icfi-8k_20210225.htm
false 0001362004 0001362004 2021-02-25 2021-02-25

 

 

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): February 25, 2021

 

ICF International, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-33045

22-3661438

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

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)

Securities registered pursuant to Section 12(b) of the Act.

Title of each class

Trading Symbols(s)

Name of each exchange on which registered

Common Stock

ICFI

NASDAQ

 

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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.         

 

 

 

 


 

 

Item 2.02 Results of Operations and Financial Condition

 

On February 25, 2021, ICF International, Inc. (the “Company”) announced its financial results for the fourth quarter and full year ended December 31, 2020.  The press release containing this announcement is attached hereto as Exhibit 99.1.

 

The information contained in this report, including Exhibit 99.1, is considered to be “furnished” and 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.

 

The release contains forward-looking statements regarding the Company and includes a cautionary statement identifying important factors that could cause actual result to differ materially from those anticipated.

 

Item 8.01 Other Events

 

On February 25, 2021, the Company's Board of Directors declared a quarterly dividend in an amount equal to $0.14 per share. This quarterly cash dividend will be paid on April 13, 2021 to stockholders of record as of the close of business on March 26, 2021.

The cash dividend policy and the payment of future cash dividends under that policy will be made at the discretion of the Company's Board of Directors and will depend on earnings, operating and financial conditions, capital requirements, and other factors deemed relevant by the Board, including the applicable requirements of the Delaware General Corporation Law and the best interests of the Company’s stockholders.

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

99.1

 

Press Release dated February 25, 2021

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

1


 

Exhibit Index

 

Exhibit

Number

 

Description

99.1

 

Press Release dated February 25, 2021

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

2


 

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 thereunto duly authorized.

 

 

 

ICF International, Inc.

 

 

 

 

Date:  February 25, 2021

 

By:

/s/ Bettina G. Welsh

 

 

 

Bettina G. Welsh

 

 

 

Senior Vice President & Chief Financial Officer

 

3

icfi-ex991_6.htm

Exhibit 99.1

 

NEWS RELEASE

ICF Reports Fourth Quarter and Full Year 2020 Results

 

 

Fourth Quarter Highlights:

 

Total Revenue Was $434 Million; Service Revenue¹ Was $262 Million, up 4.1%

 

Diluted EPS Was $0.67, Inclusive of $0.51 in One-time Executive Retirement and Lease Termination-Related Charges

 

Non-GAAP EPS¹ Was $1.36

 

Adjusted EBITDA Margin on Service Revenue¹ Was 17.1%

 

Record Contract Awards of $525 Million

 

Full Year Highlights:

 

Total Revenue Was $1.51 Billion; Service Revenue Was $1.04 billion, up 4.1%

 

Diluted EPS Was $2.87, Inclusive of $0.53 in One-time Executive Retirement and Lease Termination-Related Charges

 

Non-GAAP EPS Was $4.17

 

Adjusted EBITDA Margin on Service Revenue Was 13.7%

 

Record Contract Awards of $2.0 Billion, Representing a Book-to-Bill Ratio of 1.3

 

Operating Cash Flow of $173 Million

 

 

 

FOR IMMEDIATE RELEASE

Investor Contacts:

Lynn Morgen, ADVISIRY PARTNERS, lynn.morgen@advisiry.com +1.212.750.5800

David Gold, ADVISIRY PARTNERS, david.gold@advisiry.com +1.212.750.5800

Company Information Contact:

Lauren Dyke, ICF, lauren.dyke@ICF.com +1.571.373.5577

 

FAIRFAX, Va.—Feb. 25, 2021-- ICF (NASDAQ: ICFI), a global consulting and digital services provider, reported results for the fourth quarter and full year ended December 31, 2020.

 

Commenting on the results, John Wasson, chairman and chief executive officer, said, “The fourth quarter represented a strong finish to 2020, with total revenues that exceeded the high end of our guidance range and positive service revenue trends that are reflective of ICF’s positioning in high growth markets.

