ICF Reports Second Quarter 2025 Results (Form 8-K)

ICF Reports Second Quarter 2025 Results

―Second Quarter in Line with Expectations Led by 27% Revenue Growth in Commercial Energy―

―Margins Continue to Benefit From Favorable Mix―

―Maintains Full Year 2025 Guidance Framework with Improved Business Outlook―

―Expects a Return to Revenue and Earnings Growth in 2026―

Second Quarter Highlights:

RESTON, Va., July 31, 2025 - ICF (NASDAQ: ICFI), a leading global solutions and technology provider, reported results for the second quarter ended June 30, 2025.

Commenting on the results, John Wasson, chair and chief executive officer, said, "Second quarter results were in line with our expectations, demonstrating the benefits of our diversified client base, our agility in adapting to dynamic market conditions and ICF's deep domain expertise and crosscutting capabilities that underpin our business development opportunities.

"Revenues from commercial, state and local and international government clients increased 13.8% and accounted for 57% of total second quarter revenues. This performance was led by continued robust growth in revenues from commercial energy clients, reflecting ICF's market leadership in developing and implementing energy efficiency programs for utilities, as well as increased demand for our expertise in flexible load management, electrification and grid optimization. The capabilities that we have built through investments in these high-growth markets are well aligned with the needs of our utility clients as they address increasing electricity demand.

"As a result of the strong growth in our non-federal government client work, we delivered second quarter revenues at 2.4% below first quarter levels, after absorbing a 14.6% sequential decline in revenues from federal government clients.

"We are executing exceedingly well on our plan to maintain similar margins to those of 2024, while continuing to invest in growth markets and expanding our capabilities in AI and other technologies. Second quarter

1

Adjusted EBITDA margin expanded by approximately 20 basis points year-on-year, reflecting the increased mix of higher-margin commercial energy revenues and a 15.5% reduction in subcontractor and other direct costs. Margins also benefitted from cost management initiatives and a higher percentage of fixed price and time and material contracts, which accounted for 93% of our second quarter revenues, up from 88% last year, while cost reimbursement contracts were under 7%.

"This was a strong quarter for contract awards, which reached $621 million for a second quarter book-to-bill ratio of 1.30. Year-to-date our contract wins amounted to almost $1.1 billion, despite delays in new procurements in the federal government business. Our business development pipeline was $9.2 billion, supporting our confidence in ICF's future performance."

Second Quarter 2025 Results

Second quarter 2025 total revenue was $476.2 million, compared to $512.0 million reported in the second quarter of 2024 and $487.6 million in this year's first quarter. Subcontractor and other direct costs were 23.6% of total revenues, compared to 25.9% in the comparable prior year period. Revenues excluding subcontractor and other direct costs decreased 4.0% as compared to last year's second quarter. Gross margin increased 160 basis points to 37.3%, driven by the favorable change in business mix. Operating income was $40.0 million, compared to $42.4 million last year, and operating margin on total revenue was 8.4%, up from 8.3% in the second quarter of 2024. Net income totaled $23.7 million, versus $25.6 million in the prior year. Diluted EPS was $1.28 per share, compared to $1.36 a year ago. The company's effective tax rate was 21.0% compared to 26.3% in the 2024 second quarter.

Non-GAAP EPS was $1.66 per share, versus $1.69 per share reported in the comparable period in 2024. EBITDA was $53.1 million, compared to $55.6 million reported in the year-ago quarter. Adjusted EBITDA was $52.9 million, and Adjusted EBITDA margin on total revenues was 11.1%, 20 basis points above the 2024 second quarter.

Cash flows from operations were $52 million in the second quarter and the company reduced its debt by $40 million, reflecting the continued strong cash generation of the business.

Backlog and New Business

Total backlog was $3.4 billion at the end of the second quarter of 2025. Funded backlog was $1.8 billion, or approximately 54% of the total backlog. The total value of contracts awarded in the 2025 second quarter was $621 million, representing a book-to-bill ratio of 1.30.

Government Revenue Second Quarter 2025 Highlights

Revenue from government clients was $319.6 million during the quarter.

2

Key Government Contracts Awarded in the Second Quarter of 2025

Notable government contract awards won in the second quarter of 2025 included:

IT Modernization/Digital Transformation

Energy and Environment

Disaster Management

Health and Social Programs

3

Commercial Revenue Second Quarter 2025 Highlights

Commercial revenue was $156.6 million, up 25.2% year-over-year.

Key Commercial Contracts Awarded in the Second Quarter of 2025

Notable commercial awards won in the second quarter of 2025 included:

Dividend Declaration

On July 31, 2025, ICF declared a quarterly cash dividend of $0.14 per share, payable on October 10, 2025, to shareholders of record on September 5, 2025.

Summary and Outlook

"ICF's diversified business model and agility have enabled us to navigate an evolving federal government business environment while driving strong growth in other areas of our portfolio.

4

"We are maintaining the guidance framework for 2025 that we provided at the time of our fourth quarter 2024 earnings release, while noting our improved business outlook. Based on year-to-date results and our current visibility, we do not foresee full year 2025 revenues declining by as much as 10% from 2024 levels, which was the floor indicated by our original guidance. We continue to expect adjusted EBITDA margins to be similar to those of 2024, and our reported GAAP and Non-GAAP EPS are likely to be at the higher end of our guidance framework. This guidance framework does not contemplate an extensive government shutdown this year, nor a prolonged period of pauses in funding modifications to existing contracts or new procurements. We continue to expect operating cash flow for 2025 to be approximately $150 million.

"Our increased confidence in ICF's 2025 year-on-year comparisons is underpinned by our expectation for continued robust demand from our commercial energy clients, stable revenues from state and local government clients and the increasing ramp-up of recently won contracts by international government clients, together with the agility and resourcefulness that we have demonstrated in serving federal government clients.

"We are looking ahead to ICF's return to revenue and earnings growth in 2026 supported by continued growth from our non-federal government clients, improvement from portions of our federal government business, and the continued support of our professional staff, who have shown a tremendous commitment to ICF and to our clients and have helped us manage through challenging industry conditions," Mr. Wasson concluded.

1 Non-GAAP EPS, EBITDA and Adjusted EBITDA are Non-GAAP measurements. A reconciliation of all Non-GAAP measurements to the most applicable U.S. GAAP number is set forth below. Special charges are items that were included within our consolidated statements of comprehensive income but are not indicative of ongoing performance and have been presented net of applicable U.S. GAAP taxes. The presentation of Non-GAAP measurements may not be comparable to other similarly titled measures used by other companies.

About ICF

ICF is a leading global solutions and technology provider with approximately 9,000 employees. At ICF, business analysts and policy specialists work together with digital strategists, data scientists and creatives. We combine unmatched industry expertise with cutting-edge engagement capabilities to help organizations solve their most complex challenges. Since 1969, public and private sector clients have worked with ICF to navigate change and shape the future. Learn more at icf.com.