ICFI - Earnings call transcript Q2 2021

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Operator

Welcome to the Second Quarter 2021 ICF 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 3, 2021, 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 AdvisIRy Partners. ahead. go Please

Lynn Morgen

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

Chief James Business Operations. Joining Morgan, them of is

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

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

John Wasson

and ICF's our on joining all you call to and today's review Thank for business Lynn, second you, results thank XXXX quarter us discuss outlook.

that the growth long-term catalysts First, ICF's strong have pleased tracking against well say very let second me how with that I'm are quarter performance we and identified. we

awards, EBITDA of the markets markets our led sequential billion, time, the record trends by growth ended XXXX. solid XXXX, together diversified our and and we XX% and across increase business our client and revenues representing business, revenue quarter. in into report a and majority ranges development on of categories our represent commercial new revenues At billion continue This the both We in funding from quarter accounted ICF's government confidence strong positioning which which with maintaining backlog our revenue, commercial government clients, we second of stronger strong in opportunities total same in across $X end our a EBITDA and client increase double-digit $X.X our pipeline to earnings the metrics. service are with even growth guidance reaching revenue for and of a heading was the growth underscores and higher our sets. clients for quarter EPS supports reflects energy in in and

commercial last business. a While practice services our saw year, in marketing aviation with pickup stable revenues consulting were and

is modernization work arena, recompete increased federal year-on-year, Looking the was an Social social NASA, XX% representing and more the also contract research, increased key digital behavioral closely have U.S. modernization and IT its revenues X.X% development at the our for Transit resilience, expertise, and with Cancer part we and modernization with Federal project half the of for to or year. U.S. the modernization, oversight a the assist additional record, services ITG's in change of provide this General IT Administration, agencies. its civilian for By won revenue been qualifications, that also to In year-on-year in in in and U.S. year-on-year, XX% neither included ITG expertise, processes. IT win Administration. have ICF's the at Institute health continue combining we technology able generated its have could programs and business with on areas partnerships our Administration robust Administration's were change to track security best-in-class Aeronautical government deep over own. we continued large the work continue U.S. we revenue our January and firm Space National vehicles to synergies transformation, acquired new communication awards our National modernize large a first platform last climate domain efforts year, health help federal Security the In with in since quarter public modernization, funding up part contracts to to important with contract physical to awarded Services automate digital we client received categories, climate and system, strong This leading reflecting IT which tracking of programs, platform

Additionally, modernization billion. IT remains $X.X development over pipeline our in business

with phase with the response accounting of quarter remain continued XX% and public We Department presence Health received We government the onset awards and the totaling to our ICF respect communications scientific provide to client, research, project for analysis, management of in Human approximately million $XX and revenues. government in build the to pandemic, health and and first to our Services, of third has largest COVID-XX, clients. services since XXXX the contract half modifications policy

project including civilian IT, health federal fiscal a respect serve, public We where monitoring the IT of record large construction HHS. also includes the in increase is notably number double-digit infrastructure was I expertise bill, we are closely business into tremendous President writing pipeline Also, agencies health, clean a projects, permitting of budget XX% arena, opportunities. our and which and social most as that play. of for just for resilience, government mentioned, with in our of XXXX come at infrastructure a and the tech, developments proposals number increases to modernization a where Biden's billion, also many environmental development and monitoring mitigation impact analysis, $X.X program, We're proposal our

and received state through dollars say was will and Puerto new assistance implementation us support of more extend management technical it workers local we ICF areas territory's manage soon spending and implementation investing are extended our in the the While the addressable talent market to additional to and state many work resilience significant second relocation services Rico grants and technology safe housing and a Islands workforce that will coming an mitigation, programs. the a capture a and for $XX.X quarter. million in and damaged million years, efficiently their and development relief modestly hurricanes. homes the the ICF We our during expanded FEMA-funded market all how XXXX to in those local in robust disaster another U.S. help additional distribute federal of services this contract by expand amount opportunities. ICF too in of to enable to authority's new to implementation reflecting play do advisory Revenues from in clients them work I Department quarter, and say and and is awarded opportunities the $XX.X second Hurricanes both to by increased see the out, to from Also single-family management, and it's reconstruction to program for and will a think provide government million implement our that awarded of rehabilitation, second Irma the to Virgin recovery program was the Labor quarter, $X of to train local stimulus governments Maria.