“Revenues from federal government and commercial energy clients increased 19% and 9%, respectively, led by our work in IT modernization, public health and energy efficiency and utility consulting, while the exceptional fourth quarter increase in commercial marketing revenue was one-time in nature, tied to the completion of a large contract that primarily involved pass-through revenue.

1


“Favorable business mix, higher utilization and lower SG&A and fringe benefit costs drove a year-on-year 220 basis point expansion in adjusted EBITDA margin on service revenue in the fourth quarter, resulting in a 15% increase in Non-GAAP EPS.

“In 2020, one of the most challenging business periods in recent history, ICF reported 4% year-on-year growth in service revenue, and won a record $2 billion in contract awards, laying the foundation for strong future growth. This performance demonstrates the resilience of our company and first-rate execution by ICF’s employees, who have worked closely with clients throughout the pandemic to seamlessly execute programs and win new business, while working remotely,” Mr. Wasson noted.

 

Fourth Quarter 2020 Results

 

Fourth quarter 2020 total revenue was $434.3 million, representing 9.5% growth over the $396.6 million reported in the fourth quarter of 2019. Service revenue increased 4.1% year-over-year to $262.2 million, from $251.9 million. Net income amounted to $12.8 million in the 2020 fourth quarter, or $0.67 per diluted share, inclusive of $0.56 of tax-effected special charges, of which $0.51 represented charges relating to the departure of ICF’s executive chairman and the early termination and discontinued use of 16 office leases. In the 2019 fourth quarter, net income was $19.4 million, or $1.01 per diluted share, inclusive of $0.09 of tax-effected special charges primarily tied to M&A costs related to the ITG acquisition.

 

Non-GAAP EPS was $1.36 per share, up from $1.18 per share in 2019 in the fourth quarter. EBITDA¹ was $30.3 million compared to $34.9 million reported in the fourth quarter of 2019. Adjusted EBITDA¹ was $44.9 million compared to $37.4 million in the 2019 fourth quarter. Fourth quarter 2020 adjusted EBITDA margin on service revenue was 17.1% compared to 14.9% in the 2019 fourth quarter.

 

Full Year 2020 Results

 

For 2020, total revenue amounted to $1.51 billion, representing 1.9% growth over the $1.48 billion reported for full year 2019. Service revenue increased 4.1% year-over-year to $1.04 billion, from $1.00 billion in 2019. Full year 2020 net income amounted to $55.0 million, or $2.87 per diluted share, inclusive of $0.79 of tax-effected special charges, of which $0.53 represented one-time executive retirement and lease-related charges as referenced above. This compares to net income of $68.9 million reported in 2019, or $3.59 per diluted share, inclusive of $0.24 of special charges.

 

Non-GAAP EPS was $4.17 per share, up from $4.15 per share. EBITDA was $122.9 million compared to $129.6 million reported in 2019. Adjusted EBITDA was $143.2 million, a 6.2% increase over $134.8 million in 2019. The 2020 adjusted EBITDA margin on service revenue was 13.7% compared to 13.4% in 2019.

 

Operating cash flow reached $173 million in 2020. The significant increase above our 2020 guidance of $120 million was primarily due to $50 million of unexpected commercial client prepayments related to media placements to be paid in early 2021.

 

Backlog and New Business Awards

 

Total backlog was $2.9 billion at the end of the fourth quarter of 2020. Funded backlog was $1.5 billion, or approximately 53% of the total backlog. The total value of contracts awarded in the 2020 fourth quarter was a record $525 million. For full year 2020, contract awards were a record $1.96 billion, representing a book-to-bill ratio of 1.3.

 

Government Revenue Fourth Quarter 2020 Highlights

 

2


Revenue from government clients was $251.5 million, up 3.0% year-over-year.

