Financial Data and Key Metrics Changes - Second quarter revenue was $476.2 million, down 2.4% from the first quarter and a 7% decline year-over-year, or 4% when excluding subcontractor and other direct costs [20][21] - Adjusted EBITDA margin expanded by 20 basis points to 11.1%, reflecting gross margin expansion [24] - Net income was $23.7 million with diluted EPS of $1.28, compared to $25.6 million and diluted EPS of $1.36 in the previous year [25] Business Line Data and Key Metrics Changes - Revenues from commercial clients increased by 25.2% in the second quarter, driven by a 27% increase in commercial energy clients [8][21] - Revenues from state and local government clients increased by 1%, with disaster management accounting for about 45% of this client category [12] - Revenues from international government clients increased by 2%, while federal government revenues declined by 9.8% sequentially, representing a 25.2% reduction year-over-year [14][15] Market Data and Key Metrics Changes - Revenues from commercial, state and local government, and international government clients grew 13.8% and accounted for approximately 57% of total revenues, up from 47% a year ago [20] - The company expects revenues from commercial, state and local, and international government clients to increase approximately 15% this year [14] Company Strategy and Development Direction - The company is focused on expanding its capabilities in AI and other technologies while maintaining a balanced approach to capital allocation, including funding organic growth initiatives and pursuing strategic acquisitions [28] - The introduction of ICF Fathom, a suite of tailored AI solutions for federal agencies, is aimed at modernizing federal technology systems [19][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a more positive business outlook for 2025, supported by strong demand from commercial energy clients and a stable revenue outlook from state and local government clients [7][32] - The company does not foresee full-year revenues declining by as much as 10% from 2024 levels, indicating improved visibility and confidence in the business environment [30][46] Other Important Information - The company repurchased an additional $11 million shares during the first half of the year and announced a quarterly cash dividend of $0.14 per share [24][28] - Backlog at the end of the second quarter was $3.4 billion, with 54% of the backlog funded, reflecting stability and long-term visibility [25] Q&A Session Summary Question: Can you provide insights on the backlog and federal work mix? - Federal government backlog constitutes about half of the total backlog, with the remainder divided among state and local and commercial clients [34][35] Question: What improvements are being seen in federal government activity? - There has been a pickup in contract modifications and funding, particularly in IT modernization and complex program management [42][43] Question: How is the company viewing the state and local activity? - There has been no decrease in federal funding for FEMA programs, and the company is preparing for potential shifts in responsibilities to state and local governments [51][52] Question: What is the current acquisition pipeline like? - The company is focused on potential acquisitions in the commercial energy sector, while remaining cautious about federal acquisitions due to uncertainty [54][56] Question: What are the expectations for the procurement environment in the upcoming quarter? - The third quarter is expected to be strong for sales, although there are risks associated with staffing changes among contracting officers [61][62] Question: How is the growth in data centers impacting the commercial energy segment? - The demand for electricity associated with data centers is unprecedented, driving significant growth opportunities in the commercial energy sector [63][64]

Exhibit 99.1 NEWS RELEASE ICF Reports Second Quarter 2025 Results ―Second Quarter in Line with Expectations Led by 27% Revenue Growth in Commercial Energy― ―Margins Continue to Benefit From Favorable Mix― ―Maintains Full Year 2025 Guidance Framework with Improved Business Outlook― ―Expects a Return to Revenue and Earnings Growth in 2026― Second Quarter Highlights: RESTON, Va., July 31, 2025 — ICF (NASDAQ: ICFI), a leading global solutions and technology provider, reported results for the second quarter ende ...