and and in services particularly environmental water, state local, development. energy and our to we support planning continue Additionally, clients, transportation, in

range planning planning, energy We high-speed of renewable that permitting are reservoir and a include projects projects. busy and new rail, conservation on broad

government of existing opportunities work climate-related plus of project number we climate with good internationally down throughout being our international to quarter, a in revenues which extensions primarily noted includes year. from short-term in advisory we for make substantial for As to this secured ICF reflecting that progress earnings wins, wind increased revenues, the continues are clients a sizable release, our expertise substantially pass-through second where and implementation on recognized services. in many expect new

with a Additionally, the European on in Deal Green and clean pipeline green strong Union. of work yielding energy in many European transition opportunities is policy the finance, design

compared expect not at in XXXX levels, considerable the the revenues government international the half XXXX We continue to magnitude we to but show first our of in year. to growth saw

the marketing hardest to Moving are our health have goods X% businesses, second markets The commercial commercial by was review revenue been strength, quarter, and just early hit year-on-year. phase. show of the care packaged an services under recovery that market continued in while those in up a to consumer pandemic steady

the to continues has being for and including during clients, campaigns by Lite, Skittles to brand Pride engaged awards work, Miller acceptance report and among month. a and including win group pleased that in recognitions as been commercial Wave. also strong on Our marketing providers their inclusion large Forrester our commercial performer loyalty marketing solution that group social recognized I'm promote

and commercial Our strong with very had another business existing the great across performance by programs revenues the quarter, energy led This year-on-year. new markets of contracts. expansion efficiency up energy represented group, startup of the XX.X%

efficiency-related programs monitoring its several address We continue progress quarter and this instituted with greater expanded state California outsourcing. other or additional makes also to the climate in We're work multiple goal as new win in of XX% energy or state as anticipate states awards developments towards opportunities to efficiency are energy targets.

utilities. York, New innovative program program implements systems ICF for with Clean York all in heating designed the the investor pumps. Heat This example, fuel to fossil heat For replace electric is New

with continued environmental technical steady, resources expect programs, a A contract including commercial had which business, development the several companies We was driver and renewable with deployment energy services, remained diligence services strong electric demand advisory energy our programs, energy and for for engineering main high and vehicle storage. work grid jurisdictions. service utilities business, is state includes new renewable power developers. growth and around And services financial which associated of wins now of expansion of and advisory energy other electrification due in with Commercial also similar our distributed this quarter.

priorities, for very pursue momentum administration's affecting all building We experienced in electrification, XXXX and rebuilding trends energy represent of as resources, this studies environmental resiliency, at To equity on first change year's contracts projects. energy also energy closely the construction as well performance the large infrastructure, business energy aligned this sector new the we And quarter was in or are to strong growth models. utility positive including offshore with ICF. these wind another summarize, end of include the all monitoring quarter. for current decarbonization, continue for and Key of for distributed the and opportunities compliance ICF,

recruiting of the growth horizon. Welsh that, $XXX with to the billion prior greater we review. ensure of development contracts, These the over investments to record business book-to-bill in first future we replenished call our end indications record and people, increasing year, turn and for quarters the well at year's consecutive the we our financial $X was Bettina of X our are for second were in $X.X pipeline are Bettina? the in with And positioned that and At success. our potential we to employees have is time, growth the same strong I'll technology prioritizing ICF and the engagement trailing on a X.XXx, memory. million a have ahead Following adding XX% the quarter. in of Also, contract since billion, XX-month recent sales, quarter highest awarded

Bettina Welsh

I'm of Thank everyone. at you, our more second the a puts upper us quarter strong track achieve of revenue, and we XXXX for John. Good full detailed afternoon, that that view of to pleased the end year service year. provided to guidance on start the performance share the EBITDA EPS financial

