8-K
0001362004false00013620042024-02-272024-02-27

 

 

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 27, 2024

 

 

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.)

 

 

 

 

 

1902 Reston Metro Plaza

 

Reston, Virginia

 

20190

(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 (see General Instructions A.2 below):

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))

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


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common Stock

 

ICFI

 

The Nasdaq Global Select Market

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 27, 2024, ICF International, Inc. (the “Company”) announced its financial results for the fourth quarter and full year ended December 31, 2023. 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 27, 2024, 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 12, 2024, to stockholders of record as of the close of business on March 22, 2024.

 

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 27, 2024

104

 

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

 


 

Exhibit Index

 

Exhibit

Number

Description

99.1

Press Release dated February 27, 2024

104

 

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

 

 


 

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: February 27, 2024

By:

/s/ Barry Broadus

Barry Broadus

Chief Financial Officer

 

 


EX-99.1

Exhibit 99.1

https://cdn.kscope.io/fa760c2daa6b7f52c323452662f331d4-img241278440_0.jpg

NEWS RELEASE

ICF Reports Fourth Quarter and Full Year 2023 Results

Full Year Double-Digit Revenue Growth Aligned With Strength of ICF’s Growth Markets

2024 Guidance Anticipates High Single-Digit Organic Revenue Growth From Continuing Operations With Further Margin Expansion

Fourth Quarter Highlights:

Revenue Increased 1% to $478 Million; Up 5% Excluding Divestitures
Net Income Was $22 Million; Diluted EPS Was $1.16, Inclusive of $0.18 in Tax-Effected Net Special Charges
Non-GAAP EPS1 Was $1.68, Up 8%
EBITDA1Was $53.9 Million, Up 46%; Adjusted EBITDA1 Was $57.0 Million, Up 3%
Contract Awards Were $611 Million for a Book-to-Bill Ratio of 1.3

Full Year Highlights:

Revenue Increased 10% to $1.96 Billion; Up 12% Excluding Divestitures
Net Income Was $83 Million; Diluted EPS Was $4.35, Inclusive of $0.71 in Tax-Effected Net Special Charges
Non-GAAP EPS Was $6.50, Up 13%
EBITDA Was $197.0 Million, Up 25%; Adjusted EBITDA Was $213.2 Million, Up 11%
Contract Awards Were $2.3 Billion for a Book-to-Bill Ratio of 1.2
Operating Cash Flow Was $152 Million

RESTON, Va.— Feb. 27, 2024 -- ICF (NASDAQ: ICFI), a global consulting and technology services provider, reported results for the fourth quarter and full year ended December 31, 2023.

Commenting on the results, John Wasson, chair and chief executive officer, said, “Fourth quarter results represented a solid finish to a year of double-digit revenue growth for ICF, which demonstrated the benefits of our expanded capabilities in key growth markets and the strength of our diversified business model. Revenues increased 1% year-on-year. Adjusting for the divestiture of our commercial marketing business lines during 2023, fourth quarter revenue increased 5% year-on-year, led by strong growth in revenues from commercial energy clients and our state and local and international government clients. U.S. federal government fourth quarter revenue was approximately flat with the prior year due to a $5.3 million reduction in subcontractor and other direct costs together with the anticipated roll-off of certain small business contracts held by companies we

1


acquired. We expect year-on-year federal government revenue comparisons to increase substantially in the second half of 2024 and grow at a high single-digit rate for full year 2024.

“Full year 2023 revenue increased 10%, or by over 12% after adjusting for the divestitures, reflecting double-digit growth in revenues from both government and commercial clients. This performance was led by our growth markets, which in the aggregate accounted for approximately 80% of 2023 full year revenues from continuing operations, up from approximately 75% in 2022.

“We continued to increase profitability in the fourth quarter and full year, expanding adjusted EBITDA margin by 30 basis points and 10 basis points, respectively. This progress reflected the positive impact of higher utilization and our actions to reduce facility costs, along with the benefits of ICF’s greater scale.

