EX-99.1 2 mms-2022x09x30x8kxex991.htm EX-99.1

FOR IMMEDIATE RELEASE |  | CONTACT: | James Francis 703.251.8526
|  |  | Jessica Batt 703.251.8634
Date: November 21, 2022 |  |  | IR@maximus.com

Maximus Reports Fourth Quarter and Full Year Results for Fiscal Year 2022
Establishes Guidance for Fiscal Year 2023
(Tysons, Va. - November 21, 2022) - Maximus (NYSE: MMS), a leading provider of government services worldwide, reported financial results for the three months and year ended September 30, 2022.
Highlights for fiscal year 2022 include:
•Revenue increased 8.9% to $4.63 billion, compared to $4.25 billion for the prior year. A combination of organic and acquired growth more than offset the $800 million decline in COVID-19 response work.
•Diluted earnings per share were $3.29, and adjusted diluted earnings per share were $4.37. Results for the three months ended September 30, 2022, included combined benefits of $0.33 earnings per share from several contractual and legal items and a one-time gain on sale.
•Record signed contracts awards of $10.5 billion, which includes awarded Centers for Medicare & Medicaid Services contract for Contact Center Operations valued at $6.6 billion.
•A quarterly cash dividend of $0.28 per share payable on November 30, 2022, to shareholders of record on November 15, 2022.
"Our fiscal year 2022 results provide us confidence that the foundation we laid for the core business is yielding the desired outcome. There were record signed contract awards and the backlog of business is at an all-time high," said Bruce Caswell, President and Chief Executive Officer. "Expansion of core work and new business wins that take full advantage of our capabilities more than replaced the anticipated decline in short-term work."
Consolidated Fiscal Year 2022 Results
Revenue for fiscal year 2022 increased 8.9% to $4.63 billion, compared to $4.25 billion for the prior year. Organic growth from new or expanded programs and full-period contributions of the U.S. Federal Services acquisitions drove the $377 million revenue increase, which was net of $800 million less short-term COVID-19 response work. Adjusting for COVID-19 response work, normalized organic growth was approximately 18% over the prior year and driven by contributions from all three segments.
For fiscal year 2022, the operating margin was 7.0% and the adjusted margin operating margin was 9.0%. This compares to margins of 9.6% and 10.6%, respectively, for the prior year. Diluted earnings per share were $3.29 and adjusted diluted earnings per share were $4.37. This compares to $4.67 and $5.19, respectively, for the prior-year period.
Results for the three months ended September 30, 2022, included combined benefits of $28 million, or $0.33 earnings per share, from several contractual and legal items worth $17 million, or $0.20 earnings per share, resolved in the quarter and a one-time gain on the sale of the company's former headquarters worth $11.0 million, or $0.13 diluted earnings per share.
The Outside the U.S. Segment realized a loss in fiscal year 2022 primarily due to the unfortunate rebid outcome in Australia, which included severance costs and the write-down on a percentage of completion project disclosed in the third quarter.
U.S. Federal Services Segment
U.S. Federal Services Segment revenue for fiscal year 2022 increased 19.4% to $2.26 billion, compared to $1.89 billion reported for the prior year. The acquisitions of Attain Federal, Veterans Evaluation Services (VES), and Aidvantage had full-period contributions. Organic growth stemming from new work wins and expansion on recompete wins helped offset the decline in the COVID-19 response work. Adjusting for COVID-19 response work, normalized organic growth in the segment was approximately 4.8% over the prior year.
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The segment operating margin for fiscal year 2022 was 10.4% as compared to 10.0% reported for the prior year. Approximately one-third of the contractual and legal items benefited segment results for the three months ended September 30, 2022.
U.S. Services Segment
U.S. Services Segment revenue for fiscal year 2022 decreased by 3.3% to $1.61 billion, compared to $1.66 billion reported in the prior year. The expected decline in COVID-19 response work was tempered by growth from previously disclosed new contract wins in the segment. Adjusting for COVID-19 response work, normalized organic growth in the segment was more than 30% over the prior year.
The segment operating margin for fiscal year 2022 was 11.3% compared to 15.3% reported for the prior-year period. Approximately one-third of the contractual and legal items benefited segment results for the three months ended September 30, 2022. Margins were comparatively lower over the prior year, particularly in the second half of fiscal year 2022, as the highly-profitable short-term COVID-19 response work concluded. Meanwhile, redetermination activities remained paused as a result of the PHE, acting as a headwind to the earnings potential of the segment.
Outside the U.S. Segment
Outside the U.S. Segment revenue for fiscal year 2022 increased 9.2% to $763.7 million as compared to $699.1 million reported for the prior year, which was net of a 6% currency headwind. Organic growth in the segment was approximately 11% with U.K. Restart Programme being the largest contributor as caseload ramped across fiscal year 2022.
The segment realized an operating loss of $15.2 million for fiscal year 2022, compared to an operating profit of $20.1 million in the prior year. The fiscal 2022 loss was primarily due to an unfortunate rebid outcome in Australia and a write-down on a percentage of completion project disclosed in the prior quarter.
Sales and Pipeline
