Group 1 - The company Maximus has announced an expansion of its common stock repurchase program, now authorized to buy back up to a total of $400 million in shares [1] - This new authorization includes the remaining $32.7 million from its previous repurchase program [1]

Core Viewpoint - Maximus has authorized an expansion of its stock purchase program to a total of $400 million, indicating confidence in its financial position and commitment to returning value to shareholders [1] Company Summary - The new stock purchase program includes approximately $32.7 million of remaining availability from the existing program, suggesting a strategic approach to capital allocation [1] - Maximus plans to purchase shares opportunistically at prevailing market prices, utilizing methods such as open market transactions and 10b5-1 plans, which allows for systematic buying [1]

Financial Data and Key Metrics Changes - Group normalized revenue increased by 3% to AUD 541.6 million, with a notable 8% growth in the second half compared to the first half [4][13] - Normalized net profit after tax (NPATA) was AUD 103.2 million, down 4.1% year-on-year, while statutory net profit after tax rose by 6.4% to AUD 95.8 million [14][26] - The cost-to-income ratio improved by 230 basis points in the second half compared to the first half, with a full-year ratio of approximately 58.7% [5][42] Business Line Data and Key Metrics Changes - Group Remuneration Services (GRS) revenue was slightly up at AUD 293.4 million, with novated lease sales growing by 4.1% [16] - Asset Management Services (AMS) revenue increased by 4.3% to AUD 185.5 million, with written down value rising by 6.4% [21] - Participant numbers in the PSS segment grew by 10.5%, with revenue up 11.5% to AUD 56.5 million [22] Market Data and Key Metrics Changes - The EV percentage of new novated sales peaked at 56% in Q3 before stabilizing around 45% in Q4 [17] - The number of employees in the SME and corporate segments increased by 15.8%, contributing to 29% of total novated sales in FY 2025 [19] - NDIS participant growth was strong at 11.8%, with the government focusing on managing cost growth [24] Company Strategy and Development Direction - The company aims to be a trusted partner providing simple solutions across its segments, focusing on customer experience, technology enablement, and process simplification [7][10] - Key investment areas include digital and service excellence, data-driven insights, AI and automation, process simplification, and expanding the partner ecosystem [9][10] - The company is committed to sustainability, supporting the transition to a low carbon economy through initiatives like the On the Go EV charge card [14][15] Management's Comments on Operating Environment and Future Outlook - The company enters FY 2026 with strong business momentum and expects stable auto supply and used car values [33] - Cash rates are anticipated to decrease as inflation moderates, which should support customer confidence [34] - The company expects continued growth from new client wins and buoyant novated orders, alongside benefits from strategic investments [34] Other Important Information - The company invested AUD 20.8 million in growth and productivity, with AUD 6.1 million classified as nonrecurring costs [13][26] - The company maintained a strong balance sheet with no debt maturities due in the next twelve months, following a successful AUD 300 million private placement [31] Q&A Session Summary Question: Can you unpack the drivers for the improvement in novated yield? - The improvement was largely due to a higher proportion of plug-in hybrids at higher price points and a larger proportion of new vehicles being financed [37] Question: Is the 4.7% of novated leases in Olli incremental business? - Most of the new customers acquired through Olli are in employee brackets of 20 to 200, which was not previously targeted [40] Question: What should be expected for the cost-to-income ratio in FY 2026? - A fair assessment for FY 2026 would be around the 57% mark, with expectations for further benefits from productivity investments [42][44] Question: Will onboard finance be a positive contributor to NPATA for FY 2026? - It is expected to be neutral for FY 2026 but positive thereafter [45][46] Question: How will the removal of setup fees impact margins in PSS? - There will be a downward movement in margins in 2026 due to the removal of setup fees, but automation investments are expected to improve margins over time [52] Question: What is the outlook for GRS contract renewals? - Approximately 10% of the portfolio is up for renewal in the next eighteen months, with a strong pipeline for new opportunities [83]

Financial Data and Key Metrics Changes - Group normalized revenue increased by 3% to AUD 541.6 million, with normalized unpata at AUD 103.2 million, down 4.1% year-on-year [4][14][26] - Statutory net profit after tax rose by 6.4% to AUD 95.8 million, while normalized return on capital employed increased to 63.4% [6][14][26] - The cost to income ratio improved by 230 basis points in the second half compared to the first half, with a full-year ratio of approximately 58.7% [5][44][26] Business Line Data and Key Metrics Changes - Group Remuneration Services (GRS) segment saw normalized revenue slightly up to AUD 293.4 million, with novated lease sales growing by 4.1% [16][17] - Asset Management Services (AMS) revenue increased by 4.3% to AUD 185.5 million, with written down value up 6.4% [22] - Participant numbers in the Plan and Support Services (PSS) segment grew by 10.5% organically, with total customers increasing by 21.5% to over 42,600 [23][24] Market Data and Key Metrics Changes - The EV percentage of new novated sales reached 56% in Q3 before returning to around 45% in Q4, consistent with previous periods [18][19] - Demand and momentum remained strong, with order growth of 11.3% in June and July compared to the same period last year [18] - The company reported a strong customer growth across all segments, particularly in the SME segment [4][20] Company Strategy and Development Direction - The company aims to be a trusted partner providing solutions that simplify processes, focusing on customer experience, technology enablement, and broadening its ecosystem of