 

 

U.S. federal government revenue was $165.5 million, representing an 18.9% year-over-year increase. Federal government revenue accounted for 38% of total revenue, compared to 35% in the 2019 fourth quarter.

 

U.S. state and local government revenue was $51.7 million, compared to $69.5 million in the year-ago quarter. State and local accounted for 12% of total revenue, compared to 18% of total revenue in the 2019 fourth quarter.

 

International government revenue was $34.4 million, compared to $35.4 million in the year-ago quarter. International accounted for 8% of total revenue, compared to 9% of total revenue in the 2019 fourth quarter.

 

Key Government Contracts Awarded in the Fourth Quarter 2020

 

ICF was awarded more than 100 U.S. federal contracts and task orders and more than 200 additional contracts from U.S. state and local and international governments with an aggregate value of over $290 million. Notable awards won in the fourth quarter included:

 

Energy and Environment

 

A single-award recompete blanket purchase agreement with a ceiling of $94.0 million with the U.S. Environmental Protection Agency to provide strategic and technical support for the agency's ENERGY STAR® program.

 

A contract with recompete and new program elements with a value of $31.2 million with the New York City Department of Environmental Protection to continue and expand implementation of the city’s energy efficiency, water conservation and clean energy programs for existing and new commercial buildings.

 

Five contract modifications with a combined value of $7.7 million with a western U.S. state water resources agency to provide environmental compliance, quantitative modeling and outreach services.

 

Disaster Management

 

A new contract with initial funding of over $40 million with a key public sector client to provide mitigation services under the U.S. Department of Housing and Urban Development's Community Development Block Grant-Mitigation program.

 

A new contract with a value of $11.7 million with a South-Central U.S. state to provide disaster recovery services following Hurricane Laura.

 

A new contract with a value of $7.9 million with a South-Central U.S. local school board to provide disaster recovery services.

 

Research and Evaluation

 

A new subcontract with a value of $26.1 million to conduct survey research and provide information system infrastructure and management services related to substance abuse and mental health services across the United States and territories for an agency of the U.S. Department of Health and Human Services.

 

A recompete blanket purchase agreement with a value of $5.2 million with the U.S. Internal Revenue Service to provide survey research and evaluation services to measure customer satisfaction.

 

IT Modernization/ Strategic Communications

3


 

A recompete contract with a value of $6.7 million with the U.S. Food and Drug Administration (FDA) to provide docket management services in support of FDA's Center for Tobacco Products.

 

A new contract with a ceiling of $5.6 million with an agency of the U.S. Department of Defense to perform ServiceNow platform support services.

 

A contract expansion with a value of $4.6 million with the European Commission to support COVID-19 recovery communications.

 

Commercial Revenue Fourth Quarter 2020 Highlights

 

 

Commercial revenue was $182.8 million, up 20% from the $152.4 million reported in last year’s fourth quarter. Commercial revenue accounted for 42% of total revenue compared to 38% of total revenue in the 2019 fourth quarter.

 

Energy markets, which include energy efficiency programs, represented 36% of commercial revenue. Marketing services accounted for 59% of commercial revenue.

 

Key Commercial Contacts Awarded in the Fourth Quarter 2020

 

Commercial contract awards were over $230 million in the fourth quarter 2020. ICF was awarded more than 700 commercial projects globally during the quarter including:

 

In Energy Markets

 

Multiple contract extensions and expansions with a mid-Atlantic U.S. utility to continue implementation and marketing of its portfolio of residential, commercial and industrial energy efficiency programs.

 

A contract extension with Southern Maryland Electric Cooperative to continue to implement its portfolio of residential, commercial and industrial energy efficiency programs.

 

Six contract expansions and extensions with utilities across the Mid-Atlantic, Southeastern and Midwestern U.S. to continue to provide energy efficiency program implementation services.

 

A recompete contract with a Western U.S. utility to provide support for regulatory compliance related to environmental and capital projects.

 

In Marketing Services

 

Multiple contract extensions and task orders with a U.S. nationwide health insurer to continue providing paid media and related marketing services.

