icfi-8k_20191106.htm
false 0001362004 0001362004 2019-11-06 2019-11-06

 

 

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): November 6, 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)

Securities registered pursuant to Section 12(b) of the Act.

Title of each class

Trading Symbols(s)

Name of each exchange on which registered

Common Stock

ICFI

NASDAQ

 

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 November 6, 2019, ICF International, Inc. (the “Company”) announced its financial results for the third quarter ended September 30, 2019.  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 November 6, 2019, the Company's Board of Directors declared quarterly dividend in an amount equal to $0.14 per share. This quarterly cash dividend will be paid on January 14, 2020 to stockholders of record as of the close of business on December 13, 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 November 6, 2019 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

1


 

Exhibit Index

 

Exhibit

Number

 

Description

99.1

 

Press Release dated November 6, 2019 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

2


 

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:  November 6, 2019

 

By:

/s/ James C. Morgan

 

 

 

James C. Morgan

 

 

 

Executive Vice President & Chief Financial Officer

 

 

3

icfi-ex991_6.htm

Exhibit 99.1

 

NEWS RELEASE

ICF Reports Third Quarter 2019 Results

 

Third Quarter Highlights:

 

Total Revenue Was $374 Million, up 12 Percent

 

Diluted EPS Increased 19 Percent to $1.02 inclusive of $0.01 of Special Charges; Non-GAAP EPS¹ Was $1.12, up 11 Percent

 

Adjusted EBITDA Margin on Service Revenue¹ Was 14 Percent, Up 20 basis points Year-on-Year

 

Contract Awards of $477 Million For a Third Quarter Book-to-Bill Ratio of 1.3; TTM Contract Awards Were $1.5 Billion For a Book-to-Bill Ratio of 1.0

 

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.— November 6, 2019-- ICF (NASDAQ:ICFI), a global consulting and digital services provider, reported results for the third quarter ended September 30, 2019.

 

“ICF’s strong third quarter performance demonstrated the underlying growth catalysts in our key markets,” said John Wasson, ICF’s President and Chief Executive Officer. “Double-digit revenue growth was in line with our expectations and represented excellent execution on contracts across our client set. Revenues from government clients increased over 11 percent, and revenues from commercial clients were up over 14 percent.

 

“Higher service revenue¹ and favorable mix contributed to increased profitability in the third quarter, as diluted EPS growth substantially outpaced revenue growth, and Adjusted EBITDA margin on service revenue expanded by 20 basis points year-on-year to 14 percent.

 

“Third quarter contract awards represented a substantial number of wins with federal agency and commercial clients. We had a book-to-bill ratio of 1.3 in the third quarter, and we ended the quarter with a record business development pipeline in excess of $6.5 billion, comprised of a diversified universe of opportunities across our major markets.”

 

1 Non-GAAP EPS, Service Revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, 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 consolidated statements of comprehensive income 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

 


Third Quarter 2019 Results

 

Third quarter 2019 total revenue was $373.9 million, representing 12.3 percent growth over the $333.0 million reported in the third quarter of 2018. Service revenue increased 11.2 percent year-over-year to $257.2 million compared to $231.3 million. Net income was $19.6 million in the third quarter, up 17.7 percent from $16.7 million in the third quarter 2018. Diluted earnings per share amounted to $1.02, an 18.6 percent increase over the $0.86 per diluted share in the prior year quarter.  

 

Non-GAAP EPS increased 10.9 percent to $1.12 per share from $1.01 per share in the year-ago quarter. EBITDA¹ was $35.6 million, up 15.1 percent from $30.9 million reported in the third

quarter of 2018. Adjusted EBITDA¹ was $36.0 million, 12.8 percent above the $31.9 million reported in the comparable quarter of 2018. Third quarter 2019 adjusted EBITDA margin on service revenue expanded by 20 basis points year-on-year to 14.0 percent.

 

Backlog and New Business Awards

 

Total backlog was $2.5 billion at the end of the third quarter of 2019. Funded backlog was $1.3 billion, or approximately 54 percent of the total backlog. The total value of contracts awarded in the 2019 third quarter was $477.2 million, resulting in a third quarter book-to-bill ratio of 1.3, and a trailing-twelve-month (TTM) book-to-bill ratio of 1.0.

