icfi-8k_20200804.htm
false 0001362004 0001362004 2020-08-04 2020-08-04

 

 

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): August 4, 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):

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 August 4, 2020, ICF International, Inc. (the “Company”) announced its financial results for the second quarter ended June 30, 2020.  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 August 4, 2020, 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 October 13, 2020 to stockholders of record as of the close of business on September 11, 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 August 4, 2020 

104

 

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

 

1


 

Exhibit Index

 

Exhibit

Number

 

Description

99.1

 

Press Release dated August 4, 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:  August 4, 2020

 

By:

/s/ Bettina G. Welsh

 

 

 

Bettina G. Welsh

 

 

 

Senior Vice President & Chief Financial Officer

 

3

icfi-ex991_6.htm

 

Exhibit 99.1

 

NEWS RELEASE

ICF Reports Second Quarter 2020 Results

 

Second Quarter Highlights:

 

Total Revenue Was $354 Million, Down 3.5% Primarily Reflecting Lower Pass-Through Revenues

 

Service Revenue¹ Up 3.5% Led by Growth in Revenues from Federal Government and Commercial Energy Clients

 

Diluted EPS of $0.72; Non-GAAP EPS¹ Was $0.89

 

EBITDA¹ Increased 3.7%; Adjusted EBITDA¹ Stable Year-over-Year

 

Adjusted EBITDA Margin on Service Revenue¹ Was 12.4%

 

Contract Awards of $282 Million; TTM Contract Awards Were $1.5 Billion for a Book-to-Bill Ratio of 1.0

 

Positive Cash Flow for First Half, Substantially Above Last Year’s Levels

 

—Business Development Pipeline Exceeds $7 Billion—

—Reaffirms Full Year 2020 Guidance—

 

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.— August 4, 2020-- ICF (NASDAQ:ICFI), a global consulting and digital services provider, reported results for the second quarter ended June 30, 2020.

 

“Second quarter results demonstrated the strength and resilience of ICF’s diversified business model,” said John Wasson, president and chief executive officer. Service revenue increased 3.5% year-over-year and 2.3 percent sequentially, led by our federal government and commercial energy businesses. Favorable business mix, higher utilization and lower G&A costs drove a 3.7% year-over-year increase in EBITDA and sequential increases of 30.9% in GAAP EPS, 7.2% in Non-GAAP EPS and 28.6% in EBITDA, on revenues that were stable with first quarter levels.

 

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


 

“We are very pleased with our results for the period, which reflected strong execution in several key areas of focus, including IT modernization and public health in our federal markets, commercial energy advisory and implementation projects for utility clients and disaster management work. Disaster management now is expected to account for approximately $110 million in revenues in 2020, due to less client insourcing than originally expected.

 

“Our contract awards in the quarter largely represented new wins at existing clients, notably $13 million in new COVID-related work for federal government clients, including support to our largest client, the U.S. Department of Health and Human Services (HHS), in collecting and analyzing data as well as communicating with healthcare professionals and the general public. At the end of the second quarter our business development pipeline reached a record $7.1 billion. We also have received notice of awards with an aggregate value of over $250 million, which we expect to be included in third quarter contract wins.”

 

Second Quarter 2020 Results

 

Second quarter 2020 total revenue was $354.0 million, 3.5% below the $366.7 million reported in the second quarter of 2019. Service revenue increased 3.5% year-over-year to $261.2 million, from $252.3 million. Net income was $13.7 million, or $0.72 per diluted share in the second quarter compared to $14.6 million, or $0.76 per diluted share in the second quarter 2019.

 

Non-GAAP EPS was $0.89 per share compared to $0.97 per share in the year-ago quarter. EBITDA was $31.3 million, up 3.7% from $30.2 million reported in the second quarter 2019. Adjusted EBITDA was $32.5 million compared to $32.7 million reported in the comparable quarter 2019. Second quarter 2020 adjusted EBITDA margin on service revenue was 12.4% compared to 13.0% in the second quarter 2019.

 

Year-on-year net income and EPS comparisons reflected increased interest and amortization expense related to the ITG acquisition, which was completed on January 31, 2020, as well as a higher tax rate.

