First Quarter Highlights:
- Total Revenue Was
$358 Million , Up 5% - Diluted EPS Was
$0.55 Inclusive of$0.16 in Special Charges - Non-GAAP EPS¹ Was
$0.83 - Adjusted EBITDA Margin on Service Revenue¹ Was 10.9%
- Contract Awards of
$357 Million , Up 23%; TTM Contract Awards Were$1.6 Billion For a Book-to-Bill Ratio of 1.06 - Completed Acquisition of
Incentive Technology Group, LLC (ITG), a Leading Provider of Cloud-based IT Modernization Services to theU.S. Federal Government
Guides to Revenue and EBITDA¹ Similar to 2019 and Higher Operating Cash Flow of Approximately
ICF (NASDAQ: ICFI), a global consulting and digital services provider, reported results for the first quarter ended
"First quarter results and awards were aligned with ICF's strong positioning in key growth areas within our government and commercial markets," said
"At the onset of the COVID-19 pandemic, ICF activated business continuity plans and implemented work-from-home protocols for over 98% of our workforce. Our staff is accustomed to teleworking, and our clients were amenable to this shift, which enabled us to work seamlessly and effectively while lockdowns were in effect in most of the geographies in which we operate.
"The COVID-19 health crisis did not have a significant impact on ICF's first quarter financial performance. In total, we estimate that the COVID-19 impact on our first quarter revenue was approximately
"At the same time, we expanded our support to the
"Contract awards increased 23% in the first quarter, reflecting new wins in the areas of IT modernization, public health and energy efficiency, as well as small but strategically important disaster mitigation project work. Additionally, our business development pipeline increased considerably, reaching nearly
|
1 Non-GAAP EPS, Service Revenue, EBITDA, Adjusted EBITDA, 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 statement of comprehensive income but are not indicative of ongoing performance and have been presented net of applicable |
First Quarter 2020 Results
First quarter 2020 total revenue was
Non-GAAP EPS was
Backlog and New Business Awards
Total backlog was
Government Revenue First Quarter 2020 Highlights
Revenue from government clients was
U.S. federal government revenue was$155.4 million , representing a 17.6% year-over-year increase. Federal government revenue accounted for 44% of total revenue, up from 39% of total revenue in the first quarter of 2019.U.S. state and local government revenue was$61.3 million compared to$65.9 million in the year-ago quarter. State and local government clients accounted for 17% of total revenue, compared to 19% of total revenue in the 2019 first quarter.- International government revenue was
$23.1 million , compared to$27.1 million in the year-ago quarter, and accounted for 6% of total revenue, compared to 8% in the first quarter of 2019.
Key Government Contracts Awarded in the First Quarter
ICF was awarded more than 75 U.S. federal contracts and task orders and more than 250 additional contracts from
IT modernization:
- A task order with the
U.S. Securities and Exchange Commission (SEC) with a potential value of up to$68.0 million to deliver enterprise-wide database administration services. - Two task orders under a recompete contract with a value of up to
$26.0 million with theU.S. Department of Defense (DOD), with the Navy Commander Navy Installations Command as the account executor, to continue to build and manage a suite of applications to support military child and youth programs. - A blanket purchase agreement (BPA) with a ceiling value of
$19.0 million and a task order with a value of$7.0 million with aU.S. federal civilian agency to provide IT modernization services. - A recompete BPA with a ceiling value of
$70.0 million and a task order with a value of$15.0 million with theU.S. Federal Communications Commission (FCC) to provide program management, development, platform architecture and system administration support across theFCC's key business areas.
Program management:
- A recompete contract with a value of up to
$9.6 million with theNIH Office of the Chief Information Officer to provide program management support services.
Environment and planning:
- A new contract with a value of up to
$11.0 million with aWestern U.S. state transportation agency to provide biological support services in connection with a transportation project. - A new contract with a value of up to
$5.7 million to provide expert consultative support services to theU.S. Federal Aviation Administration's Office of Commercial Space Transportation Environmental Program , including development and review of environmental impact statements and environmental assessments to ensure compliance with the National Environmental Policy Act and other relevant environmental regulations and policies.