“This also was another year of substantial contract awards, which reached $2.3 billion. Approximately 70% of 2023’s contract wins represented new business, underscoring ICF’s strong competitive positioning in areas of high demand from government and commercial clients. At year end, our business development pipeline was a robust $9.7 billion, providing a substantial runway for future growth.”

Fourth Quarter 2023 Results

Fourth quarter 2023 total revenue was $478.4 million, similar to the $475.6 million reported in the fourth quarter of 2022 and up 4.9% from last year’s fourth quarter revenues adjusted for the divestitures. Subcontractor and other direct costs were 27.0% of total revenues compared to 28.7% in last year’s fourth quarter. Operating income was $36.9 million, up from $23.0 million, and operating margin on total revenue expanded to 7.7% from 4.8%. Net income totaled $22.2 million, and diluted EPS was $1.16 per share, up from $8.9 million, and $0.47, respectively, in the fourth quarter of 2022. Fourth quarter 2023 net income and diluted EPS included $4.4 million, or $0.18 per share, in tax-effected net special charges.

Non-GAAP EPS increased 7.7% to $1.68 per share, from the $1.56 per share reported in the comparable period in 2022. EBITDA was $53.9 million, 46% above the $36.9 million reported for the year-ago period. Adjusted EBITDA increased 3.3% to $57.0 million, from $55.2 million for the comparable period in 2022.

Full Year 2023 Results

2023 total revenue was $1.96 billion, an increase of 10.3% from $1.78 billion reported in the previous year and 12.3% higher when adjusting for the 2023 divestitures. Subcontractor and other direct costs were 27.2% of total revenues compared to 27.8% in 2022. Full year 2023 net income was $82.6 million, or $4.35 per diluted share, inclusive of $17.6 million, or $0.71 per share of tax-effected net special charges. This represents increases of 28.6% and 28.7%, respectively, from net income of $64.2 million, or $3.38 per diluted share reported in 2022.

Non-GAAP EPS was $6.50 per share, up 12.7% from $5.77 per share. EBITDA increased 25.3% to $197.0 million, compared to $157.2 million reported in 2022. Adjusted EBITDA was $213.2 million, representing an 11.2% increase over $191.8 million in 2022.

Operating cash flow was $152.4 million in 2023. This compares to $162.2 million in the prior year, which benefited by approximately $30 million related to the timing of collections and disbursements.

2


Backlog and New Business

Total backlog was $3.8 billion at the end of the fourth quarter of 2023. Funded backlog was $1.8 billion, or approximately 47% of the total backlog. The total value of contracts awarded in the 2023 fourth quarter was $611 million representing a book-to-bill ratio of 1.28, and trailing-twelve-month contract awards totaled $2.3 billion for a book-to-bill ratio of 1.18.

Government Revenue Fourth Quarter 2023 Highlights

Revenue from government clients was $368.6 million, up 4.0% year-over-year.

U.S. federal government revenue was $263.9 million, stable with the $264.8 million reported in the fourth quarter of 2022, and was impacted by a year-over-year decrease in subcontractor and other direct costs of $5.3 million in the quarter as well as the anticipated roll-off of certain acquired small business contracts. Federal government revenue accounted for 55.2% of total revenue, compared to 55.7% of total revenue in the fourth quarter of 2022.
U.S. state and local government revenue increased 16.7% to $75.9 million, from $65.0 million in the year-ago quarter. State and local government clients represented 15.9% of total revenue, compared to 13.7% in the fourth quarter of 2022.
International government revenue was $28.8 million, up 17.2% from the $24.6 million reported in the year-ago quarter. International government revenue represented 6.0% of total revenue, compared to 5.2% in the fourth quarter of 2022.

