Q2 2026 ICF International Inc Earnings Call Transcript
Key Points
- Non-federal revenues grew 6.6% year-over-year, with commercial energy efficiency and utility program revenues up 6.7% and international government revenues surging 35%.
- Adjusted EBITDA margin expanded by 10 basis points to 11.2%, and non-GAAP EPS rose 12% year-over-year to $1.86.
- The business development pipeline increased 9% sequentially to $9.3 billion, with commercial energy, technology modernization, and disaster management representing 60% of the pipeline.
- Operating cash flow improved significantly to $99.7 million in Q2, up from $52 million in the prior year, and net debt decreased to $403 million from $457 million.
- Management reaffirmed full-year 2026 guidance for revenue and EPS growth, with over 90% of required revenues already in backlog and expectations for sequential revenue growth in Q3 and Q4.
- Total revenue was flat year-over-year at $474.5 million, and federal government revenues declined 9.5% due to contract cancellations in the prior year.
- The book-to-bill ratio for Q2 was 0.85, below 1.0, primarily due to slower federal procurement activity and constrained award decisions.
- State and local government revenues decreased 1.9% year-over-year, impacted by fewer major disasters and funding delays in disaster management.
- Commercial energy growth in Q2 was only 4%, requiring mid-teens growth in the second half to meet full-year targets, which may be challenging.
- Subcontractor and other direct costs increased to 25.6% of revenues, up from 23.6% in the prior year, pressuring gross margins.
Welcome to the second-quarter 2026 ICF earnings conference call. My name is Lauren Cannon and I will be your operator for today's call.
(Operator Instructions) Please be advised that today's conference is being recorded.
I will now turn the call over to Lynn Morgen of AdvisIRy Partners. Lynn, you may begin.
Thank you, Lauren. Good afternoon, everyone, and thank you for joining us to review ICF's second-quarter 2026 performance. With us today from ICF 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 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 August 6, 2026 press release and our SEC filings for discussions of those risks.
In addition, our statements during this
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