ICF International Reports Third Quarter Results

http://www.businesswire.com/news/home/20091105006387/en

Core Business Revenue Increased 44.2 Percent

Organic Growth Rate at 14.1 Percent

Fully Diluted EPS Reached $0.32

Record Core Business Sales of $454 Million
FAIRFAX, Va.--(Business Wire)--
ICF International, Inc. (NASDAQ:ICFI), a leading provider of consulting services
and technology to government and commercial clients, reported results for the
third quarter ended September 30, 2009.

Third Quarter Results and Highlights

For the third quarter, core business revenue inclusive of the Macro
International Inc. acquisition increased 44.2 percent to $167.1 million from the
$115.9 million reported for last year`s third quarter. Total revenue for the
2009 third quarter was the same as core business revenue because The Road Home
contract was successfully completed on schedule in June 2009. In last year`s
third quarter, total revenue was $176.3 million, which included $60.4 million in
The Road Home contract revenue.

Net income for the third quarter was $5.1 million, or $0.32 per diluted share,
including non-cash compensation expense of $1.9 million. Net income benefited
from the true-up of prior year tax returns and favorable one-time tax benefits,
which reduced the effective tax rate to 35.4 percent. For the 2008 third
quarter, ICF reported net income of $6.9 million, or $0.45 per diluted share,
which included non-cash compensation expense of $1.5 million. The fully diluted
weighted-average number of shares outstanding for the 2009 third quarter was
15.8 million compared to 15.3 million in last year`s third quarter. Third
quarter 2009 EBITDA1 was $15.0 million, representing an EBITDA margin of 9.0
percent.

"We experienced significant year-over-year core business revenue growth in each
of our major markets in the third quarter: Energy, Environment, and
Infrastructure; Health, Human Services, and Social Programs; and Homeland
Security and Defense. Organic growth was 14.1 percent, an increase of almost 5
percentage points from the prior quarter`s 9.2 percent, reflecting the overall
strength of our federal business and energy efficiency programs, and a pickup in
demand for our commercial transportation business," noted Sudhakar Kesavan,
ICF`s Chairman and Chief Executive Officer.

"This was an exceptional sales quarter for ICF, representing a record period for
core business wins. We had important contract awards in priority areas such as
energy efficiency, health and education, broadband, and housing," Mr. Kesavan
said.

Backlog and New Business Awards

Backlog was $1.4 billion at the end of the 2009 third quarter, up from $1.2
billion at the end of the prior quarter. Funded backlog was $556 million, or
38.8 percent of the total.

The total value of contracts awarded in the third quarter of 2009 was $454
million.

Key contracts won in the third quarter included:

* Energy Efficiency - Three new, three-year contracts valued at more than $41
million with U.S. based utilities to develop and implement energy efficiency
programs for residential, commercial, and small business customers.
* Health Services - Four contracts and task orders valued at more than $44
million with the U.S. Department of Health and Human Services` Substance Abuse
and Mental Health Services Administration (SAMHSA) supporting health
communications, programs for people in times of crisis, and underage drinking
prevention initiatives. In supporting these programs, ICF will work with
SAMHSA`s Center for Substance Abuse Prevention, and the Center for Mental Health
Services.
* Head Start - Two new contracts and two re-compete contracts valued at more
than $47 million with the U.S. Department of Health and Human Services (HHS),
Administration for Children and Families (ACF), Office of Head Start. ICF will
assist with training and technical consulting assistance, conference
facilitation and collaboration, and program management services.
* Broadband - A new, multi-year contract valued at up to $27 million, plus an $8
million contract addition, with the U.S. Department of Agriculture Rural
Development, Rural Utilities Service (RUS) to support the RUS Broadband
Initiatives Program. ICF will assist with program administration, application
processing, post-award monitoring, program reporting, communications and
outreach, and technical assistance.
* Community Development - A new three-year grant valued at more than $13 million
with the Department of Housing and Urban Development (HUD) to provide technical
assistance to state and local governments in addressing their inventory of
foreclosed properties under HUD`s Neighborhood Stabilization Program.
* Homeland Security - A new, five-year Blanket Purchase Agreement contract
valued at more than $15 million with the Department of Homeland Security to
provide technical and administrative support services to conduct alternating
annual surveys in support of the U.S. Coast Guard Office of Boating Safety. The
overall goal is to collect detailed information that will allow analysts to
target safety programs and initiatives to specific segments of the boating
community.
* Defense Behavioral Research - A new, three-year, multiple-award contract, with
a ceiling of approximately $60 million, by the U.S. Army Research Institute
(ARI). Through this new, indefinite delivery/indefinite quantity (ID/IQ)
agreement, ICF will conduct research and analyses, attitude and opinion surveys,
and studies associated with manpower, personnel, organizational, and leader
development in support of the ARI.

