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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark one)
☒ Q UARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2024
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________.
Commission file number: 1-12997

Maximus, Inc.
(Exact name of registrant as specified in its charter)
Virginia |  | 54-1000588
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
1600 Tysons Boulevard, McLean, Virginia |  | 22102
(Address of principal executive offices) |  | (Zip Code)
(703) 251-8500
(Registrant's telephone number, including the area code)

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

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, no par value |  | MMS |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ |  | Accelerated filer ☐ |  |
Non-accelerated filer ☐ |  | Smaller reporting company ☐ |  | Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
There w ere 56,600,398 shares of the registrant's Common Stock outstanding as of February 3, 2025.

Table of Contents
Table of Contents to First Quarter 2025 Form 10-Q

| SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 3 |
Part I - Financial Information | 4 |
Item 1. | Financial Statements | 4 |
| Consolidated Statements of Operations | 4 |
| Consolidated Statements of Comprehensive Income | 5 |
| Consolidated Balance Sheets | 6 |
| Consolidated Statements of Cash Flows | 7 |
| Consolidated Statements of Changes in Shareholders’ Equity | 8 |
| Notes to Consolidated Financial Statements | 9 |
| 1. Organization | 9 |
| 2. Significant Accounting Policies | 9 |
| 3. Business Segments | 10 |
| 4. Revenue Recognition | 12 |
| 5. Earnings Per Share | 14 |
| 6. Divestitures | 14 |
| 7. Debt and Derivatives | 15 |
| 8. Fair Value Measurements | 16 |
| 9. Equity | 17 |
| 10. Other Balance Sheet Items | 18 |
| 11. Commitments and Contingencies | 19 |
| 12. Subsequent Event | 20 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 21 |
| Business Overview | 21 |
| Financial Overview | 22 |
| Results of Operations | 22 |
| Liquidity and Capital Resources | 26 |
| Critical Accounting Policies and Estimates | 29 |
| Non-GAAP and Other Measures | 30 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32 |
Item 4. | Controls and Procedures | 32 |
Part II - Other Information | 33 |
Item 1. | Legal Proceedings | 33 |
Item 1A. | Risk Factors | 33 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 |
Item 3. | Defaults Upon Senior Securities | 33 |
Item 4. | Mine Safety Disclosures | 33 |
Item 5. | Other Information | 33 |
Item 6. | Exhibits | 34 |
| Signatures | 35 |

2

Table of Contents
Unless otherwise specified, references in this Quarterly Report on Form 10-Q to "our," "we," "us," "Maximus," the "Company," and "our business" refer to Maximus, Inc. and its subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Included in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. F orward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "opportunity," "could," "potential," "believe," "project," "estimate," "expect," "continue," "forecast," "strategy," "future," "likely," "may," "should," "will," and similar references to future periods.
Any statements herein that are not historical facts, including statements about our confidence, strategies and initiatives, and our expectations about revenues, results of operations, profitability, liquidity, market dema nd, and our recent acquisitio ns and divestitures, are forward-looking statements that are subject to risks and uncertainties. These risks could cause our actual results to differ materially from those indicated by such forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
•a failure to meet performance requirements could lead to penalties, liquidated damages, actual damages, adverse settlement agreements, and/or contract termination;
•our ability to successfully compete, bid for, and accurately price contracts to generate our desired profit;
•the effects of future legislative or government budgetary and spending changes;
•the impact of the U.S. government on federal procurement, federal funding to states' safety-net programs, and the overall decision-making process related to our industry, including our business and customers;
•our ability to manage our growth, including acquired businesses;
•difficulties in integrating or achieving projected revenues, earnings, and other benefits associated with acquired businesses;
•the outcome of reviews or audits, which might result in financial penalties and impair our ability to respond to invitations for new work;
•our ability to manage capital investments and startup costs incurred before receiving related contract payments;
•our ability to manage our debt;
•our ability to maintain our technology systems and otherwise protect confidential or protected information;
•our discovery of additional information related to the previously disclosed cybersecurity incident and any potential legal, business, reputational, or financial consequences resulting from the incident;
•our ability to attract and retain executive officers, senior managers, and other qualified personnel to execute our business;
•the effect of union activity and organizing efforts at our U.S. locations;
•the ability of government customers to not exercise options, or to recompete or terminate contracts on short notice, with or without cause;
•our ability to win recompetes and/or succeed in protests on our significant contracts;
•our reliance on a small number of individual contracts;
•our ability to realize the full value of our backlog;
•our ability to maintain relationships with key government entities from whom a substantial portion of our revenue is derived;
•a failure to comply with laws governing our business, which might result in the Company being subject to fines, penalties, suspension, debarment, and other sanctions;
•the costs and outcome of litigation;
•our ability to manage third parties upon whom we depend to provide services to our customers;
•the effects of changes in laws and regulations governing our business, including tax laws and applicable interpretations and guidance thereunder, or changes in accounting policies, rules, methodologies, and practices, and our ability to estimate the impact of such changes;
•our ability to manage emerging artificial intelligence (AI) and machine learning (ML) technologies;
•matters related to businesses we disposed of or divested; and
•other factors set forth in Item 1A, "Risk Factors" of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on November 21, 2024.
Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments, or otherwise.
3

Table of Contents
PART I - Financial Information
Item 1. Financial Statements
Maximus, Inc.
Consolidated Statements of Operations
(Unaudited)

| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (in thousands, except per share amounts)
Revenue | $ | 1,402,675 |  |  | $ | 1,327,041 |
Cost of revenue | 1,101,118 |  |  | 1,026,987 |
Gross profit | 301,557 |  |  | 300,054 |
Selling, general, and administrative expenses | 191,735 |  |  | 169,195 |
Amortization of intangible assets | 23,035 |  |  | 23,349 |
Operating income | 86,787 |  |  | 107,510 |
Interest expense | 17,522 |  |  | 21,507 |
Other expense, net | 312 |  |  | 488 |
Income before income taxes | 68,953 |  |  | 85,515 |
Provision for income taxes | 27,757 |  |  | 21,367 |
Net income | $ | 41,196 |  |  | $ | 64,148 |
Earnings per share: |  |  |
Basic | $ | 0.69 |  |  | $ | 1.05 |
Diluted | $ | 0.69 |  |  | $ | 1.04 |
Weighted average shares outstanding: |  |  |
Basic | 59,733 |  |  | 61,322 |
Diluted | 60,002 |  |  | 61,535 |
Dividends declared per share | $ | 0.30 |  |  | $ | 0.30 |

See accompanying notes to consolidated financial statements.
4

Table of Contents
Maximus, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)

| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (in thousands)
Net income | $ | 41,196 |  |  | $ | 64,148 |
Other comprehensive income, net of tax: |  |  |
Foreign currency translation adjustments | 10,452 |  |  | 5,912 |
Net gains/(losses) on cash flow hedges, net of tax provision/(benefit) of $876 and $(3,169), respectively | 2,454 |  |  | (8,885) |
Other comprehensive income/(loss) | 12,906 |  |  | (2,973) |
Comprehensive income | $ | 54,102 |  |  | $ | 61,175 |

See accompanying notes to consolidated financial statements.
5

Table of Contents
Maximus, Inc.
Consolidated Balance Sheets

| December 31, 2024 |  | September 30, 2024
| (unaudited) |  |
| (in thousands)
Assets: |  |  |
Cash and cash equivalents | $ | 72,653 |  |  | $ | 183,123 |
Accounts receivable, net | 962,650 |  |  | 879,514 |
Income taxes receivable | 1,384 |  |  | 5,282 |
Prepaid expenses and other current assets | 128,691 |  |  | 132,625 |
Total current assets | 1,165,378 |  |  | 1,200,544 |
Property and equipment, net | 37,905 |  |  | 38,977 |
Capitalized software, net | 200,070 |  |  | 187,677 |
Operating lease right-of-use assets | 118,749 |  |  | 133,594 |
Goodwill | 1,779,682 |  |  | 1,782,871 |
Intangible assets, net | 607,033 |  |  | 630,569 |
Deferred contract costs, net | 58,863 |  |  | 59,432 |
Deferred compensation plan assets | 55,579 |  |  | 55,913 |
Deferred income taxes | 12,259 |  |  | 14,801 |
Other assets | 23,242 |  |  | 27,130 |
Total assets | $ | 4,058,760 |  |  | $ | 4,131,508 |
Liabilities and Shareholders' Equity: |  |  |
Liabilities: |  |  |
Accounts payable and accrued liabilities | $ | 286,359 |  |  | $ | 303,321 |
Accrued compensation and benefits | 119,869 |  |  | 237,121 |
Deferred revenue, current portion | 78,165 |  |  | 83,238 |
Income taxes payable | 36,504 |  |  | 26,535 |
Long-term debt, current portion | 34,945 |  |  | 40,139 |
Operating lease liabilities, current portion | 38,013 |  |  | 47,656 |
Other current liabilities | 85,070 |  |  | 69,519 |
Total current liabilities | 678,925 |  |  | 807,529 |
Deferred revenue, non-current portion | 40,366 |  |  | 45,077 |
Deferred income taxes | 172,548 |  |  | 169,118 |
Long-term debt, non-current portion | 1,353,217 |  |  | 1,091,954 |
Deferred compensation plan liabilities, non-current portion | 58,781 |  |  | 57,599 |
Operating lease liabilities, non-current portion | 89,743 |  |  | 97,221 |
Other liabilities | 18,331 |  |  | 20,195 |
Total liabilities | 2,411,911 |  |  | 2,288,693 |
Commitments and contingencies (Note 11) |  |  |
Shareholders' equity: |  |  |
Common stock, no par value; 100,000 shares authorized; 57,286 and 60,352 shares issued and outstanding as of December 31, 2024 and September 30, 2024, respectively | 603,252 |  |  | 598,304 |
Accumulated other comprehensive loss | (19,554) |  |  | (32,460) |
Retained earnings | 1,063,151 |  |  | 1,276,971 |
Total shareholders' equity | 1,646,849 |  |  | 1,842,815 |
Total liabilities and shareholders' equity | $ | 4,058,760 |  |  | $ | 4,131,508 |

