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What changed in ICF International, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ICF International, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+271 added−281 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-28)

Top changes in ICF International, Inc.'s 2024 10-K

271 paragraphs added · 281 removed · 220 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

76 edited+27 added−32 removed63 unchanged
Biggest changeA number of key issues are driving increased demand for the services we provide in these areas, including: • Increased focus on the proper stewardship of natural resources; • Changing precipitation patterns and drought that is affecting water infrastructure and availability; • Aging water, energy, and transportation infrastructure, particularly in the U.S.; • The increasing exposure of infrastructure to damage and interference by severe weather events influenced by a changing climate, and therefore the need to become more resilient to those effects; • Past under-investment in transportation infrastructure that was the center of the Infrastructure Investment and Jobs Act passed by Congress and signed by the President on November 15, 2021; • Economic and policy incentives for the implementation of carbon-free energy sources that were the centerpiece of the IRA passed by Congress and signed into law by the President on August 16, 2022; • The increasing demand for businesses to respond to climate change and similar environmental, social, and governance priorities being championed not only by the public sector, but also by investors, financing sources, business organizations, ratings agencies, and proxy advisory firms; and • Changing patterns of economic development that require transportation systems and energy infrastructure to adapt to new patterns of demand. 8 By leveraging our multi-disciplinary skills, which range from finance and economics to earth and life sciences, information technology, and program management, we are able to provide a wide range of services that include complex environmental impact assessments, environmental management information systems, air quality assessments, program evaluation, transportation and aviation planning and operational improvement, strategic communications, and regulatory reinvention.
Biggest changeA number of key issues are driving increased demand for the services we provide in these areas, including: • Increased focus on the proper stewardship of natural resources; • Changing precipitation patterns, including both more frequent flooding and drought, which is affecting water infrastructure and availability; • Aging water, energy, and transportation infrastructure in the U.S.; • The increasing exposure of infrastructure to damage and interference by severe weather events influenced by a changing climate, and therefore the need to become more resilient to those effects; • Past under-investment in transportation infrastructure that was the center of the Infrastructure Investment and Jobs Act; • The changing demands for businesses to respond to climate change and other priorities of our clients, investors, financing sources, business organizations, ratings agencies, and proxy advisory firms; and • Changing patterns of economic development that require transportation systems and energy infrastructure to adapt to new patterns of demand.
We do include expected revenue under an engagement in funded backlog when we do not have a signed contract, but only in situations when we have received client authorization to begin or continue work and we expect to sign a contract for the engagement. In this case, the amount of funded backlog is limited to the amount authorized.
We include expected revenue under an engagement in funded backlog when we do not have a signed contract, but only in situations when we have received client authorization to begin or continue work and we expect to sign a contract for the engagement. In this case, the amount of funded backlog is limited to the amount authorized.
Additionally, we are subject to various routine and non-routine governmental and other reviews, audits, and investigations, the results of which could affect our operating results and also subject us to penalties and sanctions. See “Item 1A. Risk Factors - Compliance Risks” for a more detailed description of the regulatory and compliance risks we face. 19
Additionally, we are subject to various routine and non-routine governmental and other reviews, audits, and investigations, the results of which could affect our operating results and also subject us to penalties and sanctions. See “Item 1A. Risk Factors - Compliance Risks” for a more detailed description of the regulatory and compliance risks we face.
Our funded backlog does not represent the full revenue potential of our contracts because many government clients, and sometimes other clients, authorize work under a particular contract on a yearly or more frequent basis, even though the contract may extend over several years.
Our funded backlog does not represent the full revenue potential of our contracts because many government clients, and sometimes other clients, authorize and fund work under a particular contract on a yearly or more frequent basis, even though the contract may extend over several years.
We generally include in our total backlog the estimated revenue represented by contract options that have been priced, but not exercised. We do not include any estimate of revenue relating to potential future delivery orders that might be awarded under our U.S.
We generally include in our backlog the estimated revenue represented by contract options that have been priced, but not exercised. We do not include any estimate of revenue relating to potential future delivery orders that might be awarded under our U.S.
We partner with our clients in the government and commercial sectors to increase their knowledge base, support program development, enhance program operations, evaluate program results, and improve program effectiveness. 9 In the area of federal health, we support many agencies and programs within the U.S.
We partner with our clients in the government and commercial sectors to increase their knowledge base, support program development, enhance program operations, evaluate program results, and improve program effectiveness. In the area of federal health, we support many agencies and programs within the U.S.
We serve clients globally from our headquarters in the Washington, D.C. metropolitan area, our 55 regional offices throughout the U.S., and 15 offices outside the U.S., including offices in the United Kingdom (“U.K.”), Belgium, India, and Canada.
We serve clients globally from our headquarters in the Washington, D.C. metropolitan area, our 55 regional offices throughout the U.S., and 15 offices outside the U.S., including offices in the United Kingdom (“U.K.”), Belgium, Spain, India, and Canada.
Rapid changes in technology, including the omnipresent influence of mobile, social, and cloud technologies, also demand new ways of communicating, evaluating, and implementing programs, and we are focused on leveraging our expertise in technology to capitalize on those changes.
Rapid changes in technology, including the omnipresent influence of mobile, social, AI, and cloud technologies, also demand new ways of communicating, evaluating, and implementing programs, and we are focused on leveraging our expertise in technology to capitalize on those changes.
We have a broad global presence We serve our clients with a global network of 55 regional offices throughout the U.S., and 15 offices in key markets outside the U.S., including offices in the U.K., Belgium, India, and Canada.
We have a broad global presence We serve our clients with a global network of 55 regional offices throughout the U.S., and 15 offices in key markets outside the U.S., including offices in the U.K., Belgium, Spain, India, and Canada.
Pursue strategic acquisitions We plan to augment our organic growth with selective, strategic acquisitions when the target company will enable us to obtain new clients, increase our presence in attractive markets, obtain capabilities that complement our existing portfolio of services, and/or gain access to customer contracts; provided, that the target company has cultural compatibility and we expect that the acquisition will have a positive financial impact.
Pursue strategic acquisitions We plan to augment our organic growth with selective, strategic acquisitions when the target company will enable us to obtain new clients, increase our presence in attractive markets, obtain capabilities that complement our existing portfolio of services, and/or gain access to customers and contracts; provided, that the target company has cultural compatibility and we expect that the acquisition will have a positive financial impact.
General Services Administration Multiple Award Schedule (“GSA Schedule”) contracts, other Indefinite Delivery/Indefinite Quantity (“IDIQ”) contracts, Master Service Agreements (“MSAs”), or other contract vehicles that are also held by a large number of firms and under which potential future delivery orders or task orders might be issued by any of a large number of different agencies, and are likely to be subject to a competitive bidding process.
General Services Administration (the “GSA”) Multiple Award Schedule (“GSA Schedule”) contracts, other Indefinite Delivery/Indefinite Quantity (“IDIQ”) contracts, Master Service Agreements (“MSAs”), or other contract vehicles that are also held by a large number of firms and under which potential future delivery orders or task orders might be issued by any of a large number of different agencies, and are likely to be subject to a competitive bidding process.
We will focus not only on defending our current market footprint, but also on innovating to continue expanding across key growth markets, such as U.S. federal government energy and climate-related programs, reengineering of U.S. public health and research efforts, and cybersecurity initiatives, digital services, and disaster recovery work for state and local governments.
We will focus not only on defending our current market footprint, but also on innovating to continue expanding across key growth markets, such as U.S. federal government energy and resilience-related programs, reengineering of U.S. public health and research efforts, and cybersecurity initiatives, digital services, and disaster recovery work for state and local governments.
We see growth opportunities for technology-based solutions involving analytics, digital services, and strategic communications across all of our markets. 5 We believe that demand for our services will continue as government, industry, and other stakeholders seek to understand and respond to these and other factors.
We see growth opportunities for technology-based solutions involving analytics, digital services, and strategic communications across all of our markets. 6 We believe that demand for our services will continue as government, industry, and other stakeholders seek to understand and respond to these and other factors.
These trends include increased government focus on environmental initiatives; efficiency and mission performance management; generational changes; the emphasis on transparency and accountability; and an increased demand for combining domain knowledge of client missions and programs with innovative technology-enabled solutions.
These trends include changing government focus and priorities on environmental initiatives; efficiency and mission performance management; generational changes; the emphasis on transparency and accountability; and an increased demand for combining domain knowledge of client missions and programs with innovative technology-enabled solutions.
Many of our government contracts provide for option periods that may be exercised by the client. In 2023, 2022, and 2021, no single contract accounted for more than 2%, 3%, and 2% of our revenue for those fiscal years, respectively.
Many of our government contracts provide for option periods that may be exercised by the client. In 2024, 2023, and 2022, no single contract accounted for more than 2%, 2%, and 3% of our revenue for those fiscal years, respectively.
We believe that our domain expertise and the program knowledge developed from our advisory engagements further position us to provide our full suite of services. 4 We report operating results and financial data in one operating and reportable segment.
We believe that our domain expertise and the program knowledge developed from our advisory engagements further position us to provide our full suite of services. 5 We report operating results and financial data in one operating and reportable segment.
Most of our revenue is derived from prime contracts under which we work directly for the end customer. These accounted for approximately 89%, 91%, and 91% of our revenue for the 2023, 2022, and 2021 fiscal years, respectively. Our contract periods typically extend from one month to five years, including option periods.
Most of our revenue is derived from prime contracts under which we work directly for the end customer. These accounted for approximately 87%, 89%, and 91% of our revenue for the 2024, 2023, and 2022 fiscal years, respectively. Our contract periods typically extend from one month to five years, including option periods.
The growth of interest in sustainability and energy efficiency issues has created opportunities to offer these types of services to new clients beyond our traditional sectors. We believe these factors, coupled with our expansive national and global footprint, will result in a greater number of engagements that will also be larger in size and scope.
The growth of interest in sustainability and energy efficiency issues has created opportunities to offer these types of services to new clients beyond our traditional sectors. We believe these factors, coupled with our expansive national footprint and our international market presence, will result in a greater number of engagements that will also be larger in size and scope.
We believe we are positioned to meet the following key safety concerns: • Vulnerability of critical infrastructure to cyber and terrorist threats; • Increasing risks to enterprises’ reputations in the wake of a cyberattack; • Broadened homeland security concerns that include areas such as health, food, energy, water, and transportation; • Reassessment of the emergency management functions of homeland security in the face of natural disasters; • Safety issues around crime and at-risk behavior; • Increased dependence on private sector personnel and organizations in emergency response; • The need to ensure that critical functions and sectors are resilient and able to recover quickly after attacks or disasters in either the physical or cyber realms; and • The challenges resulting from migrations and changing global demographics.
We believe we are positioned to meet the following key safety concerns: • Vulnerability of critical infrastructure to cyber and terrorist threats; • Increasing risks to enterprises’ reputations in the wake of a cyberattack; • Broadened homeland security concerns that include areas such as health, food, energy, water, and transportation; • Reassessment of the emergency management functions of homeland security in the face of natural disasters; • Safety issues around crime and at-risk behavior; • The need to ensure that critical functions and sectors are resilient and able to recover quickly after attacks or disasters in either the physical or cyber realms; and • The challenges resulting from migrations and changing global demographics.
As of December 31, 2023, approximately 45% of our benefits-eligible staff held post-graduate degrees in diverse fields such as the social sciences, business and management, physical sciences, public policy, human capital, information technology, mathematics, engineering, planning, economics, life sciences, and law.
As of December 31, 2024, approximately 43% of our benefits-eligible staff held post-graduate degrees in diverse fields such as the social sciences, business and management, physical sciences, public policy, human capital, information technology, mathematics, engineering, planning, economics, life sciences, and law.
Our 10 largest contracts by revenue collectively accounted for approximately 14%, 15%, and 14% of our revenue in the 2023, 2022, and 2021 fiscal years, respectively. 15 CONTRACT BACKLOG We define total backlog as the future revenue we expect to receive from our contracts and other engagements.
Our 10 largest contracts by revenue collectively accounted for approximately 12%, 14%, and 15% of our revenue in the 2024, 2023, and 2022 fiscal years, respectively. 15 CONTRACT BACKLOG We define backlog as the future revenue we expect to receive from our contracts and other engagements.
Most of the services we provide to commercial clients are provided under fully funded contracts and task orders under MSAs. As a consequence, our backlog attributable to these clients is typically reflected in funded backlog and not in unfunded backlog. We define unfunded backlog as the difference between total backlog and funded backlog.
Most of the services we provide to commercial clients are provided under fully funded contracts and task orders under MSAs. As a consequence, our backlog attributable to these clients is typically reflected in funded backlog and not in unfunded backlog.
Strengthen our technology-based offerings In early 2020 we acquired ITG, which materially increased our skills and market presence in IT modernization, including the use of popular cloud-based platforms to modernize legacy IT systems. In December 2021, we followed with the acquisition of Creative Systems, further extending our cloud platform and open-source technology implementation skills.
Strengthen our technology-based offerings In early 2020 we acquired Incentive Technology Group, which materially increased our skills and market presence in IT modernization, including the use of popular cloud-based platforms to modernize legacy IT systems. In December 2021, we followed with the acquisition of Creative Systems and Consulting (“Creative Systems”), further extending our cloud platform and open-source technology implementation skills.
As of December 31, 2023, we had approximately 9,000 full-time and part-time employees around the globe, including many recognized as thought leaders in their respective fields.
As of December 31, 2024, we had approximately 9,300 full-time and part-time employees around the globe, including many recognized as thought leaders in their respective fields.
We provide information and data management solutions that allow for integrated, purpose-driven data usage. • Digital Services. We design, develop, and implement cutting-edge technology systems and business tools that are key to our clients’ mission or business performance, and include solutions to optimize the customer and citizen experience for our clients.
We provide information and data management solutions that allow for integrated, purpose-driven data usage, including the client-specific utilization of Artificial Intelligence (“AI”). • Digital Services. We design, develop, and implement cutting-edge technology systems and business tools that are key to our clients’ mission or business performance, and include solutions to optimize the customer and citizen experience for our clients.
In addition, the DoD is undergoing major transformations in its approach to strategies, processes, organizational structures, and business practices due to several complex, long-term factors, including: • The changing nature of global security threats, including cybersecurity threats; • Family issues associated with globally-deployed armed forces; • The increasing use of commercial cloud computing infrastructure and services to support the DoD enterprise; and • The increasing need for real-time information sharing and the global nature of conflict arenas. 10 We provide key services to DoD, DHS, DoJ, and analogous Directorates-General at the E.C.
In addition, the DoD is undergoing major transformations in its approach to strategies, processes, organizational structures, and business practices due to several complex, long-term factors, including: • The changing nature of global security threats, including cybersecurity threats; • Family issues associated with globally deployed armed forces; • The increasing use of commercial cloud computing infrastructure and services to support the DoD enterprise; and • The increasing need for real-time information sharing and the global nature of conflict arenas.
We will continue to focus on: building scale in vertical and horizontal domain expertise; developing business with both our government and commercial clients; and replicating our business model geographically in selected regions of the world.
We will continue to focus on: building scale in vertical and horizontal domain expertise; developing business with both our government and commercial clients; and replicating our business model geographically in selected regions of the world, and being agile and flexible in an ever-changing business environment.
Our advisory services provide us with insight and understanding of our clients’ missions and goals. We believe the domain expertise and program knowledge we develop from these advisory assignments position us to capture a greater portion of the resulting larger engagements; however, we will need to undertake such expansion carefully to avoid actual, potential, and perceived conflicts of interest.
We believe the domain expertise and program knowledge we develop from these advisory assignments position us to capture a greater portion of the resulting larger engagements; however, we will need to undertake such expansion carefully to avoid actual, potential, and perceived conflicts of interest.
We use a variety of means to protect our intellectual property. 17 HUMAN CAPITAL As a global advisory and technology services provider, our human capital strategy is vital to our business. Our business depends substantially on attracting, developing, and retaining a highly qualified workforce that provides excellent, effective, and efficient performance reflecting the vast communities we serve.
HUMAN CAPITAL Human Capital Management As a global advisory and technology services provider, our human capital strategy is vital to our business. Our business depends substantially on attracting, developing, and retaining a highly qualified workforce that provides excellent, effective, and efficient performance reflecting the vast communities we serve.
We are able to apply our in-depth knowledge of our subject matter experts and our experience developed over 45 years of providing advisory services to address the problems and issues our clients are facing.
Our thought leadership is based on years of training, experience, and education. We are able to apply our in-depth knowledge of our subject matter experts, and our experience developed over 45 years of providing advisory services to address the problems and issues our clients are facing.
We expect that interest in energy advisory services will continue to expand as clients in a number of industries, including information service providers and companies engaged in travel and tourism, seek to better understand their energy consumption options and the positive benefits of demonstrating environmental stewardship.