service for by the increase $XXX.X points that $XX.X revenue grew in $XXX.X this XX% of million. XX Pass-through expanded in Service on a year million. Second to total of accounted the last be basis XX.X% to and with in total mind Gross revenue related the of and XX% full fourth in in revenue year, markets, revenues margin XX.X% expenses to of line pass-through while million onetime year-over-year, increased pass-through increased Indirect commercial on X% that up revenue year-on-year $XXX.X the the XX.X%, increased Keep profit completion grew to government revenues quarter X.X% basis total XX.X% contract. quarter selling to ago revenue points which compared $XXX.X year Gross our exceptional an revenue, XXXX will for expectation year-on-year and to large revenue. in quarter total had approximately were respectively. quarter. XXX and was driven that we performance gross on nature to million a XX.X%. million both in and was strong year-over-year margin

of indirect performance efficiency revenue strong service Adjusted $XX.X basis including selling indirect to mix, growth to significant a EBITDA had energy adjusted basis revenue, reflected revenue million last the quarter. percent were which expanded quarter business and on pull and million. As lower energy We and margin revenue incentive service points down up factors, EBITDA a XX service favorable half year's utilization, year. second the This with charges, second several project XXX from growth, second XX.X%. work percentage this as points $XX fees EBITDA, forward XX% up adjusted EBITDA service excludes XX.X%, expenses to of from XX.X% high the costs special EBITDA of in and in of

to with million increased in while pleased very XXXX. markets. million of our high-growth Operating up we as invest the XX.X% second achieved was they in were $XX.X income the are from of continued of in these our business results activity anticipation in We $XX reported quarter

share was diluted compared XXXX. On second rate XX% or $X.XX excluding to of charges, the the share, $XX.X up per the year-over-year. XX.X% to quarter non-GAAP of tax XX.X% from of $X.XX per diluted in or XXXX. Net the was million amortization increased severance/staff earnings of impact million $X.XX quarter quarter for basis, income Our and second the per intangibles a in share $XX.X realignment XX.X%

first this expecting the $X.X of first half with EPS year year full upper be the for As in year you guidance the of expectations, and of the were flow from won of expenditures to in year line XX cash last similar Shifting to initial the XX half million contracts second to quarter are anticipate we million million. compared $X.X in up. compared ranges, early operating $XXX of of in in our days outstanding year. the we Capital period flow to for this flow our continue million to days the approximately our was similar operating continue to to the were late for the our at sales cash full $X the that year. prior as year Days half second we and performance end ramp the cash can tell XXXX reaffirmed statement,

Our strategy approach. allocation balanced capital a remains

to payable In and the continue in organic dividends repurchased for as declared the shareholders dividend invest offset XXXX. October quarter, we to of XX, incentive debt, will to and pay a on XX,XXX down dilution of share Also, in September employee second quarterly We XX, $X.XX as capital return shareholders our form growth acquisitions, of cash today million share $X on shares to we well of repurchases. XXXX, the programs. per record

Full previously the and than than $XX.X million. be now slightly are purposes, the initial of in million. should year range of million no $XX rate amortization from greater Depreciation expense no greater year expectations. XX%, expected expense here interest modeling $XX For updated Full $XX to whereas intangibles be to to million $XX.X of tax we million noted XXXX. range $XX million, range in below should XX%. Amortization for will metrics to our be is

million. expect expenditures diluted million We weighted approximately average of to fully share XX.X approximately anticipated are count for XXXX. $XX capital be And

As flow approximately John turn to I expectation cash mentioned that, earlier, closing our million. his for remarks. is With the call $XXX back for I'll

John Wasson

at the areas over high-growth first guidance year XXXX. years. for revenue This in aggregate that organic first growth XX% half EPS as which universe provided in are key in Also, support robust the release. and firmly consulting disaster areas public the health, ICF to ICF's to in work current prospects well IT administration's positioning, revenues of in service XX% accounted quarter year, of years. modernization, expect align pipeline, together at the of the least performance our growth which next XX% Our rates over at priorities. several XXXX management and next in include service ranges annual we utility revenue, environment ICF's earnings I XXXX the am climate, These as with of our that represented several backlog and with confidence infrastructure, end This over report to well be has pleased this report full EBITDA fourth and of the half the upper our time positioned we

our people commitment how an learn the has share to The now social of more website are difference to to success addressable the nature Additionally, equality. a to market. call encourage contributions positive resources diversity, making to our to to about its neutrality, responsibilities. that can justice I'd ICF appreciate their like carbon you of financial ESG visit enabled We addresses pursue group who Operator, open our to acquisitions further work attract questions. and problem-solving exceptional ICF our we and our expand to have dedicated and who

