ICFI - Earnings call transcript Q2 2019

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Operator

Welcome to the Second Quarter 2019 ICF Earnings Conference Call. My name is Vanessa, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded on Thursday, August 1, 2019, and cannot be reproduced or rebroadcast without permission from the company.

I would now turn the call over to your host, Lynn Morgen of AdvisIRy Partners.

Lynn Morgen

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

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

consider addition, as information light. that may, this of disclaim In developments made presented call at views anticipate We elect to to specifically but some We statements on any Please that so. forward-looking future our obligation views during update do the statements today. today, our the will in are our cause point, based change. to

Sudhakar to I will now CEO, Sudhakar? XXXX turn discuss over the ICF's quarter performance. second Kesavan, call to

Sudhakar Kesavan

thank Lynn, our and review to second the the you, joining us you results Thank outlook of XXXX. quarter for remainder business for and

in are growth non-GAAP supporting growth key We well XX% beyond. adjusted revenue second second even robust, for such in as of that the metrics performance forward-looking EPS. half business and in higher pipeline converted our the quarter, continued year-on-year EBITDA development At the into time, this posting year the execute to same strong and and backlog expectations

that markets and with growth commercial continue we to key ICF catalysts have significant government The provide opportunities. in identified

us fiscal opioid funding basic agreement been we substantial in significant are that XXXX. market, The and that engagement, increase spending the on will this agencies, contracts we provide have last several cybersecurity across discretionary IT such federal an high-priority in areas for civilian defense believe is budget awarded as boosts the which with We approximately citizen in all XXXX. in there in government First, agreement a areas particularly years. X-year emergency, ICF, through the modernization, opportunities X% take will and encouraged over

Additionally, agency clients time have plans efficiently we agreement, to formulate they think an issue early and the spending their by to that federal RFPs. coming will need

several local we Wasson our in Puerto revenue long-term long-term, substantial detail important will contributor resulted an ongoing our in and wins later. state this in and qualifications see government for disaster as recovery discuss market, Texas, Second, emphasize, From in becoming disaster recovery ICF John which Rico a strategic me contract year standpoint, a little Year-to-date, years. let have several considerably are events agencies are extreme for First, storm the experienced more and the At time, the manage declarations recovery of disaster response. same has the events response reasons: weather on been and severity federal rise. in for personnel the than increased ICF major to to there strapped XX have disaster last

we last us result, a a services, this in for bandwidth of market strong additional need management to new see arena. has given year's opportunities As pursue acquisition DMS disaster and

the in to several mitigation- that qualification resiliency prevention-related years. as us seen the increase seek and agencies bid expertise planning in ICF's past the the on storm-related Additionally, have work expected in prevent gives government we to devastation

provide there markets commercial considerable services energy are in ICF both and catalysts work, opportunities. our in marketing that growth Third, with

the services. we in energy toward further competencies. an distributed greater potential significant to strengths especially with security opportunities efficiency program program platform our current our to The are commercial electrification trends and markets, buying increasing that been trends fits core growth implementation. implementation, changing specifically integrated of end-to-end model built energy that us, around advisory are services towards In our energy resiliency spend, expansion additional resources implementation services marketing, opportunities aligned continue in with energy targets. both for In see initiatives provide ICF's states other marketing in energy infrastructure that also through but efficiency of Energy nature growth have advisory from well and penetration in technology and California, their play

growth our importantly, strong to meaningful these foreseeable the growth across performance, key runway markets drive catalysts enough each have summary, there's for to In future. contributed but area the in year-to-date

Additionally, strengthen we deepen I reach have expertise in our explore continue potential opportunities current our of acquisition to our competitive to broaden and the mean, capabilities, that opportunities, positioning. areas our

John of John, a with for years, when recognition. worked as not simultaneously closely Executive our and X transition key he this to over closely In is John new is could effective seamless we well-deserved XX a I involved it ICF's to in a been be named the have significant for the ICF. role, a has issued growth—and reflects I operations. strategy will I contributor Finally, remain and happier that with decision and Board's Chairman. role be to Wasson earnings release October today announcement I CEO, appointing move in will my company

now At point, would operating John over second this to like performance. turn the quarter to John? our call review to I

John Wasson

afternoon, to was first government performance momentum as of XX% revenue those into move the this I increased quarter which good our the ICF I total revenues. are commercial quarter, kind new position for continuing growth. This and quarter our was and by Consistent another positive everyone. of reflected with drive experiencing and strong And I represented continued we together partnership government Sudhakar, appreciate you, our ICF's working growth words. led Thank XX% second operating look to in work, year-on-year markets. that forward

period, quarter X.X% Second from X% similar quarter levels. represented improvement sequential which almost first over revenues government from federal increased clients the

certain EPA, on as experience shutdown, the in to government back that were we by and affected and improvement delay quarter. see through the we new to track agencies getting at moved a projects contracts particularly USAID continued did awarded progressive We but

