Core Viewpoint - The article emphasizes the importance of value investing and highlights ICF International (ICFI) as a strong candidate for value investors due to its favorable financial metrics and Zacks Rank [2][3][6] Company Analysis - ICF International (ICFI) has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating it is a high-quality value stock [3] - The company has a Price-to-Book (P/B) ratio of 1.74, which is significantly lower than the industry average of 3.21, suggesting it may be undervalued [4] - ICFI's P/B ratio has fluctuated between a high of 3.38 and a low of 1.48 over the past 52 weeks, with a median of 2.20 [4] - The Price-to-Cash Flow (P/CF) ratio for ICFI is 10.65, which is also lower than the industry average of 16.62, further indicating potential undervaluation [5] - Over the past 12 months, ICFI's P/CF has ranged from a high of 20.45 to a low of 8.92, with a median of 13.32 [5] - These financial metrics suggest that ICFI is likely undervalued at the moment, supported by a strong earnings outlook [6]

Summary of ICF International Conference Call Company Profile - ICF International is a professional services and technology services company with revenues slightly under $2 billion and approximately 9,500 employees. The company has been publicly traded on Nasdaq for nearly 20 years [4][5] - The company operates in two main verticals: - Energy, environment, infrastructure, and disaster recovery (48% of total revenue) - Public health and social programs (37% of total revenue) [5][6] Financial Performance - The company has a strong backlog, starting each year with over 70% of revenues secured [6] - Approximately 30% of the company's work is commercial, which is higher margin and growing rapidly, particularly in the energy sector [7] - The company expects a mid-single-digit decline in revenue for the year, primarily due to a transition in the US federal business, but anticipates returning to growth next year [9] Growth Drivers - The non-federal business is expected to grow approximately 15% this year, driven by: - Commercial energy work, primarily for utilities, which has been growing over 25% due to increased power demand from data centers and crypto [11][12] - Disaster recovery services, which are increasingly in demand due to the rising frequency and severity of natural disasters [13] - International revenues are also expected to grow by 20% due to large contracts with European Union and UK government clients [13][14] Federal Business Challenges - About 43-45% of total business is with the US federal government, which has seen significant contract cancellations due to a shift in administration priorities [15][16] - The company reported $117 million in revenue impacted by contract cancellations, with expectations that no further material cancellations will occur [18] - The federal focus is shifting towards IT modernization, with a strong emphasis on AI and agile methodologies [51][52] Sustainability and Renewable Energy - There is a continued interest in sustainability and renewable energy, despite federal shifts. Utilities are still prioritizing sustainability alongside resource adequacy [22][23] - The company is involved in various energy efficiency programs, which are funded through small charges on customer bills, and has a high recompete rate for these contracts [41][43] Disaster Recovery Business - The company has diversified its disaster recovery portfolio, now working in 20 states, and is well-positioned to respond to increasing natural disasters [34][36] - Federal funding for disaster recovery typically comes through special appropriations, which are often bipartisan [35] Margin and Future Outlook - The company has guided for flat EBITDA margins this year but has seen a slight increase in margins compared to last year due to a favorable mix of higher-margin commercial business [64][65] - The expectation is for continued margin improvement in the coming years, driven by growth in the commercial energy sector [66] Conclusion - ICF International is positioned for growth despite current challenges, with a strong focus on expanding its commercial and international business segments while navigating the complexities of federal contracts and sustainability initiatives [61][62]

Core Insights - ICF, a leading global solutions and technology provider, will participate in the Canaccord Genuity 45th Annual Growth Conference in Boston on August 13, 2025 [1] - The fireside chat will feature CEO John Wasson and Executive Vice President Anne Choate, scheduled for 9:30 a.m. Eastern Time [1] - A live webcast of the event will be available, with a replay accessible for 90 days post-conference [2] Company Overview - ICF employs approximately 9,000 individuals, combining business analysts, policy specialists, digital strategists, data scientists, and creatives [3] - The company has been operational since 1969, serving both public and private sector clients to navigate change and shape the future [3]

Core Insights - ICF has launched ICF Fathom™, a suite of tailored AI solutions for federal agencies aimed at accelerating results and improving efficiency [1][2] - The solution integrates seamlessly into existing systems and is designed to support a wide range of functions, enhancing productivity and decision-making [2][3] - ICF Fathom operates on an open, modular architecture, allowing agencies to adapt and scale at their own pace, ensuring immediate ROI [3][4] Company Overview - ICF is a leading global solutions and technology provider with approximately 9,000 employees, specializing in digital modernization and transformational solutions [6] - The company combines advanced analytics, industry expertise, and enterprise technologies to create agile solutions that meet dynamic end-user requirements [4][6] - ICF has a long history of working with public and private sector clients to navigate change and address complex challenges since its establishment in 1969 [6]