partners [7][10] - Investments in digital solutions, AI, and automation are central to enhancing customer experience and operational productivity [8][10] - The Simply Stronger program has been completed, with expectations of improved customer experiences and productivity gains [13][29] Management's Comments on Operating Environment and Future Outlook - The company expects auto supply and used car values to remain stable, with continued growth in new client wins and NDIS participant growth supporting customer growth across all segments [33][35] - Management anticipates benefits from strategic investments and the removal of non-recurring costs in FY 2026 [35][36] - The company remains optimistic about growth opportunities despite the removal of setup fees impacting margins in the PSS segment [56][72] Other Important Information - The company executed a successful AUD 300 million private placement, enhancing investor diversity and lowering funding costs [6][21] - The Onboard Finance segment's normalization concluded in FY 2025, with expectations of neutral contributions in FY 2026 [47][52] - The company maintained a strong balance sheet with no maturities due in the next twelve months, providing flexibility for growth [31] Q&A Session Summary Question: Can you unpack the drivers for the improvement in novated yield? - The improvement was largely due to a higher proportion of plug-in hybrids at higher price points and improvements in insurance related to residual risk [39][40] Question: Is the 4.7% of novated leases through Olli incremental business? - Most of the new customers acquired through Olli are in employee brackets of 20 to 200, which was not previously targeted [41][42] Question: What should be expected for the cost to income ratio in FY 2026? - A fair assessment for FY 2026 would be around the 57% mark, with further benefits expected from productivity investments [44][46] Question: Will onboard finance be a positive contributor to NPATA for FY 2026? - It is expected to be neutral for FY 2026, with positive contributions anticipated thereafter [47][48] Question: How do you view margin within PSS with the new acquisition? - There will be a bit of downward movement on the margin in 2026, but automation and process improvements are expected to help recover margins over time [55][56] Question: What is the outlook for GRS contract renewals? - Approximately 10% of the portfolio is up for renewal over the next eighteen months, with a strong pipeline for new opportunities [86][87]

For personal use only Disclaimer and important information Disclaimer and important notice This presentation has been prepared by McMillan Shakespeare Limited ABN 74 107 233 983 ("MMS"). It contains summary information about MMS and its subsidiaries and their activities current as at the date of this presentation. The presentation contains selected information and does not purport to be all inclusive or to contain information that may be relevant to a prospective investor. No reliance may be placed on MMS f ...

Core Viewpoint - Maximus, Inc. (MMS) shows potential as a stock pick due to a recent "golden cross" event, indicating a bullish trend reversal [1][4]. Technical Analysis - A "golden cross" occurs when a short-term moving average (50-day) crosses above a long-term moving average (200-day), suggesting a potential bullish breakout [2]. - The successful formation of a golden cross involves three stages: a price bottom, the crossover of moving averages, and the maintenance of upward momentum [3]. Stock Performance - MMS shares have increased by 20.4% over the past four weeks, indicating strong upward movement [4]. - The company currently holds a 1 (Strong Buy) rating on the Zacks Rank, suggesting further breakout potential [4]. Earnings Outlook - There have been no cuts to earnings estimates for the current quarter, with one revision higher in the past 60 days, indicating a positive earnings outlook [4]. - The Zacks Consensus Estimate for MMS has also increased, reinforcing the bullish sentiment [4][6]. Investment Consideration - The combination of positive earnings estimate revisions and the recent technical breakout positions MMS as a stock to watch for potential gains in the near future [6].

Core Insights - Maximus, Inc. (MMS) reported strong third-quarter fiscal 2025 results, with both earnings and revenues exceeding the Zacks Consensus Estimate, leading to a 4% stock rally post-earnings release [1][3]. Financial Performance - Adjusted earnings per share (EPS) reached $2.16, surpassing the Zacks Consensus Estimate by 55.4% and increasing 24.1% year over year [3][7]. - Revenues totaled $1.35 billion, exceeding the consensus mark by 4.5% and rising 2.6% from the previous year [3][7]. - Operating income was $165.7 million, reflecting a 16.9% year-over-year increase, with an adjusted operating income margin of 12.3%, up 151 basis points year over year [8]. Guidance Update - Maximus raised its fiscal year 2025 revenue guidance to a range of $5.38 billion to $5.48 billion, up from the previous expectation of $5.25 billion to $5.34 billion [4]. - Adjusted EPS guidance was also increased to a range of $7.35 to $7.55, compared to the prior range of $6.30 to $6.60 [4][10]. - The company anticipates an adjusted EBITDA margin of approximately 13%, an increase from the earlier expectation of 11.7% [10]. Segment Performance - The U.S. Federal Services segment reported revenues of $761.2 million, an 11.4% increase year over year, exceeding estimates [5][7]. - Revenues from the Outside the U.S. segment decreased by 6.9% year over year to $147.4 million, missing expectations [5]. - The U.S. Services segment's revenues fell 6.9% year over year to $439.8 million, slightly below estimates [5]. Sales and Pipeline - Year-to-date signed contract awards totaled $3.37 billion, with pending contracts amounting to $1.44 billion [6]. - The sales pipeline stood at $44.7 billion, including $3.05 billion in pending proposals and $1.20 billion in proposals in preparation [6]. Balance Sheet and Cash Flow - Maximus ended the quarter with cash and cash equivalents of $59.8 million, down from $73 million in the previous quarter [9]. - The company generated $182.7 million in cash from operations, with a free cash outflow of $198.2 million [9].

