Welcome to the ICF International First Quarter 2016 Results Conference Call. [Operator Instructions]. And now I would now like to turn the program over to Lynn Morgen of MBS Value Partners. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us to review ICF’s first quarter 2016 performance. With us today from ICF International are Sudhakar Kesavan, Chairman and CEO; John Wasson, President and COO; and James Morgan, CFO. During this conference call, we will make forward-looking statements to assist you in understanding ICF management’s expectations about our future performance. These statements are subject to a number of risks that could cause actual events and results to differ materially. And I refer you to our May 05, 2016, press release and our SEC filings for discussions of those risks. In addition, our statements during this call are based on our views as of today. We anticipate that future developments will cause our views to change. Please consider the information presented in that light. We may, at some point elect to update the forward-looking statements made today, but specifically disclaim any obligation to do so. I will now turn the call over to our ICF’s CEO, Sudhakar Kesavan, to discuss first quarter 2016 performance. Sudhakar?

Thank you, Lynn. And thank you all for joining us today to review our first quarter 2016 results and business outlook. First quarter results were in line with our expectation and represented a solid start to 2016. Earnings growth of 25% on a 3.7% organic growth in revenues sets the stage for significantly improved performance this year. Revenue growth was led by the strong performance of our federal government business which increased 6.6% organically over last year's first quarter. As we noted in the last two quarters we have begun to see a return to a more normalized pattern of revenue flow following the awarding of federal contract. I see a strong showing the federal market as a result of our focus on key areas in which we have deep domain expertise such as energy and health broadly defined and the scale we have developed to win implementation contract involving IT solutions and digital services in these markets. I'm pleased to report that the two major pillars of our higher margin commercial business, energy markets and digital marketing services performed as expected in the first quarter. Energy markets showed solid year on year growth and digital services showed good sequential growth. This quarter we began providing data on revenue generated for work done at commercial rates for state and local government clients in these two areas. We believe this commercially priced work will become an increasingly important contributor to our state and local business. As expected commercial revenues declined from Q1 2015 levels for two primary reasons. First, we expected reduced activity on the large California utility environmental services contract and second the fact that we have the entire Midwest utility energy efficiency contract last year at this time before it was split into two contracts as we've discussed previously.…

Thank you, Sudhakar and good afternoon. As Sudhakar noted we execute well in the first quarter of the year. We also had an excellent quarter in terms of contract wins which has continued into the current quarter and we continue to have a very robust pipeline of new business opportunities. U.S. government business which showed strong year on year revenue growth of 6.6% in the first quarter involved work on a broad range of contracts across multiple civilian agencies. We were also awarded more than 100 U.S. federal contracts and task orders in the quarter. We had a number of wins with U.S. centers for disease control and prevention including our largest win which was a $34.7 million contract to provide data management support to the division of HIV Aids prevention. We were also awarded two task orders with a combined value of 14.4 million to provide health informatics and IT support to the laboratory response network. Other notable federal contract wins in Q1 included a $19.8 million with the U.S. environmental protection agency to provide technical, economic and public policy analysis to support ozone and greenhouse gas initiatives, a $5.9 million contract with U.S. Department of State to provide enterprise strategy and management support with the Bureau of Counselor Affairs and a $3.6 million contract with the Department of Defense to support the global rollout of its web based child care portal for the military. U.S. state and local government revenues grew 20.5% in the first quarter reflecting the startup of a number of new awards in environment Transportation and digital for state and local clients. It is also important to note that the pace of activities on our California state lottery contract to provide digital services increased during this period. For the full year we still expect state…

Thanks, John. Good afternoon everyone. We're pleased to report solid year on year comparisons of the first quarter. Total revenue was 283.6 million or organic growth of 3.7% above last year's first quarter driven primarily by it's [indiscernible] pick up in federal government revenues. On a constant currency basis the overall company organic growth was 4.2%, service revenue increased 1% to 212.4 million. Overall staff utilization was higher year over year, the gross margins decreased 2.3% from 39.8% in the first quarter of 2015, the 37.5% in the first quarter of 2016. As expected this year's Q1 margins were negatively impacted by the startup and implementation phases of certain large contracts and weather related federal government office closures in January. In addition this year's Q1 revenues included a higher mix of pass through revenues. In aggregate these factors reduced gross margins by approximately 150 basis points. We expect that the startup and implementation phases of certain contracts will continue to have some impact on gross margin in Q2 but to a lesser extent than in Q1. In direct and selling expenses for the first quarter were 81.6 million, a 3.3 million year-over-year decrease resulting mainly from higher labor utilization and lower overhead expenses. For the full year of 2016 we expect to continue effectively manage our indirect cost, selling expenses. Operating income was 17.7 million for this year's first quarter up 10.9% over year. Reported EBITDA was 24.8 million for the quarter 3% higher than the 24.1 million reported in last year's first quarter. EBITDA margin was 8.8% for the first quarter of 2016 consistent with first quarter of last year. It was a 90 basis point impact to the EBITDA margin in Q1 of this year as a result of the previously mentioned startup and implementation phases of certain…

