ICF International Reports Third Quarter 2010 Results

November 4, 2010 at 4:16 PM EDT
Total Revenue Increased 18 Percent
Organic Revenue Growth Rate Was 14.5 Percent
Operating Income Increased 34 Percent
Contract Sales Were $393 Million

FAIRFAX, Va., Nov 04, 2010 (BUSINESS WIRE) -- ICF International (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, reported results for the third quarter ended September 30, 2010.

Third Quarter Results and Highlights

Total revenue for the third quarter was $197.7 million, an increase of 18.3 percent over total revenue of $167.1 million reported in the 2009 third quarter. Organic revenue1 growth was 14.5 percent.

Net income was $7.4 million, a 44.5 percent increase over the $5.1 million reported for last year's third quarter. Earnings per diluted share were $0.38 compared to $0.32 in the third quarter of 2009. For the 2010 third quarter, the fully diluted weighted average number of shares outstanding was 19.6 million compared to 15.8 million in the 2009 third quarter. The increase resulted primarily from 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, Sudhakar Kesavan, chairman and chief executive officer, said, "Our third quarter revenue performance demonstrates the strength of our markets and ICF's increasingly prominent position in both advisory and implementation services in these markets. We are pleased to report another quarter of solid profitability, posting a 34 percent increase in operating income."

"This was also a strong sales quarter for ICF in which we were awarded important contracts in priority areas, including health, education, environment, and cybersecurity, which provide good visibility as we enter 2011," Mr. Kesavan said.

Backlog and New Business Awards

Backlog was $1.4 billion at the end of the third quarter. Funded backlog was $664 million, or 47 percent of the total.

The total value of contracts awarded in the third quarter of 2010 was $393 million.

Key contracts won in the third quarter included:


  • Education: A new $38 million contract by the U.S. Department of Education to support the department's Race to the Top (RTT) program, a competitive grant program designed to encourage and reward states that are creating the conditions for education, innovation, and reform. ICF will provide technical assistance support directly to RTT grantees and establish learning communities where best practices in education can be shared.
  • Health Informatics: A new multiple-award Indefinite Delivery, Indefinite Quantity (ID/IQ) contract by the U.S. Department of Health and Human Services, Centers for Disease Control and Prevention (CDC), to support CDC Information Management Services (CIMS). CIMS is a CDC-wide contract vehicle that will consolidate all information technology (IT), management consulting, and technology infrastructure activities for the next decade.The ICF bid was selected for two of three domains with a total potential value of $4 billion.
  • Head Start: One new and three re-compete contracts with a combined value of more than $60 million with the U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF), Office of Head Start. ICF will assist with training and technical consulting assistance, conference facilitation and collaboration, and program management services.
  • Health Informatics: A $31.8 million re-compete contract with the U.S. Food and Drug Administration to provide information technology and scientific support services to the National Center for Toxicological Research, including computational science/biomedical support, applications systems support, and experimental support for specific toxicology studies.
  • Obesity Prevention: A new $11.7 million contract by the U.S. Department of Health and Human Services (HHS), Centers for Disease Control and Prevention (CDC), to support CDC's "Communities Putting Prevention to Work" initiative. This initiative is the cornerstone of a comprehensive HHS prevention and wellness effort to address the leading preventable causes of death and disability, namely obesity and tobacco use.
  • Environmental Program Support: A re-compete ID/IQ valued at up to $31 million among three winning firms by the U.S. Environmental Protection Agency, Office of Solid Waste and Emergency Response. ICF will provide programmatic and regulatory support to assist with responsible national management of hazardous and nonhazardous wastes.
  • Rural Housing Programs: A re-compete contract valued at $12 million by the U.S. Department of Agriculture's Rural Development Housing Voucher Demonstration program, which provides rental-housing vouchers to tenants in federally financed, rural multifamily properties when owners' loans are prepaid or foreclosed.
  • Public Response Information Management: A re-compete contract valued at $9 million by the U.S. Forest Service to manage public response information, including services associated with receiving, processing, analyzing, storing, and summarizing public responses.
  • Cybersecurity: A new $10.5 million contract by the Social Security Administration (SSA), Office of Protective Services, to provide information technology support services for initiatives to enhance SSA's physical security posture based on the use of standardized, secure identity credentials.

Summary and Outlook

"Our results for the first nine months of 2010 illustrate our ability to achieve significant organic growth and to capture an increasing number of larger implementation contracts from government and commercial clients," Mr. Kesavan said. "We expect this year's fourth quarter results to show solid revenue growth over the comparable period in 2009, with revenues in the range of $188 million to $194 million and earnings per diluted share of $0.33 to $0.38 based on approximately 19.8 million weighted average number of shares outstanding and an effective tax rate of 40 percent."

"For full year 2010, we have narrowed our revenue guidance to $760 million to $766 million, which represents an organic growth rate of 14 percent to 15 percent, and we have narrowed our range of earnings per diluted share to $1.35 to $1.40, based on approximately 19.7 million weighted average number of shares outstanding and an effective tax rate of 39.2 percent," Mr. Kesavan noted.

"Looking ahead to 2011, we remain confident of our growth prospects and our ability to continue to generate operating leverage," Mr. Kesavan said. "Based upon current backlog and our existing portfolio of business, our preliminary indications for full year 2011 are revenues of $830 million to $865 million, and EBITDA margin of between 9 percent and 10 percent."

About ICF International

ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver professional services and technology solutions in the energy and climate change; environment and infrastructure; health, human services, 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 3,500 employees serve these clients worldwide. ICF's Web site 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.