Year-to-date signed contract awards at September 30, 2022, totaled $10.5 billion and contracts pending (awarded but unsigned) totaled $800.1 million. These awards include the previously announced Centers for Medicare & Medicaid Services Contract for contact Center Operations valued at $6.6 billion, which contributed to the higher 2.3x book-to-bill ratio at September 30, 2022.
The sales pipeline at September 30, 2022, was $30.7 billion (comprised of approximately $3.4 billion in proposals pending, $3.10 billion in proposals in preparation, and $24.2 billion in opportunities tracking). New work opportunities represent 73.5% of the total sales pipeline.
Balance Sheet and Cash Flows
At September 30, 2022, cash and cash equivalents totaled $40.7 million and gross debt was $1.37 billion. The ratio of debt, net of allowed cash, to pro-forma EBITDA for the full year ended September 30, 2022, as calculated in accordance with our credit agreement, was 2.6x. This reflects debt pay downs of approximately $128 million in the most recent quarter and compares to 2.9x at June 30, 2022. In the near term, the company plans to continue prioritizing debt pay downs using its free cash flow.
For fiscal year 2022, cash flows from operating activities totaled $289.8 million and free cash flow was $233.7 million. This compares to $517.3 million and $480.8 million, respectively, in the prior year, which benefited from additional short-term COVID-19 response work earnings and working capital benefits totaling more than $100 million.
As of September 30, 2022, DSO we re 62 days. The c ompany is updating its target range to 60 to 70 days.
On October 7, 2022, 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 November 30, 2022, to shareholders of record on November 15, 2022.
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FY23 Outlook
Maximus is establishing fiscal year 2023 guidance. The company expects revenue to range between $4.75 billion and $4.90 billion. Adjusted operating income is expected to range between $390 million and $415 million which excludes an estimated $94 million of expense for amortization of intangible assets. Adjusted diluted earnings per share is expected to range between $3.70 and $4.00 per share.
Guidance assumes that redetermination activities in the U.S. Services segment continue to be paused across fiscal year 2023 as there is currently no projected end date to the PHE. In addition, the short-term COVID response work has concluded and does not contribute to the company's forecast for fiscal year 2023.
Free cash flow is expected to range between $225 million and $275 million for fiscal year 2023. The company forecasts interest expense between $85 million and $95 million, an effective income tax rate between 24.5% and 25.5%, and weighted average shares outstanding between 61.2 million and 61.3 million shares for fiscal year 2023.
"As we enter fiscal year 2023, we conclude a formative but somewhat volatile period for the business, and now have the opportunity to capitalize on the organic growth we are seeing in the core business, and execution of our recently refreshed strategy," Caswell continued. "Our expectations for the upcoming year illustrate while there remain elements in our environment influenced by federal policy decisions, they represent upside opportunity for the business on top of a base that is supported by a stable business model with long-term contracts that provide essential and in-demand government services."
Conference Call and Webcast Information
Maximus will host a conference call tomorrow, November 22, 2022, at 9:00 a.m. ET. Shareholders are invited to submit questions for management’s consideration by emailing IR@maximus.com up to one hour prior to the call.
The call is open to the public and available by webcast or by phone at:
877.407.8289 (Domestic) / +1.201.689.8341 (International)
For those unable to listen to the live call, a recording of the webcast will be available on investor.maximus.com.
About Maximus
As a leading strategic partner to governments across the globe, Maximus helps improve the delivery of public services amid complex technology, health, economic, environmental, and social challenges. With a deep understanding of program service delivery, acute insights that achieve operational excellence, and an extensive awareness of the needs of the people being served, our employees advance the critical missions of our partners. Maximus delivers innovative business process management, impactful consulting services, and technology solutions that provide improved outcomes for the public and higher levels of productivity and efficiency of government-sponsored programs. For more information, visit maximus.com.
Non-GAAP Measures and Risk Factors
This release refers to non-GAAP measures and other indicators, including organic growth normalized for the effects of COVID-19 response work, free cash flow, operating income and EPS adjusted for amortization of intangible assets, pro-forma EBITDA, and other non-GAAP measures.
A description of these non-GAAP measures, the reasons why we use and present them, and details as to how they are calculated are included in our earnings presentation and forthcoming Form 10-K.
The presentation of these non-GAAP numbers is not meant to be considered in isolation, nor as alternatives to cash flows from operations, revenue growth, or net income as measures of performance. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies.
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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 risks could cause the Company’s actual results to differ materially from those indicated by such forward-looking statements. A summary of risk factors can be found in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended September 30, 2022, which will be filed with the Securities and Exchange Commission (SEC) on November 22, 2022. The Company's SEC reports are accessible on maximus.com.
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Maximus, Inc.
Consolidated Statements of Operations
(Unaudited)

