EX-99.1 2 mms-2017x03x31x8kxex991.htm EXHIBIT 99.1

FOR IMMEDIATE RELEASE |  | CONTACT: | Lisa Miles 703.251.8637
|  |  | lisamiles@maximus.com
Date: May 4, 2017 |  |  |

MAXIMUS Reports Second Quarter Results
- Raises Lower End of Full-Year Earnings Guidance and
Maintains Revenue Guidance for Fiscal Year 2017 -
(RESTON, Va. - May 4, 2017) - MAXIMUS (NYSE: MMS), a leading provider of government services worldwide, today reported financial results for the three and six months ended March 31, 2017.
Highlights for the second quarter of fiscal year 2017 include:

• | Revenue growth of 3% to $622.0 million compared to the same period last year

• | Diluted earnings per share of $0.80 compared to $0.74 for the same period last year

• | Strong cash flow with cash from operations of $65.7 million and free cash flow of $60.5 million

• | Year-to-date signed contract awards of $1.5 billion and contracts pending (awarded but unsigned) of

$155.1 million at March 31, 2017

• | Sales pipeline of $3.3 billion at March 31, 2017

• | Updated fiscal 2017 earnings guidance now expected to range between $3.00 and $3.10

For the second quarter of fiscal 2017, revenue increased 3% to $622.0 million compared to $606.5 million reported for the same period last year driven by the Health Services Segment. Most of the revenue growth in the quarter was organic, which was partially offset by a 2% decline from unfavorable foreign currency translation. On a constant currency basis, revenue would have increased 4% compared to the same period last year.
Total company operating margin for the second quarter of fiscal 2017 was 12.9% compared to 12.8% for the same period last year.
For the second quarter of fiscal 2017, net income attributable to MAXIMUS totaled $52.5 million (or $0.80 of diluted earnings per share). This was better than expected, driven by favorable results on several volume-based contracts in both the U.S. Federal Services and Health Services segments. This compares to diluted earnings per share of $0.74 for the second quarter of fiscal 2016, which benefited from out-of-period revenue and pre-tax income of $15.2 million (or $0.16 of diluted earnings per share) from two previously disclosed contract amendments in the Health Services Segment.
1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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Health Services Segment
Health Services Segment revenue for the second quarter of fiscal 2017 increased 6% to $349.0 million compared to $330.6 million reported for the same period last year. Most of the growth in the quarter was organic, which was offset by a 3% decline from unfavorable foreign currency translation. On a constant currency basis, revenue growth would have been 9%.
Operating margin for the second quarter of fiscal 2017 was 16.2% compared to 17.2% reported in the prior-year period.
As previously disclosed, the second quarter of last year benefited from $15.2 million of out-of-period revenue and pre-tax income related to two items: an $8.6 million change order on a large U.S. contract and $6.6 million resulting from contract modifications on the U.K. Health Assessment Advisory Service.
U.S. Federal Services Segment
U.S. Federal Services Segment revenue for the second quarter of fiscal 2017 decreased 3% to $145.4 million compared to $150.2 million reported for the same period last year. As previously disclosed, the lower revenue was largely a result of a contract cancellation for a program with the U.S. Department of Veterans Affairs. This contract ended in April of this year.
Operating margin for the second quarter was 12.1% compared to 10.0% reported for the prior-year period. The margin expansion was driven by favorable results from several volume-based contracts.
Human Services Segment
Human Services Segment revenue for the second quarter of fiscal 2017 increased 2% to $127.7 million compared to $125.7 million for the same period last year. Nearly all growth in the quarter was organic, which was partially offset by expected decreases in the Company's United Kingdom operations. The anticipated ramp down of the U.K. Work Programme unfavorably impacted both revenue and operating income in the second quarter of fiscal 2017.
Operating margin for the second quarter was 7.5% and comparable to 7.8% for the same period last year.
Sales and Pipeline
Year-to-date signed contract awards at March 31, 2017 totaled $1.5 billion and includes a three-year contract extension with the State of New York. In addition, contracts pending (awarded but unsigned) totaled
$155.1 million.
The sales pipeline at March 31, 2017 was $3.3 billion (comprised of approximately $0.6 billion in proposals pending, $0.9 billion in proposals in preparation, and $1.9 billion in opportunities tracking). This compares to a pipeline of $4.0 billion at December 31, 2016. The sequential decline is principally due to contracts converting to new awards and, to a lesser extent, procurement delays, contract losses, cancellations and no bids.
Balance Sheet and Cash Flows
Cash and cash equivalents at March 31, 2017 totaled $94.9 million. For the three months ended March 31, 2017, cash flows from operations totaled $65.7 million, with free cash flow of $60.5 million.
