Cover Page
Cover Page - shares | 3 Months Ended | |
Dec. 31, 2020 | Feb. 01, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-12997 | |
Entity Registrant Name | Maximus, Inc. | |
Entity Incorporation, State or Country Code | VA | |
Entity Tax Identification Number | 54-1000588 | |
Entity Address, Address Line One | 1891 Metro Center Drive | |
Entity Address, City or Town | Reston | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20190 | |
City Area Code | 703 | |
Local Phone Number | 251-8500 | |
Title of 12(b) Security | Common Stock, no par value | |
Trading Symbol | MMS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Reporting Company | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 61,452,520 | |
Entity Central Index Key | 0001032220 | |
Current Fiscal Year End Date | --09-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 945,554 | $ 818,229 |
Cost of revenue | 739,499 | 642,779 |
Gross profit | 206,055 | 175,450 |
Selling, general, and administrative expenses | 111,967 | 87,227 |
Amortization of intangible assets | 6,516 | 9,088 |
Operating income | 87,572 | 79,135 |
Interest expense | 206 | 484 |
Other (expense)/income, net | (775) | 719 |
Income before income taxes | 86,591 | 79,370 |
Provision for income taxes | 22,514 | 20,636 |
Net income | $ 64,077 | $ 58,734 |
Basic earnings per share (in dollars per share) | $ 1.03 | $ 0.91 |
Diluted earnings per share (in dollars per share) | 1.03 | 0.91 |
Dividends paid per share (in dollars per share) | $ 0.28 | $ 0.28 |
Weighted average shares outstanding: | ||
Basic (in shares) | 62,038 | 64,597 |
Diluted (in shares) | 62,135 | 64,758 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 64,077 | $ 58,734 |
Foreign currency translation adjustments | 6,923 | 6,893 |
Comprehensive income | $ 71,000 | $ 65,627 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 132,597 | $ 71,737 |
Accounts receivable — billed and billable, net of allowance of $6,579 and $6,051 | 662,059 | 622,871 |
Accounts receivable — unbilled | 120,764 | 163,332 |
Income taxes receivable | 2,472 | 2,075 |
Prepaid expenses and other current assets | 68,935 | 72,543 |
Total current assets | 986,827 | 932,558 |
Property and equipment, net | 62,548 | 66,721 |
Capitalized software, net | 40,434 | 38,033 |
Operating lease right-of-use assets | 165,448 | 177,159 |
Goodwill | 595,927 | 593,129 |
Intangible assets, net | 140,484 | 145,893 |
Deferred contract costs, net | 21,294 | 20,891 |
Deferred compensation plan assets | 42,350 | 36,819 |
Deferred income taxes | 222 | 1,915 |
Other assets | 10,699 | 11,584 |
Total assets | 2,066,233 | 2,024,702 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 266,038 | 253,338 |
Accrued compensation and benefits | 93,443 | 137,101 |
Deferred revenue | 58,307 | 51,655 |
Income taxes payable | 22,685 | 5,377 |
Current portion of long-term debt and other borrowings | 14,159 | 10,878 |
Operating lease liabilities | 72,482 | 80,748 |
Other current liabilities | 20,286 | 22,071 |
Total current liabilities | 547,400 | 561,168 |
Deferred revenue, less current portion | 27,428 | 27,311 |
Deferred income taxes | 24,417 | 24,737 |
Long-term debt, less current portion | 18,481 | 18,017 |
Deferred compensation plan liabilities, less current portion | 45,304 | 38,654 |
Operating lease liabilities, less current portion | 95,678 | 104,011 |
Other liabilities | 9,214 | 8,985 |
Total liabilities | 767,922 | 782,883 |
Shareholders’ equity: | ||
Common stock, no par value; 100,000 shares authorized; 61,452 and 61,504 shares issued and outstanding at December 31, 2020, and September 30, 2020, respectively | 520,357 | 513,959 |
Accumulated other comprehensive loss | (35,715) | (42,638) |
Retained earnings | 813,669 | 770,498 |
Total shareholders' equity | 1,298,311 | 1,241,819 |
Total liabilities and shareholders' equity | $ 2,066,233 | $ 2,024,702 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable, current | $ 6,579 | $ 6,051 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 61,452,000 | 61,504,000 |
Common stock, shares issued | 61,452,000 | 61,504,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operations: | ||
Net income | $ 64,077 | $ 58,734 |
Adjustments to reconcile net income to cash flows from operations: | ||
Depreciation and amortization of property and equipment and capitalized software | 11,817 | 15,318 |
Amortization of intangible assets | 6,516 | 9,088 |
Deferred income taxes | 1,298 | 422 |
Stock compensation expense | 6,062 | 5,397 |
Change in assets and liabilities, net of effects of business combinations | ||
Accounts receivable — billed and billable | (35,729) | (31,016) |
Accounts receivable — unbilled | 43,538 | 2,013 |
Prepaid expenses and other current assets | 4,893 | 4,063 |
Deferred contract costs | (205) | 848 |
Accounts payable and accrued liabilities | 11,199 | 2,403 |
Accrued compensation and benefits | (35,682) | 6,842 |
Deferred revenue | 5,757 | (1,345) |
Income taxes | 16,947 | 13,984 |
Operating lease right-of-use assets and liabilities | (4,927) | (1,622) |
Other assets and liabilities | 2,554 | 2,138 |
Cash flows from operations | 98,115 | 87,267 |
Cash flows from investing activities: | ||
Purchases of property and equipment and capitalized software costs | (9,094) | (10,487) |
Other | (159) | 25 |
Cash used in investing activities | (9,253) | (10,462) |
Cash flows from financing activities: | ||
Cash dividends paid to Maximus shareholders | (17,207) | (17,913) |
Purchases of Maximus common stock | (3,363) | (1,898) |
Tax withholding related to RSU vesting | (9,818) | (10,614) |
Borrowings of debt | 147,852 | 83,419 |
Repayment of debt | (146,188) | (86,301) |
Other | (2,763) | (493) |
Cash used in financing activities | (31,487) | (33,800) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 3,882 | 1,452 |
Net increase in cash, cash equivalents, and restricted cash | 61,257 | 44,457 |
Cash, cash equivalents, and restricted cash, beginning of period | 88,561 | 116,492 |
Cash, cash equivalents, and restricted cash, end of period | $ 149,818 | $ 160,949 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Noncontrolling Interest |
Balance (in shares) at Sep. 30, 2019 | 63,979,000 | ||||
Balance at Sep. 30, 2019 | $ 1,248,201 | $ 498,433 | $ (45,380) | $ 794,739 | $ 409 |
Increase (Decrease) in Shareholders' Equity | |||||
Net income | 58,734 | 58,734 | |||
Foreign currency translation | 6,893 | 6,893 | |||
Cash dividends | (18,322) | (17,913) | (409) | ||
Dividends on RSUs | 0 | $ 354 | (354) | ||
Purchases of Maximus common stock (in shares) | (26,000) | ||||
Purchases of Maximus common stock | (1,898) | $ (1,900) | (1,898) | ||
Stock compensation expense | 5,397 | $ 5,397 | |||
Balance (in shares) at Dec. 31, 2019 | 63,953,000 | ||||
Balance at Dec. 31, 2019 | $ 1,299,005 | $ 504,184 | (38,487) | 833,308 | 0 |
Balance (in shares) at Sep. 30, 2020 | 61,504,000 | 61,504,000 | |||
Balance at Sep. 30, 2020 | $ 1,241,819 | $ 513,959 | (42,638) | 770,498 | 0 |
Increase (Decrease) in Shareholders' Equity | |||||
Net income | 64,077 | 64,077 | |||
Foreign currency translation | 6,923 | 6,923 | |||
Cash dividends | (17,207) | (17,207) | |||
Dividends on RSUs | 0 | $ 336 | (336) | ||
Purchases of Maximus common stock (in shares) | (52,000) | ||||
Purchases of Maximus common stock | (3,363) | $ (3,400) | (3,363) | ||
Stock compensation expense | $ 6,062 | $ 6,062 | |||
Balance (in shares) at Dec. 31, 2020 | 61,452,000 | 61,452,000 | |||