 

Government Revenue Third Quarter 2019 Highlights

 

Revenue from government clients was $247.7 million, up 11.4 percent year-over-year.

 

 

U.S. federal government revenue was $148.2 million, compared to $140.3 million in the year ago quarter, an increase of 5.6 percent year-on-year. Federal government revenue accounted for 40 percent of total revenue, compared to 42 percent of total revenue in the third quarter of 2018.

 

U.S. state and local government revenue increased by 28.8 percent year-on-year to $71.5 million, driven by our disaster recovery work. State and local government clients represented 19 percent of total revenue, ahead of the 17 percent of total revenue accounted for in the 2018 third quarter.

 

International government revenue was $28.0 million, compared to $26.6 million in the year-ago quarter, an increase of 5.5 percent year-on-year. International government revenue accounted for 7 percent of total revenue, compared to 8 percent in the third quarter of 2018.

 

Key Government Contracts Awarded in the Third Quarter

 

ICF was awarded more than 150 U.S. federal contracts and task orders and more than 200 additional contracts from U.S. state and local and international governments with an aggregate value of $391.2 million. Notable awards won in the third quarter included:  

 

 

Training and technical assistance:

 

o

A recompete contract with the U.S. Department of Health and Human Services (HHS), Administration for Children and Families, Children’s Bureau to provide training and technical assistance services for the Child Welfare Capacity Building Center for States.

 

o

Two recompete cooperative agreements to continue providing technical assistance nationwide to the U.S. Department of Housing and Urban Development’s Community Compass program.

 

o

A new contract with the Centers for Disease Control and Prevention to develop and implement a comprehensive training and technical assistance program on opioids for CDC’s “Overdose to Action” grantees.

2

 


 

Communications and outreach:

 

o

A contract with the National Cancer Institute to design, develop and monitor outreach campaigns that support the Smokefree.gov program, in addition to other behavioral and cancer control engagement initiatives.   

 

o

A new contract to expand CDC’s prescription awareness campaign.

 

Disaster recovery:

 

o

As mentioned in our second quarter earnings release, a new federally-funded contract to assist with Community Development Block Grant (CDBG) housing recovery programs in Puerto Rico associated with hurricanes Irma and Maria.

 

Technical support:

 

o

A new contract with the U.S. Department of Education to provide capacity building services for a regional comprehensive center to support improved educator and student outcomes.

 

o

A recompete contract with the HHS Centers for Disease Control and Prevention to support demonstration projects to identify effective approaches to prevent HIV, sexually transmitted diseases and pregnancy in teens.

 

Program support:

 

o

A bridge contract with the National Library of Medicine at the National Institutes of Health to support biomedical and clinical information services for a variety of library programs and projects.

 

Commercial Revenue Third Quarter 2019 Highlights

 

 

Commercial revenue was $126.2 million, up 14.1 percent from the $110.6 million reported in last year’s third quarter. Commercial revenue accounted for 34 percent of total revenue compared to 33 percent of total revenue in the 2018 third quarter.

 

Energy markets, which include energy efficiency programs, represented 47 percent of commercial revenue. Marketing services accounted for 45 percent of commercial revenue.

 

Key Commercial Contracts Awarded in the Third Quarter 2019

 

Commercial sales were $85.9 million in the third quarter of 2019. ICF was awarded a diverse array of commercial projects globally during the third quarter including:

 

In Energy Markets:

 

A contract with a northeastern U.S. utility to support its electric vehicle charging program.

 

A contract with a southwestern U.S. utility to provide environmental compliance and related services.

 

A contract modification with a midwestern U.S. utility to continue delivery and administration of its energy efficiency programs.

 

A contract with a northeastern U.S. offshore wind farm to prepare a third-party environmental impact statement.

 

In Marketing Services:

 

A change order to continue providing marketing services to a U.S. health insurer.

 

A task order with a southwestern U.S. utility to provide communications support services.

