Attached files
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| EX-99.2 - EXHIBIT 99.2 - MAXIMUS, INC. | a6715087ex99_2.htm |
| 8-K - MAXIMUS, INC. 8-K - MAXIMUS, INC. | a6715087.htm |
Exhibit 99.1
MAXIMUS Reports Fiscal 2011 Second Quarter Results
- Company Delivers Record Revenue and Increases Fiscal 2011 Guidance -
RESTON, Va.--(BUSINESS WIRE)--May 5, 2011--MAXIMUS (NYSE: MMS), a leading provider of government services worldwide, today reported financial results for its fiscal second quarter ended March 31, 2011.
Key highlights include:
- Second quarter revenue grew 11% to $227.1 million compared to the same period last year.
- Diluted earnings per share from continuing operations increased 39% to $1.07 for the second quarter compared to adjusted diluted EPS of $0.77 in the prior-year period.
- Cash and cash equivalents totaled $183.2 million at March 31, 2011.
- Year-to-date signed awards were $904 million at May 2, 2011.
Revenue for the fiscal 2011 second quarter increased 11% (8% on a constant currency basis) to $227.1 million compared to $204.4 million reported for the same period last year. Income from continuing operations, net of taxes, increased to $19.0 million for the second quarter compared to $18.0 million last year (which included a pre-tax benefit of $6.0 million, or $0.21 per diluted share, related to a net legal recovery and is reflected in the supplemental pro forma table included on the last page of the financial tables). For the second quarter, diluted earnings per share from continuing operations increased 39% to $1.07 compared to adjusted diluted EPS of $0.77 for the same period last year.
Second quarter revenue and profit growth were driven by business expansion, as well as strong operational performance in both segments and across all geographies, which resulted in an operating margin of 13.0%.
“We generated very strong results for the period and made measurable progress on several key initiatives, including the expansion of our global operations and the growth of our domestic health care business,” commented Richard A. Montoni, Chief Executive Officer of MAXIMUS. “In April, we were notified of award for three new welfare-to-work contracts in the United Kingdom. These awards offer attractive economics that we can build upon to grow our presence in the U.K. and, longer-term, into other geographies. On the domestic front, we are benefiting from increased demand as states transition Medicaid and CHIP program participants into more cost-effective managed care programs and seek to comply with regulations as part of federal health care reform.”
Health Services Segment
Health Services Segment revenue for the second quarter of fiscal 2011 increased 8% to $137.8 million compared to $127.3 million in the same period last year. The year-over-year increase was driven primarily by organic growth and a spike in accretive transaction-based revenue, which resulted in an operating margin of 14%. Operating income for the second quarter increased 52% to $19.4 million compared to $12.7 million for the same period last year.
Human Services Segment
Human Services Segment revenue for the fiscal 2011 second quarter increased 16% (10% on a constant currency basis) to $89.3 million compared to $77.1 million in the prior-year period. Revenue growth was driven by the Company’s international welfare-to-work business in Australia and the United Kingdom. Operating income for the second quarter increased 12% to $10.1 million compared to $9.0 million in the same period last year. Segment operating margin was 11.3% and consistent with the same period last year.
Sales and Pipeline
At May 2, 2011 fiscal year-to-date signed contract wins totaled $904 million compared to $304 million reported last year, and new contracts pending (awarded but unsigned) totaled $526 million compared to $470 million last year. Sales opportunities (pipeline) at May 2, 2011 totaled $1.2 billion (consisting of $122 million in proposals pending, $203 million in proposals in preparation and $900 million in proposals tracking) compared to $1.8 billion the prior year.
Balance Sheet and Cash Flows
Cash and cash equivalents totaled $183.2 million at March 31, 2011. For the fiscal 2011 second quarter, cash provided by operating activities from continuing operations totaled $6.0 million with free cash flow of $0.4 million. The Company defines free cash flow as cash provided by operating activities from continuing operations less property, equipment and capitalized software.
Days Sales Outstanding (DSO) from continuing operations were 61 days. On February 28, 2011, MAXIMUS paid a quarterly cash dividend of $0.15 per share. On April 12, 2011, the Company announced its next quarterly cash dividend of $0.15 per share, payable on May 31, 2011 to shareholders of record as of May 13, 2011.
Share repurchases were not material in the second quarter of fiscal 2011 and at March 31, 2011, the Company had $122.2 million available for repurchases under the current program.