| For the Three Months Ended September 30, |  | For the Year Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (in thousands, except per share amounts)
Revenue | $ | 1,177,031 |  |  | $ | 1,106,131 |  |  | $ | 4,631,018 |  |  | $ | 4,254,485 |
Cost of revenue | 904,048 |  |  | 887,725 |  |  | 3,691,208 |  |  | 3,307,510 |
Gross profit | 272,983 |  |  | 218,406 |  |  | 939,810 |  |  | 946,975 |
Selling, general, and administrative expenses | 146,991 |  |  | 129,590 |  |  | 534,493 |  |  | 494,088 |
Amortization of intangible assets | 22,514 |  |  | 20,639 |  |  | 90,465 |  |  | 44,357 |
Gain on sale of land and building | 11,046 |  |  | — |  |  | 11,046 |  |  | — |
Operating income | 114,524 |  |  | 68,177 |  |  | 325,898 |  |  | 408,530 |
Interest expense | 16,098 |  |  | 10,695 |  |  | 45,965 |  |  | 14,744 |
Other expense, net | 742 |  |  | 521 |  |  | 2,835 |  |  | 10,105 |
Income before income taxes | 97,684 |  |  | 56,961 |  |  | 277,098 |  |  | 383,681 |
Provision for income taxes | 28,617 |  |  | 4,947 |  |  | 73,270 |  |  | 92,481 |
Net income | $ | 69,067 |  |  | $ | 52,014 |  |  | $ | 203,828 |  |  | $ | 291,200 |
Earnings per share: |  |  |  |  |  |  |
Basic | $ | 1.13 |  |  | $ | 0.84 |  |  | $ | 3.30 |  |  | $ | 4.69 |
Diluted | $ | 1.13 |  |  | $ | 0.83 |  |  | $ | 3.29 |  |  | $ | 4.67 |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic | 61,010 |  |  | 62,082 |  |  | 61,774 |  |  | 62,072 |
Diluted | 61,292 |  |  | 62,506 |  |  | 61,969 |  |  | 62,365 |
Dividends declared per share | $ | 0.28 |  |  | $ | 0.28 |  |  | $ | 1.12 |  |  | $ | 1.12 |

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Maximus, Inc.
Consolidated Balance Sheets
(Unaudited)

