ICFI - Earnings call transcript Q3 2017

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Operator

Welcome to the ICF International Third Quarter 2017 Results Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards you’ll be invited to participate in a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Thursday, November 2, 2017, and cannot be reproduced or rebroadcast without written permission from the company. And I would now like to turn the program over to Lynn Morgen. ahead. go Please

Lynn Morgen

CEO; Good us Vanessa. With And you Chairman thank today and and Thank Morgan, James review afternoon, ICF’s joining CFO. and Kesavan, Sudhakar to ICF performance. Wasson, third for President from COO; you, are everyone. John quarter us XXXX

events assist a could our conference risks. These future and call, to statements make results discussions number for ICF that understanding and are forward-looking will this of in materially, SEC actual our November management’s refer to of differ performance. cause risks to During you those filings statements release X, subject and we you to expectations for press XXXX I our

specifically We to during cause call to turn our our point anticipate may to discuss today, Please based update change. statements future the forward-looking addition, Kesavan In developments We Sudhakar the XXXX over will third that now made our statements light. I to this in quarter obligation performance. will disclaim information but of at the ICF’s CEO, so. presented Sudhakar? some views any to call are on that consider elect today. views as do

Sudhakar Kesavan

afternoon, everyone. and Lynn, you, Thank good

revenue, to that Our achieve flow cash have late on provided put year February. XXXX third in quarter ranges us EPS we the results track and full guidance

programs high initial have and mix several costs administration EBITDA growth our In addition, levels, We in XXXX. in performance were utilization, and staff continued a effect were set to margin our including operating implemented. XX.X% and pleased our total and of we for efficiencies infrastructure profitability revenues revenues year-to-date contract third service from benefiting stage reduce wins that have the factors, of and XX.X% pipeline the on ongoing revenues, favorable with program quarter on opportunities margins

were continued are experience in the handful working little clients. up one with with months will last revenues pass-through first Third later, and for impact delays which our performance quarter day, discussed second contracts trends QX to level, to government a despite we in less call, the a nine revenue on year’s of we X.X%. on James Similar stable of detail quarter revenues

these expect further the sequential quarter of historical the this showing result year levels. in which third increase will our pass-through in We revenues XXXX a fourth the shift revenue quarter, from seasonality in revenue fourth trend to with growth quarter

is reconfigured Excluding our revenues, existing some with the contract federal the the environment of contract RFP on revenue agency lower quarter-on-quarter schedule. by impact pass-through pace. volume good than essentially releases to and this being of wins year-on-year. continue remained believe of proposals we largest government we similar will first from has agency another in flat The on or submitted the at rather Expanding up in of of contracts in XXXX waived knowledge which to months considerably the been amount the Within saw due extended much quarter, RFPs markets, domain client, this uptick Human recognized nine Services, has having is last that where period the in third federal example, our budget the and bipartisan support, we similar year. enjoy XXXX. from of Health end the HHS Department for confidence the ICF year an to dollar XXXX, norm and of quarter for which benefited key be ICF

situation positions, is of administration that resulted As expect yet a political certain fill improve begin new has many agencies programmatic to some in activities, key which agency policy XXXX. the we we and in have said previously, to the reluctance to

This results, growth expertise revenue months is single-digit work for disaster growth mid work major recovery efficiency of on full Based this expectations potential Our year-to-date our in quarter Irma for opportunity in the driven horizon business on year. in ICF of put XXXX. the our first primarily Commercial perform in to Hurricanes with on to Commercial been Maria. exceed continued A energy third business the line X.X% to our up has the year to of well by and contracts. X.X% in Harvey, aftermath nine revenues we and are

As with in Urban Housing Block other housing you the existing and federally in more discuss programs moment. jurisdictions states, Grants. know, detail Community municipalities this ICF with will Department recognized is Development Wasson of recovery through are a John that and expertise funded Development

year ICF market within the local the they execution and our backlog positioned area stable the resources the this of in capture that in Commercial as solid to each in year-to-date We opportunities strong to increasing an Federal state year-on-year revenues performance ICF third are in administration; business. I International new growth summarize government quarter, billion. as the from At business; ICF is end our funded of follow; first deploying $X was of and the mix our in significant a of develop. clients Government ensure would sector

to billion call last ICF was the same review of detailed John? more John development would a which Our President to for $X.X continue for year foundation now ICF’s X% pipeline over I results. the grow. like turn up lays the business period from our to operating Wasson,