See accompanying notes to consolidated financial statements.
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Maximus, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (in thousands)
Cash flows from operating activities: |  |  |
Net income | $ | 41,196 |  |  | $ | 64,148 |
Adjustments to reconcile net income to cash flows from operations: |  |  |
Depreciation and amortization of property, equipment, and capitalized software | 8,455 |  |  | 8,411 |
Amortization of intangible assets | 23,035 |  |  | 23,349 |
Amortization of debt issuance costs and debt discount | 638 |  |  | 601 |
Deferred income taxes | 2,157 |  |  | (2,165) |
Stock compensation expense | 6,952 |  |  | 9,427 |
Divestiture-related charges | 38,341 |  |  | 1,018 |
Change in assets and liabilities, net of effects of business combinations and divestitures: |  |  |
Accounts receivable | (103,454) |  |  | (35,379) |
Prepaid expenses and other current assets | (2,500) |  |  | 10,056 |
Deferred contract costs | (366) |  |  | (888) |
Accounts payable and accrued liabilities | (8,150) |  |  | (15,543) |
Accrued compensation and benefits | (93,036) |  |  | (67,392) |
Deferred revenue | (8,232) |  |  | 877 |
Income taxes | 12,076 |  |  | 22,250 |
Operating lease right-of-use assets and liabilities | (2,349) |  |  | (1,088) |
Other assets and liabilities | 5,241 |  |  | 3,926 |
Net cash (used in)/provided by operating activities | (79,996) |  |  | 21,608 |
Cash flows from investing activities: |  |  |
Purchases of property and equipment and capitalized software | (22,992) |  |  | (22,247) |
Proceeds from divestitures | 736 |  |  | 1,815 |
Net cash used in investing activities | (22,256) |  |  | (20,432) |
Cash flows from financing activities: |  |  |
Cash dividends paid to Maximus shareholders | (18,060) |  |  | (18,299) |
Purchases of Maximus common stock | (228,593) |  |  | — |
Tax withholding related to RSU vesting | (16,441) |  |  | (13,455) |
Payments for contingent consideration | — |  |  | (2,819) |
Proceeds from borrowings | 435,000 |  |  | 228,409 |
Principal payments for debt | (179,264) |  |  | (166,658) |
Cash-collateralized escrow liabilities | (899) |  |  | 1,204 |
Net cash (used in)/provided by financing activities | (8,257) |  |  | 28,382 |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (2,384) |  |  | 1,846 |
Net change in cash, cash equivalents, and restricted cash | (112,893) |  |  | 31,404 |
Cash, cash equivalents, and restricted cash, beginning of period | 235,763 |  |  | 122,091 |
Cash, cash equivalents, and restricted cash, end of period | $ | 122,870 |  |  | $ | 153,495 |

See accompanying notes to consolidated financial statements.
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Maximus, Inc.
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)

| Common Stock |  | Accumulated Other Comprehensive Loss |  | Retained Earnings |  | Total Equity
| Shares |  | Amount |  |  |
| (in thousands)
Balance at September 30, 2024 | 60,352 |  |  | $ | 598,304 |  |  | $ | (32,460) |  |  | $ | 1,276,971 |  |  | $ | 1,842,815 |
Net income | — |  | — |  |  | — |  |  | 41,196 |  |  | 41,196 |
Foreign currency translation | — |  | — |  |  | 10,452 |  |  | — |  |  | 10,452 |
Cash flow hedge, net of tax | — |  | — |  |  | 2,454 |  |  | — |  |  | 2,454 |
Cash dividends | — |  | — |  |  | — |  |  | (18,060) |  |  | (18,060) |
Dividends on RSUs | — |  | 301 |  |  | — |  |  | (301) |  |  | — |
Purchases of Maximus common stock | (3,113) |  | — |  |  | — |  |  | (236,655) |  |  | (236,655) |
Stock compensation expense | — |  | 6,952 |  |  | — |  |  | — |  |  | 6,952 |
Tax withholding adjustment related to RSU vesting | — |  | (2,305) |  |  | — |  |  | — |  |  | (2,305) |
RSUs vested | 47 |  | — |  |  | — |  |  | — |  |  | — |
Balance as of December 31, 2024 | 57,286 |  | $ | 603,252 |  |  | $ | (19,554) |  |  | $ | 1,063,151 |  |  | $ | 1,646,849 |
| Common Stock |  | Accumulated Other Comprehensive Loss |  | Retained Earnings |  | Total Equity
| Shares |  | Amount |  |  |
| (in thousands)
Balance at September 30, 2023 | 60,998 |  | $ | 577,898 |  |  | $ | (27,615) |  |  | $ | 1,117,552 |  |  | $ | 1,667,835 |
Net income | — |  | — |  |  | — |  |  | 64,148 |  |  | 64,148 |
Foreign currency translation | — |  | — |  |  | 5,912 |  |  | — |  |  | 5,912 |
Cash flow hedge, net of tax | — |  | — |  |  | (8,885) |  |  | — |  |  | (8,885) |
Cash dividends | — |  | — |  |  | — |  |  | (18,299) |  |  | (18,299) |
Dividends on RSUs | — |  | 285 |  |  | — |  |  | (285) |  |  | — |
Stock compensation expense | — |  | 9,427 |  |  | — |  |  | — |  |  | 9,427 |
Tax withholding adjustment related to RSU vesting | — |  | (2,332) |  |  | — |  |  | — |  |  | (2,332) |
RSUs vested | 33 |  | — |  |  | — |  |  | — |  |  | — |
Balance as of December 31, 2023 | 61,031 |  | $ | 585,278 |  |  | $ | (30,588) |  |  | $ | 1,163,116 |  |  | $ | 1,717,806 |

See accompanying notes to consolidated financial statements.
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Maximus, Inc.
Notes to the Consolidated Financial Statements
1. ORGANIZATION
Maximus, a Virginia corporation established in 1975, is a leading strategic partner to government agencies worldwide. Under our mission of Moving People Forward, Maximus helps improve the delivery of public services to millions of people amid complex technological, health, economic, environmental, and social challenges. With 50 years of experience working with local, state, federal, and international government clients, we proudly design, develop, and deliver innovative and impactful programs that change lives. We are driven to strengthen communities and improve the lives of those we serve.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements, including the notes, include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission (SEC). All intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation for Interim Periods
Certain information and disclosures normally included for the annual financial statements to be prepared in accordance with U.S. GAAP have been condensed or omitted for the interim periods presented. We believe that the unaudited interim financial statements include all adjustments (which are normal and recurring in nature) necessary to present fairly our financial position and the results of operations and cash flows for the periods presented.
The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for the year or future periods. The financial statements should be read in conjunction with our audited consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024. We have continued to follow the accounting policies set forth in those financial statements.
Use of Estimates
The preparation of these financial statements, in conformity with U.S. GAAP, 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 long-lived assets, and amounts related to income taxes, certain accrued liabilities, and contingencies and litigation.
At December 31, 2024, our capitalized software balance includes $37.7 million related to technology for new services within our U.S. Services Segment. During the first quarter of fiscal year 2024, we evaluated these assets by comparing their carrying value to their estimated future cash flows. At that time, our probability-weighted undiscounted cash flows showed that we would recover the costs of these assets through our contract pipeline. We continue to monitor these assets. If circumstances change, we may be required to adjust the value or asset life of these assets.
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3. BUSINESS SEGMENTS
We conduct our operations through three business segments: U.S. Federal Services, U.S. Services, and Outside the U.S. Our operating segments represent the manner in which our Chief Executive Officer reviews our financial results.
U.S. Federal Services
Our U.S. Federal Services Segment delivers solutions that help various U.S. federal government agencies better deliver on their mission, including program operations and management, clinical services, and technology solutions. The segment also includes system and application development, Information Technology (IT) modernization, and maintenance services. Clinical services comprises appeals and assessments services, which includes managing the evaluation process for U.S. veterans and service members on behalf of the U.S. Department of Veterans Affairs (VA) and certain state-based assessments and appeals work that is part of the segment's heritage. Under Technology Consulting Services (TCS), the segment executes on its digital strategy to deliver technology solutions that advance agency missions, including the challenge to modernize, provide better customer experience, and drive process efficiencies.
U.S. Services
Our U.S. Services Segment provides a variety of services, such as program operations, clinical services, employment services and technology solutions and related consulting work for U.S. state and local government programs. These services support a variety of programs, including the programs under the Affordable Care Act (ACA), Medicaid, the Children's Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), and child support programs. Program operations include comprehensive program administration services for government clients. The services we provide vary from program to program and include: centralized multilingual customer contact centers and multichannel, digital self-service options to better serve citizens' needs; application assistance to beneficiaries to help them access benefits; person centered clinical assessment services; provider enrollment systems and related business process services; employment services including eligibility support, case management, job-readiness preparation, job search and employer outreach, job retention and career advancement, and selected educational and training services. Our consulting services include technical and financial consulting services, including Independent Verification and Validation (IV&V) services, program modernization consulting; and project management.
Outside the U.S.
Our Outside the U.S. Segment provides BPS and technology solutions for international governments. These services include health and disability assessments, program administration for employment services, wellbeing solutions and other job seeker-related services, digitally-enabled customer services, and advanced technologies for modernization. We support programs and deliver services in various locations, including the United Kingdom, where we serve the newly awarded Functional Assessment Services (FAS) contract, which replaced the Health Assessment Advisory Service (HAAS) contract, and the Restart employment program. In recent years, we have divested components of this segment including, in the first quarter of fiscal year 2025, our businesses in Australia and Korea.
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Table 3.1: Results of Operations by Business Segment
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| Amount |  | % (1) |  | Amount |  | % (1)
| (dollars in thousands)
Revenue: |  |  |  |  |  |  |
U.S. Federal Services | $ | 780,655 |  |  |  |  | $ | 677,078 |  |  |
U.S. Services | 452,250 |  |  |  |  | 489,845 |  |  |
Outside the U.S. | 169,770 |  |  |  |  | 160,118 |  |  |
Revenue | $ | 1,402,675 |  |  |  |  | $ | 1,327,041 |  |  |
Gross profit: |  |  |  |  |  |  |
U.S. Federal Services | $ | 173,315 |  |  | 22.2 | % |  | $ | 156,662 |  |  | 23.1 | %
U.S. Services | 95,004 |  |  | 21.0 | % |  | 118,363 |  |  | 24.2 | %
Outside the U.S. | 33,238 |  |  | 19.6 | % |  | 25,029 |  |  | 15.6 | %
Gross profit | $ | 301,557 |  |  | 21.5 | % |  | $ | 300,054 |  |  | 22.6 | %
Selling, general, and administrative expenses: |  |  |  |  |  |  |
U.S. Federal Services | $ | 74,215 |  |  | 9.5 | % |  | $ | 87,855 |  |  | 13.0 | %
U.S. Services | 54,158 |  |  | 12.0 | % |  | 52,300 |  |  | 10.7 | %
Outside the U.S. | 25,118 |  |  | 14.8 | % |  | 25,141 |  |  | 15.7 | %
Divestiture-related charges (2) | 38,341 |  |  | NM |  | 1,018 |  |  | NM
Other (3) | (97) |  |  | NM |  | 2,881 |  |  | NM
Selling, general, and administrative expenses | $ | 191,735 |  |  | 13.7 | % |  | $ | 169,195 |  |  | 12.7 | %
Operating income/(loss): |  |  |  |  |  |  |
U.S. Federal Services | $ | 99,100 |  |  | 12.7 | % |  | $ | 68,807 |  |  | 10.2 | %
U.S. Services | 40,846 |  |  | 9.0 | % |  | 66,063 |  |  | 13.5 | %
Outside the U.S. | 8,120 |  |  | 4.8 | % |  | (112) |  |  | (0.1) | %
Amortization of intangible assets | (23,035) |  |  | NM |  | (23,349) |  |  | NM
Divestiture-related charges (2) | (38,341) |  |  | NM |  | (1,018) |  |  | NM
Other (3) | 97 |  |  | NM |  | (2,881) |  |  | NM
Operating income | $ | 86,787 |  |  | 6.2 | % |  | $ | 107,510 |  |  | 8.1 | %

