ICF International, Inc.

(dollar amounts in tables in thousands, except share and per share data)

NOTE 1 - BASIS OF PRESENTATION AND NATURE OF OPERATIONS

Basis of Presentation

The accompanying consolidated financial statements include the accounts of ICF International, Inc. (“ICFI”) and its 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”). Consulting is a wholly owned subsidiary of ICFI. 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.

Software assets, which were previously included within “Property and equipment, net” and “Other assets” on the Company’s consolidated balance sheets, have been reclassified and consolidated under “Other intangible assets, net”. To conform to the current year’s presentation, $1.6 million and $21.8 million, as of December 31, 2024, have been reclassified from “Property and equipment, net” and “Other assets”, respectively, to “Other intangible assets, net”.

Previously separate financial statement line items “Depreciation and amortization” and “Amortization of intangible assets” on the Company’s consolidated statements of comprehensive income have been combined under “Depreciation and amortization”.

Nature of Operations

The Company primarily provides consulting and technology services across several key domains: strategy and public policy, energy and environmental sustainability, and climate resilience; digital transformation including information technology (“IT”) modernization, cloud, cybersecurity, and data analytics; health and social programs such as public health and education; international development and capacity building; disaster management and recovery planning; transportation, aviation, and infrastructure; and marketing and strategic communications. These areas combine expertise in policy, technology, and program implementation to help organizations and governments address complex challenges and drive impactful outcomes.

The Company’s customers are primarily U.S. federal government departments and agencies, U.S. state (including territories) and local government departments and agencies, international governments, and commercial clients worldwide. 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 (including territories) and local governments, unless otherwise indicated.

The Company, incorporated in Delaware, is headquartered in Reston, Virginia. It maintains additional offices throughout the world, including 49 offices in the U.S. and U.S. territories and 14 offices in key markets outside the U.S., including offices in the United Kingdom (“U.K.”), Belgium, Spain, India, and Canada.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Areas of the consolidated financial statements where estimates may have the most significant effect include valuation and lives of tangible and intangible assets, impairment of long-lived assets, accrued liabilities, revenue recognition (including estimates of variable considerations in determining the total contract price and allocation of performance obligations), the remaining costs to complete fixed-price contracts, bonus and other incentive compensation, stock-based compensation, reserves for tax benefits and valuation allowances on deferred tax assets, provisions for income taxes, collectability of receivables, and loss accruals for litigation. Actual results experienced by the Company may differ from management’s estimates.

Revenue Recognition

The Company enters into agreements with clients that create enforceable rights and obligations and for which it is probable that the Company will collect the consideration to which it will be entitled as services and solutions are transferred to the client. Except in certain narrowly defined situations, the Company’s contracts with its clients are written and revenue is generally not recognized on oral or implied arrangements. The Company recognizes revenue based on the consideration specified in the applicable agreement and excludes payments to customers and amounts collected on behalf of third parties. Accordingly, sales and similar taxes which are collected on behalf of third parties are excluded from the transaction price.

The Company evaluates whether two or more agreements should be accounted for as one single contract and whether combined or single agreements should be accounted for as more than one performance obligation. For most contracts, the client requires the Company to perform a number of tasks in providing an integrated output for which the client has contracted, and, hence, contracts of this type are tracked as having only one performance obligation since a substantial part of the Company’s promise is to ensure the individual tasks are incorporated into a combined output in accordance with contract requirements. When contracts have multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised services underlying each performance obligation. The Company generally provides customized solutions in which the pricing is based on specific negotiations with each client, and, in these cases, the Company uses a cost-plus margin approach to estimate the standalone selling price of each performance obligation. Certain contracts contain award fees, incentive fees, or other provisions that can either increase or decrease the transaction price. These variable amounts are generally awarded at the completion of a contractually stipulated performance assessment period based on the achievement of performance metrics, program milestones or cost targets, and the amount awarded may be subject to client discretion.

Variable consideration is estimated primarily by using the most likely amount method based on our prior history in providing the services to the customer or, if no history exists, the variable consideration is constrained until the initial determination by the customer. Once the Company selects a method to estimate variable consideration, it applies that method consistently over the performance assessment periods with changes in estimates resulting in cumulative catch-up adjustments in the period. Estimates of variable consideration will be constrained only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The changes in estimates result in cumulative catch-up adjustments.

The Company evaluates contractual arrangements to determine whether revenue should be recognized on a gross versus net basis. The Company’s assessment is based on the nature of the contractual obligation to the client. In most cases, the Company itself agrees to provide specified services to the client as a principal and revenue is recognized on a gross basis. In certain instances, the Company acts as an agent and merely arranges for another party to provide services to the client and revenue is recognized on a net basis in reflection of the fact that the Company does not control the goods or services provided to the client by the other party.

Long-term contracts typically contain billing terms that provide for invoicing monthly or upon completion of milestones, and payment on a net 30-day basis. Therefore, the timing of billings and cash receipts may differ from the timing of revenue recognition resulting in either contract assets or contract liabilities. Exceptions to monthly billing terms are to ensure that the Company performs satisfactorily rather than representing a significant financing component. For cost-based contracts, the Company’s performance is evaluated during a contractually-stipulated performance period and, while contract costs may be billed on a monthly basis, the Company is generally permitted to bill for incentive or award fees only after the completion of the performance assessment period, which may occur quarterly, semi-annually or annually, and after the client completes the performance assessment. Fixed-price contracts may provide for milestone billings based on the attainment of specific project objectives rather than for billing on a monthly basis. Moreover, contracts may require retention or hold backs that are paid at the end of the contract to ensure that the Company performs in accordance with requirements. The Company does not assess whether a contract contains a significant financing component if the Company expects, at contract inception, that the period between payment by the client and the transfer of promised services to the client will be one year or less.

The Company generally recognizes revenue over time as control is transferred to a client, based on the extent of progress towards satisfaction of the performance obligation. The selection of the method used to measure progress requires judgment and is dependent, among other factors, on the contract type and the nature of the services provided.

For time-and-materials contracts, the Company uses the right-to-invoice practical expedient to recognize revenue earned based on hours worked in contract performance at negotiated billing rates as the Company believes this amount is commensurate with the value transferred to the customer. Fixed-price level-of-effort contracts are substantially similar to time-and-materials contracts except that the Company is required to deliver a specified level of effort over a stated period of time. For these contracts, the Company determines the revenue earned using contract hours worked at negotiated bill rates as the Company delivers the contractually required workforce.

For certain cost-based contracts that meet the criteria for the right-to-invoice practical expedient to be used as the Company believes this amount is commensurate with the value transferred to the customer, the Company recognizes revenue based on the amount to which the Company has a contractual right to invoice which is typically costs incurred plus contractually-stipulated fixed fees. Cost-based contracts may include variable consideration which is allocated to the distinct periods in which they relate to and recognized in that period.

For series-services performance obligations, the Company measures progress using either a cost input measure, a time-elapsed output measure, or the right to invoice practical expedient.