John Wasson

Good you, afternoon, Thank Sudhakar. everyone.

in and the last shift we results Government Federal and our of seasonality markets our quarter the signaled our business demonstrated benefits strength Third diversified of the of that key quarter. business a model

is Excluding were third federal with the had the the revenues, flat we first administration impact the several largest at This government federal of beginning months. agencies. both that expectations and State. clients total and budgets year, to related revenues contract client change quarter contracts, basically year-on-year and a for in this of including revenues given to our in decline the pass-through line revenues nine different of government the the pass-through impact from our Lower Department the uncertainty agency certain us of caused report around with in at staffing

in government the this of the budget year’s to federal in be seasonal change next of XXXX capture will should more will this certainty these indications the revenue our and some fourth some pass-through agency pattern. federal year, We that portion budgets elevated of of this clients, Approval of year’s in fully at additional which expect year. quarter a revenues result bottlenecks XXXX to fiscal civilian which similar May fiscal

As continues RFPs large volume Services Health and single the by are an wins the for of and preparedness continue assistance of at provide healthcare recompete At operation of Institute National the to center agency’s in contract support and communications to We variety to a noted, Cancer the third technical IDIQ Department Human development agency was uptick other system of vary and services, gateway we the three seeing award information agency. the response. a the with Sudhakar activity. had HHS quarter. Two in

priority signature issue. communication federal qualifications which XXXX. initiatives administration. should reduce agencies Congress, opioid success Campaign areas the to on front increase of Additionally, Get government the the us earner campaigns very CDC Olson Communications being campaigns ICF year, to ICF with priority Ahead Both center for and the This working one receiving Sepsis critical are abuse Campaign. antibiotic for our bipartisan for support digital in opioid of well-positioned very lead praise disease of is abuse successful recently two positions well launched expertise the two of this prescription remain Rx high from recent client. overdose, at and this high to drug spending Awareness control for budgets the campaigns are former profile to the resistance, CDC, and the and in

revenue very ramp and in energy we the XXXX expand Central energy Energy continue key the contract support U.S. acquired Resources third Bureau Valley quarter. long-term of Consulting Interior, of Reclamation award Project the increases markets. and third operation project Also several robust. site the assessment Distributed business Department our performed quarter our part outreach for in the and to the energy first by early were the growth contracts latter up again to Water Another well new in one quarter third and efficiency nine the strong pipeline the has in in months for the efficiency and and State driven Commercial XXXX, was of the California. quarter provide of In in and projects, remains

declined our have expertise with been and clients. leverage assisting loyalty continue to several we Olson in ICF the in wind third with digital working resiliency utilities energy down is planning ICF the several primarily ICF legacy utility quarter, combine to activities XXXX. in we revenues the projects due services program commercial with ICF’s Additionally, to which Olson, early of with marketing technology Commercial collaboration services staff area,

months of Olson Olson wins new we this first integration of commercial offerings. are year. ICF Since or representing over revenue marketing We XX% $XX in are integrated we have and up into nine the have could won working the with our captured business that to pipeline on the we report through pleased building part in in area business Olson are up synergies ICF, either million, new the deeper independently

continue helping to against the integrated the overall advertising We leverage industry. mitigate is which our capability, softness

For Olson healthcare work ICF major in now the are for quarter, sustainability employee the commercial work incorporate with healthcare a example, the payer, which and loyalty third sustainability ICF and of at we up to estate teamed programming real doing practice. team firm client commercial ICF large is engagement a

will that in for of of we Irma mentioned, programs ICF vehicles, Maria. awarded be the build represent on following In contracts orders expertise. devastation October, which the needed and that of significant IDIQ housing we will data our Sudhakar opportunities ICF fall arising Harvey, see As contract area from State Hurricanes recovery the Texas two task within the

county providing late of for Florida, RFPs to begun support on housing affected Puerto Housing over and to firms. Task subcontracts Response several spring, to the the state, Orders existing site U.S. In ICF meantime, the programs. Recovery next Islands the have under support Virgin in areas of certain deploying and Grant through the recovery and programs consistent Contracts in the We awarded assistance XXXX likely who be Block Development in summer are Focused technical quarters. large released local levels territories at engineering we expect with are of of funded Texas begin be FEMA the Rico and staff to additional with early past Community members