Balance at Dec. 31, 2020 | $ 1,298,311 | $ 520,357 | $ (35,715) | $ 813,669 | $ 0 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. As permitted by these instructions, they do not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation are included. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three months ended December 31, 2020, are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2020, has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. These financial statements should be read in conjunction with the consolidated audited financial statements and the notes thereto at September 30, 2020 and 2019, and for each of the three years in the period ended September 30, 2020, included in our Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on November 19, 2020. Estimates The preparation of these financial statements, in conformity with GAAP in the United States, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. At each reporting period end, we make estimates including those related to revenue recognition and cost estimation on certain contracts, the realizability of goodwill and amounts related to income taxes, certain accrued liabilities, and contingencies and litigation. We base our estimates on historical experience and expectations of the future that we believe to be reasonable. The economic and political effects of the Coronavirus (COVID) global pandemic increase uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates may be subject to greater volatility than has been the case in the past. • Our balance sheet includes goodwill valued at $595.9 million. This balance is allocated between reporting units, which are consistent with our three operating segments. Goodwill is not amortized but is tested for impairment when necessary and no less than once per year. We performed our last annual goodwill impairment test as of July 1, 2020, using a qualitative assessment. There has been no indication of impairment of any reporting unit at this time or since. • Our balance sheet includes a number of long-lived assets, including property and equipment, capitalized software, operating lease right-of-use assets, deferred contract costs and intangible assets. These assets are depreciated or amortized over their estimated useful economic lives but are subject to impairment if events indicate that the carrying amount may not be recoverable. At this time, there are no balances which we believe are not recoverable. • Our balance sheet includes $782.8 million of billed, billable and unbilled accounts receivable, net of allowance for credit losses. Beginning October 1, 2020, we have evaluated credit risk under ASC Topic 326; as further described below. Credit risk has not historically been significant to our business due to the nature of our customers. During the three months ended December 31, 2020, we recorded changes to our estimated credit losses of $0.6 million. • As disclosed in "Note 3. Revenue Recognition," revenue for some of our employment services contracts in the Outside the U.S. Segment is based upon achievement of future outcomes as defined in each contract. Specifically, we are paid as individuals attain employment goals, which may take many months to achieve. Revenue is recognized on these contracts over the period of performance. Employment markets worldwide suffered a significant shock during fiscal year 2020 and remain disrupted. • Many of our contracts in the United States are cost-plus contracts, where we are reimbursed for costs that are allowable, allocable and reasonable. Due to the global pandemic, we are incurring incremental and unusual costs, including additional sick pay and idle labor for employees who are unable to perform services due to their health issues, child care issues, or physical restrictions imposed on their workplace. Although the U.S. Federal Government, which provides the majority of our cost-plus contracts, has provided regular guidance, there is some uncertainty within other contracts as to recoverable costs. Changes in financial reporting In August 2018, the Financial Accounting Standards Board (FASB) issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This accounting guidance requires customers in cloud-computing arrangements to identify and defer certain implementation costs in a manner broadly consistent with that of existing guidance on the costs to develop or obtain internal-use software. Costs capitalized under this guidance will be expensed over the term of the cloud computing arrangement. We adopted this guidance on October 1, 2020, using a prospective approach. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This update introduces a new model for recognizing credit losses on financial instruments, including losses on accounts receivable. This update replaces the existing incurred loss impairment model with an expected loss model. We adopted this guidance on October 1, 2020, with no material impact to our financial statements. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment . This standard will not change the manner in which we would identify a goodwill impairment but would change any subsequent calculation of an impairment charge. We adopted this standard on October 1, 2020. The effect of this new standard will depend upon the outcome of future goodwill impairment tests. We are subject to agreements that reference the London Interbank Offering Rate (LIBOR). Between now and December 2022, we anticipate that agreements with LIBOR will be updated to reflect the transition from this rate to alternative reference rates. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This standard is intended to provide temporary optional expedients and exceptions on contract modifications and hedge accounting to ease the financial reporting burdens related to this expected market transition. This standard is effective for all entities upon issuance through December 31, 2022. We are assessing the impact of the market transition and this standard. |
Segment Information
Segment Information | 3 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We conduct our operations through three business segments: U.S. Services, U.S. Federal Services, and Outside the U.S. • Our U.S. Services Segment provides a variety of business process services such as program administration, appeals and assessments work and related consulting work for U.S. state and local government programs. These services support a variety of programs, including the Affordable Care Act (ACA), Medicaid, the Children’s Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), and child support programs. The segment continues to execute on its clinical evolution strategy by expanding its clinical offerings in public health with new work in contact tracing, disease investigation, and vaccine distribution support services as part of the government's COVID-response efforts. We also successfully expanded into the unemployment insurance market, supporting more than 15 states in their unemployment insurance programs. • Our U.S. Federal Services Segment provides program administration, appeals and assessments services and technology solutions, including system and software development and maintenance services, for various U.S. federal civilian programs. The segment also contains certain state-based assessments and appeals work that is part of the segment's heritage within the Medicare Appeals portfolio and continues to be managed within this segment. The segment recently expanded its clinical offerings in public health with new work supporting the Federal Government's