ICF International Reports Third Quarter 2013 Results

  ICF International Reports Third Quarter 2013 Results

  *Total Revenue of $244 Million; Increased 2.6 Percent
  *Commercial Growth Driven by 18 Percent Increase in Energy Efficiency
    Program Revenues
  *Federal Government Revenues Remained Stable
  *Net Income Increased 16 Percent to $11.1 Million; Diluted EPS Was $0.55
  *Contract Awards Were $480 Million, Up 33 Percent; Book-to-Bill Ratio Was
    1.97
  *Nine-Month Contract Awards Were $943 Million, Up 18 Percent; Book-to-Bill
    Ratio Was 1.31
  *Nine-Month Cash Flow From Operations Was $47 Million

Business Wire

FAIRFAX, Va. -- November 5, 2013

ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting
services and technology solutions to government and commercial clients,
reported results for the third quarter and nine months ended September 30,
2013.

Third Quarter/Nine-Month Results and Highlights

For the third quarter, revenue was $244.1 million, a 2.6 percent increase over
the $237.9 million reported in the 2012 third quarter. Service revenue, total
revenue less subcontractor and other direct costs, increased 2.2 percent to
$180.1 million. Operating income was $17.2 million, 0.9 percent higher than
the $17.0 million reported in last year’s third quarter. Net income increased
16.3 percent to $11.1 million, or $0.55 per diluted share, from the $9.6
million, or $0.48 per diluted share earned in the comparable 2012 period.

For the first nine months of 2013, revenue was $719.5 million, a 2.0 percent
increase over the $705.2 million reported in the same period in 2012. Service
revenue was up 1.1 percent to $538.4 million. Operating income increased 0.9
percent to $52.1 million. Net income was $31.6 million or $1.57 per diluted
share, up 9.4 percent from the $28.9 million or $1.44 per diluted share earned
in the first nine months of 2012.

Commenting on ICF’s results, Chairman and Chief Executive Officer Sudhakar
Kesavan said, “This is the 11th consecutive quarter in which our commercial
revenue growth significantly outpaced that of our federal business. Commercial
revenues increased 7.7 percent in the third quarter, driven primarily by an 18
percent growth in revenues from energy efficiency programs. Additionally, this
quarter’s revenue growth benefited from the continued strength of our
international government business. In aggregate, our commercial and
international government businesses accounted for 32 percent of ICF’s 2013
nine-month revenues, which were up from 29 percent in the comparable 2012
period.”

“Our federal government revenues remained stable in the third quarter despite
continued headwinds, thanks to our large and diversified federal agency client
base and our domain-led approach to advisory and implementation work. We
achieved mid-single-digit growth across our two major markets in the third
quarter. Energy, Environment, & Infrastructure increased 5.3 percent, and
Health, Social Programs, & Consumer/Financial was up 4.1 percent, together
accounting for more than 88 percent of total revenues for the period.”

“Operating income increased modestly in this period of seasonally higher bid
and proposal activity, as we continued to make investments to expand our
business development activity. The benefit of ICF’s ongoing investments in
this area can be seen by the 33 percent and 18 percent sales gains ICF posted
for the third quarter and first nine months of 2013, respectively. Net income
increased at a rate greater than revenue, reflecting lower amortization and
interest costs, and a lower tax rate,” Mr. Kesavan noted.

Commercial Business Third Quarter Highlights

Commercial revenues increased 7.7 percent in the 2013 third quarter to $65.6
million and represented 27 percent of total revenue. Excluding a large
transmission infrastructure project that was in a slower phase of construction
this period, commercial revenues would have increased 12.8 percent. Commercial
business growth was driven by an 18.2 percent increase in energy efficiency
program revenues, which accounted for 38 percent of commercial revenues in the
third quarter; higher digital interactive revenues across a number of markets
including commercial health; and a pickup in energy market consulting work.
Commercial contract awards were $40.3 million for the 2013 third quarter and
$198.2 million for the first nine months of 2013.

