Mar
2
2011

ICF International Reports Fourth Quarter and Full Year 2010 Results

Fourth Quarter Highlights
Total Revenue Increased 11 Percent
Operating Income Up 21 Percent
Announced Acquisition of Leading Canadian Energy and Environmental Consulting Firm

Full Year 2010 Highlights
Total Revenue Increased 13 Percent
Operating Income Up 20 Percent
Organic Revenue Growth Was 15 Percent
Funded Backlog of $649 Million at Year-End
Up 21 Percent

 

 

Fairfax, Virginia, March 2, 2011 -

ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, reported results for the fourth quarter and year ended December 31, 2010.

Fourth Quarter 2010 Results and Highlights

Total revenue for the fourth quarter was $192.9 million, an increase of 10.8 percent compared to total revenue of $174.1 million reported in the 2009 fourth quarter. Organic revenue growth was 7.5 percent. Net income was $7.2 million, a 15.6 percent increase compared to the $6.2 million reported for last year’s fourth quarter. Earnings per diluted share were $0.36 compared to $0.37 in the fourth quarter of 2009. For the 2010 fourth quarter, the fully diluted weighted average number of shares outstanding was 19.8 million compared to 16.5 million in the 2009 fourth quarter. The increase resulted primarily from the full quarter effect of the 3.6 million shares issued in connection with the Company’s secondary public offering, which was completed in December 2009.

Commenting on the results, Chairman and Chief Executive Officer Sudhakar Kesavan said, "Fourth quarter growth was broad-based, reflecting solid revenue increases across all of our client categories and markets. Federal Government revenue was up 10.2 percent, state and local government revenue increased 28.0 percent, and commercial and international revenue was up 5.5 percent. In the fourth quarter, our commercial business benefitted from both our growing energy efficiency business as well as a modest pickup in advisory and valuation work related to energy transactions and transportation markets."

"With respect to revenues from end markets, Health, Education and Social Programs were up 11.8 percent, Energy, Environment and Transportation revenues increased 8.4 percent, and Homeland Security and Defense grew 15.4 percent. Additionally, we won more than 400 contracts in the fourth quarter that represent future work across all of our markets."

"Our acquisition of Marbek Resource Consultants Ltd. was completed in early January 2011 and gives us important cross-selling opportunities in Canada, which is a growing market for energy and environmental services to both government and commercial clients," Mr. Kesavan said.

Full Year 2010 Operating and Financial Highlights

  • Total revenue was $764.7 million, an increase of 13.4 percent from 2009; exclusive of Road Home contract revenue reported in 2009, revenue increased 24.6 percent
  • Organic revenue1 growth was 14.6 percent
  • Net income was $27.2 million, an increase of 21.5 percent
  • Earnings per diluted share were $1.38 compared to $1.40, calculated on a 23.3 percent increase in the weighted average number of shares outstanding
  • Net cash provided by operating activities was $68.2 million compared to $48.6 million last year
  • Funded backlog was up 21 percent at $649 million compared to $536 million at the end of 2009.

"This was another strong year for ICF International, reflecting significant increases in total revenues and operating income, and strong organic revenue growth," Mr. Kesavan said. "We ended 2010 with a strong balance sheet and cash flow generation, which provide the resources to continue to invest in organic growth and potential acquisitions."

Backlog and New Business Awards

Backlog was $1.4 billion at the end of the fourth quarter. Funded backlog was $649.0 million, or 47.5 percent of the total. The total value of contracts awarded in the fourth quarter of 2010 was $150 million, bringing total contract awards for 2010 to $834 million. Key contracts won in the fourth quarter included:

  • Energy Efficiency: A new three-year $14.4 million energy efficiency contract with a major U.S. utility to administer energy efficiency programs that focus on residential homes, commercial prescriptive measures, and commercial custom measures.
  • Leadership Development: A new multiple-award Indefinite Delivery/Indefinite Quantity (ID/IQ) contract with the U.S. Army Research Institute for the Behavioral and Social Sciences (ARI) to support the Research, Development, and Analysis in Army Training (TRAIN II) program. The contract has a ceiling for ICF of $30 million and a term of one base year and four option years.
  • Veterans Affairs IT: A new contract through High Performance Technologies, Inc. (HPTi), to support the U.S. Department of Veterans Affairs (VA) in providing technical and IT program assistance for the VA Veterans Relationship Management programs. The contract has a value to ICF of $10 million and a term of one base year and four option years.
  • Other Important Contract Wins: Thirty additional new contract wins individually valued at $1 million or more in the areas of environmental management for new infrastructure, energy efficiency program management, health IT and health research, housing program support, federal emergency response planning, and corporate environmental management.
  • Commercial Sector: More than 180 other contract wins in the domestic and international commercial sector in the areas of energy efficiency programs, utility industry transmission and fuels planning, and aviation and airport planning.

