News
Press Release

ICF Reports First Quarter 2022 Results

May 4, 2022

First Quarter Highlights:

  • Total Revenue Was $413 Million and Service Revenue¹ Was $305 Million, Both Up 9%
  • Diluted EPS Was $0.94 Inclusive of $0.12 in Tax-Effected Facility-Related and M&A Charges; Non-GAAP EPS¹ Was $1.31, Up 16%
  • Adjusted EBITDA¹ Was $42.3M, Up 12%; Adjusted EBITDA Margin on Service Revenue¹ Was 13.9%
  • Contract Awards Were $361 Million; TTM Contract Awards Were $2.0 Billion for a Book-to-Bill Ratio of 1.27

Re-affirms Full Year 2022 Guidance for Double-Digit Revenue Growth and Strong Margin Performance

Record Business Development Pipeline of $7.9 Billion at Quarter-End Supports Multi-Year Growth Outlook

FAIRFAX, Va., May 4, 2022 /PRNewswire/ -- ICF (NASDAQ:ICFI), a global consulting and digital services provider, reported results for the first quarter ended March 31, 2022. 

Commenting on the results, John Wasson, chair and chief executive officer, said, "We continued to execute effectively in the first quarter, building upon our positioning in high-growth areas through organic growth and acquisitions, and leveraging our capabilities to expand our addressable market. Year-on-year growth was led by our government client category, in which revenue from federal and state and local government clients increased 25% and 14%, respectively. This growth reflected particularly strong performance in the areas of IT modernization/digital transformation, public health and disaster management.

"Several factors contributed to our 13.9% adjusted EBITDA margin on service revenue, which expanded 40 basis points year-on-year, including revenue mix, high utilization levels and our increased scale. Additionally, profitability benefitted from past actions to consolidate ICF's real estate footprint and increase operating efficiencies. As a result, we were able to achieve significant margin expansion, while continuing to invest in people, technology and strategic initiatives to support future growth.

"Most of our first quarter contract awards represented new business wins at federal government and commercial energy clients, where ICF offers a unique combination of deep domain expertise together with increasing cross-cutting implementation capabilities. The substantial growth in our business development pipeline to $7.9 billion at the end of the first quarter is indicative of our expanded addressable market and the alignment of ICF's qualifications with dynamic long-term growth trends in our markets."

First Quarter 2022 Results

First quarter 2022 total revenue increased 9.2% to $413.5 million from $378.5 million in the first quarter of 2021. Service revenue was $304.6 million, up 8.9% year-over-year from $279.6 million. Net income totaled $17.9 million and diluted EPS was $0.94 per share in the 2022 first quarter, inclusive of $4.4 million, or $0.17 of tax-effected special charges, of which $0.12 represented M&A and previously disclosed facility-related charges. This compares to $18.4 million and $0.96 per share last year, inclusive of $0.05 of tax-effected special charges primarily related to facility closure and severance costs.

Non-GAAP EPS increased 15.9% to $1.31 per share from the $1.13 per share reported in the first quarter of 2021. EBITDA¹ was $37.9 million compared to $36.4 million a year ago. Adjusted EBITDA increased 12.1% to $42.3 million, from $37.7 million in the first quarter of 2021. Adjusted EBITDA margin on service revenue was 13.9%, compared to 13.5% reported in the year-ago quarter.      

Backlog and New Business Awards

Total backlog was $3.2 billion at the end of the first quarter of 2022. Funded backlog was $1.6 billion, or approximately 50% of the total backlog. The total value of contracts awarded in the 2022 first quarter was $361 million, and trailing-twelve-month contract awards totaled $2.0 billion for a book-to-bill ratio of 1.27.

