Core Insights - ICF International (ICFI) reported a revenue of $476.16 million for the quarter ended June 2025, marking a year-over-year decline of 7% and an EPS of $1.66 compared to $1.69 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $478.29 million, resulting in a surprise of -0.45%, while the EPS exceeded the consensus estimate of $1.63 by 1.84% [1] Revenue Breakdown - Revenue from the US Federal government was $204.68 million, slightly above the average estimate of $202.35 million from two analysts [4] - Revenue from US State & Local government was $85.65 million, below the average estimate of $91.4 million from two analysts [4] - Revenue from the Commercial sector was $156.57 million, exceeding the average estimate of $139.96 million from two analysts [4] - Total revenue from Government clients was $319.59 million, compared to the estimated $328.6 million from two analysts [4] - Revenue from International government clients was $29.26 million, below the average estimate of $34.85 million from two analysts [4] Stock Performance - ICF shares have returned -5.1% over the past month, contrasting with the Zacks S&P 500 composite's +2.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents ICF International, Inc.'s unaudited consolidated financial statements for periods ended June 30, 2025, covering balance sheets, income, equity, and cash flows [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Details the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $6,981 | $4,960 | | Goodwill | $1,253,025 | $1,248,855 | | **Total Assets** | **$2,073,991** | **$2,066,353** | | **Liabilities & Equity** | | | | Long-term debt | $462,319 | $411,743 | | **Total Liabilities** | **$1,073,599** | **$1,083,894** | | **Total Stockholders' Equity** | **$1,000,392** | **$982,459** | - Total assets increased slightly to **$2.07 billion**, primarily driven by an increase in contract assets and goodwill, while total liabilities decreased slightly. Long-term debt increased by approximately **$50.6 million** since year-end 2024[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Outlines the company's financial performance, including revenue, operating income, net income, and diluted EPS for Q2 and YTD 2025 and 2024 Key Income Statement Data (Unaudited) | (in thousands, except per share) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $476,155 | $512,029 | $963,773 | $1,006,465 | | Operating Income | $40,011 | $42,407 | $78,401 | $83,351 | | Net Income | $23,661 | $25,611 | $50,512 | $52,928 | | Diluted EPS | $1.28 | $1.36 | $2.72 | $2.80 | - Revenue and net income declined in both the second quarter and first half of 2025 compared to the same periods in 2024. Diluted EPS also decreased year-over-year for both periods[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities for the first six months of 2025 and 2024 Cash Flow Summary (Unaudited) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $18,923 | $50,635 | | Net Cash Used in Investing Activities | ($8,799) | ($8,677) | | Net Cash Used in Financing Activities | ($3,544) | ($46,508) | - Net cash from operating activities significantly decreased to **$18.9 million** in the first six months of 2025 from **$50.6 million** in the prior-year period. Net cash used in financing activities decreased substantially, primarily due to changes in borrowings and repayments on working capital facilities[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the consolidated financial statements, including accounting policies and significant transactions - The Company recognized **$11.6 million** in net income during the first six months of 2025 due to changes in estimates for fixed-price contracts accounted for under the percentage-of-completion method[25](index=25&type=chunk) - On December 31, 2024, the Company acquired Applied Energy Group, Inc. (AEG) for **$59.9 million** in cash. The purchase consideration included **$30.6 million** allocated to goodwill and **$25.4 million** to intangible assets like customer relationships and developed technology[59](index=59&type=chunk)[60](index=60&type=chunk) - Unfulfilled performance obligations (UPO) decreased from **$1.3 billion** at year-end 2024 to **$0.8 billion** as of June 30, 2025, reflecting a **$0.3 billion** impact from termination-for-convenience notifications related to executive orders[45](index=45&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance for Q2 and YTD June 30, 2025, highlighting revenue decline from terminated government contracts and future strategies [Overview and Outlook](index=20&type=section&id=Overview%20and%20Outlook) Management's