Outlook
The Company is increasing its fiscal 2011 revenue and earnings guidance on the strength of its performance in the first half of fiscal 2011. MAXIMUS now expects revenue from continuing operations in the range of $910 million to $920 million and diluted earnings per share from continuing operations in the range of $4.10 to $4.25. The Company expects operating margin for the full year to range between 12.5% and 13.0%.
Mr. Montoni concluded, “Our recent wins in the U.K. meet our sound criteria for scope and profitability and are expected to yield an operating margin in excess of 15% over the life of the contracts. Revenue from these contracts is expected to ramp-up over a two-year period. As a result, the contracts are expected to generate significant start-up losses in the range of $9 million to $11 million, pre-tax, for fiscal 2012, but are expected to approach break-even profitability in the fourth quarter of fiscal 2012. Even considering the start up effects of the U.K. contracts in fiscal 2012, the overall dynamics in our portfolio today set the stage for continued top-line and bottom-line growth in fiscal 2012 and beyond.”
Website Presentation, Conference Call and Webcast Information
MAXIMUS will host a conference call this morning, May 5, 2011, at 9:00 a.m. (ET). The call is open to the public and can be accessed under the Investor Relations page of the Company’s Website at www.maximus.com or by calling:
877.407.8289 (Domestic)/201.689.8341 (International)
For those unable to listen to the live call, a replay will be available through May 12, 2011. Callers can access the replay by calling:
877.660.6853 (Domestic)/201.612.7415 (International)
Replay account
number: 316
Replay conference ID number: 371369
About MAXIMUS
MAXIMUS is a leading provider of government services worldwide and is devoted to providing health and human services program management and consulting services to its clients. The Company has more than 6,500 employees located in more than 220 offices in the United States, Canada, Australia, and the United Kingdom. Additionally, MAXIMUS is included in the Russell 2000 Index and the S&P SmallCap 600 Index.
Statements that are not historical facts, including statements about the Company's confidence and strategies and the Company's expectations about revenues, results of operations, profitability, future contracts, market opportunities, market demand or acceptance of the Company's products are forward-looking statements that involve risks and uncertainties. These uncertainties could cause the Company's actual results to differ materially from those indicated by such forward-looking statements and include reliance on government clients; risks associated with government contracting; risks involved in managing government projects; legislative changes and political developments; opposition from government unions; challenges resulting from growth; adverse publicity; and legal, economic, and other risks detailed in Exhibit 99.1 to the Company's most recent Quarterly Report filed with the Securities and Exchange Commission, found on www.maximus.com.
| MAXIMUS, Inc. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except share amounts) | ||||||||
| March 31, | September 30, | |||||||
| 2011 | 2010 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 183,155 | $ | 155,321 | ||||
| Restricted cash | 4,930 | 4,182 | ||||||
| Accounts receivable — billed, net of reserves of $2,961 and $1,845 | 138,153 | 136,260 | ||||||
| Accounts receivable — unbilled | 15,228 | 17,245 | ||||||
| Income taxes receivable | 14,919 | 4,149 | ||||||
| Deferred income taxes | 16,074 | 13,290 | ||||||
| Prepaid expenses and other current assets | 24,386 | 25,702 | ||||||
