ICF International Reports First Quarter 2014 Results

May 7, 2014 at 4:06 PM EDT
  • Revenues Increased 5 Percent Despite Weather-related Closures
  • Domestic Commercial Revenue Grew by 8 Percent, Led by Digital Interactive and Energy Efficiency
  • Diluted EPS Was $0.48; Adjusted EPS Was $0.50, Exclusive of Acquisition Costs
  • Total Contract Awards Were $182 Million; Commercial Wins Represented 40 Percent

FAIRFAX, Va.--(BUSINESS WIRE)--May 7, 2014-- 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, 2014.

First Quarter 2014 Results

“First quarter results represented a solid start to the year and reflected the benefits of our diversification strategy into commercial and international markets,” said ICF Chairman and Chief Executive Officer Sudhakar Kesavan. “Our domestic commercial business grew nearly 8 percent, driven by increased demand for our digital interactive services from existing and new clients, growth in energy efficiency work, and increased energy transaction advisory assignments. In addition, we continued to see strong growth in our international government business, which more than doubled, and together with commercial revenue accounted for 37 percent of total revenues compared to 33 percent in last year’s first quarter. Commercial awards represented 40 percent of total contract awards in the first quarter.

“First quarter revenues and profitability were affected by special items as well as the severe weather conditions on the U.S. East Coast, which caused the closing of federal government offices in the Washington, D.C., area and Atlanta. We estimate that the winter storms reduced our first quarter revenue by $4.0 million to $5.0 million. In addition to the impact of reduced revenue, profitability was negatively affected by the acquisition costs related to Mostra SA and CityTech, Inc., which were completed on February 7, 2014, and March 17, 2014, respectively, partially offset by the net effect of items related to Ecommerce Accelerator LLC (ECA), a small acquisition that we completed in mid-2013. Exclusive of all of these factors, we estimate that first quarter revenue would have been $249 million to $250 million, EBITDA would have ranged from $22.6 million to $23.0 million, and diluted earnings per share would have been $0.51 to $0.52,” Mr. Kesavan noted.

Inclusive of the above-mentioned special items and weather-related impacts, first quarter 2014 revenue was $245.1 million, a 4.8 percent increase from the $233.9 million reported in the 2013 first quarter. Service revenue increased 2.3 percent to $183.0 million. EBITDA was $21.7 million, and EBITDA margin was 8.9 percent. Operating income was $16.7 million, compared to the $17.6 million reported in the 2013 first quarter. Net income was $9.7 million, or $0.48 per diluted share, compared to $10.1 million, or $0.51 per diluted share earned in the comparable 2013 period.

Backlog and New Business Awards

Backlog was $1.6 billion at the end of the first quarter of 2014, up from $1.5 billion at the end of last year’s first quarter. Funded backlog was $697 million, or 42 percent of the total. The total value of contracts awarded in the first quarter of 2014 was $182 million.

Commercial Business First Quarter 2014 Highlights

Revenues from commercial clients increased 3.5 percent in the first quarter to $68.6 million and represented 28 percent of total revenue. Commercial revenue was driven by domestic commercial revenue growth of 7.7 percent, partially offset by the anticipated decline in international aviation consulting revenues related to the completion of a large project in the first quarter of 2013. Revenues from energy efficiency clients increased 6.1 percent and accounted for 40 percent of commercial revenues.

Key Commercial Sales Highlights in the First Quarter of 2014

Commercial awards were $73 million for the first quarter, representing a book-to-bill ratio of 1.07.

ICF was awarded more than 400 commercial projects globally in the first quarter. The largest awards included:

  • Energy Efficiency: A $16.1 million contract with a southeastern U.S. utility to provide demand side management services for its residential and commercial and industrial (C&I) energy efficiency programs.
  • Energy Efficiency: A $9.3 million contract for residential and C&I energy efficiency program management for another southeastern U.S. utility.

Other commercial awards greater than $1 million included additional environmental management support for a U.S. rail carrier, training and program support for a U.S. West Coast utility, interactive data support for a gas utility, environmental research support for an industry trade association, web support for a U.S. East Coast utility, and strategic communications support for a financial organization.

Government Business First Quarter 2014 Highlights

  • U.S. Federal Government revenues declined 6.8 percent to $129.1 million in the first quarter and accounted for 53 percent of total revenue, compared to 59 percent in last year’s first quarter. Despite the decrease, we saw growth in a number of areas, including health and human services, and veterans affairs.
  • U.S. state and local government revenues increased 31 percent and accounted for 10 percent of total revenue, up from 8 percent in the comparable period last year, primarily due to increased demand for disaster recovery services related to Superstorm Sandy and an increase in work to complete a deliverable in the next phase of a large West Coast infrastructure project.
  • International government revenues increased 117.7 percent and accounted for 9 percent of total revenue, up from 5 percent in last year’s first quarter, primarily reflecting contract wins with the UK government and the European Commission and a two-month contribution from the Mostra acquisition.