perspective on current performance, strategic direction, and future expectations, including impacts from government contract terminations - The company received termination-for-convenience notices during the first six months of 2025 pursuant to executive orders by the Trump Administration, resulting in a **$418.2 million** reduction in backlog. These terminated contracts represented approximately **6.4%** of total fiscal year 2024 revenue[81](index=81&type=chunk) - Management believes long-term demand for its services will grow, particularly in areas like clean energy, health promotion, disaster relief, and homeland security[77](index=77&type=chunk) - Future strategy focuses on enhancing client relationships, seeking larger engagements, and pursuing strategic acquisitions to build scale and expertise[79](index=79&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Analyzes financial performance for Q2 and YTD periods, detailing revenue, operating income, and net income changes Q2 2025 vs Q2 2024 Performance | (in thousands) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $476,155 | $512,029 | ($35,874) | (7.0%) | | Operating Income | $40,011 | $42,407 | ($2,396) | (5.7%) | | Net Income | $23,661 | $25,611 | ($1,950) | (7.6%) | - The Q2 revenue decrease was primarily driven by a **$68.8 million** reduction from U.S. federal government clients due to terminated contracts, partially offset by a **$31.5 million** increase from commercial clients[85](index=85&type=chunk) YTD 2025 vs YTD 2024 Performance | (in thousands) | YTD 2025 | YTD 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $963,773 | $1,006,465 | ($42,692) | (4.2%) | | Operating Income | $78,401 | $83,351 | ($4,950) | (5.9%) | | Net Income | $50,512 | $52,928 | ($2,416) | (4.6%) | - The YTD revenue decrease was driven by a **$103.4 million** reduction from U.S. federal government clients, partially offset by a **$57.5 million** increase from commercial clients[96](index=96&type=chunk) [Non-GAAP Measures](index=24&type=section&id=Non-GAAP%20Measures) Provides reconciliations of non-GAAP financial measures, such as Adjusted EBITDA and Non-GAAP Diluted EPS, to their GAAP equivalents Reconciliation of Net Income to Adjusted EBITDA | (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $23,661 | $25,611 | $50,512 | $52,928 | | EBITDA | $53,074 | $55,643 | $105,207 | $112,082 | | Adjusted EBITDA | $52,875 | $56,013 | $108,073 | $111,168 | Reconciliation of U.S. GAAP Diluted EPS to Non-GAAP Diluted EPS | | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | U.S. GAAP Diluted EPS | $1.28 | $1.36 | $2.72 | $2.80 | | Non-GAAP Diluted EPS | $1.66 | $1.69 | $3.61 | $3.46 | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet financial obligations and fund operations, detailing cash flows, debt compliance, and available credit - As of June 30, 2025, the company was in compliance with its debt covenants and had **$488.3 million** available under its Credit Facility[117](index=117&type=chunk) - The company paid quarterly cash dividends of **$0.14 per share**, totaling **$5.2 million** in payments during the first six months of 2025[121](index=121&type=chunk) - Net cash provided by operating activities decreased to **$18.9 million** for the first six months of 2025, compared to **$50.6 million** for the same period in 2024[122](index=122&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States no material changes in market risk disclosures since the last Annual Report on Form 10-K - There have been no material changes in the disclosures regarding market risk from those presented in the company's Annual Report[124](index=124&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no significant internal control changes - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[125](index=125&type=chunk) - No significant changes were made to internal controls over financial reporting during the quarter[125](index=125&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters but does not expect a material adverse effect on its financial position - The company does not expect current legal proceedings to have a material adverse effect on its financial results[128](index=128&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) Indicates no material changes to risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes in the risk factors from those disclosed in the company's Annual Report[129](index=129&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Details share repurchase activity for Q2 2025, including program repurchases and shares for employee tax obligations - During Q2 2025, the company repurchased **31,339 shares** for an aggregate price of **$2.5 million** under its share repurchase program[131](index=131&type=chunk) - As of June 30, 2025, **$111.7 million** of repurchase authority remained available under the program[131](index=131&type=chunk) Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30 | 15,180 | $79.28 | | May 1 - May 31 | 16,193 | $79.69 | | June 1 - June 30 | — | $— | | **Total** | **31,373** | **$79.49** | [Other Information](index=28&type=section&id=Item%205.