Key Commercial Sales Highlights for the Third Quarter

ICF was awarded more than 350 commercial projects globally in the third
quarter. Individual commercial sales in excess of $1 million included web and
interactive data development for a major retail chain, two energy efficiency
contracts for an East Coast and a West Coast utility, and a mobile
applications development contract for an entertainment company. Primary areas
of additional awards included management consulting and interactive data
applications for health insurers, energy infrastructure and market studies for
utilities and industry associations, airline and airport management
consulting, environmental program and compliance management, and greenhouse
gas inventories for global energy providers.

Government Business Third Quarter Highlights

  *U.S. federal government revenues declined 0.7 percent in the 2013 third
    quarter and accounted for 58 percent of total revenue, compared to 60
    percent in last year’s third quarter. Growth areas included global health
    survey research, energy, education, and veterans affairs. .
  *U.S. state and local government revenues declined 1.8 percent and
    accounted for 10 percent of total revenue.
  *International government revenues increased 33.8 percent and accounted for
    5 percent of total revenue, primarily reflecting recent contract wins with
    departments in the U.K. government, European Commission, and Asian
    Development Bank.

Key Government Contracts Won in the Third Quarter

ICF was awarded more than 175 new U.S. federal government contract and task
order awards and hundreds of additional awards from other domestic (state and
local) and international governments. The largest awards included:

  *Global Health Survey Research: A $189 million contract from the U.S.
    Agency for International Development (USAID) Bureau for Global Health to
    collect, analyze, and present population, health, and nutrition data for
    more than 75 countries.
  *Environmental Technical Support: Two contracts valued in the aggregate at
    up to $31 million with the U.S. Environmental Protection Agency (EPA) to
    provide technical, analytical, and quality assurance support in two
    regions of EPA’s Environmental Services Assistance Team program.
  *Homeland Security Identity Management: A $14.6 million award from the EPA
    for Homeland Security Presidential Directive 12 (HSPD-12) and Identity,
    Credential, and Access Management support.
  *Public Health: Two contracts totaling approximately $10 million with the
    Centers for Disease Control and Prevention (CDC) for data infrastructure
    enhancement, and collection, preparation, and reporting of data on cancer
    and other chronic diseases.
  *Public Health: An $8.2 million contract with the CDC to provide IT
    enhancement and data management services related to toxicological
    research.
  *Public Health: An $8 million contract with the CDC to conduct the National
    Adult Tobacco Survey.

Additional individual government awards of approximately $5 million or greater
included cybersecurity support to the U.S. Department of Defense, data
collection and analysis for a federal agency supporting social science
research, community development program support for a federal agency,
additional disaster recovery analytical and program support for a state
affected by superstorm Sandy, IT systems support to a state judicial agency,
and urbanization and infrastructure analysis and evaluation support for a
European aid agency.

Backlog and New Business Awards

Backlog was $1.7 billion at the end of the 2013 third quarter, up from $1.6
billion at the end of the third quarter of 2012. Funded backlog was $748
million for the third quarter of 2013 as compared to $766 million for the
third quarter of 2012.

The total value of contracts awarded in the third quarter of 2013 was $480
million and was $943 million for the first nine months of 2013, resulting in a
third quarter book-to-bill ratio of 1.97 and a year-to-date book-to-bill ratio
of 1.31.

Summary and Outlook

“ICF’s results continue to benefit from the strong performance of our business
with both commercial and international government clients, which has enabled
us to report year-over-year growth  in spite of softness in the federal
government arena. Fourth quarter 2013 results, however, will reflect the
impact of the 16-day U.S. federal government shutdown. While a portion of the
lost business may be recovered later this year and/or early next year, we are
lowering our guidance for full year 2013 revenues to $945 to $960 million and
per share earnings of $1.95 to $2.00. Cash flow from operations is expected to
exceed $65 million.”

“Expectations for diluted earnings per share are based upon an effective tax
rate of no more than 38 percent and 20 million weighted average shares
outstanding for full year 2013.”

