ICF International Q3 earnings rise to $1.76 a share
First-nine-month operating cash flow was $131.748 million versus $66.244 million a year earlier, while revenue was $1,382.492 million versus $1,429.178 million.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
ICF International, Inc. (ICFI) reported third-quarter 2026 revenue of $470.497 million, compared with $465.405 million a year earlier, and net income of $31.733 million versus $23.766 million. Diluted earnings per share were $1.76, compared with $1.28, and operating income was $43.647 million versus $38.431 million. For the first nine months, revenue was $1,382.492 million versus $1,429.178 million and net income was $79.203 million versus $74.278 million.
Net cash provided by operating activities for the nine months was $131.748 million, compared with $66.244 million. Cash, cash equivalents and restricted cash totaled $99.186 million at September 30, 2026. Debt was $372.122 million at that date, compared with $401.355 million at December 31, 2025. ICFI refinanced its credit agreement in April 2026, extending maturity to April 10, 2031; the agreement maintains a $600 million revolving facility and increases the term loan facility from $300 million to $450 million. Available borrowing capacity was $619.0 million at September 30, 2026, subject to financial and performance-based limitations. The company declared a dividend of $0.14 per common share for the quarter.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net income was $31.733 million, versus $23.766 million.
- Moderate pointNine-month operating cash flow was $131.748 million, versus $66.244 million.
- Minor pointNine-month net income was $79.203 million, versus $74.278 million.
Negative
- None.
Filing Explained
At September thirtieth, one million three hundred two thousand seven hundred ninety-nine shares remained grantable, creating potential dilution if issued.
Form 10-Q is the unaudited quarterly report; ICF says 1,302,799 shares remained available for grant under its 2026 Omnibus Plan as of
The available-for-grant figure is plan capacity, not an issued-share count; if additional common shares are issued, existing holders’ percentage ownership falls absent offsetting changes.
Key Figures
Key Terms
Unfulfilled Performance Obligations financial
Consolidated Net Leverage Ratio financial
cash flow hedges financial
Delayed-Draw Term Loan financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much revenue and net income did ICFI report in Q3 2026?
How much operating cash flow did ICFI report for the first nine months of 2026?
When does ICFI expect to recognize its unfulfilled performance obligations?
What are the key terms of ICFI's 2026 credit agreement?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File Number:
(Exact name of Registrant as Specified in its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act.
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of October 30, 2026, there were
ICF INTERNATIONAL, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q FOR THE
PERIOD ENDED SEPTEMBER 30, 2026
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION |
3 |
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Item 1. |
Financial Statements |
3 |
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Consolidated Balance Sheets at September 30, 2026 (Unaudited) and December 31, 2025 |
3 |
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Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months and Nine Months Ended September 30, 2026 and 2025 |
4 |
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Consolidated Statements of Stockholders’ Equity (Unaudited) including the Three Months and Nine Months Ended September 30, 2026 and 2025 |
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Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2026 and 2025 |
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Notes to Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
26 |
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Item 4. |
Controls and Procedures |
26 |
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PART II. OTHER INFORMATION |
27 |
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Item 1. |
Legal Proceedings |
27 |
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Item 1A. |
Risk Factors |
27 |
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Item 2. |
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |
27 |
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Item 3. |
Defaults Upon Senior Securities |
27 |
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Item 4. |
Mine Safety Disclosures |
27 |
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Item 5. |
Other Information |
27 |
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Item 6. |
Exhibits |
28 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ICF International, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
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September 30, 2026 |
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(in thousands, except share and per share amounts) |
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(Unaudited) |
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December 31, 2025 |
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ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net |
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Contract assets |
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Prepaid expenses and other current assets |
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Income tax receivable |
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Total Current Assets |
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Property and equipment, net |
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Goodwill |
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Other intangible assets, net |
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Operating lease - right-of-use assets |
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Other assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Accounts payable |
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$ |
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$ |
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Contract liabilities |
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Lease liabilities - current |
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Accrued salaries and benefits |
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Accrued subcontractors and other direct costs |
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Accrued expenses and other current liabilities |
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Total Current Liabilities |
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Debt |
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Lease liabilities - non-current |
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Deferred income taxes |
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Other long-term liabilities |
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Total Liabilities |
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Commitments and Contingencies (Note 13) |
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Stockholders’ Equity: |
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Preferred stock, par value $ |
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— |
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— |
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Common stock, par value $ |
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Additional paid-in capital |
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Retained earnings |
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Treasury stock, |
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( |
) |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
3
ICF International, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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(in thousands, except per share amounts) |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Direct Costs |
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Operating costs and expenses: |
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Indirect and selling expenses |
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Depreciation and amortization |
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Total operating costs and expenses |
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Operating income |
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Interest, net |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Other income (expense) |
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( |
) |
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( |
) |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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$ |
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$ |
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$ |
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$ |
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||||
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Earnings per Share: |
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||||
Basic |
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$ |
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$ |
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$ |
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$ |
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||||
Diluted |
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$ |
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$ |
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$ |
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$ |
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||||
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Weighted-average Shares: |
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Basic |
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Diluted |
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||||
Cash dividends declared per common share |
|
$ |
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$ |
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$ |
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$ |
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||||
|
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|
||||
Other comprehensive income (loss), net of tax |
|
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( |
) |
|
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|
|||
Comprehensive income, net of tax |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
4
ICF International, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
|
|
Common Stock |
|
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Additional |
|
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Retained |
|
|
Treasury Stock |
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Accumulated |
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(in thousands) |
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Shares |
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Amount |
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Capital |
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Earnings |
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Shares |
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Amount |
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Loss |
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Total |
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||||||||
Balance at January 1, 2026 |
|
|
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|
$ |
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$ |
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$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
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|
|
|
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— |
|
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— |
|
|
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— |
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|
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|
||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
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— |
|
|
|
— |
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|
||
Issuance of shares pursuant to vesting of restricted stock units |
|
|
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|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Share repurchases |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
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( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at March 31, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Equity compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of shares pursuant to employee stock purchase plan and vesting of restricted stock units |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Share repurchases |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Equity compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of shares pursuant to vesting of restricted stock units |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Share repurchases |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at September 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
|
|
Common Stock |
|
|
Additional |
|
|
Retained |
|
|
Treasury Stock |
|
|
Accumulated |
|
|
|
|
||||||||||||||
(in thousands) |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Shares |
|
|
Amount |
|
|
Loss |
|
|
Total |
|
||||||||
Balance at January 1, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of shares pursuant to vesting of restricted stock units |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Share repurchases |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Equity compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of shares pursuant to employee stock purchase plan and vesting of restricted stock units |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Share repurchases |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Equity compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Issuance of shares pursuant to vesting of restricted stock units |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Share repurchases |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at September 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
5
The accompanying notes are an integral part of these consolidated financial statements.