Core Insights - ICF International reported mixed results for the quarter, facing significant challenges related to its largest client [1] Financial Performance - The company experienced a notable impact from what has been described as 'One Big Beautiful Headwind' affecting its operations [1]

Core Insights - ICF International, Inc. (ICFI) reported mixed second-quarter 2025 results with earnings surpassing estimates while revenues fell short [1][11] - The market reacted positively to the earnings beat, resulting in a 5.4% increase in share price since the earnings release on July 31 [1] Financial Performance - Quarterly earnings per share (EPS) were $1.66, exceeding the Zacks Consensus Estimate by 1.8%, but down 1.8% year-over-year [3][8] - Total revenues amounted to $476.2 million, missing the Zacks Consensus Estimate by 0.4% and declining 7% year-over-year [3][8] Segmental Revenues - Revenues from government clients decreased by 18.2% year-over-year to $319.6 million, below the estimate of $350.2 million [4] - U.S. state and local government revenues were $85.6 million, representing 20.1% of total revenues, which was below the expected $95.8 million and down 1.02% year-over-year [4] - International government revenues reached $29.3 million, representing 6.2% of total revenues, lagging behind the anticipated $40.7 million but up 2% year-over-year [5] - U.S. federal government revenues were $204.7 million, contributing 43% to total revenues, missing the estimate of $213.7 million and down 25.2% year-over-year [5] - Commercial revenues, which accounted for 32.9% of total revenues, were $156.6 million, exceeding expectations and up 24.4% year-over-year [6] Operating Performance - Adjusted EBITDA fell 5.6% year-over-year to $52.9 million, with an adjusted EBITDA margin of 11.12%, which increased by 18 basis points from the previous year [7] Balance Sheet and Cash Flow - At the end of the quarter, cash and cash equivalents stood at $1.28 billion, down from $4.96 billion at the end of December 2024 [9] - Long-term debt increased to $462.3 million from $411.7 million in December 2024 [9] - The company used $18.9 million in cash from operating activities, with capital expenditures of $3.84 million [9] Guidance - For 2025, ICFI expects full-year operating cash flow to be approximately $150 million and capital expenditures to be between $26 million and $28 million [10] - The anticipated full-year tax rate is approximately 18.5% [10]

Core Insights - ICF International reported a 7.0% decline in revenue for Q2 2025, totaling $476.2 million, which fell short of analyst expectations of $482.8 million [1][2] - Non-GAAP earnings per share were $1.66, exceeding the consensus estimate of $1.57, attributed to improved margins and effective cost management [1][2] Financial Performance - Revenue for Q2 2025 was $476.2 million, down from $512.0 million in Q2 2024, marking a year-over-year decrease of 7.0% [2] - Non-GAAP EPS decreased by 1.8% from $1.69 in Q2 2024 to $1.66 in Q2 2025 [2] - Adjusted EBITDA was $52.9 million, down 5.5% from $56.0 million in the previous year [2] - Operating margin improved slightly to 8.4%, up from 8.3% in Q2 2024 [2] - Net income decreased by 7.4% to $23.7 million from $25.6 million in Q2 2024 [2] Business Focus and Strategy - ICF International specializes in consulting and technology services for government and commercial clients, focusing on energy efficiency, electrification, and digital transformation [3][4] - The company is expanding its commercial work, particularly in energy advisory services, and investing in analytics and AI projects [4] Revenue Segmentation - The commercial segment saw a 25.2% increase in revenue year-over-year, driven by a 27.4% gain in energy markets revenue [5] - Energy, environment, infrastructure, and disaster recovery projects accounted for 52% of total revenue, an increase from the previous period [5] - Federal revenue dropped 25.1% year-over-year, with government clients now representing 67% of total revenue, down from 76% in Q2 2024 [6] Margin and Cost Management - Operating margin improved to 8.4%, supported by a higher mix of fixed-price contracts and reduced costs for subcontractors [7] - Gross margin expanded due to effective management of contract types and a lower tax rate during the period [7] Future Outlook - Management maintained its full-year 2025 guidance, expecting revenue to decline by less than 10% compared to FY2024 [10] - Projected operating cash flow for FY2025 is $150 million, with a potential return to revenue and earnings growth in 2026 depending on market conditions [10] - The business development pipeline is valued at $9.2 billion, indicating healthy demand [8]

