Okay, good morning, everyone. It's now 9:15 here on the East Coast, and we're ready to begin our next session. My name is Marc Riddick. I'm a senior analyst with Sidoti & Company, and I thank you for joining the Sidoti-Gues Maltcap Virtual Conference. Now, our next company is ICF International, ticker is ICFI. Joining us today is Anne Choate, Executive Vice President, who leads the Energy, Environment, and Infrastructure Group, and Barry Broadus, Chief Financial Officer. Our time together will be in a fireside chat format. Before we begin, just a reminder, feel free to click on the Q&A button at the bottom of your screen if you'd like to submit a question. There's no need to wait until the end. You're able to do so at any point during our time together today. With that, we can get started. First of all, good morning, and thank you for joining us. Thanks, Marc. Good morning. Appreciate you having us today. Why don't we start, for those that are new to the story, maybe if we can start with the brief profile of ICF International. Sure. I'll take that. I'll try to do that. So ICF is a global solutions and technology provider. We've been in business since 1969. We went public in 2006, and we have been providing primarily consulting and advisory services, and then solutions, and over time expanded into program implementation and large-scale program management with focus in the energy space. Our implementation business started in the energy space and then has over time expanded into other areas as well, including technology, digital engagement, and more recently, IT modernization, which we can talk about more later. Over the past five years, although this is more Barry will get into this more, but our revenue CAGR has been up 6.4%, and we've had a 12.4% increase in non-GAAP five-year EPS CAGR. That growth has been influenced by a very diverse portfolio and a growing and a strong portfolio of clients across a range of sectors, which, again, we can get into, and then a very strong culture at ICF. I speak to that having been here 30 years. Excellent. Can we talk a little bit about or maybe provide an update as to what you're seeing with your non-federal government business as well as your expectations for performance this year? Sure. As I said, we serve a diversified client portfolio. About half of our revenues are working with commercial clients, mainly energy utilities, state and local clients, and international government clients. That business has been growing really well. That is largely what I'm responsible for. In aggregate, we expect that those businesses are going to be up about 15%. Excellent. The. In terms of some of the. I'm sorry, go ahead. No, I was just going to say some of the things that are sort of driving that trajectory are at the core of our utility business is energy efficiency programs. The nature of those energy efficiency programs, if any of you have been following us for a long time, the nature of those programs has been evolving over time. The needs have been evolving, the needs on the part of the utilities. We've long been a leader on the residential energy efficiency side, but increasingly, we've had expansion of those kinds of programs into more, we've been calling non-traditional programs like electrification, flexible load management, marketing, and customer insights, and then more into the commercial industrial space. That has been helping to expand that portfolio of work. Okay. Excellent. Maybe we could spend some time if you could discuss what you're seeing from clients regarding renewable energy and climate-related services, particularly as we're looking at the potential of shifting from federal to state and local level needs. Yeah. So it's obviously a very exciting time in the energy space. Energy, I think, is getting a lot of attention right now. I think it's, to some extent, in the renewable arena, but in general, the focus on what will energy demand growth look like over the next 10 to 20 to 30 years. It's a hot topic. I think that there are a lot of projections out there. No matter who you ask, I think there is certainty that you're going to see faster growth in energy demand in the United States than we've been seeing over the last several decades, considerably higher, and both its demand sort of in general, but also demand during peak hours. That, obviously, has driven a lot of conversation. The need for renewable energy and the response in the industry, I think, has been somewhat impacted by uncertainty related to IRA and tax incentives. That said, the need for energy right now is so pressing, and it's a near-term need, which a lot of the renewables that were already in the queue that are already sort of, and I mean the literal and the figurative queue, those renewable energy resources are closer to implementation. Many of those are moving forward. I think where we're continuing to see interest is in renewable energy projects that have where they're cost-effective with or without the incentives. I think that in some cases, some that are on the bubble, that's where you're seeing the stall, where people are really waiting to see how long, how deeply will the tax incentives change. We're following that very closely. Our business, actually, we do a lot of advisory work supporting developers and supporting investors who are thinking about those kinds of projects. I think the nature of the projects has expanded to include some more fossil-oriented projects. The pace, I think, has just been impacted by the uncertainty. As I said, we still see a lot of them moving forward, partly