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section identifies forward-looking statements by specific terminology and outlines risks that could cause actual results to differ materially from projections - Forward-looking statements are identified by words such as 'anticipate,' 'intend,' 'plan,' 'goal,' 'seek,' 'opportunity,' 'could,' 'potential,' 'believe,' 'project,' 'estimate,' 'expect,' 'continue,' 'forecast,' 'strategy,' 'future,' 'likely,' 'may,' 'should,' 'will,' and similar references to future periods[8](index=8&type=chunk) - Important factors that could cause actual results to differ materially include a failure to meet performance requirements, ability to compete and price contracts, effects of legislative or government budgetary changes, impact of U.S. government actions, ability to manage growth and integrate acquired businesses, outcomes of reviews or audits, ability to manage debt, cybersecurity incidents, ability to attract and retain personnel, and effects of emerging technologies like AI and ML[9](index=9&type=chunk) [Part I - Financial Information](index=6&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Maximus's unaudited consolidated financial statements and detailed notes on accounting policies, segments, and other financial items [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations ($) | Metric | For the Three Months Ended June 30, 2025 ($) | For the Three Months Ended June 30, 2024 ($) | For the Nine Months Ended June 30, 2025 ($) | For the Nine Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,348.4 million | $1,314.9 million | $4,112.9 million | $3,990.3 million | | Cost of revenue | $988.9 million | $982.6 million | $3,113.0 million | $3,040.4 million | | Gross profit | $359.5 million | $332.3 million | $999.9 million | $949.9 million | | Operating income | $165.7 million | $141.7 million | $405.4 million | $376.7 million | | Net income | $106.0 million | $89.8 million | $243.7 million | $234.4 million | | Basic EPS | $1.87 | $1.47 | $4.22 | $3.83 | | Diluted EPS | $1.86 | $1.46 | $4.20 | $3.81 | | Dividends declared per share | $0.30 | $0.30 | $0.90 | $0.90 | - Revenue increased by **2.5%** for the three months ended June 30, 2025, and by **3.1%** for the nine months ended June 30, 2025, compared to the respective prior periods[15](index=15&type=chunk) - Net income grew by **18.1%** for the three months ended June 30, 2025, and by **4.0%** for the nine months ended June 30, 2025, year-over-year[15](index=15&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income ($) | Metric | For the Three Months Ended June 30, 2025 ($) | For the Three Months Ended June 30, 2024 ($) | For the Nine Months Ended June 30, 2025 ($) | For the Nine Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Net income | $106.0 million | $89.8 million | $243.7 million | $234.4 million | | Foreign currency translation adjustments | $7.3 million | $0.4 million | $21.5 million | $4.1 million | | Net losses on cash flow hedges, net of tax | $(1.6) million | $(1.2) million | $(1.7) million | $(7.4) million | | Other comprehensive income/(loss) | $5.7 million | $(0.8) million | $19.8 million | $(3.3) million | | Comprehensive income | $111.7 million | $89.0 million | $263.6 million | $231.1 million | - Comprehensive income increased by **25.6%** for the three months and **14.0%** for the nine months ended June 30, 2025, compared to the prior year periods[18](index=18&type=chunk) - Foreign currency translation adjustments significantly contributed to other comprehensive income, increasing from **$0.4 million** to **$7.3 million** for the three months, and from **$4.1 million** to **$21.5 million** for the nine months ended June 30, 2025[18](index=18&type=chunk) [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets ($) | Metric | June 30, 2025 ($) | September 30, 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $59.8 million | $183.1 million | $(123.3) million | | Accounts receivable, net | $1.42 billion | $879.5 million | $542.8 million | | Total current assets | $1.61 billion | $1.20 billion | $404.5 million | | Total assets | $4.46 billion | $4.13 billion | $330.8 million | | Total current liabilities | $706.2 million | $807.5 million | $(101.4) million | | Long-term debt, non-current portion | $1.61 billion | $1.09 billion | $517.0 million | | Total liabilities | $2.69 billion | $2.29 billion | $400.6 million | | Total shareholders' equity | $1.77 billion | $1.84 billion | $(69.8) million | - Accounts receivable, net, increased significantly by **$542.8 million** from September 30, 2024, to June 30, 2025, indicating potential delays in cash collections[21](index=21&type=chunk) - Long-term debt, non-current portion, increased by **$517.0 million**, contributing to a rise in total liabilities[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows ($) | Metric | For the Nine Months Ended June 30, 2025 ($) | For the Nine Months Ended June 30, 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | $(220.0) million | $351.4 million | $(571.4) million | | Net cash used in investing activities | $(57.1) million | $(97.2) million | $40.1 million | | Net cash provided by/(used in) financing activities | $146.8 million | $(229.8) million | $376.6 million | | Net change in cash, cash equivalents, and restricted cash | $(130.4) million | $25.7 million | $(156.1) million | - The company reported net cash used in operating activities of **$220.0 million** for the nine months ended June 30, 2025, a significant decrease from **$351.4 million** provided in the prior