Core Insights - ICF International (ICFI) reported a revenue of $476.16 million for the quarter ended June 2025, marking a year-over-year decline of 7% and an EPS of $1.66 compared to $1.69 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $478.29 million, resulting in a surprise of -0.45%, while the EPS exceeded the consensus estimate of $1.63 by 1.84% [1] Revenue Breakdown - Revenue from the US Federal government was $204.68 million, slightly above the average estimate of $202.35 million from two analysts [4] - Revenue from US State & Local government was $85.65 million, below the average estimate of $91.4 million from two analysts [4] - Revenue from the Commercial sector was $156.57 million, exceeding the average estimate of $139.96 million from two analysts [4] - Total revenue from Government clients was $319.59 million, compared to the estimated $328.6 million from two analysts [4] - Revenue from International government clients was $29.26 million, below the average estimate of $34.85 million from two analysts [4] Stock Performance - ICF shares have returned -5.1% over the past month, contrasting with the Zacks S&P 500 composite's +2.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents ICF International, Inc.'s unaudited consolidated financial statements for periods ended June 30, 2025, covering balance sheets, income, equity, and cash flows [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Details the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $6,981 | $4,960 | | Goodwill | $1,253,025 | $1,248,855 | | **Total Assets** | **$2,073,991** | **$2,066,353** | | **Liabilities & Equity** | | | | Long-term debt | $462,319 | $411,743 | | **Total Liabilities** | **$1,073,599** | **$1,083,894** | | **Total Stockholders' Equity** | **$1,000,392** | **$982,459** | - Total assets increased slightly to **$2.07 billion**, primarily driven by an increase in contract assets and goodwill, while total liabilities decreased slightly. Long-term debt increased by approximately **$50.6 million** since year-end 2024[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Outlines the company's financial performance, including revenue, operating income, net income, and diluted EPS for Q2 and YTD 2025 and 2024 Key Income Statement Data (Unaudited) | (in thousands, except per share) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $476,155 | $512,029 | $963,773 | $1,006,465 | | Operating Income | $40,011 | $42,407 | $78,401 | $83,351 | | Net Income | $23,661 | $25,611 | $50,512 | $52,928 | | Diluted EPS | $1.28 | $1.36 | $2.72 | $2.80 | - Revenue and net income declined in both the second quarter and first half of 2025 compared to the same periods in 2024. Diluted EPS also decreased year-over-year for both periods[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities for the first six months of 2025 and 2024 Cash Flow Summary (Unaudited) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $18,923 | $50,635 | | Net Cash Used in Investing Activities | ($8,799) | ($8,677) | | Net Cash Used in Financing Activities | ($3,544) | ($46,508) | - Net cash from operating activities significantly decreased to **$18.9 million** in the first six months of 2025 from **$50.6 million** in the prior-year period. Net cash used in financing activities decreased substantially, primarily due to changes in borrowings and repayments on working capital facilities[20](index=20&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the consolidated financial statements, including accounting policies and significant transactions - The Company recognized **$11.6 million** in net income during the first six months of 2025 due to changes in estimates for fixed-price contracts accounted for under the percentage-of-completion method[25](index=25&type=chunk) - On December 31, 2024, the Company acquired Applied Energy Group, Inc. (AEG) for **$59.9 million** in cash. The purchase consideration included **$30.6 million** allocated to goodwill and **$25.4 million** to intangible assets like customer relationships and developed technology[59](index=59&type=chunk)[60](index=60&type=chunk) - Unfulfilled performance obligations (UPO) decreased from **$1.3 billion** at year-end 2024 to **$0.8 billion** as of June 30, 2025, reflecting a **$0.3 billion** impact from termination-for-convenience notifications related to executive orders[45](index=45&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance for Q2 and YTD June 30, 2025, highlighting revenue decline from terminated government contracts and future strategies [Overview and Outlook](index=20&type=section&id=Overview%20and%20Outlook) Management's perspective on current performance, strategic direction, and future expectations, including impacts from government contract terminations - The company received termination-for-convenience notices during the first six months of 2025 pursuant to executive orders by the Trump Administration, resulting in a **$418.2 million** reduction in backlog. These terminated contracts represented approximately **6.4%** of total fiscal year 2024 revenue[81](index=81&type=chunk) - Management believes long-term demand for its services will grow, particularly in areas like clean energy, health promotion, disaster relief, and homeland security[77](index=77&type=chunk) - Future strategy focuses on enhancing client relationships, seeking larger engagements, and pursuing strategic acquisitions to build scale and expertise[79](index=79&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Analyzes financial performance for Q2 and YTD periods, detailing revenue, operating income, and net income changes Q2 2025 vs Q2 2024 Performance | (in thousands) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $476,155 | $512,029 | ($35,874) | (7.0%) | | Operating Income | $40,011 | $42,407 | ($2,396) | (5.7%) | | Net Income | $23,661 | $25,611 | ($1,950) | (7.6%) | - The Q2 revenue decrease was primarily driven by a **$68.8 million** reduction from U.S. federal government clients due to terminated contracts, partially offset by a **$31.5 million** increase from commercial clients[85](index=85&type=chunk) YTD 2025 vs YTD 2024 Performance | (in thousands) | YTD 2025 | YTD 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $963,773 | $1,006,465 | ($42,692) | (4.2%) | | Operating Income | $78,401 | $83,351 | ($4,950) | (5.9%) | | Net Income | $50,512 | $52,928 | ($2,416) | (4.6%) | - The YTD revenue decrease was driven by a **$103.4 million** reduction from U.S. federal government clients, partially offset by a **$57.5 million** increase from commercial clients[96](index=96&type=chunk) [Non-GAAP Measures](index=24&type=section&id=Non-GAAP%20Measures) Provides reconciliations of non-GAAP financial measures, such as Adjusted EBITDA and Non-GAAP Diluted EPS, to their GAAP equivalents Reconciliation of Net Income to Adjusted EBITDA | (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $23,661 | $25,611 | $50,512 | $52,928 | | EBITDA | $53,074 | $55,643 | $105,207 | $112,082 | | Adjusted EBITDA | $52,875 | $56,013 | $108,073 | $111,168 | Reconciliation of U.S. GAAP Diluted EPS to Non-GAAP Diluted EPS | | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | U.S. GAAP Diluted EPS | $1.28 | $1.36 | $2.72 | $2.80 | | Non-GAAP Diluted EPS | $1.66 | $1.69 | $3.61 | $3.46 | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet financial obligations and fund operations, detailing cash flows, debt compliance, and available credit - As of June 30, 2025, the company was in compliance with its debt covenants and had **$488.3 million** available under its Credit Facility[117](index=117&type=chunk) - The company paid quarterly cash dividends of **$0.14 per share**, totaling **$5.2 million** in payments during the first six months of 2025[121](index=121&type=chunk) - Net cash provided by operating activities decreased to **$18.9 million** for the first six months of 2025, compared to **$50.6 million** for the same period in 2024[122](index=122&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States no material changes in market risk disclosures since the last Annual Report on Form 10-K - There have been no material changes in the disclosures regarding market risk from those presented in the company's Annual Report[124](index=124&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no significant internal control changes - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[125](index=125&type=chunk) - No significant changes were made to internal controls over financial reporting during the quarter[125](index=125&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters but does not expect a material adverse effect on its financial position - The company does not expect current legal proceedings to have a material adverse effect on its financial results[128](index=128&type=chunk) [Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) Indicates no material changes to risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes in the risk factors from those disclosed in the company's Annual Report[129](index=129&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Details share repurchase activity for Q2 2025, including program repurchases and shares for employee tax obligations - During Q2 2025, the company repurchased **31,339 shares** for an aggregate price of **$2.5 million** under its share repurchase program[131](index=131&type=chunk) - As of June 30, 2025, **$111.7 million** of repurchase authority remained available under the program[131](index=131&type=chunk) Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30 | 15,180 | $79.28 | | May 1 - May 31 | 16,193 | $79.69 | | June 1 - June 30 | — | $— | | **Total** | **31,373** | **$79.49** | [Other Information](index=28&type=section&id=Item%205.%20Other%20Information) Discloses COO James Morgan modified a Rule 10b5-1(c) trading plan to sell up to 10,000 shares of common stock - On May 27, 2025, Chief Operating Officer James Morgan modified a Rule 10b5-1(c) trading plan to sell up to **10,000 shares** of common stock. Trading under the modified plan can begin no earlier than September 24, 2025[137](index=137&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including officer certifications and financial data formatted in iXBRL - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[138](index=138&type=chunk)

Core Viewpoint - ICF International reported quarterly earnings of $1.66 per share, exceeding the Zacks Consensus Estimate of $1.63 per share, but down from $1.69 per share a year ago, indicating a slight decline in year-over-year earnings performance [1][2] Financial Performance - The company achieved revenues of $476.16 million for the quarter ended June 2025, which fell short of the Zacks Consensus Estimate by 0.45% and decreased from $512.03 million in the same quarter last year [2] - Over the last four quarters, ICF has surpassed consensus EPS estimates four times, but has only topped consensus revenue estimates once [2] Stock Performance - ICF shares have declined approximately 30.6% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] - The current Zacks Rank for ICF is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $1.70, with projected revenues of $472.53 million, while the estimate for the current fiscal year is $6.92 on $1.9 billion in revenues [7] - The trend of earnings estimate revisions for ICF was mixed prior to the earnings release, which may influence future stock performance [6] Industry Context - The Government Services industry, to which ICF belongs, is currently ranked in the top 5% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8]