ICF International Inc. (ICFI)
Q4 2008 Earnings Call
March 11, 2009; 5:00 pm ET
Sudhakar Kesavan - Chairman & Chief Executive Officer
John Wasson - Chief Operating Officer
Alan Stewart - Chief Financial Officer
Douglas Beck - Senior Vice President of Corporate Development
Jason Kupferberg - UBS
Joseph Vafi - Jefferies & Co.
Tim McHugh - William Blair & Co.
Steve Ferazani - Sidoti & Co.
Tim Quillin - Stephens Inc.
James Harlow - Stifel Nicolaus & Co.
Previous Statements by ICFI
» ICF International Inc. Q3 2008 Earnings Call Transcript
» ICF International, Inc. Q2 2008 Earnings Call Transcript
» ICF International Inc., Q4 2007 Earnings Call Transcript
And now, I would like to turn the program over to Douglas Beck, Senior Vice President, Corporate Development. Please go ahead.
Thank you, operator. Good evening everyone, and thank you for joining us to review ICF’s fourth quarter 2008 performance. With us today from ICF International are Sudhakar Kesavan, Chairman and CEO, John Wasson, COO, and Alan Stewart, CFO.
During this conference call, we will make forward-looking statements to assist you in understanding ICF management’s expectations about our future performance. These statements are subject to a number of risks that could cause actual events and results to differ materially, and I refer you to our March 11, 2009 press release and our SEC filings for discussions of those risks.
In addition, our statements during this call are based on our views as of today. We anticipate that future developments will cause our views to change. Please consider the information presented in that light.
We may at some point elect to update the forward-looking statements made today, but specifically disclaim any obligation to do so. During this call, we will refer you to non-GAAP financial measures such as backlog and EBITDA. A reconciliation of those measures to the most directly comparable GAAP measures is available in the Investor Relations section of our website.
I will now turn the call over to our CEO, Sudhakar Kesavan to discuss fourth quarter 2008 highlights. Sudhakar?
Thank you, Doug and good evening everyone. Fourth quarter performance was in line with our expectations and represented another strong period of core business growth for ICF. Excluding The Road Home contract, which we completed in June of this year, revenues were up 42.9%, we reported organic growth for the fourth quarter of 16%.
This growth points to the strength of our markets and the high level of demand for ICF’s domain expertise and expanded implementation capabilities. The fourth quarter mix of core business revenue remains similar to recent trends.
Energy, environment and climate change together accounted for 57% of revenues, health, human services and social programs were 29%, and homeland security and defense accounted for about 14%.
We achieved double-digit growth across most of these markets in the fourth quarter, which is strong statement given the prevailing economic environment. Only homeland security and defense grew at a lesser rate but was still up 3.5%.
EBITDA margin came in within our 9% to 10% guidance range, as we worked effectively through another transition period on The Road Home contract, which as I said will be completed in June. On the cost side, we are taking advantage of synergies related to recent acquisitions. Additionally, our ability to win larger contracts is helping us increase utilization and we continue to migrate to the higher margin, time and materials and fixed price contracts, which represented 89% of our core business revenues in 2008.
And looking at full year 2008 results, it is clear that we have made significant progress on several fronts. We posted core business revenue growth of 61.6% organic growth was 20.4% for the year. Our contract win rate including recompete was 48%. Also it is important to note that no single contract represented more than 2% of core business revenues.
Looking ahead, we are pleased with our current new business pipeline, which is $1.67 billion today after another solid quarter of contract wins. Core business backlog was $757 million, up 56% from last year’s level, a 3% sequential increase over 2008 third quarter.
We know that analysts and investors are interested in discussing the project opportunities for ICF that are likely due to the recently passed Stimulus Package. We believe there will be many and we are enthusiastic about these opportunities too. However, we want to be realistic as to the likely timing for these opportunities to generate revenue. Congressional budget office estimates that only about one-fifth of the total budgeted outlays of $575 billion are expected to be committed before October 1 of this year. So yes, we are optimistic, but the timing and magnitude are not yet clear.
We recently added a section to our website that provides spot leadership on key administration priorities by our subject matter experts. These white papers proposed specific action plans that address many of the initiative outlined in the stimulus plan. They are available on our website at www.icfi.com/transition and we encourage you to take a look.
I would now like to turn the call over John Wasson, who will give you more details on contracts and business trends. John?
Thank you, Sudhakar and good evening everyone. As Sudhakar noted, fourth quarter performance was inline with our expectation and sales were seasonally strong. In fact at $141 million, our sales for the quarter were almost twice last year’s levels and were well diversified across our four major markets. Earnings release today summarizes the key wins that we have announced throughout the quarter, but I want to make some highlights and their implications.