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ICF Reports Third Quarter 2024 Results

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―Margin Expansion Driven by Favorable Business Mix and Higher Utilization―
―GAAP EPS and Non-GAAP EPS1 Include Tax Benefits of $0.25 Per Share―
―Record Business Development Pipeline of $10.6 Billion at Quarter-End―

―2024 Guidance: Adjusting Revenue Range to Account for Lower Pass-Throughs; Raising EPS Ranges to Reflect Margin Expansion and Tax Benefits―

Third Quarter Highlights: 

Revenue Increased 3% to $517 Million, Up 6% Excluding DivestituresNet Income Was $33 Million and GAAP EPS Was $1.73, Up 38% Non-GAAP EPS Increased 18% to $2.13EBITDA1 Increased 18% to $58.2 Million; Adjusted EBITDA1 Was $58.5 Million, Up 8%Contract Awards Were $697 Million for a Quarterly Book-to Bill Ratio of 1.35 and a TTM Book-to-Bill Ratio of 1.31

RESTON, Va., Oct. 31, 2024 /PRNewswire/ — ICF (NASDAQ: ICFI), a global consulting and technology services provider, reported results for the third quarter ended September 30, 2024.

Commenting on the results, John Wasson, chair and chief executive officer, said, “This was another quarter of strong performance for ICF. Total revenues increased 3% year-on-year. Revenues from continuing operations increased 6% from last year’s levels, which includes a considerable impact from lower pass-throughs.

“Our Energy, Environment, Infrastructure and Disaster Recovery client market again was a key contributor to our third quarter results, delivering year-on-year revenue growth of 15.3% and accounting for 45.7% of total third quarter revenues, up from 40.8% in the similar period last year. We experienced continued strong demand from our utility clients for a broad range of ICF’s capabilities, including core energy efficiency programs, grid resilience, electrification, decarbonization and flexible load management, all of which have taken on greater importance given recent increases in projected electricity demand, particularly from the growth in data centers. ICF is a market leader with the unique experience, capabilities and scale to assist utility clients across all these areas with analytics, multidisciplinary solutions and program management.  

“Favorable mix and higher utilization were key drivers of third quarter margin expansion. Operating margin increased by 250 basis points year-on-year to 8.9%, and Adjusted EBITDA margin expanded by 50 basis points to 11.3% from 10.8%.

“We ended the third quarter with a record business development pipeline of $10.6 billion, after $697 million in contract awards. Year-to-date contract awards increased 16% from last year’s levels to just over $2.0 billion, of which 63% represented new business wins, indicating how well aligned ICF’s capabilities are with client spending priorities.”

Third Quarter 2024 Results

Third quarter 2024 total revenue was $517.0 million, a 3.1% increase from the $501.5 million reported in the third quarter of 2023, and up 6.0% from last year’s third quarter revenues adjusted for the divestiture of our commercial marketing business lines. Subcontractor and other direct costs were 24.7% of total revenues compared to 27.1% in last year’s third quarter. Operating income was $46.0 million, up 44.3% from $31.9 million last year, and operating margin on revenue expanded to 8.9% from 6.4%. Net income totaled $32.7 million, representing a 37.7% year-on-year increase over the $23.7 million reported in the third quarter of 2023. Diluted EPS was $1.73 per share, up 38.4% from $1.25 reported in the third quarter of 2023, which included $5.2 million, or $0.20 per share, of tax-effected special charges. Third quarter 2024 net income and diluted EPS included incremental tax benefits beyond previous expectations of $0.25 per share. As a result, the company’s effective tax rate was 13.8% in the third quarter.

Non-GAAP EPS increased 17.7% to $2.13 per share, from $1.81 per share reported in the comparable period in 2023. EBITDA was $58.2 million, 18.4% above the $49.2 million reported in the year-ago period. Adjusted EBITDA increased 7.8% to $58.5 million from $54.3 million for the comparable period in 2023.

