ICFI - Earnings call transcript Q1 2018

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Operator

Welcome to the ICF International First Quarter 2018 Results Conference Call. My name is Vanessa, and I will be your operator for today's call. [Operator Instructions].

As a reminder, this conference is being recorded on Wednesday, May 2, 2018, and cannot be reproduced or rebroadcast without permission from the company. I will now turn the program over to Lynn Morgen of AdvisIRy Partners.

Lynn Morgen

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

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

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

Sudhakar Kesavan

Thank quarter you, our and you Lynn outlook. us for business results discuss our review and today to joining thank first all

and in year expect XXXX diversified sources. represented quarter our the of for underscores what benefits solid The first a our ICF. revenue to line growth will with start results of were good a expectations we be This performance

commercial in year-on-year quarter markets was growth First increases marketing by international our commercial services. energy XXXX government revenue growth and in in and strong businesses positive led

by has Florida, the today's Puerto growth expertise in in pipeline ICF. we horizon the RFPs catalysts expertise and for the the be leverage know, that affected by we recovery on from of Islands. are noted consider HUD. Almost been Based forthcoming seen the U.S. second contracts increase California, opportunities to Texas, that federal by for our on a in We relief are we you the during government hurricane the FEMA pleased seeing and quarter. our new post have jurisdictions release significant earmarked disaster we with Rico Virgin business As $XX billion XXXX funded hurricanes, earnings to both in on one our

be the several and in result, months these capture in of investing next significantly opportunities. activities over we'll pursuit proposal a As

Beyond disaster growth recovery, catalysts ICF key XXXX. there XXXX for are and four in

the XX%. increase bulk in area combat First, to bipartisan where for and agency Centers going have Human budgets there do highest which Department significant is there's Also, funding and general which years. has initiatives National largest the the ICF increased Control, Health Disease Health we work, client, the substantial expertise. the opioid abuse, in our Within for the a been represents budget XXXX of agreement, to of Both budget opportunity, of increased that Institutes of federal has Services, received civilian our funding. an

Additionally, at Energy, we Defense. see Homeland, the Department of Transportation, several opportunities emerging and Security

of won accrue We related the new be to fourth expect contracts up with quarter, months, in dollars increased budget not but these place RFPs expected the to contracts revenues from until to XXXX. ramp taking in issued are coming

our development business positive both increasing rate. pipeline and and where we win well growth international existing in contracts executing Second, we see are prospects our government our on business

and services engagement. fourth, emphasis on marketing our in commercial environment customer marketing, And for drive media ICF. increased Third, and loyalty business continues group be business, an an social is from important energy commercial our markets commerce benefiting is seeing multiengine to to improved digital

trends XXXX. summary, these mandated outlook four programs in industry. energy increase the our from efficiency advisory utility in the positive the and benefit to country support across associated for with well-positioned from business work are We transformations In

contract wins the before of the and remains the our our first the million, funded of and were XX%. quarter at increase, over quarter billion of this of backlog portion end Additionally, turn John related for the the end this to $X.X the value Also, just Wasson, pipeline first the John? backlog I'd year-on-year billion at call was our business like point, quarter $X and a in was over including steady quarter. disaster are $XXX the first at XX% COO, current recovery At review. at being RFPs issued to quarter that President our

John Wasson

our afternoon, Thank of with you, first pace trends have consistent in identified Sudhakar, The was and quarter the everyone. in our business markets. we good the

catalysts expansion We our especially for are and with pleased growth pipeline. of our business enthusiastic about the the

