ICFI - Earnings call transcript Q1 2020

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Operator

Welcome to the First Quarter 2020 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 Tuesday, May 5, 2020 and cannot be reproduced or rebroadcast without permission from the company. I will now turn the call over to Lynn Morgen of AdvisIRy Partners.

Lynn Morgen

Thank you, Vanessa. thank XXXX joining performance. and ICF’s to everyone quarter first afternoon, you us for review Good Today’s President and is CEO. call hosted by John Wasson, of X. and Bettina Sudhakar James who took CFO Also Executive CFO Welsh, the Business on as Chief March through February; are was Operations of joining end over who Kesavan, Morgan, Chairman;

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

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

I to John first over discuss to John? ICF’s XXXX turn will performance. Wasson quarter the CEO, now call

John Wasson

Thank results, opportunities call XXXX. the first and our to impacts in quarter with you, participating share today’s review thank you all and our and for Lynn to ICF COVID-XX thinking discuss for respect

work commercial have the on quarter contracts been to workforce financials. XX% COVID-XX a execute reviewing I environment notch their under have during which teleworking our clients effectively operating on to ability and to top minimized and programs would government move commend like to ICF of and able of to this first Before seamlessly results, With work-from-home for over we their staff members protocols, impact for crisis our for dedication period. producing clients,

areas government In fact, XX% several growth services, represented modest X%, line positioning government first energy with in revenues. first ICF’s revenues quarter comparisons. to very commercial marketing in our year’s year-on-year reflecting key those quarter than compared pressured and revenues, increased increased of commercial within markets. last These businesses performance energy where our and results factors in first and Together, positive commercial X.X% offset in more total quarter reductions

excellent quarter and from for substantial in business each we valued end and working XX.X% IT have areas ITG Revenues from fit engage for priority is strong over an and years ICF with federal federal quarter a business. civilian top X.X% total we growth first the other’s January. see clients we X.X growth acquisition, agencies. on average million first accounted approximately at which with performance opportunities by increased $XXX modernization the in driven been contribution in XX% an organic the revenues, closed which of represented government our clients, X-month together Year-to-date, our ITG at of This contracts to X.X% on horizon. of closely won have our

are In our of billion we more currently where qualifications working chances combined than fact, markedly our winning. together believe that of $X.X improve we opportunities on

market this and IT and growth in modernization be strong Our that will the year-to-date us a combined strength for the ITG us forward. give in ICF modernization of pipelines going confidence wins IT driver

disaster growth funding. scale mid to operate to HUD-funded our Our our our the from ongoing our work at recovery COVID-XX, business previously management with country. minimal million state had mitigation range a with of of broad together state contract of across recovery opportunities of with portion has of the approximately discussed government The Rico and $XXX line FEMA-funded business with Puerto associated significant in-sourcing portion revenues reflecting in infrastructure-related expected there in and and expectations, a for local impact contract continues of execution and performed our long-term has in local impacts disaster XXXX disaster

small several be won ICF. have that we that mitigation, long-term for potential this a the important but to driver our to contracts area growth strategically respect confidence has support With

quarter, we recovery Carolina. with city noted disaster we As the have Columbia, mitigation of won last of contracts South Missouri the and state

are include local quantifying energy Canada U.S. with disasters. to to projects state and in Beach climate these well protect the large change. of resilience North as of future natural infrastructures water the analyzing working clients across benefits several and working utilities the on in increase storm of investments plans to their currently with and We from Miami largest and America resilience Examples utilities as

have submitted recovery awarded mitigation this funded be federally Florida, contracts should year. Texas we proposals disaster Additionally, later which on in larger and

declined there and conferences pandemic, year-on-year for in events COVID-XX caused revenue the the which affected the by meetings as such government it before first in Commission were citizen U.S. engagement large delays impacted Europe quarter the International as European

With of Our portion minor business in showed accounted of tracking people’s conduct disruptions. has that markets relates but marketing desk energy commercial put work communications, This involves first X.X% reviews, engineering first center for work with entering only vast COVID-XX-related to of reporting. efficiency to reviews, due revenues majority XX% the desk respect hold energy efficiency, energy key and on quarter, to COVID-XX, field call been work. growth. application homes grew ICF’s processing, to energy and responses, audits quarter rebate total the the on programs areas IT in group is and year-on-year work this All

effective virtual been who as working of crisis, photo a and and portions their have During inspections have to priority. programs field These transitioning account as continuation closely virtual such video our COVID-XX high with the responses by of utility clients received our audits, utility virtualize been well using management. customer-facing clients work, we see to our

than travel for revenue we expect lower less revenue, verticals, to Our COVID-XX. to continue service including experience accounts of and it business across key XX% and our to commercial several due marketing comparisons retail total hospitality,

platform. recently to in sensitive A industry-leading have our are taken our reduce expenses these We of impacts. key that actions is to most areas considerably component business loyalty

throughout expect clients that with most our and will this continue retainer loyal engagement prioritize long-term We contracts period. to have customers our

single In that estimate is marketing commercial revenues vertical our million, government continue the Additionally, clients for events approximately on this COVID-XX cancellations we business, representing largest international impact see we quarter the to postponed in our and in growth clients. marketing commercial total, was in increase our $X primarily service healthcare first area as business and program budgets.