XXXX. Local State by XX% expect Moving flat third we or the year business, our in for were months revenues of this by full the and to after to be million down flat now and but XXXX them $X.X first for declined slightly XX% year in quarter, to increasing Government nine

uneven such Flag project as on sectors this transportation, QX and know, Francisco, part environmental in, work business few quarter, in growth major on a our is the work temporary in Seattle. a California. particularly postponement water tends risk, to of to and strong of couple be and was fourth affected likely we related California be to to be on and with and our infrastructure fire you the in Los associated projects but the quarter-to-quarter As decline continues In Warning of areas by planning, West our the development, San market Red Diego Angeles, that days metropolitan San in experiencing work

As have to statewide projects the there Los light be and in increase tax in Angeles gas Angeles infrastructure associated tax previously, beyond XXXX in and with discussed fund the California dedicated projects Olympics. County and to will upcoming in beyond in we rail XXXX fund Los

work, up total positive, generally for rebound We at $XX third a XXXX. same third are were than significant International year-to-date new our development Government year. and and for on quarter greater X.X% revenues revenues stood time last from first up for up accounts the end million. and at put Government XX% the in and in at million continue opportunities now market XX with International strong million quarter the $X.X quarter the $XX and X.X% ICF see double-digit International Government of continued in low pipeline third of us this of XX in Sales for activation of the nine the between included months year. to growth $XX opportunities business revenues, conditions business, XX% with track billion

quarter. the are health personal sequential the additional annualized XXXX, turnover moving categories and In of rate primarily to we agencies opportunities quarter, call a Morgan in and housing hurricane-related review third advantage higher to over forward driven as commercial to financial in revenue the James fourth utility and growth services. and Our federal pass-through see, and looking are for summary, the turn revenues can across implementation of With CFO, marketing take was you well-positioned XX.X%. projects, growth consulting client are would our that, in work, James? recovery I we by all

James Morgan

you, Thank everyone. John. Good afternoon,

performance, total With to for third ICF’s reduced metrics down as with XXXX. working achieve XXXX. in reducing with $XXX.X are $XXX.X We broadly and are year-over-year third report were which we million, into of estimated QX an one pleased this by current as account revenue estimated current slightly by and million quarter, million. work year’s less quarter the service $XXX.X of guidance estimated last million was million. the year revenue year. of expectations to in $X.X our was XX% line U.S. quarter our revenue, that John decline X.X% quarter XXXX, fourth revenues impacted of our full third day quarter revenues quarter Federal regard year’s in mentioned, into revenue third an total for days was in Majority day to Federal Federal lower reported reported to revenue and to due Government a heading of well-positioned revenues third reduction Government compared $XXX.X we less revenue delayed revenues. to was third quarter XXXX the by for $XXX.X the the growth Service also quarter the largely negatively year-over-year of to total down million one XX% last also quarter, pass-through have slightly been in compared $X.X an from million X.X%.

percentage be steady As third compared Gross growth X.X% revenue of at this XX% continued in posting a generator, the of business quarter total in $XXX.X the of and profit quarter XX%, Commercial expected, revenue remained our to third dollars to total million. to XXXX. revenue key increasing

EBITDA stable revenue of quarter that the X.X% For $XX.X the million, similar Indirect the as for reduced our reported reconciling the quarter inclusive $XX.X increased execution utilization expenses million and of experience quarter, the total million, million was million quarter, initial reported and infrastructure XX.X%. special of the to as was generally in and basis XXXX of as year’s third related third benefits in sequentially, from points well third footprint. the XX we efficiencies resources percentage Operating selling XX.X%, a were Operating aligning charges the reduce income was $XX.X also gross year last with better $X.X approximately EBITDA third staff of last at to of and with were the margin programs year EBITDA quarter margin $XX.X contract in the ongoing million reported last last consistent income reflective our costs, quarter. XX.X%. million with year. year-on-year. for to consistent quarter of third expenses $XX and up third was $X.X