Backlog and New Business

Total backlog was $3.9 billion at the end of the third quarter of 2024. Funded backlog was $1.9 billion, or approximately 50% of the total backlog. The total value of contracts awarded in the 2024 third quarter was $696.9 million for a quarterly book-to-bill ratio of 1.35, and trailing twelve-month contract awards totaled $2.0 billion, up 16.0% year-on-year for a book-to-bill ratio of 1.31.

Government Revenue Third Quarter 2024 Highlights

Revenue from government clients was $387.8 million, up 1.1% year-over-year. 

U.S. federal government revenue was $282.0 million, an increase of 1.0% compared to the $279.3 million reported in the third quarter of 2023, and was impacted by a year-over-year decrease in subcontractor and other direct costs estimated at $10 million in the quarter. Federal government revenue accounted for 54.5% of total revenue, compared to 55.7% of total revenue in the third quarter of 2023.U.S. state and local government revenue increased 3.0% to $78.9 million, from $76.6 million in the year-ago quarter. State and local government clients represented 15.3% of total revenue, unchanged from the third quarter of 2023.International government revenue was $26.9 million, slightly down from the $27.5 million reported in the year-ago quarter. International government revenue represented 5.2% of total revenue, compared to 5.5% in the third quarter of 2023.

Key Government Contracts Awarded in the Third Quarter 2024

Notable government contract awards won in the third quarter of 2024 included:

Health and Social Programs

A new task order with a value of $40.2 million with a U.S. federal agency to deliver strategic and digital communications and engagement campaigns to combat human trafficking.A contract modification with a value of $33.2 million with a U.S. federal agency to provide stakeholder engagement support services.A new contract with a value of $14.8 million with the U.S. Centers for Disease Control and Prevention (CDC) to provide support for CDC’s Needle Exchange Utilization Survey (NEXUS) surveillance project.A new subcontract with a value of $11.2 million to provide information resource support services for the U.S. National Institute of Neurological Disorders and Stroke, Office of Neuroscience Communications and Engagement.A new contract with a value of $10.9 million with the U.S. National Institutes of Health to support the National Library of Medicine’s User Services and Collections Division cross-functional initiatives, including advancing GenAI projects and other programming and technical development activities.A new contract with a value of $9.7 million with the U.S. Department of Education to provide capacity-building services to state, regional and local education agencies.

Disaster Management and Mitigation

A contract extension with a value of $38.5 million with a U.S. state land agency to provide disaster recovery and mitigation grant management services.A new contract with a value of $10.5 million with the government of a U.S. territory to provide a comprehensive array of services to support compliance with federal and local disaster management regulations related to its hurricane recovery efforts.

IT Modernization

A new contract with a value of $69.9 million with the government of a U.S. territory to design, build and implement a new geospatial data management system.A new task order under a blanket purchase agreement with a value of $8.9 million with a U.S. federal agency to provide data center modernization services.

Climate, Energy and Environment

A single-award recompete blanket purchase agreement with a ceiling of $75 million with the U.S. Environmental Protection Agency Office of Water to provide environmental, economic, regulatory and evaluation services to the agency’s critical water programs.A recompete blanket purchase agreement with a ceiling of $40.0 million with the U.S. Federal Highway Administration to provide technical, engineering, publications, marketing and professional support services.

Commercial Revenue Third Quarter 2024 Highlights

Commercial revenue was $129.2 million, compared to $118.1 million reported in the third quarter of 2023; up 23.7% compared to revenues of $104.5 million excluding divestitures in 2023.

Commercial revenue accounted for 25.0% of total revenue compared to 23.5% of total revenue in the 2023 third quarter.Energy markets revenue, which includes energy efficiency programs, increased 24.6% and represented 86.7% of commercial revenue.

