(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of April ~~28, 2023,~~26, 2024, there were ~~18,788,082~~18,736,579 shares outstanding of the registrant’s common stock.

The accompanying notes are an integral part of these consolidated financial statements.

(~~dollar~~Dollar amounts in tables in thousands, except share and per share data)

The unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These rules and regulations permit some of the information and footnote disclosures normally included in financial statements, prepared in accordance with U.S. GAAP, to be condensed or omitted. In management’s opinion, the unaudited consolidated financial statements contain all adjustments that are of a normal recurring nature, necessary for a fair presentation of the results of operations and financial position of the Company for the interim periods presented. The Company reports operating results and financial data in one operating segment and reporting unit. Operating results for the ~~three months periods~~three-month period ended March 31, ~~2023~~2024 and ~~2022~~2023 are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, ~~2022~~2023 and the notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on ~~March 1, 2023.~~

NOTE 4 – LEASES

The Company has operating and finance leases for facilities and equipment which have remaining terms ranging from 1 to 1615 years. ~~The leases may include options to extend the lease periods for up to~~ 5 ~~years~~ ~~at rates approximating market rates and/or~~ ~~options to terminate the leases within~~ 1 ~~year~~. ~~The leases may include a residual value guarantee or a responsibility to return the property to its original state of use.~~ A limited number of leases contain provisions that provide for rental increases based on consumer price indices. The change in lease cost resulting from changes in these indices is included within variable lease cost.

~~The Company’s lease cost is recognized on a straight-line basis over the lease term. Lease cost consists of the following:~~

Three Months Ended

March 31, 2023

March 31, 2022

Operating lease cost

$
6,489

$
9,502

Finance lease cost - amortization of right-of-use assets

494

—

Finance lease cost - interest

152

—

Short-term lease cost

149

133

Variable lease cost

55

20

Sublease income

(28
)

(10
)
Total lease cost

$
7,311

$
9,645

Future minimum lease payments under non-cancellable operating and finance leases as of March 31, ~~2023~~2024 were as follows:


	Operating			Finance			Operating			Finance
March 31, 2024	$	18,582		$	2,967
March 31, 2025		28,674			2,967		$	26,611		$	3,041
March 31, 2026		26,939			2,967			25,415			3,041
March 31, 2027		23,322			2,967			22,121			3,041
March 31, 2028		17,024			2,967
March 30, 2028								17,427			3,040
March 31, 2029								15,288			2,966
Thereafter		139,443			5,192			127,991			2,225
Total future minimum lease payments		253,984			20,027			234,853			17,354
Less: Interest		(48,529	)		(2,119	)		(43,389	)		(1,582	)
Total lease liabilities	$	205,455		$	17,908		$	191,464		$	15,772

~~Other information related to operating and finance leases is as follows:~~

March 31, 2023

March 31, 2022

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows for operating leases

$
4,982

$
10,110

Operating cash outflows for finance leases

152

—

Financing cash outflows for finance leases

590

—

Right-of-use assets obtained in exchange for operating lease liabilities

$
8,900

$
2,952

Weighted-average remaining lease term

Operating leases

11.6

11.5

Finance leases

6.8

—

Weighted-average discount rate

Operating leases

3.5
%

3.2
%
Finance leases

3.4
%

—

NOTE 5 – ~~ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES~~

~~At March 31, 2023 and December 31, 2022, accrued expenses and other current liabilities consisted of the following:~~

March 31, 2023

December 31, 2022

Deposits
$
22,792

$
32,384

Restricted contract funds

3,562

1,701

IT and software licensing costs

1,285

1,609

Taxes and insurance premiums

4,834

6,633

Facilities rental and lease exit costs

1,846

2,043

Interest

3,661

363

Professional services

2,958

3,617

Dividends

2,623

2,631

Cash collected not yet remitted to purchaser of billed receivables

13,225

6,164

Other accrued expenses and current liabilities

10,303

20,891

Total accrued expenses and other current liabilities
$
67,089

$
78,036

~~NOTE 6 – LONG-TERM~~ DEBT

At March 31, ~~2023~~2024 and December 31, ~~2022, long-term~~2023, debt consisted of:


	March 31, 2023				December 31, 2022				March 31, 2024				December 31, 2023
	Average Interest Rate	Outstanding Balance			Average Interest Rate	Outstanding Balance			Average Interest Rate	Outstanding Balance			Average Interest Rate	Outstanding Balance
Term Loan		$	285,000			$	288,750			$	204,000			$	207,750
Delayed-Draw Term Loan			220,000				220,000				217,250				220,000
Revolving Credit			97,721				52,616				56,904				6,340
Total before debt issuance costs	6.3%		602,721		3.3%		561,366		6.9%		478,154		6.7%		434,090
Unamortized debt issuance costs			(4,742	)			(5,032	)			(3,406	)			(3,683	)
Total		$	597,979			$	556,334			$	474,748			$	430,407

As of March 31, ~~2023,~~2024, the Company had ~~unused delayed draw term loan facility~~ $~~180.0~~541.3 million ~~(available through May 6, 2023, with an additional six-month extension upon request by the Company) and~~of unused borrowing capacity under the $600.0 million revolving line of credit under a credit agreement with a group of $~~499.6~~ ~~million under the Credit Facility.~~lenders (the “Credit Facility”). The unused borrowing capacity is inclusive of outstanding letters of credit totaling $~~2.7~~1.8 million. ~~Considering the financial, performance-based limitations, available borrowing capacity was~~$~~403.5~~ ~~million as of March 31, 2023.~~ The average interest rate on borrowings under the Credit Facility was ~~6.3~~6.9% for the ~~three-months period~~three months ended March 31, ~~2023~~2024 and ~~3.3~~6.7% for the ~~twelve-months period~~twelve months ended December 31, ~~2022.~~2023. Inclusive of the impact of floating-to-fixed interest rate swaps (see “Note ~~8 —~~7 – Derivative Instruments and Hedging Activities”), the average interest rate was ~~5.5~~5.6% for the ~~three-months period~~three months ended March 31, ~~2023~~2024 and~~3.7~~% for the ~~twelve-months period~~twelve months ended December 31, ~~2022.~~

2023, respectively.

Future ~~scheduled~~contractual repayments of debt principal are as follows:


Payments due by	Term Loan		Delayed-Draw Term Loan		Revolving Credit		Total		Term Loan		Delayed-Draw Term Loan		Revolving Credit		Total
March 31, 2024	$	15,000	$	11,000	$	—	$	26,000
March 31, 2025		15,000		11,000		—		26,000	$	15,000	$	11,000	$	—	$	26,000
March 31, 2026		22,500		16,500		—		39,000		22,500		16,500		—		39,000
March 31, 2027		22,500		16,500		—		39,000		22,500		16,500		—		39,000
May 6, 2027 (Maturity)		210,000		165,000		97,721		472,721		144,000		173,250		56,904		374,154
Total	$	285,000	$	220,000	$	97,721	$	602,721	$	204,000	$	217,250	$	56,904	$	478,154

NOTE 76 – REVENUE RECOGNITION

Disaggregation of Revenue

The Company disaggregates revenue from clients ~~most of which is earned over time,~~ into categories that depict how the nature, amount, and uncertainty of revenue and cash flows are affected by economic and business factors. Those categories are client market, client type, and contract mix. Client markets provide insight into the breadth of the Company’s expertise. In classifying revenue by client market, the Company attributes revenue from a client to the market that the Company believes is the client’s primary market. The Company also classifies revenue by the type of entity for which it does business, which is an indicator of the diversity of its client base. The Company attributes revenue generated as a subcontractor to a commercial company as government revenue when the ultimate client is a government agency or department. Disaggregation by contract mix provides insight in terms of the degree of performance risk that the Company has assumed. Fixed-price contracts are considered to provide the highest amount of performance risk as the Company is required to deliver a scope of work or level of effort for a negotiated fixed price. Time-and-materials contracts require the Company to provide skilled employees on contracts for negotiated fixed hourly rates. Since the Company is not required to deliver a scope of work, but merely skilled employees, it considers these contracts to be less risky than a fixed-price agreement. Cost-based contracts are considered to provide the lowest amount of performance risk since the Company is generally reimbursed for all contract costs incurred in performance of contract deliverables with only the amount of incentive or award fees (if applicable) dependent on the achievement of negotiated performance requirements.


	Three Months Ended March 31,										Three Months Ended March 31,
	2023					2022					2024					2023
	Dollars		Percent			Dollars		Percent			Dollars		Percent			Dollars		Percent
Client Markets:
Energy, environment, infrastructure, and disaster recovery	$	187,396		39	%	$	169,028		41	%	$	224,689		45	%	$	187,218		39	%
Health and social programs		203,698		42	%		156,057		38	%		190,148		39	%		202,782		42	%
Security and other civilian & commercial		92,188		19	%		88,383		21	%		79,599		16	%		93,282		19	%
Total	$	483,282		100	%	$	413,468		100	%	$	494,436		100	%	$	483,282		100	%


	Three Months Ended March 31,										Three Months Ended March 31,
	2023					2022					2024					2023
	Dollars		Percent			Dollars		Percent			Dollars		Percent			Dollars		Percent
Client Type:
U.S. federal government	$	267,742		55	%	$	219,044		53	%	$	274,177		55	%	$	267,742		55	%
U.S. state and local government		74,933		16	%		66,117		16	%		76,905		16	%		75,242		16	%
International government		20,669		4	%		27,377		7	%		25,276		5	%		20,684		4	%
Total Government		363,344		75	%		312,538		76	%		376,358		76	%		363,668		75	%
Commercial		119,938		25	%		100,930		24	%		118,078		24	%		119,614		25	%
Total	$	483,282		100	%	$	413,468		100	%	$	494,436		100	%	$	483,282		100	%

Three Months Ended March 31,

2023

2022

Dollars

Percent

Dollars

Percent

Contract Mix:

Time-and-materials

$
200,990

42
%

$
164,968

40
%
Fixed price

219,016

45
%

184,012

44
%
Cost-based

63,276

13
%

64,488

16
%
Total

$
483,282

100
%

$
413,468

100
%


	Three Months Ended March 31,
	2024					2023
	Dollars		Percent			Dollars		Percent
Contract Mix:
Time-and-materials	$	206,160		42	%	$	201,203		42	%
Fixed-price		224,725		45	%		218,735		45	%
Cost-based		63,551		13	%		63,344		13	%
Total	$	494,436		100	%	$	483,282		100	%

Contract ~~Balances:~~Assets and Liabilities

Contract assets consist ~~primarily~~ of unbilled ~~amounts resulting from long-term~~receivables on contracts ~~when~~where revenue recognized exceeds the amount ~~billed often due to billing schedule timing.~~billed. Contract liabilities result from advance payments received on a contract or from billings in excess of revenue recognized on long-term ~~contracts due to billing schedule timing.~~contracts.

The following table summarizes the contract ~~balances~~assets and liabilities as of March 31, ~~2023~~2024 and December 31, ~~2022:~~2023:


	March 31, 2023			December 31, 2022			March 31, 2024			December 31, 2023
Contract assets	$	188,093		$	169,088		$	230,412		$	201,832
Contract liabilities		(25,771	)		(25,773	)		(22,099	)		(21,997	)
Net contract assets (liabilities)	$	162,322		$	143,315		$	208,313		$	179,835

~~The net contract assets (liabilities) as of March 31, 2023 increased by $19.0~~ ~~million as compared to December 31, 2022.~~ The increase in net contract assets (liabilities) is primarily due to the timing difference between the performance of services and billings to and payments from customers. ~~There were no material changes to contract balances due to impairments or credit losses during the period.~~ During the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, the Company recognized $~~14.2~~12.8 million and $~~20.9~~14.2 million in revenue related to the contract liabilities balance at December 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Unfulfilled Performance ~~Obligations:~~Obligations

The Company had $~~1.4~~1.2 billion in unfulfilled performance obligations (“UPO”) as of March 31, 2023 which primarily reflects the future delivery of services for which revenue will be recognized over time. The obligations relate to continued or additional services required on contracts, including those that are either non-cancellable or have substantive termination penalties, and were generally valued using an estimated cost-plus margin approach, with variable consideration being estimated at the most likely amount. The amounts exclude marketing offers, which are negotiated but unexercised contract options and indefinite delivery/indefinite quantity (IDIQ) and similar arrangements that provided a framework for customers to issue specific tasks, delivery, or purchase orders in the future.2024. The Company expects to ~~satisfy these performance obligations in~~recognize the remaining UPO as revenue of approximately 48~~two years~~% by December 31, 2024., 77% by December 31, 2025, and the remainder thereafter.