| Total current assets | 396,845 | 356,149 | ||||||
| Property and equipment, at cost | 120,694 | 115,740 | ||||||
| Less accumulated depreciation and amortization | (71,335 | ) | (66,867 | ) | ||||
| Property and equipment, net | 49,359 | 48,873 | ||||||
| Capitalized software | 38,418 | 35,648 | ||||||
| Less accumulated amortization | (11,438 | ) | (10,933 | ) | ||||
| Capitalized software, net | 26,980 | 24,715 | ||||||
| Deferred contract costs, net | 7,991 | 6,708 | ||||||
| Goodwill | 72,832 | 71,251 | ||||||
| Intangible assets, net | 6,963 | 7,778 | ||||||
| Deferred income taxes | 453 | 1,844 | ||||||
| Deferred compensation plan assets | 9,176 | 8,317 | ||||||
| Other assets, net | 2,019 | 2,106 | ||||||
| Total assets | $ | 572,618 | $ | 527,741 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 62,206 | $ | 49,200 | ||||
| Accrued compensation and benefits | 36,288 | 40,807 | ||||||
| Deferred revenue | 47,112 | 58,070 | ||||||
| Acquisition-related contingent consideration | 1,028 | 923 | ||||||
| Income taxes payable | 7,835 | 7,120 | ||||||
| Other accrued liabilities | 6,817 | 7,934 | ||||||
| Liabilities of discontinued operations | — | 634 | ||||||
| Total current liabilities | 161,286 | 164,688 | ||||||
| Deferred revenue, less current portion | 4,854 | 4,083 | ||||||
| Long-term debt | 1,802 | 1,411 | ||||||
| Acquisition-related contingent consideration, less current portion | 2,360 | 2,138 | ||||||
| Income taxes payable, less current portion | 1,851 | 1,793 | ||||||
| Deferred income tax liability | 7,332 | 4,946 | ||||||
| Deferred compensation plan liabilities | 10,543 | 9,893 | ||||||
| Total liabilities | 190,028 | 188,952 | ||||||
| Shareholders’ equity: | ||||||||
| Common stock, no par value; 60,000,000 shares authorized; 27,776,260 and 27,487,725 shares issued and 17,325,097 and 17,174,141 shares outstanding at March 31, 2011 and September 30, 2010, at stated amount, respectively | 367,739 | 352,696 | ||||||
| Treasury stock, at cost; 10,451,163 and 10,313,584 shares at March 31, 2011 and September 30, 2010, respectively | (367,822 | ) | (359,366 | ) | ||||
| Accumulated other comprehensive income | 20,918 | 14,530 | ||||||
| Retained earnings | 361,755 | 330,929 | ||||||
| Total shareholders’ equity | 382,590 | 338,789 | ||||||
| Total liabilities and shareholders’ equity | $ | 572,618 | $ | 527,741 | ||||
| MAXIMUS, Inc. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| Ended March 31, | Ended March 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenue | $ | 227,116 | $ | 204,386 | $ | 441,230 | $ | 407,706 | ||||||||
| Cost of revenue | 164,050 | 153,835 | 322,205 | 304,980 | ||||||||||||
| Gross profit | 63,066 | 50,551 | 119,025 | 102,726 | ||||||||||||
| Selling, general and administrative expenses | 33,572 | 28,787 | 62,239 | 56,216 | ||||||||||||
| Legal and settlement expense (recovery), net | — | (6,037 | ) | — | (5,351 | ) | ||||||||||
| Operating income from continuing operations | 29,494 | 27,801 | 56,786 | 51,861 | ||||||||||||
| Interest and other income, net | 919 | 186 | 1,410 | 285 | ||||||||||||
| Income from continuing operations before income taxes | 30,413 | 27,987 | 58,196 | 52,146 | ||||||||||||
| Provision for income taxes | 11,375 | 9,996 | 21,571 | 19,555 | ||||||||||||
| Income from continuing operations | 19,038 | 17,991 | 36,625 | 32,591 | ||||||||||||
| Discontinued operations, net of income taxes: | ||||||||||||||||
| Income (loss) from discontinued operations | (265 | ) | 752 | (265 | ) | (1,220 | ) | |||||||||
| Loss on disposal | (554 | ) | — | (659 | ) | — | ||||||||||
| Income (loss) from discontinued operations | (819 | ) | 752 | (924 | ) | (1,220 | ) | |||||||||
| Net income | $ | 18,219 | $ | 18,743 | $ | 35,701 | $ | 31,371 | ||||||||