Key Commercial Contracts Awarded in the Third Quarter of 2024

Notable commercial awards won in the third quarter of 2024 included:

A contract modification with a mid-Atlantic U.S. utility to continue to provide program implementation services for its residential energy efficiency portfolio.A contract modification with a multinational energy company to prepare environmental impact statements for the company’s offshore wind projects.A new contract with an international renewable energy company to prepare an environmental impact statement for its offshore wind project.A new contract with a Midwestern U.S. utility to provide program implementation services for its residential energy efficiency program.A new contract with a Midwestern U.S. electric and gas utility to provide program implementation services for its residential energy efficiency program.A new contract with a Midwestern U.S. utility to provide demand-side management programs for both market rate and disadvantaged communities for its residential energy efficiency portfolio.A contract modification with a mid-Atlantic U.S. utility to continue to provide program implementation services for its energy efficiency programs.

Dividend Declaration

On October 31, 2024, ICF declared a quarterly cash dividend of $0.14 per share, payable on January 10, 2025, to shareholders of record on December 6, 2024.

Summary and Outlook

“Continued favorable business mix and utilization metrics, together with the incremental tax benefits of approximately $0.25 per share, have led us to increase the midpoint of our earnings per share guidance for full year 2024 by $0.35. Our revised guidance for GAAP EPS is in the range of $6.05 to $6.15, excluding special charges, and Non-GAAP EPS is expected to range from $7.40 to $7.50, representing year-on-year growth of 14.6% at the midpoint. We have adjusted our full year 2024 revenue guidance range to $2.0 billion to $2.03 billion from $2.03 billion to $2.10 billion to reflect an estimated $50 million reduction in expected pass-throughs. This primarily impacts revenue comparisons for our Health and Social Programs client market with no meaningful impact on margins. Based on our strong cash flow to date, we reaffirm our guidance for full year 2024 operating cash flow of approximately $155 million.

“Our forward-looking metrics support our confidence in continued growth for ICF as we enter 2025. We have a strong multiyear backlog, a record business development pipeline and a consistent track record of new business wins. We are experiencing robust demand from commercial clients for our energy and environment expertise and related implementation and technology capabilities. We have excellent credentials in disaster management, resilience and mitigation work to assist state and local governments with recovery after storms, flooding and wildfires, as well as with their future resilience planning. The large majority of our federal government work is in areas that have bipartisan support, particularly IT modernization, which remains an area of priority spending. And importantly, our people are fully engaged in achieving the objectives and missions of our clients, which underpins our confidence in ICF’s future growth potential,” Mr. Wasson concluded.

1 Non-GAAP EPS, EBITDA, and Adjusted EBITDA are non-GAAP measurements. A reconciliation of all non-GAAP measurements to the most applicable GAAP number is set forth below. Special charges are items that were included within our consolidated statements of comprehensive income but are not indicative of ongoing performance and have been presented net of applicable U.S. GAAP taxes. The presentation of non-GAAP measurements may not be comparable to other similarly titled measures used by other companies.

About ICF

ICF is a global consulting and technology services company with approximately 9,000 employees, but we are not your typical consultants. At ICF, business analysts and policy specialists work together with digital strategists, data scientists and creatives. We combine unmatched industry expertise with cutting-edge engagement capabilities to help organizations solve their most complex challenges. Since 1969, public and private sector clients have worked with ICF to navigate change and shape the future. Learn more at icf.com.

Caution Concerning Forward-looking Statements

Statements that are not historical facts and involve known and unknown risks and uncertainties are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such statements may concern our current expectations about our future results, plans, operations and prospects and involve certain risks, including those related to the government contracting industry generally; our particular business, including our dependence on contracts with U.S. federal government agencies; and our ability to acquire and successfully integrate businesses. These and other factors that could cause our actual results to differ from those indicated in forward-looking statements that are included in the “Risk Factors” section of our securities filings with the Securities and Exchange Commission. The forward-looking statements included herein are only made as of the date hereof, and we specifically disclaim any obligation to update these statements in the future.

