ICFI - Earnings call 4 2023 | ICF International, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q4 and Full Year 2023 ICF Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Lynn Morgen of Advisory Partners. Please go ahead.

Lynn Morgen

operator. you, Thank and ICF's everyone, for us joining Good quarter thank and review fourth performance. full to afternoon, you year XXXX today John are Barry from and us and Broadus, Wasson, CEO; CFO. With Chair ICF

James is Officer. Chief Joining them Morgan, Operating

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

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

John Wasson

discuss review Thank thank this outlook to for results you our XXXX. our and fourth joining you, afternoon for quarter us all and Lynn,

in increased over costs and further which billion represented how results runway XX; quarter the XX% substantial well margin we of full indicating ICF's ICF's ICF. takeaways wins areas overall from expansion year spending; for the for new year increased by capped XXXX scale; of of year, the and fourth solid contract of are for $X.X driven Our lastly, ahead considerable business, reaching utilization, positioned include continuing benefits from growth record another ICF. facility lower operations Key in higher revenues

opportunities of As we growth a business pointing next development book-to-bill ended pipeline, year billion and to ratio $X.X considerable ICF several with years. for over $X.X a a X.X billion the backlog, the

returns in results XXXX. continued markets yield key in investments to Our and positive growth

markets, on services; transformation management, health; climate, environmental up operations our These infrastructure modernization, disaster digital for XXXX, namely accounted XX% continuing and public of with in IT XX% from from together approximately consulting; utility and strategic implementation revenues which approximately built over in with indication XX% we year, our out successful years. of of clear the basis same the intent our the have XXXX. several last past and capabilities A

XX.X% major in of programs ICF's quarter energy disaster areas environment, is and energy for and performance and these across fourth and were continuing our in year, increased infrastructure and captured market from disaster positive infrastructure X the primarily full social programs. our our environment, in in growth up services. health Revenues momentum XX.X% portfolio management operations market, management categories, reflecting and the

program included capture new and double-digit revenue several in XXXX, existing thanks energy revenue of growth Highlights of the expansion programs and continued clients. utility to efficiency

earnings from clients As with awards quarter, dollar release, this fourth new contract expanded the work. quite representing you amount see area XX% the to can us in in awarded of were our scopes or strong of

development IIJA. of as the well our advisory as for or power analytics our and of demand around services and the the and the addition growth work, the which power from last year, for year, from of quarter and full saw advisory energy Our the May strong in engineering benefiting in GEA grid IRA engineering increased capability, renewable which CMY technical very the team, and core impact fourth compromises

synergy and for opportunities selected we year, undergrounding few fourth in Engineer strong New large as and tax year. performer areas, with cancellations, we demand utilities a Choice, as pleased disaster in of quarter developers, renewable scheduled these our are and and electrification services development revenue was geographies full team significant projects driven and offshore seeing credits environmental in our teams. note GEA commercial for and for renewables. management, future by Coast clients also despite environmental supporting in utility, for And planning private are ongoing to for the were our work power lease options additional work Also, a a number recently of seeing work are York, are of that East a as our Northern lines. IRA are we for well resilience And New for this strong mostly California Jersey and and we increasing

projects Puerto continue and we We for were XX states. contracts management, assistance are and County we our of working small in disaster training Maui, on and In in on and strategic but Rico compliance. a multiyear technical recently providing the execute where awarded mitigation large in are Texas project Virginia to over HUD

which climate, for are significant federal funding. ICF and year-on-year climate with our current where environmental categories it's associate is currently to IIJA should saw specific of north additional of government that show difficult to and $XXX and programs not full awarded us, engagements over federal agencies services, in as primarily fourth the for number legislation. of cut has federal doing our urgency is all IRA, date, does To progresses. to all at opportunities for include across with plans, contracts increasing applicants commercial year. from our on the the and This related and more government the IRA client state growth which We related million just continued provide And $XXX expansion pipeline infrastructure and to ICF our million. clients. disperse Lastly, both years climate been level a we priority quarter in the of work clients, working IIJA