%20Other%20Information) Discloses COO James Morgan modified a Rule 10b5-1(c) trading plan to sell up to 10,000 shares of common stock - On May 27, 2025, Chief Operating Officer James Morgan modified a Rule 10b5-1(c) trading plan to sell up to **10,000 shares** of common stock. Trading under the modified plan can begin no earlier than September 24, 2025[137](index=137&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including officer certifications and financial data formatted in iXBRL - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[138](index=138&type=chunk)

Core Viewpoint - ICF International reported quarterly earnings of $1.66 per share, exceeding the Zacks Consensus Estimate of $1.63 per share, but down from $1.69 per share a year ago, indicating a slight decline in year-over-year earnings performance [1][2] Financial Performance - The company achieved revenues of $476.16 million for the quarter ended June 2025, which fell short of the Zacks Consensus Estimate by 0.45% and decreased from $512.03 million in the same quarter last year [2] - Over the last four quarters, ICF has surpassed consensus EPS estimates four times, but has only topped consensus revenue estimates once [2] Stock Performance - ICF shares have declined approximately 30.6% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] - The current Zacks Rank for ICF is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $1.70, with projected revenues of $472.53 million, while the estimate for the current fiscal year is $6.92 on $1.9 billion in revenues [7] - The trend of earnings estimate revisions for ICF was mixed prior to the earnings release, which may influence future stock performance [6] Industry Context - The Government Services industry, to which ICF belongs, is currently ranked in the top 5% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Second quarter revenue was $476.2 million, down 2.4% from the first quarter and a 7% decline year-over-year, or 4% when excluding subcontractor and other direct costs [20][21] - Adjusted EBITDA margin expanded by 20 basis points to 11.1%, reflecting gross margin expansion [24] - Net income was $23.7 million with diluted EPS of $1.28, compared to $25.6 million and diluted EPS of $1.36 in the previous year [25] Business Line Data and Key Metrics Changes - Revenues from commercial clients increased by 25.2% in the second quarter, driven by a 27% increase in commercial energy clients [8][21] - Revenues from state and local government clients increased by 1%, with disaster management accounting for about 45% of this client category [12] - Revenues from international government clients increased by 2%, while federal government revenues declined by 9.8% sequentially, representing a 25.2% reduction year-over-year [14][15] Market Data and Key Metrics Changes - Revenues from commercial, state and local government, and international government clients grew 13.8% and accounted for approximately 57% of total revenues, up from 47% a year ago [20] - The company expects revenues from commercial, state and local, and international government clients to increase approximately 15% this year [14] Company Strategy and Development Direction - The company is focused on expanding its capabilities in AI and other technologies while maintaining a balanced approach to capital allocation, including funding organic growth initiatives and pursuing strategic acquisitions [28] - The introduction of ICF Fathom, a suite of tailored AI solutions for federal agencies, is aimed at modernizing federal technology systems [19][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a more positive business outlook for 2025, supported by strong demand from commercial energy clients and a stable revenue outlook from state and local government clients [7][32] - The company does not foresee full-year revenues declining by as much as 10% from 2024 levels, indicating improved visibility and confidence in the business environment [30][46] Other Important Information - The company repurchased an additional $11 million shares during the first half of the year and announced a