ICFI - Earnings call transcript Q2 2024

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Operator

Welcome to the Second Quarter 2024 ICF Earnings Conference Call. My name is Steven, and I will be your operator for today's call. [Operator Instructions]. I will now turn the call over to David Gold of Advisory Partners. David, you may begin.

David Gold

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

Joining Operating Morgan, them Officer. is James Chief

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

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

XXXX discuss the CEO, quarter ICF's turn call second to now I'll over Wasson, performance. John to John?

John Wasson

and David, for results call review business thank all you, Thank today's outlook. quarter discuss our our and participating to second in you

As we you've existing well release, seen growth. future and excellent was foundation contracts the to for executed continue lay on in ICF from quarter for another our which this

of from strong respect market areas. and array Disaster performer, secular our continue standout these the Recovery growth in to key With very to Energy, takeaways an reflecting client first, trends quarter, Environment, Infrastructure be a

quarter, considerably this guidance our increased leading metrics the and profitability again for to our year. us EBITDA Second, EPS full increase

development with opportunities sets. record QX even X.X% client And lastly, record trailing sales, billion, new pipeline wins, government commercial business our X.Xx. book-to-bill across quarter after providing XX-month ratio for outstanding an and new by $XX.X to growth us to increased sequentially was substantial our contract this Third, a our bringing

look closer at performance. second a quarter Taking

second in quarter in XX% in second market our quarter. from areas of by revenues, again, growing to total Energy, first account All of revenue energy significantly XX% markets. for to growth Infrastructure the client ICF's in and both Recovery quarter secular XXXX, last XX% and continued work commercial substantial Disaster trends with positive of year's second our Our reflecting Environment, the work posted increase revenue half up

see continue record our ICF energy efficiency consistently for in to utilities arena, demand most exceeding remain increase built capacity. strong to cost-effective continue clients. this new the We an proven which win for to track excellent programs, reaching and their has we goals, and means

utility efficiency, the Also, the At very and scope our electrification our expand their the associated as consumer of time, energy marketing and have synergies and revenue same pleased clients size programs. performance with increased programs are we broader of year's a Their us analytics renewables, planning to acquisition. capabilities work provide last services in clients. natural to utility utility a of ICF's CMY and developer engineering are enabling with and grid and extension electrification, set

important in climate our grid are we advisory with climate studies. and resilience there synergies Additionally, our into more as detailed engineering analytics work build

developers of the technical of from energy And our reflecting Similarly, strong renewable our and line business work environment continues providing particularly and show energy power resilience area or increasing developers as to renewable restoration or is planning benefiting in licensing, for well power lines growth, resources. growth utilities' and for wildfire advisory, in demand increasing ongoing undergrounding for permitting services. from as advisory compliance

also area as helps in our increasing proprietary as climate funded goals. utilities of local for DOE client and growth RFPs well we're COXSight IIJA climate independently agencies platform ICF's achieve our entities. benefiting climate to planning demand services continued in all categories. the and the significant uptick from emission state the their As EPA across you gas that know, This programs and to an quarter, federal expansion reflecting clean an second of and additional our utilities, agencies greenhouse energy number client of and seeing at we and government perform system, and be for state strategic achieve IRA, planning We're

states to Public-Private an area $XX Government Partnership management Our waiting and over final of recovery territory. well. XX also we're and executing is in XX other awarded in do word XX opportunities clients' professional contract ICF and Rico's ICF services the and recently Puerto on the next continues Authority mitigation The disaster territories, supporting nearly million states in provide currently to over X we're efforts X territory. disaster years, programs management grant XX recompete X

Environment, our client Disaster see next we over Energy, As double-digit ahead whole, Recovery the growth market and a Infrastructure years. for several

resilience replace improve teams. demand mix, Renewable at to power the grid, expand environmental fundamentals, deploy underground economic and to legislative a and and for to the additions resilience clean commitments efficiency corporations programs, policy is we regulators and infrastructure flexible transportation decarbonization pace, load clients utility electrification. energy and aging lines options. improving grid management funding proceeding load spending to for centers utilities data support engineering, disaster are including management increase to is quickly power regulatory impacts, utility to physical and regarding driving increasing resource growth energy by The electric rapid and and supply, electrification and Increasing from creating including public continue management and demand ICF's actions assess development see new forcing and to

no ICF. company In than judgment, better is positioned there to benefit from trends our these

