icfi-8k_20190226.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 26, 2019

 

ICF International, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-33045

22-3661438

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

9300 Lee Highway,

Fairfax, Virginia

 

22031

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (703) 934-3000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 


Item 2.02 Results of Operations and Financial Condition

On February 26, 2019, ICF International, Inc. (the “Company”) announced its financial results for the fourth quarter and full year ended December 31, 2018.  The press release containing this announcement is attached hereto as Exhibit 99.1.

 

The information contained in this report, including Exhibit 99.1, is considered to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section.  The information in this report shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 

The release contains forward-looking statements regarding the Company and includes a cautionary statement identifying important factors that could cause actual result to differ materially from those anticipated.

Item 8.01 Other Events

On February 26, 2019, the Company's Board of Directors declared a quarterly dividend in an amount equal to $0.14 per share. This quarterly cash dividend will be paid on April 16, 2019 to stockholders of record as of the close of business on March 29, 2019.

The cash dividend policy and the payment of future cash dividends under that policy will be made at the discretion of the Company's Board of Directors and will depend on earnings, operating and financial conditions, capital requirements, and other factors deemed relevant by the Board, including the applicable requirements of the Delaware General Corporation Law and the best interests of the Company’s stockholders.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

99.1

 

Press Release dated February 26, 2019

 


Exhibit Index

 

Exhibit

Number

 

Description

99.1

 

Press Release dated February 26, 2019

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

ICF International, Inc.

 

 

 

 

Date:  February 26, 2019

 

By:

/s/ James C. Morgan

 

 

 

James C. Morgan

 

 

 

Executive Vice President & Chief Financial Officer

 

icfi-ex991_6.htm

Exhibit 99.1

 

NEWS RELEASE

ICF Reports Fourth Quarter and Full Year 2018 Results

 

Fourth Quarter Highlights:

 

Total Revenue Was $378 Million, up 18 Percent

 

Diluted EPS Was $0.97, Inclusive of $0.09 in Special Charges1

 

Non-GAAP EPS1 Was $1.17, up 50 Percent

 

Adjusted EBITDA Margin on Service Revenue1 Was 16.5 Percent

 

Contract Awards of $286 Million

 

Full Year Highlights:

 

Total Revenue Was $1.34 Billion, up 9 Percent

 

Diluted EPS Was $3.18, Inclusive of $0.17 in Special Charges

 

Non-GAAP EPS Was $3.73, up 24 Percent

 

Adjusted EBITDA Margin on Service Revenue Was 13.4 Percent

 

Contract Awards Increased 40 Percent to $1.82 Billion, Representing a Book-to-Bill Ratio of 1.4

 

2019 Guidance:

 

Revenue: $1.45 Billion to $1.50 Billion

 

Diluted EPS: $3.75-$3.95, Exclusive of Any Special Charges

 

Non-GAAP EPS: $4.05-$4.25

 

FOR IMMEDIATE RELEASE

Investor Contacts:

Lynn Morgen, ADVISIRY PARTNERS, lynn.morgen@advisiry.com +1.212.750.5800

David Gold, ADVISIRY PARTNERS, david.gold@advisiry.com +1.212.750.5800

Company Information Contact:

Lauren Dyke, ICF, lauren.dyke@ICF.com +1.571.373.5577

 

FAIRFAX, Va.— Feb. 26, 2019-- ICF (NASDAQ:ICFI), a global consulting and digital services provider, reported results for the fourth quarter and full year ended December 31, 2018.

 

1 Non-GAAP EPS, Service Revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin on Service Revenue are non-GAAP measurements. A reconciliation of all non-GAAP measurements to the most applicable GAAP number is set forth below.  Special charges are items that were included within our statement of operations but are not indicative of ongoing performance and have been presented net of applicable U.S. GAAP taxes. The presentation of non-GAAP measurements may not be comparable to other similarly titled measures used by other companies.

1

 


“Fourth quarter results represented a strong finish to a record year for ICF and demonstrated the strength of the growth drivers that will continue in 2019,” said Sudhakar Kesavan, Chairman and Chief Executive Officer.

“Revenue growth in the fourth quarter was broad-based, across each of our client categories. Revenue from government clients increased 22 percent, driven by our disaster recovery work for state and local government clients. Revenue from commercial clients increased 12 percent from the 2017 fourth quarter, reflecting positive comparisons in both marketing services and energy markets, which together comprised over 90 percent of ICF’s commercial revenue this quarter.

