Feb
29
2012

ICF Reports Record Fourth Quarter Full Year 2011 Results

Fourth Quarter Highlights

  • Revenue Increased 11 Percent
  • Operating Income up 19 Percent, Inclusive of Acquisition-Related Expenses
  • Net Income Increased 24 Percent
  • Completed Acquisition of Ironworks Consulting, L.L.C., Effective December 31, 2011

Full Year 2011 Highlights

  • Revenue Increased 10 Percent
  • Operating Income up 26 Percent
  • Net Income Increased 28 Percent
  • Backlog was $1.7 Billion at Year-End, up 22 Percent

-- Completed Acquisition of GHK Holdings, Effective February 29, 2012 --

 

 

Fairfax, Virginia, February 29, 2012 -

ICF International, Inc., (NASDAQ:ICFI), a leading provider of professional services and technology solutions to government and commercial clients, reported results for the fourth quarter and year ended December 31, 2011.

Fourth Quarter Results and Highlights

Total revenue for the fourth quarter was $213.9 million, an increase of 10.9 percent over total revenue of $192.9 million reported in the 2010 fourth quarter. Organic revenue1 growth was 10.4 percent.

Operating income was $13.9 million, up 19 percent from the $11.6 million of last year’s fourth quarter. This year’s fourth quarter operating income included acquisition-related expenses of $1.3 million. Net income was $8.8 million, a 23.5 percent increase over the $7.2 million reported for last year’s fourth quarter. Earnings per diluted share were $0.44 compared to $0.36 in the fourth quarter of 2010. In this year’s fourth quarter the Company’s effective tax rate was 34.0 percent, slightly below the 34.2 percent rate effective for the comparable period last year. For the 2011 fourth quarter, the fully diluted weighted average number of shares outstanding was 20.0 million compared to 19.8 million in the 2010 fourth quarter.

Commenting on the results, ICF International Chairman and Chief Executive Officer Sudhakar Kesavan said, “Our fourth quarter performance demonstrated the significant operating leverage that we have been able to achieve through combining a favorable business mix with efficient execution. Revenue growth was again led by our U.S. commercial business, which increased 59 percent year-on-year to account for 22 percent of total fourth quarter revenues. In our public sector, state and local revenues increased 7.2 percent, driven by growth in infrastructure management work, and our federal business increased 2.1 percent, reflecting greater demand for our health-related IT services.”

Recent Corporate Developments

  • Today ICF completed the acquisition of GHK Holdings Limited (GHK), a London-headquartered multi-disciplinary consultancy serving government and commercial clients. GHK had revenues of approximately $30 million for full year 2011.
  • Effective December 31, 2011, ICF completed the acquisition of Ironworks, a leading interactive web development firm serving commercial and government clients. For full-year 2011, Ironworks had revenues of approximately $58 million.

“These acquisitions represent complementary elements of our strategic growth plan,” Mr. Kesavan said.

“Ironworks increases the depth and breadth of ICF’s implementation services in our key markets, builds our capabilities in the fast-growing interactive digital services arena, and brings an attractive balance of commercial and government clients.”

“GHK adds significant scale to our international business, particularly in the high-growth Asian markets; a professional staff with deep domain expertise knowledge in our key markets; and a platform through which to replicate ICF’s U.S. track record in Europe and Asia.”

Backlog and New Business Awards

Backlog was $1.7 billion at the end of the fourth quarter. Funded backlog was $730 million or 44 percent of the total.

The total value of contracts awarded in the 2011 fourth quarter was $163 million.

Key contracts won in the fourth quarter included:

  • Education: A new contract valued at $32.8 million with the U.S. Department of Education, Institute of Education Services. Under this contract, ICF will operate the Regional Education Library (REL) Mid-Atlantic. In addition, ICF was named to provide coordination support for all 10 REL laboratories throughout the United States.
  • Energy Efficiency: A new contract valued at $12 million with PEPCO Holdings. Under this contract, ICF will promote increased energy efficiency in the residential consumer market and will deliver programs to educate homeowners and home service providers about the benefits of achieving higher levels of energy efficiency.
  • Commercial Sector: In addition to the energy efficiency win already noted, ICF was awarded nearly 200 additional domestic and international commercial projects in the areas of energy efficiency, infrastructure environmental management, regulatory assessment for utilities, fuels and power markets assessment, and airline and airport planning.

