ICF International, Inc.

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

Thank you, Stephen. Good afternoon, everyone, and thank you for joining us to review ICF's second quarter 2024 performance. With us today from ICF are John Wasson, Chair and CEO, Barry Broadus, CFO. Joining them is James Morgan, Chief Operating Officer. During this conference call, we'll 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 August 1st, 2024 press release and our SEC filings for discussions of those risks. In addition, our statements during this goal 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'll now turn the call over to ICF CEO, John Watson, to discuss second quarter 2024 performance. John?

Thank you, David, and thank you all for participating in today's call to review our second quarter results and discuss our business outlook. As you've seen from our release, this was another excellent quarter for ICF in which we executed well on existing contracts and continue to lay the foundation for future growth. With respect to key takeaways from the quarter, First, our energy, environment, infrastructure, and disaster recovery client market continue to be a standout performer, reflecting an array of very strong sector growth trends in these areas. Second, our profitability metrics increased considerably again this quarter, leading us to increase our EPS and EBITDA guidance for the full year. Third, this was an outstanding quarter for new contract wins, bringing our trailing 12-month book-to-bill ratio to 1.4, And lastly, our new business development pipeline increased sequentially by 8.3% to a record 10.5 billion even after record Q2 sales, providing us with substantial growth opportunities across our government and commercial client sets. Taking a closer look at second quarter performance, our work in the energy environment infrastructure and disaster recovery client market continue to increase significantly with revenue growing by 14% to account for 45% of our total second quarter revenues, up from 41% in last year's second quarter. All areas of ICF's commercial energy work posted substantial revenue growth in both the second quarter and first half of 2024, again reflecting positive secular trends in our markets. We continue to see strong demand for energy efficiency programs, which remain the most cost effective means for utilities to increase their capacity. ICF has built an excellent track record in this arena, consistently reaching and exceeding program goals, and we continue to win new clients. At the same time, the size and scope of our programs have increased as our utility clients expand their energy efficiency, electrification, and consumer marketing programs. Also, we are very pleased with the performance and revenue synergies associated with last year's CMY acquisition. Their great engineering and analytics capabilities are a natural extension of ICF's work in electrification, utility planning, and renewables, enabling us to provide a broader set of services to utility and developer clients. Additionally, there are important synergies with our climate and resilience advisory work as we build in more detailed climate analytics into our grid engineering studies. Similarly, our energy advisory work continues to show strong growth, particularly in the area of power and technical advisory, reflecting increasing demand from developers of renewable energy resources. In growth in our environment and planning business, the line is benefiting from increasing resilience work for utilities undergrounding power lines for wildfire restoration, work for renewable developers, as well as providing ongoing licensing, permitting, and compliance services. As you know, we perform our climate services across all our client categories. This area continues to achieve significant growth in the second quarter, reflecting the expansion of climate programs at DOE and EPA, as well as an increasing number of utilities, state agencies, and additional federal entities. We're also seeing an uptick in RFPs for state and local climate planning to be funded independently of the IIJA and IRA. And we're benefiting from client demand for ICF's Coastside System, a proprietary strategic planning platform that helps utilities and government agencies achieve their clean energy and greenhouse gas emission goals. Our disaster management area also continues to do well. The government of Puerto Rico's Public-Private Partnership Authority recently awarded ICF an $84 million recompete contract to provide professional grant management services over the next three years, and we're waiting for the word on other opportunities in the territory. ICF is currently executing nearly 50 disaster recovery programs in 16 states and two territories, and we're supporting over 30 clients mitigation efforts in 10 states and one territory. As a whole, we see double-digit growth ahead for our energy environment, infrastructure, and disaster recovery client market over the next several years. Increasing physical impacts, improving economic fundamentals, public commitments by corporations, and legislative and regulatory actions regarding clean energy are driving policy and funding support for decarbonization programs, including energy efficiency, flexible load management, electrification. Increasing load growth from new data centers and transportation electrification is forcing utilities and regulators to quickly assess and deploy additions to the utility resource mix, including supply, demand management, and resilience options. Renewable development is proceeding at a rapid pace, and we continue to see electric utility clients increase spending to replace aging