Core Insights - Maximus, Inc. (MMS) is benefiting from strong government relationships, securing long-term contracts that provide a predictable revenue stream [3][4] - The company reported better-than-expected first-quarter fiscal 2025 results, with adjusted earnings of $1.61 per share, exceeding estimates by 15.8% and increasing 20.2% year-over-year [2] - Strategic acquisitions are enhancing MMS's business processes and client relationships, contributing to long-term organic growth [5] Financial Performance - MMS's revenues for the first quarter of fiscal 2025 reached $1.4 billion, surpassing consensus estimates by 7% and rising 5.7% from the previous year [2] - The company has consistently paid dividends, with payouts of $68.8 million, $68.7 million, $68 million, and $72.9 million from fiscal 2021 to 2024, reflecting its commitment to shareholder value [8] - The current ratio at the end of the first quarter of fiscal 2025 was 1.72, indicating strong liquidity compared to the industry average of 1.54 [9] Strategic Focus - Maximus is expanding its presence in clinical services and long-term support, driven by increasing demand for government social benefits due to longevity and complex health issues [4] - The company leverages the expertise of its workforce in government health and human services programs, differentiating itself through measurable outcomes [6] - Recent acquisitions, including a vendor for IT services for $18 million and the Stirling Institute of Australia, are enhancing MMS's capabilities and service offerings [5]

Core Viewpoint - Maximus (MMS) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that revisions in earnings estimates can lead to significant price changes [4][6]. - Rising earnings estimates for Maximus imply an improvement in the company's underlying business, which could lead to an increase in stock price as investors respond positively [5][10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions, which positions Maximus favorably for potential market-beating returns [9][10]. Recent Earnings Estimate Revisions - For the fiscal year ending September 2025, Maximus is expected to earn $6.08 per share, reflecting a slight decrease of -0.5% from the previous year, but the Zacks Consensus Estimate has increased by 3.9% over the past three months [8].

Core Viewpoint - Maximus (MMS) has experienced significant selling pressure, declining 13.4% over the past four weeks, but is now positioned for a potential trend reversal as it is in oversold territory, with analysts predicting better earnings than previously expected [1] Group 1: Stock Performance and Indicators - The stock's Relative Strength Index (RSI) reading is at 25.39, indicating it is oversold and suggesting a possible reversal in trend [5] - A stock is generally considered oversold when its RSI falls below 30, which helps investors identify potential entry points for a rebound [2][3] Group 2: Earnings Estimates and Analyst Consensus - Over the last 30 days, the consensus EPS estimate for MMS has increased by 2.2%, indicating a positive trend in earnings estimate revisions [6] - There is strong agreement among sell-side analysts in raising earnings estimates for MMS, which typically correlates with price appreciation in the near term [6] Group 3: Zacks Rank and Investment Potential - MMS currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, suggesting a strong potential for turnaround [7]

Core Insights - Maximus, Inc. (MMS) reported better-than-expected first-quarter fiscal 2025 results, with earnings and revenues surpassing the Zacks Consensus Estimate [1] Financial Performance - Quarterly adjusted earnings were $1.61 per share, exceeding the Zacks Consensus Estimate by 15.8% and increasing 20.2% year-over-year [1] - Revenues reached $1.4 billion, topping the consensus mark by 7% and rising 5.7% from the previous year [1] Segmental Revenues - U.S. Federal Services segment revenues were $780.7 million, up 15.3% year-over-year, beating the estimate of $687.2 million [2] - Outside the U.S. segment revenues increased to $169.8 million, a 6% rise from the first quarter of fiscal 2024, surpassing the anticipated $123.1 million [2] - U.S. Services segment revenues decreased to $452.3 million, down 7.7% year-over-year, missing the estimate of $497.2 million [2] Sales and Pipeline - Year-to-date signed contract awards totaled $2.08 billion as of December 31, 2024, with pending contracts amounting to $410 million [3] - The sales pipeline was valued at $41.4 billion, including $2.47 billion in pending proposals and $1.50 billion in proposals in preparation [3] - The book-to-bill ratio was 0.7 on a trailing 12-month basis as of December 31, 2024 [3] Operating Performance - Adjusted operating income was $156.62 million, an 11.6% increase year-over-year, compared to the expected adjusted operating income of $138.6 million [4] - The adjusted operating income margin improved to 11.2%, up 60 basis points year-over-year [4] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the quarter were $72.7 million, down from $183.1 million in the prior quarter [5] - The company used $80 million in cash from operations, with capital expenditures of $23 million and a free cash flow outflow of $103 million [5] Updated Fiscal 2025 Guidance - Maximus raised its earnings guidance but reduced revenue expectations for fiscal year 2025, now forecasting total revenues between $5.2 billion and $5.35 billion [6] - Adjusted earnings are anticipated in the range of $5.90-$6.20 per share, higher than previous expectations [7] - Free cash flow is expected to be between $355 million and $385 million, with interest expenses anticipated at approximately $75 million [8]

