PR Newswire | May 4, 2021 04:06PM EDT

05/04 15:05 CDT

ICF Reports First Quarter 2021 Results FAIRFAX, Va., May 4, 2021

FAIRFAX, Va., May 4, 2021 /PRNewswire/ --

First Quarter Highlights:

* Total Revenue Was $378 Million; Service Revenue? Was $280 Million, up 9.5% * Diluted EPS Was $0.96 Compared to $0.55 * Non-GAAP EPS? Was $1.13, up 36% * Adjusted EBITDA Margin on Service Revenue? Was 13.5% * Record Contract Awards of $596 Million up 67%; TTM Contract Awards Were $2.2 Billion For a Book-to-Bill Ratio of 1.44

-Expects Full Year 2021 Service Revenue, EBITDA?and EPS to be at Upper End of the Guidance Ranges-

ICF (NASDAQ:ICFI), a global consulting and digital services provider, reported results for the first quarter ended March 31, 2021.

Commenting on the results, John Wasson, chairman and chief executive officer, said, "This was an excellent quarter for ICF, underscoring our positioning in high-growth markets within both the government and commercial arenas, and representing efficient execution on client programs. Additionally, this was another quarter of robust contract awards that indicate how well ICF's domain expertise and implementation capabilities are aligned with market demand.

"Results exceeded our expectations, led by double-digit revenue increases in our government and commercial energy businesses, where IT modernization, public health, mitigation/resilience, energy efficiency and utility advisory work remained major growth catalysts.

"Strong service revenue growth of 9.5%, together with higher utilization, drove substantial operating leverage. Earnings and EBITDA? increased at considerably higher rates than revenue, even as we moved ahead with investments in people and technologies to expand our capabilities in the high-growth markets we have identified. Gross margin of 38.7% included a significant quarter-specific benefit primarily related to the timing of several recently awarded fixed price energy efficiency contracts on which certain program costs will be incurred in upcoming quarters and the timing of energy efficiency incentive fees on several contracts.

"This was ICF's third consecutive quarter of record contract awards, with strong year-on-year increases in federal, state and local and commercial energy wins, virtually all in response to RFPs that were issued prior to the arrival of the new administration. At the end of the first quarter, our pipeline remained over $6 billion, representing diversified growth opportunities across our government and commercial client sets," Mr. Wasson noted.

First Quarter 2021 Results

First quarter 2021 total revenue was $378.5 million, an increase of 5.6% from the $358.2 million reported in the first quarter of 2020. Service revenue growth was 9.5% year-over-year to $279.6 million, from $255.4 million. Net income amounted to $18.4 million in the 2021 first quarter, and diluted EPS was $0.96 per diluted share, inclusive of $0.05 of tax-effected special charges primarily related to facility closure and severance costs. In the 2020 first quarter, net income was $10.6 million, or $0.55 per diluted share, inclusive of $0.16 of tax-effected special charges primarily related to M&A and severance costs.

Non-GAAP EPS was $1.13 per share, an increase of 36% over the $0.83 per share reported in the year-ago quarter. EBITDA was $36.4 million, 49.5% ahead of the $24.4 million reported in the first quarter of 2020. Adjusted EBITDA? was $37.7 million, compared to $28.0 million reported in the comparable quarter of 2020. First quarter 2021 adjusted EBITDA margin on service revenue was 13.5%, representing a 260-basis point increase from the 10.9% reported in the 2020 first quarter.

Backlog and New Business Awards

Total backlog was $3.0 billion at the end of the first quarter of 2021. Funded backlog was $1.6 billion, or approximately 52% of the total backlog. The total value of contracts awarded in the 2021 first quarter was $596.1 million, up 67% year-on-year for a quarterly book-to-bill ratio of 1.57. Trailing-twelve-month (TTM) contract awards totaled $2.19 billion for a book-to-bill ratio of 1.44.

Government Revenue First Quarter 2021 Highlights

Revenue from government clients was $270.1 million, up 12.9% year-over-year.

* U.S. federal government revenue was $175.9 million, representing a 13.1% year-over-year increase. Federal government revenue accounted for 46% of total revenue, up from 43% of total revenue in the first quarter of 2020. * U.S. state and local government revenue was $57.2 million compared to $60.9 million in the year-ago quarter, with the lower year-on-year comparisons primarily representing reduced pass-through revenues. State and local government clients accounted for 15% of total revenue, compared to 17% of total revenue in the 2020 first quarter. * International government revenue was $37.1 million, representing a 62.5% year-over-year increase, primarily related to a short-term project. International government revenue accounted for 10% of total revenue, up from 6% in the first quarter of 2020.