First quarter performance supports our full year 2016 guidance which calls for substantially double digit earnings growth and mid-single digit revenue growth. Better revenues are expected to show low single digit year-on-year improvement, our commercial business will grow at a high single digit rate for this year showing sequentially improved performance in the second quarter followed by double digit growth in both the third and fourth quarter. We expect the improved gross margin in subsequently quarters of this year and progressive improvement in utilization rates to drive substantial earnings growth enabling us to report non-GAAP EPS in the range of $2.79 to $2.94 and diluted EPS of $2.40 to $2.55 on revenues of between $1.15 billion and $1.19 billion. Operator I would now like to open the call to questions.

[Operator Instructions]. And we have our first question from Tim McHugh with William Blair & Company.

If you could follow up on the comment about the energy efficiency contracts, what I guess when you talk $200 million wins including 150 since the quarter end what's the timeline for that? Should we think about that revenue spread out, three, four years, five years -- help us think about that and then also just I guess of the 150 million since the quarter roughly how much is that one large contract that you talked about as well as maybe any details on the timing of that as well.

I would think about the length of the contracts of the 150 million of wins at the end of the first quarter about three year contracts and so looking it from that perspective. In terms of 150 million how much of it is the largest contract, 60%.

It's about a 100 million.

The largest contract. I would expect these contracts to begin to ramp up in Q2 at some point in Q2 and really ramp up into full pace of activities in Q3 and Q4.

And so just the simple math there implies that that would 50 million annually to revenue versus I think your energy efficiency in the past was kind of 100 million and the total energy kind of group was 125, is that wrong or?

I think you’ve to, I mean some of these contracts are there some of them are with existing clients and so a portion of the revenues in the contracts are essentially recompete work that will continue and there's portions of the contracts that are new work that will lead to additional new organic growth. So I think you have to be little careful about assuming the 115 is all new contracts and new organic growth over the three year period.

Is the large contract you mention new or recompete. It's a mix of both, I would say it's, I don’t have a percentage but there's a material portion of new work in the contract and there is some recompete work there. And I think we will give more color when we announce it.

And then I just I guess obviously you talk positively about some of the directional trend you’re starting to see in Olson in the digital interactive space but how much visibility do you have to making that I guess your statement or expectation for high single digit growth I guess for the full year.

I think we have pretty good visibility in the sense I mentioned the large multimillion dollar contract we won with the utility and marketing communications that’s a reason to be long term contract so that will crank away. So that gives us some visibility, some of the contracts they win are traditionally around 12 months so it's not like -- they just announced that they became you know today they announced that they are one or two agency of record clients, high sense in which is a large Chinese Electronics retailer who owns the shop brand in the United States. Their agency a record of them, they just announced or an agency record for a healthcare technology company called [indiscernible] which is Chicago based. They have -- once they become an agency of record they get work for at least the next 12 months or if not longer. So there's reasonable visibility not as long as say the energy efficiency contract which are three year contractor etcetera but they certainly have a reasonable visibility on their contract.

I would just add I think in other parts of Olson certainly the one to one loyalty business tends to be larger longer term contracts with multi-year tail on them and so I think we have quite good visibility in that business, it's been a major driver of our growth. And I would just add to what Sudhakar said I also do think and I think we have talked about this on prior calls and in the brand business in particular there is a kind of momentum aspect to that that you know it's about what are the most recent creative efforts you've done and what impact have you had for your clients and so I think the good thing for us we feeling like we’re seeing some momentum here, we're seeing the kind of quarterly sequential growth. We're winning some new additional agency [indiscernible]. So getting our mojo back is an important aspect here. So I think that's going to have some confidence that we're well on our way with the new hires the new Creative Director to do that.

Our next question comes from David Gold with Sidoti & Company.

