Maximus' Q2 Earnings & Revenues Beat Estimates, Increase Y/Y

Core Insights - Maximus, Inc. (MMS) reported better-than-expected second-quarter fiscal 2025 results with adjusted earnings of $2.01 per share, exceeding the Zacks Consensus Estimate by 46.7% and increasing 28% year over year. Revenues reached $1.36 billion, surpassing the consensus mark by 5.8% and rising 1% from the previous year [1] Segmental Revenues - The U.S. Federal Services segment generated revenues of $777.9 million, an 11% increase from the prior year, beating the estimate of $687.2 million [2] - The Outside the U.S. segment reported revenues of $141.5 million, a 12% decrease year over year, but exceeded the anticipated $123.1 million [2] - The U.S. Services segment's revenues were $442.4 million, down 9% year over year, falling short of the estimate of $497.2 million [2] Sales and Pipeline - Year-to-date signed contract awards totaled $2.92 billion as of March 31, 2025, with contracts pending amounting to $451 million. The sales pipeline stood at $41.2 billion, including $1.97 billion in pending proposals, $3 billion in proposals in preparation, and $36.3 billion in tracking opportunities. The book-to-bill ratio was 0.8X on a trailing 12-month basis [3] Operating Performance - Operating income was $153 million, reflecting a 20% year-over-year increase, compared to the expected adjusted operating income of $138.6 million, which was down 16.2% year over year. The adjusted operating income margin improved to 11.2%, up 170 basis points year over year [4] Balance Sheet and Cash Flow - Maximus ended the quarter with cash and cash equivalents of $108 million, up from $73 million in the previous quarter. The company generated $42.7 million in cash from operations, with capital expenditures of $17.2 million, resulting in free cash flow of $25.5 million [5] Updated Fiscal 2025 Guidance - Maximus raised its earnings and revenue guidance for fiscal year 2025, now expecting total revenues between $5.25 billion and $5.4 billion, compared to the previous range of $5.2 billion to $5.35 billion. The midpoint of the new range ($5.325 billion) is above the Zacks Consensus Estimate of $5.31 billion [6] - Adjusted earnings are now anticipated in the range of $6.30 to $6.60 per share, up from the previous expectations of $5.90 to $6.20 per share, and higher than the current Zacks Consensus Estimate of $6.08. The adjusted EBITDA margin is expected to be approximately 11.7%, compared to the earlier expectation of 11.2% [7] - Free cash flow expectations remain unchanged between $355 million and $385 million, with forecasted interest expenses of approximately $78 million, up from the prior estimate of $75 million. The effective income tax rate is anticipated to be within 28-29%, with approximately 58 million shares expected to be outstanding on a full-year basis [8]