Aug
6
2009

ICF International Reports Second Quarter 2009 Results

Core Business Revenue Up 41 Percent
Gross Margin Increased to 40.8 Percent
Fully Diluted EPS Reached $0.33

 

 

Fairfax, Virginia, August 6, 2009 -

ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, reported results for the second quarter ended June 30, 2009.

Second Quarter Results and Highlights
For the second quarter, core business1 revenue inclusive of the Macro acquisition increased 41 percent to $160.6 million, from the $113.7 million reported for last year’s second quarter. Total revenue was $175.4 million and included revenue of $14.8 million from The Road Home contract, which was completed on schedule in June 2009. In last year's second quarter, total revenue was $184.1 million and included $70.4 million in Road Home contract revenue.

Gross profit was $71.5 million or 40.8 percent of revenue, up from $64.8 million or 35.2 percent of revenue in last year’s second quarter. Net income was $5.2 million, or $0.33 per diluted share, including non-cash stock compensation expense of $2.1 million. For the 2008 second quarter, the Company reported net income of $7.9 million, or $0.52 per diluted share, which included non-cash stock compensation of $1.7 million. The fully diluted weighted average number of shares outstanding for the 2009 second quarter was 15.7 million compared to 15.2 million in last year’s second quarter.

"Strong demand for ICF's advisory and implementation services continued across most of our key market areas in the second quarter. We also maintained solid profitability during this transition period marked by the completion of The Road Home contract and the integration of Macro International, which we acquired on March 31, 2009. Our Health, Human Services, and Social Programs market, which includes Macro, more than doubled and accounted for 48 percent of core business revenue. Organic growth for this market was 28 percent. Energy, Environment, and Infrastructure, which represented 43 percent of the core business, grew by 5 percent, reflecting continued 20 percent plus growth in domestic energy efficiency programs and climate change work, which more than offset the decline in our commercial aviation business and push-outs of certain state and local projects," said Sudhakar Kesavan, ICF Chairman and Chief Executive Officer.

"The integration of the Macro acquisition is proceeding on schedule, and we are working closely with our colleagues at Macro to tap into the significant cross-selling opportunities that leverage our combined capabilities and client relationships," Mr. Kesavan said.

Backlog and New Business Awards
Backlog was $1.2 billion at the end of the 2009 second quarter. Funded backlog was $448 million, or 37 percent of the total.

The total value of contracts awarded in the second quarter of 2009 was $143 million.

Key contracts won in the second quarter included:
  • Health Informatics:  A new five-year contract valued at more than $60 million with the National Institutes of Health (NIH) to provide support for biomedical and clinical services, such as data collection and analysis, information dissemination, and outreach initiatives for multiple NIH Institutes and Centers. ICF will support key programs related to HIV/AIDS, genetics, cancer, rare diseases, dietary supplements, clinical trials, treatment guidelines, and other federal health initiatives.
  • IT Management Services: A new five-year task order valued at approximately $17 million under ICF’s U.S. Department of State, Worldwide Program Management Support Services blanket purchase agreement (BPA) to provide program management support services to the Bureau of Consular Affairs, Consular Systems and Technology Division (CA/CST). These services cover nine program areas including information technology governance and planning, process improvement, earned value management, and program management.
  • Defense Software Support Services: A recompeted three-year contract valued at $9.3 million with the Defense Contract Management Agency (DCMA) to provide software support services to the Agency’s Information Technology Customer Service organization and the eTools program. DCMA works directly with defense suppliers to ensure efficient, cost-effective delivery of supplies and services, and eTools is DCMA’s Web-based suite of acquisitions services applications.
  • Transportation Security Program Management Support:  A new five-year subcontract valued at $10 million with the Transportation Security Administration’s (TSA) Office of Security Technology (OST) to provide program management and acquisition support. ICF is working to support the day-to-day operations of OST’s program management office and its support organizations.

Summary and Outlook
"ICF continues to benefit from its established leadership in key growth markets," Mr. Kesavan noted. "Core business revenue, exclusive of The Road Home contract and the Macro acquisition, increased 9.2 percent year-over-year and 10.5 percent sequentially, and is on track to grow by about 15 percent in 2009 to approximately $500 million. Organic growth for the year is estimated at 12 percent to 13 percent."

"We are reaffirming our guidance for total full year 2009 revenues of $660 million to $680 million and earnings per diluted share of $1.30 to $1.35, based on approximately 15.8 million weighted average shares outstanding and an effective annual tax rate of 40.5 percent," Mr. Kesavan said.

"We expect third quarter core business revenues to be between $165 million to $170 million. The ramp-up of several recently-won contracts, should result in growth for the quarter over the comparable prior year quarter, excluding the recent Macro acquisition, of between 11 percent and 15 percent. Earnings per diluted share for the period are expected to be in the range of $0.28 to $0.30 based on approximately 15.8 million weighted average shares outstanding and a tax rate of 41.6 percent," Mr. Kesavan noted.

