ICF International, Inc.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 5 November 2026: press release. Guidance figures: 1 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Revenue returned to year-on-year growth: Revenue rose 1.1% to $470.5 million, which management described as the return to year-on-year growth it had anticipated for the second half. Source
• Non-GAAP EPS rose on tax and shares: Non-GAAP diluted EPS was $1.98, up 18.6%. Management cited a 15.0% tax rate, against 22.7% a year earlier, and a lower share count. Source
• Commercial energy fell short of expectations: Commercial energy revenue was below management's expectations. Management cited a sharp drop in contract add-on activity that usually lifts second-half utility work. Source
• Federal revenue rose sequentially: Federal government revenue of $191.3 million was 3.4% above the second quarter and 3.5% below the year-earlier quarter. Source
• Adjusted EBITDA margin expanded: Adjusted EBITDA margin was 11.5%, up 10 basis points. EBITDA was $53.6 million, against $52.8 million a year earlier. Source
• Quarterly operating cash flow rose: Reported operating cash flow was $35.2 million. Excluding restricted cash, which is tied to energy efficiency programs, it was $45.5 million. Source

“ICF is on the path to second half year-on-year revenue growth, and we see positive momentum as we head into 2027.”

John Wasson, chair and chief executive officer

Guidance

What changed from last quarter

• Guidance kept: The midpoint of the 2026 Non-GAAP EPS guidance range was maintained at $7.10. Source

Results and growth drivers

• Revenue returned to year-on-year growth: Revenue rose 1.1% to $470.5 million, which management described as the return to year-on-year growth it had anticipated for the second half. Source
• Non-GAAP EPS rose on tax and shares: Non-GAAP diluted EPS was $1.98, up 18.6%. Management cited a 15.0% tax rate, against 22.7% a year earlier, and a lower share count. Source
• Net income and GAAP EPS higher: Net income was $31.7 million, or $1.76 per diluted share, against $1.28 a year earlier. Source
• Operating income increased: Operating income was $43.6 million, up 13.6% from the prior year quarter. Source

Segments and regions

• Commercial revenue rose 1.5%: Commercial revenue was $158.8 million, or 33.8% of total revenue, and commercial energy made up 88.6% of commercial revenue. Source
• Commercial energy fell short of expectations: Commercial energy revenue was below management's expectations. Management cited a sharp drop in contract add-on activity that usually lifts second-half utility work. Source
• Energy advisory revenue grew: Energy advisory revenue rose 14.1% in the quarter and 10.5% year-to-date, led by grid engineering, transmission and interconnection work. Source
• Federal revenue rose sequentially: Federal government revenue of $191.3 million was 3.4% above the second quarter and 3.5% below the year-earlier quarter. Source
• State and local revenue up 7.6%: State and local government revenue was $87.9 million. Management named energy efficiency programs in the Northeast and California among the growth drivers. Source
• International government revenue up 12.0%: International government revenue was $32.5 million, up 12.0% from the year-earlier quarter. Source

“Additionally, given ICF’s diversified portfolio, we see the midterm election results as a tailwind for our business.”

John Wasson, chair and chief executive officer

Products and customers

• Technology modernization is half of federal work: Technology modernization made up about 50% of federal revenue this quarter, and over 80% of that work is outcome-based, fixed-price. Source
• Federal share of revenue declined: Federal government clients were 40.7% of total revenue, down from 42.6% a year earlier. State and local clients rose to 18.7% of revenue. Source
• Childcare program recompete won: A $77.8 million recompete with a federal health agency covers technical assistance and training for state and territory childcare programs. Source
• Los Angeles County energy work awarded: Two new multiyear work orders with a combined ceiling of $70.9 million support a Southern California regional energy efficiency program. Source
• National security modernization award: Two new contracts worth a combined $55.9 million modernize technology systems for a federal national security agency's personnel security and vetting operations. Source

