May
2
2012

ICF International Reports First Quarter 2012 Results

  • Total Revenue Increased 17 Percent
  • Operating Income Up 21 Percent
  • Net Income Increased 16 Percent; Diluted Earnings Per Share of $0.45
 

 

Fairfax, Virginia, May 2, 2012 -

ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, reported results for the first quarter ended March 31, 2012.

First Quarter 2012 Results and Highlights

For the first quarter, total revenue reached $227.6 million, a 16.9 percent increase over the $194.7 million reported for the 2011 first quarter. Organic revenue1 growth was 7 percent. Net income was $8.9 million and $0.45 per diluted share, which amounted to increases of 15.7 percent and 15.4 percent, respectively, over 2011 first quarter net income of $7.7 million and diluted earnings per share of $0.39. Operating income increased 21 percent to $16.2 million from the $13.4 million reported in last year’s first quarter, and operating income margin was 7.1 percent compared to 6.9 percent. First quarter 2012 results included a full-quarter contribution from Ironworks Consulting, L.L.C., which ICF acquired on December 31, 2011, and a one-month contribution from GHK Holdings Limited, which was acquired on February 29, 2012.

“ICF achieved solid growth across our two largest markets2, which accounted for more than 87 percent of total first quarter revenue,” said ICF Chairman and Chief Executive Officer Sudhakar Kesavan. “Energy, Environment, and Infrastructure revenue increased 25.4 percent, and Health, Social Programs, and Consumer/Financial revenue grew 19.4 percent year-on-year, both benefiting from a combination of organic and acquisition growth. Revenue growth was led by our U.S. commercial business, which increased 51.2 percent. In addition, U.S. Federal Government work grew 6.2 percent and U.S. state and local work was up 23.1 percent.”

“We posted a 16.1 percent increase in EBITDA and 21 percent growth in operating income, reflective of our ability to effectively manage indirect expenses during the initial integration phases of two important acquisitions. The acquisition of Ironworks has expanded the range of implementation services we offer to commercial and government clients in our key markets, particularly in the area of digital interactive services. GHK adds important scale to our non-U.S. business and a platform through which to replicate our successful U.S. track record in Europe and Asia,” Mr. Kesavan noted.

Backlog and New Business Awards

Backlog was $1.7 billion at the end of the 2012 first quarter. Funded backlog was $742 million, or 44 percent of the total.

The total value of contracts awarded in the first quarter of 2012 was $233 million.

Key contracts won in the first quarter included:

  • Energy Efficiency: A contract extension and expansion valued at $31 million with a major U.S. utility. Under this contract, ICF is providing a suite of programs to increase energy efficiency in the residential consumer market.


  • Energy Efficiency: A contract extension valued at $11.5 million with the Southern Maryland Electric Cooperative to continue promoting energy efficiency programs for residential and commercial customers.


  • Energy Efficiency: A $6 million contract with another U.S. utility for a full range of marketing and technical services supporting energy efficiency programs in the residential space.


  • ENERGY STAR®:  A contract with the U.S. Environmental Protection Agency, valued at $24 million, to deliver training, technical assistance, and outreach in support of the ENERGY STAR program for commercial, institutional, and industrial partners throughout the United States.


  • Public Health: A contract with the U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, valued at up to $15.8 million, for survey research, design, and implementation to measure and report health risk behaviors and policies.

  • Transportation and Environment: A contract with the U.S. Environmental Protection Agency, valued at up to $15 million to provide analytical and modeling support for the development and evaluation of mobile source greenhouse gas (GHG) regulations and emission control technologies.

  • Commercial Sector: In addition to the energy efficiency wins already noted, ICF was awarded more than 300 additional commercial projects in the areas of energy efficiency, interactive data applications, infrastructure, environmental management, regulatory assessment for utilities, and transportation planning.

Summary and Outlook

“Over the last several quarters, ICF has reported double-digit increases in revenues and earnings, driven by the significant growth of our U.S. commercial, state, and local businesses, which has more than offset slower revenue growth from some of our U.S. Federal Government clients,” Mr. Kesavan said. “This trend should continue in the 2012 second quarter when revenues are expected to range from $247 million to $253 million, representing year-on-year growth of 17.2 percent at the midpoint. Second quarter 2012 earnings per diluted share are expected to range from $0.52 to $0.56, a growth rate of 20 percent at the midpoint, based on approximately 20.1 million weighted average number of shares outstanding and an effective tax rate of 40 percent.”

“We reaffirm our guidance for full year 2012. Revenues are expected to range from $1.0 billion to $1.04 billion, EBITDA margin to range from 9.5 percent to 10.5 percent, and earnings per diluted share of $2.05 to $2.15, based on approximately 20.2 million weighted average number of shares outstanding and an effective tax rate of 40 percent. ICF continues to generate significant cash flow from operations, which amounted to $11.0 million in the first quarter and is projected to be, on an annual basis for 2012, greater than the $60 million for the full year of 2011,” Mr. Kesavan noted.

1Organic revenue excludes revenue from acquisitions closed during the previous four quarters.

2The Company re-named select end market categories effective in the 2012 first quarter to more accurately reflect recent acquisitions and growth that allow us to reach new customers with a broad array of services in these markets.