As for mid-single-digit in growth full expect to year federal continue we to XXXX. a result, our of low business

are and that opportunities provide quarter be put awarded for XXXX to the IDIQs later this out in begin second bid growth and orders ICF two should for awarded year. was task as strategically important beyond

modernization. The scope. work our re-compete strengthens positioning only but change in ICF hold we by adoption, cloud a compete Services award in and broader infrastructure experience, of seven for the Administration blanket we in of is partial six management, include contract June, optimization. announced with that to two center agreement first, areas was customer The a IT selected services, companies the a IT purchase which the which X-year is General of one an information security covered under BPA, contact U.S.

a contract armed ICF for cybersecurity have Air markets levels award Army, was Combat Army at XXXX years cyber At with of the now development services. of our cyber substantial Department award the win, health, services Research Navy. this was holds With Laboratory; Force, of Air over business Defense: branches communications Navy. support Command; end we second track now record of The record U.S. three contracts the by a and the where federal with public the five the the services U.S. XX to with pipeline with and in and opportunities first our included half, cybersecurity of

Rico This to local in the to the XX% Virgin Puerto we government in June, a XXXX recovery in total our and government Rico, In we growth announced for the most hurricanes. recent following Texas work Development assist assist brief programs, as revenues second the Puerto award, early was Grant significant providing. Community on In the major million, and X-year $XX we that were the The year-on-year quarter increase executed a of contract Block to efforts we which by the of U.S. growth with are government, accounted our Islands modification Housing revenues. scope contract and with included second funded quarter state million with Development our services contracts by in to release, significantly agency. driven the today's was contributor Urban disaster housing we $XXX U.S. FEMA-funded of XXXX Puerto in recovery expanded description Rico recovery awarded of

to by points am recipients, any which other XX.X a ICF an of of that XXX XX the three points at firms award. the I award score out that least its also higher pleased received than on of was out received proposal, that received report of four

the executing and a is San be on the being award substantially that heavily grow is the that ground. process, million As in effectively our We a view order firms an that disaster This almost assessment ICF award of impacted $XXX over hurricane-related contracts this with latest are Juan years. government recovery This judicious areas. to region with the greater. surrounding was a post-XXXX keeping contract can the potential with value awarded three believe those towards the contracts has result, in total magnitude the award brings to of and that includes expanding

activities disaster billion further housing for In $X contract Florida early addition Carolinas recovery is to Panhandle. affected that mitigation ICF recovery XXXX related the approximately billion the Puerto for well for to in for to hurricanes the Also, material the Congress June, expansions, awards work. opportunities states. include appropriations appropriated as into and to believe its mitigation detailed the definition that speaks revenue of us developing disaster what a early well. for Rico $X those and In positioned in recovery expected the in bid to covered opportunities be This we for of terms will contributor by mentioned under is long-term there area ongoing, an September, ICF. HUD designation provide that additional Sudhakar earlier for recovery,

in to growth international pause for by revenues currency second for was Keep on up government of year-on-year business the difficult mind declined quarter, last or exceptional expect international comp; year-on-year year's the this that on Based we In XX.X%. constant by mid-single-digit years very a on took in a government were achieve second year basis. the quarter, constant clients X.X% from After several a X.X% currency pipeline, our basis. growth, solid revenues international a

the -- named to where position report. we to expanded client quarter in from benefits and and increase solutions ICF X.X% delivery of marketing and positioning strategic service the technology In technology be Year we awards honored deliver businesses from and maintained and in -- Forrester, offerings best the from Commercial Holmes leader Wave Europe. May, win services, services evidence by marketing for were marketing further work services Report's is Moving received under results had specifically our results. marketing revenues from ever continue development our Technology lead America second Also, and its integrated opportunities. Loyalty their the clients, accolades to combining April, was creative for our led our of sales which a service we the brand. strong in of in brand that as delivering quarter, Next our channel to in capabilities our to business Agency North Digital we engagement and commercial In the recognitions

other and lead opportunities bring continued activities pipeline to our opportunities inbound our and into qualified opportunities. have alignment. cross-sell helped have generation we increase commercial Overall, as of increase capabilities This considerably steadily closer to

