icfi-8k_20200227.htm
false 0001362004 0001362004 2020-02-27 2020-02-27

 

 

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 27, 2020

 

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 February 27, 2020, ICF International, Inc. (the “Company”) announced its financial results for the fourth quarter and full year ended December 31, 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 February 27, 2020, 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 April 13, 2020 to stockholders of record as of the close of business on March 27, 2020.

 

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 27, 2020 

104

 

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

 

1


 

Exhibit Index

 

Exhibit

Number

 

Description

99.1

 

Press Release dated February 27, 2020 

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:  February 27, 2020

 

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 Fourth Quarter and Full Year 2019 Results

 

 

Fourth Quarter Highlights:

 

Total Revenue Was $397 Million

 

Diluted EPS Was $1.01, Inclusive of $0.09 in Special Charges1

 

Non-GAAP EPS1 Was $1.18

 

Adjusted EBITDA Margin on Service Revenue1 Was 14.9 Percent

 

Contract Awards of $353 Million

 

Full Year Highlights:

 

Total Revenue Was $1.48 Billion

 

Diluted EPS Was $3.59, Inclusive of $0.24 in Special Charges

 

Non-GAAP EPS Was $4.15

 

Adjusted EBITDA Margin on Service Revenue Was 13.4 Percent

 

Contract Awards of $1.5 Billion, Representing a Book-to-Bill Ratio of 1.03

 

Operating Cash Flow of $91 Million

 

Organic and Acquisition Growth Expected to Drive Double-Digit Increases in 2020 Revenue, EBITDA and Operating Cash Flow

 

Announces New Executive Leadership Roles

 

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. 27, 2020-- ICF (NASDAQ: ICFI), a global consulting and digital services provider, reported results for the fourth quarter and full year ended December 31, 2019.

 

 

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

 


 

“Growth catalysts across our client set resulted in a revenue increase of 11 percent for full year 2019, representing positive year-on-year comparisons in each of our client categories,” said John Wasson, president and chief executive officer. Revenue from government clients increased at a double-digit rate, led by considerable growth in state and local government and a significant pickup in federal government work in the second half of the year. Revenue from commercial clients, which accounted for approximately 35 percent of 2019 revenue, advanced by 6 percent year-over-year, driven by growth in marketing services and energy markets, which together comprised 93 percent of commercial revenue.

“Our business mix, higher utilization and a lower tax rate led to earnings per share increasing at a faster rate than revenue for full year 2019, and we ended the year with operating cash flow of $91 million, 22 percent ahead of 2018 levels.

“Fourth quarter earnings included special charges, the majority of which represented M&A expenses related to our acquisition of ITG, which closed at the end of January. This transaction has strengthened ICF’s position in the federal IT modernization arena, and we see significant revenue synergies on the horizon by combining ICF’s domain expertise and contract vehicles with ITG’s best-in-class qualifications and leading platform expertise.

“ICF was awarded over $1.5 billion in contract awards in 2019, of which over 70 percent represented new business, and our business development pipeline was a robust $6.5 billion at year end, supporting our expectations for significant growth in 2020,” Mr. Wasson noted.

 

Fourth Quarter 2019 Results

 

Fourth quarter 2019 total revenue was $396.6 million, representing 5.0 percent growth over the $377.9 million reported in the fourth quarter of 2018. Service revenue1 increased 5.1 percent year-over-year to $251.9 million, from $239.6 million. Net income amounted to $19.4 million in the 2019 fourth quarter, or $1.01 per diluted share, inclusive of $0.09 of tax-effected special charges primarily tied to M&A costs. In the 2018 fourth quarter, net income was $18.7 million, or $0.97 per diluted share, inclusive of $0.09 of tax-effected special charges.