Operator

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

Tobey Sommer

to contract awards, is, and bids change wondering the momentum a, I able of to of election was which parse representative extent fact, the predated if or in administration influence you're change if the these still administration. the strong of in this out that may, driver sort have is in and

John Wasson

drivers this proposals over had question. good recovery They think seeing are But opportunities key predated getting utility Yes. the the generally, that the capture to I certainly and have Tobey. public would that drivers subsequent several things the programs. IT the and No, that predated -- I -- those prior continue, in proposal modernization, and to the That's of emphasized the we're quarters. in administration had really growth the growth that award sure, year-to-date, administration areas administration a and health, awards. we've and last today efforts awards remain we've in the disaster terms now capture say,

So I how certainly see we how think it. that's --

Tobey Sommer

Great. Okay.

fastest it or a think to have key over Now markets time of if order the of asked be period, where going term, sort to doesn't over medium sort good can cite some there that term; areas question? rank -- having near some you're of terrific. have would outlooks, as long the of and to lot Is you how you be sort you that's growth of sort answer

John Wasson

growth X the bounty think Including as programs. We've mean markets I disaster all too. public potential markets. IT, said, growth moves think, just kind also about mean, that see the and infrastructure had we've has I would of say, to of a We've those in drivers I growth recovery, climate, would our or the will -- would up say, administration, I of as we key double-digit I I this I talked Tobey, X. -- I pleased last think I what we're -- first, driver utility with with now. year is discussed for health, right

in markets, said, in -- of and of I last were our those XX% growing we're quarter revenues As the they're north XX%.

I that we ITG year if XX% of more, been IT the X think the X for or north last modernization emphasized not acquisition. since has completed the quarters, for growing we've

from I all try of order a them in to would to bucket. So north them I put rank would XX% there. hesitate

drivers. strong I think growth they're all

So -- and we're quite excited them. about

I several drivers for remain think years. growth they'll the we're next confident

Tobey Sommer

left us do if -- not the If do you helpful. did work would and That's of then. then. to the more that areas And share could you just acquisitions? cited for ago generated growth would Okay. you since enthusiasm acquisition How to describe your long ITG be you've interest, superior

John Wasson

Sure.

I know, we've I aspect over our -- a company, I years publicly been M&A strategy. traded as acquisitions we've So and you been think mean a mean has XX key the of

about that organic, talked I been our of average has been has and growth compound around half think it we've half has inorganic. XX% been

I so strategy. do our think remains of And a part M&A key

primarily just path the together say high-quality when we're cultural that would that with we've in I like companies, -- synergistic revenues and for where achieved I've capabilities really see looking companies growth a strategic And companies I fit mentioned. good to quality for we think their that ITG. put we ours a I significant are many think focused key and markets mean, on times, I we're -- I said we this

and in synergistic -- high-quality There's market. market months. find and we're in say you the it's And mean so the of valuations that, even a I modernization a activity. I so last, more are if the much certainly be the XX, the can company time lot But us see -- a can with opened an way IT cultural I where certainly can in I active would M&A revenues, have it up we're can the over ITG significant you frothy. think for has confidence fit, really strategic whatever, transformational. you XX mean

I health at opportunity federal right If modernization, we're M&A. certainly IT at recovery, the focused on But in how in look the we're we side take in that. that's energy disaster IT, think so commercial came health, looking a currently And markets.

Operator

Vafi We'll have Canaccord. from next with our question Joseph

Joseph Vafi

great the broad-based results to Great and in strength see the business.

of I quarter, start, federal you of pretty -- prepared the and strong, good your of also to bookings pipeline was it's Just that in a in John, the know budget some we're fact but actually kind clearly talked comments, cycle. the the about you discussed middle

seeing where pull you the some pipeline of in just extra this that just on strength you're So kind was know And business. some there federal then at Bettina energy for the point budget of one I forward wondering cycle. also. mentioned

next Just store the in after may quarters have follow-up And half a may I'll have quick that the in what few with that. or have second pull store forward? wondering then

John Wasson

Yes.