Key Government Contracts Awarded in the Fourth Quarter 2023

Notable government contract awards won in the fourth quarter of 2023 included:

Health and Social Programs

Two new task orders with a combined value of $29.9 million with the U.S. Environmental Protection Agency’s Office of Pollution Prevention and Toxics to assess the risk of chemical exposure to human health and the environment.
Four new subcontracts with a combined value of $17.1 million to support mental health programs, including evaluation and communications services, for the U.S. Substance Abuse and Mental Health Services Administration’s 988 Suicide & Crisis Lifeline.
A recompete blanket purchase agreement with a value of $9.6 million with a U.S. federal agency to provide communications engagement and education support services.
A recompete subcontract with a value of $9.4 million to support a comprehensive technical assistance center contract for the U.S. Centers for Disease Control and Prevention, Division of Overdose Prevention overdose prevention programs.

Digital Modernization

A recompete contract with a value of $33.1 million with the U.S. Centers for Medicare and Medicaid Services (CMS) to continue the modernization of the CMS system for kidney dialysis data.

3


A new blanket purchase agreement with a value of $5.7 million with the U.S. General Services Administration to provide data analytics services to the U.S. Department of State.

Commercial Revenue Fourth Quarter 2023 Highlights

Commercial revenue was $109.8 million, compared to $121.3 million reported in the fourth quarter of 2022, up 7.6% compared to revenues of $101.7 million excluding divestitures in 2022.

Commercial revenue accounted for 22.9% of total revenue compared to 25.5% of total revenue in the 2022 fourth quarter.
Energy markets revenue, which includes energy efficiency programs, increased 8.8% and represented 87.8% of commercial revenue.

Key Commercial Contracts Awarded in the Fourth Quarter

Notable commercial awards won in the fourth quarter of 2023 included:

Energy Markets

Two large multimillion-dollar recompete contracts with a mid-Atlantic U.S. utility to implement its commercial and residential energy efficiency programs.
A large multimillion-dollar new contract with a mid-Atlantic U.S. electric cooperative to serve as the implementer of its energy efficiency programs.
Five contract modifications with a Western U.S. gas utility to continue to support its energy efficiency programs, with a focus on residential and small commercial equity initiatives, agricultural customer projects and emerging technology demonstrations.
A large multimillion-dollar new contract with a Southern U.S. utility to implement its energy efficiency and demand response program portfolios.
Five contract extensions and modifications with a Northeastern U.S. utility to continue to implement its energy efficiency programs.
Two new contracts with a Southeastern U.S. utility to implement its energy efficiency retrofit program and provide marketing services for its business markets programs.
A contract modification with a Northeastern U.S. utility to continue to implement its energy efficiency retail products and residential rebates programs.
A new contract with a mid-Atlantic U.S. utility to implement a behavioral-based energy efficiency program utilizing cloud technology and analytics to engage customers.
Multiple task orders with a Northeastern U.S. utility to continue to provide marketing and advertising services as the utility’s agency of record.

Other Commercial

A recompete contract with a value of $58.6 million with a Western U.S. state lottery to continue to support the maintenance and operation of its cloud-based website and improve the user experience.

4


Dividend Declaration

On February 27, 2024, ICF declared a quarterly cash dividend of $0.14 per share, payable on April 12, 2024, to shareholders of record on March 22, 2024.

Recognitions

ICF received several important recognitions in 2023:

Forbes named ICF one of America’s Best Employers for Women for the second consecutive year.
ICF was included on Forbes’ America’s Best Management Consulting Firms list for the eighth straight year and Best Employers for Diversity list for the third straight year.
ICF was awarded a Climate Leadership Award by the Climate Registry for reducing carbon pollution and addressing climate change in its social actions and client work.
The Northern Virginia Chamber of Commerce and the Professional Services Council awarded ICF Government Contractor of the Year in the Over $300 Million category.
ICF was ranked a Top Federal Industry Leader by Bloomberg in its BGOV200 rankings.

Summary and Outlook

“2023 represented a year of significant accomplishments for ICF. In addition to our strong financial performance, we completed the integration of SemanticBits, streamlined our business through the divestiture of our commercial marketing business and supported our key growth markets by adding new competencies in the fast-growing area of grid modernization and electrical engineering. We used our substantial operating cash flow to repay debt, ending the year with a net debt to EBITDA ratio of under 2.2. This gives us additional flexibility to execute our acquisition growth strategy, which has been a key element of the company’s success to date. ICF exited 2023 with a strengthened business and financial posture, positioning us for continued strong growth in 2024.