| As of September 30,
| 2022 |  | 2021
| (in thousands)
Assets: |  |  |
Cash and cash equivalents | $ | 40,658 |  |  | $ | 135,061 |
Accounts receivable, net | 807,110 |  |  | 834,819 |
Income taxes receivable | 2,158 |  |  | 5,413 |
Prepaid expenses and other current assets | 182,387 |  |  | 104,201 |
Total current assets | 1,032,313 |  |  | 1,079,494 |
Property and equipment, net | 52,258 |  |  | 62,627 |
Capitalized software, net | 58,740 |  |  | 42,868 |
Operating lease right-of-use assets | 132,885 |  |  | 179,349 |
Goodwill | 1,779,415 |  |  | 1,774,406 |
Intangible assets, net | 804,904 |  |  | 879,168 |
Deferred contract costs, net | 47,732 |  |  | 36,486 |
Deferred compensation plan assets | 37,050 |  |  | 46,738 |
Deferred income taxes | 4,970 |  |  | 990 |
Other assets | 42,447 |  |  | 16,839 |
Total assets | $ | 3,992,714 |  |  | $ | 4,118,965 |
Liabilities and Shareholders' Equity: |  |  |
Liabilities: |  |  |
Accounts payable and accrued liabilities | $ | 264,553 |  |  | $ | 305,565 |
Accrued compensation and benefits | 178,199 |  |  | 186,809 |
Deferred revenue, current portion | 87,146 |  |  | 98,588 |
Income taxes payable | 718 |  |  | 6,782 |
Long-term debt, current portion | 63,458 |  |  | 80,555 |
Operating lease liabilities, current portion | 63,999 |  |  | 76,077 |
Other current liabilities | 116,374 |  |  | 35,057 |
Total current liabilities | 774,447 |  |  | 789,433 |
Deferred revenue, non-current portion | 21,414 |  |  | 35,932 |
Deferred income taxes | 206,099 |  |  | 194,638 |
Long-term debt, non-current portion | 1,292,483 |  |  | 1,429,137 |
Deferred compensation plan liabilities, non-current portion | 40,210 |  |  | 47,405 |
Operating lease liabilities, non-current portion | 86,175 |  |  | 121,771 |
Other liabilities | 22,515 |  |  | 20,320 |
Total liabilities | 2,443,343 |  |  | 2,638,636 |
Shareholders' equity: |  |  |
Common stock, no par value; 100,000 shares authorized; 60,774 and 61,954 shares issued and outstanding as of September 30, 2022 and 2021, respectively (shares in thousands) | 557,978 |  |  | 532,411 |
Accumulated other comprehensive loss | (33,961) |  |  | (39,908) |
Retained earnings | 1,025,354 |  |  | 987,826 |
Total shareholders' equity | 1,549,371 |  |  | 1,480,329 |
Total liabilities and shareholders' equity | $ | 3,992,714 |  |  | $ | 4,118,965 |

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Maximus, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

| For the Three Months Ended September 30, |  | For the Year Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (in thousands)
Cash flows from operating activities: |  |  |  |  |  |  |
Net income | $ | 69,067 |  |  | $ | 52,014 |  |  | $ | 203,828 |  |  | $ | 291,200 |
Adjustments to reconcile net income to cash flows from operations: |  |  |  |  |  |  |
Depreciation and amortization of property, equipment and capitalized software | 12,455 |  |  | 12,697 |  |  | 42,330 |  |  | 46,361 |
Amortization of intangible assets | 22,514 |  |  | 20,639 |  |  | 90,465 |  |  | 44,357 |
Amortization of debt issuance costs and debt discount | 1,066 |  |  | 865 |  |  | 3,012 |  |  | 865 |
Costs related to debt financing | — |  |  | — |  |  | — |  |  | 8,509 |
Gain on sale of land and building | (11,046) |  |  | — |  |  | (11,046) |  |  | — |
Deferred income taxes | 17,383 |  |  | (10,209) |  |  | 10,204 |  |  | (6,577) |
Stock compensation expense | 8,396 |  |  | 7,731 |  |  | 30,476 |  |  | 28,554 |
Change in assets and liabilities, net of effects of business combinations: |  |  |  |  |  |  |
Accounts receivable | 54,129 |  |  | 292,882 |  |  | 14,132 |  |  | 38,578 |
Prepaid expenses and other current assets | (16,199) |  |  | (24,268) |  |  | (6,745) |  |  | (16,726) |
Deferred contract costs | (4,354) |  |  | 347 |  |  | (12,056) |  |  | (15,426) |
Accounts payable and accrued liabilities | 9,855 |  |  | (89,969) |  |  | (32,722) |  |  | 26,904 |
Accrued compensation and benefits | (10,558) |  |  | (16,275) |  |  | 3,288 |  |  | 18,112 |
Deferred revenue | (19,684) |  |  | 30,028 |  |  | (19,342) |  |  | 53,652 |
Income taxes | (688) |  |  | (17,898) |  |  | (13,510) |  |  | (2,733) |
Operating lease right-of-use assets and liabilities | 218 |  |  | 4,237 |  |  | (1,112) |  |  | 5,314 |
Other assets and liabilities | (12,491) |  |  | 7,842 |  |  | (11,363) |  |  | (3,622) |
Net cash provided by operating activities | 120,063 |  |  | 270,663 |  |  | 289,839 |  |  | 517,322 |
Cash flows from investing activities: |  |  |  |  |  |  |
Purchases of property and equipment and capitalized software | (20,209) |  |  | (4,432) |  |  | (56,145) |  |  | (36,565) |
Acquisitions of businesses, net of cash acquired | (151) |  |  | (19,442) |  |  | (14,295) |  |  | (1,798,915) |
Proceeds from the sale of land and building | 14,431 |  |  | — |  |  | 16,431 |  |  | — |
Net cash used in investing activities | (5,929) |  |  | (23,874) |  |  | (54,009) |  |  | (1,835,480) |
Cash flows from financing activities: |  |  |  |  |  |  |
Cash dividends paid to Maximus shareholders | (16,954) |  |  | (17,213) |  |  | (68,716) |  |  | (68,838) |
Purchases of Maximus common stock | (22,255) |  |  | — |  |  | (96,119) |  |  | (3,363) |
Tax withholding related to RSU vesting | — |  |  | — |  |  | (9,673) |  |  | (9,818) |
Payments for contingent consideration | (1,369) |  |  | — |  |  | (1,369) |  |  | — |
Payments for debt financing costs | — |  |  | (454) |  |  | — |  |  | (23,213) |
Proceeds from borrowings | 200,000 |  |  | 33,129 |  |  | 615,000 |  |  | 2,318,129 |
Principal payments for debt | (327,685) |  |  | (216,603) |  |  | (770,658) |  |  | (824,483) |
Other | 83,264 |  |  | 42 |  |  | 83,264 |  |  | (2,721) |
Net cash (used in)/provided by financing activities | (84,999) |  |  | (201,099) |  |  | (248,271) |  |  | 1,385,693 |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (2,965) |  |  | (2,356) |  |  | (7,334) |  |  | 474 |
Net change in cash, cash equivalents, and restricted cash | 26,170 |  |  | 43,334 |  |  | (19,775) |  |  | 68,009 |
Cash, cash equivalents and restricted cash, beginning of period | 110,625 |  |  | 113,236 |  |  | 156,570 |  |  | 88,561 |
Cash, cash equivalents and restricted cash, end of period | $ | 136,795 |  |  | $ | 156,570 |  |  | $ | 136,795 |  |  | $ | 156,570 |