At March 31, 2017, Days Sales Outstanding (DSOs) were 69 and within the Company’s expected range.
On February 28, 2017, MAXIMUS paid a quarterly cash dividend of $0.045 per share. On April 11, 2017, the Company announced a $0.045 per share cash dividend, payable on May 31, 2017 to shareholders of record on May 15, 2017.
1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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Outlook
MAXIMUS is raising the bottom end of its fiscal 2017 earnings guidance and now expects GAAP diluted earnings per share to range between $3.00 and $3.10 for fiscal 2017. This compares to the Company's prior range of $2.90 to $3.10.
MAXIMUS is reiterating its revenue guidance and continues to expect revenue to range between $2.425 billion and $2.475 billion for fiscal 2017. The Company is also reiterating its cash flow guidance and continues to expect cash flows from operations to range between $230 million and $280 million and free cash flow to range between $170 million and $220 million for fiscal 2017. The Company’s guidance does not include any future acquisitions or future legal expenses or recoveries.
"We are pleased to be raising the lower end of our earnings guidance for fiscal year 2017 as a result of good performance and some expected tax benefits," commented MAXIMUS CEO Richard A. Montoni. "In addition, the extension of our contract with New York through 2020 is confirmation of our pledge to continue providing high-quality services to the state. During the quarter, we closed out contract year two of the U.K. Health Assessment Advisory Service. We successfully completed more than a million assessments in our second contract year, and we remain on track to achieve our financial and operational objectives for this program."
Conference Call and Webcast Information
MAXIMUS will host a conference call this morning, May 4, 2017, at 9:00 a.m. (ET). The call is open to the public and is available by webcast at http://investor.maximus.com or by phone at:
877.407.8289 (Domestic)/+1.201.689.8341 (International)
For those unable to listen to the live call, a replay will be available through May 18, 2017. Callers can access the replay by calling:
877.660.6853 (Domestic)/+1.201.612.7415 (International)
Replay conference ID number: 13660023
About MAXIMUS
Since 1975, MAXIMUS has operated under its founding mission of Helping Government Serve the People®, enabling citizens around the globe to successfully engage with their governments at all levels and across a variety of health and human services programs. MAXIMUS delivers innovative business process management and technology solutions that contribute to improved outcomes for citizens and higher levels of productivity, accuracy, accountability and efficiency of government-sponsored programs. With more than 18,000 employees worldwide, MAXIMUS is a proud partner to government agencies in the United States, Australia, Canada, Saudi Arabia and the United Kingdom. For more information, visit maximus.com.
Non-GAAP Measures
We utilize non-GAAP measures where we believe it will assist the user of our financial statements in understanding our business. The presentation of these measures is meant to complement, and not replace, other financial measures in this document. The presentation of non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to revenue growth, cash flows from operations or net income as measures of performance. These non-GAAP measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies.
1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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In this press release, we use the non-GAAP measures of organic revenue growth, constant currency movement and free cash flow. A description of these measures, including a description of our use of these measures and our methodology for calculating them, is included in our most recent Annual Report on Form
10-K, filed with the Securities and Exchange Commission on November 21, 2016. We have included a reconciliation of free cash flow to cash flows from operations in this press release.
Statements that are not historical facts, including statements about the Company’s confidence and strategies and the Company’s expectations about revenues, results of operations, profitability, future contracts, market opportunities, market demand or acceptance of the Company’s products are forward-looking statements that involve risks and uncertainties. These uncertainties could cause the Company’s actual results to differ materially from those indicated by such forward-looking statements and include reliance on government clients; risks associated with government contracting; risks involved in managing government projects; legislative changes and political developments; opposition from government unions; challenges resulting from growth; adverse publicity; and legal, economic, and other risks detailed in Exhibit 99.1 to the Company’s most recent Annual Report filed with the Securities and Exchange Commission, found on maximus.com.
1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)

