Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 9, 2010

 

 

ICF International, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-33045   22-3661438

(State or other jurisdiction of

incorporation or organization)

  (Commission File Number)  

(I.R.S. Employer

Identification Number)

 

9300 Lee Highway, Fairfax, Virginia   22031
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (703) 934-3000

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition

On March 9, 2010, ICF International, Inc. (the “Company”) announced its financial results for the fourth quarter and year ended December 31, 2009. The press release containing this announcement is filed as Exhibit 99.1.

The information contained in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. The information in this report shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

 

99.1   Press Release dated March 9, 2010


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  ICF International, Inc.
Date: March 9, 2010   By:  

/s/    ALAN STEWART        

    Alan Stewart
    Corporate Secretary


Exhibit Index

 

Exhibit
No.

 

Document

99.1   Press Release dated March 9, 2010
Exhibit 99.1

Exhibit 99.1

 

LOGO    NEWS RELEASE

ICF International Reports Fourth Quarter and Full Year 2009 Results

Fourth Quarter Highlights

Core Business Revenues Increased 57 Percent

Organic Growth Rate Was 22 Percent

Fully Diluted EPS Reached $0.37

Quarter-end Backlog Was $1.4 Billion

FOR IMMEDIATE RELEASE

Contacts:

Douglas Beck, ICF International, 1.703.934.3820

Lynn Morgen / Betsy Brod, MBS Value Partners, 1.212.750.5800

FAIRFAX, VA, March 9, 2010 – ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting services and technology to government and commercial clients, reported results for the fourth quarter and year ended December 31, 2009.

Fourth Quarter Results and Highlights

For the fourth quarter of 2009, core business revenue including acquisitions, increased 57 percent to $174.1 million from the $110.8 million reported in the 2008 fourth quarter. Organic revenue growth was 22 percent for the 2009 fourth quarter. In the fourth quarter of 2008, total revenue was $161.9 million, which included $51.1 million from The Road Home contract.

For the fourth quarter of 2009, net income was $6.2 million, compared to net income of $6.1 million in the 2008 fourth quarter. Net income benefited from favorable non-recurring tax benefits, which reduced the effective tax rate to 29.5 percent for the quarter. Earnings per diluted share were $0.37 calculated on a 7 percent year-over-year increase in the weighted average number of shares outstanding. For the 2008 fourth quarter, earnings per diluted share were $0.40. Fourth quarter 2009 EBITDA1, adjusted to exclude acquisition-related costs of $0.4 million, was $15.8 million, representing an adjusted EBITDA margin of 9.1 percent.

“This was another quarter of strong growth for ICF,” said Sudhakar Kesavan, chairman and chief executive officer. “Organic growth was 21.9 percent, an increase of almost six percentage points from year-ago levels. Our markets benefited from strong demand for both our advisory and implementation services from federal government clients. Growth in our commercial business was driven primarily by energy efficiency programs.”

 

1

EBITDA is a Non-GAAP measurement, which adds depreciation and amortization to operating income to derive EBITDA. We have provided EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance an understanding of our operating results. EBITDA does not purport to be an alternative to net income as a measure of operating performance or the cash flows from operating activities as a measure of liquidity. Please refer to the table at the bottom of the statement of earnings in this release that reconciles GAAP net income to EBITDA and adjusted EBITDA.


On December 10, 2009, ICF completed the acquisition of Jacob & Sundstrom, an information technology firm specializing in providing cybersecurity and identity management services to U.S. federal civilian and defense agencies.

“By combining Jacob & Sundstrom’s cybersecurity capabilities with our energy industry reliability and smart grid applications, program management, and risk assessment services, we have significantly expanded the range of advisory and implementation services that ICF can offer to government and energy industry clients, markets that are acutely aware of the importance of mitigating cybersecurity threats and vulnerabilities,” said Mr. Kesavan.

Backlog and New Business Awards

Backlog was $1.4 billion at the end of the 2009 fourth quarter, comparable to backlog levels at the end of the prior quarter. Funded backlog was $536 million, or 39.4 percent of the total.

The total value of contracts awarded in the fourth quarter of 2009 was $124 million.

Key contracts won in the fourth quarter of 2009 included:

 

   

Human Resources: A five-year indefinite delivery/indefinite quantity (ID/IQ) contract with a total program ceiling of $1.3 billion that is one of the highly competitive HRSolutions Studies and Analysis Support contracts by the U.S. Department of the Army. Through this contract, ICF may now compete to provide a full range of support to the Army’s Human Resources programs and systems, with a focus on business planning and research and evaluation as it relates to these programs.

 

   

Human Resources: A $4.9 million contract with the U.S. Coast Guard to provide strategic human capital support services in three areas: planning and recruitment, personnel development and retention, and policies and procedures support.