“On a consolidated basis, we delivered 10 percent service revenue1 growth in the fourth quarter, which together with a favorable business mix and higher utilization drove a 26 percent increase in adjusted EBITDA1, and an exceptional adjusted EBITDA to service revenue margin of 16.5 percent.

“Additionally, this was a solid quarter of new contract awards for ICF following a record third quarter, bringing the value of contracts won in 2018 to $1.82 billion, equivalent to a book-to-bill ratio of 1.4.  At the same time, our year-end business development pipeline increased to over $5.8 billion, representing a year-over-year increase of 38 percent,” Mr. Kesavan noted.  

Fourth Quarter 2018 Results

 

Fourth quarter 2018 total revenue was $377.9 million, representing 17.7 percent growth over the $321.2 million reported in the fourth quarter of 2017. Service revenue increased 10.0 percent year-over-year to $239.6 million, from $217.8 million. Net income amounted to $18.7 million in the 2018 fourth quarter, or $0.97 per diluted share, inclusive of $0.09 of tax-effected special charges, which included $0.05 for a reserve related to the bankruptcy of Pacific Gas & Electric. The 2018 fourth quarter effective tax rate was higher than anticipated primarily due to valuation allowances of foreign tax credits.  In the 2017 fourth quarter, net income was $27.1 million, or $1.41 per diluted share, inclusive of a one-time benefit of $0.85 per diluted share in connection with the Tax Cuts and Jobs Act and $0.13 of tax-effected special charges.

 

Non-GAAP EPS increased 50.0 percent to $1.17 per share from $0.78 per share in 2017. EBITDA1 was $36.9 million, up 36.1 percent from $27.1 million reported in the fourth quarter of 2017.  Adjusted EBITDA was $39.4 million, 25.5 percent above the $31.4 million reported in the 2017 fourth quarter. Fourth quarter 2018 adjusted EBITDA margin on service revenue was 16.5 percent compared to 14.4 percent in the 2017 fourth quarter.

 

Full Year 2018 Results

 

For 2018, total revenue amounted to $1.34 billion, representing 8.9 percent growth over the $1.23 billion reported for full year 2017. Service revenue increased 4.7 percent year-over-year to $925.8 million, from $884.2 million in 2017. Full year 2018 net income amounted to $61.4 million, or $3.18 per diluted share, inclusive of $0.17 of tax-effected special charges, which included $0.05 for a reserve related to the bankruptcy of Pacific Gas & Electric. This compares to net income of $62.9 million, or $3.27 per diluted share for last year, inclusive of $0.84 for a one-time tax benefit and $0.24 of tax-effected special charges.

 

Non-GAAP EPS increased 23.5 percent year-over-year to $3.73 per share from $3.02 per share. EBITDA was $119.5 million, up 7.6 percent from $111.0 million reported in 2017. Adjusted EBITDA was $123.8 million, a 5.0 percent increase over $117.9 million in 2017. The 2018 adjusted EBITDA margin on service revenue was 13.4 percent, as compared to 13.3 percent reported in 2017.

2

 


 

Backlog and New Business Awards

 

Total backlog was $2.4 billion at the end of the fourth quarter of 2018. Funded backlog was $1.1 billion, or approximately 48 percent of the total backlog. The total value of contracts awarded in the 2018 fourth quarter was $285.8 million.  For full year 2018, contract awards were $1.82 billion, representing a book-to-bill ratio of 1.4.

 

Government Revenue Fourth Quarter 2018 Highlights

 

Revenue from government clients was $226.0 million, up 21.7 percent year-over-year.

 

 

U.S. federal government revenue was $131.5 million, representing a 2.1 percent year-over-year increase. Federal government revenue accounted for 35 percent of total revenue, compared to 40 percent of total revenue in the fourth quarter of 2017.

 

U.S. state and local government revenue increased by 115.2 percent year-on-year to $62.2 million. State and local accounted for 16 percent of total revenue, compared to 9 percent of total revenue in the 2017 fourth quarter.

 

International government revenue increased 15.0 percent year-on-year to $32.3 million and accounted for 9 percent of total revenue in both the 2018 and 2017 fourth quarters.

