FINANCE

ICF reports booming third quarter

But federal growth is anemic, under 1 percent

ICF International Inc. had good news for its quarter ended Sept. 30, reporting increases in revenue, operating income and net income, as well as general growth across all of its major markets this quarter. But growth in the federal sector was anemic.

Third quarter revenue was $237.9 million, an 8.8 percent increase over third quarter 2011’s $218.7 million. Service revenue increased 12.4 percent to $176.2 million.

Operating income, which ICF said included $1.1 million in higher amortization expenses related to recent acquisitions, increased by 4.8 percent, from $16.1 million in 2011 to $16.9 million this quarter.

Net income also increased, reported at $9.6 million in the third quarter, or 48 cents per diluted share. 2011’s third quarter net income was $9.3 million, or 47 cents per diluted share.

ICF also reported its year-to-date revenue figures. For the first nine months of the current year, revenue was $705.2 million, a 12.5 percent increase over the $626.8 million reported this time last year.

As for the reason behind the growth in revenue, Sudhakar Kesavan, ICF chairman and CEO, said that it “continued to be driven by substantial increases in business with our commercial and non-U.S. government clients, which in the aggregate accounted for 29 percent of total revenues, up from 24 percent in last year’s third quarter.”

Kesavan also reported ICF’s third quarter organic revenue to be down, but reported a boost in year-to-date organic revenue, due to 2012 rates having “been affected in both the third quarter and first nine months of 2012 by a reduction as a percentage of revenue in subcontractor and other direct costs.”

As a result, “organic growth for the third quarter was negative 1.7 percent. Organic growth for the first nine months of 2012 is a positive 1.9 percent,” Kesavan said.

Kesavan also reported the good news that ICF’s “business awards this quarter included a number of important strategic wins and a high percentage of new contracts versus re-competes with government and commercial clients.”

The company’s federal government revenues figure increased 0.3 percent to $143.7 million in the third quarter. Growth came in areas such as health, social programs, and consumer/financial markets. Federal government business represented 61 percent of total revenues, ICF said, compared to 66 percent in 2011’s third quarter.

ICF's state and local government revenues increased 10.4 percent, accounting for 10 percent of total revenue.

The company said that this reflects the continued strength of its infrastructure management services, specifically in the Western states.

Non-U.S. government revenues more than tripled to $9.1 million from last year’s figure, $2.9 million, due to the company’s acquisition of GHK Holdings Limited in February 2012.

Backlog was reported to be $1.6 billion at the end of the 2012 third quarter. Funded backlog was $766 million, or 48 percent of the total.

The total value of contracts awarded in the third quarter of 2012 was $360 million; year-to-date 2012, the company reported  $796 million.

ICF said that this resulted in a third quarter book-to-bill ratio of 1.51 and a year-to-date book-to-bill ratio of 1.13.

Kesavan pointed to the company’s “ability to leverage key subject matter expertise across a broad client universe, and our strategic approach to making and building upon acquisitions,” as being the reason behind its quarterly success.

“With our strong year-to-date bookings, ICF is well positioned for future growth,” he said.

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