ICF International, Inc.

Good day and thank you for standing by. Welcome to the Q4 and full year 2023 ICF earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone and you'll hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Lynn Morgan of Advisory Partners. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us to review ICF's fourth quarter and full year 2023 performance. With us today from ICF are John Wasson, Chair and CEO, and Barry Brodess, CFO. Joining them is James Morgan, Chief Operating Officer. During this conference call, we will make forward-looking statements to assist you in understanding ICF management's expectations about 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 February 27, 2024 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. We 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 CEO John Wasson to discuss fourth quarter and full year 2023 performance. John?

Thank you, Lynn, and thank you all for joining us this afternoon to review our fourth quarter results. and discuss our outlook for 2024. Our solid fourth quarter results capped another record year for ICF. Key takeaways from 2023 include full year growth and 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, ICF's 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 investments in key growth markets continue to yield positive results, and returns in 2023. These markets, namely utility consulting, disaster management, climate, environmental, and infrastructure services, together with public health and IT modernization digital transformation, accounted for approximately 80% of our revenues from continuing operations in 2023, up from 75% on the same basis last year and approximately 55% in 2020. a clear indication of the successful implementation of our strategic intent with which we have built out our capabilities over the past several years. ICF's performance in these growth areas is primarily captured in our two major market categories, energy environment, infrastructure, and disaster management, and health and social programs. Revenues from continuing operations in our energy environment, infrastructure, and disaster management market increased 10.3 percent in the fourth quarter and we're up 13.4 percent for the full year reflecting positive momentum across our portfolio of programs and services highlights included double digit revenue growth and energy efficiency program revenue in 2023 thanks to continued expansion of existing programs and the capture of several new utility clients 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 cmy 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 impact 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, given by ongoing work for renewable developers, as well as increasing resilience work for utilities and undergrounding power lines. IRI tax credits are supporting private development of renewables, 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 and additional geographies are scheduled for this year. In disaster management, we continue to execute on our large multi-year contracts in Puerto Rico and Texas and are working on mitigation projects in over 15 states. We recently were awarded a small but strategic project in Virginia and the County of Maui, where we are providing technical and training assistance for HUD compliance. Lastly, our climate, environmental, and infrastructure services, which cut across all of our client categories, continue to show significant year-on-year growth in both the fourth quarter and full year. We saw expansion of climate programs for federal government agencies and increasing urgency at the federal level to disperse IRA and IIJA funding. ICF is currently working with a number of applicants on climate priority plans, which should provide additional opportunities for us as the year progresses. To date, ICF has been awarded just north of $110 million in contracts related to the IIJA and IRA, primarily from federal and state government clients, and our current pipeline is over $215 million. This does not include all the related work that we are doing for commercial clients, where it is more difficult to associate our engagements with specific legislation. Turning to our health and social programs market, revenues from continuing operations were up 2.4% in the fourth quarter, and 15.9% for the full year. Fourth quarter comparisons were impacted by the anticipated rule-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 public health contract. As you know, we had substantial federal government contract awards in the third quarter, followed by additional wins in the fourth quarter, and our federal government pipeline was over 6.6 billion at the end of the year. 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 and we expect our federal government revenues to grow at a high single digit rate for a full year 2024. notable in the fourth quarter was the receipt of the excellence and frontline public health award given to the biosense project which we support at the center for disease control this project was recognized for its efforts to collect data for more than 75 percent of the nation's emergency rooms. Additionally, we expanded our conventional AI capabilities and our federal health work to introduce new strategies for data collection and processing that enhance the speed and accuracy of health information monitoring and response systems. Also, we won several awards for newer expanded work in the fourth quarter, including at the Environmental Protection Agency to assess the risk of chemical exposure to human health at the Substance Abuse and Mental Health Services Administration to support mental health programs, and at the Centers for Disease Control to support overdose prevention programs. In the IT Modernization Digital Transformation arena, we followed strong third quarter contract awards of over $150 million, with another $150 million awards in the fourth quarter, including a $33 million recompete win for the Centers for Medicare and Medicaid Services to continue our modernization of their system for kidney dialysis data, a $58 million expanded re-compete with the Western US State Lottery to support the operation of its cloud-based website, and new contracts on the FDIC and the Department of Treasury. Additionally, we continue to pursue new opportunities to drive synergies between semantic bits, strong footprint at CMS, and ICS platform capabilities with ServiceNow. We are increasingly showcasing Symantec's open source and cloud native capabilities to our longstanding clients at the CDC, the NIH, and the FDA. 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. Before ending my review of the 2023 business highlights, I want to mention a unique item. As you may know, we have an aviation consulting business that works with airlines, airports, and other aviation entities, and we have particular expertise in the sustainable aviation fuels area. In fact, ICF proudly supported Virgin Atlantic Flight 100, the first commercial aircraft flown on 100% sustainable aviation fuel from London Heathrow, landing at New York's JFK on November 29, 2023. We had several team members on board that flight. With that, I'll now turn the call over to our CFO, Barry Broaddus, for his financial review. Barry? Thank you, John.