Nov
5
2009

ICF International Reports Third Quarter Results

Core Business Revenue Increased 44.2 Percent
Organic Growth Rate at 14.1 Percent
Fully Diluted EPS Reached $0.32
Record Core Business Sales of $454 Million

 

 

Fairfax, Virginia, November 5, 2009 -

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

Third Quarter Results and Highlights
For the third quarter, core business revenue inclusive of the Macro International Inc. acquisition increased 44.2 percent to $167.1 million from the $115.9 million reported for last year's third quarter. Total revenue for the 2009 third quarter was the same as core business revenue because The Road Home contract was successfully completed on schedule in June 2009. In last year's third quarter, total revenue was $176.3 million, which included $60.4 million in The Road Home contract revenue.

Net income for the third quarter was $5.1 million, or $0.32 per diluted share, including non-cash compensation expense of $1.9 million. Net income benefited from the true-up of prior year tax returns and favorable one-time tax benefits, which reduced the effective tax rate to 35.4 percent. For the 2008 third quarter, ICF reported net income of $6.9 million, or $0.45 per diluted share, which included non-cash compensation expense of $1.5 million. The fully diluted weighted-average number of shares outstanding for the 2009 third quarter was 15.8 million compared to 15.3 million in last year's third quarter. Third quarter 2009 EBITDA1 was $15.0 million, representing an EBITDA margin of 9.0 percent.

"We experienced significant year-over-year core business revenue growth in each of our major markets in the third quarter: Energy, Environment, and Infrastructure; Health, Human Services, and Social Programs; and Homeland Security and Defense. Organic growth was 14.1 percent, an increase of almost 5 percentage points from the prior quarter's 9.2 percent, reflecting the overall strength of our federal business and energy efficiency programs, and a pickup in demand for our commercial transportation business," noted Sudhakar Kesavan, ICF's Chairman and Chief Executive Officer.

"This was an exceptional sales quarter for ICF, representing a record period for core business wins. We had important contract awards in priority areas such as energy efficiency, health and education, broadband, and housing," Mr. Kesavan said.

Backlog and New Business Awards
Backlog was $1.4 billion at the end of the 2009 third quarter, up from $1.2 billion at the end of the prior quarter. Funded backlog was $556 million, or 38.8 percent of the total.

The total value of contracts awarded in the third quarter of 2009 was $454 million.

Key contracts won in the third quarter included:

  • Energy Efficiency – Three new, three-year contracts valued at more than $41 million with U.S. based utilities to develop and implement energy efficiency programs for residential, commercial, and small business customers.
  • Health Services – Four contracts and task orders valued at more than $44 million with the U.S. Department of Health and Human Services' Substance Abuse and Mental Health Services Administration (SAMHSA) supporting health communications, programs for people in times of crisis, and underage drinking prevention initiatives. In supporting these programs, ICF will work with SAMHSA's Center for Substance Abuse Prevention, and the Center for Mental Health Services.
  • Head Start – Two new contracts and two re-compete contracts valued at more than $47 million with the U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF), Office of Head Start. ICF will assist with training and technical consulting assistance, conference facilitation and collaboration, and program management services.
  • Broadband – A new, multi-year contract valued at up to $27 million, plus an $8 million contract addition, with the U.S. Department of Agriculture Rural Development, Rural Utilities Service (RUS) to support the RUS Broadband Initiatives Program. ICF will assist with program administration, application processing, post-award monitoring, program reporting, communications and outreach, and technical assistance.
  • Community Development – A new three-year grant valued at more than $13 million with the Department of Housing and Urban Development (HUD) to provide technical assistance to state and local governments in addressing their inventory of foreclosed properties under HUD's Neighborhood Stabilization Program.
  • Homeland Security – A new, five-year Blanket Purchase Agreement contract valued at more than $15 million with the Department of Homeland Security to provide technical and administrative support services to conduct alternating annual surveys in support of the U.S. Coast Guard Office of Boating Safety. The overall goal is to collect detailed information that will allow analysts to target safety programs and initiatives to specific segments of the boating community.
  • Defense Behavioral Research – A new, three-year, multiple-award contract, with a ceiling of approximately $60 million, by the U.S. Army Research Institute (ARI). Through this new, indefinite delivery/indefinite quantity (ID/IQ) agreement, ICF will conduct research and analyses, attitude and opinion surveys, and studies associated with manpower, personnel, organizational, and leader development in support of the ARI.

Summary and Outlook
"This quarter was another strong one for ICF, demonstrating our ability to achieve significant organic growth and generate consistent, solid profitability," noted Mr. Kesavan. "We continue to benefit from our recognized domain expertise in high priority issues facing government and commercial clients, and to succeed in leveraging this expertise to win larger implementation projects."

"For the fourth quarter, we expect our positive momentum to continue and to report core business revenues in the range of $165 million to $170 million, and earnings per diluted share of $0.30 to $0.33, based on approximately 16.0 million shares outstanding and an effective tax rate of 41.5 percent," Mr. Kesavan said. "We therefore expect fiscal year 2009 revenues of $665 million to $670 million, and earnings per diluted share of $1.33 to $1.36, based on approximately 15.8 million weighted-average number of shares outstanding and an effective tax rate of 39.1 percent."

"Looking ahead to 2010, we are confident about our business prospects and our ability to build upon our leadership positions in high-growth markets. Based on current backlog levels and our existing portfolio of business, our preliminary indications for fiscal year 2010 are revenues of $715 million to $750 million compared to $605 million to $610 million in core business revenues in 2009. We expect organic growth of 11 percent to 16 percent and EBITDA margin of 9 percent to 10 percent," concluded Mr. Kesavan.