our that and multidisciplinary have We plus government energy, clients, platform analytical relationships services transportation technology across and tools work. with as health, industry-leading that well climate, as our long-standing advisory expertise developer support utility, underpin implementation solutions

and for almost IRA primarily government and specific continue work now wins Examples it's grid territories IIJA, energy IRA-related and clients active include at and we for These IIJA- legislation. a IIJA needs. as tribes for metrics and opportunities and for to infrastructure clean grants million projects of upgrades to ICF's IRA infrastructure date approved commercial to formula of grant award grants variety reached energy applicants to infrastructure. our of million. to released states, to pipeline difficult reliability competitive And funding being manufacturing have $XXX represent is $XXX tie see

market. client and Health our Programs to Social Moving

The revenues of not should revenue this anticipated lower the in comparisons, government from health. year, this held in market the made comparisons couple the approximately magnitude had client We gross in second clients reduction anticipated. factors: second revenue had of we quarter. acquisitions million half in public in last in X federal increase be the improved pass-through the impact year-on-year primarily market gross alone revenues year's will $X.X lower by over see reflecting of the were but the falloff that As years the of expected, was originally contracts IT in small we divestitures, pass-through business last and primarily modernization,

market that will to are our impact in confident strong more Management lower-than-expected Disaster We the of and offset revenue Infrastructure the Programs. in Environment, continue growth growth Health Social Energy, than and client

our transfer CDC's quarter, additional functionality BioSense positioned expanded the across and federal healthy our remain execute modernization. base health and second In data and have the areas: for well hospital hospital to support and continue we We program of to client effectively discharge pipeline opportunities in public IT platform. government we'll and our admission data and in to health, include begin a developing X key public

Department CDC tracks both recompete for As for as factors you Health including Demographic insights our and national during to Global the X subject have at to and for Health mental emergency And and areas health diabetes Health than impacting the of International overdose Services, may Bureau continue on U.S. deep Americans level. Surveys opioids. support, with within Human it deliver the XX% in and health, pandemic into local of more long-standing research, the with recall, $XXX BioSense public and the data prescription front prevention, at center matter relationships of agencies nationwide, impact expertise health cancer we room hospital of million officials was bipartisan and have Development ICF won the the has prevention providing education visits Program. that contract and Agency we key

and growing government. CAGRs and the no are federal The used application of remains a at to and source by is in ICS' XX% now XXXX. $XX most And X.X% services U.S. X%, open is platforms at leader and respectively. modernization market IT services, expected targeted billion in ICF and consulting recognized a IT growing bipartisan of CAGR also reach priority, federal the widely areas, is low-code, code a

We viability Medicaid Services data and had for X are to with important and of comments. focus. combine a months faster contract teams to domain leverage regulatory wins AI This a completed or Gen solutions AI insights work to as inception Centers in includes AI the federal exciting analysis. public on numerous increased a Medicare agency second at opportunities our Gen X and quarter the We expertise, and regulatory traction proved very development comment be delivery, we the support to scope into seeing the able from was for particularly our when recently project technology client within produce we'll using where for

Also, recovery disaster efforts. exchange $XX us and contract response to the of their build to a a data FEMA platform cloud-based million and awarded efficiency new cost-effectiveness improve

approach along cloud of computing, ICF's generative We will excellent analytic is leverage with of and forms other example disaster an multi-disciplinary leading advanced new AI our management how in expertise, capabilities AI winning business. and

a the I the of as earlier, which quarter. book-to-bill X.X of us reached a contract of this in for second record awards, quarter for terms representing On business, million, mentioned new topic was $XXX ratio

half first with demonstrating accounted for well awards, aligned are spending ICS's wins of how our client XX% business capabilities priorities. New approximately

recognized percentage awards Additionally, of a contracts our an area. -- represented AI that expertise good our an had year-to-date the of this in high-demand component, increased included of value indication that

our very turn profitability Barry? metrics future in a us ICF is now that to the call over for strong Barry set growth. quarter CFO, review. for execution, up Broadus, terms our this summary, In for of and financial I'll

