Exhibit 99.1
MAXIMUS REPORTS FOURTH QUARTER REVENUE OF
$153.2 MILLION AND DILUTED EPS OF $0.44
- - Fiscal Year Revenue Reaches $558.3 million; Diluted EPS of $1.66 -
(RESTON, Va. – November 21, 2003) – MAXIMUS (NYSE: MMS), a leading provider of consulting, health and human services program management, and information technology services to government, today reported results for its fiscal 2003 fourth quarter and year ended September 30, 2003.
Key Financial Highlights
• Record backlog totaling $1.06 billion at September 30, 2003 and contract wins for fiscal 2003 of $992 million,
• Revenue for the three-month and twelve-month periods ended September 30, 2003 of $153.2 million and $558.3 million, respectively,
• Diluted EPS of $0.44 for the fourth quarter and $1.66 for the full fiscal year,
• Improved Days Sales Outstanding,
• Cash from operations of $21.0 million for the fourth quarter and $55.0 million for the fiscal year, and
• Cash, cash equivalents, and marketable securities of $117.5 million as of September 30, 2003.
Revenue for the fourth quarter increased 14.2% to $153.2 million compared to $134.1 million for the same period last year and improved 8.1% sequentially from the third fiscal quarter. Fourth quarter revenue included approximately $13.4 million in product resale revenue. Year-over-year organic growth for the fourth quarter was 9.2%. Fiscal 2003 revenue totaled $558.3 million, a 7.6% increase over fiscal 2002 revenue of $518.7 million.
Net income for the fourth quarter of fiscal 2003 totaled $9.4 million or $0.44 per diluted share, compared to net income of $10.9 million, or $0.50 per diluted share, for the comparable quarter last year and $9.0 million, or $0.43 per diluted share, in the third quarter of fiscal 2003. MAXIMUS reported net income of $35.3 million for fiscal 2003, compared to $40.3 million recorded for fiscal 2002. The anticipated year-over-year decline in net income and operating
margin is due primarily to the impact of reduced government spending in certain lines of business including the Human Services Segment and in Consulting’s Management Services practice.
“The Company posted solid performance this quarter and better than our stated expectations for the period,” commented Dr. David V. Mastran, Chief Executive Officer. “With improved results on a sequential basis from the 2003 third quarter, we are confident in our ability to generate top- and bottom-line gains in fiscal 2004 for the overall business.”
Consulting Segment
Consulting revenue was $35.2 million in the fourth quarter and $139.4 million for the full fiscal year. The revenue improvement in fiscal 2003 compared to fiscal 2002 was driven primarily by the Financial Services practice. The sequential decline in revenue is a result of approximately $3.0 million in product resale revenue related to a SchoolMAX™ contract recognized in the third quarter which did not repeat in the fourth quarter.
Health Services Segment
Health Services revenue in the fourth quarter was $39.5 million and totaled $162.5 million for fiscal 2003. Compared to fiscal 2002 revenue, revenue in fiscal 2003 remained stable and benefited from a strong base of recurring revenue. Health Services revenue is expected to increase beginning in the fiscal 2004 second quarter, driven by the $418.4 million California Healthy Families contract.
Human Services Segment
Fourth quarter Human Services revenue was $52.2 million, which included approximately $13.4 million in product resale revenue as part of the contract with Orange County, California to provide a Direct Record Electronic voting system. Revenue for the full fiscal year totaled $165.1 million for fiscal 2003. The improvement in revenue for fiscal 2003 versus fiscal 2002 is predominantly a result of revenue from acquisitions and fourth quarter product resale revenue.
Systems Segment
Systems revenue totaled $26.3 million for the fourth quarter and increased to $91.3 million for the full fiscal year. The commencement of new work, including a 16-month, $11.2 million ERP software implementation and integration contract with the city of Kansas City, Missouri,
contributed to the fourth quarter revenue increase. The revenue increase for fiscal 2003 when compared with fiscal 2002 is largely driven by growth in Justice Solutions and ERP solutions.
Sales and Backlog
The Company posted record contract wins for fiscal 2003 of $992 million, including the $418.4 million California Healthy Families contract, compared to $465 million last year. New contracts pending (awarded but unsigned) totaled $95 million at September 30, 2003 compared to $63 million for the comparable period last year.
