Press Release

Total Revenue Increased 14 Percent
Core Business Revenue Up 24 Percent
Organic Growth Rate of 20 Percent

FAIRFAX, Va., Aug 05, 2010 (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 second quarter ended June 30, 2010.

 

Second Quarter Results and Highlights

Total revenue for the 2010 second quarter reached $199.6 million, an increase of 14 percent over total revenue of $175.4 million reported in the 2009 second quarter and 24 percent above core business revenue¹ of $160.6 million reported for last year's second quarter. The second quarter of 2009 included $14.8 million of total revenue from The Road Home contract. Organic revenue² growth was 20 percent for the 2010 second quarter.

Net income was $7.2 million, a 39 percent increase over the $5.2 million reported for last year's second quarter. Earnings per diluted share were $0.37 compared to $0.33 per diluted share in the second quarter of 2009. For the 2010 second quarter, the fully diluted weighted average number of shares outstanding was 19.6 million compared to 15.7 million shares in the 2009 second quarter. The increase resulted primarily from the 3.6 million shares issued in connection with the Company's secondary public offering, which was completed in December 2009.

"Our second quarter performance was at the high end of our guidance range," noted Sudhakar Kesavan, chairman and chief executive officer. "Each of our markets achieved significant revenue growth, driven primarily by the continued strength of our federal government business, and we posted an exceptional organic growth rate of 20 percent. Operating income increased 25 percent, benefiting from higher revenue without a commensurate increase in indirect and selling expenses."

"This was a solid sales quarter for ICF in which we captured several important contracts in the federal, state, and commercial markets. Quarter-end backlog was $1.3 billion, similar to levels at the end of the 2010 first quarter, and our pipeline is $2.9 billion," Mr. Kesavan said.

Backlog and New Business Awards

Backlog was $1.3 billion at the end of the 2010 second quarter. Funded backlog was $549 million, or 43 percent of the total.

The total value of contracts awarded in the second quarter of 2010 was $162 million compared to $143 million in the second quarter of 2009.

Key contracts won in the second quarter included:

 

• Health Informatics: A new $19 million, 41-month contract with the Centers for Disease Control and Prevention (CDC) for enhanced data collection support for public health applications and comparative effectiveness research for up to 15 cancer registries. For more than 10 years, ICF has supported the National Program of Cancer Registries Cancer Surveillance System.
• Health Information Resource Center: A new $11.6 million contract with the CDC to develop a resource center for broad-scale community action to reduce chronic disease. Focused on combating obesity and reducing tobacco use, the center will provide expert information on policy, systems and environmental change, technical assistance, training, tools, and materials to 44 communities funded by CDC through the Communities Putting Prevention to Work Program.
• Energy Efficiency: A $6.5 million recompete contract with the City and County of San Francisco to implement energy efficiency programs, including the San Francisco Energy Watch program and a federally funded Home Performance program.
• Energy Efficiency and Clean Energy: Two new contracts with an aggregate ceiling of $8.5 million to support the U.S. Department of Energy's State Energy Program and Energy Efficiency Conservation Block Grant recipients. Under these programs, ICF will support grantee energy efficiency and clean energy initiatives in the municipal, institutional, and health care sectors.
• Transportation: Four five-year contracts totaling $7 million with the New York State Department of Transportation to provide transportation demand management and Commuter Choice service planning. These contracts are designed to help improve traffic congestion, air quality, commuting, and mobility throughout the New York metropolitan area and the state.
• Energy Efficiency: Two multi-million dollar energy efficiency contracts to assist two utilities with energy efficiency program management.

 

Summary and Outlook

"We expect 2010 to be a year of continued strong growth for ICF," Mr. Kesavan said. "Based upon our year-to-date results and our current visibility, we are narrowing our total revenue guidance range for full year 2010 to $755 million to $775 million from the previous range of $740 million to $775 million and our organic revenue growth rate range to 13 percent to 16 percent from the previous range of 11 percent to 16 percent. We reaffirm our expectations for EBITDA³ margin in the range of 9 percent to 10 percent and for diluted EPS of $1.33 to $1.43, based on approximately 19.7 million fully diluted shares outstanding and an effective tax rate of 40.0 percent."

For the third quarter of 2010, the Company expects total revenue of $195 million to $202 million and diluted EPS of $0.35 to $0.40, based on approximately 19.7 million fully diluted shares outstanding and an effective tax rate of 40.2 percent.

¹ Core business revenue excludes revenue from The Road Home contract.

² Organic revenue excludes revenue from The Road Home contract and revenue from acquisitions closed during the previous four quarters.

³ EBITDA is a non-GAAP measurement, which adds depreciation and amortization to operating income to derive EBITDA. We have provided EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance an understanding of our operating results. EBITDA does not purport to be an alternative to operating income as a measure of operating performance or the cash flows from operating activities as a measure of liquidity. Please refer to the table at the bottom of the statement of earnings in this release that reconciles GAAP operating income to EBITDA and adjusted EBITDA.

About ICF International

ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver professional services and technology solutions in the energy and climate change; environment and infrastructure; health, human services, 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 3,500 employees serve these clients worldwide. ICF's Web site is www.icf.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.