 

   

Substance Abuse: A five-year $7 million contract with the Office of National Drug Control Policy to assist with conducting a national evaluation of the Drug Free Communities Program. This anti-drug program supports community coalitions that mobilize their communities to prevent youth substance abuse in alcohol, tobacco, illicit drugs, and inhalants.

 

   

Housing Program Quality Control: A $9.9 million, two-year contract with the U.S. Department of Housing and Urban Development (HUD). This is the fourth consecutive contract awarded to ICF Macro to provide HUD with estimates of the type and cost of errors associated with the income certification and rent calculation process for HUD-assisted housing programs.

ICF and its subsidiaries also won more than a dozen additional contracts valued at greater than $1 million in the areas of energy efficiency, energy modeling and analysis, environmental management, transportation planning, health informatics, program evaluation, and defense program management.

Full Year 2009 Results

 

   

Core business revenue was $614.0 million, up 42 percent from the $432.6 million reported for 2008.

 

   

Full-year 2009 organic growth in core business revenue was 14.7 percent.

 

   

Total revenue was $674.4 million and included $60.4 million from The Road Home contract. In 2008, total revenue was $697.4 million and included $264.8 million from The Road Home contract revenue.

 

   

EBITDA adjusted to exclude acquisition-related costs was $61.0 million, or 9 percent of revenue.

 

   

Net income was $22.4 million, or $1.40 per diluted share, compared to $28.7 million, or $1.88 per diluted share in 2008. The weighted average number of diluted shares outstanding in 2009 was approximately 15.9 million compared to approximately 15.3 million in 2008.


Recent Corporate Developments

On December 16, 2009, the Company completed a public offering of 3,565,000 shares of common stock at a price of $24.56 per share. Total net proceeds of approximately $83.3 million to ICF were used to pay down debt. The Company intends to use the available debt capacity to fund future growth, including possible acquisitions.

Summary and Outlook

“ICF’s strong financial performance continues to reflect our prominent position in high-growth markets, and our success in gaining share and leveraging our advisory expertise to win larger implementation projects,” Mr. Kesavan said. “We have entered 2010 with a solid backlog and a strong pipeline of opportunities.”

“Looking ahead to 2010, we remain confident in our business growth prospects. We are increasing our revenue guidance range to $740 million to $775 million to reflect the Jacob & Sundstrom acquisition. This represents growth of 21 percent to 26 percent over 2009’s core business revenue of $614 million. We expect organic growth of 11 percent to 16 percent, and an EBITDA margin of 9 percent to 10 percent. Earnings per diluted share are expected to be in the range of $1.33 to $1.43 based upon approximately 19.9 million fully diluted shares outstanding and an effective tax rate of 41 percent,” noted Mr. Kesavan.

“For the 2010 first quarter, we anticipate that revenue will be in the range of $170 million to $175 million. Earnings per diluted share are expected to range from $0.27 to $0.30, based on approximately 19.6 million fully diluted shares outstanding and an effective tax rate of 41 percent,” Mr. Kesavan concluded.

About ICF International

ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, climate change, environment, transportation, social programs, health, defense, and emergency management 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 analysis and design 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 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.


ICF International, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands, except per share amounts)

 

     Three months ended
December 31,
    Twelve months ended
December 31,
 
     2009     2008     2009     2008  

Gross Revenue

   $ 174,061      $ 161,933      $ 674,399      $ 697,426   

Direct Costs

     106,576        104,864        411,334        460,002   

Operating costs and expenses:

        

Indirect and selling expenses

     52,011        42,016        203,428        170,360   

Depreciation and amortization

     2,808        1,516        9,416        5,407   

Amortization of intangible assets

     3,071        2,241        11,137        8,683   
                                

Total operating costs and expenses

     57,890        45,773        223,981        184,450   
                                

Operating Income

     9,595        11,296        39,084        52,974   

Interest expense

     (1,400     (1,050     (5,107     (4,082

Other income (expense)

     580        566        1,005        581   
                                

Income before taxes

     8,775        10,812        34,982        49,473   

Provision for income taxes

     2,586        4,670        12,626        20,750   
                                

Net income

   $ 6,189      $ 6,142      $ 22,356      $ 28,723   
                                

Earnings per Share:

        

Basic

   $ 0.38      $ 0.41      $ 1.45      $ 1.96   
                                

Diluted

   $ 0.37      $ 0.40      $ 1.40      $ 1.88   
                                

Weighted-average Shares:

        