year, primarily due to delays in cash collections[23](index=23&type=chunk) - Net cash provided by financing activities increased to **$146.8 million**, compared to net cash used of **$229.8 million** in the prior year, driven by increased borrowings and common stock repurchases[23](index=23&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Consolidated Statements of Changes in Shareholders' Equity ($) | Metric | Balance at September 30, 2024 ($) | Balance as of June 30, 2025 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Common Stock Amount | $598.3 million | $627.5 million | $29.2 million | | Accumulated Other Comprehensive Loss | $(32.5) million | $(12.6) million | $19.8 million | | Retained Earnings | $1,277.0 million | $1,158.2 million | $(118.8) million | | Total Equity | $1,842.8 million | $1,773.0 million | $(69.8) million | - Total shareholders' equity decreased by **$69.8 million** from September 30, 2024, to June 30, 2025, primarily due to significant purchases of Maximus common stock (**$306.4 million** for the nine months ended June 30, 2025) and cash dividends paid[25](index=25&type=chunk)[82](index=82&type=chunk) - Accumulated other comprehensive loss improved by **$19.8 million**, driven by foreign currency translation adjustments and cash flow hedge reclassifications[25](index=25&type=chunk)[78](index=78&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide essential details and context for the consolidated financial statements, covering accounting principles, segment performance, and financial disclosures [1. Organization](index=12&type=section&id=1.%20Organization) - Maximus, a Virginia corporation established in 1975, is celebrating its 50th anniversary and serves as a leading strategic partner to government agencies, aiming to improve public service delivery[30](index=30&type=chunk) [2. Significant Accounting Policies](index=12&type=section&id=2.%20Significant%20Accounting%20Policies) - The consolidated financial statements are prepared in accordance with U.S. GAAP and SEC regulations, with all intercompany balances and transactions eliminated[31](index=31&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions, particularly concerning revenue recognition, cost estimation, realizability of long-lived assets, income taxes, and contingencies[34](index=34&type=chunk) - The capitalized software balance includes **$41.3 million** related to technology for new services within the U.S. Services Segment, which is continuously monitored for recoverability[35](index=35&type=chunk) [3. Business Segments](index=13&type=section&id=3.%20Business%20Segments) - Maximus operates through three business segments: U.S. Federal Services, U.S. Services, and Outside the U.S., each delivering distinct solutions to government clients[37](index=37&type=chunk) Revenue and Operating Income by Segment (For the Three Months Ended June 30, 2025 vs. 2024) ($) | Segment | Revenue 2025 ($) | Revenue 2024 ($) | Operating Income 2025 ($) | Operating Income 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | U.S. Federal Services | $761.2 million | $683.3 million | $137.9 million | $106.1 million | | U.S. Services | $439.8 million | $472.3 million | $45.0 million | $61.5 million | | Outside the U.S. | $147.4 million | $159.3 million | $5.9 million | $(1.4) million | Revenue and Operating Income by Segment (For the Nine Months Ended June 30, 2025 vs. 2024) ($) | Segment | Revenue 2025 ($) | Revenue 2024 ($) | Operating Income 2025 ($) | Operating Income 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | U.S. Federal Services | $2.32 billion | $2.06 billion | $355.9 million | $258.4 million | | U.S. Services | $1.33 billion | $1.45 billion | $139.6 million | $195.5 million | | Outside the U.S. | $458.7 million | $479.9 million | $18.9 million | $(0.9) million | [4. Revenue Recognition](index=15&type=section&id=4.%20Revenue%20Recognition) - Revenue is recognized over time as performance obligations are satisfied, typically for a series of distinct services where the customer receives benefits concurrently[46](index=46&type=chunk) Revenue by Service Type (For the Nine Months Ended June 30, 2025 vs. 2024) ($) | Service Type | 2025 ($) | % of Total 2025 | 2024 ($) | % of Total 2024 | | :--- | :--- | :--- | :--- | :--- | | Program Operations | $2.05 billion | 49.7% | $1.96 billion | 49.0% | | Clinical Services | $1.54 billion | 37.3% | $1.40 billion | 35.1% | | Employment & Other | $274.5 million | 6.7% | $346.4 million | 8.7% | | Technology Solutions | $256.8 million | 6.2% | $285.8 million | 7.2% | | Total revenue | $4.11 billion | 100% | $3.99 billion | 100% | Revenue by Customer Type (For the Nine Months Ended June 30, 2025 vs. 2024) ($) | Customer Type | 2025 ($) | % of Total 2025 | 2024 ($) | % of Total 2024 | | :--- | :--- | :--- | :--- | :--- | | U.S. federal government agencies | $2.27 billion | 55.1% | $2.02 billion | 50.5% | | Total U.S. state government agencies | $1.34 billion | 32.5% | $1.44 billion | 36.1% | | International government agencies | $451.6 million | 11.0% | $469.0 million | 11.8% | | Other | $58.6 million | 1.4% | $65.2 million | 1.6% | | Total revenue | $4.11 billion | 100% | $3.99 billion | 100% | - As of June 30, 2025, remaining performance obligations totaled approximately **$330 million**, with **63%** expected to be settled within the next 12 months[59](index=59&type=chunk) [5. Earnings Per Share](index=17&type=section&id=5.