COVID-response efforts. This included expanded work with the Centers for Disease Control and Prevention (CDC) for their helpline, an outbound customer support center for the Office of the Assistant Secretary for Health to notify individuals throughout the U.S. of their COVID test result, and increased support for the IRS Wage and Investment Division's response efforts to general inquiries regarding the Coronavirus Aid Relief & Economic Security (CARES) Act and Economic Impact Payment Service Plan. • Our Outside the U.S. Segment provides business process services (BPS) solutions for international governments and commercial clients. These services include health and disability assessments, program administration for employment services and other job seeker-related services. We support programs and deliver services in the United Kingdom (U.K.), including the Health Assessment Advisory Service (HAAS), the Work & Health Programme and Fair Start; Australia, including jobactive and the Disability Employment Service; Canada, including Health Insurance British Columbia and the Employment Program of British Columbia; in addition to Italy, Saudi Arabia, Singapore, South Korea, and Sweden, where we predominantly provide employment support and job seeker services. 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. Three Months Ended December 31, (in thousands) 2020 % (1) 2019 % (1) Revenue: U.S. Services $ 384,934 $ 312,281 U.S. Federal Services 405,245 366,571 Outside the U.S. 155,375 139,377 Total $ 945,554 $ 818,229 Gross profit: U.S. Services $ 99,002 25.7% $ 89,590 28.7% U.S. Federal Services 82,496 20.4% 70,821 19.3% Outside the U.S. 24,557 15.8% 15,039 10.8% Total $ 206,055 21.8% $ 175,450 21.4% Selling, general & administrative expense: U.S. Services $ 37,456 9.7% $ 31,398 10.1% U.S. Federal Services 52,252 12.9% 39,239 10.7% Outside the U.S. 20,032 12.9% 16,053 11.5% Other (2) 2,227 NM 537 NM Total $ 111,967 11.8% $ 87,227 10.7% Operating income: U.S. Services $ 61,546 16.0% $ 58,192 18.6% U.S. Federal Services 30,244 7.5% 31,582 8.6% Outside the U.S. 4,525 2.9% (1,014) (0.7)% Amortization of intangible assets (6,516) NM (9,088) NM Acquisition-related expenses (1,873) NM — NM Other (2) (354) NM (537) NM Total $ 87,572 9.3% $ 79,135 9.7% (1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.” (2) Other selling, general, and administrative expenses includes credits and costs that are not allocated to a particular segment. Identifiable assets for the segments are shown below: (in thousands) December 31, 2020 September 30, 2020 U.S. Services $ 729,573 $ 702,728 U.S. Federal Services 889,220 937,477 Outside the U.S. 228,779 224,532 Corporate 218,661 159,965 Total $ 2,066,233 $ 2,024,702 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition We recognize revenue as, or when, we satisfy performance obligations under a contract. The majority of our contracts have performance obligations which are satisfied over time. In most cases, we view our performance obligations as promises to transfer a series of distinct services to our customer that are substantially the same and which have the same pattern of service. We recognize revenue over the performance period as a customer receives the benefits of our services. Disaggregation of revenue In addition to our segment reporting, we disaggregate our revenues by service, contract type, customer type, and geography. Our operating segments represent the manner in which our Chief Executive Officer reviews our financial results which is further discussed in "Note 2. Segment Information." By operating segment and service Three Months Ended December 31, (in thousands) 2020 2019 Program administration $ 293,844 $ 236,907 Assessments and appeals 32,615 33,831 Workforce and children services 47,821 29,386 Other 10,654 12,157 Total U.S. Services $ 384,934 $ 312,281 Program administration $ 327,790 $ 281,688 Technology solutions 34,664 43,606 Assessments and appeals 42,791 41,277 Total U.S. Federal Services $ 405,245 $ 366,571 Workforce and children services $ 77,462 $ 57,239 Assessments and appeals 53,123 62,643 Program administration 23,056 17,094 Other 1,734 2,401 Total Outside the U.S. $ 155,375 $ 139,377 Total revenue $ 945,554 $ 818,229 By contract type Three Months Ended December 31, (in thousands) 2020 2019 Performance-based $ 293,960 $ 292,758 Cost-plus 384,483 362,811 Fixed price 120,777 119,216 Time and materials 146,334 43,444 Total revenue $ 945,554 $ 818,229 By customer type Three Months Ended December 31, (in thousands) 2020 2019 New York State government agencies $ 75,356 $ 97,223 Other U.S. state government agencies 312,758 209,886 Total U.S. state government agencies 388,114 307,109 United States Federal Government agencies 385,573 351,833 International government agencies 147,342 130,816 Other, including local municipalities and commercial customers 24,525 28,471 Total revenue $ 945,554 $ 818,229 By geography Three Months Ended December 31, (in thousands) 2020 2019 United States $ 790,179 $ 678,852 United Kingdom 64,786 73,002 Australia 55,932 37,435 Rest of world 34,657 28,940 Total revenue $ 945,554 $ 818,229 Contract balances Differences in timing between revenue recognition and cash collection result in contract assets and contract liabilities. We classify these assets as accounts receivable — billed and billable and unbilled receivables; the liabilities are classified as deferred revenue. In many contracts, we bill our customers on a monthly basis shortly after the month end for work performed in that month. Funds are considered collectible and are included within accounts receivable — billed and billable. Exceptions to this pattern will arise for various reasons, including those listed below. • Under cost-plus contracts, we are typically required to estimate a contract’s share of our general and administrative expenses. This share is based upon estimates of total costs which may vary over time. We typically invoice our customers at an agreed provisional billing rate which may differ from actual rates incurred. If our actual rates are higher than the provisional billing rates, an asset is recorded for this variance; if the provisional billing rates are higher than our actual rates, we record a liability. • Certain contracts include retainage balances, whereby revenue is earned but some portion of cash payments are held back by the customer for a period of time, typically to allow the customer to confirm the objective criteria laid out by the contract have been met. This balance is classified as accounts receivable - unbilled until restrictions on billing are lifted. • In certain contracts, we may receive funds from our customers prior to performing operations. These funds are typically referred to as “set-up costs” and reflect the need for us to make investments in infrastructure prior to providing a service. This investment in infrastructure is not a performance obligation which is distinct from the service that is subsequently provided and, as a result, revenue is not recognized based upon the establishment of this infrastructure, but rather over the course of the contractual relationship. The funds are initially recorded as deferred revenue and recognized over the term of the contract. Other contracts may not include set-up fees but will provide higher fees in earlier periods of the contract. The premium on these fees is deferred. • Some of our contracts, notably our employment services contracts in the Outside the U.S. Segment, include payments for desired