Good afternoon, and welcome to the ICF conference call to discuss the definitive agreement to acquire SemanticBits. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on a touchtone phone. To withdraw your question, please press Star then two. Please note that this conference is being recorded on Wednesday, June 8, 2022, and cannot be reproduced or rebroadcast without permission from the company. I would now like to turn the conference over to Lynn Morgen of AdvisIRy Partners. Please go ahead. Thank you, operator. Good afternoon, everyone, and thank you for joining us to discuss today's announcement that ICF has reached a definitive agreement to acquire SemanticBits. Today's call will be hosted by John Wasson, Chairman and CEO, who will be joined by James Morgan, Chief of Business Operations, Mark Lee, EVP and Group Lead, Public Sector, and Barry Broadus, CFO. As noted in our release, this live webcast includes supplemental slides that we will refer to during our remarks. These slides are also posted on the ICF website at icf.com. During this conference call, we will be making 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 June 8, 2022 press release and our SEC filings for a discussion of those risks. In addition, our statements during this call are based on our reviews 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. In addition, and as a reminder, we may be limited in discussing certain aspects of this transaction until after closing. I will now turn the call over to ICF's CEO, John Wasson. John? Well, thank you, Lynn, and good afternoon, everyone. Thank you for joining us on short notice to discuss our definitive agreement to acquire SemanticBits, which we announced after the market closed today. This transaction is fully aligned with our strategy of building out ICF capabilities in high-growth markets and complementing our high single-digit organic growth with acquisitions that provide significant opportunities for revenue synergies. Moving to slide 3, you can see a snapshot of SemanticBits, a 450-person firm that provides open source IT solutions at scale, primarily to the Centers for Medicare and Medicaid Services, or CMS. SemanticBits has an excellent reputation, and its technologists and practitioners bring demonstrated success with large federal health IT projects and expertise across 30 technology platforms. Their fully agile and open source approach complements ICF's deep federal health domain expertise and digital modernization capabilities, builds out our health IT and analytics capabilities, and brings the run rate of our digital modernization business to almost $500 million, further reinforcing our leading position as a provider of these services to civilian agencies. SemanticBits is on track to generate revenues of approximately $135 million this year, and we expect to close the transaction in mid-July. Approximately $115 million of that revenue is expected to be recurring in 2023, reflecting the completion of several small business contracts this year and next. SemanticBits has a track record of double-digit revenue growth and is expected to generate EBITDA margins in the high teens as part of ICF. As you can see on the left of this slide, over 90% of SemanticBits' revenue has been derived from the Centers for Medicare & Medicaid Services, again, known as CMS. In the bottom right, you can see some of the domain areas they're focused in. These are all areas of significant growth in spending at CMS and NIH and complement our existing capabilities very well. Slide 4 highlights our strategic thinking in moving forward with this transaction. First, SemanticBits is a well-regarded service provider to the Department of Health and Human Services, which is our largest client, representing 20% of ICF's total revenues prior to this acquisition. Second, with the vast majority of its revenues derived from the CMS, SemanticBits opens up a large new addressable market for us, giving ICF scale at CMS, an agency with substantial and growing budgets. Third, we will be able to leverage their large open source project experience to serve customers both within HHS and beyond. We are seeing a lot of large open source opportunities across our civilian space, and adding SemanticBits makes those much more winnable for us. Fourth and fifth, we are acquiring a leader that is adept in all areas of advanced technology required to support the overhaul and maintenance of legacy systems and a team of exceptionally talented technology experts. Slide 5 details a number of the initial growth opportunities we see for ICF at CMS. CMS spends a great deal every year on exactly the types of services we provide, and their spending will continue to grow in line with the need to reduce the healthcare costs of an aging population. We have narrowed our focus to four of the organizations that are part of CMS, shown on the left side of this slide, which have profiles most similar to those agencies we have served successfully for many years. Notably, their needs align with our strategy of providing differentiated services versus the more commoditized services required in other parts of the agency. With the work that our recent ITG and ESAC acquisitions have brought us, we already have a footprint in OIT and CCSQ. SemanticBits will add significantly to the open source component and will give us access to the other two other target organizations, namely CPI and OC. On the right, we show overall CMS spending across the five professional service contract vehicles we have identified as highly relevant to these four organizations. We currently hold three of these, indicated with asterisks, and have subcontractor positions on the other two. The average deal size at CMS is larger