false000136200400013620042024-05-022024-05-02

 

 

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): May 02, 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. ☐

 

 

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Item 2.02 Results of Operations and Financial Condition

On May 2, 2024, ICF International, Inc. (the “Company”) announced its financial results for the first quarter ended March 31, 2024. 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 May 2, 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 July 12, 2024, to stockholders of record as of the close of business on June 7, 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 May 2, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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Exhibit Index

 

Exhibit Number		Description
99.1		Press Release dated May 2, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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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: May 2, 2024		By:	/s/ Barry Broadus
			Barry Broadus
			Chief Financial Officer

 

 

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Exhibit 99.1

NEWS RELEASE

ICF Reports First Quarter 2024 Results

-- Record First Quarter Results Represent a Strong Start to 2024 --

-- Re-affirms Full Year Guidance --

First Quarter Highlights:

RESTON, Va.— May 2, 2024-- ICF (NASDAQ: ICFI), a global consulting and technology services provider, reported results for the first quarter ended March 31, 2024.

Commenting on the results, John Wasson, chair and chief executive officer, said, “This was a record first quarter for ICF. Revenues increased 2% year-on-year, however, adjusting for the divestiture of our commercial marketing business lines during 2023, first quarter revenue increased 9% year-over-year. This strong performance was led by robust growth in revenues from commercial energy clients and supported by solid revenue growth from government clients.

“ICF performed exceptionally well in our Energy, Environment, Infrastructure and Disaster Recovery client market, with revenues up 20% year-over-year, representing 45% of ICF’s total first quarter revenues. In this market, we combine our deep domain expertise in energy efficiency, decarbonization, electrification, environmental and climate impacts, and disaster recovery and mitigation to provide comprehensive services and solutions to over 75 utility clients, as well as developers of renewable energy sources, energy companies, and federal, state and local and international government clients.

“The substantial increase in first quarter profitability was attributable to both recurring and quarter-specific factors. Revenue mix together with higher utilization, lower facility costs and our increased scale continued to drive improved margin performance. Additionally, margins benefited from the ramp-up of several recently awarded energy efficiency contracts, which are more profitable during the startup phase.

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“This was another strong quarter of contract awards, which increased 21% from the year-ago quarter, maintaining our trailing twelve-month book-to-bill ratio of 1.2. Approximately 70% of our over $2.4 billion in contract awards over the last 12 months represented new business, demonstrating ICF’s excellent positioning in growth areas within both our government and commercial client sets. Our business development pipeline remained at $9.7 billion at the end of the quarter, providing further confidence in our ability to sustain our high single-digit organic growth going forward.”

First Quarter 2024 Results

First quarter 2024 total revenue was $494.4 million, a 2.3% increase from the $483.3 million reported in the first quarter of 2023, and up 8.7% from last year’s first quarter revenues adjusted for the divestiture of our commercial marketing business lines. Subcontractor and other direct costs were 24.4% of total revenues compared to 27.3% in last year’s first quarter. Operating income was $40.9 million, up 30.2% from $31.5 million, and operating margin on total revenue expanded to 8.3% from 6.5%. Net income totaled $27.3 million, and GAAP EPS was $1.44 per share, inclusive of a net benefit of $0.5 million, or $0.02 per share of tax-effected special charges. This compares to net income and GAAP EPS of $16.4 million, and $0.87, respectively, reported in the first quarter of 2023, which included $4.6 million, or $0.18 per share of tax-effected special charges. In the 2024 first quarter, the company’s tax rate was 20.4% compared to 23.5% in the 2023 first quarter.

Non-GAAP EPS increased 24.6% to $1.77 per share, from the $1.42 per share reported in the comparable period in 2023. EBITDA was $56.4 million, 21.6% above the $46.4 million reported for the year-ago period. Adjusted EBITDA increased 8.2% to $55.2 million from $51.0 million for the comparable period in 2023.

Backlog and New Business

Total backlog was $3.6 billion at the end of the first quarter of 2024. Funded backlog was $1.8 billion, or approximately 50% of the total backlog. The total value of contracts awarded in the 2024 first quarter was $495 million, and trailing twelve-month contract awards totaled $2.4 billion for a book-to-bill ratio of 1.23.

Government Revenue First Quarter 2024 Highlights

Revenue from government clients was $376.4 million, up 3.5% year-over-year.

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Key Government Contracts Awarded in the First Quarter 2024

Notable government contract awards won in the first quarter of 2024 included:

Health and Social Programs

IT Modernization

Disaster Management and Mitigation

Climate, Energy and Environment

Commercial Revenue First Quarter 2024 Highlights

Commercial revenue was $118.1 million, compared to $119.6 million reported in the first quarter of 2023; up 29.3% compared to revenues of $91.3 million excluding divestitures in 2023.

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Key Commercial Contracts Awarded in the First Quarter of 2024

Notable commercial awards won in the first quarter of 2024 included:

Energy Markets

Other Commercial

Dividend Declaration

On May 2, 2024, ICF declared a quarterly cash dividend of $0.14 per share, payable on July 12, 2024, to shareholders of record on June 7, 2024.