| Three Months Ended March 31, |  | Six Months Ended March 31,
| 2017 |  | 2016 |  | 2017 |  | 2016
Revenue | $ | 622,047 |  |  | $ | 606,453 |  |  | $ | 1,229,611 |  |  | $ | 1,163,175 |
Cost of revenue | 469,730 |  |  | 458,786 |  |  | 932,476 |  |  | 905,293 |
Gross profit | 152,317 |  |  | 147,667 |  |  | 297,135 |  |  | 257,882 |
Selling, general and administrative expenses | 68,596 |  |  | 65,976 |  |  | 133,994 |  |  | 130,210 |
Amortization of intangible assets | 3,386 |  |  | 3,262 |  |  | 6,788 |  |  | 6,411 |
Restructuring costs | — |  |  | — |  |  | 2,242 |  |  | — |
Acquisition-related expenses | — |  |  | 529 |  |  | — |  |  | 575 |
Operating income | 80,335 |  |  | 77,900 |  |  | 154,111 |  |  | 120,686 |
Less: |  |  |  |  |  |  |
Interest expense | 744 |  |  | 1,273 |  |  | 1,593 |  |  | 2,262 |
Add: |  |  |  |  |  |  |
Other income, net | 417 |  |  | 2,209 |  |  | 680 |  |  | 3,340 |
Income before income taxes | 80,008 |  |  | 78,836 |  |  | 153,198 |  |  | 121,764 |
Provision for income taxes | 26,911 |  |  | 29,495 |  |  | 53,772 |  |  | 45,541 |
Net income | 53,097 |  |  | 49,341 |  |  | 99,426 |  |  | 76,223 |
Income attributable to noncontrolling interests | 582 |  |  | 556 |  |  | 247 |  |  | 829 |
Net income attributable to MAXIMUS | $ | 52,515 |  |  | $ | 48,785 |  |  | $ | 99,179 |  |  | $ | 75,394 |
Basic earnings per share attributable to MAXIMUS | $ | 0.80 |  |  | $ | 0.74 |  |  | $ | 1.51 |  |  | $ | 1.14 |
Diluted earnings per share attributable to MAXIMUS | $ | 0.80 |  |  | $ | 0.74 |  |  | $ | 1.50 |  |  | $ | 1.14 |
Dividends paid per share | $ | 0.045 |  |  | $ | 0.045 |  |  | $ | 0.09 |  |  | $ | 0.09 |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic | 65,549 |  |  | 65,760 |  |  | 65,669 |  |  | 65,872 |
Diluted | 65,947 |  |  | 66,079 |  |  | 65,989 |  |  | 66,196 |

1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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MAXIMUS, Inc.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