quarterly cash dividend of $0.14 per share [24][28] - Backlog at the end of the second quarter was $3.4 billion, with 54% of the backlog funded, reflecting stability and long-term visibility [25] Q&A Session Summary Question: Can you provide insights on the backlog and federal work mix? - Federal government backlog constitutes about half of the total backlog, with the remainder divided among state and local and commercial clients [34][35] Question: What improvements are being seen in federal government activity? - There has been a pickup in contract modifications and funding, particularly in IT modernization and complex program management [42][43] Question: How is the company viewing the state and local activity? - There has been no decrease in federal funding for FEMA programs, and the company is preparing for potential shifts in responsibilities to state and local governments [51][52] Question: What is the current acquisition pipeline like? - The company is focused on potential acquisitions in the commercial energy sector, while remaining cautious about federal acquisitions due to uncertainty [54][56] Question: What are the expectations for the procurement environment in the upcoming quarter? - The third quarter is expected to be strong for sales, although there are risks associated with staffing changes among contracting officers [61][62] Question: How is the growth in data centers impacting the commercial energy segment? - The demand for electricity associated with data centers is unprecedented, driving significant growth opportunities in the commercial energy sector [63][64]

Exhibit 99.1 NEWS RELEASE ICF Reports Second Quarter 2025 Results ―Second Quarter in Line with Expectations Led by 27% Revenue Growth in Commercial Energy― ―Margins Continue to Benefit From Favorable Mix― ―Maintains Full Year 2025 Guidance Framework with Improved Business Outlook― ―Expects a Return to Revenue and Earnings Growth in 2026― Second Quarter Highlights: RESTON, Va., July 31, 2025 — ICF (NASDAQ: ICFI), a leading global solutions and technology provider, reported results for the second quarter ende ...

Summary of ICF International Conference Call Company Overview - **Company Name**: ICF International - **Ticker**: ICFI - **Business Focus**: Global solutions and technology provider, primarily in consulting and advisory services, with a strong emphasis on energy, environment, and infrastructure [6][7] Key Financial Metrics - **Revenue CAGR**: 6.4% over the past five years - **Non-GAAP EPS CAGR**: 12.4% over the past five years [7] Business Segments and Growth Expectations - **Non-Federal Government Business**: Expected to grow by approximately 15% [9] - **Client Portfolio**: About half of revenues come from commercial clients, including energy utilities and state/local governments [8] Energy Sector Insights - **Energy Efficiency Programs**: Evolving to include nontraditional programs such as electrification and flexible load management [12] - **Renewable Energy Demand**: Anticipated faster growth in energy demand in the U.S. over the next 10-30 years, driven by peak hour demand and the need for renewable energy [14] - **Impact of IRA and Tax Incentives**: Uncertainty around tax incentives is affecting project timelines, but many renewable projects are still moving forward [15][16] Disaster Recovery and Management - **Growth Area**: Disaster management is expected to see more RFPs due to federal funding allocations [21][22] - **Federal to State Transition**: The federal government is shifting disaster recovery responsibilities to states, which could create more opportunities for ICF [23][25] Federal Government Work - **Revenue Losses**: Approximately $115 million in revenue lost due to contract terminations, primarily from USAID [29] - **Contract Modifications**: Some previously discontinued contracts are being reinstated, indicating a potential recovery in federal work [34][35] IT Modernization and Digital Transformation - **Focus Area**: About half of federal work involves IT modernization and digital transformation, with a projected decline in revenues due to procurement slowdowns [42][45] - **Contract Structure**: Majority of contracts are firm fixed price, aligning with the current administration's preferences [44][49] Health and Human Services - **Campaign Alignment**: The "Make America Healthy Again" campaign aligns well with ICF's expertise in health services [54] - **CMS Budget Stability**: Initial indications suggest that the budget for CMS will remain intact, providing a stable revenue source [57] Adjusted EBITDA Margins - **Margin Stability**: Expected to remain similar to the previous year despite uncertainties, with actions taken to align cost structure with revenue production [63][66] - **Contract Mix**: Shift towards more profitable commercial work is expected to enhance margins [66] Conclusion - ICF International is well-positioned to capitalize on growth opportunities in energy efficiency, disaster recovery, and health services, while navigating challenges in federal contracts and IT modernization. The company's diversified portfolio and strong client relationships are key strengths in a changing market environment [41][68]