Research and evaluation:
- Two midsized recompete contracts with a
European Commission directorate to provide research and evaluation services related to migration and security.
Public health and communications:
- A recompete contract with a value of up to
$5.0 million with an institute ofNIH to provide publications and exhibit support.
Disaster management:
- A contract with a ceiling of
$3.1 million with a municipality inFlorida to provide disaster recovery financial services. - As mentioned in last quarter's earnings release, a small contract with the
City of Columbia, South Carolina to develop the city's disaster management Community Development Block Grant Mitigation Action Plan (CDBG-Mitigation).
Commercial Revenue First Quarter 2020 Highlights
- Commercial revenue was
$118.4 million , up 2% from the$116.1 million reported in last year's first quarter. Commercial revenue accounted for 33% of total revenue compared to 34% of total revenue in the 2019 first quarter. - Energy markets, which include energy efficiency programs, represented 47% of commercial revenue. Marketing services accounted for 43% of commercial revenue.
Key Commercial Contracts Awarded in the First Quarter 2020
Commercial contract awards were over
In Energy Markets:
- Three contract amendments with a Midwestern
U.S. investor-owned utility to provide program implementation services for its energy efficiency residential, products, and heating, cooling and weatherization programs. - Two subcontracts to provide program implementation and energy IT services to a midwestern
U.S. utility for its energy efficiency residential low-income and appliances programs. - A recompete contract with a Midwestern
U.S. statewide energy efficiency and renewable resources program to support its portfolio of residential energy efficiency programs. - A subcontract to expand customer care services to support growing residential demand response programs for a Midwestern
U.S. utility. - A contract extension to continue to run and operate the electricity support program on behalf of a North American utility regulator, delivering a digital application experience to allow low-income residents to receive on-bill subsidies.
- Retainers with
U.S. health insurers to continue to provide a variety of marketing services for their programs. - Retainer to continue to provide marketing services to a manufacturer of floor care products.
- Task orders with a confectionary manufacturer to provide marketing and public relations services.
- Task orders with a pharmaceutical company to provide corporate communications services.
Dividend Declaration
On
Summary and Outlook
"First quarter results represented a solid start to the year, and our business trends remain stable. The great majority of our revenue is derived from government and utility clients under long-term contracts, which provide considerable visibility. That said, challenging business and economic conditions caused by the COVID-19 pandemic continue to impact our events work for European government clients and our commercial marketing services business. We have taken action to reduce costs in those areas, while assisting our clients in optimizing their budgets. We expect that this short-term impact on our business from COVID-19 can be more than offset in the medium to long term by opportunities that draw on ICF's deep domain expertise in public health, disaster recovery, resiliency and infrastructure,"
In light of current economic uncertainty, the Company has revised its full year 2020 guidance. For full year 2020, ICF now expects revenue of $1.450 to $1.510 billion and EBITDA of $126.0 million to $136.0 million. GAAP earnings per diluted share is expected to range from