post Importantly, and we domain than in public government the disaster believe on by short-term revenue be which in increased and to medium- subject past more our offset the ICF to government agencies all experienced public long-term federal vehicles of and multiyear periods to believe matter and key spending, on COVID-XX. us civilian impact contract from in has U.S. from economy programs infrastructure, significant knowledge spending has stimulus expertise. areas health to growth can health, benefit we recovery positions resilience, COVID-XX during ICF the the that double-digit our deep strengthen infrastructure opportunities related stimulate business

see to for of Control additional pandemic We syndromic allowing COVID-XX, coordinate early opportunities multiple recovery, key the virus Recently, the arena, better we COVID-XX and health response position for surveillance vehicles agencies the contract we ahead to like crisis. provide Centers Disease health, are would program Prevention’s into still public highlights involved additional nexus our CDC in involves ICF’s the responses. identify unique public the the handling disaster and management. Program. of this the and COVID-XX-related In and at insight has I for Now, ICF. BioSense innings received of global analytics hotspots activities funding the the in in spread and This support in ICF all tracking of

health related also provide to to COVID-XX. working on public are We messaging two small projects

through additional as the this support well. of continuing to Department as COVID-XX expect And Services to TRACIE. are and and Technical for Exchange, Additionally, Assistance preparedness Center we its and Health program project Resources, we with Information a for its funding response activities known Human

available We For further The National emergency under will and support and and local in to believe activated they treatment types to in the that physicians the be on-call that under coming Public ICF for eligible for to up Stafford and parts governments, reimbursement. for Emergency of months. declaration $XX these by HHS Health, billion website healthcare Institutes of FEMA the Assistance there support guidelines be identify includes will states and contracts the apply state of projects as which to support its Several seek would CDC up have Act made on Program. a use and activities FEMA maintain coronavirus-related opportunities provides Act funding other stood COVID-XX designed, ICF’s providers. National

Assistant developing a HHS Longer business within Response systems quarter, Secretary the domestically believe meantime, this of and and term, for Assistance to we exceptionally federal, over In expect will ICF HHS including levels. countries. the incidence well-qualified and and supporting disease billion increase infectious a through of year-end Program. in surveillance modernization, preparedness to the both end that robust pipeline considerable see experienced and representing XXXX priority we the response USAID Preparedness a FEMA’s and be is the $X.X this in internationally local continue we X% Also, analytics, in that both disease first programs IT Public to reached at advanced have the through and levels reduce that area, increase the development and a at activities state

from First up rate turnover million, $XXX quarter quarter. year’s XX.X%. quarter XX% ICF’s were was last first awards first contract Also,

call I a Bettina quarter financial will provide our over the further first turn Welsh to Bettina? to CFO, now review.

Bettina Welsh

Officer. my everyone. of afternoon, call join first Thank on ICF’s for as on quarter I company’s more Financial Good XXXX. to will I the share you, financial John. pleased first the am performance details Chief earnings you

representing Total $XXX.X revenue X% million, was year-over-year increase.

increased in by quarter. the points XXXX declined XX.X% year our $XXX.X XX in was last million over however, million $X.X amounted million. expectation revenue to on February. estimate in M&A primarily million on line and at to and for the represented the costs. we million or points X% total just increased X% last impact $XXX.X $XXX.X we revenue, quarter Gross year-end million mentioned, XX.X%. of or first expenses first X.X% Pass-through The revenue XXX to the call related of charges shared COVID-XX John revenue and margin with in quarter. basis first quarter This results severance to to revenue. selling total basis Indirect of XX.X% XX.X% year. $XXX.X expense was increase above revenue, driven profit special approximately X.X% year-on-year the Gross revenue of to compared of increased total As to Service ago $X total from year’s

charges drivers special million the revenue service XX.X% of I the to ago special income to due to compared compared of quarter quarter. of of mentioned million $XX.X acquisition the XX.X%. $XX.X a Adjusted EBITDA, the were first first million, the $XX.X intangibles lower $X.X quarter The for below last ITG in quarter depreciation was charges, this and $XX.X increase million in and amortization in EBITDA million year’s just $XX.X operating million major XXXX. which margin excludes in was first first this $XX – Adjusted EBITDA was year’s on million. in the year

