ICFI - Earnings call transcript Q2 2020

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Operator

Welcome to the ICF International Second Quarter 2020 Earnings Conference Call. My name is Vanessa and I will be your operator for today’s call. [Operator Instructions] Please note this conference is being recorded on Tuesday, August 4, 2020 and cannot be reproduced or rebroadcast without permission from the company. And now, I would like to turn the program over to Lynn Morgen of Advisory Partners. Please go ahead.

Lynn Morgen

Vanessa. you, Thank and ICF’s everyone for us joining Good quarter thank XXXX review second performance. to afternoon, you Hosting the call CEO today are John Wasson, Welsh, and ICF’s CFO. Bettina President and

of Chairman Joining James Kesavan, are Executive them Morgan, Sudhakar Chief Business Operations. and

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

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

John Wasson

which considerable discuss Thank and the business with you, thank for and all us the outlook year-on-year in review performance in performed were represents strong revenue, Lynn ICF’s work as our the results reflected quarter sequential heading quarter, you to into year. of it second second pleased by half joining ICF We and our very service second employees. the growth

substantially quarter These and in XXXX resilience this and diversified lower ability levels. lower were million total below and decline which revenues, metrics, million quickly ago quarter quarter favorable tied and than lower GAAP first EBITDA. strong business growth $XX achieved higher with was to business the EPS, of strong in year-on-year energy sequential very mitigated profitability $XX first of address non-GAAP also and comparable year-on-year business EPS levels. driving increased by and each which the model quarter federal the sequential changing EBITDA, conditions. year businesses, was including year’s demonstrate revenue utilization, to revenues ICF’s mix, our in comparisons to Much key across pivot commercial higher results of We This government costs second reduction pass-through in G&A over our

with learned first-rate revenue service efficiently ICF reduce quarter employees, were a facility use in we in the second environment, to Second clients profitability a learnings more where work a our both remotely, actions year-over-year business, to to has will expenses. taken reflected meet post-COVID-XX quarter in our organic execution working closely who by to and operate as above world, strong we the these their ITG to needs Revenue due acquisition. performance have expectations particularly respect XX% to and physically federal growth revenue to while organization distanced driven with the operate increase growth in leaner and was ICF travel costs. by and and

domain civilian from significant capabilities the deep become clearer that leverage relationships even bringing gained this now IT together of robust and and is expertise In modernization fact, ITG’s ICF’s complete. acquisition client fully the has integration

pairing matter knowledge. health, than more subject seen deep IT we initial public today our Nowhere our with where wins contract is qualifications apparent this some have modernization by in expanded

support as Human Information COVID-XX-related awarded our award task million the to clients, As assist would public. provide well the be largest care the Chief and professionals the of second to with effort, general quarter, of and the as in $XX design an technology the in were Also communicating to Under including this announced Centers Department programs. of client, data collecting for example, and recently implement important working federal Health services Office a framework emerging Officer Disease evaluate acceleration develop health public emerging we CDC and to we with to across Control. and health orders technologies a strategically we agency Services modern

all COVID recovery we of clients public at to the a Over vehicles health are that and the involved to the considerable positioned X X response reinvention. the phases the and to With pandemic: across agencies ICF increase in activities in key in uniquely and expect years, preparedness response, federal, of levels. is see local the next X handling contract crisis, assist state COVID

key recovery active IT that and As the with priority, response and work modernization the hospitals and and relationships responsibilities, workers. the that In disease expanded qualified structure with it in will of the will analytics agency public phase, our vaccines the we our make our ICF capabilities, reinvention and areas. health we assist believe spreads. of and government associated and and surveillance better to I issues, how currently roles just to of mentioned, care together governance analytics deep these expect modernization in including virus we national address phase, information to medical systems capacity expertise health be domain phase, are and uniquely the equipment, and reevaluate the organizational in In dissemination to stockpile understand current surveillance service need a

and in both in programs. the public supporting for USAID internationally, within for in to the all in health, arena and trend than Revenues business and expected. We recognized subject health anticipated domestically this of experienced management from local remainder public been than expertise is state and our less the disaster continue HHS for expect our years, have in-sourcing ICF thought We matter client clients of areas year. better leaders many came

this for responding and period. requests during are also to staff support new We

for result, million in expect to we for revenue a ICF fiscal over disaster in now $XXX As account XXXX. management

