ICF International, Inc.
For the period ended Jun 30, 2025. Filed Aug 1, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 1, 2025
ICFI$79.68-16.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0000950170-25-062246
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-01.
0000950170-25-101092
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 77 previous paragraphs and 90 current paragraphs.
46 unchanged; 27 reworded; 11 added; 4 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 5 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
nm - not meaningful
Current report
Energy, Environment, Infrastructure, and Disaster Recovery client market revenues increased $15.2 million, or 6.5%, driven by increases of $29.6 million, $1.1 million, and $0.4 million from our commercial, U.S. state and local government, and international government clients, respectively, offset by a decrease of $15.8 million from our U.S. federal government clients.
Current report
Health and Social Programs client market revenues decreased $37.1 million, or 18.9%, driven by decreases of $36.9 million, $0.7 million, and $0.1 million from our U.S. federal government, U.S. state and local government, and international government clients, respectively, offset by an increase of $0.7 million from our commercial clients.
Current report
Other (expense) income. Other (expense) income increased $1.7 million primarily due to an increase in unrealized foreign currency loss, resulting from depreciation of the U.S. dollar against the Euro and British pound, the principal currencies in which we transact. If the U.S. dollar experiences additional depreciation in 2025, we may incur additional foreign currency losses.
Current report
Provision for Income Taxes. Our effective income tax rate for the three months ended June 30, 2025 and 2024 was 21.0% and 26.3%, respectively. The difference was primarily due to the increased research and experimentation tax credit in the second quarter of 2025 and the impact of foreign withholding taxes imposed upon a dividend distribution from our Canadian subsidiaries made during the second quarter of 2024.
Current report
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Current report
Health and Social Programs client market revenues decreased $59.0 million, or 15.2%, driven by a decrease of $61.5 million from our U.S. federal government clients, offset by increases of $1.5 million and $1.0 million from our commercial and U.S. state and local government clients, respectively.
Current report
Security and Other Civilian & Commercial client market revenues decreased by $12.8 million, or 7.9%, driven by a decrease of $19.3 million from our U.S. federal government clients, offset by increases of $4.5 million, $1.1 million, and $0.8 million from our commercial, international government, and U.S. state and local government clients, respectively.
Current report
Revenue for the six months ended June 30, 2025 includes subcontractor and other direct costs, which decreased $30.4 million, or 12.0%, and totaled $222.9 million and $253.3 million for the six months ended June 30, 2025 and 2024, respectively, and the margin on such costs.
Current report
Interest, net. Our interest, net, for the six months ended June 30, 2025 was $15.8 million which is comparable to interest, net, of $15.9 million for the six months ended June 30, 2024. Use of floating-to-fixed interest rate swap agreements to hedge the variable interest portion of our debt decreased our interest expense by $0.9 million for the six months ended June 30, 2025 compared to a reduction of $3.3 million for the same period in 2024. Inclusive of the impact of the swap agreements, our interest rate was 5.4% for the six months ended June 30, 2025 compared to 5.5% for 2024.
Current report
Other (expense) income. Other (expense) income increased $4.4 million year-over-year primarily due to $2.8 million in unrealized foreign currency loss, resulting from depreciation of the U.S. dollar against the Euro and British pound, the principal currencies in which we transact, and $1.7 million gain from divestiture of our commercial marketing business during 2024. If the U.S. dollar experiences additional depreciation in 2025, we may incur additional foreign currency losses.
Removed paragraphs (4)
Previous report
In addition, subsequent to March 31, 2025, the Company received additional termination-for-convenience notices representing approximately $12.0 million of future contract value.
Previous report
Health and Social Programs client market revenues decreased $21.9 million, or 11.5%, driven primarily by a decrease of $24.6 million from our U.S. federal government clients, slightly offset by increases of $1.8 million and $0.8 million from our U.S. state and local government and commercial clients, respectively.
Previous report
Other (expense) income. The change in other (expense) income was primarily due to a gain of $1.7 million recognized in the first quarter of 2024 related to the divestiture of our commercial marketing business and losses on foreign currency rate in the first quarter of 2025.
Previous report
Cash used in investing activities decreased by $0.1 million due to a decrease in capital expenditures offset by a decrease in cash proceeds from the divestiture of our U.S. commercial marketing business.
