ICF International, Inc.

Thank you for joining the first quarter 2021 ICF earnings conference call. We will begin shortly. We appreciate your patience. Please continue to stand by. Once again, we thank you for joining our call today. Please stand by. We will begin shortly. Thank you. Welcome to the first quarter 2021 ICF earnings conference call. My name is Vanessa, and I will be your operator for today's call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. At that time, if you have a question, please press star 1 on your touchtone phone to register for a question. Please note this conference is being recorded on Tuesday, May 4, 2021 and cannot be reproduced or rebroadcast without permission from the company. And now I would like to turn the program over to Lynn Morgan of Advisory Partners. Please go ahead.

Thank you, Vanessa. Good afternoon, everyone, and thank you for joining us to review ICF's first quarter 2021 performance. With us today from ICF are John Wasson, President and CEO, and Bettina Welsh, CFO. Joining them is James Morgan, Chief of Business Operations. During this conference call, we will make forward-looking statements to assist you in understanding ICF management's expectations for our future performance. 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 May 4, 2021 press release and our SEC filings for discussions of those risks. In addition, our statements during this call are based on our views as of today. We anticipate that future developments will cause our views to change. Please consider the information presented in that light. You may at some point elect to update the forward-looking statements made today, but specifically disclaim any obligation to do so. I will now turn the call over to ICF's CEO, John Watson, to discuss first quarter 2021 performance. John?