Just was curious, interesting to see the government business growing presumably at the commercial rates and was just curious if you could comment there on sustainability of getting once a commercial rates on those projects from the government contracts also and how one is basically I want to make sure that we can maintain those margins as we go forward when we bid on these contracts. You know in another words internally.

I think that what is interesting is that if you look at the digital business traditionally the government has acquired services and this is true particularly for governments and to a large extent to the federal government where they are willing to pay higher rates for these kinds of services and it been historically true. So when we look at some of the rates which we get on the take a look at what -- [indiscernible] for digital business, for the energy efficiency business it is very different from the work which we've gotten say on the environmental impact assessment business etcetera or the transportation business which is a different rate base. So the agencies we sell to are different and there are different procurement processes and the people who bid this work within ICF different parts of the business. So I think there will be no confusion in what rates we put in for a specific kind of job for the specific kind of client, so I think that they are quite sustainable and they are traditionally used to paying those rates and I think that they will it is historically true that the industry will not bid on some of the stuff unless they get those rates. So I think that it's generally when we compete against other companies which are in this space they certainly will charge these rates, they don't go in and do what we traditionally call government rates. So they will get no one to take the work if they pay those low rate.

And then just a little bit of follow-up if you can on the overhead reduction [indiscernible] past cost cuts. There is essentially I don’t know in terms you mentioned the run rate on that which I think you did, you did too quick for me so if you can just go over that and just the potential sustainability and where else we might see lower costs?

I think maybe the way to think about it is that if you look at last year if you look at our indirect cost for the full year on average we ran that somewhere around 29.1% of revenues was our indirect expense and for this first quarter of this year we are running around 28.8, as we move forward we think that we will continue especially with the ramp up of these new programs we will continue to run in the I would say the lower 28% range and so that’s what we’re expecting as we move forward and we will certainly be 50 to 100bps lower this year than where we were last year on indirect expense.

Our next question comes from Bill Loomis with Stifel.

Just looking at the federal guidance, I think you said federal expect for the year to be low single digits you reported 7% in the first quarter, are you looking for declines in federal in the second half of the year?

I think, Bill we knew this question would be asked, so we’re thoroughly prepared for it. We think that there is -- the federal business will be at this rate at least for the second quarter and then we think that it will decline in Q3 primarily because of the fact that one of our contract is ending, has moved to a small business set aside, so I think that decline will be significant in Q3 and I think that it is hard for us to when we average it all out and we look at all the math we think that it is useful to understand that that trend will have an impact on the overall growth of the business and after that it will be at those low single digit rates going forward. So I think that that’s the reason we said it yes,

Anymore insight into that contract on small biz which one was it if possible?

I would say it's a large program management contract for a civilian agency but beyond that I don’t think we want to give any more detail on it.

And then on commercial, what was the overall organic growth in commercial and then if you could just -- anything you can do to break it out for us? I know you talked about digital and energy were 80% maybe give that -- maybe the growth number and you know somehow give us a better understanding of what [Technical Difficulty] if you can just out help us out organic growth in commercial overall and then any way you can parse up the segments show what the organic growth is in some your faster areas and where the real weakness is on how weak it is?

I think that if you look at the organic growth Q-o-Q commercial it was minus 3.5%. What I was trying to indicate was that going forward as we move forward through the year we will grow the business and primarily the minus 3.5% because of foreign exchange adjustments, the TRTP contract which [indiscernible] environmental service contract which ended and the [indiscernible] utility and energy efficiency contract which we had which was split in two. So that basically accounted for that, otherwise if you take those things out we were flat Q-o-Q in terms of commercial. What you will see going forward is plus up on these commercial contracts in commercial business in Q2 but then really a big plus up in Q3 and Q4 which again was double digit rates in terms of commercial revenue growth in Q3 and Q4 because of some of the contracts we won in energy which we described as well as in the digital business. So I think will get into would really ramp up into Q3 and Q4 and you will see double digit growth in Q3 and Q4 for commercial and in Q2 you will see an improvement from what we have currently but not quite at the level which you see in Q3 and Q4.

But for the year we will end up in the high single digits all-in.

And that’s an organic, you would have come up over and over in Olson so that’s an organic number obviously.

Everything is organic this year.

And then just one clarification, I will drop this, you said 4x impact. I thought most of the Forex was the international government contracts you get overseas, do you have a lot of that commercial work that’s impacted by Forex?

