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II

ICF International, Inc. (ICFI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered modest top-line growth with revenue of $496.3M, up 3.8% year over year, while GAAP EPS was $1.30 and non-GAAP EPS $1.87; both EPS measures rose double digits YoY .
  • Results were slightly above Wall Street consensus: revenue beat by ~$2.1M and non-GAAP EPS beat by ~$0.01, while GAAP EPS was essentially in line (vs $1.858 EPS estimate)* (values retrieved from S&P Global) *.
  • Commercial energy was the standout, up 21.8% YoY to $133.2M and representing 26.8% of total revenue, while federal revenue declined 2.4% due primarily to lower pass-through costs; operating margin contracted to 7.3% in Q4 .
  • 2025 is framed as a transition year: management guided total revenue, GAAP EPS and non-GAAP EPS to range from flat to down 10% vs 2024, with Q1 2025 guidance at $480–$500M revenue, GAAP EPS $1.35–$1.45, non-GAAP EPS $1.70–$1.80; margins targeted to be maintained via cost control .
  • Capital deployment remains supportive: $0.14 quarterly dividend declared and 395,000 shares repurchased from mid-November to date, with ~$120M buyback capacity noted; backlog ended Q4 at $3.8B (funded $1.9B) and TTM awards $2.51B (book-to-bill 1.24) .

What Went Well and What Went Wrong

What Went Well

  • Commercial energy momentum: revenue up 21.8% YoY to $133.2M, with energy markets revenue up 22.6% and representing 88.2% of commercial revenue .
  • Mix-driven profitability: adjusted EBITDA margin on total revenues expanded 30 bps for the full year to 11.2%, aided by lower interest expense; Q4 adjusted EBITDA was $56.3M with 11.3% margin .
  • Strategic M&A: acquisition of Applied Energy Group (AEG) completed Dec 31, 2024; ~$30M 2024 revenue, mid-teens 2025 growth expected, immediately accretive to non-GAAP EPS .
  • Quote: “Our broad-based energy advisory work and program implementation for commercial clients was an important contributor to fourth quarter and full year revenue growth…” — John Wasson .

What Went Wrong

  • Federal revenue softness: down 2.4% YoY in Q4 to $257.7M, driven by ~$14M decline in subcontractor/other direct costs; operating margin compressed to 7.3% vs 7.7% in Q4’23 .
  • Transitional 2025 outlook: management sees maximum downside risk of -10% revenue vs 2024 due to stop-work orders/terminations, notably USAID programmatic work; ~$90M revenue already impacted .
  • Q4 margins mixed: Q4 EBITDA $50.8M vs $53.9M YoY, with adjusted EBITDA slightly below prior year; gross margin slipped to 36.1% vs 36.5% .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$512.0 $517.0 $496.3
GAAP Diluted EPS ($)$1.36 $1.73 $1.30
Non-GAAP Diluted EPS ($)$1.69 $2.13 $1.87
Operating Margin (%)8.3% 8.9% 7.3%
Adjusted EBITDA ($USD Millions)$56.0 $58.5 $56.3
Adjusted EBITDA Margin (%)10.9% 11.3% 11.3%
Effective Tax Rate (%)26.3% 13.8% 20.9%
Q4 2024 vs ConsensusConsensusActualDelta
Revenue ($USD Millions)$494.2*$496.3 +$2.1*
Non-GAAP EPS ($)$1.858*$1.87 +$0.01*
GAAP EPS ($)$1.858*$1.30 -$0.56*

Values marked with * retrieved from S&P Global.

Segment/Client Type (Q4 2024)Revenue ($USD Millions)YoY Growth% of Total
U.S. Federal Government$257.7 -2.4% 51.9%
U.S. State & Local Government$75.5 -1.1% 15.2%
International Government$30.0 +4.2% 6.0%
Commercial$133.2 +21.8% 26.8%
KPIsQ4 2024 / FY 2024
Backlog$3.8B total; $1.9B funded
Q4 Awards / Book-to-Bill$504M; 1.02
TTM Awards / Book-to-Bill$2.51B; 1.24
Operating Cash Flow (FY 2024)$171.5M
Gross Margin (Q4)36.1% vs 36.5% PY
DSO75 days (FY)
Dividend$0.14 declared (paid 4/14/25; record 3/28/25)
Share Repurchases395,000 shares from mid-Nov 2024 to date