 

Key Government Contracts Awarded in the Fourth Quarter

 

ICF was awarded more than 80 U.S. federal contracts and task orders and more than 250 additional contracts from U.S. state and local and international governments with an aggregate value of $156.4 million. Year-to-date government awards totaled $1.36 billion. Awards won in the fourth quarter included:  

 

 

Disaster recovery: Multiple awards totaling more than $50 million, which were mentioned in our November 1, 2018 earnings call, to support housing and infrastructure programs that are part of state and local government disaster recovery activities associated with Hurricane Harvey.

 

Advisory services: A contract with the Air Force Civil Engineer Command to provide advisory and assistance services.

 

Public health: A subcontract to provide services to a federal agency related to addressing underage drinking.

 

Environment and planning: Numerous contract amendments with a western U.S. state water resources agency related to environmental evaluation, compliance, permitting, program management, and public outreach.

 

Strategic communications: Multiple contracts and task orders with various European Commission agencies and directorates to provide strategic communications services.

 

Program support: A contract with an office of the U.S. Department of Education to provide program support services.

 

Select other government contract and task order wins with a value greater than $2 million included: ongoing technical assistance services for the U.S. Department of Education’s Appalachia Regional Comprehensive Center; program support services for the responsible fatherhood clearinghouse of the Office of Family Assistance; and analysis and planning services for a western U.S. water resources board.

Commercial Revenue Fourth Quarter 2018 Highlights

3

 


 

 

Commercial revenue was $151.9 million, up 12.2 percent from the $135.4 million reported in last year’s fourth quarter. Commercial revenue accounted for 40 percent of total revenue compared to 42 percent of total revenue in the 2017 fourth quarter.

 

Energy markets, which include energy efficiency programs, represented 39 percent of commercial revenue. Marketing services accounted for 54 percent of commercial revenue.

 

Key Commercial Contracts Awarded in the Fourth Quarter

 

Commercial sales were $129.3 million in the fourth quarter of 2018 and $464.5 million year-to-date.  ICF was awarded more than 650 commercial projects globally during the fourth quarter including:

 

In Energy Markets:

 

A contract amendment with a western U.S. energy organization to continue supporting its residential energy efficiency program.

 

Contracts with a northeastern U.S. utility to support its residential energy efficiency programs.

 

Two contract extensions with a northeastern U.S. utility to continue providing support for its energy efficiency programs.

 

A contract and several task orders with a western U.S. utility to provide environment and planning services.

 

A work order with an electric transmission company to prepare a cultural resource inventory.

 

In Marketing Services:

 

A retainer with a major U.S. rail transportation system to continue to provide loyalty program services.

 

Multiple task orders with a U.S. health insurer to provide additional marketing services.

 

Multiple task orders with a U.S. health insurer to provide healthcare business consulting and digital solutions services.

 

Multiple task orders with a publisher of educational products to continue to provide marketing services.

          

Select other commercial contract and task order wins with a value of more than $1 million included: loyalty program services for two hospitality chains; ongoing support for residential energy efficiency programs for a utility in the midwestern U.S.; and program support services for a non-road electrification program for a southeastern U.S. utility.

 

Dividend Declaration

 

On February 26, 2019, ICF declared a quarterly cash dividend of $0.14 per share, payable on April 16, 2019 to shareholders of record on March 29, 2019.

 

2018 Recognitions

ICF received several important recognitions in 2018:

 

Forbes named ICF one of “America’s Best Management Consulting Firms” for the third consecutive year

 

Awarded Government Contractor of the Year and Program of the Year for a Large Business by Greater Washington GovCon

 

A “strong performer” in Forrester’s report on digital experience providers, The Forrester Wave™: Midsize Digital Experience Agencies, Q4 2018

4

 


Summary and Outlook

 

“Looking ahead, we have strong visibility into 2019 based on our existing contract backlog. We expect the catalysts that benefitted our 2018 performance to continue to drive significant growth and further margin expansion in 2019. Each of our client categories is positioned for year-over-year progress in 2019. In government markets, ICF’s domain expertise and cross-cutting implementation skills align with federal agency spending priorities and funding appropriated for post-hurricane housing recovery. In commercial markets, we have a strong pipeline of energy efficiency programs and continue to build our distributed energy and resiliency consulting services. Additionally, we have substantial opportunities to further leverage our commercial marketing services and engagement capabilities broadly across our domestic and international client sets.