Barry Broadus

Thank quarter everyone. X.X% financial $XXX XXXX increased million with revenues I'm the adjusting after to XXXX on last of you for marketing you, commercial provide divestiture details afternoon, compared business to performance. pleased of year. John, good second or our additional the to our second X.X% Total and quarter

of drivers revenue energy XX.X% international and by from our the clients. year's combined and growth same growth our quarter growth as led local clients this and business commercial in X.X% first state Our many government was a revenue second by and revenues of from quarter reflected

our approximately were from XXX flat year-on-year by impacted in This Gross government second mainly in basis million, a was which revenue reduction approximately federal our to clients points. of growth quarter. the due unfavorably pass-through revenues $X revenues

of first and As business category half increases with federal bodes pipeline in awards, contract $XXX new we look far about towards wins in an government in growth had this client sustained million. averaged future outpacing our for contract our XXXX business. million awards, federal ICF XXXX future well in along the $XXX business, year-to-date, our expanding which the our federal

XXXX. of federal is our a grown addition, business increase has the new In which pipeline billion, $X.X XX% start over since to

direct to in quarter other prior XX.X% of from down total declined and the in costs million, Subcontractor revenues, second XX.X% representing the $XXX.X year.

and Second driven quarter improvement revenues, margin This primarily growth points less a total revenue energy mix cost revenue higher-margin XX was revenues. due commercial commercial subcontractor as and to saw of up we our marketing from favorable XX.X% direct strong gross basis clients year-over-year. was

increased expenses growth. year-over-year selling considerably and less our than to Indirect $XXX.X X.X% revenue year-over-year million,

of the our XX.X%, in reported utilization, As indirect points We realize increased a XX and and on managing basis XX.X% focused percentage were scale. lower higher total our to expenses efficiencies from organization selling and remain indirect prior throughout the continue year. revenue, driving costs than benefits the

substantially grew I X.X% favorable year-over-year combined earlier, EBITDA mix XX.X% our with to growth these to EBITDA million, of The factors drove million. $XX.X revenue growth. $XX revenue Adjusted outpacing mentioned

adjusted basis last XX.X% to at points Additionally, the increase as second revenue, our XX an of margins of compared total year. of quarter EBITDA stands

a from balance. of to average million Interest $X.X expense same due decreased debt the lower last million period $X.X year

employ time. XX.X% was strategies prior year rate lower able rate compared to period. the were year in second reflected that prior tax we tax Our the in The quarter X.X% to tax optimization at

full tax in our was XX.X%. of the in second line tax rate continue XXXX expectations, to quarter expect and we with year Our a of rate

net quarter XX.X% million diluted charges. comparable $X.XX increased and year. of respectively, included diluted year's or last EPS income of per $XX.X special Net versus share tax-effected million was the income Last XX.X%, share $X.X $X.XX per period second and

Our year-over-year non-GAAP $X.XX per X.X% EPS share. grew to

Now flow. turning to our cash

the than cash of first double operating more in net income million million, and first $XX.X half cash the flow the of reflecting initiatives. reported in higher year management Our this of the XXXX, half execution our was $XX.X

down were from outstanding sales days expenditures last our days Our year and to the business. million, were capital XX days divestiture commercial Year-to-date, year. million of compared marketing timing to $XX.X last XX $XX.X due

debt June rate. million end At currently Approximately XXXX, reduction. a which of million debt the compared our is set debt $XXX.X the reflects end $XXX fixed of at was of million to our XX% June, $XXX.X at of

flow second end net of at the Our last X.XXx end to was operations company's cash at X.XXx utilize to demonstrating the quarter ratio ability year's leverage delever. our from compared to adjusted quarter, favorable quickly

As shares cash to our quarterly on we enables position and dividend to for per employee our allocation repurchasing of share growth dividends. down priorities, XXXX. from a to shareholders plan financial initiatives, XXXX, us debt, payable paying our $X.XX quarterly September strong acquisitions, announced incentive strategic October consider fund avoid on of capital organic record XX, Today, paying dilution X,

We financial Now CapEx. expense, depreciation help are your models, following: to reducing our for you and and note guidance with amortization interest please the expense

from we lowered, reduced million million million. amortization million. and from to has for expect $XX interest $XX to has guidance and range our been and now $XX depreciation $XX been Guidance Our range is to now to expected expense

anticipated $XX $XX million are and expenditures capital million. between Our

maintaining We metrics. other are all for our guidance

amortization intangible will approximately As million guidance remain $XX at to million. of reminder, a $XX

Our rate approximately full expectations year remain at tax XX.X%.