of period million $X.X the XX.X% efforts $X.X decreased improve the for quarter Effective ongoing of of last was rate quarter, and last amortization quarter XX.X% service stock mentioned XX.X%. higher charges XX -- adjusted as revenue. as On year, exercise lower and XXXX. last of conversely as account for we believe for year, our last third compared As to XX.X% total to clients revenue basis, of million, vesting service as for Depreciation percentage of the we revenue, these EBITDA EBITDA increasing million margins. percentage XX.X% I compared third revenue. restricted of was and tangibles a XXXX year-over-year commercial quarter. considered third to special margin quarter exclusive have the noted margin in our below related $X.X is XX% amortization -- year’s Adjusted was service quarter was it year-to-date a similar of EBITDA benefits tax for that quarter. revenue primarily the EBITDA an of revenue for XX.X% total $X.X to which tax just million, was to noted percentage the from rate On than margin we was or reflects stock of is third basis, due relevant to the to in The XX% options

full benefited an during to share should special amortization tax quarter the rate, in related expected the earnings XXXX was the in than XXXX of of of last EPS our year million the year’s we tax $X.XX share third rate the effects the partially to diluted which than our be $XX.X expect approximately $XX.X due above expected over $X.XX last $X.XX quarter now lower Net Non-GAAP charges Diluted and per quarter. of the third was to third and XX.X%. exchange X.X% to roughly income effective in amortization X.X% a was of of costs. more reported XXXX. for interest the special excludes small offset I and tax compared due For $X.XX, adjustment per the intangible, the as that then quarter, $X.XX by $X.XX were million, which no by the higher EPS, of quarter foreign year. than increase income higher note slightly third reported charges X.X%

at cash increase. Looking of year-over-year up year, first X.X% clients. XX.X% Service revenues. of was days the cash in to year-over-year year-over-year, to were sales X.X%. X.X%, range months increased share nine revenues for for our led earnings Days outstanding days, target provided activities million. up our was to increase XXXX. $XX months XX from Non-GAAP Diluted DSO firmly reported XXXX, total impact putting $X.XX last guidance anticipated year per EPS revenues by the XX from meet for third increase by flow a million, was end of the X.X% was $X.XX $X.XX, of first of track XX days, to million $XXX.X revenues the Year-to-date including commercial within $XXX of operating X.X% quarter nine $XX.X deferred up XXXX, the of on us million

shares the year-to-date outstanding repurchase third XXX,XXX we repurchased and allocate shares repurchased we In continue to share under our to capital third XXX,XXX our quarter program. the we shares and quarter repurchase debt. During pay down

a anticipate by balance reduced quarter regard share to our debt, we average year, million for full this down far so repurchases the long-term outstanding the paying $XX.X approximately $XX.X of we million. With during count third year result diluted XXXX. a weighted As

financial the and risks a quarter, As first to of capital last for less to The in August X. the outstanding regard with year, in the portion X-K we XX, hedging debt under months of of this long million. dated a we than for I XXXX. mitigate filing into facility. year million debt of the of EBITDA of associated are XX-month ratio leverage XXXX of transaction a a $XXX.X our of similar mentioned transactions debt details $XX.X term end potential entered our had and future we interest slightly had third the that also lastly trailing to third balance quarter presented should allocation, volatility nine rate And capital credit expenditures the this to

Sudhakar Sudhakar. $XXX no range With from like expected to $XX million the more range to be year previously to John noted, expense fourth in be purposes, $X.X I for flow a to million to back margin. Looking increase levels. sequential $XX.X year. quarter Interest we million, turn be this and compared to I million on estimated as we year. million million the rate Capital Keep the higher expense ahead, operation $XX.X of as that, that mentioned, we expect than expected now XX.X%. much see note of in million the be be earn for and tax is to lower Also expect will range. quarter expect and to pass-through $XX from expected to we call to we $XX.X would Cash modeling the to is for for to be approximately Amortization revenues volume that intangibles of a the million the $XX.X third year. in which in mind to in depreciation increase full for are the please be in amortization expenditures $X.X revenues to of range revenue million the

Sudhakar Kesavan

prospects guidance visibility, fourth and are with have you, XXXX To Based Thank result results the narrowed to-date up, we year we pleased currently sum and our our quarter heading James. XXXX. on year-to-date into into our and full range.