on IT the I again, certainly, driving going think the like I the pipeline. the I mean that I modernization certainly question, we're our significant keep I health mean growth Joe, I said XX% IT of on our HHS. -- our think think same I I mean, federal revenues. back social key side, I -- -- and Public drivers. to -- said, federal is of that's driver programs at

We are there. significant opportunities seeing

are also the we're front. to on opportunities see more more We seeing energy and opportunities -- the starting environmental on

significant they're opportunities in very our across utilities, growth and that commercial decarbonization, energy, energy we're the energy we've I in kinds just utility seeing electrification, seeing didn't energy and programs strong think areas So very talked seeing the that of all significant the renewable pipeline of commercial business. say of a with that we're year -- then -- revenue about, the awards of you that resilience. I also efficiency strong would about those opportunities really the future commercial, I had business markets, but would We're other the the there. say focus first in ask -- And and It's half terms federal. a are we've

disaster have to we in recovery -- we and think Rico awards say, this again, announced year. and recovery. I -- that's Puerto several disaster So in expecting growth the I are that double-digit

a those it record to markets, of that that's really want with our I driving sounds question is but think I answer think lot Do that's know you -- -- so the forward? a like pull this on broken business. And I

Bettina Welsh

folks, Sure. begun and energy recently a pull And we basis the of several just we that forwards to have to revenues the this, right? year, the the progresses, combined the timing contracts So program as basis on up through margin are with incentive energy of but recognized being the about energy ramp these will by contracts benefited costs straight-line incentive the had fees begun the quarter fees remind really second fixed-price gross XX on with where points. the several regard

So reminder, -- pull going we that, this last said higher Having don't and continued experienced a rate. we at just forward. expect a forward quarter, but material

And In fact, continue expected XX% to I think -- expect stated we last margin be the year. expected time forward. the going we same to around we for full that gross we

John Wasson

just I would would with everything Bettina think mean I add. I I just said. I mean -- add I agree

throughout stick I year, a half think back pull initially was in bit the What's growth a it quarter. more hockey it first year. here went and of work our -- forward is -- forward loaded higher terms of the we'd as this is pulled back net-net of kind more this of a energy of a of into I the plan that stick was for end as the think happened we've we have bit hockey the we

-- service think revenue double-digit as of guidance we that our think quarter-by-quarter revenue you I we more will which consistent -- guiding a I for range, be But upper earnings growth now hockey here X.X%, we're end think growth expected. the we're I can to pretty growth expecting And see to earnings I and mean the growth. year. and initially opposed in puts stick us kind a of pretty consistent of we're X.X%

Joseph Vafi

enough of then technology the and clearly have And follow-up, of know now one coming on not more you kind think Sure. it's civilian synergies. room DoD, I That strategic the potentially subject well. for from pretty matter focused big with a combination what you is a side? of the for across just level government, structure. now? out the acquisition, expertise footprint capability you some ITG like The really M&A And question. have makes of you're together but a strategic do that Or IT the maybe the given nature sense on more contract looks just working there

John Wasson

looking IT the in say, have Yes. there's can really the side. mean on given we've M&A where see the I domain -- say broader scale, -- think I agencies, would certainly added said I I've mean that before, that's deep I would we revenues think scale as bodies programs. or our well, side IT think for modernization there just potential IT need I front. But IT the are significantly and I always larger platforms. mean, there we that and and the of and there's growth Joe, additional world, have mean in certainly on I out looking I XX% we're given more that you side add And where it's other have civilian platforms IT relationships you fronts. modernization to focus I add Appian, the our I to us scale need the and think to our on people be business a ServiceNow mean we significant scale. you on but on to those And I expertise. on have the modernization to demonstrate deliver still significant opportunity the civilian remains we'd

domain level don't don't of we and market we On expertise, the that presence. defense have that side, just have

revenues want -- of think or our I having mean, guess client primarily we don't focused on I But it's markets. DoD. remain in And our to civilian -- is I the to that, I so would X% said our largest continue firm, I second X% say we I think

and services. we leave in of we for so on with us growth still compete think where lot front. think And core I will a civilian and markets certainly thought can But that we you bring will IT the opportunity I headroom work we the there there's just unique our can

Operator

our We next have England with question from Sam Berenberg.

