Business Wire | Nov 18, 2021 06:30AM EST

Maximus Reports Fourth Quarter and Full Year Results for Fiscal Year 2021

Nov. 18, 2021

RESTON, Va.--(BUSINESS WIRE)--Nov. 18, 2021--Maximus (NYSE: MMS), a leading provider of government services worldwide, reported financial results for the three months and year ended September 30, 2021.

Highlights for fiscal year 2021 include:

* Revenue increased 22.9% to $4.25 billion compared to $3.46 billion for the prior year, driven by approximately $1.1 billion of COVID-19 response work and $322.7 million of revenue contributions from the Attain Federal and Veterans Evaluation Services (VES) acquisitions, and offset by the completed Census contract.

* Operating margin was 9.6% compared to 8.3% for the prior year. Diluted earnings per share were $4.67. Amortization of intangible assets was $44.4 million, or $0.52 diluted earnings per share. Adjusting for amortization of intangible assets, operating income margin and diluted earnings per share would be 10.6% and $5.19, respectively.

* A quarterly cash dividend of $0.28 per share payable on November 30, 2021, to shareholders of record on November 15, 2021.

"Fiscal year 2021 was significant for the Company including three acquisitions, transition of leadership in our U.S. Federal Segment, several large contract wins including the U.K. Restart Programme, and operating over $1 billion of COVID-19 response work helping governments respond to the pandemic," shared Bruce Caswell, President and Chief Executive Officer. "The integration of the acquisitions evolves our strategy and matures our portfolio while remaining true to our core business as a program administrator dedicated to helping government serve the people."

Consolidated Fiscal Year 2021 Results

Revenue for fiscal year 2021 increased 22.9% to $4.25 billion, compared to $3.46 billion for the prior year. The $0.79 billion increase was driven by COVID-19 response work including vaccination distribution support services, unemployment insurance program support, disease investigation, contact tracing, and other key public health initiatives. COVID-19 response work contributed approximately $1.1 billion for the year ended, or an increase of approximately $0.9 billion over the prior year for this work. The acquired businesses of Attain Federal and VES completed on March 1, 2021 and May 28, 2021, respectively, contributed a combined $322.7 million of revenue to fiscal year 2021. The increases were offset by the completed Census contract which contributed approximately $450 million less revenue in fiscal year 2021.

For fiscal year 2021, operating income totaled $408.5 million, yielding an operating margin of 9.6%. This compares to an operating margin of 8.3% for the prior year. Diluted earnings per share were $4.67 as compared to $3.39 for the prior-year period.

Operating income includes amortization of intangible assets which was $44.4 million, or $0.52 diluted earnings per share for fiscal year 2021. Adjusting for amortization, operating margin and diluted earnings per share would be 10.6% and $5.19, respectively, in fiscal year 2021. In the prior year, amortization totaled $35.6 million, or $0.41, which would result in adjusted operating margin and diluted earnings per share of 9.4% and $3.80, respectively.

U.S. Services Segment

U.S. Services Segment revenue for fiscal year 2021 increased 25.0% to $1.66 billion, compared to $1.33 billion reported in the prior year. This increase was driven by COVID-19 response work, which contributed an estimated $618 million of revenue to this segment in fiscal 2021, compared to an estimated $129 million in the prior year.

Operating margin for fiscal year 2021 was 15.3% compared to 17.1% reported for the prior-year period. Fourth quarter of fiscal year 2021 included a write-off of fixed assets, leased assets and deferred contract costs related to a contract in its startup phase in this segment. Excluding the write-off, the segment margin would be 16.0% and reflects a full year of headwinds experienced on some of this segment's core programs, including those impacted by the pause of Medicaid redeterminations.

U.S. Federal Services Segment

U.S. Federal Services Segment revenue for fiscal year 2021 increased 15.9% to $1.89 billion, compared to $1.63 billion reported for the prior year. As expected, the Census contract contributed approximately $450 million less revenue in fiscal year 2021 as compared to the prior-year period due the natural conclusion of this contract. This was offset by COVID-19 response work that contributed an estimated $466 million of revenue to the segment, compared to an estimated $71 million in the prior year. Segment results for fiscal year 2021 included $322.7 million of revenue from Attain Federal and VES.

The operating margin for fiscal year 2021 was 10.0% as compared to 8.1% reported for the prior year. Both the fourth quarter and full fiscal year 2021 margins for this segment fell short of the Company's expectations due to several non-recurring investments that are expected to benefit future operating results.