We believe that this acquisition will further enhance our market presence and client footprint. We expect that interest in energy advisory services will continue to expand as clients in a number of industries, including information service providers and companies engaged in travel and tourism, seek to better understand their energy consumption options and the positive benefits of demonstrating environmental stewardship.
We leverage digital and social media with an employee-first lens to distinguish us as a named employer of choice. Employee voices and perspectives are at the heart of all we share.
We have built a strong digital and social media presence with an employee-first lens to distinguish us as a named employer of choice. Employee voices and perspectives are at the heart of the stories we share.
These government missions range from Security (e.g., the U.S. Departments of Defense (“DoD”), Homeland Security (“DHS”), and Justice (“DoJ”)) to a variety of other civilian government departments and agencies. Security programs continue to be a critical priority of the federal government, state and local governments, international governments (especially in Europe), and in the commercial sector.
Departments of Defense (the “DoD”), Homeland Security (“DHS”), and Justice (“DoJ”)) to a variety of other civilian government departments and agencies. 9 Security programs continue to be a critical priority of the federal government, state and local governments, international governments (especially in Europe), and in the commercial sector.
We generated revenue of $1,963.2 million, $1,780.0 million, and $1,553.0 million during the years ended December 31, 2023, 2022, and 2021, respectively. Our total backlog was approximately $3,777.8 million, $3,856.2 million, and $3,198.9 million at December 31, 2023, 2022, and 2021, respectively.
We generated revenue of $2,019.8 million, $1,963.2 million, and $1,780.0 million during the years ended December 31, 2024, 2023, and 2022, respectively. Our total backlog was $3,786.3 million, $3,777.8 million, and $3,856.2 million at December 31, 2024, 2023, and 2022, respectively.
Department of State (the “DoS”). In the area of social programs, we provide extensive training, technical assistance, and program analysis and support services for a number of the housing programs of the U.S. Department of Housing and Urban Development (“HUD”) and state, territorial, and local governments.
In the area of social programs, we provide extensive training, technical assistance, and program analysis and support services for a number of the housing programs of the U.S. Department of Housing and Urban Development (“HUD”) and state, territorial, and local governments. In addition, we provide research, program design, evaluation, and training for educational initiatives at the federal and state level.
We do, however, include potential future work expected to be awarded under IDIQ contracts that are available to be utilized by a limited number of potential clients and are held either by us alone or by a limited number of firms.
We do, however, include potential future work expected to be awarded under IDIQ contracts that are available to be utilized by a limited number of potential clients and are held either by us alone or by a limited number of firms, and we have a history of working with these clients on predecessor IDIQ contracts or other contract vehicles.
We provide cybersecurity solutions that support the full range of cybersecurity missions and protect evolving IT infrastructures in the face of relentless threats and modernize IT systems core to our clients’ operations. • Engagement Services.
We provide cybersecurity solutions that support the full range of cybersecurity missions and protect evolving information technology (“IT”) infrastructures in the face of relentless threats and modernize IT systems core to our clients’ operations. We assist our clients in the application of AI to support their missions/businesses and to streamline their operations. • Engagement Services.
From the environmental management of complex infrastructure engagements to strategic and operational concerns of airlines and airports, our solutions draw upon our expertise and institutional knowledge in transportation, urban and land use planning, industry management practices, financial analysis, environmental sciences, and economics.
From the environmental management of complex infrastructure engagements to strategic and operational concerns of airlines and airports, our solutions draw upon our expertise and institutional knowledge in transportation, urban and land use planning, industry management practices, financial analysis, environmental sciences, and economics. 8 Health and Social Programs We also apply our expertise across our full suite of services in the areas of health and social programs.
Our broad range of services to the aviation industry makes us well positioned to capitalize on significant industry changes; substantial airline equipment upgrades to newer, more efficient aircraft models in a cost-constrained environment; testing and adoption of Sustainable Aviation Fuels (“SAF”); and changes to airport business models and strategy as they place increasing importance on passenger experience. 13 Replicate our business model across government and industry in selected geographies We believe the services we provide to our energy, environment, and infrastructure market have strong growth potential in selected geographies.
Our broad range of services to the aviation industry makes us well positioned to capitalize on significant industry changes; substantial airline equipment upgrades to newer, more efficient aircraft models in a cost-constrained environment; testing and adoption of Sustainable Aviation Fuels (“SAF”); and changes to airport business models and strategy as they place increasing importance on passenger experience.
In addition, our anytime feedback initiative and appreciation programs empower employees to receive (and give) feedback or kudos from peers, managers, and leaders at any point during the year. In 2023, 99% of eligible employees received a performance appraisal with feedback from their manager on their 2022 performance.
In addition, our anytime feedback process and recognition program empower employees to receive and give feedback or kudos from and to peers, managers, and leaders at any point during the year. In 2024, all eligible employees also received a performance appraisal with feedback from their manager on their 2023 performance.
This combination of skills, along with our domain knowledge, allows us to deliver technology-enabled solutions tailored to our clients’ business and organizational needs with less start-up time required to understand client issues.
We also have growing experience in establishing and deploying innovative AI solutions to support our clients’ missions. This combination of skills, along with our domain knowledge, allows us to deliver technology-enabled solutions tailored to our clients’ business and organizational needs with less start-up time required to understand client issues.
We support DoD by providing high-end strategic planning, analysis, and technology-based solutions around cybersecurity. We also provide the defense sector with critical infrastructure protection, environmental management, human capital assessment, military community research, and technology-enabled solutions.
We provide key services to DoD, DHS, DoJ, and analogous Directorates-General at the E.C. We support DoD by providing high-end strategic planning, analysis, and technology-based solutions around cybersecurity. We also provide the defense sector with environmental management, human capital assessment, military community research, and technology-enabled solutions.
Our funded and estimates of unfunded and total backlog were as follows at December 31: (in millions) 2023 2022 2021 Funded $ 1,775.1 $ 1,786.9 $ 1,593.5 Unfunded 2,002.7 2,069.3 1,605.4 Total backlog $ 3,777.8 $ 3,856.2 $ 3,198.9 There were no awards included in our 2023, 2022, or 2021 backlog amounts that were under protest. 16 BUSINESS DEVELOPMENT Our business development efforts are critical to our organic growth.
Our funded and estimates of unfunded and total backlog were as follows at December 31: (in millions) 2024 2023 2022 Funded $ 1,857.1 $ 1,775.1 $ 1,786.9 Unfunded 1,929.2 2,002.7 2,069.3 Total backlog $ 3,786.3 $ 3,777.8 $ 3,856.2 There were no awards included in our 2024, 2023, or 2022 backlog amounts that were under protest.
COMPETITIVE STRENGTHS We possess the following key business strengths: We have a highly-educated professional staff with deep subject matter knowledge We possess strong intellectual capital that provides us with a deep understanding of policies, processes, and programs across our clients’ markets. Our thought leadership is based on years of training, experience, and education.
We support these organizations with a variety of technology and program support services. 10 COMPETITIVE STRENGTHS We possess the following key business strengths: We have a highly educated professional staff with deep subject matter knowledge We possess strong intellectual capital that provides us with a deep understanding of policies, processes, and programs across our clients’ markets.
For example, we have developed industry-standard energy and environmental models that are used by governments and commercial entities around the world for energy planning and air quality analyses and have also developed a suite of proprietary climate change tools to help the private sector develop strategies for complying with GHG emission reduction requirements.
For example, we have developed industry-standard energy and environmental models that are used by governments and commercial entities around the world for energy planning and air quality analyses and we have also developed a suite of proprietary planning and analysis tools to help the private sector more quickly and economically develop new electricity generation and transmission assets.
The percentages of our total revenue from these government clients are as follows: Year ended December 31, 2023 2022 2021 Department of Health and Human Services 26 % 23 % 20 % Department of State 5 % 6 % 5 % Department of Defense 3 % 4 % 5 % Total 34 % 33 % 30 % There was no single commercial client with revenue equal to or greater than 2% of our total revenue for the 2023, 2022, and 2021 fiscal years, respectively.
In fiscal years 2024, 2023, and 2022, our largest three U.S. government clients by revenue and their percentages to our total revenue are as follows: 2024 Department of Health and Human Services 25 % Department of State 3 % Environmental Protection Agency 3 % Total 31 % 2023 Department of Health and Human Services 26 % Department of State 5 % Department of Defense 3 % Total 34 % 2022 Department of Health and Human Services 23 % Department of State 6 % Department of Defense 4 % Total 33 % There was no single commercial client with revenue greater than 2% of our total revenue for the 2024, 2023, and 2022 fiscal years, respectively.
We consider our principal competitive advantages to be long-standing client relationships, the good reputation and past performance of the firm, client references, the technical knowledge and industry expertise of our employees, the quality of our services and solutions, the scope and scale of our service offerings, and pricing.
We consider our principal competitive advantages to be long-standing client relationships, the good reputation and past performance of the firm, client references, the technical knowledge and industry expertise of our employees, the quality of our services and solutions, and the scope and scale of our service offerings. 17 INTELLECTUAL PROPERTY We own a number of trademarks and copyrights, and internally developed software that helps maintain our business and competitive position.
We will specifically target deeper penetration of those agencies that currently procure services only from one or two of our service areas, and our acquisitions of ITG, Creative Systems, and SemanticBits, which provide us with strong skills and market presence in technology modernization, will provide additional capabilities in this effort.
We will continue to provide innovative solutions that help our public sector clients do more with less. We will specifically target deeper penetration of those agencies that currently procure services only from one or two of our service areas, and our skills and market presence in technology modernization provides us with capabilities in this effort.
We believe that a confluence of factors will drive an increased need for public and private focus on these areas, including, among others: • Weaknesses in our public health and healthcare delivery systems exposed by the SARS-CoV-2 virus and the Coronavirus Disease 2019 (“COVID-19”); • Expanded healthcare services to underserved portions of the population; • Rising healthcare expenditures, which require the evaluation of the effectiveness and efficiency of current and new programs; • Rampant substance abuse and widespread social and health impacts of the opioid abuse epidemic; • The emphasis on improving the effectiveness of the U.S. and other countries’ educational systems; • The perceived declining performance of the U.S. educational system compared to other countries; • The need to digitally transform and modernize the technology infrastructure underpinning government operations; • Increased arrival of refugees to the U.S. requiring social and other support; • The need for greater transparency and accountability of public sector programs; • A continued high need for social support systems, in part due to an aging population, and the interrelated nature of health, housing, transportation, employment, and other social issues; • A changing regulatory environment; and • Military personnel returning home from active duty with health and social service needs.
We believe that a confluence of factors will drive an increased need for public and private focus on these areas, including, among others: • Expanded healthcare services; • Rising healthcare expenditures, which require the evaluation of the effectiveness and efficiency of current and new programs; • Rampant substance abuse and widespread social and health impacts of the opioid abuse epidemic; • The need to digitally transform and modernize the technology infrastructure underpinning government operations, including via the use of machine learning and AI technologies; • The need for greater transparency and accountability of public sector programs; • A continued high need for social support systems, in part due to an aging population, and the interrelated nature of health, housing, transportation, employment, and other social issues; and • A changing regulatory environment.
Our staff regularly maintains, updates, and improves these software, models, and tools based on our corporate experience. In addition, we sometimes retain limited rights in software applications we develop for clients.
We use these innovative, and often proprietary, software, analytical models, and tools throughout our service offerings. Our staff regularly maintains, updates, and improves these software, models, and tools based on our corporate experience. In addition, we sometimes retain limited rights in software applications we develop for clients. We use a variety of means to protect our intellectual property.
In addition, we provide research, program design, evaluation, and training for educational initiatives at the federal and state level. We provide similar services to a variety of U.K. ministries, as well as several Directorates-General of the E.C. Security and Other Civilian & Commercial We serve a number of other important government missions and commercial markets.
We provide similar services to a variety of U.K. ministries, as well as several Directorates-General of the E.C. Security and Other Civilian & Commercial We serve a number of other important government missions and commercial markets. These government missions range from Security (e.g., the U.S.
Geopolitical factors could result in changing government priorities; however, we believe we are well positioned to provide a broad range of services in support of initiatives that will continue to be priorities to the U.S. federal government as well as to state and local and international governments and commercial clients. 6 Energy, Environment, Infrastructure, and Disaster Recovery For decades, we have advised our clients on energy and environmental issues, including the impact of human activity on natural resources, and have helped develop solutions for infrastructure-related challenges.
Geopolitical factors could result in changing government priorities; however, we believe we are well positioned to provide a broad range of services in support of initiatives that will continue to be priorities to the U.S. federal government as well as to state and local and international governments and commercial clients.
We then develop our employees to prepare them for critical roles; reward and support employees through pay, benefit, and perquisite programs that we believe are competitive; and evolve and invest in technology, tools, and resources to empower employees to belong, grow, and thrive at ICF. We employ approximately 9,000 employees, 86% of whom are employed full-time.
We have designed our human resources programs to enable our high-performing workforce to reach its full potential. We develop our employees to prepare them for critical roles; reward and support employees through pay, benefit, and perquisite programs that we believe are competitive; and evolve and invest in technology, tools, and resources to empower employees to belong, grow, and thrive.
Finally, having 55 offices across the U.S. allows us to focus more of our business development efforts on addressing the needs of U.S. federal and state and local government agencies with operations outside of the Washington, D.C. metropolitan area. 14 Pursue larger prime contract opportunities We believe that continuing to expand our client engagements into services we offer as part of our end-to-end client solutions enables us to pursue larger prime contract opportunities, which should provide a greater return on our business development efforts and allow for increased employee utilization.
Pursue larger prime contract opportunities We believe that continuing to expand our client engagements into services we offer as part of our end-to-end client solutions enables us to pursue larger prime contract opportunities, which should provide a greater return on our business development efforts and allow for increased employee utilization.
We view the energy industry as a particularly attractive sector for us over the next decade due to concerns over controlling energy costs and limiting climate and environmental impacts, increased state and federal regulation, the need for cleaner and more diverse sources of energy, and the concomitant need for infrastructure to transport/transmit, store, and/or convert those new energy sources.
We continue to see growth opportunities in our current commercial business in the utility sector as well as significant potential to expand our business in other commercial areas such as aviation and tourism. 12 We view the energy industry as a particularly attractive sector for us over the next decade due to concerns over controlling energy costs and limiting climate and environmental impacts, increasing energy demands related to electrification projects and the expansion of data centers due to AI, changing state and federal regulation, the need for cleaner and more diverse sources of energy, and the concomitant need for infrastructure to transport/transmit, store, and/or convert those new energy sources.
Our acquisition of Blanton & Associates (“Blanton”) in September 2022 added to these skills and expanded our geographic reach. We help clients deal specifically with the interrelated environmental, business, and social implications of issues surrounding all transportation modes and infrastructure.
We help clients deal specifically with the interrelated environmental, business, and social implications of issues surrounding all transportation modes and infrastructure.
Our technology-enabled solutions are driven by our subject matter expertise and creativity Government and commercial decision-makers have become increasingly aware that, to be effective, technology-based solutions need to be seamlessly integrated with people and processes. We possess a strong knowledge in information technology and a thorough understanding of organizational behavior and human decision processes.
We then use this knowledge to provide continuous improvement across our entire range of services, which maintains the relevance of our recommendations. 11 Our technology-enabled solutions are driven by our subject matter expertise and creativity Government and commercial decision-makers have become increasingly aware that, to be effective, technology-based solutions need to be seamlessly integrated with people and processes.
The types of services we provide, and the manner in which we do so, enable us to attract and retain talented professionals from a variety of backgrounds while maintaining a culture that fosters teamwork and excellence. 11 We have strong, long-standing relationships with clients across a diverse set of markets The long-term relationships we maintain with many of our clients reflect our successful track record of fulfilling our clients’ needs.
The types of services we provide, and the manner in which we do so, enable us to attract and retain talented professionals from a variety of backgrounds while maintaining a culture that fosters teamwork and excellence.
In addition, we also have proprietary program management methodologies and services that we believe can help clients improve performance measurement, support chief information officer and science and engineering program activities, and reduce security risks. 12 We are led by an experienced management team Our management team, consisting of 277 senior leaders with the title of vice president or higher, possesses extensive industry experience and had an average tenure of 16.4 years with us as of December 31, 2023 (including prior service with companies we have acquired).
We are led by an experienced management team Our management team, consisting of 293 senior leaders with the title of vice president or higher, possesses extensive industry experience and had an average tenure of approximately 17 years with us as of December 31, 2024 (including prior service with companies we have acquired).
In 2022, we acquired SemanticBits, a leading provider of cloud-native open-source technology systems with a strong client position in CMS. We are positioned to increase these services by expanding the technological underpinnings of our business, while bringing cloud, business process automation, data management, and analytics offerings to our clients to better link them with citizens, consumers, and other stakeholders.