 

Backlog and New Business Awards

 

Total backlog was $2.4 billion at the end of the second quarter of 2020. Funded backlog was $1.3 billion, or approximately 53% of the total backlog. The total value of contracts awarded in the second quarter 2020 was $282 million, resulting in a trailing-twelve-month (TTM) book-to-bill ratio of 1.0. This excludes the $250 million in third quarter notice of awards noted above.

 

Government Revenue Second Quarter 2020 Highlights

 

Revenue from government clients was $246.8 million, flat year-over-year.

 

 

U.S. federal government revenue was $170.7 million, compared to $141.3 million in the year-ago quarter. Federal government revenue accounted for 48% of total revenue, compared to 38% of total revenue in the second quarter 2019.

 

U.S. state and local government revenue was $58.0 million, compared to $73.1 million in the year-ago quarter. State and local government clients represented 17% of total revenue, compared to 20% of total revenue for the second quarter 2019.

 

International government revenue was $18.1 million, compared to $31.6 million in the year-ago quarter, and accounted for 5% of total revenue, compared to 9% in the second quarter 2019.

 

2


 

Key Government Contracts Awarded in the Second Quarter

 

ICF was awarded more than 100 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 over $160 million. Notable awards won in the second quarter included:  

 

IT modernization

 

Two task orders with a combined value of $8.7 million with a U.S. federal civilian agency to provide ServiceNow IT operations management configuration and customization support.

 

A task order with a value of $8.9 million with the Centers for Disease Control and Prevention (CDC) to provide emerging technology and design acceleration support services to the CDC’s Office of the Chief Information Officer.

 

Cybersecurity

 

A contract extension with a value of $13.0 million with the U.S. Department of Defense to provide cybersecurity defense and operations support.

 

Communications, Training and Technical Assistance

 

A contract with a value of $7.5 million with the U.S. National Institutes of Health (NIH), National Institute of Allergy and Infectious Diseases, to develop a website to publish new treatment guidelines for COVID-19.

 

Cooperative agreement amendments with a combined value of $7.3 million with the U.S. Department of Housing and Urban Development to provide training, product development, communications and direct technical assistance related to homelessness and community development assistance stemming from COVID-19, substance abuse and disaster recovery.

 

Research and Evaluation

 

A contract modification with a value of $4.4 million with the NIH, National Institute for Environmental Health Sciences for additional funding to continue providing science information management and literature-based evaluation services for its National Toxicology Program.

 

Program Management

 

A five-year recompete single-award blanket purchase agreement with a value of up to $22.0 million with the U.S. Department of Labor Employment and Training. Administration to provide regulatory development, economic analysis and implementation support services.

 

A task order with a value of $8.9 million with the HHS Substance Abuse and Mental Health Services Administration, Center for Behavioral Health Statistics and Quality to provide program management, systems development, user experience, data management, data analysis and maintenance support for high-traffic Drupal sites and statistical analysis systems related to mental health and substance abuse.

 

A recompete contract with a value of $5.0 million with a directorate general of the European Commission to provide management and coordination services for a European center of expertise.

Data Management and Analytics

 

A recompete subcontract with a ceiling of $4.2 million to provide the U.S. Department of Homeland Security (DHS), Office of the Chief Readiness Support Officer with data management and analytics support pertaining to DHS’ assets.

Energy and Environment

3


 

 

A contract extension with a value of up to $4.0 million with a western U.S. county to continue implementing an energy retrofit program, providing energy upgrades to multifamily customers with a focus on hard-to-reach customers and disadvantaged communities.

 

A contract amendment valued at approximately $3.5 million with a western U.S. state water authority to provide technical assistance to prepare and implement updates to a water quality control plan.

Commercial Revenue Second Quarter 2020 Highlights

 

Commercial revenue was $107.2 million compared to $120.7 million reported in last year’s second quarter.

 

Commercial revenue accounted for 30% of total revenue compared to 33% of total revenue in the second quarter 2019.

 

Energy markets, which include energy efficiency programs, represented 54% of commercial revenue. Marketing services accounted for 35% of commercial revenue.

