Financial 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]

Revenue Performance - Revenue for Q3 2025 was $465.4 million, a decrease of 10.0% from $517.0 million in Q3 2024, primarily due to a reduction of $83.9 million from U.S. federal government clients[87][89]. - Revenue for the nine months ended September 30, 2025 decreased by $94.3 million, or 6.2%, to $1,429.2 million compared to $1,523.5 million in 2024[101]. Income and Earnings - Net income for Q3 2025 was $23.8 million, down 27.3% from $32.7 million in Q3 2024[87]. - Operating income for the nine months ended September 30, 2025 was $116.8 million, a decrease of $12.5 million, or 9.7%, from $129.4 million in 2024[101]. - Net income for the nine months ended September 30, 2025 was $74.3 million, down $11.3 million, or 13.2%, from $85.6 million in 2024[101]. - U.S. GAAP Diluted EPS for Q3 2025 was $1.28, down 26% from $1.73 in Q3 2024; Non-GAAP Diluted EPS was $1.67, down 22% from $2.13[120]. - For the nine months ended September 30, 2025, U.S. GAAP Diluted EPS was $4.01, a decrease of 11.5% from $4.53 in 2024; Non-GAAP Diluted EPS was $5.30, down 5% from $5.58[120]. Costs and Expenses - Direct costs decreased by $34.5 million, with total direct costs as a percentage of revenue at 62.4% for Q3 2025, compared to 62.9% in Q3 2024[92]. - Indirect and selling expenses decreased by $10.6 million, or 7.9%, with these expenses representing 26.3% of revenue in Q3 2025[93]. - Direct costs decreased by $73.4 million, or 7.6%, totaling $891.5 million for the nine months ended September 30, 2025, primarily due to terminated U.S. federal government contracts[105]. - Indirect and selling expenses decreased by $11.8 million, or 3.0%, totaling $377.2 million for the nine months ended September 30, 2025[106]. Taxation - The effective income tax rate increased to 18.1% for the nine months ended September 30, 2025, compared to 20.0% for the same period in 2024[110]. - The effective tax rate for Q3 2025 was 22.7%, compared to 13.8% in Q3 2024, reflecting a significant increase in tax burden[122]. Backlog and Market Conditions - The company experienced a reduction of $418.2 million in backlog due to termination notices primarily in the first and second quarters of fiscal year 2025[84]. - Health and Social Programs client market revenues decreased by $44.8 million, or 22.8%, driven by declines from U.S. federal government clients[91]. - The federal government shutdown in October 2025 is estimated to result in a revenue reduction of $7.6 million for that month[86]. Strategic Initiatives - The company aims to enhance client relationships and seek larger engagements while evaluating strategic acquisition opportunities to broaden service offerings[82]. - The company’s future results will depend on the successful integration of strategic acquisitions and the ability to replicate its business model in selective geographies[82]. - The company is well-positioned to provide disaster recovery services, leveraging experience from past major disasters[80]. Cash Flow and Financial Position - Net cash provided by operating activities for the nine months ended September 30, 2025 was $66.2 million, a decrease of $9.9 million from $76.2 million in 2024[127]. - Total dividend payments for the nine months ended September 30, 2025 were $7.8 million, with a consistent quarterly dividend of $0.14 per share[127]. - As of September 30, 2025, the company had $501.6 million available under its Credit Facility for operations, acquisitions, dividends, and share repurchases[123]. - The company entered into interest rate swap agreements with a total notional value of $175.0 million to hedge a portion of its floating-rate Credit Facility[124]. - The net change in cash, cash equivalents, and restricted cash for the nine months ended September 30, 2025 was an increase of $35.1 million, compared to a decrease of $1.8 million in 2024[127]. - The company experienced a $46.4 million change in cash used in financing activities, primarily due to increased net borrowings and share repurchases[128]. Amortization and EBITDA - Amortization of intangible assets acquired in business combinations increased by $3.0 million, or 12.0%, totaling $27.9 million for the nine months ended September 30, 2025[107]. - Amortization of intangible assets for Q3 2025 totaled $9.2 million, compared to $8.3 million in Q3 2024; for the nine months, it was $27.9 million versus $24.9 million[121]. - EBITDA for the nine months ended September 30, 2025 was $158.0 million, down from $170.3 million in 2024[115]. - Adjusted EBITDA for the nine months ended September 30, 2025 was $161.2 million, compared to $169.7 million in 2024[115].