| March 31, 2017 |  | September 30, 2016
| (unaudited) |  |
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 94,862 |  |  | $ | 66,199 |
Accounts receivable — billed and billable | 432,255 |  |  | 444,357 |
Accounts receivable — unbilled | 39,878 |  |  | 36,433 |
Income taxes receivable | 524 |  |  | 17,273 |
Prepaid expenses and other current assets | 50,442 |  |  | 56,718 |
Total current assets | 617,961 |  |  | 620,980 |
Property and equipment, net | 112,882 |  |  | 131,569 |
Capitalized software, net | 27,564 |  |  | 30,139 |
Goodwill | 395,011 |  |  | 397,558 |
Intangible assets, net | 101,645 |  |  | 109,027 |
Deferred contract costs, net | 16,917 |  |  | 18,182 |
Deferred compensation plan assets | 25,805 |  |  | 23,307 |
Deferred income taxes | 8,791 |  |  | 8,644 |
Other assets | 9,910 |  |  | 9,413 |
Total assets | $ | 1,316,486 |  |  | $ | 1,348,819 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable and accrued liabilities | $ | 130,537 |  |  | $ | 150,711 |
Accrued compensation and benefits | 80,636 |  |  | 96,480 |
Deferred revenue | 63,533 |  |  | 73,692 |
Income taxes payable | 11,870 |  |  | 7,979 |
Long-term debt, current portion | 217 |  |  | 277 |
Other liabilities | 11,582 |  |  | 11,617 |
Total current liabilities | 298,375 |  |  | 340,756 |
Deferred revenue, less current portion | 32,902 |  |  | 40,007 |
Deferred income taxes | 10,550 |  |  | 16,813 |
Long-term debt | 115,559 |  |  | 165,338 |
Deferred compensation plan liabilities, less current portion | 26,950 |  |  | 24,012 |
Other liabilities | 8,740 |  |  | 8,753 |
Total liabilities | 493,076 |  |  | 595,679 |
Shareholders’ equity: |  |  |
Common stock, no par value | 472,075 |  |  | 461,679 |
Accumulated other comprehensive loss | (40,235 | ) |  | (36,169 | )
Retained earnings | 387,881 |  |  | 323,571 |
Total MAXIMUS shareholders’ equity | 819,721 |  |  | 749,081 |
Noncontrolling interests | 3,689 |  |  | 4,059 |
Total equity | 823,410 |  |  | 753,140 |
Total liabilities and equity | $ | 1,316,486 |  |  | $ | 1,348,819 |

1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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MAXIMUS, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

|  | Three Months Ended March 31, |  | Six Months Ended March 31,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
Cash flows from operations: |  |  |  |  |  |  |  |
Net income |  | $ | 53,097 |  |  | $ | 49,341 |  |  | $ | 99,426 |  |  | $ | 76,223 |
Adjustments to reconcile net income to cash flows from operations: |  |  |  |  |  |  |  |
Depreciation and amortization of property, equipment and capitalized software |  | 15,405 |  |  | 12,912 |  |  | 29,967 |  |  | 25,859 |
Amortization of intangible assets |  | 3,386 |  |  | 3,262 |  |  | 6,788 |  |  | 6,411 |