NOTE 87 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company uses interest rate swap agreements to manage or hedge its interest rate risk under the Credit Facility. Notwithstanding the terms of the swaps, the Company is ultimately obligated for all amounts due and payable under the Credit Facility. The derivative instruments are recorded on the consolidated balance sheets at fair value. Unrealized gains and losses on derivatives designated as cash flow hedges are reported in other comprehensive income (loss) and reclassified to earnings in a manner that matches the timing of the earnings impact of the hedged transactions. Management intends that the Swaps remain effective and, on a quarterly basis, evaluates them to determine their effectiveness or ineffectiveness and records the change in fair value as an adjustment to other comprehensive income or loss. The Company does not use derivative instruments for speculative or trading purposes.

At March 31, ~~2023,~~2024, the Company had floating-to-fixed interest rate ~~swaps (the “Swaps”)~~swap agreements for an aggregate notional amount of $275.0 million, of which ~~$100.0~~$100.0 million will mature on ~~August 31, 2023, $100.0~~February 28, 2025, $75.0 million will mature on February 28, ~~2025,~~2028, and ~~$75.0~~$100.0 million will mature on ~~February 28,~~ June 27, 2028. The Company has designated the ~~Swaps~~swap agreements as cash flow hedges. See “Note 5 – Debt” for details on the impact of the swap agreements on the Company’s interest rates.

NOTE 98 – INCOME TAXES

~~The~~A reconciliation of the Company’s statutory rate to the effective tax rate for the three months ended March 31, 2024 and 2023 ~~and 2022 was~~ ~~23.5% and~~ ~~27.5%, respectively.~~is as follows:


	Three Months Ended March 31,
	2024			2023
Statutory tax rate		21.0	%		21.0	%
State taxes, net of federal benefit		6.0	%		5.8	%
Executive compensation		1.7	%		1.2	%
Corporate-owned life insurance		(0.2	%)		(0.2	%)
Other permanent differences		0.4	%		(0.1	%)
Uncertain tax position		2.5	%		—
Valuation allowance		1.1	%		1.1	%
Equity-based compensation		(5.4	%)		(4.3	%)
Tax credits		(6.7	%)		(1.0	%)
Effective tax rate		20.4	%		23.5	%

The ~~Company is subject to federal income~~uncertain tax ~~as well as taxes in various state, local~~position and ~~foreign jurisdictions. Tax statutes and regulations within each jurisdiction are subject to interpretation and require the application of significant judgment. The Company’s~~ ~~2019~~ ~~through~~ ~~2021~~tax years remain subject to examination by the Internal Revenue Service for federal tax purposes. Certain significant state, local and foreign tax returns also remain open under the applicable statute of limitations and, as such, are subject to examination for the tax years from ~~2018~~ to ~~2021~~.

~~NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE LOSS~~

~~Accumulated other comprehensive loss as of March 31, 2023 and 2022 included the following:~~

Three Months Ended March 31, 2023

Foreign
Currency
Translation
Adjustments

Gain on Sale
of Interest
Rate Hedge
Agreement (1)

Change in
Fair Value of
Interest Rate
Hedge
Agreements (2)

Total

Accumulated other comprehensive (loss) income at December 31, 2022

$
(14,056
)

$
41

$
5,882

$
(8,133
)
Current period other comprehensive (loss) income:

Other comprehensive (loss) income before reclassifications

1,753

—

(2,532
)

(779
)
Amounts reclassified from accumulated other comprehensive (loss) income (3)

—

(60
)

(1,360
)

(1,420
)
Effect of taxes (4)

(192
)

19

1,038

865

Total current period other comprehensive (loss) income

1,561

(41
)

(2,854
)

(1,334
)
Accumulated other comprehensive (loss) income at March 31, 2023

$
(12,495
)

$
—

$
3,028

$
(9,467
)

Three Months Ended March 31, 2022

Foreign
Currency
Translation
Adjustments

Gain on Sale
of Interest
Rate Hedge
Agreement (1)

Change in
Fair Value of
Interest Rate
Hedge
Agreement (2)

Total

Accumulated other comprehensive (loss) income at December 31, 2021

$
(8,759
)

$
569

$
(2,845
)

$
(11,035
)
Current period other comprehensive (loss) income:

Other comprehensive (loss) income before reclassifications

(2,304
)

—

5,509

3,205

Amounts reclassified from accumulated other comprehensive (loss) income (3)

—

(180
)

902

722

Effect of taxes (4)

363

48

(1,679
)

(1,268
)
Total current period other comprehensive (loss) income

(1,941
)

(132
)

4,732

2,659

Accumulated other comprehensive (loss) income at March 31, 2022

$
(10,700
)

$
437

$
1,887

$
(8,376
)

~~(1)~~

Represents the unamortized value of an interest rate hedge agreement, designated as a cash flow hedge, which was sold on December 1, 2016. The fair value of the interest rate hedge agreement, at the date of the sale, was recorded in other comprehensive income, net of tax, and is being reclassified to interest expense when earnings are impacted by the hedged items and as interest payments are made on the Credit Facility from January 31, 2018 to January 31, 2023.

~~(2)~~

Represents the change in fair value of interest rate hedge agreements designated as cash flow hedges. The fair value of the interest rate hedge agreements was recorded in other comprehensive income, net of tax, and will be reclassified to earnings when earnings are impacted by the hedged items, as interest payments are made on the Credit Facility from August 31, 2018 to February 28, 2025 (see “Note 8 — Derivative Instruments and Hedging Activities”).

~~(3)~~

~~The Company expects to reclassify $4.8~~ ~~million of net gains related to the Change in Fair Value of Interest Rate Hedge Agreement from accumulated other comprehensive loss into earnings~~credits recognized during ~~the next 12 months.~~

~~(4)~~

~~The Company’s effective tax rate for~~ the three months ended March 31, ~~2023 and 2022 was~~ 2024 are both primarily related to the Research & Experimentation (R&E) credits.~~23.5% and~~ ~~27.5%, respectively.~~

1211

NOTE 119 – STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Loss

~~Changes~~Accumulated other comprehensive loss as of March 31, 2024 and 2023 included the following:


	Three Months Ended March 31, 2024
	Foreign Currency Translation Adjustments			Change in Fair Value of Interest Rate Hedge Agreements			Total
Accumulated other comprehensive (loss) income at December 31, 2023	$	(12,695	)	$	810		$	(11,885	)
Current period other comprehensive (loss) income:
Other comprehensive (loss) income before reclassifications		(1,534	)		4,589			3,055
Amounts reclassified from accumulated other comprehensive (loss) income (1)		—			(1,671	)		(1,671	)
Effect of taxes		112			(812	)		(700	)
Total current period other comprehensive (loss) income		(1,422	)		2,106			684
Accumulated other comprehensive (loss) income at March 31, 2024	$	(14,117	)	$	2,916		$	(11,201	)

(1)The Company expects to reclassify $5.2 million of gains related to the Change in ~~stockholders’ equity for~~Fair Value of Interest Rate Hedge Agreements from accumulated other comprehensive loss into earnings during the next 12 months.


	Three Months Ended March 31, 2023
	Foreign Currency Translation Adjustments			Change in Fair Value of Interest Rate Hedge Agreement and Other Adjustments			Total
Accumulated other comprehensive (loss) income at December 31, 2022	$	(14,056	)	$	5,923		$	(8,133	)
Current period other comprehensive (loss) income:
Other comprehensive (loss) income before reclassifications		1,753			(2,532	)		(779	)
Amounts reclassified from accumulated other comprehensive (loss) income		—			(1,420	)		(1,420	)
Effect of taxes		(192	)		1,057			865
Total current period other comprehensive (loss) income		1,561			(2,895	)		(1,334	)
Accumulated other comprehensive (loss) income at March 31, 2023	$	(12,495	)	$	3,028		$	(9,467	)

Share Repurchases

The Company repurchased shares under a $200 million share repurchase program authorized by the Company’s board of directors. For the three months ended March 31, 2024 and 2023, the Company used $23.8 million of cash to repurchase 172,817 shares and ~~2022 are as follows:~~$18.1 million of cash to repurchase 180,000 shares, respectively. As of March 31, 2024, $69.9 million of repurchase authority remained available for share repurchases.

In addition, the Company repurchased shares in connection with vesting of restricted stock units granted to employees. During the three months ended March 31, 2024 and 2023, the Company used $6.6 million of cash to repurchase 45,881 shares and $4.7 million of cash to repurchase 45,047 shares, respectively.

Three Months Ended March 31, 2023

Common Stock

Additional
Paid-in

Retained

Treasury Stock

Accumulated
Other
Comprehensive

Shares

Amount

Capital

Earnings

Shares

Amount

Loss

Total

Balance at December 31, 2022

18,883

$
23

$
401,957

$
703,030

4,906

$
(243,666
)

$
(8,133
)

$
853,211

Net income

—

—

—

16,398

—

—

—

16,398

Other comprehensive loss

—

—

—

—

—

—

(1,334
)

(1,334
)
Equity compensation

—

—

3,750

—

—

—

—

3,750

Exercise of stock options

4

—

111

—

—

—

—

111

Issuance of shares pursuant to vesting of restricted stock units

126

1

—

—

—

—

—

1

Payments for stock buybacks

(225
)

—

—

—

225

(22,815
)

—

(22,815
)
Dividends declared

—

—

—

(2,633
)

—

—

—

(2,633
)
Balance at March 31, 2023

18,788

$
24

$
405,818

$
716,795

5,131

$
(266,481
)

$
(9,467
)

$
846,689

Three Months Ended March 31, 2022

Common Stock

Additional
Paid-in

Retained

Treasury Stock

Accumulated
Other
Comprehensive

Shares

Amount

Capital

Earnings

Shares

Amount

Loss

Total

Balance at December 31, 2021

18,876

$
23

$
384,984

$
649,298

4,659

$
(219,800
)

$
(11,035
)

$
803,470

Net income

—

—

—

17,862

—

—

—

17,862

Other comprehensive income

—

—

—

—

—

—

2,659

2,659

Equity compensation

—

—

3,563

—

—

—

—

3,563

Exercise of stock options

4

—

92

—

—

—

—

92

Issuance of shares pursuant to vesting of restricted stock units

140

—

—

—

—

—

—

—

Payments for stock buybacks

(227
)

—

—

—

227

(21,716
)

—

(21,716
)
Dividends declared

—

—

—

(2,628
)

—

—

—

(2,628
)
Balance at March 31, 2022

18,793

$
23

$
388,639

$
664,532

4,886

$
(241,516
)

$
(8,376
)

$
803,302

NOTE 1210 – ~~ACCOUNTING FOR~~ STOCK-BASED COMPENSATION

~~On April 4,~~The Company’s 2018 ~~the Company’s board of directors (the “board”) approved the 2018~~Amended and Restated Omnibus Incentive Plan (the “2018 A&R Omnibus Plan”), which was subsequently approved by the Company’s stockholders and became effective on May 31, 2018 (the “Effective Date”). The 2018 Omnibus Plan replaced the previous 2010 Omnibus Incentive Plan (the “Prior Plan”). The 2018 Omnibus Plan was amended on May 28, 2020 to increase the number of shares available for issuance.

~~The 2018 Omnibus Plan, as amended,~~ allows the Company to grant up to ~~1,600,000~~2,050,000 total shares ~~using~~of common stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance units and performance share awards (“PSAs”), cash-settled restricted stock units (“CSRSUs”), and other stock-based awards to ~~all~~ officers, key employees, and non-employee ~~directors of the Company. Outstanding shares granted under the Prior Plan, totaling~~ ~~6,747~~ ~~as of March 31, 2023, remain subject to its terms and conditions, and~~ no ~~additional awards from the Prior Plan are to be made after the Effective Date.~~directors. As of March 31, ~~2023,~~2024, the Company had approximately ~~670,133~~1,012,241 shares available for grant under the 2018 A&R Omnibus Plan. ~~CSRSUs have no impact on the shares available for grant under the Omnibus Plan, nor on the calculated shares used in earnings per share calculations.~~

~~During~~The following awards were granted during the three months ended March 31, ~~2023, the Company granted to its employees~~ 2024 and 2023:


	Awards Granted				Average Grant Date Fair Value
	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2024		2023		2024		2023
Employee Stock Awards		110,754		113,454	$	156.16	$	110.01
Cash-Settled Restricted Stock Units		34,064		47,611	$	152.59	$	107.28
Total		144,818		161,065

The total stock-based compensation expense was $~~76,498~~5.9 ~~shares in the form~~million for each of ~~RSUs with an average grant date fair value of $107.28, and the equivalent value of~~ ~~47,611~~ ~~shares in the form of CSRSUs with an average grant date fair value of $107.28. During~~ the three months ended March 31, 2024 and 2023, and the ~~Company also granted~~ ~~36,956~~ ~~shares in the form of PSAs to its employees with a grant date fair value of $115.67~~ per share. The RSUs, CSRSUs and PSAs granted are generally subject to service-based vesting conditions, with the PSAs also having performance-based vesting conditions. The performance conditions for the PSAs granted in 2023 have a performance period from January 1, 2023 through December 31, 2025 and performance conditions that are consistent with the PSAs granted in prior years.