“Based on our strong backlog and current visibility, and the ongoing positive trends in our key growth markets, we expect 2024 organic revenues from continuing operations to range from $2.03 billion to $2.10 billion, representing year-on-year growth of 5.2% at the midpoint when compared to reported 2023 and 8.5% at the midpoint on continuing operations. EBITDA is expected to range from $220 million to $230 million, reflecting year-on-year growth of 14.2% at the midpoint. Our guidance range for GAAP EPS is $5.25 to $5.55, excluding special charges, and for Non-GAAP EPS is $6.60 to $6.90. Assuming similar margins to the rest of the business, the company’s commercial marketing business lines are estimated to have contributed $0.20 of Non-GAAP EPS in 2023, which will not recur in 2024. We expect full year 2024 operating cash flow of approximately $155 million.

“We are proud of the many recognitions that ICF received in 2023. Listed above, they are emblematic of our culture of inclusion, merit-based promotions and commitment to climate change, and highlight ICF’s deep domain expertise in energy and environment, public health and life sciences and sustainability. As we move ahead into 2024, we remain committed to maintaining the outstanding corporate culture that has been integral to our success,” Mr. Wasson concluded.

5


1 Non-GAAP EPS, EBITDA, and Adjusted EBITDA 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 consolidated statements of comprehensive income 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.

About ICF

ICF is a global consulting and technology services company with approximately 9,000 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; 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 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.

Note on Forward-Looking Non-GAAP Measures

The company does not reconcile its forward-looking non-GAAP financial measures to the corresponding U.S. GAAP measures, due to the variability and difficulty in making accurate forecasts and projections and because not all of the information necessary for a quantitative reconciliation of these forward-looking non-GAAP financial measures (such as the effect of share-based compensation or the impact of future extraordinary or non-recurring events like acquisitions) is available to the company without unreasonable effort. For the same reasons, the company is unable to estimate the probable significance of the unavailable information. The company provides forward-looking non-GAAP financial measures that it believes will be achievable, but it cannot accurately predict all of the components of the adjusted calculations, and the U.S. GAAP financial measures may be materially different than the non-GAAP financial measures.

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

 

 

 

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)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

478,352

 

 

$

475,609

 

 

$

1,963,238

 

 

$

1,779,964

 

Direct costs

 

 

303,545

 

 

 

300,064

 

 

 

1,265,018

 

 

 

1,134,422

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Indirect and selling expenses

 

 

123,354

 

 

 

136,718

 

 

 

505,162

 

 

 

486,863

 

Depreciation and amortization

 

 

6,225

 

 

 

6,284

 

 

 

25,277

 

 

 

21,482

 

Amortization of intangible assets

 

 

8,307

 

 

 

9,494

 

 

 

35,461

 

 

 

28,435

 

Total operating costs and expenses

 

 

137,886

 

 

 

152,496

 

 

 

565,900

 

 

 

536,780

 

Operating income

 

 

36,921

 

 

 

23,049

 

 

 

132,320

 

 

 

108,762

 

Interest, net

 

 

(9,535

)

 

 

(9,186

)

 

 

(39,681

)

 

 

(23,281

)

Other income (expense)

 

 

2,407

 

 

 

(1,939

)

 

 

3,908

 

 

 

(1,501

)

Income before income taxes

 

 

29,793

 

 

 

11,924

 

 

 

96,547

 

 

 

83,980

 

Provision for income taxes

 

 

7,631

 

 

 

3,046

 

 

 

13,935

 

 

 

19,737

 

Net income

 

$

22,162

 

 

$

8,878

 

 

$

82,612

 

 

$

64,243

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.18

 

 

$

0.47

 

 

$

4.39

 

 

$

3.41

 

Diluted

 

$

1.16

 

 

$

0.47

 

 

$

4.35

 

 

$

3.38

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,823

 

 

 

18,855

 

 