Army or health same in the but National Health a Abuse U.S. last and General X% Services business Services, U.S. won government to plan X/X Department navigate its an At contracts the impact support revenue Services on Our government development Center Housing of our services in and government growth the and to IT and Urban community content the Federal Islands, social state on broad solar modernization compass with lab. Abuse support remainder business a important indicative Mental representing by timing project number from federal small both provide group for third government a expertise sequentially, agencies Administration and the cybersecurity, to first were more our a energy but wins assistance Approximately XX% steady management on a was pass-through with associated handful a period our offset few notable due in CDBG customers support of revenue comparisons awarded quarter XX% Substance we the web In assistance and a national Administration, positioning decline and Federal to clinic. revenue quarter XXXX under issues and revenues the CDBG-related year's one of Security of important is X.X% government the IT projects, international a the to on lower on and of of Development, at Substance projects below SAMHSA, issues. Administration the and across provide domain U.S. Social of is ICF's existing housing revenues Child federal the modest, in revenues in on research revenues as complex technical The Strong were challenges. the on storage government in We these recognized Rico in resource at HUD been quarter was U.S. HUD's asked our market. area and than for the in levels. CDBG to grant, we Welfare. contracts delays local of up federal problem-solving compared an one revenue year. initiative overall. last have Also, Puerto with recompete, increasing Virgin to this with community in accounted first the first help at programs businesses. year-on-year significant

up and on clients XX.X% a for were reflecting lower but period from lower local first revenues the year. about government the accounted local and state Revenues points year-on-year, last sequential timing approximately associated than of with government X% revenues, projects. quarter state substantially basis, XXXX basis quarter certain First same total infrastructure XX

We to additional in track all continue and hurricanes. by to jurisdictions opportunities respond impacted that last were year's

by RFPs adjusting year-on-year the discussed the early Rounding currency show XX% most month have our category in end progress. last of the or these In QX to QX. in is growth XX% from a issued has government we of be effect. which alone, more previous for was the increased we pipeline continues international and our government calls, Revenue expect XX% business, out than QX. $X.X favorable at substantial billion to As

last first XX% Here solid international of revenues year. driving we clients are a at last almost time from over on executing the to from work X.X% up won quarter of backlog the two same years, the revenues,

had first in contract to quarter. the wins in another the of we quarter Additionally, year's posting XXXX double-digit a contracts strong of value last won quarter compared first increase

consulting a be in the quarter, first continues revenues, commercial Revenues quarter-to-quarter. revenues XX% a business rate be accounted In marketing of year's solid commercial services low-single than at from increased revenues driver. and in first more energy which to tend to fall-off and clients year-on-year from offset digit markets this commercial for quarter. growth uneven marketing Our services clients the aviation

opportunities integrated off contract on PR paying is by the and wins business. as loyalty and were focus the areas of significantly, up Our larger led more

of expands continued noteworthy named just of midsized largest clients. this services ICF contract can more integration by firm, wins earlier growth. us together existing with the largest Also, million that won the London-based vary, have our since ranked the was small acquired firm was this which and the for than And firm for in we but completed comparisons a eighth opportunities agency work XXth PR globally. the global the our do that we together, achieved year in and have Engage, to year, array is our assignments We has It number positioned and acquisition. $XXX integrated of loyalty Olson, Quarterly business believe Week. of talent ICF that more new of ICF, U.S we PR the PR

energy Finally, scope and in contracts markets, our expanding Virginia. via of energy Illinois, energy both strong clients quarter increased efficiency This pipeline of the contract our us. and growth of their for efficiency remains with XX% in their in was energy including commercial efficiency, the certain first expanding are wins a parts New the new In states action, or goals regulatory significantly legislation quarter, advisory utility over revenues energy business. are the reflecting Several robust. and the York

of starts $XX at efforts, quarter. percentage are opportunities with more quarter, development released important us of utilities to by $X.X greater these efficiency We tranche work modernization. third XX goals, in the the pursuing cases, is other a end $XX its and million. opportunity by pipeline for to million XX in in of expand opportunities as energy are were the that first aggressive than business grid driven state billion targets, remains the seeking our higher the opportunities $XX expected and million greenhouse contract and first in actively California between some states there Also, our outsource others, be in gas-related an Of the to RFPs and

with level now on Morgan, quarter areas programs we turn of client personnel annualized our our turnover CFO, our James is to the call execution over of activity RFP the pleased review. sets across I sum our Our a in James? To first up, financial will expertise. XX.X%. are for and