“Our strong year-to-date bookings position ICF for continued growth in 2014.
Based on our current visibility and portfolio, we expect to enter 2014 with a
total contract backlog at levels higher than the beginning of 2013. At the
same time, we anticipate continued strong growth from our commercial and
international government businesses as a result of the scheduled ramp-up of
existing projects, a robust pipeline of energy efficiency programs, and the
favorable demand outlook for our major markets. Acquisitions remain a key part
of our growth strategy, and we continue to explore opportunities to expand our
capabilities through accretive transactions," 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          Nine months ended
                           September 30,               September 30,
                           2013          2012          2013          2012
                           (Unaudited)                 (Unaudited)
                                                                     
Gross Revenue           $  244,055     $ 237,864     $ 719,544     $ 705,154
Direct Costs               154,024       148,267       448,370       436,316
Operating costs and
expenses:
Indirect and selling       67,647        66,356        203,513       199,613
expenses
Depreciation and           2,771         2,766         8,352         7,058
amortization
Amortization of            2,459        3,480        7,211        10,530  
intangible assets
Total operating            72,877       72,602       219,076      217,201 
costs and expenses
Operating Income           17,154        16,995        52,098        51,637
Interest expense           (476    )     (924    )     (1,870  )     (3,165  )
Other income               140          (116    )     209          (379    )
(expense)
Income before income       16,818        15,955        50,437        48,093
taxes
Provision for income       5,687        6,382        18,863       19,237  
taxes
Net income              $  11,131     $ 9,573      $ 31,574     $ 28,856  
                                                                     
Earnings per Share:
Basic                   $  0.56       $ 0.49       $ 1.60       $ 1.46    
Diluted                 $  0.55       $ 0.48       $ 1.57       $ 1.44    
                                                                     
Weighted-average
Shares:
Basic                      19,802       19,610       19,685       19,717  
Diluted                    20,165       19,770       20,088       20,004  
                                                                     
Other comprehensive
income:
Foreign currency
translation                445           84            3             (535    )
adjustments
Comprehensive income    $  11,576     $ 9,657      $ 31,577     $ 28,321  
                                                                     
                                                                     
                                                                     
Reconciliation of
non-GAAP financial
measures:
                                                                     
Reconciliation of
Service Revenue
Revenue                 $  244,055     $ 237,864     $ 719,544     $ 705,154
Subcontractor and          63,992       61,634       181,106      172,589 
Other Direct Costs*
Service Revenue         $  180,063    $ 176,230    $ 538,438    $ 532,565 
                                                                     
Reconciliation of
EBITDA
Operating Income        $  17,154      $ 16,995      $ 52,098      $ 51,637
Depreciation and           5,230        6,246        15,563       17,588  
amortization
EBITDA                     22,384        23,241        67,661        69,225
Acquisition-related        106          51           367          676     
expenses**
Adjusted EBITDA         $  22,490     $ 23,292     $ 68,028     $ 69,901  
                                                                     
* 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)
                                                             
                                      September 30, 2013     December 31, 2012
                                      (Unaudited)
                                                             
Current Assets:
Cash                                $ 6,006                $ 14,725
Contract receivables, net             216,439                204,938
Prepaid expenses and other            10,236                 7,608
Income tax receivable                 2,719                 11,231      
Total current assets                  235,400               238,502     
Total property and equipment, net     27,732                 28,860
Other assets:
Goodwill                              421,480                410,583
Other intangible assets, net          14,738                 21,016
Restricted cash                       2,042                  2,015
Other assets                          10,887                8,745       
Total Assets                        $ 712,279             $ 709,721     
                                                             
Current Liabilities:
Accounts payable                    $ 42,104               $ 44,665
Accrued salaries and benefits         39,176                 42,264
Accrued expenses                      34,359                 31,779
Deferred revenue                      19,069                 22,333
Deferred income taxes                 5,237                 5,790       
Total current liabilities             139,945               146,831     
Long-term liabilities:
Long-term debt                        64,064                 105,000
Deferred rent                         12,286                 10,599
Deferred income taxes                 10,114                 9,081
Other                                 18,744                9,460       
Total Liabilities                     245,153                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;
20,575,953 and 20,171,613 shares
issued; and 19,869,548 and            21                     20
19,559,409 shares outstanding as
of September 30, 2013, and
December 31, 2012, respectively
Additional paid-in capital            246,680                237,262
Retained earnings                     238,151                206,577
Treasury stock                        (16,488      )         (13,868     )
Accumulated other comprehensive       (1,238       )         (1,241      )
loss
Total Stockholders’ Equity            467,126               428,750     
Total Liabilities and               $ 712,279             $ 709,721     
Stockholders’ Equity