1Excludes The Road Home contract

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


ICF International, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share amounts)
 
        Three months ended   Six months ended
        June 30,   June 30,
        2009     2008   2009     2008
 
Gross Revenue $ 175,405   $ 184,064 $ 333,267   $ 359,212
Direct Costs   103,911     119,310   203,148     239,717
Operating costs and expenses:
  Indirect and selling expenses   55,698     46,856   100,987     84,093
  Depreciation and amortization   2,499     1,178   4,058     2,186
  Amortization of intangible assets   3,160     2,425   4,907     4,200
    Total operating costs and expenses   61,357     50,459   109,952     90,479
  Operating Income   10,137     14,295   20,167     29,016
  Interest expense   (1,500)     (1,037)   (2,236)     (2,247)
  Other income (expense)   194     (2)   360     (52)
  Income before taxes   8,831     13,256   18,291     26,717
  Provision for income taxes   3,662     5,358   7,240     11,004
  Net income $ 5,169   $ 7,898 $ 11,051   $ 15,713
 
  Earnings per Share:
    Basic $ 0.34   $ 0.54 $ 0.73   $ 1.08
    Diluted $ 0.33   $ 0.52 $ 0.71   $ 1.04
 
  Weighted-average Shares:
    Basic   15,204     14,586   15,142     14,534
    Diluted   15,710     15,179   15,647     15,174

ICF International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands, except share amounts)
             
      June 30, 2009     December 31, 2008
      (Unaudited)      
             
Assets          
             
Current Assets:          
  Cash and cash equivalents $ 4,373   $ 1,536
  Contract receivables, net   169,531     150,778
  Prepaid expenses and other   7,528     4,507
  Income tax receivable   1,177      3,530
  Restricted cash   309     2,180
  Deferred income taxes   7,633     4,186
Total current assets   190,551     166,717
Total property and equipment, net   22,538     13,373
Other assets:          
  Goodwill   302,237     198,724
  Other intangible assets, net   37,308     16,844
  Restricted cash   2,100     2,078
  Other assets   6,696     3,281
Total assets $ 561,430   $ 401,017
             
Liabilities and Stockholders’ Equity          
             
Current Liabilities:          
  Accounts payable $ 30,050   $ 27,740
  Accrued expenses   29,989     35,295
  Accrued salaries and benefits   27,962     27,405
  Deferred revenue   13,143     12,352
Total current liabilities   101,144     102,792
Long-term liabilities:          
  Long-term debt   221,673     80,000
  Deferred rent   2,060     2,361
   Deferred income taxes   11,562     10,849
  Other   5,084     2,098
Total Liabilities   341,523     198,100
Commitments and Contingencies          
Stockholders’ Equity:          
  Preferred stock, par value $.001 per share; 5,000,000 shares authorized; none issued —      — 
  Common stock, $.001 par value; 70,000,000 shares authorized; 15     15
15,315,472 and 15,188,320 issued; and 15,314,488 and 15,106,522 outstanding as of June 30, 2009, and December 31, 2008, respectively
  Additional paid-in capital   125,171     120,550
  Treasury stock, at cost   (25)     (1,474)
  Accumulated other comprehensive loss   (403)     (272)
  Stockholder notes receivable   (12)     (12)
  Retained earnings   95,161     84,110
Total stockholders’ equity   219,907     202,917
Total liabilities and stockholders’ equity $ 561,430   $ 401,017

ICF International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)
 
    Six months ended
    June 30,
    2009     2008
           
Cash flows from operating activities
Net income $ 11,051   $ 15,713
Adjustments to reconcile net income to net cash provided by operating activities:          
  Depreciation and amortization   8,965     6,386
  Non-cash compensation   3,775     3,370
  Loss on disposal of fixed assets   17     141
  Deferred income taxes   (2,734)     (5,693)
  Changes in operating assets and liabilities, net of the effect of acquisitions:          
      Contract receivables, net   17,833     53,928
      Prepaid expenses and other   (5,005)     1,249
      Accounts payable   (1,334)     (49,755)
      Accrued expenses   (9,189)     (9,722)
      Accrued salaries and benefits   (6,785)     (6,185)
      Deferred revenue   (1,783)     (2,654)
      Income tax receivable   2,353     1,217
      Deferred rent   (29)     307
      Other liabilities   362     (1,187)
Net cash provided by operating activities   17,497     7,115
Cash flows from investing activities          
  Capital expenditures   (2,579)     (3,756)
  Capitalized software development costs   (235)     (147)
  Payments for business acquisitions, net of cash acquired   (156,902)     (51,282)
Net cash used in investing activities   (159,716)     (55,185)
 
Cash flows from financing activities          
  Advances from working capital facilities   235,008     169,695
  Payments on working capital facilities   (93,335)     (123,878)
  Restricted cash   1,849     762
  Debt issue costs   (630)     (1,309)
  Proceeds from exercise of options   1,761     932
  Tax benefits of stock option exercises   1,007     1,038
  Net payments for stockholder issuances and buybacks   (473)     (20)
Net cash provided by financing activities   145,187     47,220
  Effect of Exchange Rate on Cash   (131)     135
Net increase (decrease) in cash and cash equivalents   2,837     (715)
Cash and cash equivalents, beginning of period   1,536     2,733
Cash and cash equivalents, end of period $ 4,373   $ 2,018
 
Supplemental disclosure of cash flow information
  Cash paid during the period for:          
      Interest $ 1,767   $ 1,671
      Income taxes $ 6,678   $ 14,541
 

 

About ICF International

ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, climate change, environment, transportation, social programs, health, defense, and emergency management markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 3,500 employees serve these clients worldwide. ICF’s Web site is www.icfi.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 annual report on Form 10-K for the fiscal year ended December 31, 2008 and our other 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.

FOR IMMEDIATE RELEASE

Douglas Beck
ICF International
1.703.934.3820

Lynn Morgen / Betsy Brod
MBS Value Partners
1.212.750.5800

 
 
 

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