outcomes, such as job placement and job retention and these outcome payments occur over several months. We are required to estimate these outcome fees ahead of their realization and recognize this estimated fee over the period of delivery. Of our revenue for the three months ended December 31, 2020, approximately $14.0 million was from cash payments made to us prior to October 1, 2020. For the three months ended December 31, 2019, we recognized revenue of $18.0 million from payments made prior to October 1, 2019. Contract estimates We are required to use estimates in recognizing revenue from some of our contracts. As discussed in "Note 1. Organization and Basis of Presentation," the calculation of these estimates has been complicated by the COVID pandemic, which has reduced our ability to use past results to estimate future performance. Some of our performance-based contract revenue is recognized based upon future outcomes defined in each contract. This is the case in many of our employment services contracts in the Outside the U.S. Segment, where we are paid as individuals attain employment goals, which may take many months to achieve. We recognize revenue on these contracts over the period of performance. Our estimates vary from contract to contract but may include estimates of the number of participants, the length of the contract, and the participants reaching employment milestones. We are required to estimate these outcome fees ahead of their realization and recognize this estimated fee over the period of delivery. In almost all of the jurisdictions in which we operate, the employment markets have experienced significant changes due to the COVID pandemic. For our existing program participants, many employment opportunities have been terminated or are no longer available. Our volume of new program participants is beginning to increase as governments shift their focus to tackling the residual impacts of the pandemic such as the economy and unemployment, particularly in those countries where the pandemic has stabilized and economies are beginning to reopen. However, it is unclear as to when employers will begin filling roles in industries that remain curtailed. In some cases, we anticipate that we may be unable to place individuals in employment in the short-term. Other performance-based contracts with future outcomes include those where we recognize an average effective rate per participant based upon the total volume of expected participants. In this instance, we are required to estimate the amount of discount applied to determine the average rate of revenue per participant. Our revised estimates of participant numbers are based upon our updated evaluation of probable future volumes. Where we make changes to our estimates, these are recognized on a cumulative catch-up basis. In the three months ended December 31, 2020, we reported a benefit to revenue of $10.2 million and a benefit to diluted earnings per share of $0.12 from changes in estimates. The corresponding change in fiscal year 2020 was a decline of $1.4 million. Deferred contract costs For many contracts, we incur significant incremental costs at the beginning of an arrangement. Typically, these costs relate to the establishment of infrastructure which we utilize to satisfy our performance obligations with the contract. We report these costs as deferred contract costs and amortize them on a straight-line basis over the shorter of the useful economic life of the asset or the anticipated term of the contract. Three Months Ended December 31, (in thousands) 2020 2019 Deferred contract cost capitalization $ 2,491 $ 1,300 Deferred contract cost amortization 2,287 2,200 This amortization was recorded within our "cost of revenue" on our consolidated statements of operations. Remaining performance obligations At December 31, 2020, we had approximately $400 million of remaining performance obligations. We anticipate that we will recognize revenue on approximately 55% of this balance within the next 12 months. This balance excludes contracts with an original duration of twelve months or less, including contracts with a penalty-free termination for convenience clause, and any variable consideration which is allocated entirely to future performance obligations including variable transaction fees or fees tied directly to costs incurred. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The weighted average number of shares outstanding used to compute earnings per share was as follows: Three Months Ended December 31, (shares in thousands) 2020 2019 Basic weighted average shares outstanding 62,038 64,597 Dilutive effect of unvested RSUs 97 161 Denominator for diluted earnings per share 62,135 64,758 |
Business combinations
Business combinations | 3 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
Business combinations | Business combinations InjuryNet Australia Pty Limited On February 28, 2020, we acquired 100% of the share capital of InjuryNet Australia Pty Limited (InjuryNet) for an estimated purchase price of $4.4 million ($6.7 million Australian Dollars), which included acquisition-related contingent consideration estimated at $2.1 million ($3.1 million Australian Dollars) based upon future earnings. The purchase price was subject to adjustment for a working capital true-up and acquisition-related contingent consideration. InjuryNet provides workplace medical services in Australia. The business was integrated into our Outside the U.S. Segment. We have completed our assessment of all acquired assets and liabilities assumed, with the exception of matters related to taxation. We recorded estimated goodwill and intangible assets of $2.6 million and $0.9 million, respectively, related to the acquisition. Index Root Korea Co. Ltd. On August 21, 2020, we acquired 100% of the share capital of Index Root Korea Co. Ltd (Index Root) for an estimated purchase price of $5.4 million (6.3 billion South Korean Won), which includes acquisition-related contingent consideration estimated at $0.9 million (1.1 billion South Korean Won) based upon future earnings. We acquired Index Root to expand our geographic presence to South Korea. The business was integrated into our Outside the U.S. Segment. We are still in the process of finalizing the allocation of assets acquired and liabilities assumed. We recorded estimated goodwill and intangible assets of $4.6 million and $1.4 million, respectively, related to the acquisition. |
Leases
Leases | 3 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | LeasesLease expense is recorded within our consolidated statements of operations based upon the nature of the assets. Where assets are used to directly serve our customers, such as facilities dedicated to customer contracts, lease costs are recorded in "cost of revenue." Facilities and equipment which serve management and support functions are expensed through "selling, general and administrative expenses." Costs recorded in the three months ended December 31, 2020 and 2019, are summarized below. Three Months Ended December 31, (in thousands) 2020 2019 Operating lease cost $ 27,734 $ 25,250 Short-term lease cost 1,889 2,110 Variable lease cost 3,015 3,334 Total operating lease costs $ 32,638 $ 30,694 Future minimum lease payments for noncancelable operating leases as of December 31, 2020, are shown below. (in thousands) Office space Equipment Total For the years ended September 30 Remainder of 2021 $ 52,375 $ 6,661 $ 59,036 2022 56,388 3,701 60,089 2023 31,731 537 32,268 2024 14,715 54 14,769 2025 9,788 9 9,797 Thereafter 2,219 — 2,219 Total minimum lease payments $ 167,216 $ 10,962 $ 178,178 Less: imputed interest (9,748) (270) (10,018) Total lease liabilities $ 157,468 $ 10,692 $ 168,160 Other information related to leases was as follows: December 31, 2020 Weighted average remaining lease term (in years) 2.8 Weighted average incremental borrowing rate 3.81 % Supplemental cash flow information related to leases was as follows: Three Months Ended December 31, (in thousands) 2020 2019 Cash payments included in the measurement of lease liabilities $ 28,513 $ 28,100 Operating lease liabilities arising from new or remeasured right-of-use assets 9,004 17,300 |
