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ICF (ICFI) Up 6.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for ICF International (ICFI - Free Report) . Shares have added about 6.4% 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 the most recent earnings report in order to get a better handle on the important catalysts.

ICF International Surpasses Q2 Earnings & Revenue Estimates

ICF International delivered impressive second-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate.

Non-GAAP earnings (excluding 12 cents from non-recurring items) of $1.19 per share surpassed the Zacks Consensus Estimate by 21.4% and increased 33.7% on a year-over-year basis. Revenues of $392.5 million surpassed the consensus mark by 4.3% and increased 5.2% year over year owing to 7.7% year-over-year increase in service revenues.

Revenues in Detail

Revenues from government clients came in at $278 million, up 13% on a year-over-year basis. The U.S. federal government revenues of $182.2 million increased 6.7% year over year and contributed 46% to total revenues.  The U.S. state and local government revenues of $58.1 million moved up 1.2% year over year and contributed 15% to total revenues. International government revenues of $37.8 million were up 111.7% year over year, contributing 10% to total revenues. This surge was driven by significant pass-through revenues. Commercial revenues totaled $114.5 million, up 6% from the year-ago quarter’s figure and contributed 29% of total revenues. Energy markets and marketing services contributed 57% and 33%, respectively, to commercial revenues.

Backlog and Value of Contracts

Total backlog and funded backlog amounted to $3 billion and $1.5 billion at the end of the quarter, respectively. The total value of contracts awarded in the quarter came in at $398 million, up 41% year over year.

Operational Results

Adjusted EBITDA of $40 million increased 23.1% from the year-ago quarter’s figure. Adjusted EBITDA margin on revenues of 10.2% increased 100 basis points (bps) year over year. Adjusted EBITDA margin on service revenues was 14.2%, up 180 bps year over year.

Balance Sheet

ICF exited the second quarter with cash and cash equivalent balance of $9.6 million compared with $8.6 million recorded at the end of the previous quarter. The company had a long-term debt of $321.7 million compared with $314.5 million at the end of the prior quarter. The company generated around $1.4 million of cash from operating activities and capex was $3.8 million. ICF paid out dividends of $2.6 million in the quarter.

Dividend Declared

On Aug 3, 2021, ICF declared a quarterly cash dividend of 14 cents per share. The dividend will be paid out to stockholders on Oct 13, as of record date Sep 10.

Reiterates 2021 Guidance

ICF expects non-GAAP EPS in the range of $4.35-$4.65. Revenues are projected in the range of $1.525-$1.575 billion. EBITDA is expected in the range of $145-$155 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, ICF has an average Growth Score of C, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ICF has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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