James Morgan

the to growth led and markets. John Revenue driven from attributable revenue increase government clients effects, growth by I'm quarter our $XXX.X with growth in revenue with X.X% provides first XXXX in by growth XX%. both for XX.X% first John. our on grew was international revenues as our clients performance, Good the the XXXX. government million, increased report quarter. you, from an million revenue clients year's revenue million, our clients. commercial growth quarter which Total when in impressive to was X.X% markets, mainly was million revenue and our solid increased digital $XXX.X And currency improvement The exclusive the commercial marketing $XXX.X in from mentioned, energy government increase last was international year-over-year of in from the everyone. pleased to supported a a of financial of services continued over afternoon, first foreign in government Thank the year-ago business. to quarter XXXX compared million million quarter of the revenue revenue first of XXXX. foundation for $XXX.X $XXX in X.X% XX% was which Gross X.X% by a Service profit growth $XXX.X in to in

quarter-over-quarter led receivables large write-off the write-off, $XX.X pass-throughs, first $XX.X for Indirect declared our business During in to in selling to that were a with quarter. the million, bankruptcy. recorded due from in year-ago expenses reserve to combination million and a our mix up quarter retailer and XX-basis-point the the gross higher margin XX.X%. QX, from decline That we

saw expenses with ongoing associated XX-basis-point we despite selling well as of and in the indirect improving and company. scalability and However, as revenue, associated increase spike with recovery percentage a expenses work in a XX.X% the efficiency an proposal total disaster reduction capture to of as in investments

XXXX. noted Adjusted X.X% and of have we above We in in the last severance $X.XX is Quarter-over-quarter of that to expect in last number XXXX. year. special opportunities. for The gross to service and was from for million of to margin the the quarter $X.XX partially to margin rate special XX.X% of as rate of was per first XX.X% be decline of of XXXX in first the previously to tax to as related tax compared the the increased in excludes disaster comparison EPS to EBITDA last rate quarter of was year's to year This the tax representing year. for that million attributed was the $XX.X Reform impact quarter lower EBITDA staff charges $XX.X $XX Tax increase QX investments. to to XX.X% It diluted on expense, basis in due first change mentioned as a to on recovery of compared the of pursue revenue compared intangible or full was quarter margin Exclusive Net XXXX. $XX.X increased due share, XX.X% XXXX share for second well associated the EBITDA as first diluted charges driven lower million. per GAAP amortization Act.Non-GAAP previously of continue by the quarter the quarter positive points expenses from work the XXXX. XX% the proposal $X.XX the quarter reported the XX improved $XX.X bid XX as revenue EBITDA adjusted $XX.X $X.XX million, income the realignment, million compared mentioned XX.X% corporate $X.XX, service reduction for adjusted or year-over-year million which the we should diluted in expense a $X.XX accelerate was to expect compared with a first will

in from of operating fourth quarter, receivable Quarter-over-quarter took due to compared of activity quarter million quarter was the was the XXXX. million of cash $X.X significant first the had collection partially due pull-forward positive of operating primarily of place the flow XXXX. first we to which the During of cash in variance first XXXX, negative that the collections to quarter flow $X.X

be range $XXX the of to flow XXXX. million $XXX cash in operating expect for to million to continue We

was Our CapEx XXXX of in first the million. $X quarter

quarter as the our we've the we was facility of Future our XXXX credit our the in of to days than increase the to the efficiencies in by outstanding higher As XXXX slightly operating increased in The $XX in due Debt developing million, timing our previously CapEx guided, of as to sales XXXX we in the of for under acquisition improve and quarter collections. of flow first additional quarter due at Day part cash property. intellectual to Customer well of make seasonality. days XX XX first expect investments end as further infrastructure first outstanding

in We revenues. the to XX of continue DSOs for anticipate impact XX be of XXXX deferred range the including to days, to

on assist In modeling. several addition our line to items our to DSO financial summarize guidance, will guidance your I

