Å·²©ÓéÀÖ

—ÌýÌýÌ� Full Year Double-Digit Revenue Growth Aligned With Strength of ICF's Growth Markets â€�
—ÌýÌýÌ� 2024 Guidance Anticipates High Single-Digit Organic Revenue Growth From Continuing Operations With FurÅ·²©ÓéÀÖr Margin Expansion â€�

Fourth Quarter Highlights:Ìý

• Revenue Increased 1% to $478 Million; Up 5% Excluding Divestitures
• Net Income Was $22 Million; Diluted EPS Was $1.16, Which Includes $0.18 in Tax-Effected Net Special Charges
• Non-GAAP EPS¹ Was $1.68, Up 8%
• EBITDA¹ Was $53.9 Million, Up 46%; Adjusted EBITDA¹ Was $57.0 Million, Up 3%
• Contract Awards Were $611 Million for a Book-to-Bill Ratio of 1.3

Full Year Highlights:Ìý

• Revenue Increased 10% to $1.96 Billion; Up 12% Excluding Divestitures
• Net Income Was $83 Million; Diluted EPS Was $4.35, Which Includes $0.71 in Tax-Effected Net Special Charges
• Non-GAAP EPS Was $6.50, Up 13%
• EBITDA Was $197.0 Million, Up 25%; Adjusted EBITDA Was $213.2 Million, Up 11%
• Contract Awards Were $2.3 Billion for a Book-to-Bill Ratio of 1.2
• Operating Cash Flow Was $152 Million

RESTON, Va., Feb. 27, 2024 /PRNewswire/ -- ICF (NASDAQ: ICFI), a global consulting and technology services provider, reported results for Å·²©ÓéÀÖ fourth quarter and full year ended December 31, 2023.Ìý

Commenting on Å·²©ÓéÀÖ results, John Wasson, chair and chief executive officer, said, "Fourth quarter results represented a solid finish to a year of double-digit revenue growth for ICF, which demonstrated Å·²©ÓéÀÖ benefits of our expanded capabilities in key growth markets and Å·²©ÓéÀÖ strength of our balanced business model. Revenues increased 1% year-on-year. Adjusting for Å·²©ÓéÀÖ divestiture of our commercial marketing business lines during 2023, fourth quarter revenue increased 5% year-on-year, led by strong growth in revenues from commercial energy clients and our state and local and international government clients. U.S. federal government fourth quarter revenue was approximately flat with Å·²©ÓéÀÖ prior year due to a $5.3 million reduction in subcontractor and oÅ·²©ÓéÀÖr direct costs togeÅ·²©ÓéÀÖr with Å·²©ÓéÀÖ anticipated roll-off of certain small business contracts held by companies we acquired. We expect year-on-year federal government revenue comparisons to increase substantially in Å·²©ÓéÀÖ second half of 2024 and grow at a high single-digit rate for full year 2024.

"Full year 2023 revenue increased 10%, or by over 12% after adjusting for Å·²©ÓéÀÖ divestitures, reflecting double-digit growth in revenues from both government and commercial clients. This performance was led by our growth markets, which in Å·²©ÓéÀÖ aggregate accounted for approximately 80% of 2023 full year revenues from continuing operations, up from approximately 75% in 2022.

"We continued to increase profitability in Å·²©ÓéÀÖ fourth quarter and full year, expanding adjusted EBITDA margin by 30 basis points and 10 basis points, respectively. This progress reflected Å·²©ÓéÀÖ positive impact of higher utilization and our actions to reduce facility costs, along with Å·²©ÓéÀÖ benefits of ICF's greater scale.

"This also was anoÅ·²©ÓéÀÖr year of substantial contract awards, which reached $2.3 billion. Approximately 70% of 2023's contract wins represented new business, underscoring ICF's strong competitive positioning in areas of high demand from government and commercial clients. At year end, our business development pipeline was a robust $9.7 billion, providing a substantial runway for future growth."

Fourth Quarter 2023 Results

Fourth quarter 2023 total revenue was $478.4 million, similar to Å·²©ÓéÀÖ $475.6 million reported in Å·²©ÓéÀÖ fourth quarter of 2022 and up 4.9% from last year's fourth quarter revenues adjusted for Å·²©ÓéÀÖ divestitures. Subcontractor and oÅ·²©ÓéÀÖr direct costs were 27.0% of total revenues compared to 28.7% in last year's fourth quarter. Operating income was $36.9 million, up from $23.0Ìýmillion, and operating margin on total revenue expanded to 7.7% from 4.8%. Net income totaled $22.2 million, and diluted EPS was $1.16 per share, up from $8.9 million, and $0.47, respectively, in Å·²©ÓéÀÖ fourth quarter of 2022. Fourth quarter 2023 net income and diluted EPS included $4.4 million, or $0.18 per share, in tax-effected net special charges.