Reworded paragraphs (27)
Previous wording
Uncertainties relating to the new presidential administration (the “Administration”) and failure of the Administration to spend Congressionally mandated appropriations;
Current wording
Uncertainties relating to the Trump Administration’s (the “Administration”) policy changes and failure of the Administration to spend Congressionally mandated appropriations;
Previous wording
Results of routine and non-routine government audits and investigations, including the unpredictability of the Administration’s executive orders and actions of the newly formed Department of Government Efficiency (“DOGE”);
Current wording
Results of routine and non-routine government audits and investigations, including the unpredictability of the Administration’s executive orders and actions of the Department of Government Efficiency (“DOGE”);
Previous wording
Additional risks as a result of having international operations.
Current wording
Additional risks as a result of having international operations, including foreign currency fluctuations.
Previous wording
As discussed in Part II, Item 7 of our Annual Report, during the three months ended March 31, 2025, we received notices for termination-for-convenience pursuant to the recent executive orders issued by the Administration or actions by DOGE. The revenue recognized in fiscal year 2024 from the contracts subject to these terminations represented approximately 5.7% of the total 2024 fiscal year revenue and approximately $375.0 million of our $3.4 billion backlog as of March 31, 2025.
Current wording
As discussed in Part II, Item 7 of our Annual Report, during the six months ended June 30, 2025, we received notices for termination-for-convenience pursuant to the recent executive orders issued by the Administration or actions by DOGE which resulted in a reduction of $418.2 million of our backlog. The revenue recognized in fiscal year 2024 from the contracts subject to these terminations represented approximately 6.4% of the total 2024 fiscal year revenue.
Previous wording
Security and Other Civilian & Commercial client market revenues increased by $1.2 million, or 1.5%, primarily driven by increases of $3.3 million, $0.8 million, and $0.3 million from our commercial, international government, and U.S. state and local government clients, respectively, offset by a decrease of $3.2 million from our U.S. federal government clients.
Current wording
Security and Other Civilian & Commercial client market revenues decreased by $14.0 million, or 16.9%, driven by a decrease of $16.1 million from our U.S. federal government clients, offset by increases of $1.2 million, $0.5 million, and $0.3 million from our commercial, U.S. state and local government, and international government clients, respectively.
Previous wording
Revenue for the three months ended March 31, 2025 includes subcontractor and other direct costs, which decreased $9.9 million, or 8.2%, from the first quarter of 2024 and totaled $110.6 million and $120.5 million for the three months ended March 31, 2025 and 2024, respectively, and the margin on such costs.
Current wording
Revenue for the three months ended June 30, 2025 includes subcontractor and other direct costs, which decreased $20.5 million, or 15.5%, from the second quarter of 2024 and totaled $112.3 million and $132.8 million for the three months ended June 30, 2025 and 2024, respectively, and the margin on such costs.
Previous wording
Direct Costs. The decrease of $8.0 million in direct costs was driven by a reduction in subcontractor and other direct costs, slightly offset by an increase in direct labor and related fringe benefit costs. For the three months ended March 31, 2025 and 2024, direct labor and related fringe benefit costs as a percentage of direct costs were 63.4% and 61.2%, respectively, and subcontractor and other direct costs as a percentage of direct costs were 36.6% and 38.8%, respectively. As a percentage of revenue, direct labor and related fringe benefit costs were 39.4% and 38.4%, respectively, and subcontractor and other direct costs were 22.7% and 24.4%, respectively, for the three months ended March 31, 2025 and 2024. Total direct costs as a percentage of revenue were 62.0% for the three months ended March 31, 2025, compared to 62.8% for the three months ended March 31, 2024.
Current wording
Direct Costs. The decrease of $30.9 million in direct costs was primarily a result of terminated U.S. federal government contracts during 2025. For the three months ended June 30, 2025 and 2024, direct labor and related fringe benefit costs as a percentage of direct costs were 62.4% and 59.7%, respectively, and subcontractor and other direct costs as a percentage of direct costs were 37.6% and 40.3%, respectively. As a percentage of revenue, direct labor and related fringe benefit costs were 39.1% and 38.4%, respectively, and subcontractor and other direct costs were 23.6% and 25.9%, respectively, for the three months ended June 30, 2025 and 2024. Total direct costs as a percentage of revenue were 62.7% for the three months ended June 30, 2025, compared to 64.3% for the three months ended June 30, 2024.