And expect diluted that, of to average to $XXX operating flow full for share call his closing the continue remarks. year a count million. turn of I'll with cash approximately John fully weighted the million over back to and continue We we expect shares, XX

John Wasson

Thank Barry. you,

on respectively, Our of increase from increase to EBITDA EPS first put and We're track the guidance and XXXX and achieve non-GAAP substantially growth midpoint. half X.X%, our to guidance. and to guidance $X.XX us pleased guidance results $X.XX our for up $X.XX, to EPS to EPS full for enabled to have at our year us revenue GAAP XX.X% have year-on-year for and $X.XX representing $X.XX prior to

million ICF Further, the our between we're $XXX Investor acquisitions XXXX from in Adjusted to reaching objective to range expected of very range $XXX EBITDA X-year to XXXX note this provided result substantially in fewer million, our midpoint And is Day, also $XXX will we and accomplish now for contemplated. originally $XXX with adjusted guidance the we million that to guidance million. EBITDA EBITDA pleased up our the prior divestitures. increased achieving expect of than

and ICF's years. multiyear A quarter in the end of to of backlog billion continued to at support our growth a high pipeline over continue expectations XXXX next business give strong single-digit growing and development grow at second us for in our ability $XX.X several the rate record the confidence

and for We and strong environment from our demand clients experiencing are energy skills. commercial expertise implementation

have government their remains objectives federal bipartisan and to clients meet mitigation planning, support, our particularly credentials would expanded resilience call assist excellent secret an confidence area which have for people, supports We in which and modernization, our state the and in spending. we success. capabilities ICF's and of have local to areas have the to government With priority operator, IT And like future that sauce, passion open our of that, I in the questions. the commitment

Operator

line [Operator Instructions] comes Genuity. of Canaccord Our first the question Vafi from Joseph of

Joseph Vafi

the higher. EPS see nice to And revision

business. of commentary, weaker now. maybe John, being you sector I down So talking federal the some just congrats maybe the in and just bit a know health about right we'd on were drill and for that. just I thought first your

to modernization is health Just bids of next those imagine over areas. of some wondering seeing what of well. the doing you could contrast in submitted how other that I see you're so maybe -- in then business that compare your pipeline. terms IT in expecting terms the and your stuff maybe of some year or And to some would of if and pretty that's you're

parts business. to a maybe have And your of some follow-up. then it'd And the they're relative how so of a flavor useful be get federal doing to of other I

John Wasson

I'll at book-to-bill forward-focus the this the sales, XX-month and quarter sales very our think I trailing No. and of that were been component Sure. been the those if thanks pipeline strong. highest federal very our Joe. look in the for the start have at pipeline, very metrics, you on obviously Certainly, year. for has ratio, those question, Well, strong strong the

specifics the on mentioned Barry federal some market. think I of the

when year we'll confidence federal we growth us over look that and next give results, see strong in And those beyond. they so the at

the to significant significant arena. and proposal continue in see opportunities federal activity We

see to occurring. continue awards We

say the quarter. strong key public obviously know, book-to-bill I we've there so any as drivers health are growth IT And wouldn't modernization. proposal, strong wins the and are change And you X And the in and the there. obviously, and seen were the

again. quarter, in With I'll I I the about last business, think that review -- we this we're and think our I said, numbers think federal the mean just talked quarter, I

that But year-on-year, was for at business the revenue, I federal part of and about quarter. And million. Our think total $X.X at as federal said, less were materially was the you if pass-throughs, look look we was in revenue if that flat X%. I essentially growth a down pass-throughs our arena the the our think -- you big

costs, And by and the direct less work pass-throughs, so revenue, subcontractors ICF. that's done total is

metric, for And that growth QX. so on we're at mid-single-digit

And the I certainly for first of -- year. and the a things that business half our here, there's think year, for in of the first federal specifically first quarter impacting half are few the the

of always health the bit. the -- and where transition into will prior this These off year. they're contract But of make it long-term issues. are rolling the with contract-specific continue a I a won when of a USAID the recompete we couple our our for we half recompete think think won slows work pass-throughs the large contract of We've under don't largest contract. ramp-up contract. one I the the We've contracts, we're Demographic quarter, issues. work been quarters that survey, a the There's second -- down new