Financial Performance - Total revenue for Q3 2025 was $465 million, a decrease of 10% from $517 million in Q3 2024[10] - Net income was $24 million, with GAAP EPS at $1.28, down from $1.73 in the prior year[7] - Revenue for Q3 2025 was $465,405,000, a decrease of 9.9% from $516,998,000 in Q3 2024[35] - Net income for Q3 2025 was $23,766,000, down 27.3% compared to $32,679,000 in Q3 2024[35] - Adjusted EBITDA for Q3 2025 was $53,159,000, a decrease of 9.3% from $58,526,000 in Q3 2024[37] - Basic earnings per share (EPS) for Q3 2025 was $1.29, down from $1.74 in Q3 2024, representing a decline of 26.0%[35] - The net income margin percent on revenue for Q3 2025 was 5.1%, down from 6.3% in Q3 2024[37] - The company reported a comprehensive income of $22,033,000 for Q3 2025, compared to $31,728,000 in Q3 2024[35] - Net income for the nine months ended September 30, 2025, was $74,278,000, a decrease of 15.9% compared to $85,607,000 in 2024[43] - Cash provided by operating activities for the nine months ended September 30, 2025, was $66,244,000, down from $76,184,000 in 2024, reflecting a decline of 13.1%[43] Revenue Sources - Revenues from commercial clients increased by 14%, accounting for 57% of total Q3 revenues, with commercial energy clients up 24%[3] - U.S. federal government revenue was $198 million, down 29.8% year-on-year, while state and local government revenue increased by 3.8% to $81.7 million[17] - Commercial revenue accounted for 33.7% of total revenue, up from 25.1% in Q3 2024, with energy markets revenue increasing by 24.3% year-over-year[21] - Revenue from the energy, environment, infrastructure, and disaster recovery sector increased to 51% of total revenue for the nine months ended September 30, 2025, up from 46% in 2024[45] - The U.S. federal government accounted for 45% of total revenue for the nine months ended September 30, 2025, down from 55% in 2024[45] - The proportion of revenue from health and social programs decreased to 34% for the nine months ended September 30, 2025, down from 38% in 2024[45] Financial Position - Total current assets increased to $568,980,000 as of September 30, 2025, compared to $492,074,000 at the end of 2024[41] - Total assets rose to $2,113,570,000 as of September 30, 2025, up from $2,066,353,000 at the end of 2024[41] - Long-term debt increased to $449,404,000 as of September 30, 2025, compared to $411,743,000 at the end of 2024[41] - Cash, cash equivalents, and restricted cash at the end of the period increased to $53,926,000 as of September 30, 2025, compared to $7,635,000 at the end of the same period in 2024[43] Dividends and Shareholder Returns - A quarterly cash dividend of $0.14 per share was declared, payable on January 9, 2026[25] - Cash dividends declared per common share remained stable at $0.14 for both Q3 2025 and Q3 2024[35] Future Outlook - The company expects a return to revenue and earnings growth in 2026, supported by a robust pipeline of opportunities[28] Contract and Backlog Information - Contract awards totaled $714 million for a quarterly book-to-bill ratio of 1.53, a 2.4% increase year-on-year[8] - Total backlog was $3.5 billion, with funded backlog at $1.9 billion, representing approximately 52% of total backlog[12] - Fixed-price contracts represented 49% of total revenue for the nine months ended September 30, 2025, an increase from 46% in 2024[45] Cash Flow and Financing Activities - Cash paid for interest during the nine months ended September 30, 2025, was $20,045,000, a decrease from $24,388,000 in 2024[43] - The company reported a net cash used in financing activities of $18,226,000 for the nine months ended September 30, 2025, a significant improvement from $64,598,000 in 2024[43] - The company experienced a net change in cash of $35,109,000 for the nine months ended September 30, 2025, compared to a decrease of $1,814,000 in 2024[43]

Core Insights - Barry Broadus, CFO of ICF, will retire on March 1, 2026, after a 40-year career in finance, and will continue as a consultant for the company [2][3] - James Morgan, currently COO, will assume the role of Chief Operating and Financial Officer (COFO) upon Broadus's retirement, while Anne Choate will be named President at the start of 2026 [2][4] Leadership Changes - Barry Broadus has significantly contributed to ICF's financial capabilities and team building since joining in 2022 [3] - James Morgan has over 30 years of leadership experience and has been instrumental in ICF's business transformation and operational efficiency [4] - Anne Choate has led ICF's energy, environment, and infrastructure markets, expanding the commercial energy practice, which now accounts for approximately 30% of total revenues [5] Strategic Focus - The new leadership team will focus on executing organic growth, acquisitions, and financial strategies to enhance future growth and profitability [4][6] - Choate will lead ICF's client-facing business groups and business development, emphasizing technology and AI to improve client delivery [5]