Previous wording
Indirect and selling expenses. For the three months ended March 31, 2025, our indirect and selling expenses increased by $2.8 million, or 2.2%, compared to the prior year, as a result of an increase of $3.2 million in indirect labor and related fringe benefit costs, due in part to the impact of severance in the current period, which was offset by a decrease of $0.5 million in general and administrative costs. As a result, our indirect and selling expenses as a percentage of revenue increased to 27.0% for the three months ended March 31, 2025 from 26.1% for the three months ended March 31, 2024.
Current wording
Indirect and selling expenses. For the three months ended June 30, 2025, our indirect and selling expenses decreased by $4.1 million, or 3.2%, compared to the prior year, primarily as a result of a decrease of $4.6 million in general and administrative costs. The decrease in general and administrative costs was due, in part, to lower facilities expense as a result of facility consolidations in the fourth quarter of 2024. Our indirect and selling expenses as a percentage of revenue were 25.8% for the three months ended June 30, 2025, compared to 24.8% for the three months ended June 30, 2024.
Previous wording
Interest, net. The decrease of $0.9 million in interest, net, was primarily from a decrease of our interest rates. Use of floating-to-fixed interest rate swap agreements to hedge the variable interest portion of our debt reduced our interest expense by $0.7 million for the three months ended March 31, 2025 compared to $1.7 million for the same period in 2024. Inclusive of the impact of the swap agreements, our interest expense for the three months ended March 31, 2025 was $6.6 million compared to $7.2 million for the same period in 2024 and our interest rate inclusive of the swap agreements was 5.1% for the three months ended March 31, 2025 compared to 5.6% for 2024.
Current wording
Interest, net. The increase of $0.7 million in interest, net, was primarily due to higher average debt balance of $542.2 million for the three months ended June 30, 2025 compared to $493.8 million for the same period in 2024. Use of floating-to-fixed interest rate swap agreements to hedge the variable interest portion of our debt reduced our interest expense by $0.2 million for the three months ended June 30, 2025 compared to a reduction of $1.7 million for the same period in 2024. Inclusive of the impact of the swap agreements, our interest rate was 5.6% for the three months ended June 30, 2025 compared to 5.3% for 2024.
Previous wording
Revenue. The decrease in revenue was driven by a decrease of $34.6 million from our U.S. federal government clients primarily as a result of terminated contracts in the first quarter of 2025 due to the Administration’s changing priorities and the actions of DOGE, as well as the disruption of the typical U.S. federal government procurement cycle. This decline was offset by increases of $26.0 million and $1.8 million from our commercial and international government clients, respectively. The following were changes in revenue from our various client markets:
Current wording
Revenue. The decrease in revenue of $42.7 million was driven by a reduction of $103.4 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 DOGE, as well as the disruption of the typical U.S. federal government procurement cycle. This decline was offset by increases of $57.5 million, $2.4 million, and $0.8 million from our commercial, international government, and U.S. state and local government clients, respectively. The following were changes in revenue from our various client markets:
Previous wording
Energy, Environment, Infrastructure, and Disaster Recovery client market revenues increased $13.9 million, or 6.2%, driven primarily by increases of $21.9 million and $0.9 million from our commercial and international government clients, respectively, offset by decreases of $6.8 million and $2.1 million from our U.S. federal government and U.S. state and local government clients, respectively.
Current wording
Energy, Environment, Infrastructure, and Disaster Recovery client market revenues increased $29.1 million, or 6.4%, driven by increases of $51.5 million and $1.3 million from our commercial and international government clients, respectively, offset by decreases of $22.6 million and $1.0 million from our U.S. federal government and U.S. state and local government clients, respectively.
Previous wording
Depreciation and amortization. Our depreciation and amortization for the three months ended March 31, 2025 was $5.3 million which is comparable to depreciation and amortization of $5.6 million for the three months ended March 31, 2024.
Current wording
Depreciation and amortization. Our depreciation and amortization for the six months ended June 30, 2025 was $10.8 million which is comparable to depreciation and amortization of $10.5 million for the six months ended June 30, 2024.
Previous wording
The increase in amortization of intangible assets acquired in business combinations was primarily due to the amortization of intangible assets acquired in our acquisition in the fourth quarter of 2024.