 

“For full year 2019, we expect revenue of $1.45 billion to $1.50 billion. This guidance includes the impact of the partial government shutdown that took place in January 2019 and affected several of ICF’s federal agency clients. The Company expects to re-capture the approximately $3 million in lost revenue due to the shutdown throughout 2019 but will absorb the related operating expenses, which are expected to impact diluted EPS by $0.05 in the first quarter. GAAP earnings per diluted share are expected to be in the range of $3.75 to $3.95, exclusive of any special charges. Non-GAAP diluted EPS is expected to range from $4.05 to $4.25. Per share guidance is based on a weighted average number of shares outstanding of 19.3 million. Operating cash flow, which was slightly below our 2018 guidance due to timing issues, is projected to be in the range of $100 million to $120 million for 2019. Full year 2019 guidance does not include any significant new disaster recovery-related contract wins that might occur,” concluded Mr. Kesavan.

 

 

 

###

 

 

About ICF

ICF (NASDAQ:ICFI) is a global consulting services company with over 5,500 specialized experts, but we are not your typical consultants. At ICF, business analysts and policy specialists work together with digital strategists, data scientists and creatives. We combine unmatched industry expertise with cutting-edge engagement capabilities to help organizations solve their most complex challenges. Since 1969, public and private sector clients have worked with ICF to navigate change and shape the future. Learn more at 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.

5

 


ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)

 

 

 

Three months ended

 

 

Twelve months ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Revenue

 

$

377,910

 

 

$

321,174

 

 

$

1,337,973

 

 

$

1,229,162

 

Direct Costs

 

 

249,057

 

 

 

207,230

 

 

 

857,508

 

 

 

771,725

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indirect and selling expenses

 

 

91,958

 

 

 

86,840

 

 

 

360,987

 

 

 

346,440

 

Depreciation and amortization

 

 

4,439

 

 

 

4,260

 

 

 

17,163

 

 

 

17,691

 

Amortization of intangible assets

 

 

3,013

 

 

 

2,663

 

 

 

10,043

 

 

 

10,888

 

Total operating costs and expenses

 

 

99,410

 

 

 

93,763

 

 

 

388,193

 

 

 

375,019

 

Operating Income

 

 

29,443

 

 

 

20,181

 

 

 

92,272

 

 

 

82,418

 

Interest expense

 

 

(2,637

)

 

 

(1,890

)

 

 

(8,710

)

 

 

(8,553

)

Other (expense) income

 

 

(170

)

 

 

97

 

 

 

(735

)

 

 

121

 

Income before income taxes

 

 

26,636

 

 

 

18,388

 

 

 

82,827

 

 

 

73,986

 

Provision (benefits) for income taxes

 

 

7,941

 

 

 

(8,682

)

 

 

21,427

 

 

 

11,110

 

Net income

 

$

18,695

 

 

$

27,070

 

 

$

61,400

 

 

$

62,876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.99

 

 

$

1.45

 

 

$

3.27

 

 

$

3.35

 

Diluted

 

$

0.97

 

 

$

1.41

 

 

$

3.18

 

 

$

3.27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,838

 

 

 

18,646

 

 

 

18,797

 

 

 

18,766

 

Diluted

 

 

19,333

 

 

 

19,136

 

 

 

19,335

 

 

 

19,244

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

 

0.14

 

 

 

 

 

 

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income:

 

 

(4,407

)

 

 

1,571

 

 

 

(6,683

)

 

 

4,601

 

Comprehensive income, net of tax

 

$

14,288

 

 

$

28,641

 

 

$

54,717

 

 

$

67,477

 

 

6

 


ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures (2)

(in thousands, except per share amounts)

 

 

 

Three months ended

 

 

Twelve months ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Reconciliation of Service Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

377,910

 

 

$

321,174

 

 

$

1,337,973

 

 

$

1,229,162

 

Subcontractor and Other Direct Costs(3)

 

 

(138,296

)

 

 

(103,399

)

 

 

(412,216

)

 

 

(344,913

)

Service Revenue

 

$

239,614

 

 

$

217,775

 

 

$

925,757

 

 

$

884,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

18,695

 

 

$

27,070

 

 

$

61,400

 

