The company is also divesting one of its marketing businesses to further sharpen which commercial markets and customers it works with.
One acquisition and divestiture during the second quarter represent signposts for how ICF is both positioning its commercial businesses and looking to create even deeper links with the company's government teams.
Both moves of undisclosed terms were announced in ICF's second quarter earnings release and subsequent call with investors.
Through the purchase of CMY Solutions, ICF eyes more technology modernization work with clients in the electricity sector. CMY's approximately 50 electrical engineers work with utilities in the U.S., Europe and Asia on grid modernization programs with a bent toward data analytics.
Investor-owned utilities, electric municipalities and electric co-operatives are among CMY's clients.
"CMY expands our addressable market by giving us the ability to support client needs for renewables interconnection, substation and distribution upgrades and grid resilience and providing us new technology and data management capabilities that we can offer our commercial energy clients as well as our government clients," ICF's chief executive John Wasson told investors on the call.
Wasson told analysts ICF sees demand picking up across the commercial energy sector in light of funds and tax credits being made available through the $1.2 trillion Infrastructure Investment and Jobs Act and $500 billion Inflation Reduction Act.
Reston, Virginia-headquartered ICF's commercial energy clients include utilities, global energy developers and energy providers. They are among those subject to a new Federal Energy Regulatory Commission order issued July 28 that seeks to expedite the interconnection of new wind, solar and storage resources to the electric grid.
Wasson characterized the pickup in demand as including advisory and related work in pilot programs focused on electrification, financing and energy equity. That also includes services needed to help renewable and offshore energy providers analyze, finance, permit, construct, connect, monitor and operate their projects.
Major announcement number two out of ICF involves the pending sale of its commercial marketing business to an as-of-yet unidentified buyer. ICF expects to close that transaction by the end of the third quarter.
Wasson characterized that business' client set as including businesses in the hospitality, retail, travel and goods packaging sectors. ICF expects the business to record $70 million in revenue this year.
In this current iteration of ICF's strategy, its five major growth drivers cut across the government and highly-regulated commercial markets such as energy.
ICF is retaining an international marketing communications business headquartered in Brussels, Belgium. But in a harken back to those growth drivers, Wassson said ICF is keeping the marketing and communications teams that focus on federal clients.
"We also have a core set of people that support our commercial energy business with communication in the market, in particular, our energy efficiency and other utility programs," Wasson said. "Those people are embedded in our commercial energy business, they are all staying with ICF, and we'll continue to do that work."
One of ICF's five major growth drivers is IT modernization, which predominantly concentrates on work with federal agencies.
The overall conversation in that domain these days seems to center around artificial intelligence and generative AI in particular given how much more advanced the latter technology has become, at least in the consumer and commercial worlds.
Wasson described ICF's work in AI as including the use of machine learning and predictive techniques to search for literature, and look for patterns and data that can identify events such as diseases and fraudulent activity.
"It's certainly our expectation that AI has been embedded in these platforms for many years and generative AI will become part of what is embedded and used in these platforms," Wasson said. "So we continue to look at that, take a hard look at that, work with our clients and and evaluate how internally how to best utilize those products and those capabilities to meet client needs and to improve productivity."
Second quarter revenue of $500.1 million was 18.2% higher than the prior year period, representing an organic growth rate of 10% and sales from the acquisition of SemanticBits in June 2022. Profit of $51 million showed a 19.2% year-over-year increase in EBITDA (earnings before interest, taxes, depreciation and amortization).
Even when including the divestiture, ICF continues to expect total revenue of $1.93 billion-to-$2 billion and EBITDA of $210 million-to-$220 million.
ICF also reported a $3.6 billion backlog as of the second quarter's end on a book-to-bill ratio of 1.3x for the trailing 12 months, a measurement of backlog growth versus drawdowns against it to book sales.