For certain fixed-price contracts requiring the delivery of a product or service, the Company uses the percentage-of-completion method to estimate the amount of revenue, based on the ratio of actual costs incurred to total estimated costs, provided that costs incurred (an input method) represents a reasonable measure of progress towards the satisfaction of a performance obligation and transfer of control to the customer. This method provides a faithful depiction of the transfer of value to the client when the Company is satisfying a performance obligation that entails integration of tasks for a combined output, which requires the Company to coordinate the work of employees, subcontractors and delivery of other contract costs. Contract costs that are not reflective of the Company’s progress toward satisfying a performance obligation are not included in the calculation of the measure of progress. When this method is used, the changes in estimated costs to complete the obligations result in adjustments to revenue on a cumulative catch-up basis, which causes the effect of revised estimates for prior periods to be recognized in the current period. For the years ended December 31, 2025, 2024, and 2023, the Company recognized net favorable revenue adjustments of$8.1 million,$4.9 million, and$3.9 million, respectively. Changes in these estimates may routinely occur over contract performance for a variety of reasons, which include: changes in contract scope; changes in contract cost estimates due to unanticipated cost growth or reassessments of risks impacting costs; changes in estimated incentive or award fees; or performing better or worse than previously estimated. For certain fixed-price contracts in which the estimated cost to perform exceeds the consideration to be received, the Company accrues for the entire estimated loss during the period in which the loss is determined by recording additional direct contract costs.

In some fixed-price service contracts, the Company performs services of a recurring nature, such as maintenance and other services of a “stand ready” nature. For these contracts, the Company has the right to consideration in an amount that corresponds directly with the value that the client has received. Therefore, the Company records revenue on a time-elapsed basis to reflect the transfer of control to the client throughout the contract.

Contracts may be modified to reflect changes in contract specifications and requirements, and these changes may create new enforceable rights and obligations. Modifications that are for services that are not distinct from the existing agreement due to the significant integration service that the Company provides are accounted for as part of an existing performance obligation. The effect of these modifications on the transaction price and the Company’s measure of progress in fulfilling the performance obligation to which they relate is recognized as an adjustment to revenue on a cumulative catch-up basis. Revenue from modifications that create new, distinct performance obligations is recognized based on the Company’s progress in fulfilling the requirements of the new obligations.

For performance obligations that are satisfied over time, the Company recognizes the cost to fulfill contracts when incurred, unless the costs are within the scope of another topic in which case the guidance of that topic is applied. The Company evaluates incremental costs of obtaining a contract and, if they are recoverable from the client and relate to a specific future contract, they are deferred and recognized over contract performance or the estimated life of the customer relationship if renewals are expected. The Company has elected to apply the practical expedient to recognize these costs when incurred if the amortization period is one year or less.

Unfulfilled performance obligations (“UPO”) represent amounts expected to be earned on non-cancellable contracts or those that are cancellable, but the Company has determined to have substantive termination penalties. UPO does not include the value of negotiated, unexercised contract options, indefinite delivery/indefinite quantity and similar arrangements, which are considered as marketing offers.

The Company’s operating cycle for long-term contracts may be greater than one year and is measured by the average time between the inception and completion of those contracts. Contract-related assets and liabilities are classified as current assets and current liabilities if the performance obligations are expected to be completed within one year.

Cash and Cash Equivalents

The Company considers cash on deposit and any highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents.

Restricted Cash

Restricted cash represents cash that is restricted as to usage due to contractual restrictions.

Contract Receivables, Net

Contract receivables represent amounts billed and due from clients and billable when there is an unconditional right to the consideration in accordance with respective contractual terms. The amounts are stated at their net realizable value. The Company estimates an allowance for expected credit loss to reflect the amount of receivables that will not be collected. The Company considers a number of factors in estimating the amount of the allowance, including knowledge of a client’s financial condition, its historical collection experience, and other factors relevant to assessing the collectability of the receivables. The Company has elected to use the practical expedient that allows for the assumption that current conditions as of the balance sheet date will persist through the remaining life of the contract receivables when developing reasonable and supportable forecasts as part of estimating the allowance for expected credit losses.

The Company writes off contract receivables when such amounts are determined to be uncollectible.

Property and Equipment

Property and equipment are carried at cost and are depreciated using the straight-line method over their estimated useful lives, which range fromtwo toseven years. Leasehold improvements are amortized on a straight-line basis over the shorter of the economic life of the improvement or the related lease term.

Goodwill and Indefinite-Lived Assets

Goodwill represents the excess of the purchase consideration over the fair value of net assets of businesses acquired. Goodwill and any intangible assets acquired in a business combination that are deemed to have an indefinite useful life are not amortized, but instead are reviewed for impairment annually, or more frequently if impairment indicators arise.

The Company performs its annual goodwill impairment test as of October 1. As its business is highly integrated and all of its components have similar economic characteristics, the Company has concluded it hasone aggregated reporting unit at the consolidated entity level and performs the assessment at that level. The Company has the option to perform a qualitative assessment that determines if it is more likely than not that the estimated fair value of goodwill is greater than its carrying value and, if so, the Company may conclude that there areno indicators of impairment. If the Company concludes that an indicator exists, a quantitative test is performed by comparing the reporting unit’s fair value to the carrying amount and recognizing the difference as an impairment loss.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, including property and equipment, operating lease right-of-use (“ROU”) assets, and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the long-lived asset group may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the long-lived asset group being evaluated, a loss is recognized for any excess of the carrying amount over the fair value of the asset group.

There wasno impairment loss related to operating facility lease right-of-use assets and leasehold improvements recorded for the year ended December 31, 2025; however, during the years ended December 31, 2024 and 2023, the Company recognized impai rment losses of$3.6 million and $6.8 million, respectively, related to operating facility lease right-of-use assets and leasehold improvements that it no longer used in ongoing operations. The impairment losses were included in indirect and selling expenses on the Company’s consolidated statements of comprehensive income.

Leases

The Company leases facilities and property and equipment. The Company determines if an arrangement is a lease at its inception and recognizes a right-of-use asset and obligation for all leases greater than twelve months based on the present value of the future minimum lease payments as of the commencement date, excluding any lease incentives and initial costs incurred to obtain the lease. Since most lease agreements do not provide an implicit rate, the Company uses its incremental borrowing rate as of the commencement date, based on publicly available yields adjusted for company-specific considerations and terms, in estimating the present value of future payments.

Lease terms, for the purpose of determining each lease’s present value, include options to extend or terminate the lease if it is reasonably certain and economically reasonable that the Company will exercise that option. Lease costs from minimum lease payments are recognized on a straight-line basis over the lease term.

The leases may contain both lease and non-lease components, which are generally accounted for separately. For office equipment leases (primarily copier leases), the Company elected to account for the lease and non-lease components as a single lease component and not recognize right-of-use assets and lease liabilities for leases with a term less than twelve months.

Operating leases are included in operating lease right-of-use assets and operating lease liabilities (current and non-current) and finance leases are included in property and equipment, net and finance lease liabilities (current and non-current) on the consolidated balance sheets.

