mms-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________.

Commission file number: 1-12997


Maximus, Inc.
(Exact name of registrant as specified in its charter)

Virginia						54-1000588
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1600 Tysons Boulevard, McLean, Virginia						22102
(Address of principal executive offices)						(Zip Code)

(703) 251-8500
(Registrant's telephone number, including the area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

MMS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

There were 60,796,458 shares of the registrant's Common Stock outstanding as of May 6, 2024.

Table of Contents

Table of Contents to Second Quarter 2024 Form 10-Q


	SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	3
Part I - Financial Information		4
Item 1.	Financial Statements	4
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Balance Sheets	6
	Consolidated Statements of Cash Flows	7
	Consolidated Statements of Changes in Shareholders’ Equity	8
	Notes to Consolidated Financial Statements	10
	1. Organization	10
	2. Significant Accounting Policies	10
	3. Business Segments	11
	4. Revenue Recognition	13
	5. Earnings Per Share	15
	6. Debt and Derivatives	15
	7. Acquisitions and Divestitures	16
	8. Fair Value Measurements	16
	9. Equity	18
	10. Other Balance Sheet Items	18
	11. Commitments and Contingencies	19
	12. Subsequent Event	21
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
	Business Overview	22
	Financial Overview	23
	Results of Operations	23
	Liquidity and Capital Resources	27
	Critical Accounting Policies and Estimates	31
	Non-GAAP and Other Measures	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
Part II - Other Information		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34
	Signatures	35

Table of Contents

Unless otherwise specified, references in this Quarterly Report on Form 10-Q to "our," "we," "us," "Maximus," the "Company," and "our business" refer to Maximus, Inc. and its subsidiaries.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Included in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "opportunity," "could," "potential," "believe," "project," "estimate," "expect," "continue," "forecast," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods.

Any statements herein that are not historical facts, including statements about our confidence, strategies and initiatives, and our expectations about revenues, results of operations, profitability, liquidity, market demand, and our recent acquisitions and divestitures, are forward-looking statements that are subject to risks and uncertainties. These risks could cause our actual results to differ materially from those indicated by such forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

•a failure to meet performance requirements could lead to penalties, liquidated damages, actual damages, adverse settlement agreements, and/or contract termination;

•our ability to successfully compete, bid for, and accurately price contracts to generate our desired profit;

•the effects of future legislative or government budgetary and spending changes;

•the impact of the U.S. government on federal procurement, federal funding to states' safety-net programs, and the overall decision-making process related to our industry, including our business and customers;

•our ability to manage our growth, including acquired businesses;

•difficulties in integrating or achieving projected revenues, earnings, and other benefits associated with acquired businesses;

•the outcome of reviews or audits, which might result in financial penalties and impair our ability to respond to invitations for new work;

•our ability to manage capital investments and startup costs incurred before receiving related contract payments;

•our ability to manage our debt;

•our ability to maintain our technology systems and otherwise protect confidential or protected information;

•our discovery of additional information related to the previously disclosed cybersecurity incident and any potential legal, business, reputational, or financial consequences resulting from the incident;

•our ability to attract and retain executive officers, senior managers, and other qualified personnel to execute our business;

•the effect of union activity and organizing efforts at our U.S. locations;

•the ability of government customers to terminate contracts on short notice, with or without cause;

•our ability to maintain relationships with key government entities from whom a substantial portion of our revenue is derived;

•a failure to comply with laws governing our business, which might result in the Company being subject to fines, penalties, suspension, debarment, and other sanctions;

•the costs and outcome of litigation;

•our ability to manage third parties upon whom we depend to provide services to our customers;

•the effects of changes in laws and regulations governing our business, including tax laws and applicable interpretations and guidance thereunder, or changes in accounting policies, rules, methodologies, and practices, and our ability to estimate the impact of such changes;

•our ability to manage emerging artificial intelligence and machine learning technologies;

•matters related to businesses we disposed of or divested; and

•other factors set forth in Item 1A, "Risk Factors" of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on November 16, 2023.

Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise.

Table of Contents

PART I - Financial Information

Item 1. Financial Statements

Maximus, Inc.