6
ICF International, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Cash Flows from Operating Activities |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Provision for (recovery of) credit losses |
|
|
|
|
|
( |
) |
|
Deferred income taxes and unrecognized income tax benefits |
|
|
|
|
|
|
||
Non-cash equity compensation |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Other operating adjustments, net |
|
|
|
|
|
|
||
Changes in operating assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
|
|
||
Net contract assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Accounts receivable |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
Operating lease assets and liabilities, net |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued salaries and benefits |
|
|
( |
) |
|
|
( |
) |
Accrued subcontractors and other direct costs |
|
|
|
|
|
( |
) |
|
Accrued expenses and other current liabilities |
|
|
|
|
|
( |
) |
|
Income tax receivable and payable |
|
|
( |
) |
|
|
( |
) |
Other liabilities |
|
|
|
|
|
|
||
Net Cash Provided by Operating Activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cash Flows from Investing Activities |
|
|
|
|
|
|
||
Payments for purchase of property and equipment and capitalized software |
|
|
( |
) |
|
|
( |
) |
Other investing, net |
|
|
( |
) |
|
|
|
|
Net Cash Used in Investing Activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash Flows from Financing Activities |
|
|
|
|
|
|
||
Advances from Credit Facility |
|
|
|
|
|
|
||
Payments on Credit Facility |
|
|
( |
) |
|
|
( |
) |
Other short-term borrowings, net |
|
|
|
|
|
( |
) |
|
Dividends paid |
|
|
( |
) |
|
|
( |
) |
Stock repurchases |
|
|
( |
) |
|
|
( |
) |
Issuance of common stock under employee stock purchase plan |
|
|
|
|
|
|
||
Payments of debt issuance costs |
|
|
( |
) |
|
|
|
|
Repayment of finance lease obligations |
|
|
( |
) |
|
|
( |
) |
Net Cash Used in Financing Activities |
|
|
( |
) |
|
|
( |
) |
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Net Change in Cash, Cash Equivalents, and Restricted Cash |
|
|
|
|
|
|
||
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period |
|
|
|
|
|
|
||
Cash, Cash Equivalents, and Restricted Cash, End of Period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental Disclosure of Cash Flow Information |
|
|
|
|
|
|
||
Cash paid during the period for: |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
|
||
Income tax payments, net of refunds |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
7
ICF International, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
(dollar amounts in tables in thousands, except share and per share data)
NOTE 1 – BASIS OF PRESENTATION
Basis of Presentation
The accompanying consolidated financial statements are of ICF International, Inc. (“ICFI”) and its wholly-owned principal subsidiary, ICF Consulting Group, Inc. (“Consulting,” and together with ICFI, the “Company”), and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”). ICFI is a holding company with no operations or assets other than its investment in the common stock of Consulting. All other subsidiaries of the Company are wholly owned by Consulting. Intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amounts of revenue and expenses. Management evaluates these estimates on an ongoing basis including those that relate to revenue recognition (including estimates of variable considerations and remaining costs to complete fixed-price contracts), expected credit losses, valuation and lives of tangible and intangible assets including those acquired from business combinations, and reserves for tax benefits and valuation allowances on deferred tax assets. Actual results experienced by the Company may differ from management’s estimates.
Interim Results
The unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These rules and regulations permit some of the information and footnote disclosures normally included in annual financial statements, prepared in accordance with U.S. GAAP, to be condensed or omitted. In management’s opinion, the unaudited consolidated financial statements contain all adjustments that are of a normal recurring nature, necessary for a fair presentation of the results of operations and financial position of the Company for the interim periods presented. The Company reports operating results and financial data as a single operating segment and reporting unit. Operating results for the three-month and the nine-month periods ended September 30, 2026 and 2025 are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2025 and the notes thereto included in the Company’s Annual Report on Form 10-K.
Recent Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
In November 2024, the FASB issued ASU 2024-03: Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires additional disaggregation of certain costs and expenses. ASU 2024-03 specifically requires all public entities to disclose within a tabular format the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities in each relevant expense caption as well as certain amounts that are already required to be disclosed under current U.S. GAAP. ASU 2024-03 also requires public entities to disclose a qualitative description of the composition of any amounts in relevant expense captions that are not separately disaggregated and the amount and definition of the entity’s selling expenses. ASU 2024-03 will be effective for the Company for the annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The amendments may be adopted on a prospective or retrospective basis. The Company is currently evaluating the impact of the adoption of ASU 2024-03.
8
Intangibles—Goodwill and Other—Internal-Use Software
In September 2025, the FASB issued ASU 2025-06: Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes the accounting for internal-use software costs by removing all references to software development project stages so that the guidance is neutral to different software development methods. ASU 2025-06 will be effective for the Company for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The amendments may be adopted on a prospective, retrospective, or modified basis. The Company is currently evaluating the impact of the adoption of ASU 2025-06.
NOTE 2 – RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents, and restricted cash as of September 30, 2026 and 2025 to cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025:
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash (1) |
|
|
|
|
|
|
||
Total of cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows |
|
$ |
|
|
$ |
|
||
Restricted cash is related to the Company’s business of managing energy efficiency programs for its clients and advances on certain programs.
NOTE 3 – ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consists of contract and other customer receivables. A reconciliation of accounts receivable, net is as follows:
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Billed and billable (1) |
|
$ |
|
|
$ |
|
||
Allowance for expected credit losses |
|
|
( |
) |
|
|
( |
) |
Accounts receivable, net |
|
$ |
|
|
$ |
|
||
The Company sells certain billed accounts receivable in accordance with its Amended Master Receivables Purchase Agreement with MUFG Bank, Ltd. (“MUFG”) that are accounted for as sales under the Accounting Standards Codification (“ASC”) 860, Transfers and Servicing (“ASC 860”). The accounts receivable are sold without recourse and the Company does not retain any ongoing financial interest in the transferred accounts receivable other than providing servicing activities.