 

Non-GAAP EPS was $1.18 per share, up from $1.17 per share in 2018. EBITDA1 was $34.9 million compared to $36.9 million reported in the fourth quarter of 2018. Adjusted EBITDA1 was $37.4 million compared to $39.4 million reported in the 2018 fourth quarter. Fourth quarter 2019 adjusted EBITDA margin on service revenue was 14.9 percent compared to 16.5 percent in the 2018 fourth quarter which was an exceptional quarter.

 

 

Full Year 2019 Results

 

For 2019, total revenue amounted to $1.48 billion, representing 10.5 percent growth over the $1.34 billion reported for full year 2018. Service revenue increased 8.3 percent year-over-year to $1.0 billion, from $925.8 million in 2018. Full year 2019 net income amounted to $68.9 million, or $3.59 per diluted share, inclusive of $0.24 of special charges. This compares to net income of $61.4 million, or $3.18 per diluted share for last year, inclusive of $0.17 of special charges.  

 

Non-GAAP EPS increased 11.3 percent year-over-year to $4.15 per share from $3.73 per share. EBITDA was $129.6 million, up 8.5 percent from $119.5 million reported in 2018. Adjusted EBITDA was $134.8 million, an 8.9 percent increase over $123.7 million in 2018. The 2019 adjusted EBITDA margin on service revenue was 13.4 percent.

 

2

 


 

 

Backlog and New Business Awards

 

Total backlog was $2.4 billion at the end of the fourth quarter of 2019. Funded backlog was $1.3 billion, or approximately 53 percent of the total backlog. The total value of contracts awarded in the 2019 fourth quarter was $353.3 million. For full year 2019, contract awards were $1.52 billion, representing a book-to-bill ratio of 1.03.

 

Government Revenue Fourth Quarter 2019 Highlights

 

Revenue from government clients was $244.3 million, up 7.6 percent year-over-year.

 

 

U.S. federal government revenue was $139.7 million, representing a 5.5 percent year-over-year increase. Federal government revenue accounted for 35 percent of total revenue in both 2019 and 2018 fourth quarters.

 

U.S. state and local government revenue increased by 10.9 percent year-on-year to $69.0 million. State and local accounted for 18 percent of total revenue, compared to 16 percent of total revenue in the 2018 fourth quarter.

 

International government revenue increased 10.0 percent year-on-year to $35.6 million and accounted for 9 percent of total revenue in both the 2019 and 2018 fourth quarters.

 

Key Government Contracts Awarded in the Fourth Quarter

 

ICF was awarded more than 75 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 $155.2 million. Notable awards won in the fourth quarter included:  

 

Disaster management:

 

A contract to support the North Carolina Office of Recovery and Resiliency to provide implementation, program management and strategic communications services for the state’s Community Development Block Grant (CDBG)-funded disaster recovery buyout program.

 

A contract with a midwestern U.S. state to provide support for its disaster management CDBG mitigation planning. Subsequent to the end of the quarter, we were awarded a small contract with the city of Columbia, SC, to develop its CDBG Mitigation Action Plan.

 

 

 

 

IT modernization and digital engagement:

 

A subcontract to support the U.S. Department of Education by providing software and system testing, requirements gathering and statistical analysis for the Free Application for Federal Student Aid (FAFSA) Application and Eligibility Determination System.

 

A recompete contract with the U.S. Department of Health and Human Services (HHS) Substance Abuse and Mental Health Services Administration (SAMHSA) to provide enterprise-wide content and technical web support related to the enhancement and maintenance of the SAMHSA.gov website and other SAMHSA-related microsites, subsites and subdomains.

 

A recompete contract with the HHS National Institutes of Health to provide agile software development support services for the Office of Extramural Research enterprise grant management systems.

 

Public health and survey research:

3

 


 

 

A follow-on agreement with U.S. Agency for International Development and the President’s Malaria Initiative to strengthen country systems across sub-Saharan Africa to generate high quality health information used to support actions that address malaria.