because they're more realistic near-term opportunity for energy expansion. Great. One of the areas certainly in the headlines as far as day-to-day uncertainty is around the current budget proposals. Maybe you could talk a little bit if you have any areas of concern related to maybe potential curtailments related to the IRA or anything within the current proposal. I think that for us, the energy advisory portion of our business is relatively small compared to the work that we do for energy utilities designing and implementing these energy efficiency and energy management programs. The trajectory, while it is, for instance, I think we all saw M&A activity die down in the first quarter of this year, but we've seen it pick back up. I think it's those kinds of trends that the energy advisory business has to follow. That said, the demand for electricity and the pressure between the data center, large load demand, the crypto demand, and this move to electrification, and in some parts of the country, a real focus on decarbonization, all of those things are driving electricity demand and therefore driving the need for the kinds of services that we do. Whether it's planning or strategic planning, integrated resource planning, optimization of a suite of both hard assets, but also behavioral solutions to manage demand, especially during peaks, that sort of plays to our sweet spot. I think that's where we're very focused. I think that in terms of how the tax credits play out, that will help us to sort out which developers, which projects are going to move faster. For instance, offshore wind, that has been an area where we've seen slope to almost to a stall as compared to some of the other areas where we see continued movement, especially where those projects are profitable either way. Excellent. Excellent. Again, as a reminder, folks, if you would like to submit a question, just click on the Q&A button at the bottom of your screen. We'll be addressing some questions from the audience toward the end of our time together. Certainly, the last couple of days, FEMA has been in the headlines. Maybe you could talk a little bit about your thoughts and views and maybe an update on disaster recovery activity and what you're seeing on the state and local level. Yes. If I had a crystal ball and I knew, I would tell you. For sure, the work that we do in disaster management is definitely the funding for that work is coming from the federal government. A lot of that funding comes through HUD, the Housing and Urban Development, and a lot of that funding can come through FEMA. The allocations are given to the states or the territories or the local governments who then implement the programs. Where we work in disaster management, we continue to see it as a growth area. We expect to see more RFPs this year coming out as a result of some of the, there's a lag. You'd see a storm happen in somewhere like Georgia or North Carolina. Those RFPs do not actually hit the streets till almost a year later for the real large work and the implementation of those recovery programs. This is the time when you are starting to see those hit the street. If you have another large season, obviously, there is another one-year lag. We expect that even though they are planning to make a significant change to how disaster funds are allocated, it is pretty clear that the federal government is interested in moving a lot of that responsibility from the federal government to the states, which that trend appears to be clear. Timing, I think specifics are not clear. For us, that is not necessarily a bad thing. One of our differentiators has been that we have run some of the largest disaster recovery programs in the nation's history. Katrina in Louisiana, Maria in Puerto Rico, Sandy in New Jersey. That sets us up pretty well from a reputational standpoint. I think that reputation and that ability to manage those funds in a compliant way, I think that has always been a strength of ICF. We'll continue to do that. I think that the close relationships and reputational trust that we've built in some of these areas that are most likely to be hit by disasters, I think that serves us well as these states and local governments issue RFPs. If we see this move from federal to states, I think our role becomes that much more critical because we have the infrastructure in place to be able to run these programs at scale with a high level of fidelity. We're proud of that. Yeah. I think that's an important point that if the federal government goes through with some of the things that have been talked about where they really decentralize the FEMA role and push the responsibility more out to the states where the federal government would still fund the disaster recovery, I mean, that really would, we would respond very well with that because we can go out to the states, help the states manage their way through these disasters. I think that would create a good amount of opportunity for the company. Either way, we're in a really good position based on the things that Anne had talked about. Excellent. Excellent. Approximately half of the trailing 12 revenue is to US federal government. Maybe you could talk a little bit about as far as the type of impact that you've seen so far with spending curtailments, what type of impact you have there and how much timing is always uncertainty. Maybe you could talk a little bit about the revenue losses that you're seeing and how much of that is sort of already in the rearview mirror and what may be ahead of you. Sure. You can feel free to correct