 

$

62,876

 

Other expense (income)

 

 

170

 

 

 

(97

)

 

 

735

 

 

 

(121

)

Interest expense

 

 

2,637

 

 

 

1,890

 

 

 

8,710

 

 

 

8,553

 

Provision for income taxes

 

 

7,941

 

 

 

(8,682

)

 

 

21,427

 

 

 

11,110

 

Depreciation and amortization

 

 

7,452

 

 

 

6,923

 

 

 

27,206

 

 

 

28,579

 

EBITDA

 

 

36,895

 

 

 

27,104

 

 

 

119,478

 

 

 

110,997

 

Special charges related to acquisition expenses(4)

 

 

748

 

 

 

239

 

 

 

1,361

 

 

 

239

 

Special charges related to severance for staff realignment(5)

 

 

559

 

 

 

742

 

 

 

1,554

 

 

 

1,583

 

Special charges related to facilities consolidations and office closures(6)

 

 

 

 

 

339

 

 

 

115

 

 

 

2,060

 

Special charges due to additional cash bonus expense(7)

 

 

 

 

 

3,000

 

 

 

 

 

 

3,000

 

Special charges related to bad debt reserve (8)

 

 

1,240

 

 

 

 

 

 

1,240

 

 

 

 

Total special charges and adjustments

 

 

2,547

 

 

 

4,320

 

 

 

4,270

 

 

 

6,882

 

Adjusted EBITDA

 

$

39,442

 

 

$

31,424

 

 

$

123,748

 

 

$

117,879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA Margin Percent on Revenue(9)

 

 

9.8

%

 

 

8.4

%

 

 

8.9

%

 

 

9.0

%

EBITDA Margin Percent on Service Revenue(9)

 

 

15.4

%

 

 

12.4

%

 

 

12.9

%

 

 

12.6

%

Adjusted EBITDA Margin Percent on Revenue(9)

 

 

10.4

%

 

 

9.8

%

 

 

9.2

%

 

 

9.6

%

Adjusted EBITDA Margin Percent on Service Revenue(9)

 

 

16.5

%

 

 

14.4

%

 

 

13.4

%

 

 

13.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.97

 

 

$

1.41

 

 

$

3.18

 

 

$

3.27

 

Special charges related to acquisitions

 

 

0.04

 

 

 

0.01

 

 

 

0.07

 

 

 

0.01

 

Special charges related to severance for staff realignment

 

 

0.03

 

 

 

0.04

 

 

 

0.08

 

 

 

0.08

 

Special charges related to facilities consolidations and office closures

 

 

 

 

 

0.02

 

 

 

0.01

 

 

 

0.12

 

Special charges due to additional cash bonus expense

 

 

 

 

 

0.16

 

 

 

 

 

 

0.16

 

Special charges related to bad debt reserve

 

 

0.06

 

 

 

 

 

 

0.06

 

 

 

 

Amortization of intangibles

 

 

0.16

 

 

 

0.14

 

 

 

0.52

 

 

 

0.57

 

Income tax effects on amortization, special charges, and adjustments(10)

 

 

(0.09

)

 

 

(0.15

)

 

 

(0.19

)

 

 

(0.35

)

Adjustments for changes in the tax rate under new Tax Act

 

 

 

 

 

(0.85

)

 

 

 

 

 

(0.84

)

Non-GAAP EPS

 

$

1.17

 

 

$

0.78

 

 

$

3.73

 

 

$

3.02

 

 

(2) These tables provide reconciliations of non-GAAP financial measures to the most applicable U.S. GAAP numbers. While we believe that these non-GAAP financial measures may be useful in evaluating our financial information, they should be considered supplemental in nature and not as a substitute for financial information prepared in accordance with U.S. GAAP. Other companies may define similarly titled non-GAAP measures differently and, accordingly, care should be exercised in understanding how we define these measures.

(3) Subcontractor and Other Direct Costs is equal to Direct Costs minus Direct Labor and Fringe Costs.

7

 


(4) Special charges related to acquisitions: These costs are mainly related to closed and anticipated-to-close acquisitions, consisting primarily of consultants and other outside party costs and an increase in the contingent consideration liability.  The amortization of deferred consideration payments, discounted as part of the acquisition, are included in the calculation of non-GAAP earnings per share.