result ago rate Net XX.X% or of million, Our diluted occurs in special each compensation, a income benefit the $XX.X $X.XX XXXX to tax charges above. to quarter quarter $X.XX compared quarter, year the diluted of largely from This the quarter relative in first inclusive compared tax or vesting in increased of was $XX.X which per the was per $X.XX noted XX.X% first year. of in XXXX. equity million for share, share the to as

available had Non-GAAP special charges a the was XXXX. $XXX.X the end in intangibles, we the providing $X.XX impact flexibility. of of mentioned of March, compared diluted $X.XX the of financial EPS, amortization to substantial million At excludes previously us quarter with which first reported liquidity, of and

ratio net expect was to leverage March of bank at we bank a approximately the end with ratio X.XX end X.X. and leverage of year the Our

to in of XXXX. sales were range first DSOs for days the the our and XX year quarter, first versus compared in for approximately million, operations, to XX% operating first XX cash similar cash quarter Based outstanding flow ahead to cash days the at collections, the days of to $XX.X the XX XXXX. we full By the Days year-end, trends. of be reflecting last XXXX. be year we pace flow XX end XX of quarter on anticipate estimate of In million to we used expected seasonal XXXX $XXX of

Our of capital our $X.X expenditures XXXX were compared the intellectual investments mainly to of in quarter property. million related facilities $X.X in to and million the infrastructure first first XXXX, quarter in

through capital $XX are capital we For the to million forecast evaluate to the priorities range full year. our we of will lowering of year, to the $XX million, continue our and a remainder expenditure expenditures

million. be depreciation we Full million and For $XX.X average approximately be to diluted XX.X modeling million Amortization weighted and shares be million purposes, $XX amortization the we tax million. from XX.X% year approximately range XXXX. of $XX.X And year in of to intangibles full expense expect should rate expense million should the to to anticipate interest for of fully $XX.X year the $XX.X full XXXX. for range approximately

closing will call I turn John back to that, the remarks. With for his

John Wasson

Thank you, Bettina.

great business conditions that revenues our derived from the clients our as to government and under Given view contracts, we long-term of majority utility continue stable.

conditions government our services noted and by of likely clients As will impact COVID-XX across decision-making in European client our economic caused delays continue earlier, are marketing set. uncertain pandemic events be for to commercial business. survey work parts to There and the our

the reflect As more full guidance of similar revised and backlog second normalized business last assumptions to align a year. with XXXX result, those our The have progressive underlying in conditions half anticipate results of to return we the guidance year. to year our a

revenue X% relate businesses due to in commercial our to projections year-on-year marketing COVID-XX. initial from and approximately lower reduction primarily The XXXX of international of expectations government performance revenue our

state our and to any COVID-XX associated in expect utility-related included impacts or U.S. half opportunities businesses state opportunities federal, new continue second in stimulus our revenues pipeline our U.S. from in mitigation Federal-funded opportunities material the with Texas and does cadence and pipeline electric minimal in our or XXXX, management pandemic in guidance Rico, implementation disaster of year-to-date a the local at which We not Puerto year assume efficiency COVID-XX. will This California. similar energy funding,

share, GAAP ahead expected is to diluted Specifically, to range $X.XX, non-GAAP Operating and $X.XX from per million diluted to the in billion $XX.X $X.XXX million million. range $XXX $X.XX. the significantly exclusive to special and $XXX now of projected billion, $X.XX EBITDA to of the is flow is earnings be range to last of in revenue to range expected from be to EPS charges, $X.XXX $XXX of generated cash approximately year. million,

recession-resistant substantial development strong pipeline. ICF these backlog, a unprecedented sum and is mix, navigating revenue To sheet up, times a balance with business record a

key confidence comprised culture, More are have about culture we a passionate service. a storm, where client relevant. of me an company growth importantly, our the driver stronger their more domain an This dedicated not will ICF far but becomes who civilian work and emerge gives strong and as in weather of thus our even that environment been people will to has expertise only ever

it safe. for With With that, questions. that, we certainly family your operator, wish I’ll open you stay and up

Operator

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

Tobey Sommer

Thank area bit assume guidance on if such? impact as you the the little probably since services that and business, was company likely do by marketing a you. could wondering I what the elaborate the to be the you most impacted your is inside COVID is

John Wasson

Thanks Tobey. question. the for Sure,

the So business certainly, significant the COVID-XX the crisis. seeing marketing impacts from most is commercial

so in about we And for there. business to so I would assumption XX% for year say are now that down be to planning it north of our you guidance the and underlying this that’s

Tobey Sommer

guidance, – of potential in to you in and maybe ask materiality that the which ‘XX and have most terms you the the for growth could could opportunities drive longer I included if could aren’t in us that Thanks. potential kind bucket largest most impact largest the term? of And contract tell

John Wasson

Sure.

