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ICF International Reports First Quarter 2011 Results

Total Revenue Increased 12 Percent
Operating Income Up 33 Percent
Diluted Earnings Per Share of $0.39, Up 39 Percent

FAIRFAX, Va., May 05, 2011 (BUSINESS WIRE) -- ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, reported results for the first quarter ended March 31, 2011.

First Quarter 2011 Results and Highlights

For the first quarter, total revenue reached $194.7 million, an 11.6 percent increase over the $174.4 million reported for the 2010 first quarter. Organic revenue1 growth was 10.9 percent. Net income was $7.7 million, or $0.39 per diluted share, representing a 42.5 percent increase over net income of $5.4 million, or $0.28 per diluted share, earned in the comparable 2010 period. Operating income increased 32.9 percent to $13.4 million from the $10.1 million reported in last year's first quarter.

"ICF's strong first quarter 2011 performance was driven by solid revenue gains across each of our markets and client categories and demonstrates our excellent competitive positioning in the high-growth areas of commercial energy and the federal health and education markets," said Chairman and Chief Executive Officer Sudhakar Kesavan. "Profitability benefited from a 40.8 percent revenue increase in our domestic commercial business, which was driven by energy efficiency work and related performance incentives, environmental management of infrastructure projects, and a pickup in energy transaction activity."

"The pace of new contract wins was good, our backlog was seasonably stable and well diversified, and our pipeline exceeded $2.6 billion at the end of the first quarter," Mr. Kesavan noted.

Backlog and New Business Awards

Backlog was $1.4 billion at the end of the 2011 first quarter. Funded backlog was $639 million, or 47 percent of the total.

The total value of contracts awarded in the first quarter of 2011 was $217 million.

Key contracts won in the first quarter included:

  • Energy Efficiency: A $36.5 million re-compete contract with the U.S. Environmental Protection Agency (EPA) to continue nearly two decades of support for the ENERGY STARĀ® PROGRAM. This particular contract supports the Labeling and Residential Branch of the program with a wide variety of research, marketing, information, evaluation, and management support functions.
  • Energy Efficiency: A new grant valued at up to $10 million to support global energy efficiency efforts of the U.S. Agency for International Development (USAID) through the agency's Energy Efficiency for Clean Development Program. ICF will help USAID address energy performance and greenhouse gas mitigation at missions worldwide.
  • Energy Efficiency: A new $4.3 million contract to support another major U.S. utility. ICF's responsibilities under the contract encompass the areas of residential energy efficiency; whole house retrofit programs; and contractor recruitment, training, and program support.
  • Health: A new multiple-award Indefinite Delivery/Indefinite Quantity (ID/IQ) contract by the U.S. Public Health Service, Centers for Disease Control and Prevention, U.S. Department of Health and Human Services, with a capacity of $100 million. ICF is one of three winners to provide global epidemiology and strategic information services, with an emphasis on activities under the U.S. President's Emergency Plan for AIDS Relief (PEPFAR).
  • Information Technology: A new, multiple-award blanket purchase agreement valued at up to $108 million by the EPA to support the agency's Information Technology Solutions - Business Information Strategic Support II (ITS-BISS II) program. Under the contract ICF will provide EPA's information technology and information management policy, planning, and support services.
  • Transportation: A new ID/IQ contract by the U.S. Department of Transportation's Volpe Transportation Systems Center valued at up to $40 million. ICF will support the National Environmental Policy Act (NEPA) of 1969 compliance area.
  • Commercial Sector: In addition to the energy efficiency projects already noted, more than 250 additional domestic and international commercial project wins in the areas of energy efficiency, power and gas market assessment, asset valuation, environmental management, and aviation.

Summary and Outlook

"First quarter results marked a strong start to 2011 for ICF and illustrated the advantages of our balanced portfolio strategy in both the government and commercial sectors," Mr. Kesavan said. "We expect results in the seasonally stronger second quarter to continue to reflect similar business trends, with revenues in the range of $212 million to $220 million and earnings per share in the range of $0.43 to $0.47, based on approximately 19.9 million weighted average number of shares outstanding and an effective tax rate of 40.0 percent."

"Based on funded backlog levels and our strong business development pipeline, we reaffirm our full year 2011 guidance of revenues in the range of $830 million to $865 million, which represent 10.8 percent growth at the midpoint and earnings per diluted share of $1.63 to $1.73, which represent 21.7 percent growth at the midpoint. This is based on approximately 20.1 million weighted average number of shares outstanding and an effective tax rate of 40.0 percent."

About ICF International

ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver professional services and technology solutions in the energy, environment and transportation; health, education, and social programs; and homeland security and defense markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from research and analysis through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 3,700 employees serve these clients worldwide. ICF's Web site is www.icfi.com.

Caution Concerning Forward-Looking Statements

Statements that are not historical facts and involve known and unknown risks and uncertainties are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements may concern our current expectations about our future results, plans, operations and prospects and involve certain risks, including those related to the government contracting industry generally; our particular business, including our dependence on contracts with U.S. federal government agencies; and our ability to acquire and successfully integrate businesses. These and other factors that could cause our actual results to differ from those indicated in forward-looking statements are included in the "Risk Factors" section of our securities filings with the Securities and Exchange Commission. The forward-looking statements included herein are only made as of the date hereof, and we specifically disclaim any obligation to update these statements in the future.