 

Key Commercial Contracts Awarded in the Second Quarter 2020

 

Commercial contract awards were over $120 million in the second quarter 2020. ICF was awarded more than 700 commercial projects globally during the quarter including:

 

In Energy Markets:

 

A contract modification with a northeastern U.S. utility for expansion of its residential portfolio of programs.

 

A contract modification with a southwestern U.S. gas utility to provide implementation services for its residential portfolio related to ENERGY STAR® products.

 

Multiple task orders with a western U.S. utility to provide a variety of environmental and planning services.

 

In Marketing Services:

 

A contract with a U.S. health insurer to provide paid media services and other marketing, communications and digital services.

 

A contract extension with a major U.S. rail transportation system to provide ongoing support services for its loyalty program.

 

A retainer and task orders with a U.S. health insurer to provide ongoing marketing services.

 

Task orders with a U.S. beverage company to continue to provide marketing and public relations services.

 

Dividend Declaration

 

On August 4, 2020, ICF declared a quarterly cash dividend of $0.14 per share, payable on October 13, 2020, to shareholders of record on September 11, 2020.

 

Summary and Outlook

 

“First half results represented a positive showing for ICF that enables us to reaffirm our full year 2020 guidance for revenue of $1.450 to $1.510 billion and EBITDA of $126.0 million to $136.0 million. GAAP earnings per diluted share are expected to range from $2.85 to $3.15, exclusive of special charges. Non-GAAP diluted EPS is expected to range from $3.50 to $3.80. Per share guidance is based on a weighted average number of shares outstanding of 19.2 million.

4


 

“We also are pleased to reaffirm our guidance for operating cash flow of approximately $110 million, significantly ahead of the $91.4 million generated in 2019.

"Our substantial backlog, recession-resistant revenue mix, strong balance sheet and record business development pipeline underpin our confidence in ICF’s ability to operate effectively throughout this period of economic uncertainty and emerge as an even stronger company. Our civilian domain expertise in the high growth, high profile areas of IT modernization, digital transformation and public health; our qualifications and experience in disaster management and mitigation; and our leadership in energy efficiency and advisory work position ICF for continued progress in 2020 and accelerated growth in the periods beyond.

“We appreciate the tremendous commitment that ICF employees have shown to our company and our clients. The ICF culture has been a key driver of our growth thus far and has enabled us to perform well during this health crisis. A key tenet of this culture has focused on embracing diversity and, given recent events, we believe in this more than ever and are thus redoubling our efforts with respect to diversity, equity and inclusion. We have a message on our website that puts forth ICF’s position on social justice, and we encourage all of our stakeholders to read it,” 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; our ability to acquire and successfully integrate businesses; and the effects of the novel coronavirus disease (COVID-19) and related federal, state and local government actions and reactions on the health of our staff and that of our clients, the continuity of our and our clients' operations, our results of operations and our outlook. These and other factors that could cause our actual results to differ from those indicated in forward-looking statements that 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

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(in thousands, except per share amounts)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

353,987

 

 

$

366,717

 

 

$

712,225

 

 

$

707,971

 

Direct costs

 

 

223,407

 

 

 

235,053

 

 

 

454,023

 

 

 

451,002

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indirect and selling expenses

 

 

99,255

 

 

 

101,450

 

 

 

202,526

 

 

 

197,969

 

Depreciation and amortization

 

 

5,064

 

 

 

5,595

 

 

 

10,243

 

 

 

10,357

 

Amortization of intangible assets

 

 

3,479

 

 

 

2,077

 

 

 

6,332

 

 

 

4,212

 

Total operating costs and expenses

 

 

107,798

 

 

 

109,122

 

 

 

219,101

 

 

 

212,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

22,782

 

 

 

22,542

 

 

 

39,101

 

 

 

44,431

 

Interest expense

 

 

(3,908

)

 

 

(2,934

)

 

 

(7,433

)

 

 

(5,387

)

Other income (loss)

 

 

349

 

 

 

186

 

 

 

539

 

 

 

(226

)

Income before income taxes

 

 

19,223

 

 

 

19,794

 

 

 

32,207

 