(1)Percentage of respective segment revenue. Percentages not considered meaningful are marked "NM."
(2)During fiscal years 2025 and 2024, we have divested businesses from our Outside the U.S. Segment. See "Note 6. Divestitures" for additional information.
(3)Other expenses include credits and costs that are not allocated to a particular segment.
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4. REVENUE RECOGNITION
We recognize revenue as, or when, we satisfy performance obligations under a contract. The majority of our contracts have performance obligations that are satisfied over time. In most cases, we view our performance obligations as promises to transfer a series of distinct services to our customers 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.

Table 4.1: Revenue by Service Type
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (dollars in thousands)
Program Operations | $ | 727,967 |  |  | 51.9 | % |  | $ | 687,370 |  |  | 51.8 | %
Clinical Services | 471,526 |  |  | 33.6 | % |  | 428,369 |  |  | 32.3 | %
Employment & Other | 113,618 |  |  | 8.1 | % |  | 118,288 |  |  | 8.9 | %
Technology Solutions | 89,564 |  |  | 6.4 | % |  | 93,014 |  |  | 7.0 | %
Total revenue | $ | 1,402,675 |  |  |  |  | $ | 1,327,041 |  |  |

Table 4.2: Revenue by Contract Type
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (dollars in thousands)
Performance-based | $ | 717,771 |  |  | 51.2 | % |  | $ | 704,711 |  |  | 53.1 | %
Cost-plus | 384,427 |  |  | 27.4 | % |  | 342,015 |  |  | 25.8 | %
Fixed price | 174,679 |  |  | 12.5 | % |  | 176,677 |  |  | 13.3 | %
Time and materials | 125,798 |  |  | 9.0 | % |  | 103,638 |  |  | 7.8 | %
Total revenue | $ | 1,402,675 |  |  |  |  | $ | 1,327,041 |  |  |

Table 4.3: Revenue by Customer Type
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (dollars in thousands)
New York state government agencies | $ | 161,695 |  |  | 11.5 | % |  | $ | 160,534 |  |  | 12.1 | %
Other U.S. state government agencies | 291,067 |  |  | 20.8 | % |  | 326,409 |  |  | 24.6 | %
Total U.S. state government agencies | 452,762 |  |  |  |  | 486,943 |  |  |
U.S. federal government agencies | 764,437 |  |  | 54.5 | % |  | 662,946 |  |  | 50.0 | %
International government agencies | 166,866 |  |  | 11.9 | % |  | 155,612 |  |  | 11.7 | %
Other, including local municipalities and commercial customers | 18,610 |  |  | 1.3 | % |  | 21,540 |  |  | 1.6 | %
Total revenue | $ | 1,402,675 |  |  |  |  | $ | 1,327,041 |  |  |

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 and such balances are considered collectible and are included within accounts receivable, net.
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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. As of December 31, 2024, and September 30, 2024, $23.4 million and $31.9 million, respectively, of our unbilled receivables related to amounts pursuant to contractual retainage provisions.
•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 that 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.
During the three months ended December 31, 2024, we recognized revenue of $47.6 million included in our deferred revenue balances at September 30, 2024. During the three months ended December 31, 2023, we recognized revenue of $37.7 million included in our deferred revenue balances at September 30, 2023.
Contract estimates
We are required to use estimates in recognizing revenue from some of our contracts.
Certain performance-based contracts include variable consideration in the form of penalties and incentives, based upon our performance under the terms of the contract. The calculation of these penalties and incentives requires the evaluation of both objective and subjective criteria, which may require the use of estimates.
Within our employment services business in our Outside the U.S. segment, some of our performance-based contract revenue is recognized based upon future milestones defined in each contract, which requires us to make estimates about the attainment of the milestones.
We estimate the total variable consideration we will receive using the expected value method. We recognize the revenue over the expected period of performance. At each reporting period, we update our estimates of the variable fees to represent the circumstances present at the end of the reporting period. We are required to constrain our estimates to the extent that it is probable that there will not be a significant reversal of cumulative revenue when the uncertainty is resolved. We do not have a history of significant constraints on these contracts.
Changes to our estimates are recognized on a cumulative catch-up basis. For the three months ended December 31, 2024, there was an increase in revenue and diluted earnings per share of $6.8 million and $0.08, respectively, from changes in estimates. For the three months ended December 31, 2023, there was a decrease in revenue and diluted earnings per share of $4.6 million and $0.07, respectively, from changes in estimates.
Remaining performance obligations
As of December 31, 2024, we had approximately $297 million of remaining performance obligations, with obligations running through March 2032. We anticipate that most of the obligations will be settled within a shorter period of time, with 61% of this balance being utilized 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 that is allocated entirely to future performance obligations, including variable transaction fees or fees tied directly to costs incurred.
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5. EARNINGS PER SHARE

Table 5: Weighted Average Number of Shares - Earnings Per Share
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (in thousands)
Basic weighted average shares outstanding | 59,733 |  |  | 61,322 |
Dilutive effect of unvested RSUs and PSUs | 269 |  |  | 213 |
Denominator for diluted earnings per share | 60,002 |  |  | 61,535 |

The diluted earnings per share calculation for the three months ended December 31, 2024 and 2023 excludes approximately 218,000 and 467,000 unvested anti-dilutive restricted stock units, respectively.
6. DIVESTITURES
We have recently made divestitures from our Outside the U.S. Segment.
In December 2024, we sold our businesses in Australia and Korea for a nominal sum. The sale agreement includes up to $5.0 million of contingent consideration based upon future performance. As of December 31, 2024, we have not recorded any potential contingent consideration. Our loss on sale of $38.3 million included approximately $21.3 million of previously unrealized foreign exchange losses, which we had recorded through other comprehensive income. The loss on sale is recorded as "selling, general, and administrative expenses" on our consolidated statement of operations. We also provided an indemnification to the buyer, the fair value of which we estimate to be $9.7 million. No tax benefit is anticipated from this transaction, resulting in a higher tax rate for the quarter ended December 31, 2024.
In November 2023, we sold our businesses in Italy and Singapore, as well as our employment services in Canada, recording a loss of $1.0 million.
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7. DEBT AND DERIVATIVES

Table 7.1: Details of Debt
| December 31, 2024 |  | September 30, 2024
| (in thousands)
Term Loan A (TLA) | $ | 633,750 |  |  | $ | 641,875 |
Term Loan B (TLB) | 497,500 |  |  | 498,750 |
Revolver | 270,000 |  |  | — |
Subsidiary loan agreements | — |  |  | 5,194 |
Total debt principal | 1,401,250 |  |  | 1,145,819 |
Less: Unamortized debt-issuance costs and discounts | (13,088) |  |  | (13,726) |
Total debt | 1,388,162 |  |  | 1,132,093 |
Less: Current portion of long-term debt | (34,945) |  |  | (40,139) |
Long-term debt | $ | 1,353,217 |  |  | $ | 1,091,954 |