Outside the U.S. Segment

Outside the U.S. Segment revenue for fiscal year 2021 increased 40.1% to $699.1 million as compared to $498.9 million reported for the prior year. Operating income for fiscal year 2021 was $20.1 million, yielding an operating margin of 2.9%, compared to an operating loss of $34.1 million for fiscal year 2020.

As previously disclosed, this segment has several contracts in startup, most notably the two-region win on the U.K. Restart Programme. The startup contracts resulted in planned startup losses incurred in the fourth quarter of fiscal 2021 as the U.K. Restart Programme ramped as expected. Significant improvement to the financial contribution from these contracts is still expected in the second half of fiscal 2022.

Sales and Pipeline

Year-to-date signed contract awards at September 30, 2021, totaled $5.62 billion and contracts pending (awarded but unsigned) totaled $0.72 billion. These awards reflect total contract value (TCV) and include the previously announced U.K. Restart Programme award of more than $960.0 million. Less than $1 billion of the $5.62 billion signed contract awards relate to COVID-19 response work. Remaining increases to signed contract awards were driven by wins in the U.S. Services and U.S. Federal Services Segments.

The sales pipeline at September 30, 2021, was $33.9 billion (comprised of approximately $8.8 billion in proposals pending, $1.42 billion in proposals in preparation, and $23.69 billion in opportunities tracking). New work opportunities represent 69.5% of the total sales pipeline.

Balance Sheet and Cash Flows

At September 30, 2021, cash and cash equivalents totaled $135.1 million and gross debt was $1.52 billion. The ratio of debt, net of allowed cash, to pro-forma EBITDA for the full year ended September 30, 2021, as calculated in accordance with our credit agreement, was 2.3x. This compares to 2.4x at June 30, 2021.

For fiscal year 2021, cash flows from operations totaled $517.3 million and free cash flow was $480.8 million. This compares to $244.6 million and $203.9 million, respectively, in the prior year. Strong cash flows for fiscal 2021 resulted from a decrease in investment in working capital and improved earnings as compared to fiscal year 2020. The decrease in investment resulted from good collections combined with advance payments on new work and deferral of payroll taxes.

As of September 30, 2021, DSO were 68 days and within the Company's typical range of 65 to 80 days.

On October 8, 2021, our Board of Directors declared a quarterly cash dividend of $0.28 for each share of our common stock outstanding. The dividend is payable on November 30, 2021, to shareholders of record on November 15, 2021.

FY22 Outlook

Maximus is establishing fiscal year 2022 guidance. The Company expects revenue to range between $4.40 billion and $4.60 billion. Diluted earnings per share is expected to range between $4.00 and $4.30. Forecasted fiscal year 2022 earnings includes approximately $90 million of amortization of intangible assets, or $1.07 on a diluted per share basis. Excluding amortization, diluted earnings per share is expected to range between $5.07 and $5.37.

Cash flows from operations are expected to range between $275 million and $325 million, and free cash flow to range between $225 million and $275 million in fiscal year 2022. The cash flow projections reflect increased investment in working capital as current liabilities normalize due to payroll tax deferrals, new work maturing, and accruals returning to a more normal level. Additionally, greater investment in accounts receivable is required by an increased revenue projection in fiscal year 2022.

For fiscal year 2022, the effective income tax rate is expected to range between 25% and 26%, weighted average shares outstanding to range between 62.5 million and 62.6 million, absent significant share purchase activity, and interest expense to range between $30 and $33 million.

The outlook for fiscal year 2022 includes assumptions around the timing and level at which core programs return to pre-pandemic levels, most notably those in the U.S. Services Segment. While the timing is uncertain, the Company expects the Public Health Emergency (PHE) to conclude and enable Medicaid redetermination activities to commence during fiscal year 2022.

"Taken together, the market and company operating dynamics anticipated in the second half of FY22 create a positive environment and momentum for the business," Caswell continued. "These dynamics include not just the anticipated conclusion of the PHE, but also our new startup contracts moving to operations, new organic wins in U.S. Services coming online, the fiscal year 2021 acquisitions maturing in their integration and contribution, and the benefits of a substantial new work pipeline. Throughout the pandemic, we proved our ability to be of service and offer value to governments. We are proud of the resulting new customers, solutions, and capabilities we have gained that offer us a solid foundation to drive future organic growth."