| Basic earnings (loss) per share: | ||||||||||||||||
| Income from continuing operations | $ | 1.11 | $ | 1.03 | $ | 2.13 | $ | 1.86 | ||||||||
| Income (loss) from discontinued operations | (0.05 | ) | 0.05 | (0.05 | ) | (0.07 | ) | |||||||||
| Basic earnings per share | $ | 1.06 | $ | 1.08 | $ | 2.08 | $ | 1.79 | ||||||||
| Diluted earnings (loss) per share: | ||||||||||||||||
| Income from continuing operations | $ | 1.07 | $ | 1.00 | $ | 2.06 | $ | 1.81 | ||||||||
| Income (loss) from discontinued operations | (0.05 | ) | 0.04 | (0.05 | ) | (0.07 | ) | |||||||||
| Diluted earnings per share | $ | 1.02 | $ | 1.04 | $ | 2.01 | $ | 1.74 | ||||||||
| Dividends paid per share | $ | 0.15 | $ | 0.12 | $ | 0.27 | $ | 0.24 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 17,211 | 17,408 | 17,196 | 17,503 | ||||||||||||
| Diluted | 17,787 | 17,980 | 17,750 | 18,012 | ||||||||||||
| MAXIMUS, Inc, | ||||||||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| Ended March 31, | Ended March 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income | $ | 18,219 | $ | 18,743 | $ | 35,701 | $ | 31,371 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Loss from discontinued operations | 819 | (752 | ) | 924 | 1,220 | |||||||||||
| Depreciation and amortization | 5,551 | 4,478 | 10,783 | 9,018 | ||||||||||||
| Deferred income taxes | 156 | 8,337 | 1,146 | (155 | ) | |||||||||||
| Deferred interest income on note receivable | — | 118 | — | 179 | ||||||||||||
| Non-cash equity based compensation | 2,438 | 2,088 | 4,495 | 3,953 | ||||||||||||
| Change in assets and liabilities: | ||||||||||||||||
| Accounts receivable — billed | (23,741 | ) | (4,572 | ) | (1,596 | ) | 4,777 | |||||||||
| Accounts receivable — unbilled | 3,575 | (2,103 | ) | 2,021 | (4,430 | ) | ||||||||||
| Prepaid expenses and other current assets | 628 | (1,456 | ) | 1,669 | (414 | ) | ||||||||||
| Deferred contract costs | (649 | ) | 487 | (1,229 | ) | 966 | ||||||||||
| Other assets | 38 | (253 | ) | (1,246 | ) | (287 | ) | |||||||||
| Accounts payable | 8,339 | 1,219 | 12,287 | 1,806 | ||||||||||||
| Accrued compensation and benefits | 4,986 | 4,952 | (6,567 | ) | 2,917 | |||||||||||
| Deferred revenue | (6,026 | ) | 992 | (11,296 | ) | 14,126 | ||||||||||
| Income taxes | (6,864 | ) | (11,099 | ) | (10,334 | ) | 3,768 | |||||||||
| Other liabilities | (1,464 | ) | 694 | (372 | ) | 1,945 | ||||||||||
| Cash provided by continuing operations | 6,005 | 21,873 | 36,386 | 70,760 | ||||||||||||
| Cash used in discontinued operations | (212 | ) | (7,139 | ) | (951 | ) | (1,005 | ) | ||||||||
| Cash provided by operating activities | 5,793 | 14,734 | 35,435 | 69,755 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Acquisition of businesses, net of cash acquired | — | (10,673 | ) | — | (10,673 | ) | ||||||||||
| Purchases of property and equipment | (4,057 | ) | (2,093 | ) | (6,464 | ) | (6,031 | ) | ||||||||
| Capitalized software costs | (1,574 | ) | (1,684 | ) | (3,872 | ) | (4,325 | ) | ||||||||
| Proceeds from note receivable | — | 173 | — | 390 | ||||||||||||
| Cash used in investing activities — continuing ops | (5,631 | ) | (14,277 | ) | (10,336 | ) | (20,639 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Employee stock transactions | 3,684 | 611 | 8,013 | 1,615 | ||||||||||||
| Repurchases of common stock | (89 | ) | (5,850 | ) | (8,459 | ) | (14,511 | ) | ||||||||
| Tax benefit due to option exercises and restricted stock units vesting | 2,787 | 975 | 3,818 | 1,110 | ||||||||||||
| Issuance (repayment) of long-term debt | 300 | (7 | ) | 300 | (7 | ) | ||||||||||
| Cash dividends paid | (2,576 | ) | (2,083 | ) | (4,643 | ) | (4,201 | ) | ||||||||