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


ICF International, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
 
        Three months ended
March 31,
        2012   2011
        (Unaudited)
 
Gross Revenue $ 227,641       $ 194,742      
Direct Costs   140,188         118,221      
Operating costs and expenses:
  Indirect and selling expenses   65,871         57,926      
  Depreciation and amortization   1,815         2,761      
  Amortization of intangible assets   3,531         2,415      
    Total operating costs and expenses   71,217         63,102      
  Operating Income   16,236         13,419      
  Interest expense   (1,307)         (629)      
  Other income (expense)   (33)         87      
  Income before income taxes   14,896         12,877      
  Provision for income taxes   5,959         5,151      
 Net income $ 8,937       $ 7,726      
 
  Earnings per Share:
    Basic $ 0.45       $ 0.39      
    Diluted $ 0.45       $ 0.39      
 
  Weighted-average Shares:
    Basic   19,769         19,580      
    Diluted   20,082         19,780      
   
Other comprehensive income:
  Foreign currency translation adjustments   (389)         156      
Comprehensive income $ 8,548       $ 7,882      
 
  Reconciliation of EBITDA
  Operating Income $ 16,236       $ 13,419      
  Depreciation and amortization   5,346         5,176      
  EBITDA   21,582         18,595      
  Acquisition-related expenses*   625              
  Adjusted EBITDA $ 22,207       $ 18,595      
                       
  * Acquisition-related expenses include expenses related to closed acquisitions.      



ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets

(in thousands, except share amounts)
             
      March 31, 2012     December 31, 2011
      (Unaudited)      
             
Current Assets:          
  Cash $ 5,713   $ 4,097
  Contract receivables, net   223,251     209,426
  Prepaid expenses and other   6,009     7,948
  Income tax receivable   484     1,155
  Deferred income taxes   5,206     7,963
Total current assets   240,663     230,589
Total property and equipment, net   29,301     21,067
Other assets:          
  Goodwill   406,799     401,134
  Other intangible assets, net   32,476     33,740
  Restricted cash   1,215     1,208
  Other assets   8,895     6,877
Total Assets $ 719,349   $ 694,615
             
Current Liabilities:          
  Accounts payable $ 40,628   $ 38,685
  Accrued salaries and benefits   41,301     46,215
  Accrued expenses   28,898     29,252
  Deferred revenue   24,241     20,180
Total current liabilities   135,068     134,332
Long-term liabilities:          
  Long-term debt   152,146     145,000
  Deferred rent   7,706     7,223
  Deferred income taxes   10,115     9,247
  Other   11,247     5,785
Total Liabilities   316,282     301,587
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; 19,979,970 and 19,887,459 shares issued; and 19,852,895 and 19,792,499 shares outstanding as of March 31, 2012, and December 31, 2011, respectively 20     20
  Additional paid-in capital   229,885     227,577
  Retained earnings   177,439     168,502
  Treasury stock   (3,083)     (2,266)
  Accumulated other comprehensive loss   (1,194)     (805)
Total Stockholders' Equity   403,067     393,028
Total Liabilities and Stockholders' Equity $ 719,349   $ 694,615



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

(in thousands)
 
    Three months ended
    March 31,
    2012     2011
    (Unaudited)
Cash flows from operating activities
Net income $ 8,937   $ 7,726
Adjustments to reconcile net income to net cash provided by operating activities:          
   Deferred income taxes   3,674     (16)
   (Gain) loss on disposal of fixed assets   67     (66)
  Non-cash equity compensation   1,772     1,195
  Depreciation and amortization   5,346     5,176
  Deferred rent   525     842
  Changes in operating assets and liabilities, net of the effect of acquisitions:          
      Contract receivables   (4,391)     (2,138)
      Prepaid expenses and other assets   1,678     (972)
      Accounts payable   (798)     (5,629)
      Accrued salaries and benefits   (5,313)     3,819
      Accrued expenses   (5,712)     (3,059)
      Deferred revenue   (655)     896
      Income tax payable   419     4,236
      Restricted cash   (7)     1,303
      Other liabilities   5,461     513
Net cash provided by operating activities   11,003     13,826
Cash flows from investing activities          
  Capital expenditures   (5,626)     (1,696)
  Capitalized software development costs       (28)
  Payments for business acquisitions, net of cash received   (8,556)     (4,547)
Net cash used in investing activities   (14,182)     (6,271)
 
Cash flows from financing activities          
  Advances from working capital facilities   35,231     32,294
  Payments on working capital facilities   (28,085)     (37,294)
  Debt issue costs   (1,681)    
  Proceeds from exercise of options   23     85
  Tax benefits of stock option exercises and award vesting   486     949
  Net payments for stockholder issuances and buybacks   (790)     (758)
Net cash provided by (used in) financing activities   5,184     (4,724)
  Effect of exchange rate on cash   (389)     156
Increase in cash   1,616     2,987
Cash, beginning of period   4,097     3,301
Cash, end of period $ 5,713   $ 6,288
 
Supplemental disclosure of cash flow information
  Cash paid during the period for:          
      Interest $ 830   $ 610
      Income taxes $ 1,468   $ 328



ICF International, Inc. and Subsidiaries
Supplemental Schedule
 
 
Revenue by market Three Months Ended
March 31,
  2012   2011
Energy, environment, and infrastructure 44%   41%
Health, social programs, and consumer/financial    43%    43%
Public safety and defense 13%      16%
Total 100%    100%
 
 
Revenue by client Three Months Ended
March 31,
2012   2011
U.S. federal government 62%    68%
U.S. state and local government 10%   10%
U.S. commercial   23%   17%
Non-U.S.  5%   5%
Total   100%   100%
         
Revenue by contract Three Months Ended
March 31,
2012   2011
Time-and-materials 50%    51%
Fixed-price 28%   27%
Cost-based  22%   22%
Total   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 infrastructure; health, social programs, and consumer/financial; and public safety 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 4,500 employees serve these clients from more than 50 offices 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

 
 
 

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