Sales opportunities at November 17, 2003, totaled $988 million (consisting of $233 million in proposals pending, $171 million in proposals in preparation, and $584 million of RFPs tracking) compared to $899 million reported at November 18, 2002.
As a result of strong sales in fiscal 2003, backlog as of September 30, 2003 is significantly higher than the prior fiscal year and totaled $1.06 billion versus $598.0 million reported at September 30, 2002.
Liquidity:
The Company once again generated solid cash from operations totaling $21.0 million in the fourth quarter and $55.0 million for the fiscal year. Days Sales Outstanding improved to 86 days (94 days excluding the effect of product resale revenue of $13.4 million recorded in the fourth quarter) at the end of the quarter, compared to 96 in the fiscal 2003 third quarter.
At September 30, 2003, cash, cash equivalents, and marketable securities totaled $117.5 million, after the Company’s repurchase of 45,700 common shares during the quarter under its ongoing share repurchase program. At the close of the fourth quarter, MAXIMUS had approximately $37.3 million available under the current Board-authorized share repurchase program.
Fiscal 2004 Outlook
For fiscal 2004, the Company currently expects revenue in the range of $600 million to $630 million and diluted earnings per share to be in line with the current consensus estimate of $1.88 per diluted share.
Dr. Mastran concluded, “As a result of significant contract wins in fiscal 2003, our backlog at September 30, 2003 is solid. This, along with improving macro-economic conditions, positions us well for growth in fiscal 2004.”
The Company will host a conference call on Friday, November 21, 2003 at 10:30a.m. ET which is open to the public and can be accessed by calling:
800.227.9428 (domestic) or 785.832.1508 (international)
For those unable to listen to the live call, a replay will be available for one week following the call through Friday, November 28, 2003. The replay will be available by calling: 402.220.4235 or 800.753.4652
MAXIMUS is one of America’s leading government services companies devoted to providing consulting, health and human services program management, and information technology services. The Company has approximately 5,200 employees located in more than 230 offices in the United States, Canada, and Australia. In 1999, 2001, and 2002, MAXIMUS was selected by Forbes Magazine as one of the Best 200 Small Companies in America for that year. MAXIMUS was selected by Business Week Magazine as one of the 100 Best Hot Growth Small Companies in 1999, 2000, 2001, and 2002. Additionally, MAXIMUS is included in the Russell 2000 Index and the S&P SmallCap 600 Index.
Statements that are not historical facts, including statements about the Company’s confidence and strategies and the Company’s expectations about revenue, results of operations, profitability, future contracts, market opportunities, market demand or acceptance of the Company’s products are forward-looking statements that involve risks and uncertainties. These uncertainties could cause the Company’s actual results to differ materially from those indicated by such forward-looking statements and include reliance on government clients; risks associated with government contracting; risks involved in managing government projects; legislative changes and political developments; opposition from government unions; challenges resulting from growth; adverse publicity; and legal, economic, and other risks detailed in Exhibit 99.1 to the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (file number 001-12997).