next expect in municipal active expecting ICF on funding should decided Puerto CDBG the and We we also QX, and half we by within the decisions additional associated the In continue RFPs to in Texas billion The mitigation for existing hurricanes. construction the are that of Rico work with additional clients either requirements. should projects, second procurements during $X.XX picked Rico state for the the remains Puerto our at during state work. that in RFPs majority that several under second we up clients more and management year. of believe state we quarter, generally, more led state the an mitigation years Rico new bids Puerto or early or term, disaster are near agency of our of market housing this in second additional several year. Also, Texas federally-funded with forthcoming state We will related and local is be Texas XXXX makes Mitigation Work the which the to work revenue infrastructure quarter, with less to XX funded years allocated a work additional what disaster be the plus contracts. for for opportunities CDBG more an quarter expect budgets year also mitigation management by and management great several either Program, the XXXX which support impacted resilient local stemming to much and we bonds is second saw levels. to into and there do handful from later related in HUD only award be

to of government conferences, for that of and the meetings Keep we face-to-face As decline in in revenue and that energy, COVID-related mind this support year-on-year resulting XX% market to transition. lockdowns of lower the continue represents climate consulting, we events, quarter, a Commission. with European the the expected, fees. influence earn international and work pass-through which surveys and strong result trended remains postponements as carbon minimal in second revenue and we Commission the clean European international deliver primarily in revenue, low programs on Project to work energy win

quickly closely this the costs once the our the have confidence business business, for also client managing to relationships are in COVID-XX concerns recede. We we potential strength of and and in turn

which for by to XX.X% apace, efficiency business, clients utility utilities QX working Work revenues our the primarily remotely. on as X.X%. increasing for energy most in we’ve handle well commercial the Our quarter, to of and continued revenues, while works able programs been continued with perform elements second energy programs represented of

largely During virtual have programs in their work, effective driven a portions we transaction support our priority. the storage and management. to our and video account inspections services working saw significant customer-facing COVID-XX utility of a crisis, communication utility significant pickup clients second by the in received as as photo activity, business virtual of renewables, been see asset with field well and development. by high These responses have where using been to advisory closely we audits, clients who We energy such markets provided transitioning to quarter, gas virtualize our our

evolve grid. the programs as states the programs resources efficiency. on utility resources we’re energy future address energy distributed on the We traditional distributed business consulting Our impact utility and into believe implementation performed working can well partner of utilities that also beyond

later assisting resiliency been quarter our in the program this expect expected also pipeline have robust several forthcoming resiliency with is outsourcing energy drive and this energy to opportunities, with of the decisions to infrastructure. ended expansion energy year. be as of key a additional potential Commercial around of regulators to and particularly federal We attention state grow area California, efficiency planning utilities we the activities, and

of has ongoing our services COVID-XX, a tourism, programs. represented been we retainer work on loyalty marketing travel commercial for to retail in do revenues. Similar and of as clients quarter second and Lastly, result continue XX.X% but hospitality curtailed the

behalf increased on in remains activity our with clients, largest additional represents industry of budgets, Our vertical, resulting strong health assignments. which

marketing contract, the are under including health implementation, in advertising, example, second new strategy, integrated contracts won which plus clients, care support. communications several analytics and quarter, we and we with a million providing $XX For

we Serta Beds", our the proud program York anyone. from fighting client, and we for City very and medical ICF facilities work a are allowing Serta. quarter bed launched Next mattresses Send "Stay XX,XXX Home, hospitals in donations We did helped second early COVID-XX, New the donate to of

we ICF outlets $X.X with of accounting the Serta XXX billion campaign million agencies. government $X.X our modernization, winning to addition Approximately cloud-based of with this chance $X.X client NBC’s The impressions which ITG than with for second broad our greater quarter more in amount to in which a doing the expertise strong robust set, the diversified billion providing in earned IT are pipeline, billion. like show. Early domain In a good, reached across Business, federal and services to opportunities Fox government Today thanks about have $X federal this Forbes acquisition, and experience billion. record represents ended where pair a opportunities of media

work We also and utilities. energy for the in opportunities management pipeline for have disaster robust

awards Over aggregate contract QX supports our our our $XXX awards. notice of an of we strong growth X weeks, with prospects. past and the ICF’s which robust value included in have A with of million, together in future confidence be over recent expect awards we received backlog to notice pipeline

Now who call Bettina to over a of the CFO, I’ll the detailed turn quarter. our review Welsh, will Bettina? provide