|
|
As of and for the Nine Months Ended |
|
|||||
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
||
Beginning balance, billed accounts receivable sold and not yet collected |
|
$ |
|
|
$ |
|
||
Billed accounts receivable sold (1) |
|
|
|
|
|
|
||
Collections from customers (1) |
|
|
( |
) |
|
|
( |
) |
Ending balance, billed accounts receivable sold and not yet collected |
|
$ |
|
|
$ |
|
||
9
The following is a reconciliation of cash collections from customers of billed accounts receivable previously sold to MUFG that were eligible and accounted for as sales under ASC 860:
|
|
As of and for the Nine Months Ended |
|
|||||
|
|
September 30, 2026 |
|
|
September 30, 2025 |
|
||
Beginning balance, cash collected but not yet remitted to MUFG |
|
$ |
|
|
$ |
|
||
Collections from customers (1) |
|
|
|
|
|
|
||
Remittances to MUFG (1) |
|
|
( |
) |
|
|
( |
) |
Ending balance, cash collected but not yet remitted to MUFG |
|
$ |
|
|
$ |
|
||
The aggregate impact of the sale of billed accounts receivable on the Company’s operating cash flows was a net outflow of $
At September 30, 2026 and December 31, 2025, the amounts due to MUFG for cash collected and not yet remitted for billed accounts receivable sold that did not qualify as sales under ASC 860 totaled $
NOTE 4 – LEASES
At September 30, 2026, the Company had operating and finance leases for facilities and equipment with remaining duration ranging from
|
|
Operating |
|
|
Finance |
|
||
September 30, 2027 |
|
$ |
|
|
$ |
|
||
September 30, 2028 |
|
|
|
|
|
|
||
September 30, 2029 |
|
|
|
|
|
|
||
September 30, 2030 |
|
|
|
|
|
|
||
September 30, 2031 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
Total future minimum lease payments |
|
|
|
|
|
|
||
Less: Interest |
|
|
( |
) |
|
|
( |
) |
Total lease liabilities |
|
$ |
|
|
$ |
|
||
Operating lease liabilities |
|
$ |
|
|
Finance lease liabilities |
|
|
|
|
Total lease liabilities |
|
$ |
|
|
|
|
|
|
|
Lease liabilities - current |
|
$ |
|
|
Lease liabilities - non-current |
|
|
|
|
Total lease liabilities |
|
$ |
|
|
NOTE 5 – LONG-TERM DEBT
On April 10, 2026, the Company completed the refinancing of its previous credit agreement, dated May 6, 2022 (the “Previous Credit Agreement”) by entering into a new Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement” or the “Credit Facility”) with PNC Bank, National Association as administrative agent, BOFA Securities, Inc. and Wells Fargo Securities, LLC as the joint lead arrangers, certain other financial institutions as lenders, and certain guarantors party thereto (“Loan Syndicate”).
10
The Amended and Restated Credit Agreement: (a) maintains a $
At September 30, 2026 and December 31, 2025, long-term debt consisted of:
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||
|
|
Average |
|
Outstanding |
|
|
Average |
|
Outstanding |
|
||
Term Loan |
|
|
|
$ |
|
|
|
|
$ |
|
||
Delayed-Draw Term Loan |
|
|
|
|
— |
|
|
|
|
|
|
|
Revolving Credit |
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||
Unamortized debt issuance costs |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
Total |
|
|
|
$ |
|
|
|
|
$ |
|
||
The Company utilizes floating-to-fixed interest rate swap agreements to hedge the variable interest portion of debt facilities. Inclusive of the impact of floating-to-fixed interest rate swaps (see “Note 7 – Derivative Instruments and Hedging Activities”), the average interest rate for long-term debt was
As of September 30, 2026, the Company had unused borrowing capacity of $
Contractual Repayments
Future contractual repayments of debt principal are as follows:
Payments due by |
|
Term Loan |
|
|
Revolving Credit |
|
|
Total |
|
|||
September 30, 2030 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
April 10, 2031 (maturity) |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|||
11
Debt Issuance Costs
The Company’s debt issuance costs, which represent fees and other direct incremental costs incurred in connection with the Company’s long-term debt, have been deferred and are amortized over the term of indebtedness.
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Deferred financing costs |
|
$ |
|
|
$ |
|
||
Accumulated amortization |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Other assets |
|
$ |
|
|
$ |
— |
|
|
Debt |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Amortization of debt issuance costs for the three months ended September 30, 2026 and 2025 totaled $
NOTE 6 – REVENUE
Substantially all of the Company’s revenue is recognized over time as control of the related goods or services is transferred to customers.
Disaggregation of Revenue
The Company disaggregates revenue from clients into categories that depict how the nature, amount, and uncertainty of revenue and cash flows are affected by economic and business factors. Those categories are client market, client type, and contract mix.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||||
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
||||||||
Client Market: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Energy, environment, infrastructure, and disaster recovery |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
Health and social programs |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||||
Security and other civilian & commercial |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||||
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
||||||||
Client Type: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. federal government |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
U.S. state and local government |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||||
International government |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||||
Total Government |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||||
Commercial |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
12
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||||
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
|
Dollars |
|
|
Percent |
|
||||||||
Contract Mix: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Time-and-materials |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
Fixed-price |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||||
Cost-based |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
Contract Assets and Liabilities
Contract assets consist of unbilled receivables on contracts where revenue recognized exceeds the amount billed. Contract liabilities result from advance payments received on a contract or from billings in excess of revenue recognized.
The following table summarizes the contract assets and liabilities as of September 30, 2026 and December 31, 2025:
|
|
Financial Statement Classification |
|
September 30, 2026 |
|
|
December 31, 2025 |
|
|
$ Change |
|
|||
Contract assets |
|
Contract assets |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Contract liabilities - current |
|
Contract liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Contract liabilities - non-current |
|
Other long-term liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net contract assets (liabilities) |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
The increase in net contract assets (liabilities) is primarily due to the timing difference between the performance of services and billings to customers. During the nine months ended September 30, 2026 and 2025, the Company recognized $
Changes in Estimates on Contracts
The Company recognized net income of $
Revenue Adjustments from Previously Satisfied Performance Obligations
The Company recognized $
Unfulfilled Performance Obligations
In computing unfulfilled performance obligations (“UPO”), the Company excludes contracts with a stated term of one year or less (practical expedient), and contracts with the U.S. federal government. As of September 30, 2026, the UPO was $
NOTE 7 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
At September 30, 2026, the Company had floating-to-fixed interest rate swap agreements (the “Swaps”) for an aggregate notional amount of $
13
NOTE 8 – INCOME TAXES
T
NOTE 9 – STOCKHOLDERS’ EQUITY
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss as of September 30, 2026 and 2025 included the following:
|
|
Three Months Ended September 30, 2026 |
|
|||||||||
|
|
Foreign |
|
|
Change in |
|
|
Total |
|
|||
Accumulated other comprehensive (loss) income at June 30, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Current period other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|||
Other comprehensive (loss) income before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
||
Amounts reclassified from accumulated other comprehensive (loss) income (1) |
|
|
— |
|
|
|
|
|
|
|
||
Effect of taxes |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total current period other comprehensive (loss) income |
|
|
( |
) |
|
|
|
|
|
|
||
Accumulated other comprehensive (loss) income at September 30, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
Three Months Ended September 30, 2025 |
|
|||||||||
|
|
Foreign |
|
|
Change in |
|
|
Total |
|
|||
Accumulated other comprehensive (loss) income at June 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Current period other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|||
Other comprehensive (loss) income before reclassifications |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from accumulated other comprehensive (loss) income |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Effect of taxes |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total current period other comprehensive (loss) income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive (loss) income at September 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
14
|
|
Nine Months Ended September 30, 2026 |
|
|||||||||
|
|
Foreign |
|
|
Change in |
|
|
Total |
|
|||
Accumulated other comprehensive (loss) income at December 31, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Current period other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|||
Other comprehensive (loss) income before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
||
Amounts reclassified from accumulated other comprehensive (loss) income |
|
|
— |
|
|
|
|
|
|
|
||
Effect of taxes |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total current period other comprehensive (loss) income |
|
|
( |
) |
|
|
|
|
|
|
||
Accumulated other comprehensive (loss) income at September 30, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
Nine Months Ended September 30, 2025 |
|
|||||||||
|
|
Foreign |
|
|
Change in |
|
|
Total |
|
|||
Accumulated other comprehensive (loss) income at December 31, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Current period other comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|||
Other comprehensive (loss) income before reclassifications |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from accumulated other comprehensive (loss) income (1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Effect of taxes |
|
|
— |
|
|
|
|
|
|
|
||
Total current period other comprehensive (loss) income |
|
|
|
|
|
( |
) |
|
|
|
||
Accumulated other comprehensive (loss) income at September 30, 2025 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Share Repurchases
The Company repurchases shares under a share repurchase program authorized by its board of directors. In addition, the Company repurchases shares in connection with the vesting of restricted stock units (“RSUs”) and performance share awards (“PSAs”) granted to employees.