health are remarks, I Obviously, my were for in So in I think of that XXXX for potential as into of guidance think growth beyond. we a public mean, I midst have we of said crisis. there areas significant and not and XXXX are number our in factored the I main growth areas opening the

As clients. I of looking are laid out a in my we for different remarks, variety federal

to laid I remarks. think HHS, broader that have responding that again I to USAID. work And NIH, will We roles existing I we the in out are to that, into through think CDC, of time, key my ups seeing that could there we that over FEMA will in prices to work be plus and second parts related as from that XXXX. expect for we place of I have and contracts half we to say funding in get COVID-XX to additional

the think stimulus that declared there ups can I so this on easily additional there. us under and for And emergency certainly emergency and potential the the that’s clients and emergency year I public been the place put from funding they reach health can pandemic think plus as the are national access funding, or those areas is

think look potential given the half could additional are second provides the and focus as the the I public in think opportunities of budget beyond the the in effort year of that, So stimulus those you magnitude growth committed. that growth. have very that then where provide dollars areas significant And arena I the and been funding health

work. we’ve turn mitigation-related And so if talking some for time you been the disaster recovery, then about to

front, We drive potential that XXXX those that of the Florida. We upside. beyond. in year have second awards growth those very that see submitting certainly the proposals are opportunities on could you in large on in and as again, And both been know, Texas could half have and

I think third a that the really could the XXXX is California I beyond. the of the will think think be by which significant awards is material. that opportunities, for energy they I bucket efficiency don’t we driver year. end see and growth area

Tobey Sommer

and question a the make contract me, Rico, talked the time you for Texas, broad in Can Florida larger including for lines, last You about etcetera? about pace particularly but mitigation? comment, programs, Puerto awards of

John Wasson

think I second decisions. terms see in next will certainly front, awards those Texas continue half mitigation award year. Sure. to And that the expect on proposal year the early and in I of we Florida of into mean, opportunities the and in

As of had work. Rico They for are some programs. has approval you mitigation-related still Puerto funding their waiting, know, significant on

RFPs, think are – expecting in the half later second see those awards those the I still so to And we year. of

and XXXX for will those more think material beyond. I be

we look mitigation I forward. as think so we And the see opportunities that’s how

Tobey Sommer

in queue. I the you. thank Okay, get back will

Operator

you. Thank

our Joseph next Vafi with question from have Canaccord. We

Joseph Vafi

role, just the kind color you assumptions, into you economy on if that? wondering that on for modest was guidance, more said but you the and recovery more welcome a of And afternoon built kind have on you bit a the follow-ups. year, Good the new guidance trajectory have I guys. during I and think are go you in if then couple the Bettina a are little I mean – looking of I just congratulations. Hi, detail could of of a little

John Wasson

Sure.

of we opening have in I marketing to each I core I at our guidance on COVID-XX. the focused as as taken government portions we’re and going primary where I we of remarks, impacts going our obviously the think significant were international to the see of from our forward. see assumed continue the a that’s continued think to go my that And impacts. that think assumed and hard markets. impacts markets, And which have events we’re mean, our And to see I we’ll minor remainder look services pace, we’ve described surveys. most have commercial we

level, that’s we out through high I and we’ll And generally plays just you at remind we’re think how so similar end about we to we’ve you, QX assuming I would see I the QX QX the as the then throughout of the QX, seen that would improvements QX. closed be will acquisition at as and sequential QX move January. a say it and year, how that ITG that guidance. think

of in QX, So there QX. were revenues get we’ll obviously full X-months ITG in X-months

marketing similar, be and sequential expect And offset that’s in a improvement international QX. QX and impacts and why QX And commercial of down the to so but the from QX government. similar bit, to month expect we services we’ll that some do extra in QX will

Joseph Vafi

on as kind awards, situation funding Just on on any just at it usual COVID business due following helpful. kind seen point? the contract side? fundings that’s to And of you change up the have contract or on Okay, is relatively question Tobey’s of this

John Wasson

and utilities activity. I proposal would as was business had strong usual, federal We say government it our obviously COVID the on across a Much it’s business impact. of both our before and awards QX.

across hospitality, seen commercial pace. business, we support RFP crisis, the retail and travel in work clients the stretch that most So and impacted or out general, in to continues obviously, would cancel – particularly including by rest But of tourism. area, that the the in services we’ve verticals the and you that are awards activity marketing this

Joseph Vafi

Any activity Okay, in probably little versus that’s on months forward helpful. of already in kind very And then it’s higher when you some of there that conveyed pipe signed while. what a there here been when incremental just they a house Thanks came the one us ITG, business on maybe deal few looking contract was like It thoughts on sounds the that kind to was now? was for much. level obviously board. a back