$X.XX. to range EPS non-GAAP $X.XX revenues between expect billion to and share $X.XX diluted earnings billion, be $X.XX to from $X.XX and to from We $X.XX range per

continue to the $XXXX to operating range be cash million in Additionally, we million. to flow $XX expect of

our XXXX stable in side position like key those we as client growth at categories, of year result are for agencies, We State recovery a expertise continued ICF organic year. remain are ICF our is government of looking expecting across for work Government to benefit our continued XXXX to Local in in clients. or and increase business International the Government and point should growth indication Housing next

like growth to our and to Commercial for energy business call business the build questions. on momentum. its the On continued in marketing development we I Operator, expect side positive now markets for open services would

Operator

with you. thank Instructions] we have first Sommer And our And Tobey SunTrust. question [Operator from

Tobey Sommer

Thank of do multiple they little you. you more tell the two geographies? a could serve or if broad IDIQ, you kind if bit maybe you they sole-source, geographies related are they could and with maybe were to wondering to about that be detail you the can was the expect multi-award, I comment us what hurricanes, one touch or chunky piecemeal business

John Wasson

is Wasson. This Sure. John

would I we seeing quarter at sometime and quarter, for do next are start on those think Block sometime And the in state we next late under were broad, of expect Council, is orders is They to the end second geographies. towards awardees, two types all cover programs. fruition pretty second one of IDIQ, work wouldn’t opportunities year, we contracts start we in seeing the award Texas, won, we we certainly we remarks, level, housing in typically that the come at task would work Community so the Grant scope would year. several of the those said, serve said was second the so that so multiple Development quarter Houston-Galveston recovery one they Area

Tobey Sommer

procured maybe the companies John, your they won, that set have or under did the skill CDBG skill in sets did have other projects they other IDIQs? did that

John Wasson

Yeah.

I spectrum programs. we full implement to the bring think of -- needed capabilities and we design that I think these

HUD we have supporting matter and Block we perspective and and around subject that local with Grant the state Committee from programs unique, think expertise deep obviously I years for plus for governments. are those Development XX

from these of implementation the done also programs end-to-end. kind have of We

States our housing involved design largest last East the largest deeply or we States United have United obviously, been implemented recovery activities we in Southern and in program Sandy Tobey, the the and years. in Superstorm in know, Northeast you As five

so think, perspective from so, we service capabilities. that are full -- And set unique bring I of we

Tobey Sommer

And residential the three an ultimately will Do all including of the much you estimate Florida Puerto you how spent when Texas? reconstruct be in Okay. in the look question, geographies the storm think on have and Caribbean damage. at for activity you territories, Rico,

John Wasson

don’t Yeah. I to response. specific come Tobey. for to we I assessments as are think estimate trying know and obviously part a have and HUD damage that their that doing FEMA do up with their estimates of

too Florida for us to and spend think I it’s on I say, have across, numbers in of mean, three a you territories, U.S. the I certainly that here involved in would that. Sandy early and Texas, Katrina the XX looking storms of if look are and Superstorm Jersey. geographic the than we’ve set some with damage hurricane years been higher think, ago at and I we New recent Rita hurricanes in

support recovery significant has there are -- -- a But opportunities set broad I estimates. have we housing spread so don’t think, to of a updated damage so with I programs. So, geographical these been --

Tobey Sommer

of numbers through quickly. questions run have I to I And Okay. kind could few if

Sudhakar Kesavan

Sure. Yeah.

Tobey Sommer

pass-throughs how those? on -- talked what’s in are the quarter, fourth What the about value the you that

James Morgan

would say I Yeah. that…

Tobey Sommer

a in as to estimates you have for couple if well? then I was you tax XXXX find had just curious I ones that. rate case And a other preliminary need

James Morgan

this would would -- range. were be similar to happen that I to that expect would, we the probably we XX% yet for some legislation in But is mean, there for that that that differences. going I don’t preliminary may position have may lot year are tax I it a where XX.X% we We have tax obviously, to say regard where XXXX. typically fairly in would estimate

Tobey Sommer

Okay.

James Morgan

of pass-throughs, the would to say, regard $X with the range $XX more kind roughly give are pass-throughs million of in the look to value $X shifting more that million I or at or take the, that’s million. And you if right,

Sudhakar Kesavan

or… For the quarter

James Morgan

year-to-date basis. the On

Sudhakar Kesavan

year-to-date basis. the On

Tobey Sommer

in say kind year-to-date quarter, the because basis fourth some On of… what that didn’t and about the you

James Morgan

million $X million the range in -- would more $X million Yeah. say $X that’s to I roughly range.