Repurchases for the three and nine months ended September 30, 2026 and 2025 are as follows:
|
Three Months Ended September 30, |
|
|||||||||||
|
2026 |
|
|
2025 |
|
||||||||
|
Shares |
|
Amount Paid |
|
|
Shares |
|
Amount Paid |
|
||||
Vesting of RSUs |
|
|
$ |
|
|
|
|
$ |
|
||||
|
Nine Months Ended September 30, |
|
|||||||||||
|
2026 |
|
|
2025 |
|
||||||||
|
Shares |
|
Amount Paid |
|
|
Shares |
|
Amount Paid |
|
||||
Share Repurchase Program |
|
|
$ |
|
|
|
|
$ |
|
||||
Vesting of RSUs and PSAs |
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
$ |
|
|
|
|
$ |
|
||||
15
NOTE 10 – STOCK-BASED COMPENSATION
The Company granted stock awards in the form of RSUs, cash-settled RSUs, and performance shares to employees and non-employee directors under the 2018 Amended and Restated Omnibus Plan (the “2018 A&R Omnibus Plan”). On June 2, 2026, the Company’s stockholders approved the 2026 Omnibus Incentive Plan (the “2026 Omnibus Plan”) that replaced the 2018 A&R Omnibus Plan. As of September 30, 2026,
The 2026 Omnibus Plan allows the Company to grant up to
The following awards were granted during the three and nine months ended September 30, 2026 and 2025:
|
|
Awards Granted |
|
|
Average Grant Date Fair Value |
|
|
Awards Granted |
|
|
Average Grant Date Fair Value |
|
||||||||||||||||||||
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||
Employee Stock Awards - RSUs |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||||
Employee Stock Awards - PSAs |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||||
Cash-Settled RSUs |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||||
Non-Employee Director Stock Awards - RSUs |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
The total stock-based compensation expense was $
NOTE 11 – EARNINGS PER SHARE
Earnings per share (“EPS”), including the dilutive effect of stock awards for each period reported is summarized below:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
(in thousands, except per share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average number of basic shares outstanding during the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of stock awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average number of diluted shares outstanding during the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic EPS |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted EPS |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following weighted-average stock awards were excluded from the calculation of weighted-average diluted share computations because they were anti-dilutive:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
Anti-Dilutive Shares |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Restricted Stock Units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
16
NOTE 12 – FAIR VALUE
Financial instruments measured at fair value on a recurring basis and their location within the accompanying consolidated balance sheets are as follows:
|
September 30, 2026 |
|
|
|
|||||||||||||
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Location on Balance Sheet |
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps - current portion |
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
Prepaid expenses and other assets |
||
Interest rate swaps - long-term portion |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
Other assets |
||
Company-owned life insurance policies |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
Other assets |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash-Settled RSUs |
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
Accrued salaries and benefits |
||
|
December 31, 2025 |
|
|
|
|||||||||||||
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Location on Balance Sheet |
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Company-owned life insurance policies |
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
Other assets |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps - current portion |
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
Accrued expenses and other current liabilities |
||
Interest rate swaps - long-term portion |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
Other long-term liabilities |
||
Cash-Settled RSUs |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
Accrued salaries and benefits |
||
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Letters of Credit and Guarantees
The Company had open standby letters of credit totaling $
At September 30, 2026 and December 31, 2025, the Company had $
Litigation and Claims
The Company is involved in various legal matters and proceedings arising in the ordinary course of business. While these matters and proceedings cause it to incur costs, including, but not limited to, attorneys’ fees, the Company currently believes that any ultimate liability arising out of these matters and proceedings will not have a material adverse effect on its financial position, results of operations, or cash flows.
17
NOTE 14 – SEGMENT INFORMATION
The Company provides a broad array of professional services to its clients across several markets, primarily within the U.S. The Company operates as a single reportable and operating segment because the Chief Operating Decision Maker (the “CODM”), which is the Chief Executive Officer, manages the business activities on a consolidated basis. Although the Company disaggregates its revenue by client market and client type, it does not manage its business or allocate resources based on client market or type.
The segment revenue, significant segment expenses, and segment profit are as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Significant segment expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct labor and related fringe benefit costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subcontractors and other direct costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Indirect and selling expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of intangible assets acquired in business combinations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment (income) expense (1) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Net Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 15 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
At September 30, 2026 and December 31, 2025, accrued expenses and other current liabilities consisted of the following:
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Client advances and restricted funds |
$ |
|
|
$ |
|
||
Cash collected not yet remitted to purchaser of billed receivables |
|
|
|
|
|
||
Other accrued expenses and current liabilities |
|
|
|
|
|
||
Total accrued expenses and other current liabilities |
$ |
|
|
$ |
|
||
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
Some of the statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,” “would,” or similar words. You should read statements that contain these words carefully.
Our forward-looking statements are based on the beliefs and assumptions of our management and the information available to our management at the time these disclosures were prepared. Although we believe the expectations reflected in these statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. We undertake no obligation to update these forward-looking statements, even if our situation changes in the future.
The terms “we,” “our,” “us,” and “the Company,” as used throughout this Quarterly Report, refer to ICF International, Inc. and its subsidiaries, unless otherwise indicated. The terms “federal” or “federal government” refer to the U.S. federal government, and “state and local” or “state and local government” refer to U.S. state and local governments and the governments of U.S. territories. The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, and liquidity and capital resources. You should read this discussion in conjunction with our consolidated financial statements and the related notes contained elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026 (our “Annual Report”).