%20Earnings%20Per%20Share) Weighted Average Number of Shares - Earnings Per Share (in thousands) | Metric | For the Three Months Ended June 30, 2025 | For the Three Months Ended June 30, 2024 | For the Nine Months Ended June 30, 2025 | For the Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic weighted average shares outstanding | 56,683 | 61,079 | 57,776 | 61,233 | | Dilutive effect of unvested RSUs and PSUs | 301 | 302 | 324 | 262 | | Denominator for diluted earnings per share | 56,984 | 61,381 | 58,100 | 61,495 | - The diluted earnings per share calculation for the nine months ended June 30, 2025, excluded approximately **142,000** unvested anti-dilutive restricted stock units[60](index=60&type=chunk) [6. Divestitures](index=17&type=section&id=6.%20Divestitures) - In December 2024, Maximus sold its businesses in Australia and Korea, resulting in divestiture-related charges of **$39.3 million**, which included **$21.3 million** of previously unrealized foreign exchange losses[62](index=62&type=chunk) - An indemnification to the buyer for the Australia and Korea divestiture is estimated at a fair value of **$11.0 million**[62](index=62&type=chunk) - In November 2023, the company sold its businesses in Italy and Singapore, and its employment services business in Canada, recording a loss of **$1.0 million**[63](index=63&type=chunk) [7. Debt and Derivatives](index=18&type=section&id=7.%20Debt%20and%20Derivatives) Details of Debt ($) | Debt Type | June 30, 2025 ($) | September 30, 2024 ($) | | :--- | :--- | :--- | | Term Loan A (TLA) | $864.4 million | $641.9 million | | Term Loan B (TLB) | $495.0 million | $498.8 million | | Revolver | $310.0 million | — | | Subsidiary loan agreements | $1.2 million | $5.2 million | | Total debt principal | $1.67 billion | $1.15 billion | | Long-term debt | $1.61 billion | $1.09 billion | - On March 20, 2025, the company amended its credit agreement, increasing the Term Loan A facility by **$250 million** for general corporate purposes[64](index=64&type=chunk) - Maximus utilizes interest rate swaps as cash flow hedges to reduce interest rate risk, with a total notional amount of **$900 million** as of June 30, 2025[67](index=67&type=chunk) - As of June 30, 2025, the effective interest rate, including original issuance costs and discount rate, was **5.5%**[68](index=68&type=chunk) [8. Fair Value Measurements](index=19&type=section&id=8.%20Fair%20Value%20Measurements) Fair Value Measurements as of June 30, 2025 ($) | Item | Level 1 ($) | Level 2 ($) | Level 3 ($) | Balance ($) | | :--- | :--- | :--- | :--- | :--- | | Deferred compensation assets - Rabbi Trust | $38.1 million | — | — | $38.1 million | | Interest rate swap - $375 million notional value (asset) | — | $8.0 million | — | $8.0 million | | Interest rate swap - $525 million notional value (liability) | — | $1.1 million | — | $1.1 million | | Indemnification liabilities | — | — | $11.0 million | $11.0 million | - Accumulated other comprehensive loss improved from **$(32.5) million** at September 30, 2024, to **$(12.6) million** at June 30, 2025, primarily due to foreign currency translation adjustments and reclassifications from derivatives[78](index=78&type=chunk) [9. Equity](index=20&type=section&id=9.%20Equity) - Maximus grants Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) under its 2021 Omnibus Incentive Plan, with vesting periods ranging from one to four years for RSUs and three years for PSUs based on performance[79](index=79&type=chunk) - During the nine months ended June 30, 2025, approximately **364 thousand** RSUs and **154 thousand** PSUs were issued[80](index=80&type=chunk) - The Board of Directors authorized an increase to the stock purchase program, allowing for up to **$400 million** in common stock repurchases, with **$65.8 million** remaining available as of June 30, 2025[81](index=81&type=chunk)[82](index=82&type=chunk) - The company purchased approximately **4.1 million** common shares at a cost of **$309.5 million** during the nine months ended June 30, 2025[82](index=82&type=chunk) [10. Other Items](index=21&type=section&id=10.%20Other%20Items) Cash, Cash Equivalents, and Restricted Cash ($) | Metric | June 30, 2025 ($) | September 30, 2024 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $59.8 million | $183.1 million | | Restricted cash | $45.6 million | $52.6 million | | Total | $105.4 million | $235.8 million | Accounts Receivable, Net ($) | Metric | June 30, 2025 ($) | September 30, 2024 ($) | | :--- | :--- | :--- | | Billed and billable receivables | $1.03 billion | $734.8 million | | Unbilled receivables | $401.5 million | $149.5 million | | Allowance for credit losses | $(9.5) million | $(4.8) million | | Accounts receivable, net | $1.42 billion | $879.5 million | - The company has a Receivables Purchase Agreement (RPA) with Wells Fargo Bank N.A., allowing the sale of up to **$200.0 million** in U.S.-originated accounts receivable[85](index=85&type=chunk) - For the nine months ended June 30, 2025, **$574.2 million** in gross fair value of receivables were transferred under the RPA, generating **$570.7 million** in cash[87](index=87&type=chunk) [11. Commitments and Contingencies](index=22&type=section&id=11.%20Commitments%20and%20Contingencies) - Maximus is subject to audits, investigations, and reviews related to government contracts, which could lead to penalties, fines, suspension, or debarment[88](index=88&type=chunk) - Multiple class action lawsuits and individual actions have been filed against the company following the May 2023 MOVEit cybersecurity incident, alleging negligence and compromise of personal information[90](index=90&type=chunk)[91](index=91&type=chunk)[95](index=95&type=chunk) - These federal cases have been centralized in a Multidistrict Litigation (MDL) in the District of Massachusetts, and the company has accrued an amount within a range of possible outcomes for these matters[92](index=92&type=chunk)[96](index=96&type=chunk) [12. Subsequent Event](index=23&type=section&id=12.