Key Government Contracts Awarded in the First Quarter 2021

ICF was awarded almost 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 $340 million. Notable awards won in the first quarter 2021 included:

Disaster Management

* A new contract with a value of $46.7 million with the Government of Puerto Rico's Public-Private Partnership Authority that includes elements of ICF's previous work to provide project formulation services to support long-term disaster recovery from hurricanes Irma and Maria and hazard mitigation efforts to protect against future disasters.

IT Modernization and Cybersecurity

* A task order with recompete and new elements valued up to $52.6 million with the U.S. Army Combat Capabilities Development Command Army Research Laboratory to expand the delivery of cyber research, development and technology services. * Two new agreements with an estimated value of $15.6 million with the U.S. Department of Labor (DOL) to provide IT and cybersecurity workforce development services under DOL's H-1B One Workforce Grant Program. * A new task order with a value of $10.7 million with the U.S. Federal Transit Administration to automate and modernize the National Transit Database. * A contract modification with a value of $9.2 million with the U.S. Department of Health and Human Services (HHS) Office of Inspector General to continue to perform ServiceNow platform support services.

Public Health

* A contract extension with a value of $11.0 million with the Maryland Department of Human Services to expand its customer support services. * A new contract with a value of $3.5 million with the health department of a Northeastern U.S. state to provide inbound call center support scheduling COVID-19 vaccinations. * A new contract with a value of $3.5 million with the U.S. Centers for Disease Control and Prevention to conduct a multistate study of COVID-19 mitigation strategies and outcomes in public schools.

Program, Technical and Analytical Support

* A recompete contract valued up to $35.0 million with the HHS Administration for Children and Families to provide training and technical assistance to support Head Start programs in Region 4. * A single-award IDIQ contract with recompete and new elements valued up to $30.0 million with the U.S. Environmental Protection Agency to provide technical, analytical and quality assurance support to inform the agency's decision-making process, including services to Regions 3, 5 and 9. * A recompete blanket purchase agreement valued up to $25.0 million with a U.S. federal department to provide analytical services to support regulatory development. * Two new multimillion-dollar agreements with a U.S. federal department to continue providing technical assistance (TA) services for its TA and capacity building activities. * A recompete contract with a value of $5.4 million with a directorate of the European Commission to provide a range of services related to tackling undeclared work, including supporting mutual learning events, conducting studies and analyses and providing communications support.

Commercial Revenue First Quarter 2021 Highlights

* Commercial revenue was $108.4 million, compared to $118.9 million reported in last year's first quarter. Commercial revenue accounted for 29% of total revenue compared to 33% of total revenue in the 2020 first quarter reflecting the impact of the COVID-19 pandemic on our commercial marketing business, which was partially offset by significant revenue growth in commercial energy markets. * Energy markets, which include energy efficiency programs, represented 58% of commercial revenue. * Marketing services accounted for 33% of commercial revenue.

Key Commercial Contracts Awarded in the First Quarter 2021

Commercial contract awards were over $250 million in the first quarter 2021. ICF was awarded almost 800 commercial projects globally during the quarter including:

Energy Markets

* Two new agreements with Southern California Edison to design and implement commercial and residential behavioral energy efficiency programs. * A new contract with Public Service Energy & Gas Co. to provide implementation and marketing services for its residential energy efficiency portfolio. * Contract expansions and extensions with utilities in the Mid-Atlantic U.S. to continue to provide implementation services for their residential, commercial and industrial energy efficiency programs. * Two recompete agreements and one contract modification with a Southeastern U.S. utility to provide implementation services for its energy efficiency programs. * A recompete contract with a Mid-Atlantic U.S. utility to provide implementation support services for its new and existing energy efficiency programs. * Contract expansions with a Midwestern U.S. utility to continue providing implementation services for its residential energy efficiency programs.

Marketing Services

* A recompete contract with an international hospitality chain to continue providing loyalty platform services. * A retainer with a U.S. floor care product manufacturer to continue to provide marketing services. * A contract modification with a U.S. pharmaceutical company to continue to provide corporate communications support services.

Dividend Declaration

On May 4, 2021, ICF declared a quarterly cash dividend of $0.14 per share, payable on July 14, 2021, to shareholders of record on June 11, 2021.