Capitalized Software and Costs of Cloud Computing Arrangements

The Company capitalizes certain costs to develop, enhance, and upgrade internal-use software. Capitalized costs include external subcontract costs and payroll costs for employees directly associated with such activities. Once completed, the software is amortized on a straight-line basis over their expected economic life, typically lasting three tofive years. The amounts are included as part of “Other intangible assets, net” on the consolidated balance sheets (see “Note 6 - Goodwill and Other Intangible Assets”).

The Company also capitalizes costs related to the implementation costs of cloud computing arrangements that are service contracts, and the amounts are included as part of “Other assets” on the consolidated balance sheets. These costs are amortized over the term of the hosting arrangement. As of December 31, 2025 and 2024, capitalized costs of cloud computing arrangements, net of accumulated amortization, totaled$2.0 million and$2.8 million, respectively.

Stock-Based Compensation

The Company recognizes stock-based compensation expense of awards given to employees and non-employee directors, including grants of stock options, restricted stock awards, restricted stock units (“RSUs”), and cash-settled restricted stock units (“CSRSUs”) on a straight-line basis over the requisite service period, which is generally the vesting period. The Company recognizes expenses for performance-based share awards (“PSAs”), which have both performance and service conditions, on a straight-line basis over a three-year performance period. Non-employee director awards are granted annually for board-related services and therefore expensed over the service period ofone year.

Stock-based compensation expense is based on the estimated fair value of the instruments on the grant date and the estimated number of shares the Company ultimately expects will vest. The Company estimates the rate of future forfeitures based on factors which include the historical forfeiture experience from the previous 10 years for each applicable employee class. In addition, the estimation of PSAs that will ultimately vest requires judgment based on the performance and market conditions that will be achieved over the performance period. Changes to these estimates are recorded as a cumulative adjustment in the period estimates are revised.

The fair value of stock options, restricted stock awards, RSUs, PSAs, and non-employee director awards is estimated based on the fair value of a share of common stock at the grant date. The fair value of PSAs is also estimated using a Monte Carlo simulation model for the market-based performance period.

CSRSUs are settled only in cash payments based on the fair value of the Company’s stock price at the vesting date, calculated by multiplying the number of CSRSUs vested by the Company’s closing stock price on the vesting date, subject to a maximum payment cap and a minimum payment floor. The Company treats these awards as liability-classified awards, and, therefore, accounts for them based on the closing price of the Company’s stock at the reporting date.

Derivative Instruments

Derivative instruments primarily include interest rate swaps. Derivative instruments designated as cash flow hedges are recorded on the consolidated balance sheets at fair value as of the reporting date and reclassified to earnings (to the same category as the item being hedged) in the period that the hedged instruments affect earnings, and the effective portion of the hedge is recorded in other comprehensive income (loss), net of tax, on the consolidated statements of comprehensive income and as part of cash flows from operating activities on the consolidated statements of cash flows. Management reviews the effectiveness of the hedges on a quarterly basis.

Income Taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company evaluates its ability to benefit from all deferred tax assets and establishes valuation allowances for amounts it believes will more likely than not be realizable. For uncertain tax positions, the Company uses a more-likely-than-not recognition threshold based on the technical merits of the income tax position taken. Income tax positions that do not meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements. Penalties, if probable and reasonably estimable, and interest expense related to uncertain tax positions are not recognized as a component of income tax expense but recorded separately in indirect expenses and interest expense, respectively.

Treasury Shares

Repurchased shares are accounted for as treasury stock under the cost method.

Foreign Currency

The financial positions and results of operations of the Company’s foreign subsidiaries, for which the functional currency is not the U.S. dollar, are translated into U.S. dollars for financial reporting purposes. Assets and liabilities of the subsidiaries are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translation adjustments are reported in accumulated other comprehensive loss included in stockholders’ equity in the Company’s consolidated balance sheets.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) includes foreign currency translation adjustments and the changes in fair value of interest rate swaps designated as cash flow hedges, net of taxes.

Business Combinations

Acquisitions that meet the definition of a business in accordance with the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations, are recorded using the acquisition method of accounting. Except for contract assets and contract liabilities, the Company recognizes and measures identifiable assets acquired, liabilities assumed, contingent purchase considerations, and any non-controlling interest as of the acquisition date at their fair values. Contract assets and contract liabilities from acquired contracts are measured as if the Company had originated the contracts. Adjustments to contingent purchase considerations subsequent to the acquisition date are recorded as part of earnings in the same period of the adjustment. The valuation of intangible assets is determined by using either a market, income, or cost approach. The excess, if any, of total consideration transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed and any non-controlling interest is recognized as goodwill.

Costs related to acquisitions include professional fees for legal, financial, and other advisory services and are expensed in the period in which they are incurred.

Direct Costs

Direct costs exclude depreciation and amortization and amortization of intangible assets, which are presented separately on the consolidated statements of comprehensive income.

Indirect and Selling Expense

Indirect and selling expenses exclude depreciation and amortization, and amortization of intangible assets, which are presented separately on the consolidated statements of comprehensive income.

Fair Value

The Company measures and reports certain financial assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available. ASC 820 establishes a three-level hierarchy used to estimate fair value by which each level is categorized based on the priority of the inputs used to measure fair value:

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Level 1: Quoted prices that are available in active markets for identical assets or liabilities;

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Level 2: Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves that are observable at commonly quoted intervals, and implied volatilities); and inputs derived principally from or corroborated by observable market data by correlation or other means; and

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Level 3: Uses inputs that are unobservable and require the Company to make certain assumptions and require significant estimation and judgment from management to use in pricing the fair value of the assets and liabilities.

Certain financial instruments, including cash and cash equivalents, contract receivables, and accounts payable are carried at cost, which, due to their short maturities, approximates their fair values. The carrying value of the Company’s debt approximates the estimated fair value for debt with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings (Level 2).

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, derivative financial instruments, and contract receivables.

The majority of the Company’s cash transactions are processed through one U.S. commercial bank, and the accounts are insured up to $250,000 by the Federal Deposit Insurance Corporation. As of December 31, 2025 and 2024, the Company had$61.9 million and$9.3 million, respectively, of cash and restricted cash in its accounts that exceeded the insured limit.

As of December 31, 2025 and 2024, the Company held approximately$4.5 million and$4.6 million, respectively, of cash and restricted cash in foreign bank accounts.

The Company enters into derivative financial instruments with financial institutions that meet certain credit guidelines and limit its risks by continuously monitoring the credit rating of the institutions.

The Company’s receivables consist principally of amounts due from agencies and departments of the federal government, state and local governments, and international governments, as well as from commercial organizations. The credit risk, with respect to federal and other government clients, is limited due to the creditworthiness of the respective governmental entity. Receivables from commercial clients generally pose a greater credit risk, and, as a result, are subject to ongoing monitoring. The Company extends credit in the normal course of operations and does not require collateral from its clients. At December 31, 2025, the Company hadone client who accounted for 13.8% of contract receivables, net, of which a portion of the outstanding invoices was paid subsequent to December 31, 2025 such that the contract receivables would have been below 10% of contract receivables, net. At December 31, 2024, there wasno client that accounted for more than 10% of contract receivables, net.

