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Core Insights - Maximus, Inc. (MMS) reported disappointing fourth-quarter fiscal 2025 results, with both earnings and revenues falling short of the Zacks Consensus Estimate, yet the stock rose 5.6% post-earnings release on Nov. 20 [1][8] - Adjusted earnings per share were $1.62, missing estimates by 0.6% but showing an 11% year-over-year increase. Revenues reached $1.32 billion, missing the consensus by 1.5% but increasing 0.19% year over year [1][8] Segmental Performance - The U.S. Federal Services segment generated revenues of $747.9 million, up 10.8% year over year, exceeding the estimate of $737.9 million [2] - The Outside the U.S. segment reported revenues of $141.2 million, down 20.3% year over year, but surpassed the anticipated $110.7 million [2] - The U.S. Services segment's revenues were $429.3 million, a decline of 7.4% year over year, falling short of the estimate of $474.2 million [2] Sales and Pipeline - Year-to-date signed contract awards totaled $4.7 billion as of Sept. 30, 2025, with pending contracts amounting to $331 million [3] - The sales pipeline stood at $51.3 billion, including $3.37 billion in pending proposals, $1.37 billion in proposals in preparation, and $46.6 billion in tracking opportunities [3] - The book-to-bill ratio was 0.9 on a trailing 12-month basis [3] Operating Performance - Operating income was $122.86 million, reflecting a 9.9% year-over-year increase, but below the expected adjusted operating income of $148.4 million, which was down 10.1% year over year [4] - The adjusted operating income margin improved to 9.32%, an increase of 82 basis points year over year [4] Financial Position - Maximus ended the quarter with cash and cash equivalents of $222 million, up from $59.8 million in the previous quarter [5] - The company generated $429 million in cash from operations, with free cash flow reported at $366 million [5] Fiscal 2026 Guidance - For fiscal 2026, total revenues are expected to range between $5.225 billion and $5.425 billion, below the Zacks Consensus Estimate of $5.61 billion [6] - Adjusted earnings are anticipated to be between $7.95 and $8.25 per share, exceeding the current consensus estimate of $7.34 [6] - The company projects an adjusted EBITDA margin of approximately 13.6-13.7% [6] - Free cash flow is expected to be between $450 million and $500 million, with interest expenses around $69 million and an effective income tax rate of approximately 25% [7]

Core Viewpoint - Maximus (MMS) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook driven by rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the importance of earnings estimate revisions, which are strongly correlated with near-term stock price movements [4][6]. - For Maximus, the recent increase in earnings estimates suggests an improvement in the company's underlying business, likely leading to higher stock prices [5]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of Maximus to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions for Maximus - Maximus is projected to earn $7.34 per share for the fiscal year ending September 2026, reflecting no year-over-year change [8]. - Over the past three months, the Zacks Consensus Estimate for Maximus has increased by 20.5%, highlighting a positive trend in earnings expectations [8].

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Financial Performance - Revenue for fiscal year 2025 increased to $5,431,276, representing a 2.4% growth compared to $5,306,197 in fiscal year 2024[183]. - Gross profit for fiscal year 2025 was $1,333,443, a 6.5% increase from $1,251,652 in fiscal year 2024, with a gross profit margin of 24.6%[183]. - Operating income rose to $528,289 in fiscal year 2025, up from $488,499 in fiscal year 2024, resulting in an operating margin of 9.7%[183]. - Net income for the year ended September 30, 2025, was $319,034 thousand, compared to $306,914 thousand in 2024[243]. - Adjusted EBITDA for fiscal year 2025 was $701,554 thousand, with an adjusted EBITDA margin of 12.9%, up from 11.6% in 2024[243]. Segment Performance - The U.S. Federal Services Segment reported revenue of $3,067,691 for fiscal year 2025, a 12.1% increase from $2,737,244 in fiscal year 2024[192]. - The U.S. Services Segment experienced a revenue decline to $1,763,691, down 7.7% from $1,911,813 in fiscal year 2024[197]. - The Outside the U.S. Segment's revenue decreased to $599,894, an 8.7% decline from $657,140 in fiscal year 2024, primarily due to business disposals[201]. - The company anticipates operating margins for the U.S. Federal Services Segment in fiscal year 2026 to range between 15.5% and 16%[195]. - The company expects operating margins for the Outside the U.S. Segment in fiscal year 2026 to range between 3% to 5%[203]. Cash Flow and Debt - The net cash provided by operating activities decreased by $85.9 million to $429.4 million in fiscal year 2025 compared to $515.3 million in fiscal year 2024[212]. - The company reported a free cash flow of $366.2 million for fiscal year 2025, down from $401.1 million in fiscal year 2024[217]. - The total debt under the Credit Agreement as of September 30, 2025, was $1.35 billion, with an additional $750 million available through a revolving