So that. seeing we're

have we'd QX. will not going first looks USAID of where a of decision in to ended awaiting with a It have we've it year. -- have until it like been on the thought year We the on the contract end another have half that. we're at We award that the

us. impacting talked that's anticipated contracts and also we're then those IT And it off were front the XXXX, some which in again, rolling small acquisitions guidance our and our deals. business So did when on we have we about explanation of from we modernization part

few for issues really impacting those And federal here what's a quarters. so business are X our

opportunity. feel I I think to sales, opportunity, -- as the the significant given the quite and certainly we confident. we look your look given road, longer at to I'm book-to-bill, wins, point, the given we we're given the the the think continue term And down modernization, see IT --

across know, you decision been As bipartisan a that's time. for -- some

think that put a few It's has one on, I administration emphasis administration real bipartisan the things the decision. it. remains of Trump continued a the that and Biden

I And significant so be for growth source us look forward. will a to think, certainly, that continue as of we

Joseph Vafi

I you Great. if And then drill that on could are of that modernization and appetite IT any again, kind contract of win John. I size of bit. modernization the a kind try extra there. color, to all to Thanks massive that IT -- you helpful. DoD see And large wondering pretty guess, budgets I I for over recently continue with That's down modernization. the in did is that of just a front, if there just the IT into grow to little business there kind given DoD was

John Wasson

Sure. No.

if kind and a specifically Gen we award that we've announce recently analytics modernization, to focus. I and did to of modernization services BPA IT want they BPA, with AI HR large applications a DoD on So $X.X data an data DoD winners just support billion think won

human capabilities. modernization we marry capabilities have HR, certainly, look capital, IT we'll with so our that And significant to

excited this. we're And about so

think there's down us for opportunity the road. I

I this We this companies XX a was will -- I on flow think was there won BPA. expect position it winners. later And start orders that the to XX task think year.

look And business And there. look think it's be we so I grow I we'll right there'll for forward. us as certainly think to the and opportunity

Operator

Blair. next Mulrooney of and Our from comes line the of Tim question William

Timothy Mulrooney

quarter, Nice guys.

John Wasson

Thank you.

Timothy Mulrooney

profitability question this to the just also relative Is on it expectations? probably consolidated expectations due you little EPS prior behind top is Barry. primary to primarily your is think a related factors give Can outlook? this the Or raise I a a line on for to higher detail more higher guidance basis?

Barry Broadus

on to which in the the that the and in we Tim, EPS that standpoint do thanks you and marketplace with adjusted during about guidance that are remarks, that as sector. well. mix the for margins, cost at talked EBITDA, increase really market especially the have. look has if the from commercial significant a not It's question. our energy Yes, the mix of mix, just We

so more and direct So our subcontractor boosting. reliant we're versus labor on that's

that the So our both can The on we're EPS and non-GAAP keep revenues. that, of higher our changed. on increase throughput hasn't of the guidance EBITDA. a But and of profile able GAAP for -- adjusted basis to margin the and we guidance because business and that

Timothy Mulrooney

helpful. That's Okay.

no mix. there. revenue in So more Still change top line, XX% about a of the a increase on

That's Okay. helpful.

question lot. other I for The for I had, a well, -- but know maybe getting question early, anyone really. it's I'm this

all I on investors Court's are might impact an Supreme have Chevron your of how or how think most curious recent that might and overturning about think the you not business.

John Wasson

Yes. Well, thanks for the question, Tim.

opportunity, we well, would Chevron overall, material have related I as so that. the to if fact-intensive And significant they're the do I -- they do decisions with create us front, the if do potential rulemaking, need the it decision. their really impact punchline they anything, honestly, support from don't is think for any business when has regulatory think going to detailed given I And Court that, or that the because our given that I and decision that new new see decision, think, to they'll work. much regulatory business potential Supreme agencies, us on just a say and for more to

us -- support there our actually for so could I work more think front. that that And be was regulatory there view a I on think practice is

FDA percentage and It's do comply to and think and only work. we -- total regulations. would EPA revenues consider or with and either context about to really X% what our or We -- on support implementing really regulatory-related doing to say, I -- I are programs regulatory doing helping of our work, DOT. the just implementing would here, small a that I work implementation only at really X% put of

X%, of or than about but And consider it's analysis X% regulatory -- our less would is it revenue, what X% to X% that regulatory implementation. of regulatory so of I half to it's or

I it's business an impact, will and as us any to be adverse will results. material. but material And ultimately, -- for it's think it much likelihood to create as not -- impact our So our having not it opportunity to has

Timothy Mulrooney

for appreciate you quarter, framing I that a all me, Again, and on John. to Okay. congrats nice talk soon. you we'll

Operator

comes Associates. question of Steinke the next Research Our from line Kevin Barrington of

Kevin Steinke

Yes.