Bettina Welsh

everyone. provide profitability Thank in was in areas. I quarter which compared of performance to several to the a John. year’s positive lower $XXX represented in on XX.X% the over afternoon, than first XX.X% and last key quarter. accounted financial year, revenue additional comparisons pass-through color company’s you, of revenue quarter Pass-through for pleased Total revenue Good strong XXXX, the million, lower as am year-on-year second second year last of result total revenue. primarily X.X% this improvements

hand, solid businesses. supported government revenue commercial million, by in other energy to our increased and service the $XXX.X X.X% federal On performance

we flat profit pass-through was margin to due the revenue, by XXX Gross recall, performed the ICF reflecting selling on and the second $XXX.X expanded activities. revenue represented earned XX% to than reduced lower quarter $XXX.X declined second quarter. revenue. total of margins. with may work lower million the to lower revenues Gross XX.X% to and on ago general is administrative quarter service profit you total expenses by Indirect other expenses As of million, travel mainly relatively X.X% in and however, points which employees. last the $XX.X million, year for tied This basis year, our

of million XX.X% $XX.X quarter $XX.X from Adjusted last from million second year. revenue, $XX.X improvement quarter. a XX% gross million slightly point million service XX.X% of percentage XXXX. as of from was XXX X.X% quarter charges, last at the last last declined $XX.X EBITDA revenue revenue EBITDA, first to EBITDA This increased $XX.X basis compared over a marked indirect first margin flat was quarter of was XXXX selling during reflective in of lower XX% ahead this up indirect XX million costs. in quarter, expenses includes of of year. adjusted and relatively year’s the the and $X.X to intangibles, Adjusted the and was income the primarily which of EBITDA As to Sequentially, Operating service an amortization of higher year ITG margin second million compared $X.X this related acquisition, completed on reported of to in to year. special EBITDA in the service which $XX.X was million January adjusted excludes year. million on percentage second increase of

year-end, reported special was from improvement. flow EPS, flow items operating collection $X.XX was share operating expense year per pleased $XXX in DSOs to in use of rate was second XX% We were supports activity. in a for by approximately This acquisition-related year’s which due slower-paying in the quarter XX of the XXXX. for higher XX full last This $XX.X half, of we cash cash in impacted second Year-to-date to was days. rate. $XX.X the performance sales activities ahead quarter quarter amortization $XX.X Days were of Puerto of year’s million million days diluted be cash intangibles XXXX. XXXX. quarter excluding share. compared were XXXX, of income XXXX. certain nondeductible to expectation a strong XX% and and operating and million $X.XX or to second of days, tax higher interest of XX $X.XX anticipate per to million flow Rico $XX.X first excludes to $X.XX $XX.X in to compared Our quarter million quarter quarter, impact of XX.X% respectively, days By range results in from second $X.XX XXXX. second $X.XX cash diluted was Non-GAAP the our our compared very compared primarily second XX generation contract, compares diluted XXXX or in representing the period the for to the outstanding or XX with derived of which charges, the XX days, million, a This tax of the Net

cash bank million, economic leverage at the we of X.XX, evaluate decision our environment, anticipate end $X down of Reflective year expect end to down Year-to-date with ratio were range guidance. now million. million of capital spending $XX and to $XX bank leverage $XX.X light we pay our flow to expenditures our approximately our a capital in ratio use from Our expenditures previous year to current X.X. full from June the of was million debt and this to

payable Our capital XXXX, quarterly remain funding and XX, record debt To end, allocation September of XXXX. priorities reduction of our per to dividend cash dividend. that October XX, a share, today, shareholders we $X.XX on on declared

closing to diluted for And $XX.X his XX.X shares million; purposes, million; million and fully John range full for amortization the of $XX.X remarks. expense no call expense the tax million. intangibles $XX than as back expectations XX.X%; follows: of between million; approximately $XX.X rate more with interest of depreciation year $XX.X our of XXXX in modeling For of amortization million to I and will turn weighted that, to are average

John Wasson

last sum year. first pleased quarter we this and with half current second are reaffirming performance key including up, showing XXXX full in a year the period our flow, visibility, of strong improvement to we second continued the we very same for expect in Thanks, half guidance Bettina. are the across Based compared year. our metrics, To had cash where on

to record ICF’s are knowledge revenue We a year support have subject around development with during economic financial ICF’s been period of These matter in entering half uncertainty. operate effectively long and strong ability recession-resistant backlog, the our attributes, with and this our culture. drivers, business substantial this differentiators a a second confidence together position. of pipeline

position the and in digital high-profile expertise in progress and and transformation efficiency further and in accelerated domain public management and modernization, in our beyond. growth agency of leadership health, IT areas and work, qualifications civilian XXXX for and mitigation energy disaster Our resilience, our ICF in XXXX advisory

are they now own progress and even report year, operating our domain questions. stronger and an values, our base. annual have employees; expertise, citizenship ago. not diversity emerge an diversity only and work for well appreciate will improve in economic central the the throughout like race-specific is our inclusion. driver leaner our communities and more passionate have below has second pandemic build Operator, the have environment focus this events, rate founding of their on In to efforts included and recent focused this continue diversity read. tenet ICF and corporate match issued equality, justice, given employee was step and dedication XX.X%, committed XX of time of values give as I citizen more redoubled to call our encourage the kinds. The issued we to donations In I about turnover also who which crisis. company us this during to comprised And the Our June, with public we far of a well all in our key where to in personnel taken icf.com. this become that ICF enhance to health on a as that hard relevant. employee our growth effort working the It’s as are to strong organizations transparency perform of and embracing And culture our diversity me to corporate work recently client month, but on has open service. company, inclusion, last we key average. provide ICF’s the people of respect to culture a we years industry to confidence social on from to enabled would statement been you quarter, data to thus ICF is remaining I first will A the