ICF International, Inc. and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share amounts)
			Three months ended						Six months ended
			June 30,						June 30,
			2010			2009			2010			2009
Gross Revenue		$	199,647		$	175,405		$	374,085		$	333,267
Direct Costs			125,131			103,911			232,690			203,148
Operating costs and expenses:
Indirect and selling expenses			56,130			55,698			107,160			100,987
Depreciation and amortization			2,643			2,499			5,311			4,058
Amortization of intangible assets			3,082			3,160			6,163			4,907
Total operating costs and expenses			61,855			61,357			118,634			109,952
Operating Income			12,661			10,137			22,761			20,167
Interest expense			(917)			(1,500)			(1,880)			(2,236)
Other income			79			194			98			360
Income before taxes			11,823			8,831			20,979			18,291
Provision for income taxes			4,622			3,662			8,358			7,240
Net income		$	7,201		$	5,169		$	12,621		$	11,051
Earnings per Share:
Basic		$	0.37		$	0.34		$	0.65		$	0.73
Diluted		$	0.37		$	0.33		$	0.65		$	0.71
Weighted-average Shares:
Basic			19,351			15,204			19,317			15,142
Diluted			19,568			15,710			19,537			15,647
Reconciliation of EBITDA
Operating Income			12,661			10,137			22,761			20,167
Depreciation and amortization			5,725			5,659			11,474			8,965
EBITDA			18,386			15,796			34,235			29,132
Transaction related costs			-			-			-			987
Adjusted EBITDA			18,386			15,796			34,235			30,119

ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
		June 30, 2010				December 31, 2009
		(Unaudited)
Current Assets:
Cash and cash equivalents	$	5,338			$	2,353
Contract receivables, net		164,541				174,120
Prepaid expenses and other		8,791				6,666
Income tax receivable		--				4,175
Deferred income taxes		3,885				1,337
Total current assets		182,555				188,651
Total property and equipment, net		20,006				22,600
Other assets:
Goodwill		323,467				323,467
Other intangible assets, net		32,311				38,474
Restricted cash		3,150				2,123
Other assets		6,874				6,912
Total assets	$	568,363			$	582,227
Current Liabilities:
Accounts payable	$	23,618			$	27,075
Accrued expenses		20,771				21,770
Accrued salaries and benefits		34,271				32,072
Deferred revenue		14,069				19,370
Total current liabilities		92,729				100,287
Long-term liabilities:
Long-term debt		120,000				145,000
Deferred rent		5,300				2,914
Deferred income taxes		11,984				11,656
Other		4,164				4,810
Total Liabilities		234,177				264,667
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; 19,425,612 and 19,278,591 issued; and 19,400,326 and 19,278,591 outstanding as of June 30, 2010, and December 31, 2009, respectively		19				19
Additional paid-in capital		216,407				211,412
Treasury stock, at cost		(584	)			--
Accumulated other comprehensive loss		(743	)			(337	)
Retained earnings		119,087				106,466
Total stockholders' equity		334,186				317,560
Total liabilities and stockholders' equity	$	568,363			$	582,227

ICF International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
			Six months ended
			June 30,
			2010				2009
Cash flows from operating activities
Net income		$	12,621			$	11,051
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			11,474				8,965
Non-cash compensation			3,888				3,775
Loss on disposal of fixed assets			19				17
Deferred income taxes			(2,220	)			(2,734	)
Deferred rent			381				(29	)
Changes in operating assets and liabilities, net of the effect of acquisitions:
Contract receivables, net			9,579				17,833
Prepaid expenses and other			(2,114	)			(5,005	)
Accounts payable			(3,822	)			(1,334	)
Accrued expenses			887				(9,189	)
Accrued salaries and benefits			2,213				(6,785	)
Deferred revenue			(5,301	)			(1,783	)
Income tax receivable			5,235				2,353
Restricted cash			(1,027	)			1,849
Other liabilities			(646	)			362
Net cash provided by operating activities			31,167				19,346
Cash flows from investing activities
Capital expenditures			(3,077	)			(2,579	)
Capitalized software development costs			(201	)			(235	)
Payments for business acquisitions, net of cash acquired			--				(156,902	)
Net cash used in investing activities			(3,278	)			(159,716	)
Cash flows from financing activities
Advances from working capital facilities			13,051				235,008
Payments on working capital facilities			(38,051	)			(93,335	)
Debt issue costs			(21	)			(630	)
Proceeds from exercise of options			489				1,761
Excess tax benefits of stock option exercises			606				1,007
Net payments for stockholder issuances and buybacks			(572	)			(473	)
Net cash (used in) provided by financing activities			(24,498	)			143,338
Effect of exchange rate on cash			(406	)			(131	)
Net increase in cash and cash equivalents			2,985				2,837
Cash and cash equivalents, beginning of period			2,353				1,536
Cash and cash equivalents, end of period		$	5,338			$	4,373
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest		$	2,379			$	1,767
Income taxes		$	4,682			$	6,678

SOURCE: ICF International

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