MAXIMUS Reports FISCAL 2011 Third Quarter Results
MAXIMUS Inc. today reported financial results for its fiscal third quarter ended June 30, 2011.
Key highlights include:
- Third quarter revenue grew 13% to a record $238.3 million compared to the same period last year.
- Adjusted diluted earnings per share from continuing operations for the third quarter increased 22% to a record level of $0.56 compared to adjusted diluted EPS of $0.46 in the prior-year period.
- Cash and cash equivalents totaled $204.0 million at June 30, 2011, while share repurchases totaled $9.4 million during the quarter.
- Year-to-date signed awards were $1.4 billion at August 2, 2011.
- The Company completed a two-for-one stock split effective June 30, 2011 and in May announced a 20% increase to its quarterly cash dividend payable on August 31, 2011.
Revenue for the fiscal 2011 third quarter increased 13% (8% on a constant currency basis) to $238.3 million compared to $211.5 million reported for the same period last year. Income from continuing operations, net of taxes, increased 24% to $20.0 million for the third quarter compared to $16.1 million last year. For the third quarter, adjusted diluted earnings per share from continuing operations increased 22% to $0.56 compared to $0.46 for the same period last year. All numbers reflect the recent two-for-one stock split.
Revenue and profit growth were driven principally by strong operational performance in both segments from new work and expansion of existing contracts, which resulted in an operating margin of 13.1%, excluding legal and settlement expense. Results in the quarter exceeded expectations and benefitted from strong performance in Australia, the acceleration of revenue and profit in the United Kingdom, and favorable currency rates in the quarter.
“Record results for the third quarter demonstrate our solid execution and continued strong performance, which positions us well for fiscal 2012,” commented Richard A. Montoni, Chief Executive Officer of MAXIMUS. “In June, we successfully launched operations in the United Kingdom for the new Work Programme and operations are trending as expected. We are also actively marketing and responding to the increase in activities under the Affordable Care Act, as states are working to solidify their plans for Medicaid expansion and health insurance exchanges.”
Health Services Segment
Health Services Segment revenue for the third quarter of fiscal 2011 increased 11% to $141.8 million compared to $127.3 million in the same period last year, driven by new work and expansion of existing contracts. Operating income for the third quarter increased 10% to $15.9 million compared to $14.5 million for the same period last year. Segment operating margin for the third quarter was 11.2%.
Human Services Segment
Human Services Segment revenue for the fiscal 2011 third quarter increased 15% (4% on a constant currency basis) to $96.5 million compared to $84.2 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 third quarter increased 40% to $14.9 million compared to $10.7 million for the same period last year. Segment operating margin for the third quarter was 15.4%.
New Sales and Pipeline
At August 2, 2011 fiscal year-to-date signed contract wins totaled $1.4 billion compared to $379 million reported last year. New contracts pending (awarded but unsigned) totaled $338 million compared to $916 million last year. Sales opportunities (pipeline) at August 2, 2011 totaled $1.8 billion (consisting of $378 million in proposals pending, $39 million in proposals in preparation and $1.4 billion in proposals tracking) compared to $1.8 billion the prior year.
Balance Sheet and Cash Flows
Cash and cash equivalents totaled $204.0 million at June 30, 2011. For the fiscal 2011 third quarter, cash provided by operating activities from continuing operations totaled $34.1 million with free cash flow of $27.8 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 favorable at 54 days and driven by the timing of collections.
On May 31, 2011, MAXIMUS paid a quarterly cash dividend of $2.6 million, which reflected the 25% dividend increase declared in January. During the third quarter, the Company completed a two-for-one stock split effective June 30, 2011 and announced another 20% increase to its quarterly cash dividend. The cash dividend of $0.09 is payable on August 31, 2011 to shareholders of record on August 15, 2011. During the fiscal 2011 third quarter, the Company purchased 238,600 shares of MAXIMUS common stock for $9.4 million under the Board-authorized share repurchase program. At June 30, 2011, the Company had $115.4 million available under the program for future repurchases. MAXIMUS remains committed to this program and since 2008, has repurchased 12.4 million shares of common stock for $246.8 million through August 2, 2011.
Outlook
The Company is raising its fiscal 2011 revenue and earnings guidance as a result of strong performance in the third quarter. MAXIMUS now expects revenue from continuing operations in the range of $925 million to $935 million and adjusted diluted earnings per share from continuing operations in the range of $2.15 to $2.20. Mr. Montoni concluded, “Our favorable performance in the quarter, in addition to our fourth quarter outlook, has led us to increase our full-year guidance and demonstrates our commitment to profitable growth and delivering long-term shareholder value. Additionally, we completed a two-for-one stock split and announced an additional 20% increase to our quarterly cash dividend, which underscores the confidence we have in our future. With a healthy balance sheet and strong cash flows, we are well positioned to fund our future growth while providing cash returns to shareholders."
Website Presentation, Conference Call and Webcast Information
MAXIMUS will host a conference call this morning, August 4, 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 August 11, 2011. Callers can access the replay by calling:
877.660.6853 (Domestic)/201.612.7415 (International)
Replay account number: 316
Replay conference ID number: 376023
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.