Revenues energy reflecting market upside project from California steady revenues in be efficiency lower energy quarter-to-quarter uneven has the by of have programs that large the due tend were that number Commission quarter, in new advisory energy first to increasing efficiency results The including energy and mid-single-digit clients XXXX growth offset Public that utilities where ended electric XX% is and programs electrification. we from XX%. thermostat nature vehicle of work. for to midstream opportunities the half to to Service energy in business. our ICF their in in second off-road the beneficial There for There year-on-year mandated several to was beyond in opportunities. significant a of potential in programs and the offerings existing invested programs and are efficiency programs, in clients, they our energy efficiency other with We expand smart pipeline increase from states also outsource are goals, new

the Additionally, is distributed utility to clients which transforming with our the we continue work generation, industry. in areas of

regulated demand to energy On and as distributed storage such continue the rooftop utility business microgrids the solar, model. side, resources challenge

work them in vehicles significant Resulting poised experts has clients advisory on with power regulatory assist work direct which these issues effects will We're market the utility to expansion, energy both management for commissions related solutions, believe are uncertainties analyzing in to Electric ICF on and grid. bring we of changes programs. and potentially resources. public lead also have implementation and policy supporting the to state which utility distributed on them caused to

least whole, by expect a to clients at XXXX. as in commercial continue digits Taken increase we revenues from mid-single to

between over XXX At $XX second opportunities we XXXX the larger be our In for beyond. of revenue margin into of summary, confident positioned and business $XX to end substantial were that and pipeline are we and and million There that XX the quarter, another momentum growth well expansion than carry year development $XX $X.X XXXX are and was million. million opportunities billion. can

was Our annual XX%. rate turnover personnel

our the James call to over financial a review. Morgan, turn I'll CFO, for Now

James Morgan

to ICF's Good second strong quarter, a solid I'm you, performance us second for of report well pleased everyone. afternoon, which XXXX. the John. Thank in on positions half

Total million, over revenue representing the our to ago was the XX.X% primarily a driven million year. year XX.X% up by XXXX last government quarter revenue XX.X% last revenue million. revenue as $XXX.X the was and X.X% year's growth this quarter $XXX.X second XX.X% Pass-throughs X.X% clients the reported $XXX.X to Service $XXX for increased in million, our clients. supported of of by commercial of in quarter. from total growth during from is compared This revenue second increase quarter from

in was work we step-up more level number to recovery is As this representative we of our previously, mentioned recovery disaster pass-throughs of programs. of expect subcontractors we hired The to a large assist related where the year. have pass-throughs with this

$XXX.X in second in XXXX, year million Gross XX.X% the quarter from of increase the million was ago profit $XXX.X quarter. the representing

indicative a in our this higher our XXX as points on is our revenue, year's gross gross margin margin XX.X%. XX.X% more business which of service the However, to expanded XX second trends, points of quarter. year-on-year to Conversely, pass-throughs, basis result basis declined

the Indirect that our special momentarily. selling reflective inclusive XX.X% selling $X.X will second million $XX.X in indirect of included of which and revenue of charges of and million in million describe and expenses from expenses, growth year year a this to ago, I were $XXX.X increased quarter

basis to as was to XX.X%. well revenue million. income the XX revenue Operating and last for second to higher As declined million quarter attributable year's and compared favorable $XX above The comparable as utilization. quarter EBITDA $XX.X XX.X% selling the by of million, expenses is total $XX.X in million service mix improved was $XX.X growth mainly in revenue, points XXXX. a indirect percentage

has of loyalty the qualifications, initially mentioned which than and of up we as existing special was Future million relationships before TFC assigned the The TFC to a included office and related relates and one, subsequent limited acquisition, closures. realignment impacted working as in Customer cycles; to $XX.X the these less focused a other purchase or as tax Next special charges intangible negatively in the a related Asia that acquisition to $X.X I strong year's previously are The well The second the charges we CRM have where large EBITDA an year to staff write-off million strategy CRM impairment this million TFC and a $X.X staff $XX.X on and to that portion quarter, are value of and client active number of -- related larger and EBITDA XX.X% ago. million clients severance charge projects. on for charges, from anticipated. adjusted Exclusive for on, ICF winning loyalty lengthy sales deals in opportunities two, Europe have revenue with TFC of

XX.X% was of share, last $X.XX to or Net the the for diluted by in quarter income the slightly on second expanded $XX.X X% year-over-year results points the in second diluted benefited per EBITDA million XXX in year. year from lower to XX.X% XX% $X.XX up margin service quarter. compared basis rate Adjusted share XXXX. from quarter of revenue per Note of that from XX.X% tax reported the a ago quarter these

no to $X.XX the diluted in XX%. be amortization for bringing of and quarter million, We XX.X% will no $X.X second more $X.XX rate special XXXX. tax which year related the charges Exclusive the intangibles the expect of of average of our EPS tax increased the remainder quarterly full totaled from of charges year rate than non-GAAP reported XX%, than to more

Puerto used the cash year, of the XXXX. compared we funded in operations flow; the the to million of $XX.X in million XXXX. first cash to we mainly $XX.X contract in to for our Rico half of half slow associated expectations won with receivables below collecting first was used large the pace Operating flow of due Turning cash federally

