Aug
5
2010

ICF International Reports Second Quarter 2010 Results

Total Revenue Increased 14 Percent
Core Business Revenue Up 24 Percent
Organic Growth Rate of 20 Percent

 

 

Fairfax, Virginia, August 5, 2010 -

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, 2010.

Second Quarter Results and Highlights
Total revenue for the 2010 second quarter reached $199.6 million, an increase of 14 percent over total revenue of $175.4 million reported in the 2009 second quarter and 24 percent above core business revenue1 of $160.6 million reported for last year's second quarter. The second quarter of 2009 included $14.8 million of total revenue from The Road Home contract. Organic revenue2 growth was 20 percent for the 2010 second quarter.

Net income was $7.2 million, a 39 percent increase over the $5.2 million reported for last year's second quarter. Earnings per diluted share were $0.37 compared to $0.33 per diluted share in the second quarter of 2009. For the 2010 second quarter, the fully diluted weighted average number of shares outstanding was 19.6 million compared to 15.7 million shares in the 2009 second quarter. The increase resulted primarily from the 3.6 million shares issued in connection with the Company's secondary public offering, which was completed in December 2009.

"Our second quarter performance was at the high end of our guidance range," noted Sudhakar Kesavan, chairman and chief executive officer. "Each of our markets achieved significant revenue growth, driven primarily by the continued strength of our federal government business, and we posted an exceptional organic growth rate of 20 percent. Operating income increased 25 percent, benefiting from higher revenue without a commensurate increase in indirect and selling expenses."

"This was a solid sales quarter for ICF in which we captured several important contracts in the federal, state, and commercial markets. Quarter-end backlog was $1.3 billion, similar to levels at the end of the 2010 first quarter, and our pipeline is $2.9 billion," Mr. Kesavan said.

Backlog and New Business Awards
Backlog was $1.3 billion at the end of the 2010 second quarter. Funded backlog was $549 million, or 43 percent of the total.

The total value of contracts awarded in the second quarter of 2010 was $162 million compared to $143 million in the second quarter of 2009.

Key contracts won in the second quarter included:

Summary and Outlook
"We expect 2010 to be a year of continued strong growth for ICF," Mr. Kesavan said. "Based upon our year-to-date results and our current visibility, we are narrowing our total revenue guidance range for full year 2010 to $755 million to $775 million from the previous range of $740 million to $775 million and our organic revenue growth rate range to 13 percent to 16 percent from the previous range of 11 percent to 16 percent. We reaffirm our expectations for EBITDA3 margin in the range of 9 percent to 10 percent and for diluted EPS of $1.33 to $1.43, based on approximately 19.7 million fully diluted shares outstanding and an effective tax rate of 40.0 percent."

For the third quarter of 2010, the Company expects total revenue of $195 million to $202 million and diluted EPS of $0.35 to $0.40, based on approximately 19.7 million fully diluted shares outstanding and an effective tax rate of 40.2 percent.

1Core business revenue excludes revenue from The Road Home contract.

2Organic revenue excludes revenue from The Road Home contract and revenue from acquisitions closed during the previous four quarters.

3EBITDA is a non-GAAP measurement, which adds depreciation and amortization to operating income to derive EBITDA. We have provided EBITDA because we believe it is a commonly used measure of financial performance in comparable companies and is provided to help investors evaluate companies on a consistent basis, as well as to enhance an understanding of our operating results. EBITDA does not purport to be an alternative to operating income as a measure of operating performance or the cash flows from operating activities as a measure of liquidity. Please refer to the table at the bottom of the statement of earnings in this release that reconciles GAAP operating income to EBITDA and adjusted EBITDA.

