MAXIMUS(MMS) - 2025 Q2 - Quarterly Report

Revenue and Profitability - Revenue for the three months ended March 31, 2025, was $1,361,786 thousand, a 1.0% increase from$ 1,348,357 thousand in the same period of 2024[104] - Gross profit for the six months ended March 31, 2025, was $640,378 thousand, reflecting a 3.7% increase compared to$ 617,643 thousand for the same period in 2024[106] - Operating income for the three months ended March 31, 2025, was $152,968 thousand, up 19.9% from$ 127,494 thousand in the prior year[104] - The gross profit percentage for the three months ended March 31, 2025, improved to 24.9% from 23.6% in the same period of 2024[104] - Organic growth contributed $39,802 thousand (3.0%) to revenue for the three months ended March 31, 2025[105] - Adjusted EBITDA margin (Non-GAAP) improved to 13.7% for the three months ended March 31, 2025, compared to 11.7% in the previous year[154] Segment Performance - The U.S. Federal Services Segment reported revenue of$ 777,927 thousand for the three months ended March 31, 2025, a 10.9% increase from $701,702 thousand in the prior year[115] - U.S. Services Segment revenue for the three months ended March 31, 2025, was$ 442.35 million, a decrease of 9.0% compared to $486.12 million for the same period in 2024[120] - Gross profit margin for the U.S. Services Segment decreased to 25.3% in Q1 2025 from 26.8% in Q1 2024[120] - Outside the U.S. Segment revenue for the three months ended March 31, 2025, was$ 141.51 million, down 11.9% from $160.54 million in Q1 2024[124] - The full-year operating margin for the U.S. Services Segment is anticipated to be approximately 11% for fiscal year 2025[121] - The Outside the U.S. Segment is expected to achieve a full-year operating margin between 3% and 5% for fiscal year 2025[128] Tax and Financial Position - The effective tax rate for the six months ended March 31, 2025, was 31.6%, an increase from 25.2% in the same period of 2024, due to the divestiture of businesses[113] - The company expects an overall effective tax rate between 28.0% and 29.0% for fiscal year 2025, influenced by divestitures and non-recurring items[113] Cash Flow and Debt - As of March 31, 2025, the company had$ 108.1 million in cash and cash equivalents, indicating a strong liquidity position[129] - The company reported net cash used in operating activities of $37.3 million for the first six months of fiscal year 2025, compared to net cash provided of$ 152.1 million for the same period in 2024[134] - The company increased its term loan debt facility by $250 million in fiscal year 2025 to reduce revolving debt and meet working capital needs[137] - The effective interest rate on the company's debt as of March 31, 2025, was 5.4%[132] - Free cash flow for the six months ended March 31, 2025, is$ (77,480,000), compared to $104,549,000 for the same period in 2024[146] Operational Metrics - Days Sales Outstanding (DSO) increased to 73 days as of March 31, 2025, compared to 61 days at September 30, 2024, indicating delays in payments[135] - Consolidated Net Total Leverage Ratio is 1.85, well below the maximum limit of 4.00:1.00 as per the Credit Agreement[144] - Consolidated EBITDA for the trailing twelve months ended March 31, 2025, is$ 754,403,000, with a net income of $300,021,000[143] - Consolidated Net Interest Coverage Ratio stands at 9.21, significantly above the minimum requirement of 3.00:1.00[144] Strategic Initiatives - The launch of Maximus Total Experience Management (TXM) aims to enhance customer experience through intelligent automation and cognitive computing[101] - The company has not recorded U.S. deferred income taxes on funds held in foreign jurisdictions, which may impact future cash flows[145] - The company continues to explore opportunities for remitting additional funds from foreign locations, considering working capital requirements and tax rules[145]