Sign in

You're signed outSign in or to get full access.

II

ICF International, Inc. (ICFI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean EPS beat with non-GAAP EPS at $1.94 vs S&P Global consensus $1.73 (+12.1%), while revenue was essentially in line at $487.6M vs $487.3M; EBITDA came in below consensus due to mix and special charges, but adjusted EBITDA margin held at 11.3% . Values retrieved from S&P Global.*
  • Commercial energy remained the growth and margin engine (+21% YoY), offsetting a 12.6% decline in federal revenue tied to new administration priorities; mix shifted further toward fixed-price (49%) and T&M (43%) contracts, supporting margin resilience .
  • Management maintained the 2025 framework: total revenue, GAAP EPS, and non-GAAP EPS expected flat to down 10% vs 2024; full-year adjusted EBITDA margins to be similar to 2024; operating cash flow ~ $150M; tax rate reduced to ~18.5% (from 20.5% prior), modestly lifting EPS power .
  • Backlog adjusted down by ~$375M since year-start due to terminations and stop-work orders, but funded backlog remains strong at $1.9B (56% of total) and the pipeline is ~$10.5B; mgmt repurchased 313k shares in Q1, underscoring confidence and capital return cadence .
  • Near-term stock catalysts: non-GAAP EPS outperformance and mix-driven margin stability, balanced against federal revenue pressure and EBITDA softness vs consensus; maintained FY framework with tax-rate relief and Q2 revenue expected similar to Q1 may anchor expectations .

What Went Well and What Went Wrong

  • What Went Well

    • Commercial energy growth and margin leadership: “Revenues from commercial energy clients increased 21% year-on-year… flexible load management, electrification and grid resilience” .
    • Mix tailwinds to margins: Adjusted EBITDA margin 11.3% (+10 bps YoY), aided by a 170 bps reduction in subcontractor and other direct costs; fixed price rose to 49% of revenue .
    • International/state & local stability and growth: International government +7.2% YoY; state & local stable with expanding disaster recovery pipeline (95 active DR contracts across 22 states/territories) .

  • What Went Wrong

    • Federal revenue decline: -12.6% YoY, reflecting funding curtailments and slower RFP cadence; mgmt has identified ~$115M 2025 revenue affected by stop-work/terminations and ~$375M backlog impact since year-start .
    • EBITDA below consensus: EBITDA $52.1M vs S&P Global consensus $54.0M; special charges ($3.1M) and cost actions tempered reported EBITDA despite adjusted margin stability . Values retrieved from S&P Global.*
    • Working capital and DSO: Operating cash flow was negative (-$33.0M) on seasonal factors; DSO increased to 81 days (timing of federal collections), expected to improve as collections normalize .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$517.0*$496.3*$487.6
GAAP Diluted EPS ($)$1.73*$1.87*$1.44
Non-GAAP EPS ($)$2.13 $1.87 $1.94
EBITDA ($USD Millions)$59.1*$53.3*$52.1
Adjusted EBITDA ($USD Millions)—$56.3 $55.2
Adjusted EBITDA Margin (%)11.3% 11.3% 11.3%
Operating Margin (%)——7.9%

Values retrieved from S&P Global.*

Q1 2025 Actual vs ConsensusActualConsensus*Surprise
Revenue ($USD Millions)$487.6 $487.3*+0.07%
Non-GAAP EPS ($)$1.94 $1.73*+12.1%
EBITDA ($USD Millions)$52.1 $54.0*-3.6%

Values retrieved from S&P Global.*

Q1 2025 Segment DetailAmount ($USD Millions)Mix (%)YoY Change
Government revenue (total)$343.6 70.5% —
- U.S. federal$239.6 49.1% of total revenue -12.6%
- U.S. state & local$76.9 15.8% of total revenue ~flat
- International government$27.1 5.6% of total revenue +7.2%
Commercial revenue (total)$144.1 29.5% of total revenue +22% (category)
Energy markets (within commercial)—87.3% of commercial revenue +21%
Contract/Revenue Mix (Q1)Q1 2024Q1 2025
Time-and-materials (%)42% 43%
Fixed-price (%)45% 49%
Cost-based (%)13% 8%
Commercial mix (%)24% 30%
Government mix (%)76% 70%
KPIs (Q1 2025)Value
Backlog (total)$3.4B
Funded backlog$1.9B (56% of total)
Contract awards$467M; Book-to-bill 0.96
Pipeline~$10.5B
DSO81 days
Net debt$499M
Share repurchases313k shares in Q1
Dividend$0.14 per share (declared; payable Jul 11, 2025)

Guidance Changes

MetricPeriodPrevious Guidance (2/27/2025)Current Guidance (5/1/2025)Change
Total revenue vs 2024FY 2025Flat to -10% Flat to -10% Maintained
GAAP EPS vs 2024FY 2025Flat to -10% Flat to -10% (excl. Q1 one-time tax benefit) Maintained/clarified
Non-GAAP EPS vs 2024FY 2025Flat to -10% Flat to -10% Maintained
Adjusted EBITDA marginFY 2025Similar to 2024 Similar to 2024 Maintained
Operating cash flowFY 2025~ $150M ~ $150M Maintained
Tax rateFY 2025~20.5% ~18.5% Lowered
CapexFY 2025$26–$28M $26–$28M Maintained
Interest expenseFY 2025$30–$32M $30–$32M Maintained
D&A expenseFY 2025$21–$23M $21–$23M Maintained
Amortization of intangiblesFY 2025$35–$37M $35–$37M Maintained
Share count (diluted)FY 2025~18.6M ~18.6M Maintained
DividendQuarterly$0.14 per share $0.14 per share Maintained
Q2 revenue cadenceQ2 2025—Similar to Q1 New color

