ICF International ICFI reported mixed second-quarter 2026 results. ICFI’s non-GAAP earnings of $1.86 per share topped the Zacks Consensus Estimate of $1.69 by 10.1% and increased 12% year over year. Revenues of $474.5 million missed the consensus mark of $476.2 million by 0.4% and fell 0.3% year over year.
How Is ICF International Faring?
During the second quarter of 2026, ICF International’s commercial, state and local and international clients generated 61% of revenues, up from 57% in 2025, while roughly 75% of contract wins came from these non-federal categories. Commercial revenues rose 5.9% year over year and international government revenues rose 35.1%, helping offset a 9.5% decline in federal revenues.
ICFI maintains long-standing relationships across government and commercial markets, including major U.S. federal agencies, the European Commission and commercial energy clients. The company also benefits from a high share of prime-contract work, which accounted for 87.3% of revenues on average over the three years through 2025.
ICF International’s current ratio during the second quarter of 2026 was 1.39, below the industry’s 1.92, however above 1. The operating cash flow, excluding restricted cash, rose to $56.7 million from $50.4 million, while net debt plummeted to $403 million from $457 million. Management anticipates the 2026 operating cash flow of $135-$150 million and year-end adjusted leverage below 1.6X, absent acquisitions
Meanwhile, U.S. federal revenues declined 9.5% year over year to $184.9 million in the second quarter of 2026 as prior contract cancellations and slower proposal activity weighed on the results. However, the top line rose 1.4% sequentially. Management said that award activity remains constrained and protests of large opportunities have increased. Book-to-bill was 0.85, reflecting slower procurement.
Direct costs remained elevated at 62.8% of revenues in second-quarter 2026, while subcontractor and other direct costs rose to 25.6% from 23.6% a year earlier on higher non-federal pass-throughs. The gross margin slipped 10 basis points to 37.2%. Therefore, the company remains at the cusp of incorporating prudent cost-management policies, ensuring margins remain despite slower growth in revenues.
Zacks Rank & Stocks to Consider
ICFI currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Zacks Business Services sector are Figure Technology Solutions FIGR and The Geo Group GEO. These two companies presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Figure Technology has a long-term earnings growth expectation of 56.9%. FIGR delivered a trailing four-quarter earnings surprise of 28.2%, on average.
The Geo Group has a long-term earnings growth expectation of 14%. GEO delivered a trailing four-quarter earnings surprise of 28.2%, on average.
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This article originally published on Zacks Investment Research (zacks.com).