ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting
services and technology solutions to government and commercial clients,
reported results for the fourth quarter and full year ended December 31,
Fourth Quarter/Full Year 2012 Results
For the fourth quarter, revenue was $232.0 million, an 8.4 percent
increase over the $213.9 million reported in the 2011 fourth quarter.
Service revenue, total revenue less subcontractor and other direct
costs, increased 10.6 percent to $172.7 million. EBITDA increased 9.5
percent to $20.8 million, and EBITDA margin was 9.0 percent, inclusive
of fourth quarter changes to employee benefit plans and the treatment of
certain compensation expenses. The net impact of these two items was a
reduction of EBITDA by $1.1 million. Operating income was $14.4 million,
a 3.7 percent increase over the $13.9 million reported in the 2011
fourth quarter. Net income was $9.2 million, representing a 4.3 percent
increase over net income of $8.8 million in last year's fourth quarter.
Diluted earnings per share were $0.47, reflecting a 7 percent increase
over the $0.44 per diluted share earned in the comparable 2011 period.
For full year 2012, revenue was $937.1 million, up 11.5 percent over the
$840.8 million reported for full year 2011. Service revenue increased
13.8 percent to $705.3 million. EBITDA increased 13.6 percent to $90.1
million; and EBITDA margin was 9.6 percent, up from 9.4 percent in 2011.
Operating income increased 11.3 percent to $65.6 million, net income was
up 9.2 percent to $38.1 million, and earnings per diluted share were
$1.91, compared to $1.75; an increase of 9.1 percent.
Commenting on ICF's results, Chairman and Chief Executive Officer
Sudhakar Kesavan said, "Consistent with our expectations, growth
continued to be driven by our commercial business where fourth quarter
revenues increased 24.6 percent as compared to the fourth quarter of
2011 and accounted for 29 percent of total revenues for the period. For
the full year of 2012, commercial revenues increased 29.4 percent as
compared to 2011 and accounted for 27 percent of our annual revenues as
compared to 23 percent in 2011. Within this client category, energy
efficiency work for 2012 increased by 16.8 percent above 2011 and our
commercial aviation consulting business increased by 46.6 percent in
2012 as compared to 2011. The strong momentum of our commercial work
continued to mitigate the impact of softness in the U.S. Federal
Government space, where fourth quarter revenues were flat during 2012
with the comparable 2011 period and revenues for the full year were up
2.0 percent over 2011."
"For full year 2012, we experienced growth across all of our key
markets. Health, Social Programs, and Consumer/Financial increased 20.1
percent over 2011 levels, reflecting the positive impact of our
Ironworks acquisition, which was completed in December 2011. Energy,
Environment, and Infrastructure were up by 6.3 percent over 2011 levels
and Public Safety and Defense increased 2.3 percent."
"Organic1 revenue growth rates for the fourth quarter
continued to be impacted by a reduction, as a percentage of revenue, in
subcontractor and other direct costs. Consequently, organic revenue
growth for the fourth quarter of 2012 was negative 2.4 percent. Organic
growth for full year 2012 was a positive 0.8 percent."
Commercial Business Fourth Quarter Highlights
Revenues from commercial clients increased 24.6 percent in the 2012
fourth quarter to $67.5 million and represented 29 percent of total
revenue, up from 25 percent in last year's fourth quarter.
Commercial sales awards were $67.3 million for the 2012 fourth quarter
and $291.2 million for full year 2012, representing 40.9 percent and
30.3 percent respectively of total sales for the periods. This
illustrates the increasing importance of commercial work to ICF's
Key Commercial Sales Highlights for the Fourth Quarter
ICF was awarded nearly 400 commercial projects globally in the fourth
quarter. Primary areas of awards included energy efficiency program
support, airline and airport management consulting, interactive data
applications, commercial health consulting for payers, climate change
and environmental management programs, and energy market and portfolio
assessments for utilities.
Among the most significant individual wins were:
Government Business Fourth Quarter Highlights
U.S. Federal Government revenues of $135.2 million were flat in the 2012
fourth quarter as compared to the 2011 fourth quarter. Federal
government business represented 58 percent of total revenues compared to
63 percent in last year's fourth quarter.
U.S. state and local government revenues declined 11.1 percent in the
2012 fourth quarter as compared to the 2011 fourth quarter, due
primarily to a temporary slowdown of a very large infrastructure project
that has entered a public comment period. U.S. state and local
government revenues represented 9 percent of total revenue in the 2012
Revenues from government clients outside the U.S. more than tripled to
$9.5 million in the fourth quarter 2012 from the $2.6 million in last
year's fourth quarter, primarily because of the acquisition of GHK,
which was completed on February 29, 2012.
Key Government Contracts Won in the Fourth Quarter
ICF was awarded more than 100 new U.S. Federal Government contracts and
task orders in the fourth quarter. Among the largest were:
Backlog and New Business Awards
Backlog was $1.5 billion at the end of 2012. Funded backlog was $695
million, or 46 percent of the total. The total value of contracts
awarded in the fourth quarter of 2012 was $165 million.
Summary and Outlook
"In 2012, we executed effectively on our strategy to diversify our
revenue mix by client category and increase revenues in our key markets.
We expect to continue our strategy in 2013 as commercial business
becomes an increasingly greater contributor to our total revenues. In
addition to benefitting ICF during the current period of difficult
conditions in the federal government arena, we believe this strategy
will put us in an excellent position to accelerate growth in a more
favorable federal industry environment.
"Based on our current portfolio of business, we expect full year 2013
revenues of $935 million to $975 million. EBITDA margin is expected to
range from 9.5 percent to 10.5 percent, and we are guiding to earnings
per diluted share of $2.00 to $2.10, based on approximately 20 million
diluted weighted average number of shares outstanding and an effective
tax rate of 39 percent. We also estimate that our operating cash flow
for 2013 will be in excess of $70 million," Mr. Kesavan noted.
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 ICF's current expectations about its future results, plans,
operations and prospects and involve certain risks, including those
related to the government contracting industry generally; ICF's
particular business, including its dependence on contracts with U.S.
federal government agencies; and its ability to acquire and successfully
integrate businesses. These and other factors that could cause ICF's
actual results to differ from those indicated in forward-looking
statements are included in the "Risk Factors" section of ICF's
securities filings with the Securities and Exchange Commission. The
forward-looking statements included herein are only made as of the date
hereof, and ICF specifically disclaims any obligation to update these
statements in the future.
1Organic revenue excludes revenue from acquisitions closed
during the previous four quarters.
Consolidated Statements of Comprehensive Income
Reconciliation of Service Revenue
Reconciliation of EBITDA
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