Summary and Outlook

"ICF's first quarter results represented a strong start to the year and have laid the foundation for significant growth across key metrics in 2021. Based on this performance and our current backlog and pipeline, we now expect full year 2021 service revenue, EBITDA and EPS to be at the upper end of the guidance ranges we provided at the time of our fourth quarter earnings release, namely service revenue of $1.095 billion to $1.13 billion; EBITDA of $145 million to $155 million; GAAP EPS of $3.90 to $4.20; and Non-GAAP EPS of $4.35 to $4.65. We continue to anticipate total revenue in 2021 of $1.525 billion to $1.575 billion, and we reaffirm our expectation that operating cash flow will be approximately $100 million.

"As noted last quarter, approximately 55% of our 2020 service revenue represented ICF's work in key growth areas, namely IT modernization, public health, disaster management, energy efficiency and utility consulting, along with climate, environment and infrastructure consulting, all of which are closely aligned with the priorities of the new administration. Taken together, we expect the growth rate in these areas to be 10% or more over the next several years.

"At ICF, much of our business is in service areas that enable us to create positive impacts on society and we, in turn, have prioritized being a good corporate citizen. This has attracted like-minded people who have been instrumental to our success and share our commitment to carbon neutrality, diversity, social justice and equality. We encourage you to access our most recent corporate citizenship report, available on our website, to learn more about how ICF addresses its environmental, social and governance responsibilities," Mr. Wasson concluded.

^1 Non-GAAP EPS, Service Revenue, EBITDA, Adjusted EBITDA, and Adjusted EBITDAMargin on Service Revenue are non-GAAP measurements. A reconciliation of allnon-GAAP measurements to the most applicable GAAP number is set forth below.Special charges are items that were included within our statement ofcomprehensive income but are not indicative of ongoing performance and havebeen presented net of applicable U.S. GAAP taxes. The presentation of non-GAAPmeasurements may not be comparable to other similarly titled measures used byother companies.

About ICFICF (NASDAQ:ICFI) is a global consulting services company with over 7,000 full-time 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 StatementsStatements 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.

ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended

March 31,

(in thousands, except per share amounts) 2021 2020

Revenue $378,478 $358,238

Direct costs 232,082 230,616

Operating costs and expenses:

Indirect and selling expenses 109,982 103,271

Depreciation and amortization 5,270 5,179

Amortization of intangible assets 3,015 2,853

Total operating costs and expenses 118,267 111,303

Operating income 28,129 16,319

Interest expense (2,683) (3,525)

Other (expense) income (417) 190

Income before income taxes 25,029 12,984

Provision for income taxes 6,678 2,372

Net income $ 18,351 $ 10,612

Earnings per Share:

Basic $ 0.97 $ 0.56

Diluted $ 0.96 $ 0.55

Weighted-average Shares:

Basic 18,885 18,840

Diluted 19,118 19,197

Cash dividends declared per common share $ 0.14 $ 0.14

Other comprehensive income (loss), net of tax 2,780 (11,123)

Comprehensive income (loss), net of tax $ 21,131 $ (511)

ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP financial measures^(2)

(Unaudited)

Three Months Ended

March 31,

(in thousands, except per share amounts) 2021 2020

Reconciliation of Service Revenue

Revenue $378,478 $358,238

Subcontractor and other direct costs ^(3) (98,911) (102,836)

Service revenue $279,567 $255,402

Reconciliation of EBITDA and Adjusted EBITDA

Net income $ 18,351 $ 10,612

Other expense (income) 417 (190)

Interest expense 2,683 3,525

Provision for income taxes 6,678 2,372

Depreciation and amortization 8,285 8,032

EBITDA 36,414 24,351

Adjustment related to impairment of long-lived 303 -assets ^(4)

Special charges related to acquisitions ^(5) 95 1,844

Special charges related to severance for staff 491 1,770realignment ^(6)

Special charges related to facilities consolidations 200 -and office closures ^(7)

Special charges related to retirement of the former 224 -Executive Chair ^(8)

Total special charges 1,313 3,614

Adjusted EBITDA $ 37,727 $ 27,965

EBITDA Margin Percent on Revenue ^(9) 9.6% 6.8%

EBITDA Margin Percent on Service Revenue ^(9) 13.0% 9.5%

Adjusted EBITDA Margin Percent on Revenue ^(9) 10.0% 7.8%

Adjusted EBITDA Margin Percent on Service Revenue ^ 13.5% 10.9%(9)