OVERVIEW AND OUTLOOK
We provide professional services and technology-based solutions, including management, technology, and policy consulting and implementation services. We help our clients conceive, develop, implement, and improve solutions that address complex business, natural resource, social, technological, and public safety issues. Our clients include U.S. federal, state, local and international governments or their agencies, as well as commercial entities. Our services primarily support clients that operate in these key markets:
We provide services to our diverse client base that deliver value throughout the entire life cycle of a policy, program, project, or initiative. Our primary services include:
We believe that, in the long-term, demand for our services will continue to grow as government, industry, and other stakeholders seek to address critical long-term societal and natural resource issues due to heightened concerns about the environment and use of clean energy and energy efficiency, particularly as a result of increasing energy demand from data centers, cryptocurrency operations, and electrification of buildings and vehicles; health promotion, treatment, and cost control; the means by which healthcare can be delivered effectively on a cross-jurisdiction basis; natural disaster relief and rebuild efforts; and ongoing homeland security threats. In the wake of the major hurricanes that devastated communities in Texas, Florida, North Carolina, Louisiana, the U.S. Virgin Islands, and Puerto Rico, and the impact of wildfires in Hawaii, Oregon, and southern California, the affected areas remain in various stages of recovery efforts. We believe our prior and current experience with disaster relief and rebuild efforts, including after hurricanes (Katrina, Rita, Helene, and Milton) and Superstorm Sandy, and the wildfires in Oregon, put us in a favorable position to continue to provide recovery and housing assistance, and environmental and infrastructure solutions, including disaster mitigation, on behalf of federal departments and agencies, state, territorial, and local jurisdictions, and regional agencies.
19
As the federal government continues to sharpen its focus on efficiency, transparency, consolidation, and accountability, we see growth opportunities for our fit-for-purpose technology solutions. Our offerings are innovative, agile, scalable, and aligned with commercial best practices, delivering clear and measurable outcomes. By combining deep institutional knowledge of our clients’ markets and data with our proven expertise in artificial intelligence, open source, cloud-native, and commercially available off the shelf low-code and no-code platforms, we are able to deliver highly functional, cost-effective solutions that meet the evolving demands of our customers while driving greater value and impact for taxpayers.
Our future results will depend on the success of our strategy to enhance our client relationships and seek larger engagements that span the entire program life cycle, and to complete and successfully integrate additional strategic acquisitions. We will continue to focus on building scale in our vertical and horizontal domain expertise, developing business with our existing clients as well as new customers, and replicating our business model in selective geographies. In doing so, we will continue to evaluate strategic acquisition opportunities that enhance our subject matter knowledge, broaden our service offerings, gain access to or expand customer relationships, and/or provide scale in specific geographies.
Although we continue to see favorable long-term market opportunities, there are certain business challenges facing all government service providers. The very nature of opportunities arising out of disaster recovery means they can involve unusual challenges. Factors such as the overall stress on communities and people affected by disaster recovery situations, political complexities, challenges among involved government agencies, and a higher-than-normal risk of audits and investigations may result in a reduction to our revenue and profit and adversely affect cash flow; however, we believe we are well positioned to provide a broad range of services in support of initiatives that will continue to be priorities to the federal government, as well as to state and local and international governments and commercial clients.
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
There have been no material changes to our critical accounting estimates and policies from those disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
RESULTS OF OPERATIONS
The table below sets forth select line items of our unaudited consolidated statements of comprehensive income, the percentage of revenue for these select items, and the period-over-period rate of change and percentage of revenue for the periods indicated.
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
Dollars |
|
|
Percentages of Revenue |
|
|
Year-to-Year Change |
|
|||||||||||||||
(dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
Dollars |
|
|
Percent |
|
||||||
Revenue |
|
$ |
470,497 |
|
|
$ |
465,405 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
$ |
5,092 |
|
|
|
1.1 |
% |
Direct Costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Direct labor and related fringe benefit costs |
|
|
180,068 |
|
|
|
178,002 |
|
|
|
38.3 |
% |
|
|
38.2 |
% |
|
|
2,066 |
|
|
|
1.2 |
% |
Subcontractor and other direct costs |
|
|
111,242 |
|
|
|
112,543 |
|
|
|
23.6 |
% |
|
|
24.2 |
% |
|
|
(1,301 |
) |
|
|
(1.2 |
%) |
Total Direct Costs |
|
|
291,310 |
|
|
|
290,545 |
|
|
|
61.9 |
% |
|
|
62.4 |
% |
|
|
765 |
|
|
|
0.3 |
% |
Operating Costs and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indirect and selling expenses |
|
|
125,632 |
|
|
|
122,261 |
|
|
|
26.7 |
% |
|
|
26.3 |
% |
|
|
3,371 |
|
|
|
2.8 |
% |
Depreciation and Amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
5,684 |
|
|
|
5,004 |
|
|
|
1.2 |
% |
|
|
1.1 |
% |
|
|
680 |
|
|
|
13.6 |
% |
Amortization of intangible assets acquired in business combinations |
|
|
4,224 |
|
|
|
9,164 |
|
|
|
0.9 |
% |
|
|
2.0 |
% |
|
|
(4,940 |
) |
|
|
(53.9 |
%) |
Total Depreciation and Amortization |
|
|
9,908 |
|
|
|
14,168 |
|
|
|
2.1 |
% |
|
|
3.1 |
% |
|
|
(4,260 |
) |
|
|
(30.1 |
%) |
Total Operating Costs and Expenses |
|
|
135,540 |
|
|
|
136,429 |
|
|
|
28.8 |
% |
|
|
29.4 |
% |
|
|
(889 |
) |
|
|
(0.7 |
%) |
Operating Income |
|
|
43,647 |
|
|
|
38,431 |
|
|
|
9.3 |
% |
|
|
8.2 |
% |
|
|
5,216 |
|
|
|
13.6 |
% |
Interest, net |
|
|
(6,372 |
) |
|
|
(7,861 |
) |
|
|
(1.4 |
%) |
|
|
(1.7 |
%) |
|
|
1,489 |
|
|
|
(18.9 |
%) |
Other income |
|
|
58 |
|
|
|
176 |
|
|
|
— |
|
|
|
— |
|
|
|
(118 |
) |
|
|
(67.0 |
%) |
Income before Income Taxes |
|
|
37,333 |
|
|
|
30,746 |
|
|
|
7.9 |
% |
|
|
6.5 |
% |
|
|
6,587 |
|
|
|
21.4 |
% |
Provision for Income Taxes |
|
|
5,600 |
|
|
|
6,980 |
|
|
|
1.2 |
% |
|
|
1.5 |
% |
|
|
(1,380 |
) |
|
|
(19.8 |
%) |
Net Income |
|
$ |
31,733 |
|
|
$ |
23,766 |
|
|
|
6.7 |
% |
|
|
5.0 |
% |
|
$ |
7,967 |
|
|
|
33.5 |
% |
20
Revenue. Revenue for the three months ended September 30, 2026 was $470.5 million, an increase of $5.1 million or 1.1%, compared to the same period in 2025. The following were changes in revenue from our various client markets:
Revenue for the three months ended September 30, 2026 includes subcontractor and other direct costs, which decreased $1.3 million, or 1.2%, compared to 2025 and totaled $111.2 million and $112.5 million for the three months ended September 30, 2026 and 2025, respectively, and the margin on such costs.
Direct Costs. For the three months ended September 30, 2026, direct costs totaled $291.3 million compared to $290.5 million for the same period in 2025. As a percentage of direct costs, direct labor and related fringe benefit costs were 61.8% and 61.3%, respectively, and subcontractor and other direct costs as a percentage of direct costs were 38.2% and 38.7%, respectively. As a percentage of revenue, direct labor and related fringe benefit costs were 38.3% and 38.2%, respectively, and subcontractor and other direct costs were 23.6% and 24.2%, respectively, for the three months ended September 30, 2026 and 2025.