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Maximus, Inc.
Consolidated Results of Operations by Segment
(Unaudited)

| For the Three Months Ended September 30, |  | For the Year Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| Amount (1) |  | % (2) |  | Amount (1) |  | % (2) |  | Amount (1) |  | % (2) |  | Amount (1) |  | % (2)
| (dollars in thousands)
Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal Services | $ | 579,066 |  |  |  |  | $ | 540,302 |  |  |  |  | $ | 2,259,744 |  |  |  |  | $ | 1,893,284 |  |  |
U.S. Services | 423,798 |  |  |  |  | 392,623 |  |  |  |  | 1,607,612 |  |  |  |  | 1,662,110 |  |  |
Outside the U.S. | 174,167 |  |  |  |  | 173,206 |  |  |  |  | 763,662 |  |  |  |  | 699,091 |  |  |
Revenue | $ | 1,177,031 |  |  |  |  | $ | 1,106,131 |  |  |  |  | $ | 4,631,018 |  |  |  |  | $ | 4,254,485 |  |  |
Gross profit: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal Services | $ | 153,508 |  |  | 26.5% |  | $ | 120,146 |  |  | 22.2% |  | $ | 519,440 |  |  | 23.0% |  | $ | 432,551 |  |  | 22.8%
U.S. Services | 94,199 |  |  | 22.2% |  | 84,794 |  |  | 21.6% |  | 343,004 |  |  | 21.3% |  | 408,050 |  |  | 24.6%
Outside the U.S. | 25,276 |  |  | 14.5% |  | 13,466 |  |  | 7.8% |  | 77,366 |  |  | 10.1% |  | 106,374 |  |  | 15.2%
Gross profit | $ | 272,983 |  |  | 23.2% |  | $ | 218,406 |  |  | 19.7% |  | $ | 939,810 |  |  | 20.3% |  | $ | 946,975 |  |  | 22.3%
Selling, general, and administrative expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal Services | $ | 81,169 |  |  | 14.0% |  | $ | 70,608 |  |  | 13.1% |  | $ | 284,509 |  |  | 12.6% |  | $ | 243,485 |  |  | 12.9%
U.S. Services | 45,176 |  |  | 10.7% |  | 36,954 |  |  | 9.4% |  | 160,902 |  |  | 10.0% |  | 153,609 |  |  | 9.2%
Outside the U.S. | 24,084 |  |  | 13.8% |  | 21,230 |  |  | 12.3% |  | 92,536 |  |  | 12.1% |  | 86,248 |  |  | 12.3%
Other (4) | (3,438) |  |  | NM |  | 798 |  |  | NM |  | (3,454) |  |  | NM |  | 10,746 |  |  | NM
Selling, general, and administrative expenses | $ | 146,991 |  |  | 12.5% |  | $ | 129,590 |  |  | 11.7% |  | $ | 534,493 |  |  | 11.5% |  | $ | 494,088 |  |  | 11.6%
Operating income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal Services | $ | 72,339 |  |  | 12.5% |  | $ | 49,538 |  |  | 9.2% |  | $ | 234,931 |  |  | 10.4% |  | $ | 189,066 |  |  | 10.0%
U.S. Services | 49,023 |  |  | 11.6% |  | 47,840 |  |  | 12.2% |  | 182,102 |  |  | 11.3% |  | 254,441 |  |  | 15.3%
Outside the U.S. | 1,192 |  |  | 0.7% |  | (7,764) |  |  | (4.5)% |  | (15,170) |  |  | (2.0)% |  | 20,126 |  |  | 2.9%
Amortization of intangible assets | (22,514) |  |  | NM |  | (20,639) |  |  | NM |  | (90,465) |  |  | NM |  | (44,357) |  |  | NM
Gain on sale of land and building (3) | 11,046 |  |  | NM |  | — |  |  | NM |  | 11,046 |  |  | NM |  | — |  |  | NM
Other (4) | 3,438 |  |  | NM |  | (798) |  |  | NM |  | 3,454 |  |  | NM |  | (10,746) |  |  | NM
Operating income | $ | 114,524 |  |  | 9.7% |  | $ | 68,177 |  |  | 6.2% |  | $ | 325,898 |  |  | 7.0% |  | $ | 408,530 |  |  | 9.6%

