Operating Income Up 33 Percent
Diluted Earnings Per Share of $0.39, Up 39 Percent
FAIRFAX, Va., May 05, 2011 (BUSINESS WIRE) -- ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, reported results for the first quarter ended March 31, 2011.
First Quarter 2011 Results and Highlights
For the first quarter, total revenue reached $194.7 million, an 11.6 percent increase over the $174.4 million reported for the 2010 first quarter. Organic revenue1 growth was 10.9 percent. Net income was $7.7 million, or $0.39 per diluted share, representing a 42.5 percent increase over net income of $5.4 million, or $0.28 per diluted share, earned in the comparable 2010 period. Operating income increased 32.9 percent to $13.4 million from the $10.1 million reported in last year's first quarter.
"ICF's strong first quarter 2011 performance was driven by solid revenue gains across each of our markets and client categories and demonstrates our excellent competitive positioning in the high-growth areas of commercial energy and the federal health and education markets," said Chairman and Chief Executive Officer Sudhakar Kesavan. "Profitability benefited from a 40.8 percent revenue increase in our domestic commercial business, which was driven by energy efficiency work and related performance incentives, environmental management of infrastructure projects, and a pickup in energy transaction activity."
"The pace of new contract wins was good, our backlog was seasonably stable and well diversified, and our pipeline exceeded $2.6 billion at the end of the first quarter," Mr. Kesavan noted.
Backlog and New Business Awards
Backlog was $1.4 billion at the end of the 2011 first quarter. Funded backlog was $639 million, or 47 percent of the total.
The total value of contracts awarded in the first quarter of 2011 was $217 million.
Key contracts won in the first quarter included:
- Energy Efficiency: A $36.5 million re-compete contract with the U.S. Environmental Protection Agency (EPA) to continue nearly two decades of support for the ENERGY STAR® PROGRAM. This particular contract supports the Labeling and Residential Branch of the program with a wide variety of research, marketing, information, evaluation, and management support functions.
- Energy Efficiency: A new grant valued at up to $10 million to support global energy efficiency efforts of the U.S. Agency for International Development (USAID) through the agency's Energy Efficiency for Clean Development Program. ICF will help USAID address energy performance and greenhouse gas mitigation at missions worldwide.
- Energy Efficiency: A new $4.3 million contract to support another major U.S. utility. ICF's responsibilities under the contract encompass the areas of residential energy efficiency; whole house retrofit programs; and contractor recruitment, training, and program support.
- Health: A new multiple-award Indefinite Delivery/Indefinite Quantity (ID/IQ) contract by the U.S. Public Health Service, Centers for Disease Control and Prevention, U.S. Department of Health and Human Services, with a capacity of $100 million. ICF is one of three winners to provide global epidemiology and strategic information services, with an emphasis on activities under the U.S. President's Emergency Plan for AIDS Relief (PEPFAR).
- Information Technology: A new, multiple-award blanket purchase agreement valued at up to $108 million by the EPA to support the agency's Information Technology Solutions - Business Information Strategic Support II (ITS-BISS II) program. Under the contract ICF will provide EPA's information technology and information management policy, planning, and support services.
- Transportation: A new ID/IQ contract by the U.S. Department of Transportation's Volpe Transportation Systems Center valued at up to $40 million. ICF will support the National Environmental Policy Act (NEPA) of 1969 compliance area.
- Commercial Sector: In addition to the energy efficiency projects already noted, more than 250 additional domestic and international commercial project wins in the areas of energy efficiency, power and gas market assessment, asset valuation, environmental management, and aviation.
Summary and Outlook
"First quarter results marked a strong start to 2011 for ICF and illustrated the advantages of our balanced portfolio strategy in both the government and commercial sectors," Mr. Kesavan said. "We expect results in the seasonally stronger second quarter to continue to reflect similar business trends, with revenues in the range of $212 million to $220 million and earnings per share in the range of $0.43 to $0.47, based on approximately 19.9 million weighted average number of shares outstanding and an effective tax rate of 40.0 percent."
"Based on funded backlog levels and our strong business development pipeline, we reaffirm our full year 2011 guidance of revenues in the range of $830 million to $865 million, which represent 10.8 percent growth at the midpoint and earnings per diluted share of $1.63 to $1.73, which represent 21.7 percent growth at the midpoint. This is based on approximately 20.1 million weighted average number of shares outstanding and an effective tax rate of 40.0 percent."
About ICF International
ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver professional services and technology solutions in the energy, environment and transportation; health, education, and social programs; and homeland security and defense markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from research and analysis through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 3,700 employees serve these clients worldwide. ICF's Web site is www.icfi.com.