~~The Company recognized stock-based~~unrecognized compensation expense ofat March 31, 2024 was $~~5.9~~43.3 million, ~~and $4.6~~ ~~million for the three months ended March 31, 2023 and 2022. Unrecognized compensation expense of approximately $19.7~~ ~~million as of March 31, 2023 related to unsettled RSUs~~which is expected to ~~be recognized~~vest over ~~a weighted-average period of~~the next ~~2.3~~ ~~years. The unrecognized compensation expense related to CSRSUs totaled approximately $12.8~~ ~~million at March 31, 2023 and is expected to be recognized over a weighted-average period of~~ ~~2.2~~ ~~years. Unrecognized compensation expense related to PSAs of approximately $7.1~~ ~~million as of March 31, 2023 is expected to be recognized over a weighted-average period of~~ ~~1.8~~2.0 years.

NOTE 1311 – EARNINGS PER SHARE

The Company’s earnings per share (“EPS”) is computed by dividing reported net income by the weighted-average number of shares outstanding. Diluted EPS considers the potential dilution that could occur if the Company’s common stock ~~equivalents of~~options, restricted stock ~~options, RSUs,~~units (“RSUs”), and ~~PSAs~~performance share awards (“PSAs”) were exercised or converted into the Company’s common stock. PSAs are included in the computation of diluted shares only to the extent that the underlying performance conditions: (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related performance period and the result would be dilutive under the treasury stock method.

As of March 31, ~~2023,~~2024, the PSAs granted during the year ended December 31, ~~2021~~2022 met the related performance conditions for the initial performance period and were included in the calculation of diluted EPS. However, the PSAs granted during the year ended December 31, ~~2022~~2023 and during the three months ended March 31, ~~2023~~2024 have not yet completed their initial two-year performance period and therefore were excluded infrom the calculation of diluted EPS. ~~For the three months ended March 31, 2023 and 2022, there were~~ ~~10,199~~ ~~and~~ ~~53,819~~ ~~weighted-average shares excluded from the calculation of EPS because they were anti-dilutive. The anti-dilutive shares in both years were associated with RSUs.~~

~~The~~EPS, including the dilutive effect of stock ~~options, RSUs, and PSAs~~awards for each period reported is summarized below:


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2023		2022
(in thousands, except per share data)					2024		2023
Net Income	$	16,398	$	17,862	$	27,317	$	16,398

Weighted-average number of basic shares outstanding during the period		18,779		18,795		18,757		18,779
Dilutive effect of stock options, RSUs, and performance shares		170		217
Dilutive effect of stock awards						189		170
Weighted-average number of diluted shares outstanding during the period		18,949		19,012		18,946		18,949

Basic earnings per share	$	0.87	$	0.95	$	1.46	$	0.87
Diluted earnings per share	$	0.87	$	0.94	$	1.44	$	0.87

NOTE ~~14 – SHARE REPURCHASE PROGRAM~~

~~In September 2017, the board approved a share repurchase program that allows for share repurchases in the aggregate up to $100.0~~ million under approved share repurchase plans pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In November 2021, the board amended and increased the previously-authorized aggregate repurchase limit from $~~100.0~~ ~~million to $200.0~~ ~~million. The Restated Credit Agreement permits share repurchases provided that the Company’s Consolidated Leverage Ratio, prior to and after giving effect to such repurchases, is~~ ~~0.50~~ ~~to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to the Company having net liquidity of at least $100.0~~ ~~million after giving effect to such repurchases. Notwithstanding the formula-based limit, the Company is permitted to make share repurchases up to $25.0~~ ~~million per calendar year provided that it was not in default.~~

Purchases under this program may be made from time to time at prevailing market prices in the open market or in privately negotiated transactions pursuant to Rule 10b-18 under the Exchange Act and in accordance with applicable insider trading and other securities laws and regulations. The purchases are funded from existing cash balances and/or borrowings, and the repurchased shares are held in treasury. The timing and extent to which the Company repurchases its shares will depend on market conditions and other corporate considerations in the Company’s sole discretion.

~~For the three months ended March 31, 2023 and 2022, the Company used $18.1~~ ~~million to repurchase~~ ~~180,000~~ ~~shares and $17.0~~ ~~million to repurchase~~ ~~176,375~~ ~~shares, respectively, under the share repurchase program. As of March 31, 2023, $93.7~~ ~~million of authorization remained available for share repurchases under the repurchase program.~~

~~NOTE 15~~12 – FAIR VALUE

Financial instruments measured at fair value on a recurring basis and their location within the accompanying consolidated balance sheets are as follows:


	March 31, 2023									March 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total		Location on Balance Sheet	Level 1		Level 2		Level 3		Total		Location on Balance Sheet
Assets:
Interest rate swaps - current portion	$	—	$	4,843	$	—	$	4,843	Prepaid expenses and other assets	$	—	$	5,178	$	—	$	5,178	Prepaid expenses and other assets
Forward contract agreements		—		23		—		23	Prepaid expenses and other assets
Foreign currency forward and swap contracts											—		10		—		10	Prepaid expenses and other assets
Interest rate swaps - long-term portion		—		1,998		—		1,998	Other assets		—		186		—		186	Other assets
Deferred compensation investments in cash surrender life insurance		—		18,624		—		18,624	Other assets
Company-owned life insurance policies											—		21,654		—		21,654	Other assets

Liabilities:
Interest rate swaps - long-term portion	$	—	$	2,732	$	—	$	2,732	Other long-term liabilities	$	—	$	1,422	$	—	$	1,422	Other long-term liabilities
Deferred compensation plan liabilities		—		18,874		—		18,874	Other long-term liabilities

December 31, 2022

(in thousands)
Level 1

Level 2

Level 3

Total

Location on Balance Sheet
Assets:

Interest rate swaps - current portion
$
—

$
5,051

$
—

$
5,051

Prepaid expenses and other assets
Interest rate swaps - long-term portion

—

2,950

—

2,950

Other assets
Deferred compensation investments in cash surrender life insurance

—

17,869

—

17,869

Other assets

Liabilities:

Deferred compensation plan liabilities
$
—

$
17,485

$
—

$
17,485

Other long-term liabilities


	December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total		Location on Balance Sheet
Assets:
Interest rate swaps - current portion	$	—	$	4,820	$	—	$	4,820	Prepaid expenses and other assets
Foreign currency forward and swap contracts		—		6		—		6	Prepaid expenses and other assets
Interest rate swaps - long-term portion		—		398		—		398	Other assets
Company-owned life insurance policies		—		20,438		—		20,438	Other assets

Liabilities:
Interest rate swaps - long-term portion	$	—	$	4,184	$	—	$	4,184	Other long-term liabilities

~~NOTE 16 – SUBSEQUENT EVENTS~~

~~Dividend~~

~~On May 9, 2023, the board approved a $0.14~~ ~~per share cash dividend. The dividend will be paid on July 14, 2023 to shareholders of record as of the close of business on June 9, 2023.~~

NOTE 1713 – COMMITMENTS AND CONTINGENCIES

Letters of Credit

~~At March 31, 2023, the~~The Company had open standby letters of credit totaling $~~2.7~~1.8 ~~million. The open~~million at both March 31, 2024 and December 31, 2023, respectively. Open standby letters of credit reduce the Company’s ~~unused~~ borrowing capacity under the Credit Facility.

Guarantees

At March 31, 2024 and December 31, 2023, the Company had $7.5 million and $7.9 million, respectively, of bank guarantees for facility leases and contract performance obligations.

Litigation and Claims

The Company is involved in various legal matters and proceedings arising in the ordinary course of business. While these matters and proceedings cause it to incur costs, including, but not limited to, attorneys’ fees, the Company currently believes that any ultimate liability arising out of these matters and proceedings will not have a material adverse effect on its financial position, results of operations, or cash flows.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,” “would,” or similar words. You should read statements that contain these words carefully. The risk factors described in our filings with the Securities and Exchange Commission (the “SEC”), as well as any cautionary language in this Quarterly Report, provide examples of risks, uncertainties, and events that may cause actual results to differ materially from the expectations described in the forward-looking statements, including, but not limited to:

•

Our dependence on contracts with United States (“U.S.”) federal, state and local, and international governments, agencies, and departments for the majority of our revenue;

•

Changes in federal government budgeting and spending priorities;

•

Failure by Congress or other governmental bodies to approve budgets and debt ceiling increases in a timely fashion and related ~~reduction~~reductions in government spending;

•

Failure of the presidential administration (the “Administration”) and Congress to agree on spending priorities, which may result in temporary shutdowns of non-essential federal functions, including our work to support such functions;

•

Results of routine and non-routine government audits and investigations;

•

Dependence of our commercial work on certain sectors of the global economy that are highly cyclical;

•

Failure to realize the full amount of our backlog;

•

Risks inherent in being engaged in significant and complex disaster relief efforts and ~~grants~~grant management programs involving multiple tiers of government in very stressful environments;

•

Risks resulting from expanding our service offerings and client base;

•

Difficulties in identifying attractive acquisitions available at acceptable prices;

•

Acquisitions we undertake ~~may present~~presenting integration challenges, ~~fail~~failing to perform as expected, ~~increase~~increasing our liabilities, and/or ~~reduce~~reducing our earnings; and

•

Additional risks as a result of having international operations.

Our forward-looking statements are based on the beliefs and assumptions of our management and the information available to our management at the time these disclosures were prepared. Although we believe the expectations reflected in these statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. We undertake no obligation to update these forward-looking statements, even if our situation changes in the future.

The terms “we,” “our,” “us,” and “the Company,” as used throughout this Quarterly Report, refer to ICF International, Inc. and its subsidiaries, unless otherwise indicated. The ~~term~~terms “federal” or “federal government” ~~refers~~refer to the U.S. federal government, and “state and local” or “state and local government” ~~refers~~refer to U.S. state and local governments and the governments of U.S. territories. The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, and liquidity and capital resources. You should read this discussion in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022,~~2023, filed with the SEC on ~~March 1, 2023~~February 28, 2024 (our “Annual Report”).

1615

OVERVIEW AND OUTLOOK

We provide professional services and technology-based solutions, including management, ~~marketing,~~ technology, and policy consulting and implementation services. We help our clients conceive, develop, implement, and improve solutions that address complex business, natural resource, social, technological, and public safety issues. Our services primarily support clients that operate in three key markets:

•

Energy, Environment, Infrastructure, and Disaster Recovery;

•

Health and Social Programs; and

•

Security and Other Civilian & ~~Commercial~~Commercial.

We provide services to our diverse client base that deliver value throughout the entire life cycle of a policy, program, project, or initiative. Our primary services include:

•

Advisory Services;

•

Program Implementation Services;

•

Analytics Services;

•

Digital Services; and

•

Engagement Services.

Our clients utilize our services because we combine diverse institutional knowledge and experience with the deep subject matter expertise of our highly educated staff, which we deploy in multi-disciplinary teams. We believe that our domain expertise and the program knowledge developed from our research and analytics, and assessment and advisory engagements further position us to provide a full suite of services.

We report operating results and financial data as a single segment based on the consolidated information used by our chief operating decision-maker in evaluating the financial performance of our business and allocating resources. Our single segment represents our core business: professional services to our broad array of clients. Although we describe our multiple service offerings to clients that operate in three markets to provide a better understanding of the scope and scale of our business, we do not manage our business or allocate our resources based on those service offerings or client markets. Rather, on a project-by-project basis, we assemble the best team from throughout the enterprise to deliver highly customized solutions that are tailored to meet the needs of each client.

We believe that, in the long-term, demand for our services will continue to grow as government, industry, and other stakeholders seek to address critical long-term societal and natural resource issues due to heightened concerns about the environment and use of clean energy and energy efficiency; health promotion, treatment, and cost control; the means by which public health can be improved effectively on a cross-jurisdiction basis; natural disaster recovery and rebuild efforts; and ongoing homeland security threats.

We also see significant opportunity to further leverage our digital and client engagement capabilities across our client base. Our future results will depend on the success of our strategy to enhance our client relationships and seek larger engagements that span the entire program life cycle, and to complete and successfully integrate additional strategic acquisitions. We will continue to focus on building scale in our vertical and horizontal domain expertise, developing business with our existing clients as well as new customers, and replicating our business model in selective geographies. In doing so, we will continue to evaluate strategic acquisition opportunities that enhance our subject matter knowledge, broaden our service offerings, and/or provide scale in specific geographies.

Although we continue to see favorable long-term market opportunities, there are certain business challenges facing all government service providers. Administrative and legislative actions by the federal government to address changing priorities or in response to the budget deficit and/or debt ceiling could have a negative impact on our business, which may result in a reduction to our revenue and profit and adversely affect cash flow. Similarly, the very nature of opportunities arising out of disaster recovery means they can involve unusual challenges. Factors such as the overall stress on communities and people affected by disaster recovery situations, political complexities and challenges among involved government agencies, and a higher-than-normal risk of audits and investigations may result in a reduction to our revenue and profit and adversely affect cash flow. However, we believe we are well positioned to provide a broad range of services in support of initiatives that will continue to be priorities to the federal government, as well as to state and local and international governments and commercial clients. We believe that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, potential acquisitions, customary capital expenditures, and other working capital requirements.