me. Through May 1, we lost about $115 million in revenues, so 2025 revenues as a result of contract terminations or stop work orders that then led to terminations. That is about 50%, a little over 50% of that was represented by our work for USAID doing international health-type work. It is too soon to say that the risk is completely behind us. Again, the crystal ball would be useful. We have seen a slowdown in that kind of activity. That obviously is something that we were looking for. We wanted to see sort of when it would start to level out. At the same time, we have seen a pickup in some funding modifications. I am sure for people on the phone, it is hard to imagine this, but basically, you are trying to feel the vibrations, right? You're trying to understand, okay, this wave has come through. Now, how should we expect that the government is going to move forward? And each of these agencies, obviously, in some agencies, they have not even put the agency heads have not been put in place. For instance, in Department of Transportation and in some of the others, you have individual modal agencies that still haven't approved their administrators. You can imagine that each agency is on its own temporal path, and we're trying to track each of them individually. With that said, we are seeing contract modifications, and we're seeing some re-compete procurements come back to the fore that had been stalled or where we hadn't heard much, and all of a sudden, they've come back in. We can sort of see them back on a procurement forecast. We are not yet seeing a lot of net new opportunities. I think that, again, goes back to these agencies still trying to sort of reshape what is it that the administrator and the new leadership is really looking for and how does that match up with their procurement plans. We are waiting and watching for that. We have had direct meetings with clients and/or with DOGE employees, particularly in the technology area and specifically on some projects where we've had to demonstrate our ability to do the work, whether it's some sort of technology project. We've passed the requisite reviews for that, which has been great. Those meetings with the politicals, the DOGE, and the program staff, it's critical. Those all three are important right now. They've included discussions of agency mission, administration priorities, and ways that we can turn our skill sets into sort of the kinds of services that they need. We have seen some task orders that were discontinued or terminated actually get turned back on. You are just trying to read the signs. Sometimes they come back on under the same agency and the same vehicle, and sometimes they might come back on under a different agency or a different vehicle. I think that is the kind of tracking that we are doing. We are seeing procurements. We have seen some continuation of new procurements. I said there are not a lot of new opportunities, but we have seen new procurements disappear and then show back up on the list for future procurements. That is also a sign that we are following. I would say just as an add-on to that, so we really step back and think about the impact of various executive orders or actions by DOGE since January 20th. It's really focused in two areas. One is our USAID work, which Anne mentioned, as well as key program here and there. One would be, for example, Energy Star. So we've had bits and pieces of different programs that have been affected. I would say that outside of those two main customer sets, it's just been, like I said, relatively small. We have seen the activity, which was a bit of a flurry right around after the inauguration in the first couple of waves where DOGE was really involved with not just us, but a great many number of companies in our industry. Things have settled down quite a bit. We're starting to see some activities as the agency heads have settled into their roles. I guess, for lack of a better term, really understand what the agency's goals, missions are for the American people. We're seeing things start to flow back on. It's slow. The pace is not what we would see in a typical year. We're excited that there are going to be opportunities that come about that are right in our wheelhouse. I think that the company, as it has in its history, has been able to react to the changing environment and we're well positioned to take advantage of these new opportunities that come about. It is nonlinear. I mean, I think it requires a certain level of scrappy behavior, which I think is sort of that has been a strength of ICF. They had this diversified portfolio, and we roll with that better than some. That actually plays to our strengths. Excellent. One of the areas that has historically been viewed as bipartisan is sort of the need for IT modernization. Maybe we could talk a little bit about how you're currently viewing those growth prospects for that as well as digital transformation on the federal level specifically. Sure. So yeah, about half of our work in the federal space is what we would call sort of IT modernization, digital sort of digital transformation. And that is a relatively new business for us. I had mentioned that we had this evolution as a firm to include more of the technology, IT modernization, and technology-type implementation work. Because we're a relatively new entrant, we could not rebuild sort of the parts of the technology stack that were sort of more commoditized. They were pretty well covered by other firms. And so when we got into this area at scale, our focus is not on managing legacy systems