 

Task orders under a Master Services Agreement with a U.S. commercial airline to support its loyalty program.

 

A contract with a global electrical company to support the digital transformation of one of its core brands through creative and technical implementation services.

 

A contract extension with a global laboratory equipment manufacturer to provide guidance around its digital roadmap and implement solutions.

 

A retainer with a food and beverage manufacturer to continue providing public relations services.

3

 


 

Dividend Declaration

 

On November 6, 2019, ICF declared a quarterly cash dividend of $0.14 per share, payable on January 14, 2020 to shareholders of record on December 13, 2019.

 

Summary and Outlook

 

“Year-to-date results have set the stage for strong full year 2019 performance. We reaffirm our expectation for full year 2019 revenues in the range of $1.475 to $1.5 billion, GAAP EPS to range from $3.80 to $3.95, exclusive of special charges, and Non-GAAP EPS of between $4.10 and $4.25. Operating cash flow is projected to be approximately $80 million, lower than our original guidance range due to the longer payment cycle we are presently experiencing associated with the large, federally-funded contract we won in Puerto Rico in 2018. Revised cash flow guidance is based on recent payments on this contract and expectations for additional payments prior to year-end.

 

“Recent contract awards, backlog levels and the size and diversity of our business development pipeline provide an excellent platform for future growth. Based on our current visibility, we expect 2020 to be a year of continued growth for ICF across our major client categories, driven by our deep subject matter expertise and our cross-cutting capabilities in technology and engagement,” Mr. Wasson concluded.

 

 

###

 

 

About ICF

ICF (NASDAQ:ICFI) is a global consulting services company with over 7,000 full- and part-time employees, 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.

4

 


ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands, except per share amounts)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

373,918

 

 

$

332,968

 

 

$

1,081,889

 

 

$

960,063

 

Direct costs

 

 

238,158

 

 

 

213,060

 

 

 

689,160

 

 

 

608,451

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indirect and selling expenses

 

 

100,130

 

 

 

88,960

 

 

 

298,099

 

 

 

269,029

 

Depreciation and amortization

 

 

5,035

 

 

 

4,210

 

 

 

15,392

 

 

 

12,724

 

Amortization of intangible assets

 

 

1,931

 

 

 

2,516

 

 

 

6,143

 

 

 

7,030

 

Total operating costs and expenses

 

 

107,096

 

 

 

95,686

 

 

 

319,634

 

 

 

288,783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

28,664

 

 

 

24,222

 

 

 

73,095

 

 

 

62,829

 

Interest expense

 

 

(2,824

)

 

 

(2,240

)

 

 

(8,211

)

 

 

(6,073

)

Other expense

 

 

(141

)

 

 

(351

)

 

 

(367

)

 

 

(565

)

Income before income taxes

 

 

25,699

 

 

 

21,631

 

 

 

64,517

 

 

 

56,191

 

Provision for income taxes

 

 

6,069

 

 

 

4,960

 

 

 

14,958

 

 

 

13,486

 

Net income

 

$

19,630

 

 

$

16,671

 

 

$

49,559

 

 

$

42,705

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.04

 

 

$

0.88

 

 

$

2.63

 

 

$

2.27

 

Diluted

 

$

1.02

 

 

$

0.86

 

 

$

2.58

 

 

$

2.22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,799

 

 

 

18,873

 

 

 

18,810

 

 

 

18,783

 

Diluted

 

 

19,169

 

 

 

19,306

 

 

 

19,208

 

 

 

19,256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.14

 

 

$

0.14

 

 

$

0.42

 

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss, net of tax

 

 

(3,281

)

 

 

(568

)

 

 

(5,851

)

 

 

(2,276

)

Comprehensive income, net of tax

 

$

16,349

 

 

$

16,103

 

 

$

43,708

 

 

$

40,429

 

 

5

 


ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures(2)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands, except per share amounts)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Reconciliation of Service Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

373,918

 

 

$

332,968

 

 

$

1,081,889

 

 

$

960,063

 

Subcontractor and other direct costs (3)

 

 

(116,710

)

 

 

(101,708

)

 