So profitability one more questions, talked in circling there some of on about to back on more commercial metrics. guidance favorable Tim's metrics, subcontractors utilization labor increase about use you there the your talked the to own energy side. And in of versus of the response efficiency you

utilization that Or that better the of the across -- guess. better driver more sole is utilization just consultants, company, the entire of I it kind just board the of your Is just is for -- metrics?

John Wasson

Barry? ahead. Go

Barry Broadus

Yes, Kevin. the thanks for question, Yes.

the that fixed-price just that contract. more staff with that is cost, well clients, Not we services the of it's of in So mix particular but related provide as to clients. some as government like especially the other work the our commercial more in than also our energy business,

cost manage to improve margins. us enables that So and the

higher that but also able is more the contracts the margins. manage to of deploy having the being less -- So also with direct doing help not contracts only of type work to that we labor, more type conducive subcontractors, we're

lowering are depreciation expense addition, amortization expense guidance on mention that, to as guidance. I increases, as thing our we well in our and as the is one remarks, interest my would I In like noted profit

year. EPS boost also as that's through we so our of go the helping And the rest

John Wasson

profitable I business. historically -- job government commercial a think summarizing. I our and long energy business, I do more mean is Barry our nice ultimately, energy -- of time, for business did mean our I just I a it's than mean,

that's margin not Kevin. firms growing And driving more who fact, to those that both in rapidly. knows, there's up, as said, are Barry many the So pass-throughs then as other

Kevin Steinke

of obviously, the in Okay. a to always going of I terms last last don't driving on specific And that been of years. quarters know to be any what growth acceleration market has business be going couple here the in highlight on nicely is you few or there are growth. commercial kind Great. the want in seems for acceleration catalysts energy But trends to an the growth and if there. there utility that seems faster an growing

John Wasson

I States would we're to I'd transformation mean we're multipronged. say say, seeing a is mean I mean I mean right just programs reduction what now. and that innovation. energy that's it's once-in-a-century of in seeing a that in I in United cost now seeing efficiency -- right and due Kevin, to standards markets this. are guess Yes. I and I the around significant we're the energy climate activities mandating energy arena, portfolio And regulatory planning carbon-free drive state-level renewable technology helping undergoing

the -- EVs you've electrification centers of both have hyperscalers, buildings you -- seeing and Amazons. I'm seeing supporting rise neutrality, the AI, and unprecedented. driving commitments mean, Metas from around Googles We're the the I from data We're change. and Then in transportation and the citizens the on carbon corporations I public load with sure been just reading, mean rapid the including it's the

of And data that's create lot with demand going on centers. to going of creating so that's given a lot a -- there's what's just --

unique the And so it's in a I time think industry. energy

we're to meet I reducing footprints, from energy, can for from We remarks, businesses it the the just the look been in going and at from years, health, it there's I the every look think from and can at address as just the on think these and carbon around And in to the technology, challenges electric I and make demand there. we're tremendous opportunity it's from my from how clean environmental, going -- progress energy said XX or angle. we've we XX regulatory.

I way, it's to accelerating. we're it for and just It is growth long-winded that's giving think here time what's tremendous strong a when going there's double-digit us is just time, mean, a I accelerating. I confidence that So it's opportunity. think And see some unique

Kevin Steinke

that's That's color. really helpful great. No,

you Lastly, I you're awards, just expertise component increasing contract Maybe and and how you including your of elaborate the AI an expertise those the wanted awards the the made if an to about of can component contracts. on can your of of percentage AI kind of ask apply your value seeing about year-to-date one comments you there. to

John Wasson

Sure. Yes.