Yes we do fair bit of aviation work overseas as well as some work which is done even by our U.S. entities overseas which we get paid in euros and pounds.

It's primarily aviation.

[Operator Instructions]. And our next question comes from Kevin Steinke with Barrington Research.

In the international business is your expectation still flash for the year? You talked about some business wins there, so just wondering if there's been any change in the trajectory or the momentum of that business overall?

I think we're still expecting flat trajectory for the international business, we have won a few contracts but because we've talked on prior calls there's still uncertainty there in the European commission you know political uncertainty and so we’re assuming it's flat.

And you talked about on your last call your efforts to build up your sales resources in the commercial business and just wondering how those efforts are going. If you're continuing to hire? If you're having success in that regard? You know any color on that front would be helpful.

We certainly continue to invest in hire for the commercial business both in marketing and sales. I think Sudhakar mentioned a few of the hires -- obviously hired a new Head of our Digital Agency, ICF Olson will obviously play key role in the sales and driving the sales and marketing, we've hired at the corporate level and the CMO who brings tremendous relationships and experience on the sales and marketing side. And maybe Sudhakar you want to add a little bit more color?

Yes. And we have also hired some additional sales people to set up the whole inside sales function and also the outside sales function, so we're basically quite focused on building up the whole inside sales function which will obviously focus on lead generation which will then be taken over by the outside sales function. We've also hired a senior person who is going to run one of our large offices which we’re going to announce in the next few weeks, who is also very sales oriented, who comes from a lot of experience in this business. So we're continuing to strengthen that part of the business and we're also focused on the nitty gritty and the mechanics of making sure that the whole process is set up so as to work sort of in a machine like way as [indiscernible] business. So we're not quite there yet but we're certainly, surely and steadily getting there.

And just a follow-up on that, if you could talk about your decision to bring on a Chief Marketing Officer for the first time. You know what sort of opportunities you see there with that higher and just kind of the overall strategy and marketing and going forward?

I mean she has got enormous experience, she used to -- her background is a very strong one. She used to be the Chief Marketing Officer of Cars.com before that were AMD the big chip company in Northern California, before that for Dell services. So she has a very strong background, she's very well connected across the potential client universe we want to focus in on. So we are certainly hoping that she will help us generate more leads as we move forward. But also take care of sort of the general visibility of the firm going forward because I think we are focused on making sure the brand as the firm has transformed itself -- the brand has to represent more than what people perhaps might think it represents. So we're focused on making sure that the whole branding arena and making the firm much more visible and ensuring that you know it builds some recognition across our more brand sensitive markets is done in a very systematic way. So she's been here like two weeks, maybe 10 days and she already is I guess changing things. So I think that we look forward to having a very positive -- having a very positive impact on our overall business and our overall sort of visibility across all our market.

And then just lastly the three loyalty programs on the digital side, those all are kind of rolling out according to plan and expectations?

I think the loyalty programs are rolling out according to plan an expectation, the loyalty business had a tremendous first quarter. This past quarter and they are all -- one of them will get done by the end of Q2 and the third will get done sort of by the end of Q3 in terms of setting it all up and the first one was done and is rolling along the biggest one where they have. So I think the performance of the loyalty business have been spectacular is the best way to put it.

Our next question comes from Tobey Sommer with SunTrust.

I wanted to just startup by follow up on the kind of the new sales hires, internal and kind of external sales stuff you said, is that impacting things already or is that the kind of initiative an effort that is sort on the com and something that will be influential in coming quarters or maybe next year?

It's certainly impacting the pipeline. I think that we have seen -- you monitor that thing quite carefully and we have seen certainly a growth in the pipeline of work which potentially folks are going after. You know it has been in place we have a number of these folks who've been in place and being managed actively over the last six weeks or so and I think we are going to watch and see how what comes out the other end of the pipe -- but we’re certainly filling the pipe and so it's not something which is going to which is sort of up in the sky which we’re hoping to do, we’re certainly doing it. It is having an impact and we hope that in Q3 and Q4 it will have a very significant impact on our sales.

In the Energy business you talked about sort of a double digit growth trajectory or a double digit growth trajectory in commercial in the second half driven by Energy in digital, if we look at the pipeline and what your customers are telling you, and prospective customers are telling you what kind of more of a medium term. Does the outlook for the second half of this year seem consistent with what might be sort of more of a medium term outlook as well?