%20Subsequent%20Event) - On July 5, 2025, the Board of Directors declared a quarterly cash dividend of **$0.30** per share, payable on August 31, 2025, with an anticipated cash payment of approximately **$16.9 million**[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Maximus's business, financial condition, and operational results, including strategic plans and liquidity [Business Overview](index=24&type=section&id=Business%20Overview) - Maximus's mission is 'Moving People Forward' by partnering with government agencies to deliver public services, including health insurance eligibility, clinical services, and technology services[99](index=99&type=chunk) - The company's strategic plan, introduced in fiscal year 2022, focuses on three pillars: Customer Services, Digitally Enabled (e.g., Maximus Total Experience Management - TXM), Future of Health, and Advanced Technologies for Modernization[100](index=100&type=chunk)[101](index=101&type=chunk) - The strategy also emphasizes optimizing processes, simplifying structure under the 'Maximus Forward' initiative, and prioritizing employee attraction, retention, and development[100](index=100&type=chunk) [Financial Overview](index=25&type=section&id=Financial%20Overview) - Maximus experienced short-term delays in cash flow during the second quarter of the current fiscal year due to administrative delays in billing and contract approval with customers in the U.S. Federal and U.S. Services Segments[102](index=102&type=chunk) - These delays resulted in a significant increase in receivables balances and necessitated additional borrowings under the revolving credit facility, leading to higher interest expense[102](index=102&type=chunk) - Significant progress in resolving these delays was made in July 2025, with a return to normal receivables anticipated by the end of the fourth quarter of fiscal year 2025[102](index=102&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section provides a consolidated overview of financial performance, detailing revenue, profit, and segment-specific results for the period Consolidated Results of Operations (For the Nine Months Ended June 30, 2025 vs. 2024) ($) | Metric | 2025 ($) | 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $4.11 billion | $3.99 billion | +3.1% | | Gross profit | $999.9 million | $949.9 million | +5.3% | | Operating income | $405.4 million | $376.7 million | +7.6% | | Net income | $243.7 million | $234.4 million | +4.0% | | Diluted EPS | $4.20 | $3.81 | +10.2% | - Selling, general, and administrative expenses for the nine months ended June 30, 2025, include **$39.3 million** in divestiture-related charges from the sale of businesses in the Outside the U.S. Segment[111](index=111&type=chunk) - The effective income tax rate for the nine months ended June 30, 2025, increased to **29.2%** from **25.3%** in the prior year, primarily due to the disposition of businesses in Australia and Korea[115](index=115&type=chunk) [U.S. Federal Services Segment](index=27&type=section&id=U.S.%20Federal%20Services%20Segment) U.S. Federal Services Segment - Financial Results ($) | Metric | For the Nine Months Ended June 30, 2025 ($) | For the Nine Months Ended June 30, 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $2.32 billion | $2.06 billion | +12.5% | | Operating income | $355.9 million | $258.4 million | +37.7% | | Gross profit percentage | 25.9% | 24.5% | +1.4 pp | | Operating margin percentage | 15.3% | 12.5% | +2.8 pp | - Revenue growth was driven by clinical programs, including medical assessments, increased volumes from the Honoring our PACT Act, and support provided to the Federal Emergency Management Agency (FEMA)[119](index=119&type=chunk) - The segment anticipates a full-year operating margin of approximately **15%** in fiscal year 2025[120](index=120&type=chunk) [U.S. Services Segment](index=28&type=section&id=U.S.%20Services%20Segment) U.S. Services Segment - Financial Results ($) | Metric | For the Nine Months Ended June 30, 2025 ($) | For the Nine Months Ended June 30, 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $1.33 billion | $1.45 billion | -7.9% | | Operating income | $139.6 million | $195.5 million | -28.6% | | Gross profit percentage | 23.4% | 25.5% | -2.1 pp | | Operating margin percentage | 10.5% | 13.5% | -3.0 pp | - The decrease in revenue and operating income is attributed to the return to normal activity levels after higher volumes from Medicaid redetermination activities in the first three quarters of fiscal year 2024[123](index=123&type=chunk) - The segment anticipates a full-year operating margin of approximately **10.5%** for fiscal year 2025[123](index=123&type=chunk) [Outside the U.S. Segment](index=29&type=section&id=Outside%20the%20U.S.