Recent Accounting Pronouncements

Accounting Pronouncements Adopted

Financial Instruments - Credit Losses

In July 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-05: Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). Under ASU 2025-05, entities may elect a practical expedient method for estimating the allowance for expected credit losses which assumes that the conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses on current accounts receivable and contract assets. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company early adopted the provisions of ASU 2025-05 during the third quarter of fiscal year 2025 and the adoption did not have any impact on the consolidated financial statements.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires greater disaggregation of income tax rate and amounts paid by entities. ASU 2023-09 specifically requires all entities to disclose, on an annual basis, disaggregated domestic and foreign pre-tax income or loss from continuing operations and the disaggregated income tax expense or benefit by federal, state, and foreign components, and a tabular rate reconciliation, using both percentages and reporting currency amounts, of eight specific categories as well as any individual reconciling items that are equal to or greater than 5% of a threshold computed by multiplying pretax income or loss from continuing operations by the applicable federal rate. Additionally, the amendments also require disclosure of income taxes paid disaggregated by federal, state, and foreign jurisdictions as well as any individual jurisdictions over 5% of the total income taxes paid. ASU 2023-09 is effective for the Company for the 2025 fiscal year, with early adoption permitted. The amendments may be adopted on a prospective or retrospective basis. The Company adopted the provisions of ASU 2023-09 on a retrospective basis and, aside from additional disclosures (see “Note 13 - Income Taxes”), the adoption did not have any impact on the consolidated financial statements.

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 2027 fiscal year and interim periods within the 2028 fiscal year, 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.

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, among other things, removes the project development stage requirements and allows capitalization of internal-use software costs once (i) management has authorized and committed to funding the project and (ii) it is probable that the project will be completed and the software will be used as intended. ASU 2025-06 will be effective for the Company for the 2028 fiscal year, 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 3 - RESTRICTED CASH

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the consolidated balance sheets at December 31,2025 and 2024 to the total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows for the years ended December 31, 2025, 2024, and 2023:

(1)

Restricted cash at December 31, 2025 includes$3.0 million of long-term restricted cash that is part of“Other assets” on the Company’s consolidated balance sheets.

Restricted cash is primarily related to the Company’s energy incentive business with public utility clients and restricted cash advances on certain programs.

NOTE 4 - CONTRACT RECEIVABLES, NET

Contract receivables, net consisted of the following as of December 31:

The Company sells certain billed contract receivables in accordance with its Amended Master Receivables Purchase Agreement with MUFG Bank, Ltd. (“MUFG”) that are accounted for as sales under ASC 860, Transfers and Servicing (“ASC 860”). The receivables are sold without recourse and the Company does not retain any ongoing financial interest in the transferred receivables, other than providing servicing activities. The following is a reconciliation of billed contract receivables sold to MUFG, including billed contract receivables sold to MUFG and payments from customers collected on behalf of MUFG during thetwelve months ended December 31, 2025 and 2024, and the balance of billed contract receivables not yet collected from customers as of December 31, 2025 and 2024, respectively:

(1)

The beginning balances represent billed contract receivables that were previously sold and derecognized by the Company but have not yet been collected from customers as of January 1,2025 and 2024, respectively.

(2)

For thetwelve months ended December 31, 2025 and 2024, the Company recorded net inflows of$12.2 million and$4.7 million, respectively, in its cash flows from operating activities from the sale of billed contract receivables.

(3)

The ending balances represent billed contract receivables that were sold and derecognized by the Company but have not yet been collected from customers as of December 31, 2025 and 2024, respectively.

The following is a reconciliation of cash collections from customers of billed contract receivables previously sold to MUFG, including collections from customers on behalf of MUFG of previously sold billed contract receivables and remittances of cash collections to MUFG during thetwelve months ended December 31, 2025 and 2024, and the balance of cash collected but not yet remitted to MUFG as of December 31, 2025 and 2024, respectively:

(1)

The beginning balances represent cash collected from customers on behalf of MUFG for billed contract receivables that were previously sold and derecognized by the Company but have not yet been remitted to MUFG as of January 1,2025 and 2024, respectively.

(2)

For thetwelve months ended December 31, 2025 and 2024, the Company recorded a net outflow of$19.5 million and a net inflow of$1.5 million, respectively, in its cash flows from operating activities from the collection of billed contract receivables that were sold but not yet remitted to MUFG.

(3)

The ending balances are included as part of “Accrued expenses and other current liabilities” on the Company’s consolidated balance sheets.

The aggregate impact of the sale of billed contract receivables on the Company’s operating cash flows was a net outflow of$7.3 million and a net inflow of$6.2 million for the twelve months ended December 31, 2025 and 2024, respectively.

At December 31, 2025 and 2024, the amounts due to MUFG for cash collected and not yet remitted for certain billed contract receivables sold that did not qualify as sales under ASC 860 totaled$3.4 million and$7.9 million, respectively. These amounts are included as part of “Accrued expenses and other current liabilities” on the Company’s consolidated balance sheets, and included within cash flows from financing activities on the Company’s consolidated statements of cash flows.

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31:

Depreciation and amortization expense of property and equipment for the years ended December 31, 2025, 2024, and 2023 totaled$14.9 million,$16.0 million, and$18.4 million, respectively.

NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the fiscal years ended December 31 were as follows:

See “Note 15 - Acquisitions and Divestitures” for the details of the business combination and divestiture resulting in the changes in goodwill.

Other Intangible Assets

Other intangible assets consists of (i) intangible assets with definite lives previously acquired through mergers and acquisitions, purchased software, and internally-developed software (completed and in the process of completion), and (ii) a domain name with an indefinite life. The intangible assets with definite lives are amortized over periods ranging from approximately 1 to 12 years. The customer-related intangible assets, which consist of customer contracts, backlog, and non-contractual customer relationships, are amortized based on estimated cash flows and respective estimated economic benefit of the assets or straight-line over the estimated lives.

As of December 31, 2025, the weighted-average periods of amortization are as follows:

The carrying values of other intangible assets are as follows at December 31,2025 and 2024:

Amortization expense of amortizable intangible assets for the years ended December 31, 2025, 2024, and 2023, totaled$43.2 million,$37.5 million, and$42.3 million, respectively. The estimated future amortization expense relating to amortizable other intangible assets is as follows:

NOTE 7 - LEASES

The Company has operating and finance leases for facilities and equipment which have remaining terms ranging from 1 to 13 years. The leases may include options toextend the lease periods for up to 5 years at rates approximating market rates and/oroptions toterminate the leases within 1 year. The leases may also include aresidual value guarantee or a responsibility to return the property to its original state of use. A limited number of leases contain provisions that provide for rental increases based on consumer price indices. The change in lease cost resulting from changes in these indices was included within variable lease cost.