of expense to $X Amortization be our million XXXX. We intangibles $XX.X to to million be depreciation to continue expect anticipated and of for million. amortization range are in the $XX.X approximately

be million, under while we to Our share full year to our XX%, to interest minimize capital programs. no of anticipated dilutive than XXXX. shares our expense employee XX.X%. is expected to expect to range for and fully expect the shares from for organically million $X.X range. XX.X appropriate we average million expenditures continue million invest to and to our rate to full tax And of more diluted program repurchasing weighted effective million currently be incentive de-lever allocation to the the now With capital strategy, approximately our respect from $XX expect year $X.X in We down effect $XX are continue we to continue acquisitions. evaluate We repurchase

a In repurchased fact, of first in quarter XX,XXX we of million outlay total $X.X XXXX. the for

XXXX. Lastly, call With on like we on X, record XX, back June $X.XX of would to declare payable to to that, quarterly July XXXX, our Sudhakar. as turn are of to per second dividend the I the shareholders pleased share over

Sudhakar Kesavan

we Non-GAAP - new total of benefit civilian I to departments. Based diluted to $X.XX now diluted wins. does including expected the the EPS earnings like not for included contemplate become to guidance revenue in would pleased budget, agencies federal agencies takes special charges a the $X.XX contract Not current of $X.XXX to related in the of billion per $X.XX from open Thank to increase range to budget $X.XX. funds guidance to share Operator, portfolio and in the is range the of reaffirm questions. to for on to $X.XXX appropriations given any recovery on from time federal significant call our two-year This current it disaster of exclusive available you, James. billion. our business, are GAAP government

Operator

our Markets. Vafi Capital with And have Instructions]. Loop [Operator first we from Joseph question

Joseph Vafi

and I disaster but I could if bit you a the just early, have questions? look a wondering, indeed on of may like, still come say, know contract structures was do out? recovery was wondering RFPs And be you a we I do adjudication do against back of some we have it little the have a are talk when it's for the some follow-up. may I versus Katrina then Hurricane early, feel relief. secondly, on for feel when these saw those contracts here cycle - what yet but they Then how disaster

John Wasson

John Sure, Wasson. Joe. It's

and remainder plan, begin going on terms given X the and opportunities the QX. to see pretty development we QX approach out want months the would of how cycle win in to think housing and been need early the in grant-related it, to in QX year. second the would would we a adjudication, recovery adjudication of one funding And we think last we're handful I and we opportunities community the - that they're may in from we I QX them, - action RFPs their the to seeing we that to expect in and see the states for HUD and have that work block thought hurricanes consistent X the over half

the on And had of as so schedule. like quite our in said out busy front. opportunity, significant I the expected And seeing proposal certainly we terms and we're capture just think it's we remarks, playing in

be and past the New Louisiana. seen fixed contracts and T&M-oriented what mix a they are to the the Jersey of I think in We'll we've in of similar terms deliver to structure see to of opportunities, going In price services. the

will And a in And certainly learned - the say but in lot be seen generally - past. would have we structure past. contract so the from seen consistent we it what we've be wins to the I similar past, contracts so will it with the

Joseph Vafi

yet. Okay. That's I the on see then government government a pretty wondering a the started federal some here know to out side was quarters. early? if of update, on bit couple base those over little some was - Sudhakar of And on on is you the similar a too positive John. of seeing RFPs of it more next kind commenting base any I the business. maybe still Or question just

Sudhakar Kesavan

Joe, think, it's I Yes, too a little early.

I think has and money. appropriation allocates departments itself take then think, the a - to complete process OMB based will to then the so on the the I it while for, money appropriations get the

see sure them, but see think I So don't before we'll am QX. we'll them I

Operator

Sommer comes Our next from question Tobey from SunTrust.

