Aug
1
2011

ICF International Reports Second Quarter 2011 Results

  • Total Revenue Increased 7 Percent
  • Operating Income Up 23 Percent
  • Net Income Increased 25 Percent; Diluted EPS of $0.45
  • Contract Awards Increased 29 Percent to $209 Million
 

 

Fairfax, Virginia, August 1, 2011 -

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, 2011.

Second Quarter and First Half 2011 Results and Highlights

For the second quarter, total revenue reached $213.4 million, a 6.9 percent increase over the $199.6 million reported in the 2010 second quarter. Net income was $9.0 million, or $0.45 per diluted share, representing a 24.5 percent increase over net income of $7.2 million, or $0.37 per diluted share, earned in the comparable 2010 period. Operating income increased 22.5 percent to $15.5 million from the $12.7 million reported in last year’s second quarter.

“ICF’s strong second quarter 2011 performance demonstrates the advantages of our diversified business mix. Domestic commercial business revenues increased 52.3 percent year-over-year, led by significant growth in energy efficiency work and infrastructure project management, as well as a pickup in energy-related transaction activity,” said Sudhakar Kesavan, chairman and chief executive officer. “We continue to achieve significant growth in profitability driven by the strength of our commercial business and success in managing costs.”

“First half 2011 revenue growth was 9.1 percent, operating income increased 27.1 percent, and net income was up 32.2 percent, indicative of ICF’s significant operating leverage,” Mr. Kesavan noted.

“We are particularly pleased with the growth and strategic importance of second quarter contract awards, which included our first task order win under the $4 billion Centers for Disease Control and Prevention ID/IQ that ICF was awarded in 2010. Gaining larger implementation contracts is an integral part of our growth strategy.”

Backlog and New Business Awards

Backlog was $1.3 billion at the end of the 2011 second quarter. Funded backlog was $579 million, or 43 percent of the total.

The total value of contracts awarded in the second quarter of 2011 was $209 million compared to $162 million in 2010, an increase of 29 percent.

Key contracts won in the second quarter included:

  • Energy: A new contract valued at more than $40 million with the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability. ICF will provide technical, IT, and management support to assist the office’s mission to modernize the electric grid and enhance the security and reliability of the U.S. energy infrastructure.

  • Health Information Technology: A new $25.9 million task order under the contract supporting the Centers for Disease Control and Prevention (CDC) Information Management Services (CIMS), which was announced in October 2010. Under this task order, ICF International will support the Division of HIV/AIDS Prevention in its efforts to reduce HIV transmission, identify those living with HIV, and link them with appropriate care.

  • Information Technology Management: A new $27.5 million contract with the Office of the Chief Information Officer (CIO) at the National Institutes of Health (NIH). Under the contract, ICF will support the strategic direction and management responsibilities of the NIH CIO with IT market research, executive program and communications services, and other technical support services.

  • Public Health: A $16.3 million re-compete contract from the U.S. Department of Health and Human Services (HHS), Office of the Assistant Secretary for Health, Office of the Surgeon General, Office of the Civilian Volunteer Medical Reserve Corps. ICF will provide the office with communications, outreach, deployment operations, regional coordination, and IT services to help engage public health volunteers.

  • Energy Efficiency: Two new contracts totaling $13.6 million to support a major U.S. utility. ICF’s responsibilities under the two contracts include commercial and residential energy efficiency, demand side management, whole house retrofit programs, and contractor recruitment, training, and program support.

  • Commercial Sector: In addition to the energy efficiency projects already noted, ICF was awarded more than 300 additional domestic and international commercial projects in the areas of energy efficiency, environmental management, fuels, renewable and grid strategy, asset valuation, and aviation.

Summary and Outlook

“ICF continues to gain share in its key markets, and we believe that our recent awards will ensure continued future growth in our federal business. We also expect our commercial business to continue to show double-digit revenue growth and drive significant growth in profitability,” Mr. Kesavan said.

“Based on first-half performance, funded backlog levels, and our existing portfolio of business, we are narrowing our full year 2011 revenue guidance and increasing our guidance for earnings per diluted share (EPS). Revenues for the year are expected to be within the range of $835 million to $850 million, which represents 10.2 percent year-over-year growth at the midpoint, and fully diluted earnings per share are expected to range from $1.69 to $1.77, equivalent to 25.4 percent growth at the midpoint. EPS estimates are based upon approximately 19.9 million weighted average shares outstanding and an effective tax rate of 40.0 percent,” noted Mr. Kesavan.

“For the third quarter of 2011, the Company expects revenues to range from $214 million to $220 million and earnings per diluted share to range from $0.43 to $0.47, based on approximately 20.0 million weighted average shares outstanding and an effective tax rate of 40.0 percent,” Mr. Kesavan concluded.

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,
        2011     2010     2011     2010
                     
 
Gross Revenue $ 213,395   $ 199,647   $ 408,137   $ 374,085
Direct Costs   133,522     125,131     251,743     232,690
Operating costs and expenses:
  Indirect and selling expenses   59,270     56,130     117,196     107,160
  Depreciation and amortization   2,778     2,643     5,539     5,311
  Amortization of intangible assets   2,321     3,082     4,736     6,163
    Total operating costs and expenses   64,369     61,855     127,471     118,634
  Operating Income   15,504     12,661     28,923     22,761
  Interest expense   (564)     (917)     (1,193)     (1,880)
  Other income   2     79     89     98
  Income before income taxes   14,942     11,823     27,819     20,979
  Provision for income taxes   5,979     4,622     11,130     8,358
  Net income $ 8,963   $ 7,201   $ 16,689   $ 12,621
 