Core Viewpoint - ICF International, Inc. reported strong earnings for Q1 2025, exceeding the Zacks Consensus Estimate, but revenues fell short, leading to minimal market reaction post-earnings release [1]. Financial Performance - Quarterly earnings per share were $1.94, beating the Zacks Consensus Estimate by 11.5% and increasing 9.6% year-over-year [2]. - Total revenues amounted to $487.7 million, slightly missing the Zacks Consensus Estimate and decreasing 1.4% year-over-year [2]. Segmental Revenues - Revenues from government clients rose 12.6% year-over-year to $343.6 million, but fell short of the estimate of $364.7 million [3]. - U.S. state and local government revenues were $76.9 million, representing 15.8% of total revenues, which was below the expected $90.7 million and declined 0.13% year-over-year [3]. - International government revenues reached $27.1 million, accounting for 5.6% of total revenues, lagging behind the anticipated $30.4 million but increasing 7.2% year-over-year [4]. - U.S. federal government revenues were $239.6 million, contributing 49.1% to total revenues, missing the estimate of $243.6 million and decreasing 12.6% year-over-year [4]. - Commercial revenues, which made up 29.5% of total revenues, amounted to $144.1 million, exceeding expectations of $121.8 million and rising 3.1% year-over-year [5]. Operating Performance - Adjusted EBITDA increased by 0.08% year-over-year to $55.2 million, with an adjusted EBITDA margin of 11.3%, up 10 basis points from the previous year [6]. Balance Sheet and Cash Flow - At the end of the quarter, cash and cash equivalents stood at $5.7 billion, up from $5 billion in the previous quarter [7]. - Long-term debt increased to $502 million from $411.7 million in the prior quarter [7]. - The company utilized $33 million in cash from operating activities, with capital expenditures of $3.5 million [7]. Guidance - For Q2 2025, ICFI expects revenues to be similar to Q1 2025 levels [8]. - GAAP EPS for 2025 is projected to be flat to down 10% compared to last year [8]. - Full-year operating cash flow is anticipated to be around $150 million, with capital expenditures expected to be between $26 million and $28 million [8]. - The full-year tax rate is now expected to be approximately 18.5% [8].

Core Insights - ICF International reported a revenue of $487.62 million for the quarter ended March 2025, reflecting a decrease of 1.4% year-over-year, while EPS increased to $1.94 from $1.77 in the previous year [1] - The revenue was slightly below the Zacks Consensus Estimate of $487.7 million, resulting in a surprise of -0.02%, whereas the EPS exceeded the consensus estimate of $1.74 by +11.49% [1] Revenue Breakdown - Revenue from the US Federal government was $239.62 million, surpassing the average estimate of $236.82 million from two analysts [4] - Revenue from US State & Local government was $76.87 million, falling short of the average estimate of $86.85 million from two analysts [4] - Commercial revenue reached $144.06 million, exceeding the average estimate of $132.40 million from two analysts [4] - Total revenue from the Government sector was $343.56 million, slightly below the average estimate of $351.86 million from two analysts [4] - International government revenue was $27.08 million, also below the average estimate of $28.19 million from two analysts [4] Stock Performance - ICF shares have returned +1.5% over the past month, contrasting with a -0.5% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