Tobey Sommer

that be that you last question me, accounting Perfect. to? as of there into how we are And contemplating kind start on XXXX Okay. changes business the work numerical look and should any report doing and we for impact

James Morgan

Yeah. results. starting on significant obviously, recognition They -- recognition new analysis there through, will to XXXX, what our I but that revenue our no done based gone in place we’ve are be rules impact it’s mean, of revenue really

won’t be and through year we are. it -- any be those something that be what to certainly, we is that impact next as shouldn’t changes material, anything will of So required go report

Tobey Sommer

Thank I Thanks. Okay. will in back the get queue. you.

Operator

thank And you.

next McHugh Company. with Blair Tim & comes Our question from William

Tim McHugh

Thanks. Hi.

much question First, you just to would another visibility maybe guess, there the on pushed pass-throughs, further? do be how have I those, being

John Wasson

I think here. good visibility rest of quarter have Tim. for we I we in fourth are the a this the year mean,

the next in how We to going play that for and month -- the fourth are this a this quarter. into quarter so, clear visibility of out I think gives us is some

some want the of get some clients on end of know the of we the the work also We by pass-through, the year. to federal done

in will that And highly actually pass-throughs we up so are I see confident we think these in pick QX.

Tim McHugh

and… entire was want business for services understand to just services the with marketing piece, rate, marketing new that guess, business, I that the XX% And that growth

James Morgan

It’s for the…

Tim McHugh

guess… I

James Morgan

services commercial business, … marketing yes.

Tim McHugh

Right.

guess, market, companies set the there? Okay. on Yeah. marketing versus guess from services are initiatives what internal a guess, environment Is tougher? that That in I you put and what how lot environment -- of of the you the a referenced see much I there. results and just out but piece very you obviously, getting you seeing the it’s I that, given, think, end I mixed

Sudhakar Kesavan

Yeah.

that, think companies. for this, the me think I tougher because large let I might take that the environment be

we the our own to thing. that sure number, which million is sure in make sell focus continue our their they to that think that we is verticals legacy continue doing make $XX trying in to I are which services to addition to growth one where

will we the programs, as we we talk haven’t to I continue to think, for in vertical in vertical think in sophistication. they long that or do, example, utility they of vertical, receptivity because I arena and be, that health about level okay. government significant kinds think And and that seen I the as the specific So grow clients there to necessarily the things when go in which is

be -- do can But So, make the that of on focusing we think, environment there, verticals we also to all that, sure continues our their legacy competitive. whole I whatever very them, to legacy certainly, the focus help they have. but I is think course,

Tim McHugh

you. Thank helpful. That’s Okay.

Operator

you. thank And

Our next Vafi question comes from with Loop Capital. Joseph

Joseph Vafi

delays. afternoon. where Sudhakar, contracts I couple guys. there wondering, there federal a you Hey, Good been was were said, know, has of I

to If or you anymore may be that to little the as those extent to a I something and when be then color could situation provide appointing and have political a resolve would they follow-up? else? delays there, due more is Thanks. And helpful what color are

John Wasson

this is Joe. -- think I John,

certain largest new I our so as of have work, Demographic this we Washington I the Department saw because issues, certain more think that have and There that certain countries slowed work. more a start contract USAID last we projects, quarter. several USAID quarters about survey over the beginning with -- of Survey that We State bit. also is that and last regional time in correlating the and down missions Health with have think, seen we here had delays of security we closely in work issues, delays some political on our on delayed talked takes the mission is efforts just so new

biggest has on impact the so the USAID been And work.

portion really to of we a visibility that’s recapture pass-throughs been those and year. next as QX good have delayed into go that we will do going we certainly in improve have think I

the -- level issue. that is the driver think of federal the and I pass-through largest

Joseph Vafi

we going Okay. legacy of the risk? kind have we the do potentially out of business down ramp there that’s ramp then now ramp you And base if or downs, is visibility to, that -- what’s Olson at project still some if down, to on of

John Wasson

that we we’ve think I projects off impacted We projects. -- QX. that us the rolled in those wrote-off

We taken so that have and impact. we’ve

I We business. see visibility think we a to have good improve the pipeline.

decline see if to so more no, is And business I don’t is is, going the and there roll-off further, coming I that, question -- don’t your we think…

Joseph Vafi

That…

John Wasson

of back it then visibility to are winding trajectory. business be couple third at up now just we the given did we of have We of or that trend significant are for projects get technology deals a -- continuing closing and end we growth projects, the pipeline quarter. on going wrapping that to of on kind what clients backlog down it’s technology and pretty just the a roll-off matter that of … and not confident a couple the

Joseph Vafi

Okay. the or And percentage energy housekeeping the -- what disclose total just much of Did business. question then Commercial or business? the on it you one I is how guess efficiency

Sudhakar Kesavan

press in was release. That the

James Morgan

release It should I Joe. be believe the in

Joseph Vafi

I Okay. it. All find Great. right. will

guys. Okay. Thanks,

Sudhakar Kesavan

Yeah. XX%. It’s

Joseph Vafi

Okay.

