Maximus (MMS) investor relations material

Executive summary

• Third-quarter revenue was $1.28 billion, down 5.1% year-over-year but in line with expectations and supporting full-year guidance.

• Adjusted EBITDA margin improved to 15.0%, and adjusted diluted EPS rose to $2.22, both up from the prior year, driven by automation, AI, and operational efficiencies.

• Net income for Q3 was $103.6 million, a slight decrease from $106.0 million in the prior year.

• Technology investments, divestitures, and efficiency initiatives contributed to margin improvements, offsetting lower surge volumes and impacting segment results.

• Cash flow from operations was negative due to delayed federal collections, with subsequent receipts post-quarter-end.

Financial highlights

• Q3 2026 revenue: $1.28 billion (down 5.1% year-over-year); adjusted EBITDA: $192.3 million (15.0% margin); adjusted EPS: $2.22.

• Net income for Q3: $103.6 million; operating margin: 12.6%; gross margin: 27.3%.

• Free cash flow for Q3 was an outflow of $137 million; DSO elevated at 98 days, with improvement expected by year-end.

• Interest expense for Q3 was $23.9 million; effective tax rate: 25.0%.

• Quarterly dividend of $0.33 per share declared, payable August 31, 2026.

Outlook and guidance

• Fiscal 2026 revenue guidance reiterated at $5.2–$5.35 billion, with results expected toward the lower end.

• Adjusted diluted EPS guidance updated to $7.90–$8.20, with a $0.35 per quarter reduction through Q1 FY27 due to a temporary contract modification.

• Adjusted EBITDA margin guidance: ~13.7%; Q4 margin: ~13%.

• Free cash flow guidance: $425–$475 million; DSO expected below 70 days by year-end.

• U.S. Federal Services margin: 16.5–17.0%; U.S. Services: 9.5–10.0%; Outside the U.S.: breakeven.