EX-99 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm

Exhibit 99.1

 

 

 

 

NEWS RELEASE

 

 

 

ICF International Reports Second Quarter 2013 Results

 

 

Total Revenue of $242 Million; Diluted Earnings Per Share of $0.52

 

Commercial Revenues Growing; Energy Efficiency Program Revenues Up 21 Percent

 

Federal Revenues Remain Stable

 

Contract Sales of $236 Million, Up 16 Percent

 

First-Half Cash Flow From Operations Was $30.3 Million, Up 7 Percent

 

Raises Full Year 2013 Guidance Midpoints for Revenues and Diluted EPS

 

Completed Acquisition of E-commerce Technology Services Firm on July 31

 

FAIRFAX, Va. (August 1, 2013) - 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, 2013.

 

Second Quarter 2013 Results and Highlights

 

“Second quarter results were similar to those of the first quarter, reflecting the continued growth of our commercial business, which was driven by a 21.3 percent increase in energy efficiency revenues, and the improved traction of our non-U.S. government business. At the same time, U.S. Federal Government revenues remained stable compared to last year, which we consider to be solid performance in light of current market conditions. Earnings per diluted share were the same as the prior year’s second quarter, inclusive of acquisition expenses, although operating income was lower due primarily to higher subcontractor activity on government contracts,” said ICF Chairman and Chief Executive Officer Sudhakar Kesavan.

 

For the second quarter, total revenue was $241.6 million, a 0.8 percent increase over the $239.6 million reported for the 2012 second quarter. Service revenue, total revenue less subcontractor and other direct costs, was $179.5 million, a 1.1 percent decline from second quarter 2012 levels. Operating income was $17.3 million, down from the $18.3 million reported in last year’s second quarter; operating margin was 7.2 percent compared to 7.6 percent a year ago. EBITDA was $22.4 million and EBITDA margin was 9.3 percent, compared to $24.4 million and 10.2 percent, respectively, in last year’s second quarter. Net income for the 2013 second quarter was $10.3 million or $0.52 per diluted share, equivalent to last year’s net income of $10.3 million and diluted earnings per share of $0.52. Acquisition charges amounted to $0.3 million in this year’s second quarter.

 

For the 2013 first half, total revenue was $475.5 million, up 1.8 percent over the $467.3 million reported in the 2012 first half. Operating income was $34.9 million, up 0.9 percent; net income was up 6.0 percent to $20.4 million, and earnings per diluted share were $1.02 compared to $0.96.

 

“The pace of contract sales increased in the second quarter, resulting in a solid book-to-bill ratio of nearly 1.0 for the period, compared to 0.85 in the prior year,” Mr. Kesavan said. “Ongoing investments to expand our business development capabilities have enabled ICF to respond to a greater number of government and commercial requests for proposals. We have continued to see solid demand for our domain expertise and IT services across key markets and expect sales in the second half of 2013 to be significantly ahead of the $462 million booked in the first half of the year, which we believe will position us for continued growth in 2014.”

 

 
 

 

 

 

 

“Additionally, on July 31 we completed the acquisition of an e-commerce technology services firm (Ecommerce Accelerator LLC, or ECA), with approximately $10 million in annual revenue, that will enhance ICF’s multi-channel, end-to-end e-commerce solutions. We have a robust acquisition pipeline and continue to evaluate acquisition opportunities that enhance our subject matter knowledge, broaden our service offerings, and/or provide scale in specific geographies,” Mr. Kesavan said.

 

Backlog and New Business Awards

 

Backlog was $1.5 billion at the end of the 2013 second quarter. Funded backlog was $647 million, or 44 percent of the total.

 

The total value of contracts awarded was $236 million in the second quarter of 2013 and $462 million for the 2013 first half, up 16.3 percent and 6.0 percent, respectively, from last year’s second quarter and first half.

 

Commercial Client Second Quarter/First Half 2013 Highlights

 

Revenues from commercial clients increased 3.3 percent in the 2013 second quarter to $66.9 million and were up 8.2 percent in the first half to $133.6 million. Excluding a large commercial infrastructure project that is currently in a slower phase of construction, commercial revenues would have increased 7.4 percent in the second quarter and 10.4 percent for the first half.

 

Revenues from commercial energy efficiency programs increased 21.3 percent and 15.6 percent in the second quarter and first half of 2013, respectively, and accounted for 37.5 percent and 36.6 percent, respectively, of commercial revenues.

 

Commercial sales awards were $36.8 million for the 2013 second quarter and $159.0 million for the first half, representing 34 percent of total sales for the first six months of 2013.

 

ICF was awarded more than 450 commercial projects globally in the second quarter. Primary areas of awards included energy efficiency program support, airline and airport management consulting, environmental program management, interactive data applications, strategic communications support for non-profits, commercial health consulting for payers, and energy market and portfolio assessment for utilities.

 

Key Government Sales Highlights for the Second Quarter 2013

 

ICF was awarded nearly 100 new U.S. Federal Government contract and task order awards and hundreds of additional awards from other domestic (state and local) and non-U.S. governments. The largest awards included:

 

 

Health Informatics: A $72 million contract with the National Institutes of Health to continue to support the Electronic Research Administration grants management program across a range of health informatics and systems engineering activities.