 

18,802

 

 

 

18,818

 

Diluted

 

 

19,025

 

 

 

19,065

 

 

 

18,994

 

 

 

19,033

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.14

 

 

$

0.14

 

 

$

0.56

 

 

$

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income, net of tax

 

 

(1,516

)

 

 

6,009

 

 

 

(3,752

)

 

 

2,902

 

Comprehensive income, net of tax

 

$

20,646

 

 

$

14,887

 

 

$

78,860

 

 

$

67,145

 

 

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)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Reconciliation of Revenue, Adjusted for Impact of Exited Business

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

478,352

 

 

$

475,609

 

 

$

1,963,238

 

 

$

1,779,964

 

Less: Revenue from exited business (3)

 

 

(194

)

 

 

(19,951

)

 

 

(59,908

)

 

 

(84,369

)

Total Revenue, Adjusted for Impact of Exited Business

 

$

478,158

 

 

$

455,658

 

 

$

1,903,330

 

 

$

1,695,595

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA and Adjusted EBITDA (4)

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

22,162

 

 

$

8,878

 

 

$

82,612

 

 

$

64,243

 

Interest, net

 

 

9,535

 

 

 

9,186

 

 

 

39,681

 

 

 

23,281

 

Provision for income taxes

 

 

7,631

 

 

 

3,046

 

 

 

13,935

 

 

 

19,737

 

Depreciation and amortization

 

 

14,532

 

 

 

15,778

 

 

 

60,738

 

 

 

49,917

 

EBITDA

 

 

53,860

 

 

 

36,888

 

 

 

196,966

 

 

 

157,178

 

Impairment of long-lived assets (5)

 

 

3,860

 

 

 

8,354

 

 

 

7,666

 

 

 

8,354

 

Acquisition and divestiture-related expenses (6)

 

 

74

 

 

 

920

 

 

 

4,759

 

 

 

6,441

 

Severance and other costs related to staff realignment (7)

 

 

1,911

 

 

 

1,134

 

 

 

6,366

 

 

 

6,302

 

Charges for facility consolidations and office closures (8)

 

 

608

 

 

 

5,034

 

 

 

3,187

 

 

 

5,034

 

Expenses related to the transfer to our new corporate headquarters (9)

 

 

 

 

 

2,640

 

 

 

 

 

 

8,287

 

Expenses related to our agreement for the sale of receivables (10)

 

 

 

 

 

240

 

 

 

 

 

 

240

 

Pre-tax gain from divestiture of a business (11)

 

 

(3,287

)

 

 

 

 

 

(5,712

)

 

 

 

Total Adjustments

 

 

3,166

 

 

 

18,322

 

 

 

16,266

 

 

 

34,658

 

Adjusted EBITDA

 

$

57,026

 

 

$

55,210

 

 

$

213,232

 

 

$

191,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Margin Percent on Revenue (12)

 

 

4.6

%

 

 

1.9

%

 

 

4.2

%

 

 

3.6

%

EBITDA Margin Percent on Revenue (13)

 

 

11.3

%

 

 

7.8

%

 

 

10.0

%

 

 

8.8

%

Adjusted EBITDA Margin Percent on Revenue (13)

 

 

11.9

%

 

 

11.6

%

 

 

10.9

%

 

 

10.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Diluted EPS (4)

 

 

 

 

 

 

 

 

 

 

 

 

U.S. GAAP Diluted EPS

 

$

1.16

 

 

$

0.47

 

 

$

4.35

 

 

$

3.38

 

Impairment of long-lived assets

 

 

0.20

 

 

 

0.44

 

 

 

0.40

 

 

 

0.44

 

Acquisition and divestiture-related expenses

 

 

 

 

 

0.05

 

 

 

0.25

 

 

 

0.34

 

Severance and other costs related to staff realignment

 

 

0.10

 

 

 

0.06

 

 

 

0.33

 

 

 

0.33

 

Expenses related to facility consolidations and office closures (14)

 

 

0.10

 

 

 

0.26

 

 

 

0.24

 