Core Insights - ICF has announced the next generation of its utility program platform, Sightline, which now includes enhanced AI capabilities for better customer program management [1][4] - The upgraded Sightline platform aims to provide utilities with a comprehensive view of customer programs, enabling data-driven decisions to optimize energy efficiency and grid performance [2][3] Company Overview - ICF is a leading global solutions and technology provider with approximately 9,000 employees, specializing in energy consultancy and demand management across North America [5][6] - The company collaborates with various utilities, energy developers, and government agencies to deliver end-to-end solutions in the energy value chain [5] Product Features - Sightline's new AI analytics can identify peak energy demand periods, suggest ways to alleviate grid stress, and tailor cost-effective energy efficiency programs for customers [2][3] - The platform supports rapid business intelligence and analytics, allowing utilities to design and manage customer programs more efficiently [3] Market Context - By 2030, energy demand is projected to rise by 25%, with peak electricity demand increasing by 14%, presenting challenges for utility program planning [4] - Sightline's modular design allows utilities to adapt to changing needs, streamline operations, and enhance customer engagement [4] Industry Impact - Over 90 utilities and government entities utilize Sightline for managing programs, forecasting distributed energy resource adoption, and evaluating demand-side management program effectiveness [4]

Core Viewpoint - ICF International (ICFI) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade for ICF reflects an improved earnings outlook, which is likely to positively affect its stock price [4][6]. Impact of Earnings Estimate Revisions - There is a strong correlation between changes in earnings estimates and near-term stock price movements, with institutional investors using these estimates to determine fair value [5][7]. - Rising earnings estimates and the upgrade for ICF suggest an improvement in the company's underlying business, which should lead to higher stock prices [6]. Performance of Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [8]. - The upgrade of ICF to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10][11]. Earnings Estimate for ICF - For the fiscal year ending December 2025, ICF is expected to earn $7.06 per share, with a 2% increase in the Zacks Consensus Estimate over the past three months [9].

Core Insights - ICF International is currently experiencing a significant decline in stock price, dropping from approximately $180 to around $84 since November 2024, indicating a bearish outlook according to the Adhishthana Principles [1][5][7] - The stock has broken a critical Cakra formation, triggering a bearish signal known as the Move of Pralaya, which suggests deeper weakness ahead [1][3][5] Stock Performance - The stock's decline represents a drop of roughly 45% from its previous highs, with historical data indicating that this underperformance may continue until the Guna Triads begin in mid-2029 [5][7] - The Cakra formation typically indicates bullish implications; however, ICF International's failure to maintain this structure has led to a significant bearish trend [2][3] Structural and Fundamental Issues - A breakdown of the Cakra formation may signal potential underlying structural or fundamental issues within ICF International that are not yet apparent [6] - The current outlook for ICF International remains bearish, and investors considering a value buy are advised to delay their decisions due to the implications of the Move of Pralaya [7]

Group 1 - Britain's International Personal Finance received a takeover proposal of 514.9 million pounds ($693.31 million) from U.S.-based BasePoint Capital [1]

Group 1 - ICF International, Inc. has secured a new multi-year contract valued at $40 million to implement large-scale residential energy programs in Southern California [1][3] - The company will collaborate with local community organizations to provide no-cost energy and electrification upgrades, benefiting thousands of households by improving indoor air quality and reducing energy bills [2][3] - ICF will utilize advanced digital twin technology to simulate and analyze grid impacts in a virtual environment prior to deployment [4] Group 2 - Barrington has raised its price target for ICF International from $102 to $107, maintaining an Outperform rating, reflecting optimism about the company's revenue growth from commercial energy clients [4] - As of September 5, the average price target for ICF International is $98.50, indicating an upside potential of approximately 3.46% from current levels [5] - ICF International provides management, technology, and policy consulting services to both government and commercial clients [5]

Core Viewpoint - ICF has been awarded a $40 million contract to implement large-scale residential energy programs in six Southern California counties, aimed at improving energy efficiency and reducing strain on the electric grid [1][2]. Company Overview - ICF is a leading global solutions and technology provider with approximately 9,000 employees, specializing in energy programs and residential electrification [5]. - The company combines industry expertise with advanced technology to address complex challenges faced by public and private sector clients [5]. Contract Details - The contract, awarded in Q2 2025, focuses on integrating no-cost energy and electrification upgrades into existing home infrastructures [1][2]. - ICF will collaborate with local community organizations and trade allies to enhance indoor air quality, lower energy bills, and improve resilience to extreme heat [2]. Technology Utilization - ICF will utilize its Sightline® analytics platform to identify communities in need and monitor program performance [3]. - Advanced digital twin technology will be deployed to simulate and analyze the impact on the power grid before actual implementation [3]. Industry Context - The initiative addresses the growing tension between reliable power supply and affordability faced by communities across the country [4]. - ICF's extensive experience in energy programs positions it as a top provider in the utility sector, offering comprehensive services from strategy to customer engagement [4].