Press Release

• Total Revenue of $244 Million; Increased 2.6 Percent
• Commercial Growth Driven by 18 Percent Increase in Energy Efficiency Program Revenues
• Federal Government Revenues Remained Stable
• Net Income Increased 16 Percent to $11.1 Million; Diluted EPS Was $0.55
• Contract Awards Were $480 Million, Up 33 Percent; Book-to-Bill Ratio Was 1.97
• Nine-Month Contract Awards Were $943 Million, Up 18 Percent; Book-to-Bill Ratio Was 1.31
• Nine-Month Cash Flow From Operations Was $47 Million

FAIRFAX, Va.--(BUSINESS WIRE)--Nov. 5, 2013-- ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, reported results for the third quarter and nine months ended September 30, 2013.

Third Quarter/Nine-Month Results and Highlights

For the third quarter, revenue was $244.1 million, a 2.6 percent increase over the $237.9 million reported in the 2012 third quarter. Service revenue, total revenue less subcontractor and other direct costs, increased 2.2 percent to $180.1 million. Operating income was $17.2 million, 0.9 percent higher than the $17.0 million reported in last year’s third quarter. Net income increased 16.3 percent to $11.1 million, or $0.55 per diluted share, from the $9.6 million, or $0.48 per diluted share earned in the comparable 2012 period.

For the first nine months of 2013, revenue was $719.5 million, a 2.0 percent increase over the $705.2 million reported in the same period in 2012. Service revenue was up 1.1 percent to $538.4 million. Operating income increased 0.9 percent to $52.1 million. Net income was $31.6 million or $1.57 per diluted share, up 9.4 percent from the $28.9 million or $1.44 per diluted share earned in the first nine months of 2012.

Commenting on ICF’s results, Chairman and Chief Executive Officer Sudhakar Kesavan said, “This is the 11th consecutive quarter in which our commercial revenue growth significantly outpaced that of our federal business. Commercial revenues increased 7.7 percent in the third quarter, driven primarily by an 18 percent growth in revenues from energy efficiency programs. Additionally, this quarter’s revenue growth benefited from the continued strength of our international government business. In aggregate, our commercial and international government businesses accounted for 32 percent of ICF’s 2013 nine-month revenues, which were up from 29 percent in the comparable 2012 period.”

“Our federal government revenues remained stable in the third quarter despite continued headwinds, thanks to our large and diversified federal agency client base and our domain-led approach to advisory and implementation work. We achieved mid-single-digit growth across our two major markets in the third quarter. Energy, Environment, & Infrastructure increased 5.3 percent, and Health, Social Programs, & Consumer/Financial was up 4.1 percent, together accounting for more than 88 percent of total revenues for the period.”

“Operating income increased modestly in this period of seasonally higher bid and proposal activity, as we continued to make investments to expand our business development activity. The benefit of ICF’s ongoing investments in this area can be seen by the 33 percent and 18 percent sales gains ICF posted for the third quarter and first nine months of 2013, respectively. Net income increased at a rate greater than revenue, reflecting lower amortization and interest costs, and a lower tax rate,” Mr. Kesavan noted.

Commercial Business Third Quarter Highlights

Commercial revenues increased 7.7 percent in the 2013 third quarter to $65.6 million and represented 27 percent of total revenue. Excluding a large transmission infrastructure project that was in a slower phase of construction this period, commercial revenues would have increased 12.8 percent. Commercial business growth was driven by an 18.2 percent increase in energy efficiency program revenues, which accounted for 38 percent of commercial revenues in the third quarter; higher digital interactive revenues across a number of markets including commercial health; and a pickup in energy market consulting work. Commercial contract awards were $40.3 million for the 2013 third quarter and $198.2 million for the first nine months of 2013.

Key Commercial Sales Highlights for the Third Quarter

ICF was awarded more than 350 commercial projects globally in the third quarter. Individual commercial sales in excess of $1 million included web and interactive data development for a major retail chain, two energy efficiency contracts for an East Coast and a West Coast utility, and a mobile applications development contract for an entertainment company. Primary areas of additional awards included management consulting and interactive data applications for health insurers, energy infrastructure and market studies for utilities and industry associations, airline and airport management consulting, environmental program and compliance management, and greenhouse gas inventories for global energy providers.