 

 

0.26

 

Expenses related to the transfer to our new corporate headquarters

 

 

 

 

 

0.14

 

 

 

 

 

 

0.44

 

Expenses related to our agreement for the sale of receivables

 

 

 

 

 

0.01

 

 

 

 

 

 

0.01

 

Pre-tax gain from divestiture of a business

 

 

(0.17

)

 

 

 

 

 

(0.30

)

 

 

 

Amortization of intangibles

 

 

0.44

 

 

 

0.50

 

 

 

1.87

 

 

 

1.49

 

Income tax effects of the adjustments (15)

 

 

(0.15

)

 

 

(0.37

)

 

 

(0.64

)

 

 

(0.92

)

Non-GAAP Diluted EPS

 

$

1.68

 

 

$

1.56

 

 

$

6.50

 

 

$

5.77

 

 

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) Revenue from the exited U.K. commercial marketing business (June 30, 2023), U.S. commercial marketing business (September 11, 2023), and Canadian mobile text aggregation business (November 1, 2023).

 

 

 

 

 

(4) Reconciliations of EBITDA, Adjusted EBITDA, and Non-GAAP Diluted EPS were calculated using numbers as reported in U.S. GAAP.

 

 

 

 

 

(5) Represents impairment of operating lease right-of-use and leasehold improvement assets associated with exit from certain facilities, and an intangible asset associated with exit of a business.

 

 

 

 

 

(6) These are primarily third-party costs related to acquisitions and potential acquisitions, integration of acquisitions, and separation of discontinued businesses or divestitures.

 

 

 

 

 

(7) These costs are mainly due to involuntary employee termination benefits for our officers, and employees who have been notified that they will be terminated as part of a business reorganization or exit.

 

 

 

 

 

(8) These are exit costs associated with terminated leases or full office closures that we either (i) will continue to pay until the contractual obligations are satisfied but with no economic benefit to us, or (ii) paid upon termination and cease-use of the leased facilities.

 

 

 

 

 

(9) These costs represent incremental non-cash lease expense associated with a straight-line rent accrual during the “free rent” period in the lease for our new corporate headquarters in Reston, Virginia. We took possession of the new facility during the fourth quarter of 2021, while also maintaining and incurring lease costs for the former headquarters in Fairfax, Virginia. The transition to the new corporate headquarters was completed in the fourth quarter of 2022.

 

 

 

 

 

(10) These costs include legal and structuring fees related to our 2022 Master Receivables Purchase Agreement with MUFG Bank, Ltd. put in place for the sale of our receivables.

 

 

 

 

 

(11) Includes pre-tax gain of $2.5 million and of $3.2 million from the divestitures of our U.S. commercial marketing and Canadian mobile text aggregation businesses.

 

 

 

 

 

(12) Net Margin Percent on Revenue was calculated by dividing net income by revenue.

 

 

 

 

 

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

 

 

 

 

 

(14) These are exit costs related to actual office closures (previously included in Adjusted EBITDA) and accelerated depreciation related to fixed assets for planned office closures.

 

 

 

 

 

(15) Income tax effects were calculated using the effective tax rate, adjusted for discrete items, if any, of 21.1% and 25.5% for the three months ended December 31, 2023 and 2022, respectively, and 22.8% and 28.0% for the twelve months ended December 31, 2023 and 2022, respectively.

 

9


ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except share and per share amounts)

 

December 31, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,361

 

 

$

11,257

 

Restricted cash

 

 

3,088

 

 

 

1,711

 

Contract receivables, net

 

 

205,484

 

 

 

232,337

 

Contract assets

 

 

201,832

 

 

 

169,088

 

Prepaid expenses and other assets

 

 

28,055

 

 

 

40,709

 

Income tax receivable

 

 

2,337

 

 

 

11,616

 

Total Current Assets

 

 

447,157

 

 

 

466,718

 

Property and Equipment, net

 

 

75,948

 

 

 

85,402

 

Other Assets:

 

 

 

 

 

 

Goodwill

 

 

1,219,476

 