 

A retainer with a hospitality industry client to provide public relations and social media services.

 

A retainer with a mattress manufacturer to provide public relations services.

 

Dividend Declaration

 

On February 25, 2021, ICF declared a quarterly cash dividend of $0.14 per share, payable on April 13, 2021, to shareholders of record on March 26, 2021.

 

2020 Recognitions

 

ICF received several important recognitions in 2020:

 

4


 

For the 5th straight year, Forbes included ICF on its annual list of “America’s Best Management Consulting Firms.”

 

ICF was recognized by CDP (global environmental disclosure system) as a corporate pioneer against climate change, scoring A- for the third consecutive year.

 

Northern Virginia Technology Council named ICF a Tech 100 Firm for the third year in a row.

 

ICF Next was ranked the 6th largest public relations agency in the U.S. and 12th globally in PRWeek’s annual Agency Business Report.

 

ICF’s WayPoint technology won Environmental Business Journal’s Environmental Achievement Awards in the information technology category.

 

ICF was named a Top 200 Environmental Firm by Engineering News Record.

 

Summary and Outlook

 

“Record contract awards, higher backlog and a business development pipeline in excess of $6.3 billion have positioned ICF for considerable organic growth in service revenue in 2021 and beyond. In addition to the key growth catalysts we identified two years ago, namely IT modernization, public health, disaster management and energy efficiency and utility consulting, ICF’s expertise and qualifications also align well with the current administration’s priorities in climate, environment and infrastructure, supporting our expectation for considerable growth in the coming years.

 

“Based on our current portfolio of business, we expect service revenue for full year 2021 to range from $1.095 billion to $1.13 billion, representing year-on-year growth of 6.6% at the midpoint. Pass-through revenues are anticipated at approximately 28% of total revenue in 2021, compared to 31% in 2020, implying total revenue in 2021 of between $1.525 billion and $1.575 billion. EBITDA is expected to range from $145 million to $155 million, equivalent to an EBITDA margin on service revenue of 13.5% at the midpoints of the ranges. GAAP EPS is projected to be $3.90 to $4.20 and Non-GAAP EPS is expected to range from $4.35 to $4.65. Operating cash flow for 2021 is expected to be approximately $100 million.

 

“Approximately 55% of ICF’s 2020 service revenue represented work in the key growth areas noted above in which we expect growth rates, in the aggregate, to approximate 10% or more over the next several years. In 2021 we plan to utilize a portion of the savings from the optimization of our real estate footprint and reduced travel and entertainment expense to invest in people and technology as we further expand our capabilities in these high-growth markets.

 

At ICF, we are passionate about addressing and solving some of the most complex environmental and social issues facing the world today. Our work enables us to attract and retain professionals who are committed to making a positive impact on society by providing innovative solutions in areas such as climate, energy efficiency, disaster management, public health and social programs, and supporting our clients’ initiatives across a broad range of industries. As a company, ICF has long been committed to the highest standards of corporate responsibility. We encourage you to access our latest Corporate Citizenship report, which is available on our website, Mr. Wasson concluded.

 

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 operations but are not indicative of ongoing performance and have been presented net of applicable U.S. GAAP taxes. The presentation of non-GAAP measurements may not be comparable to other similarly titled measures used by other companies.

 

###

 

5


 

About ICF

ICF (NASDAQ:ICFI) is a global consulting services company with over 7,000 full- 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 U.S. federal government agencies; our ability to acquire and successfully integrate businesses; and the effects of the novel coronavirus disease (COVID-19) and related federal, state and local government actions and reactions on the health of our staff and that of our clients, the continuity of our and our clients' operations, our results of operations and our outlook. These and other factors that could cause our actual results to differ from those indicated in forward-looking statements that 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.