Indirect and selling expenses. For the three months ended September 30, 2026, indirect and selling expenses increased by $3.4 million, or 2.8%, compared to the prior year as a result of increases of $1.0 million and $2.3 million in indirect labor and related fringe benefit costs and general and administrative costs, respectively. The increase in general and administrative costs was primarily from higher software and travel expenses. As a percentage of total indirect and selling expenses, indirect labor and related fringe benefit costs were 72.0% and 73.2% for the three months ended September 30, 2026 and 2025, respectively, and general and administrative costs as a percentage of indirect and selling expenses were 28.0% and 26.8% for the three months ended September 30, 2026 and 2025, respectively.
Depreciation and amortization. Depreciation and amortization for the three months ended September 30, 2026 was $5.7 million compared to $5.0 million for the three months ended September 30, 2025. The change was due to incremental amortization associated with software placed in service during 2026.
The decrease in amortization of intangible assets acquired in business combinations was primarily due to certain intangible assets previously acquired becoming fully amortized.
Interest, net. The decrease of $1.5 million in interest, net, was primarily due to lower average debt balance of $418.8 million for the three months ended September 30, 2026 compared to $508.4 million for the same period in 2025. Interest from debt facilities was $5.3 million for the three months ended September 30, 2026, compared to $7.4 million for the three months ended September 30, 2025. Use of floating-to-fixed interest rate swap agreements to hedge the variable interest portion of debt facilities resulted in an increase of interest by less than $0.1 million for the three months ended September 30, 2026 compared to a reduction of $0.2 million for the same period in 2025. The average interest rate for our debt facilities was 4.9% for the three months ended September 30, 2026 compared to 5.7% for the same period in 2025. Inclusive of the impact of the swap agreements, our interest rate was 5.0% for the three months ended September 30, 2026 compared to 5.5% for the same period in 2025.
Other income. The change in other income for the three months ended September 30, 2026 as compared to 2025 was primarily due to lower foreign currency gains in 2026 of $0.1 million compared to $0.2 million in 2025.
Provision for Income Taxes. Our effective income tax rate for the three months ended September 30, 2026 and 2025 was 15.0% and 22.7%, respectively. The difference was primarily due to implementation of state tax planning strategies and changes to valuation allowances on research and development tax credit.
21
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
Dollars |
|
|
Percentages of Revenue |
|
|
Year-to-Year Change |
|
|||||||||||||||
(dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
Dollars |
|
|
Percent |
|
||||||
Revenue |
|
$ |
1,382,492 |
|
|
$ |
1,429,178 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
$ |
(46,686 |
) |
|
|
(3.3 |
%) |
Direct Costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Direct labor and related fringe benefit costs |
|
|
524,542 |
|
|
|
556,072 |
|
|
|
37.9 |
% |
|
|
38.9 |
% |
|
|
(31,530 |
) |
|
|
(5.7 |
%) |
Subcontractor and other direct costs |
|
|
335,261 |
|
|
|
335,440 |
|
|
|
24.3 |
% |
|
|
23.5 |
% |
|
|
(179 |
) |
|
|
(0.1 |
%) |
Total Direct Costs |
|
|
859,803 |
|
|
|
891,512 |
|
|
|
62.2 |
% |
|
|
62.4 |
% |
|
|
(31,709 |
) |
|
|
(3.6 |
%) |
Operating Costs and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Indirect and selling expenses |
|
|
367,787 |
|
|
|
377,169 |
|
|
|
26.6 |
% |
|
|
26.4 |
% |
|
|
(9,382 |
) |
|
|
(2.5 |
%) |
Depreciation and Amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
17,070 |
|
|
|
15,797 |
|
|
|
1.2 |
% |
|
|
1.1 |
% |
|
|
1,273 |
|
|
|
8.1 |
% |
Amortization of intangible assets acquired in business combinations |
|
|
19,442 |
|
|
|
27,868 |
|
|
|
1.4 |
% |
|
|
1.9 |
% |
|
|
(8,426 |
) |
|
|
(30.2 |
%) |
Total Depreciation and Amortization |
|
|
36,512 |
|
|
|
43,665 |
|
|
|
2.6 |
% |
|
|
3.0 |
% |
|
|
(7,153 |
) |
|
|
(16.4 |
%) |
Total Operating Costs and Expenses |
|
|
404,299 |
|
|
|
420,834 |
|
|
|
29.2 |
% |
|
|
29.4 |
% |
|
|
(16,535 |
) |
|
|
(3.9 |
%) |
Operating Income |
|
|
118,390 |
|
|
|
116,832 |
|
|
|
8.6 |
% |
|
|
8.2 |
% |
|
|
1,558 |
|
|
|
1.3 |
% |
Interest, net |
|
|
(19,846 |
) |
|
|
(23,620 |
) |
|
|
(1.4 |
%) |
|
|
(1.6 |
%) |
|
|
3,774 |
|
|
|
(16.0 |
%) |
Other expense |
|
|
(1,041 |
) |
|
|
(2,515 |
) |
|
|
(0.1 |
%) |
|
|
(0.2 |
%) |
|
|
1,474 |
|
|
|
(58.6 |
%) |
Income before Income Taxes |
|
|
97,503 |
|
|
|
90,697 |
|
|
|
7.1 |
% |
|
|
6.4 |
% |
|
|
6,806 |
|
|
|
7.5 |
% |
Provision for Income Taxes |
|
|
18,300 |
|
|
|
16,419 |
|
|
|
1.3 |
% |
|
|
1.1 |
% |
|
|
1,881 |
|
|
|
11.5 |
% |
Net Income |
|
$ |
79,203 |
|
|
$ |
74,278 |
|
|
|
5.8 |
% |
|
|
5.3 |
% |
|
$ |
4,925 |
|
|
|
6.6 |
% |
Revenue. The decrease in revenue of $46.7 million was driven by a reduction of $82.9 million from our U.S. federal government clients, primarily as a result of terminated contracts in the first six months of 2025 due to the Administration’s changing priorities and the actions recommended by the Department of Government Efficiency as well as the disruption of the typical U.S. federal government procurement cycle. This decline was offset by increases of $18.5 million, $13.5 million, and $4.2 million from our international government, commercial, and U.S. state and local government clients, respectively. The following were changes in revenue from our various client markets:
Revenue for the nine months ended September 30, 2026 includes subcontractor and other direct costs, which decreased $0.2 million, or 0.1%, and totaled $335.3 million and $335.4 million for the nine months ended September 30, 2026 and 2025, respectively, and the margin on such costs.