Caution Concerning Forward-Looking Statements
Statements that are not historical facts and involve known and unknown risks and uncertainties are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements may concern our current expectations about our future results, plans, operations and prospects and involve certain risks, including those related to the government contracting industry generally; our particular business, including our dependence on contracts with U.S. federal government agencies; and our ability to acquire and successfully integrate businesses. These and other factors that could cause our actual results to differ from those indicated in forward-looking statements are included in the "Risk Factors" section of our securities filings with the Securities and Exchange Commission. The forward-looking statements included herein are only made as of the date hereof, and we specifically disclaim any obligation to update these statements in the future.
1 Organic revenue excludes revenue from acquisitions closed during the previous four quarters.
| ICF International, Inc. and Subsidiaries | ||||||||||
| Consolidated Statements of Earnings (Unaudited) | ||||||||||
| (in thousands, except per share amounts) | ||||||||||
| Three months ended | ||||||||||
| March 31, | ||||||||||
| 2011 | 2010 | |||||||||
| Gross Revenue | $ | 194,742 | $ | 174,438 | ||||||
| Direct Costs | 118,221 | 107,559 | ||||||||
| Operating costs and expenses: | ||||||||||
| Indirect and selling expenses | 57,926 | 51,030 | ||||||||
| Depreciation and amortization | 2,761 | 2,668 | ||||||||
| Amortization of intangible assets | 2,415 | 3,081 | ||||||||
| Total operating costs and expenses | 63,102 | 56,779 | ||||||||
| Operating income | 13,419 | 10,100 | ||||||||
| Interest expense | (629 | ) | (963 | ) | ||||||
| Other income | 87 | 19 | ||||||||
| Income before income taxes | 12,877 | 9,156 | ||||||||
| Provision for income taxes | 5,151 | 3,736 | ||||||||
| Net income | $ | 7,726 | $ | 5,420 | ||||||
| Earnings per Share: | ||||||||||
| Basic | $ | 0.39 | $ | 0.28 | ||||||
| Diluted | $ | 0.39 | $ | 0.28 | ||||||
| Weighted-average Shares: | ||||||||||
| Basic | 19,580 | 19,282 | ||||||||
| Diluted | 19,780 | 19,504 | ||||||||
|
Reconciliation of EBITDA |
||||||||||
| Operating Income | 13,419 | 10,100 | ||||||||
| Depreciation and amortization | 5,176 | 5,749 | ||||||||
| EBITDA | 18,595 | 15,849 | ||||||||
| ICF International, Inc. and Subsidiaries | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (in thousands) | ||||||||||
| March 31, 2011 | December 31, 2010 | |||||||||
| (unaudited) | ||||||||||
| Current Assets: | ||||||||||
| Cash | $ | 6,288 | $ | 3,301 | ||||||
| Contract receivables, net | 180,816 | 176,963 | ||||||||
| Prepaid expenses and other | 7,423 | 6,995 | ||||||||
| Income tax receivable | -- | 1,628 | ||||||||
| Deferred income taxes | 3,713 | 4,973 | ||||||||
| Total current assets | 198,240 | 193,860 | ||||||||
| Total property and equipment, net | 17,786 | 18,887 | ||||||||
| Other assets: | ||||||||||
| Goodwill | 325,999 | 323,467 | ||||||||
| Other intangible assets, net | 24,729 | 26,148 | ||||||||
| Restricted cash | 1,876 | 3,179 | ||||||||
| Other assets | 7,676 | 7,278 | ||||||||
| Total assets | $ | 576,306 | $ | 572,819 | ||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | 24,216 | $ | 29,866 | ||||||
| Accrued salaries and benefits | 44,880 | 40,750 | ||||||||
| Accrued expenses | 22,569 | 25,522 | ||||||||
| Deferred revenue | 20,931 | 20,034 | ||||||||
| Income tax payable | 2,615 | -- | ||||||||
| Total current liabilities | 115,211 | 116,172 | ||||||||
| Long-term liabilities: | ||||||||||
| Long-term debt | 80,000 | 85,000 | ||||||||
| Deferred rent | 5,944 | 5,142 | ||||||||
| Deferred income taxes | 8,848 | 10,068 | ||||||||
| Other | 4,218 | 3,704 | ||||||||
| Total Liabilities | 214,221 | 220,086 | ||||||||
| Commitments and Contingencies | ||||||||||
| Stockholders' Equity: | ||||||||||
| Preferred stock, par value $.001 per share; 5,000,000 shares authorized; none issued | -- | -- | ||||||||
| Common stock, $.001 par value; 70,000,000 shares authorized; 19,738,880 and 19,618,659 shares issued; and 19,651,969 and 19,567,571 shares outstanding as of March 31, 2011, and December 31, 2010, respectively | 20 | 20 | ||||||||