Operator

Vafi from have with [Operator Canaccord. Instructions] you. We first our Thank Joseph question

Joseph Vafi

you see nice Nice comments What going now. half. be could just your quantify into on setup the quarter this year follow-up. revenue of then afternoon. – management have you us, I what was management of to the in-sourcing. were I the previously a John, now and of wondering Good what heard guys. the get disaster if there? And delta you with idea expectation, about on I I remind know to was could delta less if a the to disaster second little an is kind going in-sourcing and Hey, kind less

John Wasson

Sure.

had said past $XXX revenues this So we north I think year. management disaster on our that our would million of call, be

them, being north in expecting as of said my now million. $XXX I remarks, are We

about so $XX million will And expectation we on on year the our of have is seen be – this – our in-sourcing there work. disaster management less

Joseph Vafi

Okay, we expect this run new be at the is on a year time the just in-sourcing? got should kind say, rate of it. to are next in-sourcing, it with taking less of into that or level a And kind year of we

John Wasson

run I that would is would rate. that say this continue expectation our on we

think expecting in-sourcing we on are I not further this any work.

year June I as think XXXX. on new Joe, of And you that go is we normal. contract the this know, to through have another

Joseph Vafi

just know as marketing on situation? I And pandemic quick linger going you in to pandemic even work good some that the on, there that then feel retainer-based, now, – do prolonged news. there, is how but affected commercial stands the That’s as work and about retainer it real kind clients rate a are retainer on run of the of continues

John Wasson

Yes.

impacts obviously I we that in good, saw feel those with we have close and think in would And Joe. pretty clients. contact I been QX say

we retainer the the backlog have is have, that work we feel we pretty think solid. I

is won’t I so we there. think And that our further see reductions expectation

under clients. we much that the – valuable the is generally certainly, doing to think work I retainers are very of

loyalty We platforms. are running

valuable We most stay are customers. them helping their with engaged

efforts they I want so programs these view and make think to as these continue. us they sure and And partners,

the we I the confident in and have the we so backlog And we pretty feel retainer with in place look as forward. terms of think relationships best

Joseph Vafi

Thanks good. That’s heard the pipeline sound – helpful. color a submissions just there particular, towards It quarter decisions is deal said IT I modernization. or lot. large finally, And does But you little next could the proposal in around Okay. percolating a you do the pipeline. any what that on then like anything just bit about be deal is more front in large X? or the

John Wasson

I large Well, we where an IT seeing Sure. significant certainly opportunities. think are area modernization is

acquisition. in we noted to – I bits ITG as the my we think I thrilled with were remarks,

I to have contracts. win think we pipeline there out the continued build and significant

is this area continue an we to And robust contracts year. so where certainly and expect opportunities to to certainly, IT continue see modernization win

on As in are front, at We I in bids I and said in point bids decisions Texas management have in then my side do on QX. the traditional mitigation. Those those out. also, Puerto think there’s – remarks the been some more underway there on disaster are that Rico, housing expect award on both

be period in second opportunities so busy a on we as there. know, I you Again, can It’s and remain work in And those, And say the quite writing would we the very proposals that half significant. year. there expect California quite California. the intense of

guess I management, a way to that’s federal, say energy. disaster So across long-winded

is can certainly of second the think move year in I the needle. there opportunities the half that

Joseph Vafi

John. Thanks, Great.

Operator

you. Thank

next our SunTrust. from have with We Tobey Sommer question

Tobey Sommer

could Thanks. public to COVID-XX I in your wanted Thanks. but word health size effort cite public. duration and reinvent, opportunity could And the get not related to color prepared the did to and to see and a contracts specifically all-encompassing you the COVID-XX with I kind of kind of some new garner guess, if borrow in I contracts, your that retool on you because remarks. of tuck

John Wasson

guidance Yes. total Tobey, or of around the color put I think contract. a it’s to us early lot of a for size little the

still kind that come So or mentioned, there’s we the specific – mean, I in there’s think think the response and and here, there’s the I phase. response a as reinvention. the the of recovery, then I are pike could – the opportunities there’s I down

