ICF International(ICFI) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited consolidated financial statements for ICF International, Inc. as of June 30, 2022, including balance sheets, income statements, cash flow statements, and detailed notes Financial Statements This section presents the unaudited consolidated financial statements for ICF International, Inc. as of June 30, 2022, including balance sheets, income statements, cash flow statements, and detailed notes Consolidated Balance Sheets Total assets and total liabilities and stockholders' equity remained relatively stable at approximately $1.85 billion from December 31, 2021, to June 30, 2022 Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $452,952 | $449,163 | | Total Assets | $1,850,802 | $1,849,534 | | Total Current Liabilities | $341,875 | $376,631 | | Long-term debt | $435,075 | $411,605 | | Total Liabilities | $1,031,385 | $1,046,064 | | Total Stockholders' Equity | $819,417 | $803,470 | Consolidated Statements of Comprehensive Income For Q2 2022, revenue increased by 7.8% year-over-year to $423.1 million, but net income decreased by 9.4% to $18.4 million, with diluted EPS at $0.97 Key Performance Indicators (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $423,110 | $392,525 | $836,578 | $771,003 | | Operating Income | $29,776 | $31,954 | $57,479 | $60,083 | | Net Income | $18,397 | $20,312 | $36,259 | $38,663 | | Diluted EPS | $0.97 | $1.07 | $1.91 | $2.03 | - Cash dividends declared per common share remained constant at $0.14 for the quarter and $0.28 for the six-month period, year-over-year[12] Consolidated Statements of Cash Flows For the six months ended June 30, 2022, net cash provided by operating activities was $6.4 million, nearly flat compared to the prior year, while net cash used in financing activities decreased significantly Net Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $6,409 | $6,341 | | Net Cash Used in Investing Activities | ($8,115) | ($7,475) | | Net Cash Used in Financing Activities | ($9,074) | ($45,642) | | Decrease in Cash, Cash Equivalents, and Restricted Cash | ($11,969) | ($46,077) | Notes to Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and financial statement line items, including revenue disaggregation, credit facility details, and subsequent events - The company's major clients are U.S. federal government departments, particularly the Department of Health and Human Services, Department of State, and Department of Defense[18] - On May 6, 2022, the company entered into an Amended and Restated Credit Agreement, increasing the term loan to $300 million, adding a $400 million delayed draw term loan, and extending the maturity to May 2027[30] - On July 13, 2022, the company acquired SemanticBits, LLC for a purchase price of $220.0 million in cash, funded by the existing Credit Facility[68] - The company is involved in a lawsuit with the State of Louisiana regarding the Road Home Program, with the state seeking approximately $220.2 million, which the company believes has no merit and has not recorded a liability[71] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's performance, highlighting an 8.5% revenue increase for the first six months of 2022, driven by U.S. government clients, while operating income decreased due to higher direct costs and amortization from recent acquisitions Overview and Outlook The company provides professional services and technology solutions across four key markets and maintains a positive long-term outlook, expecting continued growth driven by societal needs and strategic acquisitions - The company reports as a single segment, focusing on professional services for government and commercial clients[78] - Long-term demand is expected to be driven by heightened concerns about the environment, clean energy, health promotion, and disaster relief efforts[79] - The company's strategy includes enhancing client relationships, seeking larger engagements, and completing strategic acquisitions to build scale and expertise[80] Results of Operations For Q2 2022, revenue grew 7.8% year-over-year to $423.1 million, driven by U.S. federal and state government clients, but operating income fell 6.8% to $29.8 million due to higher costs and increased amortization Q2 2022 vs Q2 2021 Performance (in thousands) | Metric | Q2 2022 | Q2 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $423,110 | $392,525 | 7.8% | | Operating Income | $29,776 | $31,954 | (6.8%) | | Net Income | $18,397 | $20,312 | (9.4%) | - Q2 2022 revenue growth was driven by a $43.0 million increase from U.S. federal government clients, offset by a $10.0 million decrease from international government clients and an $8.0 million decrease from commercial clients[96] - The increase in amortization of intangible assets by $2.0 million in Q2 2022 was primarily due to the acquisitions of ESAC and Creative Systems and Consulting in late 2021[100] Six Months 2022 vs 2021 Performance (in thousands) | Metric | Six Months 2022 | Six Months 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $836,578 | $771,003 | 8.5% | | Operating Income | $57,479 | $60,083 | (4.3%) | | Net Income | $36,259 | $38,663 | (6.2%) | Non-GAAP Measures The company uses non-GAAP measures like Service Revenue, EBITDA, Adjusted EBITDA, and Non-GAAP Diluted EPS to evaluate performance, with Adjusted EBITDA increasing to $44.1 million for Q2 2022 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $18,397 | $20,312 | $36,259 | $38,663 | | EBITDA | $39,802 | $39,701 | $77,660 | $76,115 | | Total special charges and adjustments | $4,329 | $311 | $8,756 | $1,624 | | Adjusted EBITDA | $44,131 | $40,012 | $86,416 | $77,739 | Reconciliation of Diluted EPS to Non-GAAP EPS | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Diluted EPS | $0.97 | $1.07 | $1.91 | $2.03 | | Non-GAAP EPS | $1.33 | $1.19 | $2.63 | $2.32 | Liquidity and Capital Resources As of June 30, 2022, the company had $410.9 million available under its Credit Facility, with long-term debt increasing to $454.8 million, and repurchased $17.0 million in shares - As of June 30, 2022, the company had $438.1 million of unused borrowing capacity under its revolving line of credit, with $410.9 million available after accounting for financial limitations[131] - Days Sales Outstanding (DSO) was 82 days for the quarter ended June 30, 2022, the same as the prior-year quarter[139] - The share repurchase program was increased to a $200.0 million limit in November 2021, with $111.9 million remaining available for repurchases as of June 30, 2022[150][151] - On August 3, 2022, the board approved a quarterly cash dividend of $0.14 per share[151] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its market risk disclosures since its last Annual Report on Form 10-K - There have been no material changes in the disclosures discussed in the section entitled 'Quantitative and Qualitative Disclosures About Market Risk' in Part II, Item 7A of the company's Annual Report[157] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period, with no significant changes in internal controls over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the period covered by the report[158] - No significant changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[158] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and exhibits Legal Proceedings The company is involved in various legal matters arising in the ordinary course of business, which management believes will not have a material adverse effect on its financial position - The company is involved in various legal matters from the ordinary course of business but does not expect them to have a material adverse effect on its financials[162] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes have occurred in the risk factors discussed in the company's Annual Report[163] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2022, the company did not repurchase any shares under its publicly announced share repurchase program, but acquired 502 shares from employees to satisfy tax withholding obligations Share Repurchase Activity for Q2 2022 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Program | | :--- | :--- | :--- | :--- | | April 1 - April 30 | — | $ — | — | | May 1 - May 31 | 502 | $98.02 | — | | June 1 - June 30 | — | $ — | — | | Total | 502 | $98.02 | — | - The 502 shares purchased were from employees to pay required withholding taxes related to the settlement of restricted stock units[164] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications and the financial statements formatted in iXBRL