The Company’s lease cost is recognized on a straight-line basis over the lease term and is primarily included within indirect and selling expenses on the consolidated statements of comprehensive income. Lease cost consisted of the following:

Future minimum lease payments under non-cancellable operating and finance leases as of December 31,2025 were as follows:

Other information related to operating and finance leases is as follows:

NOTE 8 - DEBT

On May 6, 2022, the Company entered into the Restated Credit Agreement with a group of lenders with (a) PNC Bank, National Association as the Administrative Agent and (b) PNC Capital Markets LLC, BOFA Securities, Inc., TD Securities (USA) LLC, Wells Fargo Securities, LLC and Citizens Bank, N.A., as joint lead arrangers. The various facilities under the Restated Credit Agreement are referred to as the “Credit Facility”. The Restated Credit Agreement amended and restated the Company’s prior credit agreement (the “Existing Credit Agreement”) to, among other things: (a) maintain the existing $600 million revolving credit facility (together and inclusive of a $75 million swing line sublimit and $100 million sublimit for letters of credit); (b) increase the existing term loan facility from $200 million to $300 million; (c) provide for a new delayed draw term loan facility of $400 million; (d) maintain the existing incremental credit facility to make, subject to approval of the lenders making such loans, incremental term or revolving credit loan(s) in the aggregate principal amount of not more than $300 million; (e) increase the maximum Consolidated Leverage Ratio (as such term is defined in the Restated Credit Agreement) from 4.00 to 1.00 to 4.50 to 1.00 (with temporary increases to 5.00 to 1.00 for the three fiscal quarters following a “Material Permitted Acquisition”, as such term is defined in the Restated Credit Agreement); (f) maintain the minimum Consolidated Interest Coverage Ratio (as such term is defined in the Restated Credit Agreement) of 3.00 to 1.00; (g) increase the foreign currency debt limit in Euro and Sterling Pounds from $30 million equivalent to $200 million equivalent; (h) modify LIBOR based interest pricing conventions with SOFR based interest pricing conventions; (i) extend the maturity date of the Credit Facility until May 6, 2027; (j) incorporate various provisions and conventions encouraged by the Loan Syndication and Trade Association; and (k) modify certain definitions and certain covenants.

Under the Restated Credit Agreement, the Company may, at its discretion, borrow funds under the Credit Facility at interest rates based on both term SOFR (i.e., 1-, 3-, or 6-month rates) and the Base Rate (as defined herein), plus their applicable margins. The Base Rate is a fluctuating rate of interest equal to the highest of (a) the Overnight Bank Funding Rate (as defined in the Restated Credit Agreement), plus 0.5%, (b) the Prime Rate (as defined in the Restated Credit Agreement) and (c) the Daily Simple SOFR Rate (as defined in the Restated Credit Agreement) plus 1%, all as then adjusted to include the Applicable Margin (as defined in the Restated Credit Agreement) as then in effect (and as determined pursuant to the then-current Consolidated Leverage Ratio). For the years ended December 31,2025 and 2024, interest expense from debt facilities was$29.2 million and$31.8 million, respectively, and the average interest rate on borrowings under the Credit Facility was 5.6% and 6.6%, respectively. As a result of floating-to-fixed interest rate swaps (see “Note 10 - Derivative Instruments and Hedging Activities”), interest expense decreased by$1.2 million and$6.2 million for the years ended December 31, 2025 and 2024, respectively, and the average interest rate was 5.4% and 5.3% for the years ended December 31, 2025 and 2024, respectively.

The Credit Facility is collateralized by substantially all the assets of the Company and its material domestic subsidiaries and requires that the Company remain in compliance with certain financial and non-financial covenants including, but not limited to the Consolidated Leverage Ratio and the Consolidated Interest Coverage Ratio. The Credit Facility also includes other terms and conditions, covenants, and other provisions of the Restated Credit Agreement that are materially consistent with the Existing Credit Agreement. As of December 31, 2025, the Company was in compliance with all covenants.

As of December 31, 2025, the Company had unused borrowing capacity of$550.0 million from the available $600.0 million revolving line of credit. The unused borrowing capacity is inclusive offour outstanding letters of credit totaling$1.6 million.

As of December 31, 2025 and 2024, debt consisted of the following:

Future scheduled repayments of debt principal are as follows:

Debt Issuance Cost

The Company’s debt issuance costs are amortized over the term of indebtedness. Amortization of debt issuance costs totaling$1.1 million,$1.2 million, and$2.0 million was recorded for each of the years ended December 31, 2025, 2024, and 2023, respectively, and was included as part of interest, net, on the Company’s consolidated statements of comprehensive income.

NOTE 9 - REVENUE RECOGNITION

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 markets, client type, and contract mix.

Client markets provide insight into the breadth of the Company’s expertise. In classifying revenue by client markets, the Company attributes revenue from a client to the market that the Company believes is the client’s primary market. The Company also classifies revenue by the type of client for which it does business, which is an indicator of the diversity of its client base. The Company attributes revenue generated as a subcontractor to the market or type of the ultimate client. For the years ended December 31, 2025, 2024, and 2023, the Company’s largest client was the Department of Health and Human Services with$415.5 million,$503.9 million, and$509.5 million of revenue, respectively. There was no other client with revenue greater than 5% of total revenue for the years ended December 31, 2025, 2024, and 2023. Disaggregation by contract mix provides insight in terms of the degree of performance risk that the Company has assumed. Fixed-price contracts are considered to provide the highest amount of performance risk as the Company is required to deliver a scope of work or level of effort for a negotiated fixed price. Time-and-materials contracts require the Company to provide skilled employees for negotiated fixed hourly rates. Since the Company is not required to deliver a scope of work, but merely skilled employees, it considers these contracts to be less risky than a fixed-price agreement. Cost-based contracts are considered to provide the lowest amount of performance risk since the Company is generally reimbursed for all contract costs incurred in performance of contract deliverables with only the amount of incentive or award fees (if applicable) dependent on the achievement of negotiated performance requirements.

The Company’s revenue by client market, client type, and contract mix are summarized below.

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 on contracts.

The following table summarizes the contract balances as of December 31,2025 and December 31, 2024:

(1)

Contract liabilities as of December 31, 2025 include$3.0 million of long-term contract liabilities that are part of“Other long-term liabilities” on the Company's consolidated balance sheets.

The net contract assets (liabilities) as of December 31, 2025 decreased by$24.2 million as compared to December 31, 2024, primarily due to the timing difference between the performance of services and billings to and payments from customers. There were no material changes to contract balances due to impairments or credit losses during the period. During the years ended December 31, 2025 and 2024, the Company recognized$20.6 million and$17.6 million in revenue related to the contract liabilities balance at December 31, 2024 and 2023, respectively.

Changes in Estimates on Contracts:

For the years ended December 31, 2025, 2024, and 2023, the aggregate net changes in estimates on contracts accounted under the percentage-of-completion method reflected increases of$14.8 million,$12.7 million, and$7.9 million, respectively, to “Operating income” on the Company’s consolidated statements of comprehensive income. The impact of the changes on the Company’s diluted earnings per share was$0.65,$0.54, and$0.36, respectively. The Company used its effective tax rates of 18.2%,20.2%, and 14.4%, respectively, to calculate the impact on net income.