or sort of doing the PMO, O&M-type work. In fact, our focus has been more on the modernization and the sort of how you take data from these legacy systems and rationalize it so that you can use it in newer, more modern systems. That is great in this moment because that is way more in line with what the administration sees as high priority and valuable work. Also, where the new administration is not a big fan of cost-plus contracts, we really did not have that many cost-plus contracts in our technology business. About 80% of our contracts were firm fixed price. That kind of keeps in line with the administration's priorities to have a little more pay-for-performance sort of ethic. I think that we were already sort of there in our technology work. The 2025 guidance that we have put out projects a mid to high single-digit decline in our IT modernization revenues. That is mainly because of these slowdowns, these pauses. It's not so much that something's getting turned off or that our programs are being deemed irrelevant, but rather that the procurement cycles have just ground to a halt as everything gets looked at and evaluated. There's been this postponement of new contracts as DOGE reviews. Given our recent experience and our positioning, I think we're hoping that we'll see that return back to growth in 2026. I think IT mod, we still see IT mod as an area of a priority for ICF. We think that we have a pretty solid position in the larger technology ecosystem, which includes in this administration a lot of Silicon Valley entrants as well because we bring the right size and the right amount of agility and sort of some aspect of domain that does not exist in a lot of those competitors. We feel like we can see our space in this new environment. I think one thing to add is that, and Anne mentioned this, is that we've had a number of visits from the DOGE folks, and they've visited our program offices where our customers sit and where we sit. One of the things that I think has really come to light, which is very favorable for our company, is that the basis of how we do application development is an agile, fast application development mode. We use low-code, no-code, open-source type of applications. We're partners with Salesforce, ServiceNow, Appian, other software providers such as those. We're already, like Anne said, most of our contracts are fixed price. They're outcome-based, which is what the administration wants to see. We're already well-positioned, well-versed in this environment. We've shown really well when we have to present our code, how we go about developing applications. They're quick hits from a cost perspective, very much affordable, if you will, for our customers, just the way we go about producing applications for our customer sets. We feel very strongly that once things kind of settle down and we get into a normal rhythm, that we're well-positioned to really exploit how we actually have done things from a historical perspective and that we've got the technology experts that the new administration is looking for. We feel good about that. Yeah. Along the lines of what Barry was saying, the rapid prototyping, that's the kind of thing that this administration is looking for. I think that was already sort of inherent in how we go to market. I think that's been actually the new administration, the new folks in these agencies are very interested in seeing kind of what's the art of the possible. I think that's where we can offer something that's a little bit new. From a cutting-edge technology perspective, I mean, we're already out there from an AI perspective, using AI tools to help our customers be more effective and efficient with what services they provide to their folks that use their services. That is ongoing. We've got a real structured, disciplined approach to using AI tools that we've thought quite a bit about. It has really served us well with bringing these kinds of technologies to our customers and showing them how we can use AI along with traditional application development to really enhance what we can deliver. Excellent. One of the key areas that investors have certainly focused on and an area of strength for ICF for a long time has been your work with Health and Human Services. Maybe we can take a little time to talk a little bit about those activities, what you're seeing there, and the type of areas of demand that are being put to the forefront by the new administration. Yeah. Sure. On the surface, this Make America Healthy Again, it's uh-huh. This AHA, that campaign holds a lot of promise for ICF at the surface level. Our track record of work and expertise in this area goes back almost to the founding of the firm. When you look at what they say they'd like to achieve through that campaign, it is very well aligned. I think what we're trying to do is figure out how the actual campaign and sort of the stated mission, kind of how that funnels into the organization of the agency. Right now, there's been a lot of disruption that's resulted from this HHS reorganization. The staff rifts that were happening there have seemed to ease. You can start to see, okay, well, who's going to be here? It's going to stay in the agency and in these program offices because for a little while, we just couldn't get much information because there's just so much chaos. Now we're starting to get insights into the 2026 budget and the justification documents that were recently released, I think, gave us many more clues into how they were going to sort of take the campaign promises and turn them into agency