than most of our other clients, so it's attractive from that perspective as well. Importantly, both the strategic and cultural fit are excellent here. On slide 6 is a quick look at their talent base. SemanticBits has long operated under a mission-driven culture, and we look forward to welcoming them to a comparable cultural environment at ICF. At our recent Investor Day 2 weeks ago, we stressed the importance of our culture. It defines the way we do things at ICF, and it's the glue that binds us. It captures the animating energy of ICF, including our passion and mission orientation, our willingness to collaborate, and the diversity of skills and viewpoints that we can bring to solve complex problems. We see the same elements at SemanticBits, which is why their owners sought out ICF when they were contemplating the sale of the company. Now, to review the financial details on slide 7. The $220 million purchase price will be funded by our existing credit facility, which was recently expanded. We expect ICF's net leverage ratio post-transaction to be approximately 3.55, which we expect to lower by approximately 40 basis points by 2022 year-end, absent any additional acquisitions this year. When we release our second quarter results on August 3, we will revise our full year guidance to reflect the SemanticBits contribution. To sum up on slide 8, SemanticBits checks all the boxes for us. We show the left side of this slide at our Investor Day to provide additional insight into our M&A criteria. The SemanticBits transaction expands our addressable market by providing access to CMS, strengthens both our technical and domain expertise, is a mission-driven client-centric organization with great client relationships, and will be immediately accretive to our EPS. We look forward to closing this transaction and bringing our new SemanticBits colleagues on board in the near future. With that, operator, my colleagues and I would like to open the call for questions. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Tobey Sommer with Truist Securities. Please go ahead. Hey, good afternoon. This is actually Jasper Bibb for Toby. Thanks for taking my questions. I just wanted to start with how you're thinking about the revenue synergy opportunity here. You know, why has SemanticBits been so concentrated with CMS historically? How do you think, you know, bringing them onto the ICF platform would help them diversify that customer base? I'll ask Mark Lee, who leads our public service practice and manages our IT modernization business to take that question first. Mark? Yeah, sure. I think there's two parts of that, synergies being one, and then second, how we might be able to leverage ICF to bring them into more markets. I think for the first one, you know, I think that the synergies there are really about the past performance that they bring us for the large, you know, modernization tasks, which increasingly have a large, open source component. Marries really well with our low code expertise, which I think is, you know, most of the big deals going forward are gonna be, you know, some blend of those likely, and I think they really help in terms of synergy sales there. I think in terms of bringing them into our markets, that's actually the easy part. That, you know, their capabilities are really, leading, you know, leading edge and, you know, there are some that are specific to health and CMS, but a lot of them aren't, and very easily extendable to our other, public sector clients, particularly in, the civilian space. I think, you know, we're already seeing these kinds of jobs, and what this brings us really is some larger past performance examples that'll really help differentiate us on those bids. Thanks. Just wanted to ask about the small business exposure. Are you expecting that headwind from small business or set-aside programs to be complete in 2023 with revenue declining to $115 million? Or would there potentially still be more work coming out in future years? Yeah, I think that, you know, as you know, our last several deals, ITG, Creative, and now SemanticBits, have included small business revenues. I think we have a pretty clear and effective playbook we've followed to manage the transition of small business revenues, you know, by looking for full and open contracts to move those revenues. If we're not able to do that, look at means to, you know, sub or have joint ventures of small businesses, with small businesses. You know, given that playbook and our experience with it, we think we've really ring-fenced what the, you know, potential reduction in revenues is here from 2022-2023, you know, using the same approach we have on our last couple of acquisitions. I think, you know, I think we think we've ring-fenced the risk and fully captured it here. We would expect, as we say, the revenues to come down in 2023, but then thereafter, you know, we would return to growth and we would expect significant growth in this market. I think, as you know, we've had quite robust, you know, double-digit growth in IT modernization. I think we're confident in the long run we'll achieve that with SemanticBits. They've certainly been a growth company, and this has been a growth market for ICF. No, that makes sense. Maybe following up on that, could you just comment on the backlog metrics for Semantic and their recompete profile in the next few years? How did that inform your thinking on the acquisition? I think that I'll start, and then I'll ask Mark Lee to add any comments. I mean, I think they're obviously in the federal market. I think they, like ICF, have a significant backlog. They start each year with strong visibility on their backlog. They've been very successful in growing this