credit facility[218]. - The Consolidated Net Total Leverage Ratio as of September 30, 2025, was 1.51, compared to 1.37 in the previous year[228]. - The Consolidated Net Interest Coverage Ratio improved to 9.25 for fiscal year 2025, up from 8.54 in fiscal year 2024[228]. Shareholder Returns - The company utilized $447.5 million in fiscal year 2025 to repurchase 5.8 million shares of common stock, funded by operating cash flows and a $250 million expansion of its credit facility[214]. Assets and Investments - Cash and cash equivalents stood at $222.4 million as of September 30, 2025, indicating a stable liquidity position[208]. - The company made significant investments in technology upgrades for federal medical disability examinations, largely completed in the middle of fiscal year 2025[216]. - As of September 30, 2025, the company reported $1.78 billion in goodwill and $538.3 million in net intangible assets[235]. - The company held net assets denominated in currencies other than the U.S. Dollar amounting to $266.8 million as of September 30, 2025[246]. Tax and Exchange Rate Impact - The effective tax rate for fiscal year 2025 was 28.3%, up from 24.5% in fiscal year 2024, impacted by the disposal of businesses in Australia and Korea[189]. - A hypothetical 10% favorable exchange rate movement would increase comprehensive income by $26,681 thousand[248]. - A 100 basis point increase in interest rates would decrease net income by $6,969 thousand, while a decrease would increase net income by the same amount[251]. Other Financial Metrics - The company experienced a rise in Days Sales Outstanding (DSO) to 62 days as of September 30, 2025, up from 61 days in the previous year[216]. - The company has no collateral posted with its counterparty related to derivatives as of September 30, 2025[252].

Core Insights - Maximus reported revenue of $1.32 billion for the quarter ended September 2025, reflecting a year-over-year increase of 0.2% [1] - The earnings per share (EPS) for the quarter was $1.62, up from $1.46 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate by 1.52%, while the EPS also missed the consensus estimate by 0.61% [1] Revenue Breakdown - U.S. Federal Services revenue was $747.94 million, slightly below the average estimate of $750.39 million, with a year-over-year increase of 10.8% [4] - U.S. Services revenue was reported at $429.27 million, which is a decline of 7.4% compared to the previous year and below the estimated $454.98 million [4] - Revenue from outside the U.S. was $141.11 million, exceeding the average estimate of $133.36 million, but showing a significant year-over-year decline of 20.4% [4] Stock Performance - Over the past month, Maximus shares have returned -11.2%, contrasting with a -0.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Fiscal year 2025 revenue totaled $5.43 billion, reflecting a 2.4% increase year-over-year, with an organic growth rate of 3.9% [26][29] - Adjusted EBITDA margin for the full year was 12.9%, up from 11.6% in the prior year, and adjusted earnings per share were $7.36, a 20% increase from $6.11 [26][29] - Free cash flow for fiscal year 2025 was $366 million, with strong cash flows of $642 million in the fourth quarter alone [26][33] Business Line Data and Key Metrics Changes - The U.S. federal services segment achieved 12.1% organic growth, while the outside-the-U.S. segment delivered 4.1% organic growth [5][29] - Revenue for the U.S. services segment decreased to $1.76 billion from $1.91 billion, with an operating income margin of 9.7%, down from 12.9% in the prior year [31][32] - The outside-the-U.S. segment's revenue decreased to $600 million due to divestitures, but it experienced positive organic growth of 4.1% [32] Market Data and Key Metrics Changes - The total pipeline at September 30 was $51.3 billion, up from $44.7 billion in the previous quarter, with 64% representing new work [24] - Approximately 66% of the total pipeline is attributable to the U.S. federal services segment, with significant opportunities tied to the One Big Beautiful Bill Act still in development [24] Company Strategy and Development Direction - The company is focused on three strategic priorities for fiscal year 2026: expanding in U.S. federal markets, policy-driven initiatives, and deploying AI and tech-enabled automation [7][8] - Investments in AI capabilities are a key priority, aimed at transforming service delivery and enhancing operational efficiency [20][21] - The company aims to maintain a disciplined approach to capital allocation, prioritizing organic investments, dividends, and strategic acquisitions [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth opportunities, citing strong customer relationships and strategic investments as key drivers [7][9] - The company anticipates that fiscal 2026 will be defined by shaping efforts, with actual work and revenue expected to materialize in fiscal year 2027 [43] - Management noted that the impact of the recent government shutdown is expected to be minimal, as most programs are deemed essential services [55][57] Other Important Information - The company repurchased approximately $457 million worth of shares during fiscal year 2025, with a remaining authorization of $250 million [34][35] - The