ICF International Reports First Quarter 2013 Results

  ICF International Reports First Quarter 2013 Results

  *Total Revenue Increased 3 Percent; Led by Commercial Revenues
  *Operating Income Increased 8 Percent
  *Diluted Earnings Per Share Were $0.51, Up 13 percent
  *Cash Flow From Operations Was $13 Million

Business Wire

FAIRFAX, Va. -- May 03, 2013

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, 2013.

First Quarter 2013 Results and Highlights

For the first quarter, total revenue was $233.9 million, a 2.8 percent
increase over the $227.6 million reported for the 2012 first quarter. Service
revenue, total revenue less subcontractor and other direct costs, increased
2.3 percent to $178.9 million. Operating income increased 7.8 percent to $17.6
million from the $16.4 million reported in last year’s first quarter, and
operating margin was 7.5 percent up from 7.2 percent. EBITDA increased 5.8
percent to $22.8 million, and EBITDA margin was 9.8 percent, up from 9.5
percent in last year’s first quarter. Net income for the 2013 first quarter
was $10.1 million, or $0.51 per diluted share, which represent increases of
13.1 percent and 13.3 percent, respectively, over last year’s net income of
$8.9 million and diluted earnings per share of $0.45. First quarter 2013
results included a full quarter contribution from GHK, which ICF acquired on
February 29, 2012.

“The 14.3 percent year-over-year growth in our commercial client revenues and
the increased contribution from our non-U.S. government clients enabled us to
report higher first quarter revenues despite the uncertainty surrounding
sequestration in the U.S. federal market and the uneven timing of certain
state and local government projects,” said ICF Chairman and Chief Executive
Officer Sudhakar Kesavan. “Our investments in business development activities
across several commercial growth areas, including energy efficiency, aviation
consulting, energy infrastructure, interactive data, and commercial health, in
the aggregate, combined with our recognized expertise in the more resilient
federal government areas, continue to favorably impact ICF’s performance.
Revenues from our key markets---Energy, Environment, & Infrastructure, and
Health, Social Programs, & Consumer/Financial---increased by 2.1 percent and
5.5 percent, respectively. These markets accounted for 87 percent of first
quarter 2013 revenues.”

“We reported healthy gross and operating margins in the first quarter, which
as expected benefited from disciplined contract management and energy
efficiency contract incentives. Net income outpaced operating income due to
lower interest expense, as we have utilized a portion of our strong operating
cash flow to pay down debt.”

“The pace of total contract sales was in line with first quarter seasonality;
however, commercial awards were a much greater percentage of the total.
Several of ICF’s first quarter contract wins were strategically noteworthy,
including GHK’s energy efficiency contract win in the U.K., extending our
leadership in this business to non-U.S. markets, and continued success with
new large energy efficiency program management engagements.”

Commercial Revenue First Quarter 2013 Highlights

Revenues from commercial clients increased 14.3 percent in the 2013 first
quarter to $67.0 million and represented 28.7 percent of total revenue, up
from 25.8 percent in last year’s first quarter.

Commercial sales awards were $121 million for the 2013 first quarter,
representing 53 percent of total sales for the period. This percentage
illustrates the increasing importance of commercial work to ICF’s current and
future business mix.

Key Commercial Sales Highlights for the First Quarter 2013

ICF was awarded nearly 400 commercial projects globally in the first quarter.
Primary areas of awards included energy efficiency program support, airline
and airport management consulting, environmental program management,
interactive data applications, commercial health consulting for payers, and
energy market and portfolio assessment for utilities. The largest awards

  *Energy Infrastructure: A $48 million contract to continue the management
    of environmental compliance for the construction of a major transmission
    line for a U.S. utility.
  *Energy Efficiency: A $20 million contract to support a portfolio of
    innovative energy efficiency programs for a major U.S. utility.
  *Energy Efficiency: A $16 million contract to provide commercial energy
    efficiency services for the Energy Trust of Oregon.
  *Energy Efficiency: A $9.4 million contract to support new energy
    efficiency programs for a major U.S. utility.

Additional individual commercial sales in excess of $1 million included
aviation consulting support for a global aircraft leasing corporation;
aviation consulting support for a global airline; aviation consulting support
for a telecommunications supplier to the aviation industry, analytical support
for a North American oil and gas producer, interactive data support for a
trade association, and continued commercial health and interactive data
support for two health benefits companies.