Tobey Sommer

in to - approval? for work submitted being internal respect constraints on recovery, clients bought that. the does you or if the to to terms plans With you and of coincident HUD be winning terms there similar are other by brought geographies? kind Or would in disaster action of there two And hold? that how consultants ahead resources sequence Are of secondly in RFPs timing, the after, then of of any on kind or questions your capability multiple

John Wasson

Sure.

market the we're would on side, this market. a think leader I in constraints say I

programs of history we We've country. the of think implemented, on significant housing have you several recovery in advisory depth disaster the as I largest the know, the front.

And so significant have I depth. think we

can or us, We that work. of up I front say of them deliver we'll to opportunity hiring to significant able in in think would here view geographies bid believe history people all But type so very take work. I and we and hard. it's I working our very be the staffing us do is opportunities in quickly the have busy, advantage think are this and of the front we deliver in staff there

Sudhakar Kesavan

win we work. sure when go also to hiring ready the in do to and make And are geographies contingent as different we we just that

we which So people always make the that. do certainly the sure to do we in And are think so that who to good over what think that's the that understand I have locally. have are make well-positioned, learned I we have something, it's years. I think issues that sure we And geographies we

an in And on way. respond in and geographies so the to having it's what's going important order the is if of people even spend appropriate understand ahead element an think opportunity the RFP I to for some us time in

plan we we that to still in want So we front, - sure make action I implementation, - are little geographies - a do plan, - we each are try out we think we there what we see the do sure can we find so who make always action and how exactly plan on some action do then to that careful the that if try of these too. the the

Tobey Sommer

you for Okay. efficiency the energy That year? Can makes this procurements sense. focus on California

John Wasson

into my as released I we quarter. to Yes, see expect the I do in RFPs fourth those to in said starting be the going remarks, think third,

to know, play you outsourced, do As see the will a the months. we some that significantly higher proportion PUC and RFPs XX this expect has those we work to the next out of year. later of But start mandated over

Tobey Sommer

still And Okay. order magnitude about? we that talked of similar

John Wasson

based Yes, energy and think the Same California. up still we that Currently, go talked the XX% efficiency consultants, I not about And changed. that. I expect on on in outsourced XX% that of and to is PUC be total has to case, will magnitude. that mandate we to programs think we spend mean,

Tobey Sommer

Okay.

lift detail performance? DSO company that the outlook, couple in is the XQ heavy outlook, On DSO something can for Or a it of range kind then. kind of questions course Just hit do given is activities? your end to you through the of lower a the flow of to middle normal annual and cash

James Morgan

performance certainly of We given performance, Tobey. we the nothing the with that end to the regard James, that normal do through at heavy year. course. can It's really not us a surprised had There's that last lift. It's QX

we can fully we hit expect that our So still guidance.

Tobey Sommer

been what does you secularly sector? kind challenged scrubbed like the With company's respect to retail for write-off you has what of look the that and cited, have that a exposure

James Morgan

retailers. really looked significant at exposure with in don't have We other we - Yes, other that. have

QX. I we there So any further in be expect activity don't will had like

Tobey Sommer

me. Okay. the $XXX new to sales Last a marketing between that numeric With have of in respect question services? do markets the your and million, breakdown you of for energy commercial your business,

John Wasson

think We that. breakdown don't have I I Tobey. have a that. have I have don't that, don't don't think no, we on we -

Tobey Sommer

I can it off-line. ask

you think mentioned prior it might I have in here. quarters,

I So know... didn't

John Wasson

Okay.

Operator

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

Timothy McHugh

another Just on you think I feel any Is to particular one larger about if or that? guess. Or where seeing hurricanes, we you the better opportunities? guess work, to there I are geographies better positioned to get were

John Wasson

say would all or Puerto all across And the state I opportunities are three geographies, Rico. both there, at seeing CDBG-related geographies, city within level level, Texas three support. state significant But are seeing support we both FEMA-related and for also of the primarily Florida, seeing at we're and and across territory opportunities Houston. we the opportunities

Sudhakar Kesavan

and, And is therefore, the hurricanes go I to the fairly would enough just - very associated add around. significant the there are with that dollars hurricane significance

So I that that opportunities all I X go think and they'll X substantial, the firms. doubt or potential are to

I there opportunity work is think the So money the because also states be up think for to pick around. to I firms an careful spread would

Timothy McHugh

that margins Okay. how this quantify the you big terms write-off did the impact in of And question, was on second quarter?