Summary of ICF International Conference Call Company Overview - **Company Name**: ICF International - **Ticker**: ICFI - **Business Focus**: Global solutions and technology provider, primarily in consulting and advisory services, with a strong emphasis on energy, environment, and infrastructure [6][7] Key Financial Metrics - **Revenue CAGR**: 6.4% over the past five years - **Non-GAAP EPS CAGR**: 12.4% over the past five years [7] Business Segments and Growth Expectations - **Non-Federal Government Business**: Expected to grow by approximately 15% [9] - **Client Portfolio**: About half of revenues come from commercial clients, including energy utilities and state/local governments [8] Energy Sector Insights - **Energy Efficiency Programs**: Evolving to include nontraditional programs such as electrification and flexible load management [12] - **Renewable Energy Demand**: Anticipated faster growth in energy demand in the U.S. over the next 10-30 years, driven by peak hour demand and the need for renewable energy [14] - **Impact of IRA and Tax Incentives**: Uncertainty around tax incentives is affecting project timelines, but many renewable projects are still moving forward [15][16] Disaster Recovery and Management - **Growth Area**: Disaster management is expected to see more RFPs due to federal funding allocations [21][22] - **Federal to State Transition**: The federal government is shifting disaster recovery responsibilities to states, which could create more opportunities for ICF [23][25] Federal Government Work - **Revenue Losses**: Approximately $115 million in revenue lost due to contract terminations, primarily from USAID [29] - **Contract Modifications**: Some previously discontinued contracts are being reinstated, indicating a potential recovery in federal work [34][35] IT Modernization and Digital Transformation - **Focus Area**: About half of federal work involves IT modernization and digital transformation, with a projected decline in revenues due to procurement slowdowns [42][45] - **Contract Structure**: Majority of contracts are firm fixed price, aligning with the current administration's preferences [44][49] Health and Human Services - **Campaign Alignment**: The "Make America Healthy Again" campaign aligns well with ICF's expertise in health services [54] - **CMS Budget Stability**: Initial indications suggest that the budget for CMS will remain intact, providing a stable revenue source [57] Adjusted EBITDA Margins - **Margin Stability**: Expected to remain similar to the previous year despite uncertainties, with actions taken to align cost structure with revenue production [63][66] - **Contract Mix**: Shift towards more profitable commercial work is expected to enhance margins [66] Conclusion - ICF International is well-positioned to capitalize on growth opportunities in energy efficiency, disaster recovery, and health services, while navigating challenges in federal contracts and IT modernization. The company's diversified portfolio and strong client relationships are key strengths in a changing market environment [41][68]

Core Viewpoint - ICF International, Inc. reported strong earnings for Q1 2025, exceeding the Zacks Consensus Estimate, but revenues fell short, leading to minimal market reaction post-earnings release [1]. Financial Performance - Quarterly earnings per share were $1.94, beating the Zacks Consensus Estimate by 11.5% and increasing 9.6% year-over-year [2]. - Total revenues amounted to $487.7 million, slightly missing the Zacks Consensus Estimate and decreasing 1.4% year-over-year [2]. Segmental Revenues - Revenues from government clients rose 12.6% year-over-year to $343.6 million, but fell short of the estimate of $364.7 million [3]. - U.S. state and local government revenues were $76.9 million, representing 15.8% of total revenues, which was below the expected $90.7 million and declined 0.13% year-over-year [3]. - International government revenues reached $27.1 million, accounting for 5.6% of total revenues, lagging behind the anticipated $30.4 million but increasing 7.2% year-over-year [4]. - U.S. federal government revenues were $239.6 million, contributing 49.1% to total revenues, missing the estimate of $243.6 million and decreasing 12.6% year-over-year [4]. - Commercial revenues, which made up 29.5% of total revenues, amounted to $144.1 million, exceeding expectations of $121.8 million and rising 3.1% year-over-year [5]. Operating Performance - Adjusted EBITDA increased by 0.08% year-over-year to $55.2 million, with an adjusted EBITDA margin of 11.3%, up 10 basis points from the previous year [6]. Balance Sheet and Cash Flow - At the end of the quarter, cash and cash equivalents stood at $5.7 billion, up from $5 billion in the previous quarter [7]. - Long-term debt increased to $502 million from $411.7 million in the prior quarter [7]. - The company utilized $33 million in cash from operating activities, with capital expenditures of $3.5 million [7]. Guidance - For Q2 2025, ICFI expects revenues to be similar to Q1 2025 levels [8]. - GAAP EPS for 2025 is projected to be flat to down 10% compared to last year [8]. - Full-year operating cash flow is anticipated to be around $150 million, with capital expenditures expected to be between $26 million and $28 million [8]. - The full-year tax rate is now expected to be approximately 18.5% [8].