1716

~~Energy, Environment, Infrastructure, and Disaster Recovery~~

For decades, we have advised our clients on energy and environmental issues, including the impact of human activity on natural resources, and have helped develop solutions for infrastructure-related challenges. In addition to addressing government policy and regulation in these areas, our work focuses on industries that are affected by these policies and regulations, particularly in those industries most heavily involved in the use and delivery of energy. Significant factors affecting suppliers, users, and regulators of energy are driving private and public sector demand for professional services firms, including:

•

~~Changing power markets, increasingly diverse sources of supply including distributed energy resources and an increased demand for more carbon-free sources of energy and/or energy storage;~~

•

~~The changing role of the U.S. in the world’s energy markets;~~

•

~~Ongoing efforts to upgrade energy infrastructure to meet new power, transmission, environmental, and cybersecurity requirements and to enable more distributed forms of generation;~~

•

Changing public policy, regulations, and incentives (including those established by the Inflation Reduction Act) surrounding the modernization of and investment in an upgraded energy infrastructure, including new business models that may accompany those changes;

•

~~The need to manage energy demand and increase efficient energy use in an era of environmental concerns, especially regarding carbon and other emissions; and~~

•

~~The disruption of global energy markets and supplies, involving natural gas in particular, that have emerged as a result of the invasion of Ukraine by Russia.~~

We assist energy enterprises worldwide in their efforts to analyze, develop, and implement strategies related to their business operations and the interrelationships of those operations with the environment and applicable government regulations. We utilize our policy expertise, deep industry knowledge, and proprietary modeling tools to advise government and commercial clients on key topics related to electric power, traditional fuels, and renewable sources of energy. Our areas of expertise include power market analysis and modeling, transmissions analysis, flexible load and distribution system management, electric system reliability standards, energy asset valuation and due diligence, regulatory and litigation support, fuels market analysis, air regulatory strategy, and renewable energy and green power project implementation.

We also assist commercial and government clients in designing, implementing, and evaluating demand side management programs, both for residential and for commercial and industrial sectors. Utility companies must balance the changing demand for energy with a price-sensitive, environmentally conscious consumer base. We help utilities meet these needs, guiding them through the entire life cycle of energy efficiency and related demand side management and electrification programs, including policy and planning, determining technical requirements, and program implementation and improvement.

Carbon emissions have been an important focus of federal government regulation, international governments, many state and local governments, and multinational corporations around the world. Reducing or offsetting greenhouse gas (“GHG”) emissions continues to be the subject of both public and private sector interest, and the regulatory landscape in this area is still evolving. The need to address carbon and other harmful emissions has significantly changed the way the world’s governments and industries interact and continues to be one of the drivers of interest in energy efficiency. Moreover, how government and business adapt to the effects of climate change continues to be of global importance. We support governments at the federal and state and local level, including providing comprehensive support to the National Science and Technology Council’s Global Change Research Program. Additionally, we support ministries and agencies of the government of the United Kingdom (the “U.K.”) and the European Commission (the “E.C.”), as well as commercial clients, on these and related issues.

We believe that demand for our services will continue to grow as government, industry, and other stakeholders seek to provide natural disaster recovery and rebuilding. In the wake of the major hurricanes (Ian, Harvey, Ida, Irma, Maria, Laura and Michael) that devastated communities in Texas, Florida, North Carolina, Louisiana, the U.S. Virgin Islands, and Puerto Rico, the affected areas remain in various stages of relief and recovery efforts. Our prior experience with disaster relief and rebuild efforts, including after hurricanes Katrina and Rita and Superstorm Sandy, puts us in a favorable position to provide recovery and housing assistance, and environmental and infrastructure solutions, including disaster mitigation, on behalf of federal departments and agencies, state, territorial and local jurisdictions, and regional agencies. We support ongoing disaster recovery and mitigation efforts in a variety of US states, territories, and local jurisdictions that have been affected by natural disasters including but not limited to hurricanes.

We also have decades of experience in designing, evaluating, and implementing environmental policies and environmental compliance programs for energy, transportation (including aviation), and other infrastructure projects. A number of key issues are driving increased demand for the services we provide in these areas, including:

•

~~Increased focus on the proper stewardship of natural resources;~~

•

~~Changing precipitation patterns and drought that is affecting water infrastructure and availability;~~

•

~~Aging water, energy, and transportation infrastructure, particularly in the U.S.;~~

•

~~The increasing exposure of infrastructure to damage and interference by severe weather events influenced by a changing climate, and therefore the need to become more resilient to those effects;~~

•

~~Past under-investment in transportation infrastructure that was recently the center of the Infrastructure Investment and Jobs Act passed by Congress and signed by the President on November 15, 2021;~~

•

Economic and policy incentives for the implementation of carbon-free energy sources that were the centerpiece of the Inflation Reduction Act passed by Congress and signed by the President on August 16, 2022;

•

The increasing demand for businesses to respond to climate change and similar “ESG” priorities being championed not only by the public sector, but also by investors, financing sources, business organizations, ratings agencies, and proxy advisory firms; and

•

~~Changing patterns of economic development that require transportation systems and energy infrastructure to adapt to new patterns of demand.~~

By leveraging our interdisciplinary skills, which range from finance and economics to earth and life sciences, information technology, and program management, we are able to provide a wide range of services that include complex environmental impact assessments, environmental management information systems, air quality assessments, program evaluation, transportation and aviation planning and operational improvement, strategic communications, and regulatory reinvention. Our acquisition of Blanton & Associates (“Blanton”) in September 2022 added to these skills and expanded our geographic reach. We help clients deal specifically with the interrelated environmental, business, and social implications of issues surrounding all transportation modes and infrastructure. From the environmental management of complex infrastructure engagements to strategic and operational concerns of airlines and airports, our solutions draw upon our expertise and institutional knowledge in transportation, urban and land use planning, industry management practices, financial analysis, environmental sciences, and economics.

~~Health, and Social Programs~~

We also apply our expertise across our full suite of services in the areas of health, and social programs. We believe that a confluence of factors will drive an increased need for public and private focus on these areas, including, among others:

•

~~Weaknesses in our public health and healthcare delivery systems exposed by COVID-19;~~

•

~~Expanded healthcare services to underserved portions of the population;~~

•

~~Rising healthcare expenditures, which require the evaluation of the effectiveness and efficiency of current and new programs;~~

•

~~Rampant substance abuse and widespread social and health impacts of the opioid abuse epidemic;~~

•

~~The emphasis on improving the effectiveness of the U.S. and other countries’ educational systems;~~

•

~~The perceived declining performance of the U.S. educational system compared to other countries;~~

•

~~The need to digitally transform and modernize the technology infrastructure underpinning government operations;~~

•

~~The need for greater transparency and accountability of public sector programs;~~

•

~~A continued high need for social support systems, in part due to an aging population, and the interrelated nature of health, housing, transportation, employment, and other social issues;~~

•

~~A changing regulatory environment; and~~

•

~~Military personnel returning home from active duty with health and social service needs.~~

We believe we are well positioned to provide our services to help our clients develop and manage effective programs in the areas of health, education, and social programs at the international, regional, national, and local levels. Our subject matter expertise includes public health, biomedical research, healthcare quality, mental health, international health and development, health communications and associated interactive technologies, education, child and family welfare needs, housing and communities, and substance abuse. Our combination of domain knowledge and our experience in information technology-based applications provides us with strong capabilities in health and social programs informatics and analytics, which we believe will be of increasing importance as the need to manage information grows. We partner with our clients in the government and commercial sectors to increase their knowledge base, support program development, enhance program operations, evaluate program results, and improve program effectiveness.

In the area of federal health, we support many agencies and programs within the U.S. Department of Health and Human Services (“HHS”), including the National Institutes of Health (the “NIH”), the Centers for Disease Control and Prevention (the “CDC”), and the Centers for Medicare and Medicaid Services (“CMS”) by conducting primary data collection and analyses, assisting in designing, delivering and evaluating programs, managing technical assistance centers, providing instructional systems, developing information technology applications, and managing information clearinghouse operations. Our 2021 acquisition of ESAC brought a strong team with deep expertise in bioinformatics to further extend our capabilities in this arena. Our 2022 acquisition of SemanticBits, LLC (“SemanticBits”) brought substantial expertise in technology applications used in CMS to oversee healthcare quality. Increasingly, we provide multichannel communications and messaging for public health programs. We also provide training and technical assistance for early care and educational programs (such as Head Start), and health and demographic surveys in developing countries for the U.S. Department of State (the “DoS”). In the area of social programs, we provide extensive training, technical assistance, and program analysis and support services for a number of the housing programs of the U.S. Department of Housing and Urban Development (“HUD”) and state, territorial, and local governments. In addition, we provide research, program design, evaluation, and training for educational initiatives at the federal and state level. We provide similar services to a variety of U.K. ministries, as well as several Directorates-General of the European Commission.

~~Security and Other Civilian & Commercial~~

We serve a number of other important government missions and commercial markets. These government missions range from Security (e.g., the Departments of Defense, Homeland Security, and Justice) to a variety of other civilian government departments and agencies; commercial markets include those we serve with our commercial marketing and communications services.

Security programs continue to be a critical priority of the federal government, state and local governments, international governments (especially in Europe), and in the commercial sector. We believe we are positioned to meet the following key safety concerns:

•

~~Vulnerability of critical infrastructure to cyber and terrorist threats;~~

•

~~Increasing risks to enterprises’ reputations in the wake of a cyber-attack;~~

•

~~Broadened homeland security concerns that include areas such as health, food, energy, water, and transportation;~~

•

~~Reassessment of the emergency management functions of homeland security in the face of natural disasters;~~

•

~~Safety issues around crime and at-risk behavior;~~

•

~~Increased dependence on private sector personnel and organizations in emergency response;~~

•

~~The need to ensure that critical functions and sectors are resilient and able to recover quickly after attacks or disasters in either the physical or cyber realms; and~~

•

~~The challenges resulting from changing global demographics.~~

~~These security concerns create demand for government programs that can identify, prevent, and mitigate key cybersecurity issues and the societal issues they cause.~~

In addition, the U.S. Department of Defense (“DoD”) is undergoing major transformations in its approach to strategies, processes, organizational structures, and business practices due to several complex, long-term factors, including:

•

~~The changing nature of global security threats, including cybersecurity threats;~~

•

~~Family issues associated with globally deployed armed forces;~~

•

~~The increasing use of commercial cloud computing infrastructure and services to support the DoD enterprise; and~~

•

~~The increasing need for real-time information sharing and the global nature of conflict arenas.~~

We provide key services to DoD, the U.S. Department of Homeland Security (“DHS”), the U.S. Department of Justice (“DoJ”), and analogous Directorates-General at the European Commission. We support DoD by providing high-end strategic planning, analysis, and technology-based solutions around cybersecurity. We also provide the defense sector with critical infrastructure protection, environmental management, human capital assessment, military community research, and technology-enabled solutions.

At the DHS, we assist in shaping and managing critical programs to ensure the safety of communities, developing critical infrastructure protection plans and processes, establishing goals and capabilities for national preparedness at all levels of government in the U.S., and managing the national program to test radiological emergency preparedness at the state and local government levels in communities adjacent to nuclear power facilities. At the DoJ, we provide technical and communications assistance to programs that help victims of crime and at-risk youths. At the E.C., we provide support and analytical services related to justice and home affairs issues within the European context.

Other large Federal departments and agencies, such as USDA and Treasury, also face important challenges that motivate them to transform their business processes and to modernize the associated technology systems. ICF supports these organizations with a variety of technology and program support services.

~~In the area of commercial marketing and communications, some of the long-term market factors that we believe will have an impact on our clients include:~~

•

Increased use of interactive digital technologies to link organizations with consumers and other stakeholders in more varied and personalized ways, and less reliance on traditional print and television marketing;

•

~~Changing industry structures in marketing and advertising services;~~

•

~~The desire for greater return on marketing investments; and~~

•

The continued elevation of data analytics as a business management and marketing tool, as well as the concomitant growth of concerns about, and regulation of, data capture and exploitation for marketing and other private and public sector purposes.

We combine our expertise in strategic communications, marketing and creative services, and public relations with our strengths in interactive and mobile technologies to help companies develop stronger relationships and engage with their customers and stakeholders across all channels, whether via traditional or digital media, to drive better operating results. We took steps in 2022 to exit our traditional advertising and marketing platform technology business lines and refocus on the core services of business transformation, loyalty, and integrated communications across several key verticals. Target customer areas include airlines, airports, electric and gas utilities, health care companies, transportation, travel, and hospitality firms.

Across all of the areas described above we assist our clients in their growing efforts to ensure equity in their program operations, whether it is with an environmental justice or a health equity focus, or some other perspective depending on the program being delivered.