 

6


ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

(in thousands, except per share amounts)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

434,335

 

 

$

396,636

 

 

$

1,506,875

 

 

$

1,478,525

 

Direct costs

 

 

295,095

 

 

 

264,027

 

 

 

972,406

 

 

 

953,187

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Indirect and selling expenses

 

 

108,963

 

 

 

97,664

 

 

 

411,612

 

 

 

395,763

 

Depreciation and amortization

 

 

5,013

 

 

 

4,707

 

 

 

20,399

 

 

 

20,099

 

Amortization of intangible assets

 

 

3,506

 

 

 

1,940

 

 

 

13,349

 

 

 

8,083

 

Total operating costs and expenses

 

 

117,482

 

 

 

104,311

 

 

 

445,360

 

 

 

423,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

21,758

 

 

 

28,298

 

 

 

89,109

 

 

 

101,393

 

Interest expense

 

 

(2,971

)

 

 

(2,508

)

 

 

(13,892

)

 

 

(10,719

)

Other expense

 

 

(860

)

 

 

(134

)

 

 

(544

)

 

 

(501

)

Income before income taxes

 

 

17,927

 

 

 

25,656

 

 

 

74,673

 

 

 

90,173

 

Provision for income taxes

 

 

5,107

 

 

 

6,277

 

 

 

19,714

 

 

 

21,235

 

Net income

 

$

12,820

 

 

$

19,379

 

 

$

54,959

 

 

$

68,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.68

 

 

$

1.03

 

 

$

2.92

 

 

$

3.66

 

Diluted

 

$

0.67

 

 

$

1.01

 

 

$

2.87

 

 

$

3.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,841

 

 

 

18,835

 

 

 

18,841

 

 

 

18,816

 

Diluted

 

 

19,143

 

 

 

19,234

 

 

 

19,135

 

 

 

19,224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.14

 

 

$

0.14

 

 

$

0.56

 

 

$

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax

 

 

5,654

 

 

 

6,258

 

 

 

(1,962

)

 

 

407

 

Comprehensive income, net of tax

 

$

18,474

 

 

$

25,637

 

 

$

52,997

 

 

$

69,345

 

 

7


ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures(2)

(Unaudited)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

(in thousands, except per share amounts)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Reconciliation of Service Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

434,335

 

 

$

396,636

 

 

$

1,506,875

 

 

$

1,478,525

 

Subcontractor and other direct costs (3)

 

 

(172,148

)

 

 

(144,728

)

 

 

(463,364

)

 

 

(475,717

)

Service revenue

 

$

262,187

 

 

$

251,908

 

 

$

1,043,511

 

 

$

1,002,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

12,820

 

 

$

19,379

 

 

$

54,959

 

 

$

68,938

 

Other expense

 

 

860

 

 

 

134

 

 

 

544

 

 

 

501

 

Interest expense

 

 

2,971

 

 

 

2,508

 

 

 

13,892

 

 

 

10,719

 

Provision for income taxes

 

 

5,107

 

 

 

6,277

 

 

 

19,714

 

 

 

21,235

 

Depreciation and amortization

 

 

8,519

 

 

 

6,647

 

 

 

33,748

 

 

 

28,182

 

EBITDA

 

 

30,277

 

 

 

34,945

 

 

 

122,857

 

 

 

129,575

 

Adjustment related to impairment of long-lived assets  (4)

 

 

3,090

 

 

 

 

 

 

3,090

 

 

 

1,728

 

Special charges related to acquisitions (5)

 

 

30

 

 

 

1,574

 

 

 

1,983

 

 

 

1,771

 

Special charges related to severance for staff realignment (6)

 

 

1,069

 

 

 

453

 

 

 

4,764

 

 

 

1,774

 

Special charges related to facilities consolidations, office closures, and our future corporate headquarters (7)

 

 

1,643

 

 

 

454

 

 

 

1,643

 

 

 

717

 

Special charges related to retirement of Executive Chair (8)

 

 

8,825

 

 

 

 

 

 

8,825

 

 

 

 

