Everforth (EFOR) Q4 2023 earnings summary

Executive summary

• Q4 2023 revenue was $1,074.1M, down 6.6% YoY; adjusted EBITDA was $121.0M, with an 11.3% margin.

• FY 2023 revenue was $4,450.6M, down 2.8% YoY; adjusted EBITDA was $517.2M, with an 11.6% margin.

• Commercial consulting revenue exceeded $1.0B for FY 2023; management plans to focus on higher-end IT consulting projects in 2024.

Financial highlights

• Q4 gross profit was $304.9M versus $340.1M YoY; gross margin was 28.4% versus 29.6%.

• Q4 income was $50.3M, adjusted income was $68.8M, diluted EPS was $1.06 and adjusted diluted EPS was $1.45.

• FY income was $219.3M, adjusted income was $296.8M, diluted EPS was $4.50 and adjusted diluted EPS was $6.09.

• FY gross profit was $1,280.0M versus $1,369.6M YoY; gross margin was 28.8% versus 29.9%.

• Q4 operating cash flow was $116.4M and free cash flow was $109.2M; FY figures were $456.9M and $417.0M.

Outlook and guidance

• Q1 2024 revenue guidance: $1,032M–$1,052M, down 8.6%–6.8% YoY; gross margin 28.0%–28.3%.

• Q1 net income guidance: $37.7M–$41.3M; diluted EPS $0.80–$0.87; adjusted EBITDA $104.5M–$109.5M.

• Q1 adjusted net income guidance: $52.2M–$55.8M; adjusted diluted EPS $1.10–$1.18; adjusted EBITDA margin 10.1%–10.4%.

• Guidance assumes 62.75 billable days; annual payroll-tax resets are expected to lower Q1 gross and adjusted EBITDA margins. Estimates assume no significant market deterioration.