 

Two sub-agreements to support questionnaire design, programming of mobile devices for data collectors and data analysis for national level HIV surveys in Zambia and Botswana funded by the Centers for Disease Control and Prevention (CDC).

 

Two recompete contracts with the Maryland Department of Health and a southwestern U.S. state department of health services to administer the Behavioral Risk Factor Surveillance System (BRFSS) survey that collects data from state residents about their health-related behaviors, chronic health conditions and use of preventive services.

 

Communications and outreach:

 

A new contract with the CDC National Diabetes Prevention Program (DPP) to provide marketing and communication training, technical assistance, materials and evaluation support to 1815/1817 grantees to increase enrollment and retention in the National DPP lifestyle change program and Diabetes Self-Management Education.

 

Environmental planning:

 

A master services agreement with a western U.S. water authority to provide environmental planning and implementation support.

 

 

Commercial Revenue Fourth Quarter 2019 Highlights

 

 

Commercial revenue was $152.4 million, up 1.0 percent from the $150.9 million reported in last year’s fourth quarter. Commercial revenue accounted for 38 percent of total revenue compared to 40 percent of total revenue in the 2018 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 2019

 

Commercial contract awards were $198.1 million in the fourth quarter of 2019. ICF was awarded more than 700 commercial projects globally during the third quarter including:

 

In Energy Markets:

 

A contract with a midwestern U.S. utility to provide program implementation services for its residential energy efficiency programs.

 

Multiple task orders with a south-central U.S. utility to provide program implementation and energy IT services for its portfolio of energy efficiency programs.

 

A contract extension with a northwestern U.S. state energy organization to provide energy efficiency implementation services for its existing buildings program.

 

Four task orders with a southwestern U.S. utility to support turnkey customer programs related to energy efficiency and electric vehicles as part of the utility’s long-term sustainability plan.

 

Two subcontract amendments with a midwestern U.S. utility to supports its residential energy efficiency programs.

 

Multiple task orders with a renewable energy company to provide environment and planning services.

 

A master services agreement and task order with a North American energy efficiency program to provide commercial and industrial retrofit services.

4

 


 

 

In Marketing Services:

 

Multiple task orders with a U.S. health insurer to provide a variety of marketing services for its programs.

 

Extensions of our retainer with a U.S. rail transportation system to continue providing loyalty services.

 

A retainer with a hospitality website to provide public relations and social media services.

 

A task order with a global hospitality company to continue providing loyalty services.

 

Multiple task orders with a financial services provider to deliver end-to-end communications programs across both employee and customer audiences.

 

 

Recent Corporate Developments

On January 31, 2020, ICF announced that it had closed its acquisition of ITG, one of the leading and fastest growing providers of IT modernization and cloud-based platform services to the U.S. federal government. This transaction significantly expands ICF’s IT modernization services and adds best-in-class IT platform expertise and partnerships.

In a separate release today, ICF announced new executive leadership roles designed to ensure and support ICF’s continued growth. Notably, James Morgan, chief financial officer (CFO), will assume the newly created role of executive vice president and chief of business operations. Bettina Welsh, senior vice president for finance, will become CFO. These changes are effective February 29th.

 

 

 

Dividend Declaration

 

On February 27, 2020, ICF declared a quarterly cash dividend of $0.14 per share, payable on April 13, 2020 to shareholders of record on March 27, 2020.

 

 

2019 Recognitions

 

ICF received several important recognitions in 2019:

 

 

For the fourth and second straight years, respectively, Forbes included ICF on two of its coveted annual lists: "America's Best Management Consulting Firms" and "America's Best Midsize Employers."

 

ICF was named a "Fast Moving" brand by the Government Business Council in its 2019 Leading Brands in Government study.

 

CDP (formerly the Climate Disclosure Project) recognized ICF for climate leadership by scoring our 2019 annual climate report as A-.  

