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| Statement |
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| Based on our current strong backlog and visibility, together with the ongoing positive trends in our key growth markets, we expect 2024 organic revenues from continuing operations to range from $2.03 billion to $2.1 billion, representing year-on-year growth of 8.5% at the midpoint and 5.2% growth at the midpoint, when compared to reported 2023 results |
| Both public health and IT modernization are areas of bipartisan support and we believe ICF’s deep domain expertise in health and our broad technology capabilities across the key platforms of choice in the federal government position us for growth in 2024 |
| Our investments in key growth markets continued to yield positive results and returns in 2023 |
| Thus, we are confident that our federal government revenue comparisons will improve substantially in the second half of this year as new contracts ramp up |
| Revenues from continuing operations in our Energy Environment, Infrastructure and Disaster Management market, increased 10.3% in the fourth quarter and were up 13.4% for the full year, reflecting positive momentum across our portfolio of programs and services |
| But certainly, the Oregon wildfires is a nice contract win for us and will drive some growth |
| As you can see from our earnings release, contract awards in this area were quite strong in the fourth quarter, with 45% of the dollar amount awarded to us representing new clients or expanded scopes of work |
| Our Energy Advisory work, which saw very strong growth in the fourth quarter and for the full year, benefiting from the addition of Power Engineering from CNY in May last year, which compromises the core of our grid engineering and analytics capability or GEA team, as well as increased demand for our power and technical advisory services around renewable development and the impacts of the IRA and the IIJA |
| Also, we are pleased to note that we were recently selected as Engineer of Choice for a large East Coast utility and we are seeing a significant number of revenue synergy opportunities with our GEA team and our Disaster Management, Environmental and Electrification teams |
| And our environmental and planning work for commercial clients also was a strong performer in the fourth quarter and full year, driven by ongoing work for renewable developers as well as increasing resilience work for utilities and undergrounding power lines |
| And despite a few cancellations, we are seeing strong demand for our services in these areas, mostly for projects offshore in New York, New Jersey and Northern California and future lease auctions in additional geographies are scheduled for this year |
| Lastly, our Climate Environmental Infrastructure services, which cut across all of our client categories continued to show significant year-on-year growth in both the fourth quarter and full year |
| We’ve had very strong awards in the Federal vein, a very strong pipeline |
| And so we feel quite comfortable, quite confident in it |
| As we mentioned throughout 2023, we continue to successfully offset a significant portion of the bottom line impact of our higher interest expense through various cost reduction initiatives and tax efficiency strategies |
| In addition to this very positive outlook, we’re also encouraged by the many recognitions that ICF received in 2023, highlighting our commitment to a corporate culture predicated on investing in our people, minimizing our environmental footprint, supporting our communities and serving clients with integrity |
| So, I think we remain bullish on disaster recovery and continue to see this as an important growth area |
| Our strong top line performance for the full year was led by our growth markets, which drove double-digit revenue growth from both government and commercial clients, highlighted by a 15.7% growth in our commercial energy business and a 10.5% increase in our U.S |
| Highlights included double-digit revenue growth in energy efficiency program revenue in 2023, thanks to continued expansion of existing programs and the capture of several new utility clients |
| So, it’s – I think we have done a good job of paying down the debt, and getting ourselves in a position where we can leverage the balance sheet again going forward |
| This served us well in 2023 and will continue to drive ICF’s profitable growth in 2024 and beyond |
| And so with the synergies that we’re seeing, the strong pipeline and strong awards, I mentioned, we’ve I think we’ve discussed the last two quarters |
| We’re very pleased with our success in optimizing profitability |
| Adjusting for the divestiture of our commercial marketing business in 2023, total revenues increased 4.9%, led by a strong 8.8% growth from our commercial energy clients and 16.9% growth from our state and local and international government clients |
| And in the Energy and Climate arena, and I think that, as I’ve talked about before, I think they continue to provide potentially additional upside, particularly as we get into 2025 |
| Key takeaways from 2023 include full year growth in revenues from continuing operations of 12%, further margin expansion driven by higher utilization, lower facility costs and the overall benefits of ICF’s increased scale, ICS considerable contract wins reaching over $2.3 billion for the year, of which 70% represented new business, indicating how well positioned we are in areas of increased spending, and lastly, the substantial runway ahead for ICF, as we ended the year with a $3.8 billion backlog, a book-to-bill ratio of 1.2 and a $9.7 billion business development pipeline, pointing to considerable growth opportunities for ICF over the next several years |
| Our solid fourth quarter results capped another record year for ICF |
| In a similar way, I think on the public health front, again, between CDC, NIH, Administration for Children and Families, we have a good pipeline of opportunities and have had awards here at the end of the year that give us visibility for how that will play out and will drive that growth |
| But we feel like we can continue to produce the cash flows like we have done in the past and pay-down debt and improve the leverage position even further, in 2024, of course, barring any acquisitions |
| Additionally, we continue to pursue new opportunities to drive synergies between SemanticBits, strong footprint at CMS and ICS platform capabilities with ServiceNow |
| Statement |
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| Fourth quarter comparisons were impacted by the anticipated roll-off of certain small business contracts held by companies we acquired as well as the significant reduction in pass-through revenues, associated with the large international development of the health contract |
| Our fourth quarter non-GAAP EPS was also impacted by the divestiture of the commercial marketing business |
| I don’t think pricing on acquisitions is fully, fully come down given the ongoing interest rate environment |
| So my own personal opinion is that’s unlikely to be pulled back |
| And then as we also noted, we had some reduction in pass-through of some USAID work |
| Are there any particular areas of concern as far as pushback, or how are we thinking about the pricing environment generally? John Wasson I would say from a – when you say – well, I guess I would say from a pricing perspective for acquisitions, I would say that it’s still a bit of frothy market |
| 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 February 27, 2024 press release and our SEC filings for discussions of those risks |
| There is a little noise here with the divestiture |
| Our fourth quarter indirect and selling expenses decreased 9.8% year-over-year to $123.4 million |
| Moving forward, we will continue to evaluate facilities as appropriate, but we would expect any facility-related charges to be considerably less than what we incurred in 2023 |
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