Good morning, everyone.
I am Jason Tilchin, Senior Research Analyst at Canaccord Genuity, and it is my pleasure to welcome the team from ICF International, including Anne Choate, President, and Kyle Wiggins, Senior Vice President for Energy, Environment, and Infrastructure Strategy.
Thank you both so much for joining us today.
Thanks for having us.
Absolutely.
I think it may be helpful to start with a bit of overview of the business. Perhaps one for Anne.
Could you just give us a little bit of a brief recap of the history of ICF International, when you guys went public, what services you provide, and who are your primary clients?
Sure. ICF is a consultancy, so we provide technical, technology and professional services. We are roughly $1.9 billion in revenue and about 9,000 employees, and we've been publicly traded on the Nasdaq since 2006.
We serve a very diverse portfolio, which actually makes it hard for people who try to follow us. It's a diverse portfolio of both clients and and geographies and services. I can get into that a little bit more later.
We basically serve commercial clients, state and local clients, international and US federal government clients.
In 2025, just to give you a sense of how that breaks out, in 2025, our revenues from the non-federal clients accounted for about 57% of our total revenues.
In 2026, we said on our recent earnings call that our non-federal work will be about 60% of the portfolio. We expect that part of the portfolio to grow at about 10% per year in the coming years. Of the remaining 40%, that's U.S. federal, approximately half of that is technology modernization, and I can get into that later.
The other half is providing programmatic services, primarily federal civilian clients.
We expect that the federal technology modernization work is going to return to low single-digit growth this year. Then the total federal business, inclusive of the programmatic work to return to growth in 2027.
I bring that up because that's obviously the federal part has been an area of focus.
Getting back to the founding, we were founded in 1969.
At that time, we developed these very deep domain sort of pillars of expertise. Energy was one of them back at the founding of Department of Energy, for instance. Also, the EPA was founded around that same time. We had a very strong pillar in environment and similarly in health. Those continue to be areas where we are exceptionally deep in terms of the expertise.
In the first several years maybe the first 30 years of the company, we were very focused on providing advisory sort of support, strategic advice.
In the last 20 or so years, the focus has been how do you take that advice, support that customer through the early strategic planning and advisory Phases all the way through this continuum and this tail of implementation. T
Here what we've done is we've basically developed this cross-cutting suite of services that include technology monetization, but also large project management, program management, program design and delivery, for instance, in the energy efficiency space. that just gives you some sense of kind of how the nature of the work has evolved over time.
Yeah. That was a terrific.
I think I covered everything.
No, it's a terrific overview, and we'll dive into some of those areas in a bit more detail here in a few minutes.
I just wanted to touch on some leadership changes from last year. If you could just maybe spend a minute or two talking about your new role as president, what you're most excited about, what you're focused on.
Well, John announced that end of last year.
I've been at ICF for 30 years, and so while I know the company really well, the scope of the role has changed dramatically.
Hopefully we're not having A/V system issues. We just had a flash, but you're there.
Mm-hmm
I've been with ICF a long time. By the nature of the work that I did, which was in the area of climate, clean energy, air quality, we always had to work across these various pockets of expertise in ICF. My job over that maybe a 20-year period was connecting these dots across the company, and I feel like the new job, the role as president is really kind of very similar.
Now I have a focus on growth. I love to grow. I think when I was leading EEI, I think one of the most exciting things, the energy environment infrastructure part of the business, was connecting the dots between, for instance, our disaster management business and our energy business and our climate business.
There are a lot of connections there where it allows us to differentiate ourselves above and beyond our competitors. Now I think in the new role, there's a strong focus on returning to growth in federal. Bringing together a particular customer may need expertise from across the firm. I think the fun part for me is connecting those dots and trying to bring all of ICF to a particular agency, a particular customer.
That's something that I'm taking very seriously. It's actually a very exciting part of the job. There's also continued focus on strategy, on M&A, just at a much broader platform. Obviously there's a little bit heavier focus on investor activities, which is why you've got me today.
Yes, absolutely. You just reported Q4 results a few weeks ago. Wrapped up a somewhat challenging year for the company.
Maybe just talk briefly to the headwinds that the federal government business faced last year, how that evolved throughout 2025, and how you expect that to rebound as we move through 2026.
Yes. Well, it was something.
It was definitely a very special year. It was the most challenging year that I have witnessed in any capacity here, and I think in the federal government business.
The rest of the business really was not, you know. It wasn't particularly remarkable.