Government Business Third Quarter Highlights

• U.S. federal government revenues declined 0.7 percent in the 2013 third quarter and accounted for 58 percent of total revenue, compared to 60 percent in last year’s third quarter. Growth areas included global health survey research, energy, education, and veterans affairs. .
• U.S. state and local government revenues declined 1.8 percent and accounted for 10 percent of total revenue.
• International government revenues increased 33.8 percent and accounted for 5 percent of total revenue, primarily reflecting recent contract wins with departments in the U.K. government, European Commission, and Asian Development Bank.

Key Government Contracts Won in the Third Quarter

ICF was awarded more than 175 new U.S. federal government contract and task order awards and hundreds of additional awards from other domestic (state and local) and international governments. The largest awards included:

• Global Health Survey Research: A $189 million contract from the U.S. Agency for International Development (USAID) Bureau for Global Health to collect, analyze, and present population, health, and nutrition data for more than 75 countries.
• Environmental Technical Support: Two contracts valued in the aggregate at up to $31 million with the U.S. Environmental Protection Agency (EPA) to provide technical, analytical, and quality assurance support in two regions of EPA’s Environmental Services Assistance Team program.
• Homeland Security Identity Management: A $14.6 million award from the EPA for Homeland Security Presidential Directive 12 (HSPD-12) and Identity, Credential, and Access Management support.
• Public Health: Two contracts totaling approximately $10 million with the Centers for Disease Control and Prevention (CDC) for data infrastructure enhancement, and collection, preparation, and reporting of data on cancer and other chronic diseases.
• Public Health: An $8.2 million contract with the CDC to provide IT enhancement and data management services related to toxicological research.
• Public Health: An $8 million contract with the CDC to conduct the National Adult Tobacco Survey.

Additional individual government awards of approximately $5 million or greater included cybersecurity support to the U.S. Department of Defense, data collection and analysis for a federal agency supporting social science research, community development program support for a federal agency, additional disaster recovery analytical and program support for a state affected by superstorm Sandy, IT systems support to a state judicial agency, and urbanization and infrastructure analysis and evaluation support for a European aid agency.

Backlog and New Business Awards

Backlog was $1.7 billion at the end of the 2013 third quarter, up from $1.6 billion at the end of the third quarter of 2012. Funded backlog was $748 million for the third quarter of 2013 as compared to $766 million for the third quarter of 2012.

The total value of contracts awarded in the third quarter of 2013 was $480 million and was $943 million for the first nine months of 2013, resulting in a third quarter book-to-bill ratio of 1.97 and a year-to-date book-to-bill ratio of 1.31.

Summary and Outlook

“ICF’s results continue to benefit from the strong performance of our business with both commercial and international government clients, which has enabled us to report year-over-year growth in spite of softness in the federal government arena. Fourth quarter 2013 results, however, will reflect the impact of the 16-day U.S. federal government shutdown. While a portion of the lost business may be recovered later this year and/or early next year, we are lowering our guidance for full year 2013 revenues to $945 to $960 million and per share earnings of $1.95 to $2.00. Cash flow from operations is expected to exceed $65 million.”

“Expectations for diluted earnings per share are based upon an effective tax rate of no more than 38 percent and 20 million weighted average shares outstanding for full year 2013.”

“Our strong year-to-date bookings position ICF for continued growth in 2014. Based on our current visibility and portfolio, we expect to enter 2014 with a total contract backlog at levels higher than the beginning of 2013. At the same time, we anticipate continued strong growth from our commercial and international government businesses as a result of the scheduled ramp-up of existing projects, a robust pipeline of energy efficiency programs, and the favorable demand outlook for our major markets. Acquisitions remain a key part of our growth strategy, and we continue to explore opportunities to expand our capabilities through accretive transactions," Mr. Kesavan concluded.

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 infrastructure; health, social programs, and consumer/financial; and public safety and defense markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program lifecycle, 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 4,500 employees serve these clients from more than 60 offices worldwide. ICF's website is http://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.

Source: ICF International

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