James Morgan

gross margin. XX it, basis XX quantified the to points but haven't We of in it's

Timothy McHugh

there Or Okay. And least can change is another just kind bookings to in it's the I you I of guess did services, talk that there marketing then leadership leader notice about to at guess announced. perspective? can good leadership are running you how kind there. I I new turn - and business of and of hear the from came you're kind a that guess better. there's the over

John Wasson

like months I Knicker, There's has We the there. business, mean, Matt feel very a was we of experience. our for He technology Founder of yes. and think Bergen, strong Sure, leader or X significant CEO strong replaced who who I announce digital the folks each Van X a businesses. who Chip ago. leadership retired CITYTECH running have we did new

He's on experienced, Chip quite board. very brought knows we well. so Accenture, Acquity, And business that

So quite days out, we XX we as a pointed our about or leadership feel which, addition team, week that good ago. announced to you

components business. strong the for We the business. our loyalty leading the Specht and of - Bryan brand running people leader business, PR business, have leading very Guy Canadian our strong Cierzan

have feel I we So think a we experienced team good like leadership there.

Sudhakar Kesavan

all And a for been while. there they've

traditional than that's think at level the higher about leadership I that level, stable in our not that terms the how I is and business pretty in the turnover true leadership legacy but are I are they whole doing. But ICF is the pleased of turnover mean, for think business high. turnover, least we at industry.

Operator

Company. Guo from question Lucy comes from next Our & Cowen

Lucy Guo

off So hurricane favorite seems I question. wanted to start with maybe also recoveries. It like everyone's

the still case? the and had sort about $XX essentially, call, in of is toward next On last end the XXXX, the anticipated you ramping year that million have up of revenues - once you but more information,

John Wasson

guidance - in obviously, million hurricane assumed million new that that And, contracts, I had we and that's we work, assumption think our still of of work would position. Sandy-related update $XX we we million said million our changed roughly haven't of significant work. initial win - the guidance, $XX disasters-related that think I $XX $X we had if Yes, and

Lucy Guo

process some versus protesting you the just of RFPs differ of terms how Great. maybe And and may can give the the CDBG and rounds context federal with process? HUD and solicitations around work government rest bidding the of in

John Wasson

the bid there's similar is is particularly experience different and to our local about think don't and it. work. or unique think anything process I state I very Yes, federal

pretty it's think federal typical consistent procurements. with I so And

any? I do protests, James, of have the know, you terms In don't

James Morgan

is procurement processes. No, I it's to obviously, respective goes states, passed it's And can't the money normal out remember being the [indiscernible]. state and through so really

John Wasson

a recall in front. history, disaster-related can't I I don't a program, on had our CDBG them we - seen think we the on have certainly - contract single where recovery protest

Lucy Guo

is there in QX. kind It There I timeline. some the if when you action June, what time potential already July put of kind wondering some just - of it. frame. tight sort in on any plans sounds timeline. expecting like are saying predictions you're their of in will together adjudications seems be Got and And the a early like information. of It was giving are delays HUD, those that May, some approval

Sudhakar Kesavan

You different different amounts understand just that different money times. jurisdictions - jurisdictions of at have have to the gotten

ahead are in some in So certain are areas, some certain behind areas.

also I approves think plans of jurisdiction action separately. So HUD each

them, how on cetera, that's et approve depending first. the So they

that will therefore, with doesn't think have every time, be uniform determined their way approvals. I the coming up HUD at all by timeless same of and jurisdictions. at a the looking jurisdiction So And

or involved. on is how start the the HUD I approvals of - get So all get before approvals FEMA quickly think sort better, Get varying plans significantly, depending quite start the HUD their the action approvals, act the process. whatever their will they or city together, it state,