We are positioned to increase these services by expanding the technological underpinnings of our business, while bringing cloud, AI, business process automation, data management, and analytics offerings to our clients to better link them with citizens, consumers, and other stakeholders. 13 Leverage advisory work into full life-cycle solutions We plan to continue to leverage our advisory services and strong client relationships to increase our revenue by winning longer-term engagements.
Defend, expand, and deepen our presence in core U.S. federal and state and local government markets Changing and somewhat unpredictable political priorities at the U.S. federal, state, and local government levels have created challenging market conditions for all competitors in the government services sector; however, we believe that the Biden administration provides renewed opportunities for growth in many of the government mission areas, such as efforts to address infrastructure issues with the passing of the Infrastructure Investment and Jobs Act in 2021, where we have expertise and long-standing relationships.
Defend, expand, and deepen our presence in core U.S. federal and state and local government markets Changing and somewhat unpredictable political priorities at the U.S. federal, state, and local government levels have created challenging market conditions for all competitors in the government services sector; however, we believe that changes driven by the Trump administration will provide opportunities to accelerate digital transformation of the U.S. federal government activities and to provide advisory and analytic support to changing policy priorities.
We rely on the technology and models, proprietary processes, and other intellectual property we own or have the rights to use in our analyses and other work we perform for our clients. We use these innovative, and often proprietary, software, analytical models, and tools throughout our service offerings.
Sales and licenses of our intellectual property do not currently comprise a substantial portion of our revenue or profit. We rely on the technology and models, proprietary processes, and other intellectual property we own or have the right to use in our analyses and other work we perform for our clients.
As a result, we are able to understand our clients’ requirements and objectives as they evolve over time. We then use this knowledge to provide continuous improvement across our entire range of services, which maintains the relevance of our recommendations.
As a result, we are able to understand our clients’ requirements and objectives as they evolve over time.
We have advised the U.S. Environmental Protection Agency (“EPA”), the United States Agency for International Development (“USAID”), and HHS for more than 30 years, the U.S.
We have strong, long-standing relationships with clients across a diverse set of markets The long-term relationships we maintain with many of our clients reflect our successful track record of fulfilling our clients’ needs. We have advised the U.S. Environmental Protection Agency (“EPA”), the United States Agency for International Development (“USAID”), and HHS for more than 30 years, the U.S.
Our 2022 acquisition of SemanticBits, LLC (“SemanticBits”) brought substantial expertise in technology applications used in CMS to oversee healthcare quality. Increasingly, we provide multichannel communications and messaging for public health programs. We also provide training and technical assistance for early care and educational programs (such as Head Start), and health and demographic surveys in developing countries for the U.S.
Increasingly, we provide multichannel communications and messaging for public health programs. We also provide training and technical assistance for early care and educational programs, and health and demographic surveys for the U.S. Department of State (the “DoS”).
Our clients span a broad range of civilian and defense agencies and commercial enterprises. Commercial clients include non-profit organizations and universities, while government clients include the World Bank and the United Nations. In general, a client is considered to be a government client if its primary funding is from a government agency or institution.
Commercial clients (including U.S. and international clients) accounted for approximately 25%, 24%, and 24% of our 2024, 2023, and 2022 revenue, respectively. Our clients span a broad range of civilian and defense agencies and commercial enterprises. Commercial clients include non-profit organizations and universities, while government clients include the World Bank and the United Nations.
Our acquisition of CMY in 2023 is an example of this approach. These elements of our strategy permeate all of the Company and influence our day-to-day decisions. We believe that, collectively, they support the overall long-term growth of the organization.
These elements of our strategy permeate all of the Company and influence our day-to-day decisions. We believe that, collectively, they support the overall long-term growth of the organization. 14 CLIENT AND CONTRACT MIX Government clients (including U.S. federal, state and local, as well as international) accounted for approximately 75%, 76%, and 76% of our 2024, 2023, and 2022 revenue, respectively.
Once a new hire joins us, we set them up for long-term success with a robust onboarding program, including sessions focused on our purpose and values and required compliance training. To further enhance this experience, new employees may participate in an optional peer coaching program to connect with other employees throughout their first year.
We have also been named as one of the best places to work by PRWeek and one of the best places to work in Washington, D.C., by Built In, a community for startups and tech companies. 18 Once a new hire joins us, we set them up for long-term success with a robust onboarding program, including sessions focused on our purpose and values and required compliance training.
In addition, as a result of our acquisitions of Incentive Technology Group, LLC (“ITG”) in January 2020, Creative Systems and Consulting (“Creative Systems”) in December 2021, SemanticBits in July 2022, and ESAC in November 2022, we have strong partnerships and experience in cloud-based technology platforms and open-source ecosystems that are central to our federal government clients’ technology modernization agendas.
We possess a strong knowledge and experience base in information technology and a thorough understanding of organizational behavior and human decision processes. We have strong partnerships and experience in cloud-based technology platforms and open-source ecosystems that are central to our federal government clients’ technology modernization agendas.
Our prior experience with disaster relief and rebuild efforts, including after hurricanes Katrina and Rita and Superstorm Sandy, puts us in a favorable position to provide recovery and housing assistance, and environmental and infrastructure solutions, including disaster mitigation, on behalf of federal departments and agencies, state, territorial, and local jurisdictions, and regional agencies.
This position us to continue to deliver recovery and housing assistance, as well as environmental and infrastructure solutions, including disaster mitigation, on behalf of federal agencies, state and local governments, and regional authorities.
Leverage advisory work into full life-cycle solutions We plan to continue to leverage our advisory services and strong client relationships to increase our revenue by winning longer-term engagements. These engagements could include: information services and technology-based solutions; project and program management; business process solutions; and technical assistance and training.
These engagements could include: information services and technology-based solutions; project and program management; business process solutions; and technical assistance and training. Our advisory services provide us with insight and understanding of our clients’ missions and goals.
If we are a subcontractor, we classify the revenue based on the nature of the ultimate client receiving the services. In fiscal years 2023, 2022, and 2021, our largest three government clients by revenue were HHS, DoS, and DoD.
In general, a client is considered to be a government client if its primary funding is from a government agency or institution. If we are a subcontractor, we classify the revenue based on the nature of the ultimate client receiving the services.
In 2023, we delivered digital and instructor-led programs to build skills in various areas, including leadership inclusion, people management, project management, business development, finance, technology, and innovation skills. To increase enterprise-wide access to industry-leading content, we also partner with LinkedIn Learning, Udemy, and Microsoft for digital learning in self-paced programs.
We have tailored offerings for every stage of career, and every type of learner, ranging from experiential learning to informal learning like our mentoring program, and formal courses. In 2024, we delivered digital and instructor-led programs to build skills in various areas, including leadership, people management, project management, consulting, business development, finance, technology, and innovation skills.
We support ongoing disaster recovery and mitigation efforts in a variety of U.S. states, territories, and local jurisdictions that have been affected by natural disasters including, but not limited to, hurricanes. We also have decades of experience in designing, evaluating, and implementing environmental policies and environmental compliance programs for energy, transportation (including aviation), and other infrastructure projects.
Our mission is to assist these communities in overcoming disaster challenges, building long-term resilience, and securing the necessary recovery and mitigation funding to ensure their future stability and growth. We also have decades of experience in designing, evaluating, and implementing environmental policies and environmental compliance programs for energy, transportation (including aviation), and other infrastructure projects.
Historically, we experience employee voluntary turnover that is consistently below industry benchmarks. In 2023, our overall company turnover was 14.7% and 11.4% when excluding our on-call staff. The results of our employee engagement survey reflect a strong culture that encourages our employees to stay and grow a career with ICF.
Historically, we experience voluntary employee turnover that is consistently below industry benchmarks. In 2024, our overall company turnover was 12.6% and 10.0% when excluding our on-call team members. Employee Well Being Our well-being and total rewards team benchmarks externally and assesses the evolving needs of our workforce, incorporating insights gathered through an employee survey.
We expanded our leadership development curriculum and were able to triple our reach to emerging leaders. In 2023, we had 410 seats allocated for leadership development programs at various career stages. Another area of employee development is our intentional culture of continuous coaching and feedback through our Impact Conversations program.
Our key focus area is taking an enterprise-wide approach to continue building our pipeline of tomorrow’s leaders. Another area of employee development is our intentional culture of continuous coaching and feedback through our Impact Conversations program.
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In addition to addressing government policy and regulation in these areas, our work focuses on industries that are affected by these policies and regulations, particularly in those industries most heavily involved in the use and delivery of energy.
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Energy, Environment, Infrastructure, and Disaster Recovery We view the energy industry as a particularly attractive sector for us over the next decade due to concerns over reliability, and increasing energy demands from data centers, cryptocurrency, and expanding electrification of buildings and vehicles.
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Significant factors affecting suppliers, users, and regulators of energy are driving private and public sector demand for professional services firms, including: • Changing power markets, increasingly diverse sources of supply including distributed energy resources and an increased demand for more carbon-free sources of energy and/or energy storage; • The changing role of the U.S. in the world’s energy markets; • Ongoing efforts to upgrade energy infrastructure to meet new power, transmission, environmental, and cybersecurity requirements and to enable more distributed forms of generation and greater reliance on more distant electricity generation; • Changing public policy, regulations, and incentives, including those established by the Inflation Reduction Act (the “IRA”), surrounding the modernization of and investment in an upgraded energy infrastructure, including new business models that may accompany those changes; • The need to manage energy demand and increase efficient energy use in an era of environmental concerns, especially regarding carbon and other emissions; and • The disruption of global energy markets and supplies, involving natural gas in particular, that have emerged as a result of the invasion of Ukraine by Russia.
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In addition, energy providers are having to adjust to changing state and federal regulations, demand more diverse (and in some cases, cleaner) sources of energy, and the concomitant need for infrastructure to transport/transmit, store, and/or convert those new energy sources. We see a continued demand for our energy advisory and consulting services to utilities, developers, and other commercial clients.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to THE Changing Business ENVIRONMENT IN WHICH WE OPERATE As we develop new services, clients and practices, enter new lines of business, and focus more of our business on providing a full range of client solutions, our operating risks increase.
Biggest changeIn addition, increased government deficits and debt, both domestic and international, may lead to reduced spending by agencies and departments on projects or programs we support. 20 Risks Related to THE Changing Business ENVIRONMENT IN WHICH WE OPERATE As we develop new services, clients and practices, enter new lines of business, and focus more of our business on providing a full range of client solutions, the additional demands that such growth places on our management and staff, information and operational systems, and cash flow may adversely affect the quality of our work, our operating margins, and our operating results.
In addition, we extend our services to new clients, lines of business, and selected geographic locations, including outside the U.S., and to seek out cross-border opportunities.
In addition, we extend our services to new clients, lines of business, and selected geographic locations, including outside the U.S., and seek out new cross-border opportunities.
We may, from time to time, have forward contract agreements (“hedges”) related to our operations in the U.K. to hedge the remeasurement between the Euro and the pound sterling. We recognize the changes in the fair value of the economic hedges in our results of operations.
We may, from time to time, have forward contract agreements (the “hedges”) related to our operations in the U.K. to hedge the remeasurement between the Euro and the pound sterling. We recognize the changes in the fair value of the economic hedges in our results of operations.
While estimates are inherently subjective and often change, we may experience contract cost overruns as a result of ambiguities in contract specifications, our inability to meet service-level agreements, inflationary pressures, high demand for skilled labor, unanticipated technical problems, difficulties in obtaining permits or approvals, changes in local laws or labor conditions, weather delays, inability of our vendors or subcontractors to perform, or for other reasons.
Estimates are inherently subjective and often change, and we may experience contract cost overruns as a result of ambiguities in contract specifications, our inability to meet service-level agreements, inflationary pressures, high demand for skilled labor, unanticipated technical problems, difficulties in obtaining permits or approvals, changes in local laws or labor conditions, weather delays, inability of our vendors or subcontractors to perform, or for other reasons.
In addition, the federal government and other governments with which we do business may change their procurement practices or adopt new contracting laws, rules, or regulations that could be costly to satisfy or that could impair our ability to obtain new contracts and reduce our revenue and profit, such as curtailing the use of services firms or increasing the use of firms with a “preferred status,” such as small businesses.
In addition, the federal government and other governments with which we do business may change their procurement practices or requirements, or adopt new contracting laws, rules, or regulations that could be costly to satisfy or that could impair our ability to obtain new contracts and reduce our revenue and profit, such as curtailing the use of services firms or increasing the use of firms with a “preferred status,” such as small businesses.
Civil False Claims Act and the False Statements Act; and • U.S. laws, rules, and regulations restricting (i) the use and dissemination of information classified for national security purposes, (ii) the exportation of specified products, technologies, and technical data, and (iii) the use and dissemination of sensitive but unclassified data. 30 Any failure to comply with applicable federal, and/or state and local government laws, rules, and regulations could subject us to civil and criminal penalties and administrative sanctions, including termination of contracts, repayment of amounts already received under contracts, forfeiture of profits, suspension of payments, fines, and suspension or debarment from doing business with federal and/or state and local government agencies and departments, any of which could adversely affect our reputation, our revenue, our operating results, and/or the value of our stock.
Civil False Claims Act and the False Statements Act; and • U.S. laws, rules, and regulations restricting (i) the use and dissemination of information classified for national security purposes, (ii) the exportation of specified products, technologies, and technical data, and (iii) the use and dissemination of sensitive but unclassified data. 29 Any failure to comply with applicable federal, and/or state and local government laws, rules, and regulations could subject us to civil and criminal penalties and administrative sanctions, including termination of contracts, repayment of amounts already received under contracts, forfeiture of profits, suspension of payments, fines, and suspension or debarment from doing business with federal and/or state and local government agencies and departments, any of which could adversely affect our reputation, our revenue, our operating results, and/or the value of our stock.
We have offices in the U.K., Belgium, India, and Canada, among others, and expect to continue to have international operations and offices, some of which are in economically developing countries that do not have a well-established business infrastructure. We also perform work in some countries where we do not have a physical office.
We have offices in the U.K., Belgium, Spain, India, and Canada, among others, and expect to continue to have international operations and offices, some of which are in economically developing countries that do not have a well-established business infrastructure. We also perform work in some countries where we do not have a physical office.
The 2018 California Consumer Privacy Act (“CCPA”), which went into effect January 2020, now imposes similar requirements. New privacy laws in California, Colorado, Virginia, and other states took effect in 2023, with others likely to follow. Several privacy bills have also been introduced in Congress.
The 2018 California Consumer Privacy Act (“CCPA”), which went into effect January 2020, imposes similar requirements. New privacy laws in California, Colorado, Virginia, and other states took effect in 2023, with others likely to follow. Several privacy bills have also been introduced in Congress.
In addition to our U.S. operations, we also have a significant presence in key markets outside the U.S., including offices in the U.K., Belgium, India, and Canada. Failure to abide by laws, rules, and regulations applicable to us because of our work outside the U.S., such as the U.K.
In addition to our U.S. operations, we also have a significant presence in key markets outside the U.S., including offices in the U.K., Belgium, Spain, India, and Canada. Failure to abide by laws, rules, and regulations applicable to us because of our work outside the U.S., such as the U.K.
Even if we prevail in defending the contract award, the resulting delay in the startup and funding of the work under these contracts may adversely affect our operating results. Moreover, in order to protect our competitive position, we may protest the contract awards of our competitors.
Even if we prevail in defending the contract award, the resulting delay in the startup and funding of the work under these contracts may adversely affect our operating results. 24 Moreover, in order to protect our competitive position, we may protest the contract awards of our competitors.
The budgets of many of our state and local government clients are also subject to similar divisions, risks, and uncertainties as are inherent in the federal budget process. 20 Government spending priorities may change in a manner adverse to our business.
The budgets of many of our state and local government clients are also subject to similar divisions, risks, and uncertainties as are inherent in the federal budget process. Government spending priorities may change in a manner adverse to our business.
Any failure of these third-party systems, which are outside of our control but still impact us, could have similar adverse effects. 26 Impermissible use, misuse or an improper disclosure of personal data or confidential information and breaches of, or disruptions to, our information technology systems or those of our third-party providers, could adversely affect our business and could result in liability and harm to our reputation.
Any failure of these third-party systems, which are outside of our control but still impact us, could have similar adverse effects. 25 Impermissible use, misuse, or an improper disclosure of personal data or confidential information and breaches of, or disruptions to, our information technology systems or those of our third-party providers, could adversely affect our business and could result in liability and harm to our reputation.
Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and, as a result, revenue, profits, and operating results could be adversely affected. 27 We depend on our intellectual property and our failure to protect it could harm our competitive position.
Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and, as a result, revenue, profits, and operating results could be adversely affected. 26 We depend on our intellectual property and our failure to protect it could harm our competitive position.
If a client terminates one of our contracts for convenience, we would only bill the client for work completed prior to the termination, plus any commitments and settlement expenses that we may claim and the client agrees to pay, but not for any work not yet performed.