John Wasson

of relationships suite able take opportunities improving clients broader we cultural clients broader by our I giving ITG, and I continuously. this strong terrific market company and continue think we high-quality Joe, brought good our of as be new was partnerships we deep growth be together thought bringing we independent here our people, pleasing growth revenue to when suite are collective say, track it’s domain forward capability, our that that record to and identifying you our very our win and was had across contract the growth that for clients. had first-rate a would When advantage enjoyed market strategic will into think their them a And come put to that, terrific a of Sure. that and that ITG a ITG synergistic I pipelines going company a going a certainly robust an acquired double-digit a obviously, it’s us, and opportunities that it rates, that since together significant for a believe fit, of our with And broad revenue expertise civilian company. market firm, good they’ve mix fit. civilian capabilities,

it’s I to of we mean, believe synergistic driver, met We key begun to expectations. our And already this have some opportunities. say going is capture a would the that be so I fully growth

in long-term up acquisition really and remain a we the arena. again, quite the IT in when still very I’ve growth discussed a And acquisition, realm so I us for us be real in innings for arena, run modernization as that this think the terrific we set confident the announced early we’re which, federal of modernization federal and to IT is home the going in

so there’s opportunity we And there. think terrific

Joseph Vafi

Thanks, John. Great.

Operator

you. Thank

We from Nicholas Andrew have our next Blair. with question William

Andrew Nicholas

you taken point? was I afternoon. you’ve what’s color cost good for this actions add actions more of at a in Hi, could terms hoping Also, and the to embedded size bit those type of about your revised guidance? comments cost take should can your And marketing back you to currently make other and then optionality a bounce longer than you in any bit services structure international expect?

John Wasson

Sure.

of first, So taken, actions the a people in terms we’ve obviously, we’re business. in

as come to we’re looking the we firm. revenues Obviously, As become of manage to look the them down, in carefully. business cost our across staff available, redeploy portfolio

opportunities communications, and for taking technology marketing markets staff in business. government looking folks and of aspects we also our in redeploy commercial broader our will in So and

have transferring We our it’s technology the IT then folks in made technology using modernization of – progress cost. actually in managing some marketing commercial and about And business. government our

where their time actions admittedly a some Europe in have of put $XX,XXX work months of as their staff We’ve XX% in and for governments furlough they programs is we’ve are to furlough limit, $XX,XXX governments on or has some North up on X can which European furlough those furlough Europe. while use both will pay taken also year, paid they’ll down up – but staff programs, salary, the to use you to Europe. America in place and in we our so off. slowed – taken And have put implemented

perspective entertainment are our of and indirect We’ve those traveling down costs we from steps so of present types an staff. to taken terms actions. of taken Obviously, hiring in travel also limit have time. new significantly folks not the indirect at And

general. We’re in monitoring recruiting carefully

cost around we we a see are to number if to which the have additional staff our manage in levers so the At how them. of we can And of certainly business. manage deploy levers have that impacts pull end our And and pulled the we day, we’ve costs, date. to we additional the largely

impacted cost leaning monitoring very from on that that if management would markets forward Bettina, in I add are else don’t that And touched carefully, haven’t there’s the so standpoint we’re front. carefully anything are know, I on? key and a you that

Bettina Welsh

No.

use a the space business. you lean mentioned, I the as we’re only in aspect would use people other our of I IT. I of just leveraging, evaluating think mean, it’s was on CapEx,

of revenue full still those redirecting slowing many, John the as needed. down But taken and the many we needs has advantage So flowing in forward. where mentioned, have that taking area back we going our more down we’ve few actions, gone our pocket monitor a as of as and are we’re and business in

Andrew Nicholas

trying the than Thank some economic we Just terms is understand currently the you. an little question. in your Thank of there? maybe year, how potential a updated a to, helpful. if to back and lockdown again, answered the in or what you’re up maybe some I this other second any bit maybe to about cadence of of and response in longer of one, recovery ramp commercial Great. restrictions you. And then what marketing when growth thinking provide think travel another of guidance expect? can take you bit you and to back measures earlier That’s thinking half But I’m about kind the international detail of the the is downside bounce there

John Wasson

assuming in business that assuming this there say say verticals have would as are there QX, would and that marketing not will think crisis, our time. for the been those it XX% I Yes. – impacted I say, we’re in as are vertical. that down – that by be improvement be over healthcare that growing, I I modest think very a into at we’re particularly I of commercial arena, see the north year. go we’re we’ll we I mean, business expecting to impacts

in that impacts, of of those bottom verticals And it extent terms area, of mean that in the the I least will modest when to trough growth it’s the that modest are in modest I so verticals by impacted. And we’re the say showing be are driven because that impacted. growth least

business European modeling think think we QX. until modest the see I QX trough assumption business, into and I we’ll events-related reach is, the the we’re impacts impacts. again, On later don’t our get in on

we’ll year. in of I the think improvement quarter third see just an it’s businesses those this in unlikely