22
Direct Costs. The decrease of $31.7 million in direct costs was primarily a result of terminated U.S. federal government contracts during the first six months of 2025. For the nine months ended September 30, 2026 and 2025, direct labor and related fringe benefit costs as a percentage of direct costs were 61.0% and 62.4%, respectively, and subcontractor and other direct costs as a percentage of direct costs were 39.0% and 37.6%, respectively. As a percentage of revenue, direct labor and related fringe benefit costs were 37.9% and 38.9%, respectively, and subcontractor and other direct costs were 24.3% and 23.5%, respectively, for the nine months ended September 30, 2026 and 2025. Total direct costs as a percentage of revenue were 62.2% for the nine months ended September 30, 2026, compared to 62.4% for the nine months ended September 30, 2025.
Indirect and selling expenses. For the nine months ended September 30, 2026, our indirect and selling expenses decreased by $9.4 million, or 2.5%, compared to the prior year, as a result of decreases of $8.6 million and $0.8 million in indirect labor and related fringe benefit costs and general and administrative costs, respectively. The decreases were primarily from our efforts to align indirect and selling expenses to support our ongoing operations. As a percentage of revenue, indirect and selling expenses were 26.6% and 26.4% for the nine months ended September 30, 2026 and 2025, respectively.
Depreciation and amortization. Depreciation and amortization for the nine months ended September 30, 2026 was $17.1 million compared to $15.8 million for the nine months ended September 30, 2025. The change was primarily due to incremental amortization associated with software placed in service during 2026.
The decrease in amortization of intangible assets acquired in business combinations was primarily due to certain intangible assets previously acquired becoming fully amortized.
Interest, net. The decrease of $3.8 million in interest, net, was primarily due to lower average debt balance of $443.9 million for the nine months ended September 30, 2026 compared to $521.6 million for the same period in 2025. Interest from debt facilities was $16.7 million for the nine months ended September 30, 2026, compared to $22.5 million for the nine months ended September 30, 2025. Use of floating-to-fixed interest rate swap agreements to hedge the variable interest portion of debt facilities resulted in an increase of interest by $0.1 million for the nine months ended September 30, 2026 compared to a reduction of $1.1 million for the same period in 2025. The average interest rate for our debt facilities was 5.0% for the nine months ended September 30, 2026 compared to 5.7% for the same period in 2025. Inclusive of the impact of the swap agreements, our interest rate was 5.0% for the nine months ended September 30, 2026 compared to 5.4% for the same period in 2025.
Other expense. The change in other expense for the nine months ended September 30, 2026 as compared to 2025 was primarily due to lower foreign currency expense in 2026 partially offset by higher losses from disposal of assets in 2026 compared to 2025.
Provision for Income Taxes. Our effective income tax rate for the nine months ended September 30, 2026 and 2025 was 18.8% and 18.1%, respectively. The 2026 rate was comparable to 2025 as a result of certain state tax planning implemented during the year and changes to valuation allowances on research and development tax credit.
NON-GAAP MEASURES
The following tables provide reconciliations of financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S. (“non-GAAP”) to their most comparable U.S. GAAP measures. While we believe that these non-GAAP financial measures provide additional information to investors and may be useful in evaluating our financial information and assessing ongoing trends to better understand our operations, they should be considered supplemental in nature and not as a substitute for financial information prepared in accordance with U.S. GAAP. Other companies may define similarly titled non-GAAP measures differently, thus limiting their use for comparability.
EBITDA and Adjusted EBITDA
Earnings before interest, tax, and depreciation and amortization (“EBITDA”) is a measure we use to evaluate operating performance. Adjusted EBITDA is EBITDA further adjusted to eliminate the impact of certain items that we do not consider to be indicative of the performance of our ongoing operations (“Adjusted EBITDA”). We evaluate these adjustments on an individual basis based on both the quantitative and qualitative aspects of the item, including their size and nature, as well as whether we expect them to recur as part of our normal business on a regular basis.
EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow as these measures do not include certain cash requirements such as interest payments, tax payments, capital expenditures, and debt service.
23
The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
September 30, |
|
|||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income |
|
$ |
31,733 |
|
|
$ |
23,766 |
|
|
$ |
79,203 |
|
|
$ |
74,278 |
|
Interest, net |
|
|
6,372 |
|
|
|
7,861 |
|
|
|
19,846 |
|
|
|
23,620 |
|
Provision for income taxes |
|
|
5,600 |
|
|
|
6,980 |
|
|
|
18,300 |
|
|
|
16,419 |
|
Depreciation and amortization |
|
|
9,908 |
|
|
|
14,168 |
|
|
|
36,512 |
|
|
|
43,665 |
|
EBITDA |
|
|
53,613 |
|
|
|
52,775 |
|
|
|
153,861 |
|
|
|
157,982 |
|
Acquisition and divestiture-related expenses (1) |
|
|
290 |
|
|
|
25 |
|
|
|
984 |
|
|
|
479 |
|
Severance and other costs related to staff realignment (2) |
|
|
255 |
|
|
|
359 |
|
|
|
614 |
|
|
|
2,909 |
|
Charges and adjustments related to facility consolidations and office closures (3) |
|
|
11 |
|
|
|
— |
|
|
|
983 |
|
|
|
(138 |
) |
Total Adjustments |
|
|
556 |
|
|
|
384 |
|
|
|
2,581 |
|
|
|
3,250 |
|
Adjusted EBITDA |
|
$ |
54,169 |
|
|
$ |
53,159 |
|
|
$ |
156,442 |
|
|
$ |
161,232 |
|
Non-GAAP Diluted Earnings per Share
Non-GAAP diluted earnings per share (“Non-GAAP Diluted EPS”) represents diluted U.S. GAAP earnings per share (“U.S. GAAP Diluted EPS”) excluding the impact of the specific items noted above, amortization of acquired intangible assets, and the related income tax effects. While these adjustments may be recurring and not infrequent or unusual, we do not consider these adjustments to be indicative of the performance of our ongoing operations. We believe that the supplemental adjustments provide additional useful information to investors.
The following table presents a reconciliation of U.S. GAAP Diluted EPS to Non-GAAP Diluted EPS for the periods indicated.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
U.S. GAAP Diluted EPS |
|
$ |
1.76 |
|
|
$ |
1.28 |
|
|
$ |
4.36 |
|
|
$ |
4.01 |
|
Acquisition and divestiture-related expenses |
|
|
0.02 |
|
|
|
— |
|
|
|
0.05 |
|
|
|
0.02 |
|
Severance and other costs related to staff realignment |
|
|
0.01 |
|
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.16 |
|
Charges and adjustments related to facility consolidations and office closures |
|
|
— |
|
|
|
— |
|
|
|
0.06 |
|
|
|
(0.01 |
) |
Amortization of intangible assets acquired in business combinations (1) |
|
|
0.23 |
|
|
|
0.49 |
|
|
|
1.07 |
|
|
|
1.50 |
|
Income tax effects of the adjustments (2) |
|
|
(0.04 |
) |
|
|
(0.12 |
) |
|
|
(0.22 |
) |
|
|
(0.38 |
) |
Non-GAAP Diluted EPS |
|
$ |
1.98 |
|
|
$ |
1.67 |
|
|
$ |
5.34 |
|
|
$ |
5.30 |
|
24
LIQUIDITY AND CAPITAL RESOURCES
Material Cash Requirements from Contractual Obligations. Contractual obligations requiring material cash outflows primarily consist of payments related to operating and finance leases for facilities and equipment, as well as scheduled principal and interest payments under our Credit Facility. See “Note 4 – Leases” and “Note 5 – Long-Term Debt,” respectively, in the “Notes to Consolidated Financial Statements” in this Quarterly Report for additional details.