If a client terminates one of our contracts for convenience, we will only bill the client for work completed prior to the termination, plus any commitments and settlement expenses that we may claim and the client agrees to pay, but not for any work not yet performed.
Although we have to date determined that goodwill has not been impaired, future events or changes in circumstances that result in an impairment of goodwill or intangible assets would have a negative impact on our profitability and operating results. 28 RISKS RELATED TO OUR CORPORATE AND CAPITAL STRUCTURE Provisions of our charter documents and Delaware law may prevent or deter potential acquisition bids to acquire us and other actions that stockholders may consider favorable, and the market price of our common stock may be lower as a result.
We have to date determined that goodwill has not been impaired; however, future events or changes in circumstances that result in an impairment of goodwill or intangible assets would have a negative impact on our profitability and operating results. 27 RISKS RELATED TO OUR CORPORATE AND CAPITAL STRUCTURE Provisions of our charter documents and Delaware law may prevent or deter potential acquisition bids to acquire us and other actions that stockholders may consider favorable, and the market price of our common stock may be lower as a result.
The delayed funding or shutdown of many parts of the federal government, including agencies, departments, programs, and projects we support, could have a substantial negative affect on our revenue, profit, and cash flows.
The delayed funding or shutdown of many parts of the federal government, including agencies, departments, programs, and projects we support, could have a substantial negative effect on our revenue, profit, and cash flows.
Although we adjust our backlog to reflect modifications to or renewals of existing contracts, awards of new contracts, or approvals of expenditures, if we subsequently fail to realize revenue corresponding to our backlog, our revenue and operating results could be adversely affected.
We adjust our backlog to reflect modifications to or renewals of existing contracts, awards of new contracts, or approvals of expenditures; however, if we subsequently fail to realize revenue corresponding to our backlog, our revenue and operating results could be adversely affected.
Therefore, we must ensure that we, as well as our vendors, can comply and demonstrate compliance with the various countries’ and U.S. states’ privacy and data protection laws, rules, and regulations (collectively, “Privacy and Data Protection Law(s)”) in any location where we or our vendors process Data Subjects’ Personal Data.
Therefore, we must ensure that we, as well as our vendors, can comply and demonstrate compliance with the various countries’ and U.S. states’ privacy and data protection laws, rules, and regulations (collectively, “Privacy and Data Protection Laws”) in any location where we or our vendors process Data Subjects’ Personal Data.
Certain lines of business of our commercial work depend on certain sectors of the global economy that are highly cyclical, which can lead to substantial variations in our revenue and profit from period to period. Our commercial clients, which include clients outside the U.S., generated approximately 24%, 24%, and 29% of our revenue in 2023, 2022, and 2021, respectively.
Certain lines of business of our commercial work depend on certain sectors of the global economy that are highly cyclical, which can lead to substantial variations in our revenue and profit from period to period. Our commercial clients, which include clients outside the U.S., generated approximately 25%, 24%, and 24% of our revenue in 2024, 2023, and 2022, respectively.
Some of the countries in which we work have a history of political instability or may expose our employees and subcontractors to physical danger over and above pandemic-related risk. Expansion into selective new geographic regions requires considerable management and financial resources, the expenditure of which may negatively impact our results, and we may never see any return on our investment.
Some of the countries in which we work have a history of political instability or may expose our employees and subcontractors to physical danger. Expansion into selective new geographic regions requires considerable management and financial resources, the expenditure of which may negatively impact our results, and we may never see any return on our investment.
In addition, federal government contracts rely on Congressional appropriation of funding, which is typically provided only partially at any point during the term of federal government contracts, and all or some of the work to be performed under a contract may require future appropriations by Congress and the subsequent allocation of funding by the procuring agency or department to the contract.
In addition, federal government contracts rely on Congressional appropriation of funding, which is typically provided on an incremental basis at any point during the term of federal government contracts, and all or some of the work to be performed under a contract may require future appropriations by Congress and the subsequent allocation of funding by the procuring agency or department to the contract.
The increase in size, scope, and complexity of the engagements in which we become involved in subjects us to the potential for a larger impact of performance risk associated with larger and more challenging engagements and the credit risk associated with certain larger customers, particularly among our commercial non-U.S. government and non-federal U.S. government clients.
The increase in the size, scope, and complexity of these engagements subjects us to the potential for a larger impact of performance risk associated with larger and more challenging engagements and the credit risk associated with certain larger customers, particularly among our commercial non-U.S. government and non-federal U.S. government clients.
As of December 31, 2023, we had an aggregate of $430.4 million of outstanding indebtedness (net of unamortized debt issuance costs) that will mature on May 6, 2027. Subject to the limits contained in the agreements governing our Credit Facility, we may incur additional debt in the future to fund our ongoing operations as well as acquisitions.
As of December 31, 2024, we had an aggregate of $411.7 million of outstanding indebtedness (net of unamortized debt issuance costs) that will mature on May 6, 2027. Subject to the limits contained in the agreements governing our Credit Facility, we may incur additional debt in the future to fund our ongoing operations as well as acquisitions.
Expenditures by our federal government clients may be restricted or reduced by Administration or Congressional actions, by action of the Office of Management and Budget, by action of individual agencies or departments, or by other actions.
Expenditures by our federal government clients may be restricted or reduced by Administration or Congressional actions, by action of the Office of Management and Budget, by action of individual agencies or departments, or by other actions from the DOGE advisory commission.
All of our acquisitions have involved purchase prices in excess of tangible asset values net of liabilities assumed, resulting in the creation of an increased amount of goodwill and other intangible assets. As of December 31, 2023, goodwill and purchased intangibles accounted for approximately 61% and 5%, respectively, of our total assets.
All of our acquisitions have involved purchase prices in excess of tangible asset values net of liabilities assumed, resulting in the creation of an increased amount of goodwill and other intangible assets. As of December 31, 2024, goodwill and purchased intangibles accounted for approximately 60% and 4%, respectively, of our total assets.
We derived approximately 55%, 55%, and 47% of our revenue in 2023, 2022, and 2021, respectively, from contracts with federal government clients, and approximately 21%, 21%, and 24% of our revenue from contracts with state and local governments and international governments in 2023, 2022, and 2021, respectively.
We derived approximately 54%, 55%, and 55% of our revenue in 2024, 2023, and 2022, respectively, from contracts with federal government clients, and approximately 21%, 21%, and 21% of our revenue from contracts with state and local governments and international governments in 2024, 2023, and 2022, respectively.
There can be no assurance that those expiring contracts we are servicing will continue after their expiration, that the client will re-procure those requirements, that any such re-procurement will not be restricted in a way that would eliminate us from the competition (e.g., set asides for small businesses), or that we will be successful in any such re-procurements or in obtaining subcontractor roles.
The expiring contracts we service may not continue after their expiration, the client may not re-procure those requirements, re-procurement may be restricted in a way that would eliminate us from the competition (e.g., set asides for small businesses), or we may not be successful in any such re-procurements or in obtaining subcontractor roles.
There are risks associated with our outstanding and future indebtedness which could reduce our profitability, limit our ability to pursue certain business opportunities, and reduce the value of our stock. At our discretion, we borrow funds from our various credit facilities (the “Credit Facility”) under a credit agreement with a group of lenders.
Our outstanding and future indebtedness could reduce our profitability, limit our ability to pursue certain business opportunities, and reduce the value of our stock. At our discretion, we borrow funds from our credit facility (the “Credit Facility”) under a credit agreement with a group of lenders.
Accordingly, we expect that, due to changing government budgeting and spending priorities, including necessary balancing of defense spending with civilian agency spending, and related disputes among Congress and the Administration, some of our government clients in the future may delay payments due to us, eventually fail to pay what they owe us, and/or delay certain programs and projects.
Accordingly, we expect that, due to changing government budgeting and spending priorities, including necessary balancing of defense spending with civilian agency spending, and related disputes among Congress and the Administration, some of our government clients in the future may elect to terminate or issue stop-work orders with respect to contracts or programs for which we perform services, delay payments due to us, eventually fail to pay what they owe us, and/or delay certain programs and projects.
Any factor that diminishes client relationships and/or professional reputation with federal, state and local, and international government clients, as well as commercial clients, could make it substantially more difficult for us to compete successfully for new engagements and qualified employees. To the extent our client relationships and/or professional reputation deteriorate, our revenue and operating results could be adversely affected.
Any factor that diminishes client relationships and/or professional reputation with federal, state and local, and international government clients, as well as commercial clients, could make it substantially more difficult for us to compete successfully for new engagements and qualified employees.
Among other things, our debt could: • Make it difficult to obtain additional financing for working capital, capital expenditures, acquisitions, or other general corporate purposes; • Result in a substantial portion of our cash flows from operations being dedicated to the payment of the principal and interest on our debt, as well as used to make debt service payments; • Limit our flexibility in planning for, and reacting to, changes in our business and the marketplace; • Place us at a competitive disadvantage relative to other less leveraged firms; and • Increase our vulnerability to economic downturns and rises in interest rates. 29 Should any of these or other unforeseen consequences arise, they could have an adverse effect on our business, financial condition, results of operations, future business opportunities and/or ability to satisfy our obligations under our debt.
Among other things, our debt could: • Make it difficult to obtain additional financing for working capital, capital expenditures, acquisitions, or other general corporate purposes; • Result in a substantial portion of our cash flows from operations being dedicated to the payment of the principal and interest on our debt, as well as used to make debt service payments; • Limit our flexibility in planning for, and reacting to, changes in our business and the marketplace; • Place us at a competitive disadvantage relative to other less leveraged firms; and • Increase our vulnerability to economic downturns and rises in interest rates.
On the expiration of a contract, we typically seek a new contract or subcontractor role relating to that client to replace the revenue generated by the expired contract.
On the expiration of a contract, we typically seek a new contract or subcontractor role relating to that client to replace the revenue generated by the expired contract. We face several risks related to these expiring contracts.
We cannot be sure that our hedges will be successful in reducing the risks to us of our exposure to foreign currency fluctuations and, in fact, the hedges may adversely affect our operating results. 31 Presently, there is active armed conflict across the territory of Ukraine as a result of a Russian invasion.
These hedges may not be successful in reducing our exposure to foreign currency fluctuations and, in fact, the hedges may adversely affect our operating results. 30 Presently, there is active armed conflict across the territory of Ukraine as a result of a Russian invasion.
We derived 45%, 45%, and 41% of our total revenue from fixed-price contracts in 2023, 2022, and 2021, respectively. Under fixed-price contracts, we receive a fixed price irrespective of the actual costs we incur and, consequently, we realize a profit on fixed-price contracts only if we can control our costs and prevent cost overruns while meeting our contractual obligations.
Under fixed-price contracts, we receive a fixed price irrespective of the actual costs we incur and, consequently, we realize a profit on fixed-price contracts only if we can control our costs and prevent cost overruns while meeting our contractual obligations.
Moreover, our revenue, profit and operating results could be adversely affected if any prime contractor or teammate does not pay our invoices in a timely fashion, chooses to offer products or services of the type that we provide, teams with other companies to provide such products or services, or otherwise reduces its reliance upon us for such products or services.
Moreover, our revenue, profit and operating results could be adversely affected if any prime contractor or teammate does not pay our invoices in a timely fashion, chooses to offer products or services of the type that we provide, teams with other companies to provide such products or services, or otherwise reduces its reliance upon us for such products or services. 23 PROFITABILITY RISKS Our inability to accurately estimate or control our costs on our fixed price contracts may result in a decrease of our operating margins, and in some cases result in contract losses.
As we expand our national and global footprint, we may become involved in a greater number of engagements that will be larger in size, scope and complexity.
Our efforts to become involved in engagements that are greater in terms of size, scope, and performance demands may result in increased performance and credit risk. As we expand our national and global footprint, we may become involved in a greater number of engagements that will be larger in size, scope and complexity.
Even if we win a particular contract through competitive bidding, our profit margins may be depressed, or we may even suffer losses as a result of the costs incurred through the bidding process and the need to lower our prices to overcome competition. 22 Our reliance on GSA Schedule and other IDIQ contracts creates the risk of volatility in our revenue and profit levels.
Even if we win a particular contract through competitive bidding, our profit margins may be depressed, or we may even suffer losses as a result of the costs incurred through the bidding process and the need to lower our prices to overcome competition.
If a client were to terminate, decline to exercise options under, or curtail further performance under one or more of our major contracts, our revenue and operating results could be adversely affected. 23 Our relationships with other contractors are important to our business and, if disrupted, could cause us damage.
If a client were to terminate, decline to exercise options under, or curtail further performance under one or more of our major contracts, our revenue and operating results could be adversely affected.
There can be no assurance that we will continue to obtain revenue from such contracts at current levels, or in any amount, in the future.
We may be unable to continue to obtain revenue from such contracts at current levels, or in any amount, in the future.
The diversity of the services we provide, and the clients we serve, may create actual, potential, and perceived conflicts of interest and business conflicts that limit our growth and could lead to potential liabilities for us.
To the extent our client relationships and/or professional reputation deteriorate, our revenue and operating results could be adversely affected. 21 The diversity of the services we provide, and the clients we serve, may create actual, potential, and perceived conflicts of interest and business conflicts that limit our growth and could lead to potential liabilities for us.
The calculation of backlog is conditioned on numerous uncertainties and estimates, and there can be no assurance that we will in fact receive the amounts we have included in our backlog.
The calculation of backlog is conditioned on numerous uncertainties and estimates, and we may, in fact, fail to receive the amounts we have included in our backlog.
The declaration of any future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to the discretion of the Board taking into account future earnings, cash flows, net income, dividend yield and other factors. Authorization of dividends by the Board is subject to adherence/compliance with our Credit Facility.
The Board has authorized, declared and paid regular dividends each quarter since 2018. The declaration of any future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to the discretion of the Board taking into account future earnings, cash flows, net income, dividend yield and other factors.
Thus, the failure by Congress and the Administration to enact appropriations bills in a timely manner can result in the loss of revenue and profit when federal government agencies and departments are required to cancel or change existing or new initiatives or the deferral of revenue and profit to later periods due to shutdowns or delays in implementing existing or new initiatives.
Failures by Congress and the Administration to enact appropriations bills in a timely manner can force federal government agencies and departments to shut down or to cancel, change, or delay the implementation of existing or new initiatives. Such events may result in the loss of revenue and profit, or the deferral of revenue and profit to later periods.
Likewise, we may protest the contracts awarded to some of our competitors, a process that takes the time and energy of our management and may result in additional legal and consultant costs.
Our business could be adversely affected by delays caused by our competitors protesting contract awards received by us, which could stop our work. Likewise, we may protest the contracts awarded to some of our competitors, a process that takes the time and energy of our management and may result in additional legal and consultant costs.
If we fail to satisfy the needs of our clients in providing these services, we could incur reputational damage and clients could claim significant costs and losses for which they could seek compensation from us. 21 RISKS RELATED TO THE GOVERNMENT CONTRACTS BUSINESS Maintaining our client relationships and professional reputation is critical to our ability to successfully win new contracts and renew expired contracts.
If we fail to satisfy the needs of our clients in providing these services, we could incur reputational damage, and clients could claim significant costs and losses for which they could seek compensation from us.
GOVERNMENT BUDGETING AND SPENDING PRIORITIES RISKS The failure of Congress to approve appropriations bills in a timely manner for the federal government agencies and departments we support, or the failure of the Administration and Congress to reach an agreement on fiscal issues, could delay and reduce spending, cause us to lose revenue and profit, and affect our cash flow.
Because of the following factors affecting our business, operations, financial position or future financial performance, reputation, and/or value of our stock, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. 19 GOVERNMENT BUDGETING AND SPENDING PRIORITIES RISKS The failure of Congress to approve appropriations bills in a timely manner for the federal government agencies and departments we support, or the failure of the Administration and Congress to reach an agreement on fiscal issues, could delay and reduce spending, cause us to lose revenue and profit, and affect our cash flow.
This information should be read in conjunction with the description of our business, Management’s Discussion and Analysis, and the consolidated financial statements and related notes contained in this Annual Report on Form 10-K.
ITEM 1A. RI SK FACTORS The following discussion sets forth the material risk factors facing the Company that make an investment in us speculative or risky. This information should be read in conjunction with the description of our business, Management’s Discussion and Analysis, and the consolidated financial statements and related notes contained in this Annual Report on Form 10-K.
Demand for our services from our commercial clients has historically declined when their industries have experienced downturns, and we expect a decline in demand for our services when these industries or their customer bases experience downturns in the future. 24 Our efforts to become involved in engagements that are greater in terms of size, scope and performance demands may result in increased performance and credit risk.
Demand for our services from our commercial clients has historically declined when their industries have experienced downturns, and we expect a decline in demand for our services when these industries or their customer bases experience downturns in the future.
