ICF Reports Third Quarter 2025 Results

―Revenues From Commercial Clients and State & Local and International Government Clients Increased 14% to Account for 57% of Q3 Revenues―

―Revenues from Commercial Energy Clients Up 24%―

―Favorable Mix and Effective Cost Management Continued to Drive Margin Expansion―

―Maintains Guidance Framework and Expects a Return to Revenue and Earnings Growth in 2026―

Third Quarter Highlights:

RESTON, Va., Oct. 30, 2025 /PRNewswire/ -- ICF (NASDAQ: ICFI), a leading global solutions and technology provider, reported results for the third quarter ended September 30, 2025.

Commenting on the results, John Wasson, chair and chief executive officer, said, "Our third quarter performance demonstrates the benefits of ICF's diversified client base, our agility in adapting to challenging market conditions, and the success of our business development activities.

"We continued to see strong year-on-year growth in revenues from our commercial, state & local government and international government clients. Within this client set, revenue growth from commercial energy clients remained robust, driven by strong demand from our utility clients for ICF's industry-leading energy efficiency programs and expertise in flexible load management, electrification, grid resilience and affordability—expertise that is closely aligned with the needs of our utility clients as they address increasing electricity demand.

"We are successfully executing our plan to maintain similar margins to those of 2024. Adjusted EBITDA margin expanded by 10 basis points to 11.4% of third quarter revenues, primarily reflecting the increased contribution of higher-margin commercial energy revenues and the benefits of cost management initiatives. Additionally, fixed price and time and materials contracts accounted for 93% of third quarter revenues compared to 88% last year, while cost reimbursement contracts declined to 7%.

"Third quarter contract awards increased 2.4% year-on-year, resulting in a quarterly book-to-bill ratio of 1.53, despite the continuing delays in new federal government procurements. Approximately 50% of the awarded contracts in the federal government arena represented new business, a good indication that our capabilities, particularly in the area of IT modernization, are being recognized. Our business development pipeline was $8.4 billion at the end of the third quarter, which together with our year-to-date contract awards of $1.8 billion support our confidence in ICF's ability to return to growth in 2026.

"In a separate release today, we announced several executive leadership changes supporting ICF's future growth. Following Barry Broadus' decision to retire after a 40-year career in finance, we have tapped James Morgan, currently COO, to take on the additional role of CFO following the publication of ICF's full year 2025 financial results. In addition, Anne Choate, currently executive vice president, will take on the role of president. ICF is fortunate to have a strong, stable group of talented leaders like James and Anne, who will work closely with me, our executive leadership team and our board of directors in executing organic growth, acquisitions and financial strategies that build our future growth and profitability."

Third Quarter 2025 Results

Third quarter 2025 total revenue was $465.4 million, compared to $517.0 million reported in the third quarter of 2024 and $476.2 million in this year's second quarter. Subcontractor and other direct costs were 24.2% of total revenues, compared to 24.7% in the comparable prior year period. Revenues excluding subcontractor and other direct costs decreased 9.4% compared to last year's third quarter and 3.0% compared to the prior quarter. Gross margin increased 50 basis points to 37.6%, driven by favorable business mix. Operating income was $38.4 million, compared to $46.0 million last year, and operating margin on total revenue was 8.3%, compared to 8.9% in the third quarter of 2024. Net income totaled $23.8 million, versus $32.7 million in the prior year. Diluted EPS was $1.28 per share, compared to $1.73 a year ago. The company's effective tax rate was 22.7% compared to 13.8% in the third quarter of 2024.

Non-GAAP EPS was $1.67 per share, inclusive of a negative tax adjustment of $0.04 per share versus $2.13 per share reported in the comparable period in 2024. EBITDA was $52.8 million, compared to $58.2 million reported in the year-ago quarter. Adjusted EBITDA was $53.2 million, and Adjusted EBITDA margin on total revenues was 11.4%, 10 basis points above third quarter 2024 levels.

Backlog and New Business

Total backlog was $3.5 billion at the end of the third quarter of 2025. Funded backlog was $1.9 billion, or approximately 52% of the total backlog. The total value of contracts awarded in the third quarter of 2025 was $714 million, representing a quarterly book-to-bill ratio of 1.53 and a 2.4% increase over the similar period last year.