 

 

1,212,898

 

Other intangible assets, net

 

 

94,904

 

 

 

126,537

 

Operating lease - right-of-use assets

 

 

132,807

 

 

 

149,066

 

Other assets

 

 

41,480

 

 

 

51,637

 

Total Assets

 

$

2,011,772

 

 

$

2,092,258

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Current portion of long-term debt

 

$

26,000

 

 

$

23,250

 

Accounts payable

 

 

134,503

 

 

 

135,778

 

Contract liabilities

 

 

21,997

 

 

 

25,773

 

Operating lease liabilities

 

 

20,409

 

 

 

19,305

 

Finance lease liabilities

 

 

2,522

 

 

 

2,381

 

Accrued salaries and benefits

 

 

88,021

 

 

 

85,991

 

Accrued subcontractors and other direct costs

 

 

45,645

 

 

 

45,478

 

Accrued expenses and other current liabilities

 

 

79,129

 

 

 

78,036

 

Total Current Liabilities

 

 

418,226

 

 

 

415,992

 

Long-term Liabilities:

 

 

 

 

 

 

Long-term debt

 

 

404,407

 

 

 

533,084

 

Operating lease liabilities - non-current

 

 

175,460

 

 

 

182,251

 

Finance lease liabilities - non-current

 

 

13,874

 

 

 

16,116

 

Deferred income taxes

 

 

26,175

 

 

 

68,038

 

Other long-term liabilities

 

 

56,045

 

 

 

23,566

 

Total Liabilities

 

 

1,094,187

 

 

 

1,239,047

 

 

 

 

 

 

 

 

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; 23,982,132 and 23,771,596 shares issued; and 18,845,521 and 18,883,050 shares outstanding at December 31, 2023 and 2022, respectively

 

 

24

 

 

 

23

 

Additional paid-in capital

 

 

421,502

 

 

 

401,957

 

Retained earnings

 

 

775,099

 

 

 

703,030

 

Treasury stock, 5,136,611 and 4,906,209 shares at December 31, 2023 and 2022, respectively

 

 

(267,155

)

 

 

(243,666

)

Accumulated other comprehensive loss

 

 

(11,885

)

 

 

(8,133

)

Total Stockholders’ Equity

 

 

917,585

 

 

 

853,211

 

Total Liabilities and Stockholders’ Equity

 

$

2,011,772

 

 

$

2,092,258

 

 

10


ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Years ended

 

 

 

December 31,

 

(in thousands)

 

2023

 

 

2022

 

Cash Flows from Operating Activities

 

 

 

 

 

 

Net income

 

$

82,612

 

 

$

64,243

 

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

 

 

 

 

 

 

Provision for credit losses

 

 

1,164

 

 

 

248

 

Deferred income taxes and unrecognized income tax benefits

 

 

(17,634

)

 

 

7,428

 

Non-cash equity compensation

 

 

14,861

 

 

 

13,171

 

Depreciation and amortization

 

 

60,738

 

 

 

49,917

 

Facilities consolidation reserve

 

 

 

 

 

(317

)

Amortization of debt issuance costs

 

 

1,996

 

 

 

1,305

 

Impairment of long-lived assets

 

 

7,666

 

 

 

8,412

 

Gain on divestiture of a business

 

 

(7,590

)

 

 

 

Other adjustments, net

 

 

(1,368

)

 

 

1,283

 

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

 

 

 

 

 

 

Net contract assets and liabilities

 

 

(38,422

)

 

 

(41,634

)

Contract receivables

 

 

20,939

 

 

 

19,732

 

Prepaid expenses and other assets

 

 

18,579

 

 

 

(20,737

)

Operating lease assets and liabilities, net

 

 

3,544

 

 

 

(1,466

)

Accounts payable

 

 

(1,489

)

 

 

30,003

 

Accrued salaries and benefits

 

 

2,175

 

 

 

(3,337

)

Accrued subcontractors and other direct costs

 

 

(269

)

 

 

6,965

 

Accrued expenses and other current liabilities

 

 