Summary and Outlook

Mr. Kesavan continued, "In 2010, in addition to winning important new contracts in our traditional mission support areas, we were awarded several large capacity contracts to implement IT services in the health and environment markets. This was the first time that we have won multiple opportunities of this magnitude, and we believe they could represent significant growth potential for ICF in the periods ahead."

"Funded backlog levels at 2010 year-end and our growing business development pipeline provide good visibility, enabling us to reaffirm our full year 2011 guidance of revenues in the range of $830 million to $865 million, which represents growth of 10.8 percent at the midpoint. We expect to continue to achieve operating leverage in 2011 and are guiding to a range of earnings per diluted share of $1.63 to $1.73, based on approximately 20.1 million weighted average number of shares outstanding and an effective tax rate of 40.5 percent."

"For the 2011 first quarter, we expect revenues to range from $192 million to $197 million, representing year-over-year growth of 11.5 percent at the midpoint. Earnings per diluted share are expected to be in the range of $0.34 to $0.38, a year-over-year increase of 28.6 percent at the midpoint," Mr. Kesavan noted.

1Organic revenue excludes revenue from The Road Home contract and revenue from acquisitions closed during the previous four quarters.

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


ICF International, Inc. and Subsidiaries
Consolidated Statements of Earnings
(in thousands, except per share amounts)
 
        Three months ended   Twelve months ended
        December 31,   December 31,
        2010     2009   2010     2009
        (Unaudited)          
 
Gross Revenue $ 192,938   $ 174,061 $ 764,734   $ 674,399
Direct Costs   119,437     106,576   476,187     411,334
Operating costs and expenses:
  Indirect and selling expenses   56,025     52,011   218,533     203,428
  Depreciation and amortization   2,747     2,808   10,775     9,416
  Amortization of intangible assets   3,082     3,071   12,326     11,137
    Total operating costs and expenses   61,854     57,890   241,634     223,981
  Operating Income   11,647     9,595   46,913     39,084
  Interest expense   (747)     (1,400)   (3,403)     (5,107)
  Other income (expense)   (25)     580   172     1,005
  Income before income taxes   10,875     8,775   43,682     34,982
  Provision for income taxes   3,718     2,586   16,511     12,626
  Net income $ 7,157   $ 6,189 $ 27,171   $ 22,356
 
  Earnings per Share:
    Basic $ 0.37   $ 0.38 $ 1.40   $ 1.45
    Diluted $ 0.36   $ 0.37 $ 1.38   $ 1.40
 
  Weighted-average Shares:
    Basic   19,489     16,187   19,375     15,433
    Diluted   19,751     16,522   19,626     15,914
 
         
Reconciliation of EBITDA                    
Operating Income   11,647     9,595     46,913     39,084
Depreciation and amortization   5,829     5,879     23,101     20,553
EBITDA 17,476     15,474     70,014     59,637
Transaction related costs   -     367     -     1,354
Adjusted EBITDA   17,476     15,841     70,014     60,991


ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets

(in thousands)
             
      December 31, 2010     December 31, 2009
             
             
Current Assets:          
  Cash $ 3,301   $ 2,353
  Contract receivables, net   176,963     174,120
  Prepaid expenses and other   6,995     6,666
  Income tax receivable   1,628     4,175
  Deferred income taxes   4,973     1,337
Total current assets   193,860     188,651
Total property and equipment, net   18,887     22,600
Other assets:          
  Goodwill   323,467     323,467
  Other intangible assets, net   26,148     38,474
  Restricted cash   3,179     2,123
  Other assets   7,278     6,912
Total assets $ 572,819   $ 582,227
             