Current wording
The increase in amortization of intangible assets acquired in business combinations was primarily due to the amortization of intangible assets acquired in our acquisition of AEG in the fourth quarter of 2024.
Previous wording
Provision for Income Taxes. Our effective income tax rate for the three months ended March 31, 2025 and 2024 was 10.5% and 20.4%, respectively. The difference was primarily due to an income tax benefit of $4.5 million recognized in the first quarter of 2025 from tax planning implemented in connection with the “transitional rules” governing unrealized foreign exchange gains and losses derived from translation of operations, assets and liabilities of non-U.S. qualified subsidiaries provided by recently finalized U.S. federal tax regulations on Internal Revenue Code 987.
Current wording
Provision for Income Taxes. Our effective income tax rate for the six months ended June 30, 2025 and 2024 was 15.7% and 23.4%, respectively. The difference was primarily due to an income tax benefit of $4.5 million recognized in the first quarter of 2025 from tax planning implemented in connection with the “transitional rules” governing unrealized foreign exchange gains and losses derived from translation of operations, assets, and liabilities of non-U.S. qualified subsidiaries provided by recently finalized U.S. federal tax regulations under IRC 987.
Previous wording
These costs are mainly due to involuntary employee termination benefits for our officers, and employees who have been notified that they will be terminated as part of a business reorganization or exit.
Current wording
These costs are due to involuntary employee termination benefits for (i) our officers and (ii) group of employees who have been notified that they will be terminated as part of a business reorganization or exit.
Previous wording
These are charges related to the closure of certain international offices.
Current wording
These charges and adjustments are related to a previously exited leased facility which we will continue to pay until the contractual obligations are satisfied but with no economic benefit to us, and the closure of certain international offices.
Previous wording
Pre-tax gain related to the 2023 divestiture of our U.S. commercial marketing business which include contingent gains realized in the first quarter of 2024.
Current wording
Pre-tax gain related to the 2023 divestiture of our U.S. commercial marketing business which includes contingent gains realized in the first quarter of 2024.
Previous wording
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 certain items noted above, amortization of 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.
Current wording
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 certain 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.
Previous wording
These are office closure charges previously included in Adjusted EBITDA and accelerated depreciation related to fixed assets for planned office closures.
Current wording
These are office closure charges and adjustments previously included in Adjusted EBITDA and accelerated depreciation related to fixed assets for planned office closures.
Previous wording
For the three months ended March 31, 2025 and 2024, amortization of intangible assets acquired from business combinations totaled $9.5 million and $8.3 million, respectively.
Current wording
The amortization of intangible assets acquired from business combinations totaled $9.2 million and $8.3 million for the three months ended June 30, 2025 and 2024, respectively, and $18.7 million and $16.6 million for the six months ended June 30, 2025 and 2024, respectively.
Previous wording
Income tax effects were calculated using the effective tax rate, adjusted for certain discrete items, if any, of 25.3% and 20.4% for the three months ended March 31, 2025 and 2024, respectively.
Current wording
Income tax effects were calculated using the effective tax rate, adjusted for certain discrete items, if any, of 21.0% and 26.3% for the three months ended June 30, 2025 and 2024, respectively, and 23.1% and 23.4% for the six months ended June 30, 2025 and 2024, respectively.
Previous wording
Liquidity and Borrowing Capacity. In addition to cash and cash equivalents on hand and cash generated from operations, our primary source of liquidity is from our Credit Facility with a syndicate of multiple commercial banks, as described in “Note 5– 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 Credit Agreement, see “Note 10 – Long-Term Debt” in the “Notes to Consolidated Financial Statements” in our Annual Report for additional details). As of March 31, 2025, we were in compliance with the covenants and we had $448.4 million available under the Credit Facility to fund our ongoing operations, future acquisitions, dividend payments, and share repurchase program.
Current wording
Liquidity and Borrowing Capacity. In addition to cash and cash equivalents on hand and cash generated from operations, our primary source of liquidity is from our Credit Facility with a syndicate of multiple commercial banks, as described in “Note 5– 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 Credit Agreement, see “Note 10 – Long-Term Debt” in the “Notes to Consolidated Financial Statements” in our Annual Report for additional details). As of June 30, 2025, we were in compliance with these covenants, and we had $488.3 million available under the Credit Facility to fund our ongoing operations, future acquisitions, dividend payments, and share repurchase program.