 

 

38,818

 

Provision for income taxes

 

 

5,567

 

 

 

5,183

 

 

 

7,939

 

 

 

8,889

 

Net income

 

$

13,656

 

 

$

14,611

 

 

$

24,268

 

 

$

29,929

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.73

 

 

$

0.78

 

 

$

1.29

 

 

$

1.59

 

Diluted

 

$

0.72

 

 

$

0.76

 

 

$

1.27

 

 

$

1.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,829

 

 

 

18,805

 

 

 

18,835

 

 

 

18,815

 

Diluted

 

 

19,020

 

 

 

19,133

 

 

 

19,120

 

 

 

19,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.14

 

 

$

0.14

 

 

$

0.28

 

 

$

0.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss, net of tax

 

 

(164

)

 

 

(2,853

)

 

 

(11,287

)

 

 

(2,570

)

Comprehensive income, net of tax

 

$

13,492

 

 

$

11,758

 

 

$

12,981

 

 

$

27,359

 

 

6


 

ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures(2)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

(in thousands, except per share amounts)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Reconciliation of Service Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

353,987

 

 

$

366,717

 

 

$

712,225

 

 

$

707,971

 

Subcontractor and other direct costs (3)

 

 

(92,789

)

 

 

(114,381

)

 

 

(195,625

)

 

 

(214,280

)

Service revenue

 

$

261,198

 

 

$

252,336

 

 

$

516,600

 

 

$

493,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

13,656

 

 

$

14,611

 

 

$

24,268

 

 

$

29,929

 

Other (income) expense

 

 

(349

)

0

 

(186

)

 

 

(539

)

 

 

226

 

Interest expense

 

 

3,908

 

0

 

2,934

 

 

 

7,433

 

 

 

5,387

 

Provision for income taxes

 

 

5,567

 

0

 

5,183

 

 

 

7,939

 

 

 

8,889

 

Depreciation and amortization

 

 

8,543

 

0

 

7,672

 

 

 

16,575

 

 

 

14,569

 

EBITDA

 

 

31,325

 

 

 

30,214

 

 

 

55,676

 

 

 

59,000

 

Adjustment related to impairment of intangible assets  (4)

 

 

 

 

 

1,728

 

 

 

 

 

 

1,728

 

Special charges related to acquisitions (5)

 

 

98

 

 

 

 

 

 

1,942

 

 

 

 

Special charges related to severance for staff realignment (6)

 

 

1,078

 

 

 

701

 

 

 

2,848

 

 

 

1,155

 

Special charges related to facilities consolidations and office closures (7)

 

 

 

 

 

69

 

 

 

 

 

 

69

 

Adjustment related to bad debt reserve (8)

 

 

 

 

 

 

 

 

 

 

 

(782

)

Total special charges

 

 

1,176

 

 

 

2,498

 

 

 

4,790

 

 

 

2,170

 

Adjusted EBITDA

 

$

32,501

 

 

$

32,712

 

 

$

60,466

 

 

$

61,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA Margin Percent on Revenue (9)

 

 

8.8

%

 

 

8.2

%

 

 

7.8

%

 

 

8.3

%

EBITDA Margin Percent on Service Revenue (9)

 

 

12.0

%

 

 

12.0

%

 

 

10.8

%

 

 

12.0

%

Adjusted EBITDA Margin Percent on Revenue (9)

 

 

9.2

%

 

 

8.9

%

 

 

8.5

%

 

 

8.6

%

Adjusted EBITDA Margin Percent on Service Revenue (9)

 

 

12.4

%

 

 

13.0

%

 

 

11.7

%

 

 

12.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.72

 

 

$

0.76

 

 

$

1.27

 

 

$

1.56

 

Adjustment related to impairment of intangible assets

 

 

 

 

 

0.09

 

 

 

 

 

 

0.09

 

Special charges related to acquisitions

 

 

 

 

 

 

 

 

0.10

 

 

 

 

Special charges related to severance for staff realignment

 

 

0.06

 

 

 

0.04

 

 

 

0.15

 

 

 

0.06

 

Special charges related to facilities consolidations and office closures

 