We contract on cycle before client that this with and continue will our year-end. normalize to payment believe the work

in flow week for first $XX July. client received by cash which the payment operating of receivables million was we Our impacted roughly further of

we $XXX cash the still of expect be As the few flow to range XXXX. months $XXX and million over for the million in to mentioned, operating collections year full to anticipate normalize of next

second XX quarter. outstanding in ago Days year the the compared days to sales for quarter days was XX

Excluding two the items XX just out, sales I days have days called outstanding this been quarter. would

XXXX revenue. impact We the anticipate range of days year XX to end, at continue to XX to days deferred sales including outstanding from

Our $XX.X period capital related to timing consolidations. facility the mainly to of in the amounted investments in million, $XX.X IT to compared expenditures and XXXX, million comparable

capital to expenditures million. million expect the year be of range continue our $XX $XX to to full We in

on outstanding activity the receivables pace from our end increased I the second end of due quarter mainly million collection at credit by slower of Debt the the of just XXXX, to $XX.X XXXX facility of of the that mentioned.

roughly now beginning of we result interest a initially the that, of at year. to As expense $X.X the more than we expect expected what million be

priorities and our shares that our remain continue share are forward, acquisitions ensure And under capital shares current XXXX, to the employee million. second same: neutralize the enough programs. organically, of repurchased effect for per our will our of share the Grow incentive repurchase $X.X allocation to authorization make Going business we repurchased quarter de-lever. price approximately a outlay an of total dilutive of $XX.XX at we XXX,XXX average In

be to million amortization full and tax the please expense full from to for $XX.X $XX.X expect the to note depreciation million around to million million to effective we be interest per no as for previously is year year the million our our of you September Lastly, as help our the mentioned, to updating we your $X quarterly intangibles $XX are amortization range models, continue XXXX; is XXXX. XX, XX.X for range of approximately share, our expect million; seventh following: be than average in we on more $XX pleased payable expense to To million; to record weighted to on now shares we dividend XXXX of $X.X expected of number October of and expect with to rate to $X.XX be the diluted declare anticipated shareholders fully XX%; XXXX. XX,

to like for that, With call Sudhakar closing back to I'd remarks. turn his the

Sudhakar Kesavan

James. you, Thank

was As our founded are XXXX, ICF anniversary XXth you and year. celebrating know, we in

environment, services. substantial have years We our these cybersecurity, over last technology subject have marketing recovery, energy, built and knowledge matter health, and in credentials disaster XX public

in first ability of our and half pleased leverage year are across with execution to and ICF's expertise the We growth advantage government this domain opportunities sets. quite our commercial client our to of take

year We this future this in growth continuing see expect years. remainder of and to the in

Year-to-date and growth activity beyond. XXXX our substantial wins recent results, operating support and in pipeline for expectations

EPS EPS As a and XX%, year-on-year our the billion and a earnings. $X.X non-GAAP billion, We EPS growth non-GAAP raised result, to to be comparable expect $X.XX. this GAAP growth on revenue we the to and range ranges of to and $X.XX special charges, over growth in guidance to from GAAP be of for of revenue basis, XX%. represents almost midpoints XX% between XXXX $X.XXX At of range now have the EPS revenues $X.XX, of midpoints, exclusive $X.XX of to close

questions. now would Vanessa, to like call the I to open

Operator

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

Tobey Sommer

First, you, congratulations John, Sudhakar, new you, to the role. for and

John Wasson

Thank you.

Tobey Sommer

recovery to work. And disaster I by the about start asking wanted

San it's allocation of around a that Juan. geographic cited You sort

damage damage that the in because In terms population that density? proportion outsized geography inflected, storm of an is the the of of there

John Wasson

geography Yes, significant San that Juan area. that's population the damage more right. a in There's in

Tobey Sommer

do duration? the longer three have far, cited extend these opportunity for think a so to contracts What is then as And work you years. the been for

John Wasson

for at Road a I New longer it's if The so there's the many Jersey went I programs for on. programs highly duration. will you precedent that extended look work Home years, the Louisiana. likely programs many mean, for in think the extend

programs. think I seventh we're of in our those year

opportunities think a the I the and in think in X-year is XX-year X-year longer-term And to I past, initial beyond recovery. in Puerto period I as certainly we've recovery Texas. think talked this be the would Rico

Tobey Sommer

your opportunity more color help in us market of Okay. and sense little create disaster between an disasters mean with that it us Give give ongoing a company a could about, Could the what is a you natural as bit like, again, recovery, you inroads? for the develop to business. for the what more

Sudhakar Kesavan

Yes.

