ICF International(US:ICFI)2025-10-30 21:30Financial Data and Key Metrics Changes - Third quarter revenues totaled $465.4 million, down from $517 million in the same quarter of 2024, and relatively stable compared to $476.2 million in the second quarter of 2025 [20] - Year-to-date revenues decreased by 6.2%, with revenues excluding subcontractor and other direct costs declining by 4.3% [20] - Adjusted EBITDA was $53.2 million, compared to $58.5 million in the previous year's third quarter, with adjusted EBITDA margins expanding by 10 basis points to 11.4% [24][26] - Net income totaled $23.8 million, or $1.28 per diluted share, down from $32.7 million, or $1.73 per diluted share in the third quarter of 2024 [26] Business Line Data and Key Metrics Changes - Revenues from commercial, state and local, and international clients increased by 13.8% year-on-year, led by a 24.3% increase in the commercial energy business [20][21] - Federal government revenues declined by 29.8% year-on-year, with a 3% sequential decline in the third quarter [5][21] - The commercial energy business represented 30% of third quarter revenues, up from 22% in the previous year [10] Market Data and Key Metrics Changes - Revenues from state and local government clients increased by 3.8% in the third quarter, primarily due to growth in technology work in disaster recovery [14] - International client revenues increased by 8% year-on-year, although the ramp-up of new contracts has been slower than anticipated [16][17] Company Strategy and Development Direction - The company is focused on maintaining margins despite reduced revenue, with a book-to-bill ratio of 1.53 for the third quarter, supporting a return to growth in 2026 [4][32] - The company is investing in organic growth, pursuing strategic acquisitions, and maintaining a disciplined approach to capital allocation [28][29] - The management is optimistic about the potential for growth in the commercial energy sector, despite challenges in the renewables area due to the current administration's policies [45] Management's Comments on Operating Environment and Future Outlook - Management expects the government shutdown to reduce revenues by approximately $8 million and gross profit by $2.5 million in October, with a total estimated impact of $25 million in revenues for the quarter [9][36] - The company remains confident in its ability to return to revenue and earnings growth in 2026, supported by a strong pipeline of opportunities and growth from non-federal clients [32][42] Other Important Information - The CFO announced retirement, with James Morgan taking on the additional role of CFO while continuing as COO [18][60] - The company has a backlog of $3.5 billion, with 52% funded, and a new business development pipeline of $8.4 billion [26] Q&A Session Summary Question: What is the expected decline in federal business for the fourth quarter? - Management did not provide a specific estimate but indicated that federal revenues would be down more than in the third quarter due to the government shutdown [34] Question: How is the government shutdown impacting project progress? - Some projects continue to progress without government interaction, but there are significant impacts on others, particularly in health and human services [36][39] Question: What are the growth expectations for the commercial energy business? - The commercial energy business is expected to continue strong growth, with double-digit growth anticipated next year [44][49] Question: What is the company's approach to acquisitions? - The company is focused on opportunities in the energy sector and disaster recovery, with a disciplined approach to capital allocation and debt repayment [51][53]