Our credit agreements require us to comply with a number of covenants, including leverage and interest coverage ratios. At December 31, 2024, we are in compliance with all covenants. We do not believe that the covenants represent a significant restriction on our ability to successfully operate the business or to pay dividends.
The following table sets forth future minimum principal payments due under our debt obligations as of December 31, 2024 for the remainder of fiscal year 2025 through fiscal year 2031:

Table 7.2: Details of Future Minimum Principal Payments Due |  |
| Amount Due |  |
| (in thousands) |  |
January 1, 2025 through September 30, 2025 | $ | 28,125 |  |  |
Year ended September 30, 2026 | 41,563 |  |  |
Year ended September 30, 2027 | 53,750 |  |  |
Year ended September 30, 2028 | 57,812 |  |  |
Year ended September 30, 2029 | 746,250 |  |  |
Years ended thereafter | 473,750 |  |  |
Total payments | $ | 1,401,250 |  |  |

Interest Rate Derivative Instruments
We utilize interest rate swaps to reduce our risk from interest rates, which we have designated as cash flow hedges.
•We have an arrangement for a notional amount of $75.0 million, which hedges a Secured Overnight Financing Rate (SOFR) component of our TLB to a fixed amount of 4.09%. This arrangement expires in September 2025.
•We have arrangements for a combined notional amount of $500.0 million, which hedges a SOFR component of our TLA to a fixed amount of 2.31%. These arrangements expire in May 2026.
•We have an arrangement for a notional amount of $75.0 million, which hedges a SOFR component of our TLB to a fixed amount of 3.72%. This arrangement expires in September 2026.
The balance of the debt pays interest based upon the SOFR. At December 31, 2024, our effective interest rate, including the original issuance costs and discount rate, was 5.5%.
At December 31, 2024, we recorded an asset of $13.4 million and a liability of $0.9 million to reflect the fair value of these interest rate swap agreements, compared to an asset of $12.6 million and a liability of $3.4 million at September 30, 2024. The asset and liability are recorded as "other assets" and "other liabilities," respectively, within our consolidated balance sheets. As these instruments are effective cash flow hedges, gains and losses based upon interest rate fluctuations are recorded within "accumulated other comprehensive income" within our consolidated financial statements.
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8. FAIR VALUE MEASUREMENTS
The following assets and liabilities are recorded at fair value on a recurring basis.
•We hold mutual fund assets within a Rabbi Trust to cover liabilities in our deferred compensation plan. These assets have prices quoted within active markets and, accordingly, are classified as level 1 within the fair value hierarchy.
•We have interest rate swap agreements serving to reduce our interest rate risk on our debt. These agreements can be valued using observable data and, accordingly, are classified as level 2 within the fair value hierarchy.
•In connection with the businesses sold in Australia and Korea, we provided assurances of potential losses. This indemnified liability is recorded at fair value as of the disposal date, based on an assessment of probability-weighted outcomes. Accordingly, these inputs were not observable and were classified as level 3 within the fair value hierarchy. Changes in the fair value of the indemnification liability are recorded in the consolidated statement of operations.
The tables below present assets and liabilities measured and recorded at fair value in our consolidated balance sheets on a recurring basis and their corresponding level within the fair value hierarchy. No transfers between Level 1, Level 2, and Level 3 fair value measurements occurred for the three months ended December 31, 2024.

Table 8.1: Fair Value Measurements
| As of December 31, 2024
| Level 1 |  | Level 2 |  | Level 3 |  | Balance
| (in thousands)
Assets: |  |  |  |  |  |  |
Deferred compensation assets - Rabbi Trust | $ | 34,832 |  |  | $ | — |  |  | $ | — |  |  | $ | 34,832 |
Interest rate swaps - $450 million notional value | — |  |  | 13,388 |  |  | — |  |  | 13,388 |
Total assets | $ | 34,832 |  |  | $ | 13,388 |  |  | $ | — |  |  | $ | 48,220 |
Liabilities: |  |  |  |  |  |  |
Interest rate swaps - $200 million notional value | $ | — |  |  | $ | 880 |  |  | $ | — |  |  | $ | 880 |
Indemnification liability | — |  |  | — |  |  | 9,710 |  |  | 9,710 |
Total liabilities | $ | — |  |  | $ | 880 |  |  | $ | 9,710 |  |  | $ | 10,590 |

The fair values of receivables, prepaids, other assets, accounts payable, accrued costs, and other current liabilities approximate the carrying values as a result of the short-term nature of these instruments. The carrying value of our debt is consistent with the fair value as the stated interest rates in the agreements are consistent with the current market rates used in notes with similar terms in the markets (Level 2 inputs).
Accumulated Other Comprehensive Loss
All amounts recorded in accumulated other comprehensive loss are related to our foreign currency translations and interest rate swaps, net of tax. The following table shows changes in accumulated other comprehensive loss. Amounts reclassified from other comprehensive income were recorded within our selling, general and administrative expenses (for foreign currency translation adjustments) and within interest expense (for gains on derivatives).

Table 8.2: Details of Changes in Accumulated Other Comprehensive Loss by Category
| Foreign currency translation adjustment |  | Net unrealized gain on derivatives, net of tax |  | Total
| (in thousands)
Balance as of September 30, 2024 | $ | (39,225) |  |  | $ | 6,765 |  |  | $ | (32,460) |
Other comprehensive income before reclassifications | (10,820) |  |  | 4,912 |  |  | (5,908) |
Amounts reclassified from accumulated other comprehensive loss | 21,272 |  |  | (2,458) |  |  | 18,814 |
Net current period other comprehensive losses | 10,452 |  |  | 2,454 |  |  | 12,906 |
Balance as of December 31, 2024 | $ | (28,773) |  |  | $ | 9,219 |  |  | $ | (19,554) |

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9. EQUITY
Stock Compensation
We grant restricted stock units ("RSUs") and performance stock units ("PSUs") to eligible participants under our 2021 Omnibus Incentive Plan, which was approved by the Board of Directors and stockholders. The RSUs granted to employees vest ratably over three to four years and one year for members of the Board of Directors, in each case from the grant date. PSU vesting is subject to the achievement of certain performance and market conditions, and the number of PSUs earned could vary from 0% to 200% of the number of PSUs awarded. The PSUs will vest at the end of a three-year performance period. We issue new shares to satisfy our obligations under these plans. The fair value of each RSU and PSU is calculated at the date of the grant.
During the three months ended December 31, 2024, we issued approximately 336,000 RSUs, which will vest ratably over three to four years, and approximately 154,000 PSUs, which will vest after three years.
Stock Repurchase Programs
Under resolutions adopted in June 2024 and December 2024, the Board of Directors authorized an increase to our existing stock purchase program that allows us to purchase, at management's discretion, up to $400 million of our common stock.
During the three months ended December 31, 2024, we purchased approximately 3.1 million common shares at a cost of $236.7 million, which includes an additional charge from the 1% excise tax on share purchases. No purchases were made in the three months ended December 31, 2023.
At December 31, 2024, $137.9 million remained available for future stock purchases. Subsequent to quarter end, we acquired an additional 0.7 million common shares at a cost of $52.9 million.
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10. OTHER BALANCE SHEET ITEMS
Cash, Cash Equivalents, and Restricted Cash

Table 10.1: Details of Cash and Cash Equivalents and Restricted Cash
| December 31, 2024 |  | September 30, 2024
| (in thousands)
Cash and cash equivalents | $ | 72,653 |  |  | $ | 183,123 |
Restricted cash | 50,217 |  |  | 52,640 |
Cash, cash equivalents, and restricted cash | $ | 122,870 |  |  | $ | 235,763 |

Restricted cash is recorded within "Prepaid expenses and other current assets" on the Consolidated Balance Sheets.

Table 10.2: Supplemental Disclosures of Cash Flow Information
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (in thousands)
Interest payments | $ | 17,559 |  |  | $ | 20,522 |
Income tax payments/(refunds), net | $ | 12,418 |  |  | $ | (588) |

Accounts Receivable, Net

Table 10.3: Details of Accounts Receivable, Net
| December 31, 2024 |  | September 30, 2024
| (in thousands)
Billed and billable receivables | $ | 672,288 |  |  | $ | 734,817 |
Unbilled receivables | 295,025 |  |  | 149,488 |
Allowance for credit losses | (4,663) |  |  | (4,791) |
Accounts receivable, net | $ | 962,650 |  |  | $ | 879,514 |