impacted X.X% certain small companies, we full operations health the Fourth Turning anticipated of in a the international and for quarter health comparisons development by year. well roll-off reduction of in the as revenues, to the contract. by associated large business contracts quarter as our fourth Revenues continuing the were social held up market. pass-through acquired, with significant programs from XX.X% and were

confident at pipeline the and grow the federal of up, wins we new that we revenue our year. quarter, As this in at additional government government you know, revenues contract our quarter, had the rate awards a improve billion and are to half government our end in substantially year, we of for single-digit high fourth contracts Thus, the expect comparisons substantial XXXX. federal ramp third followed will federal $X.X second over federal year full the by as in was government

in its which of the data This for Notable recognized receipt Control. the the award, fourth from quarter Center project, Public support Frontline the more to Health the given BioSense than at was Disease emergency rooms. the collect Excellence project for effort in nation's was XX% of to we

processing data AI information federal accuracy our conventional enhance in our work new collection to speed and health that and the response expanded and we systems. health introduce monitoring of capabilities strategies Additionally, for

at Also, Agency the new or of we Control strong at assess expanded Services including Environmental mental and for health programs prevention and support to won Administration third digital the Protection work Disease several exposure Centers quarter fourth chemical the modernization, to Western in to human for kidney risk support programs. In the of their overdose Treasury. website we recompete at to another FDIC the IT to quarter, services arena, including the a awards $XX $XXX contract health followed Abuse awards for the Substance of the fourth over Mental with Health cloud-based lottery to for win, dialysis State million contracts of million, system data, the in U.S. and and a centers its support operation $XX recompete $XXX modernization continue on million Department expanded Medicaid million a new quarter, of awards in our Medicare the with transformation the

capabilities and capabilities ICS strong and Additionally, platform longstanding at between deep in health cloud-native to in clients synergies capabilities the with domain and position the for ServiceNow. across and FDA. showcasing new Both modernization and of key increasingly our government, in source are we are ICF's believe our to the SemanticBits, pursue IT broad expertise we public XXXX. CMS us at footprint of SemanticBits' growth continue CDC, opportunities the NIH bipartisan platforms Health and drive the And we federal choice to open areas support technology

business item. review to unique want a ending highlights, mention Before the my XXXX I of

And airlines, in have have fuels sustainable other consulting that you we may we expertise with particular As know, area. works and the aviation aviation an airports entities. business aviation

In New that Heathrow, XXX% from flown and fact, members ICF November XXXX, team XX, Virgin aircraft supported fuel on commercial at on aviation flight. several London Flight on board proudly JFK XXX, had first the York's we landing Atlantic sustainable

financial now With that, over Barry? turn his I'll the review. call for Barry CFO, to Broadus, our

Barry Broadus

you, and John. quarter everyone. with to afternoon, you Good year full fourth pleased Thank additional I'm provide our XXXX, performance. details financial on

or fourth Total $XXX.X total the in quarter of the revenues comparable were marketing X.X%, our divestiture for strong in XXXX, X.X% the commercial growth for Adjusting million to and of total a XXXX. by and from led revenues the totaled growth to revenues increased business reported XX% commercial million quarter from as our the of revenue, other clients. Subcontractor direct total in clients international XXXX. government XX.X% our local fourth costs $XXX energy XX.X% and of quarter of revenue and compared state

other Excluding fourth operations direct third the for was Gross of revenue margin quarter fourth total the continuing quarter. subcontractor and points revenues, from X.X% year. of increased XXX in XX.X% quarter from costs, basis up this the

quarter decreased selling business. Fourth business quarter year. due and of revenues XX.X% XX representing scale the Our the and year-over-year expenses, of was last points EBITDA of nonrecurring selling and were $XX.X an fourth the increase and fourth XXXX, facility-related million. XX% basis full expenses million, during fourth incurred from continue X.X% total marketing expenses as in to sale the of year-over-year of of fourth quarter year, reduced respectively, for a indirect benefit $XXX.X On part from and adjusted commercial to for we decrease and of indirect to quarter XX.X% increased the expenses the an XX the basis, quarter the efficiency