 

ICF Next was named a "Strong Performer" among loyalty service providers by Forrester Research in The Forrester Wave™: Loyalty Service Providers, Q3 2019 and was recognized as a "Leader" in another loyalty report focused on technology platforms, The Forrester Wave™: Loyalty Technology Platforms, Q2 2019.

 

ICF Next was named the Holmes Report's 2019 Digital Agency of the Year.

 

 

Summary and Outlook

 

5

 


 

“2019 was a record year for ICF, and we look forward to continued growth ahead in 2020. In government markets, our federal government business development pipeline was at record levels at 2019 year-end, and our acquisition of ITG, which closed in late January 2020, provides further visibility and additional growth opportunities. We are pleased with recent wins to provide disaster management services in new geographies and we continue to expect this area to be a long-term growth driver for ICF. In commercial markets, we have a robust energy efficiency pipeline and are engaged in several pilot programs that position ICF at the leading edge of distributed energy consulting work for utilities. Also, we continue to leverage our commercial marketing services, loyalty platforms and engagement capabilities across our client set.

 

“Our guidance for 2020 is based on our current backlog and portfolio of business and does not include any additional material contract wins or expansions in the disaster recovery arena, nor any material benefit from new disaster recovery-related mitigation contract awards or energy efficiency contract wins in California, all areas that represent long-term growth opportunities for ICF,” Mr. Wasson noted.

 

For full year 2020, ICF expects revenue of $1.60 billion to $1.65 billion and EBITDA of $145.0 million to $155.0 million, representing year-on-year growth of 10 percent and 16 percent, respectively, at the midpoints. GAAP earnings per diluted share is expected to range from $3.45 to $3.75, exclusive of special charges. Non-GAAP diluted EPS is expected to range from $4.00 to $4.30. EPS guidance includes more than $0.30 per share in additional interest expense related to the ITG acquisition, as well as a higher tax rate. Per share guidance is based on a weighted average number of shares outstanding of 19.2 million. Operating cash flow is expected to be approximately $120 million, substantially ahead of 2019 levels.

 

Concluding, Mr. Wasson said, “The new executive leadership roles we announced today will ensure that ICF remains at the leading edge in our client work, while utilizing best practices across the company. Our growth profile and substantial bench strength enable us to leverage their leadership skills to strengthen areas that are critical to our continued success.”

 

 

###

 

 

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.

6

 


 

ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

 

Twelve months ended

 

 

 

December 31,

 

 

December 31,

 

(in thousands, except per share amounts)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

396,636

 

 

$

377,910

 

 

$

1,478,525

 

 

$

1,337,973

 

Direct costs

 

 

264,027

 

 

 

249,057

 

 

 

953,187

 

 

 

857,508

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indirect and selling expenses

 

 

97,664

 

 

 

91,958

 

 

 

395,763

 

 

 

360,987

 

Depreciation and amortization

 

 

4,707

 

 

 

4,439

 

 

 

20,099

 

 

 

17,163

 

Amortization of intangible assets

 

 

1,940

 

 

 

3,013

 

 

 

8,083

 

 

 

10,043

 

Total operating costs and expenses

 

 

104,311

 

 

 

99,410

 

 

 

423,945

 

 

 

388,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

28,298

 

 

 

29,443

 

 

 

101,393

 

 

 

92,272

 

Interest expense

 

 

(2,508

)

 

 

(2,637

)

 

 

(10,719

)

 

 

(8,710

)

Other expense

 

 

(134

)

 

 

(170

)

 

 

(501

)

 

 

(735

)

Income before income taxes

 

 

25,656

 

 

 

26,636

 

 

 

90,173

 

 

 

82,827

 

Provision for income taxes

 

 

6,277

 

 

 

7,941

 

 

 

21,235

 

 

 

21,427

 

Net income

 

$

19,379

 

 

$

18,695

 

 

$

68,938

 

 

$

61,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.03

 

 

$

0.99

 

 

$

3.66

 

 

$

3.27

 

Diluted

 

$

1.01

 