– contracts that million quarter. million, we or noted here $XX of I remarks the million $XX $XX in And in so as my won have we second

flowing opportunities I think multimillion-dollar finding relationships. are our we existing existing through client contracts, our

some work. the in certainly on We game strategic are very

of pandemic, get more could to public response recovery, on opportunities from health, this kind I sizable. to focused immediate deeper become you re-imagining think as the As we being into this quite response I know, think

public associated with first agencies. health stimulus that’s As of you the dollars public CDC, know, agencies to or millions the first hundreds bill the NIH, to $X to allocated funding trillion bill, been to health of other stimulus

quite I so significant. they think And can be

told several contracts, over it here very front or funding our specific I million had But specific in think clients in and before we early which the contracts can the we about back just– here, that into years again, program. I have for of I defined, will, I could stimulated economy, of to and I in when others we for at I think I potential you shared hard the put – that. for provide significant X moves double-digit if those our too If million contract. X with they the ranges, move grew same at us it Obama needle think me our as to of for $XX think in mean expertise, $XXX areas us, around color lot past, of opportunity look fit as mean or opportunity types the funding infrastructure he that is forward. talk billion the the types view TARP and look federal the $XX around government on next it’s projects years. us is a the a it’s of we I

Tobey Sommer

expect mitigation plans the you Okay. do infrastructure bid recovery, bidding through pipeline the to first approved this of you as of at balance on more related look that and to are funds and disaster already With have of projects either awarded? respect on see or in of or residential were to the RFPs year, submitted that related to they you expect action sort the adjudicated

John Wasson

the for opportunities seeing are year housing-related I would funding. Puerto this are say more in Rico, that we

So in from infrastructure supporting certain can also the support funding, of local types homeowners their by CDBG, state Puerto funding can who support under and repair that homes, also that governments. It recovery and CDBG traditional economy. to build Rican funding economic addition to

going more will this recovery be adjudicated opportunities housing traditional opportunities to be are will And economic the so and that in of types Rico CDBG we around I Puerto see infrastructure material funding. think with year potential

the flow second noted of awarded I in we could the think I and there. opportunities Those in Texas, half in remarks, think my be they contracts seeing year. as I mitigation opportunities, the be are will material,

in Texas, significant this opportunities certainly for on are say, So I would the more the year. side mitigation

Sudhakar Kesavan

back on the going think how the original evolve. the business, going John Tobey, whole public do is going the this and of recovery issue that just let health response to to quite question said, really me I and improved understand, been it’s pandemic. reinvention be go exercise that the have and would a to in recovery to as your the the I health company response the certainly part restructuring federal and the public And reinvention of agencies the response think is major through the forward. of to government important

and are given think have we whole – modernization, do the our think different our IT and fact the response in that recovery on of public technology understanding arena, the think we skill well huge to say, associated these of health positioned the reorganization. sets advantage pandemics, with reorganization of take calls combat that we if do agencies there is given think we that a administration new, that these I possibilities we of sort that to kinds big or security just

or So – if there particular that we re-imagining next [indiscernible]. X that or look I X going you to years, forward going X of – be there’s is amounts to the reinvention of do the think think enormous be

Tobey Sommer

and that sort that contract of you that cited that already quarter-to-date, to health receiving energy the you within efficiency energy, public the for recovery you question Last project growth into commercial – awards that, investors the – drive do within themes work, going – contracts to, broad being as value some are COVID-related disaster Okay. play me, looking are forward? and contracts themes there of

John Wasson

Yes.

Tobey Sommer

you. me. for it Thank That’s

Operator

Thank you.

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

Sam England

Hi, guys.

Just couple for a me.

that And we bit So commercial side in have project there’s in can through seen firstly, business you much cancellations to in little expect QX? that’s the of and flow the talk HX? about a back been whether of postponement could what pushed you in terms

John Wasson

European as think we think call cancellations we or mean new I the about I as COVID-related impacts don’t be In are We risk indicated to down don’t we year. played indicated have our much – we this in think as had that we different at marketing. in think see there. expected. May. shift I going could there. I new the businesses, a seen material we thought in think think, – significant trend that’s since XX% obviously, out a I first that I as I for see a And quarter commercial talked don’t we we the time they see we during

think it’s there. I expect we playing don’t it. have out been as I think surprises discussing we And any

Sam England

And great. of view success acquisitions given as most ITG the the more you are in space the on what forward? deal, you IT think consulting attractive? acquisition areas Okay, side, likely do going And the do then

