ICFI - Earnings call transcript Q4 2017

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Operator

Welcome to the Fourth Quarter and Full Year 2017 ICF Earnings Conference Call. My name is Vanessa and I'll be your operator for today's call.

During the presentation, all participants will be in a listen-only mode. Afterward you'll be invited to participate in a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Tuesday, February 27, 2018, and cannot be reproduced or rebroadcast without written permission from the company. to program like Morgen. to now will turn over the Lynn I go Please ahead.

Lynn Morgen

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

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

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

Sudhakar Kesavan

Lynn, review our thank outlook XXXX. us our Thank for year joining you, results to and discuss and you fourth afternoon full this for all XXXX quarter and

improvement digit clients brought provided Revenue increase performance was double our by the business Our fourth at year and ago. by one quarter guidance results significant time we year higher saw commercial led our that growth a full XXXX strong represented line revenues. year-on-year where to this with across a in in supported that was pass-through finish strong the we

were from federal increased the to in our slight European business, US government strong market. by growth revenue from we single clients our organic positive increased with X.X% rate, driven commercial from clients. growth clients our a detail addition quarter, pleased service low ahead the Exclusive digit growth income growth, strong growth representing government will Overall, quarter, James of our commercial at this of Union growth of In X.X% fourth revenues the call, and and in represented in Morgan trends from fourth both in later operating items operating substantially demand which reflected significant quarter that leverage. of service specific the revenue all and the

our On the operating same increased year. total and XXXX, X.X% basis revenue for service full of considerably for income year the growth ahead revenue

and ended anticipated positive As in we XXXX we to our key with that to the point momentum each through and year tail XXXX our areas. improve wins business growth results continued in of continued

of areas. each discuss these Let's

are the time the expectations to XXXX civilian our given any provides programs This the done in backlog operating year-over-year units. not specific congress internal on to at generally First, down fourth Once The gets for time. our fiscal years end are until March reconcile organizational from new of signed, from each the higher quarter Act enact included agencies of Bipartisan current through bills early ramp with develop to revenue the based business, generally plans on budgets we on contracts pass budget Budget the not XXXX. expect makers We're We've flow the takes should current XX, passage law that move placed in how in also are to pipeline. revenue it XXXX year September. show Appropriation significant recognition. pleased We revenues the for will earliest. flow expect revenue the XXXX. means recent civilian won House Senate up growth the bills the to it expected bills March the XX by to money XX as government If to by see in Appropriations the represents we increases coming These and of and of it in the and our highest schedule agreement sub-committees. the they budget framework bills gives the and benefit guidance, funds agency Appropriation

aligned our the Bipartisan for That particularly needle around while news business more and should public capabilities Budget development the elements the is good being focus So with Act of in year, specific be of of late and a are XXXX. many it spending. in the budget said, benefit mover infrastructure business will health areas, closely ICF ICF and

in act disaster faster did funding, move Rico the issued and California, billion Virgin see to $XX time provide the number relief expect In have allocated almost Puerto table US been which should RFPs and of in we Florida, addition, a for recovery months. coming Texas, The for Islands. disaster

strong look let's robust. anticipate and Revenues increase XXXX. country, following commercial rate commercial showing business scope With continued utilities energy in in growth to business had work. At existing our expected of continuing expanding contracts the are mid same in second the at revenue digit our respect for Now, commercial pipeline efficiency win time, executing to clients the at XXX on we than area, very in XXXX markets more our our new we across energy We're business. new remains with work energy to clients, from XXXX. single the a

clients. work Olson's loyalty part value is loyalty our pipeline growth budgets to in marketing in a our opportunities. services new overall year-on-year is boutique marketing in should upon in Improved particularly Also, been we've for work, of we providing The valuation US believe markets services. commercial advisory new and as marketing in in efficiency, ICF leverage January XXXX, gaining grow financial our we acquired for growth for practice. we operating resource is in building UK, transaction of XXXX. related acquired clients Europe energy traditional size company leader positioned X-to-X In and can traction strategies average continues in both developing to communication analysis a firm conditions in and distributed energy that around dollar expanded loyalty which and we energy our business strategy economic addition In consulting the business and drive our

to this gives work relationships. on Global work government over new our in in revenues the Additionally, our law loyalty our million and the Europe amounts Morgan $XXX build in marketing on substantial into the for XXXX, impact changes clients ICF provide ability commercial current leverage aggregate, James for details results. giving services client's to In and our tax extend of developments. business to us to additional qualification will the

lower benefit by to share. of strong operating our of we're quarterly our Given effective of return cash initiation dividend per rate able to a utilize to the shareholders $X.XX tax cash the flow, capital

Our priorities remain capital however, allocation unchanged.

to volume attractive continue to same expand focus capabilities. domain our our and investing We improve access on we're time, to in deepen the development, At expertise implementation business innovation making training. acquisitions strategic and markets,

dilution incentive to at We the least offset continue any and repurchase due employee to debt. shares to to we'll programs down pay will continue

is you As XXXX can see our quite for positive. beyond outlook and

President, like with pipeline I'd heading a business to ICF more John ICF XXXX. review ended momentum over new Wasson of at had billion wins Our we with which XX% billion, provides to backlog our billion, and positive last of new all We funded. turn for results. was detailed year now XXXX contract is of which $X.X represented business year the year-end $X.X X.XX a the the call of which John? into majority