Consolidated Statements of Operations

(Unaudited)


	For the Three Months Ended				For the Six Months Ended
	March 31, 2024		March 31, 2023		March 31, 2024		March 31, 2023
	(in thousands, except per share amounts)
Revenue	$	1,348,357	$	1,206,852	$	2,675,398	$	2,456,098
Cost of revenue	1,030,768		978,249		2,057,755		1,982,748
Gross profit	317,589		228,603		617,643		473,350
Selling, general, and administrative expenses	168,454		142,448		337,649		288,900
Amortization of intangible assets	21,641		23,650		44,990		47,168
Operating income	127,494		62,505		235,004		137,282
Interest expense	20,366		20,999		41,873		42,605
Other expense/(income), net	(822)		(818)		(334)		(1,084)
Income before income taxes	107,950		42,324		193,465		95,761
Provision for income taxes	27,440		10,536		48,807		23,978
Net income	$	80,510	$	31,788	$	144,658	$	71,783

Earnings per share:
Basic	$	1.31	$	0.52	$	2.36	$	1.17
Diluted	$	1.31	$	0.52	$	2.35	$	1.17
Weighted average shares outstanding:
Basic	61,371		61,120		61,330		61,119
Diluted	61,622		61,383		61,573		61,265

Dividends declared per share	$	0.30	$	0.28	$	0.60	$	0.56

See accompanying notes to consolidated financial statements.

Table of Contents

Maximus, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)


	For the Three Months Ended				For the Six Months Ended
	March 31, 2024		March 31, 2023		March 31, 2024		March 31, 2023
	(in thousands)
Net income	$	80,510	$	31,788	$	144,658	$	71,783
Other comprehensive (loss)/income, net of tax:
Foreign currency translation adjustments	(2,245)		965		3,667		9,001
Net gains/(losses) on cash flow hedge, net of tax effect of $957, $(1,630), $(2,212), and $(2,979), respectively	2,684		(4,562)		(6,201)		(8,343)
Other comprehensive income/(loss)	439		(3,597)		(2,534)		658
Comprehensive income	$	80,949	$	28,191	$	142,124	$	72,441

See accompanying notes to consolidated financial statements.

Table of Contents

Maximus, Inc.

Consolidated Balance Sheets


	March 31, 2024		September 30, 2023
	(unaudited)
	(in thousands)
Assets:
Cash and cash equivalents	$	77,370	$	65,405
Accounts receivable, net	916,004		826,873
Income taxes receivable	14,167		16,556
Prepaid expenses and other current assets	110,912		146,632
Total current assets	1,118,453		1,055,466
Property and equipment, net	35,371		38,831
Capitalized software, net	141,943		107,811
Operating lease right-of-use assets	148,413		163,929
Goodwill	1,780,158		1,779,215
Intangible assets, net	676,909		703,648
Deferred contract costs, net	49,102		45,372
Deferred compensation plan assets	51,786		42,919
Deferred income taxes	2,129		2,459
Other assets	36,880		46,147
Total assets	$	4,041,144	$	3,985,797
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued liabilities	$	276,199	$	282,081
Accrued compensation and benefits	172,601		194,251
Deferred revenue, current portion	76,574		60,477
Income taxes payable	15,792		451
Long-term debt, current portion	88,517		86,844
Operating lease liabilities, current portion	48,470		49,852
Other current liabilities	50,563		49,058
Total current liabilities	728,716		723,014
Deferred revenue, non-current portion	33,374		38,849
Deferred income taxes	192,890		203,898
Long-term debt, non-current portion	1,121,337		1,163,149
Deferred compensation plan liabilities, non-current portion	53,539		46,432
Operating lease liabilities, non-current portion	112,780		129,367
Other liabilities	9,365		13,253
Total liabilities	2,252,001		2,317,962
Commitments and contingencies (Note 11)
Shareholders' equity:
Common stock, no par value; 100,000 shares authorized; 61,037 and 60,998 shares issued and outstanding as of March 31, 2024, and September 30, 2023, respectively	594,387		577,898
Accumulated other comprehensive loss	(30,149)		(27,615)
Retained earnings	1,224,905

SEC Form 10-Q filed by Maximus Inc.