Reconciliation of Non-GAAP Diluted EPS

Diluted EPS $ 0.96 $ 0.55

Adjustment related to impairment of long-lived 0.02 -assets

Special charges related to acquisitions - 0.10

Special charges related to severance for staff 0.03 0.09realignment

Special charges related to facilities consolidations 0.01 -and office closures

Special charges related to retirement of the former 0.01 -Executive Chair

Amortization of intangibles 0.16 0.15

Income tax effects ^(10) (0.06) (0.06)

Non-GAAP EPS $ 1.13 $ 0.83

^(2) These tables provide reconciliations of non-GAAP financial measures tothe most applicable GAAP numbers. While we believe that these non-GAAPfinancial measures may be useful in evaluating our financial information,they should be considered supplemental in nature and not as a substitute forfinancial information prepared in accordance with GAAP. Other companies maydefine similarly titled non-GAAP measures differently and, accordingly, careshould be exercised in understanding how we define these measures.

^(3) Subcontractor and other direct costs is direct costs excluding directlabor and fringe costs.

^(4) Adjustment related to impairment of long-lived assets: We recognizedimpairment expense of $0.3 million in the first quarter of 2021 related toimpairment of a right-of-use lease asset.

^(5) Special charges related to acquisitions: These costs consist primarilyof consultants and other outside third-party costs and integration costsassociated with an acquisition.

^(6) Special charges related to severance for staff realignment: These costsare mainly due to involuntary employee termination benefits for our officers,groups of employees who have been notified that they will be terminated aspart of a consolidation or reorganization or, to the extent that the costsare not included in the previous two categories, involuntary employeetermination benefits for employees who have been terminated as a result ofCOVID-19.

^(7) Special charges related to facilities consolidations and officeclosures: These costs are exit costs associated with terminated leases orfull office closures. The exit costs include charges incurred under acontractual obligation that existed as of the date of the accrual and forwhich we will continue to pay until the contractual obligation is satisfiedbut with no economic benefit to us.

^(8) Special charges related to retirement of the former Executive Chair: Asa result of the employment agreement, the departing officer was able tomaintain certain equity awards beyond his date of employment. The 2019 equityaward held by the former Executive Chair was updated for a change in theperformance factor.

^(9) EBITDA Margin Percent and Adjusted EBITDA Margin Percent were calculatedby dividing the non-GAAP measure by the corresponding revenue.

^(10) Income tax effects were calculated using an effective U.S. GAAP taxrate of 26.7% and 18.3% for the three months ended March 31, 2021 and 2020,respectively.

ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share March 31, 2021 December 31, 2020and per share amounts)

ASSETS

Current Assets:

Cash and cash equivalents $ 8,592 $ 13,841

Restricted cash 42,231 68,146

Contract receivables, net 214,291 222,850

Contract assets 164,155 143,369

Prepaid expenses and other 22,115 25,492assets

Income tax receivable - 1,977

Total Current Assets 451,384 475,675

Property and Equipment, net 60,294 62,434

Other Assets:

Goodwill 910,359 909,913

Other intangible assets, net 56,900 59,887

Operating lease - right-of-use 119,250 127,132assets

Other assets 32,572 32,249

Total Assets $ 1,630,759 $ 1,667,290

LIABILITIES AND STOCKHOLDERS'EQUITY

Current Liabilities:

Current portion of long-term $ 10,000 $ 10,000debt

Accounts payable 90,894 91,365

Contract liabilities 43,589 42,050

Operating lease liabilities - 28,881 23,350current

Accrued salaries and benefits 85,134 80,512

Accrued subcontractors and 45,110 78,842other direct costs

Accrued expenses and other 77,318 100,908current liabilities

Income taxes payable 2,402 -

Total Current Liabilities 383,328 427,027

Long-term Liabilities:

Long-term debt 314,451 303,214

Operating lease liabilities - 106,551 115,614non-current

Deferred income taxes 36,966 34,330

Other long-term liabilities 38,230 40,144

Total Liabilities 879,526 920,329

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;23,461,587 and 23,305,255shares issued at March 31,2021 and December 31, 2020, 23 23respectively; 18,859,608 and18,909,983 shares outstandingat March 31, 2021 andDecember 31, 2020,respectively