  Earnings per Share:
    Basic $ 0.46   $ 0.37   $ 0.85   $ 0.65
    Diluted $ 0.45   $ 0.37   $ 0.84   $ 0.65
 
  Weighted-average Shares:
    Basic   19,688     19,351     19,634     19,317
    Diluted   19,847     19,568     19,849     19,537
 
           
  Reconciliation of EBITDA                      
  Operating Income   15,504     12,661       28,923     22,761
  Depreciation and amortization   5,099     5,725       10,275     11,474
  EBITDA 20,603     18,386       39,198     34,235

ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets

(in thousands, except share amounts)
             
      June 30, 2011     December 31, 2010
      (unaudited)      
             
Current Assets:          
  Cash $ 2,677   $ 3,301
  Contract receivables, net   184,409     176,963
  Prepaid expenses and other   9,395     6,995
  Income tax receivable   2,761     1,628
  Deferred income taxes   4,564     4,973
Total current assets   203,806     193,860
Total property and equipment, net   17,247     18,887
Other assets:          
  Goodwill   325,835     323,467
  Other intangible assets, net   22,685     26,148
  Restricted cash   1,735     3,179
  Other assets   7,520     7,278
Total Assets $ 578,828   $ 572,819
             
Current Liabilities:          
    Accounts payable $ 33,255   $ 29,866
    Accrued salaries and benefits   42,911     40,750
    Accrued expenses   24,772     25,522
    Deferred revenue   20,596     20,034
Total current liabilities   121,534     116,172
Long-term liabilities:          
  Long-term debt   63,414     85,000
  Deferred rent   6,312     5,142
  Deferred income taxes   9,560   10,068
  Other   5,250     3,704
Total Liabilities   206,070     220,086
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; 19,854,975 and 19,618,659 shares issued; and 19,758,966 and 19,567,571 shares outstanding as of June 30, 2011, and December 31, 2010, respectively
   
  20     20
  Additional paid-in capital   225.058     220,891
  Retained earnings   150.326     133,637
  Treasury stock   (2,322)     (1,291)
  Accumulated other comprehensive loss   (324)     (524)
Total Stockholders' Equity   372,758     352,733
Total Liabilities and Stockholders' Equity $ 578,828   $ 572,819

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

(in thousands)
 
    Six months ended
    June 30,
    2011     2010
           
Cash flows from operating activities
  Net income $ 16,689   $ 12,621
  Deferred income taxes   (157)     (2,220)
  (Gain) loss on disposal of fixed assets   (58)     19
  Non-cash equity compensation   2,972     3,888
  Depreciation and amortization   10,275     11,474
  Deferred rent   1,251     381
  Changes in operating assets and liabilities, net of the effect of acquisitions:          
      Contract receivables, net   (5,778)     9,579
      Prepaid expenses and other assets   (2,987)     (2,114)
      Accounts payable   2,878     (3,822)
      Accrued salaries and benefits   1,850     2,213
      Accrued expenses   37     887
      Deferred revenue   561     (5,301)
      Income tax receivable and payable   (1,140)     5,235
      Restricted cash   1,444     (1,027)
      Other liabilities   1,545     (646)
Net cash provided by operating activities   29,382     31,167
Cash flows from investing activities          
  Capital expenditures   (4,234)     (3,077)
  Capitalized software development costs   (28)     (201)
  Payments for business acquisitions, net of cash received   (4,523)    
Net cash used in investing activities   (8,785)     (3,278)
 
Cash flows from financing activities          
  Advances from working capital facilities   81,841     13,051
  Payments on working capital facilities   (103,427)     (38,051)
  Debt issue costs       (21)
  Proceeds from exercise of options   219     489
  Tax benefits of stock option exercises and award vesting   911     606
  Net payments for stockholder issuances and buybacks   (965)     (572)
Net cash used in financing activities   (21,421)     (24,498)
  Effect of exchange rate on cash   200     (406)
Increase (decrease) in cash   (624)     2,985
Cash, beginning of period   3,301     2,353
Cash, end of period $ 2,677   $ 5,338
 
Supplemental disclosure of cash flow information
  Cash paid during the period for:          
      Interest $ 1,185   $ 2,379
      Income taxes $ 11,760   $ 4,682

ICF International, Inc. and Subsidiaries
Supplemental Schedule
 
 
Revenue by market Three Months Ended
June 30,
  Six Months Ended
June 30,
  2011     2010   2011     2010
Energy, environment, and transportation 43%     39%   42%     39%
Health, education, and social programs   43%     46%   44%     46%
Homeland security and defense 14%     15%   14%     15%
Total 100%     100%   100%     100%
 
 
Revenue by client Three Months Ended
June 30,
  Six Months Ended
June 30,
2011     2010   2011     2010
U.S. federal government 66%     70%   67%     71%
U.S. state and local government 10%     11%   10%     11%
Domestic commercial   20%     14%   19%     14%
International 4%     5%   4%     4%
Total   100%     100%   100%     100%
 
 
Revenue by contract Three Months Ended
June 30,
  Six Months Ended
June 30,
  2011     2010   2011     2010
Time-and-materials 49%     49%   50%     49%
Fixed-price   27%     29%   27%     28%
Cost-based 24%     22%   23%     23%
Total   100%     100%   100%     100%
 

 

About ICF International

ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver professional services and technology solutions in the energy, environment, and transportation; health, education, 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 lifecycle, 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 3,700 employees serve these clients worldwide. ICF's website 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

Dr. Douglas Beck
ICF International
+1.703.934.3820

Lynn Morgen
MBS Value Partners
1.212.750.5800

Betsy Brod
MBS Value Partners
1.212.750.5800

 
 
 

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