Previous wording
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 Credit Facility. The swap agreements will expire in 2028 and we may consider entering into additional swap agreements before these existing hedges expire. As of March 31, 2025, the percentage of our fixed-rate debt to floating-rate debt was 35%.
Current wording
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 Credit Facility, of which $150.0 million in swaps will expire in 2028 and the remaining $25.0 million will expire in 2030. We may consider entering into additional swap agreements before these existing hedges expire. As of June 30, 2025, the percentage of our fixed-rate debt to floating-rate debt was 38%.
Previous wording
Dividends. We have historically paid quarterly cash dividends to our stockholders of record at $0.14 per share. Total dividend payments during the three months ended March 31, 2025 were $2.6 million.
Current wording
Dividends. We have historically paid quarterly cash dividends to our stockholders of record at $0.14 per share. Total dividend payments during the six months ended June 30, 2025 were $5.2 million.
Previous wording
Cash Flow. The following table sets forth our sources and uses of cash for the three months ended March 31, 2025 and 2024:
Current wording
Cash Flow. The following table sets forth our sources and uses of cash for the six months ended June 30, 2025 and 2024:
Previous wording
Cash used in operating activities increased by $23.0 million to $33.0 million due to the timing of invoicing our customers and subsequent collection of cash and paying our vendor payments, offset by the profitability of our contracts.
Current wording
Cash provided by operating activities was impacted by the timing of invoicing our customers, subsequent collection of cash, paying our vendors, and by the profitability of our contracts.
Previous wording
Cash provided by financing activities increased by $32.2 million due to increased net borrowings from our Credit Facility and short-term borrowings, partially offset by an increase in share repurchases during the first quarter of 2025.
Current wording
The change in cash used in financing activities of $43.0 million was primarily due to increased net borrowings from our Credit Facility and short-term financing, partially offset by an increase in share repurchases during the six months ended June 30, 2025.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Revenue. The decrease in revenue was driven by a reduction of $68.8 million from our U.S. federal government clients primarily as a result of terminated contracts during 2025 due to the Administration’s changing priorities and the actions recommended by DOGE, as well as the disruption of the typical U.S. federal government procurement cycle. This decline was offset by increases of $31.5 million, $0.9 million, and $0.6 million from our commercial, U.S. state and local government, and international government clients, respectively. The following were changes in revenue from our various client markets:
Current report — wording carried from elsewhere
Depreciation and amortization. Our depreciation and amortization for the three months ended June 30, 2025 was $5.5 million compared to $4.9 million for the three months ended June 30, 2024.
Current report — wording carried from elsewhere
The increase in amortization of intangible assets acquired in business combinations was primarily due to the amortization of intangible assets acquired in our acquisition of Applied Energy Group (“AEG”) in the fourth quarter of 2024.
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
Direct Costs. The decrease of $38.9 million in direct costs was primarily a result of terminated U.S. federal government contracts during the first six months of 2025. For the six months ended June 30, 2025 and 2024, direct labor and related fringe benefit costs as a percentage of direct costs were 62.9% and 60.4%, respectively, and subcontractor and other direct costs as a percentage of direct costs were 37.1% and 39.6%, respectively. As a percentage of revenue, direct labor and related fringe benefit costs were 39.2% and 38.4%, respectively, and subcontractor and other direct costs were 23.1% and 25.2%, respectively, for the six months ended June 30, 2025 and 2024. Total direct costs as a percentage of revenue were 62.4% for the six months ended June 30, 2025, compared to 63.6% for the six months ended June 30, 2024.
Current report — wording carried from elsewhere
Indirect and selling expenses. For the six months ended June 30, 2025, our indirect and selling expenses decreased by $1.3 million, or 0.5%, compared to the prior year, as a result of a decrease of $4.5 million in general and administrative costs, offset by an increase of $3.2 million in indirect labor and related fringe benefit costs. The decrease in general and administrative costs was due, in part, to lower facilities expense as a result of facility consolidations in the fourth quarter of 2024. The increase in indirect labor and related fringe benefit costs was due in part to the impact of severance in the current period. Our indirect and selling expenses as a percentage of revenue were 26.4% for the six months ended June 30, 2025, compared to 25.5% for the six months ended June 30, 2024.