Revenue Adjustments from Previously Satisfied Performance Obligations:

For the years ended December 31, 2025 and 2024, the Company recognized$4.8 million, and$1.6 million, respectively, of revenue from previously satisfied performance obligations. For the year ended December 31, 2023, the Company reduced revenue by$1.4 million from previously satisfied performance obligations. The adjustments were primarily due to changes in the transaction prices and final performance determination of certain awards.

Unfulfilled Performance Obligations:

The Company had$0.7 billionin UPO as of December 31, 2025, of which approximately 66% relates to its contracts with U.S. federal government. During the year ended December 31, 2025, pursuant to the executive orders issued by the Administration or actions by the Department of Government Efficiency, the Company received notices for termination-for-convenience. The termination notices were received primarily in the first and second quarters of the 2025 fiscal year.

The Company expects to recognize the remaining UPO as revenue of approximately 74% by December 31,2026,91% by December 31,2027, and the remaining thereafter.

NOTE 10 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company uses interest rate swap agreements (the “Swaps”) to manage its variable interest rate risk associated with its borrowings under the Credit Facility. The Company does not use such instruments for speculative or trading purposes.

During the second and third quarters of the 2025 fiscal year, the Company executed a strategy that extended the term of the existing Swaps at a lower interest rate while maintaining the same overall notional value of each Swap. As a result of the amendment, $50.0 million will mature on February 28, 2030, $25.0 million will mature on June 26, 2030, and $100.0 million will mature on July 31, 2030. The Company has designated the modified Swaps as cash flow hedges. See “Note 8 - Debt” for details on the impact of the Swap on the Company’s interest rates. See “Note 11 - Fair Value” for the fair value of these Swaps.

For the years ended December 31,2025 and 2024, the effect of the Swaps on the Company’s financial statements are as follows:

As of December 31, 2025,$0.6 million in unrealized losses from the Swaps are expected to be reclassified from AOCI into earnings within the next twelve months.

NOTE 11 - FAIR VALUE

Financial instruments measured at fair value on a recurring basis and their location within the accompanying consolidated financial statements are as follows:

Financial and non-financial instruments measured or re-measured at fair value on a non-recurring basis after initial measurement include certain impaired right-of-use assets from operating leases (see “Note 19 - Exit Activities”)using the discounted cash flows method with Level 3 inputs as of the impairment dates.

NOTE 12 - STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Loss

Accumulated other comprehensive (loss) income included the following:

(1)

Represents the change in fair value of interest rate hedge agreements designated as cash flow hedges. The fair value of the interest rate hedge agreements was recorded in other comprehensive income, net of tax, and will be reclassified to earnings when earnings are impacted by the hedged items, as interest payments are made on the debt. See additional details of the hedge agreements in“Note 10 - Derivative Instruments and Hedging Activities”.

(2)

The Company expects to reclassify$0.6 million in unrealized gains related to the Change in Fair Value of Interest Rate Hedge Agreement from accumulated other comprehensive loss into earnings during the next 12 months.

(3)

During the first quarter of 2025, the Company reclassified $4.1 million of effect of taxes related to Foreign Currency Translation Adjustments from accumulated other comprehensive (loss) income into earnings in connection with Section 987 (“IRC 987”) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). See “Note 13 - Income Taxes”.

Share Repurchases

The Company’s current approved share repurchase program allows for share repurchases in the aggregate up to $300.0 million under approved share repurchase plans pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act. The repurchase program and the authorized amount have no expiration date. On an annual basis, the Credit Facility (see “Note 8 - Debt”) permits share repurchases of at least $25.0 million provided that the Company is not in default of its covenants, and higher amounts provided that the Company’s Consolidated Leverage Ratio, prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to the Company having net liquidity of at least $100.0 million after giving effect to such repurchases.

Purchases under this program may be made from time to time at prevailing market prices in open market purchases or in privately negotiated transactions pursuant to Rule 10b-18 under the Exchange Act and in accordance with applicable insider trading and other securities laws and regulations. The purchases are funded from existing cash balances and/or borrowings, and the repurchased shares are held in treasury. The timing and extent to which the Company repurchases its shares will depend on market conditions and other corporate considerations in the Company’s sole discretion.

For the years ended December 31, 2025 and 2024, the Company used$55.3 million to repurchase 563,988 shares at an average price of$98.08 per share and$44.4 million to repurchase 327,321 shares at an average price of$135.77 per share, respectively, under this program. As of December 31, 2025, approximately$94.0 million of authority remained available under the share repurchase plan.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (“ESPP”) under whichone million shares have been authorized for issuance. The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions up to $25,000 per calendar year, per Internal Revenue Services rules, over six-month offering periods at a discount not to exceed 5% of the market value on the date of each purchase period, and therefore the Company does not have any compensation expense related to the ESPP. For the years ended December 31, 2025 and 2024, employees purchased a total of 57,197 and 40,987 shares at an average purchase price of$80.96 and$125.20, respectively. At December 31, 2025 and 2024, there were 450,648 and 507,845 shares remaining available for future issuance under this plan.

NOTE 13 - INCOME TAXES

For the years ended December 31,2025, 2024, and 2023, domestic and foreign income before income taxes is as follows:

Income tax expense consisted of the following for the years ended December 31:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes.

The Company’s provision for income taxes differs from the U.S. federal statutory tax rate of 21.0% due to the following reconciling items:

(1)

State taxes in Virginia, Maryland, and the District of Columbia make up the majority (greater than 50 percent) of the tax effect in this category.

(2)

The 2025 provision for income tax includes a benefit recognized in the first fiscal quarter of 2025 from tax planning implemented in connection with the “transitional rules” governing unrealized foreign exchange gains and losses derived from translation of the operations, assets and liabilities of non-U.S. qualified subsidiaries provided by recently finalized U.S. federal tax regulations under IRC 987. The regulations under IRC 987 are effective for the Company for tax years beginning after December 31, 2024, and require computation of a pre-transition foreign currency gain or loss to be included in the determination of future taxable income or loss and an analysis of the various elections available to taxpayers. Based on the Company’s current analysis of the regulations and the available election to amortize its pre-2025 cumulative unrealized foreign exchange gains and losses impacting U.S. taxation of foreign earnings under Subpart F of the Internal Revenue Code, the Company recognized a non-cash deferred income tax benefit of $4.5 million related to its election to amortize its pre-transition foreign currency losses against taxable income over ten years.

(3)

During 2023, the Company restructured the ownership of its Canadian entities for tax purposes, resulting in a 3.8% decrease in the Company’s effective income tax rate for the year ended December 31, 2023.

(4)

During 2023, the Company liquidated one of its U.K. subsidiaries as part of the wind-down of its commercial marketing business, resulting in a reduction in the Company’s effective income tax rate of 5.1% for the year ended December 31, 2023.