Deferred income taxes |  | (11,631 | ) |  | 172 |  |  | (5,721 | ) |  | (327 | )
Stock compensation expense |  | 5,345 |  |  | 4,819 |  |  | 10,234 |  |  | 9,151 |
Change in assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable — billed and billable |  | (4,657 | ) |  | (5,304 | ) |  | 10,030 |  |  | (35,051 | )
Accounts receivable — unbilled |  | (1,447 | ) |  | (2,998 | ) |  | (3,445 | ) |  | (4,851 | )
Prepaid expenses and other current assets |  | 1,267 |  |  | 127 |  |  | 7,512 |  |  | 5,443 |
Deferred contract costs |  | 954 |  |  | 46 |  |  | 998 |  |  | 810 |
Accounts payable and accrued liabilities |  | (3,144 | ) |  | (28,137 | ) |  | (17,719 | ) |  | (19,949 | )
Accrued compensation and benefits |  | 10,944 |  |  | 7,172 |  |  | (6,293 | ) |  | (14,211 | )
Deferred revenue |  | (5,757 | ) |  | 877 |  |  | (15,853 | ) |  | (2,009 | )
Income taxes |  | 3,813 |  |  | (19,554 | ) |  | 20,715 |  |  | (22,597 | )
Other assets and liabilities |  | (1,867 | ) |  | (2,237 | ) |  | 209 |  |  | (3,038 | )
Cash flows from operations |  | 65,708 |  |  | 20,498 |  |  | 136,848 |  |  | 21,864 |
Cash flows from investing activities: |  |  |  |  |  |  |  |
Purchases of property and equipment and capitalized software costs |  | (5,207 | ) |  | (9,151 | ) |  | (12,975 | ) |  | (19,836 | )
Acquisition of businesses, net of cash acquired |  | — |  |  | (39,206 | ) |  | — |  |  | (41,812 | )
Proceeds from the sale of a business |  | — |  |  | — |  |  | 385 |  |  | — |
Other |  | 175 |  |  | 126 |  |  | 218 |  |  | 210 |
Cash used in investing activities |  | (5,032 | ) |  | (48,231 | ) |  | (12,372 | ) |  | (61,438 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |
Cash dividends paid to MAXIMUS shareholders |  | (2,917 | ) |  | (2,919 | ) |  | (5,837 | ) |  | (5,860 | )
Repurchases of common stock |  | (91 | ) |  | — |  |  | (28,858 | ) |  | (31,138 | )
Tax withholding related to RSU vesting |  | (12 | ) |  | (44 | ) |  | (9,267 | ) |  | (11,597 | )
Borrowings under credit facility |  | 70,000 |  |  | 83,493 |  |  | 135,000 |  |  | 130,563 |
Repayment of credit facility and other long-term debt |  | (104,761 | ) |  | (42,498 | ) |  | (184,828 | ) |  | (55,219 | )
Other |  | — |  |  | — |  |  | (1,145 | ) |  | — |
Cash (used in)/provided by financing activities |  | (37,781 | ) |  | 38,032 |  |  | (94,935 | ) |  | 26,749 |
Effect of exchange rate changes on cash and cash equivalents |  | 2,200 |  |  | (474 | ) |  | (878 | ) |  | (1,064 | )
Net increase/(decrease) in cash and cash equivalents |  | 25,095 |  |  | 9,825 |  |  | 28,663 |  |  | (13,889 | )
Cash and cash equivalents, beginning of period |  | 69,767 |  |  | 50,958 |  |  | 66,199 |  |  | 74,672 |
Cash and cash equivalents, end of period |  | $ | 94,862 |  |  | $ | 60,783 |  |  | $ | 94,862 |  |  | $ | 60,783 |