Summary and Outlook

“ICF’s robust first quarter performance supports our full year guidance and sets the stage for another year of substantial growth in 2024. Our energy efficiency and utility consulting, together with ICF’s climate and infrastructure services continue to benefit from strong demand from commercial and government clients; our disaster management work is moving forward with new contract wins; and our key areas of focus in the federal government arena, namely public health and IT modernization/digital transformation provide us with significant long-term growth opportunities.

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“Based on our strong backlog and current visibility, we are pleased to reaffirm our guidance for 2024. 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% growth 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 that our work involves helping clients address many of the most challenging issues of the day. Our ability to attract and retain professionals who are committed to excellent execution and making a positive impact on society has been and remains critical to our success,” Mr. Wasson concluded.

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. GAAP EPS refers to U.S. GAAP Diluted EPS. Non-GAAP EPS refers to Non-GAAP Diluted EPS. 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.

 

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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

 

 

 

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ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

		Three Months Ended
		March 31,
(in thousands, except per share amounts)		2024				2023
Revenue		$	494,436			$	483,282
Direct costs			310,533				312,565
Operating costs and expenses:
Indirect and selling expenses			129,094				123,733
Depreciation and amortization			5,574				6,309
Amortization of intangible assets			8,291				9,224
Total operating costs and expenses			142,959				139,266
Operating income			40,944				31,451
Interest, net			(8,238	)			(9,457	)
Other income (expense)			1,630				(558	)
Income before income taxes			34,336				21,436
Provision for income taxes			7,019				5,038
Net income		$	27,317			$	16,398
Earnings per Share:
Basic		$	1.46			$	0.87
Diluted		$	1.44			$	0.87
Weighted-average common shares outstanding:
Basic			18,757				18,779
Diluted			18,946				18,949
Cash dividends declared per common share		$	0.14			$	0.14
Other comprehensive income (loss), net of tax			684				(1,334	)
Comprehensive income, net of tax		$	28,001			$	15,064

 

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ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures(2)

(Unaudited)

 

		Three Months Ended
		March 31,
(in thousands, except per share amounts)		2024				2023
Reconciliation of Revenue, Adjusted for Impact of Exited Business
Revenue		$	494,436			$	483,282
Less: Revenue from exited business (3)			—				(28,317	)
Total Revenue, Adjusted for Impact of Exited Business		$	494,436			$	454,965
Reconciliation of EBITDA and Adjusted EBITDA (4)
Net income		$	27,317			$	16,398
Interest, net			8,238				9,457
Provision for income taxes			7,019				5,038
Depreciation and amortization			13,865				15,533
EBITDA			56,439				46,426
Impairment of long-lived assets (5)			—				894
Acquisition and divestiture-related expenses (6)			66				803
Severance and other costs related to staff realignment (7)			365				2,495
Charges for facility consolidations and office closures (8)			—				359
Pre-tax gain from divestiture of a business (9)			(1,715	)			—
Total Adjustments			(1,284	)			4,551
Adjusted EBITDA		$	55,155			$	50,977
Net Income Margin Percent on Revenue (10)			5.5	%			3.4	%
EBITDA Margin Percent on Revenue (11)			11.4	%			9.6	%
Adjusted EBITDA Margin Percent on Revenue (11)			11.2	%			10.5	%
Reconciliation of Non-GAAP Diluted EPS (4)
U.S. GAAP Diluted EPS		$	1.44			$	0.87
Impairment of long-lived assets			—				0.04
Acquisition and divestiture-related expenses			—				0.04
Severance and other costs related to staff realignment			0.02				0.13
Expenses related to facility consolidations and office closures (12)			0.04				0.02
Pre-tax gain from divestiture of a business			(0.09	)			—
Amortization of intangibles			0.44				0.49
Income tax effects of the adjustments (13)			(0.08	)			(0.17	)
Non-GAAP Diluted EPS		$	1.77			$	1.42

 

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(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 an intangible asset associated with the exit of our commercial marketing business in the United Kingdom in 2023.
(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 ceasing to use the leased facilities.
(9) Pre-tax gain resulting from the release of an escrow related to the 2023 divestiture of our U.S. commercial marketing business.
(10) Net Income Margin Percent on Revenue was calculated by dividing net income by revenue.
(11) EBITDA Margin Percent and Adjusted EBITDA Margin Percent on Revenue were calculated by dividing the non-GAAP measure by the corresponding revenue.
(12) 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.
(13) Income tax effects were calculated using the effective tax rate, adjusted for discrete items, if any, of 20.4% and 23.5% for the three months ended March 31, 2024 and 2023, respectively.