%20Segment) Outside the U.S. Segment - Financial Results ($) | Metric | For the Nine Months Ended June 30, 2025 ($) | For the Nine Months Ended June 30, 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $458.7 million | $479.9 million | -4.4% | | Operating income/(loss) | $18.9 million | $(0.9) million | N/A (moved to profit) | | Gross profit percentage | 18.7% | 15.5% | +3.2 pp | | Operating margin percentage | 4.1% | -0.2% | +4.3 pp | - This segment transitioned from a near breakeven to profitability between fiscal years 2024 and 2025, despite a revenue decrease[127](index=127&type=chunk) - The divestiture of operations in Australia and Korea in the first quarter of fiscal year 2025 reduced revenue and costs but provided a benefit to margin[128](index=128&type=chunk) - Organic growth was achieved across the portfolio, including the Functional Assessment Services (FAS) contract in the United Kingdom[128](index=128&type=chunk) - The segment anticipates a full-year operating margin ranging between **3%** and **5%** for fiscal year 2025[129](index=129&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary liquidity sources include cash on hand (**$59.8 million** as of June 30, 2025), cash from operations, and availability under revolving credit facilities[130](index=130&type=chunk) - Net cash used in operations was **$220.0 million** for the first nine months of fiscal year 2025, a significant decrease from **$351.4 million** provided in the prior year, primarily due to delays in cash collections from large customers[135](index=135&type=chunk) - Days Sales Outstanding (DSO) increased to **96 days** at June 30, 2025, compared with **61 days** at September 30, 2024, reflecting the collection delays[138](index=138&type=chunk) - The company utilized **$306.4 million** to repurchase approximately **4.1 million** common shares during the nine months ended June 30, 2025[140](index=140&type=chunk) - Maximus was in compliance with all financial covenants of its Credit Agreement as of June 30, 2025, with a Consolidated Net Total Leverage Ratio of **2.09** and a Consolidated Net Interest Coverage Ratio of **9.22**[144](index=144&type=chunk)[148](index=148&type=chunk) Free Cash Flow (Non-GAAP) ($) | Metric | For the Nine Months Ended June 30, 2025 ($) | For the Nine Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net cash (used in)/provided by operating activities | $(220.0) million | $351.4 million | | Purchases of property and equipment and capitalized software | $(55.7) million | $(82.2) million | | Free cash flow (Non-GAAP) | $(275.7) million | $269.2 million | [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no material changes to the critical accounting policies and estimates previously disclosed in the 2024 Form 10-K during the nine months ended June 30, 2025[151](index=151&type=chunk) [Non-GAAP and Other Measures](index=34&type=section&id=Non-GAAP%20and%20Other%20Measures) - Maximus utilizes non-GAAP measures such as organic growth, Adjusted EBITDA, and free cash flow to provide users with a clearer understanding of business performance by excluding the effects of currency fluctuations, acquisitions, divestitures, and amortization of intangible assets[152](index=152&type=chunk)[154](index=154&type=chunk)[158](index=158&type=chunk) Non-GAAP Adjusted Results (For the Nine Months Ended June 30, 2025 vs. 2024) ($) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Operating income | $405.4 million | $376.7 million | | Adjusted EBITDA (Non-GAAP) | $541.3 million | $470.4 million | | Net income | $243.7 million | $234.4 million | | Adjusted net income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) | $334.0 million | $285.9 million | | Diluted earnings per share | $4.20 | $3.81 | | Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) | $5.75 | $4.65 | - Adjusted EBITDA (Non-GAAP) for the nine months ended June 30, 2025, increased to **$541.3 million** from **$470.4 million** in the prior year, and Adjusted diluted EPS (Non-GAAP) rose to **$5.75** from **$4.65**[158](index=158&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material changes to market risk disclosures, covering interest rates, foreign currency, and counterparty risk - No material changes to the company's market rate risk disclosures (interest rates, foreign currency exchange rates, and counterparty risk) occurred during the nine months ended June 30, 2025[159](index=159&type=chunk) - The company uses derivative instruments to manage selected interest rate exposures[159](index=159&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures as effective, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, ensuring timely and accurate reporting[160](index=160&type=chunk) - No changes in internal control over financial reporting that materially affected or are reasonably likely to materially affect internal control over financial reporting were identified during the last fiscal quarter[161](index=161&type=chunk) [Part II - Other Information](index=38&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section cross-references detailed disclosures on legal proceedings, commitments, and contingencies in Note 11 of the financial statements - Information on legal proceedings is cross-referenced to 'Note 11. Commitments and Contingencies' in Part I, Item 1 of this Quarterly Report[163](index=163&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to risk factors previously disclosed in the 2024 Form 10-K and 2025 Q2 Form 10-Q - No material changes to the risk factors discussed in the 2024 Form 10-K, as supplemented by the 2025 Q2 Form 10-Q, occurred during the three months ended June 30, 2025[164](index=164&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the company for the reporting period - This item is not applicable[165](index=165&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - This item is not applicable[165](index=165&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - This item is not applicable[165](index=165&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or officer adopted, modified, or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[167](index=167&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and taxonomy documents - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act), Amended and Restated By-laws, and Inline XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[168](index=168&type=chunk) [Signatures](index=40&type=section&id=Signatures) This section contains the required signatures of the principal executive and financial officers, certifying the report submission - The report was signed by Bruce L. Caswell, President and Chief Executive Officer, and David W. Mutryn, Chief Financial Officer, on August 7, 2025[173](index=173&type=chunk)