mitigation responding have Tobey, I that think basically with, mentioned, are many we familiar as focus that there's think I in disaster years, we we to think a as on prevention. I and as had to -- over whole that you addition now

resiliency, there likely all we amounts in of in this will so disaster to where issue mitigation there be is options, likely money bid are states. -- out the for currently even allocations lot in of cetera, near whole mitigation recovery, the a And of significant which is also which money these of affected future spent on be work, et

that So no think be we continue recovery, to And think these when there speak, that have we to so always there'll will are possibilities. even that, where areas I we disaster mean significant that events. will in work

the frequency allocated going of also fall work. And isn't We, in think which obviously, years, last we event, be there fact, bid of mitigation the contracts there $X.X Puerto of anticipate, there's mitigation we sometime almost the few been over have has to But even increased. if year. and this those will to seen has -- be for are Rico and an events lots in billion, the that as

us that mitigation think have the work allow I forward. So think to disaster going and that, likely of a geographies we steady are to contracts things that all will across also stream other and management these on continue,

Tobey Sommer

required the Is then work to already? -- firm skills within for compete fulfill resident and are in that the

Sudhakar Kesavan

we've for mean, resiliency many of years. planning, Yes. these mitigation I and planning stuff sort many, all done

worked and of entity an these going was likely which acquisition, states. on DMS, many our projects are to the across And that the the forward. think increase scope We areas have -- we size obviously

skills, quite those leveraging think planning we leveraging effectively with could resiliency do going So cetera, which are our we skills et forward. things

John Wasson

Tobey, would we're the actually our -- programs. change a now have whole projects capabilities and and of the say expertise. the mitigation-type that practice, and unrelated set And local I climate state and expertise, resiliency leadership of become brought it's undertaking specific terms a of think that storms position market government and core planning we mitigation implementation that think settings -- have would using development practice in so in of climate I to I aspect

Tobey Sommer

for Great. of scale efficiency energy in on How programs utility respond of that mandates and being because the or the opportunities you new that took and consolidated programs me you front in Last question to. describe to work. your either existing terms trying strength versus would recompleted pipeline saying [indiscernible] of new state-level

John Wasson

I pipeline quite mean our I remains think energy efficiency robust.

see many year. in year, next about this to We there a of that in bid continue states. We quite opportunity involved significant quite process sort be for and We're the to for intentionally expect talked material California. we bit

York, trend I a continued see seeing we've increasing. activity about California. certain also And states And well I more are we've so lot budgets Illinois. of we've which talked where to mean there's New programs, opportunities us. think the So of in about talked plays we're certainly bundled in to

do still have And quite James, opportunities there's so we know, a the... and I don't pipeline. significant robust

James Morgan

-- market from a the I $X in billion commercial, It's perspective. or in pipeline mean Yes. energy range area the energy it's

Operator

next Gautam Company. from Cowen Khanna and our We with question have

Gautam Khanna

adjudication to lies? schedule Yes. for some QX, you calendar just could what if flavor you give book will, bookings, -- in I you was where QX if the anticipate wondering calendar for based QX, bill, on us

John Wasson

the the certainly, think -- businesses. quarter our typically, is QX in for generally, government sales, I strongest

trend for or our been aspect us consistent a I pretty think business. that's of

down robust to book sales So in I QX the would company. comes quite expect a and across generally bill. QX quite strong

the year could Although that we I opportunities do could think there. by the help of energy have that materialize some end efficiency

book it's -- expect to it think we the to or in remain on to quarters. And XX there X.X I and been increase a I months the expect period, go trailing would I several even forward as X.XX some next our so bill, for

Gautam Khanna

Is -- profile any then as Okay. out give follow-up, the can next that If over surge it revenue a expansion in how And frame it? the recent do steps on of work do we quarters back just year? help next and the have, Puerto us you for of we Rico, down? the a given four it like, shaping

John Wasson

run say won, and kind would on the we've of out exist, Puerto I additional mitigation to Rico to funding of the continue them think be on we'll expect up that we're in think we're -- phase early potential putting get don't I a foreseeable of Puerto we'll bids yet or we're given mid-$X that disaster help then that in and billion opportunities work, out that the the our for for program. future. I in generally peaking with ramp contracts I work those example, that this efforts where peak. Texas, variety the Rico hitting to that to point still anywhere recovery and at contracts, close

And so I don't know. Sudhakar, do [ph]? you concur

Sudhakar Kesavan

robust a up, and better can revenues give think there we that or two, we as next you quickly ramp the next we of cetera. et to understand how certainly model do I how sense in year what we revenues think will months be few Gautam, is the can they

will this to the example, wrap And for potential said, that up the think with going and year. for that we then as CDBG expand we contract, So slowly it's increase.

better end and give -- get sense guidance So we'll you of have we'll more towards a the the year.