Government Revenue First Quarter 2022 Highlights

Revenue from government clients was $311.9 million, up 15.7% year-over-year  

  • U.S. federal government revenue was $220.3 million, 25.2% above the $176.0 million reported in the year-ago quarter. Federal government revenue accounted for 53% of total revenue, compared to 46% of total revenue in the first quarter of 2021.
  • U.S. state and local government revenue increased 14.0% to $64.8 million, from $56.9 million in the year-ago quarter. State and local government clients represented 16% of total revenue, compared to 15% in the first quarter of 2021.
  • International government revenue was $26.7 million, compared to $36.7 million in the year-ago quarter, reflecting the wind-down of a short-term project with significant pass-through revenue that we highlighted throughout 2021. Excluding that contract, revenues were similar to year-ago first quarter levels. International government revenue represented 6% of total revenue, compared to 10% in the first quarter of 2021.

Key Government Contracts Awarded in the First Quarter 2022

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 $180 million. Notable awards won in the first quarter 2022 included:

Digital Modernization

  • A contract modification with a value of $9.9 million with the U.S. Department of Health and Human Services National Cancer Institute (NCI) to provide platform development services and support NCI's digital service center.
  • A contract modification with a value of $8.7 million with a U.S. federal government department to maintain a grants management system to support implementation of the CARES Act.
  • A contract modification with a value of $6.7 million with an Office of the Inspector General for a large U.S. federal government department to continue to provide platform development services.
  • A new contract with a value of $6.2 million with a U.S. federal government department to modernize and consolidate a suite of legacy systems for case analysis management.

Transportation, Energy and Environment

  • A recompete blanket purchase agreement with a ceiling of $94.0 million with the U.S. Federal Highway Administration's Office of Operations to provide technical support services to help create the next generation of multimodal transportation management systems.
  • A recompete contract with a value of $5.0 million with the Maryland Department of Transportation Office of Environment to provide environmental consultant services.

Public Health
A subcontract ceiling increase with a value of $11.4 million to continue providing survey and evaluation services for the U.S. Agency for International Development's MEASURE Evaluation Phase IV.

Training and Technical Assistance

  • A sole-source recompete contract with a value of $6.5 million with the U.S. Department of Justice to support the Office for Victims of Crime Training and Technical Assistance Center.
  • A task order with a value of $6.4 million under a subcontract to provide medical modeling simulation and training to the U.S. Air Force.

Commercial Revenue First Quarter 2022 Highlights

Commercial revenue was $101.6 million, compared to $108.9 million in the year-ago quarter.

  • Commercial revenue accounted for 25% of total revenue compared to 29% of total revenue in the 2021 first quarter.
  • This variance was primarily driven by commercial marketing services which remained below pre-pandemic levels.
  • Energy markets revenue declined modestly due to the timing of environment and infrastructure projects, after increasing 12% in the first quarter of 2021.
  • Energy markets represented 60% of commercial revenue. Marketing services accounted for 29% of commercial revenue.

Key Commercial Contracts Awarded in the First Quarter 2022

ICF was awarded commercial projects during the quarter with an aggregate value of approximately $180 million. Notable awards won in the first quarter 2022 included:

Energy Markets

  • A multimillion-dollar recompete contract with Public Service Company of Oklahoma to manage and implement the majority of its commercial and residential energy efficiency portfolios.
  • Multiple subcontract modifications to provide energy efficiency program implementation services for a Midwestern U.S. utility.
  • A new multimillion-dollar subcontract to implement an energy efficient retail products program for a large Midwestern U.S. electric utility.
  • A subcontract modification to continue to manage implementation of a residential energy efficiency portfolio for a Midwestern U.S. statewide energy efficiency and renewable resource program.

Marketing Services and Other

  • A new multimillion-dollar contract with a mid-Atlantic U.S. energy company to serve as agency of record, providing marketing and advertisement services to each of its operating utilities.
  • A contract modification to continue providing broad-based corporate communications support, including internal communications, social media, media relations, employee events and meetings, metrics and branding, to a U.S. pharmaceutical company.
  • A contract modification with a European low-cost carrier to provide operational transformation services and help the airline strengthen its maintenance processes and procedures.