I kind thinking year. this how think for we’re So that’s of about it

Andrew Nicholas

having questions. Perfect. taken for Thanks my

Operator

Thank you.

from next with Research. Our Barrington Kevin question Steinke is

Kevin Steinke

afternoon. crisis, it’s I the the mind, about federal at to buckets, When mid- government’s different opportunities you’re my business make want least Hello, in good from emerging sounds almost segmented correct. into to it to talking three like the for to sure COVID-XX long-term that have I response me, your

the also opportunities am about driving spending, preparedness about and driver, supporting opportunities You response there? of third, talked potentially way And then so and spending in of the funding, the then I Stafford FEMA right HHS? have – health continue thinking size stimulus you about growth each and those talk CDC and opportunities and maybe the which could and right you public way that to a potential potential Act

John Wasson

I infrastructure, more of resilience, potential think the about pandemics emergency agree, in both say future stimulus those to I Well, would as they sure, I potential that’s think stimulus in – the mean, significant hit also Then public from arena national key disaster and going general, broadly. the opportunities, potential fall pandemic I forward. topic been There’s you’ve in opportunities. pandemics then would public recovery. the there’s and on of There’s I emergency I about certainly health kind funding response we as a conversation, and going opportunities in health think, think as package. forward, Stafford said, you the on the think buckets issues, Act you

I significant, Kevin. think be can quite the opportunities

to national billion been know, Stafford here. from funding. significant the in the Act, very public $XX trillion emergency there mean, around $X.X stimulus there’s committed to individual in I have funding billion goes there’s disaster resources around public health, initial recovery – material companies, legislation also that Americans you amount pandemic $X there in and but As support the under there’s going was also a and be to health significant of direct for to issues. Admittedly,

for kind And could hard to the I to here. mean hard so it on little a I significant it’s dollars be quite me think of involved. put me opportunities – it’s for pull bounds

crises, benefited has ICF that financial has the in crises, here. I X-years. With where Administration, would stimulus periods supported X-years early impact other would think were it’s government economy, there the – the events and a been X-years economic stimulus material very ICF before, to Obviously, in that that. for again in arena. federal grew still crisis, done, I financial as prior in the stimulate double-digit game there’s has made programs just I that in I’ve for the to response significant funding, and around or Obama discussed reiterate

that in a think plan Administration. stimulus billion the I $XXX Obama was

come. $X with to here have trillion We more

say I And very so do I think opportunity significant what here. there guess I would is, is

growth to be a becomes make the clients of pandemics our I bring where people rethink can address think and public of in for good significant of bills We experience in response there’s think fundamental be – combat we just place our future. already response in And intelligence prepared and think there saw our across for across think civilian I help terrorism could passion medium term. around play we’re put going make that it’s across If that markets. in public significant there’s that. been a to here part X/XX, forward introduced to that I how and resources long expertise front. I of package, health our we these to could and in the also us recovery of an a Congress. chance was reevaluation issues there’ll terms in opportunity that similar to to after types difference community in of resilience, And sure drive health, on stimulus many a sweet the domain I these our and our lot reinvent spot disaster that to areas would to it of a think bring expertise, the

Kevin Steinke

helpful. follow-up Okay. to as And that. a That’s just

be So but sounds the could correct? for that’s that think you like just general just also but not tied to stimulating infrastructure, it stimulating pandemic not necessarily the there pandemic opportunities response, etcetera on you the economy, related, more response, spending just economy, is to

John Wasson

of recovery – it’s obviously, disaster of I health has a part go the Well, I Obviously, I correct. stimulus activities. think for and is gone public it’s funding it public pandemics think will – mean health-related I for will portion think too.

opportunities some As around Congress think is discussion I said, in there I infrastructure now.

I have you more? know, future, in think might don’t you mean, add want what’s committed us. based could I I think I on with align come Sudhakar, on what some been nicely any additional could this. and so those And if perspective the to

Sudhakar Kesavan

Yes.

I think John. all, it that you’ve said

recall doing there we some act. well – a energy that with the think were past, would did when think work we as the the work I if in resilience sector as And is, American Recovery – all certainly, and in Funding, lot the the ARRA Reinvestment that associated of I Act.

