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Why Is ICF (ICFI) Up 6.9% Since Last Earnings Report?

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A month has gone by since the last earnings report for ICF International (ICFI - Free Report) . Shares have added about 6.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ICF due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

ICF International Beats on Q3 Earnings

ICF International reported mixed third-quarter 2020 numbers, with earnings beating estimates and revenue missing the same.

 Non-GAAP EPS (excluding 16 cents from non-recurring items) of $1.10 per share surpassed the Zacks Consensus Estimate by 27.9% but declined 1.8% on a year-over-year basis. Revenues of $360.3 million missed the consensus mark marginally and declined 3.6% year over year mainly due to lower pass-through revenues.

Revenues in Detail

Revenues from government clients came in at $247 million, flat year over year. The U.S. federal government revenues of $175.1 million increased 18% year over year and contributed 49% to total revenues. The U.S. state and local government revenues of $51.6 million declined 27.8% year over year and contributed 14% of total revenues. International government revenues of $20.3 million were down 27.5% year over year, contributing 6% of total revenues.

Commercial revenues totaled $113.3 million, down 10.2% from the year-ago quarter’s figure and contributed 31% of total revenues. Energy markets and marketing services contributed 53% and 37%, respectively, to commercial revenues.

Backlog and Value of Contracts

Total backlog and funded backlog amounted to $2.9 billion and $1.5 billion at the end of the third quarter, respectively. The total value of contracts awarded in the quarter came in at $792 million.

Operational Results

Adjusted EBITDA of $37.8 million, increased 4.9% from the year-ago quarter’s figure. Adjusted EBITDA margin on revenue of 10.5% increased 90 basis points (bps) year over year. Adjusted EBITDA margin on service revenues was 14.3%, up 30 bps year over year.

Balance Sheet

ICF exited the third quarter with cash and cash equivalent balance of $8.2 million compared with the $9.1 million recorded at the end of the previous quarter. The company had a long-term debt of $362.3 million compared with $441 million at the end of the prior quarter.

The company generated $84.4 million of cash from operating activities, and capex was $3.9 million. ICF paid out dividends of $2.6 million in the reported quarter.

Revised 2020 Guidance

Management revised its guidance for 2020. Revenues are projected in the range of $1.46-$1.50 billion (previous guidance: $1.45-$1.51 billion).

Operating cash flow is anticipated to be around $120 million (previous guidance: $110 million).

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 5.23% due to these changes.

VGM Scores

Currently, ICF has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ICF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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