adjusted EPS guidance for fiscal year 2026 is projected to be between $7.95 and $8.25, with a midpoint of $8.10 [37][41] Q&A Session Summary Question: Can you provide more color on what's driving the EBITDA margin expansion for 2026? - Management indicated that the margin guidance reflects continued deployment of technology and automation, along with cost management efforts [47][50] Question: How are you thinking about the effects of the government shutdown on your results? - Management does not anticipate negative impacts on contract delivery, as most programs were funded prior to the shutdown [55][56] Question: What are your priorities for allocating capital in the short term? - The company remains focused on growth in the U.S. federal market, particularly in defense and national security, while also considering M&A opportunities [60][63] Question: What phase of the opportunity related to the One Big Beautiful Bill are you currently in? - Management noted that states are actively planning for compliance with new requirements, with significant urgency around SNAP payment error rates [66][68]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company reported revenue of $5.43 billion, reflecting an organic growth rate of 3.9% compared to the previous year [25][27] - The adjusted EBITDA margin for the full year was 12.9%, an increase from 11.6% in the prior year, while adjusted earnings per share rose to $7.36 from $6.11, representing a 20% increase [27][28] - Free cash flow for fiscal year 2025 totaled $366 million, with strong cash flows of $642 million in the fourth quarter alone [25][31] Business Line Data and Key Metrics Changes - The U.S. federal services segment achieved 12.1% organic growth, driven by high demand in clinical and disaster support programs [5][27] - The U.S. services segment revenue decreased to $1.76 billion, with an operating income margin of 9.7%, down from 12.9% in the prior year due to the completion of pandemic-related engagements [29][30] - The outside-the-U.S. segment reported revenue of $600 million, with a 4.1% organic growth rate, and an operating income margin improved to 3.7% from 1.2% in the prior year [30] Market Data and Key Metrics Changes - The total pipeline of sales opportunities as of September 30 was $51.3 billion, up from $44.7 billion in the previous quarter, with 66% of this attributed to the U.S. federal services segment [24][22] - Approximately 64% of the total pipeline represents new work, indicating a strong future growth potential [24] Company Strategy and Development Direction - The company is focusing on three strategic priorities for fiscal year 2026: expanding in U.S. federal markets, policy-driven initiatives related to the One Big Beautiful Bill Act, and deploying AI and tech-enabled automation [8][10] - Investments in AI capabilities are seen as crucial for transforming service delivery and enhancing operational efficiency [21][22] - The company aims to maintain a disciplined approach to capital allocation, prioritizing organic investments, dividends, and strategic acquisitions to accelerate growth [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth, citing strong customer relationships and a robust pipeline of opportunities, particularly in the U.S. federal services segment [7][42] - The company anticipates that fiscal year 2026 will be characterized by shaping efforts, with actual revenue growth expected to materialize in fiscal year 2027 [42][43] - Management noted that the impact of the recent government shutdown is expected to be minimal, as most programs are deemed essential services [48][49] Other Important Information - The company repurchased approximately $457 million worth of shares during fiscal year 2025, with a remaining authorization of $250 million for future repurchases [32][33] - The adjusted EPS guidance for fiscal year 2026 is projected to be between $7.95 and $8.25, reflecting ongoing margin expansion and growth [36][40] Q&A Session Summary Question: Can you provide more color on what's driving the EBITDA margin expansion for 2026? - Management indicated that the margin guidance reflects continued deployment of technology and automation, along with cost management initiatives [44][45] Question: How do you anticipate the government shutdown affecting results? - Management stated that they do not expect negative impacts on contract delivery, as most programs were funded prior to the shutdown [48][49] Question: What are the priorities for allocating capital in the short term? - The company emphasized a focus on growth in the U.S. federal market, particularly in defense and national security, while also considering M&A opportunities [51][52]

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Fiscal 2025 Year End Earnings Call Bruce Caswell President & Chief Executive Officer November 20, 2025 1 | Maximus: Q4 FY25 Earnings Presentation Forward-looking Statements & Non-GAAP Information These slides should be read in conjunction with our most recent quarterly earnings press release, along with listening to or reading a transcript of management comments from our most recent quarterly earnings conference call. This document contains non-GAAP financial information. Management uses this information in ...