Samuel England

or The thought that health first be projects the one, viewing greater you've to did now. from I the how comparable mentioned HIV was know future work opportunity around you're it AIDS. you in I past and you the just wondering pandemic-related could

So latest your I wondered is view what there. just

John Wasson

the still longer-term we're about the think opportunities pandemic. I around optimistic

still we think I are response immediate in phase. the

continues. think I Delta pandemic variant. a the the focus on that lot There's of

have the to can phase. in But there bills support I immediate have once beyond to continue We I the that, be better prepared look how for response government mean we do Congress think been at phase. and pandemics move everybody issues. governance say programs in like. and this clients might immediate look I what still would our We response of around that those still with future types is But conversations

But optimistic think ready opportunities. about focus so clients that aren't those -- we're still those still And conversations to think it's phase. on immediate the -- I the given still response I is and have

Samuel England

then so wondered And what in of far been wage count pretty you're seeing Great. it's next just And how Okay. busy terms that, XXXX this also hiring and a inflation in head what environment been year. I of one, you've terms half the in the do over second seeing to you see I XXXX? plans your of linked developing churn. then suppose labor

John Wasson

mean on there. issues I several sure. Well, you've I touched think

group is tight. certainly company in is market availability and labor forget is, in and the economy, challenges terms recruiting, them me certainly, labor broadly comp in, the every company and one investment new time, in it areas, pandemic, a there's I current I know, me really last every you at a in I can please one of to say, of energy, them. And remind in it's let including, IT take mean So in if kind say the problem. saw question we in our to believe prior I a would recruiting more no I the of experiencing I would the we're timely modernization, a But talent quarters, entirely the even more everything broad sure now. not bring several It's way. to in market. we we have make certainly our doing cyber, mean, in labor tight increased certain significantly as recruiting components.

that and leadership metric more we track to starts needs. to with we helps of investing to we and is recruiting in meet is the serve, between job I say brand hired standpoint, I market to markets we've which post kind start, So X would when time a description generally staff. We're the with find which been ICF the we've continue investment position ICF. core the in a contract recruiters more then that our candidate from recruiters. time our mean, the able

in was averaging XX.X days. time pre-pandemic, to our So start XXXX,

we're at the on far XX.X XXXX, days across firm. average So in

so but I pretty couple up I'm a metric. it's mean, considered, of days, And all happy with things that

Now to that there be would of pre-pandemic. numbers those higher, some challenges. was hot very there that be markets are are more But honest, and some

feel I -- we're a tight is So market. like it

lot. a and doing on pressures. think well The recruiting invest to I continue we're inflationary the front, we'll

I think some we've wages. on upward experienced everybody, pressure like certainly

doing carefully I lot and we're we monitoring -- would sure any wage you and pressure making say have mission-driven wage at we're incentivize, and the need place, that on think I strong to a is we've can front. continue culture. impactful on about we're issues certainly work. our what talked address do do a we a This we're what's market in and markets to going to

seeing clauses and I us -- be think think have of will from reduce we're us into helps facilities do that talked travel lock that inflationary pandemic, that some our footprint. talent. which expenses, long escalation we've reduced savings are the there the -- But of there will incurring think maintain help from are run, about manage entertainment our I we -- contracts most form And of of can some that. many pressures. I the

-- So even material to drone you with want I long. we're on don't profitability guess on think I a from too that. wage here going the to our pressure, impact don't see I

like I but turnover. higher I You about think I it. recruiting, again, asked seen have managing some we're much think mean turnover, we I mean,

frontline was I one manager. with -- the we up they're mean XX.X% I think people carefully. our is about that like reason of to quarters in the first XX.X%. watching are turnover leave their employees. stay pre-pandemic, XXXX. pandemic is, We're -- We're We're feel the programs in engaged of ICF to X manage #X We core about hear people kind don't engaged the leaving with it. our managing during frontline things of they put

what about culture. talked we're I've that. on compensation and the managing we're front So doing the

I generally, those doing we -- topics, we're So we're can. think all across everything

Operator

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

Andrew Nicholas

of just on follow up I one, marketing. First commercial to wanted kind

they you to add how activity you to are you're if giving in on what year that business? the you And out Are wondering color timing any the could from business? customers kind Just hearing in of up rest some that there? ramping project expecting indications of of play