Summary and Outlook

"This quarter was another strong one for ICF, demonstrating our ability to
achieve significant organic growth and generate consistent, solid
profitability," noted Mr. Kesavan. "We continue to benefit from our recognized
domain expertise in high priority issues facing government and commercial
clients, and to succeed in leveraging this expertise to win larger
implementation projects."

"For the fourth quarter, we expect our positive momentum to continue and to
report core business revenues in the range of $165 million to $170 million, and
earnings per diluted share of $0.30 to $0.33, based on approximately 16.0
million shares outstanding and an effective tax rate of 41.5 percent," Mr.
Kesavan said. "We therefore expect fiscal year 2009 revenues of $665 million to
$670 million, and earnings per diluted share of $1.33 to $1.36, based on
approximately 15.8 million weighted-average number of shares outstanding and an
effective tax rate of 39.1 percent."

"Looking ahead to 2010, we are confident about our business prospects and our
ability to build upon our leadership positions in high-growth markets. Based on
current backlog levels and our existing portfolio of business, our preliminary
indications for fiscal year 2010 are revenues of $715 million to $750 million
compared to $605 million to $610 million in core business revenues in 2009. We
expect organic growth of 11 percent to 16 percent and EBITDA margin of 9 percent
to 10 percent," concluded Mr. Kesavan.

About ICF International

ICF International (NASDAQ:ICFI) partners with government and commercial clients
to deliver consulting services and technology solutions in the energy, climate
change, environment, transportation, social programs, health, defense, and
emergency management markets. The firm combines passion for its work with
industry expertise and innovative analytics to produce compelling results
throughout the entire program life cycle, from analysis and design through
implementation and improvement. Since 1969, ICF has been serving government at
all levels, major corporations, and multilateral institutions. More than 3,500
employees serve these clients worldwide. ICF`s Web site is www.icfi.com.

Caution Concerning Forward-looking Statements

Statements that are not historical facts and involve known and unknown risks and
uncertainties are "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Such statements may concern our
current expectations about our future results, plans, operations and prospects
and involve certain risks, including those related to the government contracting
industry generally; our particular business, including our dependence on
contracts with U.S. federal government agencies; and our ability to acquire and
successfully integrate businesses. These and other factors that could cause our
actual results to differ from those indicated in forward-looking statements are
included in the "Risk Factors" section of our securities filings with the
Securities and Exchange Commission. The forward-looking statements included
herein are only made as of the date hereof, and we specifically disclaim any
obligation to update these statements in the future.

1 EBITDA is a Non-GAAP measurement, which adds depreciation and amortization to
operating income to derive EBITDA.

ICF International, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
(in thousands, except per share amounts)

Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008

Gross Revenue $ 167,071 $ 176,281 $ 500,338 $ 535,493
Direct Costs 101,610 115,421 304,758 355,138
Operating costs and expenses:
Indirect and selling expenses 50,430 44,251 151,417 128,344
Depreciation and amortization 2,550 1,706 6,608 3,891
Amortization of intangible assets 3,159 2,241 8,066 6,442
Total operating costs and expenses 56,139 48,198 166,091 138,677
Operating Income 9,322 12,662 29,489 41,678
Interest expense (1,471 ) (785 ) (3,707 ) (3,032 )
Other income (expense) 65 67 425 15
Income before taxes 7,916 11,944 26,207 38,661
Provision for income taxes 2,800 5,076 10,040 16,080
Net income $ 5,116 $ 6,868 $ 16,167 $ 22,581

Earnings per Share:
Basic $ 0.33 $ 0.47 $ 1.06 $ 1.55
Diluted $ 0.32 $ 0.45 $ 1.03 $ 1.48

Weighted-average Shares:
Basic 15,299 14,631 15,187 14,570
Diluted 15,844 15,283 15,708 15,209