Adjustment related to bad debt reserve (9)

 

 

 

 

 

 

 

 

 

 

 

(782

)

Total special charges

 

 

14,657

 

 

 

2,481

 

 

 

20,305

 

 

 

5,208

 

Adjusted EBITDA

 

$

44,934

 

 

$

37,426

 

 

$

143,162

 

 

$

134,783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA Margin Percent on Revenue (10)

 

 

7.0

%

 

 

8.8

%

 

 

8.2

%

 

 

8.8

%

EBITDA Margin Percent on Service Revenue (10)

 

 

11.5

%

 

 

13.9

%

 

 

11.8

%

 

 

12.9

%

Adjusted EBITDA Margin Percent on Revenue (10)

 

 

10.3

%

 

 

9.4

%

 

 

9.5

%

 

 

9.1

%

Adjusted EBITDA Margin Percent on Service Revenue (10)

 

 

17.1

%

 

 

14.9

%

 

 

13.7

%

 

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.67

 

 

$

1.01

 

 

$

2.87

 

 

$

3.59

 

Adjustment related to impairment of long-lived assets

 

 

0.16

 

 

 

 

 

 

0.16

 

 

 

0.09

 

Special charges related to acquisitions

 

 

 

 

 

0.08

 

 

 

0.10

 

 

 

0.10

 

Special charges related to severance for staff realignment

 

 

0.06

 

 

 

0.02

 

 

 

0.25

 

 

 

0.09

 

Special charges related to facilities consolidations, office closures, and our future corporate headquarters

 

 

0.10

 

 

 

0.02

 

 

 

0.10

 

 

 

0.08

 

Special charges related to retirement of Executive Chair

 

 

0.46

 

 

 

 

 

 

0.46

 

 

 

 

Adjustment related to bad debt reserve

 

 

 

 

 

 

 

 

 

 

 

(0.04

)

Amortization of intangibles

 

 

0.18

 

 

 

0.10

 

 

 

0.70

 

 

 

0.42

 

Income tax effects (11)

 

 

(0.27

)

 

 

(0.05

)

 

 

(0.47

)

 

 

(0.18

)

Non-GAAP EPS

 

$

1.36

 

 

$

1.18

 

 

$

4.17

 

 

$

4.15

 

 

8


 

(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) Adjustment related to impairment of long-lived assets: We recognized impairment expense of $3.1 million in the fourth quarter of 2020 related to impairment of right-of-use lease assets and $1.7 million in the second quarter of 2019 related to an intangible asset associated with a historical business acquisition.

(5) Special charges related to acquisitions: These costs consist primarily of consultants and other outside third-party costs, integration costs associated with an acquisition, and an adjustment to the contingent consideration liability from a previous acquisition.

 

 

 

 

 

(6) Special charges related to severance for staff realignment: These costs are mainly due to involuntary employee termination benefits for Company officers, groups of employees who have been terminated as part of a consolidation or reorganization or, to the extent that the costs are not included in the previous two categories, involuntary employee termination benefits for employees who have been terminated as a result of COVID-19.

 

 

 

 

 

(7) Special charges related to facilities consolidations, office closures, and our future corporate headquarters: These costs are exit costs associated with terminated leases or full office closures.  The exit costs include charges incurred under a contractual obligation that existed as of the date of the accrual and for which we will (i) continue to pay until the contractual obligation is satisfied but with no economic benefit to us or (ii) we contractually terminated the obligation and ceased utilizing the facilities. Additionally, we incurred one-time charges with respect to the execution of a new lease agreement for our corporate headquarters.

 

 

 

 

 

(8) Special charges related to retirement of Executive Chair: These costs include severance, pro rata incentive bonus, welfare benefits, and acceleration of equity awards we incurred under the departing officer’s severance agreement during the fourth quarter of 2020. As a result of the severance agreement, the departing officer was able to maintain certain equity awards beyond his date of employment. The adjustment for the retirement of the Executive Chair includes amounts relating to equity awards that would have been lost under normal operating procedures upon his departure.  With the activation of the severance agreement in the fourth quarter all benefits were guaranteed and attributed to the same quarter.