Financial Data and Key Metrics Changes - Maximus, Inc. reported revenue of $1.40 billion for Q1 FY2025, representing a 5.7% year-over-year growth, with 6.3% on an organic basis [35] - Adjusted EBITDA margin was 11.2% and adjusted EPS was $1.61 for the quarter, compared to $1.34 in the prior year period [35] - The company completed the divestiture of its employment services businesses in Australia and South Korea, incurring divestiture charges of about $38 million, primarily due to foreign exchange losses [36][34] Business Line Data and Key Metrics Changes - US Federal Services segment revenue increased 15.3% to $781 million, driven by clinical assessments and customer service programs, with an operating income margin of 12.7% [38] - US Services segment revenue decreased 7.7% to $452 million, with an operating income margin of 9.0%, impacted by prior year excess volumes and seasonality [39] - Outside the U.S. segment revenue increased 6.0% year-over-year to $170 million, with organic growth of 10.7%, generating a profit margin of 4.8% [41] Market Data and Key Metrics Changes - The total pipeline of sales opportunities at December 31st was $41.4 billion, down from $54.3 billion reported at September 30th, with approximately 57% representing new work [25] - The company signed awards totaling $2.1 billion in Q1 FY2025, with a book-to-bill ratio of approximately 1.5 times [22] Company Strategy and Development Direction - Maximus is focused on being a value-added partner to government, leveraging its core business tied to established entitlement programs with bipartisan support [12] - The company is investing in technology modernization and AI capabilities to enhance service delivery and operational efficiency [28][29] - The strategic focus includes maintaining a balanced mix of federal and state opportunities while ensuring a diversified portfolio [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of its core business despite potential uncertainties in the policy environment [14] - The company anticipates continued deal flow and is cautiously optimistic about its pipeline, with less than 2% of FY2025 revenue coming from anticipated pipeline conversions [82] - Management raised full-year guidance for revenue to $5.2 billion to $5.35 billion, reflecting strong Q1 results and the impact of the divestiture [47] Other Important Information - The Board of Directors authorized an increase of $200 million to the share repurchase program, with approximately $290 million deployed through share repurchases since the fiscal year start [11][34] - The company ended Q1 with total debt of $1.40 billion, with a net debt to EBITDA ratio increasing to 1.8 times [45] Q&A Session Summary Question: Discussion on Q1 strength and potential pull forward - Management indicated that Q1 outperformance was not a pull forward but rather a reflection of strong execution and favorable conditions [60][64] Question: Confidence in guidance and thought process - Management remains confident in guidance, emphasizing careful forecasting and visibility into new business assumptions [66][68] Question: Impact of new administration on smaller portfolio segments - Management noted that while there are small pockets of risk, core functions are expected to continue, and deal flow remains stable [70][74] Question: Medicaid program dynamics and enrollment trends - Management highlighted a significant increase in enrollment activity as individuals transition from Medicaid to state-based exchanges, indicating a fluid policy environment [101][104] Question: Outlook for veteran assessment business - Management expects stability in volume for veteran assessments, with ongoing investments in technology to improve service delivery [111][115] Question: Free cash flow rhythm and considerations - Management indicated that Q1 cash flow was impacted by timing of payments, but expects strong cash flows in the remaining quarters [120][126]

Fiscal 2025 First Quarter Earnings Call Bruce Caswell President & Chief Executive Officer February 6, 2025 1 | Maximus: Q1 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 may contain non-GAAP financial information. Management uses this informa ...