"The assumptions underlying our guidance align with our backlog and anticipate a progressive return to more normalized business conditions in the second half of this year. The reduction from our initial 2020 revenue expectations of approximately 9% relate primarily to projections of lower year-on-year revenue performance in our commercial marketing and international government businesses due to COVID-19. We expect that our
"In summary, ICF is navigating these unprecedented times with a substantial backlog, a recession-resistant revenue mix, a strong balance sheet and a record business development pipeline. We expect these attributes to enable us to weather this storm and emerge as an even stronger company in an environment where our civilian domain expertise becomes ever more relevant,"
About ICF
ICF (NASDAQ:ICFI) is a global consulting services company with over 7,000 full-time 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
|
|
||||
|
Consolidated Statements of Comprehensive Income |
||||
|
(Unaudited) |
||||
|
Three Months Ended |
||||
|
|
||||
|
(in thousands, except per share amounts) |
2020 |
2019 |
||
|
Revenue |
$ 358,238 |
$ 341,254 |
||
|
Direct costs |
230,616 |
215,949 |
||
|
Operating costs and expenses: |
||||
|
Indirect and selling expenses |
103,271 |
96,519 |
||
|
Depreciation and amortization |
5,179 |
4,762 |
||
|
Amortization of intangible assets |
2,853 |
2,135 |
||
|
Total operating costs and expenses |
111,303 |
103,416 |
||
|
Operating income |
16,319 |
21,889 |
||
|
Interest expense |
(3,525) |
(2,453) |
||
|
Other income (expense) |
190 |
(412) |
||
|
Income before income taxes |
12,984 |
19,024 |
||
|
Provision for income taxes |
2,372 |
3,706 |
||
|
Net income |
$ 10,612 |
$ 15,318 |
||
|
Earnings per Share: |
||||
|
Basic |
$ 0.56 |
$ 0.81 |
||
|
Diluted |
$ 0.55 |
$ 0.80 |
||
|
Weighted-average Shares: |
||||
|
Basic |
18,840 |
18,825 |
||
|
Diluted |
19,197 |
19,263 |
||
|
Cash dividends declared per common share |
$ 0.14 |
$ 0.14 |
||
|
Other comprehensive (loss) income, net of tax |
(11,123) |
283 |
||
|
Comprehensive (loss) income, net of tax |
$ (511) |
$ 15,601 |
||
|
|
||||
|
Reconciliation of Non-GAAP financial measures(2) |
||||
|
(Unaudited) |
||||
|
Three Months Ended |
||||
|
|
||||
|
(in thousands, except per share amounts) |
2020 |
2019 |
||
|
Reconciliation of Service Revenue |
||||
|
Revenue |
$ 358,238 |
$ 341,254 |
||
|
Subcontractor and other direct costs (3) |
(102,836) |
(99,899) |
||
|
Service revenue |
$ 255,402 |
$ 241,355 |
||
|
Reconciliation of EBITDA and Adjusted EBITDA |
||||
|
Net income |
$ 10,612 |
$ 15,318 |
||
|
Other (income) expense |
(190) |
412 |
||
|
Interest expense |
3,525 |
2,453 |
||
|
Provision for income taxes |
2,372 |
3,706 |
||
|
Depreciation and amortization |
8,032 |
6,897 |
||
|
EBITDA |
24,351 |
28,786 |
||
|
Special charges related to acquisitions (4) |
1,844 |
— |
||
|
Special charges related to severance for staff realignment (5) |
1,770 |
454 |
||
|
Adjustment related to bad debt reserve (6) |
— |
(782) |
||
|
Total special charges |
3,614 |
(328) |
||
|
Adjusted EBITDA |
$ 27,965 |
$ 28,458 |
||
|
EBITDA Margin Percent on Revenue (7) |
6.8% |
8.4% |
||
|
EBITDA Margin Percent on Service Revenue (7) |
9.5% |
11.9% |
||
|
Adjusted EBITDA Margin Percent on Revenue (7) |
7.8% |
8.3% |
||
|
Adjusted EBITDA Margin Percent on Service Revenue (7) |
10.9% |
11.8% |
||
|
Reconciliation of Non-GAAP Diluted EPS |
||||
|
Diluted EPS |