We have a Receivables Purchase Agreement with Wells Fargo Bank N.A., under which we may sell certain U.S.-originated accounts receivable balances up to a maximum amount of $200.0 million at any given time. In return for these sales, we receive a cash payment equal to the face value of the receivables less a financing charge.
We account for these transfers as sales. We have no retained interest in the transferred receivables other than administrative responsibilities, and Wells Fargo has no recourse for any credit risk. We estimate that the implicit servicing fees for an arrangement of this size and type would be immaterial.
For the three months ended December 31, 2024 and 2023, the gross fair value of accounts receivables transferred to Wells Fargo and derecognized from our balance sheet was $125.2 million and $108.2 million, respectively. In exchange for these sales, we received cash of $124.4 million and $107.5 million for the same periods, respectively. The balance, representing a loss on sale from these transfers, is included within our selling, general, and administrative expenses. We have recorded these transactions within our operating cash flows.
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11. COMMITMENTS AND CONTINGENCIES
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 federal, state, local, and foreign governments. 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, which include but are not limited to bid protests, employment matters, contractual disputes, and charges before administrative agencies. Except for the matters described below for which we cannot predict the outcome, we do not believe the outcome of any existing matter would likely have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
We evaluate developments in our litigation matters and establish or make adjustments to our accruals as appropriate. A liability is accrued if a loss is probable and the amount of such loss can be reasonably estimated. If the risk of loss is probable, but the amount cannot be reasonably estimated, or the risk of loss is only reasonably possible, a potential liability will be disclosed but not accrued, if material. Due to the inherent uncertainty in the outcome of litigation, our estimates and assessments may prove to be incomplete or inaccurate and could be impacted by unanticipated events and circumstances, adverse outcomes, or other future determinations.
MOVEit Cybersecurity Incident Litigation
As the Company has previously disclosed, on May 31, 2023, Progress Software Corporation, the developer of MOVEit, a file transfer application used by many organizations to transfer data, announced a critical zero-day vulnerability in the application that allowed unauthorized third parties to access its customers’ MOVEit environments. Maximus uses MOVEit for internal and external file sharing purposes, including to share data with government customers related to Maximus's services in support of certain government programs. Based on its review of the impacted files to date, the Company has provided notices to individuals whose personal information, including social security numbers, protected health information, and/or other personal information, may have been included in the impacted files.
On August 1, 2023, a purported class action was filed against Maximus Federal Services, Inc. (a wholly-owned subsidiary of Maximus, Inc.) in the U.S. District Court for the Eastern District of Virginia arising out of the MOVEit cybersecurity incident – Bishop v. Maximus Federal Services, Case No. 1:23-cv-01019 (U.S. Dist. Ct. E. D. VA). The plaintiff, who purports to represent a nationwide class of individuals, alleges, among other things, that the Company’s negligence resulted in the compromise of the plaintiff’s personally identifiable information and protected health information. The plaintiff seeks damages to be proved at trial. Over the course of the next year, twelve similar cases were filed in federal courts across the country (inclusive of one case filed in state court and removed to federal court by the Company).
On October 4, 2023, the United States Judicial Panel on Multidistrict Litigation granted a Motion to Transfer creating a Multidistrict Litigation (MDL) in the District of Massachusetts for all cases related to the MOVEit cybersecurity incident. Each of the actions pending in federal courts are now centralized in the MDL.
On December 12, 2024, the Court granted in part Defendants' omnibus motion to dismiss Plaintiffs’ claims pursuant to Rule 12(b)(1) challenging Plaintiffs’ standing to bring this suit, dismissing claims brought by four of the Plaintiffs in the MOVEit MDL. None of the dismissed claims were asserted against the Company.
The Court has also named the Company as a bellwether defendant in the MDL. The Company and the other bellwether defendants are preparing motions to dismiss the pending actions pursuant to Rule 12(b)(6). The Company and the other bellwether defendants will participate in phased discovery, with discovery partially limited prior to the Court’s decision on the Rule 12(b)(6) motions.
Separately, there is currently an individual action pending against the Company in Florida state court. On September 6, 2023, an individual action related to the MOVEit incident was filed in state court in the Florida Circuit Court for the 7th Judicial Circuit, Volusia County: Taylor v. Maximus Federal Services, Case No. 2023-12349 (Fla. Cir. Ct., 7th Jud. Cir., Volusia Cnty.). The plaintiff alleges, among other things, that the Company’s negligence resulted in the compromise of the plaintiff’s personally identifiable information and protected health information. The plaintiff seeks damages to be proved at trial. On April 3, 2024, the Court stayed this action pending the issuance of a scheduling order in the MOVEit MDL that contemplates timing for class certification. Such a scheduling order has not yet been issued and this case remains stayed.
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The Company also settled seven individual actions in Florida state courts and a single matter related to the incident filed in small claims court in Texas. All eight cases have been dismissed.
While the Company is unable to predict the ultimate outcome of any of the remaining proceedings, we have accrued an amount within a range of possible outcomes expected to be incurred to resolve the matters.
Census Project – Civil Investigation Demand (“CID”)
In 2021, Maximus received a CID from the U.S. Department of Justice (DOJ) pursuant to the False Claims Act seeking records pertaining to the Census project. The CID requested the production of documents related to the Company’s compliance with telephone call quality assurance scoring and reporting requirements. The Company is cooperating with the DOJ in its investigation and providing responses and information on an ongoing basis. As of December 31, 2024, the Company recorded an accrual of $8.2 million related to this matter. While it is reasonably possible that losses exceeding the amount accrued may be incurred, it is not possible at this time to estimate the additional possible loss in excess of the amount already accrued.
Maximus Federal Services, Inc. v. United States
In October 2024, Maximus Federal Services, Inc. (a wholly-owned subsidiary of Maximus, Inc.) filed suit in the U.S. Court of Federal Claims, challenging the inclusion of a “labor harmony agreement” and related requirements in a solicitation issued by the Centers for Medicare and Medicaid Services (CMS) to reprocure the Contact Center Operations (CCO) 1-800-MEDICARE contract. In November 2024, CMS cancelled the early reprocurement. The Court then granted Maximus Federal Services. Inc.'s request to voluntarily dismiss the lawsuit without prejudice. We will continue work on this contract, which was awarded to us in 2022, and includes annual option periods through 2031.
12. SUBSEQUENT EVENT
On January 5, 2025, our Board of Directors declared a quarterly cash dividend of $0.30 for each share of our common stock outstanding. The dividend is payable on February 28, 2025, to shareholders of record on February 15, 2025. Based upon the number of shares outstanding, we anticipate a cash payment of approximately $17.0 million.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with "Risk Factors," "Special Note Regarding Forward-Looking Statements," and our financial statements and related notes included in our Annual Report on Form 10-K for fiscal year 2024 filed with the SEC on November 21, 2024 (the "2024 Form 10-K") and elsewhere in this Quarterly Report on Form 10-Q, as applicable.
Business Overview
Maximus, under its mission of Moving People Forward, helps millions of people access the vital government services they need. With nearly 50 years of experience working with local, state, federal, and international government clients, we proudly design, develop, and deliver innovative and impactful programs that change lives. We are driven to strengthen communities and improve the lives of those we serve.
We create value for our customers through our ability to translate health and human services public policy into operating models that achieve outcomes for governments at scale. Our work covers a broad array of services, including the operation of large health insurance eligibility and enrollment programs; clinical services, including assessments, appeals, and independent medical reviews; and technology services. These services benefit from a market with increasing demographic demand, constrained government budgets, and an increased focus on technology as governments prioritize modernization. We also demonstrate the ability to move quickly, ranging from digitally enabled contact center support services for natural disaster response to swift establishments of public health and safety initiatives, examples of which occurred during the COVID-19 pandemic. Our organic growth has occurred through increased contract scope and entry into new markets. In addition, we have made strategic acquisitions, intended to drive additional organic growth through new capabilities or customer sets gained.
We are progressing through our strategic plan introduced in fiscal year 2022. We believe in further expansion of our business and remain in a strong position to capitalize on organic growth opportunities in our core business. Our strategic plan consists of three central pillars:
•Customer Services, Digitally Enabled. Elevate the customer experience to achieve higher levels of satisfaction, performance, and outcomes through intelligent automation and cognitive computing. The launch of Maximus Total Experience Management (TXM) is evidence of this focus and commitment. TXM is an integrated solution designed to help federal agencies deliver trusted information and government services simply, consistently, and securely. This new differentiated solution seamlessly integrates people, experience, data insights, and secure technologies into one digitally powered platform to reimagine government service delivery.
•Future of Health. Help governments reach the rising demand for health services by growing our clinical capabilities and increasing the level of sophistication of underlying tools to improve the health of people and their communities.
•Advanced Technologies for Modernization. Further our credibility as a technology leader, enabling the transformation of government programs and legacy system environments to be resilient, dynamic, integrated, and equitable.
Our strategic plan is aligned with specific opportunities within all three segments and include a common focus on optimizing processes and simplifying our structure under our Maximus Forward corporate initiative. We also continue to focus on our people - the foundation of our strategy. As an employer of choice, our goal is to continue to prioritize attracting, retaining, developing, and empowering employees as a central part of our plan for achieving future growth.
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Financial Overview
A number of factors have affected our results for the first quarter of fiscal year 2025. More detail on these changes is presented below within our "Results of Operations" section.
Results of Operations
The following table sets forth items from our consolidated statements of operations for the three months ended December 31, 2024, and December 31, 2023.

Table MD&A 1: Consolidated Results of Operations
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (dollars in thousands, except per share data)
Revenue | $ | 1,402,675 |  |  | $ | 1,327,041 |
Cost of revenue | 1,101,118 |  |  | 1,026,987 |
Gross profit | 301,557 |  |  | 300,054 |
Gross profit percentage | 21.5 | % |  | 22.6 | %
Selling, general, and administrative expenses | 191,735 |  |  | 169,195 |
Selling, general, and administrative expenses as a percentage of revenue | 13.7 | % |  | 12.7 | %
Amortization of intangible assets | 23,035 |  |  | 23,349 |
Operating income | 86,787 |  |  | 107,510 |
Operating margin | 6.2 | % |  | 8.1 | %
Interest expense | 17,522 |  |  | 21,507 |
Other expense, net | 312 |  |  | 488 |
Income before income taxes | 68,953 |  |  | 85,515 |
Provision for income taxes | 27,757 |  |  | 21,367 |
Effective tax rate | 40.3 | % |  | 25.0 | %
Net income | $ | 41,196 |  |  | $ | 64,148 |
Earnings per share: |  |  |
Basic | $ | 0.69 |  |  | $ | 1.05 |
Diluted | $ | 0.69 |  |  | $ | 1.04 |

Our business segments have different factors driving revenue fluctuations and profitability. The sections that follow cover these segments in greater detail. Our revenue reflects fees earned for services provided. Cost of revenue consists of direct costs related to labor and related overhead, subcontractor labor, outside vendors, rent, and other direct costs. The largest component of cost of revenue, approximately two-thirds, is labor, including subcontracted labor.