John Wasson

afternoon fourth the was which execution our as solid period Thank key you, to XXXX. we of Sudhakar quarter is The areas and a good business, of everyone. continuing move across

the for will and in full year with due in periods, the business the quarter, first fourth Of service previous diversified remainder quarter posted revenue represented pass-through model revenue. As in ICFs revenue clear to the higher XX.X% X.X% total benefits we of XXXX. growth growth

more X.X% revenue Thanks, by quarter, to and in our another Our uptick strong in government in the a by state our local quarterly slight business, government decline perform business overall. federal increasing compensated government than to continued the international and well for revenue. year-over-year business fourth with which showing

guidance public caused state, impact by accomplishment, of for the the the year, year quarter, X% of agencies, total dipped in would to slowdown Federal the high We others. health although, revenue and of revenue the the Opioid given Control an period. administration XXXX. accounted it value the launched and and fiscal revenue, government on and the for pass-through of in with was Services of our original the fourth in contracts in quarter and and security, revenue Excluding budget Antibiotic for and of Sepsis was and stable Department XXXX, increased a in in resistance. given three XX%, government have commercial getting This in Health for Disease significant Centers a fourth energy, inland full federal including significant new the substantial revenue for a line Washington Defense XX% delay of transition abuse, federal a departments the to XXXX priority a about campaigns ICF and Department growth of group In were issues, broad transportation number important XXXX interior, across Human strategically awarded approved.

we've result this Bipartisan and that the work campaign, to on the the also where Laboratory. Defense million billion cyber the As to for excellent appropriations already benefit positioned campaign this well plans heard a very CDC, expand our client of we're to won U.S. combat X year services Research we re-compete a for Opioid Army crisis. is This from the of the includes security Department which $XX strong from

additional in positive operations provide XXXX, part XXX provided XXXX. year, at we scientific federal awards we year's order a growth eligible government engineering won a to support cyber an first has Budget with task for services XXXX the government new compete federal outlook the this defense approximately includes billion civilian Additionally, won management. in XXXX IDIQ and Research Bipartisan full more and latter XX research in million the perform revenue which to of agency to The spectrum quarter and to Act two through fiscal Laboratory. And and Army of targeted spending

mentioned, sweet spending areas are Sudhakar some the As spots. priority ICFs in of

budget. these there in aid, to to expertise. spending do ICF new epidemic, the proposed deep billion is XX additional included with billion all disaster infrastructure there which in our addition $X the domain Opioid relief in the is million In hurricane XX has And areas for

the As programs know, we see severe from recovery hurricanes. that opportunities September by the following the you caused arising and August housing ICF damage needed significant will for

we and we to quarter, RFPs a win declined recovery In material community in next to development, total of area. are ensure was investing off well and new signaled in the during block several that state delays in for project slowdown the support accounting quarters full which was X% The fourth call. continue XX% of clients We to fires to funded and fourth completion positioned for work quarter grant planned up housing project caused third by ramp quarter the revenue from to and conditions XXXX, decline XX% amount earnings our released and revenue the local of this infrastructure we're for and over of year. in be certain weather by California, due

We many to State County substantial Coast, Department in XXXX, in the across in revenue. the and to client increased to won contract year-on-year category the in other This of California, and Resource given environment California specifically is Control of rail growth XX% XX% Angeles and with our large Los post government Water our client see West the Resources, ongoing Transportation XXXX speed account up year, a Water State planning a for high Department businesses. total the this fourth in Revenue international Caltrans, X% projects clients Board, for service local on work Washington expect California we've work. Metro, the the quarter category improvement. Jumping the state continues

benefitting a digit contracts from of XXXX. value the in we're double increase and backlog Here won a XXXX solid compared to in

strong and revenue. revenue XX% see Revenues to government continued fourth in in accounted international for XX% from clients the of expect commercial quarter We over growth increased XXXX. in total

our XX% total services. For a increased and million than double from excellent Represented a commercial revenue. and energy Energy scopes an expanding energy market in at efficiency remained sustained in and of we alone the energy we work. contracts full year, revenue markets the quarter saw increased consulting were digit efficiency programs XXX substantial clients in performer. XX% Revenue awarded from represented also more fourth pickup rate

pilot beyond Our business believe consulting to energy programs, energy future utility including which technologies, distributed utility has we implementation acquired has energy the well testing programs performed way and several traditional efficiency. points distributed resources new contracts,

business associated market We areas, strong the end of continue energy a wind interest traditional and our to transaction financial engagements the development see resources. solar in analysis of in with and

represents The continued on we're strong also have in energy. its backlog market renewable performance the reduction. to efficiency robust additional activities. energy be gas several at been energy resiliency utilities in energy and and released commercial third the growth approach We opportunities alters assisting with California planning energy our as greenhouse efficiency, for to Based ahead current looking markets us state and quarter pipeline,

