ICF International (ICFI) Q4 2007 earnings summary

Executive summary

• FY07 revenue rose to $727.1M from $331.3M, while operating earnings reached $70.5M and net income $40.6M; The Road Home drove most of the expansion.

• Organic growth excluding 2007 acquisitions and The Road Home revenue was 10.5%; management cited strong organic growth and a robust acquisition and project pipeline.

Financial highlights

• Revenue increased 119.5% YoY to $727.1M, driven mainly by $459.4M from The Road Home, $34.5M in other contract growth, and $18.0M from Z-Tech and SH&E.

• Operating income was $70.5M, up from $22.9M; net income was $40.6M versus $11.9M, and diluted EPS was $2.72 versus $1.10.

• Direct costs were $532.2M, or 73.2% of revenue, versus $217.7M, or 65.7%; subcontracted work on The Road Home was the main driver of the higher ratio.

• Operating expenses were $124.4M, or 17.0% of revenue, versus $90.6M, or 27.3%; indirect and selling expense ratio fell to 16.2% from 26.3%.

Outlook and guidance

• Management expected growth opportunities from energy investment, climate and environmental regulation, likely healthcare reform, and continued homeland security priorities.

• The Road Home revenue was expected to decline in 2008 and beyond as applications were processed; replacing it through organic growth, acquisitions, or other investments was critical to results.

• The February 2008 Jones & Stokes acquisition was expected to expand western U.S. reach and environmental and implementation capabilities; strong organic growth and acquisition and project pipelines supported optimism.