 

 

Program and IT Management: A $34 million contract with the United States Postal Service to provide support for the Mailing Information Systems and Domestic Products divisions.

 

 

Disaster Recovery Support: An award estimated to exceed $10 million to assist one of the states affected by Superstorm Sandy with analytical and program support for disaster recovery programs.


 

European Employment Programs: An $8.9 million contract with the European Commission to provide employment program support.

 

 

Health Survey Research: A $7.8 million contract with the Centers for Disease Control and Prevention supporting the 2013-2014 Tobacco Survey.

 

 

 
 

 

 

Additional individual government sales awards in excess of $2 million included providing program and organizational management support for the U.S. Department of the Navy, energy efficiency program support for the Association of Bay Area Governments (California) and the New York State Energy Research and Development Authority, environmental and engineering support services for the U.S. Bureau of Reclamation, survey research support for the National Science Foundation, and monitoring and evaluation support for the World Health Organization.

 

Summary and Outlook

 

“ICF’s year-to-date 2013 results illustrate the benefits of revenue diversification with emphasis on leveraging expertise in key markets across a growing client base. We expect that second half 2013 performance will exceed that of the first half, benefiting from the continued growth of our commercial business and the ramp up of certain government contracts,” Mr. Kesavan said.

 

“The Company narrowed its revenue guidance range for full year 2013 revenues to $955 million to $975 million; narrowed its expectations for EBITDA margin to 9.5 percent to 10.0 percent; and narrowed its guidance range for earnings per diluted share to $2.02 to $2.10. Guidance is based upon approximately 20 million diluted weighted average shares outstanding and an effective tax rate of 39 percent. Operating cash flow for 2013 is estimated to exceed $70 million,” Mr. Kesavan concluded.

 

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 60 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.

 

SOURCE: ICF International

 

Contacts:

Douglas Beck, ICF International, 1.703.934.3820

Lynn Morgen/Betsy Brod, MBS Value Partners, 1.212.750.5800

 

 

 
 

 

 

ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)

 

   

Three months ended

June 30,

   

Six months ended

June 30,

 
   

2013

   

2012

   

2013

   

2012

 
   

(Unaudited)

   

(Unaudited)

 
                                 

Gross Revenue

  $ 241,568     $ 239,649     $ 475,489     $ 467,290  

Direct Costs

    151,528       147,861       294,346       288,049  

Operating costs and expenses:

                               

Indirect and selling expenses

    67,604       67,404       135,866       133,257  

Depreciation and amortization

    2,782       2,597       5,581       4,292  

Amortization of intangible assets

    2,359       3,519       4,752       7,050  

Total operating costs and expenses

    72,745       73,520       146,199       144,599  

Operating Income

    17,295       18,268       34,944       34,642  

Interest expense

    (626 )     (814 )     (1,394 )     (2,241 )

Other income (expense)

    (9 )     (212 )     69       (263 )

Income before income taxes

    16,660       17,242       33,619       32,138  

Provision for income taxes

    6,329       6,896       13,176       12,855  

Net income

  $ 10,331     $ 10,346     $ 20,443     $ 19,283  
                                 

Earnings per Share:

                               

Basic

  $ 0.52     $ 0.52     $ 1.04     $ 0.98  

Diluted

  $ 0.52     $ 0.52     $ 1.02     $ 0.96  
                                 

Weighted-average Shares:

                               

Basic

    19,706       19,774       19,625       19,771  

Diluted

    19,996       19,971       19,993       20,061  
                                 

Other comprehensive income:

                               

Foreign currency translation adjustments

    (197 )     (230 )     (442 )     (619 )

Comprehensive income

  $ 10,134     $ 10,116     $ 20,001     $ 18,664  
                                 
                                 
                                 

Reconciliation of non-GAAP financial measures:

                               
                                 

Reconciliation of Service Revenue

                               

Revenue

  $ 241,568     $ 239,649     $ 475,489     $ 467,290  

Subcontractor and Other Direct Costs*

    62,072       58,205       117,114       110,955  

Service Revenue

  $ 179,496     $ 181,444     $ 358,375     $ 356,335  
                                 

Reconciliation of EBITDA

                               

Operating Income

  $ 17,295     $ 18,268     $ 34,944     $ 34,642  

Depreciation and amortization

    5,141       6,116       10,333       11,342  

EBITDA

    22,436       24,384       45,277       45,984  

Acquisition-related expenses**

    261       -       261       625  

Adjusted EBITDA

  $ 22,697     $ 24,384     $ 45,538     $ 46,609  

 

 

*

Subcontractor and Other Direct Costs exclude Direct Labor and Fringe.

 

**

Acquisition-related expenses include expenses related to closed and anticipated-to-close acquisitions.