 

 

 

 

 

(9) 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.

 

 

 

 

 

(10) EBITDA Margin Percent and Adjusted EBITDA Margin Percent were calculated by dividing the non-GAAP measure by the corresponding revenue.

 

 

 

 

 

(11) Income tax effects were calculated using an effective U.S. GAAP tax rate of 28.5% and 24.5% for the three months ended December 31, 2020 and 2019, respectively, and 26.4% and 23.6% for the twelve months ended December 31, 2020 and 2019, respectively.

 

9


ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except share and per share amounts)

 

December 31, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,841

 

 

$

6,482

 

Restricted cash - current

 

 

68,146

 

 

 

 

Contract receivables, net

 

 

222,850

 

 

 

261,176

 

Contract assets

 

 

143,369

 

 

 

142,337

 

Prepaid expenses and other assets

 

 

25,492

 

 

 

17,402

 

Income tax receivable

 

 

1,977

 

 

 

7,320

 

Total Current Assets

 

 

475,675

 

 

 

434,717

 

Property and Equipment, net

 

 

62,434

 

 

 

58,237

 

Other Assets:

 

 

 

 

 

 

 

 

Goodwill

 

 

909,913

 

 

 

719,934

 

Other intangible assets, net

 

 

59,887

 

 

 

25,829

 

Operating lease - right-of-use assets

 

 

127,132

 

 

 

133,965

 

Other assets

 

 

32,249

 

 

 

23,352

 

Total Assets

 

$

1,667,290

 

 

$

1,396,034

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

10,000

 

 

$

 

Accounts payable

 

 

91,365

 

 

 

134,578

 

Contract liabilities

 

 

42,050

 

 

 

37,413

 

Operating lease liabilities - current

 

 

23,350

 

 

 

32,500

 

Accrued salaries and benefits

 

 

80,512

 

 

 

52,130

 

Accrued subcontractors and other direct costs

 

 

78,842

 

 

 

45,619

 

Accrued expenses and other current liabilities

 

 

100,908

 

 

 

35,742

 

Total Current Liabilities

 

 

427,027

 

 

 

337,982

 

Long-term Liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

303,214

 

 

 

164,261

 

Operating lease liabilities - non-current

 

 

115,614

 

 

 

119,250

 

Deferred income taxes

 

 

34,330

 

 

 

37,621

 

Other long-term liabilities

 

 

40,144

 

 

 

22,369

 

Total Liabilities

 

 

920,329

 

 

 

681,483

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, par value $.001; 5,000,000 shares authorized; none issued

 

 

 

 

 

 

Common stock, $.001 par value; 70,000,000 shares authorized; 23,305,255 and 22,846,374 shares issued; and 18,909,983 and 18,867,555 shares outstanding at December 31, 2020 and December 31, 2019, respectively

 

 

23

 

 

 

23

 

Additional paid-in capital

 

 

369,058

 

 

 

346,795

 

Retained earnings

 

 

588,731

 

 

 

544,840

 

Treasury stock, 4,395,272 and 3,978,819 shares at December 31, 2020 and 2019, respectively

 

 

(196,745

)

 

 

(164,963

)

Accumulated other comprehensive loss

 

 

(14,106

)

 

 

(12,144

)

Total Stockholders’ Equity

 

 

746,961

 

 

 

714,551

 

Total Liabilities and Stockholders’ Equity

 

$

1,667,290

 

 

$

1,396,034

 

 

10


ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Years ended

 

 

 

December 31,

 

(in thousands)

 

2020

 

 

2019

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

54,959

 

 

$

68,938

 

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

 

 

 

 

 

 

 

 

Bad debt expense

 

 

4,062

 

 

 

624

 

Deferred income taxes

 