impacted a million of the XXXX, Our occurred year-over-year as of million the X.X% noncash quarter increased quarter -- $X.X rates impact of adjusted interest from accounting XXXX, EBITDA of of by reflecting third was XXXX. Interest which our quarter the and the million, in rate from CMG interest growth fourth higher increase the charges. fourth expense was $X.X $XX in divestiture,

of initiatives of through a our line throughout mentioned we the continue impact and efficiency cost-reduction tax expense we portion higher interest successfully to strategies. bottom As offset XXXX, significant various

gain on or share was in $X.XX quarter business. marketing costs, income income related or year. quarter, tax-effected per period per by special $X.XX $X.XX the million facility a of in sale diluted the the comparable net last remaining income offset included fourth or Fourth to per net million million $X.X net the and commercial net the diluted reduction share of compared severance to of $X.X $XX.X portion partially Net charges in share

continue of an per than X.X%, share we we any considerably compared recorded will be Fourth non-GAAP But what we evaluate less appropriate. to EPS forward, was $X.XX, facilities incurred in facility-related $X.XX fourth quarter. Moving increase last the quarter charges as to would XXXX. to in expect year's

marketing commercial the quarter Our EPS business. impacted by non-GAAP the of fourth also was divestiture

now will review of an year I Total increase from continuing operations. billion, representing was results. XX.X% XXXX $X.XX briefly XX.X% the our from prior revenue and

growth Our our energy a full XX.X% our government strong line led client, double increase our from business top growth highlighted growth in was commercial revenue performance the a year drove digit which markets, both by government for and commercial in and by revenues. XX.X% U.S.

direct XXXX, $X.XX share to of by $XXX $X.XX and $XXX CMG. In million, million of which primarily net revenue which consisted revenue other tax-affected to including the $X.XX costs, XX.X% share, charges. in XXXX. special tax EPS gain million GAAP per total and or in EBITDA offset diluted in sale $XX.X $XXX.X was or share, XXXX. M&A compared of charges, GAAP per to including effective special total reported costs of XX.X% on diluted partially Subcontractor severance of per XX.X% the were EPS facility-related million $X.XX Adjusted Full were year was compared increased

a pleased very year, XX.X% For increase non-GAAP profitability. in year-over-year. success the $X.XX, optimizing with We're full representing EPS our our was

multiyear that the In XX.X% tax actions addition rate have to implemented earlier, to in tax realize we enabled us I XXXX. mentioned a strategies

us anticipate annual our we maintain of allow XXXX an forward, will rate in tax Going approximately to tax XX.X% and XXXX. strategies

sheet. flows Shifting our balance to cash and

flow Our $XX timing prior which and to million $XXX.X $XXX.X collections approximately year, full the totaled in year operating related disbursements. million. cash from million of the benefited This to compares

reduction, as days million, $XX.X from totaled last XX paying quarter. prior for to made down Our XXXX year's days on progress day in Capital year. We significant expenditures sales reduced debt million Solutions. in was operations. flow XX compared debt outstanding fourth our million, in fourth the $XX.X the the since The last cash by year, We end paydown acquisition $XXX CMY debt of million of primarily the total of driven inclusive our quarter. $XXX during from nearly by our was down

to previous XXXX. ratio on leverage we in was will Absent focus our end at manner of net adjusted on a compared call. In we an of quarter to as provided we to at similar X.XXx Our third did the the debt in guidance quarter, acquisition, we the end, continue XXXX, ahead expect delever X.Xx reduction.

our debt total Our XX% of consistent at year-end, our was which approximately with fixed debt target. is