 

$

0.97

 

 

$

3.59

 

 

$

3.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,835

 

 

 

18,838

 

 

 

18,816

 

 

 

18,797

 

Diluted

 

 

19,234

 

 

 

19,333

 

 

 

19,224

 

 

 

19,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.14

 

 

$

0.14

 

 

$

0.56

 

 

$

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax

 

 

6,258

 

 

 

(4,407

)

 

 

407

 

 

 

(6,683

)

Comprehensive income, net of tax

 

$

25,637

 

 

$

14,288

 

 

$

69,345

 

 

$

54,717

 

7

 


 

ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures(2)

(Unaudited)

 

 

 

Three Months Ended

 

 

Twelve months ended

 

 

 

December 31,

 

 

December 31,

 

(in thousands, except per share amounts)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Reconciliation of Service Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

396,636

 

 

$

377,910

 

 

$

1,478,525

 

 

$

1,337,973

 

Subcontractor and other direct costs (3)

 

 

(144,728

)

 

 

(138,296

)

 

 

(475,717

)

 

 

(412,216

)

Service revenue

 

$

251,908

 

 

$

239,614

 

 

$

1,002,808

 

 

$

925,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

19,379

 

 

$

18,695

 

 

$

68,938

 

 

$

61,400

 

Other expense

 

 

134

 

 

 

170

 

 

 

501

 

 

 

735

 

Interest expense

 

 

2,508

 

 

 

2,637

 

 

 

10,719

 

 

 

8,710

 

Provision for income taxes

 

 

6,277

 

 

 

7,941

 

 

 

21,235

 

 

 

21,427

 

Depreciation and amortization

 

 

6,647

 

 

 

7,452

 

 

 

28,182

 

 

 

27,206

 

EBITDA

 

 

34,945

 

 

 

36,895

 

 

 

129,575

 

 

 

119,478

 

Adjustment related to impairment of intangible assets (4)

 

 

 

 

 

 

 

 

1,728

 

 

 

 

Special charges related to acquisitions (5)

 

 

1,574

 

 

 

748

 

 

 

1,771

 

 

 

1,361

 

Special charges related to severance for staff realignment (6)

 

 

453

 

 

 

559

 

 

 

1,774

 

 

 

1,554

 

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

 

 

454

 

 

 

 

 

 

717

 

 

 

115

 

Adjustment related to bad debt reserve (8)

 

 

 

 

 

1,240

 

 

 

(782

)

 

 

1,240

 

Total special charges

 

 

2,481

 

 

 

2,547

 

 

 

5,208

 

 

 

4,270

 

Adjusted EBITDA

 

$

37,426

 

 

$

39,442

 

 

$

134,783

 

 

$

123,748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA Margin Percent on Revenue (9)

 

 

8.8

%

 

 

9.8

%

 

 

8.8

%

 

 

8.9

%

EBITDA Margin Percent on Service Revenue (9)

 

 

13.9

%

 

 

15.4

%

 

 

12.9

%

 

 

12.9

%

Adjusted EBITDA Margin Percent on Revenue (9)

 

 

9.4

%

 

 

10.4

%

 

 

9.1

%

 

 

9.2

%

Adjusted EBITDA Margin Percent on Service Revenue (9)

 

 

14.9

%

 

 

16.5

%

 

 

13.4

%

 

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

1.01

 

 

$

0.97

 

 

$

3.59

 

 

$

3.18

 

Adjustment related to impairment of intangible assets

 

 

 

 

 

 

 

 

0.09

 

 

 

 

Special charges related to acquisitions

 

 

0.08

 

 

 

0.04

 

 

 

0.10

 

 

 

0.07

 

Special charges related to severance for staff realignment

 

 

0.02

 

 

 

0.03

 

 

 

0.09

 

 

 

0.08

 

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

 

 

0.02

 

 

 

 

 

 

0.08

 

 

 

0.01

 