John Wasson

with have I mark. was as pandemic, think down, I our the -- now up the prior business obviously, think, flattened We're doing X-year been of Well, down. QX, said less past which first X%, were the in quarter, were, during the given the we obviously, the for year quarters, out. We than we business I

essentially So the flat. business is

I they're improvement in said been early As that care I stronger assume not been impacted, would there's tourism good I that verticals I my think flattening really wouldn't opportunities -- I most that when said that significant we're recovery. a consumer there. worse. getting say -- packaged out, there. our assumption. hospitality, I are But didn't still have XXXX. say stages recovery health the material the severely we and guidance, they're the a are with there think travel for think a I mean as goods, we remarks, think I is And and client think in did I of seeing we

but -- not business been the I do out, similar for I again, think in we're business, with we event significantly XXXX. it's that's, the and a impacted, a European I in marketing there Commission. story Europe European rebound it's flattened mean, services we assuming the think

Andrew Nicholas

touch then on to And I for Got quickly. my margins follow-up, it. hoping was

Another really strong there. quarter

you'd year things if recent and wondering much be as you're this front or come the cost back performance. it's the later cost And maybe it's travel to to into Just start quantify possible entertainment to like next, come structure back how opportunity thinking online, how would about that whether expect on that given great. medium-term early

John Wasson

I've on our year, -- the is EBITDA had still to XX.X%, prior slightly I margin year down is taking service guidance but highest we've be think revenue. the I it's front, would mean, setting some the think time been I we were -- from aside the think XX.X%, highest I year, at time here. which guided XX.X% And to I but I generally would adjusted for that this since we've XX.X%, to think say the that last

up. So trending it been has

delivering I that to on our XX think we've based leveraging bps mix, on improvement year-on-year said back on based that committed XX office, generally, to we're managing utilization.

I trend first I think generally of would I -- then do the as the that still the face-to-face obviously, front, as travel down the significantly entertainment expect you and and begin on travel through we year. I mean, upwards half our with to think entertainment we've is more business -- clients.

our said facility savings I those we'd savings the a in expect the to material And in expect think we entertainment. I least space that long -- think front. we travel XX% on run and in capture at and capture

Now invested which doing back right opportunities some in business be that will of and we're the people, certainly development of now given front us. in growth our all

more XX think savings guess to now, -- I I to sticking how on XX if say and XX I kind for room but and entertainment, And in to back my then committed travel there's bps. stick is with bps the So we with of yes. we mix I'm what would remain depending the XX invest would I there,

Operator

question next with Kevin comes Steinke Our from Barrington.

Kevin Steinke

aviation out good consulting called specifically a having is quarter. You

behind to economy Any there's So terms would of it's of anything or color or in I know be on that that recovering helpful. recovering kind if maybe into a travel don't and read one-off? that more

John Wasson

just practice, it's $XX is practice. want revenue aviation. consulting to million small small think of the remind a It's Yes. Well, small a million, aviation I change I $XX in what's mean practice. a practice folks, first, our I

of are they think a I couple opportunity seeing in areas.

do first leasing arrangements it's -- investment of banks with think aircraft they leasing I and all, companies.

international, airlines. We're some Middle European work. and also in doing that seen Eastern have pickup We more work for

some pick stuff. I around we some our been And gases greenhouse strategy. do work environmental that actually type in there's oriented and think of up

quarters. So although can be improvement generally certainly a two last that seeing also I on business, in think, optimistic profitable. signs we're small yes, is here, the of business. we're And it highly It

Kevin Steinke

helpful. That's and million the some modernization When like what develop? to about does Understood. the we plus continues deals, Okay. the build as of in pipeline IT that pipeline specifically for larger $XXX pipeline there, think look

John Wasson

and our $XX certainly front in has pipeline a to the I quite the million been of north up on has breakdown. have is us. million $XX modernization spot deal more think me, ramping million of the large the sweet mean opportunity IT $XXX is I $XXX million I a Well, mean for quite range. I breakdown on robust. in deal, been Kevin, don't

think don't as deals larger $XXX I we up. they're up -- plus, in are think $XXX certainly said But deals. I figures trending And have million I in I of me. those before, there. front I out trending But there have been million we think

deals, that -- and to scale on on of you the down does you Appian of -- scale have deliver some the that demonstrate which board talent demonstrate think is on have the the to I come the at you of those be that to size. which to ServiceNow talent scale depth have of can or that that able us just platforms you problems, contracts deliver

Kevin Steinke

efficiency sense. California wanted about just energy the to makes lastly I That right. also pipeline. All ask

should the the deals pipeline win just XXXX new maybe you as about come mentioned and of to larger opportunities energy think I efficiency. some we you when there. regard some California through to But continue with think still

John Wasson

Yes.