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 (Unaudited)
(in thousands, except per share amounts)
        Three months ended       Nine months ended
        September 30,       September 30,
        2010       2009       2010       2009
Gross Revenue     $ 197,711       $ 167,071       $ 571,796       $ 500,338  
Direct Costs       124,060         101,610         356,750         304,758  
Operating costs and expenses:                                        
Indirect and selling expenses       55,348         50,430         162,508         151,417  
Depreciation and amortization       2,716         2,550         8,027         6,608  
Amortization of intangible assets       3,082         3,159         9,245         8,066  
Total operating costs and expenses       61,146         56,139         179,780         166,091  
Operating Income       12,505         9,322         35,266         29,489  
Interest expense       (776 )       (1,471 )       (2,656 )       (3,707 )
Other income       99         65         197         425  
Income before taxes       11,828         7,916         32,807         26,207  
Provision for income taxes       4,435         2,800         12,793         10,040  
Net income     $ 7,393       $ 5,116       $ 20,014       $ 16,167  
Earnings per Share:                                        
Basic     $ 0.38       $ 0.33       $ 1.03       $ 1.06  
Diluted     $ 0.38       $ 0.32       $ 1.02       $ 1.03  
Weighted-average Shares:                                        
Basic       19,413         15,299         19,349         15,187  
Diluted       19,630         15,844         19,579         15,708  

Reconciliation of EBITDA

Operating Income       12,505         9,322         35,266         29,489  
Depreciation and amortization       5,798         5,709         17,272         14,674  
EBITDA       18,303         15,031         52,538         44,163  
Transaction related costs       -         -         -         987  
Adjusted EBITDA       18,303         15,031         52,538         45,150  
ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands)
        September 30, 2010       December 31, 2009
Current Assets:                    
Cash and cash equivalents     $ 6,498       $ 2,353  
Contract receivables, net       169,405         174,120  
Prepaid expenses and other       8,029         6,666  
Income tax receivable       --         4,175  
Deferred income taxes       1,212         1,337  
Total current assets       185,144         188,651  
Total property and equipment, net       19,160         22,600  
Other assets:                    
Goodwill       323,467         323,467  
Other intangible assets, net       29,229         38,474  
Restricted cash       3,164         2,123  
Other assets       7,571         6,912  
Total assets     $ 567,735       $ 582,227  
Current Liabilities:                    
Accounts payable     $ 22,166       $ 27,075  
Accrued expenses       22,638         21,770  
Accrued salaries and benefits       44,681         32,072  
Deferred revenue       16,496         19,370  
Total current liabilities       105,981         100,287  
Long-term liabilities:                    
Long-term debt       100,000         145,000  
Deferred rent       5,753         2,914  
Deferred income taxes       7,841         11,656  
Other       3,771         4,810  
Total Liabilities       223,346         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; 19,457,098 and 19,278,591 issued; and 19,429,864 and 19,278,591 outstanding as of September 30, 2010, and December 31, 2009, respectively       19         19  
Additional paid-in capital       219,087         211,412  
Treasury stock, at cost       (628 )       --  
Accumulated other comprehensive loss       (569 )       (337 )
Retained earnings       126,480         106,466  
Total stockholders' equity       344,389         317,560  
Total liabilities and stockholders' equity     $ 567,735       $ 582,227  
ICF International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
        Nine months ended
        September 30,
        2010       2009
Cash flows from operating activities                    
Net income     $ 20,014       $ 16,167  
Adjustments to reconcile net income to net cash provided by operating activities:                    
Depreciation and amortization       17,272         14,674  
Non-cash compensation       6,242         5,680  
Loss on disposal of fixed assets       36         (7 )
Deferred income taxes       (3,690 )       1,569  
Deferred rent       753         26  
Changes in operating assets and liabilities, net of the effect of acquisitions:                    
Contract receivables, net       4,715         18,453  
Prepaid expenses and other       (2,070 )       (2,797 )
Accounts payable       (5,301 )       (5,685 )
Accrued expenses       2,702         (14,580 )
Accrued salaries and benefits       12,609         2,379  
Deferred revenue       (2,874 )       1,421  
Income tax receivable       5,278         (1,082 )
Restricted cash       (1,041 )       2,154  
Other liabilities       (1,039 )       (159 )
Net cash provided by operating activities       53,606         38,213  
Cash flows from investing activities                    
Capital expenditures       (4,706 )       (5,717 )
Capitalized software development costs       (306 )       (333 )
Payments for business acquisitions, net of cash acquired       --         (156,902 )
Net cash used in investing activities       (5,012 )       (162,952 )
Cash flows from financing activities                    
Advances from working capital facilities       22,094         254,404  
Payments on working capital facilities       (67,094 )       (124,404 )
Debt issue costs       (21 )       (630 )
Proceeds from exercise of options       616         2,484  
Excess tax benefits of stock option exercises       784         2,380  
Net payments for stockholder issuances and buybacks       (595 )       (1,801 )
Net cash (used in) provided by financing activities       (44,216 )       132,433  
Effect of exchange rate on cash       (233 )       20  
Net increase in cash and cash equivalents       4,145         7,714  
Cash and cash equivalents, beginning of period       2,353         1,536  
Cash and cash equivalents, end of period     $ 6,498       $ 9,250  
Supplemental disclosure of cash flow information                    
Cash paid during the period for:                    
Interest     $ 3,141       $ 3,710  
Income taxes     $ 10,882       $ 7,367  

SOURCE: ICF International, Inc.

ICF International, Inc.
Douglas Beck, 1.703.934.3820
MBS Value Partners
Lynn Morgen / Betsy Brod, 1.212.750.5800

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