business. I think to have had high win rates and have been very successful on recompetes. I think all those metrics are strong. Mark, I don't know if you wanna add any more color or specifics on that. No, I think you summed it up pretty well. Okay. Last one for me. Could you maybe give us a bit more context on how this deal came about? Is this a company that you partnered with in the past? Was this an auction process, or did the management team from Semantic come directly to you? Mark, do you wanna comment on that? Yeah, sure. Thanks, John. Yeah. We had run across them a number of times out in the market and had been really impressed by, you know, the quality of their capabilities. You know, we started talking with the owner probably, maybe almost a year ago and just started getting to know them more. The more we got to know, the more we liked them. You know, we entered into a proprietary process, and that got us to where we are today. This wasn't an auction. It was very purposeful on both sides. I think, you know, talking to, you know, the primary owner, Ram, I think he was really looking for a really good cultural fit and a really good growth platform for his people and felt really comfortable with ICF. Obviously, we were really excited about, you know, the staff that they have and the capabilities and the clients. I think it really seemed like a great match. Okay. Yeah. Appreciate the detail. Thanks for taking the questions, guys. As a reminder, if you have a question, please press star, then one to be joined into the queue. The next question comes from Marc Riddick with Sidoti. Please go ahead. Hi, good afternoon. Hey, Marc. A lot of the general questions are covered. I was sorta curious as to the capacity. You made mention in the slides as far as financials and sort of plans as far as debt repayment, paying down through the remainder of the year. Really appreciate that type of color. Can you talk a little bit about where this puts you as to further acquisition capacity for the near term? Well, sure. I'll say a few words, and I'll ask Barry Broadus to add. I think as we said in our conference call remarks, you know, this will take us up to a net leverage ratio of about 3.55. You know, I think as we've discussed, you know, over the years, ICF's generally been in the range of, you know, 2 to 3.5, 3.75. In all the years, we've levered up and then, you know, paid down the debt quickly with our very strong cash flow. You know, I would say at this point, you know, we generally are comfortable in the range of, you know, 2.5 to high threes. I certainly don't see us, you know, going above a 4 leverage ratio, as a general rule. You know, I think you know, obviously, this is a significant and highly strategic acquisition for us. We'll be quite focused on integration here, certainly in the next year. You know, I think if we were to do anything on the acquisition front, it would be small tuck-in acquisitions. You know, I think we'll be focused on integration here for the next year. Barry, I don't know if there's anything else you'd wanna add on that front. Yeah. Yeah. Thanks, John. Hi, Marc. You know, if you- Hey there. If you look at the capacity, you know, we'll still have plenty of room, you know, for other acquisitions. If you take into account the leverage position that John had mentioned, as well as, you know, some holdbacks that we like to have for working capital needs, you know, we're still in that, you know, $200 million-plus range. We've got plenty of capacity with those two governors in place. You know, we certainly have room, you know, to do the things that we'd like to do from an acquisition perspective. I know it's only been a couple of weeks, but maybe you could sort of for those who maybe didn't, you know, who weren't at the Investor Day or had heard it, could you talk a little bit about sort of how you're viewing the overall acquisition pipeline and sort of what the opportunity set looks like for you overall? Well, you know, I think as we've discussed at our Investor Day, you know, we have our five key growth drivers. I think generally, you know, from an acquisitions perspective, we're focused on those five key markets. I would say the priorities, you know, certainly have been IT modernization. I think this deal. With this deal, we have the core of all the capability we need on the digital transformation and IT modernization front across the low-code and no-code platforms and the open source platforms and across the full suite of key civilian clients. I mean, we're really, really pleased this acquisition kinda adds significant scale on the open source side and really pleased it puts us on the map at scale at CMS. This is a terrific acquisition for us. I think in addition to that, I would say as we talked about on Investor Day, you know, the broader public health and health markets remain a priority and energy markets remain a priority. I would say those are the three priorities. You know, as you imply, we do keep a pipeline of potential acquisitions. You know, I think we'll certainly stay out on the market looking at opportunities. This is obviously a significant acquisition for us. We're certainly gonna make sure we do a great job of integrating, you know, the top-notch talent and the terrific capabilities within SemanticBits. Okay, great. I appreciate the color. Congratulations, John. Yep. Okay. This concludes our question and answer session. I would now like to turn the conference back over to the management for any closing remarks. Well, thank you for joining us today. We look forward to speaking with you, at our second quarter earnings call in early August and at our upcoming investor events. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.