 

 

 

 

0.05

 

 

 

 

 

 

0.05

 

Adjustment related to bad debt reserve

 

 

 

 

 

 

 

 

 

 

 

(0.04

)

Amortization of intangibles

 

 

0.18

 

 

 

0.11

 

 

 

0.33

 

 

 

0.22

 

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

 

 

(0.07

)

 

 

(0.08

)

 

 

(0.14

)

 

 

(0.09

)

Non-GAAP EPS

 

$

0.89

 

 

$

0.97

 

 

$

1.71

 

 

$

1.85

 

 

7


 

 

(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 consist primarily of consultants and other outside third-party costs, as well as integration costs associated with an acquisition.

 

 

 

 

 

(6) Special charges related to severance for staff realignment: These costs are mainly due to involuntary employee termination benefits for our officers, groups of employees who have been notified that they will be terminated as part of a consolidation or reorganization or, to the extent that the costs are not included in the previous two categories, involuntary employee termination benefits for employees who have been terminated as a result of COVID -19.

 

 

 

 

 

(7) Special charges related to facilities consolidations and office closures:  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.

 

 

 

 

 

(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 29.0% and 26.2% for the three months ended June 30, 2020 and 2019, respectively, and 24.6% and 22.9% for the six months ended June 30, 2020 and 2019, respectively.

 

8


 

ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except share and per share amounts)

 

June 30, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,064

 

 

$

6,482

 

Contract receivables, net

 

 

224,379

 

 

 

261,176

 

Contract assets

 

 

150,577

 

 

 

142,337

 

Prepaid expenses and other assets

 

 

19,566

 

 

 

17,402

 

Income tax receivable

 

 

15,455

 

 

 

7,320

 

Total Current Assets

 

 

419,041

 

 

 

434,717

 

Property and Equipment, net

 

 

61,039

 

 

 

58,237

 

Other Assets:

 

 

 

 

 

 

 

 

Goodwill

 

 

905,101

 

 

 

719,934

 

Other intangible assets, net

 

 

66,558

 

 

 

25,829

 

Operating lease - right-of-use assets

 

 

139,189

 

 

 

133,965

 

Other assets

 

 

24,596

 

 

 

23,352

 

Total Assets

 

$

1,615,524

 

 

$

1,396,034

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

10,000

 

 

$

-

 

Accounts payable

 

 

76,785

 

 

 

134,578

 

Contract liabilities

 

 

30,135

 

 

 

37,413

 

Operating lease liabilities - current

 

 

33,028

 

 

 

32,500

 

Accrued salaries and benefits

 

 

57,872

 

 

 

52,130

 

Accrued subcontractors and other direct costs

 

 

36,112

 

 

 

45,619

 

Accrued expenses and other current liabilities

 

 

25,365

 

 

 

35,742

 

Total Current Liabilities

 

 

269,297

 

 

 

337,982

 

Long-term Liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

440,928

 

 

 

164,261

 

Operating lease liabilities - non-current

 

 

121,921

 

 

 

119,250

 

Deferred income taxes

 

 

38,118

 

 

 

37,621

 

Other long-term liabilities

 

 

40,157

 

 

 

22,369

 

Total Liabilities

 

 

910,421

 

 

 

681,483

 

 

 

 

 

 

 

 

 

 

Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, par value $.001; 70,000,000 shares authorized; 23,138,271 and 22,846,374 shares issued at June 30, 2020 and December 31, 2019, respectively; 18,848,522 and 18,867,555 shares outstanding at June 30, 2020 and December 31, 2019, respectively

 

 

23

 

 

 

23

 

Additional paid-in capital

 

 

354,200

 

 

 

346,795

 

Retained earnings

 

 

563,322

 

 

 

544,840

 

Treasury stock, 4,289,749 and 3,978,819 shares at June 30, 2020 and December 31, 2019, respectively

 

 

(189,011

)

 

 

(164,963

)

Accumulated other comprehensive loss

 

 

(23,431

)

 

 

(12,144

)

Total Stockholders’ Equity

 

 

705,103

 

 

 

714,551

 

Total Liabilities and Stockholders’ Equity

 