Operator

Kevin Barrington Research. Steinke we And thank next have Instructions] you. [Operator our with from question And

Kevin Steinke

is you to heard Commercial Yes. correct? on this I your said year, growth comments. I prepared wanted sure I you’re in to single-digit your in that target correctly believe make exceed mid track

James Morgan

Yes.

Sudhakar Kesavan

That yes. correct, is

Kevin Steinke

so just efficient ramp can What’s I quarter? mean, -- really change it’s is the talk up you from more just that, planned what’s of last anything outlook driving quickly than energy about your going or that’s

John Wasson

related care doing have I in think, marketing sector on it’s a continued visibility significant communication fourth quarter, ramp way. going Commercial in efficiency and in to I think and we are performance arena health up the strong that’s the energy we the in

Kevin Steinke

Okay.

John Wasson

commercial drive quarter growth high the the to high-single in digits, will to That strong be digits. fourth

I for think year. the growth high single-digit

Kevin Steinke

Okay.

up and in year, growth okay. the quarter, yeah, rate oh, ramping obviously, the then, For fourth

did, So to the business legacy projects. the ICF not? out due marketing the also if acquired have or out quarter decline of can to able wondering roll-off you business I’m specifically, usually services separate in commercial Commercial just the sense the separate or in you if how a Olson that you’re out called on business, there

John Wasson

Yeah.

were the I think, the flat for Olson quarter. generally business

Kevin Steinke

Okay.

Thanks. are wins new Okay. growth ramping up of and ramp in there the there that there, well? matter just a signed or previously Government, up -- contracts again so as is business the the International And

John Wasson

both. it’s I think

I think to talked -- it’s we we quarters -- contracts about the have activation are we won this place. seeing for talked we on were looking throughout fact activation many for that have take we XXXX and strong that

activation are we We are additional certainly experiencing and winning contracts. robust

the is on quite right outlook I so, International think, bullish our now. front And

Sudhakar Kesavan

Right.

Kevin Steinke

change last the you Okay. the in have the quarters of don’t and Great. or expenses, And know the I not? you then, methodology impact on margin allocation just have labor called gross and that handy cost here, selling indirect lastly couple out if also

James Morgan

and labor other somewhere flows that margin then, in full what the on through the kind dilution XX-basis-point gross for has impact of obviously, for be. metrics. XX-basis-point, quarter that And would Yeah. Roughly year, that impact

Kevin Steinke

Yeah. Yeah.

mean, So, like… I it looks

James Morgan

at neutralizes EBIT -- at service out down basically it it’s Down to nets the itself through obviously, revenue, the EBITDA, level.

Kevin Steinke

Okay. again, figure Part and year-over-year expense line just indirect move how there so out I’m of to if take looks trying forward? the more indirect on down as factor is the reason is that probably expenses, cost it like they you selling out for to we much into asking the that in and are shift room selling methodology

James Morgan

Yeah.

to service per way continue adjusted is about the XX our year think as trying I visibility that EBITDA revenue several we percent years. have year-over-year we doing improve to that basis have to XX of it year to we by per for points are the points next looking stated and think margins basis and that

of can by other and take While driven are facilities operate able are we and we actions to of to that’s that as the get nature, timing out internally. of when streamline we things how

doing we years. than on several XX were year visibility the as continue track are points on a for are to we I this basis where So for certainly, next as last higher we year-to-date have year that mentioned, And basis. we

Kevin Steinke

for questions. taking Okay. Great. Thanks the

Sudhakar Kesavan

Yeah.

Operator

thank you. And

Our with next Riddick question Marc from Sidoti & comes Company.

Marc Riddick

evening, Good Hi. everyone.

Sudhakar Kesavan

Good evening.

Marc Riddick

we was don’t ICF should recall you over I any impacts that, know if go than I direct any mention seeing to there? around but want that wanted guess them from to anything some any I if others. that came see estimates of to be thinking about have results of storms. I wanted thoughts a things, or there the smaller general to couple of I

Sudhakar Kesavan

No.