.Dividend Declaration

On May 4, 2022, ICF declared a quarterly cash dividend of $0.14 per share, payable on July 14, 2022, to shareholders of record on June 10, 2022.

Summary and Outlook

"First quarter results represented a very positive start to the year and support our expectations for double-digit revenue growth and strong margin performance in full year 2022.

"We are pleased to re-affirm our guidance for service revenue of $1.225 billion to $1.275 billion, implying total revenue of $1.7 billion to $1.76 billion, EBITDA of between $160 million and $172 million and adjusted EBITDA of $168 million to $180 million, equivalent to an adjusted EBITDA margin on service revenue of 13.9% at the midpoints of the ranges. The difference between EBITDA and adjusted EBITDA guidance is primarily due to the add-back of a non-cash rent expense of approximately $8 million associated with our new Reston, Virginia, headquarters. GAAP EPS is projected at $4.15 to $4.45 exclusive of special charges, and non-GAAP EPS is expected to range from $5.15 to $5.45, representing increases of 16% and 10% at the mid-point, respectively, over 2021. Operating cash flow is expected to be approximately $130 million in 2022.

"We continue to expand our capabilities, backlog and pipeline in the key growth areas of IT modernization/digital transformation, public health, disaster management and utility consulting, as well as climate, environment and infrastructure, where we see strong, sustained demand, and which we expect to progressively increase as a percentage of ICF's service revenue over the next several years. In addition to representing growth catalysts for ICF, our work in these areas enables ICF to make a positive impact on society, which is the key element of our corporate purpose. Our ability to attract and retain professionals who are engaged in helping clients address many of the most challenging issues of the day has been critical to our success to date. As we build out our growth platform, ICF remains committed to providing a collaborative working environment and maintaining the collegial, entrepreneurial culture for which we are known," Mr. Wasson concluded.

1 Non-GAAP EPS, Service Revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin 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 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 (NASDAQ:ICFI) is a global consulting services company with approximately 8,000 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.

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

 






ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)








Three Months Ended



March 31,

(in thousands, except per share amounts)


2022


2021

Revenue


$                 413,468


$               378,478

Direct costs


258,158


232,082

Operating costs and expenses:





Indirect and selling expenses


117,452


109,982

Depreciation and amortization


4,838


5,270

Amortization of intangible assets


5,317


3,015

Total operating costs and expenses


127,607


118,267






Operating income


27,703


28,129

Interest expense


(2,697)


(2,683)

Other expense


(369)


(417)

Income before income taxes


24,637


25,029

Provision for income taxes


6,775


6,678

Net income


$                   17,862


$                 18,351






Earnings per Share:





Basic


$                        0.95


$                     0.97

Diluted


$                        0.94


$                     0.96






Weighted-average Shares:





Basic


18,795


18,885

Diluted


19,012


19,118






Cash dividends declared per common share


$                        0.14


$                     0.14






Other comprehensive income, net of tax


2,659


2,780

Comprehensive income, net of tax


$                   20,521


$                 21,131

 

ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP financial measures(2) 

(Unaudited)








Three Months Ended



March 31,

(in thousands, except per share amounts)


2022


2021

Reconciliation of Service Revenue





Revenue


$               413,468


$               378,478

Subcontractor and other direct costs (3)


(108,898)


(98,911)

Service revenue


$               304,570


$               279,567






Reconciliation of EBITDA and Adjusted EBITDA





Net income


$                 17,862


$                 18,351

Other expense


369


417

Interest expense


2,697


2,683

Provision for income taxes


6,775


6,678

Depreciation and amortization


10,155


8,285

EBITDA


37,858


36,414

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



303

Special charges related to acquisitions (5)


1,319


95

Special charges related to severance for staff realignment (6)


1,226


491

Special charges related to facilities consolidations and office closures (7)



200

Special charges related to the transfer to our new corporate headquarters (8)