finding have opportunities, have we think We And say, to both out we're our certainly, we increased technology of AI business, as who need the solution. the really technology have federal mean, and need think their many and in our programmatic achieve I front and these innovative carry who -- capability can opportunities programmatic can domain clients, with with AI, those our technology benefit from on maximize increasingly I -- our So side out the we're with AI working goals to folks, most bench by and we to well out on are I finding domain what that that. around and in I deep those as we're And a benefit missions. they plus federal we people -- we're both their figure how people sides leverage have house. the side working the bring that interest carrying honestly, think the positioned clients And experts the the I to I part their seeing interested that new clients achieve given and would of work, business think AI that they are that, clients. to of and missions,

people. a so federal the from and the these coming And lot agencies are opportunities of programmatic

public the to or AI. can to experts, want to leverage health people bring the or experts, people, how bear out the the toxicologists our to figure health And who policy energy technology on we people public in our are domain the So then it. talking epidemiologists,

something well. that's think do we I particularly and -- So can

with are cases people have to a we're be that quickly. at we to there work in our on seeing business, particularly and rebate assistance, potentially domain of these mean, and side, we're think we perhaps we're evaluation of corporate looking And advantage a that AI think looking grants relevant, commercial of processing. and material we're set but technical Anyway, the interest. could management so use the our we several lot that of I training The tiger can research at team buckets think they opportunities And cases a use I have take experts where potential.

also all key ServiceNow, and IT capabilities platforms. people with, into Appian, platforms we're we have modernization Obviously, their work the Salesforce, are AI X,XXX working building who are doing

finding supporting -- it And help marketing improve the are can our productivity technologists our create for activities for using clients clients. also that that. content so And We're technologists. AI we're on obviously, us to our we of

be And so a I yes, different a we're leverage number expertise of and and most our for I it's use array to our expertise. clients impactful quite technology said, -- figure our of at, looking business. that think the out what really I think trying our And to impactful could a also as both kind of wide we're domain for and are cases things trying

Operator

of question of Sidoti. next from Riddick line Our comes Marc the

Marc Riddick

little touch the to remarks talked release and of wanted the in a disaster the one market on press -- the bit the about prepared you're expecting the half in second I year. client So and of comments the growth recovery the that

can of sort driving some -- maybe what So that. a I certainly you of the seen and seen open front disaster on bit if about we've the talk you talk little what's little a bit wonder you've up could But recovery announcements. maybe about

John Wasson

Yes.

we'll Puerto I think several obviously, on that disaster the mean, over years, you Rico. I I mean, about as front, quite active be talked in the last recovery continue we've to know,

a -- there have we We FEMA-related contract recovery. support just announced to recompete disaster

opportunities engaged Rico, have word waiting the to are housing in side and Puerto also we're on still busy we the continue quite And quite in follow-on several new work. win pipeline on. We contract

a they There's still client. we're there. in -- us I think front And of material so significant are opportunity

Texas, now there a recovery, recovery, excited potentially Rico in Including continues and the both significant us Texas, We're to And potential Texas. long-term the to for us introduce still very around which role Texas for disaster be opportunity work. around Puerto mitigation-related larger play busy we're about. particularly supporting side disaster and in technology in on a

I be the impressive But number, an would then disaster continue great we impressive past, recovery -- know of have and effort qualification going the -- mitigation the remarks, that's wildfire noted client, clients busy a In us. I an to That's doing first Louisiana. our of we're in mean, number Oregon. in number my well, we've of discussed and I major for We've disaster we list. for and company the say it's I State

saw frequency were XXXX I'm out -- the tropical severity NOAA storms, these increase. to story. you a They major prediction. the XX and I to think is sure Marc, significant that, it's is also, certainly X as events know, Atlantic you their XX put of increasing. hurricane only saying including X which hurricanes, is

events for going I well, recovery be become this events live you're the experiencing if seeing And to are in States, And considered funding. the And also eligible United that I -- you think seeing more disaster we're heat know, don't wildfires. summer. then we're anywhere some heat potential

we're really think think that industry there arena. as look road. we're And I are be And growing, business, opportunity leader we we there's down significant an that So in well. doing going to the I

Marc Riddick

acquisition Great. the wondering an one lot a of if give certainly other and -- I could as be pipeline the some cuts. looks should may and wanted update touch on there, maybe available you sort of to as currently maybe are maybe thoughts -- you and out then what I quality potential around what on you those maybe some shaking loose wise. us we And And on thing of chances like maybe is already. was touch get interest thoughts you think valuation the covered rate acquisitions then quantity your things far what

John Wasson

do as ratio position. first leverage sheet Well, strong X. Barry We'll good certainly continue that. apparently that is a generating -- all, as our to strong, I noted, down I to would think mean No, cash. I in balance say significant is Yes. question. of our start We're

for high We have confidence that.