Caswell concluded with, "Our accomplishments have been made possible by the hard work of our employees, and I offer my sincerest thanks to our more than 35,000 dedicated colleagues that support Maximus globally."

Conference Call and Webcast Information

Maximus will host a conference call this morning, November 18, 2021, at 9:00 a.m. (ET).

The call is open to the public and available by webcast or by phone at:

877.407.8289 (Domestic) / +1.201.689.8341 (International)

For those unable to listen to the live call, a recording of the webcast will be available on investor.maximus.com.

About Maximus

Since 1975, Maximus has operated under its founding mission of Helping Government Serve the People(r), enabling citizens around the globe to successfully engage with their governments at all levels and across a variety of health and human services programs. Maximus delivers innovative business process management and technology solutions that contribute to improved outcomes for citizens and higher levels of productivity, accuracy, accountability, and efficiency of government-sponsored programs. With more than 35,000 employees worldwide, Maximus is a proud partner to government agencies in the United States, Australia, Canada, Italy, Saudi Arabia, Singapore, South Korea, Sweden, and the United Kingdom. For more information, visit maximus.com.

Non-GAAP Measures and Risk Factors

This release refers to non-GAAP measures and other indicators, including free cash flow, results on a pro forma basis and other non-GAAP measures.

A description of these non-GAAP measures, the reasons why we use and present them, and details as to how they are calculated are included in our Annual Report on Form 10-K.

The presentation of these non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to cash flows from operations, revenue growth, or net income as measures of performance. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies.

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 such as those related to the impact of the pandemic and our recently-completed acquisitions including but not limited to:

* Our indebtedness following the completion of the VES acquisition is significant and could adversely affect our business and our ability to meet our obligations. * Difficulties in integrating our operations with those of Attain and VES and realizing the expected benefits of these acquisitions. * If one or more of these contracts with the VA are terminated or are not renewed on favorable terms or at all, if the VA reduces the number of medical examinations allocated to VES under the contracts or if VES receives an adverse finding or review resulting from an audit or investigation, the benefits of the VES acquisition may be adversely affected. * In connection with the acquisitions, we may be required to take write-downs or write-offs, restructuring and impairment, or other charges that could negatively affect our business, assets, liabilities, prospects, outlook, financial condition, and results of operations. * The ultimate duration of the pandemic. * The threat of further negative pandemic-related impacts. * Delays in our core programs returning to normal volumes and operations. * The potential impacts resulting from budget challenges with our government clients. * The possibility of delayed or missed payments by customers. * The potential for further supply chain disruptions impacting IT or safety equipment. * The impact of further legislation and government policies on the programs we operate.

These risks could cause the Company's actual results to differ materially from those indicated by such forward-looking statements. A summary of risk factors can be found in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended September 30, 2021, which will be filed with the Securities and Exchange Commission (SEC) on November 18, 2021. The Company's SEC reports are accessible on maximus.com.

Maximus, Inc.

Consolidated Statements of Operations

For the Three Months For the Year Ended September 30, Ended September 30,

2021 2020 2021 2020

(in thousands, except share data and per share amounts)

(Unaudited) (Unaudited)

Revenue $ 1,106,131 $ 923,836 $ 4,254,485 $ 3,461,537

Cost of 887,725 726,985 3,307,510 2,750,535 revenue

Gross profit 218,406 196,851 946,975 711,002

Selling,general, and 129,590 103,428 494,088 387,090 administrativeexpenses

Amortizationof intangible 20,639 8,900 44,357 35,634 assets

Operating 68,177 84,523 408,530 288,278 income

Interest (10,695 ) (494 ) (14,744 ) (2,059 ) expense

Other(expense)/ (521 ) 222 (10,105 ) 843 income, net

Income before 56,961 84,251 383,681 287,062 income taxes

Provision for 4,947 20,590 92,481 72,553 income taxes

Net income $ 52,014 $ 63,661 $ 291,200 $ 214,509



Earnings per share:

Basic $ 0.84 $ 1.03 $ 4.69 $ 3.40

Diluted $ 0.83 $ 1.02 $ 4.67 $ 3.39

Weightedaverage shares outstanding:

Basic 62,082 61,874 62,072 63,062

Diluted 62,506 62,256 62,365 63,322



Dividendsdeclared per $ 0.28 $ 0.28 $ 1.12 $ 1.12 share

Maximus, Inc.