(4,757

)

 

 

24,742

 

Income tax receivable and payable

 

 

9,277

 

 

 

(1,526

)

Other liabilities

 

 

361

 

 

 

3,774

 

Net Cash Provided by Operating Activities

 

 

152,383

 

 

 

162,206

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

Capital expenditures for property and equipment and capitalized software

 

 

(22,337

)

 

 

(24,475

)

Payments for business acquisitions, net of cash acquired

 

 

(32,664

)

 

 

(237,280

)

Proceeds from working capital adjustments related to prior business acquisition

 

 

 

 

 

2,911

 

Proceeds from divestiture of a business

 

 

51,328

 

 

 

 

Net Cash Used in Investing Activities

 

 

(3,673

)

 

 

(258,844

)

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

Advances from working capital facilities

 

 

1,245,198

 

 

 

1,583,936

 

Payments on working capital facilities

 

 

(1,372,474

)

 

 

(1,446,125

)

Proceeds from other short-term borrowings

 

 

48,532

 

 

 

 

Repayments of other short-term borrowings

 

 

(41,653

)

 

 

 

Receipt of restricted contract funds

 

 

7,672

 

 

 

15,721

 

Payment of restricted contract funds

 

 

(8,084

)

 

 

(25,959

)

Debt issuance costs

 

 

 

 

 

(4,907

)

Payments of principal portion of finance leases

 

 

(2,438

)

 

 

 

Proceeds from exercise of options

 

 

279

 

 

 

602

 

Dividends paid

 

 

(10,537

)

 

 

(10,547

)

Net payments for stockholder issuances and buybacks

 

 

(19,083

)

 

 

(21,218

)

Payments on business acquisition liabilities

 

 

 

 

 

(1,132

)

Net Cash (Used in) Provided by Financing Activities

 

 

(152,588

)

 

 

90,371

 

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

 

 

359

 

 

 

(1,198

)

 

 

 

 

 

 

 

Decrease in Cash, Cash Equivalents, and Restricted Cash

 

 

(3,519

)

 

 

(7,465

)

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

 

 

12,968

 

 

 

20,433

 

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

 

$

9,449

 

 

$

12,968

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

34,093

 

 

$

22,782

 

Income taxes

 

$

26,190

 

 

$

16,476

 

Non-cash investing and financing transactions:

 

 

 

 

 

 

Tenant improvements funded by lessor

 

$

568

 

 

$

20,253

 

Acquisition of property and equipment through finance lease

 

$

337

 

 

$

18,319

 

 

11


ICF International, Inc. and Subsidiaries

Supplemental Schedule(16)(17)

 

Revenue by client markets

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Energy, environment, infrastructure, and disaster recovery

 

 

44

%

 

 

40

%

 

 

41

%

 

 

40

%

Health and social programs

 

 

41

%

 

 

41

%

 

 

42

%

 

 

40

%

Security and other civilian & commercial

 

 

15

%

 

 

19

%

 

 

17

%

 

 

20

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by client type

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

U.S. federal government

 

 

55

%

 

 

56

%

 

 

55

%

 

 

55

%

U.S. state and local government

 

 

16

%

 

 

14

%

 

 

16

%

 

 

15

%

International government

 

 

6

%

 

 

5

%

 

 

5

%

 

 

6

%

Government

 

 

77

%

 

 

75

%

 

 

76

%

 

 

76

%

Commercial

 

 

23

%

 

 

25

%

 

 

24

%

 

 

24

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by contract mix

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Time-and-materials

 

 

41

%

 

 

40

%

 

 

41

%

 

 

40

%

Fixed-price

 

 

46

%

 

 

47

%

 

 

45

%

 

 

45

%

Cost-based

 

 

13

%

 

 

13

%

 

 

14

%

 

 

15

%

Total

 

 

100

%

 

 

100

%

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16) 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.

 

 

 

 

 

 

 

 

 

(17) During the first quarter of 2023, we re-aligned our client markets from four to three and reclassified the 2022 percentages to conform to the current presentation.

 

12