1 Organic revenue excludes revenue from acquisitions closed during the previous four quarters.

ICF International, Inc. and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share amounts)
Three months ended
March 31,
2011 2010
Gross Revenue $ 194,742 $ 174,438
Direct Costs 118,221 107,559
Operating costs and expenses:
Indirect and selling expenses 57,926 51,030
Depreciation and amortization 2,761 2,668
Amortization of intangible assets 2,415 3,081
Total operating costs and expenses 63,102 56,779
Operating income 13,419 10,100
Interest expense (629 ) (963 )
Other income 87 19
Income before income taxes 12,877 9,156
Provision for income taxes 5,151 3,736
Net income $ 7,726 $ 5,420
Earnings per Share:
Basic $ 0.39 $ 0.28
Diluted $ 0.39 $ 0.28
Weighted-average Shares:
Basic 19,580 19,282
Diluted 19,780 19,504

Reconciliation of EBITDA

Operating Income 13,419 10,100
Depreciation and amortization 5,176 5,749
EBITDA 18,595 15,849
ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
March 31, 2011 December 31, 2010
(unaudited)
Current Assets:
Cash $ 6,288 $ 3,301
Contract receivables, net 180,816 176,963
Prepaid expenses and other 7,423 6,995
Income tax receivable -- 1,628
Deferred income taxes 3,713 4,973
Total current assets 198,240 193,860
Total property and equipment, net 17,786 18,887
Other assets:
Goodwill 325,999 323,467
Other intangible assets, net 24,729 26,148
Restricted cash 1,876 3,179
Other assets 7,676 7,278
Total assets $ 576,306 $ 572,819
Current Liabilities:
Accounts payable $ 24,216 $ 29,866
Accrued salaries and benefits 44,880 40,750
Accrued expenses 22,569 25,522
Deferred revenue 20,931 20,034
Income tax payable 2,615 --
Total current liabilities 115,211 116,172
Long-term liabilities:
Long-term debt 80,000 85,000
Deferred rent 5,944 5,142
Deferred income taxes 8,848 10,068
Other 4,218 3,704
Total Liabilities 214,221 220,086
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, par value $.001 per share; 5,000,000 shares authorized; none issued -- --
Common stock, $.001 par value; 70,000,000 shares authorized; 19,738,880 and 19,618,659 shares issued; and 19,651,969 and 19,567,571 shares outstanding as of March 31, 2011, and December 31, 2010, respectively 20 20
Additional paid-in capital 223,140 220,891
Retained earnings 141,363 133,637
Treasury stock (2,070 ) (1,291 )
Accumulated other comprehensive loss (368 ) (524 )
Total stockholders' equity 362,085 352,733
Total liabilities and stockholders' equity $ 576,306 $ 572,819
ICF International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Three months ended
March 31,
2011 2010
Cash flows from operating activities
Net income $ 7,726 $ 5,420
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes (16 ) (1,222 )
(Gain) loss on disposal of fixed assets (66 ) 29
Non-cash equity compensation 1,195 1,715
Depreciation and amortization 5,176 5,749
Deferred rent 842 (76 )
Changes in operating assets and liabilities, net of the effect of acquisitions:
Contract receivables, net (2,138 ) 7,265
Prepaid expenses and other assets (972 ) 496
Accounts payable (5,629 ) (4,347 )
Accrued salaries and benefits 3,819 2,818
Accrued expenses (3,059 ) (1,499 )
Deferred revenue 896 (2,949 )
Income tax receivable and payable 4,236 4,112
Restricted cash 1,303 (1,013 )
Other liabilities 513 (635 )
Net cash provided by operating activities 13,826 15,863
Cash flows from investing activities
Capital expenditures (1,696 ) (1,447 )
Capitalized software development costs (28 ) (93 )
Payments for business acquisitions, net of cash received (4,547 ) --
Net cash used in investing activities (6,271 ) (1,540 )
Cash flows from financing activities
Advances from working capital facilities 32,294 3,729
Payments on working capital facilities (37,294 ) (13,729 )
Proceeds from exercise of options 85 408
Tax benefits of stock option exercises and award vesting 949 192
Net payments for stockholder issuances and buybacks (758 ) (428 )
Net cash used in financing activities (4,724 ) (9,828 )
Effect of exchange rate on cash 156 (82 )
Increase in cash 2,987 4,413
Cash, beginning of period 3,301 2,353
Cash, end of period $ 6,288 $ 6,766
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 610 $ 1,459
Income taxes $ 328 $ 518
ICF International, Inc. and Subsidiaries
Supplemental Schedule (Unaudited)
Revenue by market Three Months Ended
March 31,
2011 2010
Energy, environment, and transportation 41 % 40 %
Health, education, and social programs 45 % 46 %
Homeland security and defense 14 % 14 %
Total 100 % 100 %
Revenue by client Three Months Ended
March 31,
2011 2010
U.S. federal government 68 % 72 %
U.S. state and local government 10 % 10 %
Domestic commercial 17 % 14 %
International 5 % 4 %
Total 100 % 100 %
Revenue by contract type Three Months Ended
March 31,
2011 2010
Time-and-materials 51 % 49 %
Cost-based 22 % 24 %
Fixed-price 27 % 27 %
Total 100 % 100 %

SOURCE: ICF International

ICF International
Douglas Beck, 1-703-934-3820
or
MBS Value Partners
Lynn Morgen / Betsy Brod, 1-212-750-5800