CONTACTS:
Lisa Miles
Investor Relations
703.251.8637
Rachael Rowland
Public/Media Relations
703.251.8688
MAXIMUS, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
|
| September 30, |
| ||||
|
| 2002 |
| 2003 |
| ||
|
|
|
| (unaudited) |
| ||
ASSETS |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 94,965 |
| $ | 117,372 |
|
Restricted cash |
| — |
| 3,653 |
| ||
Marketable securities |
| 160 |
| 140 |
| ||
Accounts receivable – billed |
| 108,074 |
| 117,857 |
| ||
Accounts receivable - unbilled |
| 25,102 |
| 26,277 |
| ||
Deferred income taxes |
| — |
| 3,410 |
| ||
Prepaid expenses and other current assets |
| 7,123 |
| 7,063 |
| ||
Total current assets |
| 235,424 |
| 275,772 |
| ||
Property and equipment, net |
| 25,406 |
| 26,217 |
| ||
Software development costs, net |
| 14,116 |
| 14,683 |
| ||
Deferred contract costs |
| — |
| 7,283 |
| ||
Goodwill, net |
| 68,812 |
| 81,757 |
| ||
Intangible assets, net |
| 6,540 |
| 7,212 |
| ||
Other assets |
| 1,792 |
| 2,096 |
| ||
Total assets |
| $ | 352,090 |
| $ | 415,020 |
|
|
|
|
|
|
| ||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 10,867 |
| $ | 21,578 |
|
Accrued compensation and benefits |
| 19,726 |
| 23,219 |
| ||
Deferred revenue |
| 12,939 |
| 22,356 |
| ||
Income taxes payable |
| 2,325 |
| 2,837 |
| ||
Deferred income taxes |
| 1,811 |
| — |
| ||
Current portion of capital lease obligations |
| 284 |
| 809 |
| ||
Other accrued liabilities |
| 1,510 |
| 3,653 |
| ||
Total current liabilities |
| 49,462 |
| 74,452 |
| ||
Capital lease obligations, less current portion |
| 269 |
| 3,821 |
| ||
Deferred income taxes |
| — |
| 2,745 |
| ||
Other long-term liabilities |
| 230 |
| 725 |
| ||
Total liabilities |
| 49,961 |
| 81,743 |
| ||
Shareholders’ equity: |
|
|
|
|
| ||
Common stock, no par value; 60,000,000 shares authorized; 21,509,444 and 21,200,197 shares issued and outstanding at September 30, 2002 and 2003, at stated amount, respectively |
| 150,298 |
| 146,219 |
| ||
Accumulated other comprehensive income (loss), net |
| 24 |
| (95 | ) | ||
Retained earnings |
| 151,807 |
| 187,153 |
| ||
Total shareholders’ equity |
| 302,129 |
| 333,277 |
| ||
Total liabilities and shareholders’ equity |
| $ | 352,090 |
| $ | 415,020 |
|
MAXIMUS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
|
| Three Months |
| Twelve Months |
| ||||||||
|
| 2002 |
| 2003 |
| 2002 |
| 2003 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 134,085 |
| $ | 153,188 |
| $ | 518,698 |
| $ | 558,283 |
|
Cost of revenue |
| 90,134 |
| 109,879 |
| 357,036 |
| 391,707 |
| ||||
Gross profit |
| 43,951 |
| 43,309 |
| 161,662 |
| 166,576 |
| ||||
Selling, general and administrative expenses |
| 26,243 |
| 27,322 |
| 96,013 |
| 107,406 |
| ||||
Non-cash equity based compensation |
| 257 |
| 213 |
| 342 |
| 939 |
| ||||
Amortization of acquisition-related intangibles |
| 275 |
| 325 |
| 968 |
| 1,189 |
| ||||
Income from operations |
| 17,176 |
| 15,449 |
| 64,339 |
| 57,042 |
| ||||
Interest and other income, net |
| 839 |
| 113 |
| 3,100 |
| 1,381 |
| ||||
Income before income taxes |
| 18,015 |
| 15,562 |
| 67,439 |
| 58,423 |
| ||||
Provision for income taxes |
| 7,076 |
| 6,147 |
| 27,093 |
| 23,077 |
| ||||
Net income |
| $ | 10,939 |
| $ | 9,415 |
| $ | 40,346 |
| $ | 35,346 |
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.50 |
| $ | 0.45 |
| $ | 1.78 |
| $ | 1.68 |
|
Diluted |
| $ | 0.50 |
| $ | 0.44 |
| $ | 1.73 |
| $ | 1.66 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 21,773 |
| 20,947 |
| 22,675 |
| 20,999 |
| ||||
Diluted |