Government Revenue Third Quarter 2025 Highlights

Revenue from government clients was $308.8 million during the quarter.

Key Government Contracts Awarded in the Third Quarter of 2025

Notable government contract awards won in the third quarter of 2025 included:

IT Modernization/Digital Transformation

Disaster Management

Health and Social Programs

Strategic Communications

Commercial Revenue Third Quarter 2025 Highlights

Commercial revenue was $156.6 million, up 20.9% year-over-year.

Key Commercial Contracts Awarded in the Third Quarter of 2025

Notable commercial awards won in the third quarter of 2025 included:

Energy

Other

Dividend Declaration

On October 30, 2025, ICF declared a quarterly cash dividend of $0.14 per share, payable on January 9, 2026, to shareholders of record on December 5, 2025.

Summary and Outlook

"Year-to-date results have put us on track for our 2025 results to be within the guidance framework we provided at the beginning of this year, which stated that a 10% decline in revenues, GAAP EPS and Non-GAAP EPS from 2024 levels was the maximum downside risk we foresaw from the loss of business primarily from federal government clients during this transition year. At that time, we stated that our guidance framework did not consider the potential impact of an extended government shutdown. In the month of October, we estimate that ICF's revenues will be reduced by approximately $8 million and gross profit by approximately $2.5 million as a result of the current government shutdown. Based on this monthly impact continuing, we are pleased to be able to maintain our original guidance framework for revenues and Non-GAAP EPS even if the government shutdown extends through the end of the year. Given these assumptions, we expect the year-on-year decline in fourth quarter revenues and Non-GAAP EPS would be similar to what was reported for the third quarter. We are revising our operating cash flow estimate for 2025 to range from $125 million to $150 million to reflect the timing of payments as a result of the government shutdown.

"Looking ahead, we continue to be confident in our ability to return to revenue and earnings growth in 2026. This outlook is supported by the continued growth from our non-federal government clients, improvement from portions of our federal government business, recent contract wins and a robust pipeline of opportunities. Additionally, our professional staff has been instrumental in helping us navigate difficult business conditions, and their ongoing commitment to ICF and our clients underpins our ability to drive long-term growth," Mr. Wasson concluded.

1 Non-GAAP EPS, EBITDA, and Adjusted EBITDA are Non-GAAP measurements. A reconciliation of all Non-GAAP measurements to the most applicable GAAP number is set forth below. Special charges are items that were included within our consolidated statements of comprehensive income but are not indicative of ongoing performance and have been presented net of applicable U.S. GAAP taxes. The presentation of Non-GAAP measurements may not be comparable to other similarly titled measures used by other companies.

About ICF

ICF is a leading global solutions and technology provider with approximately 9,000 employees. At ICF, business analysts and policy specialists work together with digital strategists, data scientists and creatives. We combine unmatched industry expertise with cutting-edge engagement capabilities to help organizations solve their most complex challenges. Since 1969, public and private sector clients have worked with ICF to navigate change and shape the future. Learn more at icf.com.

Caution Concerning Forward-looking Statements

Statements that are not historical facts and involve known and unknown risks and uncertainties are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, as amended. Such statements may concern our current expectations about our future results, plans, operations and prospects and involve certain risks, including those related to the government contracting industry generally; our particular business, including our dependence on contracts with U.S. federal government agencies; and our ability to acquire and successfully integrate businesses. These and other factors that could cause our actual results to differ from those indicated in forward-looking statements are included in the "Risk Factors" section of our securities filings with the Securities and Exchange Commission. The forward-looking statements included herein are only made as of the date hereof, and we specifically disclaim any obligation to update these statements in the future.