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


ICF International, Inc. and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
Gross Revenue $ 199,647 $ 175,405 $ 374,085 $ 333,267
Direct Costs 125,131 103,911 232,690 203,148
Operating costs and expenses:
Indirect and selling expenses 56,130 55,698 107,160 100,987
Depreciation and amortization 2,643 2,499 5,311 4,058
Amortization of intangible assets 3,082 3,160 6,163 4,907
Total operating costs and expenses 61,855 61,357 118,634 109,952
Operating Income 12,661 10,137 22,761 20,167
Interest expense (917) (1,500) (1,880) (2,236)
Other income 79 194 98 360
Income before taxes 11,823 8,831 20,979 18,291
Provision for income taxes 4,622 3,662 8,358 7,240
Net income $ 7,201 $ 5,169 $ 12,621 $ 11,051
Earnings per Share:
Basic $ 0.37 $ 0.34 $ 0.65 $ 0.73
Diluted $ 0.37 $ 0.33 $ 0.65 $ 0.71
Weighted-average Shares:
Basic 19,351 15,204 19,317 15,142
Diluted 19,568 15,710 19,537 15,647
Reconciliation of EBITDA
Operating Income 12,661 10,137 22,761 20,167
Depreciation and amortization 5,725 5,659 11,474 8,965
EBITDA 18,386 15,796 34,235 29,132
Transaction related costs - - - 987
Adjusted EBITDA 18,386 15,796 34,235 30,119

ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets

(in thousands)
June 30, 2010 December 31, 2009
(Unaudited)
Current Assets:
Cash and cash equivalents $ 5,338 $ 2,353
Contract receivables, net 164,541 174,120
Prepaid expenses and other 8,791 6,666
Income tax receivable - 4,175
Deferred income taxes 3,885 1,337
Total current assets 182,555 188,651
Total property and equipment, net 20,006 22,600
Other assets:
Goodwill 323,467 323,467
Other intangible assets, net 32,311 38,474
Restricted cash 3,150 2,123
Other assets 6,874 6,912
Total assets $ 568,363 $ 582,227
Current Liabilities:
Accounts payable $ 23,618 $ 27,075
Accrued expenses 20,771 21,770
Accrued salaries and benefits 34,271 32,072
Deferred revenue 14,069 19,370
Total current liabilities 92,729 100,287
Long-term liabilities:
Long-term debt 120,000 145,000
Deferred rent 5,300 2,914
Deferred income taxes 11,984 11,656
Other 4,164 4,810
Total Liabilities 234,177 264,667
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; 19 19
19,425,612 and 19,278,591 issued; and 19,400,326 and 19,278,591 outstanding as of June 30, 2010, and December 31, 2009, respectively
Additional paid-in capital 216,407 211,412
Treasury stock, at cost (584)
Accumulated other comprehensive loss (743) (337)
Retained earnings 119,087 106,466
Total stockholders’ equity 334,186 317,560
Total liabilities and stockholders’ equity $ 568,363 $ 582,227

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

(in thousands)
Six months ended
June 30,
2010 2009
Cash flows from operating activities
Net income $ 12,621 $ 11,051
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 11,474 8,965
Non-cash compensation 3,888 3,775
Loss on disposal of fixed assets 19 17
Deferred income taxes (2,220) (2,734)
Deferred rent 381 (29)
Changes in operating assets and liabilities, net of the effect of acquisitions:
Contract receivables, net 9,579 17,833
Prepaid expenses and other (2,114) (5,005)
Accounts payable (3,822) (1,334)
Accrued expenses 887 (9,189)
Accrued salaries and benefits 2,213 (6,785)
Deferred revenue (5,301) (1,783)
Income tax receivable 5,235 2,353
Restricted cash (1,027) 1,849
Other liabilities (646) 362
Net cash provided by operating activities 31,167 19,346
Cash flows from investing activities
Capital expenditures (3,077) (2,579)
Capitalized software development costs (201) (235)
Payments for business acquisitions, net of cash acquired (156,902)
Net cash used in investing activities (3,278) (159,716)
Cash flows from financing activities
Advances from working capital facilities 13,051 235,008
Payments on working capital facilities (38,051) (93,335)
Debt issue costs (21) (630)
Proceeds from exercise of options 489 1,761
Excess tax benefits of stock option exercises 606 1,007
Net payments for stockholder issuances and buybacks (572) (473)
Net cash (used in) provided by financing activities (24,498) 143,338
Effect of exchange rate on cash (406) (131)
Net increase in cash and cash equivalents 2,985 2,837
Cash and cash equivalents, beginning of period 2,353 1,536
Cash and cash equivalents, end of period $ 5,338 $ 4,373
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 2,379 $ 1,767
Income taxes $ 4,682 $ 6,678
 

 

About ICF International
ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver professional services and technology solutions in the energy and climate change; environment and infrastructure; health, human services, and social programs; and homeland security and defense 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 research and analysis 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 http://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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