Key Government Contracts Awarded for the 2014 First Quarter

ICF was awarded more than 100 U.S. Federal Government contracts and task orders and hundreds of additional contracts from other U.S. state and local and international governments. The largest awards included:

  • Environment: A contract valued at up to $17 million to provide environmental compliance assistance to the State of New Jersey for Superstorm Sandy recovery programs.
  • Health: A contract valued in excess of $8 million to provide technical and interactive data assistance for a healthcare program for a U.S. federal agency.
  • Housing: A contract valued at approximately $7 million net to ICF to provide staff augmentation assistance to the State of New Jersey as part of Superstorm Sandy housing recovery programs.
  • Climate Change: A €5 million contract with the European Commission's Directorate-General for Development and Cooperation to support the design and implementation of greenhouse gas (GHG) emissions trading systems in China to help reach GHG mitigation goals.

Other individual U.S. Federal Government awards greater than $1 million included childcare program technical assistance, IT and other logistics program support for the Department of Defense; climate change adaptation and modeling and simulation support for the Department of Transportation; marine life survey research support for the Department of Commerce; and Educational Technical Assistance for the Department of Education. At the U.S. state and local level, they included California conservation and water program assistance, environmental impact support for a West Coast port, and public health survey research for the State of New York. In Europe, additional government contract wins included employment strategy assistance for the European Commission and technical assistance to a European Aid agency.

Summary and Outlook

“First quarter results reflected our continued success in diversifying our client base. After a record year for sales in 2013, first quarter contract awards included important strategic wins, many of them in the commercial arena. Our trailing 12-month book-to-bill ratio is 1.17, and our pipeline at the end of the first quarter was up 29 percent year-over-year and 9 percent sequentially, reflecting significant growth potential across all of our client categories.

"Based on our current portfolio of business, we continue to expect full year 2014 revenues to be in the range of $1.025 billion to $1.065 billion and earnings per diluted share to be between $2.27 and $2.37, based on approximately 20.2 million diluted weighted average number of shares outstanding and an effective tax rate of 38.5 percent. Our operating cash flow for 2014 is expected to be $70 million to $80 million,” Mr. Kesavan said.

About ICF International

ICF International (NASDAQ:ICFI) provides professional services and technology solutions that deliver beneficial impact in areas critical to the world’s future. ICF is fluent in the language of change, whether driven by markets, technology, or policy. Since 1969, we have combined a passion for our work with deep industry expertise to tackle our clients’ most important challenges. We partner with clients around the globe—advising, executing, innovating—to help them define and achieve success. Our more than 4,500 employees serve government and commercial clients from more than 70 offices worldwide. ICF's website is

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.

ICF International, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)


Three months ended



March 31,










Gross Revenue   $ 245,052     $ 233,921  
Direct Costs     153,730       142,818  
Operating costs and expenses:            
Indirect and selling expenses     69,637       68,262  
Depreciation and amortization     3,076       2,799  
Amortization of intangible assets     1,959       2,393  
Total operating costs and expenses     74,672       73,454  
Operating Income     16,650       17,649  
Interest expense     (714 )     (768 )
Other (expense) income     (35 )     78  
Income before income taxes     15,901       16,959  
Provision for income taxes     6,185       6,847  
Net income   $ 9,716     $ 10,112  
Earnings per Share:            
Basic   $ 0.49     $ 0.52  
Diluted   $ 0.48     $ 0.51  
Weighted-average Shares:            
Basic     19,804       19,543  
Diluted     20,277       19,875  
Other comprehensive income:            
Foreign currency translation adjustments     (347 )     (245 )
Comprehensive income   $ 9,369     $ 9,867  
Reconciliation of non-GAAP financial measures:            

Reconciliation of Service Revenue

Revenue   $ 245,052     $ 233,921  
Subcontractor and Other Direct Costs*     (62,054 )     (55,042 )
Service Revenue   $ 182,998     $ 178,879  

Reconciliation of EBITDA

Operating Income   $ 16,650     $ 17,649  
Depreciation and amortization     5,035       5,192  
EBITDA     21,685       22,841  
Acquisition-related expenses**     543        
Adjusted EBITDA   $ 22,228     $ 22,841  

Reconciliation of Adjusted EPS

Diluted EPS   $ 0.48     $ 0.51  
EPS impact of acquisition costs, net of tax     0.02        
Adjusted EPS   $ 0.50     $ 0.51  
*   Subcontractor and Other Direct Costs exclude Direct Labor and Fringe.
**   Acquisition-related expenses include expenses related to closed and anticipated-to-close acquisitions.
ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)


