MAXIMUS Reports Second Quarter Revenue of $130.7 Million and EPS of 32 Cents.Business Editors RESTON Reston, uninc. city (1990 pop. 48,556), Fairfax co., N Va., a planned community established in 1961. A suburb of Washington, D.C., Reston is organized in a series of residential villages and commercial areas. , Va.--(BUSINESS WIRE)--May 6, 2003 MAXIMUS Maximus is a name formed from the Latin term for "greatest" or "largest." It is therefore also a common noun, and may refer to any of the following: People in the Ancient World Politicians See: New York Stock Exchange :MMS (Multimedia Messaging Service) An enhanced transmission service that enables graphics, video clips and sound files to be transmitted via cellphones. Developed as part of the 3GPP project, MMS phones are generally backward compatible with SMS and EMS. ), a leading provider of consulting, health and human services Noun 1. Health and Human Services - the United States federal department that administers all federal programs dealing with health and welfare; created in 1979 Department of Health and Human Services, HHS program management, and information technology services for government agencies, today reported results for its fiscal 2003 second quarter ended March 31, 2003. Revenue for the second quarter increased 7.1% to $130.7 million compared to $122.0 million recorded in the second quarter last year and consistent with the Company's revised revenue expectations in the range of $127.0 million to $132.0 million. Net income for the second quarter was $6.9 million, or $0.32 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, versus net income in the prior-year period of $7.1 million, or $0.30 per diluted share, and also in line with the Company's revised EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. expectations in the range of $0.30 to $0.35 per diluted share. Since the close of the second quarter, the Company announced that it had been notified of the intent of the state of California's Managed Risk Medical Insurance Board (MRMIB MRMIB Managed Risk Medical Insurance Board (California) ) to award MAXIMUS a five-year contract, estimated at $418.4 million which includes $70.6 million in pass-through pass-through n. 1. An opening between two rooms, especially a shelved space between a kitchen and dining room that is used for passing food. 2. A route through which something is permitted to pass. 3. costs. The scope of work will cover two California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). programs: the Healthy Families Program (HFP HFP Healthy Families Program HFP Honda Factory Performance HFP Hexafluoropropylene (Shipboard Fire Fighting Agent) HFP Hostile Fire Pay HFP Hepatic Function Panel HFP Hexafluoro-2-Propanol HFP Hands Free Protocol ) and the Access for Infants Persons who are under the age of legal majority—at Common Law, 21 years, now generally 18 years. According to the sense in which this term is used, it may denote the age of the person, the contractual disabilities that non-age entails, or his or her status with regard to and Mothers (AIM) Program. The Company does not expect to recognize any revenue from this project until January January: see month. 1, 2004, and it estimates that reimbursable re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. transition costs of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $18.0 million will be incurred through December December: see month. 2003. These costs will be deferred and are expected to be amortized over the five years beginning January 1, 2004 and are not expected to impact profitability in 2003. The award is still subject to execution of a completed contract, which is expected to occur in May. "After a challenging March quarter, we are delighted by this notice of contract award which ranks as one of the largest wins in the Company's 28-year history," Dr. David V. Mastran, Chief Executive Officer and President. "This award is a solid confirmation of our strategy to invest in our proposal operations center The facility or location on an installation, base, or facility used by the commander to command, control, and coordinate all crisis activities. See also base defense operations center; command center. , established just last year, and underscores our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. commitment to invest in and develop new initiatives and capabilities that expand our business despite weaknesses and uncertainties in the current environment." As previously expected, second quarter results were impacted by challenging market conditions, including state cutbacks and postponements due to continued state budget pressures which influenced state procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. decisions. Related delays in contract signings and work start delays in certain Systems and Consulting contracts affected revenue and profitability for the period. While Systems revenue declined slightly on a sequential One after the other in some consecutive order such as by name or number. basis due to the delayed signing and work start delays, revenue still increased 18% on a year-over-year basis as a result of growth in ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. Solutions, Asset Solutions and Justice Solutions and we expect continued growth the remainder of the year. As expected, Health Services health services Managed care The benefits covered under a health contract increased slightly on a sequential basis as the segment maintained market share, serviced existing accounts and continued to benefit from a base of consistent recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue. On a year-over year basis, revenue increased 15% over the second quarter of last year. Human Services revenue increased approximately 5% on a year-over-year basis but declined when compared to first quarter revenue as the segment continued to be impacted by weakness primarily in Workforce Services and is expected to remain soft for the remainder of the fiscal year as current trends persist. Consulting revenue in the second quarter increased slightly on a sequential basis but declined 4% year-over-year due to softer demand for traditional services, such as IT consulting and management studies, which was partially offset by the solid performance of the Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. practice. