A month has gone by since the last earnings report for ICF International (ICFI). Shares have added about 1.3% 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 drivers.
ICF International Lags Q4 Earnings Estimates, Revenues Beat
ICF International reported mixed fourth-quarter 2018 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same.
Non-GAAP earnings per share (EPS) of $1.17 missed the consensus mark by 6 cents but improved 50% on a year-over-year basis. Revenues came in at $377.9 million, which outpaced the consensus mark by $28 million and increased 17.7% year over year.
Revenues in Detail
Revenues from government clients of $226 million improved 21.7% year over year. U.S. federal government revenues of $131.5 million increased 2.1% year over year and contributed 35% to total revenues. U.S. state and local government revenues of $62.2 million surged 115.2% year over year and contributed 16% to total revenues. International government revenues totaled $32.3 million, up 15% year over year and contributed 8% to total revenues.
Commercial revenues totaled $151.9 million, up 12% from the year-ago quarter’s tally and contributed 40% to total revenues. Energy markets contributed 39% to commercial revenues and Marketing services contributed 54% to the same.
Backlog and Value of Contracts
Total backlog and funded backlog amounted to $2.4 billion and $1.1 billion at the end of the fourth quarter, respectively. The total value of contracts awarded was $285.8 million, representing a book-to-bill ratio of 1.4.
Operational Results
Adjusted EBITDA was $39.4 million, up 25.5% from the year-ago quarter’s figure. Adjusted EBITDA margin was 16.5% of service revenues, up 210 basis points (bps) year over year. The increase in adjusted EBITDA margin was due to seasonal strength, higher utilization related to the ramp up of new contracts, higher level of incentive fee payments and significant increase in higher margin service revenues.
Balance Sheet
At the end of fourth quarter, cash and cash equivalents balance was $11.7 million compared with $5.8 million at the end of the previous quarter. The company had long-term debt of $200.4 million compared with $232.5 million at the end of the prior quarter.
ICF gained $64.3 million of cash from operating activities and spent $6.2 million on capex. The company purchased 214,000 shares for $13.9 million and paid dividends of $7.9 million in 2018. It declared a quarterly cash dividend of 14 cents per share, payable on Apr 16, 2019 to shareholders of record as on Mar 29, 2019.
2019 Outlook
Management expects total revenues between $1.45 billion and $1.50 billion. Non-GAAP EPS is expected in the range of $4.05-$4.25.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -9.71% due to these changes.
VGM Scores
At this time, ICF has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, ICF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
ICF International, Inc. (ICFI): Free Stock Analysis Report
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