1,882


Special charges related to retirement of Executive Chair (9)



224

Total special charges


4,427


1,313

Adjusted EBITDA


$                 42,285


$                 37,727






EBITDA Margin Percent on Revenue (10)


9.2%


9.6%

EBITDA Margin Percent on Service Revenue (10)


12.4%


13.0%

Adjusted EBITDA Margin Percent on Revenue (10)


10.2%


10.0%

Adjusted EBITDA Margin Percent on Service Revenue (10)


13.9%


13.5%






Reconciliation of Non-GAAP Diluted EPS





Diluted EPS


$                     0.94


$                     0.96

Adjustment related to impairment of long-lived assets



0.02

Special charges related to acquisitions


0.07


Special charges related to severance for staff realignment


0.06


0.03

Special charges related to facilities consolidations and office closures



0.01

Special charges related to the transfer to our new corporate headquarters 


0.10


Special charges related to retirement of Executive Chair 



0.01

Amortization of intangibles


0.28


0.16

Income tax effects on amortization, special charges, and adjustments (11)


(0.14)


(0.06)

Non-GAAP EPS


$                     1.31


$                     1.13






(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 $0.3 million in the first quarter of 2021
related to impairment of a right-of-use lease asset.


(5) Special charges related to acquisitions: These costs consist primarily of consultants and other outside third-party costs and integration
costs associated with our acquisitions and/or potential acquisitions.






(6) Special charges related to severance for staff realignment: These costs are mainly due to involuntary employee termination benefits for
our officers, groups of employees who have been notified that they will be 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 and office closures:  These costs are exit costs or gains associated with office lease
contraction, terminated office 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 continue to pay until the contractual obligation is satisfied but with no economic
benefit to us.






(8) Special charges related to the transfer to our new corporate headquarters:  These costs are additional rent as a result of us taking
possession of our new corporate headquarters in Reston, Virginia, during the fourth quarter of 2021 while maintaining our current
headquarters in Fairfax, Virginia.  We intend to complete the transition to our new corporate headquarters by the end of 2022 when our
Fairfax lease ends.






(9) Special charges related to retirement of the former Executive Chair: Our former Executive Chair retired effective December 31, 2020. 
These costs relate to unvested equity awards that, as a result of his employment agreement, the departing officer was able to maintain
certain equity awards beyond the date of employment.






(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 27.5% and 26.7% for the three months ended March 31,
2022 and 2021.

 

ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)






(in thousands, except share and per share amounts)


March 31,
2022


December 31,
2021

ASSETS





Current Assets:





Cash and cash equivalents


$                     7,392


$                    8,254

Restricted cash - current


1,681


12,179

Contract receivables, net


205,827


237,684

Contract assets


189,147


137,867

Prepaid expenses and other assets


41,176


42,354

Income tax receivable


8,288


10,825

Total Current Assets


453,511


449,163

Property and Equipment, net


62,886


52,053

Other Assets:





Goodwill


1,045,503


1,046,760

Other intangible assets, net


74,274


79,645

Operating lease - right-of-use assets


172,133


177,417

Other assets


49,416


44,496

Total Assets


$              1,857,723


$            1,849,534






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Current portion of long-term debt


$                   10,000


$                  10,000

Accounts payable


95,706


105,652

Contract liabilities


31,491


39,665

Operating lease liabilities - current


30,530


34,901

Accrued salaries and benefits


94,931


85,517

Accrued subcontractors and other direct costs


40,165


39,400

Accrued expenses and other current liabilities


41,388


61,496

Total Current Liabilities


344,211


376,631

Long-term Liabilities:





Long-term debt


449,776


411,605

Operating lease liabilities - non-current


189,857


191,805

Deferred income taxes


47,684


41,913

Other long-term liabilities


22,893


24,110

Total Liabilities


1,054,421


1,046,064






Commitments and Contingencies 










Stockholders' Equity:





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



Common stock, par value $.001; 70,000,000 shares authorized; 23,679,411 and 23,535,671 shares issued at
March 31, 2022 and December 31, 2021, respectively; 18,793,455 and 18,876,490 shares outstanding at
March 31, 2022 and December 31, 2021, respectively


23


23

Additional paid-in capital


388,639


384,984

Retained earnings


664,532


649,298

Treasury stock, 4,885,956 and 4,659,181 shares at March 31, 2022 and December 31, 2021, respectively


(241,516)


(219,800)

Accumulated other comprehensive loss


(8,376)


(11,035)

Total Stockholders' Equity


803,302


803,470

Total Liabilities and Stockholders' Equity


$              1,857,723


$            1,849,534

 








ICF International, Inc. and Subsidiaries


Consolidated Statements of Cash Flows


(Unaudited)




 Three Months Ended 




 March 31, 


(in thousands)


2022


2021


Cash Flows from Operating Activities






Net income


$                    17,862


$                    18,351


Adjustments to reconcile net income to net cash (used in) provided by operating activities:






(Recovery of) provision for credit losses


(170)


5,334


Deferred income taxes


4,505


1,838


Non-cash equity compensation


3,563


3,275


Depreciation and amortization


10,154


8,285


Facilities consolidation reserve


(78)


(75)


Amortization of debt issuance costs


154


155


Impairment of long-lived assets



303


Other adjustments, net


353


457


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






Net contract assets and liabilities


(59,689)


(19,750)


Contract receivables


31,473


2,531


Prepaid expenses and other assets


(11,708)


2,016


Operating lease assets and liabilities, net


(532)


(1,143)


Accounts payable


(9,815)


(354)


Accrued salaries and benefits


9,513


4,715


Accrued subcontractors and other direct costs


1,078


(33,466)


Accrued expenses and other current liabilities


(6,883)


8,303


Income tax receivable and payable


2,621


3,924


Other liabilities


544


262


Net Cash (Used in) Provided by Operating Activities


(7,055)


4,961








Cash Flows from Investing Activities






Capital expenditures for property and equipment and capitalized software


(6,454)


(3,595)








Cash Flows from Financing Activities






Advances from working capital facilities


329,690


185,755


Payments on working capital facilities


(291,662)


(174,674)


Receipt of restricted contract funds


4,301


451


Payment of restricted contract funds


(14,714)


(27,081)


Proceeds from exercise of options


92


2,702


Dividends paid


(2,644)


(2,642)


Net payments for stock issuances and buybacks


(22,268)


(17,104)


Payments on business acquisition liabilities


(121)


(682)


Net Cash Provided by (Used in) Financing Activities


2,674


(33,275)


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


(525)


745








Decrease in Cash, Cash Equivalents, and Restricted Cash


(11,360)


(31,164)


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


20,433


81,987


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


$                      9,073


$                    50,823








Supplemental Disclosure of Cash Flow Information






Cash paid during the period for:






Interest


$                      2,760


$                      2,637


Income taxes


$                         949


$                         961


Non-cash investing and financing transactions:






Tenant improvements funded by lessor


$                    10,843


$                           —

 

ICF International, Inc. and Subsidiaries

Supplemental Schedule(12)













Revenue by client markets


Three Months Ended




March 31,




2022


2021


Energy, environment, and infrastructure


38%


43%


Health, education, and social programs


50%


42%


Safety and security


7%


8%


Consumer and financial


5%


7%


Total


100%


100%














Revenue by client type


Three Months Ended




March 31,




2022


2021


U.S. federal government


53%


46%


U.S. state and local government


16%


15%


International government


6%


10%


Total Government


75%


71%


Commercial


25%


29%


Total


100%


100%














Revenue by contract mix


Three Months Ended




March 31,




2022


2021


Time-and-materials


40%


42%


Fixed price


44%


39%


Cost-based


16%


19%


Total


100%


100%














(12) 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.

 

SOURCE ICF