I think are saying different QX about to and time, to going it's that we all which it's So going QX. happen at why is a be

Lucy Guo

And right? XX it expecting it up margin some you. that like on sort your bid XX other looks are Is Is opportunities? target keeping What's and to you proposals, bps, recovery, ramp you're spend upsetting mix? it up Got of on but headwind? of

James Morgan

there, completely if not am followed your sure Lucy. I question I

Lucy Guo

bps year-over-year. target You up hurricane said are XX your your ramping for you and keeping but XX recovery RFPs, bid up investments you to margin proposal are

in So proposal wondering what's your I'm the offsetting spent. increase

James Morgan

- our going we utilization, it's to think investments expect little in offset and QX. of able we additional to bit half be obviously, bid pick now personnel making be we'll to and in be I making of to in that But the proposal, I more can that able the back think able investments we're that can work we the back manage soon. half. here the a year can, the offset, If fund be up this to investments hopefully, normal we're we in

we have the to we services the these expenses flexible ability expenses that are luckily, QX incurring to and QX. manage - it's business, and offset be try So in and

Lucy Guo

side. lastly, have of seeing helpful. Olson on number That's was revenue you terms And I if the wondering collaboration their with and government any in updated synergies potentially the you've

John Wasson

I reported think I million. I said in $XXX - we my think remarks

James Morgan

million. $XXX

John Wasson

think number. for that's the cross-selling, million updated I synergistic $XXX the and so

Operator

Our Steinke Barrington Research. next with Kevin question comes from

Kevin Steinke

you if I the second maybe activity quarter, expect the the the quarter as quarter? basis In impact? you spending margins? might it know higher What in the terms of was can in in increased you point the the What well spending on in first of even it quarter RFP terms first characterize second as don't in

James Morgan

want how certainly, on we we on in QX. and it's much tell what say seven for But I will are B&P or too if impact exactly sure activity spending not the we I'm detail this. to much investing give are marketing is is what figures you,

Kevin Steinke

Okay. Fair enough.

So state both government markets. local federal and in and

flow local, as mentioned government, project soon projects. see those a of we you Or think timing that delays. to see playing revenue as Should second State you quarter? I the that few do and federal projects how start in and infrastructure out? maybe

John Wasson

year. early second at quarter quarter they'll or we expect on When later in the we of to look you year, occur But half of year. or when second of think to project, the I depend the the expect I exactly the end would the it think that most so will they them throughout flow is year, expectation occur. second I our and see start think

Kevin Steinke

marketing year, then that business of in an in And move in given know throughout mentioned quarter. the could characterize first the the approximate don't growth commercial you you as rate and quarter pipeline? through the first right. I All you what you if expect stronger growth might services

John Wasson

the the The single growth low first quarter was in digits. in

of I XXXX. we're quarters prior think the in mid-single two quarters, at of the - end the last in two digits,

we digits would to I be so it And the mid-single in to say for the low expect year.

Operator

Ben from markets. comes Klieve from question NOBLE next Capital Our

Christian Herbosa

of a Herbosa This on Ben. have questions. couple for is Christian I

be you to growth in the what First, do most current for inorganic the areas find environment? attractive

Sudhakar Kesavan

said? Inorganic growth, you

Christian Herbosa

Yes. Inorganic.

Sudhakar Kesavan

said as buy to not we I before, go which and we Well, don't going something I've understand. mean, are

we there federal very are recovery, energy, are there traditional are arena the are certain we marketing The interesting. And could certain skills utility in in want, be always which always we which it's services forward. our There So government, areas. useful areas. add sets is interesting like our disaster which specific will be specialty think skill areas can which areas going certain There us. to

continue we're we those things. our traditional is evaluate So And to at I significant see areas, and looking I opportunity and there think there. - that we'll think

can in I So we in expect work. the areas do think currently you will we stuff which

Christian Herbosa

budget you about behind related concerned factors are is you, that the what question And my second to now forward? most macroeconomic looking is uncertainty government's