X.X%. incentive our and Our acquisitions, repurchases dilution growth to average remain capital was shareholders organic and employee dividends. per the we committed of includes XXXX. record XX, quarterly for a quarterly our programs We interest March for which rate XXXX, to share XX, cash dividend payable XXXX balanced April share, $X.XX of debt allocation, to of announced initiatives, approach Today, reductions offset on on

will my you XXXX, providing remarks I with for by conclude assist your guidance metrics modeling. additional to

expense with cadence Depreciation, we XX% the of first half expense approximately revenue approximately to Interest expected generate will of $XX And I tax the the as XXXX, rate half. million should amortization balance guidance intangibles XX.X%. of mentioned, to range second Amortization our million. Looking million. in expect $XX $XX of at year will approximately from to million. is $XX our from the to to full the million year in be range be $XX million $XX

fully a and count weighted remarks. back are be expect XX million And anticipated $XX closing that, Operating million. million. call turn $XXX John capital $XX We is with diluted expected be our I cash will to to average and for expenditures of million flow approximately between his to over the share

John Wasson

strategy, And of several with commercial capability, growth our of competencies providing well profitable addition This to trends in ICF XXXX in from growth providing markets, to ongoing at streamline markets the modernization business leverage and range expected execute reported marketing strong net included on of success on we verticals. $XXX continue ICF's expect the year-on-year ratio has in a $X.XX XXXX so, which integration divestiture our visibility, source midpoint Thanks, took continuing the from fast-growing growth to additional in lines substantially and the new the SemanticBits to to on and billion, our been engineering. In These positive the of which with when us X.X% have billion backlog revenues business growth operations key to range Barry. identified. XXXX, and XX.X% electrical served our growth strengthen our date. Based midpoint growth we together and current acquisition we noted, our XXXX, XXXX $X.X X.X% focused the the beyond. of million, actions and flexibility Barry financial CMY, open with towards key strategic XXXX element to brought areas grid is organic drive to our positioning we the our us to from representing million doing growth will and reflecting at further In year-on-year acquisition, high-growth at critical us compared of $XXX reduced we results. EBITDA ICF's of the in as midpoint. key portfolio

$X.XX is GAAP charges, $X.XX guidance of to special EPS for $X.XX. $X.XX non-GAAP to range for and EPS Our excluding

the non-GAAP to business in in on commercial to estimated marketing in EPS of of have are will not the basis, lines at operations which contributed non-GAAP margins assuming continuing the recur EPS reminder, will Thus, X% XXXX. XXXX similar a be $X.XX midpoint. rest a our XXXX, As estimated growth business,

our corporate people, environmental with integrity. communities In this commitment recognitions that, a operator, in encouraged outlook, positive addition our would our XXXX, to to and our footprint, to received the investing we're minimizing to open ICF serving call on very in questions. many predicated with I by also culture clients like supporting the that And highlighting

Operator

of comes Joe to Our the with [Operator Canaccord. first Vafi question line Instructions]

Joseph Vafi

kind some a business moving SBA like federal could there were It away that going parts drill pass-throughs. year. couple for and then with organic of of down we if here is outlook Just, sounds the on this

federal of here forward cadence any thought the I And process Just, of XXXX? have then through on your that organic follow-up. moving here a

John Wasson

of made when a are that contracts think mean, of we we XXXX. we I our end off in the acquired of nice I contracts those that indicated think Joe. I you acquisitions, we we I small I sure. roll rolling the Well, remarks, did XXXX. we towards think I mean, off would noted as in And business job think summarizing, certain few and

that, so end certainly the the here third we did done quarter of we've that at in the year. And fourth and

And so that occurred. has

on noted, winning as from in acquisitions some Modernization. synergistic USAID those see had don't And also that small we of roll-off will We're IT we work. go then reduction as next some we'll we say year, also contracts. I pass-through that I as material into business work think on

And synergies so very in a strong million we're IT quarters, the million and had strong last We pipeline X vein, strong with in we've $XXX mentioned, Modernization. QX, $XXX -- I the very discussed I QX. seeing, in awards, federal we've in we've the that think the pipeline awards strong won

in the second And mid-single-digit us so at, the to that, clear buildup the with to double-digit year. the that. first and bottom-up we think I we're momentum government growth from year say, that which high in would I And looking a for low I to visibility and the visibility low gets growth half of think from half single-digit the of year, of have that growth

confident comfortable, And feel quite we it. so quite in

Joseph Vafi

and you And I helpful. and few mentioned opportunities. IRA That's Okay. a puts takes know IIJA on then

at is puts Or of little you a slower? this normal of is kind work and see high rolling it is as this takes kind at So do a a thought? level, some Or Or of evolves? little out the of -- it high as faster? a this level, -- kind it's you stuff