Summary and Outlook

“This was another year of strong performance for ICF International. We achieved year-over-year growth in operating income and earnings per diluted share of 26 percent and 27 percent, respectively, on a revenue increase of 10 percent. We had record sales of $1.2 billion, up 43 percent over 2010 levels, and our strong financial position provided the resources for us to continue to invest in organic growth and in strategic acquisitions.”

"We expect this positive momentum to continue in 2012. Funded backlog levels at 2011 year-end and the addition of Ironworks and GHK provide good visibility, enabling us to reaffirm our full-year 2012 guidance of revenues in the range of $1.0 billion to $1.04 billion, up over 21 percent at the midpoint compared to 2011 levels. EBITDA margin is expected to range from 9.5 percent to 10.5 percent, which in U.S. dollars amounts to $102 million at the midpoint, or year-on-year growth of 29 percent. We are guiding to a range of earnings per diluted share of $2.05 to $2.15 for the year, up 19.7 percent at the midpoint, based on approximately 20.2 million weighted average number of shares outstanding and an effective tax rate of 40 percent," Mr. Kesavan noted.

“For the 2012 first quarter, we expect revenues to range from $227 million to $233 million, and earnings per diluted share to be in the range of $0.43 to $0.47.”

1Organic revenue excludes 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,
        2011     2010   2011     2010
        (Unaudited)          
 
Gross Revenue $ 213,947   $ 192,938 $ 840,775   $ 764,734
Direct Costs   131,436     119,437   520,522     476,187
Operating costs and expenses:
  Indirect and selling expenses   63,525     56,025   241,062     218,553
  Depreciation and amortization   2,674     2,747   10,757     10,775
  Amortization of intangible assets   2,445     3,082   9,550     12,326
    Total operating costs and expenses   68,644     61,854   261,369     241,634
  Operating Income   13,867     11,647   58,884     46,913
  Interest expense   (516)     (747)   (2,248)     (3,403)
  Other income (expense)   35     (25)   124     172
  Income before income taxes   13,386     10,875   56,760     43,682
  Provision for income taxes   4,544     3,718   21,895     16,511
  Net income $ 8,842   $ 7,157 $ 34,865   $ 27,171
 
  Earnings per Share:
    Basic $ 0.45   $ 0.37 $ 1.77   $ 1.40
    Diluted $ 0.44   $ 0.36 $ 1.75   $ 1.38
 
  Weighted-average Shares:
    Basic   19,738     19,489   19,684     19,375
    Diluted   19,956     19,751   19,928     19,626
 
         
Reconciliation of EBITDA                    
Operating Income   13,867     11,647     58,884     46,913
Depreciation and amortization   5,119     5,829     20,307     23,101
EBITDA 18,986     17,476     79,191     70,014
Acquisition-related expenses*   1,272     -     1,682     -
Adjusted EBITDA   20,258     17,476     80,873     70,014
* Acquisition-related expenses include expenses related to closed and anticipated to close acquisitions.


ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets

(in thousands)
             
      December 31, 2011     December 31, 2010
             
             
Current Assets:          
  Cash $ 4,097   $ 3,301
  Contract receivables, net   209,426     176,963
  Prepaid expenses and other   7,948     6,995
  Income tax receivable   1,155     1,628
  Deferred income taxes   7,963     4,973
Total current assets   230,589     193,860
Total property and equipment, net   21,067     18,887
Other assets:          
  Goodwill   401,134     323,467
  Other intangible assets, net   33,740     26,148
  Restricted cash   1,208     3,179
  Other assets   6,877     7,278
Total assets $ 694,615   $ 572,819
             