 

 

 
 

 

 

ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share amounts)

 

   

June 30, 2013

   

December 31, 2012

 
   

(Unaudited)

         
                 

Current Assets:

               

Cash

  $ 5,486     $ 14,725  

Contract receivables, net

    207,440       204,938  

Prepaid expenses and other

    10,960       7,608  

Income tax receivable

    3,660       11,231  

Total current assets

    227,546       238,502  

Total property and equipment, net

    27,927       28,860  

Other assets:

               

Goodwill

    410,482       410,583  

Other intangible assets, net

    16,264       21,016  

Restricted cash

    2,168       2,015  

Other assets

    9,601       8,745  

Total Assets

  $ 693,988     $ 709,721  
                 

Current Liabilities:

               

Accounts payable

  $ 37,541     $ 44,665  

Accrued salaries and benefits

    41,423       42,264  

Accrued expenses

    30,138       31,779  

Deferred revenue

    21,097       22,333  

Deferred income taxes

    4,728       5,790  

Total current liabilities

    134,927       146,831  

Long-term liabilities:

               

Long-term debt

    75,000       105,000  

Deferred rent

    11,772       10,599  

Deferred income taxes

    11,902       9,081  

Other

    9,251       9,460  

Total Liabilities

    242,852       280,971  

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; 20,467,724 and 20,171,613 shares issued; and 19,761,996 and 19,559,409 shares outstanding as of June 30, 2013, and December 31, 2012, respectively

    20       20  

Additional paid-in capital

    242,207       237,262  

Retained earnings

    227,020       206,577  

Treasury stock

    (16,428 )     (13,868 )

Accumulated other comprehensive loss

    (1,683 )     (1,241 )

Total Stockholders’ Equity

    451,136       428,750  

Total Liabilities and Stockholders’ Equity

  $ 693,988     $ 709,721  

 

 
 

 

 

ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

 

   

Six months ended

June 30,

 
   

2013

   

2012

 
   

(Unaudited)

 

Cash flows from operating activities

               

Net income

  $ 20,443     $ 19,283  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Deferred income taxes

    1,710       3,611  

Loss on disposal of fixed assets

    7       76  

Non-cash equity compensation

    4,283       3,927  

Depreciation and amortization

    10,333       11,342  

Amortization of debt issue costs

    238       323  

Deferred rent

    1,302       2,317  

Changes in operating assets and liabilities, net of the effect of acquisitions:

               

Contract receivables, net

    (2,351 )     (962 )

Prepaid expenses and other assets

    (4,752 )     (2,205 )

Accounts payable

    (6,183 )     (2,021 )

Accrued salaries and benefits

    (841 )     888  

Accrued expenses

    (17 )     (1,766 )

Deferred revenue

    (1,236 )     (1,940 )

Income tax receivable and payable

    7,571       (5,582 )

Other liabilities

    (209 )     1,130  

Net cash provided by operating activities

    30,298       28,421  

Cash flows from investing activities

               

Capital expenditures

    (7,197 )     (8,102 )

Payments for business acquisitions, net of cash received

          (8,532 )

Net cash used in investing activities

    (7,197 )     (16,634 )
                 

Cash flows from financing activities

               

Advances from working capital facilities

    58,317       122,220  

Payments on working capital facilities

    (88,317 )     (123,690 )

Debt issue costs

          (1,896 )

Proceeds from exercise of options

    460       23  

Tax benefits of stock option exercises and award vesting

    26       648  

Net payments for stockholder issuances and buybacks

    (2,384 )     (7,313 )

Net cash used in financing activities

    (31,898 )     (10,008 )

Effect of exchange rate on cash

    (442 )     (619 )

Increase (decrease) in cash

    (9,239 )     1,160  

Cash, beginning of period

    14,725       4,097  

Cash, end of period

  $ 5,486     $ 5,257  
                 

Supplemental disclosure of cash flow information

               

Cash paid during the period for:

               

Interest

  $ 1,409     $ 1,737  

Income taxes

  $ 3,783     $ 14,197  

 

 
 

 

ICF International, Inc. and Subsidiaries

Supplemental Schedule

 

Revenue by market

 

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

2013

   

2012

   

2013

   

2012

 
                                 

Energy, environment, and infrastructure

    38 %     41 %     39 %     40 %

Health, social programs, and consumer/financial

    49 %     46 %     48 %     46 %

Public safety and defense

    13 %     13 %     13 %     14 %
                                 

Total

    100 %     100 %     100 %     100 %

 

 

 

Revenue by client

 

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

2013

   

2012

   

2013

   

2012

 
                                 

U.S. federal government

    59 %     59 %     59 %     61 %

U.S. state and local government

    9 %     10 %     9 %     10 %

Non-U.S. government

    4 %     4 %     4 %     3 %

Government

    72 %     73 %     72 %     74 %
                                 

Commercial

    28 %     27 %     28 %     26 %
                                 

Total

    100 %     100 %     100 %     100 %

 

 

 

Revenue by contract

 

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

2013

   

2012

   

2013

   

2012

 
                                 

Time-and-materials

    51 %     49 %     51 %     50 %

Fixed-price

    28 %     30 %     29 %     29 %

Cost-based

    21 %     21 %     20 %     21 %
                                 

Total

    100 %     100 %     100 %     100 %