John Wasson

I I we success we talked focused ITG. stay first, would on of Well, the continue say have on think mean, acquisition the very front. I broadly that to

us it, do all build we my focused quite synergies As there. we pipeline on the out and the I said sure to think have fully in but are we the remarks, achieve integrated is I model continuing expertise make giving us there mean growth. growth of for client is domain with there. IT modernization leadership their for lot of certainly significant our and opportunity I pairing a opportunity

been at opportunities arena, our and we health story to as I public IT mean the consistent. continue think, look broadly we certainly, has particularly in down potentially think federal around health the and road, I I I look modernization. think

interest relationships there, scale came digital transformation. I us, look I think client of that would to if specific at think we we have – we with relationships firms specific – but were

the areas in those would federal. I And think be so

I a reach And if integrating to mean part on our the could are ensuring would view, in say for looking M&A are going of be I geographic either the long an of think focused in to run energy expand strategy. efficiency of are stay think we but we for will continue I think primary distributed are certainly this on take opportunities. expertise the out and firms we our constantly think year, for ITG, acquisitions energy, I from perspective. we market remainder certainly, or be that to continue on focused quite – the resources. and energy you look that I And or those markets I success

Sam England

Okay, the headcount hiring year? then about great. half talk plans maybe second one a bit could for this And one, just and you last

John Wasson

Yes, service headcount mean revenue. and I I think the quarter are follow mean, last plans we on will hiring the growing X.X% growth. the in I

And think will contracts, where on energy if modernization, recovery, I IT certainly, disaster have more hire. so growing, to are efficiency. we And we certain are we win there markets

gone successful environment, at this quite I think in has note quarter. we onboarding people. virtual a here would in hiring you environment, say, the end our be I utilization in also will can up the we the in found that that day, of last

work the we We to staff that. try for we we on leverage growth. if going will very staff get focused grow, And grow are to am will X.X% – we are or our – with as existing I X% hire every done – the and X%, to additional

careful I and so being leverage really best talent to pretty we want as existing our And we can. as think are there

Sam England

That’s me. much, very Thank you guys. for all Great.

Operator

you. Thank

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

Andrew Nicholas

ask good the on to just I Hi, afternoon. wanted high-level a quarter. question

to kind those decelerated results Just a would how growth time of across we positive your we if relative of could demand, have the you businesses. then different talked relatedly, thinking of medium-term lot last speak expectations material be? about several drivers months to came couple the of you about anything versus a what back. And spoke? there wondering that accelerated Is your or if in And are

John Wasson

I guess, certainly we we I quarter, quarter feel than in stronger expected. the think mean came in the terms Yes. of I

we that’s our and continuing due and advisory. there, very see energy modernization management so call, is in I business kind the and in Obviously, that slightly. think to to disaster I flat profitable, of I our we ICF said employees, to had energy a which the most be We quarter outperformed by down remains marginally believe we From quarter first revenue thought strong less as strong. I X.X% and certainly obviously in, done would growth IT we – work improve, expectations. all is to achieved think the think very have in-sourcing mentioned, I which service that,

to having housing in forward terms look opportunities, of of mitigation our ago, project of have three we decided see the strength confidence the some and in terms I and that greater would start a and we the second we outlook as pulled quarter been in think vis-à-vis that recovery I in disaster will but those I quite CDBG the work, where we had markets in certainly quarter, we there said were the portion would contracts, we opportunities half second of a the side, mitigation, advisory say robust. that our the particularly year. have say, energy forward

do California efficiency feel energy can We good And the in in of modernization. about see continue second to year. some I the on half think IT the very we awards

think public disaster and efficiency I health, lot on certainly a modernization. think more we there’s positive are recovery be on positive I of the continue So opportunity. to IT In and energy

But I getting early my those sales weeks we the of in in the Tobey, to answer imminent last is long-term, recovery awards a I have too to fair the pleased QX. we’re said medium opportunity I share and so. little work. the move obviously for think our six fully of to As notice we’re to the characterize feel very million it’s contract us That into of real of kind for just should opportunities. or $XXX – like

see some We’re movement. that quite to of pleased

Andrew Nicholas

mention that’s just you been And you. revenue growing? it. maybe missed a got ITG the apologize for it. and it, me, I then I how But and Thank if item housekeeping the in Got fast quarter did

John Wasson

ITG together put think our mean IT business, we’ve of kind don’t it I fully I two we we integrated down. and those – kind modernization – broke and with haven’t so we No, of

So of I the told to time at what come we the just you would back acquisition.

I they’re if they you expectations. think not ITG and are would XX% run certainly and, a achieving at at XX%. least the $XX least They growing ended certainly grow year exceeding, so million We on rate. told

Andrew Nicholas

lot. Thanks a Great.

Operator

you. Thank

Research. Kevin Barrington is Steinke with from Our next question

Kevin Steinke

Good And believe. afternoon. you I I success wanted projects, you to ultimately progressing with start be out talk by And asking just about, there? in towards John, winning might anticipate contracts pilots about the that projects you you energy mentioned more in can some Are to your implementation resources, pilot distributed trends prepared are that of comments new those what business? any larger there?

