MAXIMUS INC

Our primary sources of liquidity are cash on hand, cash from operations, and availability under our revolving credit facilities. As of December 31, 2023, we had $104.2 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 6. 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, 2023, and their effective interest rates.

(1) Applicable margin ranges between 1% and 2%, based on our leverage ratio.

Our effective cash interest rate reflects the drivers of our cash interest payments as of December 31, 2023, 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, 2023 is 6.0%.

The below table summarizes our change in cash, cash equivalents, and restricted cash.

Net Cash Provided By/Used In Operating Activities

Net cash from operations was $21.6 million in the first quarter of fiscal year 2024, compared with a cash outflow of $134.7 million in the first quarter of fiscal year 2023.

•Cash collections were stronger than usual in the the first quarter of the current year, with our Days Sales Outstanding ("DSO") remaining steady between September 30, 2023, and December 31, 2023 at 60 days and 59 days, respectively. Our DSO at September 30, 2022 and December 31, 2022, were 62 days and 74 days, respectively, with slower payments in the first quarter catching up in the second quarter of fiscal year 2023.

•In fiscal year 2023, we also made payroll tax payments that had been deferred as part of pandemic-related relief measures, as well as higher income tax payments, which did not occur in the first quarter of fiscal year 2024.

Net Cash Used In Investing Activities

Investing activities in the first quarter of fiscal years 2024 and 2023 include significant investments in internal-use software, as well as standard purchases of property and equipment. In the first quarter of fiscal year 2024, we received payments for the sale of businesses disposed of in the quarter, as well as an installation on the sale of our United Kingdom commercial practice.

Net Cash Provided By Financing Activities

Our net borrowings in the first quarter of fiscal year 2024 were lower than the same prior year period, due to the improved cash collections.

Credit Facilities

Our principal debt agreement is with JPMorgan Chase Bank N.A. (the "Credit Agreement"). At December 31, 2023, we owed $1.31 billion under the Credit Agreement, with access to an additional $520 million through a revolving credit facility. Mandatory repayments are required under this agreement through May 2028, when the agreement ends, and must be renegotiated or the funds repaid.

The Credit Agreement contains a number of covenants with which we are expected to comply. Failure to meet these requirements would result in a need to renegotiate the agreement 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, offset by up to $75 million of unrestricted cash (Consolidated 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, 2023, we were in compliance with all applicable covenants of our Credit Agreement. We do not believe that these covenants represent a significant restriction in our ability to operate our business or to pay our dividends.

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)