you as last key been over decades. X know, and of -- the a have part acquisitions our think, several I strategy

X been we've there's levered times federal engagement, bet, a in modernization or strategic where and or digital think paid capabilities then or key I IT whether placed in a of before. this mean I X years levered next strategy, discussed X that and or and think up that, again. I we've down the component key our debt remains resources markets X up, I strategic acquired think the

in area, would be certainly that capabilities we're And looking the terms energy the think skills in in at opportunities to the I of breadth the of opportunity carefully and given array that interest. support it, all required market. of wide of and certainly that opportunity

and something to at that recovery, at technology analytics those. I business, greater we'd do and I brought federal that complementary or if along thought think but perhaps tools there's the we to I think gave if think were going we've came more look reach acquisitions, data it. our geographic continued in and us we're smaller systems opportunities -- look And tuck-in to market around then disaster

flow so And I the would say seeing more improving. deal We're is potential opportunities.

And perhaps, focus the valuations are improving think down. And come and I those note, think bit. I -- lot on. I a interest rates, your a think I think there's will to to

in the looking. mean I so And We're we're market.

think we're set not we're quite know, clear we'll have -- disciplined. we to as a I very to We're that. you stick of criteria, going -- and

the But mean our year, it'd of don't and out end in think of strategy, to if were -- before it be on potential do the opportunities. I market, variety a small the we though. more taking we're certainly at remains the anything part I I tuck-in think look

Operator

line comes question from of Truist of Tobey next Our Securities. Sommer the

Tobey Sommer

a talk continued that and attrition head that you about could if about retention? your Do reported to you employee has comment about rebounding like better better lot growth the you have billable than that opportunity levels. or before maybe of have In count even even I pre-pandemic see was been for talked what year-to-date. wondering companies maybe

Barry Broadus

question. for the Thanks Yes.

quarter-over-quarter. Our has a and retention certainly bit XX% turnover from improved, little a perspective. less year-over-year the than in We're rate certainly

we're that talent able been that -- the from happy a the to have on And got programs talent. growing execute from and year-over-year perspective. feel that. we seeing we bit a about retain We're to perspective, talent So our count, the and the a has head little ease we've good get

James Morgan

a That's significantly attrition Yes. a XX% as you is perspective, is is and The up lowest which Morgan. basically give -- this I we're certainly, to little years. -- far a mentioned, from mid-single-digit that, count little been where -- under like as billable on bit from an James head more retention color mean year-over-year, in down, Tobey Barry it's is bit perspective, it ranges.

Tobey Sommer

-- any price, and/or of bids shift be any firm composition a implied I'm any by terms of pipeline and bids primarily a towards margin From kind award of like may and the contract you the thinking sort of cetera. that plan that. appreciate change mix those perspective, discernible the are that or there of winning in to call in trends fixed et out you're submitting of I in that could

John Wasson

stable. I think saying I continue has contracts. a the -- to been I significant don't lower perspective, And under not Or -- pressure would pretty the from not pricing think think across have pricing think -- I don't to fixed say, key do I I don't markets, the see, we've -- been we're I I think -- think margins margins. pretty price that stable. we're our we're we

Barry Broadus

I say that... Yes, would

John Wasson

percentage. at looking that, say you our Would

Barry Broadus

which fixed percentage it's cost of look the our replacing contract reimbursable if going that's contracts, up And is our Yes, our significantly. margins. all contracts, price certainly of you at helping with

mix that we haven't as direct subcontract would big significantly shifts labor that and hasn't seen far of that's good. versus say of really related, I the that. as So any our changed in

John Wasson

proposals going our to implementation deals the other been mean, efficiency energy the which with of is and to say size the modernization. in price in opportunities focus fixed And and the there, I'd our beneficial and particularly up, the us. tend has of very and IT honestly, I thing energy side energy be some programs the given area,

So the size we're deals is the of uptick. the that on certainly bidding

Operator

Wasson closing remarks. now no John I would to turn questions it back I am further to for showing like this at time.

John Wasson

good and at forward conferences Have to call. Well, rest for the summer. events. in Okay. thanks connecting a of participating upcoming look today's We

Operator

in This does you your conclude for program. Thank right. participation the conference. All today's

You may now disconnect.

ICF International (ICFI) 1 Aug 242024 Q2 Earnings call transcript