John Wasson

And to the variety three I but of that I these just think years. reality would the go answer to is I reiterate, asked contracts, Tobey the question X-year contracts in are the recovery beyond geography these going guess, a is

effort. a programs, we Community about won like only from future the this All thing for we the contracts has the impact will Carolinas, XXXX. It so to Panhandle. the work. XXXX work-ins longer-term Development appropriated funds think how is to we've from storms. is are I And the going the billion certainly And the obviously, the have $X for for Block Florida this Congress Grant point out

pipeline. under Carolina payment Community in we a in for hires for North that's the Block know looking recruiting, our been to We're have already Development support think we've down required will on I opportunities be program. positioning in Grant contingent I bids. we're what capture those

are won of pipeline we which the XXXX opportunities additional there next the get will storms. out on later year contracts layer year, we've So to as in will the play top that from

Operator

our with & William from Blair next have We Company. Tim question McHugh

Tim McHugh

to is relates XXXX, building, want just the opportunities, hurricane that still there ask, awards the the as on revenue, revenue it when guess, grow guess, guess, Are you prior or I or disaster calls now the type I I work is the opportunity, -- we're to hurricane you stream of to of recovery from of I about could talk think some looking the about haven't I it the on? from XXXX at more the that type captured incremental XXXX?

John Wasson

Yes.

opportunities think from recovery I we particularly that is about think significant is talked a just still I firms million, XXXX storms that in expansion potential the program script for those contract, I perform $XX housing drive X-year the here. well. mean, won, further which which we've significant the could there, there there's upside

I much greater. indicated work. beginning could order think We're as as we an be that it of magnitude just

housing was, quite Juan yesterday, housing center we In I which San our a just in successful fact, recovery, first think, opened recovery opening.

beginning longer a just X-year I which so And contract, recovery. that we're involve think will

help there. Puerto fall, Grant additional Community We the out program create funding mitigation there. certainly that X-year opportunities will talked putting government for the under X-year Rico. upside to Rico Development will program the there's of billion to be RFPs Puerto So Block that $X about in and administer

Puerto in Houston, office, have general our with land FEMA three the early And think in then Texas, Houston, land there. -- stages significant I Rico contract existing of work there's the Texas programs. the Harris and have the potential we of contracts say, in to surrounds County, which those City We're I additional that

there. to be well we're quite a generally long-term going think doing It's recovery. I

so -- long-winded expansion potential to than significant as yet, guess, I I I Congress way the haven't even know, the say there's played XXXX you storms been forward. the there's we there's think think here it's look -- appropriated. funding from that's then And funding a the from as XXXX out storms other And

Tim McHugh

you guess, extending to revenue and And stream I guess, think I dissect in the of from still the bigger beyond the work it life or for Is I stream I extend for there's to that? build like the sounds and bigger, it right... it lengthen the grow was room absolute to, trying but size, additional ability that make of versus revenue I guess, that just continue guess, it to,

John Wasson

Yes.

it's think both. I

run period in increase in I then contract. and -- extend it could think XXXX next over and for a rate X-year lengthier current the we beyond, size the the beyond

certainly I here. before as think we're I think, here a I front even to us, there's grow -- the in we, peak given of there's not, conversation we're -- the room can we're have opportunity opportunities to begin what's said, -- of

Tim McHugh

end, slow, -- you Okay. to paying been the just receivable accounts issue it's client mean, what I guys? of terms And the back it you administrative with to on I the guess, bill them in then why their hear from the is pay do

James Morgan

mean -- I This been is activities. is James. it administrative it's really more about

As support help contract you customer FEMA a can had almost it. for infrastructure of new stand to imagine, that a kind to contract this on is basically up large very

was the April say year. of customer contract lot a them doing approval in mature believe FEMA an end political has a process in to that payment instituted be normalize and their Rico, review there's our this by that with our organization the through inwards to contract. expect could And deal been seem with it. And though to certainly, to it that you has so. we've to recently and I effort, Puerto of that federally-funded an continue we help that the processes processes. They this able review normal to will approval will their disruption is with year. challenges of for And handle place the working that given be certainly process, part As FEMA

FEMA through by reviewed paid without approved invoices that paid We and exception. and process, several had

for that payment believe will a just institutional cycle. process of us any the cause at issues don't I So it to the all. that sometimes does It's matter

normalized So pay cycle certainly, client, get believe will out current we start our we'll to with the more in do weeks, invoices by believe end to the the based discussions flow that coming we on a of our outstanding year. and the still

Operator

next have Berenberg Capital. from We England our question Sam with

Samuel England

development on business if covered the wondered looking side? obviously, of opportunities, I there's side? particularly particular all within terms stand Just think that, the I the of pipeline. any in disaster you've, commercial out just recovery size at that areas