In addition, we could suffer serious harm to our reputation and our stock price could decline if allegations of impropriety are made against us, whether true or not. Federal government audits have been completed on our incurred contract costs only through 2019 for our NIH-cognizant indirect rates and through 2015 for our USAID-cognizant indirect rates.
In addition, we could suffer serious harm to our reputation and our stock price could decline if allegations of impropriety are made against us, whether true or not.
In addition, many state and local governments are not permitted to operate with budget deficits, and nearly all state and local governments face considerable challenges in balancing their budgets.
This may include impact to our revenue, profit, and cash flows as a result of changes by or changes in the priorities of the Administration. In addition, many state and local governments are not permitted to operate with budget deficits, and nearly all state and local governments face considerable challenges in balancing their budgets.
As these security threats continue to evolve, we may be required to devote additional resources to protect, prevent, detect, and respond against cybersecurity attacks, system disruptions, and security breaches. Moreover, we also rely in part on third-party software and information technology vendors to run our information systems.
We have been the target of cyberattacks in the past and expect to continue to be a target in the future. As these security threats continue to evolve, we may be required to devote additional resources to protect against, prevent, detect, and respond to cybersecurity attacks, system disruptions, and security breaches.
Bribery Act 2010 and the GDPR, could have similar effects to those described above. Our international operations pose additional risks to our profitability and operating results.
Bribery Act 2010 and the GDPR, could have similar effects to those described above. Our international operations pose additional risks to our profitability and operating results, including political instability across many of the jurisdictions in which we operate, restrictions on the repatriation of funds, expropriation or nationalization of our assets, and currency exchange rate fluctuations.
Federal, state and local government, and/or international government elections could also affect spending priorities and budgets at all levels of government. In addition, increased government deficits and debt, both domestic and international, may lead to reduced spending by agencies and departments on projects or programs we support.
Federal, state and local government, and/or international government elections could also affect spending priorities and budgets at all levels of government.
We may not receive revenue corresponding to the full amount of our backlog, or may receive it later than we expect, which could adversely affect our revenue and operating results.
There may also be changes in the manner in which the GSA approaches procurement under the various GSA Schedule contract vehicles and other IDIQ contracts that may impact our ability to pursue and obtain awards of new or recompete opportunities. 22 We may not receive revenue corresponding to the full amount of our backlog, or may receive it later than we expect, which could adversely affect our revenue and operating results.
PROFITABILITY RISKS Our inability to accurately estimate or control our costs on our fixed price contracts may result in a decrease of our operating margins, and in some cases result in contract losses. As described elsewhere in this Form 10-K, we have three principal types of contracts with our clients: fixed-price, time-and-materials and cost-based.
As described elsewhere in this Form 10-K, we have three principal types of contracts with our clients: fixed-price, time-and-materials and cost-based. We derived 46%, 45%, and 45% of our total revenue from fixed-price contracts in 2024, 2023, and 2022, respectively.
Audits for costs incurred on work performed since then have not yet been completed. In addition, non-audit reviews may still be conducted on all of our government contracts, even for periods before 2015. 25 PRIVACY, CYBERSECURITY, TECHNOLOGY, AND DATA PROTECTION RISKS Our operations face continuous and evolving cybersecurity risks.
In addition, non-audit reviews may still be conducted on all of our government contracts, even for periods before 2015.
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ITEM 1A. RI SK FACTORS The following discussion of “risk factors” sets forth some of the most significant factors that may adversely affect our business, operations, financial position or future financial performance, reputation, and/or value of our stock.
Added
RISKS RELATED TO THE GOVERNMENT CONTRACTS BUSINESS Maintaining our client relationships and professional reputation is critical to our ability to successfully win new contracts and renew expired contracts . and failure to do so may inhibit our ability to secure future contracts, leading to decreased revenue and other adverse effects.
Removed
Because of the following factors, as well as other factors, whether known or unknown, affecting our business, operations, financial position or future financial performance, reputation, and/or value of our stock, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
Added
Our reliance on GSA Schedule and other IDIQ contracts creates the risk of volatility in our revenue and profit levels.
Removed
We regularly monitor the aging of receivables and make assessments of the ability of customers to pay amounts due. Our business could be adversely affected by delays caused by our competitors protesting contract awards received by us, which could stop our work.
Added
Our relationships with other contractors are important to our business and, if disrupted, could cause us reputational damage or result in contract termination or other adverse effects on our business.
Removed
Although we devote significant resources to our cybersecurity programs and have implemented security measures to protect our systems and to prevent, detect, and respond to cybersecurity incidents, we have been the target of these types of attacks in the past.
Added
The percentage of work we perform on a fixed-price basis may increase in the future based on changes to the procurement approach of our clients.
Removed
We have not identified a material adverse impact on our business or our financial results, individually or in the aggregate, due to being the target of prior cyber attacks.
Added
Federal government audits have been completed on our incurred contract costs only through 2019 for our NIH-cognizant indirect rates and through 2015 for our USAID-cognizant indirect rates, but audits for costs incurred on work performed since then have not yet been completed.
Removed
While we are committed to threat detection and mitigation efforts to reduce such impact, there can be no assurance that our efforts will prevent such attacks or their impact in the future.
Added
PRIVACY, CYBERSECURITY, TECHNOLOGY, AND DATA PROTECTION RISKS Our operations face continuous and evolving cybersecurity risks, including disruptions in critical systems, security breaches, and the unauthorized access to our and our clients’ systems, any of which may harm our reputation, impose unexpected remediation costs, and expose us to potential liability.
Removed
We cannot assure you that we will pay special or regular dividends on our stock in the future. The Board has authorized, declared and paid regular dividends each quarter since 2018.
Added
Moreover, we also rely in part on third-party software and information technology vendors to run our information systems.
Removed
There can be no assurance that the board of directors will declare any dividends in the future.
Added
Should any of these or other unforeseen consequences arise, they could have an adverse effect on our business, financial condition, results of operations, future business opportunities and/or ability to satisfy our obligations under our debt. 28 We may not pay special or regular dividends on our stock in the future.
Added
Authorization of dividends by the Board is subject to adherence/compliance with our Credit Facility. The Board may, upon taking into consideration any of the foregoing or other relevant factors, decide not to declare dividends in the future.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Audit Committee regularly reviews and evaluates cybersecurity risks and the procedures and policies implemented by management to identify, manage, and mitigate such risks. Management is responsible for day-to-day assessment and management of cybersecurity risks. Our Chief Information Officer (the “CIO”) has primary oversight of material risks from cybersecurity threats.
Biggest changeCybersecurity Governance and Oversight Our Board, directly or through its committees, is responsible for the oversight of the Company's overall enterprise risk management program, which includes cybersecurity risks. Our Audit Committee regularly reviews and evaluates cybersecurity risks and the procedures and policies implemented by management to identify, manage, and mitigate such risks.
The primary components of our risk mitigation strategy include: • Security Controls: We maintain a comprehensive set of controls aligned with industry standards such as the National Institute of Standards and Technology (“NIST”) and the International Organization of Standards (“ISO”) 27001 to protect our systems, networks, and data. • Incident Response Plan: We have a well-defined incident response plan that outline roles, responsibilities, and procedures for handling cybersecurity incidents. • Employee Training and Awareness: We have training programs to ensure that our employees understand their role in maintaining a secure environment and recognize potential threats. • Third-party Risk Assessment and Management: We assess and manage cybersecurity risks associated with our vendors, partners, and service providers. 32 Our approach to information security follows a defense-in-depth methodology in which security is embedded throughout the system architecture.
The primary components of our risk mitigation strategy include: • Security Controls: We maintain a comprehensive set of controls aligned with industry standards such as the National Institute of Standards and Technology (“NIST”) and the International Organization of Standards (“ISO”) 27001 to protect our systems, networks, and data. • Incident Response Plan: We have a well-defined incident response plan that outlines roles, responsibilities, and procedures for handling cybersecurity incidents. • Employee Training and Awareness: We have training programs to ensure that our employees understand their role in maintaining a secure environment and recognize potential threats. • Third-Party Risk Assessment and Management: We assess and manage cybersecurity risks associated with our vendors, partners, and service providers. 31 Our approach to information security follows a defense-in-depth methodology in which security is embedded throughout the system architecture.
ITEM 1C. CYBE RSECURITY As discussed in the “Item 1A. Risk Factors – Privacy, Cybersecurity, Technology, and Data Protection Risks”, we face certain ongoing risks from cybersecurity threats and recognize the critical importance of effective cybersecurity risk management in today's interconnected digital landscape.
ITEM 1C. CYBE RSECURITY As discussed in the “Item 1A. Risk Factors – Privacy, Cybersecurity, Technology, and Data Protection Risks,” we face certain ongoing risks from cybersecurity threats and recognize the critical importance of effective cybersecurity risk management in today's interconnected digital landscape.
The CISO and our security staff provides ongoing support to internal operations and oversight to our systems that offer services to our clients within our enterprise network. Our security staff is also augmented through an industry-recognized security operations center where systems are continuously monitored.
The CISO and our security staff provide ongoing support to internal operations and oversight to our systems that offer services to our clients within our enterprise network. Our security staff is also augmented through an industry-recognized security operations center where systems are continuously monitored.
The CIO and the CISO have a combined tenure of over 33 years with the Company in various progressive management roles in information systems and technology and information security. The CIO and the CISO conducts regular meetings with the Audit Committee and the Board to communicate updates on cybersecurity risks, incidents, and mitigation efforts.
They have a combined tenure of over three decades with the Company in various progressive management roles in information systems and technology and in formation security. They conduct regular meetings with the Audit Committee and the Board to communicate updates on cybersecurity risks, incidents, and mitigation efforts.
Directly reporting to our CIO is our Deputy Chief Information Officer (“the Deputy CIO”), with over 30 years of experience leading implementation of various IT infrastructure and systems, and our Chief Information Security Officer (the “CISO”), with over 20 years of specific cyber security experience and is responsible for maintaining compliance with applicable security requirements.
Our Deputy CIO has over 30 years of experience leading implementation of various IT infrastructure and systems, and our CISO has over 20 years of specific cybersecurity experience and is responsible for maintaining compliance with applicable security requirements.
To date, we have not identified cybersecurity risks, threats, or incidents that have materially affected us, including our operations, business strategy, results of operations, or financial conditions. Cybersecurity Governance and Oversight Our Board, directly or through its committees, is responsible for the oversight of the Company's overall enterprise risk management program that includes cybersecurity risks.
To date, we have not identified cybersecurity risks, threats, or incidents that have materially affected us or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial conditions.
Removed
He has over 40 years of professional experience across various engineering, business and management roles.
Added
Management is responsible for day-to-day assessment and management of cybersecurity risks. Our current Chief Information Officer (the “CIO”), the Deputy Chief Information Office (the “Deputy CIO”) and the Chief Information Security Officer (the “CISO”) have primary oversight of material risks from cybersecurity threats. The CIO has decades of professional experience across various engineering, business and management roles.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2023, we had leases in place for approximately 970,843 square feet of office space in more than 70 office locations throughout the U.S. and around the world, with various lease terms expiring over the next fifteen years.
Biggest changeAs of December 31, 2024, we had leases in place for approximately 920,239 square feet of office space in more than 70 office locations throughout the U.S. and around the world, with various lease terms expiring over the next fourteen years.
ITEM 2. PR OPERTIES We lease our offices and do not own any real estate. As of December 31, 2023, we leased approximately 208,274 square feet of office space at our corporate headquarters at 1902 Reston Metro Plaza, Reston, Virginia (in the Washington, D.C. metropolitan area) through May 2039 (the “Reston Office”).
ITEM 2. PR OPERTIES We lease our offices and do not own any real estate. As of December 31, 2024, we leased approximately 208,274 square feet of office space at our corporate headquarters at 1902 Reston Metro Plaza, Reston, Virginia (in the Washington, D.C. metropolitan area) through May 2039 (the “Reston Office”).
We continually review our need for office space, and we believe that our current office space, as well as other future office space we expect to be able to obtain in the lease marketplace, will be sufficient to meet our office space needs. 33
We continually review our need for office space, and we believe that our current office space, as well as other future office space we expect to be able to obtain in the lease marketplace, will be sufficient to meet our office space needs. 32

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile these matters and proceedings cause us to incur costs, including, but not limited to, attorneys’ fees, we currently believe that any ultimate liability arising out of these matters and proceedings will not have a material adverse effect on our financial position, results of operations, or cash flows. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 34 PAR T II
Biggest changeWhile these matters and proceedings cause us to incur costs, including, but not limited to, attorneys’ fees, we currently believe that any ultimate liability arising out of these matters and proceedings will not have a material adverse effect on our financial position, results of operations, or cash flows. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 33 PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur Credit Facility contains certain restrictions related to the payment of cash dividends, requiring us to meet certain covenants prior to and after the declaration of any dividend. 35 Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock from December 31, 2018 through December 31, 2023, with the cumulative total return on (i) the NASDAQ Composite, (ii) the Russell 2000 stock index, and (iii) the S&P 1500 companies having GICS Code 2020 Commercial & Professional Services.
Biggest changeStock Performance Graph The following graph compares the cumulative total stockholder return on our common stock from December 31, 2019 through December 31, 2024, with the cumulative total return on (i) the Nasdaq Composite, (ii) the Russell 2000 stock index, and (iii) the S&P 1500 companies having GICS Code 2020 Commercial & Professional Services. 34 The comparison below assumes an initial investment of $100.00 on December 31, 2019 in which all dividends (if any) are reinvested and all returns are market-cap weighted.
Our Credit Facility permits annual share repurchases of at least $25 million provided that the Company is not in default of its covenants, and higher amounts provided that our Consolidated Leverage Ratio prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to a net liquidity of $100.00 million.
Our Credit Facility permits annual share repurchases of at least $25.0 million provided that the Company is not in default of its covenants, and higher amounts provided that our Consolidated Leverage Ratio prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to a net liquidity of $100.00 million.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the NASDAQ Global Select Market under the symbol “ICFI.” Holders As of February 23, 2024, there were 26 registered holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Global Select Market under the symbol “ICFI.” Holders As of February 21, 2025, there were 23 registered holders of record of our common stock.
Period Total Number of Shares Purchased (a) Average Price Paid per Share (a) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (b) October 1 – October 31 — $ — — $ 93,743,956 November 1 – November 30 4,935 $ 126.64 — $ 93,743,956 December 1 – December 31 — $ — — $ 93,743,956 Total 4,935 $ 126.64 — a) The total number of shares purchased includes any shares repurchased pursuant to our share repurchase program described further in footnote (b) below, as well as shares purchased from employees to pay required withholding taxes related to the settlement of restricted stock units in accordance with our applicable long-term incentive plan.
Period Total Number of Shares Purchased (a) Average Price Paid per Share (a) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (b) October 1 – October 31 — $ — — $ 67,217,536 November 1 – November 30 75,255 $ 139.83 66,929 $ 158,114,581 December 1 – December 31 69,392 $ 127.10 69,392 $ 149,293,133 Total 144,647 $ 133.72 136,321 a) The total number of shares purchased includes any shares repurchased pursuant to our share repurchase program described further in footnote (b) below, as well as shares purchased from employees to pay required withholding taxes related to the settlement of restricted stock units in accordance with our applicable long-term incentive plan.
During the three months ended December 31, 2023, we repurchased 4,935 shares of common stock from employees in satisfaction of tax withholding obligations at an average price of $126.64 per share. b) The current share repurchase program authorizes share repurchases in the aggregate up to $200.0 million.
During the three months ended December 31, 2024, we repurchased 136,321 under the stock repurchase program at an average price of $131.47 and 8,326 shares of common stock from employees in satisfaction of tax withholding obligations at an average price of $170.69 per share. b) The current share repurchase program authorizes share repurchases in the aggregate up to $300.0 million.
Our Credit Facility permits annual share repurchases of at least $25 million provided that the Company is not in default of its covenants, and higher amounts provided that our Consolidated Leverage Ratio, prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to a net liquidity of $100.0 million after giving effect to such purchases. 37 Repurchases of Equity Securities The following table summarizes the share repurchase activity for the three months ended December 31, 2023 for our share repurchase plan and shares purchased in satisfaction of employee tax withholding obligations related to the settlement of restricted stock units.
Our Credit Facility permits annual share repurchases of at least $25.0 million provided that the Company is not in default of its covenants, and higher amounts provided that our Consolidated Leverage Ratio, prior to and after giving effect to such repurchases, is 0.50 to 1.00 less than the then-applicable maximum Consolidated Leverage Ratio and subject to a net liquidity of $100.0 million after giving effect to such purchases.
Share Repurchase Program In September 2017, the Board approved a share repurchase program that authorizes share repurchases in the aggregate up to $100.0 million. In November 2021, the Board approved an increase to the share repurchase program to a new limit of $200.0 million, inclusive of the prior limit.