Costs

• Subcontractor costs fell as share of revenue: Subcontractor and other direct costs were 23.6% of total revenue, down from 24.2% a year earlier. Source
• Corporate costs managed while investing: Management said it is closely managing corporate costs while continuing to invest in technology and professional staff. Source
• Acquired-intangible amortization fell: Amortization of acquired intangibles was $4.2 million in the quarter, against $9.2 million a year earlier. Non-GAAP measures add it back. Source
• Staff realignment severance recorded: Severance and other staff realignment costs were $255 thousand in the quarter, against $359 thousand a year earlier. Source
• Acquisition-related costs small: Acquisition and divestiture-related expenses were $290 thousand in the quarter, mainly third-party costs on potential and closed deals. Source

“We continue to see commercial energy as a long-term growth driver for ICF.”

John Wasson, chair and chief executive officer

Margins and pricing

• Adjusted EBITDA margin expanded: Adjusted EBITDA margin was 11.5%, up 10 basis points. EBITDA was $53.6 million, against $52.8 million a year earlier. Source
• Gross margin up 50 basis points: Gross margin was 38.1%. Management attributed the margin to efficient contract delivery and favorable contract mix. Source
• Fixed-price share of revenue rose: Fixed-price contracts were 50.2% of revenue, up from 48.7%. Fixed-price and time-and-materials contracts together were 94.3%. Source

Cash and shareholder returns

• Quarterly operating cash flow rose: Reported operating cash flow was $35.2 million. Excluding restricted cash, which is tied to energy efficiency programs, it was $45.5 million. Source
• Nine-month operating cash flow higher: Operating cash flow for the first nine months was $131.7 million. Excluding restricted cash, it was $88.7 million, against $30.2 million a year earlier. Source
• Stock repurchases lower year-to-date: Stock repurchases were $33.1 million for the first nine months, against $42.0 million in the same period of 2025. Source
• Debt reduced during the nine months: Debt was $372.1 million at September 30, 2026, down from $401.4 million at December 31, 2025. Source

Demand and the order book

• New business made up most awards: Over 60% of third-quarter contract awards were new business, which management said reflects how its capabilities align with client priorities. Source
• Commercial energy share of awards: Commercial energy represented about 26% of year-to-date contract awards. Source
• Pipeline by client market: Technology modernization pipeline was about $2.4 billion and state and local government about $1.1 billion. Commercial energy pipeline exceeded $1.6 billion. Source

Strategy, investment and people

• Federal portfolio aligned to priorities: Management is aligning the federal portfolio around administration priorities, with more focus on defense and national security. Source
• Hyperscaler advisory work expanding: Work with hyperscalers is expanding to cover energy efficiency, community impacts, power supply and reliability tied to data center development. Source
• Disaster rebuilding and resilience work: ICF continues rebuilding and mitigation projects and has significantly increased its on-call contracts with state and local governments. Source
• Staff energy credited for client work: Management credited the energy and dedication of its people and the company's corporate culture for its commitment to clients. Source

Coming up, as management said on 5 November 2026

• Dividend payable January 8, 2027: A quarterly cash dividend of $0.14 per share was declared, payable January 8, 2027 to holders of record on December 4, 2026. Source
• Utility pipeline building in new areas: Management said it is building pipeline in utility spending areas including audits and weatherization, demand response and virtual power plants. Source

Figures management reported

Risks management discussed

• Regulatory: Political and regulatory pressure on utilities to offer affordable solutions has slowed or shifted incremental spending on some existing utility programs. Source
• Operational: New contracts ramped more slowly than expected, a factor management named alongside the commercial energy shortfall. Source
• Demand: Federal revenue comparisons were affected by 2025 contract cancellations, and new RFPs have been coming at a slower pace. Source
• External: Funding delays and fewer major events have constrained near-term disaster management activity, though management views the market as a long-term growth driver. Source

Earlier plans management reported on

• Met: Management said the quarter demonstrated the return to year-on-year revenue growth it had anticipated for the second half. Source
• On track: Management said federal revenues showed sequential growth in line with its expectations. Source
• Missed: Management said third-quarter commercial energy revenue came in below its expectations. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 results
• Q4 FY2025 results
• Q3 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.