of legacy also Olson boutique end set. well billion quarter in opportunities ICF the developing the XX businesses see very strategies XXXX. XX and European our ICFs pipeline our for could quarter, of business across and firm have positive integration service marketing year of into revenue the services fourth pipeline of in London and considerably million the future sell in was captured momentum momentum of won. XXX XX commercial million. XX Since did ICFs expansion The loyalty new substantially an well-known to ICF, increased increased the clients, included successful and with customer. neither providing the Olson XX that comprised at our the leading Our ICF business we continue million meantime, cross in opportunities XXXX. client it's positive business our part we grew In has in the been representing and for In million, brands. additional and between we Olson fourth fourth development nor heading to The the of independently greater opportunities edge expect quarter business number integrated integrated pipeline synergies engagement and involving of into X.X we've continued than

positioning results Our year. was pleased summary, we're XX.X%. and turnover annualized personnel ICFs our with fourth In quarter this

in revenue our year. from about a key review. turn the call over spoke catalyst move business the as XXXX the growth We Sudhakar and CFO, through to Morgan, progressively now see our areas of report higher benefits expect for that to we to financial James? the James I'll

James Morgan

Total revenue million, on a performance million. momentum This Thank the John. afternoon, positive you, pass-through XXXX XX.X quarter and for revenues Service to from year-over-year profit dollars quarter. of increased $XXX.X to and of financial the quarter. revenue, on increase clients gross XXXX the call. $XXX.X in $XX.X fourth fourth from generate quarter of From were quarter margin in a the over pleased up margin quarter X.X% reflected saw perspective, to quarter. XX% million the increased the fourth the commercial double year. we XX% that the XXXX. Good the $XXX.X $XXX.X million year-over-year fourth as typically quarter XX% revenue everyone. in growth guided points our $XXX.X Pass-through revenues XXXX on total I'm from XXXX, in that year's last quarter of to of deceasing basis for earnings last million compared Gross million, the report revenues we $XXX.X fourth levels digit million from in from up X.X% year little pass-through government $XXX.X in higher last fourth growth revenues year's fourth and margin on resulted XXX million both associated increased to third in the ago XX.X% was

on XX was million points for acquisition planning tax basis future selling of the off decision charges. well pay were and associated from $X.X as of $X.X quarter of million to to XX% customer. year-to-year up staff XX.X% revenue acquisition office million a of Including service with equity from related $XX.X of mix $XX.X increase expenses expenses the our some bonus of realignments, as XX.X% to special the impact was related strategic the and year-to-year severance the up organizational of of gross the cash, of the XXXX. revenue result change closures to from revenue, or fourth half or Indirect fourth Roughly the year. However, last million of margin quarter

continue cost return to to As for to look always longer we mid reduce and the net provide our a positive over opportunities and benefit term.

discuss Let me incremental the take expense cash to minute in detail. our more decision strategic regarding bonus a

of saved roughly This our deductable Given tax equity the cash a rates had XXXX accelerated XX% related expense an rate. versus in higher tax of instruments. decision the more With corporate to beyond, pay elected higher we where XXXX, XXXX we into in company year-end instead tax $XXX,XXX programs. bonuses only change and roughly did dilution it future the the change in bonus decision nor the This pay aggregate incentive our of value not did also of the employee share changed of outs to mix bonuses. executive mitigated nonexecutives. by caused nature officers taxes and bonus for It

benefit fourth of margin the million. flat fourth initially year. from from selling will growth. up expenses Adjusted million quarter last XXXX, line We our XXXX, last revenue year-to-year with decision of X.X% service in this and $X decision beginning fourth for with in XX.X% quarter on was year's service EBITDA but $XX.X of EBITDA quarter indirect the $XX.X was revenue by Adjusted the million, increased

a cost. the expense, before, including EBITDA severance As remainder, office adjusted special impact of I noted incremental charges cash the closures, bonus excludes acquisition and

the a million, $XX.X million EBITDA. X.X% reflected charges, $X.X The year's the up growth income times Adjusting year-to-year $XX.X year-to-year million revenue, nearly $XX.X was special million two for the For was from operating improved income. fourth quarter reported of reduction $X.X of operating in evidencing operating growth of EBITDA million leverage. X.X% service our adjusted last

assets. provisional our fully special year. and was XXX.X $X.X last diluted increase the This million cash $X.XX of to down million was differed our year compared enacted to the net added $XX.X benefit and onetime us contributor fourth excludes result the gave versus cost differed quarter. acquisitions key fourth million fourth from reported tax charges quarter of a comparisons, Cuts % $XX.X quarter the and in a the intangibles recently tax the million to the fourth bonus Certain the share related the per tax as $XX.X to was onetime $X.XX to Tax EPS, amortization XX.X% diluted $XX.X $X.XX onetime onetime XXXXs special of Non-GAAP compared ago which million year-over-year quarter to was adjustment benefit income XXXX, amortized Act share the million from liabilities EPS, became and The in diluted $X.XX this Job in to $X.X $X.X in in of year. a income well from As expense of million tax fourth which $X.XX throughout as year-over-year other charges, amortization incremental intangibles, reduction prior of as per of benefit operating of year. mentioned XXXX, quarter. operating previously was for as Also the intangibles income for benefiting of of