John Wasson

as rolling say expected. we would out I Yes. it's

see we to think on progress, front. opportunities and see that continue to more continue we I

to million. IIJA work and we the The acceleration of $XXX additional say we've both date. and opportunities IRA, said $XXX I awards. As see to the I would in is worth the continue And in remarks, the on won million pipeline

in As remarks, the driven on I side credits IRA a renewables from the and energy clean by commercial activity seeing lot mentioned the transition. the tax of we're around

are that Climate for think those drivers to we see -- key in expect Energy I So arena. and the XXXX in growth the

to potentially XXXX. I've -- about think additional we I I continue before, provide And particularly talked that into think they as upside, as get

As here XXXX. high for guiding before, I growth single-digit organic all-in we're for said to

quite IIJA every and major identifying a that's and if to the XXXX that's in potentially that's ICF accelerate, pursuing so IRA there, and think everything us now. focused can imagine, path you a focus get to for I to double-digit growth and organic we're as on And, for out beyond. single right opportunity continue

Operator

This the from question of with Sommer comes Tobey line Truist.

Tobey Sommer

tax With respect recently already to as been those federal what anticipation degree, private and political as and if assess as could funds, opportunities climate. or capital either risk somehow IRA? the IIJA state have investors different or IRA, in and capitated spent the a you be has credits How do well asking of been local funds to of the defunded in

John Wasson

good efforts renewable visibility fronts. quite opportunities all, we say we from side, focused is to It's are their the are question, and hearing funds a state and seeing that the transition. -- the pushing those and flowing say energy leveraging first have -- would local certainly IIJA local Tobey. questions, forward and clean I federal with think and state those in I on money clients climate same and on and that we're and federal energy would of I on And on IRA

speed full so ahead it's And there.

side, credits of shifted the commercial have investment cost side, on are renewables seeing and tax side driving the on and that the the the certainly energy, curves we're are very And house. I significant and commercial the in on think clean IRA

sector. there's taking funds of the the in government leveraging focus of a them both and on so, lot those and private And advantage

mean, obviously IRA, the I risk credits. a I of I'm will by the clinical the funds impacted tax on the funds new not do majority the vast through administration, a think, The prognosticator. being flow

-- taxes. credits I be I think way politically, raising I less think -- seen the mean, cut that I predict will likely won't would of see tax -- I In I I a you're -- -- it I it's going those of guess to any think haven't future. kind potentially event, political in

progress to the IIJA so that that is the that's business. tax lot my pulled a and I Federal is certainly and those funds And making back. be that as well spending moving the moving a say State credits are say, In think and will opinion moving funding strongly, unlikely driving money. I the leveraging federal businesses that funding and I bipartisan think bill, was I are of on own is change, and and focused IRA, too. are personal significant

Tobey Sommer

-- back of contracts sounds mid-single back verify cadence that digit right? right, I that in that half that more to in federal I it half, are the like then heard there be specific acceleration are business, The Is 'XX will you like in just the if digit and the double that. first And call half. then in you want agencies out? or driving could the kind your

John Wasson

Well, in It primarily growth modernization it'll think, in $XXX wins, X I we be arena. federal IT think the We the third won -- driven fourth quarter. driven $XXX in the be the to the growth million going be year, I where quarter. drivers contract our won the is in by million by major will back half of our

continue there. have pipeline significant a We to

our going significant largest client come from. That is where I think visibility pretty -- we that's HHS. to have

will on IT we other modernization front. civilian key portion key from support come that a and of So clients HHS then clients the that

a a Children that pipeline had have between that how give visibility way, end will on the here the year out think Families, and again, have of health public the opportunities for I good And and in for play we that Administration front, drive and will similar at of NIH, growth. us awards CDC,

about off guidance SemanticBits are we and the was it. we here talked which gave fourth quarter, and we I rolling small some or these And this so third when acquired business in contracts period just we're of think for where in expected,

other those federal health. ramp of So programs, off continuing modernization and rolling public and particularly IT we're then up and also win in to

