ICF International, Inc.

Welcome to the first quarter 2024 ICF earnings conference call. My name is Liz, and I will be your operator for today's call. At this time, all participants are in listen-only mode. Afterwards, you will be invited to participate in the question and answer session. During the question and answer session, if you have a question, please press star, then 1-1 on your touchtone phone. I will now turn the call over to Lynn Morgan of Advisory Partners. Lynn, you may begin.

Thank you, operator. Good morning, everyone, and thank you for joining us to review ICF's first quarter 2024 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's 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 May 2, 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 first quarter 2024 performance. John?

Thank you, Lynn, and thank you all for joining today's call to discuss our first quarter results and review our business outlook. First quarter results represented an excellent start to 2024 and demonstrated ICF's positioning in key growth areas and the strength of our diversified business model. There are several takeaways worth highlighting. First, revenue growth for the quarter was quite strong. Excluding divestitures, revenues increased by 8.7% from last year's levels. Second, our margin profile continues to strengthen. Drivers such as revenue mix, high utilization, and reduced facility costs continue to contribute to the consistent margin expansion that we have achieved over the last several years. And third, our forward-looking metrics point to continued growth for ICF. At the end of the first quarter, our backlog was 3.6 billion, our trailing 12-month book-to-bill ratio was 1.23, and our business development pipeline was 9.7 billion. This speaks to how well aligned our capabilities are with the current spending priorities of our government and commercial clients. Taking a closer look at our first quarter revenue performance, ICF's work in the energy, environment, infrastructure, and disaster recovery client market, again, was a meaningful contributor to our first quarter growth. Revenues in this client market increased 20% year on year to account for 45% of first quarter revenues. we are seeing very strong results across both our service offerings and our diversified client base. ICF brings together a complement of deep domain and implementation expertise across a broad platform of interconnected subject matter areas, including energy efficiency, decarbonization, electrification, environmental and climate impacts, and disaster recovery and mitigation. We combine our expertise with proven implementation skills around program management, environmental monitoring, and grid engineering services supported by cutting edge analytic tools and proprietary energy models that have become the industry standard. Thus, we are offering unique and very customizable services and solutions which are resonating with utility clients, renewable energy producers, and others on the commercial side while we continue to provide our government clients with research, policy and economic analysis, program design, analytics, grant management services, disaster recovery work, and climate impact analysis. Highlights in this market in the first quarter were over 30% increase in revenues from utility programs, including energy efficiency work, reflecting continued expansion in both size and scope of programs. ICF is now serving over 75 utilities across the country. Notable contract wins in the quarter included $85 million of expanded energy efficiency work with a large utility holding company, a new $18 million electrification project for a large Midwestern utility, and in conjunction with our disaster management team, ICF was tapped to support a Western states wildfire and natural disaster resiliency rebuild program, which provides incentives to help homeowners impacted by natural disasters rebuild all electric homes. We also saw strong double-digit growth in energy advisory revenues, driven by increased demand for both our power and technical advisory work. First quarter contract awards included numerous grid engineering and analytics projects for utilities and developers. Additionally, revenues from our environment and planning services in the U.S. continued to show solid growth, representing continued strong demand for renewable developers, increased resilience work for utilities undergrounding power lines, and environmental infrastructure-related work for state clients on projects funded under the IIJA. Contract wins in the first quarter were from a combination of utilities, developers, and government clients for the full breadth of ICF's licensing, permitting, and compliance services. IRA and IIJA funds are also starting to flow at scale, including the Department of Energy's Green Resilience and Innovation Partnership Program and its National Electrical Vehicle Infrastructure Program, and EPA's Environmental Justice Awards. Funding for state energy offices is now in the process of being released, and states and other recipients are beginning to issue solicitations for planning and program support. We are actively monitoring opportunities to provide support at all levels, federal, state, and local, and commercial. To date, ICF has won contracts valued at approximately $125 million related to the IIJA and IRA, primarily from federal and state government clients and our pipeline is about 200 million. This does not include all the related work that we are doing for commercial clients, where it's more difficult to tie our engagements to specific legislation. In the first quarter, our revenues from federal government clients increased 2.4%, in line with expectations, primarily reflecting the $5 million reduction in pass-through revenues associated with large international public health contracts that we referred to last quarter. Revenues from federal government clients excluding subcontractor and other direct costs increased 5.4% in the quarter. Our two growth markets in the federal government client category are public health and IT modernization. With respect to public health, our contract wins at SAMHSA last year are now fully up and running, and we expanded our clinical decision support work at the Veterans Administration. Also, our business development pipeline in public health is quite strong. There is bipartisan support to address the nation's mental health crisis, and with increased budgets, we see significant opportunities to expand our work for SAMHSA. Also, recent funding for NIH and CDC is in specific areas that are relevant to ICF subject matter expertise and experience, including funding to end HIV, and for cancer and Alzheimer's research. We continue to see a strong pipeline for global health security in low middle income countries where we have historically worked providing demographic and health surveys, nutrition surveys, and diagnostic testing. Global health security involves identifying and containing infectious disease threats wherever they occur in the world. CDC's and USAID's work on monkeypox and Ebola are two of the most current examples. Additionally, we continue to see strong, steady performance on our environmental health work at EPA, with a BPA recompete win for EPA's Office of Research and Development and task order wins to support EPA's Office of Pollution Prevention and Toxics. As you know, the EPA issued the final National Primary Drinking Water Standards to protect Americans from exposure to PFAS substances in mid-April. ICF supported the scientific and regulatory analyses that informed development of the new rule, setting maximum levels of these chemicals for the nation's drinking water supply. Our work continues as we staff EPA laboratory contracts to which samples are tested for PFAS substances. IT modernization and digital transformation is another area of bipartisan support. In the first quarter, we continue to execute our programs to update workflows and infrastructure and optimize data usage across our civilian agency clients and we continued to ramp up work on the $300 million of contracts we won in the second half of 2023. Additionally, we completed several important projects within the Department of Health and Human Services that advanced research efforts and support public health, including the development of dashboards to support the Medicare Diabetes Prevention Program, facilitate health equity data submission, and address vascular health. Notably, in the first quarter, we combined ICF's domain expertise in energy, with cutting-edge technology to stand up three unique grant management programs with varying complexity levels for the Department of Energy to support millions of dollars in new IIJA and IRA funding across multiple rebate programs. This project, together with the close tie-in that our IT modernization capabilities have with our public health expertise, demonstrates ICF's unique ability to combine subject matter expertise with substantial IT capabilities to drive growth and positive outcomes for client. We also have a strong active pipeline in this area, which includes a significant number of opportunities that reflect potential synergies between our open source capabilities and ICS policy related experience. To sum up, this was another record quarter for ICF, which has set the stage for substantial organic growth for the company in 2024. Now I'll turn over the call to our CFO, Barry Broaddus, for a financial review. Barry?