Income taxes paid, net of refunds received, consisted of the following:

(1)

Primarily includes taxes paid to California, New York, New Jersey, and Texas.

(2)

Primarily includes taxes paid to Belgium and Puerto Rico.

The Company measures certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is 27.0%. Deferred tax assets (liabilities) consisted of the following at December 31:

The Company’s 2022, 2023, and 2024 tax years remain subject to examination by the Internal Revenue Service for federal tax purposes. Certain significant state and foreign tax jurisdictions are also either currently under examination or remain open under the statutes of limitation and subject to examination for the tax years from 2021, 2022, 2023, and 2024.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the “OB3 Act”). The OB3 Act made permanent changes to certain key elements of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), including 100% bonus depreciation, domestic research cost expensing, the business interest expense limitation, and the repeal of various clean energy tax credits. As a result, the OB3 Act impacted the Company’s income tax payables and deferred tax assets as of July 4, 2025, the date of enactment, via the reversal of approximately $32.0 million of deferred tax assets resulting from capitalized research expenses incurred through June 30, 2025. The reversal is reflected on the Company’s annual financial statements as of and for the year ended December 31, 2025. These capitalized research expenses are being recovered over their remaining useful lives as outlined in IRC 174A enacted via the OB3 Act.

As of December 31, 2025, the Company had gross state income tax credit carryforwards of approximately $1.7 million, which expire between 2025 and 2030. A deferred tax asset of approximately $1.3 million, net of federal benefit, has been established related to these state income tax credit carryforwards as of December 31,2025.

The need to establish valuation allowances for deferred assets is based on a more-likely-than-not threshold that the benefit of such assets will be realized in future periods. Appropriate consideration has been given to all available evidence, including historical operating results, projections of taxable income, and tax planning alternatives. The Company concluded that a $0.4 million valuation allowance was required for tax attributes related to specified state jurisdictions, a $1.1 million valuation allowance was required for tax attributes related to capital loss carryforwards, a $0.7 million valuation allowance was required for certain equity-based compensation assets, and an additional $8.7 million valuation allowance was required against our U.S. foreign tax credit carryforwards.

The total amount of unrecognized tax benefits as of December 31, 2025 and 2024 was $24.7 million and $25.8 million, respectively, which includes $18.2 million and $15.0 million, respectively, of tax positions that, if recognized, would impact the effective rate. The unrecognized tax benefits and the related accrued interest are part of other long-term liabilities on the Company’s consolidated balance sheets.

The components of unrecognized tax benefits, excluding penalty and interest, are as follows at December 31:

The unrecognized tax benefit reconciliation, excluding penalty and interest, is as follows:

NOTE 14 - STOCK-BASED COMPENSATION

On June 1, 2023, the Company’s stockholders approved an amendment and restatement of the 2018 Omnibus Plan (the “2018 A&R Omnibus Plan”) which increased the number of shares available for issuance to 2,050,000 shares using stock options, stock appreciation rights, restricted stock, RSUs, performance units and PSAs, cash-based awards, and other stock-based awards to all key officers, key employees, and non-employee directors of the Company. As of December 31, 2025, the Company had approximately 785,433 shares available for grant under the A&R 2018 Omnibus Plan.

Stock-based compensation expense is included as part of direct costs and indirect and selling expenses on the consolidated statements of comprehensive income. The total stock-based compensation expense for the years ended December 31,2025, 2024, and 2023, the unrecognized compensation expense at December 31, 2025, and the weighted-average period to recognize the remaining unrecognized shares are as follows:

The stock-based compensation expense is deductible for income tax purposes. The income tax expense reflects adjustments for differences between the stock-based compensation expense and the actual compensation included in award recipient’s gross income. For the year ended December 31, 2025, the Company recognized an additional$0.4 million of shortfall tax expense related to stock-based compensation. For the years ended December 31, 2024 and 2023, the Company recognized windfall tax benefits of$2.4 million, and$1.1 million, respectively, related to stock-based compensation.

Restricted Stock Units

RSUs generally have a vesting term ofthree years. On vesting the employee is issued one share of stock for each RSU awarded. The fair value of shares vested was$9.7 million,$10.3 million, and$7.3 million for the years ended December 31, 2025, 2024, and 2023, respectively.

A summary of the Company’s RSUs is presented below:

Cash-Settled Restricted Stock Units

CSRSUs generally have a vesting term ofthree years. The fair value of CSRSUs vested and settled in cash for the years ended December 31,2025, 2024, and 2023 was$6.4 million,$7.8 million and$7.9 million, respectively.

A summary of the Company’s CSRSUs is presented below:

Non-Employee Director Awards

The Company grants awards of registered shares to its non-employee directors on an annual basis under the A&R Omnibus Plan.

A summary of the non-employee director awards is presented below:

Performance Share Awards

The Company’s performance-based share program (the “Program”) provides for the issuance of PSAs to its senior management. Under the Program, the PSAs that the participant will receive depends on the Company’s achievement of two performance goals duringtwo performance periods. The performance goals under the Program are based on (i) the Company’s compounded annual growth rate in EPS (adjusted to exclude certain items specified in the award’s agreement) during a two-year performance period (the “Initial Period”) and (ii) the Company’s cumulative total shareholder return relative to its peer group (“rTSR”) during a performance period from the first day of the performance period (typically January 1 of the year awarded) to the last day of the third year of the performance period (typically December 31). The PSAs will only be eligible to vest following the expiration of the three-year performance period. The actual shares vested will be subject to both continued employment by the Company (barring certain exceptions allowing for partial performance periods) and actual financial measures achieved. The final number of shares of common stock that will be issued to each participant at the end of the applicable performance period will be determined by multiplying the award by the product oftwo percentages: the first based on the Company’s EPS performance and the second based on the Company’s rTSR performance, subject to a minimum and maximum performance level. As of December 31, 2025, shares granted during 2023, 2024, and 2025 are within year three, two, andone of the performance periods, respectively, and therefore have not fully vested. A total of 38,079 shares granted in 2022 vested during 2025 after meeting the performance goals. As of December 31, 2025, a total of 99,342 shares granted in 2023 and 2024 are expected to vest in the future based on estimated financial measures achieved in the Initial Period and rTSR performance.

A summary of the Company’s PSAs is presented below:

The fair value of the awards is estimated on the grant date using a Monte Carlo simulation model due to the market condition for the rTSR component. The fair value assumptions using the Monte Carlo simulation model for awards granted in 2025, 2024, and 2023 were:

NOTE 15- ACQUISITIONS AND DIVESTITURES

Acquisitions

Applied Energy Group, Inc.

On December 31, 2024, the Company completed the acquisition of Applied Energy Group, Inc. (“AEG”), an energy technology and advisory services company, for$59.9 million in cash consideration. AEG provides a suite of integrated technology and advisory solutions to electric and gas utilities, state and local governments, and state energy offices nationwide which further enhance the Company’s service offering and client footprint.