John Wasson

impact. ICF was There impact, No from the no impact no No. to material storms.

Marc Riddick

right. you as working not one to All any be as reminded just have far -- sure going on I Okay. make quarters, Why more or more we one more want next or am housekeeping. upcoming this of the have do little any extra day I wondering to day. forward, calendar And in is was less one missing I extra the something the there?

Sudhakar Kesavan

do. actually We Yeah.

year year than this less occurred has day last that is So QX. one that during a year

more than and compared actually year of next in day QX additional this QX is day year that this to Next is year year. one one there

Marc Riddick

right. All Okay.

public. we of wide-ranging, then, but just Great. recovery were not I guess a that, maybe be to we point, you And preparation company how general whether housing additional looking competing or -- the hiring pacing at some ahead expect just of these I middle about that to should before Okay. maybe into time thinking see last -- of or or some programs, some be you. one maybe you’re to when for some guess, this into of competing are of get Thank the I you of certainly more sense coming opportunities those actually thought just of to wanted at sort is expenses sort year you maybe private how the are these next do sort before flow we expecting that go should you get things as competition? these for the going

Sudhakar Kesavan

Sure.

given we usually mean, are add and those take engineering and me I usually response very large let we some to in his can but traditionally -- John are do then that to firm subcontractors contracts comments. the response we them. think phase, I expertise, have

we are them process being ask have so potentially being agencies in which always specific will the given -- for positions, been have at which deployed. and they bunch response So are by the resumes, us looked of a who

that the but the phase. revenue far that’s starting will we in in some little as QX, the response action real in response bit not maybe get we on where that’s minimal we phase, So a And QX expect concerned. are as

Marc Riddick

Right.

Sudhakar Kesavan

when has little housing assessment CDBG time to recovery and a done of are after is have orders. the figure FEMA out John those county that Block they the cetera to better -- The real we monies traditionally to a how monies they start et going and state administer then used bit task doing action and going said monies, damage the and the are we Grant and are those have local how have and issue take

action to they the and example, in order decide could that, the develop they the level, that and then to they do plan they of could for all to months which or be State Feds plan, the money the spending will do have level either the that all at to that plan or phase have where start have they use, an once at they action Texas, action help that’s so. So, in can that, have all the is approved nine decide we action will and or all state happens the once decide county they and next right by traditionally approved we over prevent

not you provided of So the recovery and already the will of work up the But then contract. pre-hiring. hire the that’s I and and the traditionally We bunch contract who win we to have think for on primes. that happens you response phase folks much think see potentially have that certainly I way resumes usually that those phase it can a in

in our to see numbers have you some have it hiring before won’t we necessarily You but till that, deployed. contingent such are times

Marc Riddick

Okay.

we there on from you. guess, that that the field, last and anything the talked I you if out a one the would -- And opportunities was Olson then, thing, affect storms the was I you. color appreciate Great. California? was guess, that. directly Thank I opportunities curious I but would have Okay. this And fires of I about little ICF given left wondering bit Thank was in have.

John Wasson

and potential recovery that be a monitoring certainly to is related There could fires there we California that. are work

think and I radar. on it’s so our

of be homeowners and so rebuild. be I damage from help will think initial do think them from insurance, California have in I we of will fires the had the insured will -- intelligence people’s part lot we I the a

monitoring following certainly, that are opportunities so -- fires work to but we from would And that and in we are if recovery we the certainly arise the California carefully. phase

XXX in As California people... you significant have presence know we

Marc Riddick

Yeah.

Sudhakar Kesavan

in communities been … impacted. that were have those located

to And so it’s -- I recovery it, material think, think as are watching love related how it to programs. out. we is I it’s as see on housing the hurricane opportunity be on it don’t radar, going plays our

Marc Riddick

very much. Okay. I appreciate. Thank you

Sudhakar Kesavan

Yeah.

Operator

thank And you.

remarks. for questions closing now call further over I management to the We time. turn no this have will at

Sudhakar Kesavan

us joining for today. much very you Thank

talk you. to you next will We Thank year.

Operator

Ladies And and gentlemen, concludes thank for you today’s conference. thank this participating. you. We

You disconnect. may now

ICF International (ICFI) 2 Nov 172017 Q3 Earnings call transcript