to XXXX Now let's results. the turn full year

For revenue XXXX our record billion, year-on-year year. Pass-through up up year. million and million the revenue for guidance. X.X% of $XXX.X we $X.XXX X.X% were the had was up Service upper end revenue $XXX.X a revenues year-over-year to last at X.X% last from of

decreased from with to $XXX slightly mentioned, $XXX,XXX EBITDA which special of adjusted and EBITDA the million items points in over per to $XXX.X to to service up revenue, XXXX. in just This year-over-year While revenue million, increasing service increased by million support XX $XXX.X margin continuing basis adjusted by invest to XX XX.X% was on year XXXX is I the excludes in XX future by business basis objective points our of EBITDA line growth.

mentioned was $XX.X amortization per which full in charges, up to and million charges for XXXX. would $X.XX essentially Adjusting last for for $XX.X the of per of XXXX, EPS, compared onetime million diluted reported was an for expense earnings $X.XX ago, primarily year. XXXX. EPS benefit quarter to Operating up of $X.XX $XX.X increased XXXX, tax XX% the the of depreciation XXXX, been $X.XX $X.XX XXXXX increase includes decreased XX.X%. compared due $X.XX to share, tax adjusting XX.X intangibles was $X.X the million as million to to X.X% earlier, fourth of well to the share million Reported last XX.X% Non-GAAP from as amortization amortization as but share with and benefit, in Net million special XXXX, year. X.X%. benefit flat last special income income year compared $XX.X as year, the million of up $XX.X in have While intangibles was for of of $XX.X XXXX, tax diluted diluted in of from million per year in

quarter Our with to some in $XXX.X left range sales that into in days, of the cash to being of fourth flow $XX.X compared activity favorably of to provided XXXX to to move to of XXXX of fourth be guidance of XX outstanding in DSO including favorably collection cash as achieved million the days We quarter revenues include XX collected cash excellent by collections our in compared days XXXX. to XXXX. to XXXX million. $Xo our Favorable XXXX. of $XXX opposed due anticipate flow XX the in and to slightly Day for XX million the impact operating differed receivable million operating was activities the

capital million. our Regarding expenditures to year-end. totaled which $XX.X during million pay XXXX full $XX.X capital facility, the credit year under were utilized in down at We allocation, debt million $XXX.X

dilution during we Additionally of and weighted incentive stock XXXX maintain million fully to program below $XX.X year. count diluted million for full programs under made XX.X repurchase totaling our offsetting employee exceeded year from goal our share share the average purchases the our cost of

share for In average XXXX weighted fully fact, was XX.X million. count the diluted

of year-end which XXXX. As current $XXX our have November left was million renewed repurchase in we of authorization, on XXXX,

full we'll some the for our XXXX. Now, expectations details provide year regarding

First, on in basis XXXX. to EBITDA of margin we service continue of to adjusted XX XX expect points expansion

efficiencies as in million further infrastructure to previous in million higher the million. be more property. years somewhat to organic million range, to scale investments expect for We're to depreciation make ongoing expenditures of $X.X expected million $XX.X while to We're intellectual be $XX to year XXXX. the achieve expense operating amortization to range forecasting invest and amortization million. company $X.X to we year improve additional currently and of the developing forecasting $XX.X We ability growth. efficiently this full the deliver $XX We're invest to business, in $X are interest intangibles approximately to full expecting improve of to expense in continuing be million Capital of and the of the than company

and expect XX.X expect of XXXX. full XX.X% more little weighted approximately average tax shares for year the We diluted than fully million of rate we

reform like strategy. would of a our reviewed act I in tax rate, federal result the reduction tax and related Lastly, to capital this our allocation mention US as that we

benefits of reflects already the of share using The a our quarterly act, we're on and tax dividend cash to caused initiation confidence significant to pay does savings still by employee per With XX, we've cash that dividend to employed. dividend dilution call and shareholders the our tax allocation execute implementation that capital to incentive the not a to of the our change $X.XX to on be momentum strong share the by March flow, health business, a received reform record Given program XX. payable management's I'd initiate of fund like back have returns at and acquisitions will flow minimum programs. to April We over underlying our turn a repurchases offset that and XXXXto program of in Sudhakar. our shareholders the historically the enhance dividend desire our cash program but to the strategy the as

Sudhakar Kesavan

In into growth XXXX multiple James. with Thank heading we're you, summary, catalysts.

focus James future businesses in also confidence mentioned. our continue to This significant in ability more our leaner operating efficient flow our on to We back continue to investing gives plus generate leveraging growth. to us as making and office

representsXX increase guidance of Non-GAAP charges, approximately is midpoint per total our midpoint revenue organic X% special our revenue $X.XXX of in At guidance the of either For earnings the total impact is is capture in be $X.XX, on tax the to in of the XX% it XXXX The our per act, guidance in any the normalizing or .X% all GAAP of year-on-year effectively service share $X.XXX to approximately equivalent range revenue diluted share already earnings for expected of midpoint our to billion. of to and $X.XX. expected are billion revenue stages of in GAAP $X.XX to growth growth revenue, total range pipeline. X.X% on exclusive $X.XX revenue earnings in from final of the backlog growth.

hurricane spending questions. certainly increased you earlier, year. As mentioned will as impact in Operator, not the these revenue to true federal would timing we we update progress I the our through does given material expected for developments call from open include the civilian I appropriations, holds guidance recovery spending, of the areas same any to now on like any related

Operator

Thank you.

