ICF International(ICFI) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements 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 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 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 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 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] - 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] - 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] 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 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 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] - Subsequent to the quarter-end, additional termination notices were received, representing approximately $12.0 million of future contract value[75] - 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] Results of Operations 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] Non-GAAP Measures 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 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][97] - The company paid quarterly cash dividends of $0.14 per share, totaling $2.6 million in Q1 2025[101] - 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] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] PART II. OTHER INFORMATION Legal Proceedings 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] Risk Factors 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] Issuer Purchases of Equity Securities 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] - As of March 31, 2025, $114.2 million remained available for future share repurchases under the authorized program[110] 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 No defaults upon senior securities were reported - None[114] Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Not applicable[115] Other Information No other material information was reported - None[116] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL data files