$

1,615,524

 

 

$

1,396,034

 

 

9


 

ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Six Months Ended

 

 

 

June 30,

 

(in thousands)

 

2020

 

 

2019

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

24,268

 

 

$

29,929

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Bad debt expense

 

 

1,153

 

 

 

304

 

Deferred income taxes

 

 

6,070

 

 

 

2,872

 

Non-cash equity compensation

 

 

6,344

 

 

 

7,865

 

Depreciation and amortization

 

 

16,575

 

 

 

14,569

 

Facilities consolidation reserve

 

 

(141

)

 

 

(134

)

Amortization of debt issuance costs

 

 

403

 

 

 

254

 

Impairment of long-lived assets

 

 

 

 

 

1,728

 

Other adjustments, net

 

 

(1,646

)

 

 

(450

)

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

 

 

 

 

 

 

 

 

Net contract assets and liabilities

 

 

(15,050

)

 

 

(15,508

)

Contract receivables

 

 

54,729

 

 

 

(46,212

)

Prepaid expenses and other assets

 

 

(1,866

)

 

 

(1,609

)

Accounts payable

 

 

(65,293

)

 

 

(7,569

)

Accrued salaries and benefits

 

 

4,658

 

 

 

3,535

 

Accrued subcontractors and other direct costs

 

 

(9,227

)

 

 

(17,479

)

Accrued expenses and other current liabilities

 

 

(8,685

)

 

 

(11,460

)

Income tax receivable and payable

 

 

(8,158

)

 

 

(8,733

)

Other liabilities

 

 

6,667

 

 

 

152

 

Net Cash Provided by (Used in) Operating Activities

 

 

10,801

 

 

 

(47,946

)

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures for property and equipment and capitalized software

 

 

(9,015

)

 

 

(14,516

)

Payments for business acquisitions, net of cash acquired

 

 

(253,090

)

 

 

(1,819

)

Net Cash Used in Investing Activities

 

 

(262,105

)

 

 

(16,335

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Advances from working capital facilities

 

 

914,507

 

 

 

378,474

 

Payments on working capital facilities

 

 

(626,159

)

 

 

(290,354

)

Payments on capital expenditure obligations

 

 

(1,712

)

 

 

(1,621

)

Debt issue costs

 

 

(2,084

)

 

 

 

Proceeds from exercise of options

 

 

37

 

 

 

429

 

Dividends paid

 

 

(5,275

)

 

 

(5,278

)

Net payments for stock issuances and buybacks

 

 

(23,024

)

 

 

(24,158

)

Payments on business acquisition liabilities

 

 

(1,924

)

 

 

 

Net Cash Provided by Financing Activities

 

 

254,366

 

 

 

57,492

 

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

 

 

(480

)

 

 

107

 

 

 

 

 

 

 

 

 

 

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

 

 

2,582

 

 

 

(6,682

)

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

 

 

6,482

 

 

 

12,986

 

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

 

$

9,064

 

 

$

6,304

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

7,875

 

 

$

4,697

 

Income taxes

 

$

10,123

 

 

$

15,426

 

10


 

ICF International, Inc. and Subsidiaries

Supplemental Schedule(11) (12)

 

Revenue by client markets

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Energy, environment, and infrastructure

 

 

43

%

 

 

45

%

 

 

43

%

 

 

45

%

Health, education, and social programs

 

 

42

%

 

 

37

%

 

 

41

%

 

 

36

%

Safety and security

 

 

9

%

 

 

8

%

 

 

9

%

 

 

9

%

Consumer and financial services

 

 

6

%

 

 

10

%

 

 

7

%

 

 

10

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by client type

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

U.S. federal government

 

 

48

%

 

 

38

%

 

 

46

%

 

 

39

%

U.S. state and local government

 

 

17

%

 

 

20

%

 

 

17

%

 

 

20

%

International government

 

 

5

%

 

 

9

%

 

 

6

%

 

 

8

%

Government

 

 

70

%

 

 

67

%

 

 

69

%

 

 

67

%

Commercial

 

 

30

%

 

 

33

%

 

 

31

%

 

 

33

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%