And think significant that been we think think between that. about by on I that and I similar is there forth significant and administration current there, that conversation upside front a administration, there that. I see So if back but Congress movement hopefully the I think is the will there on that has

as see, for we’ll infrastructure a be going I just amount So is but to be there a wait have included. think or and that significant care program do committed to will

John Wasson

mean, $XX – can I that, I again, I I NIH just specific at underway for in million have $X broadly in our of work I opening we HHS. guess, talked at million to more projects CDC are to several Maybe and remarks those have also years. And the Yes. want add. I CDC range the about in over range is the of reiterate of and just several BioSense efforts

over for it’s years million contract Our to NIH work think in build on COVID-XX, X-years. websites X- – a on helping response or $XX building I

have USAID us say potentially that Africa And again, and involved public there is about, the that markets, in that – for And work certainly around pulsed I begun will some rates I additional monitoring countries material also can I developing up. be disease are those so do and so areas on opportunities, be messaging, are think health would in in we international in working those calculating there’s other on or talked of in opportunities COVID-XX.

give out of that be could I there we year do. work there are the of are perspective want as about – should there think opportunities the clients our so they as and to – so you out kinds And of some think that additional in the half second

certainly we the the second vehicles are is have I in with clients. have us we just these for here in the we’ve place year, of think there half with work – the clients there leveraging done reputation and and those upside

Sudhakar Kesavan

just would Yes. to as has add I said. John what just

some the and about of the You’ve used by the etcetera, COBOL. discussions are by which seen government, systems in federal written – unemployment states systems

So significant do of local I of very think, part IT federal is forward because is the in that’s sort I become the of to and potentially a which think of issue whole infrastructure going IT governments, place. idea going modernization, state also

is that why that good us place So infrastructure we ITG in on front, puts the think too. that acquisition

Kevin Steinke

great. you taking questions. Thank Okay, my for

Operator

have our with next Marc question Riddick Company. Instructions] & We Sidoti [Operator from

Marc Riddick

first I time. company, great guess pandemic. joins Bettina, the welcome. the it’s during not So Most a of is a CFO of time a this all when

have difficulty a favor. So you degree in high of your

if be could prior state you your little if government to if follow-up was So or you some and modernization, but little things of could welcome. bit? you’ve where was to guess, – I a is several talking the were that on time was trying a the weeks talk there on sort you bit just tested local anecdotal, sort thoughts maybe I I And because already of last federal this over congratulations, and do I just already versus IT experienced wondering been now touch wondering would was on confirm acquisition? are I what have that suppose, that maybe or either maybe about, I curious, to said about stress little thought? bit – want let spend me what if out figure and that learnings changed I’m there a you

John Wasson

given there. the level, and state few to would through speed many size the funding add – to stimulus I of mean, COBOL, provide program, the significantly which unfortunately those I Sudhakar said. what Maybe mean, federal I but and and to it’s also systems trying level, this the I been I stressed money be and the local businesses I’ll or at to early I systems scope been get start to point, think innings, either other off the in and then, obviously, just mean, to Sudhakar, think And think small And words. to say the recently, need these federal out in really at is a ancient particularly systems still grants with that Americans. modernized. if you are, by government I working has languages, languages Sudhakar’s individual still have want

unemployment federal for of I and need many points these in that when the seen to It And and local funds so – that insurance to the been have and other focus, Americans so or I do modernization a think IRS the modernization. state getting to programs. just potential kind opportunities it think of quickly, money whether be business outdated challenges certainly And through systems through can out are and modernization. or it’s and in only IT of good some in-fill small IT

you’d want And that’s to so so I how see I Sudhakar, would it. that? – if don’t know, add think I anything on

Sudhakar Kesavan

I would the on high. currently. running the I’ve state there’s trying that emphasis be that federal amortization running end whatever. significant for knows No, that of subsequent I going be to X/X government said the I to bill systems modernized that been X/X put only mean think legacy the the do think think has of systems modernize that very would to because is is to Everyone what cost it –

B A think place. have taken quicker that, think I to So this situation And from gives whole issue. State making happens a would that hadn’t been this the sure it getting if State fillet has I than to

John Wasson

work in at a week were that the has COVID-XX have Group across on them history modernization. two say pleased issues, IT of won or which working had win so work their HHS on of our and also last many we piece But to ITG small HHS other working would just programs. first I

think into there – capabilities into NIH places. those those and and out take obviously I – more take So CDC opportunities deeply and other also can we

Marc Riddick

Okay, great.

more. I’ve only So two got

be will easy. this So

update were process on and I bit a you could now was efficiency And seeing going and more just bit that what that. the you pace The first that? you what has wanted little energy detail maybe changed of follow-up maybe is, taking kind see in California, whether on I you you’re have to give there. after just versus one you’re on or touch then what place little relative if touched – wondering seeing to there not what’s around And or touch can to a of the last you one I thought

John Wasson

Sure. would as that California playing I we out is say expected.

we expected come, bids think and front. year. as time, very busy And becoming are RFP on which we later oriented, I forthcoming. more more they’re seeing been this statewide get the we increasingly over larger into We’ve

As selection process. you know, a it’s X-stage

stage. our with the to second get pleased quite ability to We’re

on working We’re proposals. hard

I half start to see second the think to of the do year. we in awards expect

driver us. say so that I remains And would a again, strong growth for potential

slowdown We’re haven’t very we busy weeks. those or as good the I any transpiring. and generally – X how seen And we delay California in in feeling really activities in last about said, haven’t X that’s to