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025N/AFlat to down 10% vs 2024 New
GAAP EPSFY 2025N/AFlat to down 10% vs 2024 New
Non-GAAP EPSFY 2025N/AFlat to down 10% vs 2024 New
Adjusted EBITDA MarginFY 2025N/AMaintain similar to 2024 New
Operating Cash FlowFY 2025N/A~$150M New
RevenueQ1 2025N/A$480–$500M New
GAAP EPSQ1 2025N/A$1.35–$1.45 New
Non-GAAP EPSQ1 2025N/A$1.70–$1.80 New
Depreciation & AmortizationFY 2025N/A$21–$23M (D&A); $35–$37M (intangible amort.) New
Interest ExpenseFY 2025N/A$30–$32M New
CapexFY 2025N/A$26–$28M New
Tax RateFY 2025N/A~20.5% New
Diluted Share CountFY 2025N/A~18.6M New
DividendOngoing$0.14/qtr$0.14/qtr declared Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3 2024)Current Period (Q4 2024)Trend
Commercial Energy MomentumRobust demand; energy market revenue +24–25% YoY; record pipeline $10.5–$10.6B; awards with AI components Energy revenue +22.6% YoY; commercial +21.8%; continued mix shift favorability Strengthening
IT Modernization / AIFederal IT mod wins (CMS QPP, FEMA cloud platform); emphasis on digital and AI in awards Expect temporary slowdown in procurements; medium-term uplift from AI/efficiency mandates; margins to be maintained Near-term pause; medium-term positive
Federal Programmatic RiskLower pass-throughs impacting revenue comparisons ~$90M revenue impacted by stops/terminations; USAID DHS/ Treasury/ DOD tech less at risk; max -10% FY risk Elevated risk
International GrowthEC/UK wins; international revenue flat-to-down International revenue +4.2% YoY; EC/UK contracts >$210M awarded Q4/Q1 Improving
Disaster Recovery / State & LocalMajor Puerto Rico/LA regional contracts; resilience/mitigation emphasis Hurricane Helene recovery awards across Carolinas; ongoing wildfire recovery support (CA/OR) Stable to improving

Management Commentary

  • Strategy and mix: “Adjusted EBITDA margin on total revenues expanded by 30 basis points year-on-year to 11.2%, and lower interest expense drove a 33% increase in net income for the year.” — John Wasson .
  • 2025 framework: “We expect ICF’s 2025 total revenues, GAAP EPS and Non-GAAP EPS to range from flat to down 10%… and plan to manage expenditures to maintain similar adjusted EBITDA margins to those of 2024.” — John Wasson .
  • Federal transition: “Approximately $90 million of our estimated 2025 revenues have been affected by stop work orders and by contract terminations… maximum risk… approximately a 10% reduction.” — John Wasson .
  • Cost disciplines and tax: “We remain focused on managing our indirect costs… tax rate of 20.9% in Q4… expect ~21% over the next several years.” — Barry Broadus .
  • Capital allocation: “From mid-November 2024 to date, we have repurchased approximately 395,000 shares for $48 million… quarterly cash dividend of $0.14.” — Barry Broadus .

Q&A Highlights

  • Downside risk quantification: Management reiterated a conservative floor of -10% FY25 revenue vs 2024, based on project-by-project federal review; programmatic exposure (e.g., USAID) drives the majority of risk .
  • Commercial energy resilience: No expected ripple effects from federal slowdowns; strong backlog and pipeline underpin continued robust growth .
  • IT modernization outlook: No issues flagged on current IT mod contracts; opportunity to leverage fraud detection and efficiency capabilities; temporary procurement delays expected .
  • M&A focus: Federal-space acquisitions unlikely in 2025; tuck-ins possible in energy; ~$120M buyback capacity cited; continued deleveraging if no suitable deals .
  • Quarterly guidance approach: Providing Q1 2025 ranges given elevated uncertainty; quarterly guidance may continue as needed .

Estimates Context

  • Q4 2024 revenue modestly exceeded S&P Global consensus ($496.3M vs $494.2M); non-GAAP EPS slightly beat ($1.87 vs $1.858); GAAP EPS was below the same EPS consensus due to non-GAAP adjustments (GAAP $1.30)* (values retrieved from S&P Global) *.
  • Trend across prior quarters: Q2 2024 beat on both revenue and EPS ($512.0M vs $505.7M*, $1.69 vs $1.494*); Q3 2024 missed revenue ($517.0M vs $528.0M*) but beat EPS ($2.13 vs $1.774*) (values retrieved from S&P Global) * *.
  • Given 2025 federal headwinds and management’s proactive cost actions, street models may need to reflect lower federal programmatic revenue, maintained adjusted EBITDA margins, and incremental commercial/international growth offsets .

Key Takeaways for Investors

  • Mix shift to commercial energy remains a structural tailwind for margins and EPS; continued growth expected with AEG enhancing utility tech capabilities .
  • Federal programmatic risk is the principal headwind; management sized maximum FY25 downside at -10% and is prepared to defend margins via cost containment and redeployment .
  • Backlog and awards support multi-year visibility, with improving international momentum (EC/UK >$210M) and state/local disaster recovery wins providing diversification .
  • Q1 2025 guidance suggests resilient near-term performance despite federal transitions; watch for procurement cadence and any incremental stop-work orders .
  • Capital returns are active (buybacks, dividend) and leverage is improving (adjusted net leverage 1.8x at year-end), offering downside support .
  • Estimates likely require fine-tuning: lower federal, higher commercial/international, maintained adjusted EBITDA margins, and ~20.5% tax rate assumptions per CFO .
  • Trading implications: Mild beat coupled with cautious FY25 framework—stock likely to react to incoming federal policy signals and evidence of commercial/international execution; monitoring Q1 delivery vs guidance is key .