Executive Summary

Q4 FY2024 revenue grew 4.4% year over year to $1.316B, with diluted EPS of $1.19 and adjusted diluted EPS of $1.46; margins improved YoY but normalized sequentially from Q3’s exceptionally strong performance .
FY2025 guidance established: revenue $5.275–$5.425B, adjusted EBITDA margin ~11.0%, adjusted diluted EPS $5.70–$6.00, and free cash flow $345–$375M, with tax rate ~25% and weighted average shares ~61M .
Capital and cash flow: full-year operating cash flow $515M and free cash flow $401M; leverage reduced to 1.4x net debt/EBITDA at 9/30/24 vs 2.2x prior year, supporting buybacks and dividend continuity .
Strategic/catalyst: CMS canceled early re-procurement of the 1-800-MEDICARE/Federal Marketplace CCO contract, retaining option periods through 2031; Q4 also saw consistent segment performance and OUS profitability improvement, while backlog declined .

What Went Well and What Went Wrong

What Went Well
- Strong YoY finish: Q4 revenue +4.4% to $1.316B; diluted EPS $1.19 and adjusted EPS $1.46, reflecting healthy core operations within margin expectations .
- U.S. Federal and U.S. Services margins improved YoY; OUS returned to profitability on the year, with segment Q4 margin at 4.8% reflecting headwind containment .
- Cash generation and deleveraging: FY2024 operating cash flow $515M, FCF $401M; net leverage 1.4x, below the 2–3x target range, enabling buybacks and a $0.30 quarterly dividend .
What Went Wrong
- Sequential normalization: Q4 diluted EPS ($1.19) and adjusted EPS ($1.46) declined vs Q3 ($1.46/$1.74) as overperformance moderated and investment timing impacted margins .
- Sales metrics softer: book-to-bill 0.4x TTM and backlog down to $16.2B vs $20.7B prior year; management expects adjudications to increase over the next 12 months .
- Medicaid unwinding excess volumes concluded by Q4; segment margins normalized sequentially, removing a tailwind present in earlier quarters .

Financial Results

Headline metrics (oldest → newest)

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Billions)	$1.260	$1.315	$1.316
Diluted EPS ($)	$0.96	$1.46	$1.19
Adjusted Diluted EPS ($)	$1.29	$1.74	$1.46
Operating Margin (%)	7.9%	10.8%	8.5%
Gross Profit Margin (%)	23.1%	25.3%	22.9%

Segment breakdown (Revenue and Segment OI Margin; oldest → newest)

Segment	Q4 2023 Revenue ($USD Millions)	Q4 2023 OI Margin (%)	Q3 2024 Revenue ($USD Millions)	Q3 2024 OI Margin (%)	Q4 2024 Revenue ($USD Millions)	Q4 2024 OI Margin (%)
U.S. Federal Services	$617.4	12.4%	$683.3	15.5%	$675.1	11.1%
U.S. Services	$473.8	11.6%	$472.3	13.0%	$463.6	11.1%
Outside the U.S.	$168.7	(0.1%)	$159.3	(0.9%)	$177.2	4.8%

KPIs (oldest → newest)

KPI	Q4 2023	Q3 2024	Q4 2024
Free Cash Flow ($USD Millions)	$112.8	$164.6	$131.9
DSO (Days)	60	59	61
Net Debt / EBITDA (x, credit agreement)	2.2x	1.5x	1.4x
Weighted Avg Diluted Shares (Millions)	61.6	61.4	61.1
Dividend per Share ($)	$0.28	$0.30	$0.30

Note: Adjusted results exclude amortization of intangible assets and divestiture-related charges; Q4 adjusted EPS $1.46 vs diluted $1.19 reflects $0.27 EPS impact from intangible amortization .

Guidance Changes

FY2025 guidance initiated

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY2025	N/A	$5.275–$5.425	New
Adjusted EBITDA ($USD Millions)	FY2025	N/A	$576–$601	New
Adjusted EBITDA Margin (%)	FY2025	N/A	10.9%–11.1%	New
Operating Income ($USD Millions)	FY2025	N/A	$439–$464	New
Diluted EPS ($)	FY2025	N/A	$4.60–$4.90	New
Adjusted Diluted EPS ($)	FY2025	N/A	$5.70–$6.00	New
Cash from Operations ($USD Millions)	FY2025	N/A	$435–$465	New
Capital Expenditure ($USD Millions)	FY2025	N/A	~$90	New
Free Cash Flow ($USD Millions)	FY2025	N/A	$345–$375	New
Interest Expense ($USD Millions)	FY2025	N/A	~$65	New
Intangible Amortization ($USD Millions)	FY2025	N/A	~$92	New
Depreciation + Cap Software ($USD Millions)	FY2025	N/A	~$45	New
Effective Tax Rate (%)	FY2025	N/A	~25%	New
Weighted Avg Shares (Millions)	FY2025	N/A	~61	New
Dividend ($/share)	Q4 FY2024	$0.30	$0.30 (payable 11/30/24)	Maintained