Marc Riddick

Again, I thought general as that anecdotal, wondering was place commercial understand maybe to moment. if switch back differ thought share then in detail doing. of either additional, if with be process get from reengage to on a but planned last was those you’re that And the may may great. – wondering to so wondering for I far term process may in is near seeing delaying the a but as And for I with how Okay, me, to how if there? you can what they can on they’re and or sense I things anything already maybe be more an you not you very I you? as it anecdotal, to that get customers guess, delay that what what give maybe of you what for want just just as have a what or bit their executing had could just they programs maybe you’re the be seeing thing if customers already little wondering commercial a

John Wasson

our by in numbers, with about Yes, of verticals XX% that is services highly half say to in that business and amount in about COVID-XX. talked verticals I about would is has is that commercial calls. guess, talking total in I I – I’m revenues. would business again, back what but of have marketing that round that I I been mean, of come half been you impacted our about prior

lot talking say travel and I on had to of those of the the stretch there, long-term hotel significant out end retail effort. And to their are hold. chains, absolutely discussions out And an impacts. is the recognize been have from remind done primarily and for stretch would A XX% loyalty just of looking have you, so is would and asked reduction But overall are loyal where reduce loyalty seeing coming business day, that that’s also that clients at industry-leading we that. there’s essential assignments and are So tourism, – part we’re viability. or assignments their do most hospitality, platform, to putting work organizations. with of part of we’ve customers They impact, that them. They for certainly the which hospitality is I that the is level clients. platforms certainly from. business

that think And we sure I we of be leveraging we those very other difficult so they’re they’ll people on so make they’re working the keep side leverage that when core this, and these stay partnership with them engaged them to frankly, with of the now in And get and times. able in set us them. to have programs even

those tourism, but do still backlog. clients and travel across way, have similar with They’ve working are a in cut and – we’re budgets, so And retail, us. we again,

to engaged. core to staff, We’ve workload pay them. very which has difficult there. had We furlough off time reduce and We’ve had to teams our been move have

protect I for company, to we’ve and can managing have effectively. business sure the about, out trying is particularly really have that core, continue are we keep us, term maintain – can and so a in leaning that it for we recognize And the them. forward work with the where we the us clients core, backside long been there that clients make our the and core come to capability on we work there also manage business and so – think we but that managing to with

have as The other not services, marketing been portion said that impacted. verticals I in as are of

some we serve. seeing health, in of growth technology the the We are commercial clients

And so we’re managing carefully. the business

with maintain We’re I core. work think opportunity and capabilities run, value with core the this clients someday. return a our have a the it to set to we will trying with see, come growth align will, business in we’ll peer out that long of of And to

very We’re carefully. managing it

I there. our story around a European activities, business in think events-related impacts it’s similar our

businesses. with XX% best Europe events-related these we’re down can. managing in are We we associated Again, as overall,

clients programs. you work European these and side We’re our work the commercial of government work so Commission in we’re using and it partnership our us to UK the tried do I some to the in the in as for best while worked ask with for try they related clients tell as to furlough again, also the long really would have on primary can. client events business And we the We can. then have we make want think protect to best as or managing run, these these core, cuts managing the cuts. as that we

Marc Riddick

Okay.

got on you was headcount more. of last update potential wondering one far if consultants, I the bit one new that’s as just So as like recruiting, could I for things me. that give and an a

John Wasson

recruiting. I so Sure. our mean, parts we we of are I are broadly think more – I business mean, there growing.

business quarter, demonstrated our I been growing. I in we has first think the mean, as federal

we have government effectively quarter. to to And modernization, arena, virtually. grew in certainly for continue clients. business think – nicely hire have energy I recruit quite doing folks And transitioned in IT the We continue engagement so energy to in public first we for Our then and the that health markets. recruit we in

virtually of competency, think as we out. we’ve maintain we’ll period, be forward. staff, one staff to I want figure core identifying this that’s on-boarding And go the things interviewing, in to So I think had a we’ll

your point, flat I the our as headcount. staffing mean, essentially I think, is I follow And year think now said, on does so guidance this for I think to the I revenue.

actually through areas where not I We we need we’ve terms six is in in virtually and five have the to we’re way more of of growing focused quite some or long come that So the on approaches we’ve I growing. our But where to managing we’re out. weeks recruiting markets our recruit that and add think a staff are on been onboard ability recruiting the obviously working laid front.

Marc Riddick

Thank you much. very great. Okay,

Operator

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

John Wasson

for look well. forward upcoming Thank at safe you participating Stay thank meetings with We Well, be to you conferences. and today’s in you. engaging and call.

Operator

This your ladies We concludes now you, you Thank gentlemen. conference. for and disconnect. may you thank today’s and participation

ICF International (ICFI) 10 May 202020 Q1 Earnings call transcript