We have our And will begin [Operator our we from with first Sommer Tobey SunTrust. session. now question-and-answer question Instructions]

Tobey Sommer

give on of was wondering your the hurricanes if RFPs. Community update I what associated local timeline some sit you news with of an of represents terms Development Grant down that governments, where funding that Thanks. of Thanks. dispersing could to we in in us perspective curious but news Block moneys HUD with seeing the between kind

John Wasson

couple John It's Tobey. Wasson. a Sure, I would things. say of

several or think appropriation, know, I've months about program. you back initial of as I provided the CDBG X $X.X billion total for funding

so that. see The been states summer related funding needs just in the has to some hurricane approximate we Puerto to are purchase of agreement recent money that that would the most still and in see beginning allocated and to that most summer. Rico the and later billion will another to mid-summer expect this really by $XX appropriated we be majority that think RFPs coming I to So added and expect RFPs awards we and the to we in come so the of later of see expect

flowing so process in we And think related funding RFPs to of and down into terms work. states the early the turn are in CDBG still see I that

Sudhakar Kesavan

I and sort $X.X done billion was related of was of Yeah. rest I most the just on et CDBG. work would Of is human think being add. $X were cetera. there - The think I billion, removal the debris

commence. stuff still recovery is I to the think housing

two our that So to it you take suggested its in we had think will I as call ago. time earnings or

the would So carefully. as I be in thought think same will process and are we we follow this we still we

Tobey Sommer

is funds with do residential many secondly, then associated reconstruction as projects How ICF to potential residential opposed for competing to you related infrastructure customers receive CDBG expect and a reconstruction?

Sudhakar Kesavan

counsels Well, counties be state I think governments areas be of or are be example, there to In states In Florida, states. clients. are affected different. the There the Texas, could different on the be a could for be going the will the will plans the in clients. depending client

I the of the going think in Government it's client. to which be Puerto likely Rico, Puerto Rico - the is

we that how I on we how but have be might might utilities sure say we all the that of to side, more think I divvied which too, at how we be So et resiliency and I looking anything think than we out looking I works think that sort on want the so other I is the works entities infrastructure in to depends ways at can on and that just don't up cetera, money follow is help what make that. process know and

Tobey Sommer

Okay. $XX billion to or so you've from that date, heard in be perspective more in the total opinion think from is might do customers? final what Is it the you your appropriations or

Sudhakar Kesavan

And talk customers, of amounts you expect money. all to if they large different

I think that to come to them. certain states expect that just amount

to that think be my to I appropriations mean take we follow it's more difficult will say. I - coming. there I think have So just bet think I I if a

Tobey Sommer

little that? levels the the you the about XXXX? could What's for also pass-through and quarter describe in driving discuss expectation in - give gears, bit color more Shifting elevated a Okay. revenues your

James Morgan

those were digital James. Tobey, QX, and business revenues elevated elevated associated for can marketing of XX with cover the fruition. our - was to do in In there some our pass-through with with XXXX. we elevated business, pass-through And that expected business, we I This for to drivers were work. commercial we had pass-throughs. international major two quarter have had the it. then really the government two also We quarter is revenues areas Commission. Those came that One with some fourth European the

are pass-throughs, as what where low for anticipating for higher you if year typically As look than of Typically were a pass-throughs XX% our and or certainly was higher the revenues we than we and we year of normal were year, see. a at pass-through this half what far two revenues. point next that's

a XX XX% We give-or-take closer little next basis expect points. to bit year maybe to be range roughly the down

Tobey Sommer

intellectual provide on property intellectual the anything other described, you California from you increased and quarter your update could color an the of Two Okay. Thank describing me, are? market IPM to overhaul give that you. that That's coming on you what color on opportunities else could helpful. size investments energy in of us things investment the or is additional that maybe are property third the some if those

Sudhakar Kesavan

the I I think efficiency more think has something decided than used to and about. California outsource efficiency, the they I energy to that's and energy are the pleased we RFPs on business which of that state think

mentioned or efficiency you coming call RFPs earning energy two I traditional that we think those which out would are think ago, so their see. RFPs I

know there will look will and of It's non-traditional large a and we which is you - they cetera Some is at are pilot lots the also we market as market leading and projects carefully. do. them that California of et

out. see will those we things come how So

are investment, we loyalty intellectual I basically think the property On improving our programs.

too programs certain them is want sure variants amount we other them industry it invest sales. we markets, the also where existing much. that could - to for a market I there don't make utility we make the of utility little of of just way if the our large and in including business in to and potential angle But that a an customer we the use are had would to tally effective more trying industry in We also we have bit spend help I are platform, in money just have other right talk trying we immediate about utilize which a various basically would sure in much and engagement to on the

spending are what - we good on So that's is - I money think pretty in that IPM we more shape. the are doing

continued. is from But years client there has of Over work. that investment the most the investment

not required of from really company. much it's too investment the So

Tobey Sommer

Okay. Thank you.