I mean, we grew. We had the typical sort of experience through last year. Where we really struggled was the uncertainty that was introduced in the beginning of last year. We had to weather some very unprecedented challenges.
When I say that, just for people who aren't familiar, really familiar with federal, in the federal business, our revenues were down about 25%, due to the DOJ-related activities. We had contracts canceled. That's very, very rare for in the federal space, contracts canceled that. Those cancellations happened somewhere between some started in February, some took place as late as May.
There were also a tremendous amount of risks and turnover in terms of our customers, our day-to-day points of contact. And you know and whole civilian you know USAID, for instance went away..
A whole agency disappearing. There were also changes in the procurement regulations and approaches.
At one point it looked like there was going to be a consolidation of GSA, and then that went back. And then there was this 43-day government shutdown. All those things wrapped together, it was very exciting. We experienced rapid change, unprecedented disruptions. I mean, the thing that we are most proud of is how resilient we were.
We had to just hunker down, address the challenges as they came, try not to put too much focus on any one signal because the signals did not lead to a pattern that was actually actionable. We were forecasting as accurately as we could, reducing costs to offset the revenue that we were missing.
We were very proud that we were able to maintain the overall profitability of the business. We reported that at the call, if you think about profitability of the business measured as EBITDA of revenue in the face of the significant revenue challenges, we really got ahead of the cost. We did that very proactively. We did it as a team. We did it as a unified front, and I think that showed a lot of resiliency, but also a strong leadership focus.
Now DOGE is in the rearview mirror. Budgets for 2026 with a few exceptions, are clearer. Procurements are moving more predictably, and the reorganizations that are in the agencies are mostly complete.
We have a much better understanding of the agency, of the administration's priorities within each of the agencies and the opportunities for us and where we want to place our chips for for attention and investment. We still see opportunities, so thinking about sort of where we want to grow, we see opportunities in technology modernization. They continue.
For instance, there's a strong desire to consolidate systems. Consolidating, for instance, grant management systems, that plays to our strengths.
There's a lack of institutional capacity in a lot of these agencies, so our understanding of those grant programs, our understanding of the institutions themselves is actually quite valuable right now.
We also have opportunities to utilize where we have this unique combination of, like, the technology, but we also understand some specific subject matter, so for instance, environmental permitting.
Where you're trying to use technology to streamline, that's a good opportunity for us. As I mentioned, we expect that technology modernization will return to growth this year. That's going to be about 20% of our total revenues, and we think it'll be in low single digits in 2026.
All in, talking about the federal business still if you think about both the technology modernization and the programmatic support, we're expecting to show consecutive quarter growth from Q1 to Q3.
I mention that 'cause we have a very difficult comp in the first part of the year, so we're trying to show consecutive growth and then year-over-year growth in Q4 of 2026.
Perfect. Yeah, it's a great overview of sort of what took place and obviously, moving past it. And the other thing that sort of was really notable from the earnings call, at least in my opinion, was the bright spot that was your commercial energy business last year, which I know is near and dear to your heart, to both of you actually. Revenue was up 24% for that part of the business, in 2025.
Maybe you could just first start with the momentum that you're seeing with utility clients. What's the type of project that you typically work with, in that segment, and how sustainable, no pun intended, is that part of the business, the growth you're seeing going forward?
I was going to ask David to respond to that.
Sure. Well, certainly, as you say, that part of the business has been very strong for us.
We expect at least 10% organic growth in the commercial energy business going forward. Of that business, roughly 80% is in utility programs, and those programs being energy efficiency, demand response, flexible load management, electrification, battery storage, all programs that are designed to meet the increasing load that's put on the system generally.
Collectively, those markets have an addressable market of maybe $3 to 5 billion a year, and it's growing at a high single-digit % rate. We're growing faster than our competitors in that, growing faster than the market because we've been able to take share from our competitors pretty aggressively over the past few years.
We think we're going to be able to continue to do that going forward, hence the 10% growth projection in that part of the business. Our commercial energy advisory business is also growing double digits and really benefits from the strong increase in demand on the system, really with a focus on reliability as well as affordability and the interconnection of new AI data centers and other large loads.
Again, that portion of the business is projected to grow at least 10%. It's got an addressable market of perhaps $0.6-$0.8 billion a year. We're also investing in adjacent markets to that business. Most of those markets have a stronger engineering focus on things like large load engineering, grid modernization.
While currently small, that business is another significant potential growth area, and that's one of the areas that we imagine deploying our balance sheet going forward.