 

(330,990

)

 

 

(273,920

)

Service revenue

 

$

257,208

 

 

$

231,260

 

 

$

750,899

 

 

$

686,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

19,630

 

 

$

16,671

 

 

$

49,559

 

 

$

42,705

 

Other expense

 

 

141

 

 

 

351

 

 

 

367

 

 

 

565

 

Interest expense

 

 

2,824

 

 

 

2,240

 

 

 

8,211

 

 

 

6,073

 

Provision for income taxes

 

 

6,069

 

 

 

4,960

 

 

 

14,958

 

 

 

13,486

 

Depreciation and amortization

 

 

6,966

 

 

 

6,726

 

 

 

21,535

 

 

 

19,754

 

EBITDA

 

 

35,630

 

 

 

30,948

 

 

 

94,630

 

 

 

82,583

 

Adjustment related to impairment of intangible assets (4)

 

 

 

 

 

 

 

 

1,728

 

 

 

 

Special charges related to acquisitions (5)

 

 

 

 

 

507

 

 

 

 

 

 

613

 

Special charges related to severance for staff realignment (6)

 

 

166

 

 

 

340

 

 

 

1,321

 

 

 

995

 

Special charges related to facilities consolidations, office closures, and our future corporate headquarters (7)

 

 

194

 

 

 

 

 

 

263

 

 

 

 

Adjustment related to bad debt reserve (8)

 

 

 

 

 

115

 

 

 

(782

)

 

 

115

 

Total special charges

 

 

360

 

 

 

962

 

 

 

2,530

 

 

 

1,723

 

Adjusted EBITDA

 

$

35,990

 

 

$

31,910

 

 

$

97,160

 

 

$

84,306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA Margin Percent on Revenue (9)

 

 

9.5

%

 

 

9.3

%

 

 

8.7

%

 

 

8.6

%

EBITDA Margin Percent on Service Revenue (9)

 

 

13.9

%

 

 

13.4

%

 

 

12.6

%

 

 

12.0

%

Adjusted EBITDA Margin Percent on Revenue (9)

 

 

9.6

%

 

 

9.6

%

 

 

9.0

%

 

 

8.8

%

Adjusted EBITDA Margin Percent on Service Revenue (9)

 

 

14.0

%

 

 

13.8

%

 

 

12.9

%

 

 

12.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

1.02

 

 

$

0.86

 

 

$

2.58

 

 

$

2.22

 

Adjustment related to impairment of intangible assets

 

 

 

 

 

 

 

 

0.09

 

 

 

 

Special charges related to acquisitions

 

 

 

 

 

0.03

 

 

 

 

 

 

0.03

 

Special charges related to severance for staff realignment

 

 

0.01

 

 

 

0.02

 

 

 

0.07

 

 

 

0.05

 

Special charges related to facility consolidations, office closures, and our future corporate headquarters

 

 

0.01

 

 

 

0.01

 

 

 

0.06

 

 

 

0.01

 

Adjustment related to bad debt reserve

 

 

 

 

 

 

 

 

(0.04

)

 

 

 

Amortization of intangibles

 

 

0.10

 

 

 

0.13

 

 

 

0.32

 

 

 

0.37

 

Income tax effects (10)

 

 

(0.02

)

 

 

(0.04

)

 

 

(0.12

)

 

 

(0.11

)

Non-GAAP EPS

 

$

1.12

 

 

$

1.01

 

 

$

2.96

 

 

$

2.57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


6

 


(2) These tables provide reconciliations of non-GAAP financial measures to the most applicable 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 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 Direct Costs excluding Direct Labor and Fringe Costs.

 

 

 

 

 

 

 

 

 

(4) Adjustment related to impairment of intangible assets: We recognized impairment expense of $1.7 million in the second quarter of 2019 related to intangible assets associated with a historical business acquisition.

 

 

 

 

 

 

 

 

 

(5) Special charges related to acquisitions: These costs are mainly related to closed and anticipated-to-close acquisitions, consisting primarily of consultant and other outside third-party costs and amortization of deferred consideration payments, discounted as part of the acquisition.

