ICF International Reports Q2 2026 Results: Full Earnings Call Transcript

On Thursday, ICF International (NASDAQ: ICFI ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary ICF International reported a 6% increase in revenues from commercial clients, with notable growth in commercial energy efficiency and international government client revenues.

2% and reported a 12% increase in non-GAAP EPS, supported by tax, interest, and share count benefits. 3 billion, indicating strong future growth prospects. The company has been successful in diversifying its client base, with 75% of new contract wins in non-federal client categories, focusing on commercial, state and local, and international clients. ICF International is leveraging its expertise across various sectors, such as energy, technology modernization, and disaster management, to capture growth opportunities.

The company repurchased over 435,000 shares in the first half of the year and continues to evaluate acquisition opportunities, particularly in the commercial energy space. ICF International reaffirmed its full-year 2026 revenue and EPS guidance, with expectations of accelerating growth in the fourth quarter. 6% year over year, while federal revenues grew slightly sequentially, aligning with expectations. Management expressed confidence in achieving mid to high-single-digit growth in 2027, driven by strong performance across non-federal and federal segments.

Full Transcript Lauren Cannon, Operator Welcome to the second quarter 2026 ICF International Earnings Conference Call. My name is Lauren Cannon, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

I will now turn the call over to Lynne Morgan of Advisory Partners. Lynne, you may begin. Lynne Morgan, Advisory Partners Thank you, Lauren. Good afternoon, everyone, and thank you for joining us to review ICF International's second quarter 2026 performance.

With us today from ICF International are John Wasson, Chair and CEO; Anne Choate, President; and James Morgan, Chief Operating and Financial Officer. During this conference call, we will make forward-looking statements to assist you in understanding ICF International management's expectations about our future performance. These statements are subject to a number of risks that could cause actual events and results to differ materially, and I refer you to our 8-6-2026 press release and our SEC filings for discussions of those risks. In addition, our statements during this call are based on our views as of today.

We anticipate that future developments will cause our views to change. Please consider the information presented in that light. We may at some point elect to update the forward-looking statements made today, but specifically disclaim any obligation to do so. I will now turn the call over to ICF International CEO John Wasson to discuss second quarter 2026 performance.

John Wasson — Chairman, President and Chief Executive Officer Thank you, Lynne, and thank you all for joining us this afternoon to review our second quarter results and discuss our business outlook. Business trends in our markets were consistent with our expectations, allowing us to deliver revenues in line with last year's second quarter while we continued to carefully manage costs and directed our resources toward expanding our pipeline of new business opportunities.

7% year-on-year; a sequential increase in revenues from federal government clients, as we had anticipated, reflecting growth in our technology modernization work; and a 35% increase in revenues from international government clients as we ramped up work on the large contract awards secured in 2025 and earlier this year. 2%, up 10 basis points from last year's second quarter. Non-GAAP EPS increased 12%, driven by the profitability I just noted and year-on-year tax, interest, and share count benefits. 09, and since the end of the second quarter we've been awarded contracts in excess of $200 million.

5 billion reported at the end of this year's first quarter. In short, this was another quarter in which our diversified, integrated business model made a positive difference in ICF International's results, positioning us to achieve our guidance expectations for the full year. Revenues from our commercial, state and local, and international clients accounted for 61% of our second quarter revenues, in keeping with our expectation that these client categories will represent over 60% of our 2026 revenues, up from 57% in 2025.

The diversification within our client set provides us with both resilience and the ability to shift our resources to capture growth opportunities as markets evolve. Approximately 75% of our second quarter contract wins were in these non-federal client categories, as delays in procurement decisions constrained federal government awards. We continue to invest in these non-federal client categories while at the same time pivoting to expand our presence in federal agencies that are benefiting from increased funding.

Additionally, we are seeing greater opportunities to bring insights and capabilities from across client categories and domain expertise to help clients address complex challenges. For example, many of the issues facing today's energy market—including load growth, grid reliability, transmission development, resilience, affordability, and energy security—are being addressed simultaneously by commercial clients, regulators, and other government agencies. The fact that we work with all these market participants gives us a broader perspective on emerging challenges and potential solutions, providing significant competitive advantage to ICF International.

Also, our work with state regulators and industry associations helps us to develop innovative approaches to transmission investment and grid planning. It provides us with insights that we can directly apply to our energy advisory clients. Our work related to data centers leverages capabilities across planning, policy, financial, and engineering disciplines as well as across our client categories. We provide assistance to states, counties, and other local governments as they evaluate the economic and energy infrastructure and community impacts of data center development.

That gives us valuable perspective on stakeholder concerns and public issues that we are able to bring to our hyperscaler, developer, and utility clients as they plan for and develop new projects. And our deep energy expertise, including decades of support to the federal government and to commercial oil and gas companies regarding critical reserves and potential disruptions, positioned us to support the State of California with real-time monitoring of refinery production, energy imports, and stocks so the state can better take actions to address price variability.

Finally, we are adapting AI-enabled analytics and technical assistance solutions that we originally developed for federal government clients to support commercial and state and local government clients. 3 billion. 5 billion, or 60% of that pipeline, supporting our expectation for continued growth in these markets. Summing up the quarter, we were pleased that our revenues were similar to last year's second quarter results in advance of our return to year-on-year growth for 2026 and to positive quarterly revenue comparisons beginning next quarter.

We're also pleased with the way we have managed our cost structure to maintain strong margin performance while investing in growing our substantial business development pipeline. Our year-to-date repurchases of over 435,000 shares represented a first-half record for ICF International and a strong indication of the confidence that management and the Board have in our company's long-term prospects. We continue to review acquisition opportunities, particularly in the commercial energy space, but we remain very disciplined.

