximus
shareholders
(17,020
)
(16,954
)
(68,073
)
(68,716
)
Purchases of Maximus common stock
—
(22,255
)
—
(96,119
)
Tax withholding related to RSU vesting
—
—
(8,475
)
(9,673
)
Payments for contingent consideration
(2,769
)
(1,369
)
(9,431
)
(1,369
)
Proceeds from borrowings
161,901
200,000
844,299
615,000
Principal payments for debt
(222,460
)
(327,685
)
(952,974
)
(770,658
)
Cash-collateralized escrow liabilities
(1,601
)
83,264
(56,144
)
83,264
Net cash (used in)/provided by financing
activities
(81,949
)
(84,999
)
(250,798
)
(248,271
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(1,018
)
(2,965
)
2,717
(7,334
)
Net change in cash, cash equivalents, and
restricted cash
30,398
26,170
(14,704
)
(19,775
)
Cash, cash equivalents and restricted
cash, beginning of period
91,693
110,625
136,795
156,570
Cash, cash equivalents and restricted
cash, end of period
$
122,091
$
136,795
$
122,091
$
136,795
Maximus, Inc. Consolidated
Results of Operations by Segment (Unaudited)
For the Three Months Ended
September 30,
For the Year Ended
September 30,
2023
2022
2023
2022
Amount (1)
% (2)
Amount (1)
% (2)
Amount (1)
% (2)
Amount (1)
% (2)
(dollars in thousands)
Revenue:
U.S. Federal Services
$
617,404
$
579,066
$
2,403,606
$
2,259,744
U.S. Services
473,827
423,798
1,812,069
1,607,612
Outside the U.S.
168,722
174,167
689,053
763,662
Revenue
$
1,259,953
$
1,177,031
$
4,904,728
$
4,631,018
Gross profit:
U.S. Federal Services
$
155,373
25.2
%
$
153,508
26.5
%
$
557,886
23.2
%
$
519,440
23.0
%
U.S. Services
109,389
23.1
%
94,199
22.2
%
377,541
20.8
%
343,004
21.3
%
Outside the U.S.
26,132
15.5
%
25,276
14.5
%
93,181
13.5
%
77,366
10.1
%
Gross profit
$
290,894
23.1
%
$
272,983
23.2
%
$
1,028,608
21.0
%
$
939,810
20.3
%
Selling, general, and administrative
expenses:
U.S. Federal Services
$
78,606
12.7
%
$
81,169
14.0
%
$
308,197
12.8
%
$
284,509
12.6
%
U.S. Services
54,198
11.4
%
45,176
10.7
%
194,991
10.8
%
160,902
10.0
%
Outside the U.S.
26,375
15.6
%
24,084
13.8
%
102,311
14.8
%
92,536
12.1
%
Divestiture related charges (2)
2,868
NM
—
NM
3,751
NM
—
NM
Other (4)
5,731
NM
(3,438
)
NM
29,973
NM
(3,454
)
NM
Selling, general, and administrative
expenses
$
167,778
13.3
%
$
146,991
12.5
%
$
639,223
13.0
%
$
534,493
11.5
%
Operating income/(loss):
U.S. Federal Services
$
76,767
12.4
%
$
72,339
12.5
%
$
249,689
10.4
%
$
234,931
10.4
%
U.S. Services
55,191
11.6
%
49,023
11.6
%
182,550
10.1
%
182,102
11.3
%
Outside the U.S.
(243
)
(0.1
)%
1,192
0.7
%
(9,130
)
(1.3
)%
(15,170
)
(2.0
)%
Amortization of intangible assets
(23,992
)
NM
(22,514
)
NM
(94,591
)
NM
(90,465
)
NM
Divestiture related charges (2)
(2,868
)
NM
—
NM
(3,751
)
NM
—
NM
Gain on sale of land and building (3)
—
NM
11,046
NM
—
NM
11,046
NM
Other (4)
(5,731
)
NM
3,438
NM
(29,973
)
NM
3,454
NM
Operating income
$
99,124
7.9
%
$
114,524
9.7
%
$
294,794
6.0
%
$
325,898
7.0
%
(1)
Percentage of respective segment revenue.
Percentages not considered meaningful are marked "NM."
(2)
During fiscal year 2023, we sold a small
commercial practice in the United Kingdom and our employment
services business in Sweden, both subsidiaries within our Outside
the U.S. Segment, resulting in a loss of $0.9 million. In addition,
we recorded impairment losses of $2.9 million on businesses sold
subsequent to fiscal year end.
(3)
During fiscal year 2022, we sold the land
and building that held our corporate headquarters, resulting in a
gain on sale of $11.0 million.
(4)
Other includes credits and costs that are
not allocated to a particular segment. For the fiscal year 2023,
these charges include $29.3 million related to the costs of a
previously disclosed cybersecurity incident. Other charges include
direct costs of acquisitions. These costs are excluded from
measuring each segment's operating performance.
Maximus, Inc. Consolidated
Free Cash Flows - Non-GAAP (Unaudited)
For the Three Months Ended
September 30,
For the Year Ended
September 30,
2023
2022
2023
2022
(in thousands)
Net cash provided by operating
activities
$
144,589
$
120,063
$
314,340
$
289,839
Purchases of property and equipment and
capitalized software
(31,832
)
(20,209
)
(90,695
)
(56,145
)
Free cash flow
$
112,757
$
99,854
$
223,645
$
233,694
Maximus, Inc. Non-GAAP
Adjusted Results - Operating Income, Net Income, and Diluted
Earnings per Share (Unaudited)
For the Three Months Ended
September 30,
For the Year Ended
September 30,
2023
2022
2023
2022
(dollars in thousands, except per
share data)
Operating income
$
99,124
$
114,524
$
294,794
$
325,898
Add back: Amortization of intangible
assets
23,992
22,514
94,591
90,465
Add back: Divestiture-related charges
2,868
—
3,751
—
Adjusted operating income excluding
amortization of intangible assets and divestiture-related charges
(Non-GAAP)
$
125,984
$
137,038
$
393,136
$
416,363
Adjusted operating income margin excluding
amortization of intangible assets and divestiture-related charges
(Non-GAAP)
10.0
%
11.6
%
8.0
%
9.0
%
Net income
$
59,146
$
69,067
$
161,792
$
203,828
Add back: Amortization of intangible
assets, net of tax
17,682
16,622
69,714
66,786
Add back: Divestiture-related charges
2,868
—
3,751
—
Adjusted net income excluding amortization
of intangible assets and divestiture-related charges (Non-GAAP)
$
79,696
$
85,689
$
235,257
$
270,614
Diluted earnings per share
$
0.96
$
1.13
$
2.63
$
3.29
Add back: Effect of amortization of
intangible assets on diluted earnings per share
0.28
0.27
1.14
1.08
Add back: Effect of divestiture-related
charges on diluted earnings per share
0.05
—
0.06
—
Adjusted diluted earnings per share
excluding amortization of intangible assets and divestiture-related
charges (Non-GAAP)
$
1.29
$
1.40
$
3.83
$
4.37
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231115106917/en/
James Francis 703.251.8526 Jessica Batt 703.251.8634
IR@maximus.com
MAXIMUS (NYSE:MMS)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
MAXIMUS (NYSE:MMS)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024