Consolidated Balance Sheets

As of September 30,

2021

2020

(in thousands)

Assets:

Cash and cash equivalents

$

135,061

$

71,737

Accounts receivable, net

834,819

786,203

Income taxes receivable

5,413

2,075

Prepaid expenses and other current assets

104,201

72,543

Total current assets

1,079,494

932,558

Property and equipment, net

62,627

66,721

Capitalized software, net

42,868

38,033

Operating lease right-of-use assets

179,349

177,159

Goodwill

1,774,406

593,129

Intangible assets, net

879,168

145,893

Deferred contract costs, net

36,486

20,891

Deferred compensation plan assets

46,738

36,819

Deferred income taxes

990

1,915

Other assets

16,839

11,584

Total assets

$

4,118,965

$

2,024,702

Liabilities and Shareholders' Equity:

Liabilities:

Accounts payable and accrued liabilities

$

305,565

$

253,338

Accrued compensation and benefits

186,809

137,101

Deferred revenue, current portion

98,588

51,655

Income taxes payable

6,782

5,377

Long-term debt, current portion

80,555

10,878

Operating lease liabilities, current portion

76,077

80,748

Other current liabilities

35,057

22,071

Total current liabilities

789,433

561,168

Deferred revenue, non-current portion

35,932

27,311

Deferred income taxes

194,638

24,737

Long-term debt, non-current portion

1,429,137

18,017

Deferred compensation plan liabilities, non-current portion

47,405

38,654

Operating lease liabilities, non-current portion

121,771

104,011

Other liabilities

20,320

8,985

Total liabilities

2,638,636

782,883

Shareholders' equity:

Common stock, no par value; 100,000 shares authorized; 61,954 and 61,504 shares issued and outstanding as of September 30, 2021 and 2020, respectively (shares in thousands)

532,411

513,959

Accumulated other comprehensive loss

(39,908

)

(42,638

)

Retained earnings

987,826

770,498

Total shareholders' equity

1,480,329

1,241,819

Total liabilities and shareholders' equity

$

4,118,965

$

2,024,702

Maximus, Inc.

Consolidated Balance Sheets

As of September 30,

2021 2020

(in thousands)

Assets:

Cash and cash equivalents $ 135,061 $ 71,737

Accounts receivable, net 834,819 786,203

Income taxes receivable 5,413 2,075

Prepaid expenses and other current assets 104,201 72,543

Total current assets 1,079,494 932,558

Property and equipment, net 62,627 66,721

Capitalized software, net 42,868 38,033

Operating lease right-of-use assets 179,349 177,159

Goodwill 1,774,406 593,129

Intangible assets, net 879,168 145,893

Deferred contract costs, net 36,486 20,891

Deferred compensation plan assets 46,738 36,819

Deferred income taxes 990 1,915

Other assets 16,839 11,584

Total assets $ 4,118,965 $ 2,024,702

Liabilities and Shareholders' Equity:

Liabilities:

Accounts payable and accrued liabilities $ 305,565 $ 253,338

Accrued compensation and benefits 186,809 137,101

Deferred revenue, current portion 98,588 51,655

Income taxes payable 6,782 5,377

Long-term debt, current portion 80,555 10,878

Operating lease liabilities, current portion 76,077 80,748

Other current liabilities 35,057 22,071

Total current liabilities 789,433 561,168

Deferred revenue, non-current portion 35,932 27,311

Deferred income taxes 194,638 24,737

Long-term debt, non-current portion 1,429,137 18,017

Deferred compensation plan liabilities, 47,405 38,654 non-current portion

Operating lease liabilities, non-current portion 121,771 104,011

Other liabilities 20,320 8,985

Total liabilities 2,638,636 782,883

Shareholders' equity:

Common stock, no par value; 100,000 sharesauthorized; 61,954 and 61,504 shares issued and 532,411 513,959 outstanding as of September 30, 2021 and 2020,respectively (shares in thousands)

Accumulated other comprehensive loss (39,908 ) (42,638 )

Retained earnings 987,826 770,498

Total shareholders' equity 1,480,329 1,241,819

Total liabilities and shareholders' equity $ 4,118,965 $ 2,024,702

Maximus, Inc.