activities. CMS was largely untouched by the reorganization and the rifts. We have seen initial—and again, this is at this moment, I'm telling you what I know, and we might all read something this afternoon. There are initial indications that the budget for CMS is going to stay largely intact. That's good news. CMS became a major client for ICF when we did our SemanticBits acquisition, which was part of our IT modernization, digital engagement sort of investment strategy. When we pulled in SemanticBits, that gave us more of a footprint in CMS. We continue to have a strong presence there. That has been great. We expect that will continue. Areas of focus there for growth would include prevention of healthcare fraud, waste, and abuse, which is clearly in line with the administration priorities, as well as developing and testing models and approaches to deliver better healthcare for lower costs. I mentioned the Agency for a Healthy America, AHA. That is an area of interest for us. There is a lawsuit currently. One of the reasons that we can't totally predict where that's headed, this lawsuit's prevented the government from moving ahead on officially creating that new agency. Meetings and planning efforts, we know they're underway. AHA is going to include several of the agencies we've historically worked for, so SAMHSA, HRSA, NIEHS, and parts of CDC, among others. Those divisions historically have focused on mental health, chronic health, environmental health, behavioral health, all areas where we have strong expertise and where we have long-standing, not just subject matter expertise, but also kind of hard-to-acquire and sort of niche expertise. Bioinformatics and environmental toxicology and things like that, where it would be efficient to access that expertise here as part of that, supporting that mission. The portion of CDC that's not moving to AHA is going to focus on disease surveillance and response, which was formerly under an agency called ASPR, which is Assistant Secretary for Preparedness and Response. Those are areas that we've supported for decades and we would expect to continue supporting. Obviously, disease surveillance is still a very important piece of the administration priorities, and we've been very active in that area. We would expect to continue to be active there. Excellent. Amazingly, but I guess maybe not surprisingly because time has flown by. We're technically at the end of our time, but I did want to sneak in one last one. Oh, my God. It's been very, very productive, and I really thank you for that. Just one last one, maybe we could sneak in. Maybe we could talk a little bit about the guidance around adjusted EBITDA margins. The commentary is we're expecting it to be similar to the year before, despite all the areas of uncertainty. Maybe we could talk a little bit about the actions that you've taken that would support being able to stay stable on a margin basis. Sure. As we were looking at 2025 and trying to anticipate some of the things that we've seen happen with some of our contracts, we put in place plans to make sure that our cost structure is aligned with our revenue production. That would enable us to maintain our margins. As we saw in the first quarter, our gross profit margins, our adjusted EBITDA margins actually improved year over year. We're glad to see that. Now, from a specific actions perspective, I'll break it down into two different sections. One is folks that work directly in support of our contracts. For those people, if we have a contract that has ended, then we'll try to redeploy those staff to other contracts and become billable resources in support of other organizations, other contracts. If we can't find work for those folks, then unfortunately, they have to depart the company. We act very quickly on that. We certainly want to retain as many employees because of the valuable experiences and insights that they have and domain expertise in their given fields. That is one side of the equation. On the other side is the indirect cost that the company has to support the business. If the revenues decrease from a year-over-year perspective, then it is our thought that our support organizations need to follow suit. We have taken very quick action to reduce the cost structure of the company. The actions that we have taken were really reflected in the first quarter results, where, like I had mentioned, we not only saw the margins were steady with 2024, but they are actually a little bit better. One other point is that as the business shifts and we become an organization that has more commercial work, inherently, that commercial work is more profitable for a number of reasons. One is the mix, and another is the contract types. If you look at, for example, the cost-reimbursable contracts, last year in the first quarter, we were almost 13% cost-reimbursable from a contract structure perspective. In the first quarter, we were around 8%. The majority of that work went to fixed-price type of contracts, which, generally speaking, are associated more with commercial work. Those factors certainly helped as well. It is really twofold. It is the type of contracts, the mix of business, as well as managing the cost structure of the company. Excellent. This has been outstanding. I really want to thank you both for joining us and providing all of your insights. It's really been a great use of time. I want to thank all of our participants for joining us today. Everybody have a wonderful and productive remainder of the day. Thank you so much. Thanks, Marc. Thank you. Thanks, everybody.