~~Employees and Offices:~~

We have approximately 9,000 full and part-time employees around the globe, including many recognized as thought leaders in their respective fields. We serve clients globally from our headquarters in the Washington, D.C. metropolitan area, our 50 regional offices throughout the U.S. and more than 20 offices in key regions outside the U.S., including offices in the U.K., Belgium, India and Canada.

~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~

Our discussion of our financial condition and results of operations is based on our consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make certain estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses and our application of critical accounting policies, including revenue recognition, impairment of goodwill and other intangible assets, and income taxes. If any of these estimates, assumptions or judgments prove to be incorrect, our reported results could be materially affected. Actual results may differ significantly from our estimates under different assumptions or conditions. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Note 2 –~~Summary of Significant Accounting Policies” in our Annual Report and “Note 1~~ – Basis of Presentation and Nature of Operations” in the “Notes to Consolidated Financial Statements” in this Quarterly Report for further discussions of our significant accounting policies and estimates.

~~We periodically evaluate our critical accounting policies and estimates based on changes in U.S. GAAP and the current environment that may have an effect on our financial statements.~~

~~RECENT ACCOUNTING PRONOUNCEMENTS~~

~~Recent accounting standards are discussed in “Note 1~~ – ~~Basis of Presentation and Nature of Operations—Recent Accounting Pronouncements” in the “Notes to Consolidated Financial Statements” in this Quarterly Report.~~

~~SELECTED KEY METRICS~~

In order to evaluate operations, we track revenue by key metrics that provide useful information about the nature of our operations. Client markets provide insight into the breadth of our expertise. Client type is an indicator of the diversity of our client base. Revenue by contract mix provides insight in terms of the degree of performance risk that we have assumed. Significant variances in the key metrics are discussed under the revenue section of the results of operations. For further discussion see “Note 7 – ~~Revenue Recognition” in the “Notes to Consolidated Financial Statements” in this Quarterly Report.~~

RESULTS OF OPERATIONS

Three Months Ended March 31, ~~2023~~2024 Compared to Three Months Ended March 31, ~~2022~~2023

The table below sets forth ~~certain~~select line items ~~from~~of our unaudited consolidated statements of comprehensive income, the percentage of revenue for ~~such~~these select items, ~~in the periods provided,~~ and the period-over-period rate of change and percentage of revenue for the periods indicated.


	Three Months Ended March 31,																		Three Months Ended March 31,
	Dollars						Percentages of Revenue						Year-to-Year Change						Dollars						Percentages of Revenue						Year-to-Year Change
(dollars in thousands)	2023			2022			2023			2022			Dollars			Percent			2024			2023			2024			2023			Dollars			Percent
Revenue	$	483,282		$	413,468			100.0	%		100.0	%	$	69,814			16.9	%	$	494,436		$	483,282			100.0	%		100.0	%	$	11,154			2.3	%
Direct Costs		312,565			258,158			64.7	%		62.4	%		54,407			21.1	%
Direct Costs:
Direct labor & related fringe																				190,023			180,587			38.4	%		37.4	%		9,436			5.2	%
Subcontractors & other direct costs																				120,510			131,978			24.4	%		27.3	%		(11,468	)		(8.7	%)
Total Direct Costs																				310,533			312,565			62.8	%		64.7	%		(2,032	)		(0.7	%)
Operating Costs and Expenses:
Indirect and selling expenses		123,733			117,452			25.6	%		28.4	%		6,281			5.3	%		129,094			123,733			26.1	%		25.6	%		5,361			4.3	%
Depreciation and amortization		6,309			4,838			1.3	%		1.2	%		1,471			30.4	%		5,574			6,309			1.1	%		1.3	%		(735	)		(11.7	%)
Amortization of intangible assets		9,224			5,317			1.9	%		1.3	%		3,907			73.5	%		8,291			9,224			1.7	%		1.9	%		(933	)		(10.1	%)
Total Operating Costs and Expenses		139,266			127,607			28.8	%		30.9	%		11,659			9.1	%		142,959			139,266			28.9	%		28.8	%		3,693			2.7	%
Operating Income		31,451			27,703			6.5	%		6.7	%		3,748			13.5	%		40,944			31,451			8.3	%		6.5	%		9,493			30.2	%
Interest expense, net		(9,457	)		(2,627	)		(2.0	%)		(0.6	%)		(6,830	)		260.0	%
Other expense		(558	)		(439	)		(0.1	%)		(0.1	%)		(119	)		27.1	%
Interest, net																				(8,238	)		(9,457	)		(1.7	%)		(2.0	%)		1,219			(12.9	%)
Other income (expense)																				1,630			(558	)		0.3	%		(0.1	%)		2,188		nm
Income before Income Taxes		21,436			24,637			4.4	%		6.0	%		(3,201	)		(13.0	%)		34,336			21,436			6.9	%		4.4	%		12,900			60.2	%
Provision for Income Taxes		5,038			6,775			1.0	%		1.6	%		(1,737	)		(25.6	%)		7,019			5,038			1.4	%		1.0	%		1,981			39.3	%
Net Income	$	16,398		$	17,862			3.4	%		4.4	%	$	(1,464	)		(8.2	%)	$	27,317		$	16,398			5.5	%		3.4	%	$	10,919			66.6	%

nm - not meaningful

Revenue. ~~Revenue for the three months ended March 30, 2023 was $483.3 million, compared to $413.5 million for the three months ended March 30, 2022, an increase of $69.8 million or 16.9%.~~ The increase in revenue of $11.2 million was driven by $6.4 million, $4.6 million, and $1.7 million from our U.S. federal government, international government, and U.S. state and local government clients, ~~increases in our U.S. and international commercial clients, as well as the favorable impact of our acquisitions of SemanticBits and Blanton & Associates in third quarter of 2022. These gains were~~respectively, offset by ~~decreases~~a decrease of $1.5 million from our ~~international government work.~~commercial clients. Our revenue from client markets were impacted by varying amounts by our exit from the commercial marketing and events business during 2023 and resulted in the following changes:

~~The~~•

Revenue from the Energy, Environment, Infrastructure, and Disaster Recovery client market, which increased ~~$18.4~~from the first quarter of 2023 by $37.5 million, or ~~10.9% over the same period last year and was~~20.0%, driven ~~by:~~

•

~~Increases in our U.S. based commercial and international commercial businesses which grew~~ by ~~$10.5~~$24.4 million, $9.7 million, $2.1 million, and ~~$2.9~~$1.3 million ~~respectively;~~

•

~~Growth in our~~from commercial, U.S. ~~state and local~~federal government, ~~and U.S. government business which increased by $5.7 million and $2.9 million respectively;~~

•

~~Reduction of our~~ international ~~government business which decreased by $3.5 million.~~

~~The Health and Social Programs client market increased $47.6 million or 30.5% over the same period last year and was driven by:~~

•

~~Growth in our U.S.~~ government, and U.S. state and local government ~~businesses which increased~~clients, respectively, offset by ~~$44.6 million and $3.1 million, respectively;~~

•

~~Increases in our U.S. based commercial business which grew by $6.5 million;~~

•

~~Reductions in our international government and commercial businesses which decreased $5.9 million and $0.7 million, respectively.~~

~~The~~Revenue from the Security and Other Civilian & Commercial client market, ~~increased $3.8~~which decreased from the first quarter of 2023 by $13.7 million, or ~~4.3% over the same period last year~~14.7%, led by decreases of $17.2 million and ~~was driven by:~~$1.6 million from our commercial and international government clients, respectively, which were offset by an increase of $5.1 million from U.S. federal government clients,

and also offset by

•

~~Growth in~~Revenue from Health and Social Programs client market, which decreased from the first quarter of 2023 by $12.6 million, or 6.2%, as a result of decreases of $8.7 million and $8.4 million from our commercial and U.S. federal government clients, respectively, which were offset by increases of $4.1 million and $0.4 million from international government and U.S. state and government ~~businesses~~clients, respectively.

Revenue includes subcontractor & other direct costs, which ~~increased by $2.7~~decreased $11.5 million, or 8.7%, from the first quarter of 2023 and totaled $120.5 million and ~~$1.2~~$132.0 million ~~respectively;~~

for the three months ended March 31, 2024 and 2023, respectively, and the margin on such costs.

•

~~Increases in our international commercial business which grew by $1.7 million;~~

•

~~Reductions in our U.S. commercial businesses which decreased $1.8 million.~~

2317

Direct Costs. The ~~increase~~decrease of ~~$54.4~~$2.0 million in direct costs was driven by ~~increases~~a decrease of ~~$31.3~~$11.5 million in our subcontractor & other direct costs, primarily as a result of our exit from the commercial marketing and events business during 2023, offset by an increase of $9.4 million in our direct labor and associated fringe benefit ~~costs and $23.1 million in our~~costs. Our subcontractor ~~and~~& other direct costs ~~which was driven, in part, by~~as a percentage of direct costs were 38.8% and 42.2% for the ~~acquisitions of SemanticBits~~three months ended March 31, 2024 and ~~Blanton in the third quarter of 2022, as well as the growth in the business.~~2023, respectively. Our direct labor ~~and associated~~& related fringe benefit costs as a percentage of direct costs were 61.2% and 57.8% for ~~each of~~ the ~~three-month periods~~three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively. Our subcontractor ~~and~~& other direct costs as a percentage of direct costs was steady at 42.2% for each of the three-month periods ended March 31, 2023 and 2022, respectively. The increase in our direct costs was also due to additional work performed during the three months ended March 31, 2023 compared to the same period in 2022, partly due to our recent acquisitions previously noted. Our direct costs as a percent of revenue were ~~64.7%~~24.4% and 27.3% for the three months ended March 31, 2024 and 2023, ~~compared to 62.4% for the three months ended March 31, 2022. Our~~respectively, and our direct labor ~~and associated~~& related fringe benefit costs as a percentage of revenue were ~~37.4%~~38.4% and ~~36.1%~~37.4% for the three months ended March 31, 2024 and 2023, ~~and 2022, respectively, and our subcontractor and other~~respectively. Our total direct costs as a percentage of revenue were ~~27.3% and 26.3%,~~62.8% for the three months ended March 31, ~~2023 and 2022, respectively.~~2024, compared to 64.7% for the three months ended March 31, 2023.

Indirect and selling expenses. For the three months ended March 31, ~~2023,~~2024, our indirect and selling expenses increased ~~$6.3~~$5.4 million, or ~~5.3%~~4.3%, compared to the prior ~~year, primarily due to additional indirect labor and associated fringe costs~~year. As a percentage of $3.8 million and to general and administrative costs of $2.5 million. The increase in our indirect labor and associated fringe costs was a result of additional headcount from our recent acquisitions in 2022 as well as additional labor resources to support our growth. The increase in our general and administrative costs were primarily from impairment of $0.9 million of intangible asset related to a prior acquisition, an increase of $0.9 million in travel expense, and additional credit losses of $0.7 million in 2023 compared to 2022. Although we saw our overall indirect and selling expenses increase in 2023,revenue, our indirect and selling expenses ~~as a percent of revenue decreased~~increased to 26.1% from 25.6% ~~for the three months ended March 31, 2023 compared~~. The increase in indirect and selling expenses was primarily due to ~~28.4% for the three months ended March 31, 2022 as we continue to implement efficiency measures and reduce our operating expenses while supporting our revenue growth.~~higher compensation costs.

Depreciation and amortization. The ~~increase~~decrease of ~~$1.5~~$0.7 million in our depreciation and amortization was ~~from $0.9 million~~primarily due to fewer capital assets as a result of ~~additional depreciation expense and $0.6 million~~the divestiture of ~~additional amortization expense resulting from additional capital expenditure~~our U.S. commercial marketing business in the ~~three months ended March 31, 2023 as compared to 2022.~~third quarter of 2023.

Amortization of intangible ~~assets~~.assets. The ~~increase~~decrease of $0.9 million in amortization of intangible assets was primarily due to the ~~amortization~~divestiture of ~~intangible assets acquired in~~ our ~~acquisitions of SemanticBits and Blanton~~U.S. commercial marketing business in the third quarter of ~~2022.~~2023 that resulted in fewer intangible assets in the first quarter of 2024 compared to 2023.

~~Operating Income~~.Interest, net. ~~Our operating income increased by $3.7~~The decrease of $1.2 million in interest, net, was primarily from a decrease of our average debt balance to $508.8 million for the three months ended March 31, ~~2023~~2024 compared to ~~the prior year due to higher gross profit offset by higher operating costs to support our growing operations.~~

~~Interest expense, net.~~ ~~The increase of $6.8 million in interest expense, net, was primarily due to higher average debt balance of~~ $634.3 million ~~during the three months ended March 31, 2023 as compared to $461.2 million during~~for the same period in ~~2022, as a result of our acquisition activities.~~2023. We utilize floating-to-fixed interest rate swap agreements ~~(the “Swaps”)~~ to hedge the variable interest portion of our debt. For the three months ended March 31, ~~2023,~~2024, settlements of the ~~Swaps provided a reduction of $1.4 million to~~swap agreements reduced our interest expense, net, by $1.7 million compared to ~~$0.9~~$1.4 million ~~in additional interest~~ for the same period in ~~2022. Our average interest rate on borrowings, inclusive~~2023. Inclusive of the impact of the ~~Swaps, was 5.5%~~swap agreements, our interest expense for the three months ended March 31, ~~2023~~2024 was $7.2 million compared to ~~2.1%~~$8.8 million for 2023 and our interest rate inclusive of the swap agreements was 5.6% for the three months ended March 31, ~~2022.~~2024 compared to 5.5% for 2023.