 

 

 

 

 

 

 

 

 

(6) Special charges related to severance for staff realignment: These costs are mainly due to involuntary employee termination benefits for our officers and groups of employees who have been notified that they will be terminated as part of a consolidation or reorganization.

 

 

 

 

 

 

 

 

 

(7) Special charges related to facility consolidations, office closures, and our future corporate headquarters: These costs are exit costs associated with terminated leases or full office closures.  The 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.  Additionally, we incurred one-time charges with respect to the execution of a new lease agreement for our corporate headquarters.

 

 

 

 

 

 

 

 

 

(8) Adjustment related to bad debt reserve: During 2018, we established a bad debt reserve for amounts due from a utility client that had filed for bankruptcy and included the reserve as an adjustment due to its relative size. The adjustment reflects a favorable revision of our prior estimate of collectability based on a third party acquiring the receivables.

 

 

 

 

 

 

 

 

 

(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 23.6% and 22.9% for the three months ended September 30, 2019 and 2018, respectively, and 23.2% and 24.0% for the nine months ended September 30, 2019 and 2018, respectively.

 

 

7

 


ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

 

 

 

 

 

 

 

 

(in thousands, except share and per share amounts)

 

September 30, 2019

 

 

December 31, 2018

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,452

 

 

$

11,694

 

Contract receivables, net

 

 

269,368

 

 

 

230,966

 

Contract assets

 

 

153,055

 

 

 

126,688

 

Prepaid expenses and other assets

 

 

19,459

 

 

 

16,253

 

Income tax receivable

 

 

7,621

 

 

 

6,505

 

Total Current Assets

 

 

456,955

 

 

 

392,106

 

Property and Equipment, net

 

 

57,189

 

 

 

48,105

 

Other Assets:

 

 

 

 

 

 

 

 

Restricted cash - non-current

 

 

 

 

 

1,292

 

Goodwill

 

 

716,699

 

 

 

715,644

 

Other intangible assets, net

 

 

27,478

 

 

 

35,494

 

Operating lease - right-of-use assets

 

 

138,156

 

 

 

 

Other assets

 

 

23,939

 

 

 

21,221

 

Total Assets

 

$

1,420,416

 

 

$

1,213,862

 

 

 

 

 

 

 

 

 

 

LIABILITIES and STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

97,359

 

 

$

102,599

 

Contract liabilities

 

 

32,086

 

 

 

33,494

 

Operating lease liabilities - current

 

 

30,935

 

 

 

 

Accrued salaries and benefits

 

 

67,163

 

 

 

44,103

 

Accrued subcontractors and other direct costs

 

 

40,507

 

 

 

58,791

 

Accrued expenses and other current liabilities

 

 

34,032

 

 

 

39,072

 

Total Current Liabilities

 

 

302,082

 

 

 

278,059

 

Long-term Liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

245,000

 

 

 

200,424

 

Operating lease liabilities - non-current

 

 

124,864

 

 

 

 

Deferred rent

 

 

 

 

 

13,938

 

Deferred income taxes

 

 

40,281

 

 

 

40,165

 

Other long-term liabilities

 

 

22,687

 

 

 

20,859

 

Total Liabilities

 

 

734,914

 

 

 

553,445

 

 

 

 

 

 

 

 

 

 

Contingencies (Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, par value $.001; 5,000,000 shares authorized; none issued

 

 

 

 

 

 

Common stock, par value $.001; 70,000,000 shares authorized; 22,788,318 and 22,445,576 shares issued as of September 30, 2019 and December 31, 2018, respectively; 18,811,087 and 18,817,495 shares outstanding as of September 30, 2019 and December 31, 2018, respectively

 

 

23

 

 

 

22

 

Additional paid-in capital

 

 

340,626

 

 

 

326,208

 

Retained earnings

 

 

528,103

 

 

 

486,442

 

Treasury stock

 

 

(164,848

)

 

 

(139,704

)

Accumulated other comprehensive loss

 

 

(18,402

)

 

 

(12,551

)

Total Stockholders’ Equity

 

 

685,502

 

 

 

660,417

 