Consolidated Statements of Cash Flows

For the Three Months Ended September 30,

For the Year Ended September 30,

2021

2020

2021

2020

(Unaudited)

(Unaudited)

(in thousands)

Cash flows from operating activities:

Net income

$

52,014

$

63,661

$

291,200

$

214,509

Adjustments to reconcile net income to cash flows from operations:

Depreciation and amortization of property, equipment and capitalized software

12,697

17,031

46,361

64,527

Amortization of intangible assets

20,639

8,900

44,357

35,634

Amortization of debt issuance costs and debt discount

865

-

865

-

Deferred income taxes

(10,209

)

(13,935

)

(6,577

)

(19,145

)

Stock compensation expense

7,731

6,150

28,554

23,708

Gain on sale of a business

-

(12

)

-

(1,718

)

Costs related to debt financing

-

-

8,509

-

Change in assets and liabilities, net of effects of business combinations

Accounts receivable

292,882

47,146

38,578

(180,747

)

Prepaid expenses and other current assets

(24,268

)

(10,368

)

(16,726

)

(9,839

)

Deferred contract costs

347

(515

)

(15,426

)

(1,911

)

Accounts payable and accrued liabilities

(89,969

)

31,308

26,904

79,930

Accrued compensation and benefits

(16,275

)

(4,163

)

18,112

29,484

Deferred revenue

30,028

(415

)

53,652

2,391

Income taxes

(17,898

)

2,927

(2,733

)

3,490

Operating lease right-of-use assets and liabilities

4,237

515

5,314

(556

)

Other assets and liabilities

7,842

279

(3,622

)

4,835

Net cash provided by operating activities

270,663

148,509

517,322

244,592

Cash flows from investing activities:

Purchases of property and equipment and capitalized software costs

(4,432

)

(12,271

)

(36,565

)

(40,707

)

Acquisitions of businesses, net of cash acquired

(19,442

)

(4,455

)

(1,798,915

)

(7,066

)

Proceeds from the sale of a business

-

-

-

3,250

Other

-

-

-

385

Net cash used in investing activities

(23,874

)

(16,726

)

(1,835,480

)

(44,138

)

Cash flows from financing activities:

Cash dividends paid to Maximus shareholders

(17,213

)

(17,167

)

(68,838

)

(70,155

)

Purchases of Maximus common stock

-

-

(3,363

)

(166,959

)

Tax withholding related to RSU vesting

-

-

(9,818

)

(10,614

)

Payments for debt financing

(454

)

-

(23,213

)

-

Proceeds from borrowings

33,129

216,560

2,318,129

638,048

Principal payments for debt

(216,603

)

(340,474

)

(824,483

)

(619,445

)

Other

42

(8

)

(2,721

)

(965

)

Net cash provided by/(used in) financing activities

(201,099

)

(141,089

)

1,385,693

(230,090

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(2,356

)

1,879

474

1,705

Net change in cash, cash equivalents, and restricted cash

43,334

(7,427

)

68,009

(27,931

)

Cash, cash equivalents and restricted cash, beginning of period

113,236

95,988

88,561

116,492

Cash, cash equivalents and restricted cash, end of period

$

156,570

$

88,561

$

156,570

$

88,561

Maximus, Inc.

Consolidated Statements of Cash Flows

For the Three Months For the Year Ended September 30, Ended September 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

(in thousands)

Cash flows from operating activities:

Net income $ 52,014 $ 63,661 $ 291,200 $ 214,509

Adjustments to reconcilenet income to cash flows from operations:

Depreciation andamortization of property, 12,697 17,031 46,361 64,527 equipment and capitalizedsoftware

Amortization of intangible 20,639 8,900 44,357 35,634 assets

Amortization of debtissuance costs and debt 865 - 865 - discount

Deferred income taxes (10,209 ) (13,935 ) (6,577 ) (19,145 )

Stock compensation expense 7,731 6,150 28,554 23,708

Gain on sale of a business - (12 ) - (1,718 )

Costs related to debt - - 8,509 - financing

Change in assets andliabilities, net of effects of businesscombinations

Accounts receivable 292,882 47,146 38,578 (180,747 )

Prepaid expenses and other (24,268 ) (10,368 ) (16,726 ) (9,839 )current assets

Deferred contract costs 347 (515 ) (15,426 ) (1,911 )

Accounts payable and (89,969 ) 31,308 26,904 79,930 accrued liabilities

Accrued compensation and (16,275 ) (4,163 ) 18,112 29,484 benefits

Deferred revenue 30,028 (415 ) 53,652 2,391

Income taxes (17,898 ) 2,927 (2,733 ) 3,490

Operating leaseright-of-use assets and 4,237 515 5,314 (556 )liabilities

Other assets and 7,842 279 (3,622 ) 4,835 liabilities

Net cash provided by 270,663 148,509 517,322 244,592 operating activities

Cash flows from investing activities:

Purchases of property andequipment and capitalized (4,432 ) (12,271 ) (36,565 ) (40,707 )software costs

Acquisitions ofbusinesses, net of cash (19,442 ) (4,455 ) (1,798,915 ) (7,066 )acquired

Proceeds from the sale of - - - 3,250 a business

Other - - - 385

Net cash used in investing (23,874 ) (16,726 ) (1,835,480 ) (44,138 )activities

Cash flows from financing activities:

Cash dividends paid to (17,213 ) (17,167 ) (68,838 ) (70,155 )Maximus shareholders

Purchases of Maximus - - (3,363 ) (166,959 )common stock

Tax withholding related to - - (9,818 ) (10,614 )RSU vesting

Payments for debt (454 ) - (23,213 ) - financing

Proceeds from borrowings 33,129 216,560 2,318,129 638,048

Principal payments for (216,603 ) (340,474 ) (824,483 ) (619,445 )debt

Other 42 (8 ) (2,721 ) (965 )

Net cash provided by/(used (201,099 ) (141,089 ) 1,385,693 (230,090 )in) financing activities

Effect of exchange ratechanges on cash, cash (2,356 ) 1,879 474 1,705 equivalents, andrestricted cash

Net change in cash, cashequivalents, and 43,334 (7,427 ) 68,009 (27,931 )restricted cash

Cash, cash equivalents andrestricted cash, beginning 113,236 95,988 88,561 116,492 of period

Cash, cash equivalents andrestricted cash, end of $ 156,570 $ 88,561 $ 156,570 $ 88,561 period

Maximus, Inc.

Consolidated Results of Operations by Segment

For the Three Months Ended September 30,

For the Year Ended September 30,

2021

2020

2021

2020

Amount (1)

% (2)

Amount (1)

% (2)

Amount (1)

% (2)

Amount (1)

% (2)

(Unaudited)

(dollars in thousands)

Revenue:

U.S. Services

$

392,623

$

371,345

$

1,662,110

$

1,329,274

U.S. Federal Services

540,302

423,232

1,893,284

1,633,337

Outside the U.S.

173,206

129,259

699,091

498,926

Revenue

$

1,106,131

$

923,836

$

4,254,485

$

3,461,537

Gross Profit:

U.S. Services

$

84,794

21.6

%

$

92,199

24.8

%

$

408,050

24.6

%

$

360,272

27.1

%

U.S. Federal Services

120,146

22.2

%

86,423

20.4

%

432,551

22.8

%

318,925

19.5

%

Outside the U.S.

13,466

7.8

%

18,229

14.1

%

106,374

15.2

%

31,805

6.4

%

Gross Profit

$

218,406

19.7

%

$

196,851

21.3

%

$

946,975

22.3

%

$

711,002

20.5

%

Selling, general, and administrative expense:

U.S. Services

$

36,954

9.4

%

$

29,856

8.0

%

$

153,609

9.2

%

$

132,489

10.0

%

U.S. Federal Services

70,608

13.1

%

54,568

12.9

%

243,485

12.9

%

186,023

11.4

%

Outside the U.S.

21,230

12.3

%

18,813

14.6

%

86,248

12.3

%

65,938

13.2

%

Gain on sale of business (4)

-

NM

(12

)

NM

-

NM

(1,718

)

NM

Other (3)

798

NM

203

NM

10,746

NM

4,358

NM

Selling, general and administrative expense

$

129,590

11.7

%

$

103,428

11.2

%

$

494,088

11.6

%

$

387,090

11.2

%

Operating income:

U.S. Services

$

47,840

12.2

%

$

62,343

16.8

%

$

254,441

15.3

%

$

227,783

17.1

%

U.S. Federal Services

49,538

9.2

%

31,855

7.5

%

189,066

10.0

%

132,902

8.1

%

Outside the U.S.

(7,764

)

(4.5

)%

(584

)

(0.5

)%

20,126

2.9

%

(34,133

)

(6.8

)%

Amortization of intangible assets

(20,639

)

NM

(8,900

)

NM

(44,357

)

NM

(35,634

)

NM

Gain on sale of business (4)

-

NM

12

NM

-

NM

1,718

NM

Other (3)

(798

)

NM

(203

)

NM

(10,746

)

NM

(4,358

)

NM

Operating income

$

68,177

6.2

%

$

84,523

9.1

%

$

408,530

9.6

%

$

288,278

8.3

%

Maximus, Inc.