Other ~~expense.~~income (expense). ~~Other expense did not materially~~The change ~~for~~in other income (expense) of $2.2 million was primarily from a gain of $1.7 million that was recognized after the ~~three months ended March 31,~~release of an escrow the 2023 ~~as compared to 2022.~~divestiture of our U.S. commercial marketing business.

Provision for Income Taxes. Our effective income tax rate for the three months ended March 31, 2024 and 2023 was 20.4% and ~~2022 was~~ 23.5% ~~and 27.5%~~, respectively. The decrease in the effective income tax rate was primarily due to the impact of windfall tax benefits relating to equity-based compensation that vested during the quarter ~~and non-taxable income on insurance investments~~ partially offset by non-deductible executive compensation, and an additional valuation allowance on excess foreign tax credits generated during the quarter.

NON-GAAP MEASURES

The following tables provide reconciliations of financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S. to their most comparable U.S. GAAP measures (“non-GAAP”). While we believe that these non-GAAP financial measures ~~provided~~provide additional information to investors and may be useful in evaluating our financial information, they should be considered supplemental in nature and not as a substitute for financial information prepared in accordance with U.S. GAAP. Other companies may define similarly titled non-GAAP measures differently and, accordingly, care should be exercised in understanding how we define these measures as similarly named measures are unlikely to be comparable across different companies.

~~Service Revenue~~

We compute Service Revenue as U.S. GAAP revenue less subcontractor and other direct costs (which include third-party materials and travel expenses, excluding any associated margins), which we believe represents the service we provide to our customer for directly contracting with and managing the activities of subcontractors. We believe Service Revenue is a useful measure to investors that best represents services that we provide to clients through our own employees.

~~The table below presents a reconciliation of U.S. GAAP revenue to Service Revenue for the periods indicated.~~

Three Months Ended

March 31,

(in thousands)

2023

2022

Revenue

$
483,282

$
413,468

Subcontractor and other direct costs

(131,978
)

(108,898
)
Service Revenue

$
351,304

$
304,570

EBITDA and Adjusted EBITDA

Earnings before interest, tax, and depreciation and amortization (“EBITDA”) is a measure we use to evaluate operating performance. We believe EBITDA is useful in assessing ongoing trends and, as a result, may provide ~~greater~~additional visibility in understanding our operations.

Adjusted EBITDA is EBITDA further adjusted to eliminate the impact of certain items that we do not consider to be indicative of the performance of our ongoing ~~operations.~~operations (“Adjusted EBITDA”). We evaluate these adjustments on an individual basis based on both the quantitative and qualitative aspects of the item, including their size and nature, as well as whether or not we expect them to occur as part of our normal business on a regular basis. ~~We believe that the adjustments applied in calculating Adjusted EBITDA are reasonable and appropriate to provide additional information to investors.~~

EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow ~~for management’s discretionary use~~ as these measures do not include certain cash requirements such as interest payments, tax payments, capital expenditures, and debt service.

The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated.


	Three Months Ended				Three Months Ended
	March 31,				March 31,
(in thousands)	2023		2022		2024			2023
Net income	$	16,398	$	17,862	$	27,317		$	16,398
Interest, net		9,457		2,627		8,238			9,457
Provision for income taxes		5,038		6,775		7,019			5,038
Depreciation and amortization		15,533		10,155		13,865			15,533
EBITDA (1)		46,426		37,419
Impairment of long-lived assets (2)		894		—
Acquisition-related expenses (3)		803		1,319
Severance and other costs related to staff realignment (4)		2,495		1,226
Facilities consolidations and office closures (5)		359		—
Expenses related to the transfer to our new corporate headquarters (6)		—		1,882
EBITDA						56,439			46,426
Impairment of long-lived assets (1)						—			894
Acquisition and divestiture-related expenses (2)						66			803
Severance and other costs related to staff realignment (3)						365			2,495
Charges for facility consolidations and office closures (4)						—			359
Pre-tax gain from divestiture of a business (5)						(1,715	)		—
Total Adjustments		4,551		4,427		(1,284	)		4,551
Adjusted EBITDA	$	50,977	$	41,846	$	55,155		$	50,977

(1)

The calculation of EBITDA for the three months ended March 31, 2022 has been revised to conform to the current period calculation of EBITDA. Specifically, interest income of $0.1 million was reclassified from “Other expense” to “Interest, net” on the consolidated statements of comprehensive income.

~~(2)~~

~~We recognized impairment expense of $0.9 million in the first quarter of 2023 related to~~Represents impairment of an intangible asset associated with the exit of our commercial marketing business in the United Kingdom in 2023.

(2)

These are primarily third-party costs related to ~~a prior acquisition.~~acquisitions and potential acquisitions, integration of acquisitions, and separation of discontinued businesses or divestitures.

(3)

~~These costs consist primarily of consultants and other outside third-party costs and integration costs associated with our acquisitions and/or potential acquisitions.~~

~~(4)~~

These costs are mainly due to involuntary employee termination benefits for our officers, ~~and/or groups of~~and employees who have been notified that they will be terminated as part of a ~~consolidation~~business reorganization or ~~reorganization.~~exit.

~~(5)~~(4)

These ~~costs~~ are exit costs associated with terminated leases or full office ~~closures. The exit costs include charges incurred under a contractual obligation~~closures that ~~existed as of the date of the accrual and for which~~ we either (i) will ~~(i)~~ continue to pay until the contractual ~~obligation is~~obligations are satisfied but with no economic benefit to us, or (ii) ~~we contractually terminated~~paid upon termination and ceasing to use the ~~obligation and ceased utilizing the~~leased facilities.

~~(6)~~(5)

~~These costs represent incremental non-cash lease expense associated with a straight-line rent accrual during~~Pre-tax gain resulting from the ~~“free rent” period in the lease for our new corporate headquarters in Reston, Virginia. We took possession~~release of ~~the new facility during the fourth quarter of 2021, while also maintaining and incurring lease costs for the former headquarters in Fairfax, Virginia. The transition~~an escrow related to the ~~new corporate headquarters was completed in the fourth quarter~~2023 divestiture of ~~2022.~~our U.S. commercial marketing business.

Non-GAAP Diluted Earnings per Share

Non-GAAP diluted earnings per share (“Non-GAAP Diluted EPS”) represents diluted U.S. GAAP earnings per share (“U.S. GAAP Diluted EPS”) excluding the impact of certain items noted above, ~~as well as the impact of~~ amortization of intangible assets, and the related ~~to our acquisitions and~~ income tax ~~effects of these exclusions.~~effects. While these adjustments may be recurring and not infrequent or unusual, we do not consider these adjustments to be indicative of the performance of our ongoing operations. We believe that the supplemental adjustments ~~applied in calculating Non-GAAP Diluted EPS are reasonable and appropriate to~~ provide additional useful information to investors.

The following table presents a reconciliation of U.S. GAAP Diluted EPS to Non-GAAP Diluted EPS for the periods indicated.


	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2023			2022			2024			2023
U.S. GAAP Diluted EPS	$	0.87		$	0.94		$	1.44		$	0.87
Impairment of long-lived assets		0.04			—			—			0.04
Acquisition-related expenditures		0.04			0.07
Acquisition and divestiture-related expenses								—			0.04
Severance and other costs related to staff realignment		0.13			0.06			0.02			0.13
Facilities consolidations and office closures		0.02			—
Expenses related to the transfer to our new corporate headquarters		—			0.10
Expenses related to facility consolidations and office closures (1)								0.04			0.02
Pre-tax gain from divestiture of a business								(0.09	)		—
Amortization of intangibles		0.49			0.28			0.44			0.49
Income tax effects on amortization, special charges, and adjustments (1)		(0.17	)		(0.14	)
Income tax effects of the adjustments (2)								(0.08	)		(0.17	)
Non-GAAP Diluted EPS	$	1.42		$	1.31		$	1.77		$	1.42

(1)

These are exit costs related to actual office closures (previously included in Adjusted EBITDA) and accelerated depreciation related to fixed assets for planned office closures.

(2)

Income tax effects were calculated using the effective tax rate, adjusted for certain discrete items, if any, of ~~23.5%~~20.4% and ~~27.5%~~23.5% for the three months ended March 31, 2024 and 2023, ~~and 2022,~~ respectively.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Borrowing Capacity. Short-term liquidity requirements are created by our use of funds for working capital, capital expenditures, debt service, dividends, and share repurchases. We expect to meet these requirements through a combination of our cash and cash equivalents at hand, cash flow from operations, and borrowings. Our primary source of borrowings is from our Credit Facility with a syndicate of multiple commercial banks, as described in “Note ~~6 — Long-Term~~5 – Debt” in the “Notes to Consolidated Financial Statements” in this Quarterly Report. As of March 31, ~~2023,~~2024, we had ~~$499.6~~$541.3 million ~~or $403.5 million after taking into account the financial and performance-based limitations,~~ available under the Credit Facility to fund our ongoing operations, future acquisitions, dividend payments, and share repurchase program. We believe that our cash balances, expected cash flows from operations, and access to our Credit Facility will be sufficient to meet our working capital needs, debt servicing commitments, share repurchase, and dividend payment requirements for the next twelve months and beyond.

We have entered into floating-to-fixed interest rate swap agreements ~~(the “Swaps”)~~ for a total notional value of $275.0 million to hedge a portion of our floating rate Credit Facility. The ~~Swaps~~swap agreements will expire in ~~2023,~~ 2025 and 2028, respectively, and we may consider entering into additional ~~hedges~~swap agreements as these existing hedges expire. ~~For additional details on~~As of March 31, 2024, the ~~Swaps, see “Note 8 — Derivative Instruments and Hedging Activities” in the “Notes~~percentage of our fixed-rate debt to ~~Consolidated Financial Statements” in this Quarterly Report.~~floating-rate debt was 58%.

There are other conditions, such as the ongoing ~~war~~wars in Ukraine and the Middle East, and the recent increase in inflation, both in the U.S. and globally, that create uncertainty in the global economy, which in turn may impact, among other things, our ability to generate positive cash flows from operations and our ability to successfully execute and fund key initiatives. However, our current belief is that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, customary capital expenditures and acquisitions, quarterly cash dividends, share repurchases, and organic growth. Additionally, we continuously analyze our capital structure to ensure we have capital to fund future strategic acquisitions.

The recent closures of Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”) in March 2023 and First Republic Bank (”Republic”) in May 2023 have raised significant concerns about bank-specific risks, broader financial institution liquidity risks, and the stability of the banking system in the United States. We did not hold any of our funds in, or have any banking relationship with SVB, Signature, or Republic. To date, we have not experienced any issues with the banks where we do maintain our accounts or have other banking relationships. We hold our funds in large commercial banks and our intent is to maintain account balances at a reasonably low level to reduce our risk of loss from a sudden failure at any individual bank. Our Credit Facility is supported by a syndicate of multiple commercial banks, and each bank in the syndicate provides a pro rata percentage of our total available borrowings and commitments independently of the others. No member of the bank syndicate is responsible for providing more than fifteen percent of the total available borrowings and commitments.

We ~~continue to~~continuously monitor the state of the financial markets to assess the ~~continuing~~ availability of borrowing capacity under the Credit Facility and the cost of additional capital from both debt and equity markets. At present, we believe we will be able to continue to access these markets at commercially reasonable terms and conditions if we need additional capital in the near term.

~~Financial Condition. There were several changes in our consolidated balance sheet as of March 31, 2023 compared to the consolidated balance sheet as of December 31, 2022. Significant changes are discussed below.~~

Cash and cash equivalents decreased to $5.4 million as of March 31, 2023, from $11.3 million on December 31, 2022 and restricted cash increased to $3.6 million as of March 31, 2023 from $1.7 million on December 31, 2022. These balances and the changes to the balances of cash and cash equivalents and restricted cash are further discussed in “Cash Flow” below and in “Note 2 — Restricted Cash” in the “Notes to Consolidated Financial Statements” in this Quarterly Report.