On November 14, 2024, the Board approved an increase to the share repurchase program, including purchases pursuant to Rules 10b5-1 and 10b-18, to a new limit of $300.0 million, inclusive of the prior limit of $200.0 million.
The historical information set forth below is not necessarily indicative of future performance. 36 Year Ended December 31, 2018 2019 2020 2021 2022 2023 ICF International, Inc. $ 100.00 $ 177.20 $ 144.95 $ 201.18 $ 195.41 $ 265.74 NASDAQ Composite 100.00 136.69 198.10 242.03 163.28 236.17 Russell 2000 Index 100.00 125.52 150.58 172.90 137.56 160.85 S&P Composite 1500 Commercial & Professional Services 100.00 135.88 160.43 202.40 182.94 215.78 Recent Sales of Unregistered Securities None.
The historical information set forth below is not necessarily indicative of future performance. 35 Year Ended December 31, 2019 2020 2021 2022 2023 2024 ICF International, Inc. $ 100.00 $ 81.80 $ 113.53 $ 110.27 $ 149.96 $ 133.84 Nasdaq Composite 100.00 144.92 177.06 119.45 172.77 223.87 Russell 2000 Index 100.00 119.96 137.74 109.59 128.14 142.93 S&P Composite 1500 Commercial & Professional Services 100.00 118.06 148.95 134.63 158.80 184.99 Recent Sales of Unregistered Securities None.
During the year ended December 31, 2023, we repurchased 180,000 shares under this program at an average price of $100.70 per share. As of December 31, 2023, $93.7 million of authority remained available for share repurchases. The objective of our share repurchase program is to offset dilution resulting from employee stock compensation.
During the year ended December 31, 2024, we used $44.4 million to repurchase 327,321 shares under this program at an average price of $135.77 per share.
Removed
The comparison below assumes an initial investment of $100.00 on December 31, 2018 in which all dividends (if any) are reinvested and all returns are market-cap weighted.
Added
Our Credit Facility contains certain restrictions related to the payment of cash dividends, requiring us to meet certain covenants prior to and after the declaration of any dividend.
Removed
For additional information on the share repurchase program, see “Note 18 - Share Repurchase Program” in our financial statements. ITEM 6. [ RESERVED] 38
Added
Share Repurchase Program In September 2017, the Board approved a share repurchase program to offset dilution resulting from employee stock compensation.
Added
As of December 31, 2024, $149.3 million of authority remained available for share repurchases. 36 Repurchases of Equity Securities The following table summarizes the share repurchase activity for the three months ended December 31, 2024 for our share repurchase plan and shares purchased in satisfaction of employee tax withholding obligations related to the settlement of restricted stock units.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears Ended December 31, 2023 and 2022 (dollars in thousands) Year Ended December 31, Year to Year Change 2023 2022 2023 2022 2022 to 2023 Dollars Percentages Dollars Percent Revenue $ 1,963,238 $ 1,779,964 100.0 % 100.0 % $ 183,274 10.3 % Direct Costs: Direct labor & related fringe 730,322 639,861 37.2 % 35.9 % 90,461 14.1 % Subcontractors & other direct costs 534,696 494,561 27.2 % 27.8 % 40,135 8.1 % Total Direct Costs 1,265,018 1,134,422 64.4 % 63.7 % 130,596 11.5 % Operating Costs and Expenses Indirect and selling expenses 505,162 486,863 25.7 % 27.4 % 18,299 3.8 % Depreciation and amortization 25,277 21,482 1.3 % 1.2 % 3,795 17.7 % Amortization of intangible assets 35,461 28,435 1.8 % 1.6 % 7,026 24.7 % Total Operating Costs and Expenses 565,900 536,780 28.8 % 30.2 % 29,120 5.4 % Operating Income 132,320 108,762 6.7 % 6.1 % 23,558 21.7 % Interest, net (39,681 ) (23,281 ) (2.0 )% (1.3 )% (16,400 ) 70.4 % Other income (expense) 3,908 (1,501 ) 0.2 % (0.1 )% 5,409 (360.4 )% Income Before Income Taxes 96,547 83,980 4.9 % 4.7 % 12,567 15.0 % Provision for Income Taxes 13,935 19,737 0.7 % 1.1 % (5,802 ) (29.4 )% Net Income $ 82,612 $ 64,243 4.2 % 3.6 % $ 18,369 28.6 % 45 Year ended December 31, 2023 compared to year ended December 31, 2022 Revenue.
Biggest changeYears Ended December 31, 2024 and 2023 (dollars in thousands) Year Ended December 31, Year to Year Change 2024 2023 2024 2023 2023 to 2024 Dollars Percentages Dollars Percent Revenue $ 2,019,787 $ 1,963,238 100.0 % 100.0 % $ 56,549 2.9 % Direct Costs: Direct labor & related fringe costs 775,239 730,322 38.4 % 37.2 % 44,917 6.2 % Subcontractors & other direct costs 506,777 534,696 25.1 % 27.2 % (27,919 ) (5.2 )% Total Direct Costs 1,282,016 1,265,018 63.5 % 64.4 % 16,998 1.3 % Operating Costs and Expenses Indirect and selling expenses 518,453 505,162 25.7 % 25.7 % 13,291 2.6 % Depreciation and amortization 20,484 25,277 1.0 % 1.3 % (4,793 ) (19.0 )% Amortization of intangible assets 32,992 35,461 1.6 % 1.8 % (2,469 ) (7.0 )% Total Operating Costs and Expenses 571,929 565,900 28.3 % 28.8 % 6,029 1.1 % Operating Income 165,842 132,320 8.2 % 6.7 % 33,522 25.3 % Interest, net (29,590 ) (39,681 ) (1.5 )% (2.0 )% 10,091 (25.4 )% Other income 1,806 3,908 0.1 % 0.2 % (2,102 ) (53.8 )% Income Before Income Taxes 138,058 96,547 6.8 % 4.9 % 41,511 43.0 % Provision for Income Taxes 27,888 13,935 1.4 % 0.7 % 13,953 100.1 % Net Income $ 110,170 $ 82,612 5.5 % 4.2 % $ 27,558 33.4 % Year ended December 31, 2024 compared to year ended December 31, 2023 Revenue.
EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow as these measures do not include certain cash requirements such as interest payments, tax payments, capital expenditures, and debt service. 47 The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated.
EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow as these measures do not include certain cash requirements such as interest payments, tax payments, capital expenditures, and debt service. The following table presents a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods indicated.
We believe that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, potential acquisitions, customary capital expenditures, and other working capital requirements. 40 Our results of operations and cash flows may vary significantly from quarter to quarter depending on a number of factors, including, but not limited to: • Progress of contract performance; • Extraordinary economic events and natural disasters; • Number of billable days in a quarter; • Timing of client orders; • Timing of award fee notices; • Changes in the scope of contracts; • Variations in purchasing patterns under our contracts; • Federal and state and local governments’ and other clients’ spending levels; • Federal government shutdowns; • Timing of billings to, and collection of payments from, clients; • Timing of receipt of invoices from, and payments to, employees and vendors; • Commencement, completion, and termination of contracts; • Strategic decisions, such as acquisitions, consolidations, divestments, spin-offs, joint ventures, strategic investments, and changes in business strategy; • Timing of significant costs and investments (such as bid and proposal costs and the costs involved in planning or making acquisitions); • Timing of events related to discrete tax items; • Our contract mix and use of subcontractors or the timing of other direct costs for which we may earn lower contract margin; • Changes in contract margin performance due to performance risks; • Additions to, and departures of, staff; • Changes in staff utilization; • Paid time off taken by our employees; • Level and cost of our debt; • Changes in accounting principles and policies; and/or • General market and economic conditions.
We believe that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, potential acquisitions, customary capital expenditures, and other working capital requirements. 39 Our results of operations and cash flows may vary significantly from quarter to quarter depending on a number of factors, including, but not limited to: • Progress of contract performance; • Extraordinary economic events and natural disasters; • Number of billable days in a quarter; • Timing of client orders; • Timing of award fee notices; • Changes in the scope of contracts; • Variations in purchasing patterns under our contracts; • Changes in priorities, especially with the federal government; • Federal and state and local governments’ and other clients’ spending levels; • Federal government shutdowns; • Timing of billings to, and collection of payments from, clients; • Timing of receipt of invoices from, and payments to, employees and vendors; • Commencement, completion, and termination of contracts; • Strategic decisions, such as acquisitions, consolidations, divestments, spin-offs, joint ventures, strategic investments, and changes in business strategy; • Timing of significant costs and investments (such as bid and proposal costs and the costs involved in planning or making acquisitions); • Timing of events related to discrete tax items; • Our contract mix and use of subcontractors or the timing of other direct costs for which we may earn lower contract margin; • Changes in contract margin performance due to performance risks; • Additions to, and departures of, staff; • Changes in staff utilization; • Paid time off taken by our employees; • Level and cost of our debt; • Changes in accounting principles and policies; and/or • General market and economic conditions.
There are three main types of contracts: time-and-materials contracts, fixed-price contracts, and cost-based contracts. 44 The following table shows the approximate percentage of our revenue for each of these types of contracts for the periods indicated. Certain immaterial revenue amounts in the prior years have been reclassified due to minor adjustments and reclassification within contract mix.
There are three main types of contracts: time-and-materials contracts, fixed-price contracts, and cost-based contracts. 43 The following table shows the approximate percentage of our revenue for each of these types of contracts for the periods indicated. Certain immaterial revenue amounts in the prior years have been reclassified due to minor adjustments and reclassification within contract mix.
Our services primarily support clients that operate in four key markets: • Energy, Environment, Infrastructure, and Disaster Recovery; • Health and Social Programs; and • Security and Other Civilian & Commercial We provide services to our diverse client base that deliver value throughout the entire life cycle of a policy, program, project, or initiative.
Our services primarily support clients that operate in the following key markets: • Energy, Environment, Infrastructure, and Disaster Recovery; • Health and Social Programs; and • Security and Other Civilian & Commercial. We provide services to our diverse client base that deliver value throughout the entire life cycle of a policy, program, project, or initiative.
RESULTS OF OPERATIONS The following table sets forth certain items from our consolidated statements of comprehensive income for the years ended December 31, 2023 and 2022 and expresses these items as a percentage of revenue for the periods indicated and the period-over-period rate of change in each of them.
RESULTS OF OPERATIONS The following table sets forth certain items from our consolidated statements of comprehensive income for the years ended December 31, 2024 and 2023 and expresses these items as a percentage of revenue for the periods indicated and the period-over-period rate of change in each of them.
While we believe that these non-GAAP financial measures provide additional information to investors and may be useful in evaluating our financial information, they should be considered supplemental in nature and not as a substitute for financial information prepared in accordance with U.S. GAAP.
GAAP measures (“non-GAAP”). While we believe that these non-GAAP financial measures provide additional information to investors and may be useful in evaluating our financial information, they should be considered supplemental in nature and not as a substitute for financial information prepared in accordance with U.S. GAAP.
We believe our prior and current experience with disaster relief and rebuild efforts, including after hurricanes Katrina and Rita and Superstorm Sandy, put us in a favorable position to continue to provide recovery and housing assistance, and environmental and infrastructure solutions, including disaster mitigation, on behalf of federal departments and agencies, state, territorial, and local jurisdictions, and regional agencies.
We believe our prior and current experience with disaster relief and rebuild efforts, including after hurricanes Katrina and Rita and Superstorm Sandy, and the wildfires in Oregon, put us in a favorable position to continue to provide recovery and housing assistance, and environmental and infrastructure solutions, including disaster mitigation, on behalf of federal departments and agencies, state, territorial, and local jurisdictions, and regional agencies.
Our commercial clients, which include clients outside the U.S., generated approximately 24%, 24%, and 29% of our revenue in 2023, 2022, and 2021, respectively. We believe that our domain expertise and the program knowledge developed from our research and analytics, and assessment and advisory engagements further position us to provide a full suite of services.
Our commercial clients, which include clients outside the U.S., generated approximately 25%, 24%, and 24% of our revenue in 2024, 2023, and 2022, respectively. We believe that our domain expertise and the program knowledge developed from our research and analytics, and assessment and advisory engagements further position us to provide a full suite of services.
The estimates do not take into account future drawdowns and repayments on the debt or changes in the variable interest rate, and actual interest may be different. As of December 31, 2023, we have operating leases for facilities and equipment with remaining terms ranging from 1 to 15 years.
The estimates do not take into account future drawdowns and repayments on the debt or changes in the variable interest rate, and actual interest may be different. As of December 31, 2024, we have operating leases for facilities and equipment with remaining terms ranging from 1 to 14 years.
Most of our revenue is from contracts on which we are the prime contractor, which we believe provides us with strong client relationships. In 2023, 2022, and 2021, approximately 89%, 91%, and 91% of our revenue, respectively, was from prime contracts.
Most of our revenue is from contracts on which we are the prime contractor, which we believe provides us with strong client relationships. In 2024, 2023, and 2022, approximately 87%, 89%, and 91% of our revenue, respectively, was from prime contracts.
We estimate the most likely amount expected to achieve based on our prior history in providing the services to the customer or, if no history exists, we constrain the variable consideration until the initial determination by the customer.
We estimate the most likely amount expected to be achieved based on our prior history in providing the services to the customer or, if no history exists, we constrain the variable consideration until the initial determination by the customer.
Discussions of 2022 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 1, 2023, and is incorporated by reference into this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 28, 2024, and is incorporated by reference into this Management’s Discussion and Analysis of Financial Condition and Results of Operations.
International government clients generated approximately 5%, 6%, and 9% of our revenue in 2023, 2022, and 2021, respectively. 39 We also serve a variety of commercial clients worldwide, including: airlines, airports, electric and gas utilities, health care companies, banks and other financial services companies, transportation, non-profits/associations, manufacturing firms, retail chains, and distribution companies.
International government clients generated approximately 5%, 5%, and 6% of our revenue in 2024, 2023, and 2022, respectively. 38 We also serve a variety of commercial clients worldwide, including: airlines, airports, electric and gas utilities, health care companies, banks and other financial services companies, transportation, non-profits/associations, manufacturing firms, retail chains, and distribution companies.
Our government efforts include work performed under subcontract agreements to commercial clients whose ultimate customers are government agencies and departments. Our largest clients are U.S. federal government departments and agencies. Our federal government clients have included every cabinet-level department, most significantly HHS, DoD, and DoS.
Our government efforts include work performed under subcontract agreements to commercial clients whose ultimate customers are government agencies and departments. Our largest clients are U.S. federal government departments and agencies. Our federal government clients include every cabinet-level department, most significantly HHS, EPA, and DoS.
The following table summarizes our cash flows from the years ended December 31, 2023, 2022, and 2021.
The following table summarizes our cash flows from the years ended December 31, 2024, 2023, and 2022.
(2) Income tax effects were calculated using the effective tax rate, adjusted for discrete items, if any, of 22.8%, 28.0% and 28.9% for the years ended December 31, 2023, 2022, and 2021, respectively. LIQUIDITY AND CAPITAL RESOURCES Liquidity and Borrowing Capacity .
(2) Income tax effects were calculated using the effective tax rate, adjusted for discrete items, if any, of 20.2%, 22.8% and 28.0% for the years ended December 31, 2024, 2023, and 2022, respectively. 47 LIQUIDITY AND CAPITAL RESOURCES Liquidity and Borrowing Capacity .
For the years ended December 31, 2023, 2022, and 2021, our revenue from contracts in which we use EACs totaled $310.1 million, $287.4 million, and $253.6 million, respectively. Our contracts may include variable considerations such as award fees and incentives that may increase or decrease the transaction price.
For the years ended December 31, 2024, 2023, and 2022, our revenue from contracts in which we use EACs totaled $479.7 million, $310.1 million, and $287.4 million, respectively. Our contracts may include variable considerations such as award fees and incentives that may increase or decrease the transaction price.
Our current and long-term operating lease liabilities of $195.9 million at December 31, 2023 represent the present value of the minimum payments required under the non-cancellable leases, and the actual cash payments total $241.1 million. The operating lease payment obligations by year are further discussed in “Note 7 - Leases” in the “Notes to Consolidated Financial Statements”.
Our current and long-term operating lease liabilities of $176.7 million at December 31, 2024 represent the present value of the minimum payments required under the non-cancellable leases, and the actual cash payments total $214.9 million. The operating lease payment obligations by year are further discussed in “Note 7 - Leases” in the “Notes to Consolidated Financial Statements”.