Three months ended Nine months ended
September 30, September 30,
Reconciliation of EBITDA 2009 2008 2009 2008

Operating Income $ 9,322 $ 12,662 $ 29,489 $ 41,678
Depreciation and Amortization 5,709 3,947 14,674 10,333
EBITDA $ 15,031 $ 16,609 $ 44,163 $ 52,011
9.0 % 9.4 % 8.8 % 9.7 %

ICF International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)

September 30, 2009 December 31, 2008
(Unaudited)

Assets

Current Assets:
Cash and cash equivalents $ 9,250 $ 1,536
Contract receivables, net 167,104 150,778
Prepaid expenses and other 6,996 4,507
Income tax receivable 5,017 3,530
Restricted cash - 2,180
Deferred income taxes 4,995 4,186
Total current assets 193,362 166,717
Total property and equipment, net 23,563 13,373
Other assets:
Goodwill 301,832 198,724
Other intangible assets, net 34,150 16,844
Restricted cash 2,104 2,078
Other assets 6,804 3,281
Total assets $ 561,815 $ 401,017

Liabilities and Stockholders` Equity

Current Liabilities:
Accounts payable $ 25,391 $ 27,740
Accrued expenses 25,204 35,295
Accrued salaries and benefits 37,127 27,405
Deferred revenue 16,347 12,352
Total current liabilities 104,069 102,792
Long-term liabilities:
Long-term debt 210,000 80,000
Deferred rent 2,109 2,361
Deferred income taxes 13,227 10,849
Other 4,563 2,098
Total Liabilities 333,968 198,100
Commitments and Contingencies
Stockholders` Equity:
Preferred stock, par value $.001 per share; 5,000,000 shares authorized; none issued - -
Common stock, $.001 par value; 70,000,000 shares authorized; 15,497,065 and 15,188,320 issued; and 15,448,464 and 15,106,522 outstanding as of September 30, 2009, and December 31, 2008, respectively 15 15
Additional paid-in capital 129,202 120,550
Treasury stock, at cost (1,395 ) (1,474 )
Accumulated other comprehensive income (252 ) (272 )
Stockholder notes receivable - (12 )
Retained earnings 100,277 84,110
Total stockholders` equity 227,847 202,917
Total liabilities and stockholders` equity $ 561,815 $ 401,017

ICF International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

Nine months ended
September 30,
2009 2008

Cash flows from operating activities
Net income $ 16,167 $ 22,581
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 14,674 10,333
Non-cash compensation 5,680 4,827
(Gain) Loss on disposal of fixed assets (7 ) 122
Deferred income taxes 1,569 (4,736 )
Changes in operating assets and liabilities, net of the effect of acquisitions:
Contract receivables, net 18,453 51,932
Prepaid expenses and other (2,797 ) 327
Accounts payable (5,685 ) (55,083 )
Accrued expenses (14,580 ) (7,685 )
Accrued salaries and benefits 2,379 543
Deferred revenue 1,421 (3,887 )
Income tax receivable (1,082 ) 36
Deferred rent 26 569
Other liabilities (159 ) (3,738 )
Net cash provided by operating activities 36,059 16,141
Cash flows from investing activities
Capital expenditures (5,717 ) (9,257 )
Capitalized software development costs (333 ) (245 )
Payments for business acquisitions, net of cash acquired (156,902 ) (51,334 )
Net cash used in investing activities (162,952 ) (60,836 )

Cash flows from financing activities
Advances from working capital facilities 254,404 227,878
Payments on working capital facilities (124,404 ) (185,265 )
Restricted cash 2,154 1,024
Debt issue costs (630 ) (1,311 )
Proceeds from exercise of options 2,484 1,200
Tax benefits of stock option exercises 2,380 2,047
Net payments for stockholder issuances and buybacks (1,801 ) (676 )
Net cash provided by financing activities 134,587 44,897
Effect of Exchange Rate on Cash 20 (236 )
Net increase (decrease) in cash and cash equivalents 7,714 (34 )
Cash and cash equivalents, beginning of period 1,536 2,733
Cash and cash equivalents, end of period $ 9,250 $ 2,699

Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 3,710 $ 2,714
Income taxes $ 7,367 $ 20,694

ICF International
Douglas Beck
1-703-934-3820
or
MBS Value Partners
Lynn Morgen / Betsy Brod
1-212-750-5800

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