Operator

you. Thank

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

Marc Riddick

afternoon. good Hi,

John Wasson

Hello, Mark.

Marc Riddick

think things the a follow-up spend a light covered what that looking things, couple is that are of of we we maybe perspective, increase. at a couple you from you to around wondering on timeframe should looking was around more looking commentary and about? from you be you at, might the with at are little a technology CapEx a could that wanted shed that I that I bit if

Sudhakar Kesavan

we for solid a us. said, - business are is Well, revenue. very loyalty as It's I the business the

we basically make it little little and a cater money you can the we that is quite more We to think a bit of As sticky. of clients that more on think it spend nature sizes. We modular. if revenue know, the all

So doing we are that.

as which forward. we effective - where to would as elements characteristics just the will adding this as competitors be and I said, other certain own using to not we it sure unseat has some are which in industry modifying help perhaps that, are is make products which industry cater also utility us going its think are which We the utility it industry the then to are we

able So it that as our go or market should the to I the We down different of get at the in so that's year will think get done. and we year certainly next we times development to be focus.

that's think what on front. basically we are I doing that So

We also front. spending the are on CapEx

needed back-office making are modify also upgrades. which sure We - that some we which systems, our are

et We systems are going have certain which HR obsolete. cetera,

date think make also. sure to get to that trying are up we speed we doing that I something those and up to So there and are we

we So doing are what CapEx. that's on basically

Marc Riddick

space, wins? there was I place new and wins potentially would wanted if to is now may some are Okay. you of for quarter being standpoint commercial in there? gain momentum it there touch the with took the that. sort a you the the commercial of saw if little Is quarters of we while could momentum framework make and to you And at forward saw seem what the larger wondering sort XX% given there specific? in as look gain sort the looking that one the of of of of and about could wins a revenue that the business during at you. new sense sense And just that pickup be then business of Thank to bit you sort overall commercial magnitude going I get you commercial of of a magnitude, Maybe from of help new over us that get that

Sudhakar Kesavan

Yeah.

I more over than and that we - wins, quarter certainly sales, our see. most primarily the have last wait we so have makes think trend, the we of watch than think one I did our overall new work we and quarter of were fair in I certainly as and past. commercial a share know will in - we won I that just don't work the suggested

quarter than more us think more to that on or XX% it commercial. I will to for a take switch

to I it think rapidly we're we certainly ahead But did. of continues but optimistic. that that but grow will we it wait as are as and watch, we way, hope

Marc Riddick

bit may on wondering could you a one some Thank one time of there the was perhaps me, XXXX. your Then for international trends on drivers you and last maybe and little spend if Okay. had the have the growth from that seeing of of I guide that some revenue influence are some you.

John Wasson

is mission we crisis right we continue. last been there's think the John international XX XX of and have the seen talked is European and so driving months, last the as over this back The year you distractions, is That's number and growth European what's I to we the issue contracts side, mean its business activation on seeing amount getting that to with to now. couple certainly I the what in resulting revenue And of issue under I we and of in to the getting work activation year migration expect contracts the I about European a of back those is that Wasson. and was in XX we've certainly Union won we and or getting significant quarters are return and certainly usual. getting contracts year new won activating as work Commission. are - that the are think Commission months a last really work last think Obviously we've the to to under of months the past the

Marc Riddick

very Okay. you appreciate. Thank Perfect. I much.

Operator

you. thank And

comes with from next Joseph Capital. Loop question Our Vafi

Joseph Vafi

repeat guys. afternoon. Good based right the the visibility in now? your backlog year for percent guidance Could of on Hi, you what methodology

John Wasson

I backlog revenues has dissimilar think the which is it XX% we of not about to Joe. our past, in have been is in what

Joseph Vafi

call And mean know at number. you of looked XX% Thanks that if it year Would Okay. of how there a color. that ago? that the you was XX% that apples-to-apples hard that a or amount potentially XXXX on the - uncertainty Would kind I in ago? was a visibility for visibility, visibility versus is uncertainty you really and is characterize year that XX% versus I harder

John Wasson

think made say when better. when administration Yeah, certain we had certainly, talked then statements certainly we year which seemed be dire it's Last I settled time you. - to did are Joe, are quite things to down I atmospheres this last the would and the since call,

certainly is So you quality alluding I better year. had is XX% we that's think certainly it think of that are the what to what last than the been

Joseph Vafi

you help new drive maybe front and departments kind in policies And of to potential you some discussions during know into of appointees progress That's know work I of on any you seen helpful. third for agencies across look John, that level those the to drive political for I more forward then, policy year, that to and on are continuing et our kind then cetera ripple see second Have more and you. would and that opportunities help those potentially new policies? new