As part of the allocation of the purchase consideration, the Company recorded the following:

Net working capital includes restricted cash of $5.4 million, accounts receivable of $4.4 million, contract assets of $2.6 million, accrued expenses of $6.6 million, accounts payable of $1.3 million, and other assets and liabilities of $0.7 million.

The allocation of the purchase consideration was finalized during the third quarter of the 2025 fiscal year.

The estimated useful lives of acquired intangible assets are as follows:

The goodwill is attributable to the workforce of AEG and expected synergies with the Company. Goodwill has an indefinite life, and is deductible for income tax purposes. The pro-forma impact of the acquisition is not material to the Company’s results of operations.

CMY Solutions, LLC

On May 1, 2023, the Company acquired CMY Solutions, LLC (“CMY”), a privately-held company that provides engineering and automation solutions to utilities and organizations, for $32.6 million in cash. The acquisition enhances the Company’s offerings in the field of power and energy advisory services.

As part of the allocation of purchase consideration, the Company recorded the following:

The estimated useful lives of acquired intangible assets are as follows:

Goodwill has an indefinite life and is deductible for income tax purposes. The pro-forma impact of the acquisition is not material to the Company’s results of operations.

Divestitures

Commercial Marketing

On September 12, 2023, the Company completed the divesture of its U.S. commercial marketing business for $47.1 million in cash. The disposal of the commercial marketing business was not a major strategic shift that was significant to the Company’s operations and financial results. For the years ended December 31, 2024 and 2023, the Company recorded pre-tax gain of $2.0 million and $2.5 million, respectively, that are included within other income on the Company’s consolidated statements of comprehensive income.

Mobile and SMS Messaging Aggregator Business

On November 1, 2023, the Company completed the divesture of its Canadian mobile and Short Message Service (“SMS”) messaging aggregator business for $5.4 million in cash. The disposal of the mobile aggregation and SMS messaging aggregator business was not a major strategic shift that was significant to the Company’s operations and financial results. In connection with the sale, the Company recorded a pre-tax gain of $3.2 million that is included within other (expense) income on the Company’s consolidated statements of comprehensive income for the year ended December 31, 2023.

NOTE 16 - EARNINGS PER SHARE

EPS is computed by dividing reported net income by the weighted-average number of shares outstanding. Diluted EPS considers the potential dilution that could occur if common stock equivalents of stock options, RSUs, and PSAs were exercised or converted into stock. PSAs are included in the computation of diluted shares only to the extent that the underlying performance conditions: (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related performance period and the result would be dilutive under the treasury stock method.

As of December 31, 2025, the PSAs granted during the year ended December 31, 2023 and 2024 met the related performance conditions for the initial performance period and were included in the calculation of diluted EPS; however, the PSAs granted during the year ended December 31, 2025 have not yet completed their initialtwo-year performance period and therefore were excluded in the calculation of diluted EPS.

There were 32,629,518, and 1,925 ofpotentially dilutive shares of stock awards that were excluded from the calculation of weighted-average diluted share computations for the years ended December 31, 2025, 2024, and 2023, respectively, because they were anti-dilutive.

EPS, including the dilutive effect of stock awards for each period reported, is summarized below:

NOTE 17 - COMMITMENTS AND CONTINGENCIES

Letters of Credit and Guarantees

At December 31, 2025 and 2024, the Company had open standby letters of credit totaling$1.6 million and$1.6 million, respectively, and guarantees of$7.0 million and$8.2 million issued by its banks. The letters of credit and guarantees were primarily for the Company’s facility leases and contract performance obligations. The open standby letters of credit reduce the Company’s unused borrowing capacity under its Credit Facility.

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 the Company’s financial position, results of operations, or cash flows.

NOTE 18 - EMPLOYEE BENEFIT PLANS

Defined Contribution Plan

Effective June 30, 1999, the Company established the ICF Consulting Group Retirement Savings Plan (the “Retirement Savings Plan”). The Retirement Savings Plan is a defined contribution profit sharing plan with a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code. Participants are able to elect to defer up to 70% of their compensation, subject to statutory limitations, and are entitled to receive 100% employer matching contributions for the first 3% and 50% for the next 2% of their compensation. The Company’s contribution expense for the years ended December 31,2025, 2024, and 2023 was$26.1 million,$26.8 million, and$25.4 million, respectively.

Deferred Compensation Plan

Certain key employees of the Company are eligible to defer a specified percentage of their cash compensation to a non-qualified deferred compensation plan. Eligible employees may elect to defer up to 80% of their base salary and up to 100% of performance bonuses, reduced by any amounts withheld for the payment of taxes or other deductions required by law. Participants are always 100% vested in their account balances. The Company funds its deferred compensation liabilities by making cash contributions to a Rabbi Trust (the “Trust”) at the time the salary or bonus being deferred would otherwise be payable to the employee. As of December 31, 2025 and 2024, the deferred compensation liabilities to plan participants totaled$26.2 million and $24.3 million, respectively, which were materially funded by assets in the Trust.

NOTE 19 - EXIT ACTIVITIES

During the year ended December 31, 2023, the Company incurred and paid $2.5 million in retention and severance benefits related to the wind-down of its non-core commercial marketing and communication businesses in the U.K. and Belgium. The exit activity was completed as of December 31, 2023.

During the year ended December 31, 2023, the Company completed the divestitures of its non-core U.S. commercial marketing and Canadian mobile and SMS messaging aggregator businesses. As a result of these divestitures, the Company incurred and paid retention and severance benefits of $1.9 million for the year ended December 31, 2023, which was primarily recorded within direct costs.

As a result of these wind-down and divestitures, the Company also recorded $3.0 million related to right-of-use operating leases, accrued $2.4 million for other facility-related exit cost, and recorded impairment of $0.9 million related to a customer-related intangible from a prior acquisition.

NOTE 20 - SEGMENT INFORMATION AND GEOGRAPHIC DATA

The Company provides a broad array of professional services to its clients across several markets, primarily within the U.S. The Company operates as asingle 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 CODM assesses performance of the segment based on consolidated net income that is reported on the Company’s consolidated statements of comprehensive income. The CODM uses consolidated net income to evaluate the Company’s performance against budgets and decide whether to use the profits to invest in the business, paydown debt, repurchase stock, pay dividends, or fund acquisitions. Asset information provided to the CODM is not used for the purpose of making decisions and assessing performance of the Company.

The segment revenue, significant segment expenses, and segment profit are as follows:

(1) Other segment expense (income) primarily includes interest income, gains/losses on foreign currency, and gains/losses on disposition of assets.

Other Segment Information and Geographic Data

Revenue is attributed to the country where the contract is awarded by the client. There wasno single foreign country that individually accounted for 10% or more of total revenue for the years ended December 31,2025, 2024, and 2023. The following table provides net revenue for the Company’s home country and foreign countries:

At December 31, 2025 and 2024, tangible long-lived assets were primarily held in the U.S. There wasno single foreign country that, individually, held more than 10% of the total long-lived assets. The following table provides tangible long-lived assets held in the Company’s home country and in foreign countries:

NOTE 21 -ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at December 31: