MAXIMUS(MMS) - 2024 Q3 - Quarterly Report

Financial Performance - Revenue for the three months ended June 30, 2024, was $1,314,929 thousand, representing a 10.6$1,188,677 thousand in the same period of 2023[86] - Gross profit for the three months ended June 30, 2024, was $332,314 thousand, with a gross profit margin of 25.3$141,739 thousand, compared to $58,388 thousand for the same period in 2023, resulting in an operating margin of 10.8$89,752 thousand, significantly higher than $30,863 thousand in the same period of 2023[86] - Organic revenue growth for the nine months ended June 30, 2024, was$372,624 thousand, representing a 10.2% increase compared to the same period in 2023[89] - Revenue for the three months ended June 30, 2024, increased by 17.0% to $683.3 million compared to$584.0 million for the same period in 2023[97] - Revenue for the U.S. Services Segment for the three months ended June 30, 2024, increased by 5.2% to $472.3 million compared to$449.1 million in the same period of 2023[101] - The Outside the U.S. Segment reported revenue of $159.3 million for the three months ended June 30, 2024, a 2.3$155.7 million in the prior year[104] Expenses and Margins - Selling, general, and administrative expenses for the three months ended June 30, 2024, were $167,033 thousand, down from$182,545 thousand in the same period of 2023[86] - The company expects to return to normal profit margin levels in the coming quarters, with a full-year operating profit margin anticipated at approximately 13%[102] - The U.S. Federal Services Segment is expected to continue growing, driven by additional volumes in clinical services, with a full-year operating margin anticipated at around 12.5%[98] - Adjusted operating income margin excluding amortization of intangible assets and divestiture-related charges was 12.6% for the three months ended June 30, 2024, up from 6.9% in the same period last year[130] Tax and Effective Rates - The effective tax rate for the three months ended June 30, 2024, was 25.4%, compared to 15.1% for the same period in 2023[95] - The company expects an effective tax rate between 24.5% and 25.5% for fiscal year 2024[95] Cash Flow and Liquidity - As of June 30, 2024, the company had $102.8 million in cash and cash equivalents, indicating sufficient liquidity for operating requirements over the next 12 months[108] - Free cash flow for the nine months ended June 30, 2024, was$269.2 million, compared to $110.9 million in the prior year[124] - The net change in cash and cash equivalents and restricted cash for the nine months ended June 30, 2024, was$25.7 million, compared to a decrease of $45.1 million in the same period last year[111] - The company reported a net cash provided by operating activities of$351.4 million, an increase of $181.7 million compared to the same period in the prior year[112] Debt and Financing - The principal debt agreement totals$1.15 billion, with access to an additional $750 million through a revolving credit facility[116] - The Consolidated Net Total Leverage Ratio was reported at 1.47 as of June 30, 2024, complying with the Amended Credit Agreement's requirement of not exceeding 4.00:1.00[120] - The company incurred new financing costs of$9.7 million due to the amendment of its credit agreement in May 2024[114] Earnings and Shareholder Returns - Diluted earnings per share for the three months ended June 30, 2024, was $1.46, up from$0.50 in the same period last year, representing a growth of 192%[130] - Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related charges was $1.74 for the three months ended June 30, 2024, compared to$0.78 in the same period last year, an increase of 123.1%[130] Operational Insights - The company is monitoring the recompete status of significant contracts, including a $6.6 billion contract with the Centers for Medicare & Medicaid Services, which could represent 10% to 15% of total revenue annually[98] - The company has undertaken divestitures in fiscal year 2024, including its employment services business in Canada and operations in Italy and Singapore, to improve performance in the Outside the U.S. Segment[106] - The company generated 12% of its revenue from international markets for the three months ended June 30, 2024[127] Financial Risk Management - The company remains exposed to financial risks such as changes in interest rates and foreign currency exchange rates, with no material changes in market rate risk disclosures since the last report[132] - The company utilizes derivative instruments to manage selected interest rate exposures, maintaining a proactive approach to financial risk management[132]