John Wasson

I for But there be made. Joe. still need progress has to is additional There be more on been some has could say Yeah, room improvement, that. would that certainly some made and been appointments there

Joseph Vafi

something see mean much all - M&A slow the front break. it maybe at hand changing hey, just Was any we idea up dividend going that I capital then dividend versus now? the said, really money that right there M&A to M&A it's other on nice is really it's a going and strategy, out that's going not a mean anything just is And I to to down it's tax the that's not environment with clearly efforts. allocation the

Sudhakar Kesavan

As out you as we of too, emphasized - interesting things there that basically pointed there. Joe, think think out, we I I is lots that

clearly our capital that the our to business. shareholders. what that not changing did. changed posture an opportunity We sure are have down that. make in don't strategy. and But we to do we I of should we had terms think so has That's want thought We grow how rates the we we any And of overall given some sort return tax to allocation gone

James Morgan

will us great have healthy addition help very all a hinder not do desires that have still here. acquisition flows with cash our We coming move mind. capacity in forward, paying facility at the support in we to so credit expect keep acquisitions Yeah, ability as our to to we dividend for

Joseph Vafi

Should operating Okay. That's has sounds here the kind there ongoing about a helping about think are these modest of and I year helpful leverage I restructurings mean and on then we just leverage as been talking this and long-term or more of operating guess. you restructurings perhaps next finally year bit there like it little front?

Sudhakar Kesavan

at XX will of our of to least so continue as at our the property or to internal Yeah, the about we systems, drive been some and some in last revenue. years our past, into that's business the some some investing intellectual continue I it are back profitability in we've into are But to savings our reinvestment been few the we of long-term taking we per talked the to of and margin reinvested certainly into to company. as mean basis more efforts have same getting points improve will. over going time we the have as service grow margin as mentioned well dollars XX on improvement back year

in we we out to I margins deliver can improvement points we think forward more we and basis for year. of per to as to up XX we're deliver as believe our internal but signing the some future now be move to will programs, those right wrap So years, continue we XX able

Joseph Vafi

thanks very guys. Great, much

Operator

you. thank And

from Grove & Company. comes question Cohen next Our Lucy [ph] with

Unidentified Analyst

Thank you for taking the questions.

off, just is digit given that us that, of to work able very you growth of XXXX First they in the it plan, we did XXXX? to is there mid-single your type timing to can get may be please start sounds clarify to hurricane assume fair to low kind like

John Wasson

I the wrapping Sandy sort about $X last guidance. million picking about is $XX from John hurricane of into $XX on say summer. I be is million will is for front occurred disaster would the Wasson. say we our are of of This XXXX would I revenue work that up hurricane that of what million related guess recovery

are is potential in funding and and we on significant us the the there timing of think front opportunities depending successful. I of upside

did and super efforts in Sandy, the hurricane CDBG spoken that we've work four or housing think work on history history and $XX other around I forums about related look about if five the storm over with million years. you at recovery we our

was the about year million. $XX the revenue one think in I maximum

would about So of single that's I did there in history and home $XXX say we think bookend. conservative that's we XX to pretty press home storms. scale and recent But bookend. given road the I think That's kind CDBG of to our on revenues and you one million then XX north history, good how program obviously million and range. would did bookend the and million when a road of programs of so the $XXX year the I is impacts a the from these

us. expect perspective the out later as to be up I to and I this and think it potentially would wrap and opportunity the summer opportunities we get fall. as into these fourth RFP we from for could a XXXX. into significant work pick then play an quarter way revenues will range in We percentage. or experienced hesitate opportunities very into the the of a fall guidance said that and a it goes to it it's to a for we've I growth rate give look or - at had of road would reasonable you down The on XXXX a say to is range specific potential under just just Sandy reasonable to bookends. front home I the think

Unidentified Analyst

with to awards That's especially that organic in to Then your agencies, growth? hire with appropriations HHS support on order contracts to support consider more healthcare, would along federal you those civilian be potentially the more - and people if and potential it need helpful. do on - further you

John Wasson

on from the what I I'm I that mean to civilian appropriations in budget are additional separate say again say agreement, recent I the hurricanes. about would is would say the

the a any agencies largely in providing upside upside and material then think flow see funds The XXXX. about talking hurricane given the to should civilian appropriated. so of budgeting as through just time really of funds. funds, is be really I disaster throw from those or we our the guidance this the as pickup the timing recovery those So Again we the need see of in and QX appropriations ramp-up

we in QX ramp-up ramp-up again some XXXX. see amount the it small a in of really mover then our hurricanes And so guidance, top into but in as on baked QX, of for - needle

would employees, the I we additional year. to In amount I think terms of significant additional the say new don't of get growth we to later hire of creations employees see need opportunities that from as the into we advantage take

it's later I room increase able have funding and with we into but to us to are we the as to would as to expect increase utilization appropriations course, the the staff additional is periods from material on revenues, get there a margin a I we folks, be people later increase the year. for and think Of we we appropriations business have need for for that we to get additional support would our do