Contract receivables, net of allowance for expected credit losses, as of March 31, 2023, decreased to $221.1 million from $232.3 million on December 31, 2022 due to the timing of our billings and collection of client invoices. Contract receivables are a significant component of our working capital and may be favorably or unfavorably impacted by our collection efforts, including timing from new contract startups, and other short-term fluctuations related to the payment practices of our clients. We also utilize our MRPA with MUFG Bank, Ltd. to sell certain eligible billed receivables and sold $28.6 million in receivables during the first quarter of 2023. See “Note 3 — Contract Receivables, Net” in the “Notes to Consolidated Financial Statements” in this Quarterly Report

Contract assets and contract liabilities represent revenue in excess of billings and billings in excess of revenue, respectively, both of which generally arise from revenue recognition timing and contractually stipulated billing schedules or billing complexity. At March 31, 2023, contract assets and contract liabilities were $188.1 million and $25.8 million, respectively, compared to $169.1 million and $25.8 million, respectively, at December 31, 2022.

We evaluate our collections efforts using the days-sales-outstanding ratio (“DSO”), which we calculate by dividing total accounts receivable (contract receivables, net and contract assets, less contract liabilities), by revenue per day for the trailing 90-day period. Our DSO improved to 71 days at March 31, 2023, from 79 days at March 31, 2022, due, in part, to the utilization of our MRPA and improved collection efforts. Excluding collections relating to the Puerto Rico disaster relief and rebuild efforts (which include unusually long invoice payment cycles due to complex customer reporting and billing requirements), DSO was 68 days at March 31, 2023 compared to 74 days at March 31, 2022.

Accounts payable decreased to $109.9 at March 31, 2023 from $135.8 million at December 31, 2022, and our accrued expenses totaled $171.6 million at March 31, 2023 as compared to $209.5 million at December 31, 2022. The changes in our accounts payable and accrued expenses are primarily due to the timing of invoices from our vendors and subcontractors for services rendered and our subsequent payments of those invoices.

Long-term debt (exclusive of unamortized debt issuance costs) increased to $602.7 million on March 31, 2023 from $561.4 million on December 31, 2022, primarily due to the net advance on our Credit Facility of $41.4 million to fund short-term working capital needs. The average debt balances on the Credit Facility for the three months ended March 31, 2023 and 2022 were $634.3 million and $461.2 million, respectively. We deploy cash flow from operations as our primary source of funding and utilize our Credit Facility to fund any temporary cash requirements.

~~Inflation~~. Our business and results of operations have not been materially affected by inflation and changing prices during the period presented and we do not expect to be materially affected in the future due to the nature of our business as a provider of professional services with contracts that can be negotiated with new prices.

~~Share Repurchase Program.~~ The objective of our share repurchase program has been to offset dilution resulting from our employee incentive plan. Our share repurchase program is described in “Note 14 — Share Repurchase Program” in the “Notes to Consolidated Financial Statements” in this Quarterly Report. The timing and extent to which we repurchase our shares will depend upon market conditions and other corporate considerations, as may be considered in our sole discretion. The purchases will be funded from our existing cash balances and/or borrowings, and the repurchased shares will be held in treasury.

During the three months ended March 31, 2023, we repurchased 180,000 shares under this program at an average price of $100.70 per share. As of March 31, 2023, $93.7 million remained available for share repurchases.

Dividends. We ~~pay~~have historically paid quarterly cash dividends to our shareholders of record at $0.14 per share. Total dividend payments during the three months ended March 31, ~~2023~~2024 were $2.6 million.

Cash dividends declared thus far in ~~2023~~2024 are as follows:

Dividend Declaration Date

Dividend Per Share

Record Date

Payment Date
February 28, 2023

$
0.14

March 24, 2023

April 13, 2023
May 9, 2023

$
0.14

June 9, 2023

July 14, 2023


Dividend Declaration Date	Dividend Per Share		Record Date	Payment Date
February 27, 2024	$	0.14	March 22, 2024	April 12, 2024
May 2, 2024	$	0.14	June 7, 2024	July 12, 2024

Cash Flow. ~~We consider cash on deposit and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents.~~ The following table sets forth our sources and uses of cash for the three months ended March 31, ~~2023~~2024 and ~~2022:~~2023:


	Three Months Ended
	March 31,
(in thousands)	2024			2023
Net Cash Used in Operating Activities	$	(10,001	)	$	(16,831	)
Net Cash Used in Investing Activities		(3,511	)		(6,900	)
Net Cash Provided by Financing Activities		8,833			19,688
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		(171	)		11
Decrease in Cash, Cash Equivalents, and Restricted Cash	$	(4,850	)	$	(4,032	)

Three Months Ended

March 31,

(in thousands)

2023

2022

Net Cash Used in Operating Activities

$
(16,831
)

$
(7,055
)
Net Cash Used in Investing Activities

(6,900
)

(6,454
)
Net Cash Provided by Financing Activities

19,688

2,674

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash

11

(525
)
Decrease in Cash, Cash Equivalents, and Restricted Cash

$
(4,032
)

$
(11,360
)

~~Our operating cash flows are primarily affected by the overall profitability~~Cash used in Operating Activities decreased $6.8 million as a result of ~~our contracts, our ability to invoice and collect from our clients in a timely manner,~~favorable impact of working capital changes and the timing of ~~vendor~~servicing the receivables sold to MUFG Bank, Ltd., under our Master Receivables Purchase Agreement (the “MRPA”). See “Note 3 - Contract Receivables, Net” in the “Notes to Consolidated Financial Statements” in this Quarterly Report for additional details on the sale of receivables under the MRPA.

Cash used in investing activities decreased by $3.4 million due to reduced capital expenditures and ~~subcontractor payments~~cash received in ~~accordance~~connection with ~~negotiated payment terms. We bill most~~the 2023 divestiture of our ~~clients on a monthly basis after services are rendered.~~U.S. commercial marketing business.

~~Net cash used in operating~~Cash provided by financing activities ~~increased~~decreased by ~~$9.8~~$10.9 million, primarily due to ~~an additional payroll cycle that~~ increased ~~the use~~share repurchases of ~~cash by $25.2 million during the first quarter of 2023 and the timing of vendor payments, partially offset by higher proceeds from sale of receivables.~~

~~Net cash used in investing activities increased by $0.4 million primarily due to payments for prior business acquisitions.~~

~~Net cash provided by cash flows from financing activities increased by $17.0 million primarily due to net lower cash payments against restricted contract funds of $12.2~~$7.5 million and higher ~~borrowing against our Credit Facility~~payments to MUFG of ~~$3.3 million.~~$2.1 million under the MRPA.

2820

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the disclosures discussed in the section entitled “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report.

Item 4. Controls and Procedures

Disclosure Controls and Procedures and Internal Controls Over Financial Reporting. As Our management, with the participation of ~~the period covered by this report, we carried out an evaluation of~~our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of the ~~design and operation of our~~Company’s disclosure controls and procedures ~~as such term is~~(as defined in Rules 13a-15(e) and 15d-15(e) ~~promulgated under~~of the Exchange ~~Act. We performed the evaluation under the supervision~~Act of 1934) and ~~with the participation~~have concluded that as of ~~our management, including our Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that~~March 31, 2024, our disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in our reports filed with the SEC under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.effective. There have been no significant changes in our internal controls over financial reporting ~~as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f),~~ during the ~~periods~~quarterly period covered by this ~~Quarterly Report or, to our knowledge, in other factors~~report that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

~~Limitations on the Effectiveness of Controls~~. Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been or will be detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and may not be detected.21

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various legal matters and proceedings arising in the ordinary course of business. While these matters and proceedings cause us to incur costs, including, but not limited to, attorneys’ fees, we currently believe that any ultimate liability arising out of these matters and proceedings will not have a material adverse effect on our financial position, results of operations, or cash flows.

Item 1A. Risk Factors

There have been no material changes in the risk factors discussed in the section entitled “Risk Factors” disclosed in Part I, Item 1A of our Annual Report.

The risks described in our Annual Report are not the only risks that we encounter. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also materially adversely affect our business, financial condition, and/or operating results.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

~~Purchase~~Share Repurchase Program. One of the objectives of our share repurchase program has been to offset dilution resulting from our employee incentive plan. The timing and extent to which we repurchase our shares will depend upon market conditions and other corporate considerations, as may be considered in our sole discretion. Repurchases are funded from our existing cash balances and/or borrowings, and repurchased shares are held as treasury stock.

During the three months ended March 31, 2024, we repurchased 172,817 shares by using $23.8 million under the program and $69.9 million remained available for share repurchases as of March 31, 2024.

Repurchases of Equity ~~Securities by Issuer~~Securities. . The following table summarizes ~~our~~the share repurchase activity for the three months ended March 31, ~~2023:~~2024 for our share repurchase program and shares purchased in satisfaction of employee tax withholding obligations related to the settlement of restricted stock units.

Period

Total Number
of Shares
Purchased (1)

Average Price
Paid per
Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

Maximum Number
(or Approximate
Dollar Value) of
Shares that May
Yet Be Purchased
Under the Plans
or Programs (2)

January 1 - January 31

129,605

$
99.17

113,573

$
93,743,956

February 1 - February 28

66,427

$
103.20

66,427

$
93,743,956

March 1 - March 31

29,015

$
107.28

—

$
93,743,956

Total

225,047

$
101.40

180,000


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1 - January 31		129,786	$	133.46		113,179	$	78,608,384
February 1 - February 29		47,089	$	144.76		46,602	$	71,855,335
March 1 - March 31		41,823	$	151.65		13,036	$	69,905,208
Total		218,698	$	139.37		172,817

(1)

The total number of shares purchased ~~of 225,047~~ includes shares repurchased pursuant to our share repurchase program described further in footnote (2) below, as well as shares purchased from employees to pay required withholding taxes related to the settlement of ~~any~~ restricted stock units in accordance with our applicable long-term incentive plan. During the three months ended March 31, ~~2023,~~2024, we repurchased ~~180,000~~172,817 shares under the stock repurchase program at an average price of ~~$100.70~~$137.90 and ~~45,047~~45,881 shares of common stock from employees in satisfaction of tax withholding obligations at an average price of ~~$104.22~~$144.92 per share.

(2)

The current share repurchase program authorizes share repurchases in the aggregate up to $200.0 million. ~~The Restated~~Our Credit ~~Agreement~~Facility permits annual share repurchases of at least $25.0 million provided that the ~~Company’s~~Company is not in default of its covenants, and higher amounts provided that our Consolidated Leverage Ratio prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the ~~then applicable~~then-applicable maximum Consolidated Leverage Ratio and subject to a net liquidity of $100.00 million. Additionally, we are permitted to make share repurchases up to $25 million per calendar year provided that we are not in default. For additional information on the share repurchase program, see “Note 14 — Share Repurchase Program” in the “Notes to Consolidated Financial Statements” in this Quarterly Report.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~On March 4, 2024 and upon the expiration of his prior trading plan, John Wasson, our Chair, President and Chief Executive Officer, adopted a trading plan intended to satisfy the affirmative defense conditions under Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The plan provides for the sale of up to 8,121 shares and terminates on the earlier of the date all the shares under the plan are sold or March 6, 2026.

30On March 5, 2024 and upon the expiration of his prior trading plan, James Morgan, our Chief Operating Officer, adopted a trading plan intended to satisfy the affirmative defense conditions under Rule 10b5-1(c) of the Exchange Act. The plan provides for the sale of up to 5,000 shares and terminates on the earlier of the date all the shares under the plan are sold or March 5, 2026.

On March 8, 2024, Anne Choate, our Executive Vice President of Energy, Environment, and Infrastructure, adopted a trading plan intended to satisfy the affirmative defense conditions under Rule 10b5-1(c) of the Exchange Act. The plan provides for the sale of up to 5,366 shares and terminates on the earlier of the date all the shares under the plan are sold or March 7, 2026.

Item 6. Exhibits


Exhibit Number		Exhibit

10.1		Restricted Stock Unit Award Agreement (Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, filed March 13, 2024) +

10.2		Performance Share Award Agreement(Incorporated by reference to Exhibit 10.2 to the Company's Form 8-K, filed March 13, 2024) +

10.3		CEO Restricted Stock Unit Award Agreement (CEO Template)(Incorporated by reference to Exhibit 10.3 to the Company's Form 8-K, filed March 13, 2024) +

31.1		Certificate of the Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a). *

31.2		Certificate of the Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a). *

32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

101		The following materials from the ICF International, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2023~~2024 formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements.*

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* Submitted electronically herewith.

+ Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit.

3124

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	ICF INTERNATIONAL, INC.