infrastructure, to underground power lines, to improve resilience, and to expand the power grid. creating demand for ICF's grid engineering, environmental, and disaster management teams. In our judgment, there is no company better positioned to benefit from these trends than ICF. We have longstanding relationships with utility, developer, and government clients, multidisciplinary expertise across energy, climate, transportation, and health, plus industry-leading analytical tools that support our advisory services, as well as technology platform solutions that underpin or implementation work. And we continue to see IIJA and IRA grant funding being released to applicants for a variety of approved infrastructure needs. Examples include formula grants to states, territories and tribes for energy infrastructure and grid reliability upgrades, and award of competitive grants for clean energy manufacturing infrastructure. ICF's IIJ and IRA-related wins to date have reached almost 140 million. Interactive pipeline of IIJ IRA opportunities is now at 275 million. These metrics represent work primarily for government clients, as it's difficult to tie commercial projects to specific legislation. Moving to our health and social programs client market. As expected, this market had lower year-on-year gross revenue comparisons. primarily reflecting three factors, the impact of last year's divestitures, anticipated fall-off in small business contracts that were held by the acquisitions we made over the last couple of years in IT modernization, and lower pass-through revenues, primarily in public health. The reduction in pass-through revenues alone in this client market was approximately $7.5 million in the second quarter. We should see improved gross revenue comparisons from federal government clients in the second half of the year, but the increase will not be of the magnitude we had originally anticipated. We are confident that the strong growth in our energy, environment, infrastructure, and disaster management client market will continue to more than offset the impact of lower than expected revenue growth in health and social programs. We continue to execute effectively across our federal government client base and remain well positioned and have a healthy pipeline of opportunities in our two key areas, public health and IT modernization. In public health, we expanded our support for CDC's BioSense program in the second quarter, and we'll begin developing additional functionality to include hospital admission data and hospital discharge and transfer data to the platform. As you may recall, BioSense was front and center during the pandemic, as it tracks data from more than 75% of hospital emergency room visits nationwide, providing CDC and public health officials with insights and two factors impacting the health of Americans at both a national and local level. And we won our $237 million recompete contract with the U.S. Agency for International Development, Bureau for Global Health, to continue to deliver the demographic and health surveys program. ICF has longstanding relationships at six key agencies within the Department of Health and Human Services, and we have deep subject matter expertise expertise in areas that have bipartisan support, including cancer research, mental health, diabetes prevention, overdose prevention, and education on the impact of prescription opioids. IT modernization also remains a bipartisan priority, and ICF is now a recognized leader in the most widely used low-code, no-code, and open-source platforms in the federal government. The US federal IT services market is growing at a category of 8.5% and is expected to reach 95 billion by 2027. And ICS targeted areas, consulting and application services, are growing at categories of 14% and 9% respectively. We had two important contract wins in the second quarter at the Centers for Medicare and Medicaid Services and are seeing increased traction on opportunities where we'll be able to combine our technology and domain expertise particularly when the scope includes a data or AI focus. We recently completed work with a federal agency client to leverage GenAI solutions for regulatory development support and public comment analysis. This was a very exciting project for our teams, as within three months from inception to delivery, we proved the viability of using GenAI to produce faster insights into numerous regulatory comments. Also, FEMA awarded us a new $17 million contract to build a cloud-based data exchange platform to improve the efficiency and cost-effectiveness of their disaster recovery and response efforts. We will leverage our leading disaster management expertise, along with cloud computing, generative AI, and other forms of AI and advanced analytic capabilities, an excellent example of how ICF's multidisciplinary approach is winning new business. On the topic of new business, as I mentioned earlier, this was a record second quarter for us in terms of contract awards, which reached $810 million, representing a book-to-bill ratio of 1.58 for the quarter. New business wins accounted for approximately 55% of our first half awards, demonstrating how well ICS capabilities are aligned with client spending priorities. Additionally, an increased percentage of the value of our year-to-date awards represented contracts that had that included an AI component, a good indication of our recognized expertise in this high-demand area. In summary, this is a very strong quarter for ICF in terms of execution, profitability, and metrics that set us up for future growth. I'll now turn it over to call to our CFO, Barry Broaddus, for a financial review. Barry?