$ 0.55 |
$ 0.80 |
||
|
Special charges related to acquisitions |
0.10 |
— |
||
|
Special charges related to severance for staff realignment |
0.09 |
0.02 |
||
|
Adjustment related to bad debt reserve |
— |
(0.04) |
||
|
Amortization of intangibles |
0.15 |
0.11 |
||
|
Income tax effects on amortization, special charges, and adjustments (8) |
(0.06) |
(0.02) |
||
|
Non-GAAP EPS |
$ 0.83 |
$ 0.87 |
||
|
(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) 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. |
||||
|
(5) Special charges related to severance for staff realignment: These costs are mainly due to involuntary employee termination benefits for our officers and groups of employees who have been notified that they will be terminated as part of a consolidation or reorganization. |
||||
|
(6) 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. |
||||
|
(7) EBITDA Margin Percent and Adjusted EBITDA Margin Percent were calculated by dividing the non-GAAP measure by the corresponding revenue. |
||||
|
(8)Income tax effects were calculated using an effective |
||||
|
|
||||
|
Consolidated Balance Sheets |
||||
|
(Unaudited) |
||||
|
(in thousands, except share and per share amounts) |
|
|
||
|
ASSETS |
||||
|
Current Assets: |
||||
|
Cash and cash equivalents |
$ 58,661 |
$ 6,482 |
||
|
Contract receivables, net |
238,474 |
261,176 |
||
|
Contract assets |
151,558 |
142,337 |
||
|
Prepaid expenses and other assets |
19,885 |
17,402 |
||
|
Income tax receivable |
10,280 |
7,320 |
||
|
Total Current Assets |
478,858 |
434,717 |
||
|
Property and Equipment, net |
61,951 |
58,237 |
||
|
Other Assets: |
||||
|
|
905,177 |
719,934 |
||
|
Other intangible assets, net |
70,048 |
25,829 |
||
|
Operating lease - right-of-use assets |
145,344 |
133,965 |
||
|
Other assets |
22,645 |
23,352 |
||
|
Total Assets |
$ 1,684,023 |
$ 1,396,034 |
||
|
LIABILITIES and STOCKHOLDERS' EQUITY |
||||
|
Current Liabilities: |
||||
|
Current portion of long-term debt |
$ 10,000 |
$ - |
||
|
Accounts payable |
92,818 |
134,578 |
||
|
Contract liabilities |
29,318 |
37,413 |
||
|
Operating lease liabilities - current |
33,333 |
32,500 |
||
|
Accrued salaries and benefits |
57,615 |
52,130 |
||
|
Accrued subcontractors and other direct costs |
34,906 |
45,619 |
||
|
Accrued expenses and other current liabilities |
31,893 |
35,742 |
||
|
Total Current Liabilities |
289,883 |
337,982 |
||
|
Long-term Liabilities: |
||||
|
Long-term debt |
506,979 |
164,261 |
||
|
Operating lease liabilities - non-current |
128,990 |
119,250 |
||
|
Deferred income taxes |
39,494 |
37,621 |
||
|
Other long-term liabilities |
27,921 |
22,369 |
||
|
Total Liabilities |
993,267 |
681,483 |
||
|
Contingencies |
||||
|
Stockholders' Equity: |
||||
|
Preferred stock, par value |
— |
— |
||
|
Common stock, par value |
23 |
23 |
||
|
Additional paid-in capital |
350,658 |
346,795 |
||
|
Retained earnings |
552,303 |
544,840 |
||
|
|
(188,961) |
(164,963) |
||
|
Accumulated other comprehensive loss |
(23,267) |
(12,144) |
||
|
Total Stockholders' Equity |
690,756 |
714,551 |
||
|
Total Liabilities and Stockholders' Equity |
$ 1,684,023 |
$ 1,396,034 |
||
|
|
||||
|
Consolidated Statements of Cash Flows |
||||
|
(Unaudited) |
||||
|
Years ended |
||||
|
March 31, |
||||
|
(in thousands) |
2020 |
2019 |
||
|
Cash Flows from Operating Activities |
||||
|
Net income |
$ 10,612 |
$ 15,318 |
||
|
Adjustments to reconcile net income to net cash used in operating activities: |
||||
|
Bad debt expense |
444 |
(159) |
||
|
Deferred income taxes |
4,756 |
3,144 |
||
|
Non-cash equity compensation |