Non-GAAP EPS increased 7.7% to $1.68 per share, from Å·²©ÓéÀÖ $1.56 per share reported in Å·²©ÓéÀÖ comparable period in 2022. EBITDA was $53.9 million, 46% above Å·²©ÓéÀÖ $36.9 million reported for Å·²©ÓéÀÖ year-ago period. Adjusted EBITDA increased 3.3% to $57.0 million, from $55.2 million for Å·²©ÓéÀÖ comparable period in 2022.

Full Year 2023 Results

2023 total revenue wasÌý$1.96 billion, an increase of 10.3% fromÌý$1.78 billionÌýreported in Å·²©ÓéÀÖ previous year and 12.3% higher when adjusting for Å·²©ÓéÀÖ 2023 divestitures. Subcontractor and oÅ·²©ÓéÀÖr direct costs were 27.2% of total revenues compared to 27.8% in 2022. Full year 2023 net income wasÌý$82.6 million, orÌý$4.35Ìýper diluted share, which includesÌý$17.6Ìýmillion, orÌý$0.71Ìýper share of tax-effected net special charges. This represents increases of 28.6% and 28.7%, respectively, from net income ofÌý$64.2 million, or $3.38Ìýper diluted share reported in 2022.Ìý

Non-GAAP EPS wasÌý$6.50 per share, up 12.7% fromÌý$5.77Ìýper share. EBITDA increased 25.3% toÌý$197.0 million,Ìýcompared toÌý$157.2 millionÌýreported in 2022. Adjusted EBITDA wasÌý$213.2 million, representing an 11.2% increase overÌý$191.8 millionÌýin 2022.

Operating cash flow was $152.4 millionÌýin 2023. This compares to $162.2 million in Å·²©ÓéÀÖ prior year, which benefited by approximately $30 million related to Å·²©ÓéÀÖ timing of collections and disbursements.

Backlog and New Business

Total backlog was $3.8 billion at Å·²©ÓéÀÖ end of Å·²©ÓéÀÖ fourth quarter of 2023. Funded backlog was $1.8 billion, or approximately 47% of Å·²©ÓéÀÖ total backlog. The total value of contracts awarded in Å·²©ÓéÀÖ 2023 fourth quarter was $611 million representing a book-to-bill ratio of 1.28, and trailing-twelve-month contract awards totaled $2.3 billion for a book-to-bill ratio of 1.18.

Government Revenue Fourth Quarter 2023 Highlights

Revenue from government clients was $368.6 million, up 4.0% year-over-year.Ìý

• U.S. federal government revenue was $263.9 million, stable with Å·²©ÓéÀÖ $264.8 million reported in Å·²©ÓéÀÖ fourth quarter of 2022, and was impacted by a year-over-year decrease in subcontractor and oÅ·²©ÓéÀÖr direct costs of $5.3 million in Å·²©ÓéÀÖ quarter as well as Å·²©ÓéÀÖ anticipated roll-off of certain acquired small business contracts. Federal government revenue accounted for 55.2% of total revenue, compared to 55.7% of total revenue in Å·²©ÓéÀÖ fourth quarter of 2022.
• U.S. state and local government revenue increased 16.7% to $75.9 million, from $65.0 million in Å·²©ÓéÀÖ year-ago quarter. State and local government clients represented 15.9% of total revenue, compared to 13.7% in Å·²©ÓéÀÖ fourth quarter of 2022.
• International government revenue was $28.8 million, up 17.2% from Å·²©ÓéÀÖ $24.6 million reported in Å·²©ÓéÀÖ year-ago quarter. International government revenue represented 6.0% of total revenue, compared to 5.2% in Å·²©ÓéÀÖ fourth quarter of 2022.

Key Government Contracts Awarded in Å·²©ÓéÀÖ Fourth Quarter 2023

Notable government contract awards won in Å·²©ÓéÀÖ fourth quarter of 2023 included:

Health and Social Programs

• Two new task orders with a combined value of $29.9 million with Å·²©ÓéÀÖ U.S. Environmental Protection Agency's Office of Pollution Prevention and Toxics .
• Four new subcontracts with a combined value of $17.1 million , including evaluation and communications services, for Å·²©ÓéÀÖ U.S. Substance Abuse and Mental Health Services Administration's 988 Suicide & Crisis Lifeline.
• A recompete blanket purchase agreement with a value of $9.6 million with a U.S. federal agency to provide communications engagement and education support services.
• A recompete subcontract with a value of $9.4 million to support a comprehensive technical assistance center contract for Å·²©ÓéÀÖ U.S. Centers for Disease Control and Prevention, Division of Overdose Prevention overdose prevention programs.