Key Government Sales Highlights for the First Quarter 2013

ICF was awarded nearly 100 new U.S. 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:

  *Homeland Security: A multiple award contract valued at up to $11 billion
    to provide technical assistance and support to the U.S. Department of
    Homeland Security.
  *Federal Policy and Planning: A $50 million Multiple-Award Blanket Purchase
    Agreement with the U.S. Department of Interior to support a wide range of
    policy, planning, and human capital activities.
  *Environment: A contract valued at up to $23 million to provide technical
    outreach and support to the U.S. Environmental Protection Agency’s Clean
    Air Markets Division.
  *Energy: A $5 million contract to provide energy efficiency improvement
    support to a U.K. government agency.
  *International Development: A $5 million contract to support the Urban
    Infrastructure Investment Program in India.

Additional individual government sales in excess of $2 million included health
training for the U.S. Department of Defense, forestry and biodiversity support
to the U.S. Agency for International Development, continued education program
outreach support for the U.S. Department of Education, IT support services to
the U.S. Department of Veterans Affairs Veterans Health Administration, public
health survey for a U.S. state department of public health, environmental
management support for the State of California, and public health and medical
planning support for a Metropolitan Washington regional planning organization.

Backlog and New Business Awards

Backlog was $1.5 billion at the end of the 2013 first quarter. Funded backlog
was $720 million, or 48 percent of the total.

The total value of contracts awarded in the first quarter of 2013 was $226

Summary and Outlook

“First quarter 2013 results were in line with our expectations and
demonstrated the benefits of our revenue diversification strategy and our
success in gaining traction through our recognized domain expertise. We expect
the shift in our business mix to continue in 2013, as commercial and non-U.S.
markets become increasingly greater contributors to total performance,” Mr.
Kesavan said.

“The company reaffirms its guidance for full year 2013 revenues of $935
million to $975 million, EBITDA margin of 9.5 percent to 10.5 percent, and
earnings per diluted share of $2.00 to $2.10. Guidance is based upon
approximately 20 million diluted weighted average number of 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.

ICF International, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(in thousands, except per share amounts)
                                                   Three months ended
                                                   March 31,
                                                   2013         2012    
Gross Revenue                                    $ 233,921     $ 227,641
Direct Costs                                       142,818       140,188
Operating costs and expenses:
Indirect and selling expenses                      68,262        65,853
Depreciation and amortization                      2,799         1,695
Amortization of intangible assets                 2,393       3,531   
Total operating costs and expenses                73,454      71,079  
Operating Income                                   17,649        16,374
Interest expense                                   (768    )     (1,427  )
Other income (expense)                            78          (51     )
Income before income taxes                         16,959        14,896
Provision for income taxes                        6,847       5,959   
Net income                                       $ 10,112     $ 8,937   
Earnings per Share:
Basic                                            $ 0.52       $ 0.45    
Diluted                                          $ 0.51       $ 0.45    
Weighted-average Shares:
Basic                                             19,543      19,769  
Diluted                                           19,875      20,082  
Other comprehensive income:
Foreign currency translation adjustments          (245    )    (389    )
Comprehensive income                             $ 9,867      $ 8,548   
Reconciliation of non-GAAP financial measures:
Reconciliation of Service Revenue
Revenue                                          $ 233,921     $ 227,641
Subcontractor and Other Direct Costs*             55,042      52,750  
Service Revenue                                  $ 178,879    $ 174,891 
Reconciliation of EBITDA
Operating Income                                 $ 17,649      $ 16,374
Depreciation and amortization                     5,192       5,226   
EBITDA                                             22,841        21,600
Acquisition-related expenses**                    -           625     
Adjusted EBITDA                                  $ 22,841     $ 22,225  

  *   Subcontractor and Other Direct Costs exclude Direct Labor and Fringe.
    **   Acquisition-related expenses include expenses related to closed

ICF International, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share amounts)