Adjustment related to bad debt reserve

 

 

 

 

 

0.06

 

 

 

(0.04

)

 

 

0.06

 

Amortization of intangibles

 

 

0.10

 

 

 

0.16

 

 

 

0.42

 

 

 

0.52

 

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

 

 

(0.05

)

 

 

(0.09

)

 

 

(0.18

)

 

 

(0.19

)

Non-GAAP EPS

 

$

1.18

 

 

$

1.17

 

 

$

4.15

 

 

$

3.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


8

 


 

(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, consisting primarily of consultants and other outside party costs, and an increase in the contingent consideration liability from a previous 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 in 2019 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 24.5% and 29.8% for the three months ended December 31, 2019 and 2018, respectively, and 23.6% and 25.9% for the years ended December 31, 2019 and 2018, respectively.

 

9

 


 

ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except share and per share amounts)

 

December 31, 2019

 

 

December 31, 2018

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,482

 

 

$

11,694

 

Contract receivables, net

 

 

261,176

 

 

 

230,966

 

Contract assets

 

 

142,337

 

 

 

126,688

 

Prepaid expenses and other assets

 

 

17,402

 

 

 

16,253

 

Income tax receivable

 

 

7,320

 

 

 

6,505

 

Total Current Assets

 

 

434,717

 

 

 

392,106

 

Property and Equipment, net

 

 

58,237

 

 

 

48,105

 

Other Assets:

 

 

 

 

 

 

 

 

Restricted cash - non-current

 

 

 

 

 

1,292

 

Goodwill

 

 

719,934

 

 

 

715,644

 

Other intangible assets, net

 

 

25,829

 

 

 

35,494

 

Operating lease - right-of-use assets

 

 

133,965

 

 

 

 

Other assets

 

 

24,535

 

 

 

21,221

 

Total Assets

 

$

1,397,217

 

 

$

1,213,862

 

 

 

 

 

 

 

 

 

 

LIABILITIES and STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

134,578

 

 

$

102,599

 

Contract liabilities

 

 

37,413

 

 

 

33,494

 

Operating lease liabilities - current

 

 

32,500

 

 

 

 

Accrued salaries and benefits

 

 

52,130

 

 

 

44,103

 

Accrued subcontractors and other direct costs

 

 

45,619

 

 

 

58,791

 

Accrued expenses and other current liabilities

 

 

35,742

 

 

 

39,072

 

Total Current Liabilities

 

 

337,982

 

 

 

278,059

 

Long-term Liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

165,444

 

 

 

200,424

 

Operating lease liabilities - non-current

 

 

119,250

 

 

 

 

Deferred rent

 

 

 

 

 

13,938

 

Deferred income taxes

 

 

37,621

 

 

 

40,165

 

Other long-term liabilities

 

 

22,369

 

 

 

20,859

 

Total Liabilities

 

 

682,666

 

 

 

553,445

 

 

 

 

 

 

 

 

 

 

Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, $.001 par value; 70,000,000 shares authorized; 22,846,374 and 22,445,576 shares issued; and 18,867,555 and 18,817,495 shares outstanding at December 31, 2019 and December 31, 2018, respectively

 

 

23

 

 

 

22

 

Additional paid-in capital

 

 

346,795

 

 

 

326,208

 

Retained earnings

 

 

544,840

 

 

 

486,442

 

Treasury stock, 3,978,819 and 3,628,081 shares at December 31, 2019 and 2018, respectively

 

 

(164,963

)

 

 

(139,704

)

Accumulated other comprehensive loss

 

 

(12,144

)

 

 

(12,551

)

Total Stockholders’ Equity

 

 

714,551

 

 

 

660,417

 

Total Liabilities and Stockholders’ Equity

 

$

1,397,217

 

 

$

1,213,862

 

10

 


 

ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Years ended

 

 

 

December 31,

 

(in thousands)

 

2019

 

 