GAAP Diluted EPS $ 4.35 $ 3.38 $ 3.72 Impairment of long-lived assets 0.40 0.44 0.43 Acquisition and divestiture-related expenses 0.25 0.34 0.25 Severance and other costs related to staff realignment 0.33 0.33 0.06 Expenses related to facility consolidations and office closures (1) 0.24 0.26 0.08 Expenses related to the transfer to our new corporate headquarters — 0.44 0.05 Expenses related to retirement of Executive Chair — — 0.02 Expenses related to our agreement for the sale of receivables — 0.01 — Pre-tax gain from divestiture of a business (0.30 ) — — Amortization of intangibles 1.87 1.49 0.65 Income tax effects of the adjustments (2) (0.64 ) (0.92 ) (0.44 ) Non-GAAP Diluted EPS $ 6.50 $ 5.77 $ 4.82 (1) These are exit costs related to actual office closures (previously included in Adjusted EBITDA) and accelerated depreciation related to fixed assets for planned office closures.
GAAP Diluted EPS $ 5.82 $ 4.35 $ 3.38 Impairment of long-lived assets 0.19 0.40 0.44 Acquisition and divestiture-related expenses 0.07 0.25 0.34 Severance and other costs related to staff realignment 0.08 0.33 0.33 Expenses related to facility consolidations and office closures (1) 0.06 0.24 0.26 Expenses related to the transfer to our new corporate headquarters — — 0.44 Expenses related to our agreement for the sale of receivables — — 0.01 Pre-tax gain from divestiture of a business (0.11 ) (0.30 ) — Amortization of intangibles 1.74 1.87 1.49 Income tax effects of the adjustments (2) (0.40 ) (0.64 ) (0.92 ) Non-GAAP Diluted EPS $ 7.45 $ 6.50 $ 5.77 (1) These are exit costs related to actual office closures (previously included in Adjusted EBITDA) and accelerated depreciation related to fixed assets for planned office closures.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of the Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Fair Value of Acquired Assets from Business Combinations Our consolidated balance sheets as of December 31, 2023 and 2022 include $94.9 million and $126.5 million, respectively, of net intangible assets that were created through business acquisitions.
Fair Value of Acquired Assets from Business Combinations Our consolidated balance sheets as of December 31, 2024 and 2023 include $88.3 million and $94.9 million, respectively, of net intangible assets that were created through business acquisitions.
Our discussion of the items for the years ended December 31, 2022 and 2021 can be found in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 1, 2023.
Our discussion of the items for the years ended December 31, 2023 and 2022 can be found in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 28, 2024.
Federal government clients generated approximately 55%, 55%, and 47% of our revenue in 2023, 2022, and 2021, respectively. State and local government clients generated approximately 16%, 15%, and 15% of our revenue in each of 2023, 2022, and 2021, respectively.
Federal government clients generated approximately 54%, 55%, and 55% of our revenue in 2024, 2023, and 2022, respectively. State and local government clients generated approximately 16%, 16%, and 15% of our revenue in each of 2024, 2023, and 2022, respectively.
Client type is an indicator of the diversity of our client base. Revenue by contract mix provides insight in terms of the degree of performance risk that we have assumed. Significant variances in the key metrics tables that are provided below are discussed under the revenue section of the results of operations.
Revenue by contract mix provides insight in terms of the degree of performance risk that we have assumed. Significant variances in the key metrics tables that are provided below are discussed under the revenue section of the results of operations.
We believe that we will be able to access these markets at commercially reasonable terms and conditions if, in the future, we need additional borrowings or capital. 49 Material Cash Requirements from Contractual Obligations .
At present, we believe we will be able to continue to access these markets at commercially reasonable terms and conditions if we need additional capital in the near term. Material Cash Requirements from Contractual Obligations .
We generally have been able to price our contracts in a manner that accommodates the rates of inflation experienced in recent years, although we cannot ensure that we will be able to do so in the future. 41 BUSINESS COMBINATIONS A key element of our growth strategy is to pursue acquisitions.
We generally have been able to price our contracts in a manner that accommodates the rates of inflation experienced in recent years, although we cannot ensure that we will be able to do so in the future.
Year ended December 31, 2023 2022 2021 Net income $ 82,612 $ 64,243 $ 71,132 Interest, net 39,681 23,281 9,984 Provision for income taxes 13,935 19,737 28,958 Depreciation and amortization 60,738 49,917 31,970 EBITDA 196,966 157,178 142,044 Impairment of long-lived assets (1) 7,666 8,354 8,215 Acquisition and divestiture-related expenses (2) 4,759 6,441 4,798 Severance and other costs related to staff realignment (3) 6,366 6,302 1,242 Charges for facility consolidations and office closures (4) 3,187 5,034 1,434 Expenses related to the transfer to our new corporate headquarters (5) — 8,287 899 Expenses related to retirement of Executive Chair (6) — — 397 Expenses related to our agreement for the sale of receivables (7) — 240 — Pre-tax gain from divestiture of a business (8) (5,712 ) — — Total adjustments 16,266 34,658 16,985 Adjusted EBITDA $ 213,232 $ 191,836 $ 159,029 (1) Represents impairment of operating lease right-of-use and leasehold improvement assets associated with exit from certain facilities, and an intangible asset associated with exit of a business.
Year ended December 31, 2024 2023 2022 Net income $ 110,170 $ 82,612 $ 64,243 Interest, net 29,590 39,681 23,281 Provision for income taxes 27,888 13,935 19,737 Depreciation and amortization 53,476 60,738 49,917 EBITDA 221,124 196,966 157,178 Impairment of long-lived assets (1) 3,583 7,666 8,354 Acquisition and divestiture-related expenses (2) 1,313 4,759 6,441 Severance and other costs related to staff realignment (3) 1,535 6,366 6,302 Charges for facility consolidations and office closures (4) 464 3,187 5,034 Expenses related to the transfer to our new corporate headquarters (5) — — 8,287 Expenses related to our agreement for the sale of receivables (6) — — 240 Pre-tax gain from divestiture of a business (7) (2,013 ) (5,712 ) — Total adjustments 4,882 16,266 34,658 Adjusted EBITDA $ 226,006 $ 213,232 $ 191,836 46 (1) Represents impairment of operating lease right-of-use and leasehold improvement assets associated with exit from certain facilities, and an intangible asset associated with exit of a business.
Assuming that our interest rate on the Credit Facility is the same as on December 31, 2023, we anticipate our interest payments on the debt to be approximately $29.5 million in 2024, $27.5 million in 2025, $24.9 million in 2026, and $8.1 million in 2027 when our Credit Facility expires.
Assuming that our interest rate on the Credit Facility is the same as on December 31, 2024, we anticipate our interest payments on the debt to be approximately $23.6 million in 2025, $23.6 million in 2026, and $6.2 million in 2027 when our Credit Facility expires.
For the years ended December 31, 2023 and 2022, direct labor and related fringe benefit costs were 57.7% and 56.4% of total direct costs, respectively, and subcontractors and other direct costs were 42.3% and 43.6% of total direct costs, respectively.
For the years ended December 31, 2024 and 2023, direct labor and related fringe benefit costs were 60.5% and 57.7% of total direct costs, respectively, and subcontractors and other direct costs were 39.5% and 42.3% of total direct costs, respectively.
Additionally, we continuously analyze our capital structure to ensure we have capital to fund future strategic acquisitions. We continue to monitor the state of the financial markets on a regular basis to assess the availability and cost of additional capital resources from both debt and equity sources.
Additionally, we continuously analyze our capital structure to ensure we have capital to fund future strategic acquisitions. We continuously monitor the state of the financial markets to assess the availability of borrowing capacity under the Credit Facility and the cost of additional capital from both debt and equity markets.
As a percentage of total indirect and selling expenses, indirect labor and associated fringe costs were 71.1% and 67.2%, respectively, and general and administrative costs were 28.9% and 32.8%, respectively, for the years ended December 31, 2023 and 2022.
As a percentage of total indirect and selling expenses, indirect labor and associated fringe costs were 71.0% and 71.1%, respectively, and general and administrative costs were 29.0% and 28.9%, respectively, for the years ended December 31, 2024 and 2023. As a percentage of revenue, indirect and selling expenses was 25.7% for the years ended December 31, 2024 and 2023.
Revenue from Security and Other Civilian & Commercial client market saw a decrease of $18.6 million, or 5.1%, as a result of: • Decreases of $20.4 million from commercial, driven by the divestiture of the commercial marketing business, and $4.0 million from U.S. federal government client markets, respectively, offset by • Increases of $5.5 million from international government and $0.3 million from U.S. state and local government client markets, respectively.
Revenue from Security and Other Civilian & Commercial client market saw a decrease of $16.9 million, or 4.9%, as a result of: • Decreases of $34.8 million from commercial clients, driven by the divestiture of the commercial marketing and events business during fiscal year 2023, $1.4 million from international government clients, and $0.3 million from U.S. state and local government clients, respectively, offset by • An increase of $19.6 million from U.S. federal government clients.
In the wake of the major hurricanes (Ian, Harvey, Ida, Idalia, Irma, Maria, Laura and Michael) that devastated communities in Texas, Florida, North Carolina, Louisiana, the U.S. Virgin Islands, and Puerto Rico, the affected areas remain in various stages of relief and recovery efforts.
In the wake of the major hurricanes that devastated communities in Texas, Florida, North Carolina, Louisiana, the U.S. Virgin Islands, and Puerto Rico, and the impact of wildfires in Hawaii, Oregon, and southern California, the affected areas remain in various stages of evacuation, relief, and recovery efforts.
For the years ended December 31, 2023, 2022, and 2021, revenue from cost-based contracts totaled $265.3 million, $263.7 million, and $274.1 million, respectively. 42 For performance obligations requiring the delivery of a service for a fixed price, we use the ratio of actual costs incurred to total estimated costs at completion (“EAC”) provided that costs incurred (an input method) represents a reasonable measure of progress towards the satisfaction of a performance obligation, in order to estimate the portion of total revenue earned.
For performance obligations requiring the delivery of a service for a fixed price, we use the ratio of actual costs incurred to total estimated costs at completion (“EAC”) provided that costs incurred (an input method) represents a reasonable measure of progress towards the satisfaction of a performance obligation, in order to estimate the portion of total revenue earned.
Cash dividends declared in 2023 were as follows: Declaration Date Dividend Per Share Record Date Payment Date February 28, 2023 $ 0.14 March 24, 2023 April 13, 2023 May 9, 2023 $ 0.14 June 9, 2023 July 14, 2023 August 3, 2023 $ 0.14 September 8, 2023 October 13, 2023 November 2, 2023 $ 0.14 December 8, 2023 January 12, 2024 Cash Flows .
Cash dividends declared in 2024 were as follows: Declaration Date Dividend Per Share Record Date Payment Date February 27, 2024 $ 0.14 March 22, 2024 April 12, 2024 May 2, 2024 $ 0.14 June 7, 2024 July 12, 2024 August 1, 2024 $ 0.14 September 6, 2024 October 11, 2024 October 31, 2024 $ 0.14 December 6, 2024 January 10, 2025 Cash Flows .
For cost-based contracts, we recognize revenue as a single performance obligation based on contract costs incurred, as we become contractually entitled to reimbursement of the contract costs, plus a most likely estimate of award or incentive fees earned on those costs even though final determination of fees earned occurs after the contractually stipulated performance assessment period ends.
The selection of the method used to measure progress requires judgment and, among other things, is dependent on the contract type selected by the client during contract negotiation and the nature of the services and solutions to be provided. 41 For cost-based contracts, we recognize revenue as a single performance obligation based on contract costs incurred, as we become contractually entitled to reimbursement of the contract costs, plus a most likely estimate of award or incentive fees earned on those costs even though final determination of fees earned occurs after the contractually stipulated performance assessment period ends.
Year ended December 31, 2023 Year ended December 31, 2022 Year ended December 31, 2021 (dollars in thousands) Dollars Percent Dollars Percent Dollars Percent Client Markets: Energy, environment, infrastructure, and disaster recovery $ 806,482 41 % $ 714,628 40 % $ 693,572 45 % Health and social programs 814,454 42 % 704,465 40 % 563,590 36 % Security and other civilian & commercial 342,302 17 % 360,871 20 % 295,886 19 % Total $ 1,963,238 100 % $ 1,779,964 100 % $ 1,553,048 100 % Our primary clients within the client markets are the agencies and departments of the federal government and commercial clients.
Year ended December 31, 2024 Year ended December 31, 2023 Year ended December 31, 2022 (dollars in thousands) Dollars Percent Dollars Percent Dollars Percent Client Markets: Energy, environment, infrastructure, and disaster recovery $ 929,711 46 % $ 805,942 41 % $ 714,628 40 % Health and social programs 764,477 38 % 814,789 42 % 704,465 40 % Security and other civilian & commercial 325,599 16 % 342,507 17 % 360,871 20 % Total $ 2,019,787 100 % $ 1,963,238 100 % $ 1,779,964 100 % Our primary clients within the client markets are the agencies and departments of the federal government and commercial clients.
Year ended December 31, 2023 Year ended December 31, 2022 Year ended December 31, 2021 (dollars in thousands) Dollars Percent Dollars Percent Dollars Percent Contract Mix: Time-and-materials $ 812,430 41 % $ 713,693 40 % $ 633,135 41 % Fixed-price 885,465 45 % 802,568 45 % 645,809 41 % Cost-based 265,343 14 % 263,703 15 % 274,104 18 % Total $ 1,963,238 100 % $ 1,779,964 100 % $ 1,553,048 100 % Payments we received on cost-based contracts with the federal government are provisional payments subject to adjustment upon audit by the government.
Year ended December 31, 2024 Year ended December 31, 2023 Year ended December 31, 2022 (dollars in thousands) Dollars Percent Dollars Percent Dollars Percent Contract Mix: Time-and-materials $ 855,538 42 % $ 811,911 41 % $ 713,693 40 % Fixed-price 932,351 46 % 886,200 45 % 802,568 45 % Cost-based 231,898 12 % 265,127 14 % 263,703 15 % Total $ 2,019,787 100 % $ 1,963,238 100 % $ 1,779,964 100 % Payments we received on cost-based contracts with the federal government are provisional payments subject to adjustment upon audit by the government.
The growth in revenue of $183.3 million was driven by increases of $103.3 million from U.S. federal government clients, $48.4 million from U.S. state and local government clients, and $31.8 million from commercial clients, respectively, offset by a decrease of $0.2 million from international government clients.
The growth in revenue of $56.5 million was driven by increases of $39.3 million from commercial clients, $7.4 million from international government clients, $6.6 million from U.S. state and local government clients, and $3.3 million from U.S. federal government clients, respectively.
As of December 31, 2023, we also have finance leases for equipment and furniture with lease payment obligations through 2029 as discussed in “Note 7 - Leases” in the “Notes to Consolidated Financial Statements”. The current and long-term finance lease liabilities at December 31, 2023 of $16.4 million represent the present value of the minimum payments totaling $18.1 million. Inflation.
As of December 31, 2024, we also have finance leases for equipment and furniture with lease payment obligations through 2029 as discussed in “Note 7 - Leases” in the “Notes to Consolidated Financial Statements”.
The increase in indirect and selling expenses of $18.3 million for the year ended December 31, 2023 compared to 2022 was due to an additional $31.7 million in indirect labor and related fringe benefit costs offset by a decrease of $13.4 million in general and administrative costs.
The total direct costs as a percentage of revenue was 63.5% for the year ended December 31, 2024 compared to 64.4% for 2023. Indirect and selling expenses. The increase in indirect and selling expenses was due to additional $8.9 million in indirect labor and related fringe benefit costs and $4.4 million in general and administrative costs.
Uncertain tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements.
Uncertain tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements. 42 Recent Accounting Pronouncements New accounting standards are discussed in “Note 2 - Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements”.
Year ended December 31, 2023 Year ended December 31, 2022 Year ended December 31, 2021 (dollars in thousands) Dollars Percent Dollars Percent Dollars Percent Client Type: U.S. federal government $ 1,084,043 55 % $ 980,746 55 % $ 735,032 47 % U.S. state and local government 308,134 16 % 259,764 15 % 235,416 15 % International government 103,399 5 % 103,609 6 % 139,229 9 % Government 1,495,576 76 % 1,344,119 76 % 1,109,677 71 % Commercial 467,662 24 % 435,845 24 % 443,371 29 % Total $ 1,963,238 100 % $ 1,779,964 100 % $ 1,553,048 100 % Contract mix Contract mix varies from year to year due to numerous factors, including our business strategies and the procurement activities of our clients.
Year ended December 31, 2024 Year ended December 31, 2023 Year ended December 31, 2022 (dollars in thousands) Dollars Percent Dollars Percent Dollars Percent Client Type: U.S. federal government $ 1,087,349 54 % $ 1,084,047 55 % $ 980,746 55 % U.S. state and local government 316,083 16 % 309,516 16 % 259,764 15 % International government 110,798 5 % 103,446 5 % 103,609 6 % Government 1,514,230 75 % 1,497,009 76 % 1,344,119 76 % Commercial 505,557 25 % 466,229 24 % 435,845 24 % Total $ 2,019,787 100 % $ 1,963,238 100 % $ 1,779,964 100 % Contract mix Contract mix varies from year to year due to numerous factors, including our business strategies and the procurement activities of our clients.
