Why Is ICF (ICFI) Up 7.8% Since Last Earnings Report?
It has been about a month since the last earnings report for ICF International (ICFI). Shares have added about 7.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ICF due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
ICF International Reports Q1 Earnings Beat
ICF International reported better-than-expected first-quarter 2023 results with year-over-year increases in revenues and earnings.
Impressive results appeared to have pleased investors as the stock has gained 2.5% since the earnings release on May 9.
Quarterly earnings (excluding 55 cents from non-recurring items) of $1.42 per share beat the Zacks Consensus Estimate by 0.7% and increased 8.4% from the year-ago reported figure. Total revenues of $483.3 million surpassed the Zacks Consensus Estimate by 1.1% and improved 16.9% on a year-over-year basis.
Quarter Details
Service revenues increased 15% on a year-over-year basis to $351.3 million.
Revenues from government clients totaled $363.3 million, up 16.3% on a year-over-year basis. The U.S. federal government revenues of $267.7 million increased 22.2% year over year and contributed 55.4% to total revenues.
The U.S. state and local government revenues of $74.9 million moved up 13.3% year over year and contributed 15.5% to total revenues.
International government revenues of $20.7 million were down 24.5% year over year, contributing 4.3% to total revenues.
Commercial revenues, accounted for 24.8% of the total revenues, amounted to $119.9 million, rose 18.8% from the year-ago reported figure. It comprised 66% and 27.8% of revenues from Energy markets and, Marketing services and aviation consulting, respectively.
Adjusted EBITDA increased 22% from the year-ago reported figure to $51 million. The current adjusted EBITDA margin on revenues were 10.5%, up 40 basis points from the year-ago reported level. Adjusted EBITDA margin on service revenues were 14.5%, expanded 80 basis points from the year-ago reported figure.
Backlog and Value of Contracts
Total backlog and funded backlog amounted to $3.7 billion and $1.7 billion at the end of the quarter, respectively. The total value of contracts awarded in the first quarter of 2023 was $410 million for a quarterly book-to-bill ratio of 1.3.
Balance Sheet & Cash Flow
As of Mar 31, ICF International had cash and cash equivalents of $5,364 million, down 52.3% from the quarter-ago figure. Long-term debt at the end of the first quarter was $572 million, up from $533.1 million reported a quarter ago.
ICFI generated $16.8 million in cash from operating activities. CapEx was $6.4 million. During the quarter under review the company paid dividends worth $2.64 million.
Reposts 2023 Guidance
Service revenues are projected in the band of $1.405-$1.465 billion. Total Revenues are expected to be between $1.93 billion and $2 billion.
Earnings (on an adjusted basis) are anticipated in the range of $6.15-$6.45 per share.
EBITDA is estimated to be between $210 million and $220 million. Operating cash flow is expected to be 150 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, ICF has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ICF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
ICF belongs to the Zacks Government Services industry. Another stock from the same industry, Maximus (MMS), has gained 5.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Maximus reported revenues of $1.21 billion in the last reported quarter, representing a year-over-year change of +2.5%. EPS of $0.80 for the same period compares with $1.07 a year ago.
For the current quarter, Maximus is expected to post earnings of $1.14 per share, indicating a change of +46.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +9.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Maximus. Also, the stock has a VGM Score of B.
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