May ~~10, 2023~~2, 2024	By:	/s/ John Wasson
		John Wasson
		President and Chief Executive Officer
		(Principal Executive Officer)

May ~~10, 2023~~2, 2024	By:	/s/ Barry Broadus
		Barry Broadus
		Chief Financial Officer (Principal Financial Officer)

3225


Delaware		22-3661438
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1902 Reston Metro Plaza, Reston, VA		20190
(Address of Principal Executive Offices)		(Zip Code)


Title of each class	Trading Symbols(s)	Name of each exchange on which registered
Common Stock	ICFI	The NASDAQ Global Select Market


(in thousands, except share and per share amounts)	March 31, 2023			December 31, 2022			March 31, 2024			December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	5,364		$	11,257		$	3,683		$	6,361
Restricted cash		3,572			1,711			916			3,088
Contract receivables, net		221,066			232,337			202,246			205,484
Contract assets		188,093			169,088			230,412			201,832
Prepaid expenses and other assets		28,341			40,709			28,401			28,055
Income tax receivable		8,420			11,616			—			2,337
Total Current Assets		454,856			466,718			465,658			447,157
Property and Equipment, net		85,445			85,402			74,296			75,948
Other Assets:
Goodwill		1,213,908			1,212,898			1,219,031			1,219,476
Other intangible assets, net		116,430			126,537			86,613			94,904
Operating lease - right-of-use assets		150,511			149,066			128,356			132,807
Other assets		51,280			51,637			43,740			41,480
Total Assets	$	2,072,430		$	2,092,258		$	2,017,694		$	2,011,772

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt	$	26,000		$	23,250		$	26,000		$	26,000
Accounts payable		109,854			135,778			119,285			134,503
Contract liabilities		25,771			25,773			22,099			21,997
Operating lease liabilities - current		16,124			19,305
Finance lease liabilities - current		2,400			2,381
Operating lease liabilities								20,889			20,409
Finance lease liabilities								2,545			2,522
Accrued salaries and benefits		61,428			85,991			70,176			88,021
Accrued subcontractors and other direct costs		43,109			45,478			48,707			45,645
Accrued expenses and other current liabilities		67,089			78,036			82,966			79,129
Total Current Liabilities		351,775			415,992			392,667			418,226
Long-term Liabilities:
Long-term debt		571,979			533,084			448,748			404,407
Operating lease liabilities - non-current		189,331			182,251			170,575			175,460
Finance lease liabilities - non-current		15,508			16,116			13,227			13,874
Deferred income taxes		69,343			68,038			21,975			26,175
Other long-term liabilities		27,805			23,566			54,353			56,045
Total Liabilities		1,225,741			1,239,047			1,101,545			1,094,187

Commitments and Contingencies (Note 17)
Commitments and Contingencies (Note 13)

Stockholders’ Equity:
Preferred stock, par value $.001; 5,000,000 shares authorized; none issued		—			—			—			—
Common stock, par value $.001; 70,000,000 shares authorized; 23,919,338 and 23,771,596 shares issued at March 31, 2023 and December 31, 2022, respectively; 18,788,082 and 18,883,050 shares outstanding at March 31, 2023 and December 31, 2022, respectively		24			23
Common stock, par value $.001; 70,000,000 shares authorized; 24,110,071 and 23,982,132 shares issued at March 31, 2024 and December 31, 2023, respectively; 18,754,762 and 18,845,521 shares outstanding at March 31, 2024 and December 31, 2023, respectively								24			24
Additional paid-in capital		405,818			401,957			425,160			421,502
Retained earnings		716,795			703,030			799,796			775,099
Treasury stock, 5,131,256 and 4,906,209 shares at March 31, 2023 and December 31, 2022 respectively		(266,481	)		(243,666	)
Treasury stock, 5,355,309 and 5,136,611 shares at March 31, 2024 and December 31, 2023, respectively								(297,630	)		(267,155	)
Accumulated other comprehensive loss		(9,467	)		(8,133	)		(11,201	)		(11,885	)
Total Stockholders’ Equity		846,689			853,211			916,149			917,585
Total Liabilities and Stockholders’ Equity	$	2,072,430		$	2,092,258		$	2,017,694		$	2,011,772


	Three Months Ended						Three Months Ended
	March 31,						March 31,
(in thousands)	2023			2022			2024			2023
Cash Flows from Operating Activities
Net income	$	16,398		$	17,862		$	27,317		$	16,398
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (recovery of) credit losses		567			(170	)
Deferred income taxes		2,187			4,505
Provision for credit losses								1,347			567
Deferred income taxes and unrecognized income tax benefits								(4,786	)		2,187
Non-cash equity compensation		3,750			3,563			3,551			3,750
Depreciation and amortization		15,533			10,154			13,865			15,533
Facilities consolidation reserve		—			(78	)
Amortization of debt issuance costs		326			154
Impairment of long-lived assets		894			—
Other adjustments, net		(827	)		353
Gain on divestiture of a business								(1,715	)		—
Other operating adjustments, net								46			393
Changes in operating assets and liabilities, net of the effects of acquisitions:
Net contract assets and liabilities		(18,716	)		(59,689	)		(29,024	)		(18,716	)
Contract receivables		10,929			31,473			1,604			10,929
Prepaid expenses and other assets		15,353			(11,708	)		(192	)		15,353
Operating lease assets and liabilities, net		1,016			(532	)		523			1,016
Accounts payable		(26,083	)		(9,815	)		(15,119	)		(26,083	)
Accrued salaries and benefits		(24,678	)		9,513			(17,775	)		(24,678	)
Accrued subcontractors and other direct costs		(2,613	)		1,078			3,303			(2,613	)
Accrued expenses and other current liabilities		(14,688	)		(6,883	)		(3,988	)		(14,688	)
Income tax receivable and payable		3,192			2,621			11,375			3,192
Other liabilities		629			544			(333	)		629
Net Cash Used in Operating Activities		(16,831	)		(7,055	)		(10,001	)		(16,831	)

Cash Flows from Investing Activities
Capital expenditures for property and equipment and capitalized software		(6,441	)		(6,454	)
Payments for purchase of property and equipment and capitalized software								(5,226	)		(6,441	)
Payments for business acquisitions, net of cash acquired		(459	)		—			—			(459	)
Proceeds from divestiture of a business								1,715			—
Net Cash Used in Investing Activities		(6,900	)		(6,454	)		(3,511	)		(6,900	)

Cash Flows from Financing Activities
Advances from working capital facilities		334,995			329,690			355,877			334,995
Payments on working capital facilities		(293,640	)		(291,662	)		(311,813	)		(293,640	)
Other short-term borrowings		2,483			—
Proceeds from other short-term borrowings								24,356			2,483
Repayments of other short-term borrowings								(23,950	)		—
Receipt of restricted contract funds		2,916			4,301			1,261			2,916
Payment of restricted contract funds		(1,131	)		(14,714	)		(3,391	)		(1,131	)
Payments of principal portion of finance leases		(590	)		—
Proceeds from exercise of options		111			92
Dividends paid		(2,641	)		(2,644	)		(2,636	)		(2,641	)
Net payments for stock issuances and buybacks		(22,815	)		(22,268	)
Payments on business acquisition liabilities		—			(121	)
Net payments for stock issuances and share repurchases								(30,355	)		(22,815	)
Other financing, net								(516	)		(479	)
Net Cash Provided by Financing Activities		19,688			2,674			8,833			19,688
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		11			(525	)		(171	)		11

Decrease in Cash, Cash Equivalents, and Restricted Cash		(4,032	)		(11,360	)		(4,850	)		(4,032	)
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period		12,968			20,433			9,449			12,968
Cash, Cash Equivalents, and Restricted Cash, End of Period	$	8,936		$	9,073		$	4,599		$	8,936

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest	$	5,924		$	2,760		$	7,740		$	5,924
Income taxes	$	914		$	949		$	1,133		$	914
Non-cash investing and financing transactions:
Tenant improvements funded by lessor	$	—		$	10,843


	March 31, 2023				March 31, 2022				March 31, 2024				March 31, 2023
	Beginning		Ending		Beginning		Ending		Beginning		Ending		Beginning		Ending
Cash and cash equivalents	$	11,257	$	5,364	$	8,254	$	7,392	$	6,361	$	3,683	$	11,257	$	5,364
Restricted cash		1,711		3,572		12,179		1,681		3,088		916		1,711		3,572
Total of cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	12,968	$	8,936	$	20,433	$	9,073	$	9,449	$	4,599	$	12,968	$	8,936


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at March 31, ~~2023~~2024 (Unaudited) and December 31, ~~2022~~2023	3

	Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March 31, ~~2023~~2024 and ~~2022~~2023	4

	Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2024 and 2023	5

	Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, ~~2023~~2024 and ~~2022~~2023	56

	Notes to Consolidated Financial Statements	67

	Note 1 - Basis of Presentation	7

	Note 2 - Restricted Cash	8

	Note 3 - Contract Receivables, Net	8

	Note 4 - Leases	9

	Note 5 - Debt	10

	Note 6 - Revenue Recognition	10

	Note 7 - Derivative Instruments and Hedging Activities	11

	Note 8 - Income Taxes	11

	Note 9 - Stockholders' Equity	12

	Note 10 - Stock-Based Compensation	13

	Note 11 - Earnings Per Share	13

	Note 12 - Fair Value	13

	Note 13 - Commitments and Contingencies	14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1615

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2921

Item 4.	Controls and Procedures	2921

PART II. OTHER INFORMATION		3022

Item 1.	Legal Proceedings	3022

Item 1A.	Risk Factors	3022

Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	3022

Item 3.	Defaults Upon Senior Securities	3022

Item 4.	Mine Safety Disclosures	3022

Item 5.	Other Information	3023

Item 6.	Exhibits	3124


	Common Stock					Additional Paid-in		Retained			Treasury Stock					Accumulated Other Comprehensive
(in thousands)	Shares			Amount		Capital		Earnings			Shares		Amount			Loss			Total
Balance at January 1, 2024		18,846			24		421,502		775,099			5,136		(267,155	)		(11,885	)	$	917,585
Net income		—			—		—		27,317			—		—			—			27,317
Other comprehensive income		—			—		—		—			—		—			684			684
Equity compensation		—			—		3,551		—			—		—			—			3,551
Exercise of stock options		2			—		107		—			—		—			—			107
Issuance of shares pursuant to vesting of restricted stock units		125			—		—		—			—		—			—			—
Payments for share repurchases		(218	)		—		—		—			218		(30,475	)		—			(30,475	)
Dividends declared		—			—		—		(2,620	)		—		—			—			(2,620	)
Balance at March 31, 2024		18,755		$	24	$	425,160	$	799,796			5,354	$	(297,630	)	$	(11,201	)	$	916,149


	As of and for the Three Months Ended
	March 31, 2024			March 31, 2023
Beginning balance	$	21,302		$	3,819
Billed receivables sold during the period		133,398			28,635
Collections from customers during the period		(129,824	)		(17,044	)
Ending balance (1)	$	24,876		$	15,410


	March 31, 2023			March 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	4,982		$	10,110
Operating cash outflows for finance leases		152			—
Financing cash outflows for finance leases		590			—
Right-of-use assets obtained in exchange for operating lease liabilities	$	8,900		$	2,952
Weighted-average remaining lease term
Operating leases		11.6			11.5
Finance leases		6.8			—
Weighted-average discount rate
Operating leases		3.5	%		3.2	%
Finance leases		3.4	%		—


	March 31, 2023		December 31, 2022
Deposits	$	22,792	$	32,384
Restricted contract funds		3,562		1,701
IT and software licensing costs		1,285		1,609
Taxes and insurance premiums		4,834		6,633
Facilities rental and lease exit costs		1,846		2,043
Interest		3,661		363
Professional services		2,958		3,617
Dividends		2,623		2,631
Cash collected not yet remitted to purchaser of billed receivables		13,225		6,164
Other accrued expenses and current liabilities		10,303		20,891
Total accrued expenses and other current liabilities	$	67,089	$	78,036


	Three Months Ended March 31, 2023
	Foreign Currency Translation Adjustments			Gain on Sale of Interest Rate Hedge Agreement (1)			Change in Fair Value of Interest Rate Hedge Agreements (2)			Total
Accumulated other comprehensive (loss) income at December 31, 2022	$	(14,056	)	$	41		$	5,882		$	(8,133	)
Current period other comprehensive (loss) income:
Other comprehensive (loss) income before reclassifications		1,753			—			(2,532	)		(779	)
Amounts reclassified from accumulated other comprehensive (loss) income (3)		—			(60	)		(1,360	)		(1,420	)
Effect of taxes (4)		(192	)		19			1,038			865
Total current period other comprehensive (loss) income		1,561			(41	)		(2,854	)		(1,334	)
Accumulated other comprehensive (loss) income at March 31, 2023	$	(12,495	)	$	—		$	3,028		$	(9,467	)


	Three Months Ended March 31, 2022
	Foreign Currency Translation Adjustments			Gain on Sale of Interest Rate Hedge Agreement (1)			Change in Fair Value of Interest Rate Hedge Agreement (2)			Total
Accumulated other comprehensive (loss) income at December 31, 2021	$	(8,759	)	$	569		$	(2,845	)	$	(11,035	)
Current period other comprehensive (loss) income:
Other comprehensive (loss) income before reclassifications		(2,304	)		—			5,509			3,205
Amounts reclassified from accumulated other comprehensive (loss) income (3)		—			(180	)		902			722
Effect of taxes (4)		363			48			(1,679	)		(1,268	)
Total current period other comprehensive (loss) income		(1,941	)		(132	)		4,732			2,659
Accumulated other comprehensive (loss) income at March 31, 2022	$	(10,700	)	$	437		$	1,887		$	(8,376	)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company