Current Liabilities:          
  Accounts payable $ 38,685   $ 29,866
  Accrued salaries and benefits   46,215     40,750
  Accrued expenses   29,252     25,522
  Deferred revenue   20,180     20,034
Total current liabilities   134,332     116,172
Long-term liabilities:          
  Long-term debt   145,000     85,000
  Deferred rent   7,223     5,142
  Deferred income taxes   9,247   10,068
  Other   5,785     3,704
Total Liabilities   301,587     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; 19,887,459 and 19,618,659 shares issued; and 19,792,499 and 19,567,571 shares outstanding as of December 31, 2011, and December 31, 2010, respectively
   
  20     20
  Additional paid-in capital   227,577     220,891
  Retained earnings   168,502     133,637
  Treasury stock   (2,266)     (1,291)
  Accumulated other comprehensive loss   (805)     (524)
Total Stockholders' Equity   393,028     352,733
Total Liabilities and Stockholders' equity $ 694,615   $ 572,819


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

(in thousands)
 
    Twelve months ended
    December 31,
    2011     2010
           
Cash flows from operating activities
Net income $ 34,865   $ 27,171
Adjustments to reconcile net income to net cash provided by operating activities:          
  Bad debt expense   (64)     543
  Deferred income taxes   (4,623)     (5,224)
  (Gain) loss on disposal of fixed assets   (13)     110
  Non-cash equity compensation   6,658     7,533
  Depreciation and amortization   20,307     23,101
  Deferred rent   2,235     1,153
  Changes in operating assets and liabilities, net of the effect of acquisitions:          
      Contract receivables   (18,147)     (3,386)
      Prepaid expenses and other assets   (1,043)     (778)
      Accounts payable   7,996     2,396
      Accrued salaries and benefits   4,703     8,677
      Accrued expenses   2,822     5,832
      Deferred revenue   (692)     664
      Income tax payable   466     2,547
      Restricted cash   1,971     (1,056)
      Other liabilities   2,080     (1,105)
Net cash provided by operating activities   59,521     68,178
Cash flows from investing activities          
  Capital expenditures   (10,206)     (7,283)
  Capitalized software development costs   (28)     (394)
  Payments for business acquisitions, net of cash received   (108,009)    
Net cash used in investing activities   (118,243)     (7,677)
 
Cash flows from financing activities          
  Advances from working capital facilities   213,138     43,317
  Payments on working capital facilities   (153,138)     (103,317)
  Debt issue costs   (8)     (21)
  Proceeds from exercise of options   478     966
  Tax benefits of stock option exercises and award vesting   227     914
  Issuance of stock   77     66
  Shares reacquired in net share issuance   (975)     (1,291)
Net cash provided by (used in) financing activities   59,799     (59,366)
  Effect of exchange rate on cash   (281)     (187)
Increase in cash   796     948
Cash, beginning of period   3,301     2,353
Cash, end of period $ 4,097   $ 3,301
 
Supplemental disclosure of cash flow information
  Cash paid during the period for:          
      Interest $ 2,334   $ 3,873
      Income taxes $ 26,411   $ 18,977


ICF International, Inc. and Subsidiaries
Supplemental Schedule
 
 
Revenue by market Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2011     2010   2011     2010
Energy, environment, and transportation 46%     41%   43%     40%
Health, education, and social programs   41%     44%   43%     45%
Homeland security and defense 13%     15%   14%     15%
Total 100%     100%   100%     100%
 
 
Revenue by client Three Months Ended
December 31,
  Twelve Months Ended
December 31,
2011     2010   2011     2010
U.S. federal government 63%     69%   66%     71%
U.S. state and local government 10%     11%   10%     10%
Domestic commercial   22%     15%   20%     14%
International 5%     5%   4%     5%
Total   100%     100%   100%     100%
 
 
Revenue by contract Three Months Ended
December 31,
  Twelve Months Ended
December 31,
  2011     2010   2011     2010
Time-and-materials 47%     49%   49%     49%
Fixed-price   30%     28%   28%     28%
Cost-based 23%     23%   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 4,000 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. 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. Although ICF’s expectations are based on what management believes to be reasonable assumptions, it cannot assure the expectations reflected herein will be achieved as they are subject to risks and uncertainties that are difficult to predict and may be outside of ICF’s control. Such risks and uncertainties include the possibility that the benefits anticipated from the GHK and Ironworks transactions will not be fully realized. 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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