I will think we how have clear that on but transition, out. visibility so play just this And we're in very

Tobey Sommer

you what, juxtapose what looks as pipeline, could trying big $XXX in think like Just commercial and of what the may describe a work these in seeing catalysts? bounds upper said, of used far million, from you federal to we're your project the existing As come like, what I some pipeline? with other to the that

John Wasson

mean local state opportunities. $XX to Yes. the big contract XX, mean, year IIJA I contract -- are $X and understand. the a Like be, big revenue, in which rest million planning opportunities -- XX and total significant front $X I smaller you are our so opportunities. of I of a million studies, doing would IRA know, have would say, be I to that market business, advisory, going million I there doing mean, more are to studies, don't

And handful into going And those the upper implementation bound. Whether of then energy larger XXXX there's efficiency, be would opportunities. implementation. electrification, a it's implementing of decarbonization at

of into So advisory time, million over over all break be to business. to X on to larger I our it'll out X $XX million like as deeper $XX implementation, And contracts implementation. more more between the you again, it's years. going money, spend But get think that

Operator

This Mulrooney William of question from Tim Blair. the comes with line

Timothy Mulrooney

a operations continuing so here was how in color the about XXXX. a basis performing one on XXXX. I There's the is, federal can to on an expectations in business on business little organic first a hoping you in hoping with commercial you give the divestiture, appreciate idea that little was I The gave of noise get well. your just in expected you're the business more as color thinking us growth

John Wasson

Yes.

operation would of -- I the the business a think in growth. say neighborhood will be commercial standpoint XX% continuing XX% to on I

Timothy Mulrooney

the across how Hawaii thinking recent the we've -- increase that business. mean, you opportunities little you I seeing your the thinking to you're about Oregon I detail. pivoting this in demand we're just a management, Curious in that disaster additional or or seeing then hoping And issues parts dig Okay. are in certain flooding business was won notable contract country. more a lately? about I'm the how into of seen to that business recently, in that in

John Wasson

at drop start way, highest answer then I'll I'll your the and Well, question level, Tim. down that

across been management our over we've all So many we've key say, would drivers -- several first, achieved the level disaster of stating drivers level, is disaster at high last of a the XX%, obviously, recovery, over that growth X growth north years. last years, of I Across the growing been one certainly growth. has those

as for disaster high we doing we significant do opportunities out look I Texas XXXX we're I there have single-digit recovery of point, in potentially there, play are on into book or think work the could I think, business today. your here Puerto forward, generally, based think to material thinking that out We're and Rico. XXXX. in going

occurs infrastructure, in there's significant the a typically got when public the Typically, immediate rebuilding significant the work, once or the homes, rebuilding more the funding response. -- hurricanes has do is not which natural place. storm typically not Congress disasters, work the recovery we It's begins about year after

busy win of are as a growth. play very later this Oregon Puerto Texas. still some in and materially mentioned, Rico probably busy the will is for think, others, more so some out wildfires go in Hawaii, opportunities year, drive we into We're XXXX. But us you the and certainly, opportunities us contract And I for nice

remain an think as important recovery bullish area. I growth on we to see disaster So this continue and

Operator

This Marc question comes to Riddick of the Sidoti. line with

Marc Riddick

year, So a the a flow little as toward type curious I of used wanted [ ]. you to pay down end faster of getting go maybe just sort sort the of the down few over sort pay of a had I was the -- with questions. debt of cash

has comfort a give impact leverage interest range reminder little maybe as to of you timing an on whether been as and that? -- to can So us level around rates any thoughts

Barry Broadus

Marc, the thanks for question.

in $XX million of half lot Most of where of saw do past, As year. we in in reduction in the have a we stage the $XXX we've the QX of done debt. with pay pace second QX. the reduction particular this debt the the in year, down debt happens happen that seasonality We in million and

business. That acquisition So which We on see earlier to deal did year. helped was we some the the marketing offset of in the go-forward related debt we Solutions the pay commercial a pickup our CMY for and that that did sale of on expect reduction, basis. the