PART I. FINANCIAL INFORMATION [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) In Q1 2025, ICF International, Inc. reported a slight revenue decrease to **$487.6 million**, stable net income, and increased cash used in operations to **$33.0 million** due to working capital timing [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased slightly to **$2.075 billion**, while total liabilities rose to **$1.106 billion** and stockholders' equity decreased to **$968.9 million** due to share repurchases Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $510,829 | $492,074 | | Goodwill | $1,251,199 | $1,248,855 | | **Total Assets** | **$2,075,098** | **$2,066,353** | | **Total Current Liabilities** | $381,527 | $449,180 | | Long-term debt | $502,044 | $411,743 | | **Total Liabilities** | **$1,106,230** | **$1,083,894** | | **Total Stockholders' Equity** | **$968,868** | **$982,459** | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 2025 revenue decreased **1.4%** to **$487.6 million**, with operating income falling to **$38.4 million** and net income remaining flat at **$26.9 million** Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $487,618 | $494,436 | | Operating Income | $38,390 | $40,944 | | Net Income | $26,851 | $27,317 | | Diluted EPS | $1.44 | $1.44 | | Comprehensive Income | $24,138 | $28,001 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to **$33.0 million** in Q1 2025, primarily due to working capital timing, resulting in a **$5.3 million** net increase in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(33,034) | $(10,001) | | Net Cash Used in Investing Activities | $(3,452) | $(3,511) | | Net Cash Provided by Financing Activities | $41,024 | $8,833 | | **Net Change in Cash** | **$5,275** | **$(4,850)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail revenue recognition, debt, and acquisitions, noting decreased U.S. federal government revenue, a lower effective tax rate, and reduced unfulfilled performance obligations - On December 31, 2024, the Company acquired Applied Energy Group, Inc. (AEG) for **$60.7 million** in cash, enhancing service offerings to utility and government clients[54](index=54&type=chunk) - The effective tax rate for Q1 2025 was **10.5%**, down from **20.4%** in Q1 2024, primarily due to a **$4.5 million** non-cash deferred income tax benefit from new U.S. federal tax regulations under IRC Section 987[48](index=48&type=chunk) - Unfulfilled performance obligations (UPO) were **$0.9 billion** as of March 31, 2025, down from **$1.3 billion** at year-end 2024, including approximately **$0.3 billion** from contract terminations for convenience[45](index=45&type=chunk) Revenue by Client Type (in thousands) | Client Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | U.S. federal government | $239,620 (49%) | $274,195 (55%) | | U.S. state and local government | $76,865 (16%) | $76,953 (16%) | | International government | $27,075 (5%) | $25,263 (5%) | | Commercial | $144,058 (30%) | $118,025 (24%) | | **Total** | **$487,618 (100%)** | **$494,436 (100%)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **1.4%** revenue decline to decreased U.S. federal government contracts, offset by commercial growth, with Adjusted EBITDA flat at **$55.2 million** and Non-GAAP Diluted EPS increasing to **$1.94** [Overview and Outlook](index=23&type=section&id=Overview%20and%20Outlook) The company faces challenges from U.S. government contract terminations impacting **5.7%** of 2024 revenue, but sees long-term growth opportunities in key markets, focusing on strategic acquisitions and technology solutions - In Q1 2025, the company received termination-for-convenience notices from the new Administration or DOGE, impacting about **5.7%** of total 2024 revenue and **$375.0 million** of backlog[74](index=74&type=chunk) - Subsequent to the quarter-end, additional termination notices were received, representing approximately **$12.0 million** of future contract value[75](index=75&type=chunk) - The company sees growth opportunities for its technology solutions, combining deep institutional knowledge with expertise in AI, open source, and cloud-native platforms to meet evolving customer demands[71](index=71&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Q1 2025 revenue decreased **1.4%** to **$487.6 million** due to Health and Social Programs decline, partially offset by growth in Energy, Environment, Infrastructure, and Disaster Recovery, with operating income falling **6.2%** Results of Operations Summary (in thousands) | Line Item | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $487,618 | $494,436 | (1.4%) | | Total Direct Costs | $302,542 | $310,533 | (2.6%) | | Operating Income | $38,390 | $40,944 | (6.2%) | | Income before Income Taxes | $30,001 | $34,336 | (12.6%) | | Net Income | $26,851 | $27,317 | (1.7%) | - The decrease in revenue was driven by a **$34.6 million** decline from U.S. federal government clients, offset by a **$26.0 million** increase from commercial clients[78](index=78&type=chunk) [Non-GAAP Measures](index=26&type=section&id=Non-GAAP%20Measures) Adjusted EBITDA for Q1 2025 was nearly