Icf (ICFI) Q2 Revenue Falls 7%

Core Insights - ICF International reported a 7.0% decline in revenue for Q2 2025, totaling $476.2 million, which fell short of analyst expectations of $482.8 million [1][2] - Non-GAAP earnings per share were $1.66, exceeding the consensus estimate of $1.57, attributed to improved margins and effective cost management [1][2] Financial Performance - Revenue for Q2 2025 was $476.2 million, down from $512.0 million in Q2 2024, marking a year-over-year decrease of 7.0% [2] - Non-GAAP EPS decreased by 1.8% from $1.69 in Q2 2024 to $1.66 in Q2 2025 [2] - Adjusted EBITDA was $52.9 million, down 5.5% from $56.0 million in the previous year [2] - Operating margin improved slightly to 8.4%, up from 8.3% in Q2 2024 [2] - Net income decreased by 7.4% to $23.7 million from $25.6 million in Q2 2024 [2] Business Focus and Strategy - ICF International specializes in consulting and technology services for government and commercial clients, focusing on energy efficiency, electrification, and digital transformation [3][4] - The company is expanding its commercial work, particularly in energy advisory services, and investing in analytics and AI projects [4] Revenue Segmentation - The commercial segment saw a 25.2% increase in revenue year-over-year, driven by a 27.4% gain in energy markets revenue [5] - Energy, environment, infrastructure, and disaster recovery projects accounted for 52% of total revenue, an increase from the previous period [5] - Federal revenue dropped 25.1% year-over-year, with government clients now representing 67% of total revenue, down from 76% in Q2 2024 [6] Margin and Cost Management - Operating margin improved to 8.4%, supported by a higher mix of fixed-price contracts and reduced costs for subcontractors [7] - Gross margin expanded due to effective management of contract types and a lower tax rate during the period [7] Future Outlook - Management maintained its full-year 2025 guidance, expecting revenue to decline by less than 10% compared to FY2024 [10] - Projected operating cash flow for FY2025 is $150 million, with a potential return to revenue and earnings growth in 2026 depending on market conditions [10] - The business development pipeline is valued at $9.2 billion, indicating healthy demand [8]