                                        March 31, 2013    December 31, 2012
Current Assets:
Cash                                    $ 4,465            $ 14,725
Contract receivables, net                 207,840            204,938
Prepaid expenses and other                6,653              7,608
Income tax receivable                    4,299            11,231      
Total current assets                     223,257          238,502     
Total property and equipment, net         28,516             28,860
Other assets:
Goodwill                                  410,482            410,583
Other intangible assets, net              18,622             21,016
Restricted cash                           2,013              2,015
Other assets                             9,608            8,745       
Total Assets                            $ 692,498         $ 709,721     
Current Liabilities:
Accounts payable                        $ 43,806           $ 44,665
Accrued salaries and benefits             36,924             42,264
Accrued expenses                          28,025             31,779
Deferred revenue                          22,471             22,333
Deferred income taxes                    3,561            5,790       
Total current liabilities                134,787          146,831     
Long-term liabilities:
Long-term debt                            86,711             105,000
Deferred rent                             11,201             10,599
Deferred income taxes                     10,890             9,081
Other                                    9,703            9,460       
Total Liabilities                         253,292            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;
20,340,916 and 20,171,613 shares
issued; and 19,665,328 and 19,559,409     20                 20
shares outstanding as of March 31,
2013, and December 31, 2012,
Additional paid-in capital                239,530            237,262
Retained earnings                         216,689            206,577
Treasury stock                            (15,547    )       (13,868     )
Accumulated other comprehensive loss     (1,486     )      (1,241      )
Total Stockholders’ Equity               439,206          428,750     
Total Liabilities and Stockholders’     $ 692,498         $ 709,721     

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

                                                   Three months ended
                                                   March 31,
                                                   2013            2012
Cash flows from operating activities
Net income                                         $ 10,112        $ 8,937
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income taxes                                (469    )       3,674
Loss on disposal of fixed assets                     11              67
Non-cash equity compensation                         2,001           1,772
Depreciation and amortization                        5,192           5,226
Amortization of debt issue costs                     119             120
Deferred rent                                        665             525
Changes in operating assets and liabilities,
net of the effect of acquisitions:
Contract receivables, net                            (2,752  )       (4,391  )
Prepaid expenses and other assets                    (102    )       1,678
Accounts payable                                     (587    )       (798    )
Accrued salaries and benefits                        (5,340  )       (5,313  )
Accrued expenses                                     (2,858  )       (1,315  )
Deferred revenue                                     138             (655    )
Income tax receivable and payable                    6,932           419
Other liabilities                                   245           1,057   
Net cash provided by operating activities           13,307        11,003  
Cash flows from investing activities
Capital expenditures                                 (3,621  )       (5,626  )
Payments for business acquisitions, net of          —             (8,556  )
cash received
Net cash used in investing activities               (3,621  )      (14,182 )
Cash flows from financing activities
Advances from working capital facilities             19,757          35,231
Payments on working capital facilities               (38,046 )       (28,085 )
Debt issue costs                                     —               (1,681  )
Proceeds from exercise of options                    40              23
Tax benefits of stock option exercises and           197             486
award vesting
Net payments for stockholder issuances and          (1,649  )      (790    )
Net cash provided by (used in) financing             (19,701 )       5,184
Effect of exchange rate on cash                     (245    )      (389    )
Increase (decrease) in cash                          (10,260 )       1,616
Cash, beginning of period                           14,725        4,097   
Cash, end of period                                $ 4,465        $ 5,713   
Supplemental disclosure of cash flow
Cash paid during the period for:
Interest                                           $ 754          $ 830     
Income taxes                                       $ 120          $ 1,468   

ICF International, Inc. and Subsidiaries
Supplemental Schedule
Revenue by market                                   Three Months Ended
                                                    March 31,
                                                    2013         2012
Energy, environment, and infrastructure             40   %       40  %
Health, social programs, and consumer/financial     47   %       46  %
Public safety and defense                           13   %       14  %
Total                                               100  %       100 %
Revenue by client                                   Three Months Ended
                                                    March 31,
                                                    2013         2012
U.S. federal government                             59   %       62  %
U.S. state and local government                     8    %       10  %
Non-U.S. Government                                 4    %       2   %
Government                                          71   %       74  %
Commercial                                          29   %       26  %
Total                                               100  %       100 %
Revenue by contract                                 Three Months Ended
                                                    March 31,
                                                    2013         2012
Time-and-materials                                  52   %       50  %
Fixed-price                                         30   %       29  %
Cost-based                                          18   %       21  %
Total                                               100  %       100 %


ICF International, Inc.
Douglas Beck, 1-703-934-3820
MBS Value Partners
Lynn Morgen/Betsy Brod, 1-212-750-5800
Press spacebar to pause and continue. Press esc to stop.