Core Insights - ICF International reported a revenue of $487.62 million for the quarter ended March 2025, reflecting a decrease of 1.4% year-over-year, while EPS increased to $1.94 from $1.77 in the previous year [1] - The revenue was slightly below the Zacks Consensus Estimate of $487.7 million, resulting in a surprise of -0.02%, whereas the EPS exceeded the consensus estimate of $1.74 by +11.49% [1] Revenue Breakdown - Revenue from the US Federal government was $239.62 million, surpassing the average estimate of $236.82 million from two analysts [4] - Revenue from US State & Local government was $76.87 million, falling short of the average estimate of $86.85 million from two analysts [4] - Commercial revenue reached $144.06 million, exceeding the average estimate of $132.40 million from two analysts [4] - Total revenue from the Government sector was $343.56 million, slightly below the average estimate of $351.86 million from two analysts [4] - International government revenue was $27.08 million, also below the average estimate of $28.19 million from two analysts [4] Stock Performance - ICF shares have returned +1.5% over the past month, contrasting with a -0.5% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

PART I. FINANCIAL INFORMATION [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) In Q1 2025, ICF International, Inc. reported a slight revenue decrease to **$487.6 million**, stable net income, and increased cash used in operations to **$33.0 million** due to working capital timing [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased slightly to **$2.075 billion**, while total liabilities rose to **$1.106 billion** and stockholders' equity decreased to **$968.9 million** due to share repurchases Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $510,829 | $492,074 | | Goodwill | $1,251,199 | $1,248,855 | | **Total Assets** | **$2,075,098** | **$2,066,353** | | **Total Current Liabilities** | $381,527 | $449,180 | | Long-term debt | $502,044 | $411,743 | | **Total Liabilities** | **$1,106,230** | **$1,083,894** | | **Total Stockholders' Equity** | **$968,868** | **$982,459** | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Q1 2025 revenue decreased **1.4%** to **$487.6 million**, with operating income falling to **$38.4 million** and net income remaining flat at **$26.9 million** Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $487,618 | $494,436 | | Operating Income | $38,390 | $40,944 | | Net Income | $26,851 | $27,317 | | Diluted EPS | $1.44 | $1.44 | | Comprehensive Income | $24,138 | $28,001 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly increased to **$33.0 million** in Q1 2025, primarily due to working capital timing, resulting in a **$5.3 million** net increase in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(33,034) | $(10,001) | | Net Cash Used in Investing Activities | $(3,452) | $(3,511) | | Net Cash Provided by Financing Activities | $41,024 | $8,833 | | **Net Change in Cash** | **$5,275** | **$(4,850)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail revenue recognition, debt, and acquisitions, noting decreased U.S. federal government revenue, a lower effective tax rate, and reduced unfulfilled performance obligations - On December 31, 2024, the Company acquired Applied Energy Group, Inc. (AEG) for **$60.7 million** in cash, enhancing service offerings to utility and government clients[54](index=54&type=chunk) - The effective tax rate for Q1 2025 was **10.5%**, down from **20.4%** in Q1 2024, primarily due to a **$4.5 million** non-cash deferred income tax benefit from new U.S. federal tax regulations under IRC Section 987[48](index=48&type=chunk) - Unfulfilled performance obligations (UPO) were **$0.9 billion** as of March 31, 2025, down from **$1.3 billion** at year-end 2024, including approximately **$0.3 billion** from contract terminations for convenience[45](index=45&type=chunk) Revenue by Client Type (in thousands) | Client Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | U.S. federal government | $239,620 (49%) | $274,195 (55%) | | U.S. state and local government | $76,865 (16%) | $76,953 (16%) | | International government | $27,075 (5%) | $25,263 (5%) | | Commercial | $144,058 (30%) | $118,025 (24%) | | **Total** | **$487,618 (100%)** | **$494,436 (100%)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **1.4%** revenue decline to decreased U.S. federal government contracts, offset by commercial growth, with Adjusted EBITDA flat at **$55.2 million** and Non-GAAP Diluted EPS increasing to **$1.94** [Overview and Outlook](index=23&type=section&id=Overview%20and%20Outlook) The company faces challenges from U.S. government contract terminations impacting **5.7%** of 2024 revenue, but sees long-term growth opportunities in key markets, focusing on strategic acquisitions and technology solutions - In Q1 2025, the company received termination-for-convenience notices from the new Administration or DOGE, impacting about **5.7%** of total 2024 revenue and **$375.0 million** of backlog[74](index=74&type=chunk) - Subsequent to the quarter-end, additional termination notices were received, representing approximately **$12.0 million** of future contract value[75](index=75&type=chunk) - The company sees growth opportunities for its technology solutions, combining deep institutional knowledge with expertise in AI, open source, and cloud-native platforms to meet evolving customer demands[71](index=71&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Q1 2025 revenue decreased **1.4%** to **$487.6 million** due to Health and Social Programs decline, partially offset by growth