| Additional paid-in capital | 223,140 | 220,891 | ||||||||
| Retained earnings | 141,363 | 133,637 | ||||||||
| Treasury stock | (2,070 | ) | (1,291 | ) | ||||||
| Accumulated other comprehensive loss | (368 | ) | (524 | ) | ||||||
| Total stockholders' equity | 362,085 | 352,733 | ||||||||
| Total liabilities and stockholders' equity | $ | 576,306 | $ | 572,819 | ||||||
| ICF International, Inc. and Subsidiaries | ||||||||||
| Consolidated Statements of Cash Flows (Unaudited) | ||||||||||
| (in thousands) | ||||||||||
| Three months ended | ||||||||||
| March 31, | ||||||||||
| 2011 | 2010 | |||||||||
| Cash flows from operating activities | ||||||||||
| Net income | $ | 7,726 | $ | 5,420 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Deferred income taxes | (16 | ) | (1,222 | ) | ||||||
| (Gain) loss on disposal of fixed assets | (66 | ) | 29 | |||||||
| Non-cash equity compensation | 1,195 | 1,715 | ||||||||
| Depreciation and amortization | 5,176 | 5,749 | ||||||||
| Deferred rent | 842 | (76 | ) | |||||||
| Changes in operating assets and liabilities, net of the effect of acquisitions: | ||||||||||
| Contract receivables, net | (2,138 | ) | 7,265 | |||||||
| Prepaid expenses and other assets | (972 | ) | 496 | |||||||
| Accounts payable | (5,629 | ) | (4,347 | ) | ||||||
| Accrued salaries and benefits | 3,819 | 2,818 | ||||||||
| Accrued expenses | (3,059 | ) | (1,499 | ) | ||||||
| Deferred revenue | 896 | (2,949 | ) | |||||||
| Income tax receivable and payable | 4,236 | 4,112 | ||||||||
| Restricted cash | 1,303 | (1,013 | ) | |||||||
| Other liabilities | 513 | (635 | ) | |||||||
| Net cash provided by operating activities | 13,826 | 15,863 | ||||||||
| Cash flows from investing activities | ||||||||||
| Capital expenditures | (1,696 | ) | (1,447 | ) | ||||||
| Capitalized software development costs | (28 | ) | (93 | ) | ||||||
| Payments for business acquisitions, net of cash received | (4,547 | ) | -- | |||||||
| Net cash used in investing activities | (6,271 | ) | (1,540 | ) | ||||||
| Cash flows from financing activities | ||||||||||
| Advances from working capital facilities | 32,294 | 3,729 | ||||||||
| Payments on working capital facilities | (37,294 | ) | (13,729 | ) | ||||||
| Proceeds from exercise of options | 85 | 408 | ||||||||
| Tax benefits of stock option exercises and award vesting | 949 | 192 | ||||||||
| Net payments for stockholder issuances and buybacks | (758 | ) | (428 | ) | ||||||
| Net cash used in financing activities | (4,724 | ) | (9,828 | ) | ||||||
| Effect of exchange rate on cash | 156 | (82 | ) | |||||||
| Increase in cash | 2,987 | 4,413 | ||||||||
| Cash, beginning of period | 3,301 | 2,353 | ||||||||
| Cash, end of period | $ | 6,288 | $ | 6,766 | ||||||
| Supplemental disclosure of cash flow information | ||||||||||
| Cash paid during the period for: | ||||||||||
| Interest | $ | 610 | $ | 1,459 | ||||||
| Income taxes | $ | 328 | $ | 518 | ||||||
| ICF International, Inc. and Subsidiaries | ||||||||
| Supplemental Schedule (Unaudited) | ||||||||
| Revenue by market | Three Months Ended | |||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| Energy, environment, and transportation | 41 | % | 40 | % | ||||
| Health, education, and social programs | 45 | % | 46 | % | ||||
| Homeland security and defense | 14 | % | 14 | % | ||||
| Total | 100 | % | 100 | % | ||||
| Revenue by client | Three Months Ended | |||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| U.S. federal government | 68 | % | 72 | % | ||||
| U.S. state and local government | 10 | % | 10 | % | ||||
| Domestic commercial | 17 | % | 14 | % | ||||
| International | 5 | % | 4 | % | ||||
| Total | 100 | % | 100 | % | ||||
| Revenue by contract type | Three Months Ended | |||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| Time-and-materials | 51 | % | 49 | % | ||||
| Cost-based | 22 | % | 24 | % | ||||
| Fixed-price | 27 | % | 27 | % | ||||
| Total | 100 | % | 100 | % | ||||
SOURCE: ICF International
ICF International
Douglas Beck, 1-703-934-3820
or
MBS Value Partners
Lynn Morgen / Betsy Brod, 1-212-750-5800