(5) Special charges related to severance for staff realignment:  These costs are mainly due to involuntary employee termination benefits for Company officers or groups of employees who have been terminated as part of a consolidation or reorganization.

(6) Special charges related to facilities consolidations and office closures: These costs are exit costs associated with terminated leases or full office closures. These exit costs include charges incurred under a contractual obligation that existed as of the date of the accrual and for which we will continue to pay until the contractual obligation is satisfied but with no economic benefit to us.

(7) Special charges due to additional cash bonus expense: In response to the Tax Act that was passed in December 2017 and took effect in 2018, we increased the portion of bonuses that will be paid in cash, which increased the amount that can be deducted for income tax purposes for 2017.

(8) Special charge related bad debt reserve:  This cost is related to the January 2019 bankruptcy filing of a utility client.

(9) EBITDA Margin Percent and Adjusted EBITDA Margin Percent were calculated by dividing the non-GAAP measure by the corresponding revenue.

(10) Income tax effects were calculated using an effective U.S. GAAP tax rate of 29.8% and 25.9% for the quarter and the year ended December 31, 2018, respectively, and 41.1% and 37.0%, prior to the adjustments for changes in the tax rate under the new tax regulations, for the quarter and the year ended December 31, 2017, respectively.

8

 


ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share amounts)

 

 

 

December 31, 2018

 

 

December 31, 2017

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,694

 

 

$

11,809

 

Restricted cash - current

 

 

 

 

 

11,191

 

Contract receivables, net

 

 

230,966

 

 

 

168,318

 

Contract assets

 

 

126,688

 

 

 

123,197

 

Prepaid expenses and other

 

 

16,253

 

 

 

11,327

 

Income tax receivable

 

 

6,505

 

 

 

5,596

 

Total Current Assets

 

 

392,106

 

 

 

331,438

 

Total Property and Equipment, net

 

 

48,105

 

 

 

38,052

 

Other Assets:

 

 

 

 

 

 

 

 

Restricted cash - non-current

 

 

1,292

 

 

 

1,266

 

Goodwill

 

 

715,644

 

 

 

686,108

 

Other intangible assets, net

 

 

35,494

 

 

 

35,304

 

Other assets

 

 

21,221

 

 

 

18,087

 

Total Assets

 

$

1,213,862

 

 

$

1,110,255

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

102,599

 

 

$

75,074

 

Contract liabilities

 

 

33,494

 

 

 

38,571

 

Accrued salaries and benefits

 

 

44,103

 

 

 

45,645

 

Accrued subcontractors and other direct costs

 

 

58,791

 

 

 

47,508

 

Accrued expenses and other current liabilities

 

 

39,072

 

 

 

17,572

 

Total Current Liabilities

 

 

278,059

 

 

 

224,370

 

Long-term Liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

200,424

 

 

 

206,250

 

Deferred rent

 

 

13,938

 

 

 

15,119

 

Deferred income taxes

 

 

40,165

 

 

 

33,351

 

Other

 

 

20,859

 

 

 

15,135

 

Total Liabilities

 

 

553,445

 

 

 

494,225

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 19)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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; 22,445,576 and 22,019,315 shares issued; and 18,817,495 and 18,661,801 shares outstanding as of December 31, 2018 and December 31, 2017, respectively

 

 

22

 

 

 

22

 

Additional paid-in capital

 

 

326,208

 

 

 

307,821

 

Retained earnings

 

 

486,442

 

 

 

434,766

 

Treasury stock

 

 

(139,704

)

 

 

(121,540

)

Accumulated other comprehensive loss

 

 

(12,551

)

 

 

(5,039

)

Total Stockholders’ Equity

 

 

660,417

 

 

 

616,030

 

Total Liabilities and Stockholders’ Equity

 

$

1,213,862

 

 

$

1,110,255

 

 

9

 


ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

Twelve months ended

 

 

 

December 31,

 

 

 

2018

 

 

2017

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

61,400

 

 

$

62,876

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Bad debt expense

 

 

2,480

 

 

 

1,480

 

Deferred income taxes

 

 

5,100

 

 

 

(7,390

)

Non-cash equity compensation

 

 

11,506

 

 

 

10,291

 

Depreciation and amortization

 

 

27,206

 

 

 

28,579

 

Deferred rent

 

 

523

 

 

 