1EBITDA is a Non-GAAP measurement, which adds depreciation and amortization to operating income to derive EBITDA.

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   Nine months ended
        September 30,   September 30,
        2009     2008   2009     2008
 
Gross Revenue $ 167,071   $ 176,281 $ 500,338   $ 535,493
Direct Costs   101,610     115,421   304,758     355,138
Operating costs and expenses:
  Indirect and selling expenses   50,430     44,251   151,417     128,344
  Depreciation and amortization   2,550     1,706   6,608     3,891
  Amortization of intangible assets   3,159     2,241   8,066     6,442
    Total operating costs and expenses   56,139     48,198   166,091     138,677
  Operating Income   9,322     12,662   29,489     41,678
  Interest expense   (1,471)     (785)   (3,707)     (3,032)
  Other income (expense)   65     67   425     15
  Income before taxes   7,916     11,944   26,207     38,661
  Provision for income taxes   2,800     5,076   10,040     16,080
  Net income $ 5,116   $ 6,868 $ 16,167   $ 22,581
 
  Earnings per Share:
    Basic $ 0.33   $ 0.47 $ 1.06   $ 1.55
    Diluted $ 0.32   $ 0.45 $ 1.03   $ 1.48
 
  Weighted-average Shares:
    Basic   15,299     14,631   15,187     14,570
    Diluted   15,844     15,283   15,708     15,209
 
    Three months ended   Nine months ended
    September 30,   September 30,
Reconciliation of EBITDA   2009     2008   2009     2008
 
Operating Income $ 9,322   $ 12,662   $ 29,489   $ 41,678
Depreciation and Amortization   5,709     3,947     14,674     10,333
EBITDA $ 15,031   $ 16,609   $ 44,163   $ 52,011
    9.0%     9.4%     8.8%     9.7%

ICF International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands, except share amounts)
             
      September 30, 2009     December 31, 2008
      (Unaudited)      
             
Assets          
             
Current Assets:          
  Cash and cash equivalents $ 9,250   $ 1,536
  Contract receivables, net   167,104     150,778
  Prepaid expenses and other   6,996     4,507
  Income tax receivable   5,017      3,530
  Restricted cash       2,180
  Deferred income taxes   4,995     4,186
Total current assets   193,362     166,717
Total property and equipment, net   23,563     13,373
Other assets:          
  Goodwill   301,832     198,724
  Other intangible assets, net   34,150     16,844
  Restricted cash   2,104     2,078
  Other assets   6,804     3,281
Total assets $ 561,815   $ 401,017
             
Liabilities and Stockholders' Equity          
             
Current Liabilities:          
  Accounts payable $ 25,391   $ 27,740
  Accrued expenses   25,204     35,295
  Accrued salaries and benefits   37,127     27,405
  Deferred revenue   16,347     12,352
Total current liabilities   104,069     102,792
Long-term liabilities:          
  Long-term debt   210,000     80,000
  Deferred rent   2,109     2,361
   Deferred income taxes   13,227     10,849
  Other   4,563     2,098
Total Liabilities   333,968     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
15,497,065 and 15,188,320 issued; and 15,448,464 and 15,106,522 outstanding as of September 30, 2009, and December 31, 2008, respectively
  Additional paid-in capital   129,202     120,550
  Treasury stock, at cost   (1,395)     (1,474)
  Accumulated other comprehensive income   (252)     (272)
  Stockholder notes receivable       (12)
  Retained earnings   100,277     84,110
Total stockholders' equity   227,847     202,917
Total liabilities and stockholders' equity $ 561,815   $ 401,017

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

(in thousands)
 
    Nine months ended
    September 30,
    2009     2008
           
Cash flows from operating activities
Net income $ 16,167   $ 22,581
Adjustments to reconcile net income to net cash provided by operating activities:          
  Depreciation and amortization   14,674     10,333
  Non-cash compensation   5,680     4,827
  (Gain) Loss on disposal of fixed assets   (7)     122
  Deferred income taxes   1,569     (4,736)
  Changes in operating assets and liabilities, net of the effect of acquisitions:          
      Contract receivables, net   18,453     51,932
      Prepaid expenses and other   (2,797)     327
      Accounts payable   (5,685)     (55,083)
      Accrued expenses   (14,580)     (7,685)
      Accrued salaries and benefits   2,379     543
      Deferred revenue   1,421     (3,887)
      Income tax receivable   (1,082)     36
      Deferred rent   26     569
      Other liabilities   (159)     (3,738)
Net cash provided by operating activities   36,059     16,141
Cash flows from investing activities          
  Capital expenditures   (5,717)     (9,257)
  Capitalized software development costs   (333)     (245)
  Payments for business acquisitions, net of cash acquired   (156,902)     (51,334)
Net cash used in investing activities   (162,952)     (60,836)
 
Cash flows from financing activities          
  Advances from working capital facilities   254,404     227,878
  Payments on working capital facilities   (124,404)     (185,265)
  Restricted cash   2,154     1,024
  Debt issue costs   (630)     (1,311)
  Proceeds from exercise of options   2,484     1,200
  Tax benefits of stock option exercises   2,380     2,047
  Net payments for stockholder issuances and buybacks   (1,801)     (676)
Net cash provided by financing activities   134,587     44,897
  Effect of Exchange Rate on Cash   20     (236)
Net increase (decrease) in cash and cash equivalents   7,714     (34)
Cash and cash equivalents, beginning of period   1,536     2,733
Cash and cash equivalents, end of period $ 9,250   $ 2,699
 
Supplemental disclosure of cash flow information
  Cash paid during the period for:          
      Interest $ 3,710   $ 2,714
      Income taxes $ 7,367   $ 20,694
 

 

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 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.

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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