Our focus is primarily on tuck-in transactions that provide capabilities with the potential to drive meaningful revenue synergies and will be accretive soon after completion. Now I'll turn the call over to our President, Anne Choate, to discuss our business performance. Anne Choate — President Good afternoon, everyone. I'm pleased to present a business review of ICF International's second quarter results which, as John mentioned, set the stage for our return to year-on-year growth in the second half of this year starting in Q3.

I'm also happy to discuss how ICF International's diversified and integrated business model continues to differentiate us and provide us with a unique multidisciplinary viewpoint in solving complex problems for clients. In my remarks, I'll walk through some specific examples of work in each of our client categories, starting with commercial energy. We continue to experience strong demand for ICF International's utility programs, which include energy efficiency, flexible load management, electrification, and battery storage programs. 7% in the second quarter and represented approximately 82% of second quarter Commercial Energy revenues.

Our results in this area were driven by the continued success of our performance-based programs, the expansion of existing engagements, and the startup of new projects. The addressable market for these services is large, and ICF International is a recognized market leader, with our share gains coming from excellent results we are delivering to clients, introduction of new services, and winning work away from competitors. 6% for the first half, accounting for about 13% of first half Commercial Energy revenues. Contributions from this part of our business tend to vary due to the timing of assignments and client transactions.

As we look to Q3, we're expecting more robust M&A activity, which should drive our valuation and due diligence services. Additionally, we're seeing increased demand for our supply strategy and market access assessments for natural gas, as well as greater developer demand for data centers and other large loads in need of assistance in siting decisions. These decisions reflect a complex suite of factors including grid capacity, interconnection and queue position, and proximity to future load growth, all areas where ICF International's integrated advisory capabilities are particularly well positioned.

In addition, our energy advisory team is fielding requests for our energy advisory services from state and local governments as they also address siting challenges, affordability concerns, economic development priorities, reliability, and growing energy demand. The remaining less than 5% of our Commercial Energy revenues represents environmental and planning work that we do for utility and other commercial clients. Lower quarterly revenue comparisons in this part of our business were due to the wind down of several wind energy projects that ended in last year's third quarter.

We expect improvement in this area of our business in the second half of this year given recent utility transmission line related awards and our increasing support for power developers who are co-locating data centers with renewable generation assets. To sum up Commercial Energy, the drivers underlying demand for this part of our business remain very strong. The combination of accelerating electricity demand and the need to modernize aging infrastructure is expanding the addressable market across nearly all of our energy offerings.

As these infrastructure investments are unlikely to satisfy the scale and timing of emerging grid needs, demand for cost-effective, community-centric, programmatic solutions such as energy efficiency, demand response, distributed energy resources, and flexible load management programs continues to grow. These are areas where ICF International has significant scale and expertise, and the economics of these solutions are becoming increasingly attractive as power and capacity costs rise. 5 billion of our pipeline at the end of the quarter, good indications of our future growth prospects. Next, I'll move to our state and local portfolio.

9% below the comparable period last year, with disaster management and recovery services continuing to account for about 45% of this client category. ICF International is a recognized leader in the development and implementation of disaster recovery and mitigation programs, and we currently support 75 active disaster recovery projects in 22 states and territories.

Fewer major disasters and funding delays have constrained near-term activity in this arena, but ICF International continues to execute on substantial rebuilding and mitigation projects, which include utilizing our environmental and climate expertise to advise state and local clients on optimal mitigation solutions. We anticipate a direct opportunity for ICF International as states and local governments look to increase their capability and capacity for both response and recovery as well as preemptive disaster mitigation. In February we announced the award of a comprehensive management services contract by the State of Florida.

As expected, that contract is now serving as a platform for new opportunities, including a $4 million funded contract to support the Administration's approach to rural health transformation via state agencies. Also in Florida, we expect to see more opportunities for a state agricultural land preservation program. We support that, which just earned appropriations of 425 million in funding for the 2026-27 program budget year.

Additionally, we recently leveraged our state and local expertise in the disaster management arena to win a contract to provide grants management and compliance services to a commercial client, a Northeast utility, where we will support hundreds of millions of dollars in FEMA funding across multiple hazard mitigation projects designed to improve the utility's grid infrastructure, resilience, and reliability. Energy, environmental, and disaster services have always comprised the majority of our state and local portfolio.

As I mentioned, this year we are actively expanding the offerings we provide to our state and local clients to include health expertise and advanced technology solutions. 3 billion of the total pipeline at the end of the second quarter, and we expect year-on-year revenue growth from this client category in the second half of the year. As we discussed in our last call, our international portfolio is showing exceptional growth. International government revenues increased 35% in the second quarter, reflecting the significant contracts that ICF International has been awarded over the last 18 months by the European Union and UK clients.

Sales continue to be strong across our international portfolio as we've been winning key recompetes and securing net new contracts that support growth for the next few years. Lastly, I'll talk about our work with US federal clients. Our federal business has stabilized. 4% sequentially, in line with our expectations after delivering 8% sequential growth in Q1.

Moving forward, we are expecting Q3 to be another quarter of sequential revenue growth before returning to year-on-year growth in federal revenues in this year's fourth quarter. Procurement activity continues to improve, but award activity remains constrained and varies from agency to agency. Protests of large opportunities are also much more common. Accordingly, we've adapted our go-to-market approach to increasingly focus on rapid prototyping and demonstration of capabilities both on contract and to secure new contracts.

Technology Modernization represents about half of our 185 million in revenues from federal government clients and increased 4% sequentially in the second quarter. Over 80% of ICF International's technology modernization work is performed under outcome-based fixed-price contracts, the preferred contract vehicles for government technology projects.