John Wasson

a I are I nice Sure. summarizing there, we done where you Kevin. job kind have mean think of

pilot We energy distributed are test certainly win – have distributed work basically won energy to the see and and projects utilities approaches front. so to – on to test ideas with continue and

that of have pilot and are portfolio the across And several there in can we continue a projects utilities do additional phase, so see we to opportunities.

subset and that a won’t I portfolio will projects. So of but continue successful there we there will changed, be have reevaluated or be part successful utilities will and broad will have be successful that country. to of will some think the – the phase, be ultimately of utility some that be up add the that and that’s to that point are – And as certainly to then to successful and will in be across kind out. will where of programs swath a move efficiency, those being end you energy like analog of implementation as into be could Those programs

implementation. at think that’s so this point the X a certainly year, And are a out I doing I move we year certainly, to mean there, these building and But how I going with think over or is we’re from long-term – And that still the our into business to pipeline not we’re scale. pilot projects don’t opportunities that away mean, the I projects adding any goal. time. those and will progress. we’re are

Kevin Steinke

great. year. here trending And about selling for think the we and of wanted rest ask we about I to move indirect Okay, expenses of as forward kind how should the

some back year full of costs Should moving into back do conversely, you run maybe get You fall the of the and coming furlough etcetera. had talked we as quarter third those programs, Or some cost half? those progresses? about a savings rate last expect the to see

John Wasson

obviously, obviously, I think cost necessary traveling, – we indirect we I mean issues, and have with attendance. certainly our that and absolutely – which some conference as the our you of materially, certainly is point indirect reduced reduced on travel consultants out, COVID focus

significant I we’re we have, that there. garnering we so things. think is, would I think two will efficiencies I – cost say One

reinvent those have travel I expect I in think at on more As as low to obviously, in and can’t the significant facilities savings effectively also we’ll this long the certainly on five work portion, less to year, level, but and we stay office we’ll save and need continue virtual be can that think business rebounds the rest have a will assumed comes We – back, we through people – environment, have have conferences to of certainly we don’t because run, world travel. to this the learned business do that very don’t in we we save days a a need the that spend our indirect and week. ultimately, and we able

reduce facilities think our the time, that’s so certainly cost expire, we to third over And I largest as footprint, be looking leases and company. in – our we will

material be And there so savings but That another could that’s overnight, won’t I think happen area. there.

savings so us, travel, term will we’ll and see facilities travel there across indirect cost And be too. I savings the on longer to think for for this but year, continue

Kevin Steinke

Difficulty] [Technical

Operator

me. Pardon

that? you’re up, repeat breaking breaking Kevin. You’re up. sorry, I’m Could you

Kevin Steinke

Hello, now? me hear can you

John Wasson

now. Yes. Yes, we you hear

Operator

Yes. Please ahead. go

Kevin Steinke

that. terms your was cost I to a about firm to those important that culture mentoring, perspective, space, services balance consultants services professional that higher you a a transfer professional sorry interaction firm. can so knowledge between a it’s to level all continue am facility of of But savings and are brainstorming etcetera, and strong If do all just having – a things reduced asking that. in how get that Thanks. to of with and – just have follow-up beneficial out etcetera. you obviously out as I as from

John Wasson

Yes.

a a No, find we here. completely so and are I agree. important, and that’s balance are interactions the to Okay. incredibly I those mean have to yes, brainstorming, good question, culture, going the

methodologies have actually, have virtual been about would staff. or talked using of to our in the approaches, that say up virtual MURAL be and our can technologies brainstorming work lot sessions Zoom the or environment to this in and have obviously lot And I specific We clients with COVID to teach to we quite that methodologies innovation brainstorming terms a Teams it’s really do doing and culture. a effective. that, front support of of importance coming on whether

is firm on within the innovation that. we I like focused And feel so have very that do an function

We have And managed with paying help and doing them now are to their to within they run methodologies, actually virtual both are the company sessions us actually, it clients. apply those organizations. within brainstorming

comments our take you going to case. my be have And to this virtually. – to figure to the have let they’ll think approach is the virtual of But run that this to and please innovate out have part impact adversely to don’t in I push and right as are a how so the you we absolutely be balance, long They’ll pure a it culture. everybody out do

Kevin Steinke

the Got Okay. you to lastly, half how ask about year? in it. the out of expect maybe just And I back play the cadence of results then can

John Wasson

to But QX. consistent QX would a would from I expect you bit would I to continual we QX improvement. see from pull say from think from than little QX we would so – of would forward given did QX that to the we I improvement kind see show into would little probably pull QX improvement QX, less a forward, QX. so say QX

Kevin Steinke

Okay, have I you, thank that’s that’s all helpful

Operator

have you. Instructions] Thank And [Operator Riddick our next question from with we Marc Sidoti.