 

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ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except share and per share amounts)		March 31, 2024				December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents		$	3,683			$	6,361
Restricted cash			916				3,088
Contract receivables, net			202,246				205,484
Contract assets			230,412				201,832
Prepaid expenses and other assets			28,401				28,055
Income tax receivable			—				2,337
Total Current Assets			465,658				447,157
Property and Equipment, net			74,296				75,948
Other Assets:
Goodwill			1,219,031				1,219,476
Other intangible assets, net			86,613				94,904
Operating lease - right-of-use assets			128,356				132,807
Other assets			43,740				41,480
Total Assets		$	2,017,694			$	2,011,772
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt		$	26,000			$	26,000
Accounts payable			119,285				134,503
Contract liabilities			22,099				21,997
Operating lease liabilities			20,889				20,409
Finance lease liabilities			2,545				2,522
Accrued salaries and benefits			70,176				88,021
Accrued subcontractors and other direct costs			48,707				45,645
Accrued expenses and other current liabilities			82,966				79,129
Total Current Liabilities			392,667				418,226
Long-term Liabilities:
Long-term debt			448,748				404,407
Operating lease liabilities - non-current			170,575				175,460
Finance lease liabilities - non-current			13,227				13,874
Deferred income taxes			21,975				26,175
Other long-term liabilities			54,353				56,045
Total Liabilities			1,101,545				1,094,187
Commitments and Contingencies
Stockholders’ Equity:
Preferred stock, par value $.001 per share; 5,000,000 shares authorized; none issued			—				—
Common stock, par value $.001; 70,000,000 shares authorized; 24,110,071 and 23,982,132 shares issued at March 31, 2024 and December 31, 2023, respectively; 18,754,762 and 18,845,521 shares outstanding at March 31, 2024 and December 31, 2023, respectively			24				24
Additional paid-in capital			425,160				421,502
Retained earnings			799,796				775,099
Treasury stock, 5,355,309 and 5,136,611 shares at March 31, 2024 and December 31, 2023 respectively			(297,630	)			(267,155	)
Accumulated other comprehensive loss			(11,201	)			(11,885	)
Total Stockholders’ Equity			916,149				917,585
Total Liabilities and Stockholders’ Equity		$	2,017,694			$	2,011,772

 

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ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

		Three Months Ended
		March 31,
(in thousands)		2024				2023
Cash Flows from Operating Activities
Net income		$	27,317			$	16,398
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			1,347				567
Deferred income taxes and unrecognized income tax benefits			(4,786	)			2,187
Non-cash equity compensation			3,551				3,750
Depreciation and amortization			13,865				15,533
Gain on divestiture of a business			(1,715	)			—
Other operating adjustments, net			46				393
Changes in operating assets and liabilities, net of the effects of acquisitions:
Net contract assets and liabilities			(29,024	)			(18,716	)
Contract receivables			1,604				10,929
Prepaid expenses and other assets			(192	)			15,353
Operating lease assets and liabilities, net			523				1,016
Accounts payable			(15,119	)			(26,083	)
Accrued salaries and benefits			(17,775	)			(24,678	)
Accrued subcontractors and other direct costs			3,303				(2,613	)
Accrued expenses and other current liabilities			(3,988	)			(14,688	)
Income tax receivable and payable			11,375				3,192
Other liabilities			(333	)			629
Net Cash Used in by Operating Activities			(10,001	)			(16,831	)
Cash Flows from Investing Activities
Payments for purchase of property and equipment and capitalized software			(5,226	)			(6,441	)
Payments for business acquisitions, net of cash acquired			—				(459	)
Proceeds from divestiture of a business			1,715				—
Net Cash Used in Investing Activities			(3,511	)			(6,900	)
Cash Flows from Financing Activities
Advances from working capital facilities			355,877				334,995
Payments on working capital facilities			(311,813	)			(293,640	)
Proceeds from other short-term borrowings			24,356				2,483
Repayments of other short-term borrowings			(23,950	)			—
Receipt of restricted contract funds			1,261				2,916
Payment of restricted contract funds			(3,391	)			(1,131	)
Dividends paid			(2,636	)			(2,641	)
Net payments for stockholder issuances and buybacks			(30,355	)			(22,815	)
Other financing, net			(516	)			(479	)
Net Cash Provided by Financing Activities			8,833				19,688
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash			(171	)			11
Decrease in Cash, Cash Equivalents, and Restricted Cash			(4,850	)			(4,032	)
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period			9,449				12,968
Cash, Cash Equivalents, and Restricted Cash, End of Period		$	4,599			$	8,936
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest		$	7,740			$	5,924
Income taxes		$	1,133			$	914

 

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ICF International, Inc. and Subsidiaries

Supplemental Schedule (14)

 

Revenue by client markets		Three Months Ended
		March 31,
		2024				2023
Energy, environment, infrastructure, and disaster recovery			45	%			39	%
Health and social programs			39	%			42	%
Security and other civilian & commercial			16	%			19	%
Total			100	%			100	%
Revenue by client type		Three Months Ended
		March 31,
		2024				2023
U.S. federal government			55	%			55	%
U.S. state and local government			16	%			16	%
International government			5	%			4	%
Government			76	%			75	%
Commercial			24	%			25	%
Total			100	%			100	%
Revenue by contract mix		Three Months Ended
		March 31,
		2024				2023
Time-and-materials			42	%			42	%
Fixed-price			45	%			45	%
Cost-based			13	%			13	%
Total			100	%			100	%

(14) 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.

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