FY2024 guidance was raised in Q3 (for context): revenue $5.25–$5.35B, adjusted OI $570–$590M, adjusted EPS $6.00–$6.20, FCF $350–$380M .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
AI/Technology initiatives (TXM, IRS EDOS)	TXM and tech-led modernization emphasized; wins at DOE, OPM CSC; IRS EDOS task orders beginning	Continued focus on technology modernization; FY25 guide assumes ~11% adj EBITDA with ongoing efficiency initiatives	Sustained investment; medium-term contribution expected
Medicaid redeterminations	U.S. Services margins peaked in Q2 (14.0%) with excess volumes; normalization expected in H2	Excess volumes concluded by Q4; segment delivered 11.1% margin in Q4 without excess volumes	Normalizing; margins settling within target range
VA MDE volumes/rebid	Elevated demand; rebid expected late CY2024; investments in internal-use software to enhance capacity	Federal segment supported by clinical program volumes; FY25 commentary cautious on mix and performance-based work	Elevated volumes sustained near term; efficiency investments to back-end load benefits
CCO 1-800-MEDICARE re-procurement	GAO process and potential protests; management confident in service continuity	CMS canceled early re-procurement; contract option periods retained until 2031	Positive resolution; program continuity reduces risk
Book-to-bill and backlog	Q3 TTM book-to-bill ~0.6x; pipeline $44.1B, rebids included	TTM book-to-bill 0.4x; backlog $16.2B vs $20.7B prior year; pipeline $54.3B	Softer conversion; adjudications expected to increase over next 12 months
Leverage and capital allocation	Net debt/EBITDA fell to 1.5x; opportunistic buybacks; bias to lower end of 2–3x target	Net debt/EBITDA 1.4x at year-end; buybacks continued; dividend paid	Strengthened balance sheet supports flexibility

Management Commentary

“We are proud of the team for an excellent finish to a strong year, and one that demonstrates a healthy core business operating within our margin expectations.” – Bruce Caswell, President & CEO .
“Our earned position as an efficient and flexible partner to government…positions us well to advise, adapt, and rapidly implement new priorities.” .
On FY2025 approach: guidance “blends the momentum of fiscal 2024 with thoughtfulness toward the upcoming U.S. Presidential transition.” .
On segment performance drivers: higher demand for clinical services and performance-based work drove Federal margin enhancement; Medicaid-related excess volumes concluded by Q4 in U.S. Services .

Q&A Highlights

Note: A Q4 FY2024 earnings call transcript was not available in the document catalog; highlights reference Q3/Q2 calls.

CCO re-procurement timing/impact: GAO process and potential further appeals; management stressed continuity and indirect cost absorption implications; now resolved favorably post-Q4 press release .
FY2025 trajectory: early view of revenue roughly similar to raised FY2024, with moderation from nonrecurring volumes; margins at least ~10% adjusted OI next year .
VA MDE volumes and rebid: elevated inventory supports sustained demand into FY2025; efficiency investments planned; rebid expected to align with FY2025 start .
Book-to-bill confidence: procurement cycles and small business set-asides lengthening timelines; BD/capture investments and tech collaboration expected to ignite growth engine .
Margin framework: management targeting continued progression within 10%–14% adjusted OI margin longer-term, acknowledging near-term normalization .

Estimates Context

Wall Street consensus estimates (S&P Global/Capital IQ) for Q4 FY2024 were not available at time of retrieval due to SPGI request limits, so we cannot provide a definitive beat/miss comparison. We attempted to fetch “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q4 FY2024; access returned an error indicating the daily request limit was exceeded. As a result, estimates-based comparisons are unavailable [functions.GetEstimates error].

Key Takeaways for Investors

FY2025 guide signals stability: ~11% adjusted EBITDA margin and adjusted EPS $5.70–$6.00, with strong FCF ($345–$375M), supporting continued deleveraging and shareholder returns .
Federal clinical volumes remain a pillar; U.S. Services margins normalize as Medicaid excess volumes ended, aligning with mid-teens target ranges over time .
CMS cancellation of CCO re-procurement removes a major uncertainty and supports continuity through 2031 option periods—an incremental positive for risk profile and indirect absorption .
Sales metrics need monitoring: book-to-bill 0.4x and backlog decline to $16.2B suggest conversion softness; management expects adjudications to pick up over next 12 months .
Balance sheet optionality: net leverage 1.4x and robust FCF enable opportunistic buybacks/dividend while preserving capacity for M&A aligned to tech modernization strategy .
OUS shaping progressing: segment profitable for FY2024 with Q4 margin at 4.8%; recent divestitures aim to reduce volatility and improve consistency .
Near-term trading lens: focus on sequential margin normalization vs Q3 peak, FY2025 guide quality, and pipeline/backlog updates; resolved CCO risk and cash generation are supportive drivers .

MAXIMUS, INC. (MMS)·Q4 2024 Earnings Summary