in Energy, Environment, Infrastructure, and Disaster Recovery, with operating income falling **6.2%** Results of Operations Summary (in thousands) | Line Item | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $487,618 | $494,436 | (1.4%) | | Total Direct Costs | $302,542 | $310,533 | (2.6%) | | Operating Income | $38,390 | $40,944 | (6.2%) | | Income before Income Taxes | $30,001 | $34,336 | (12.6%) | | Net Income | $26,851 | $27,317 | (1.7%) | - The decrease in revenue was driven by a **$34.6 million** decline from U.S. federal government clients, offset by a **$26.0 million** increase from commercial clients[78](index=78&type=chunk) [Non-GAAP Measures](index=26&type=section&id=Non-GAAP%20Measures) Adjusted EBITDA for Q1 2025 was nearly flat at **$55.2 million**, while Non-GAAP Diluted EPS increased to **$1.94** from **$1.77**, benefiting from a lower tax rate and specific adjustments Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $26,851 | $27,317 | | EBITDA | $52,133 | $56,439 | | Adjustments | $3,065 | $(1,284) | | **Adjusted EBITDA** | **$55,198** | **$55,155** | Reconciliation of U.S. GAAP Diluted EPS to Non-GAAP Diluted EPS | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | U.S. GAAP Diluted EPS | $1.44 | $1.44 | | Adjustments (net) | $0.50 | $0.33 | | **Non-GAAP Diluted EPS** | **$1.94** | **$1.77** | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained **$448.4 million** in unused borrowing capacity, with cash used in operations increasing to **$33.0 million** due to working capital timing, while funding dividends and share repurchases - As of March 31, 2025, the company had **$448.4 million** of unused borrowing capacity under its **$600.0 million** revolving line of credit[39](index=39&type=chunk)[97](index=97&type=chunk) - The company paid quarterly cash dividends of **$0.14 per share**, totaling **$2.6 million** in Q1 2025[101](index=101&type=chunk) - Cash used in operating activities increased by **$23.0 million** to **$33.0 million** due to the timing of invoicing, collections, and vendor payments[101](index=101&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes in its market risk disclosures compared to the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes in the disclosures regarding Quantitative and Qualitative Disclosures About Market Risk since the last Annual Report[103](index=103&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no significant changes in internal controls over financial reporting during the quarter - Management concluded that as of March 31, 2025, the Company's disclosure controls and procedures were effective[104](index=104&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters in the ordinary course of business, not expecting a material adverse effect on its financial position, results of operations, or cash flows - The company is involved in various legal matters in the ordinary course of business and does not expect any ultimate liability to have a material adverse effect on its financials[107](index=107&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes in the risk factors discussed in the company's Annual Report[108](index=108&type=chunk) [Issuer Purchases of Equity Securities](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) In Q1 2025, the company repurchased **313,048 shares** for **$35.1 million** under its share repurchase program, with **$114.2 million** of repurchase authority remaining available - In Q1 2025, the company repurchased **313,048 shares** for **$35.1 million** under its share repurchase program[110](index=110&type=chunk) - As of March 31, 2025, **$114.2 million** remained available for future share repurchases under the authorized program[110](index=110&type=chunk) Share Repurchase Activity for Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | January | 134,895 | $129.53 | 121,572 | | February | 191,858 | $101.15 | 191,476 | | March | 29,105 | $84.83 | — | | **Total** | **355,858** | **$110.57** | **313,048** | [Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[114](index=114&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Not applicable[115](index=115&type=chunk) [Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No other material information was reported - None[116](index=116&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL data files

Company Performance - ICF International (ICFI) reported quarterly earnings of $1.94 per share, exceeding the Zacks Consensus Estimate of $1.74 per share, and up from $1.77 per share a year ago, representing an earnings surprise of 11.49% [1] - The company posted revenues of $487.62 million for the quarter ended March 2025, slightly missing the Zacks Consensus Estimate by 0.02%, and down from $494.44 million year-over-year [2] - Over the last four quarters, ICF has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Outlook - ICF shares have declined approximately 28.7% since the beginning of the year, compared to a 5.3% decline in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.63 on revenues of $481.39 million, and for the current fiscal year, it is $6.97 on revenues of $1.93 billion [7] - The estimate revisions trend for ICF is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Industry Context - The Government Services industry, to which ICF belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact ICF's stock performance [5]