Supplemental Disclosures
Supplemental Disclosures | 3 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Disclosures | Supplemental Disclosures Under a resolution adopted in March 2020, the Board of Directors authorized the purchase, at management's discretion, of up to $200 million of our common stock. This supplemented a similar resolution adopted in June 2018. During the three months ended December 31, 2020, we purchased approximately 52,000 of our common shares at a cost of $3.4 million. During the three months ended December 31, 2019, we purchased approximately 26,000 common shares at a cost of $1.9 million. At December 31, 2020, $146.7 million remained available for future stock repurchases. During the three months ended December 31, 2020, we granted approximately 257,000 restricted stock units (RSUs) to our employees. Most of these awards will vest ratably over four years, as opposed to five years in previous years. In addition, we awarded approximately 85,000 performance stock units in the three months ended December 31, 2020, to certain executives that will vest at the end of a three-year performance period with the actual number of vested units dependent upon the Company's achievement of certain performance targets. Our deferred compensation plan uses both mutual fund and life insurance investments to fund its obligations. The mutual funds are recorded at fair value, based upon quoted prices in active markets (Level 1), and the life insurance investments at cash surrender value; changes in value are reported in our consolidated statements of operations. At December 31, 2020, the deferred compensation plan held $26.1 million of the mutual fund investments. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and other amounts included within current assets and liabilities that meet the definition of a financial instrument are shown at values equivalent to fair value due to the short-term nature of these items. Our debt balances are principally from credit facilities which can be utilized and repaid as required and whose rates are based upon prevailing market conditions; accordingly, we believe the balance disclosed approximates the fair value. Our accounts receivable billed and billable balance includes both amounts invoiced and amounts that are ready to be invoiced where the funds are collectible within standard invoice terms. Our accounts receivable unbilled balance includes balances where revenue has been earned but no invoice was issued on or before December 31, 2020. Restricted cash represents funds which are held in our bank accounts but which we are precluded from using for general business needs through contractual requirements; these requirements include serving as collateral for lease, credit card, or letter of credit arrangements, or where we hold funds on behalf of clients. Restricted cash is included within "prepaid expenses and other current assets" on our consolidated balance sheets and is included within "cash, cash equivalents, and restricted cash" in our consolidated statements of cash flows. A reconciliation of these balances is shown below. Balance as of (in thousands) December 31, September 30, 2020 December 31, Cash and cash equivalents $ 132,597 $ 71,737 $ 149,515 Restricted cash (recorded within "prepaid expenses and other current assets") 17,221 16,824 11,434 Cash, cash equivalents, and restricted cash $ 149,818 $ 88,561 $ 160,949 During each of the three months ended December 31, 2020 and 2019, we made interest payments of $0.2 million. During the three months ended December 31, 2020 and 2019, we made income tax payments of $4.1 million and $6.3 million, respectively. |
Litigation
Litigation | 3 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation We are subject to audits, investigations and reviews relating to compliance with the laws and regulations that govern our role as a contractor to agencies and departments of the United States Federal Government, state, local, and foreign governments, and otherwise in connection with performing services in countries outside of the U.S. Adverse findings could lead to criminal, civil, or administrative proceedings, and we could be faced with penalties, fines, suspension, or debarment. Adverse findings could also have a material adverse effect on us because of our reliance on government contracts. We are subject to periodic audits by federal, state, local, and foreign governments for taxes. We are also involved in various claims, arbitrations, and lawsuits arising in the normal conduct of our business. These include but are not limited to bid protests, employment matters, contractual disputes, and charges before administrative agencies. Although we can give no assurance, based upon our evaluation and taking into account the advice of legal counsel, we do not believe that the outcome of any existing matter would likely have a material adverse effect on our consolidated financial position, results of operations, or cash flows. Medicaid claims The Centers for Medicare and Medicaid Services (CMS) has asserted two disallowances against a state Medicaid agency totaling approximately $31 million. From 2004 through 2009, we had a contract with the state |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn January 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 February 26, 2021, to shareholders of record on February 12, 2021. Based upon the number of shares outstanding, we anticipate a cash payment of approximately $17 million. |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Policies) | 3 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. As permitted by these instructions, they do not include all of the information and notes required by generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation are included. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three months ended December 31, 2020, are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2020, has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. |
