Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 6, 2026 · Beat 3 of last 7 quarters
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ICF's commercial energy business is a direct beneficiary of AI-driven data center load growth, with utility programs up 6.7% and increasing demand for siting, grid capacity, and interconnection advisory. The company's federal technology modernization work supports AI adoption across civilian agencies, though procurement volatility remains a near-term headwind. ICF's diversified model positions it to capture growth from both the energy buildout and government AI modernization.
ICF delivered flat revenue in Q2, with commercial revenue up 6% and international government revenue up 35%, while federal revenue declined 9.5% YoY but grew 1.4% sequentially. Adjusted EBITDA margin expanded 10 bps to 11.2%, and non-GAAP EPS rose 12% to $1.86, helped by a lower tax rate and share count. The company generated $99.7M in operating cash flow (including restricted cash) and repurchased 435K shares in the first half. Trailing 12-month book-to-bill was 1.09x, with a $9.3B pipeline, up 9% sequentially.
Management reaffirmed full-year 2026 guidance for revenue of $1.89B–$1.96B, GAAP EPS of $5.95–$6.25, and non-GAAP EPS of $6.95–$7.25, with more than 90% of required revenue already in backlog. They expect sequential revenue growth in Q3 and Q4, accelerating in Q4, and a return to year-on-year growth starting in Q3. The company continues to target 10–20 bps of annual adjusted EBITDA margin expansion, driven by ERP modernization, AI tools, and favorable mix. They remain disciplined on M&A, focused on tuck-ins in commercial energy, and expect year-end leverage under 1.6x absent acquisitions.
“In short, this was another quarter in which our diversified integrated business model made a positive difference in ICF's results. Positioning us to achieve our guidance expectations for the full year.”
on Diversified model
“We are looking ahead to a return to growth this year and an acceleration next year. Bringing us back to mid to high single digit growth in 2027.”
on 2027 outlook
“The combination of accelerating electricity demand and the need to modernize aging infrastructure is expanding the addressable market across nearly all of our energy offerings.”
on Commercial energy demand
Commercial energy grew 4% in Q2, implying mid-teens growth needed in H2 to hit full-year guidance. Is that math right, and what drives it?
John confirmed the math and cited strong Q2 awards, contracts in negotiation, a robust pipeline, and back-half-loaded performance fees. Anne added that energy advisory work was delayed by the July 4 tax credit deadline but is expected to resume. James noted the business grew mid-teens in each of the prior two years.
Can you expand on expectations for 2027 growth and the key puts and takes?
John reiterated mid-to-high single-digit growth for 2027, with non-federal growing high-single to low-double digits and federal growing low-to-mid single digits. He expressed confidence in double-digit international growth for 2027.
What is the trend in contract size and procurement in technology modernization, and are you seeing government procure licenses directly from OEMs?
Anne said procurements are picking up, with a high fraction of pending awards in tech modernization, but no significant change in deal size. John said they have not seen a material shift in OEM relationships, and James noted most work is labor-based services rather than license pass-throughs.