Note on Forward-Looking Non-GAAP Measures

The company does not reconcile its forward-looking Non-GAAP financial measures to the corresponding U.S. GAAP measures due to the variability and difficulty in making accurate forecasts and projections and because not all of the information necessary for a quantitative reconciliation of these forward-looking Non-GAAP financial measures (such as the effect of share-based compensation or the impact of future extraordinary or non-recurring events like acquisitions) is available to the company without unreasonable effort. For the same reasons, the company is unable to estimate the probable significance of the unavailable information. The company provides forward-looking Non-GAAP financial measures that it believes will be achievable, but it cannot accurately predict all of the components of the adjusted calculations, and the U.S. GAAP financial measures may be materially different than the Non-GAAP financial measures.

Investor Contacts:

Lynn Morgen, ADVIS IR Y PARTNERS, lynn.morgen@advisiry.com +1.212.750.5800

David Gold, ADVIS IR Y PARTNERS, david.gold@advisiry.com +1.212.750.5800

Company Information Contact:

Lauren Dyke, ICF, lauren.dyke@ICF.com +1.571.373.5577

ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per share amounts)

2025

2024

2025

2024

Revenue

$ 465,405

$ 516,998

$ 1,429,178

$ 1,523,463

Direct costs

290,545

325,047

891,512

964,911

Operating costs and expenses:

Indirect and selling expenses

122,261

132,816

377,169

389,001

Depreciation and amortization

14,168

13,111

43,665

40,176

Total operating costs and expenses

136,429

145,927

420,834

429,177

Operating income

38,431

46,024

116,832

129,375

Interest, net

(7,861)

(7,195)

(23,620)

(23,136)

Other income (expense)

176

(899)

(2,515)

767

Income before income taxes

30,746

37,930

90,697

107,006

Provision for income taxes

6,980

5,251

16,419

21,399

Net income

$ 23,766

$ 32,679

$ 74,278

$ 85,607

Earnings per Share:

Basic

$ 1.29

$ 1.74

$ 4.03

$ 4.57

Diluted

$ 1.28

$ 1.73

$ 4.01

$ 4.53

Weighted-average Shares:

Basic

18,432

18,760

18,447

18,752

Diluted

18,526

18,910

18,542

18,915

Cash dividends declared per common share

$ 0.14

$ 0.42

Other comprehensive (loss) income, net of tax

(1,733)

(951)

1,712

(610)

Comprehensive income, net of tax

$ 22,033

$ 31,728

$ 75,990

$ 84,997

ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP financial measures (2)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per share amounts)

2025

2024

2025

2024

Reconciliation of EBITDA and Adjusted EBITDA (3)

Net income

$ 23,766

$ 32,679

$ 74,278

$ 85,607

Interest, net

7,861

7,195

23,620

23,136

Provision for income taxes

6,980

5,251

16,419

21,399

Depreciation and amortization

14,168

13,111

43,665

40,176

EBITDA

52,775

58,236

157,982

170,318

Acquisition and divestiture-related expenses (4)

139

479

205

Severance and other costs related to staff realignment (5)

359

449

2,909

1,184

Charges and adjustments related to facility consolidations and office closures (6)

—

(138)

—

Pre-tax gain from divestiture of a business (7)

—

(298)

—

(2,013)

Total Adjustments

384

290

3,250

(624)

Adjusted EBITDA

$ 53,159

$ 58,526

$ 161,232

$ 169,694

Net Income Margin Percent on Revenue (8)

5.1 %

6.3 %

5.2 %

5.6 %

EBITDA Margin Percent on Revenue (9)

11.3 %

11.1 %

11.2 %

Adjusted EBITDA Margin Percent on Revenue (9)

11.4 %

11.3 %

11.1 %

Reconciliation of Non-GAAP Diluted EPS (3)

U.S. GAAP Diluted EPS

$ 1.28

$ 1.73

$ 4.01

$ 4.53

Acquisition and divestiture-related expenses

—

0.01

0.02

0.01

Severance and other costs related to staff realignment

0.02

0.16

0.06

Charges and adjustments related to facility consolidations and office closures (10)

—

(0.01)

0.04

Pre-tax gain from divestiture of a business

—

(0.02)

—

(0.11)

Amortization of intangible assets acquired in business combinations (11)

0.49

0.44

1.50

1.31

Income tax effects of the adjustments (12)

(0.12)

(0.05)

(0.38)

(0.26)

Non-GAAP Diluted EPS

$ 1.67

$ 2.13

$ 5.30

$ 5.58

(2) These tables provide reconciliations of Non-GAAP financial measures to the most applicable U.S. GAAP numbers. While we believe that these Non-GAAP financial measures may be useful in evaluating our financial information, they should be considered supplemental in nature and not as a substitute for financial information prepared in accordance with U.S. GAAP. Other companies may define similarly titled Non-GAAP measures differently and, accordingly, care should be exercised in understanding how we define these measures.