Liquidity and Borrowing Capacity. In addition to cash and cash equivalents on hand and cash generated from operations, our primary source of liquidity is the Credit Facility with a syndicate of commercial banks, as described in “Note 5 – Long-Term Debt” in the “Notes to Consolidated Financial Statements” in this Quarterly Report. The Credit Facility requires that we remain in compliance with certain financial and non-financial covenants (as defined by the Amended and Restated Credit Agreement, see “Note 5 – Long-Term Debt” in the “Notes to Consolidated Financial Statements” in this Quarterly Report for additional details). As of September 30, 2026, we remained in compliance with these covenants, and we had $585.9 million of unused borrowing capacity under the $600.0 million revolving line of credit (inclusive of outstanding letters of credit totaling $1.6 million) and $400.0 million of unused delayed draw term loan facilities under the Credit Facility available to fund our ongoing operations, future acquisitions, dividend payments, and share repurchase program. Taking into account the financial and performance-based limitations, the available borrowing capacity was $619.0 million at September 30, 2026.
We have entered into floating-to-fixed interest rate swap agreements for a total notional value of $175.0 million to hedge a portion of our floating-rate debt under the Credit Facility. The interest rate swaps will expire in 2030, but we may consider entering into additional swap agreements prior to the expiration of these existing hedges. As of September 30, 2026, the percentage of our fixed-rate debt to total debt from the Credit Facility was 47%.
We provide support services to the U.S. federal government and any prolonged federal government shutdown may affect our abilities to generate cash from that business to certain degrees. There are other conditions, such as the ongoing wars in Ukraine, instabilities in the Middle East, and volatility in global trade (including the imposition of tariffs), that create uncertainty in the global economy, which in turn may impact, among other things, our ability to generate positive cash flows from operations and our ability to successfully execute and fund key initiatives. However, our current belief is that the combination of internally generated funds, available bank borrowing capacity, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, customary capital expenditures, quarterly cash dividends, share repurchases, and organic growth. Additionally, we continuously analyze our capital structure to ensure we have capital to fund future strategic acquisitions.
We continuously monitor the state of the financial markets to assess the availability of borrowing capacity under the Credit Facility and the cost of additional capital from both debt and equity markets. At present, we believe we will be able to continue to access these markets on commercially reasonable terms and conditions if we need additional capital in the near term.
Dividends. We have historically paid quarterly cash dividends to our stockholders of record at $0.14 per share. Total dividend payments during the nine months ended September 30, 2026 were $7.6 million.
Cash dividends declared thus far in 2026 are as follows:
Dividend Declaration Date |
|
Dividend Per Share |
|
|
Record Date |
|
Payment Date |
|
February 26, 2026 |
|
$ |
0.14 |
|
|
March 27, 2026 |
|
April 14, 2026 |
May 7, 2026 |
|
$ |
0.14 |
|
|
June 5, 2026 |
|
July 10, 2026 |
August 6, 2026 |
|
$ |
0.14 |
|
|
September 4, 2026 |
|
October 9, 2026 |
November 5, 2026 |
|
$ |
0.14 |
|
|
December 4, 2026 |
|
January 8, 2027 |
Cash Flow. The following table sets forth our sources and uses of cash for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Net Cash Provided by Operating Activities |
|
$ |
131,748 |
|
|
$ |
66,244 |
|
Net Cash Used in Investing Activities |
|
|
(14,402 |
) |
|
|
(14,342 |
) |
Net Cash Used in Financing Activities |
|
|
(74,301 |
) |
|
|
(18,226 |
) |
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash |
|
|
(183 |
) |
|
|
1,433 |
|
Net Change in Cash, Cash Equivalents, and Restricted Cash |
|
$ |
42,862 |
|
|
$ |
35,109 |
|
Net cash provided by our operations during the nine months ended September 30, 2026 increased by $65.5 million compared to the same period in 2025 primarily due to lower taxes and interest payments and timing of cash advances related to certain energy incentive programs.
Cash used in investing activities for the nine months ended September 30, 2026 was comparable to the same period in 2025.
25
Cash used in financing activities for the nine months ended September 30, 2026 was higher than the same period in 2025 by $56.1 million primarily due to net repayment of debt and payment of costs related to the refinancing of our Credit Facility, partially offset by reduced cash used for share repurchases.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the disclosures discussed in the section entitled “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A of our Annual Report.
Item 4. Controls and Procedures
Disclosure Controls and Procedures and Internal Controls Over Financial Reporting. Management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act of 1934, as amended) and have concluded that as of September 30, 2026, our disclosure controls and procedures were effective. There have been no significant changes in our internal controls over financial reporting during the quarterly period covered by this report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in various legal matters and proceedings arising in the ordinary course of business. While these matters and proceedings cause us to incur costs, including, but not limited to, attorneys’ fees, we currently believe that any ultimate liability arising out of these matters and proceedings will not have a material adverse effect on our financial position, results of operations, or cash flows.
Item 1A. Risk Factors
There have been no material changes in the risk factors discussed in the section entitled “Risk Factors” disclosed in Part I, Item 1A of our Annual Report.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Repurchases of Equity Securities. The following table summarizes the share repurchase activity for the three months ended September 30, 2026, including shares purchased in satisfaction of employee tax withholding obligations related to the settlement of restricted stock units.
Period |
|
Total Number |
|
|
Average Price |
|
|
Total Number of |
|
|
Approximate |
|
||||
July 1 - July 31 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
164,778,539 |
|
August 1 - August 31 |
|
|
4,025 |
|
|
$ |
94.12 |
|
|
|
— |
|
|
$ |
164,778,539 |
|
September 1 - September 30 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
164,778,539 |
|
Total |
|
|
4,025 |
|
|
$ |
94.12 |
|
|
|
— |
|
|
|
|
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
27
Item 6. Exhibits
Exhibit Number |
|
Exhibit |
|
|
|
31.1 |
|
Certificate of the Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a). * |
|
|
|
31.2 |
|
Certificate of the Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a) and 15d-14(a). * |
|
|
|
32.1 |
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * |
|
|
|
32.2 |
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * |
|
|
|
101 |
|
The following materials from the ICF International, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.* |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Submitted electronically herewith.
28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
ICF INTERNATIONAL, INC. |
||
|
|
|
|
November 5, 2026 |
By: |
|
/s/ John Wasson |
|
|
|
John Wasson |
|
|
|
Chair and Chief Executive Officer |
|
|
|
(Principal Executive Officer) |
|
|
|
|
November 5, 2026 |
By: |
|
/s/ James Morgan |
|
|
|
James Morgan |
|
|
|
Chief Operating and Financial Officer (Principal Financial Officer) |
29