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses in the second quarter totaled $19.2 million with free cash flow (which represents cash provided by operating activities less capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. software development costs and purchases of property and equipment) of $15.8 million. As anticipated, Days Sales Outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (DSOs) declined to 98 days at the end of the quarter from 101 days in the first quarter. At March 31, 2003, cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has increased to $92.8 million, primarily as a result of solid cash flows and net of the Company's repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of 369,800 common shares under its ongoing share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. In March 2003, the Board authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: an additional $30 million for the program for a total balance available at the end of the second quarter of approximately $31.5 million. MAXIMUS remains debt-free and intends to continue to repurchase shares under the program as appropriate. Signed contract wins through April 30, 2003 totaled $238.0 million compared to $118.7 million for the comparable period last year. Awarded but unsigned unsigned Adjective (of a letter etc.) anonymous Adj. 1. unsigned - lacking a signature; "the message was typewritten and unsigned" signed - having a handwritten signature; "a signed letter" contracts, which include the newly awarded $418 million MRMIB contract, totaled $539.8 million at April 30, 2003, versus $125.0 million in the prior year. Sales opportunities (consisting of $458.2 million in proposals pending, $52.7 million in proposals in preparation and $497.1 million of RFPs tracking) remained strong and totaled just over $1 billion versus $649.0 million recorded for the same period a year ago. For the fiscal year ending September September: see month. 30, 2003, MAXIMUS continues to expect to generate revenue between $520.0 million and $530.0 million and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of at least $1.60. MAXIMUS expects sequential improvement in profitability from the second quarter driven by resource reductions in some areas and improved contributions primarily related to the commencement of previously delayed work. Dr. Mastran concluded, "While it was necessary to previously adjust our outlook for the year, we are energized about our future prospects and opportunities. In addition to winning the largest contract in company history, the overall business remains largely resilient See resiliency. , profitable and continues to generate solid recurring annual cash flows." The Company will host a conference call at 10:30 EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT which is open to the public and can be accessed by calling:
Conference Call Number: 800/223-9488 (Domestic)
785/832-1077 (International)
Conference ID: MMS
For those unable to listen to the live call, a replay will be available for one week following the call and will expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. on Tuesday Tuesday: see week. , May 13th, 2003, at midnight. The replay will be available by calling: Replay: 402/220-1173 or 800/934-4245 MAXIMUS is one of America's largest government services companies, providing governments with consulting, program management, and information technology services. The Company has 5,300 employees located in more than 245 offices across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and overseas. In 1999, 2000, and 2001, MAXIMUS was selected by Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes Magazine as one of the Best 200 Small Companies in America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. . MAXIMUS is also one of the two companies selected by Business Week Magazine as one of the Hottest Small Cap Growth Companies for the last four years in a row. Additionally, MAXIMUS is included in the Russell 2000 Index Russell 2000 Index An index measuring the performance of the 2,000 smallest companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small-cap stocks in the United States. 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 revenue, results of operations, profitability, future contracts, market opportunities, market demand or acceptance of the Company's products are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Annual Report filed with the Securities and Exchange Commission (file number 001-12997)
MAXIMUS, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Sept. 30, March 31,
2002 2003
(unaudited)
---------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 94,965 $92,623
Marketable securities 160 140
Accounts receivable - billed 108,074 111,313
Accounts receivable - unbilled 25,102 29,839
Prepaid expenses and other current assets 7,123 7,518
---------- -----------
Total current assets 235,424 241,433
Property and equipment, at cost 39,612 43,018
Less: Accumulated depreciation and
amortization (14,206) (16,814)