Thank you, Lynn, and thank you all for joining us today to review our 2021 first quarter results and discuss our business outlook. ICF's first quarter results represented an outstanding start to the year, setting the stage for considerable growth in 2021. Indeed, the outperformance led us to move our full year service revenue, EBITDA, and EPS expectations to the upper end of the ranges, despite it being early in the year. There are three key takeaways from our first quarter performance that I would like to point out. First, our qualifications, positioning, and contract vehicles in high growth markets in both the government And commercial arenas drove substantial growth in service revenue, which together with higher utilization and quarter specific margin benefits resulted in year on year increases in EBITDA and EPS that significantly outpaced revenue growth. Second, this was the third consecutive quarter of record contract awards for ICF, resulting in a trailing 12 month book to bill of 1.44 times, which is the highest level in recent years and is overwhelmingly related to bids submitted prior to the Biden administration assuming office. And lastly, the greater clarity we have on the Biden administration's funding priorities, the more confident we are about ICF's additional long-term growth potential for 2022 and beyond. First quarter revenue growth was led by strong results from our government and commercial energy businesses, which together accounted for 88% of total revenues. Looking more closely at our first quarter results by client category, the increase in our government business was driven by a 13% increase in revenues from federal government clients, led by IT modernization, digital transformation, and public health work at key civilian agencies, including the Department of Health and Human Services, the Federal Communication Commission, the Department of State, as well as the Department of Homeland Security. This was also a strong quarter for ICF's contract wins in the federal market, particularly in IT modernization, public health, and cybersecurity. We continue to win new task orders and contract modifications to perform COVID-related response work, which brings the cumulative value of these awards to over 45 million since the onset of the pandemic. More than the dollars, however, these wins continue to strengthen our positioning for future work related to COVID-19 recovery and reinvention programs, which we expect will include the modernization of disease surveillance systems and new initiatives to improve the country's readiness in the face of future pandemics. We are monitoring how the new administration is working to define and implement its policy and funding priorities. Just looking at the Biden administration's $1.9 trillion America Rescue Plan Act that has been passed by Congress, we see significant opportunities in our addressable market. Notably, at least $2 billion has been allocated for federal agency ID, and this includes $1 billion in new funding for the Technology Modernization Fund to help complete modernization projects at federal agencies. Additionally, $650 million specifically designated for the Cybersecurity and Infrastructure Security Agency, which is a new client of ours. Another $40 billion is earmarked to support childcare, childcare providers, and Head Start, where ICF currently provides services to Head Start grantees in six of the 12 Head Start regions across 40 states and the District of Columbia. Other funding includes $12 billion for food support to families in need through nutrition programs, $500 million to the CDC for data modernization and analytics, and $9 billion for essential tribal and federal safety net programs that serve native communities. These opportunities do not even include the proposed $2 trillion American Jobs Plan, where, for example, our project permitting and monitoring of infrastructure projects and our expertise in resilience, mitigation, and cleantech come into play, nor the fiscal 2022 budget proposal that includes a 16 percent increase for civilian agencies, including a 23 percent increase for our largest client, HHS, a 41 percent increase at the Department of Education, a 21 percent increase at EPA, and a 15 percent increase at HUD. This gives you some idea of the magnitude of proposed federal spending over the next several years in areas and agencies where ICF has strong qualifications and relevant contract vehicles. As we mentioned in our conference call last quarter, we are utilizing a portion of the savings we have gained from the optimization of our real estate footprint and reduced travel and entertainment expenses to invest in people and technologies to expand our capabilities in these high-growth markets. State and local revenues declined by 6 percent in the first quarter, probably due to lower pass-through revenues. Our disaster management business continues to track well and is expected to meet our expectations for double-digit growth in 2021. Last week, we announced a first-quarter $46 million award from the government of Puerto Rico's Public-Private Partnership Authority that includes elements of ICF's previous work to provide FEMA-funded project formulation services to support long-term disaster recovery from Hurricanes Irma and Maria and hazard mitigation efforts to protect against future disasters. This contract includes an initial four-month term through June 30th of this year, plus two additional one-year options to extend. Additionally, during the first quarter, we ramped up existing mitigation contracts and added new clients in Oregon related to the wildfires in 2019 and 2020, and expanded work in Louisiana related to the winter power outages. As noted in our earnings release, revenues from international government clients increased substantially in the first quarter, primarily reflecting a sizable short-term project, which we expect to wind down throughout this year. The recent $11 million contract award to manage the EU Climate Pact has placed ICF at the heart of the Commission's activities and provides ICF with a high-profile role in stimulating climate action within the European Union. We expect to see a return to growth in revenue from non-US government clients in 2021, but not at the magnitude we saw in the first quarter. Moving to a review of our commercial business, Commercial marketing services accounted for just under 10 percent of total revenues in this year's first quarter, with the year-on-year decline tied to the impact of the pandemic on a portion of this business. We have closely managed expenses in this area while continuing to do great work for clients, which we were recognized for with awards for multiple campaigns in the first quarter. I am pleased to report that we added several new clients in the first quarter across the health, consumer product, and financial sectors. Adjusting for the completion of the large media buying related contract at the end of 2020, we expect revenues from commercial marketing clients in 2021 to be down slightly compared to last year. Commercial energy markets had a great first quarter, up 12% year on year, and representing 16.5% of total revenues. Specifically, revenues from our utility programs business, which includes energy efficiency, electrification, and flexible load management programs increased at a high single-digit rate, reflecting the startup of new contracts, the expansion of existing contracts under extensions awarded at the end of last year, and the timing of performance-related incentive fees on several contracts. At the same time, we saw significant demand for our energy advisory service activities, which include financial and engineering due diligence services around the deployment and development of renewable resources and energy storage. Additionally, in the first quarter, our environmental services business won new contracts with utilities and renewable energy developers, including an additional contract to do an environmental study for an East Coast offshore wind project. ICF's leadership and expertise in energy-related issues is broadly recognized in both the commercial and government markets. As long-term advisors to the U.S. Department of Energy, we were called in in real time to provide a detailed situation analysis at the time of the winter vortex that caused an energy blackout in Texas and surrounding states in February of this year. ICF also supports electric vehicle programs at the federal and state levels, and we design and run several utility EV programs. Our expertise in renewable energy and transmission issues, energy efficiency, climate science, decarbonization, infrastructure resilience, and climate adaptation aligns well with the Biden administration's priorities and creates significant long-term growth opportunity for both ICF's commercial and government energy business in a multitude of areas. To summarize, this was an excellent quarter for ICF, continuing the positive momentum we experienced at the end of last year and supporting our expectations for strong growth in 2021. We achieved record contract sales of $596 million, up 67% year-on-year, and our business development pipeline was over $6 billion at the end of the first quarter. With that, I'm going to turn the call over to Bettina Wells, our CFO, for a financial review. Bettina?