(1)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.
(2)Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM."
(3)During fiscal year 2022, we sold the land and building which held our corporate headquarters, resulting in a gain on sale of $11.0 million.
(4)Other expenses includes credits and costs that are not allocated to a particular segment. This includes expenses incurred as part of our acquisitions, as well as potential acquisitions which have not been or may not be completed.
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Maximus, Inc.
Consolidated Free Cash Flows - Non-GAAP
(Unaudited)

| For the Three Months Ended September 30, |  | For the Year Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (in thousands)
Net cash provided by operating activities | 120,063 |  |  | $ | 270,663 |  |  | 289,839 |  |  | 517,322 |
Purchases of property and equipment and capitalized software | (20,209) |  |  | (4,432) |  |  | (56,145) |  |  | (36,565) |
Free cash flow | $ | 99,854 |  |  | $ | 266,231 |  |  | $ | 233,694 |  |  | $ | 480,757 |

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Maximus, Inc.
Non-GAAP Adjusted Results Excluding Amortization of Intangible Assets
(Unaudited)

| For the Three Months Ended September 30, |  | For the Year Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (dollars in thousands, except per share data)
Operating income | $ | 114,524 |  |  | $ | 68,177 |  |  | $ | 325,898 |  |  | $ | 408,530 |
Add back: Amortization of intangible assets | 22,514 |  |  | 20,639 |  |  | 90,465 |  |  | 44,357 |
Adjusted operating income excluding amortization of intangible assets (Non-GAAP) | $ | 137,038 |  |  | $ | 88,816 |  |  | $ | 416,363 |  |  | $ | 452,887 |
Adjusted operating income margin excluding amortization of intangible assets (Non-GAAP) | 11.6 | % |  | 8.0 | % |  | 9.0 | % |  | 10.6 | %
Net income | $ | 69,067 |  |  | $ | 52,014 |  |  | $ | 203,828 |  |  | $ | 291,200 |
Add back: Amortization of intangible assets, net of tax | 16,622 |  |  | 15,388 |  |  | 66,786 |  |  | 32,752 |
Adjusted net income excluding amortization of intangible assets (Non-GAAP) | $ | 85,689 |  |  | $ | 67,402 |  |  | $ | 270,614 |  |  | $ | 323,952 |
Diluted earnings per share | $ | 1.12 |  |  | $ | 0.83 |  |  | $ | 3.29 |  |  | $ | 4.67 |
Add back: Effect of amortization of intangible assets on diluted earnings per share | 0.28 |  |  | 0.25 |  |  | 1.08 |  |  | 0.52 |
Adjusted diluted earnings per share excluding amortization of intangible assets (Non-GAAP) | $ | 1.40 |  |  | $ | 1.08 |  |  | $ | 4.37 |  |  | $ | 5.19 |

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