Financial Data and Key Metrics Changes - The company's first quarter revenues declined by 1.4% year over year to $487.6 million, which is within the guidance range [17] - Adjusted EBITDA margin on total revenues expanded by 10 basis points to 11.3%, reflecting careful cost management [6][21] - Non-GAAP EPS increased by 9.6% year over year to $1.90, significantly outpacing revenue performance [22] Business Line Data and Key Metrics Changes - Revenues from commercial clients increased by 22.1% year over year, accounting for 29.5% of total revenues, up from 23.9% in the previous year [6][18] - Revenues from commercial energy clients rose by 21%, driven by strong demand for energy efficiency programs [5][7] - Revenues from state and local government clients remained stable year on year, with disaster management revenues experiencing lower pass-through revenues [11][12] - International government client revenues increased by 7.2% in the first quarter, aided by new task orders from the European Union and UK government [12][13] Market Data and Key Metrics Changes - The company reported that revenues from commercial, state and local, and international government clients collectively accounted for 51% of first quarter revenues, up from approximately 45% a year ago [5][18] - Federal client revenues declined by 12.6% year over year, impacted by contract funding curtailments and a slower pace of new RFPs [13][15] Company Strategy and Development Direction - The company aims to maintain adjusted EBITDA margins comparable to 2024 levels while navigating a dynamic federal government business environment [15][30] - The focus remains on capturing growth opportunities in commercial energy, state and local, and international government sectors, with expectations of at least 15% growth in these areas for the full year [29] - The company is also exploring strategic acquisitions, particularly in the energy sector, while remaining cautious in the federal arena due to uncertainty [74] Management's Comments on Operating Environment and Future Outlook - Management indicated that the federal business environment remains fluid and unsettled, with expectations of continued activity but not significantly more impactful than the first quarter [33] - The company reaffirmed its revenue guidance for 2025, projecting a decline of flat to 10% from last year, primarily due to federal government revenue losses [15][29] - Management expressed confidence in the growth prospects for the commercial energy business, citing increased budgets from utility clients for energy efficiency programs [10][16] Other Important Information - The backlog at the end of the first quarter was $3.4 billion, with $1.9 billion funded, indicating stability in the business [23] - The company repurchased 313,000 shares for a total of $35 million during the first quarter, demonstrating confidence in its long-term outlook [25][26] Q&A Session Summary Question: Guidance on the impact of federal government changes - Management expects Q2 and Q3 to have similar impacts as Q1, with no significant increase in federal activity [33] Question: Update on stop work orders - The figure for stop work orders has increased to approximately $375 million [34] Question: Contribution of Applied Energy Group to revenues - Specific revenue figures for Applied Energy Group were not disclosed, but integration and performance have been positive [36][37] Question: Outlook for IT modernization business - The IT modernization business is expected to decline by 5% to 10% due to delays in awards, with no significant cuts observed yet [41][42] Question: Growth outlook for disaster recovery business - The disaster recovery business is expected to grow, supported by a robust pipeline of opportunities [60] Question: Potential for acquisitions - Future acquisitions are likely to focus on the energy sector, with smaller tuck-in acquisitions being more probable [74][76]

Financial Data and Key Metrics Changes - First quarter revenues declined by 1.4% year over year to $487.6 million, within guidance range [17] - Adjusted EBITDA margin on total revenues expanded by 10 basis points to 11.3% [6][21] - Non-GAAP EPS increased by 9.6% year over year to $1.90, significantly ahead of revenue comparisons [22] Business Line Data and Key Metrics Changes - Revenues from commercial clients increased by 22.1% year over year, accounting for 29.5% of total revenues [6][18] - Revenues from commercial energy clients rose by 21% year over year, driven by energy efficiency and customer engagement programs [5][7] - Revenues from state and local government clients remained stable year on year, with disaster management revenues experiencing lower pass-through revenues [10][11] - Revenues from international government clients increased by 7.2% in the first quarter [12] Market Data and Key Metrics Changes - Revenues from federal clients declined by 12.6% compared to the previous year, impacted by contract funding curtailments [14] - Approximately $115 million of estimated 2025 revenues have been affected by stop work orders and contract terminations [15] Company Strategy and Development Direction - The company expects revenues from commercial energy, state and local, and international government clients to grow at least 15% in aggregate for the year [29] - The company plans to maintain adjusted EBITDA margins similar to 2024 levels despite revenue challenges [15][30] - Focus on organic growth initiatives and strategic acquisitions in targeted markets, particularly in energy [26][74] Management's Comments on Operating Environment and Future Outlook - The federal government business environment remains fluid, with expectations of continued activity but not significantly more impactful than Q1 [33] - The company is optimistic about growth prospects in commercial energy and disaster recovery despite challenges in