ICF International Reports Third Quarter Results

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

• Press Release
• Source: ICF International, Inc.
• On 4:15 pm EST, Thursday November 5, 2009

FAIRFAX, Va.--(BUSINESS WIRE)--ICF International, Inc. (NASDAQ:ICFI - News), a leading provider of consulting services and technology to government and commercial clients, reported results for the third quarter ended September 30, 2009.

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Symbol	Price	Change
ICFI	27.17	-0.33

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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 - News) 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
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