ICF International (ICFI) Q4 2011 earnings summary

Executive summary

• 2011 revenue rose 9.9% to $840.8M; operating income increased 25.5% to $58.9M and net income rose to $34.9M.

• Growth came from domestic commercial work, particularly energy, alongside continued U.S. government expansion; year-end backlog was $1.7B.

• The Ironworks acquisition added digital and customer-engagement capabilities; GHK was acquired in February 2012 to expand international scale.

Financial highlights

• Revenue was $840.8M vs. $764.7M in 2010, up 9.9%; domestic commercial revenue grew $57.2M and U.S. government revenue grew $14.5M.

• Operating income was $58.9M vs. $46.9M, up 25.5%; operating margin was 7.0% vs. 6.1%.

• Net income reached $34.9M vs. $27.2M; diluted EPS was $1.75 vs. $1.38.

• EBITDA was $79.2M vs. $70.0M; includes non-cash compensation charges of $6.7M and $7.5M, respectively.

• Direct costs were 61.9% of revenue vs. 62.3%; indirect and selling expenses were 28.7% vs. 28.6%.

Outlook and guidance

• 2012 revenue was expected to reach $1B for the first time; backlog stood at $1.7B at year-end 2011.

• Ironworks plus organic growth was expected to raise domestic commercial revenue to 22% of total revenue in 2012, roughly double its level five years earlier.

• Traditional international business was expected to reach 6% of the 2012 portfolio; broader business performed outside the U.S., including international development, was expected to reach 12%.

• Strategy emphasized larger implementation and life-cycle engagements, commercial expansion, international growth, higher-margin work, and selective acquisitions.