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Press Release

ICF Reports Second Quarter 2018 Results

FAIRFAX, Va

Aug 2, 2018

Second Quarter Highlights

  • Total Revenue Was $324 Million, Up 6 Percent
  • Diluted EPS of $0.71, Up 13 Percent; Non-GAAP EPS¹ Was $0.80
  • Adjusted EBITDA Margin¹ on Service Revenue¹ Was 11.9 Percent
  • Contract Awards Increased 74 Percent to $590 Million; TTM Contract Awards Were $1.6 Billion for a Book-to-Bill of 1.28x
  • Increased Business Development Spending Drives Record Pipeline of $5.7 Billion at Quarter-End
Lynn Morgen
AdvisIRy Partners
David Gold
AdvisIRy Partners
Sr. Director, Communications

ICF (NASDAQ:ICFI), global consultancy and digital services providers to government and commercial clients around the world, reported results for the second quarter ended June 30, 2018.

“Second quarter results showed good year-on-year growth across our government and commercial client sets and strong business development metrics that position ICF for future growth,” said Sudhakar Kesavan, ICF’s Chairman and Chief Executive Officer.

“In the second quarter, revenue growth from government clients was led by strong gains in our international government work. Both energy markets and marketing services were key drivers of second quarter commercial revenue growth, posting double-digit and high single-digit year-on-year increases, respectively. Similar to this year’s first quarter, we significantly increased our business development spending to fund capture and proposal activity around disaster recovery opportunities and are pleased with our success to date. Revenues associated with recent disaster recovery contract wins are expected to significantly ramp up in the second half of the year. This growth will be enhanced by our acquisition of DMS Disaster Consultants, a 50-person disaster planning and recovery advisory firm, which we announced today and detailed in a separate release.

“This was a record second quarter of contract wins for ICF. Contract awards were broad-based across our client sets and increased 74 percent, primarily representing new business. At the end of the second quarter, our business development pipeline was a record $5.7 billion, up from $4.4 billion at the end of the prior quarter, setting the stage for continued growth,” Mr. Kesavan noted.

Second Quarter 2018 Results

Second quarter 2018 revenue was $324.3 million, a 5.8 percent increase from $306.4 million in the second quarter of 2017. Service revenue grew 2.7 percent year-over-year to $231.0 million. Net income was $13.6 million in the second quarter, up 14.1 percent from $11.9 million in the second quarter of 2017. Diluted earnings per share (EPS) amounted to $0.71, a 12.7 percent increase from $0.63 per diluted share in the prior year period. Non-GAAP EPS increased 9.6 percent year-on-year to $0.80 per share in the second quarter of 2018, from $0.73 in the year-ago quarter. EBITDA1 was $27.3 million, compared to $29.3 million in the second quarter of 2017. Adjusted EBITDA was $27.4 million compared to $29.9 million in last year’s second quarter. Second quarter 2018 adjusted EBITDA margin was 11.9 percent of service revenue compared to 13.3 percent in the 2017 second quarter. Both EBITDA and adjusted EBITDA in the second quarter of 2018 were impacted primarily by significant marketing investments associated with pursuing disaster recovery opportunities.

Backlog and New Business Awards

Total backlog was $2.2 billion at the end of the second quarter of 2018. Funded backlog was $1.1 billion, representing approximately half of the total backlog. The total value of contracts awarded in the 2018 second quarter was $590 million, up 74 percent year-on-year, representing a book-to-bill ratio of 1.82.

Government Business Second Quarter 2018 Highlights

Revenue from government clients was $208.7 million, up 5.5% year-on-year.

  • U.S. federal government revenue was $138.9 million and accounted for 43 percent of total revenue, compared to 46 percent of total revenue in the second quarter of 2017.
  • U.S. state and local government revenue was $35.3 million and accounted for 11 percent of total revenue, compared to 12 percent of total revenue in the second quarter of 2017.
  • International government revenue was $34.5 million and accounted for 10 percent of total revenue, up from 7 percent in last year’s second quarter.