1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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MAXIMUS, Inc.
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)

|  | Three Months Ended March 31, |  | Six Months Ended March 31,
(Amounts in thousands) |  | 2017 |  | % (1) |  | 2016 |  | % (1) |  | 2017 |  | % (1) |  | 2016 |  | % (1)
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Health Services |  | $ | 348,994 |  |  | 100 | % |  | $ | 330,567 |  |  | 100 | % |  | $ | 689,723 |  |  | 100 | % |  | $ | 622,470 |  |  | 100 | %
U.S. Federal Services |  | 145,370 |  |  | 100 | % |  | 150,191 |  |  | 100 | % |  | 286,668 |  |  | 100 | % |  | 295,476 |  |  | 100 | %
Human Services |  | 127,683 |  |  | 100 | % |  | 125,695 |  |  | 100 | % |  | 253,220 |  |  | 100 | % |  | 245,229 |  |  | 100 | %
Total |  | $ | 622,047 |  |  | 100 | % |  | $ | 606,453 |  |  | 100 | % |  | $ | 1,229,611 |  |  | 100 | % |  | $ | 1,163,175 |  |  | 100 | %
Gross Profit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Health Services |  | $ | 86,454 |  |  | 24.8 | % |  | $ | 82,717 |  |  | 25.0 | % |  | $ | 164,688 |  |  | 23.9 | % |  | $ | 134,689 |  |  | 21.6 | %
U.S. Federal Services |  | 36,571 |  |  | 25.2 | % |  | 33,421 |  |  | 22.3 | % |  | 74,147 |  |  | 25.9 | % |  | 61,659 |  |  | 20.9 | %
Human Services |  | 29,292 |  |  | 22.9 | % |  | 31,529 |  |  | 25.1 | % |  | 58,300 |  |  | 23.0 | % |  | 61,534 |  |  | 25.1 | %
Total |  | $ | 152,317 |  |  | 24.5 | % |  | $ | 147,667 |  |  | 24.3 | % |  | $ | 297,135 |  |  | 24.2 | % |  | $ | 257,882 |  |  | 22.2 | %
Selling, general, and administrative expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Health Services |  | $ | 29,914 |  |  | 8.6 | % |  | $ | 25,803 |  |  | 7.8 | % |  | $ | 58,021 |  |  | 8.4 | % |  | $ | 50,967 |  |  | 8.2 | %
U.S. Federal Services |  | 18,927 |  |  | 13.0 | % |  | 18,438 |  |  | 12.3 | % |  | 38,622 |  |  | 13.5 | % |  | 35,960 |  |  | 12.2 | %
Human Services |  | 19,663 |  |  | 15.4 | % |  | 21,735 |  |  | 17.3 | % |  | 36,902 |  |  | 14.6 | % |  | 42,633 |  |  | 17.4 | %
Other (4) |  | 92 |  |  | NM |  |  | — |  |  | NM |  |  | 449 |  |  | NM |  |  | 650 |  |  | NM |
Total |  | $ | 68,596 |  |  | 11.0 | % |  | $ | 65,976 |  |  | 10.9 | % |  | $ | 133,994 |  |  | 10.9 | % |  | $ | 130,210 |  |  | 11.2 | %
Operating income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Health Services |  | $ | 56,540 |  |  | 16.2 | % |  | $ | 56,914 |  |  | 17.2 | % |  | $ | 106,667 |  |  | 15.5 | % |  | $ | 83,722 |  |  | 13.4 | %
U.S. Federal Services |  | 17,644 |  |  | 12.1 | % |  | 14,983 |  |  | 10.0 | % |  | 35,525 |  |  | 12.4 | % |  | 25,699 |  |  | 8.7 | %
Human Services |  | 9,629 |  |  | 7.5 | % |  | 9,794 |  |  | 7.8 | % |  | 21,398 |  |  | 8.5 | % |  | 18,901 |  |  | 7.7 | %
Amortization of intangible assets |  | (3,386 | ) |  | NM |  |  | (3,262 | ) |  | NM |  |  | (6,788 | ) |  | NM |  |  | (6,411 | ) |  | NM |
Restructuring costs (2) |  | — |  |  | NM |  |  | — |  |  | NM |  |  | (2,242 | ) |  | NM |  |  | — |  |  | NM |
Acquisition-related expenses (3) |  | — |  |  | NM |  |  | (529 | ) |  | NM |  |  | — |  |  | NM |  |  | (575 | ) |  | NM |
Other (4) |  | (92 | ) |  | NM |  |  | — |  |  | NM |  |  | (449 | ) |  | NM |  |  | (650 | ) |  | NM |
Total |  | $ | 80,335 |  |  | 12.9 | % |  | $ | 77,900 |  |  | 12.8 | % |  | $ | 154,111 |  |  | 12.5 | % |  | $ | 120,686 |  |  | 10.4 | %

(1) Percentage of respective segment revenue. Percentages not considered meaningful are marked “NM.”

(2) | During the current fiscal year, we incurred costs in restructuring our United Kingdom Human Services business.

(3) | Acquisition-related expenses relate to the acquisitions of Assessments Australia and Ascend in December 2015 and February 2016, respectively.

(4) | During the six months ended March 31, 2017, we incurred $0.4 million of legal-related costs pertaining to a legacy matter from a business line that the Company exited. During the six months ended March 31, 2016, we incurred $0.7 million of legal costs related to a matter that occurred in fiscal year 2014. Both items are classified within other selling general and administrative expense.

1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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MAXIMUS, Inc.
FREE CASH FLOW
(Non-GAAP measure)
(Amounts in thousands)
(Unaudited)

|  | Three Months Ended March 31, |  | Six Months Ended March 31,
(in thousands) |  | 2017 |  | 2016 |  | 2017 |  | 2016
Cash provided by operating activities |  | $ | 65,708 |  |  | $ | 20,498 |  |  | $ | 136,848 |  |  | $ | 21,864 |
Purchases of property and equipment and capitalized software costs |  | (5,207 | ) |  | (9,151 | ) |  | (12,975 | ) |  | (19,836 | )
Free cash flow |  | $ | 60,501 |  |  | $ | 11,347 |  |  | $ | 123,873 |  |  | $ | 2,028 |

-XXX-
1891 METRO CENTER DRIVE | RESTON, VIRGINIA 20190 | 703.251.8500 | MAXIMUS.COM
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