Core Insights - Maximus reported revenue of $1.35 billion for the quarter ended June 2025, reflecting a year-over-year increase of 2.6% and a surprise of +4.48% over the Zacks Consensus Estimate of $1.29 billion [1] - The earnings per share (EPS) for the quarter was $2.16, significantly higher than the $1.74 reported in the same quarter last year, resulting in an EPS surprise of +55.4% compared to the consensus estimate of $1.39 [1] Financial Performance Metrics - Revenue from U.S. Federal Services was $761.17 million, exceeding the average estimate of $723.66 million by two analysts, marking an 11.4% year-over-year increase [4] - Revenue from U.S. Services was reported at $439.82 million, slightly below the estimated $442.07 million, representing a decline of 6.9% compared to the previous year [4] - Revenue from outside the U.S. was $147.41 million, which was also below the average estimate of $151.22 million, indicating a year-over-year decrease of 7.5% [4] Stock Performance - Over the past month, Maximus shares have returned +4.1%, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Financial Data and Key Metrics Changes - For Q3 fiscal year 2025, adjusted diluted earnings per share reached $2.16, a 24% increase year over year [5] - Adjusted EBITDA grew by 15%, with Q3 revenue of $1,350,000,000 reflecting a 4.3% organic growth year over year [5][29] - The adjusted EBITDA margin was 14.7%, compared to 13.1% in the prior year period [30] Business Line Data and Key Metrics Changes - U.S. Federal Services segment revenue increased by 11.4% to $761,000,000, driven entirely by organic growth [31] - U.S. Services segment revenue decreased slightly to $440,000,000, impacted by the completion of the Medicaid unwinding exercise [33] - Outside the U.S. segment revenue decreased to $147,000,000, partially offset by organic growth of 7.3% [34] Market Data and Key Metrics Changes - The total pipeline of sales opportunities increased to $44,700,000,000 from $41,200,000,000 reported previously [24] - Approximately 63% of the current pipeline represents new work, with 67% attributable to the U.S. Federal Services segment [24] Company Strategy and Development Direction - The company is focused on leveraging recent legislation and regulatory changes to assist federal and state clients, particularly in Medicaid and SNAP [6][14] - MAXIMUS aims to expand its role in the defense sector, as evidenced by a recent $77,000,000 contract with the U.S. Air Force [18][70] - The company is investing in technology and process efficiencies to enhance service delivery and operational readiness [19][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of the U.S. Services segment over the next 18 to 24 months due to new regulatory requirements [14] - The company anticipates a strong fourth quarter of free cash flow, supported by recent improvements in accounts receivable collections [40] - Management highlighted potential headwinds from budget constraints but remains optimistic about long-term growth opportunities [46][48] Other Important Information - The company raised its guidance for fiscal year 2025, with revenue expected to range between $5,375,000,000 and $5,475,000,000 [41] - Adjusted EPS guidance increased to a range between $7.35 and $7.55 per share, reflecting year-over-year earnings growth of 22% [42] - The company achieved Cybersecurity Maturity Model Certification Level 2, enhancing its competitive position in federal contracting [20] Q&A Session Summary Question: What are the key drivers behind the opportunities from the One Big Beautiful Bill? - Management indicated that the opportunities in Medicaid and SNAP are substantial, with a focus on program eligibility and work requirements expected to positively impact growth [53][54] Question: Can you quantify the potential benefits from these opportunities? - Management suggested that the U.S. Services segment growth rate could increase from mid-single digits to high-single digits, with potential for low double-digit growth depending on the timing and size of opportunities [64][65] Question: How does MAXIMUS maintain its competitive advantage? - The company emphasized its conflict-free status and established presence in the Medicaid space, which provides a competitive barrier [66][68] Question: Will defense become a more significant focus for MAXIMUS? - Management confirmed that defense is an increasing focus, with plans to leverage core capabilities in the defense community [69][70] Question: Can you provide guidance on revenue splits by segment for Q4? - Management indicated it was too early to provide specific segment-level guidance due to various risks and opportunities present [76][78] Question: Is there potential for EPS growth even with flat revenue next year? - Management noted that reduced interest expenses could provide a tailwind to EPS, potentially improving it by $0.30 year over year [81]