Sudhakar Kesavan

well. is doing mean, I the for economy us, that I think

extent business it's, commercial better we to because growth. will, Our related to economic think, do I think, some

et to government something that alluding spending manage that a likely that are XX%, you good because federal think quite business the generally it's sign the rates, carefully. think with we which think go is we in I up us future, it's cetera, our to for if I of XX% on. labor dependent And

do, turnover we gone attracted doing we've or more think, turnover think We always most kinds the we our think who economy I that of lesser rates I up our with better. competition. so of like the - have, work people than haven't

potentially well that proactive able that an go obviously, on that confident think going So cetera, utilization, and manage environment are that quite I been has quite think so we think be where managed to would carefully up. front, think et try We, generally up, on that going I perhaps we're do our in could also managing be we I But front. salaries are I and we forward.

Operator

Instructions]. from comes Tobey SunTrust. our question next [Operator with to Sommer And

Tobey Sommer

a Just of couple follow-ups.

mentioned couple on anything's in a you seeing elaborate of the in could the quarter? impacting delays growth areas changed, wondering I quarter. you're if revenue if You those, in

John Wasson

into had to of trends deep any projects Department Services we occur of that. and broadly we for year. couple I read this wouldn't reasons, a the those I and handful specific client Health expect projects No, delayed projects, were within Human of that mean,

slower with going So were - specific issues get to in it client I the and - first was those project just projects quarter. think

Tobey Sommer

Okay.

investing perhaps clue you CapEx. don't on are investments? I'm it when as able property to wondering a quarters the your associated in what you out should might as with marketplace is to mentioned know, result be when For I some, in got those products couple you us intellectual of now, of a

Sudhakar Kesavan

a Yes, uses let property more to business we intellectual me generate services which emphasize services. that are

it's a addition we think to I which we now. the be used will used in investing, example, loyalty that in investing we are So - ways think not Tally, platform, a are it's in being for variety the of ways

talked we've in sector. government, the which about effective, areas. it very certain think use in can We ways in health are can certain use especially in we I There it. public utility it

ensure so just we to enough, offering So are we as trying quite we sure our continue to make make flexible is investing that to impressive. by that make and which discriminate I - can think specific we in it it intellectual property,

in really engage arena, much. cared the engagement, customers think that about customers. example, to They've the customer restructure are quite that For the they utilities efficiency keen never their with as energy we

are So the industry, worried more changing be like about structure happening, resourcing, they of the they that is to much which energy distributable now the would friendly. customer

to from into customer to have So a tool order friendly, of money be loyalty in ideal way we which and friendly, And a in changes to we have a setting, invest utility to is sort the be customer customers. to bit get make little it. of use certain

continue So start that's we spend to do we clients to continue that sure terms ensure as to slightly competition I the the what - to that of make to that. in think money, we ahead as we're major trying are the do of

all we are doing. So I think that's

to we to as of too. We the side do the upgrades trends Tally, us which in stuff frameworks, existing need to data what do do allow are specific analytics sort to different in other modeling analytics platform add on will develop also doing on

which edge areas traditional So of expertise. our essential we I are these think are for us think in things, to our keep

Tobey Sommer

higher this now? be CapEx? CapEx be sort of year's from than good a Or it to is ongoing one year level this for a or Is level step might considered function two

James Morgan

is this James, Tobey. Yes,

I we're before, the to mentioned we're because is I we're those place intellectual and as help expect the next improve will - off. tail and the for between operating will an service scalability think our improve and a activities from higher this various in various investments year property that of majority of then will the those making tools perspective to take year addition also, we investments offerings, making Those this company. efficiencies to year

in that fall percentage areas. company and expect percentage least of revenue that to with bigger, think happening, little Obviously, perspective. increases from some as gets there'll it be So would a a bigger revenue be down the at other But some reduction, bit. there'll I of I perspective, a from

Operator

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

Sudhakar Kesavan

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

Operator

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

now You disconnect. may

ICF International (ICFI) 2 May 182018 Q1 Earnings call transcript