---------- -----------
Property and equipment, net 25,406 26,204
Software development costs 19,024 20,719
Less: Accumulated amortization (4,908) (6,829)
Software development, net 14,116 13,890
Goodwill, net 68,812 71,291
Intangible assets, net 6,540 6,647
Other assets 1,792 2,115
---------- -----------
Total assets $ 352,090 $ 361,580
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,867 $ 13,459
Accrued compensation and benefits 19,726 18,361
Deferred revenue 12,939 16,080
Income taxes payable 2,325 3,163
Deferred income taxes 1,811 1,938
Other current liabilities 1,794 1,766
---------- -----------
Total current liabilities 49,462 54,767
Other liabilities 499 414
---------- -----------
Total liabilities 49,961 55,181
Shareholders' equity:
Common stock, no par value; 60,000,000 shares
authorized; 21,509,444
and 20,888,289 shares issued and outstanding
at September 30, 2002 and March 31, 2003,
at stated amount, respectively 144,156 131,109
Accumulated other comprehensive income 24 42
Retained earnings 157,949 175,248
---------- -----------
Total shareholders' equity 302,129 306,399
---------- -----------
Total liabilities and shareholders' equity $ 352,090 $ 361,580
========== ===========
MAXIMUS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Six Months
Ended March 31, Ended March 31,
--------------------- ---------------------
2002 2003 2002 2003
---------- ---------- ---------- ----------
Revenue $121,953 $130,663 $251,523 $263,354
Cost of revenue 86,749 92,077 175,535 182,507
---------- ---------- ---------- ----------
Gross profit 35,204 38,586 75,988 80,847
Selling, general and
administrative expenses 23,589 27,059 46,117 52,676
Non-cash equity based
compensation - 256 - 512
Amortization of
acquisition-related
intangibles 250 273 513 553
---------- ---------- ---------- ----------
Income from
operations 11,365 10,998 29,358 27,106
Interest and other income 670 390 1,403 937
---------- ---------- ---------- ----------
Income before income
taxes 12,035 11,388 30,761 28,043
Provision for income taxes 4,968 4,498 12,458 11,077
---------- ---------- ---------- ----------
Net income $7,067 $6,890 $18,303 $16,966
========== ========== ========== ==========
Earnings per share:
Net income:
Basic $ 0.31 $ 0.33 $ 0.79 $ 0.80
========== ========== ========== ==========
Diluted $ 0.30 $ 0.32 $ 0.76 $ 0.79
========== ========== ========== ==========
Weighted average shares
outstanding:
Basic 23,142 21,092 23,121 21,159
========== ========== ========== ==========
Diluted 23,850 21,329 23,937 21,419
========== ========== ========== ==========
MAXIMUS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months
Ended March 31,
---------------------
2002 2003
---------- ----------
Cash flows from operating activities:
Net income $ 18,303 $ 16,966
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,147 2,608
Amortization 1,613 2,474
Deferred income taxes 1,331 294
Tax benefit due to option exercises 915 333
Non-cash equity based compensation - 512
Change in assets and liabilities, net of effects
from acquisitions:
Accounts receivable - billed 455 (3,201)
Accounts receivable - unbilled (3,155) (4,738)
Prepaid expenses and other current assets (3,307) (1,253)
Other assets 470 259
Accounts payable (1,151) 2,316
Accrued compensation and benefits (3,650) (1,365)
Deferred revenue (5,024) 3,132
Income taxes payable 1,084 838
Other liabilities 99 (187)
---------- ----------
Net cash provided by operating activities 9,130 18,988
Cash flows from investing activities:
Acquisition of businesses, net of cash
acquired (4,100) (2,801)
Purchases of property and equipment (4,148) (3,382)
Decrease in notes receivable 90 136
Capitalization of software development
costs (3,415) (1,695)
Decrease in marketable securities 1,040 30
---------- ----------
Net cash used in investing activities (10,533) (7,712)
Cash flows from financing activities:
Employee stock transactions 6,556 1,906
Repurchases of common stock (5,279) (15,465)
Net payments on capital leases (123) (59)
---------- ----------
Net cash provided by (used in) financing
activities 1,154 (13,618)
---------- ----------
Net decrease in cash and cash equivalents (249) (2,342)
Cash and cash equivalents, beginning of period 114,108 94,965
---------- ----------
Cash and cash equivalents, end of period $113,859 $ 92,623
========== ==========
MAXIMUS, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
The following table provides certain financial information for
each of the Company's business segments:
Three Months Six Months
Ended March 31, Ended March 31,
--------------------- ---------------------
2002 2003 2002 2003
---------- ---------- ---------- ----------
Revenue:
Consulting Group $ 35,009 $ 33,566 $ 68,412 $ 66,761
Health Services Group 34,567 39,884 74,722 79,408
Human Services Group 34,403 36,014 71,583 74,373
Systems Group 17,974 21,199 36,806 42,812
---------- ---------- ---------- ----------
Total $121,953 $130,663 $251,523 $263,354
========== ========== ========== ==========
Gross Profit:
Consulting Group $ 16,560 $ 14,090 $ 32,090 $ 28,050
Health Services Group 2,657 9,407 11,125 19,212
Human Services Group 6,958 6,306 14,507 14,308
Systems Group 9,029 8,783 18,266 19,277
---------- ---------- ---------- ----------
Total $ 35,204 $ 38,586 $ 75,988 $ 80,847
========== ========== ========== ==========
Income from operations:
Consulting Group $ 8,425 $ 5,132 $ 16,376 $ 10,271
Health Services Group (1,011) 5,270 4,102 11,670
Human Services Group 2,273 166 5,573 2,123
Systems Group 1,678 430 3,307 3,042
---------- ---------- ---------- ----------
Total $11,365 $10,998 $29,358 $27,106
========== ========== ========== ==========
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