Table MD&A 2: Changes in Revenue, Cost of Revenue, and Gross Profit for the Three Months Ended December 31, 2024
| Revenue |  | Cost of Revenue |  | Gross Profit
| Dollars |  | % Change |  | Dollars |  | % Change |  | Dollars |  | % Change
| (dollars in thousands)
Three months ended December 31, 2023 | $ | 1,327,041 |  |  |  |  | $ | 1,026,987 |  |  |  |  | $ | 300,054 |  |  |
Organic effect | 83,088 |  |  | 6.3 | % |  | 82,156 |  |  | 8.0 | % |  | 932 |  |  | 0.3 | %
Disposal of businesses | (10,896) |  |  | (0.8) | % |  | (10,866) |  |  | (1.1) | % |  | (30) |  |  | — | %
Currency effect compared to the prior period | 3,442 |  |  | 0.3 | % |  | 2,841 |  |  | 0.3 | % |  | 601 |  |  | 0.2 | %
Three months ended December 31, 2024 | $ | 1,402,675 |  |  | 5.7 | % |  | $ | 1,101,118 |  |  | 7.2 | % |  | $ | 301,557 |  |  | 0.5 | %

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Selling, general, and administrative ("SG&A") expenses
Selling, general, and administrative expenses ("SG&A") consist of indirect costs related to general management, marketing, and administration. It is primarily composed of labor costs. These costs may be incurred at a segment level, for dedicated resources that are not client-facing, or at a corporate level. Corporate costs are allocated to segments on a consistent and rational basis. Fluctuations in our SG&A are primarily driven by changes in our administrative cost base, which are not directly driven by changes in our revenue. As part of our work for the U.S. federal government and many states, we allocate these costs using a methodology driven by the U.S. Federal Cost Accounting Standards.
Our SG&A expense for the three months ended December 31, 2024, includes $38.3 million of divestiture-related charges from our sale of businesses in the Outside the U.S. Segment. These charges included accumulated foreign currency losses incurred over two decades of operations, as well as the cost of an indemnification provided to the buyer.
Amortization of intangible assets
Amortization of intangible assets remained consistent for the three months ended December 31, 2024, as compared to three months ended December 31, 2023.
Our balance sheet includes $455 million of intangible assets from a 2021 acquisition. These assets, comprised of customer relationships, technology, and a medical provider network, continue to support medical disability examinations (MDE) contracts with the VA. The greater part of these assets are being amortized over the remaining nine years. In the event that our expectations change with respect to these acquired contracts, the value of these assets and the estimated remaining lives of these assets may need to be adjusted.
Interest Expense
Our interest expense has declined in fiscal year 2025 compared to fiscal year 2024 driven by a decline in our average outstanding borrowings and reductions in our interest rates. During December 2024, we drew on our revolving credit facility for share repurchases and working capital needs, which may result in higher interest expense charges in future quarters.
Provision for Income Taxes
Our effective income tax rate for the three months ended December 31, 2024, was 40.3%, compared to 25.0% for the three months ended December 31, 2023. The rate increase is a result of the disposition of our business in Australia and Korea, which negatively impacted the effective tax rate. For fiscal year 2025, we expect the effective tax rate on operations to be between 25.5% and 26.0%, with an overall effective tax rate of between 28.0% and 29.0%, including the results of the divestiture.
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U.S. Federal Services Segment
Our U.S. Federal Services Segment delivers solutions that help various U.S. federal government agencies better deliver on their mission, including program operations and management, clinical services, and technology solutions. The segment also includes system and application development, IT modernization, and maintenance services. Clinical services comprises appeals and assessments services, which includes managing the evaluation process for U.S. veterans and service members on behalf of the VA and certain state-based assessments and appeals work that is part of the segment's heritage. Under TCS, the segment executes on its digital strategy to deliver technology solutions that advance agency missions, including the challenge to modernize, provide better customer experience, and drive process efficiencies.

Table MD&A 3: U.S. Federal Services Segment - Financial Results
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (dollars in thousands)
Revenue | $ | 780,655 |  |  | $ | 677,078 |
Cost of revenue | 607,340 |  |  | 520,416 |
Gross profit | 173,315 |  |  | 156,662 |
Selling, general, and administrative expenses | 74,215 |  |  | 87,855 |
Operating income | 99,100 |  |  | 68,807 |
Gross profit percentage | 22.2 % |  | 23.1 %
Operating margin percentage | 12.7 % |  | 10.2 %

Our revenue and cost of revenue for the three months ended December 31, 2024, increased 15.3% and 16.7%, respectively, compared to the three months ended December 31, 2023. All growth in the first quarter of fiscal year 2025 was organic.
Our revenue growth continues to be driven by clinical programs, including medical assessments, as well as broad growth across our portfolio of contracts. The first quarter of fiscal year 2025 received revenue and margin benefit from additional volume-based work, which is not expected to continue through the year.
We anticipate a full-year operating margin of approximately 11.5% for this segment in fiscal year 2025.
During the first quarter of fiscal year 2025, we received updates on two of our significant contracts.
•We have been re-awarded contracts to continue performing MDEs on behalf of the VA through 2026. A majority of the MDE contracts under the VA had ceilings on claims volumes at the time of award in 2018. Volumes significantly increased since the passage of the Honoring our PACT Act of 2022, thereby requiring a rebid process.
•The Centers for Medicare & Medicaid Services, which holds our Contact Center Operations contract, withdrew an early re-procurement of this arrangement which attempted to include a labor harmony agreement. We will continue work on this contract, which was awarded to us in 2022, and includes annual option periods through 2031.
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U.S. Services Segment
Our U.S. Services Segment provides a variety of services, such as program operations, clinical services, employment services and technology solutions and related consulting work for U.S. state and local government programs. These services support a variety of programs, including the programs under the Affordable Care Act (ACA), Medicaid, the Children's Health Insurance Program (CHIP), Temporary Assistance to Needy Families (TANF), and child support programs. Program operations include comprehensive program administration services for government clients. The services we provide vary from program to program and include: centralized multilingual customer contact centers and multichannel, digital self-service options to better serve citizens' needs; application assistance to beneficiaries to help them access benefits; person centered clinical assessment services; provider enrollment systems and related business process services; employment services including eligibility support, case management, job-readiness preparation, job search and employer outreach, job retention and career advancement, and selected educational and training services. Our consulting services include technical and financial consulting services, including Independent Verification and Validation (IV&V) services, program modernization consulting; and project management.

Table MD&A 4: U.S. Services Segment - Financial Results
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (dollars in thousands)
Revenue | $ | 452,250 |  |  | $ | 489,845 |
Cost of revenue | 357,246 |  |  | 371,482 |
Gross profit | 95,004 |  |  | 118,363 |
Selling, general, and administrative expenses | 54,158 |  |  | 52,300 |
Operating income | 40,846 |  |  | 66,063 |
Gross profit percentage | 21.0 % |  | 24.2 %
Operating margin percentage | 9.0 % |  | 13.5 %

Our revenue and cost of revenue for the three months ended December 31, 2024, decreased 7.7% and 3.8%, respectively, compared to the three months ended December 31, 2023.
As noted at the time, our business in the first quarter of fiscal year 2024 was experiencing higher volumes from the resumption of Medicaid redetermination activities, driving benefits in both revenue and margins. Our business had returned to normal activity levels by the fourth quarter of fiscal year 2024.
We anticipate a full-year operating margin of approximately 11% for this segment in fiscal year 2025.
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Outside the U.S. Segment
Our Outside the U.S. Segment provides BPS and technology solutions for international governments. These services include health and disability assessments, program administration for employment services, wellbeing solutions and other job seeker-related services, digitally-enabled customer services, and advanced technologies for modernization. We support programs and deliver services in various locations, including the United Kingdom, where we serve the newly awarded Functional Assessment Services (FAS) contract, which replaced the Health Assessment Advisory Service (HAAS) contract, and the Restart employment program. In recent years, we have divested components of the segment including, in the first quarter of fiscal year 2025, our businesses in Australia and Korea.

