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 ...

Maximus, Inc. (MMS) shares have returned 8% in the past month, and we believe that the stock has the potential to sustain its momentum in the near term.MMS carries a Zacks Rank #2 (Buy) and a VGM Score of A at present. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition.The Zacks Consensus Estimate for fiscal 2025 earnings is ...

Maximus (MMS) has been on a downward spiral lately with significant selling pressure. After declining 21.8% over the past four weeks, the stock looks well positioned for a trend reversal as it is now in oversold territory and there is strong agreement among Wall Street analysts that the company will report better earnings than they predicted earlier.How to Determine if a Stock is OversoldWe use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is ...

Financial Data and Key Metrics Changes - For fiscal year 2024, consolidated revenue increased by 8.2% to $5.31 billion, with organic revenue growth of 8.8% [30][29] - Adjusted earnings per share (EPS) for fiscal year 2024 was $6.11, a significant increase from $3.83 in the prior year [30][29] - Free cash flow exceeded $400 million, representing nearly 80% growth over the prior year [29][36] - Adjusted EBITDA margin for fiscal year 2024 was 11.6%, compared to 9.1% in the prior year [31][30] Business Line Data and Key Metrics Changes - US Federal Services segment revenue increased by 13.9% to $2.74 billion, driven by volume growth on expanded clinical programs [33] - US Services segment revenue grew by 5.5% to $1.91 billion, supported by strong performance in core Medicaid-related activities [34] - Outside the US segment revenue decreased by 4.6% to $657 million, impacted by prior year divestitures [35] Market Data and Key Metrics Changes - The total pipeline as of September 30 was $54.3 billion, up from $44.1 billion in the previous quarter [23] - Approximately 68% of the total pipeline is attributed to the US Federal Services segment [23] - The book-to-bill ratio for the trailing 12-month period was approximately 0.4 times, reflecting lower-than-normal rebid activity [22] Company Strategy and Development Direction - The company is focused on technology modernization and has secured contracts that align with this strategic priority, including a $128 million task order with the IRS [16] - The company aims for a compound annual growth rate of 5% over the next three years, consistent with mid-single-digit organic growth targets [15] - The company is committed to maintaining a disciplined approach to capital allocation, prioritizing organic investments and strategic acquisitions [38][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the transition to a new administration, emphasizing its established role as a trusted partner to governments [12][26] - The company anticipates a return to a more normal volume of rebids and procurement activity in fiscal year 2025 [22][62] - Management highlighted the importance of continuing to deliver high-quality services to over 100 million Americans, particularly in entitlement programs [55] Other Important Information - The company repurchased approximately 0.9 million shares for about $73 million during fiscal year 2024, with an additional 0.5 million shares repurchased post-year-end [37] - The company is currently involved in legal proceedings regarding the CMS CCO contract, with a stay of award until March 15, 2025 [22] Q&A Session Summary Question: Update on the CCO contract - Management confirmed that the GAO upheld a protest regarding the procurement, and the administration has indicated that award announcements will not occur until March 2025 [53] Question: Comparison of Trump 1.0 and Trump 2.0 administrations - Management noted that the current administration has more experience, which may reduce delays in procurement processes compared to the previous administration [54] Question: Clarification on revenue guidance and margins - Management explained that fiscal year 2024 margins benefited from excess volumes that are not expected to recur in fiscal year 2025, leading to a more normalized margin outlook [58] Question: Backlog and book-to-bill dynamics - Management indicated that the book-to-bill ratio is expected to trend towards 1.0 as rebid activity normalizes in fiscal year 2025 [62]