3,826 |
4,151 |
||
|
Depreciation and amortization |
8,032 |
6,897 |
||
|
Facilities consolidation reserve |
(71) |
(67) |
||
|
Amortization of debt issuance costs |
246 |
127 |
||
|
Other adjustments, net |
(766) |
(264) |
||
|
Changes in operating assets and liabilities, net of the effects of acquisitions: |
||||
|
Net contract assets and liabilities |
(17,349) |
(23,152) |
||
|
Contract receivables |
40,488 |
8,236 |
||
|
Prepaid expenses and other assets |
(1,070) |
1,353 |
||
|
Accounts payable |
(49,200) |
(15,561) |
||
|
Accrued salaries and benefits |
4,453 |
5,913 |
||
|
Accrued subcontractors and other direct costs |
(10,326) |
(8,796) |
||
|
Accrued expenses and other current liabilities |
(5,835) |
(8,705) |
||
|
Income tax receivable and payable |
(2,996) |
(757) |
||
|
Other liabilities |
(476) |
(366) |
||
|
|
(15,232) |
(12,688) |
||
|
Cash Flows from Investing Activities |
||||
|
Capital expenditures for property and equipment and capitalized software |
(4,704) |
(7,539) |
||
|
Payments for business acquisitions, net of cash received |
(253,021) |
(1,819) |
||
|
|
(257,725) |
(9,358) |
||
|
Cash Flows from Financing Activities |
||||
|
Advances from working capital facilities |
744,331 |
163,240 |
||
|
Payments on working capital facilities |
(389,776) |
(131,346) |
||
|
Debt issue costs |
(2,081) |
— |
||
|
Proceeds from exercise of options |
37 |
404 |
||
|
Dividends paid |
(2,639) |
(2,636) |
||
|
Net payments for stock issuances and buybacks |
(23,998) |
(15,218) |
||
|
Net Cash Provided by Financing Activities |
325,874 |
14,444 |
||
|
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash |
(738) |
305 |
||
|
Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash |
52,179 |
(7,297) |
||
|
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period |
6,482 |
12,986 |
||
|
Cash, Cash Equivalents, and Restricted Cash, End of Period |
$ 58,661 |
$ 5,689 |
||
|
Supplemental disclosure of cash flow information: |
||||
|
Cash paid during the period for: |
||||
|
Interest |
$ 3,892 |
$ 1,597 |
||
|
Income taxes |
$ 895 |
$ 1,066 |
||
|
|
||||
|
Supplemental Schedule(9)(10) |
||||
|
Revenue by client markets |
Three Months Ended |
|||
|
|
||||
|
2020 |
2019 |
|||
|
Energy, environment, and infrastructure |
42% |
45% |
||
|
Health, education, and social programs |
40% |
35% |
||
|
Safety and security |
9% |
9% |
||
|
Consumer and financial services |
9% |
11% |
||
|
Total |
100% |
100% |
||
|
Revenue by client type |
Three Months Ended |
|||
|
|
||||
|
2020 |
2019 |
|||
|
|
44% |
39% |
||
|
|
17% |
19% |
||
|
International government |
6% |
8% |
||
|
Government |
67% |
66% |
||
|
Commercial |
33% |
34% |
||
|
Total |
100% |
100% |
||
|
Revenue by contract mix |
Three Months Ended |
|||
|
|
||||
|
2020 |
2019 |
|||
|
Time-and-materials |
47% |
45% |
||
|
Fixed-price |
37% |
40% |
||
|
Cost-based |
16% |
15% |
||
|
Total |
100% |
100% |
||
|
(9)As is shown in the supplemental schedule, we track revenue by key metrics that provide useful information about the nature of our operations. Client markets provide insight into the breadth of our expertise. Client type is an indicator of the diversity of our client base. Revenue by contract mix provides insight in terms of the degree of performance risk that we have assumed. |
||||
|
(10)Certain immaterial revenue percentages in the prior year have been reclassified due to minor adjustments and reclassifications. |
||||
Investor Contacts: http://investors.globant.com/alerts
Company Information Contact:
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SOURCE ICF
