Total Revenue Increased 11 Percent
Operating Income Up 21 Percent
Announced Acquisition of Leading Canadian Energy and Environmental Consulting Firm
Full Year 2010 Highlights
Total Revenue Increased 13 Percent
Operating Income Up 20 Percent
Organic Revenue Growth Was 15 Percent
Funded Backlog of $649 Million at Year-End, Up 21 Percent
FAIRFAX, Va., Mar 02, 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 fourth quarter and year ended December 31, 2010.
Fourth Quarter 2010 Results and Highlights
Total revenue for the fourth quarter was $192.9 million, an increase of 10.8 percent compared to total revenue of $174.1 million reported in the 2009 fourth quarter. Organic revenue growth was 7.5 percent.
Net income was $7.2 million, a 15.6 percent increase compared to the $6.2 million reported for last year's fourth quarter. Earnings per diluted share were $0.36 compared to $0.37 in the fourth quarter of 2009. For the 2010 fourth quarter, the fully diluted weighted average number of shares outstanding was 19.8 million compared to 16.5 million in the 2009 fourth quarter. The increase resulted primarily from the full quarter effect of the 3.6 million shares issued in connection with the Company's secondary public offering, which was completed in December 2009.
Commenting on the results, Chairman and Chief Executive Officer Sudhakar Kesavan said, "Fourth quarter growth was broad-based, reflecting solid revenue increases across all of our client categories and markets. Federal Government revenue was up 10.2 percent, state and local government revenue increased 28.0 percent, and commercial and international revenue was up 5.5 percent. In the fourth quarter, our commercial business benefitted from both our growing energy efficiency business as well as a modest pickup in advisory and valuation work related to energy transactions and transportation markets."
"With respect to revenues from end markets, Health, Education and Social Programs were up 11.8 percent, Energy, Environment and Transportation revenues increased 8.4 percent, and Homeland Security and Defense grew 15.4 percent. Additionally, we won more than 400 contracts in the fourth quarter that represent future work across all of our markets."
"Our acquisition of Marbek Resource Consultants Ltd. was completed in early January 2011 and gives us important cross-selling opportunities in Canada, which is a growing market for energy and environmental services to both government and commercial clients," Mr. Kesavan said.
Full Year 2010 Operating and Financial Highlights
- Total revenue was $764.7 million, an increase of 13.4 percent from 2009; exclusive of Road Home contract revenue reported in 2009, revenue increased 24.6 percent
- Organic revenue1 growth was 14.6 percent
- Net income was $27.2 million, an increase of 21.5 percent
- Earnings per diluted share were $1.38 compared to $1.40, calculated on a 23.3 percent increase in the weighted average number of shares outstanding
- Net cash provided by operating activities was $68.2 million compared to $48.6 million last year
- Funded backlog was up 21 percent at $649 million compared to $536 million at the end of 2009.
"This was another strong year for ICF International, reflecting significant increases in total revenues and operating income, and strong organic revenue growth," Mr. Kesavan said. "We ended 2010 with a strong balance sheet and cash flow generation, which provide the resources to continue to invest in organic growth and potential acquisitions."
Backlog and New Business Awards
Backlog was $1.4 billion at the end of the fourth quarter. Funded backlog was $649.0 million, or 47.5 percent of the total.
The total value of contracts awarded in the fourth quarter of 2010 was $150 million, bringing total contract awards for 2010 to $834 million.
Key contracts won in the fourth quarter included:
- Energy Efficiency: A new three-year $14.4 million energy efficiency contract with a major U.S. utility to administer energy efficiency programs that focus on residential homes, commercial prescriptive measures, and commercial custom measures.
- Leadership Development: A new multiple-award Indefinite Delivery/Indefinite Quantity (ID/IQ) contract with the U.S. Army Research Institute for the Behavioral and Social Sciences (ARI) to support the Research, Development, and Analysis in Army Training (TRAIN II) program. The contract has a ceiling for ICF of $30 million and a term of one base year and four option years.
- Veterans Affairs IT: A new contract through High Performance Technologies, Inc. (HPTi), to support the U.S. Department of Veterans Affairs (VA) in providing technical and IT program assistance for the VA Veterans Relationship Management programs. The contract has a value to ICF of $10 million and a term of one base year and four option years.
- Other Important Contract Wins: Thirty additional new contract wins individually valued at $1 million or more in the areas of: environmental management for new infrastructure, energy efficiency program management, health IT and health research, housing program support, federal emergency response planning, and corporate environmental management.
- Commercial Sector: More than 180 other contract wins in the domestic and international commercial sector in the areas of energy efficiency programs, utility industry transmission and fuels planning, and aviation and airport planning.
Summary and Outlook
Mr. Kesavan continued, "In 2010, in addition to winning important new contracts in our traditional mission support areas, we were awarded several large capacity contracts to implement IT services in the health and environment markets. This was the first time that we have won multiple opportunities of this magnitude, and we believe they could represent significant growth potential for ICF in the periods ahead."