John Wasson

this mean, John I Sure. Wasson. is

funding think Plus, a budget. talked public catalysts could sizable about the cybersecurity, remains business. in so key Federal recovery. arena growth the I modernization in is disaster X-year opportunities I lot there Obviously, The the and larger we to driving see continue health, environment for IT I think opportunity that's we I robust. of we've four our kind Federal about mean the talk talked I good business. pipeline about think the

the energy I On pipeline. a process. are answered the We're think commercial I energy on commercial the efficiency proposals quite the robust. -- That's writing California we two-step efficiency question mean, side,

more teens began proposed submitted, First, of set proposal We've designs. we're a I those. submit in in a detailed based proposal. the approved, on designs we've the writing are once you terms of We program number of you submit those think, submitted. proposals And

opportunity significant So efficiency arena. the in energy pipeline and

services, cross integrated our really lot I that's happened marketing to things I opportunities the mean, think great comments, we're Next. I we seeing think in ICF the one more is a said of here

And so robust are pipeline longer-term contracts, the contracts. where work loyalty of is contracts, a And technology is driving business there. certain business that and that's the technology on pipeline good -- quite good. opportunities winning there then more there of parts larger we're technology our longer-term large and we platform The The integrated implementation pipeline those have growth. there's working

is positive we quite very the pipeline four strong, it. I and pipeline feel the record And think, I about so are a catalysts, have these

Samuel England

was second great. margins. just Okay, And one on the then

you margins how obviously had few and nice will half? that follow of whether just You margins I quarter. second we've usual the you're a cadence second into the bump heading wondered quarter years in seen sort last the thinking think based about quite the in over this up it

James Morgan

points do as expect fact the margin define be we revenues. improvement the We We over we EBITDA to being Yes. we that case. XX you James. margin service is of about This when the have would thought to year, of that, recall, XX may you talked year-over-year basis beginning still expect that

half we XX% certainly QX. so until forward, back year, we the of as in delivered And go the

back target is. on leave so our is XX.X% expect EPA it average to that And what at then, we XX.X%, that I'll would closer year, certainly be that that achieve We be half closer our to for target the increase year. the at to range. of can the

Operator

next Steinke question Barrington Research. with from Kevin Our comes

Kevin Steinke

key on maybe So just if -- the can was of that Puerto of and kind we performance led about Rico And your FEMA-funded talk a that back of winning more being step your significantly you expended? how execution contract to was maybe component a work? that expanded,

John Wasson

mean helping and we FEMA up winning significant that I tap work, think pleased the well Sure. I on that XXX, on Rico I that to driver contract, getting no very clients. progress XXX pleased, played continue execute government -- our in rebuild personally I of our very mean been their met I with the was that our role quickly, a Puerto that hire on absolutely ability work, with it quite and funds key question think very key stand They're program I -- infrastructure. to clients contract. there's with of happy our work, that people think our our process have increase. to in performance on that and the make

Sudhakar Kesavan

question, the on CDBG would we the you also but too. even just though contract a I of open firms didn't center, are the ask to the add, first

the open. we So yesterday. of people hundreds center first one had to were We come through our

Kevin Steinke

to Rico, CDB in a given going maybe be awarded? then be to was rolled for by geography -- Puerto geography sounds that kind and it this And like they're that's one that Okay. it area basis CDBG across is a new regional just going going how of out that that Rico, it's in on be to contract Puerto they're

John Wasson

Right.

essentially, by companies' the geography the geography gave the of down think they I So who each most was scored basically, there favorable were four highest, contracts the the went and which and awarded, they proposals, us, firm and they were scored to they divided list.

time. to by it call initial there's the yes, is it's certainly work over significantly in is we ceilings amounts -- And do -- well expect the contracts I these I I obviously, so geography. time this And firms those started in think, to get but would do. our conference of remarks, are more And do more think work as said will, who over

Kevin Steinke

just in factor? expect to? and really has And moving do that the which Or is a impacted rate terms that you Rico Good. in pipeline turmoil Okay. the Or political along? of the at it is Puerto not landscape,

Sudhakar Kesavan

Well, we did our yesterday. I there open center mean,

two in But and going demonstrations out been millions have obviously, So we the people the so obviously doing with that. or three are when their those. street, for offices days of along one closed are steadily or on and

and in down terms that that moving think work and continue think forward. things to will I us we and continue the next days forward, but disruptive, I in we'll our it's settle settled So believe few will do in of keep things to going

is it I [indiscernible] contract. think us it'll from deter going So on this but disruptive, don't forward, especially FEMA

John Wasson

I think that as On we short-term and just contract. a could mean distraction. -- it the the I view FEMA CDBG

Kevin Steinke

about talked talked I that the opportunities start Okay. included coming opportunities referenced, actually bidding some then some that large pipeline? energy California the that you now Are all second you half in in larger on. kind efficiency pipeline of you of about And where the the 'XX. and you're in they remember California the lastly, of opportunities California of the