Yes, I think what we're seeing in the marketplace both on the energy efficiency and the broader energy markets around you know distributed generation and grid modernization and those types of things. The Energy efficiency and the distributed resource grid modernization two strong trends, that’s certainly drive -- they are going to drive significant double digit growth for the Energy business for 2016 and given the pipeline and the momentum we have, I have to say we're quite optimistic about 2017. I think certainly -- and we'll see further ramp up as we go into 2017 around the latter issue grid modernization distributor resources while we continue to grow the energy efficiency business.

And I think on digital I would just add that I think that the market itself is growing there and with our focus on sales then with all the qualifications we have and the visibility which we're getting I think that we certainly have seen some results of the integration of the business with our legacy businesses and we are certainly pursuing some very large contracts which potentially could lead to very significant growth in the medium term. So, yes I think in both those two areas, I think we’re quite optimistic.

And I'm curious when you look at larger projects either in energy efficiency or digital, does the competitive set narrow significantly, so are you in a better competitive position if the project being discussed with a customer is a large one any differences there you look at lot smaller projects versus large?

I will take the energy and I will let Sudhakar because on digital. On the energy front I think certainly as we see the largest implementation projects whether it's on energy efficiency or the more classic grid modernization, renewable resources. We have a stronger competitive position on this very large implementation opportunities because we can bring a full suite of integrated solutions to the client under one roof and frankly we have a track of doing these projects and doing them successfully and very efficiently and so I think. So there is certainly an the energy side the competitive set narrows and we can make a pretty compelling case that we have a unique set of integrated capabilities, a long history of doing this and can really do it very efficiently and very cost effectively.

Yes I think certainly you have to have some scale to get the larger contracts in the digital marketing arena. I mean no one is going to give you a $50 million unless you -- they can see the financial [indiscernible] and I think that having put together this business and getting some visibility by being in some top 15 list etcetera in terms global agencies, I mean it's only relevant to the extent that you get visible. I think that that makes a difference, I mean you are larger than certain comfort factor so will be giving you a large job and so I think that it certainly makes a difference. I would add that in areas where we have a legacy business I think there is a significant competitive advantage we have because I think there are possibilities of getting work almost on a sole source basis, I mean the one which I described the contract we got on the marketing [indiscernible] energy conservation effort was almost like a sole source of it. And I don't think it's going to happen too often but we certainly are in a position where people know us well enough and trust us enough to give us the work especially when we can demonstrate that we know it's a certain kind of business and we have the right people to do it. So you know I think that in both areas, the size makes the difference in terms of making the client comfortable. You also need to have the qualifications both in the technology as well as in the creative as well as in the whole you know strategy arena for that specific job. And I think that in our legacy businesses it makes a huge difference because you know the trust and relationship aspects do make a difference. So I think that in both cases I think we have an advantage and we have a good size which makes people feel quite comfortable.

And I had a last question, on contract awards and backlog over time as you transition the business more towards commercial and more recently digital. How should we utilize the contract awards and backlog and maybe how has the utility of using that as a guide for revenue growth over the next year or two changed as a result of the revenue mix change. Thanks.

I think that we have obviously the backlog business gives you great visibility in revenue and earnings for government businesses. I think it also gives you great visibility in revenue and earnings for regulated industries which they tend to procure in similar ways. So if you look at the utility industry etcetera you know you see that they have been three or four year procurement. So I think for regulated industries and for the government it's a very useful way to look at it, I think it's -- we think that pipeline has become quite important and win rates become quite important for the non-regulated industries because backlog perhaps is -- we still track it but it's not perhaps as good an indicator but I think pipeline with steady will rate I think is a good visibility factor for I think the non-regulated industries. So it will still be quite relevant because our business if you add the two is quite significant for backlog but I think that it's certainly more relevant for regulated industries in government than it is for the non-regulated industry.

So if we were to kind of couple government as well as regulated business, what kind of percentage of revenue may that represent for the company at this point?

I think if you think about the regulated business view in the state and local and then I would also include in the energy efficiency business and even the international and I think I would consider the one to one business too which is also you know a long term contract so when you add all of that up you're getting close to 80% of the businesses. You have pretty good visibility.

And thank you. We have no further questions in queue. I will now turn the call back to management for closing comments.

Thank you very much for participating in today's call. We look forward to speaking with you at the upcoming conferences and our next call to review second quarter 2016 results. Thank you very much.

And thank you ladies and gentlemen, this concludes today's conference. We thank you for participating and you may now disconnect.