ICF International, Inc.

After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I will now turn the call over to Lynn Morgan of Advisory Partners. Lynn, you may begin.

Thank you, Lauren. Good afternoon, everyone. and thank you for joining us to review ICF's second quarter 2025 performance. With us today from ICF are John Watson, Chair and CEO, Mary Broadus, 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 July 31st, 2025 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 CEO John Watson to discuss second quarter 2025 performance. John?

Thank you, Lynn, and thank you all for joining us today to review our second quarter results and discuss our business outlook. I am pleased to report that we executed effectively in the second quarter with results benefiting from our diversified client base and demonstrating our agility in adapting to changing market conditions. There were several key takeaways worth noting. First, second quarter revenue was generally stable with first quarter levels in line with our expectations. Revenues from our commercial, state, and local government and international government client set increased 13.8% in the aggregate and accounted for 57% of our second quarter revenues. Second, within this client set, revenue from commercial energy clients remained robust increasing 27% year-on-year thanks to continued strong demand from our utility clients for our energy efficiency programs and ICS expertise in flexible load management, electrification, and grid resilience. Third, we expanded our adjusted EBITDA margin by approximately 20 basis points year-on-year, reflecting favorable business mix and cost management initiatives. And fourth, we only experienced an additional $2 million dollar impact on our 2025 revenues from contract cancellations in the US federal market. And in the past month, we began to see a pickup in federal procurement activity. Taken together with our strong second quarter book to bill ratio of 1.3, these factors give us confidence in a more positive business outlook for 2025. Taking a closer look at 2025 business trends, revenues from commercial clients, increased 25.2% in the second quarter, led by the 27% increase in commercial energy that I just mentioned. This growth was driven by new and expanded energy efficiency, electrification, flexible load management, and customer engagement programs for utility clients as they address rapid load growth. ICF is the market leader in designing, developing, and implementing residential energy efficiency programs And we are progressively gaining share in the commercial energy efficiency market as well. These energy efficiency programs represent the core of our commercial energy work. And as a reminder, they are funded by a small surcharge on rate payers by public service commissions in over 30 states. Over the last 20 years, ICF's track record of meeting or exceeding the energy savings goals of our clients has enabled us to significantly increase our utility client base. And as we have built out our capabilities, we have been able to considerably expand the scope of services we provide to these clients, allowing us to capture a larger share of a growing market. We believe that the demand for energy efficiency and other demand-side management programs will expand into more states and be relied upon even more in the coming years with the unprecedented demand for electricity associated with the construction of data centers. We've already seen early signs of this in several states ISEP is working in, including New York, Georgia, and Illinois. Our energy advisory practice saw a sequential revenue increase led by a recent increase in grid engineering projects and new business wins in the second quarter that included a broad range of activities, including grid transformation planning, fuel constraint analysis, price forecasting, renewables development, and M&A support. Additionally, we have seen an uptick in activity since passage of the One Big Beautiful Bill and anticipate an increase in development and M&A activities over the next six to 18 months, now that regulatory uncertainty has been eliminated and developers seek to meet safe harbor deadlines associated with expiring tax credits for projects already underway. We experienced strong demand for environment and planning services for commercial clients in the second quarter, driven by growth of renewable and transmission permitting, construction monitoring, wildlife restoration, and new awards in additional work areas. This includes a new project to increase manual extraction by developing the first-ever environmental impact assessment for a coal facility associated with the January 2025 executive order directing federal agencies to accelerate critical energy infrastructure projects. The current pace of our work for utility clients and energy developers, together with the opportunities we see on the horizon, underpin our confidence that we will see sustained growth in commercial energy for the foreseeable future. Revenue from state and local government clients increased by 1% in the quarter. In disaster management, which accounts for about 45% of this client category, ICF is currently supporting more than 90 disaster recovery programs in over 20 states and territories, with the largest being in Puerto Rico and Texas. Late last year, Congress appropriated nearly $11.9 billion in CDBG-DR funding to enable long-term recovery from disaster declarations in 2023 and 2024. And in January 2025, HUD released these funds to 46 states and localities. We are actively positioned to compete for this work, and we expect decisions