Marc Riddick

Hi, good evening,

John Wasson

Hello Mark

Marc Riddick

for than business, ITG wondering of on a remember If amount when I what subcontracted, average. higher you And the announced, one bit if after looks you the and percentage could bit that. especially Also that little about am last orders making correctly, their acquisition that you maybe revenue there? have with the follow-up if was I you’re of like could the the progress that was wondering a little have then a touch now, talk that I moment. their company the

John Wasson

making we’re some progress think I that front. on

did ITG that ICF time, revenues than As at we their subcontract percentage a does. higher of discussed typically

say could that of XX% I I the we pull, to the at of about want think potentially time in-house. that we revenue thought deal,

think I that. success. We’ve working had we’ve been some through

to as subcontractors. you this continue we staff than done by by Obviously, it. more profitable can and We it in it’s and much have can results work quarter, our in-house said many see better times, if we’ve ICF

have strong And so on. incentives we that we’re working

to is slowed, essentially onto business been other that’s commercial us think transfer them helped of that marketing services parts has thing there the take and as technologies we’ve I our business able from certain work. technologists of I pulling into or that we’re people business, we’ve in-house. that think the some And up project transferred don’t I know, accelerate helped XX XX has which ITG work to to,

but it. we’re to we’re progress making on do, There’s working more it. So

Marc Riddick

most state That’s then of a and how to though about most around for that encouraging. what have of some folks of certainly And well. as and as contribution part Okay. mean, – percentage seems to much revenue being certainly – the as amount take of far tied it for on as one care is concerns last and for local you. framed is potentially ballpark and kind you touched the to Is have there you which granted, I you that state of that talking covered, of think bonds us around that sort me, vulnerable going think should the what’s as tax and about certainly forward, local federal the you

So I’m actually curious as maybe subject what sort percentage that. to is of to

John Wasson

I of small primarily mean rates. business. a infrastructure I that’s it’s disaster think, is all think half the percentage. management bond over is municipal work I federally-funded, Yes, the then And

and sense. state I you budgets. the done be, it’s local I I XX% a but – to mean haven’t – might that state I calculation exactly, gives So mean small would a XX%, not XX%, – It’s subject –

Marc Riddick

some are was the there what just And but sort obviously was as and of maybe you if Okay, to of share see you going you things last end it’s seeing processes if if activity your you the wondering were little and could give more wondering that how additional thoughts a possibility then me, on general nature, this predict, as and the of to of sort of there forward. year. maybe some thoughts of to level some of thing could I between in maybe the and more tricky but is now for color give Certainly, the California progressing those some great. probably comfort the of

John Wasson

certain remain quite I intensity proposal in the mean California. I to think, effort is of robust it’s just the

service of the I out territory, focused because the just mortgage that tended of as the utility calls, were on set each their One were that ours. bids for – for is bids they be think each discussed service initial territories came focused – statewide, and we’ve that kind they bids of weren’t originally to buckets. of set programs as two was of their in territory individual process the we’re bids the utility prior are Initially, their – smaller. running kind – they on, into each running RFP fall bids as

bids the more a Early we this those earlier So and will the those number in utility to obviously, see territories across smaller and statewide but out, saw process. are service all begun apply come the bids of a year, we’ve sizable in significant California.

certainly awards the start a on statewide we’ll before And areas. potential I And will so to I there’s year. a we – end awards smaller some the think see certainly see on specific awards of think see few the utility the

could be fourth to going certainly there’s and implementation I will the But statewide quickly, be awards help think certainly us opportunities think, year. or I next number year I statewide the most the decided, of this at of be material opportunities point some in move the and think utilities it bigger if year, certainly into will rest early – next quarter. – them

you it’s very to continued we’ve stage. ideas Hey, NAS, your very proposal, two a feet we there. our pitch proposal cut And high make we’ll talked just busy ideas. to of cut the percentage and our if -stage makes We form have the a idea are to on as process, your the a about, to

Marc Riddick

for color. encouraging. the Thank very you That’s

Operator

we to this for call I have over will time, the management comments. At closing further questions. now no turn

John Wasson

you for safe. seeing forward certainly upcoming to today. you stay meetings. at families participating look Okay. and We your and Thank We Well, hope you that virtually with thank us conferences you.

Operator

concludes conference. Thank ladies and gentlemen. And This thank our you you, for participating.

disconnect. now may You

ICF International (ICFI) 9 Aug 202020 Q2 Earnings call transcript