2018

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

68,938

 

 

$

61,400

 

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

 

 

 

 

 

 

 

 

Bad debt expense

 

 

624

 

 

 

2,480

 

Deferred income taxes

 

 

(123

)

 

 

5,100

 

Non-cash equity compensation

 

 

15,818

 

 

 

11,506

 

Depreciation and amortization

 

 

28,182

 

 

 

27,206

 

Deferred rent

 

 

(1,247

)

 

 

523

 

Facilities consolidation reserve

 

 

(274

)

 

 

(260

)

Remeasurement of contingent acquisition liability

 

 

 

 

 

505

 

Amortization of debt issuance costs

 

 

507

 

 

 

510

 

Impairment of long-lived assets

 

 

1,728

 

 

 

 

Other adjustments, net

 

 

181

 

 

 

449

 

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

 

 

 

 

 

 

 

 

Net contract assets and liabilities

 

 

(11,963

)

 

 

(14,148

)

Contract receivables

 

 

(31,300

)

 

 

(60,096

)

Prepaid expenses and other assets

 

 

1,997

 

 

 

(6,650

)

Accounts payable

 

 

31,949

 

 

 

28,309

 

Accrued salaries and benefits

 

 

8,012

 

 

 

(2,159

)

Accrued subcontractors and other direct costs

 

 

(12,293

)

 

 

10,762

 

Accrued expenses and other current liabilities

 

 

(4,951

)

 

 

11,120

 

Income tax receivable and payable

 

 

(4,489

)

 

 

(2,063

)

Other liabilities

 

 

144

 

 

 

176

 

Net Cash Provided by Operating Activities

 

 

91,440

 

 

 

74,670

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures for property and equipment and capitalized software

 

 

(26,901

)

 

 

(21,812

)

Payments for business acquisitions, net of cash received

 

 

(3,569

)

 

 

(34,575

)

Net Cash Used in Investing Activities

 

 

(30,470

)

 

 

(56,387

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Advances from working capital facilities

 

 

686,830

 

 

 

573,991

 

Payments on working capital facilities

 

 

(721,809

)

 

 

(579,817

)

Payments on capital expenditure obligations

 

 

(1,621

)

 

 

(3,726

)

Debt issue costs

 

 

 

 

 

(21

)

Proceeds from exercise of options

 

 

2,914

 

 

 

5,842

 

Dividends paid

 

 

(10,540

)

 

 

(7,915

)

Net payments for stockholder issuances and buybacks

 

 

(23,414

)

 

 

(17,125

)

Net Cash Used in Financing Activities

 

 

(67,640

)

 

 

(28,771

)

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

 

 

166

 

 

 

(792

)

 

 

 

 

 

 

 

 

 

Decrease in Cash, Cash Equivalents, and Restricted Cash

 

 

(6,504

)

 

 

(11,280

)

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

 

 

12,986

 

 

 

24,266

 

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

 

$

6,482

 

 

$

12,986

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

10,424

 

 

$

9,893

 

Income taxes

 

$

26,595

 

 

$

14,870

 

Non-cash investing and financing transactions:

 

 

 

 

 

 

 

 

Deferred and contingent consideration arising from businesses acquired

 

$

 

 

$

8,391

 

Capital expenditure obligations

 

$

 

 

$

6,121

 

11

 


 

ICF International, Inc. and Subsidiaries

Supplemental Schedule(11) (12)

 

Revenue by client markets

 

Three Months Ended

 

 

Twelve months ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Energy, environment, and infrastructure

 

 

44

%

 

 

42

%

 

 

45

%

 

 

42

%

Health, education, and social programs

 

 

40

%

 

 

41

%

 

 

37

%

 

 

40

%

Safety and security

 

 

8

%

 

 

8

%

 

 

8

%

 

 

8

%

Consumer and financial services

 

 

8

%

 

 

9

%

 

 

10

%

 

 

10

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by client type