(3) Reconciliations of EBITDA, Adjusted EBITDA, and Non-GAAP Diluted EPS were calculated using numbers as reported in U.S. GAAP.

(4) These are primarily third-party costs related to acquisitions and integration of acquisitions.

(5) These costs are due to involuntary employee termination benefits for (i) our officers and (ii) group of employees who have been notified that they will be terminated as part of a business reorganization or exit.

(6) These charges and adjustments are related to a previously exited leased facility which we will continue to pay until the contractual obligations are satisfied but with no economic benefit to us, and the closure of certain international offices.

(7) Pre-tax gain related to the 2023 divestiture of our U.S. commercial marketing business which includes contingent gains realized in the first quarter of 2024.

(8) Net Income Margin Percent on Revenue was calculated by dividing net income by revenue.

(9) EBITDA Margin Percent and Adjusted EBITDA Margin Percent on Revenue were calculated by dividing the Non-GAAP measure by the corresponding revenue.

(10) These are office closure charges and adjustments previously included in Adjusted EBITDA and accelerated depreciation related to fixed assets for planned office closures.

(11) The amortization of intangible assets acquired from business combinations totaled $9.2 million and $8.3 million for the three months ended September 30, 2025 and 2024, respectively, and $27.9 million and $24.9 million for the nine months ended September 30, 2025 and 2024, respectively.

(12) Income tax effects were calculated using the effective tax rate, adjusted for certain discrete items, if any, of 22.7% and 13.8% for the three months ended September 30, 2025 and 2024, respectively, and 23.0% and 20.0% for the nine months ended September 30, 2025 and 2024, respectively.

ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share amounts)

September 30, 2025

December 31, 2024

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$ 3,988

$ 4,960

Restricted cash

46,965

13,857

Contract receivables, net

233,014

256,923

Contract assets

225,946

188,941

Prepaid expenses and other assets

22,115

21,133

Income tax receivable

36,952

6,260

Total Current Assets

568,980

492,074

Property and Equipment, net

58,807

66,503

Other Assets:

Goodwill

1,252,136

1,248,855

Other intangible assets, net

88,824

111,701

Operating lease - right-of-use assets

108,602

115,531

Deferred tax assets

—

1,603

Other assets

36,221

30,086

Total Assets

$ 2,113,570

$ 2,066,353

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$ 139,235

$ 159,522

Contract liabilities

34,680

24,580

Operating lease liabilities

18,544

20,721

Finance lease liabilities

2,681

2,612

Accrued salaries and benefits

84,262

105,773

Accrued subcontractors and other direct costs

50,791

49,271

Accrued expenses and other current liabilities

73,182

86,701

Total Current Liabilities

403,375

449,180

Long-term Liabilities:

Long-term debt

449,404

411,743

Operating lease liabilities - non-current

144,077

155,935

Finance lease liabilities - non-current

9,242

11,261

Deferred income taxes

22,795

—

Other long-term liabilities

60,556

55,775

Total Liabilities

1,089,449

1,083,894

Commitments and Contingencies

Stockholders' Equity:

Preferred stock, par value $.001; 5,000,000 shares authorized; none issued

—

Common stock, par value $.001; 70,000,000 shares authorized; 24,345,942 and 24,186,962 shares

issued at September 30, 2025 and December 31, 2024, respectively; 18,435,932 and 18,666,290 shares

outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

458,902

443,463

Retained earnings

941,319

874,772

Treasury stock, 5,910,010 and 5,520,672 shares at September 30, 2025 and December 31, 2024, respectively

(362,090)

(320,054)