 

(1,865

)

 

 

(123

)

Non-cash equity compensation

 

 

17,555

 

 

 

15,818

 

Depreciation and amortization

 

 

33,748

 

 

 

28,182

 

Non-cash lease expense

 

 

(2,307

)

 

 

(1,247

)

Facilities consolidation reserve

 

 

(288

)

 

 

(274

)

Amortization of debt issuance costs

 

 

710

 

 

 

507

 

Impairment of long-lived assets

 

 

3,090

 

 

 

1,728

 

Other adjustments, net

 

 

964

 

 

 

181

 

Changes in operating assets and liabilities, net of the effects of acquisitions:

 

 

 

 

 

 

 

 

Net contract assets and liabilities

 

 

6,064

 

 

 

(11,963

)

Contract receivables

 

 

54,384

 

 

 

(31,300

)

Prepaid expenses and other assets

 

 

(5,410

)

 

 

1,997

 

Accounts payable

 

 

(51,177

)

 

 

31,949

 

Accrued salaries and benefits

 

 

26,810

 

 

 

8,012

 

Accrued subcontractors and other direct costs

 

 

32,544

 

 

 

(12,293

)

Accrued expenses and other current liabilities

 

 

(18,198

)

 

 

(4,951

)

Income tax receivable and payable

 

 

5,375

 

 

 

(4,489

)

Other liabilities

 

 

12,125

 

 

 

144

 

Net Cash Provided by Operating Activities

 

 

173,145

 

 

 

91,440

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures for property and equipment and capitalized software

 

 

(17,683

)

 

 

(26,901

)

Payments for business acquisitions, net of cash acquired

 

 

(253,265

)

 

 

(3,569

)

Net Cash Used in Investing Activities

 

 

(270,948

)

 

 

(30,470

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Advances from working capital facilities

 

 

1,020,451

 

 

 

686,830

 

Payments on working capital facilities

 

 

(870,114

)

 

 

(721,809

)

Payments on capital expenditure obligations

 

 

(1,712

)

 

 

(1,621

)

Receipt of restricted contract funds

 

 

65,694

 

 

 

 

Payment of restricted contract funds

 

 

(106

)

 

 

 

Debt issue costs

 

 

(2,094

)

 

 

 

Proceeds from exercise of options

 

 

37

 

 

 

2,914

 

Dividends paid

 

 

(10,551

)

 

 

(10,540

)

Net payments for stock issuances and buybacks

 

 

(29,726

)

 

 

(23,414

)

Payments on business acquisition liabilities

 

 

(1,924

)

 

 

 

Net Cash Provided by (Used in) Financing Activities

 

 

169,955

 

 

 

(67,640

)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash

 

 

3,353

 

 

 

166

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash

 

 

75,505

 

 

 

(6,504

)

Cash, Cash Equivalents, and Restricted Cash, Beginning of Period

 

 

6,482

 

 

 

12,986

 

Cash, Cash Equivalents, and Restricted Cash, End of Period

 

$

81,987

 

 

$

6,482

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

14,337

 

 

$

10,424

 

Income taxes

 

$

15,954

 

 

$

26,595

 

Non-cash investing and financing transactions:

 

 

 

 

 

 

 

 

Tenant improvements funded by lessor

 

$

3,124

 

 

$

 

Exercise of options receivable from shareholders

 

$

2,615

 

 

$

 

 

11


ICF International, Inc. and Subsidiaries

Supplemental Schedule(12) (13)

 

Revenue by client markets

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Energy, environment, and infrastructure

 

 

38

%

 

 

44

%

 

 

41

%

 

 

45

%

Health, education, and social programs

 

 

50

%

 

 

41

%

 

 

44

%

 

 

38

%

Safety and security

 

 

6

%

 

 

8

%

 

 

8

%

 

 

8

%

Consumer and financial services

 

 

6

%

 

 

7

%

 

 

7

%

 

 

9

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%