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Commercial energy growth and marginsStrong multi-year growth; mix lift; adj. EBITDA margin +50 bps YoY; demand from utilities and data centers +21% YoY energy markets; 87% of commercial; margins supported by mix and lower pass-throughs Strengthening
Federal programmatic exposure and USAID impactIdentified maximum downside (-10% rev) from administrative shifts; USAID impacts; conservative bottoms-up risk assessment Federal revenue -12.6% YoY; ~$115M 2025 revenue affected; backlog impact ~$375M year-to-date Pressure persists
IT modernization outlook (AI, fixed-price)Pursuing larger contracts; digital modernization seen as bipartisan priority Expected -5% to -10% in 2025 due to award delays; >80% in Agile sprints; ~50% fixed-price outcome-based Transitional, second-half setups
Disaster recovery and state/local climate workExpanding state/local pipeline and DR programs; expecting RFPs later in 2025 DR revenue ex pass-through up ~3% YoY; 95 active DR contracts in 22 states/territories Stable-to-improving
International momentum (EU/UK)Noted wins in late 2024 and early 2025 Continued ramp; +7.2% YoY; recent >$210M awards EU/UK Building
Tax optimizationLower tax rate supporting EPS Q1 tax rate 10.5%; FY tax ~18.5% Beneficial

Management Commentary

  • “First quarter revenues were in line with our expectations…Commercial energy clients increased 21% year-on-year… flexible load management, electrification and grid resilience. Demand… increased as utility clients face greater demands for electricity to support data center requirements and seek to manage distributed energy resources.” — John Wasson, CEO .
  • “Adjusted EBITDA margin was 11.3% of total revenues… Fixed price contracts accounted for 49%… up from 46% in the year-ago period.” — John Wasson, CEO .
  • “We are maintaining the guidance framework… total revenues, GAAP EPS and Non-GAAP EPS to range from flat to down 10% from last year’s levels… revenues from commercial energy, state and local and international government clients will grow at least 15% in the aggregate.” — John Wasson, CEO .
  • “The change in our business mix… delivered higher gross margin, increased our adjusted EBITDA margin and grew non-GAAP EPS despite a modest revenue decline… Q2 revenues are anticipated to be similar to those first quarter.” — Barry Broadus, CFO .

Q&A Highlights

  • Guidance cadence and federal impact: Management expects Q2 and Q3 to be similar to Q1 in terms of federal impact; environment remains fluid, with improving flow of extensions/modifications and RFPs, but not normalized .
  • Backlog and stop-work orders: Backlog reduced by ~$375M since year-start due to terminations; ~$115M of estimated 2025 revenues affected by stop-work/terminations; stop-work orders assumed to result in terminations this year (upside if reversed) .
  • IT modernization: Expect down 5–10% in 2025 on delays; administration favors fixed-price, outcome-based contracting aligned with ICF’s approach; medium-term AI-led tech priorities seen as tailwinds .
  • Commercial energy durability: Guide assumes continued strong performance and margins in commercial energy; pilots in flexible load management/electrification scaling over time .
  • Disaster recovery outlook: Growth expected with opportunities in CA, FL, Carolinas, GA; FEMA/CDBG process changes not expected to materially impair state/local DR opportunity set .

Estimates Context

  • Q1 2025 vs S&P Global consensus: non-GAAP EPS $1.94 vs $1.73 (+12.1% beat), revenue $487.6M vs $487.3M (+0.07%), EBITDA $52.1M vs $54.0M (-3.6%). Values retrieved from S&P Global.* .
  • Prior quarters: Q4 2024 EPS $1.87 vs $1.858 (beat), revenue $496.3M vs $494.2M (beat), EBITDA $53.3M vs $57.8M (miss); Q3 2024 EPS $2.13 vs $1.774 (beat), revenue $517.0M vs $528.0M (miss), EBITDA $59.1M vs $58.2M (beat). Values retrieved from S&P Global.*
  • Implications: Street likely nudges FY tax rate lower (~18.5%) and appreciates durability of adj. EBITDA margin, but may trim EBITDA expectations near-term given federal mix and special charges; Q2 revenue “similar to Q1” tones down top-line inflection hopes until 2H .

Key Takeaways for Investors

  • Mix-driven resilience: Despite federal headwinds, commercial energy growth and higher fixed-price/T&M mix are sustaining margins and supporting EPS beats; maintain overweight thesis on commercial energy exposure .
  • 2025 is transitional: Maintain base case of flat to -10% revenue/EPS vs 2024 with adjusted EBITDA margins similar to 2024; tax-rate reset to ~18.5% is a positive offset .
  • Monitor federal contracting cadence: Watch conversion of extensions/modifications and RFP flow through Q2–Q3; upside if stop-work orders revert or if new fixed-price awards accelerate in 2H .
  • Cash flow and capital allocation: OCF guided to ~$150M with seasonality; ongoing buybacks (313k shares in Q1) and dividend ($0.14) provide support while delevering remains a focus .
  • Trend signals: International/EU-UK wins (> $210M ceilings) and DR pipeline breadth diversify revenue and reduce policy risk concentration .
  • Near-term trading setup: Positive EPS surprise and guidance maintenance likely supportive; caution on EBITDA vs consensus and federal backlog adjustments may cap multiple expansion near term .
  • Medium-term thesis: AI-led IT modernization, scaling flexible load management/electrification programs, and international ramp offer re-acceleration potential into 2026 as federal priorities clarify .

S&P Global disclaimer: All consensus estimate figures (and any “actual” values marked with an asterisk) were retrieved from S&P Global Capital IQ and may differ from company-reported figures due to methodology differences.*