Accumulated other comprehensive loss

(14,034)

(15,746)

Total Stockholders' Equity

1,024,121

982,459

Total Liabilities and Stockholders' Equity

$ 2,113,570

$ 2,066,353

ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended

September 30,

(in thousands)

2025

2024

Cash Flows from Operating Activities

Net income

$ 74,278

$ 85,607

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses

(305)

3,176

Deferred income taxes and unrecognized income tax benefits

20,186

(16,957)

Non-cash equity compensation

12,915

12,494

Depreciation and amortization

43,665

40,176

Gain on divestiture of a business

—

(2,009)

Other operating adjustments, net

3,837

2,206

Changes in operating assets and liabilities, net of the effects of acquisitions:

Net contract assets and liabilities

(22,676)

(40,155)

Contract receivables

26,829

(9,634)

Prepaid expenses and other assets

(2,470)

(434)

Operating lease assets and liabilities, net

(6,774)

(3,065)

Accounts payable

(21,099)

(13,402)

Accrued salaries and benefits

(22,143)

2,889

Accrued subcontractors and other direct costs

(25)

9,660

Accrued expenses and other current liabilities

(9,804)

16,979

Income tax receivable and payable

(30,566)

(9,574)

Other liabilities

396

(1,773)

Net Cash Provided by Operating Activities

66,244

76,184

Cash Flows from Investing Activities

Payments for purchase of property and equipment and capitalized software

(14,745)

(15,559)

Proceeds from divestiture of a business

—

1,985

Other investing, net

403

—

Net Cash Used in Investing Activities

(14,342)

(13,574)

Cash Flows from Financing Activities

Advances from working capital facilities

1,048,671

917,953

Payments on working capital facilities

(1,011,838)

(930,043)

Proceeds from other short-term borrowings

10,798

43,735

Repayments of other short-term borrowings

(16,620)

(53,280)

Receipt of restricted contract funds

—

1,275

Payment of restricted contract funds

—

(3,586)

Dividends paid

(7,775)

(7,880)

Net payments for stock issuances and share repurchases

(39,512)

(30,995)

Other financing, net

(1,950)

(1,777)

Net Cash Used in Financing Activities

(18,226)

(64,598)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash

1,433

174

Net Change in Cash, Cash Equivalents, and Restricted Cash

35,109

(1,814)

Cash, Cash Equivalents, and Restricted Cash, Beginning of Period

18,817

9,449

Cash, Cash Equivalents, and Restricted Cash, End of Period

$ 53,926

$ 7,635

Supplemental Disclosure of Cash Flow Information

Cash paid during the period for:

Interest

$ 20,045

$ 24,388

Income taxes

$ 27,431

$ 50,382

ICF International, Inc. and Subsidiaries

Supplemental Schedule (13)

Revenue by client market

Three Months Ended

Nine Months Ended

September 30,

2025

2024

2025

2024

Energy, environment, infrastructure, and disaster recovery

53 %

46 %

51 %

46 %

Health and social programs

33 %

38 %

34 %

38 %

Security and other civilian & commercial

14 %

16 %

15 %

16 %

Total

100 %

Revenue by client type

Three Months Ended

Nine Months Ended

September 30,

2025

2024

2025

2024

U.S. federal government

43 %

55 %

45 %

55 %

U.S. state and local government

17 %

15 %

17 %

16 %

International government

6 %

5 %

6 %

5 %

Total Government

66 %

75 %

68 %

76 %

Commercial

34 %

25 %

32 %

24 %

Total

100 %

Revenue by contract mix

Three Months Ended

Nine Months Ended

September 30,

2025

2024

2025

2024

Time-and-materials

44 %

43 %

42 %

Fixed-price

49 %

46 %

49 %

46 %

Cost-based

7 %

11 %

8 %

12 %

Total

100 %

(13) As is shown in the supplemental schedule, we track revenue by key metrics that provide useful information about the nature of our operations. Client markets provide insight into the breadth of our expertise. Client type is an indicator of the diversity of our client base. Revenue by contract mix provides insight in terms of the degree of performance risk that we have assumed.

SOURCE ICF