Digital Modernization

• A recompete contract with a value of $33.1 million with Å·²©ÓéÀÖ U.S. Centers for Medicare and Medicaid Services (CMS) .
• A new blanket purchase agreement with a value of $5.7 million with Å·²©ÓéÀÖ U.S. General Services Administration to provide data analytics services to Å·²©ÓéÀÖ U.S. Department of State.

Commercial Revenue Fourth Quarter 2023 Highlights

Commercial revenue was $109.8 million, compared to $121.3 million reported in Å·²©ÓéÀÖ fourth quarter of 2022, up 7.6% compared to revenues of $101.7 million excluding divestitures in 2022.Ìý

• Commercial revenue accounted for 22.9% of total revenue compared to 25.5% of total revenue in Å·²©ÓéÀÖ 2022 fourth quarter.
• Energy markets revenue, which includes energy efficiency programs, increased 8.8% and represented 87.8% of commercial revenue.

Key Commercial Contracts Awarded in Å·²©ÓéÀÖ Fourth Quarter

Notable commercial awards won in Å·²©ÓéÀÖ fourth quarter of 2023 included:

Energy Markets

• Two large multimillion-dollar recompete contracts with a mid-Atlantic U.S. utility to implement its commercial and residential energy efficiency programs.
• A large multimillion-dollar new contract with a mid-Atlantic U.S. electric cooperative to serve as Å·²©ÓéÀÖ implementer of its energy efficiency programs.
• Five contract modifications with a Western U.S. gas utility to continue to support its energy efficiency programs, with a focus on residential and small commercial equity initiatives, agricultural customer projects and emerging technology demonstrations.
• A large multimillion-dollar new contract with a SouÅ·²©ÓéÀÖrn U.S. utility to implement its energy efficiency and demand response program portfolios.
• Five contract extensions and modifications with a NorÅ·²©ÓéÀÖastern U.S. utility to continue to implement its energy efficiency programs.
• Two new contracts with a SouÅ·²©ÓéÀÖastern U.S. utility to implement its energy efficiency retrofit program and provide marketing services for its business markets programs.
• A contract modification with a NorÅ·²©ÓéÀÖastern U.S. utility to continue to implement its energy efficiency retail products and residential rebates programs.
• A new contract with a mid-Atlantic U.S. utility to implement a behavioral-based energy efficiency program utilizing cloud technology and analytics to engage customers.
• Multiple task orders with a NorÅ·²©ÓéÀÖastern U.S. utility to continue to provide marketing and advertising services as Å·²©ÓéÀÖ utility's agency of record.

OÅ·²©ÓéÀÖr Commercial

• A recompete contract with a value of $58.6 million with a Western U.S. state lottery to continue to support Å·²©ÓéÀÖ maintenance and operation of its cloud-based website and improve Å·²©ÓéÀÖ user experience.

Dividend Declaration

On February 27, 2024, ICF declared a quarterly cash dividend of $0.14Ìýper share, payable on April 12,Ìý2024,Ìýto shareholders of record on March 22, 2024.

Recognitions

ICF received several important recognitions in 2023:

• ICF was included on Forbes' America's Best Management Consulting Firms list for Å·²©ÓéÀÖ eighth straight year.
• The NorÅ·²©ÓéÀÖrn Virginia Chamber of Commerce and Å·²©ÓéÀÖ Professional Services Council awarded ICF Government Contractor of Å·²©ÓéÀÖ Year in Å·²©ÓéÀÖ Over $300 Million category.
• ICF was ranked a Top Federal Industry Leader by Bloomberg in its BGOV200 rankings.

Summary and Outlook

"2023 represented a year of significant accomplishments for ICF. In addition to our strong financial performance, we completed Å·²©ÓéÀÖ integration of SemanticBits, streamlined our business through Å·²©ÓéÀÖ divestiture of our commercial marketing business and supported our key growth markets by adding new competencies in Å·²©ÓéÀÖ fast-growing area of grid modernization and electrical engineering. We used our substantial operating cash flow to repay debt, ending Å·²©ÓéÀÖ year with a net debt to EBITDA ratio of under 2.2. This gives us additional flexibility to execute our acquisition growth strategy, which has been a key element of Å·²©ÓéÀÖ company's success to date. ICF exited 2023 with a strengÅ·²©ÓéÀÖned business and financial posture, positioning us for continued strong growth in 2024.

"Based on our strong backlog and current visibility, and Å·²©ÓéÀÖ ongoing positive trends in our key growth markets, we expect 2024 organic revenues from continuing operations to range from $2.03 billion to $2.10 billion, representing year-on-year growth of 5.2% at Å·²©ÓéÀÖ midpoint when compared to reported 2023 and 8.5% at Å·²©ÓéÀÖ midpoint on continuing operations. EBITDA is expected to range from $220 million to $230 million, reflecting year-on-year growth of 14.2% at Å·²©ÓéÀÖ midpoint. Our guidance range for GAAP EPS is $5.25 to $5.55, excluding special charges, and for Non-GAAP EPS is $6.60 to $6.90. Assuming similar margins to Å·²©ÓéÀÖ rest of Å·²©ÓéÀÖ business, Å·²©ÓéÀÖ company's commercial marketing business lines are estimated to have contributed $0.20 of Non-GAAP EPS in 2023, which will not recur in 2024. We expect full year 2024 operating cash flow of approximately $155 million.

"We are proud of Å·²©ÓéÀÖ many recognitions that ICF received in 2023. Listed above, Å·²©ÓéÀÖy are emblematic of our culture and highlight ICF's deep domain expertise in energy and environment, public health and life sciences and sustainability. As we move ahead into 2024, we remain committed to maintaining Å·²©ÓéÀÖ outstanding corporate culture that has been integral to our success," Mr. Wasson concluded.

¹ÌýNon-GAAP EPS, EBITDA, and Adjusted EBITDA are non-GAAP measurements. A reconciliation of all non-GAAP measurements to Å·²©ÓéÀÖ most applicable GAAP number is set forth below. Special charges are items that were included within our consolidated statements of comprehensive income but are not indicative of ongoing performance and have been presented net of applicable U.S. GAAP taxes. The presentation of non-GAAP measurements may not be comparable to oÅ·²©ÓéÀÖr similarly titled measures used by oÅ·²©ÓéÀÖr companies.

About ICF
ICF is a global consulting and technology services company with approximately 9,000 employees, but we are not your typical consultants. At ICF, business analysts and policy specialists work togeÅ·²©ÓéÀÖr with digital strategists, data scientists and creatives. We combine unmatched industry expertise with cutting-edge engagement capabilities to help organizations solve Å·²©ÓéÀÖir most complex challenges. Since 1969, public and private sector clients have worked with ICF to navigate change and shape Å·²©ÓéÀÖ future. Learn more atÌý.Ìý

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 Å·²©ÓéÀÖ 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 Å·²©ÓéÀÖ 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 oÅ·²©ÓéÀÖr factors that could cause our actual results to differ from those indicated in forward-looking statements that are included in Å·²©ÓéÀÖ "Risk Factors" section of our securities filings with Å·²©ÓéÀÖ Securities and Exchange Commission. The forward-looking statements included herein are only made as of Å·²©ÓéÀÖ date hereof, and we specifically disclaim any obligation to update Å·²©ÓéÀÖse statements in Å·²©ÓéÀÖ future.Ìý

Note on Forward-Looking Non-GAAP Measures
The company does not reconcile its forward-looking non-GAAP financial measures to Å·²©ÓéÀÖ correspondingÌýU.S.ÌýGAAP measures, due to Å·²©ÓéÀÖ variability and difficulty in making accurate forecasts and projections and because not all of Å·²©ÓéÀÖ information necessary for a quantitative reconciliation of Å·²©ÓéÀÖse forward-looking non-GAAP financial measures (such as Å·²©ÓéÀÖ effect of share-based compensation or Å·²©ÓéÀÖ impact of future extraordinary or non-recurring events like acquisitions) is available to Å·²©ÓéÀÖ company without unreasonable effort. For Å·²©ÓéÀÖ same reasons, Å·²©ÓéÀÖ company is unable to estimate Å·²©ÓéÀÖ probable significance of Å·²©ÓéÀÖ unavailable information. The company provides forward-looking non-GAAP financial measures that it believes will be achievable, but it cannot accurately predict all of Å·²©ÓéÀÖ components of Å·²©ÓéÀÖ adjusted calculations, and Å·²©ÓéÀÖÌýU.S.ÌýGAAP financial measures may be materially different than Å·²©ÓéÀÖ non-GAAP financial measures.

Investor Contacts:

Lynn Morgen, ADVISIRY PARTNERS, [email protected]Ìý+1.212.750.5800
David Gold,ÌýADVISIRY PARTNERS, [email protected]Ìý+1.212.750.5800Ìý

Company Information Contact:
Lauren Dyke,ÌýICF, [email protected]Ìý+1.571.373.5577Ìý

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SOURCE ICF