Basic

     16,187        14,891        15,433        14,641   
                                

Diluted

     16,522        15,452        15,914        15,270   
                                
     Three months ended
December 31,
    Twelve months ended
December 31,
 
Reconciliation of EBITDA    2009     2008     2009     2008  

Operating Income

   $ 9,595      $ 11,296      $ 39,084      $ 52,974   

Depreciation and Amortization

     5,879        3,757        20,553        14,090   
                                

EBITDA

     15,474        15,053        59,637        67,064   

Transaction related costs

     367        —          1,354        —     
                                

Adjusted EBITDA

   $ 15,841      $ 15,053      $ 60,991      $ 67,064   
                                
     9.1     9.3     9.0     9.6


ICF International, Inc., and Subsidiaries

Consolidated Balance Sheets

 

December 31,

   2009     2008  
     (in thousands of dollars)  

Assets

    

Current Assets

    

Cash and cash equivalents

   $ 2,353      $ 1,536   

Contract receivables, net

     174,120        150,778   

Prepaid expenses and other

     6,666        4,507   

Income tax receivable

     4,175        3,530   

Restricted cash

     —          2,180   

Deferred income taxes

     1,337        4,186   
                

Total current assets

     188,651        166,717   

Total property and equipment, net

     22,600        13,373   

Other assets:

    

Goodwill

     323,467        198,724   

Other intangible assets, net

     38,474        16,844   

Restricted cash

     2,123        2,078   

Other assets

     6,912        3,281   
                

Total Assets

   $ 582,227      $ 401,017   
                

Liabilities and Stockholders’ Equity

    

Current Liabilities

    

Accounts payable

   $ 27,075      $ 27,740   

Accrued salaries and benefits

     32,072        27,405   

Accrued expenses

     21,770        35,295   

Deferred revenue

     19,370        12,352   
                

Total Current Liabilities

     100,287        102,792   

Long-term Liabilities:

    

Long-term debt

     145,000        80,000   

Deferred rent

     2,914        2,361   

Deferred income taxes

     11,656        10,849   

Other

     4,810        2,098   
                

Total Liabilities

     264,667        198,100   

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,

    

19,278,591 and 15,188,320 shares issued; and

    

19,278,591 and 15,106,522 shares outstanding

     19        15   

Additional paid-in capital

     211,412        120,550   

Retained earnings

     106,466        84,110   

Treasury stock

     —          (1,474

Stockholder notes receivable

     —          (12

Accumulated other comprehensive income

     (337     (272
                

Total Stockholders’ Equity

     317,560        202,917   

Total Liabilities and Stockholders’ Equity

   $ 582,227      $ 401,017   
                


ICF International, Inc., and Subsidiaries

Consolidated Statements of Cash Flows

 

Year ended December 31,    2009     2008  
     (in thousands of dollars)  

Cash Flows from operating activities

    

Net income

   $ 22,356      $ 28,723   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Bad debt expense

     241        422   

Deferred income taxes

     2,203        (3,380

Loss on disposal of fixed assets

     (14     127   

Non-cash equity compensation

     7,192        6,473   

Depreciation and amortization

     20,553        14,090   

Changes in operating assets and liabilities:

    

Contract receivables

     15,948        57,022   

Prepaid expenses and other assets

     (3,962     598   

Accounts payable

     (3,763     (50,654

Accrued salaries and benefits

     (3,207     (4,219

Accrued expenses

     (16,813     (12,608

Deferred revenue

     4,341        (3,834

Income tax receivable/payable

     1,150        (1,905

Restricted cash

     2,135        (3,415

Deferred rent

     106        567   

Other liabilities

     88        (3,373
                

Net Cash Provided by Operating Activities

     48,554        24,634   

Cash Flows from Investing Activities

    

Capital expenditures

     (8,068     (9,929

Payments for business acquisitions, net of cash received

     (188,672     (51,422

Capitalized software development costs

     (437     (341
                

Net Cash Used in Investing Activities

     (197,177     (61,692

Cash Flows from Financing Activities

    

Advances from working capital facilities

     315,784        270,949   

Payments on working capital facilities

     (250,784     (238,028

Restricted cash related to Caliber acquisition

     —          1,325   

Debt issue costs

     (655     (1,315

Proceeds from secondary offering, net

     83,294        —     

Exercise of options

     2,832        2,127   

Tax benefits of stock option exercises and award vesting

     3,113        3,271   

Issuances of stock

     88        485   

Purchases of stock for treasury

     (4,179     (2,329

Payments received on stockholder notes

     12        9   
                

Net Cash Provided by Financing Activities

     149,505        36,494   

Effect of Exchange Rate on Cash

     (65     (633

Increase (Decrease) in Cash

     817        (1,197

Cash, beginning of year

     1,536        2,733   

Cash, end of year

   $ 2,353      $ 1,536   
                

Supplemental disclosures of cash flow information:

    

Cash paid during the period:

    

Interest

   $ 4,664      $ 4,505   
                

Income taxes

   $ 7,644      $ 24,445