So hearing -- our XXXX, our we've and out. we how plays for been what from interest think rates, reductions given friends that we that some in the baked Fed. of We'll see at

further been, we on a can any done think we've in produce acquisitions. just of like the pay leverage what the we even good say, of debt to provide like for barring debt past conservative to But and But a flows in down from position I improve would and reduction some we and continue feel we've cash that the XXXX, runway perspective. course, more

John Wasson

Yes, that perspective, you I acquisitions ICF's XXXX. ITG over there's pay up would and acquisition from then XXXX mean, up SemanticBits my the in just debt. to levered obviously where Creative the do and levered as in I years, We the periods down been know, given add and

think a I X.X over done paying debt, years, focusing really X we've down on good that job years last that. the

back down X.X% Our net leverage to here, ratio ratio. is leverage

opportunities the disciplined If on we And capacity can position that. acquisition the Obviously, of certainly sheet. here, so we're along, advantage I we're think in them. right we come have in now where a take quite balance

the we paying balance strong so it's and have is in a fit, down and going of debt to the have find that to which part year paid in I good a markets, done gets where good position down strategy, sheet But have we've state think think in now. forward. which of a you what's I -- mean, and is debt good of can again are certainly job a acquisitions X, getting opportunities want balance fit accretive know, of our cultural been position leverage our in we As I growth -- ourselves key right we we sheet the where kind valuations we strategic the

Marc Riddick

could I wondering we about particular about and then And areas there little the environment of pricing bit during was as as as Are rate the pushback? what far increases thinking of concern the Great. about, Or are if you as generally? course year. environment far thinking a the pricing any talk you're maybe how

John Wasson

that But pricing it's down don't you of the perspective interest rates still -- and well, deals I we're guess acquisitions, Barry, to -- And acquisitions talk bit say want would those say I come market. I flow. starting some issues? fully a pricing say of on a is interest deal when see frothy that, from interesting I from I for fully, say said would think I and would to -- interesting ongoing don't given environment. types rate about having some you a

Barry Broadus

we'll the balance we'll fed see which a some Second through are. that, little And just we've starting real that the that is the from see the at And to to yet interest are valuation rates deal levels reductions that perspective bit economic they But more hopefully, we've the come seen. reacts with good. how but I'm coming see seen not data we -- sure a flow, rate soon.

Marc Riddick

AI if should And Great. months you sort near-term if what as didn't as Can to remiss and any few of that a the of drive sort adjustments AI-driven evolve do? color maybe over might any last be or as a give -- then they around and really I would their to ask make that about you've -- from changes what that demand thoughts little I bit customers, how progress be or we as far seen longer-term changes they you're thinking the or want opportunities? seeing of their

John Wasson

I And or clients. clients, that support the in to seeing reached mean our number we I mission on various certainly doing exploring from interested help of use focus a our have agencies say cases clients. our federal who and are interest with AI would commercial increased out have pilot we're projects an of or AI

so seeing domain AI front. the our more doing technology experts, with in partnership on client and work, we're the experts more our interest And there certainly

ICF, in to before, within and preparation talked a take As about proposal AI of our to we our continue IT modernization productivity improve marketing, the approaches improve at of hard look the the use our IT our to certainly business development, we've to business. our efficiency coders

there there. think I productivity are for improvement real some opportunities

I certainly, be it's think And to net positive long think going a ICF. so for I run, the in

out it's from and clients very help early, and think our looking but for assistance I to we're still reaching see us. pleased

approaches AI watching value our and we're add improve evaluating and both clients. for to internal -- productivity so And activities it internal carefully and to for clients undertaking leverage

area for of focus certainly it's So us. an

Operator

like turn I'm showing time. back questions no further John to the now for would closing this to remarks. I at call Wasson

John Wasson

call. you to care. We Take conferences look forward you for thank in connecting and with participating upcoming Well, at today's events.

Operator

you you. This Again, thank program, now does and disconnect. the may conclude

ICF International (ICFI) 27 Feb 242023 Q4 Earnings call transcript