Estimates | Estimates The preparation of these financial statements, in conformity with GAAP in the United States, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. At each reporting period end, we make estimates including those related to revenue recognition and cost estimation on certain contracts, the realizability of goodwill and amounts related to income taxes, certain accrued liabilities, and contingencies and litigation. We base our estimates on historical experience and expectations of the future that we believe to be reasonable. The economic and political effects of the Coronavirus (COVID) global pandemic increase uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates may be subject to greater volatility than has been the case in the past. • Our balance sheet includes goodwill valued at $595.9 million. This balance is allocated between reporting units, which are consistent with our three operating segments. Goodwill is not amortized but is tested for impairment when necessary and no less than once per year. We performed our last annual goodwill impairment test as of July 1, 2020, using a qualitative assessment. There has been no indication of impairment of any reporting unit at this time or since. • Our balance sheet includes a number of long-lived assets, including property and equipment, capitalized software, operating lease right-of-use assets, deferred contract costs and intangible assets. These assets are depreciated or amortized over their estimated useful economic lives but are subject to impairment if events indicate that the carrying amount may not be recoverable. At this time, there are no balances which we believe are not recoverable. • Our balance sheet includes $782.8 million of billed, billable and unbilled accounts receivable, net of allowance for credit losses. Beginning October 1, 2020, we have evaluated credit risk under ASC Topic 326; as further described below. Credit risk has not historically been significant to our business due to the nature of our customers. During the three months ended December 31, 2020, we recorded changes to our estimated credit losses of $0.6 million. • As disclosed in "Note 3. Revenue Recognition," revenue for some of our employment services contracts in the Outside the U.S. Segment is based upon achievement of future outcomes as defined in each contract. Specifically, we are paid as individuals attain employment goals, which may take many months to achieve. Revenue is recognized on these contracts over the period of performance. Employment markets worldwide suffered a significant shock during fiscal year 2020 and remain disrupted. • Many of our contracts in the United States are cost-plus contracts, where we are reimbursed for costs that are allowable, allocable and reasonable. Due to the global pandemic, we are incurring incremental and |
Changes in financial reporting | Changes in financial reporting In August 2018, the Financial Accounting Standards Board (FASB) issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . This accounting guidance requires customers in cloud-computing arrangements to identify and defer certain implementation costs in a manner broadly consistent with that of existing guidance on the costs to develop or obtain internal-use software. Costs capitalized under this guidance will be expensed over the term of the cloud computing arrangement. We adopted this guidance on October 1, 2020, using a prospective approach. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This update introduces a new model for recognizing credit losses on financial instruments, including losses on accounts receivable. This update replaces the existing incurred loss impairment model with an expected loss model. We adopted this guidance on October 1, 2020, with no material impact to our financial statements. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment . This standard will not change the manner in which we would identify a goodwill impairment but would change any subsequent calculation of an impairment charge. We adopted this standard on October 1, 2020. The effect of this new standard will depend upon the outcome of future goodwill impairment tests. We are subject to agreements that reference the London Interbank Offering Rate (LIBOR). Between now and December 2022, we anticipate that agreements with LIBOR will be updated to reflect the transition from this rate to alternative reference rates. In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This standard is intended to provide temporary optional expedients and exceptions on contract modifications and hedge accounting to ease the financial reporting burdens related to this expected market transition. This standard is effective for all entities upon issuance through December 31, 2022. We are assessing the impact of the market transition and this standard. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of financial information for each of the Company's business segments | Three Months Ended December 31, (in thousands) 2020 % (1) 2019 % (1) Revenue: U.S. Services $ 384,934 $ 312,281 U.S. Federal Services 405,245 366,571 Outside the U.S. 155,375 139,377 Total $ 945,554 $ 818,229 Gross profit: U.S. Services $ 99,002 25.7% $ 89,590 28.7% U.S. Federal Services 82,496 20.4% 70,821 19.3% Outside the U.S. 24,557 15.8% 15,039 10.8% Total $ 206,055 21.8% $ 175,450 21.4% Selling, general & administrative expense: U.S. Services $ 37,456 9.7% $ 31,398 10.1% U.S. Federal Services 52,252 12.9% 39,239 10.7% Outside the U.S. 20,032 12.9% 16,053 11.5% Other (2) 2,227 NM 537 NM Total $ 111,967 11.8% $ 87,227 10.7% Operating income: U.S. Services $ 61,546 16.0% $ 58,192 18.6% U.S. Federal Services 30,244 7.5% 31,582 8.6% Outside the U.S. 4,525 2.9% (1,014) (0.7)% Amortization of intangible assets (6,516) NM (9,088) NM Acquisition-related expenses (1,873) NM — NM Other (2) (354) NM (537) NM Total $ 87,572 9.3% $ 79,135 9.7% (1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.” (2) Other selling, general, and administrative expenses includes credits and costs that are not allocated to a particular segment. |
Schedule of identifiable assets by segment | Identifiable assets for the segments are shown below: (in thousands) December 31, 2020 September 30, 2020 U.S. Services $ 729,573 $ 702,728 U.S. Federal Services 889,220 937,477 Outside the U.S. 228,779 224,532 Corporate 218,661 159,965 Total $ 2,066,233 $ 2,024,702 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | By operating segment and service Three Months Ended December 31, (in thousands) 2020 2019 Program administration $ 293,844 $ 236,907 Assessments and appeals 32,615 33,831 Workforce and children services 47,821 29,386 Other 10,654 12,157 Total U.S. Services $ 384,934 $ 312,281 Program administration $ 327,790 $ 281,688 Technology solutions 34,664 43,606 Assessments and appeals 42,791 41,277 Total U.S. Federal Services $ 405,245 $ 366,571 Workforce and children services $ 77,462 $ 57,239 Assessments and appeals 53,123 62,643 Program administration 23,056 17,094 Other 1,734 2,401 Total Outside the U.S. $ 155,375 $ 139,377 Total revenue $ 945,554 $ 818,229 By contract type Three Months Ended December 31, (in thousands) 2020 2019 Performance-based $ 293,960 $ 292,758 Cost-plus 384,483 362,811 Fixed price 120,777 119,216 Time and materials 146,334 43,444 Total revenue $ 945,554 $ 818,229 By customer type Three Months Ended December 31, (in thousands) 2020 2019 New York State government agencies $ 75,356 $ 97,223 Other U.S. state government agencies 312,758 209,886 Total U.S. state government agencies 388,114 307,109 United States Federal Government agencies 385,573 351,833 International government agencies 147,342 130,816 Other, including local municipalities and commercial customers 24,525 28,471 Total revenue $ 945,554 $ 818,229 By geography Three Months Ended December 31, (in thousands) 2020 2019 United States $ 790,179 $ 678,852 United Kingdom 64,786 73,002 Australia 55,932 37,435 Rest of world 34,657 28,940 Total revenue $ 945,554 $ 818,229 |
