ICF International (ICFI) reported Q2 EPS of $1.33, in-line with the analyst estimate of $1.33. Revenue for the quarter came in at $423.1 million versus the consensus estimate of $431.13 million.
Summary and Outlook:
"Our first half results have put us on track for substantial growth in fiscal 2022. Additionally, we completed the acquisition of SemanticBits in mid-July, which broadens ICF's digital modernization capabilities and significantly expands our addressable market. As one of the industry's leading digital service and platform providers using open-source, SemanticBits adds to our rapidly growing capabilities in this arena, enabling us to support larger projects across federal civilian agencies and providing ICF entrée at scale to the Centers for Medicare & Medicaid Services (CMS).
"We have raised our full year 2022 guidance to reflect the SemanticBits acquisition and now expect service revenue to range from $1.275 billion to $1.325 billion, implying total revenue of $1.760 billion to $1.820 billion, and representing year-on-year service revenue growth of 17% at the midpoint of guidance. Adjusted EBITDA is anticipated at $186 million to $198 million, equivalent to an adjusted EBITDA margin on service revenue of 14.8% at the midpoint. Approximately one-half of the 90-basis point increase from our prior adjusted EBITA margin guidance represents the acquisition of SemanticBits, with the remainder related to a pushout of planned corporate investments. Our GAAP EPS range remains the same at $4.15 to $4.45 exclusive of year-to-date special charges amounting to $0.19 per share on a tax-effected basis, which primarily were M&A-related. The GAAP EPS guidance range incorporates the impact of non-cash rent abatement charges associated with our new headquarters totaling $7.6 million, or $0.30 per share. Non-GAAP EPS is expected to range from $5.50 to $5.80, which at the midpoint represents a year-on-year increase of 17.2%. Operating cash flow is expected to increase to $140 million in 2022.
"Over 70% of ICF's year-to-date service revenue was derived from our key growth areas of IT modernization/digital transformation, public health, disaster management and utility consulting, as well as climate, environment and infrastructure, where we continue to anticipate strong, long-term demand. These areas also contribute to ICF's positive impact on society and have enabled us to retain and attract like-minded people who are passionate about their work, as well as enhance our profile as a preferred acquiror of firms with similar cultures," Mr. Wasson concluded.
1 Non-GAAP EPS, Service Revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Margin on Service Revenue are non-GAAP measurements. A reconciliation of all non-GAAP measurements to the most applicable GAAP number is set forth below. Special charges are items that were included within our consolidated statements of comprehensive income but are not indicative of ongoing performance and have been presented net of applicable U.S. GAAP taxes. The presentation of non-GAAP measurements may not be comparable to other similarly titled measures used by other companies.
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