flat at **$55.2 million**, while Non-GAAP Diluted EPS increased to **$1.94** from **$1.77**, benefiting from a lower tax rate and specific adjustments Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $26,851 | $27,317 | | EBITDA | $52,133 | $56,439 | | Adjustments | $3,065 | $(1,284) | | **Adjusted EBITDA** | **$55,198** | **$55,155** | Reconciliation of U.S. GAAP Diluted EPS to Non-GAAP Diluted EPS | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | U.S. GAAP Diluted EPS | $1.44 | $1.44 | | Adjustments (net) | $0.50 | $0.33 | | **Non-GAAP Diluted EPS** | **$1.94** | **$1.77** | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained **$448.4 million** in unused borrowing capacity, with cash used in operations increasing to **$33.0 million** due to working capital timing, while funding dividends and share repurchases - As of March 31, 2025, the company had **$448.4 million** of unused borrowing capacity under its **$600.0 million** revolving line of credit[39](index=39&type=chunk)[97](index=97&type=chunk) - The company paid quarterly cash dividends of **$0.14 per share**, totaling **$2.6 million** in Q1 2025[101](index=101&type=chunk) - Cash used in operating activities increased by **$23.0 million** to **$33.0 million** due to the timing of invoicing, collections, and vendor payments[101](index=101&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes in its market risk disclosures compared to the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes in the disclosures regarding Quantitative and Qualitative Disclosures About Market Risk since the last Annual Report[103](index=103&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no significant changes in internal controls over financial reporting during the quarter - Management concluded that as of March 31, 2025, the Company's disclosure controls and procedures were effective[104](index=104&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters in the ordinary course of business, not expecting a material adverse effect on its financial position, results of operations, or cash flows - The company is involved in various legal matters in the ordinary course of business and does not expect any ultimate liability to have a material adverse effect on its financials[107](index=107&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes in the risk factors discussed in the company's Annual Report[108](index=108&type=chunk) [Issuer Purchases of Equity Securities](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) In Q1 2025, the company repurchased **313,048 shares** for **$35.1 million** under its share repurchase program, with **$114.2 million** of repurchase authority remaining available - In Q1 2025, the company repurchased **313,048 shares** for **$35.1 million** under its share repurchase program[110](index=110&type=chunk) - As of March 31, 2025, **$114.2 million** remained available for future share repurchases under the authorized program[110](index=110&type=chunk) Share Repurchase Activity for Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | January | 134,895 | $129.53 | 121,572 | | February | 191,858 | $101.15 | 191,476 | | March | 29,105 | $84.83 | — | | **Total** | **355,858** | **$110.57** | **313,048** | [Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[114](index=114&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Not applicable[115](index=115&type=chunk) [Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No other material information was reported - None[116](index=116&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL data files

Company Performance - ICF International (ICFI) reported quarterly earnings of $1.94 per share, exceeding the Zacks Consensus Estimate of $1.74 per share, and up from $1.77 per share a year ago, representing an earnings surprise of 11.49% [1] - The company posted revenues of $487.62 million for the quarter ended March 2025, slightly missing the Zacks Consensus Estimate by 0.02%, and down from $494.44 million year-over-year [2] - Over the last four quarters, ICF has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Outlook - ICF shares have declined approximately 28.7% since the beginning of the year, compared to a 5.3% decline in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.63 on revenues of $481.39 million, and for the current fiscal year, it is $6.97 on revenues of $1.93 billion [7] - The estimate revisions trend for ICF is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Government Services industry, to which ICF belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact ICF's stock performance [5]