Deferred Contract Cost | Three Months Ended December 31, (in thousands) 2020 2019 Deferred contract cost capitalization $ 2,491 $ 1,300 Deferred contract cost amortization 2,287 2,200 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Weighted average number of shares used to compute earnings per share | The weighted average number of shares outstanding used to compute earnings per share was as follows: Three Months Ended December 31, (shares in thousands) 2020 2019 Basic weighted average shares outstanding 62,038 64,597 Dilutive effect of unvested RSUs 97 161 Denominator for diluted earnings per share 62,135 64,758 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Lease Costs | Costs recorded in the three months ended December 31, 2020 and 2019, are summarized below. Three Months Ended December 31, (in thousands) 2020 2019 Operating lease cost $ 27,734 $ 25,250 Short-term lease cost 1,889 2,110 Variable lease cost 3,015 3,334 Total operating lease costs $ 32,638 $ 30,694 Other information related to leases was as follows: December 31, 2020 Weighted average remaining lease term (in years) 2.8 Weighted average incremental borrowing rate 3.81 % Supplemental cash flow information related to leases was as follows: Three Months Ended December 31, (in thousands) 2020 2019 Cash payments included in the measurement of lease liabilities $ 28,513 $ 28,100 Operating lease liabilities arising from new or remeasured right-of-use assets 9,004 17,300 |
Future Minimum Lease Payments | Future minimum lease payments for noncancelable operating leases as of December 31, 2020, are shown below. (in thousands) Office space Equipment Total For the years ended September 30 Remainder of 2021 $ 52,375 $ 6,661 $ 59,036 2022 56,388 3,701 60,089 2023 31,731 537 32,268 2024 14,715 54 14,769 2025 9,788 9 9,797 Thereafter 2,219 — 2,219 Total minimum lease payments $ 167,216 $ 10,962 $ 178,178 Less: imputed interest (9,748) (270) (10,018) Total lease liabilities $ 157,468 $ 10,692 $ 168,160 |
Supplemental Disclosures (Table
Supplemental Disclosures (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents | A reconciliation of these balances is shown below. Balance as of (in thousands) December 31, September 30, 2020 December 31, Cash and cash equivalents $ 132,597 $ 71,737 $ 149,515 Restricted cash (recorded within "prepaid expenses and other current assets") 17,221 16,824 11,434 Cash, cash equivalents, and restricted cash $ 149,818 $ 88,561 $ 160,949 |
Restrictions on Cash and Cash Equivalents | A reconciliation of these balances is shown below. Balance as of (in thousands) December 31, September 30, 2020 December 31, Cash and cash equivalents $ 132,597 $ 71,737 $ 149,515 Restricted cash (recorded within "prepaid expenses and other current assets") 17,221 16,824 11,434 Cash, cash equivalents, and restricted cash $ 149,818 $ 88,561 $ 160,949 |
Organization and Basis of Pre_3
Organization and Basis of Presentation - Narrative (Details) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020USD ($)segment | Sep. 30, 2020USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Goodwill | $ 595,927 | $ 593,129 |
Number of operating segments | segment | 3 | |
Billed, billable and unbilled accounts receivable | $ 782,800 | |
Bad debt expense | $ 600 |
Segment Information - Financial
Segment Information - Financial information by segment (Details) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020USD ($)segmentstate | Dec. 31, 2019USD ($) | |
Financial information for each of the Company's business segments | ||
Number of operating segments | segment | 3 | |
Number of states supported in unemployment insurance programs (more than) | state | 15 | |
Revenue: | ||
Revenue | $ 945,554 | $ 818,229 |
Gross profit: | ||
Gross profit | $ 206,055 | $ 175,450 |
Gross profit (as a percent) | 21.80% | 21.40% |
Selling, general & administrative expense: | ||
Selling, general, and administrative expenses | $ 111,967 | $ 87,227 |
Selling, general, and administrative expense (as a percent) | 11.80% | 10.70% |
Operating income: | ||
Operating income | $ 87,572 | $ 79,135 |
Operating income (as a percent) | 9.30% | 9.70% |
Amortization of intangible assets | $ (6,516) | $ (9,088) |
Segment Reconciling Items | ||
Selling, general & administrative expense: | ||
Selling, general, and administrative expenses | 2,227 | 537 |
Operating income: | ||
Amortization of intangible assets | (6,516) | (9,088) |
Acquisition-related expenses | (1,873) | 0 |
Other operating income (loss) | (354) | (537) |
U.S. Services | ||
Revenue: | ||
Revenue | 384,934 | 312,281 |
U.S. Services | Operating Segments | ||
Revenue: | ||
Revenue | 384,934 | 312,281 |
Gross profit: | ||
Gross profit | $ 99,002 | $ 89,590 |
Gross profit (as a percent) | 25.70% | 28.70% |
Selling, general & administrative expense: | ||
Selling, general, and administrative expenses | $ 37,456 | $ 31,398 |
Selling, general, and administrative expense (as a percent) | 9.70% | 10.10% |
Operating income: | ||
Operating income | $ 61,546 | $ 58,192 |
Operating income (as a percent) | 16.00% | 18.60% |
U.S. Federal Services | ||
Revenue: | ||
Revenue | $ 405,245 | $ 366,571 |
U.S. Federal Services | Operating Segments | ||
Revenue: | ||
Revenue | 405,245 | 366,571 |
Gross profit: | ||
Gross profit | $ 82,496 | $ 70,821 |
Gross profit (as a percent) | 20.40% | 19.30% |
Selling, general & administrative expense: | ||
Selling, general, and administrative expenses | $ 52,252 | $ 39,239 |
Selling, general, and administrative expense (as a percent) | 12.90% | 10.70% |
Operating income: | ||
Operating income | $ 30,244 | $ 31,582 |
Operating income (as a percent) | 7.50% | 8.60% |
Outside the U.S. | ||
Revenue: | ||
Revenue | $ 155,375 | $ 139,377 |
Outside the U.S. | Operating Segments | ||
Revenue: | ||
Revenue | 155,375 | 139,377 |
Gross profit: | ||
Gross profit | $ 24,557 | $ 15,039 |
Gross profit (as a percent) | 15.80% | 10.80% |
Selling, general & administrative expense: | ||
Selling, general, and administrative expenses | $ 20,032 | $ 16,053 |
Selling, general, and administrative expense (as a percent) | 12.90% | 11.50% |
Operating income: | ||
Operating income | $ 4,525 | $ (1,014) |
Operating income (as a percent) | 2.90% | (0.70%) |
Segment Information - Identifia
Segment Information - Identifiable assets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 |
Financial information for each of the Company's business segments | ||
Assets | $ 2,066,233 | $ 2,024,702 |
Corporate | ||
Financial information for each of the Company's business segments | ||
Assets | 218,661 | 159,965 |
U.S. Services | Operating Segments | ||
Financial information for each of the Company's business segments | ||
Assets | 729,573 | 702,728 |
U.S. Federal Services | Operating Segments | ||
Financial information for each of the Company's business segments | ||
Assets | 889,220 | 937,477 |
Outside the U.S. | Operating Segments | ||
Financial information for each of the Company's business segments | ||
Assets | $ 228,779 | $ 224,532 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 945,554 | $ 818,229 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 790,179 | 678,852 |
United Kingdom | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 64,786 | 73,002 |
Australia | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 55,932 | 37,435 |
Rest of world | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 34,657 | 28,940 |
Total U.S. state government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 388,114 | 307,109 |
New York State government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 75,356 | 97,223 |
Other U.S. state government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 312,758 | 209,886 |
United States Federal Government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 385,573 | 351,833 |