(177

)

Facilities consolidation reserve

 

 

(260

)

 

 

1,479

 

Remeasurement of contingent acquisition liability

 

 

505

 

 

 

 

Amortization of debt issuance costs

 

 

510

 

 

 

673

 

Other adjustments, net

 

 

449

 

 

 

275

 

Changes in operating assets and liabilities, net of the effect of acquisitions:

 

 

 

 

 

 

 

 

Net contract assets and liabilities

 

 

(14,148

)

 

 

405

 

Contract receivables

 

 

(60,096

)

 

 

702

 

Prepaid expenses and other assets

 

 

(6,650

)

 

 

(1,844

)

Accounts payable

 

 

28,309

 

 

 

3,631

 

Accrued salaries and benefits

 

 

(2,159

)

 

 

5,597

 

Accrued subcontractors and other direct costs

 

 

10,762

 

 

 

15,507

 

Accrued expenses and other current liabilities

 

 

11,120

 

 

 

(2,250

)

Income tax receivable and payable

 

 

(2,063

)

 

 

(5,697

)

Other liabilities

 

 

176

 

 

 

3,054

 

Net Cash Provided by Operating Activities

 

 

74,670

 

 

 

117,191

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures for property and equipment and capitalized software

 

 

(21,812

)

 

 

(14,513

)

Payments for business acquisitions, net of cash received

 

 

(34,575

)

 

 

(91

)

Net Cash Used in Investing Activities

 

 

(56,387

)

 

 

(14,604

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Advances from working capital facilities

 

 

573,991

 

 

 

590,225

 

Payments on working capital facilities

 

 

(579,817

)

 

 

(643,363

)

Payments on capital expenditure obligations

 

 

(3,726

)

 

 

(4,808

)

Debt issue costs

 

 

(21

)

 

 

(1,612

)

Proceeds from exercise of options

 

 

5,842

 

 

 

4,722

 

Dividends paid

 

 

(7,915

)

 

 

 

Net payments for stockholder issuances and buybacks

 

 

(17,125

)

 

 

(32,464

)

Net Cash Used in Financing Activities

 

 

(28,771

)

 

 

(87,300

)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash

 

 

(792

)

 

 

1,094

 

 

 

 

 

 

 

 

 

 

(Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash

 

 

(11,280

)

 

 

16,381

 

Cash, Cash Equivalents, and Restricted Cash, Beginning of Period

 

 

24,266

 

 

 

7,885

 

Cash, Cash Equivalents, and Restricted Cash, End of Period

 

$

12,986

 

 

$

24,266

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

9,893

 

 

$

7,922

 

Income taxes

 

$

14,870

 

 

$

21,659

 

Non-cash investing and financing transactions:

 

 

 

 

 

 

 

 

Deferred and contingent consideration arising from businesses acquired

 

$

8,391

 

 

$

 

Capital expenditure obligations

 

$

6,121

 

 

$

 

10

 


ICF International, Inc. and Subsidiaries

Supplemental Schedule (11)(12)

 

Revenue by client markets

Three Months Ended

 

 

Twelve Months Ended

 

 

December 31,

 

 

December 31,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Energy, environment, and infrastructure

 

42

%

 

 

39

%

 

 

42

%

 

 

40

%

Health, education, and social programs

 

41

%

 

 

44

%

 

 

40

%

 

 

42

%

Safety and security

 

8

%

 

 

8

%

 

 

8

%

 

 

8

%

Consumer and financial

 

9

%

 

 

9

%

 

 

10

%

 

 

10

%

Total

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by client type

Three Months Ended

 

 

Twelve Months Ended

 

 

December 31,

 

 

December 31,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

U.S. federal government

 

35

%

 

 

40

%

 

 

41

%

 

 

45

%

U.S. state and local government

 

16

%

 

 

9

%

 

 

14

%

 

 

10

%

International government

 

9

%

 

 

9

%

 

 

9

%

 

 

7

%

Government

 

60

%

 

 

58

%

 

 

64

%

 

 

62

%

Commercial

 

40

%

 

 

42

%

 

 

36

%

 

 

38

%

Total

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by contract mix

Three Months Ended

 

 

Twelve Months Ended

 

 

December 31,

 

 

December 31,

 

 

2018

 

 

2017

 

 

2018

 

 

2017