Perfect. There's two natural follow-ups to that.
One is, you mentioned the advisory side as being a particularly strong growth area. What are some of the things that you've done as a company over the past few years, either internally or through acquisition to sort of strengthen your capabilities in that area?
W e certainly deployed our balance sheet in that area in recent years to undertake several tuck-in acquisitions that really added key skills and capabilities in response to those attractive areas. In 2023, we acquired CMY, which added about 40 engineers that really expanded our capabilities in distribution system engineering, interconnection of distributed energy assets, grid resilience, and again, some of that data center integration work.
At the beginning of 2025, we acquired AEG from Ameresco, which brought significant data and analytics and technology capabilities to expand our advisory business.
We've been really pleased with the ability of that former AEG team to both bring in new clients and expand large implementation opportunities that are a natural outgrowth of much of the advisory work that we do, and also to introduce additional energy engineering software analytics tools.
You also, you mentioned data centers, and that's been a very hot topic these days. You really can't have any sort of conversation without them coming up.
Obviously growing in importance with the AI infrastructure build-outs that's taking place. Maybe you could just talk to some of the different ways that you, as you just said, you're already and that you maybe will be participating in this opportunity going forward.
Sure. Well, we're certainly very active in that market already with utilities, with developers, with government, and with hyperscalers, including Google and Meta and AWS, to name a few. We work with those clients in really five primary ways. We offer planning services, which is focused on evaluating site alternatives based on power and fiber availability, infrastructure readiness, and permitting considerations.
We're also advising on where data center load growth creates the strongest opportunities for generators of electricity, and we're assisting hyperscalers with workforce availability assessments. Second area that we support is construction, and we do that primarily with environmental permitting and due diligence services. We provide grid engineering and analytics services, as I mentioned previously, really to enable new data center connections.
Our engineering teams are performing substation design for data centers, both for the data centers themselves as well as the utilities extending service to them. The fourth area is engaging with stakeholders. We're working with a hyperscaler on community-focused outreach and collaboration with the utility to develop energy efficiency programs for low-income households near data centers.
We're also working with utilities to engage data centers in their existing energy efficiency and demand response programs. Finally, we advise governments on the economic rate and community impacts of data centers, including folks like Loudoun County, Data Center Alley, and other state and local governments that are focused on managing the impact of data centers both on the grid as well as on the community.
We focus less on the physical construction and the risks associated with that, but those are the services we're certainly very active in.
Right. As we think about sort of the different levers potentially driving growth over the next few years and even maybe the upside potential, what area out of those five maybe do you see the most opportunity for you guys, in terms of differentiating versus competitors and taking further share?
I think part of our we're certainly differentiated, we think, in all of those, quite frankly. Perhaps the key is that we provide integrated suite of services and a journey between and amongst them. We start at the very beginning of the value chain of where a data center might be sited. We are unique in our ability to work across stakeholders.
The fact that we work with state and local government, we work with local communities, we work with the data centers, we understand where that infrastructure is. We can get in early on that. Our ability to help them through the construction Phase, through the environmental work, to engage those communities, to reduce consumption at those facilities with our energy efficiency and demand response programs.
Certainly one of the differentiators is the ability to stick with a single vendor throughout that continuum.
All right.
I was just going to add. I don't know if you can hear me, Jason.
Oh, go ahead.
I was just going to add to that. There is this strong convening potential that we have, and we've already it's already played out here with a number of the you know state regulators, the Metropolitan Washington Council of Governments, the Loudoun County representatives, the Data Center Coalition, where we have a trusted name, they understand our areas of expertise, and we can bring those people in a room and have a very different conversation than most. Could convene. Then that puts you in a position to provide better advice.
Absolutely.
Through that.
this is obviously just one area that this AI theme is touching your business. Last year you launched Fathom, which is sort of a suite of AI solutions designed for federal agencies.
Can you just talk to some of the conversations you've had with those customers since that launched, and just more broadly, how that's the AI theme and build out is sort of impacting your tech modernization practice?
Sure. The most valuable outcome of having Fathom within ICF is that we can do rapid prototyping. When you have customers or in these federal agencies who are under the gun from a time standpoint, who may be crunched because they don't have enough procurement officials available to to send out lengthy typical government procurements, which will often have like an 18- to 36-month time horizon, these people need to get stuff done. As I mentioned, they're limited in terms of institutional capacity, they're often limited in terms of procurement officials.