| 22,028 |
| 21,523 |
| 23,287 |
| 21,335 |
| ||||
SUPPLEMENTAL SEGMENT INFORMATION
|
| Three Months Ended |
| Twelve Months Ended |
| ||||||||
|
| 2002 |
| 2003 |
| 2002 |
| 2003 |
| ||||
Revenue: |
|
|
|
|
|
|
|
|
| ||||
Consulting |
| $ | 35,009 |
| $ | 35,217 |
| $ | 137,939 |
| $ | 139,444 |
|
Health Services |
| 42,169 |
| 39,471 |
| 161,152 |
| 162,503 |
| ||||
Human Services |
| 37,837 |
| 52,176 |
| 148,720 |
| 165,070 |
| ||||
Systems |
| 19,070 |
| 26,324 |
| 70,887 |
| 91,266 |
| ||||
Total |
| $ | 134,085 |
| $ | 153,188 |
| $ | 518,698 |
| $ | 558,283 |
|
Gross profit: |
|
|
|
|
|
|
|
|
| ||||
Consulting |
| $ | 17,288 |
| $ | 14,765 |
| $ | 64,886 |
| $ | 58,237 |
|
Health Services |
| 8,712 |
| 9,353 |
| 28,793 |
| 37,827 |
| ||||
Human Services |
| 8,689 |
| 7,706 |
| 33,182 |
| 29,606 |
| ||||
Systems |
| 9,262 |
| 11,485 |
| 34,801 |
| 40,906 |
| ||||
Total |
| $ | 43,951 |
| $ | 43,309 |
| $ | 161,662 |
| $ | 166,576 |
|
Income from operations: |
|
|
|
|
|
|
|
|
| ||||
Consulting |
| $ | 8,097 |
| $ | 6,109 |
| $ | 30,965 |
| $ | 23,455 |
|
Health Services |
| 4,780 |
| 4,639 |
| 12,930 |
| 20,037 |
| ||||
Human Services |
| 2,589 |
| 956 |
| 12,006 |
| 3,373 |
| ||||
Systems |
| 1,710 |
| 3,745 |
| 8,438 |
| 10,177 |
| ||||
Total |
| $ | 17,176 |
| $ | 15,449 |
| $ | 64,339 |
| $ | 57,042 |
|
MAXIMUS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
|
| Year ended September 30, |
| ||||
|
| 2002 |
| 2003 |
| ||
|
|
|
|
|
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net income |
| $ | 40,346 |
| $ | 35,346 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation |
| 3,653 |
| 6,249 |
| ||
Amortization |
| 3,631 |
| 4,981 |
| ||
Deferred income taxes |
| 2,661 |
| (2,310 | ) | ||
Non-cash equity based compensation |
| 342 |
| 939 |
| ||
Tax benefit from option exercises |
| 1,829 |
| 1,756 |
| ||
Changes in assets and liabilities, net of effects from acquisitions: |
|
|
|
|
| ||
Accounts receivable - billed |
| 12,792 |
| (8,354 | ) | ||
Accounts receivable - unbilled |
| (4,666 | ) | (1,176 | ) | ||
Prepaid expenses and other current assets |
| (489 | ) | (355 | ) | ||
Deferred contract costs |
| — |
| (3,051 | ) | ||
Other assets |
| 217 |
| 59 |
| ||
Accounts payable |
| (2,515 | ) | 9,965 |
| ||
Accrued compensation and benefits |
| 252 |
| 2,631 |
| ||
Deferred revenue |
| (208 | ) | 9,004 |
| ||
Income taxes payable |
| 1,111 |
| 512 |
| ||
Other liabilities |
| (592 | ) | (1,149 | ) | ||
Net cash provided by operating activities |
| 58,364 |
| 55,047 |
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Acquisition of businesses, net of cash acquired |
| (23,706 | ) | (14,715 | ) | ||
Purchases of property and equipment |
| (7,850 | ) | (6,825 | ) | ||
Decrease in notes receivable |
| 114 |
| 222 |
| ||
Capitalization of software development costs |
| (5,063 | ) | (4,359 | ) | ||
Decrease (increase) in marketable securities |
| 1,093 |
| (34 | ) | ||
Net cash used in investing activities. |
| (35,412 | ) | (25,711 | ) | ||
Cash flows from financing activities: |
|
|
|
|
| ||
Employee stock transactions |
| 8,998 |
| 15,170 |
| ||
Repurchases of common stock |
| (50,842 | ) | (21,944 | ) | ||
Net payments on borrowings |
| (251 | ) | (155 | ) | ||
Net cash used in financing activities |
| (42,095 | ) | (6,929 | ) | ||
Net increase (decrease) in cash and cash equivalents |
| (19,143 | ) | 22,407 |
| ||
Cash and cash equivalents, beginning of period |
| 114,108 |
| 94,965 |
| ||
Cash and cash equivalents, end of period |
| $ | 94,965 |
| $ | 117,372 |
|
###