federal contracts [10][12][29] - Management believes that the diversified business model will help navigate through challenging conditions and position for growth in 2026 [16][30] Other Important Information - Backlog at the end of the first quarter was $3.4 billion, with $1.9 billion funded [23] - The company repurchased 313,000 shares for an aggregate purchase price of $35 million [25] Q&A Session Summary Question: Guidance on federal business impact - Management expects Q2 and Q3 to have similar impacts as Q1, with no significant increase in federal business impact [33] Question: Update on contract terminations - The figure for contract terminations has increased to approximately $375 million [35] Question: Contribution of Applied Energy Group to revenues - Specific revenue contributions from Applied Energy Group were not disclosed, but integration and performance are satisfactory [36] Question: Outlook for IT modernization business - IT modernization is expected to decline by 5% to 10% due to delays in awards, but opportunities are anticipated in the second half of the year [42][68] Question: Growth outlook for disaster recovery business - The disaster recovery business is expected to grow, supported by a robust pipeline of opportunities [60] Question: Acquisition strategy - Future acquisitions are likely to focus on the energy sector, with smaller tuck-in acquisitions being more probable [74]

Financial Data and Key Metrics Changes - The company's first quarter revenues declined by 1.4% year over year to $487.6 million, which is within the guidance range [16] - Adjusted EBITDA margin on total revenues expanded by 10 basis points to 11.3%, reflecting careful cost management [6][19] - Non-GAAP EPS increased by 9.6% year over year to $1.90, significantly outpacing revenue performance [21] Business Line Data and Key Metrics Changes - Revenues from commercial clients increased by 22.1% year over year, accounting for 29.5% of total first quarter revenues, up from 23.9% in the previous year [6][17] - Revenues from commercial energy clients rose by 21% year over year, driven by strong demand for energy efficiency programs [5][6] - Revenues from state and local government clients remained stable year on year, with disaster management revenues experiencing lower pass-through revenues [11] - Revenues from international government clients increased by 7.2% in the first quarter, aided by recent contract wins with the European Union and the UK government [12][13] Market Data and Key Metrics Changes - The company reported that revenues from commercial, state and local, and international government clients collectively accounted for 51% of total revenues, up from approximately 45% in the prior year [17] - Federal client revenues declined by 12.6% year over year, impacted by contract funding curtailments and a slower pace of new RFPs [13][14] Company Strategy and Development Direction - The company aims to maintain its adjusted EBITDA margins at levels comparable to 2024 margins while navigating a dynamic federal government business environment [14][29] - The company expects revenues from commercial energy, state and local, and international government clients to grow at least 15% in aggregate for the year, partially offsetting lower revenues from federal clients [27][28] - The company is focused on organic growth initiatives and strategic acquisitions in targeted markets, particularly in the energy sector [24][73] Management's Comments on Operating Environment and Future Outlook - Management indicated that the federal business environment remains fluid and unsettled, with expectations for continued activity in the coming quarters [32] - The company reaffirmed its revenue guidance for 2025, projecting a decline of flat to 10% from last year, primarily due to federal government revenue losses [14][27] - Management expressed confidence in the growth prospects for the commercial energy business, citing increased budgets from utility clients for energy efficiency programs [10][29] Other Important Information - The company completed the integration of AEG, a leading energy technology and advisory firm, which is expected to enhance growth opportunities [9] - The backlog at the end of the first quarter was $3.4 billion, with $1.9 billion funded, indicating stability in the business [22] - The company repurchased 313,000 shares for an aggregate purchase price of $35 million, demonstrating confidence in its long-term outlook [24] Q&A Session Summary Question: Guidance on the impact of federal business - Management expects Q2 and Q3 to have similar impacts as Q1, with no significant increase in federal business impact [32] Question: Update on stop work orders - The figure for stop work orders has increased to approximately $375 million [33] Question: Contribution of Applied Energy Group to revenues - The contribution of Applied Energy Group was not disclosed separately, but management expressed satisfaction with its integration and performance [35][36] Question: Outlook for IT modernization business - The IT modernization business is expected to decline by 5% to 10% for the year due to delays in awards [40] Question: Growth outlook for commercial energy - Management expects commercial energy to continue being a strong performer with high margins [46] Question: Insights on disaster recovery business - The disaster recovery business is expected to grow this year, supported by a robust pipeline of opportunities [60] Question: Potential for acquisitions - Future acquisitions are likely to focus on the energy sector, with smaller tuck-in acquisitions being more probable [73]