International government agencies | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 147,342 | 130,816 |
Other, including local municipalities and commercial customers | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 24,525 | 28,471 |
Performance-based | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 293,960 | 292,758 |
Cost-plus | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 384,483 | 362,811 |
Fixed price | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 120,777 | 119,216 |
Time and materials | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 146,334 | 43,444 |
U.S. Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 384,934 | 312,281 |
U.S. Federal Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 405,245 | 366,571 |
Outside the U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 155,375 | 139,377 |
Program administration | U.S. Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 293,844 | 236,907 |
Program administration | U.S. Federal Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 327,790 | 281,688 |
Program administration | Outside the U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 23,056 | 17,094 |
Technology solutions | U.S. Federal Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 34,664 | 43,606 |
Assessments and appeals | U.S. Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 32,615 | 33,831 |
Assessments and appeals | U.S. Federal Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 42,791 | 41,277 |
Assessments and appeals | Outside the U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 53,123 | 62,643 |
Workforce and children services | U.S. Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 47,821 | 29,386 |
Workforce and children services | Outside the U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 77,462 | 57,239 |
Other | U.S. Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 10,654 | 12,157 |
Other | Outside the U.S. | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 1,734 | $ 2,401 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue, revenue recognized | $ 14,000 | $ 18,000 |
Cumulative catch-up adjustment to revenue from change in estimates | $ 10,200 | (1,400) |
Cumulative catch-up adjustment to diluted earnings per share from change in estimates (in dollars per share) | $ 0.12 | |
Deferred contract cost capitalization | $ 2,491 | 1,300 |
Deferred contract cost amortization | $ 2,287 | $ 2,200 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligation (Details) $ in Millions | Dec. 31, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, amount | $ 400 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, amount | $ 400 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 55.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares outstanding | 62,038 | 64,597 |
Dilutive effect of unvested RSUs | 97 | 161 |
Denominator for diluted earnings per share | 62,135 | 64,758 |
Antidilutive securities excluded from computation of earnings per share | 600 | 300 |
Business combinations (Details)
Business combinations (Details) $ in Thousands, $ in Millions, ₩ in Billions | Aug. 21, 2020USD ($) | Aug. 21, 2020KRW (₩) | Feb. 28, 2020USD ($) | Feb. 28, 2020AUD ($) | Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Aug. 21, 2020KRW (₩) | Feb. 28, 2020AUD ($) |
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 595,927 | $ 593,129 | ||||||
InjuryNet | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of voting equity interests acquired | 100.00% | 100.00% | ||||||
Cash payment to acquire business | $ 4,400 | $ 6.7 | ||||||
Contingent consideration | 2,100 | $ 3.1 | ||||||
Goodwill | 2,600 | |||||||
Intangible assets | $ 900 | |||||||
Index Root | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of voting equity interests acquired | 100.00% | 100.00% | ||||||
Cash payment to acquire business | $ 5,400 | ₩ 6.3 | ||||||
Contingent consideration | 900 | ₩ 1.1 | ||||||
Goodwill | 4,600 | |||||||
Intangible assets | $ 1,400 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 27,734 | $ 25,250 |
Short-term lease cost | 1,889 | 2,110 |
Variable lease cost | 3,015 | 3,334 |
Total operating lease costs | $ 32,638 | $ 30,694 |
Leases - Remaining Lease Paymen
Leases - Remaining Lease Payments (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Lessee, Lease, Description [Line Items] | |
Remainder of 2021 | $ 59,036 |
2022 | 60,089 |
2023 | 32,268 |
2024 | 14,769 |
2025 | 9,797 |
Thereafter | 2,219 |
Total minimum lease payments | 178,178 |
Less: imputed interest | (10,018) |
Total lease liabilities | 168,160 |
Office space | |
Lessee, Lease, Description [Line Items] | |
Remainder of 2021 | 52,375 |
2022 | 56,388 |
2023 | 31,731 |
2024 | 14,715 |
2025 | 9,788 |
Thereafter | 2,219 |
Total minimum lease payments | 167,216 |
Less: imputed interest | (9,748) |
Total lease liabilities | 157,468 |
Equipment | |
Lessee, Lease, Description [Line Items] | |
Remainder of 2021 | 6,661 |
2022 | 3,701 |
2023 | 537 |
2024 | 54 |
2025 | 9 |
Thereafter | 0 |
Total minimum lease payments | 10,962 |
Less: imputed interest | (270) |
Total lease liabilities | $ 10,692 |
Leases - Other Information and
Leases - Other Information and Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Weighted average remaining lease term (in years) | 2 years 9 months 18 days | |
Weighted average incremental borrowing rate | 3.81% | |
Cash payments included in the measurement of lease liabilities | $ 28,513 | $ 28,100 |
Operating lease liabilities arising from new or remeasured right-of-use assets | $ 9,004 | $ 17,300 |
Supplemental Disclosures - Narr
Supplemental Disclosures - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Mar. 31, 2020 | |
Payments for Repurchase of Equity [Abstract] | ||||
Repurchases of common stock | $ 3,363,000 | $ 1,898,000 | ||
Investments in mutual funds | 26,100,000 | |||
Interest paid | 200,000 | 200,000 | ||
Income taxes paid | $ 4,100,000 | $ 6,300,000 | ||
Restricted Stock Units (RSUs) | ||||
Payments for Repurchase of Equity [Abstract] | ||||
Granted (in shares) | 257,000 | |||
Vesting period | 4 years | 5 years | ||
Performance-based RSUs | ||||
Payments for Repurchase of Equity [Abstract] | ||||
Granted (in shares) | 85,000 | |||
Vesting period | 3 years | |||
Common Stock | ||||
Payments for Repurchase of Equity [Abstract] | ||||
Common shares repurchased (in shares) | 52,000 | 26,000 | ||
Repurchases of common stock | $ 3,400,000 | $ 1,900,000 | ||
Stock Repurchase Program, March 2020 | Common Stock | ||||
Payments for Repurchase of Equity [Abstract] | ||||
Stock repurchase programs, authorized amount | $ 200,000,000 | |||
Remaining authorized repurchase amount | $ 146,700,000 |
Supplemental Disclosures - Sche
Supplemental Disclosures - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 132,597 | $ 71,737 | $ 149,515 | |
Restricted cash (recorded within "prepaid expenses and other current assets") | 17,221 | 16,824 | 11,434 | |
Cash, cash equivalents, and restricted cash | $ 149,818 | $ 88,561 | $ 160,949 | $ 116,492 |
Litigation (Details)
Litigation (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Feb. 29, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Loss contingency, maximum potential loss | $ 31 | |
Disallowance | $ 19 | $ 12 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 26, 2021 | Jan. 08, 2021 |
Common Stock | Forecast | ||
Subsequent Event [Line Items] | ||
Payments of Dividends | $ 17 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Cash dividend declared (in dollars per share) | $ 0.28 |