Current Liabilities:          
  Accounts payable $ 29,866   $ 27,075
  Accrued salaries and benefits   40,750     32,762
   Accrued expenses   25,522     21,080
  Deferred revenue   20,034     19,370
Total current liabilities   116,172     100,287
Long-term liabilities:          
  Long-term debt   85,000     145,000
  Deferred rent   5,142     2,914
  Deferred income taxes   10,068   11,656
  Other   3,704     4,810
Total Liabilities   220,086     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; 19,618,659 and 19,278,591 shares issued; and 19,567,571 and 19,278,591 shares outstanding as of December 31, 2010, and December 31, 2009, respectively
   
  20     19
  Additional paid-in capital   220,891     211,412
  Retained earnings   133,637     106,466
  Treasury stock   (1,291)    
  Accumulated other comprehensive loss   (524)     (337)
Total stockholders' equity   352,733     317,560
Total liabilities and stockholders' equity $ 572,819   $ 582,227


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

(in thousands)
 
    Twelve months ended
    December 31,
    2010     2009
           
Cash flows from operating activities
Net income $ 27,171   $ 22,356
Adjustments to reconcile net income to net cash provided by operating activities:          
  Bad debt expense   543     241
  Deferred income taxes   (5,224)     2,203
  (Gain) loss on disposal of fixed assets   110     (14)
  Non-cash equity compensation   7,533     7,192
  Depreciation and amortization   23,101     20,553
  Deferred rent   1,153     106
  Changes in operating assets and liabilities, net of the effect of acquisitions:          
      Contract receivables   (3,386)     15,948
      Prepaid expenses and other assets   (778)     (3,962)
      Accounts payable   2,396     (3,763)
      Accrued salaries and benefits   8,677     (2,517)
      Accrued expenses   5,832     (17,503)
      Deferred revenue   664     4,341
      Income tax receivable   2,547     1,150
      Restricted cash   (1,056)     2,135
      Other liabilities   (1,105)     88
Net cash provided by operating activities   68,178     48,554
Cash flows from investing activities          
  Capital expenditures   (7,283)     (8,068)
  Capitalized software development costs   (394)     (437)
  Payments for business acquisitions, net of cash received       (188,672)
Net cash used in investing activities   (7,677)     (197,177)
 
Cash flows from financing activities          
  Advances from working capital facilities   43,317     315,784
  Payments on working capital facilities   (103,317)     (250,784)
  Debt issue costs   (21)     (655)
  Proceeds from secondary offering, net       83,294
  Proceeds from exercise of options   966     2,832
  Tax benefits of stock option exercises and award vesting   914     3,113
  Issuance of stock   66     88
  Shares reacquired in net share issuance   (1,291)     (4,179)
  Payments received on stockholder notes       12
Net cash (used in) provided by financing activities   (59,366)     149,505
  Effect of exchange rate on cash   (187)     (65)
Increase in cash   948     817
Cash, beginning of period   2,353     1,536
Cash, end of period $ 3,301   $ 2,353
 
Supplemental disclosure of cash flow information
  Cash paid during the period for:          
      Interest $ 3,873   $ 4,664
      Income taxes $ 18,977   $ 7,644


ICF International, Inc. and Subsidiaries
Supplemental Schedule (Unaudited)
 
 
Revenue by market Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2010     2009   2010     2009
Energy, environment, and transportation 41%     42%   40%     42%
Health, education, and social programs   45%     45%   46%     44%
Homeland security and defense 14%     13%   14%     14%
Total 100%     100%   100%     100%
 
 
Revenue by client Three Months Ended
December 31,
  Twelve Months Ended
December 31,
2010     2009   2010     2009
U.S. federal government 69%     69%   71%     60%
U.S. state and local government 11%     9%   10%     19%
Domestic commercial   15%     16%   14%     16%
International 5%     6%   5%     5%
Total   100%     100%   100%     100%
 
 
Revenue by contract type Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2010     2009   2010     2009
Time-and-materials 49%     45%   49%     51%
Cost-based   23%     23%   23%     20%
Fixed-price 28%     32%   28%     29%
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 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 3,700 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

Contact: Douglas Beck
1.703.934.3820

Contact: Lynn MorgenBetsy Brod
MBS Value Partners
1.212.750.5800

 
 
 

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