Unidentified Analyst

the revenue, this contract That of Got it is of was XXXX. the that variances year. the on to mix? pass-through contract couple your and and pass-through seemed had question recompete that Is maybe over maybe into state lower revenue a case late for by I that of James pass-through large questions baked also driving the up course thought department you a for

John Wasson

or we material work some timing there using of contract begin health are specific the do recompete. had It's about up ID is true It issues, significant for XX, a will six or countries. a the is that? perspective on it's is USA that probably cycle to years This to our We've and for large here. around many, potential developing our of IDs. seven contract some a I work with years XX contract development that - been that year recompete add has But Maybe contributor. many that so That actually on this under associated prospects James, and anything pass-throughs USA recompetes and we John. contract confident pass-throughs. I start has so state that contributor have a had countries, to approving to want you want countries say that certain contract from is that's had for political do in we international department with

James Morgan

done, I in the what the to contract had level I of of say Yeah, in that pass-throughs pass-throughs, just essentially level we've for have with into guess XXXX would is we XXXX what same our baked plan regard we XXXX. for that

change. see conservative somewhat we we until that giving So are the

John Wasson

correct. pass-throughs But The certainly on your initial our been down is XXXX. quarters ratio. It pass-through have several that point of contract impacted

James Morgan

That's right.

Unidentified Analyst

That's great.

John Wasson

half Latter yeah. XXXX, of

Unidentified Analyst

quantify James, is, other in CapEx looks can from the of there's and in question if offsets terms help the your there? pieces last if any some process of My us operating offsets. cash pretty like and tax outlook moving increase large you savings a in in It

James Morgan

For XXXX you XXXX? referring are to or

Unidentified Analyst

your XXX of reported? is to that For XXX cash down outlook the so XXXX, from you operating XXX

James Morgan

operating be I of - there of Yeah, that $XX high fact especially flow, some had by contracts had we of went the work our international and very that's of domestic we so for - guidance some at the may to recall million would million work, commercial up. XX million a going driven some balances really payments received we at $XXX you midpoint we XXX, we level, advance work what XXXX mean the $XX And that revenue differed cash by bet midpoint. associated at that were at our was and why whereby some with also for so

reverse. expecting into that had in little the our less do you but some slightly, than then you moved are receivable perspective addition, you that XXXX. up, that at sum close look expect $XXX is be And to we XXXX you a to little DSO go And income XXXX, of bit anticipating $XX we we from when at XXXX. the to from will will - if difference. $XXX non-cash taxes because cash for rate a tax believe of by would that just benefit between that of up million we'll somewhere million we days have we're get kind down What a - days all gets tax it net you expect some XX we're and balances if our and then receivables performance, flow. to basically few In left add And over a - just that up that we million and we've

expect being closer middle XXXX, We get to to days. that little for of will XX our range the bit our a XX range

and that's this Hopefully capital of So of working that's the XXX. that to causing of a cash bit use taking perspective little is what from a helps. midpoint

Unidentified Analyst

appreciate I color. it. the for you Thank

Operator

Instructions] question [Operator Capital. have we next Ben Noble Cleave with And our comes from

Ben Cleave

Hi, two I have questions.

your state a potential business there is strong especially First, guidance? has of your of XXXX that beat excitement to an

Sudhakar Kesavan

Could question? you repeat the

Ben Cleave

a business Is segment seems that revenue has there beat - guidance like could guidance? your strong to XXXX a it certain like seems your - potential it of

Sudhakar Kesavan

more all existing reconciliation we that have getting I and guess run based beat which $XX than the contracts, of start if and help decent made, the projects we will the guidance numbers. process, than we clearly which but the and earlier, which - what we also the on budget process amounts the there's I moves in we if get money also rate us if that probably some here, that the think recovery disaster vehicles more higher that got help contract that agencies are build would we've We've million anticipated. up earlier on quickly a is required, could work even the have

and So could I both recovery things two think, the agency spending are which issues up the potentially number. disaster civilian the

Ben Cleave

for there to be levels to or you. we CapEx my Thank And great. second question somewhere change expect can any will be XXXX is, fiscal there? XXXX Okay, the meaningful

James Morgan

systems, range by driven midpoint. that's million to it's million, our we're said and from - the industrial $X up. making mentioned to were some investments investments driving for about we internally guidance we $X financial property some an as we And for HR XXXX that higher million systems internal we that well as CapEx, perspective $XX.X XXXX million been as are So in some of gave CapEx is $XX as capital in making so at I'd million our $XX

Ben Cleave

all me. your time. That's for Thanks thanks. Okay, for

Operator

at have closing turn over remarks. time. this for we And the I'll call management further now no to questions

Sudhakar Kesavan

to ICF. We Thank keeping up look call. developments on again. at you in participating you you all for forward today's Thank to date

Operator

for concludes And today's participating. you conference. you gentlemen. thank ladies We This and thank

may disconnect. You now

ICF International (ICFI) 27 Feb 182017 Q4 Earnings call transcript