Consolidated Results of Operations by Segment

For the Three Months For the Year Ended September 30, Ended September 30,

2021 2020 2021 2020

Amount (1) % (2) Amount (1) % (2) Amount (1) % (2) Amount (1) % (2)

(Unaudited)

(dollars in thousands)

Revenue:

U.S. Services $ 392,623 $ 371,345 $ 1,662,110 $ 1,329,274

U.S. Federal 540,302 423,232 1,893,284 1,633,337 Services

Outside the 173,206 129,259 699,091 498,926 U.S.

Revenue $ 1,106,131 $ 923,836 $ 4,254,485 $ 3,461,537

Gross Profit:

U.S. Services $ 84,794 21.6 % $ 92,199 24.8 % $ 408,050 24.6 % $ 360,272 27.1 %

U.S. Federal 120,146 22.2 % 86,423 20.4 % 432,551 22.8 % 318,925 19.5 %Services

Outside the 13,466 7.8 % 18,229 14.1 % 106,374 15.2 % 31,805 6.4 %U.S.

Gross Profit $ 218,406 19.7 % $ 196,851 21.3 % $ 946,975 22.3 % $ 711,002 20.5 %

Selling,general, and administrativeexpense:

U.S. Services $ 36,954 9.4 % $ 29,856 8.0 % $ 153,609 9.2 % $ 132,489 10.0 %

U.S. Federal 70,608 13.1 % 54,568 12.9 % 243,485 12.9 % 186,023 11.4 %Services

Outside the 21,230 12.3 % 18,813 14.6 % 86,248 12.3 % 65,938 13.2 %U.S.

Gain on saleof business - NM (12 ) NM - NM (1,718 ) NM (4)

Other (3) 798 NM 203 NM 10,746 NM 4,358 NM

Selling,general and $ 129,590 11.7 % $ 103,428 11.2 % $ 494,088 11.6 % $ 387,090 11.2 %administrativeexpense

Operating income:

U.S. Services $ 47,840 12.2 % $ 62,343 16.8 % $ 254,441 15.3 % $ 227,783 17.1 %

U.S. Federal 49,538 9.2 % 31,855 7.5 % 189,066 10.0 % 132,902 8.1 %Services

Outside the (7,764 ) (4.5 ) (584 ) (0.5 ) 20,126 2.9 % (34,133 ) (6.8 )U.S. % % %

Amortizationof intangible (20,639 ) NM (8,900 ) NM (44,357 ) NM (35,634 ) NM assets

Gain on saleof business - NM 12 NM - NM 1,718 NM (4)

Other (3) (798 ) NM (203 ) NM (10,746 ) NM (4,358 ) NM

Operating $ 68,177 6.2 % $ 84,523 9.1 % $ 408,530 9.6 % $ 288,278 8.3 %income

(1)

Expenses that are not specifically included in the segments are included in other categories, including amortization of intangible assets and the direct costs of acquisitions. These costs are excluded from measuring each segment's operating performance.

(2)

Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM."

(3)

Other selling, general, and administrative expenses includes credits and costs that are not allocated to a particular segment. This includes expenses incurred as part of our acquisitions, as well as potential acquisitions which have not been or may not be completed. Our results for the year ended September 30, 2021, included $9.5 million of expenses relating to the acquisitions of Attain, LLC, and VES Group, Inc.

(4)

During fiscal year 2020, we sold Q2 Administrators LLC, a subsidiary within our U.S. Federal Services Segment, resulting in a gain.

Expenses that are not specifically included in the segments are included(1) in other categories, including amortization of intangible assets and the direct costs of acquisitions. These costs are excluded from measuring each segment's operating performance.

(2) Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM."

Other selling, general, and administrative expenses includes credits and costs that are not allocated to a particular segment. This includes(3) expenses incurred as part of our acquisitions, as well as potential acquisitions which have not been or may not be completed. Our results for the year ended September 30, 2021, included $9.5 million of expenses relating to the acquisitions of Attain, LLC, and VES Group, Inc.

(4) During fiscal year 2020, we sold Q2 Administrators LLC, a subsidiary within our U.S. Federal Services Segment, resulting in a gain.

Maximus, Inc.