Key Government Contracts Awarded in the Second Quarter

ICF was awarded more than 80 U.S. federal contracts and task orders and more than 250 additional contracts from U.S. state and local and international governments. The largest awards have an aggregate value of more than $370 million and are listed below:

  • Disaster recovery: As previously disclosed in our 8-K filing, a professional services agreement with an authority of the government of Puerto Rico to provide disaster recovery grant claims review and disaster recovery project formulation services assistance related to Hurricanes Irma and Maria.
  • Technical assistance: A contract with the U.S. Agency for International Development to provide implementation support services and technical assistance to improve national diagnostic networks, laboratory systems, and disease surveillance mechanisms.
  • Cybersecurity services: A contract with the U.S. Air Force to provide comprehensive cybersecurity support across the U.S. Air Force enterprise.
  • Program support: Two task orders with the U.S. Department of Defense to provide strategic planning and program support to the Defense Security Service.
  • Technical assistance: A contract modification with the New Jersey Department of Community Affairs to provide ongoing regulatory compliance and construction management support related to Superstorm Sandy.

Select other government contract and task order wins with a value greater than $2 million included: additional funding to provide program support services for the Pennsylvania Department of Insurance; a recompete with the Connecticut Department of Public Health to provide support services related to the U.S. Centers for Disease Control’s Behavioral Risk Factor Surveillance Survey; and environmental planning services for a California county water resources agency and a western U.S. transit authority.

Commercial Business Second Quarter 2018 Highlights

  • Commercial revenue was $115.7 million, 6.5 percent above the $108.6 million in last year’s second quarter.
  • Energy markets, which includes energy efficiency programs for utilities, represented 48 percent of commercial revenue. Marketing services accounted for 43 percent of commercial revenues.Key Commercial Contracts Awarded in the Second Quarter

Key Commercial Contracts Awarded in the Second Quarter

Commercial sales were $144.0 million in the second quarter of 2018, and ICF was awarded more than 700 commercial projects globally during the period.

The Energy Markets contracts below have an aggregate value of over $10 million:

  • Contracts with a northeastern U.S. utility to support its residential energy efficiency programs and provide related services.
  • A contract extension with a midwestern U.S. utility to continue support for its residential energy efficiency programs.
  • Multiple task orders with a western U.S. utility to provide environment and planning services.

The Marketing Services contracts below have an aggregate value of over $70 million:

  • Multiple contracts and task orders with a U.S. health insurer to continue providing marketing support for its programs.
  • Two task orders with a U.S. hospitality company to provide support for its loyalty program.
  • Multiple task orders with a health, beauty, and home care products company to provide digital solutions services.
  • A contract with a U.S. healthcare association to provide digital strategy services.
  • Renewal of the retainer with the Belize Tourism Board to continue to provide marketing services.

Selected other commercial contract wins with a value of more than $1 million included: customer relationship marketing services for a large U.S. consumer packaged foods company; training development for a U.S. city airport system; marketing services for a North American fitness club chain; loyalty strategy for a U.K. telecommunications and internet service provider; environment and planning services for a western U.S. utility; energy efficiency program support for a southwestern U.S. utility; digital solutions services for a U.S. manufacturer of fluid-handling systems and products; advisory services for an aviation company; and customer strategy for a global e-commerce platform.

Dividend Payment

On August 2, 2018, ICF declared a quarterly cash dividend of $0.14 per share, payable on October 16, 2018 to shareholders of record on September 7, 2018.

Summary and Outlook

“Our first half results, together with our funded backlog, and record pipeline levels have enhanced our visibility heading into the second half of 2018. Consequently, we are increasing our guidance for revenue and EPS for full year 2018.

“We now expect to report total revenue of $1.295 billion to $1.335 billion for full year 2018. The midpoint of our updated guidance is equivalent to 7.0 percent year-on-year growth. GAAP diluted EPS is expected to be in the range of $3.35 to $3.55, exclusive of any special charges. Non-GAAP EPS is expected to range from $3.70 to $3.90. Per-share guidance is based on a weighted average number of shares outstanding of 19.2 million. Operating cash flow is expected to be in the range of $100 million to $110 million,” concluded Mr. Kesavan.


1Non-GAAP EPS, Service Revenue, 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.  The presentation of non-GAAP measurements may not be comparable to other similarly titled measures used by other companies.

To view the full release, including financial tables, download the PDF.
About ICF

ICF (NASDAQ:ICFI) is a global consulting services company with over 5,500 specialized experts, 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 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.