2007 Annual Report ICF International Global Locations
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ICF International 2007 Annual Report ICF International Global Locations Albany, NY ¡ Baton Rouge, LA Bellevue, WA ¡ Cambridge, MA Charleston, SC ¡ Dallas, TX ¡ Dayton, OH Fairfax, VA ¡ Gillette, WY ¡ Houston, TX Irvine, CA ¡ Lexington, MA Los Angeles, CA ¡ Middletown, PA New York, NY ¡ Oakland, CA ¡ Ogden, UT Oklahoma City, OK ¡ Portland, OR Research Triangle Park, NC Rockville, MD ¡ Sacramento, CA San Diego, CA ¡ San Francisco, CA Seattle, WA ¡ Washington, DC London ¡ Moscow ¡ New Delhi Rio de Janeiro ¡ Toronto ICF International (NASDAQ: ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, climate change, environment, transportation, social programs, health, defense, and emergency management markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 3,000 employees serve these clients worldwide. ICF’s Web site is www.icfi.com. ICF to Bolster Status as Carbon Hero by Reducing Footprint to Zero The Washington Post l ICF Intl Awarded FEMA Task Order Valued up to $26 M to Implement Radiological Emergency Preparedness Dow Jones Newswires l ICF to Support Bay Area Preparedness Terror Response Technology Report l ICF International Closes Purchase of Simat Helliesen & Eichner The Weekly of Business Aviation l Emission Permits May Fall as Utilities, Factories Curb Pollution ICF Says Bloomberg News l Va.-based ICF to Promote Energy Star Homes Earthtimes.org l ICF International Enters DHS Mentor Protegee Program Defense Daily l Companies Aim to Make Bike to Work More Than Day Washington Business Journal Chairman’s Message n the past year, ICF accomplished n Expanding profitability by much, and the results are impres- winning larger contracts, Isive. I am proud to report that 2007 increasing the size of was a period of sustained growth for our commercial business, our firm. While many industries faced and leveraging our the challenges of difficult macroeco- corporate infrastructure. nomic conditions, we continued to We continued to advance on all these experience favorable trends across fronts in 2007 by achieving significant all of our principal markets—energy organic growth and completing and climate change; environment and strategically important acquisitions. infrastructure; health, human services, and social programs; and defense and homeland security—including: Organic Growth n Huge new capital requirements Organic growth in the core business, in the energy industry to respond excluding all acquisitions closed in to growing demand, create ways 2007 and The Road Home revenues, to use less energy with fewer was 10.5 percent over the previous resources, and reduce emissions year, which exceeded the goal we set of greenhouse gases; in 2006. Even more notable is our n Aging transportation infrastructure, coupled with organic growth record that includes the revenues from increased environmental sensitivity, that drives a The Road Home contract. demand for innovative approaches to revitalizing In 2007, ICF continued to implement the largest housing the infrastructure, while managing the use of recovery effort of its type in U.S. history. We completed natural resources and complying with stricter 90,000 homeowner grant closings by the end of the year regulatory mandates; and passed the milestone of 100,000 such closings in early n Rising healthcare costs, an aging population, and March 2008, nearly nine months ahead of schedule. More deteriorating urban environments that increase than $6 billion in payments were distributed to eligible pressure on government and industry to address the homeowners. The complexity and dynamics associated health and social service needs of citizens efficiently with this contract required ICF to be flexible and and creatively; and responsive. The unparalleled challenges obliged us to react n Urgency for identifying new defense and homeland quickly and improve continually. While no program could security solutions at all levels of government despite have been delivered quickly enough for those affected stringent budgets. by the 2005 hurricanes, our team performed tirelessly. I assure you that we will not rest until we complete this These trends prompted governments and industry to important program. look for firms with the in-depth expertise and experience to provide advisory, implementation, and improvement Recent Acquisitions services. Our unequaled proficiency in these domains, We complemented our organic growth with growth and exceptional skills in information technology, from acquisitions: program management, organizational improvement, and stakeholder communications, continue to drive the growth n Energy and Environmental Analysis (January in our business. 2007)—a 27-person firm nationally known in the energy field for expertise in natural gas, Our Growth Strategy transportation, and emerging market topics, including environmental issues and new technologies. The ICF strategy for success has three elements: This acquisition gave ICF additional expertise in the n Building revenue by strengthening our competitive electricity and gas sectors to create an unmatched position in our four key markets both domestically platform for integrated analyses. and internationally; n Gaining scale in our implementation business, which provides information technology, program II management, and human capital solutions; and ICF International 2007 Annual Report n Advanced Performance Consulting Group great place to work on some of the most important issues (January 2007)—a 29-person firm specializing in of our time continued to be reflected in the comparatively partnering with federal organizations to devise low turnover of our personnel, the long tenure of our and implement strategies, improve performance, senior staff, and the ability to attract and retain talented manage change, and support employee development. employees throughout the world. In 2007, ICF received This acquisition enhanced ICF’s expertise and the Helios HR Apollo Award™, sponsored by Helios HR client relationships in strategic organization and and the Society for Human Resource Management, performance measurement, as well as in human recognizing organizations that promote a continuous capital services and strategic communications. learning environment as part of their culture. Also in n Z-Tech (June 2007)—a 200-person firm that provides 2007, ICF received a CARE (Companies as Responsive software engineering, Web, and scientific computing Employers) Award from Northern Virginia Family Service, services to federal health agencies. This acquisition honoring companies that provide work environments that positioned ICF as a leader in the high-growth health are responsive to the needs of employees’ families. We information technology market. also demonstrated our commitment to our employees, our clients, and the environment by being one of the first n Simat, Helliesen & Eichner (December 2007)— professional services firms in the world to implement a 90-person firm dedicated to the air transport a program that made us a carbon neutral company in industry. This acquisition placed ICF in the forefront early 2008. of airline, airport, and aviation consulting, thereby strengthening our transportation service offerings to commercial, federal, and state clients in the United Looking Ahead States and abroad. With increasing energy investment, more regulatory initiatives associated with climate change and the Financial Performance environment, the high probability of healthcare reform, and resolute attention to homeland security, the markets For 2007, revenue was $727.1 million, compared to $331.3 we serve are poised for strong growth. I am confident that million reported for the previous year. Earnings from ICF is well positioned to take advantage of these positive operations were $70.5 million, compared to market trends in the coming years. In fact, we already $22.9 million reported for 2006. Net income was have completed one acquisition in 2008. The acquisition $40.6 million, or $2.72 per diluted share, compared to of Jones & Stokes, a 400-plus person firm specializing in $11.9 million, or $1.10 per diluted share, for 2006. The natural resources and environmental planning, dramatically weighted average number of shares outstanding in 2007 increases ICF’s geographic diversity in the western United was approximately 14.9 million compared to approximately States. Building on the experience of Jones & Stokes in 10.8 million in 2006. implementing state and local government programs, the We held more than 1,500 active contracts during 2007. business combination will facilitate our organic growth by Federal clients generated approximately 27 percent securing large-scale implementation-oriented contracts in of our revenue. State and local government clients markets that both firms know well. produced approximately 65 percent of our revenue in Our strategy of developing the capabilities to support 2007. Commercial and international clients generated our clients throughout the entire program life cycle approximately 8 percent of our 2007 revenue, primarily in will reinforce the value of our services to industries and the air transportation and energy sectors. organizations. Strong organic growth and a robust