"Funded backlog levels at 2010 year-end and our growing business development pipeline provide good visibility, enabling us to reaffirm our full year 2011 guidance of revenues in the range of $830 million to $865 million, which represents growth of 10.8 percent at the midpoint. We expect to continue to achieve operating leverage in 2011 and are guiding to a range of earnings per diluted share of $1.63 to $1.73, based on approximately 20.1 million weighted average number of shares outstanding and an effective tax rate of 40.5 percent."
"For the 2011 first quarter, we expect revenues to range from $192 million to $197 million, representing year-over-year growth of 11.5 percent at the midpoint. Earnings per diluted share are expected to be in the range of $0.34 to $0.38, a year-over-year increase of 28.6 percent at the midpoint," Mr. Kesavan noted.
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.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.
1 Organic revenue excludes revenue from The Road Home contract and revenue from acquisitions closed during the previous four quarters.
| ICF International, Inc. and Subsidiaries | ||||||||||||||||||
| Consolidated Statements of Earnings | ||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Gross Revenue | $ | 192,938 | $ | 174,061 | $ | 764,734 | $ | 674,399 | ||||||||||
| Direct Costs | 119,437 | 106,576 | 476,187 | 411,334 | ||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||
| Indirect and selling expenses | 56,025 | 52,011 | 218,533 | 203,428 | ||||||||||||||
| Depreciation and amortization | 2,747 | 2,808 | 10,775 | 9,416 | ||||||||||||||
| Amortization of intangible assets | 3,082 | 3,071 | 12,326 | 11,137 | ||||||||||||||
| Total operating costs and expenses | 61,854 | 57,890 | 241,634 | 223,981 | ||||||||||||||
| Operating Income | 11,647 | 9,595 | 46,913 | 39,084 | ||||||||||||||
| Interest expense | (747 | ) | (1,400 | ) | (3,403 | ) | (5,107 | ) | ||||||||||
| Other income (expense) | (25 | ) | 580 | 172 | 1,005 | |||||||||||||
| Income before income taxes | 10,875 | 8,775 | 43,682 | 34,982 | ||||||||||||||
| Provision for income taxes | 3,718 | 2,586 | 16,511 | 12,626 | ||||||||||||||
| Net income | $ | 7,157 | $ | 6,189 | $ | 27,171 | $ | 22,356 | ||||||||||
| Earnings per Share: | ||||||||||||||||||
| Basic | $ | 0.37 | $ | 0.38 | $ | 1.40 | $ | 1.45 | ||||||||||
| Diluted | $ | 0.36 | $ | 0.37 | $ | 1.38 | $ | 1.40 | ||||||||||
| Weighted-average Shares: | ||||||||||||||||||
| Basic | 19,489 | 16,187 | 19,375 | 15,433 | ||||||||||||||
| Diluted | 19,751 | 16,522 | 19,626 | 15,914 | ||||||||||||||
|
Reconciliation of EBITDA |
||||||||||||||||||
| Operating Income | 11,647 | 9,595 | 46,913 | 39,084 | ||||||||||||||
| Depreciation and amortization | 5,829 | 5,879 | 23,101 | 20,553 | ||||||||||||||
| EBITDA | 17,476 | 15,474 | 70,014 | 59,637 | ||||||||||||||
| Transaction related costs | - | 367 | - | 1,354 | ||||||||||||||
| Adjusted EBITDA | 17,476 | 15,841 | 70,014 | 60,991 | ||||||||||||||
| ICF International, Inc. and Subsidiaries | |||||||||
| Consolidated Balance Sheets | |||||||||
| (in thousands) | |||||||||
| December 31, 2010 | December 31, 2009 | ||||||||
| Current Assets: | |||||||||
| Cash | $ | 3,301 | $ | 2,353 | |||||
| Contract receivables, net | 176,963 | 174,120 | |||||||
| Prepaid expenses and other | 6,995 | 6,666 | |||||||
| Income tax receivable | 1,628 | 4,175 | |||||||
| Deferred income taxes | 4,973 | 1,337 | |||||||
| Total current assets | 193,860 | 188,651 | |||||||
| Total property and equipment, net | 18,887 | 22,600 | |||||||
| Other assets: | |||||||||
| Goodwill | 323,467 | 323,467 | |||||||
| Other intangible assets, net | 26,148 | 38,474 | |||||||
| Restricted cash | 3,179 | 2,123 | |||||||
| Other assets | 7,278 | 6,912 | |||||||
| Total assets | $ | 572,819 | $ | 582,227 | |||||
| Current Liabilities: | |||||||||
| Accounts payable | $ | 29,866 | $ | 27,075 | |||||
| Accrued salaries and benefits | 40,750 | 32,762 | |||||||
| Accrued expenses | 25,522 | 21,080 | |||||||
| Deferred revenue | 20,034 | 19,370 | |||||||
| Total current liabilities | 116,172 | 100,287 | |||||||
| Long-term liabilities: | |||||||||
| Long-term debt | 85,000 | 145,000 | |||||||
| Deferred rent | 5,142 | 2,914 | |||||||
| Deferred income taxes | 10,068 | 11,656 | |||||||
| Other | 3,704 | 4,810 | |||||||
| Total Liabilities | 220,086 | 264,667 | |||||||
| 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; 19,618,659 and 19,278,591 |
20 | 19 | |||||||
| Additional paid-in capital | 220,891 | 211,412 | |||||||
| Retained earnings | 133,637 | 106,466 | |||||||