So you're on come California more is in build going that to could further? the to there bid that pipeline

John Wasson

Yes.

to more there's come. think I

we large of I I you programs. talked -- California in think be part mean, the for your effort programs recommend that they're design the bundled to looking as statewide. about We would programs, is

year certainly be next think come get -- I we are the better will those clarity, pipeline later this that's into those exactly and for as into year. to material add what will

Operator

Company. from comes & with question next Sidoti Marc Riddick Our Instructions] [Operator

Marc Riddick

follow-up things the use see. moment. of around after look sort quick of then congratulations. And to And wondering nice that well, was Sudhakar. kind John, could of I like profile? maybe into you course, maybe the a some I the if sort on help of that. to you of come on acquisition -- pipeline touch as growth with the of what opportunities any wanted touch the I first, where of at of and base opportunities going given you some the thoughts have Just -- have scope to congratulations, It's cash scale or might might sort on play particular announcement that

Sudhakar Kesavan

Marc. Sure,

areas. before, think four said acquisitions in have we each looking the we have We're I of these for as four areas.

that targets we out there that think basically I is think certainly there.

come XX you So sometimes before, air are and you're if down, we're strategic talking bunch people, they bunch to And of the I've have in one said deal. we and whole do a and of a of or the balls them to as two folks. talking

in little think areas the and everybody that think areas, evaluations and I quite do we fact In a our else adjacencies contend certain of We don't is areas, conversations that successful of to we crazy. have we've where more. can are other looking. generally with where intensively obviously we having in expertise places the So where are to domain been go we

we valuation So wouldn't I ago. years have our back a this, paid few last acquisitions, history look XX what of ago, think the years XX almost XX of be you gotten. done over in the the we've some acquisition if perhaps acquisitions we twice years of for will In

active So patient, which are can sure we in I perhaps. we mitigate just strategic areas, plus we be will with, where XX, have things make the our that be and comfortable to equal one and risk think two two of where be just

it's we -- So is are will we when we're and we continuing -- and right. and think I think what right think we to do look

Marc Riddick

or then if great. -- of I of out play either at some guess, but from for while color being of you mean, Senate a feedback going kind know the sort it whether wondering to with I benefits any getting more early forward, this budget. to might you are of sort sense act who little of quicker we're quite of wanted That's Okay, you're there what not ready it and could through getting as looking the and wondering little of this with sort clients if whether to was time, of a a folks the get not of sure little we're helpful. or a might maybe sort process -- or And kind initial I'm around for were sort may moving I I the with out? put take to

Sudhakar Kesavan

are big I is X-year that pretty the the a process the when in the - time. recall late not we to don't had X-year prior the year. can think, budget It's go this you as going know, when last even summer. I edge we Marc, in one of the I to done relieved know budget, summer, the budget was

the are I the Senate we -- -- precedent we are is So today. think fact, just I at the relieved today, in think And Senate moment.

more some So we we And given are beginning President cetera, off, looking in be way forward as them been organized have about just to I'm the to the will feedback from think sure the perhaps we understand I moment, the money, the allocate so more forward, get we past. in move place the they a much our OMB year, what in process than to funding that the distribute it. and the as start able signing and the clients we given et the of but agencies much agencies, think process, a will and at fiscal all systematic

move in more much in will than have way So things we'll very pleased the a then two forward "normal" I be that they think if happens and past years.

Operator

We Sommer Tobey have a follow-up question with from SunTrust.

Tobey Sommer

of function being the gain Or underperform? new respect there CDBG an to share Rico opportunity they that's it's other to With from a your is to contract, Puerto providers applied geography? if just money

John Wasson

the others perform. No. there's gain potential don't if share I that certainly would say to

I one real the and our -- to out that's are reasons the we of get working of and up that's the well. it's think running gate get hard think of And who center having does awards multiple intent and here. I seeing

Tobey Sommer

someone Got going for Juan? this Or time have the it. [indiscernible]? else And, to period relocate you're going are mean new of to a does send to given role, John, San to to

Sudhakar Kesavan

what that's He's He forward is is going to doing, Juan. to it. to move San forward in be role, his looking looking he new

John Wasson

Juan. I'll be to Yes, think right. I committing San

Sudhakar Kesavan

and quite all on disaster are -- spending recovery sure. we work, we're time focused Juan, San our in for just But

Operator

you. thank And

queue. will We remarks. further management to questions I closing over for in call have no now turn the

Sudhakar Kesavan

conferences forward the look again. obviously, very Well, you, today's Thank upcoming next participating We to at for our at thanks much call. meetings and in you and seeing call.

Operator

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

You may now disconnect.

ICF International (ICFI) 4 Aug 192019 Q2 Earnings call transcript