Our ability to have a contract be under contract, walk in the door, hear their challenge, or understand their needs, and then walk away, do a rapid prototype like in 48 hours or less, and come back and show them how we can solve that problem, it's not a full solution, but you have a prototype that allows the customer to see, "M y God, if you could do that that in two days, then you really could solve my problem."
That's been really, really valuable. I don't think we realized at the time how valuable it would be. But it's also an opportunity for us to differentiate ourselves in that early stage 'cause it's not just about stitching together. There's a lot of AI.
There are many, many AI tools out there, and many of them can do a lot of things. Unless you know the right questions to ask, unless you know the right datasets to pull on, unless you understand, really understand the root of the need it's impressive, but it's impressive kind of without the substance. These prototypes have allowed us to kinda show that, to show that differentiation, and so that's been great.
I think agentic AI coding tools, regardless of whether we deploy them in our internal Fathom environment or whether they're elsewhere, they speed up development for sure. They don't satisfy the full sort of federal technology modernization need.
When I say that, what I mean is that the programs themselves that the agencies have to administer by regulation, they're shaped by statute, they have regulations. There are. There's a certain amount of mission detail and orientation that's needed, and there's agency-specific norms that basically need to be followed. The nice thing for us is that we are experienced in these agencies.
We are experienced in sort of where those guardrails are, in civilian especially with some of these civilian agencies. Unlike some of the commercial software, the federal systems don't usually follow this sort of clean, repeatable pattern.
You need some judgment that's required along the way, and that's what we're trying to demonstrate with some of these prototypes, whether we end up deploying in Fathom or elsewhere.
The portfolio of work that we do in technology modernization is, I think many folks who have followed us for a while know it's differentiated and it's distinct from what you think of as more sort of commoditized O&M for technology systems. Our focus, as I mentioned earlier, is on this cross-system orchestration. There are AI agents and tools popping up everywhere within these agencies.
Some are coming in the program side, some are coming through the CIO, and so we're trying to figure out how we can continue to basically be the trusted advisor as the agencies try to navigate this plethora now of activity.
Many of them kind of organically sprouting, but without sort of a you know a cohesive sort of system-wide view, and so we think we can bring that. In fact, if anything we talk about how AI can reduce complexity, but right now because of the complexity of the systems and the plethora of activity, it's actually more complicated than usual. The landscape is very, very crowded.
Okay.
So.
That's very helpful, and obviously it's a rapidly evolving space, so that'll.
Yeah.
Continue to sort of change how you guys are working with that. We're a little bit low on time. There's sort of two quick things I wanted to touch on. One is back on the energy topic, and it's nuclear. It's seen sort of a resurgence in popularity over the past few years. Just wondering if you could just talk to some of the types of projects that you're working on in this space and how big of an opportunity you see there.
Do you want me to go or you?
Certainly nuclear has become a big topic. One of the things that we're certainly doing is helping create understanding of what the commercial viability, what the timeline, what the likely cost profile is nuclear going to be, and then integrating it with the overall system planning of the energy system.
Make sure that there is a system that can quickly compare renewables and solar and wind, as well as traditional generation with nuclear and determine an expansion path and its impact on climate, on affordability, and on reliability in new ways. We've come out with new software tools and processes that can help enable that.
We're also looking at the relicensing of nuclear plants, everything from the nature of that facility to reconductoring of transmission that may be necessary to come out and get that to the grid. There's a broad set of, we think, nuclear opportunities that really are driven by the rapid increase in demand.
Perfect. We're essentially out of time here, but maybe just to wrap up with one last question. If you could each share just what you think is the single most important thing about ICF that you'd like investors to take away from our conversation today.
Well for me, I think the strength of the energy business certainly can't be overlooked, and the breadth of our capabilities and the fact that we serve all of the players in that market, whether it's utilities, whether it's developers, whether it's providers of transmission, as well as the customer and the ability to address the affordability issues. The strength of that market and our unique position across all the stakeholders, I think is powerful.
Yeah. Just building on that we say that we're going to return to growth in 2026 with a 3% revenue growth and 5% non-GAAP EPS at the midpoint of the guidance. That's a 10% swing from last year, and I think that that's, you know. I hope people see that.
Perfect. Only sort of building on that, exiting the year and going to a sort of a cleaner comp on the in 2027. Absolutely very exciting times. Really appreciate you both taking the time to join us today for this discussion and looking forward to speaking again soon.
Thank you. Thanks so much.
Perfect