Table MD&A 5: Outside the U.S. Segment - Financial Results
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (dollars in thousands)
Revenue | $ | 169,770 |  |  | $ | 160,118 |
Cost of revenue | 136,532 |  |  | 135,089 |
Gross profit | 33,238 |  |  | 25,029 |
Selling, general, and administrative expenses | 25,118 |  |  | 25,141 |
Operating income/(loss) | 8,120 |  |  | (112) |
Gross profit percentage | 19.6 % |  | 15.6 %
Operating margin percentage | 4.8 % |  | (0.1) %

Table MD&A 6: Outside the U.S. Segment - Changes in Revenue, Cost of Revenue, and Gross Profit
| Revenue |  | Cost of Revenue |  | Gross Profit
| Amount |  | % Change |  | Amount |  | % Change |  | Amount |  | % Change
| (dollars in thousands)
Three months Ended December 31, 2023 | $ | 160,118 |  |  |  |  | $ | 135,089 |  |  |  |  | $ | 25,029 |  |  |
Organic effect | 17,106 |  |  | 10.7 | % |  | 9,468 |  |  | 7.0 | % |  | 7,638 |  |  | 30.5 | %
Disposal of businesses | (10,896) |  |  | (6.8) | % |  | (10,866) |  |  | (8.0) | % |  | (30) |  |  | (0.1) | %
Currency effect compared to the prior period | 3,442 |  |  | 2.1 | % |  | 2,841 |  |  | 2.1 | % |  | 601 |  |  | 2.4 | %
Three months ended December 31, 2024 | $ | 169,770 |  |  | 6.0 | % |  | $ | 136,532 |  |  | 1.1 | % |  | $ | 33,238 |  |  | 32.8 | %

This segment has moved from breakeven to profitability between fiscal years 2024 and 2025.
We divested a number of employment services businesses over the past two years. The most significant divestiture impacting the results above is the sale of our operations in Australia and Korea in the first quarter of fiscal year 2025, which has reduced revenue and costs but provided a benefit to margin.
Organic growth was derived from our UK contracts, notably the FAS contract, as well as efficiency savings across the segment.
The currency benefit is principally from the British Pound, which was stronger in the first quarter of the current fiscal year.
We anticipate the full-year operating margin will range between 3% and 5% for this segment in fiscal year 2025.
Liquidity and Capital Resources
Our primary sources of liquidity are cash on hand, cash from operations, and availability under our revolving credit facilities. As of December 31, 2024, we had $72.7 million in cash and cash equivalents. We believe that our current cash position, access to our revolving debt, and cash flow generated from operations should be sufficient for our operating requirements for the next 12 months and beyond, including enabling us to fund required long-term debt repayments, dividends and any share purchases we might choose to make. See "Note 7. Debt and Derivatives" to the Consolidated Financial Statements for a more detailed discussion of our debt financing arrangements.
We have included the following table showing our debt balances as of December 31, 2024, and their effective interest rates.
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Table MD&A 7: Debt Balances and Interest Rates as of December 31, 2024
| December 31, 2024
| Carrying value |  | Effective cash interest rate |  | Interest rate basis
| (dollars in thousands)
Term Loan A - Hedged through May 2026 | $ | 500,000 |  |  | 3.81 | % |  | Fixed rate of 2.31% plus margin. (1)
Term Loan A - Unhedged | 133,750 |  |  | 5.86 | % |  | Term SOFR reset monthly plus margin. (1)
Term Loan B - Hedged through September 2026 | 75,000 |  |  | 5.72 | % |  | Fixed Rate of 3.72% plus margin. (1)
Term Loan B - Hedged through September 2025 | 75,000 |  |  | 6.09 | % |  | Fixed Rate of 4.09% plus margin. (1)
Term Loan B - Unhedged | 347,500 |  |  | 6.36 | % |  | Term SOFR reset monthly plus margin. (1)
Revolver | 270,000 |  |  | 5.82 | % |  | Term SOFR reset monthly plus margin. (1)
Debt Principal | $ | 1,401,250 |  |  |  |  |

(1) Applicable margins are currently 1.5% for the Term Loan A and Revolver and 2.0% for the Term Loan B. The Term Loan A and Revolver will vary based upon leverage starting in February 2025.
Our effective cash interest rate reflects the drivers of our cash interest payments as of December 31, 2024, which can change based upon the reset of the rates. Including the amortization of the upfront payments, our effective interest rate as of December 31, 2024, is 5.5%.
The below table summarizes our change in cash, cash equivalents, and restricted cash.

Table MD&A 8: Net Change in Cash and Cash Equivalents and Restricted Cash
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (in thousands)
Operating activities: |  |  |
Net cash (used in)/provided by operating activities | $ | (79,996) |  |  | $ | 21,608 |
Net cash used in investing activities | (22,256) |  |  | (20,432) |
Net cash (used in)/provided by financing activities | (8,257) |  |  | 28,382 |
Effect of foreign exchange rates on cash and cash equivalents and restricted cash | (2,384) |  |  | 1,846 |
Net change in cash and cash equivalents and restricted cash | $ | (112,893) |  |  | $ | 31,404 |

Net Cash (Used in)/Provided by Operating Activities
We reported an operating cash outflow for the first three months of fiscal year 2025, compared to cash from operations of $21.6 million in the first quarter of the 2024 fiscal year.
This outflow is consistent with slower receipts from our customers during the holiday period. Our Days Sales Outstanding ("DSO") at December 31, 2024, were 62 days, compared with 61 days at September 30, 2024.
In addition, the timing of income tax payments year-over-year has affected our operating cash flows, increasing outflows in the current fiscal year by approximately $13.0 million.
Net Cash Used in Investing Activities
We continue to make investments in our capital base, most notably in upgrading technology on our Federal MDE contracts. We anticipate the pace of this investment will decline through the latter half of fiscal year 2025.
Net Cash (Used in)/Provided by Financing Activities
We have utilized our revolving credit facility in fiscal year 2025 for working capital needs as well as purchases of Maximus common stock. During the first quarter of fiscal year 2025, we acquired 3.1 million common shares at a cost of $236.7 million. We also incurred charges from the recently-introduced excise tax on these purchases. Since December 31, 2024, we have acquired an additional 0.7 million common shares at a cost of $52.9 million, leaving approximately $85.0 million available for purchase under our existing program.
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Credit Facilities
Our principal debt agreement is with JPMorgan Chase Bank N.A. (the "Credit Agreement"). At December 31, 2024, we owed $1.40 billion under the Credit Agreement, with access to an additional $480 million through a revolving credit facility. Our principal loans mature in May 2029 and May 2031, when the remaining balances must be renegotiated or repaid in full. The revolving facility also matures in May 2029. In addition, our term loans require quarterly mandatory repayments.
The Credit Agreement contains a number of covenants. Failure to meet these requirements would result in a need to renegotiate the agreement, seek a waiver, or a requirement to repay our outstanding debt in full. There are two financial covenants, both defined in the Credit Agreement:
•Our Consolidated Net Total Leverage Ratio means, for any twelve-month period, the ratio of our Funded Debt (as defined by the Credit Agreement), offset by up to $150 million of unrestricted cash (Consolidated Net Total Leverage), against our Consolidated EBITDA (as defined by the Credit Agreement). To comply with our Credit Agreement, this ratio cannot exceed 4.00:1.00 at the end of each quarter, with a step up to 4.50:1.00 under certain circumstances. This ratio also determines both our interest rate and the charge we pay on the unused component of our revolving credit facility, with the charge increasing as the leverage ratio increases.
•Our Consolidated Net Interest Coverage Ratio means, for any twelve-month period, the ratio of our Consolidated EBITDA against our Consolidated Net Interest Expense, as defined by the Credit Agreement. To comply with our Credit Agreement, this ratio cannot be less than 3.00:1.00 at the end of each quarter.
Consolidated EBITDA also drives certain permissions within the Credit Agreement, such as the level of investment we are entitled to make without seeking additional approval from our lenders.
Our Credit Agreement defines Consolidated EBITDA, as well as other components of the calculations above. The definition of Consolidated EBITDA requires us to include adjustments not typically included within EBITDA, including unusual, non-recurring expenses, certain non-cash adjustments, the pro forma effects of acquisitions and disposals, and estimated synergies from acquisitions. As a result, Consolidated EBITDA as defined by the Credit Agreement may not be comparable to EBITDA or related or similarly titled measures presented by other companies.
We have summarized below the components of our two financial ratio calculations, including the components of Consolidated EBITDA as defined by the Credit Agreement which are included within our financial statements. At December 31, 2024, we were in compliance with all applicable covenants of our Credit Agreement. We do not believe that these covenants represent a significant restriction on our ability to operate our business or to pay our dividends.

Table MD&A 9: Reconciliation of Net Income to Consolidated EBITDA as defined by our Credit Agreement
| For the Three Months Ended |  | For the Trailing Twelve Months Ended
| December 31, 2024 |  | December 31, 2024
| (in thousands)
Net income | $ | 41,196 |  |  | $ | 283,962 |
Adjustments: |  |  |
Interest expense | 17,522 |  |  | 78,455 |
Other expense/(income), net | 312 |  |  | (625) |
Provision for income taxes | 27,757 |  |  | 105,985 |
Amortization of intangibles | 23,035 |  |  | 91,256 |
Stock compensation expense | 6,952 |  |  | 32,874 |
Acquisition-related expenses | 121 |  |  | 1,615 |
Loss on sale of businesses | 38,341 |  |  | 38,341 |
Depreciation and amortization of property, equipment, and capitalized software | 8,455 |  |  | 34,001 |
Pro forma and other adjustments permitted by our Credit Agreement | 4,059 |  |  | 66,567 |
Consolidated EBITDA (as defined by our Credit Agreement) | $ | 167,750 |  |  | $ | 732,431 |

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Table MD&A 10: Consolidated Net Total Leverage Ratio |  |  |
| For the Trailing Twelve Months Ended |  |
| December 31, 2024 |  |
| (in thousands, except ratio data) |  |
Funded Debt (as defined by our Credit Agreement) | $ | 1,401,250 |  |  |
Cash and cash equivalents up to $150 million | 72,653 |  |  |
Consolidated Net Total Leverage (as defined by our Credit Agreement) | $ | 1,328,597 |  |  |
Consolidated Net Total Leverage Ratio (as defined by our Credit Agreement) | 1.81 |  |  |

Table MD&A 11: Consolidated Net Interest Coverage Ratio |  |  |
| For the Trailing Twelve Months Ended |  |
| December 31, 2024 |  |
| (in thousands, except ratio data) |  |
Consolidated EBITDA (as defined by our Credit Agreement) | $ | 732,431 |  |  |
Interest expense | 78,455 |  |  |
Components of other income/expense, net allowed in ratio calculation | 2,843 |  |  |
Consolidated Net Interest Expense (as defined by our Credit Agreement) | $ | 81,298 |  |  |
Consolidated Net Interest Coverage Ratio (as defined by our Credit Agreement) | 9.01 |  |  |