| Treasury stock | (1,291 | ) | -- | ||||||
| Accumulated other comprehensive loss | (524 | ) | (337 | ) | |||||
| Total stockholders' equity | 352,733 | 317,560 | |||||||
| Total liabilities and stockholders' equity | $ | 572,819 | $ | 582,227 | |||||
| ICF International, Inc. and Subsidiaries | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||
| (in thousands) | ||||||||||||
| Twelve months ended | ||||||||||||
| December 31, | ||||||||||||
| 2010 | 2009 | |||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income | $ | 27,171 | $ | 22,356 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Bad debt expense | 543 | 241 | ||||||||||
| Deferred income taxes | (5,224 | ) | 2,203 | |||||||||
| (Gain) loss on disposal of fixed assets | 110 | (14 | ) | |||||||||
| Non-cash equity compensation | 7,533 | 7,192 | ||||||||||
| Depreciation and amortization | 23,101 | 20,553 | ||||||||||
| Deferred rent | 1,153 | 106 | ||||||||||
| Changes in operating assets and liabilities, net of the effect of acquisitions: | ||||||||||||
| Contract receivables | (3,386 | ) | 15,948 | |||||||||
| Prepaid expenses and other assets | (778 | ) | (3,962 | ) | ||||||||
| Accounts payable | 2,396 | (3,763 | ) | |||||||||
| Accrued salaries and benefits | 8,677 | (2,517 | ) | |||||||||
| Accrued expenses | 5,832 | (17,503 | ) | |||||||||
| Deferred revenue | 664 | 4,341 | ||||||||||
| Income tax receivable | 2,547 | 1,150 | ||||||||||
| Restricted cash | (1,056 | ) | 2,135 | |||||||||
| Other liabilities | (1,105 | ) | 88 | |||||||||
| Net cash provided by operating activities | 68,178 | 48,554 | ||||||||||
| Cash flows from investing activities | ||||||||||||
| Capital expenditures | (7,283 | ) | (8,068 | ) | ||||||||
| Capitalized software development costs | (394 | ) | (437 | ) | ||||||||
| Payments for business acquisitions, net of cash received | -- | (188,672 | ) | |||||||||
| Net cash used in investing activities | (7,677 | ) | (197,177 | ) | ||||||||
| Cash flows from financing activities | ||||||||||||
| Advances from working capital facilities | 43,317 | 315,784 | ||||||||||
| Payments on working capital facilities | (103,317 | ) | (250,784 | ) | ||||||||
| Debt issue costs | (21 | ) | (655 | ) | ||||||||
| Proceeds from secondary offering, net | -- | 83,294 | ||||||||||
| Proceeds from exercise of options | 966 | 2,832 | ||||||||||
| Tax benefits of stock option exercises and award vesting | 914 | 3,113 | ||||||||||
| Issuances of stock | 66 | 88 | ||||||||||
|
Shares reacquired in net share issuance |
(1,291 | ) | (4,179 | ) | ||||||||
| Payments received on stockholder notes | -- | 12 | ||||||||||
| Net cash (used in) provided by financing activities | (59,366 | ) | 149,505 | |||||||||
| Effect of exchange rate on cash | (187 | ) | (65 | ) | ||||||||
| Increase in cash | 948 | 817 | ||||||||||
| Cash, beginning of period | 2,353 | 1,536 | ||||||||||
| Cash, end of period | $ | 3,301 | $ | 2,353 | ||||||||
| Supplemental disclosure of cash flow information | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Interest | $ | 3,873 | $ | 4,664 | ||||||||
| Income taxes | $ | 18,977 | $ | 7,644 | ||||||||
| ICF International, Inc. and Subsidiaries | |||||||||||||
| Supplemental Schedule (Unaudited) | |||||||||||||
| Revenue by market | Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, | December 31, | ||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||
| Energy, environment, and transportation | 41 | % | 42 | % | 40 | % | 42 | % | |||||
| Health, education, and social programs | 45 | % | 45 | % | 46 | % | 44 | % | |||||
| Homeland security and defense | 14 | % | 13 | % | 14 | % | 14 | % | |||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||
| Revenue by client | Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, | December 31, | ||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||
| U.S. federal government | 69 | % | 69 | % | 71 | % | 60 | % | |||||
| U.S. state and local government | 11 | % | 9 | % | 10 | % | 19 | % | |||||
| Domestic commercial | 15 | % | 16 | % | 14 | % | 16 | % | |||||
| International | 5 | % | 6 | % | 5 | % | 5 | % | |||||
| Total | 100 | % | 100 | % | 100 | % | 100 | % | |||||
|
Revenue by contract type |
Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, | December 31, | ||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||
| Time-and-materials | 49 | % | 45 | % | 49 | % | 51 | % | |||||
| Cost-based | 23 | % | 23 | % | 23 | % | 20 | % | |||||
| Fixed-price | 28 | % | 32 | % | 28 | % | 29 | % | |||||
| Total | 100 | % | 100 | % | 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