March 31, 2014



December 31, 2013




Current Assets:            


  $ 20,204     $ 8,953  
Contract receivables, net     242,915       205,062  
Prepaid expenses and other     9,181       7,847  
Income tax receivable     989       4,482  
Total current assets     273,289       226,344  

Total property and equipment, net of accumulated depreciation of $51,784 and $49,229 as of March 31, 2014, and December 31, 2013, respectively

    31,262       30,214  
Other assets:            
Goodwill     464,285       418,839  
Other intangible assets, net     19,662       12,239  
Restricted cash     2,097       1,864  
Other assets     11,592       11,414  
Total Assets   $ 802,187     $ 700,914  
Current Liabilities:            
Accounts payable   $ 49,392     $ 45,544  
Accrued salaries and benefits     34,253       45,994  
Accrued expenses     40,503       32,256  
Deferred revenue     23,536       20,282  
Deferred income taxes     6,617       6,144  
Total current liabilities     154,301       150,220  
Long-term liabilities:            
Long-term debt     127,208       40,000  
Deferred rent     13,824       12,912  
Deferred income taxes     10,670       10,780  
Other     9,003       12,911  
Total Liabilities     315,006       226,823  
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; 20,883,654 and 20,617,270 shares issued; and 19,937,076 and 19,764,634 shares outstanding as of March 31, 2014, and December 31, 2013, respectively     21       21  
Additional paid-in capital     258,223       250,698  
Retained earnings     255,623       245,907  
Treasury stock     (25,349 )     (21,545 )
Accumulated other comprehensive loss     (1,337 )     (990 )
Total Stockholders’ Equity     487,181       474,091  
Total Liabilities and Stockholders’ Equity   $ 802,187     $ 700,914  

ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows
(in thousands)


Three months ended



March 31,










Cash flows from operating activities            
Net income   $ 9,716     $ 10,112  
Adjustments to reconcile net income to net cash provided by operating activities:            
Non-cash equity compensation     3,929       2,001  
Depreciation and amortization     5,035       5,192  
Other adjustments, net     (1,103 )     263  
Changes in operating assets and liabilities, net of the effect of acquisitions:            
Contract receivables, net     (24,246 )     (2,752 )
Prepaid expenses and other assets     (1,231 )     (102 )
Accounts payable     616       (587 )
Accrued salaries and benefits     (12,956 )     (5,340 )
Accrued expenses     5,903       (2,795 )
Deferred revenue     456       138  
Income tax receivable and payable     3,271       6,932  
Other liabilities     (1,419 )     245  
Net cash (used in) provided by operating activities     (12,029 )     13,307  
Cash flows from investing activities            
Capital expenditures for property and equipment and capitalized software     (5,658 )     (3,621 )
Payments for business acquisitions, net of cash received     (57,716 )      
Net cash used in investing activities     (63,374 )     (3,621 )
Cash flows from financing activities            
Advances from working capital facilities     168,516       19,757  
Payments on working capital facilities     (81,308 )     (38,046 )
Proceeds from exercise of options     1,177       40  
Tax benefits of stock option exercises and award vesting     2,435       197  
Net payments for stockholder issuances and buybacks     (3,819 )     (1,649 )
Net cash provided by (used in) financing activities     87,001       (19,701 )
Effect of exchange rate changes on cash     (347 )     (245 )
Increase (decrease) in cash     11,251       (10,260 )
Cash, beginning of period     8,953       14,725  
Cash, end of period   $ 20,204     $ 4,465  
Supplemental disclosure of cash flow information            
Cash paid during the period for:            
Interest   $ 550     $ 754  
Income taxes   $ 582     $ 120  
ICF International, Inc. and Subsidiaries
Supplemental Schedule
Revenue by market   Three Months Ended
    March 31,
    2014   2013
Energy, environment, and infrastructure   40 %   39 %

Health, social programs, and consumer/financial

  49 %   48 %
Public safety and defense   11 %   13 %
Total   100 %   100 %
Revenue by client   Three Months Ended
    March 31,
    2014   2013
U.S. federal government   53 %   59 %
U.S. state and local government   10 %   8 %
Non-U.S. government   9 %   5 %
Government   72 %   72 %
Commercial   28 %   28 %
Total   100 %   100 %
Revenue by contract   Three Months Ended
    March 31,
    2014   2013
Time-and-materials   50 %   52 %
Fixed-price   33 %   30 %
Cost-based   17 %   18 %
Total   100 %   100 %


Source: ICF International, Inc.

Investor information contact:
MBS Value Partners
Lynn Morgen, +1-212-750-5800
Company information contact:
ICF International
Douglas Beck, +1-703-934-3820

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