Core Insights - Maximus reported $1.4 billion in revenue for the quarter ended December 2024, a year-over-year increase of 5.7% [1] - The company's EPS for the same period was $1.61, up from $1.34 a year ago, indicating a positive trend in earnings [1] - Revenue exceeded the Zacks Consensus Estimate of $1.31 billion by 7.42%, and EPS surpassed the consensus estimate of $1.39 by 15.83% [1] Revenue Breakdown - U.S. Federal Services revenue was $780.66 million, exceeding the average estimate of $685.54 million, with a year-over-year change of +15.3% [4] - U.S. Services revenue was $452.25 million, below the average estimate of $478.82 million, reflecting a year-over-year decline of -7.7% [4] - Revenue from outside the U.S. was $169.77 million, surpassing the estimated $141.43 million, with a year-over-year increase of +6% [4] Stock Performance - Maximus shares have returned -2.2% over the past month, while the Zacks S&P 500 composite increased by +2.1% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Revenue and Profitability - Revenue for the three months ended December 31, 2024, was $1,402,675, a 5.7% increase from $1,327,041 in the same period of 2023[101] - Gross profit for the same period was $301,557, reflecting a 0.5% increase from $300,054 year-over-year, with a gross profit percentage of 21.5% compared to 22.6%[101] - Operating income decreased to $86,787, resulting in an operating margin of 6.2%, down from 8.1% in the prior year[101] - U.S. Federal Services Segment revenue increased by 15.3% to $780,655, with an operating margin of 12.7%[111] - U.S. Services Segment revenue decreased by 7.7% to $452,250, with an operating margin of 9.0%[116] - Revenue for the three months ended December 31, 2024, was $169.77 million, representing a 6.0% increase from $160.12 million in the same period of 2023[120] - Gross profit increased to $33.24 million, a 32.8% increase from $25.03 million year-over-year, with a gross profit percentage of 19.6% compared to 15.6%[120] - Operating income improved to $8.12 million from a loss of $0.11 million in the prior year, resulting in an operating margin of 4.8%[120] - Adjusted EBITDA for the same period was $156,618,000, representing an increase from $140,288,000 year-over-year, with an adjusted EBITDA margin of 11.2% compared to 10.6%[148] - Net income for the three months ended December 31, 2024, was $41,196,000, down from $64,148,000 in 2023[148] - Diluted earnings per share decreased to $0.69 from $1.04 year-over-year, while adjusted diluted earnings per share rose to $1.61 from $1.34[148] Tax and Expenses - The effective tax rate increased to 40.3% from 25.0% due to the divestiture of businesses in Australia and Korea[109] - SG&A expenses included $38.3 million in divestiture-related charges from the sale of businesses in the Outside the U.S. Segment[105] Cash Flow and Debt - As of December 31, 2024, the company had $72.7 million in cash and cash equivalents, with a total debt of $1.40 billion[124][133] - The effective cash interest rate was reported at 5.5%, with various term loans having interest rates ranging from 3.81% to 6.36%[126][127] - The company reported a net cash outflow from operating activities of $79.99 million for the three months ended December 31, 2024, compared to a cash inflow of $21.61 million in the same period of 2023[128][129] - Free cash flow for the three months ended December 31, 2024, was $(102.99) million, a significant decrease from $(0.64) million in the prior year[141] Segment Performance and Divestitures - The Outside the U.S. Segment has divested businesses in Australia and Korea, impacting overall segment performance[119] - The organic growth effect contributed $17.11 million (10.7% increase) to revenue, while the disposal of businesses negatively impacted revenue by $10.90 million (6.8% decrease)[121] - The anticipated full-year operating margin for the segment is expected to range between 3% and 5% for fiscal year 2025[123] Shareholder Actions - The company has acquired 3.1 million common shares at a cost of $236.7 million during the first quarter of fiscal year 2025, with an additional 0.7 million shares acquired at a cost of $52.9 million[132] Financial Management and Risk - The company incurred losses on sales of businesses for the three months ended December 31, 2024, and 2023, impacting financial performance[146] - The company regularly refreshes fixed assets and technology to sustain cash flows from operations, with free cash flow provided to complement the statement of cash flows[148] - The company uses derivative instruments to manage selected interest rate exposures, indicating exposure to financial risks such as interest rate changes and foreign currency exchange rates[149] - The adjusted net income excluding amortization of intangible assets and divestiture-related charges was $96,514,000 for the three months ended December 31, 2024[148] - The company calculates Days Sales Outstanding (DSO) to evaluate efficiency in converting revenue into cash receipts[148] New Initiatives - The company launched Maximus Total Experience Management (TXM), an integrated solution aimed at enhancing government service delivery[98]

Core Viewpoint - Maximus reported quarterly earnings of $1.61 per share, exceeding the Zacks Consensus Estimate of $1.39 per share, and showing an increase from $1.34 per share a year ago, representing an earnings surprise of 15.83% [1][2] Financial Performance - The company achieved revenues of $1.4 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 7.42%, compared to $1.33 billion in the same quarter last year [2] - Over the last four quarters, Maximus has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Maximus shares have increased approximately 1.6% since the beginning of the year, while the S&P 500 has gained 3.1% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.48 on revenues of $1.32 billion, and for the current fiscal year, it is $5.95 on revenues of $5.32 billion [7] - The trend of estimate revisions for Maximus is favorable ahead of the earnings release [6] Industry Context - The Government Services industry, to which Maximus belongs, is currently ranked in the top 2% of over 250 Zacks industries, suggesting strong performance potential [8]

FOR IMMEDIATE RELEASE CONTACT: James Francis, VP - IR Jessica Batt, VP - IR & ESG Date: February 6, 2025 IR@maximus.com Maximus Reports Fiscal Year 2025 First Quarter Results Raises FY25 Earnings Guidance While Securing Favorable Outcomes on Key Rebids (Tysons, Va. - February 6, 2025) - Maximus (NYSE: MMS), a leading provider of government services worldwide, reported financial results for the three months ending December 31, 2024. Highlights for the first quarter of fiscal year 2025 include: "Along with st ...