Total Liabilities and Stockholders’ Equity

 

$

1,420,416

 

 

$

1,213,862

 

8

 


ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2019

 

 

2018

 

(in thousands)

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

49,559

 

 

$

42,705

 

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

 

 

 

 

 

 

 

 

Bad debt expense

 

 

377

 

 

 

1,060

 

Deferred income taxes

 

 

1,089

 

 

 

3,176

 

Non-cash equity compensation

 

 

11,682

 

 

 

8,682

 

Depreciation and amortization

 

 

21,535

 

 

 

19,753

 

Facilities consolidation reserve

 

 

(204

)

 

 

(193

)

Amortization of debt issuance costs

 

 

380

 

 

 

385

 

Impairment of long-lived assets

 

 

1,728

 

 

 

 

Other adjustments, net

 

 

(1,110

)

 

 

1,701

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Net contract assets and liabilities

 

 

(28,793

)

 

 

(32,158

)

Contract receivables

 

 

(39,711

)

 

 

(25,110

)

Prepaid expenses and other assets

 

 

(385

)

 

 

(6,841

)

Accounts payable

 

 

(5,052

)

 

 

(5,882

)

Accrued salaries and benefits

 

 

23,227

 

 

 

12,921

 

Accrued subcontractors and other direct costs

 

 

(16,895

)

 

 

(7,897

)

Accrued expenses and other current liabilities

 

 

(6,756

)

 

 

3,602

 

Income tax receivable and payable

 

 

(4,134

)

 

 

(5,535

)

Other liabilities

 

 

(173

)

 

 

(16

)

Net Cash Provided by Operating Activities

 

 

6,364

 

 

 

10,353

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures for property and equipment and capitalized software

 

 

(20,686

)

 

 

(15,593

)

Payments for business acquisitions, net of cash received

 

 

(3,569

)

 

 

(22,847

)

Net Cash Used in Investing Activities

 

 

(24,255

)

 

 

(38,440

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Advances from working capital facilities

 

 

545,539

 

 

 

444,637

 

Payments on working capital facilities

 

 

(500,963

)

 

 

(418,383

)

Payments on capital expenditure obligations

 

 

(1,621

)

 

 

(3,243

)

Debt issue costs

 

 

 

 

 

(21

)

Proceeds from exercise of options

 

 

1,883

 

 

 

5,842

 

Dividends paid

 

 

(7,906

)

 

 

(5,269

)

Net payments for stockholder issuances and buybacks

 

 

(24,301

)

 

 

(12,399

)

Net Cash Provided by Financing Activities

 

 

12,631

 

 

 

11,164

 

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

 

 

(274

)

 

 

(253

)

 

 

 

 

 

 

 

 

 

Decrease in Cash, Cash Equivalents, and Restricted Cash

 

 

(5,534

)

 

 

(17,176

)

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

 

 

12,986

 

 

 

24,266

 

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

 

$

7,452

 

 

$

7,090

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

7,581

 

 

$

7,193

 

Income taxes

 

$

18,061

 

 

$

13,056

 

Non-cash investing and financing transactions:

 

 

 

 

 

 

 

 

Capital expenditure obligations

 

$

 

 

$

6,121

 

9

 


ICF International, Inc. and Subsidiaries

Supplemental Schedule(11)

 

Revenue by client markets

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Energy, environment, and infrastructure

 

 

46

%

 

 

44

%

 

 

46

%

 

 

42

%

Health, education, and social programs

 

 

37

%

 

 

38

%

 

 

36

%

 

 

40

%

Safety and security

 

 

8

%

 

 

9

%

 

 

8

%

 

 

8

%

Consumer and financial services

 

 

9

%

 

 

9

%

 

 

10

%

 

 

10

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by client type

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

U.S. federal government

 

 

40

%

 

 

42

%

 

 

39

%

 

 

43

%

U.S. state and local government

 

 

19

%

 

 

17

%

 

 

19

%

 

 

13

%

International government

 

 

7

%

 

 

8

%

 

 

8

%

 

 

9

%

Government

 

 

66

%

 

 

67

%