and additional procurements to take place in the second half of this year. Additionally, in response to uncertainty with respect to the future role of FEMA, ICF has been actively developing an approach and delivery model to provide disaster recovery support to state and local governments should greater responsibilities shift from the federal to the state and local levels. Our climate, environment, and infrastructure services for state and local clients represent about 40% of our state and local government category. We're also seeing growing opportunities for environmental business, rising from changing federal priorities, and increasing state-based environmental initiatives. As federal emphasis on environmental protection declines, we are seeing many states increase their efforts to fill the gap, creating opportunities for ICF and state planning, rulemaking, stakeholder engagement, permitting, and compliance. Moving to international government, our second quarter revenues increased 2%, representing a slow ramp-up of our recent sizeable contract vehicle wins with the European Union and the UK government. We were pleased to see a pickup in new task orders being issued under these contract vehicles towards the end of the quarter, which will benefit our revenues in the second half of this year, as well as in 2026. Despite the delayed activation of work in the international government arena, ICF's revenues from commercial, state and local government, and international government clients are on track to increase approximately 15% this year and will represent over 55% of our 2025 total revenues. Now to our revenues from federal government clients, which declined 9.8% sequentially, representing a 25.2% reduction from last year's second quarter. As I mentioned earlier, the dollar amount of our total 2025 federal revenues that has been impacted by contract cancellations grenade stable with our last report on May 1st of this year. As of today, July 31st, that number stood at 117 million, only 2 million more than we reported on May 1st. This does not include the impact of the slower pace of program procurement activity that has also affected our federal revenue comparisons. As we await final decisions on the reorganization of the Department of Health and Human Services, we continue to support our clients' public health programs For example, CDC's Biosense Syndrome Surveillance System and the National Program of Cancer Registries. Likewise, we continue to build a database of substance abuse and mental health treatment facilities, helping families in crisis find care. In our scientist review studies, the results for inclusion in clinicaltrials.gov, so people needing treatment might more easily find a clinical trial. Recently, we've also begun to see new opportunities come out from the health Resources and Services Administration, NIH, the Administration for Children and Families, and CDC. We believe our expertise in key areas such as nutrition, obesity, suicide prevention, cancer research, and the health risks associated with the use of pesticides, chemicals, and food additives position us well for future opportunities. In IT modernization in the federal arena, While the pace of new opportunities in contract modifications has slowed this year, second quarter procurement activity was up from Q1, and that trend is expected to continue in Q3. This improving procurement momentum, combined with our skills and positioning, gives us confidence that this portion of our federal business will return to growth in 2026. ICF is well positioned to respond to the needs of our federal clients as we believe our differentiated approach to building agile, flexible, and lean engineering and product teams, allows us to deliver value quicker and more efficiently than competitors. And as the federal government continues to shift IT modernization pyramids towards outcome-based contracting that is deliverable-based and or fixed price, ICF can easily adapt to these changes and support our clients in the transition, even though approximately 80% of the work we currently perform in this area is in agile scrums and sprints, and at least half is under fixed price for outcome-based contracts. Further, to help address the pressure for federal agencies to modernize quickly, improve service delivery, and operate more efficiently, this month we are introducing ICF Fathom, a new suite of tailored artificial intelligence solutions and services designed specifically for federal agencies. This is a production-ready solution that can integrate seamlessly into existing systems at scale to unlock the full potential of AI to support mission outcomes. ICF-ATHOM is built on a proprietary platform and offers a suite of tailored solutions and services and includes a set of intelligent AI agents that can be directly and securely embedded into existing workflows and infrastructures. The agents automate complex tasks, support informed decision-making, reduce waste, and boost productivity. These agents can be configured to support a wide range of functions from software development, cybersecurity, to document processing, grants management, and regulatory analysis. Our early discussions with clients have generated considerable interest in other programs, and we look forward to providing updates on our progress in the coming periods. To sum up, we are pleased with our second quarter performance as it was in line with our expectations, demonstrated sequential stability, and reflected ICF's agility in managing through a dynamic environment. Now I'll turn the call over to our CFO, Barry Broaddus, for Finance Review.