Consolidated Free Cash Flows - Non-GAAP

For the Three Months Ended September 30,

For the Year Ended September 30,

2021

2020

2021

2020

(unaudited, in thousands)

Net cash provided by operating activities

$

270,663

$

148,509

$

517,322

$

244,592

Purchases of property and equipment and capitalized software costs

(4,432

)

(12,271

)

(36,565

)

(40,707

)

Free cash flows

$

266,231

$

136,238

$

480,757

$

203,885

Maximus, Inc.

Consolidated Free Cash Flows - Non-GAAP

For the Three Months For the Year Ended September 30, Ended September 30,

2021 2020 2021 2020

(unaudited, in thousands)

Net cash provided by $ 270,663 $ 148,509 $ 517,322 $ 244,592 operating activities

Purchases of property andequipment and capitalized (4,432 ) (12,271 ) (36,565 ) (40,707 )software costs

Free cash flows $ 266,231 $ 136,238 $ 480,757 $ 203,885

Maximus, Inc.

Unaudited Pro Forma Results

For the Year Ended September 30,

2021

2020

(dollars in thousands, except per share amounts)

Revenue

$

4,672,597

$

4,013,994

Cost of revenue

3,566,894

3,107,493

Gross profit

1,105,703

906,501

Selling, general, and administrative expenses

553,048

485,903

Amortization of intangible assets

85,621

101,467

Operating income

467,034

319,131

Interest expense

(37,410

)

(38,239

)

Other expense, net

(2,414

)

(12,791

)

Income before income taxes

427,210

268,101

Provision for income taxes

102,045

64,328

Net income

$

325,165

$

203,773

Earnings per share:

Basic

$

5.24

$

3.23

Diluted

$

5.21

$

3.22

Weighted average shares outstanding:

Basic

62,072

63,062

Diluted

62,365

63,322

These pro forma results are shown as though VES and Attain acquisitions occurred on October 1, 2019. Please refer to our Annual Report on Form 10-K for an explanation of the methodology used to prepare these pro forma financial results.

Maximus, Inc.

Unaudited Pro Forma Results

For the Year Ended September 30,

2021 2020

(dollars in thousands, except per share amounts)

Revenue $ 4,672,597 $ 4,013,994

Cost of revenue 3,566,894 3,107,493

Gross profit 1,105,703 906,501

Selling, general, and administrative 553,048 485,903 expenses

Amortization of intangible assets 85,621 101,467

Operating income 467,034 319,131

Interest expense (37,410 ) (38,239 )

Other expense, net (2,414 ) (12,791 )

Income before income taxes 427,210 268,101

Provision for income taxes 102,045 64,328

Net income $ 325,165 $ 203,773



Earnings per share:

Basic $ 5.24 $ 3.23

Diluted $ 5.21 $ 3.22

Weighted average shares outstanding:

Basic 62,072 63,062

Diluted 62,365 63,322

These pro forma results are shown as though VES and Attain acquisitions occurred on October 1, 2019. Please refer to our Annual Report on Form 10-K for an explanation of the methodology used to prepare these pro forma financial results.

Maximus, Inc.

Non-GAAP Adjusted Results Excluding Amortization of Intangible Assets

For the Three Months For the Year Ended Ended September 30, September 30,

2021 2020 2021 2020

(dollars in thousands, except per share data)

Operating income $ 68,177 $ 84,523 $ 408,530 $ 288,278

Add back: Amortization of 20,639 8,900 44,357 35,634 intangible assets

Adjusted operating incomeexcluding amortization of $ 88,816 $ 93,423 $ 452,887 $ 323,912 intangible assets(Non-GAAP)

Adjusted operating incomemargin excluding 8.0 % 10.1 % 10.6 % 9.4 %amortization of intangibleassets (Non-GAAP)



Net income $ 52,014 $ 63,661 $ 291,200 $ 214,509

Add back: Amortization ofintangible assets, net of 15,388 6,437 32,752 26,321 tax

Adjusted net incomeexcluding amortization of $ 67,402 $ 70,098 $ 323,952 $ 240,830 intangible assets(Non-GAAP)



Diluted earnings per share $ 0.83 $ 1.02 $ 4.67 $ 3.39

Add back: Effect ofamortization of intangible 0.25 0.11 0.52 0.41 assets on diluted earningsper share

Adjusted diluted earningsper share excluding $ 1.08 $ 1.13 $ 5.19 $ 3.80 amortization of intangibleassets (Non-GAAP)

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CONTACT: James Francis 703.251.8526 JamesBFrancis@maximus.com Madison West 703.251.8443 MadisonTWest@maximus.com