Cash in Foreign Locations
We have no requirement to remit funds from our foreign locations to the United States. We will continue to explore opportunities to remit additional funds, taking into consideration the working capital requirements and relevant tax rules in each jurisdiction. When we are unable to remit funds back without incurring a penalty, we will consider these funds indefinitely reinvested until such time as these restrictions are changed. As a result, we do not record U.S. deferred income taxes on any funds held in foreign jurisdictions. We have not attempted to calculate our potential liability from any transfer of these funds, as any such transaction might include tax planning strategies that we have not fully explored. Accordingly, it is not possible to estimate the potential tax obligations if we were to remit all of our funds from foreign locations to the United States.
Free Cash Flow (Non-GAAP)

Table MD&A 12: Free Cash Flow (Non-GAAP)
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (in thousands)
Net cash (used in)/provided by in operating activities | $ | (79,996) |  |  | $ | 21,608 |
Purchases of property and equipment and capitalized software | (22,992) |  |  | (22,247) |
Free cash flow (Non-GAAP) | $ | (102,988) |  |  | $ | (639) |

Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates, judgments, and assumptions that affect the amounts reported. Actual results could differ from those estimates. The 2024 Form 10-K, as filed with the SEC on November 21, 2024, includes a summary of critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenues, or expenses during the three months ended December 31, 2024.
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Non-GAAP and Other Measures
We utilize non-GAAP measures where we believe it will assist users of our financial statements in understanding our business. The presentation of these measures is meant to complement, but not replace, other financial measures in this document. The presentation of non-GAAP numbers is not meant to be considered in isolation, nor as an alternative to revenue growth, net cash provided by operating activities, net income, or earnings per share as measures of performance or liquidity. These non-GAAP measures, as determined and presented by us, may not be comparable to related or similarly titled measures presented by other companies.
For the three months ended December 31, 2024, 12% of our revenue was generated outside the U.S. We believe that users of our financial statements wish to understand the performance of our foreign operations using a methodology that excludes the effect of year-over-year exchange rate fluctuations. To calculate year-over-year currency movement, we determine the current fiscal year's results for all foreign businesses using the exchange rates in the prior fiscal year.
In recent years, we made a number of acquisitions and divestitures. We believe users of our financial statements wish to evaluate the performance of our operations, excluding changes that have arisen due to businesses acquired or disposed of. We identify acquired revenue and cost of revenue by showing these results for periods for which no comparative results exist within our financial statements. We identify revenue and cost of revenue that has been disposed of in a similar manner. This information is supplemented by our calculations of organic growth. To calculate organic growth, we compare current fiscal year results, excluding transactions from acquisitions or disposals, to our prior fiscal year results.
Our previous acquisitions have resulted in significant intangible assets, which are amortized over their estimated useful lives. We believe users of our financial statements wish to understand the performance of the business by using a methodology that excludes the amortization of our intangible assets. For the three months ended December 31, 2024 and 2023, we also incurred losses on sales of businesses. We believe that providing supplemental measures that exclude the impact of the items detailed below is useful to investors in evaluating our core operations and results in relation to past periods. Adjusted EBITDA is also a useful measure of performance that focuses on the cash generating capacity of the business as it excludes the non-cash expenses of depreciation, amortization and divestiture-related charges, and makes for easier comparisons between the operating performance of companies with different capital structures by excluding interest expense and therefore, the impacts of financing costs. Accordingly, we have calculated our operating income, Adjusted EBITDA, net income, and diluted earnings per share, excluding the effect of the amortization of intangible assets and divestiture-related charges. As noted above, Adjusted EBITDA is calculated in a different manner from Consolidated EBITDA, as defined by our Credit Agreement. We have included a table showing our reconciliation of these income measures to their corresponding GAAP measures.
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Table MD&A 13: Non-GAAP Adjusted Results - Operating Income, Adjusted EBITDA, Net Income, and Diluted Earnings per Share
| For the Three Months Ended
| December 31, 2024 |  | December 31, 2023
| (dollars in thousands, except per share data)
Operating income | $ | 86,787 |  |  | $ | 107,510 |
Add back: Amortization of intangible assets | 23,035 |  |  | 23,349 |
Add back: Divestiture-related charges | 38,341 |  |  | 1,018 |
Add back: Depreciation and amortization of property, equipment, and capitalized software | 8,455 |  |  | 8,411 |
Adjusted EBITDA (Non-GAAP) | $ | 156,618 |  |  | $ | 140,288 |
Adjusted EBITDA margin (Non-GAAP) | 11.2 | % |  | 10.6 | %
Net income | $ | 41,196 |  |  | $ | 64,148 |
Add back: Amortization of intangible assets, net of tax | 16,977 |  |  | 17,208 |
Add back: Divestiture-related charges | 38,341 |  |  | 1,018 |
Adjusted net income excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) | $ | 96,514 |  |  | $ | 82,374 |
Diluted earnings per share | $ | 0.69 |  |  | $ | 1.04 |
Add back: Effect of amortization of intangible assets on diluted earnings per share | 0.28 |  |  | 0.28 |
Add back: Effect of divestiture-related charges on diluted earnings per share | 0.64 |  |  | 0.02 |
Adjusted diluted earnings per share excluding amortization of intangible assets and divestiture-related charges (Non-GAAP) | $ | 1.61 |  |  | $ | 1.34 |

In order to sustain our cash flows from operations, we regularly refresh our fixed assets and technology. We believe that users of our financial statements wish to understand the cash flows that directly correspond with our operations and the investments we must make in those operations using a methodology that combines operating cash flows and capital expenditures. We provide free cash flow to complement our statement of cash flows. Free cash flow shows the effects of our operations and replacement capital expenditures and excludes the cash flow effects of acquisitions, purchases of our common stock, dividend payments, and other financing transactions. We have provided a reconciliation of cash flows from operations to free cash flow in "Liquidity and Capital Resources."
To sustain our operations, our principal source of financing comes from receiving payments from our customers. We believe that users of our financial statements wish to evaluate our efficiency in converting revenue into cash receipts. Accordingly, we provide DSO, which we calculate by dividing billed and unbilled receivable balances at the end of each quarter by revenue per day for the quarter. Revenue per day for a quarter is determined by dividing total revenue by 91 days.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, we are exposed to financial risks such as changes in interest rates, foreign currency exchange rates, and counterparty risk. We use derivative instruments to manage selected interest rate exposures. The Company's market rate risk disclosures set forth in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" on the 2024 Form 10-K, as filed with the SEC on November 21, 2024, have not changed materially during the three month period ended December 31, 2024.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - Other Information
Item 1. Legal Proceedings
Refer to our disclosures included in "Note 11. Commitments and Contingencies" included in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
There were no material changes during the three months ended December 31, 2024, to the risk factors previously disclosed in the 2024 Form 10-K, as filed with the SEC on November 21, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)None.
(b)None.
(c)The following table sets forth the information required regarding purchases of common stock that we made during the three months ended December 31, 2024.

Common Stock Repurchase Activity During the Three Months Ended December 31, 2024
Period |  | Total Number of Shares Purchased |  | Average Price Paid Per Share |  | Total Number of Shares Purchased as Part of the Publicly Announced Plans or Programs (1) |  | Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs (in thousands)
October 1, 2024 - October 31, 2024 |  | 55,688 |  |  | $ | 86.87 |  |  | 55,688 |  |  | $ | 166,592 |
November 1, 2024 - November 30, 2024 |  | 1,020,625 |  |  | $ | 77.44 |  |  | 1,020,625 |  |  | $ | 87,560 |
December 1, 2024 - December 31, 2024 |  | 2,036,826 |  |  | $ | 73.46 |  |  | 2,036,826 |  |  | $ | 137,934 |
Total |  | 3,113,139 |  |  | $ | 75.00 |  |  | 3,113,139 |  |  |

(1)Under resolutions adopted in June 2024 and December 2024, the Board of Directors authorized an increase to our existing stock purchase program that allows us to purchase, at management's discretion, up to $400 million of our common stock.
Item 3. Defaults Upon Senior Securities
(a)None.
(b)None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a)None.
(b)None.
(c)During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, except as follows:
•Michelle Link, our Chief Human Resources Officer, adopted a new Rule 10b5-1 trading arrangement on December 6, 2024, which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and scheduled to terminate on or before December 8, 2025. Under the trading arrangement, up to an aggregate of approximately 7,542 shares of common stock are available to be sold by the broker on particular dates.
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Item 6. Exhibits

Exhibit No. |  | Description of Exhibit |  |  |  |
31.1 | v | Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |  |  |  |
31.2 | v | Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |  |  |  |
32.1 | Φ | Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |  |  |  |
32.2 | Φ | Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |  |  |  |
101.INS | v | Inline XBRL Instance Document. |  |  |  |
101.SCH | v | Inline XBRL Taxonomy Extension Schema Document. |  |  |  |
101.CAL | v | Inline XBRL Taxonomy Calculation Linkbase Document. |  |  |  |
101.DEF | v | Inline XBRL Taxonomy Definition Linkbase Document. |  |  |  |
101.LAB | v | Inline XBRL Taxonomy Label Linkbase Document. |  |  |  |
101.PRE | v | Inline XBRL Taxonomy Presentation Linkbase Document. |  |  |  |
104 | v | Cover Page Interactive Data File (formatted as Inline XBRL tags and contained in Exhibit 101). |  |  |  |

v | Filed herewith.
Φ | Furnished herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Maximus, Inc.
| /s/ Bruce L. Caswell |  | February 6, 2025
By: | Bruce L. Caswell |  |
| President and Chief Executive Officer |  |
| (Principal Executive Officer) |  |
| /s/ David W. Mutryn |  | February 6, 2025
By: | David W. Mutryn |  |
| Chief Financial Officer |  |
| (Principal Financial Officer) |  |

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