I think There I a we're would good. California awards -- this XXXX I remains the later we set pipeline of there's think of be do we've up mean more -- think I be year. discussed will a this think in ramping that awards set that related. we year are are that that

that. a of number California XXXX. is or for we that them the of a around year discussion XX% development or after by that the XXXX situation higher The think talked outsourcing about is, There aspect could could or much go outsourcing go X California by XXX% now the work I in other as XXXX or as

is -- increase 'XX. would that there an will increasing there's certainly the continue I that what addressable XXXX, say I -- think to so beyond I think And market is likelihood there there

of And so I be we'll instead X guess about just the for X of next talking years. over years a California or couple

Operator

next with Company. our Marc & [Operator from Sidoti And is Instructions]. Riddick question

Marc Riddick

various and was I of back as bit or could already, as messages services. that the a the about us human the how new talk bit would that, played into altered wondering, with you in may you challenges/discoveries? the be the a should we of but sort in could little activity with around you if quite wondering strong walk was was to and sort develop pickup that change through needs pandemic covered whether messaging or how maybe go forward need And I we health go about it think

John Wasson

HHS story pipeline the and there we're is think largest IT front our that is are broad-based. work IT client. That part I would within pretty winning HHS our our relationships. leveraging we on the I say at is modernization of I mean

human I we've recompete X quarters, bill won so last talking and significant services to ITG and or plus book a say to of that's them some significant certainly we've in what is ups been look about And portion modernization but IT the related. X other with our the doing contracts, of would our been the in you terms there as on -- side. recompetes, the of we've awards, thing

Head quite child child our program broadly on last the the on had HHS X long-term side work or to I around history we've regions long pandemic Start around and lunch homelessness, did we've -- welfare want in where X example, increased had so X programs. supporting announced contracts. And gateway, of in we for recompete recompetes won X a in education, a school region of for a I where new We social won abuse the months. We think And funding. mean, services information which the and

we've thing is in HHS. the at budget greater the work outlook And social for say some they're the be say work I us. the Biden's even I to around phase. into we the is what of the the just other reporting has response winning HHS, administration, there went at mean, and we've looking our done been of of Trump more obviously in think budgets -- net HHS been I positive immediate nicely. the office, think increases. up But pandemic-related specific So kind would have side I been pandemic a And including services

I don't James, go So there's as has of kind the within to all lift that budgets or? the up, mean HHS. potential I missed know, if that -- I anything boats

James Morgan

No, you key covered points.

Marc Riddick

was see And -- clients maybe any Are that or active that is to the more activity. Great. some if wanted mix others? that? of any commercial client or to commercial of we the with through starting and encouraging wondering there particular activity side I shift then as Okay. certainly to I -- though from groups particular over things to verticals was seeing leisure, there's of and some was there a are read as the been ahead I have benefits like aggressive of wondering

John Wasson

there's most year. efficiency of a add-ons, this significant think in energy new any We've I would mean won I half been work, lot don't there. trends that of the contracts that remains part say first recompetes, significant. the positive I We've energy efficiency very of business. seen

haven't We to we on are very busy initial some are states that electrification, I I say as the very margin. at tends very efficiency are -- distributed decarbonization, or given much indications relooking around be attention energy, mean, spent much I energy seeing haven't paid positive. it as mean has climate our business that issue. that advisory is business would high which advisory that been

And terms side, is so broad-based. it's the of energy pretty certainly in pipeline trends -- the on I think the the opportunities and

Operator

And thank you.

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

John Wasson

in you to with All right. upcoming We and today's meeting all you forward at Thanks events look for for thank soon. participating participating. seeing you Well, call.

Operator

This gentlemen. for you We you, thank ladies your participation. conference. concludes And and our thank

disconnect. may You now

ICF International (ICFI) 7 Aug 212021 Q2 Earnings call transcript