The increase in interest, net was primarily due to higher average debt balance of $613.5 million in 2023 compared to $575.0 million in 2022, and higher average interest rate of 6.7% in 2023 compared to 3.3% in 2022. We utilize floating-to-fixed interest rate swap agreements to hedge the variable interest portion of our debt.
The average interest rate was 6.6% in 2024 compared to 6.7% in 2023. We utilize floating-to-fixed interest rate swap agreements to hedge the variable interest portion of our debt. Our 2024 interest expense from our debt was reduced by $6.2 million from the swap agreements, compared to $6.9 million in 2023.
Recent Accounting Pronouncements New accounting standards are discussed in “Note 2 - Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements”. 43 SELECTED KEY METRICS In order to evaluate operations, we track revenue by key metrics that provide useful information about the nature of our operations. Client markets provide insight into the breadth of our expertise.
SELECTED KEY METRICS In order to evaluate operations, we track revenue by key metrics that provide useful information about the nature of our operations. Client markets provide insight into the breadth of our expertise. Client type is an indicator of the diversity of our client base.
NON-GAAP MEASURES The following tables provide reconciliations of financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S. to their most comparable U.S. GAAP measures (“non-GAAP”).
The increase in provision for income taxes in 2024 was primarily due to the favorable impact of one-time tax planning strategies implemented in 2023 which were not repeated in 2024. 45 NON-GAAP MEASURES The following tables provide reconciliations of financial measures that are not calculated in accordance with generally accepted accounting principles in the U.S. to their most comparable U.S.
In doing so, we will continue to evaluate strategic acquisition opportunities, such as our acquisitions of ESAC and Creative Systems in 2021, SemanticBits and Blanton in 2022, and CMY in 2023 that enhance our subject matter knowledge, broaden our service offerings, gain access to or expand customer relationships, and/or provide scale in specific geographies.
In doing so, we will continue to evaluate strategic acquisition opportunities that enhance our subject matter knowledge, broaden our service offerings, gain access to or expand customer relationships, and/or provide scale in specific geographies. Although we continue to see favorable long-term market opportunities, there are certain business challenges facing all government service providers.
The increase in other income (expense) was primarily due to pre-tax gains of $2.5 million and $3.2 million from the divestiture of our U.S. commercial marketing and Canadian mobile aggregation businesses in 2023. Provision for income taxes . The effective income tax rate for the years ended December 31, 2023 and 2022 was 14.4% and 23.5%, respectively.
Our average interest rate inclusive of the impact of the swap agreements was 5.3% for 2024 compared to 5.6% for 2023. Other income . The decrease in other income was primarily due to higher pre-tax gains from the divestiture of our U.S. commercial marketing and Canadian mobile aggregation businesses in 2023.
Should the need arise, we intend to further increase our borrowing capacity in the future to provide us with adequate working capital to continue our ongoing operations.
As of December 31, 2024, we had $541.1 million of unused borrowing capacity available under the Credit Facility to fund our ongoing operations, future acquisitions, dividend payments, and share repurchase program. Should the need arise, we intend to further increase our borrowing capacity in the future to provide us with adequate working capital to continue our ongoing operations.
GAAP Diluted EPS to Non-GAAP Diluted EPS for the periods indicated: Year ended December 31, 2023 2022 2021 U.S.
We believe that the supplemental adjustments provide additional information to investors. The following table presents a reconciliation of U.S. GAAP Diluted EPS to Non-GAAP Diluted EPS for the periods indicated: Year ended December 31, 2024 2023 2022 U.S.
We used $152.6 million of cash in financing activities during the year ended December 31, 2023 compared to $90.4 million provided by financing activities during 2022, a change of $243.0 million.
Cash used in investing activities for the year ended December 31, 2024 increased by $71.1 million compared to 2023 primarily due to our acquisition of AEG during fiscal year 2024. We used $86.9 million of cash in financing activities during the year ended December 31, 2024 compared to $152.6 million during 2023.
Year ended December 31, (in thousands) 2023 2022 2021 Net cash provided by operating activities $ 152,383 $ 162,206 $ 110,205 Net cash used in investing activities (3,673 ) (258,844 ) (194,481 ) Net cash (used in) provided by financing activities (152,588 ) 90,371 23,233 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 359 (1,198 ) (511 ) Decrease in cash, cash equivalents, and restricted cash $ (3,519 ) $ (7,465 ) $ (61,554 ) Cash provided by operating activities for the year ended December 31, 2023 decreased by $9.8 million compared to 2022 primarily due to higher interest and tax payments and the timing of collections of our billed receivables and payments of our operating liabilities. 50 Cash used in investing activities for the year ended December 31, 2023 decreased by $255.2 million compared to 2022 primarily due to higher usage of cash to fund the acquisitions of SemanticBits and Blanton in 2022; 2023 was favorably impacted by the proceeds received from the divestiture of our U.S. commercial marketing and Canadian mobile text aggregation businesses.
Year ended December 31, (in thousands) 2024 2023 2022 Net cash provided by operating activities $ 171,544 $ 152,383 $ 162,206 Net cash used in investing activities (74,805 ) (3,673 ) (258,844 ) Net cash (used in) provided by financing activities (86,898 ) (152,588 ) 90,371 Effect of exchange rate changes on cash, cash equivalents, and restricted cash (473 ) 359 (1,198 ) Increase (decrease) in cash, cash equivalents, and restricted cash $ 9,368 $ (3,519 ) $ (7,465 ) Cash provided by operating activities for the year ended December 31, 2024 increased by $19.2 million compared to 2023 primarily due to the profitability of our contracts, our ability to invoice our customers and subsequent collection of cash, and the timing of vendor payments.
As of December 31, 2023, contractual obligations that require a material use of cash include repayments of our Credit Facility and operating lease obligations for facilities and equipment.
As of December 31, 2024, contractual obligations that require a material use of cash include payments of interest on our Credit Facility and operating lease obligations for facilities and equipment. At December 31, 2024, our outstanding Credit Facility balance, net of unamortized debt issuance costs, was $411.7 million, which is due in 2027 upon maturity.
(7) These costs include legal and structuring fees related to our 2022 Master Receivables Purchase Agreement with MUFG Bank, Ltd. put in place for the sale of our receivables. (8) Includes pre-tax gain of $2.5 million and of $3.2 million from the divestitures of our U.S. commercial marketing and Canadian mobile text aggregation businesses.
The transition to the new corporate headquarters was completed in the fourth quarter of 2022. (6) These costs include legal and structuring fees related to our 2022 Master Receivables Purchase Agreement with MUFG Bank, Ltd. put in place for the sale of our receivables.
There are certain geo-political and macro-economic conditions, such as the ongoing wars in Ukraine and the the Middle East and the recent increase in inflation, both in the U.S. and globally, that create uncertainty in the global economy, which in turn may impact, among other things, our ability to generate positive cash flows from operations and our ability to successfully execute and fund key initiatives in the near future; however, our current belief is that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, customary capital expenditures and acquisitions, quarterly cash dividends, share repurchases and organic growth.
However, our current belief is that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund ongoing operations, customary capital expenditures, quarterly cash dividends, share repurchases, and organic growth.
Revenue from Health and Social Programs client market increased by $110.0 million, or 15.6%, driven by: • Increases of $97.4 million from U.S. federal government, $10.4 million from U.S. state and local government, and $2.5 million from commercial client markets, respectively, offset by a • Decrease of $0.3 million from international government client market.
Revenue from Energy, Environment & Infrastructure and Disaster Recovery client market increased by $123.8 million, or 15.4%, due to: • Increases of $88.0 million from commercial, $31.8 million from U.S. federal government, $3.4 million from international government, and $0.5 million from U.S. state and local government clients, respectively. 44 Revenue from Health and Social Programs client market decreased by $50.3 million, or 6.2%, due to: • Decreases of $48.1 million from U.S. federal government and $13.8 million from commercial clients, respectively, driven by lower pass-throughs from several U.S. federal contracts and our exit from the commercial marketing business during 2023, offset by • Increases of $6.3 million and $5.4 million from U.S. state and local government and international government clients, respectively.
Creative Systems and Consulting – In December 2021, we acquired Creative Systems, a premier provider of IT modernization and digital transformation solutions to U.S. federal agencies. SemanticBits, LLC – In July 2022, we acquired SemanticBits, a premier partner to U.S. federal health agencies for mission-critical digital modernization solutions.
During the previous three fiscal years, we completed four acquisitions summarized as follows: SemanticBits, LLC – In July 2022, we acquired SemanticBits, a premier partner to U.S. federal health agencies for mission-critical digital modernization solutions. Blanton & Associates – In September 2022, we acquired Blanton & Associates, an environmental consulting, planning, and project management firm.
Blanton & Associates – In September 2022, we acquired Blanton & Associates, an environmental consulting, planning, and project management firm. CMY Solutions, LLC – In May 2023, we acquired CMY, an engineering and automation solutions provider to utilities and organizations.
CMY Solutions, LLC – In May 2023, we acquired CMY, an engineering and automation solutions provider to utilities and organizations. Applied Energy Group – In December 2024, we acquired AEG, a leading energy technology and advisory services company.
While these adjustments may be recurring and not infrequent or unusual, we do not consider these adjustments to be indicative of the performance of our ongoing operations. We believe that the supplemental adjustments provide additional information to investors. 48 The following table presents a reconciliation of U.S.
GAAP Diluted EPS”) excluding the impact of certain items noted above, and the impact of amortization of intangible assets and the related income tax effects. While these adjustments may be recurring and not infrequent or unusual, we do not consider these adjustments to be indicative of the performance of our ongoing operations.
Non-GAAP Diluted Earnings per Share Non-GAAP diluted earnings per share (“Non-GAAP Diluted EPS”) represents diluted U.S. GAAP earnings per share (“U.S. GAAP Diluted EPS”) excluding the impact of certain items noted above, and the impact of amortization of intangible assets and the related income tax effects.
(7) Includes pre-tax gain from the divestitures of our U.S. commercial marketing and Canadian mobile text aggregation businesses. Non-GAAP Diluted Earnings per Share Non-GAAP diluted earnings per share (“Non-GAAP Diluted EPS”) represents diluted U.S. GAAP earnings per share (“U.S.
Removed
Although we continue to see favorable long-term market opportunities, there are certain business challenges facing all government service providers.
Added
As with other federal contractors, we have experienced business impacts, of varying degrees, from the changing priorities of the Administration that could have an adverse impact on our results and, as these new priorities are implemented, it may be difficult for us to accurately predict the effect they will have on our results. 40 Subsequent to December 31, 2024, and through February 25, 2025, pursuant to the recent executive orders issued by the Administration or actions by DOGE, the Company received notices for termination-for-convenience of approximately $276 million and for stop-work orders of approximately $99 million.
Removed
During the previous three fiscal years, we completed five acquisitions summarized as follows: ESAC – In November 2021, we acquired ESAC, one of the leading specialized providers of advanced health analytics, research data management, and bioinformatics solutions to U.S. federal health agencies.
Added
The majority of the termination-for-convenience and stop-work orders notices are associated with our contracts with USAID. The impact of these contract terminations and stop-work orders is not expected to be material, with such contracts contributing approximately 3.3% of our 2024 fiscal year revenue.
Removed
The selection of the method used to measure progress requires judgment and, among other things, is dependent on the contract type selected by the client during contract negotiation and the nature of the services and solutions to be provided.
Added
Presently, it is unknown if the stop-work orders notices will be lifted and the Company will resume work on these programs, or if the stop-work orders will result in a termination-for-convenience. BUSINESS COMBINATIONS A key element of our growth strategy is to pursue acquisitions.
Removed
Revenue from Energy, Environment & Infrastructure and Disaster Recovery client market increased by $91.8 million, or 12.9%, due to: • Increases of $49.7 million from commercial, $37.6 million from U.S. state and local government, and $10.0 million from U.S. federal government client markets, respectively, offset by a • Decrease of $5.5 million from international government client market due, in part, to the wind-down of the ICF NEXT U.K. business.
Added
For the years ended December 31, 2024, 2023, and 2022, revenue from cost-based contracts totaled $231.9 million, $265.1 million, and $263.7 million, respectively.
Removed
Direct costs . The increase in direct costs of $130.6 million was driven by additional direct labor and related fringe benefit costs of $90.5 million and subcontractors and other direct costs of $40.1 million to support new and existing revenue-generating contracts.
Added
Direct costs . The increase in direct costs was driven by additional direct labor and related fringe benefit costs of $44.9 million which reflected growth in the ongoing business, offset by a decrease of subcontractors and other direct costs of $27.9 million primarily as a result of our exit from the commercial marketing and events business during 2023.
Removed
The total direct costs as a percentage of revenue remained steady at 64.4% for the year ended December 31, 2023 compared to 63.7% for 2022. Indirect and selling expenses.
Added
Depreciation and amortization . The decrease in depreciation and amortization was due to having fewer capital assets primarily as a result of the divestiture of our U.S. commercial marketing business in 2023. Amortization of intangible assets .
Removed
The increase in indirect labor and associated fringe costs was a result of additional headcount from our recent acquisitions in 2022 and 2023 as well as additional labor resources to support our growth.
Added
The decrease in amortization of intangible assets was due to having fewer intangible assets primarily as a result of the divestiture of our U.S. commercial marketing business in 2023. Interest, net . The decrease in interest, net was primarily due to our lower average debt balance of $474.0 million in 2024 compared to $613.5 million in 2023.
Removed
The decrease in our general and administrative costs was primarily from lower facilities expense that was, in part, attributed to our Fairfax lease ending at the end of the 2022 fiscal year.
Added
We recognized $5.7 million of pre-tax gains in 2023 fiscal year compared to $2.0 million in 2024 fiscal year. Provision for income taxes . The effective income tax rate for the years ended December 31, 2024 and 2023 was 20.2% and 14.4%, respectively.
Removed
As a percentage of revenue, indirect and selling expenses decreased to 25.7% for the year ended December 31, 2023 compared to 27.4% for the year ended December 31, 2022. Depreciation and amortization .
Added
There are other conditions, such as the ongoing wars in Ukraine and the instability in the Middle East, that create uncertainty in the global economy, which in turn may impact, among other things, our ability to generate positive cash flows from operations and our ability to successfully execute and fund key initiatives.
Removed
The increase in depreciation and amortization of $3.8 million was driven by additional capital expenditure during 2023 and acceleration of depreciation of certain fixed assets associated with the exit of an office facility. The transition is expected to be completed in 2024. Amortization of intangible assets .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs a result of conducting business in currencies other than the U.S. dollar, we are subject to market risk with respect to adverse fluctuations in currency exchange rates. In general, our currency risk is mitigated largely by matching costs with revenues in a given currency.
Biggest changeSee “Note 12 - Derivative Instruments and Hedging Activities” in the “Notes to Consolidated Financial Statements”. 49 As a result of conducting business in currencies other than the U.S. dollar, we are subject to market risk with respect to adverse fluctuations in currency exchange rates.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 51
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
As a result, a 10% increase or decrease in the value of the U.S. dollar against all currencies would have an estimated impact on revenue of approximately 1%, or $13.1 million.
As a result, a 10% increase or decrease in the value of the U.S. dollar against all currencies would have an estimated impact on revenue of approximately 1%, or $15.1 million.
We use a sensitivity analysis to assess the impact of movement in foreign currency exchange rates on revenue. During the year ended December 31, 2023, 7% of our revenue was generated from our international operations based on the location to which a contract was awarded.
We use a sensitivity analysis to assess the impact of movement in foreign currency exchange rates on revenue. During the year ended December 31, 2024, approximately 7% of our revenue was generated from our international operations based on the location to which a contract was awarded.
Based on our borrowings under the Credit Facility, a 1% increase in interest rates would have increased interest expense by approximately $6.1 million and would have decreased our annual net income and operating cash flows by a comparable amount.
Based on our borrowings under the Credit Facility, a 1% increase in interest rates would have increased interest expense by approximately $4.8 million and would have decreased our annual net income and operating cash flows by a comparable amount.
At December 31, 2023, we had seven interest rate swap agreements with a total aggregate notional amount of $275.0 million to hedge against changes in interest rates and offset potential increases in interest expense. See “Note 12 - Derivative Instruments and Hedging Activities” in the “Notes to Consolidated Financial Statements”.
At December 31, 2024, we had seven interest rate swap agreements with a total aggregate notional amount of $275.0 million to hedge against changes in interest rates and offset potential increases in interest expense.
However, our exposure to fluctuations in other currencies against the U.S. dollar increases as a greater portion of our revenue is generated in currencies other than the U.S. dollar.
In general, our currency risk is mitigated largely by matching costs with revenues in a given currency. However, our exposure to fluctuations in other currencies against the U.S. dollar increases as a greater portion of our revenue is generated in currencies other than the U.S. dollar.

Other ICFI 10-K year-over-year comparisons