| Cash used in financing activities — continuing ops | 4,106 | (6,354 | ) | (971 | ) | (15,994 | ) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,883 | 319 | 3,706 | 425 | ||||||||||||
| Net increase in cash and cash equivalents | 6,151 | (5,578 | ) | 27,834 | 33,547 | |||||||||||
| Cash and cash equivalents, beginning of period | 177,004 | 126,940 | 155,321 | 87,815 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 183,155 | $ | 121,362 | $ | 183,155 | $ | 121,362 | ||||||||
| MAXIMUS, Inc. | ||||||||||||||||||||||||||||
| SEGMENT INFORMATION | ||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Three Months Ended March 31, | Six Months Ended March 31, | |||||||||||||||||||||||||||
| 2011 | % (1) | 2010 | % (1) | 2011 | % (1) | 2010 | % (1) | |||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||
| Health Services | $ | 137,779 | 100 | % | $ | 127,279 | 100 | % | $ | 267,790 | 100 | % | $ | 257,919 | 100 | % | ||||||||||||
| Human Services | 89,337 | 100 | % | 77,107 | 100 | % | 173,440 | 100 | % | 149,787 | 100 | % | ||||||||||||||||
| Total | 227,116 | 100 | % | 204,386 | 100 | % | 441,230 | 100 | % | 407,706 | 100 | % | ||||||||||||||||
| Gross Profit: | ||||||||||||||||||||||||||||
| Health services | 38,320 | 28 | % | 28,932 | 23 | % | 72,597 | 27 | % | 61,842 | 24 | % | ||||||||||||||||
| Human Services | 24,746 | 28 | % | 21,619 | 28 | % | 46,428 | 27 | % | 40,884 | 27 | % | ||||||||||||||||
| Total | 63,066 | 28 | % | 50,551 | 25 | % | 119,025 | 27 | % | 102,726 | 25 | % | ||||||||||||||||
| Selling, general, and administrative expense: | ||||||||||||||||||||||||||||
| Health Services | 18,968 | 14 | % | 16,209 | 13 | % | 34,422 | 13 | % | 31,611 | 12 | % | ||||||||||||||||
| Human Services | 14,623 | 16 | % | 12,582 | 16 | % | 27,802 | 16 | % | 24,468 | 16 | % | ||||||||||||||||
| Corporate/Other | (19 | ) | NM | (4 | ) | NM | 15 | NM | 137 | NM | ||||||||||||||||||
| Total | 33,572 | 15 | % | 28,787 | 14 | % | 62,239 | 14 | % | 56,216 | 14 | % | ||||||||||||||||
| Operating income from continuing operations: | ||||||||||||||||||||||||||||
| Health services | 19,352 | 14 | % | 12,723 | 10 | % | 38,175 | 14 | % | 30,231 | 12 | % | ||||||||||||||||
| Human Services | 10,123 | 11 | % | 9,037 | 12 | % | 18,626 | 11 | % | 16,416 | 11 | % | ||||||||||||||||
| Corporate/Other | 19 | NM | 4 | NM | (15 | ) | NM | (137 | ) | NM | ||||||||||||||||||
| Subtotal: Segment Operating Income | 29,494 | 13 | % | 21,764 | 11 | % | 56,786 | 13 | % | 46,510 | 11 | % | ||||||||||||||||
| Legal and settlement recovery (expense), net | — | NM | 6,037 | NM | — | NM | 5,351 | NM | ||||||||||||||||||||
| Total | $ | 29,494 | 13 | % | $ | 27,801 | 14 | % | $ | 56,786 | 13 | % | $ | 51,861 | 13 | % | ||||||||||||
| (1) | Percentage of respective segment revenue. Changes not considered meaningful are marked “NM.” |
| MAXIMUS, Inc. | |||||||||||||||||
| Supplemental Pro Forma Diluted EPS from Continuing Operations ("Adjusted EPS") | |||||||||||||||||
| FY 2010 and Q1/Q2 of 2011 | |||||||||||||||||
| Q1 10 | Q2 10 | Q3 10 | Q4 10 |
Total
FY 10 |
Q1 11 | Q2 11 | |||||||||||
| Diluted EPS from continuing operations- | |||||||||||||||||
| GAAP basis | $0.81 | $1.00 | $0.90 | $1.16 | $3.86 | $0.99 | $1.07 | ||||||||||
| Pro forma adjustments: | |||||||||||||||||
| Legal and settlement expense (recovery), net | 0.02 | (0.21 | ) | - | - | (0.19 | ) | - | - | ||||||||
| Adjustment for taxation rate | 0.04 | (0.02 | ) | 0.01 | (0.08 | ) | (0.05 | ) | - | - | |||||||
| Subtotal pro forma adjustments | $0.06 | ($0.23 | ) | $0.01 | ($0.08 | ) | ($0.24 | ) | $0.00 | $0.00 | |||||||
| Adjusted EPS from continuing operations | $0.87 | $0.77 | $0.91 | $1.08 | $3.62 | $0.99 | $1.07 | ||||||||||
CONTACT:
MAXIMUS
Lisa Miles, 800-MAXIMUS x11637