Additional paid-in capital 372,420 369,058

Retained earnings 604,441 588,731

Treasury stock, 4,601,979 and4,395,272 shares at March 31, (214,325) (196,745)2021 and December 31, 2020,respectively

Accumulated other (11,326) (14,106)comprehensive loss

Total Stockholders' Equity 751,233 746,961

Total Liabilities and $ 1,630,759 $ 1,667,290Stockholders' Equity

ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended

March 31,

(in thousands) 2021 2020

Cash Flows from Operating Activities

Net income $ 18,351 $ 10,612

Adjustments to reconcile net income to net cashprovided by operating activities:

Provision for credit losses 5,334 444

Deferred income taxes 1,838 4,756

Non-cash equity compensation 3,275 3,826

Depreciation and amortization 8,285 8,032

Non-cash lease expense (1,143) (418)

Facilities consolidation reserve (75) (71)

Amortization of debt issuance costs 155 246

Impairment of long-lived assets 303 -

Other adjustments, net 457 (348)

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

Net contract assets and liabilities (19,750) (17,349)

Contract receivables 2,531 40,488

Prepaid expenses and other assets 2,016 (1,070)

Accounts payable (354) (49,200)

Accrued salaries and benefits 4,715 4,453

Accrued subcontractors and other direct costs (33,466) (10,326)

Accrued expenses and other current liabilities 8,303 (5,835)

Income tax receivable and payable 3,924 (2,996)

Other liabilities 262 (476)

Net Cash Provided by (Used in) Operating Activities 4,961 (15,232)

Cash Flows from Investing Activities

Capital expenditures for property and equipment and (3,595) (4,704)capitalized software

Payments for business acquisitions, net of cash - (253,021)acquired

Net Cash Used in Investing Activities (3,595) (257,725)

Cash Flows from Financing Activities

Advances from working capital facilities 185,755 744,331

Payments on working capital facilities (174,674) (389,776)

Receipt of restricted contract funds 451 -

Payment of restricted contract funds (27,081) -

Debt issue costs - (2,081)

Proceeds from exercise of options 2,702 37

Dividends paid (2,642) (2,639)

Net payments for stock issuances and buybacks (17,104) (23,998)

Payments on business acquisition liabilities (682) -

Net Cash (Used in) Provided by Financing Activities (33,275) 325,874

Effect of Exchange Rate Changes on Cash, Cash 745 (738)Equivalents, and Restricted Cash

(Decrease) Increase in Cash, Cash Equivalents, and (31,164) 52,179Restricted Cash

Cash, Cash Equivalents, and Restricted Cash, 81,987 6,482Beginning of Period

Cash, Cash Equivalents, and Restricted Cash, End of $ 50,823 $ 58,661Period

Supplemental Disclosure of Cash Flow Information

Cash paid during the period for:

Interest $ 2,637 $ 3,892

Income taxes $ 961 $ 895

ICF International, Inc. and Subsidiaries

Supplemental Schedule^(11)(12)

Revenue by client markets Three Months Ended

March 31,

2021 2020

Energy, environment, and infrastructure 43% 42%

Health, education, and social programs 42% 42%

Safety and security 8% 8%

Consumer and financial services 7% 8%

Total 100% 100%

Revenue by client type Three Months Ended

March 31,

2021 2020

U.S. federal government 46% 43%

U.S. state and local government 15% 17%

International government 10% 7%

Government 71% 67%

Commercial 29% 33%

Total 100% 100%

Revenue by contract mix Three Months Ended

March 31,

2021 2020

Time-and-materials 42% 47%

Fixed-price 39% 37%

Cost-based 19% 16%

Total 100% 100%

^(11) As is shown in the supplemental schedule, we track revenue by key metricsthat provide useful information about the nature of our operations. Clientmarkets provide insight into the breadth of our expertise. Client type is anindicator of the diversity of our client base. Revenue by contract mixprovides insight in terms of the degree of performance risk that we haveassumed.

^(12) Certain immaterial revenue percentages in the prior year have beenreclassified due to minor adjustments and reclassifications.

Investor Contacts:Lynn Morgen, ADVISIRY PARTNERS,lynn.morgen@advisiry.com+1.212.750.5800David Gold, ADVISIRY PARTNERS,david.gold@advisiry.com+1.212.750.5800Company Information Contact:Lauren Dyke, ICF,lauren.dyke@ICF.com+1.571.373.5577

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SOURCE ICF