                                                               
ICF International, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
                                                                    
                                                     Nine months ended
                                                     September 30,
                                                     2013           2012
                                                     (Unaudited)
Cash flows from operating activities
Net income                                         $ 31,574       $ 28,856
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred income taxes                                432            2,915
Loss on disposal of fixed assets                     1              102
Non-cash equity compensation                         6,565          6,419
Depreciation and amortization                        15,563         17,588
Amortization of debt issue costs                     357            443
Deferred rent                                        1,898          2,745
Changes in operating assets and liabilities, net
of the effect of acquisitions:
Contract receivables, net                            (10,199  )     13,045
Prepaid expenses and other assets                    (5,337   )     (765     )
Accounts payable                                     (1,694   )     462
Accrued salaries and benefits                        (3,119   )     (115     )
Accrued expenses                                     4,665          2,930
Deferred revenue                                     (3,621   )     (6,151   )
Income tax receivable and payable                    8,512          (910     )
Restricted cash                                      (27      )     (614     )
Other liabilities                                    1,256         (95      )
Net cash provided by operating activities            46,826        66,855   
Cash flows from investing activities
Capital expenditures for property and equipment      (10,082  )     (10,404  )
and capitalized software
Payments for business acquisitions, net of cash      (4,763   )     (10,749  )
received
Net cash used in investing activities                (14,845  )     (21,153  )
                                                                    
Cash flows from financing activities
Advances from working capital facilities             90,790         150,516
Payments on working capital facilities               (131,726 )     (180,516 )
Debt issue costs                                     —              (1,957   )
Proceeds from exercise of options                    2,360          67
Tax benefits of stock option exercises and award     338            649
vesting
Net payments for stockholder issuances and           (2,465   )     (11,961  )
buybacks
Net cash used in financing activities                (40,703  )     (43,202  )
Effect of exchange rate on cash                      3             (535     )
Increase (decrease) in cash                          (8,719   )     1,965
Cash, beginning of period                            14,725        4,097    
Cash, end of period                                $ 6,006       $ 6,062    
                                                                    
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest                                           $ 1,881       $ 2,593    
Income taxes                                       $ 9,764       $ 16,706   
                                                                    
Non-cash investing and financing transactions:
Fair value of contingent consideration payable     $ 8,028       $ —        
in connection with acquisition

                                                                  
ICF International, Inc. and Subsidiaries
Supplemental Schedule
                                                                        
                                                                        
Revenue by market                       Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                        2013       2012      2013       2012
                                                                        
Energy, environment, and                40   %     39   %    39   %     39   %
infrastructure
Health, social programs, and            48   %     48   %    48   %     47   %
consumer/financial
Public safety and defense               12   %     13   %    13   %     14   %
                                                                     
Total                                   100  %     100  %    100  %     100  %
                                                                        
                                                                        
                                                                        
Revenue by client                       Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                        2013       2012      2013       2012
                                                                        
U.S. federal government                 58   %     60   %    59   %     61   %
U.S. state and local government         10   %     10   %    9    %     10   %
Non-U.S. government                     5    %     4    %    4    %     3    %
Government                              73   %     74   %    72   %     74   %
                                                                        
Commercial                              27   %     26   %    28   %     26   %
                                                                     
Total                                   100  %     100  %    100  %     100  %
                                                                        
                                                                        
                                                                        
Revenue by contract                     Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                        2013       2012      2013       2012
                                                                        
Time-and-materials                      52   %     48   %    52   %     49   %
Fixed-price                             27   %     30   %    28   %     30   %
Cost-based                              21   %     22   %    20   %     21   %
                                                                     
Total                                   100  %     100  %    100  %     100  %

Contact:

ICF International
Douglas Beck, 1-703-934-3820
or
MBS Value Partners
Lynn Morgen/Betsy Brod, 1-212-750-5800