Note on Forward-Looking Non-GAAP Measures

The company does not reconcile its forward-looking non-GAAP financial measures to the corresponding U.S. GAAP measures, due to the variability and difficulty in making accurate forecasts and projections and because not all of the information necessary for a quantitative reconciliation of these forward-looking non-GAAP financial measures (such as the effect of share-based compensation or the impact of future extraordinary or non-recurring events like acquisitions) is available to the company without unreasonable effort. For the same reasons, the company is unable to estimate the probable significance of the unavailable information. The company provides forward-looking non-GAAP financial measures that it believes will be achievable, but it cannot accurately predict all of the components of the adjusted calculations, and the U.S. GAAP financial measures may be materially different than the non-GAAP financial measures.

Investor Contacts:

Lynn Morgen, ADVISIRY PARTNERS, lynn.morgen@advisiry.com +1.212.750.5800
David Gold, ADVISIRY PARTNERS, david.gold@advisiry.com +1.212.750.5800

Company Information Contact:
Lauren Dyke, ICF, lauren.dyke@ICF.com +1.571.373.5577

 

ICF International, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands, except per share amounts)  

2024

2023

2024

2023

Revenue

$                    516,998

$                 501,519

$              1,523,463

$               1,484,886

Direct costs

325,047

323,504

964,911

961,473

Operating costs and expenses:

Indirect and selling expenses

132,816

131,553

389,001

381,808

Depreciation and amortization

4,820

5,917

15,303

19,052

Amortization of intangible assets

8,291

8,644

24,873

27,154

Total operating costs and expenses

145,927

146,114

429,177

428,014

Operating income

46,024

31,901

129,375

95,399

Interest, net

(7,195)

(10,557)

(23,136)

(30,146)

Other (expense) income

(899)

2,736

767

1,501

Income before income taxes

37,930

24,080

107,006

66,754

Provision for income taxes

5,251

340

21,399

6,304

Net income

$                     32,679

$                   23,740

$                  85,607

$                    60,450

Earnings per Share:

Basic

$                         1.74

$                       1.26

$                      4.57

$                        3.22

Diluted

$                         1.73

$                       1.25

$                      4.53

$                        3.19

Weighted-average Shares:

Basic

18,760

18,815

18,752

18,795

Diluted

18,910

18,974

18,915

18,958

Cash dividends declared per common share

$                         0.14

$                       0.14

$                      0.42

$                        0.42

Other comprehensive loss, net of tax

(951)

(4,053)

(610)

(2,236)

Comprehensive income, net of tax

$                     31,728

$                   19,687

$                  84,997

$                    58,214

 

ICF International, Inc. and Subsidiaries

Reconciliation of Non-GAAP financial measures (2) 

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands, except per share amounts)

2024

2023

2024

2023

Reconciliation of Revenue, Adjusted for Impact of Exited Business 

Revenue

$                516,998

$                501,519

$           1,523,463

$           1,484,886

Less: Revenue from exited business (3)

—

(13,565)

—

(59,713)

Total Revenue, Adjusted for Impact of Exited Business

$                516,998

$                487,954

$           1,523,463

$           1,425,173

Reconciliation of EBITDA and Adjusted EBITDA (4)

Net income

$                  32,679

$                  23,740

$                85,607

$                60,450

Interest, net

7,195

10,557

23,136

30,146

Provision for income taxes

5,251

340

21,399

6,304

Depreciation and amortization

13,111

14,561

40,176

46,206

EBITDA 

58,236

49,198

170,318

143,106

Impairment of long-lived assets (5)

—

2,912

—

3,806

Acquisition and divestiture-related expenses (6)

139

1,779

205

4,685

Severance and other costs related to staff realignment (7)

449

595

1,184

4,455

Charges for facility consolidations and office closures (8)

—

2,220

—

2,579

Pre-tax gain from divestiture of a business (9)

(298)

(2,425)

(2,013)

(2,425)

Total Adjustments

290

5,081

(624)

13,100

Adjusted EBITDA

$                  58,526

$                  54,279

$              169,694

$              156,206

Net Income Margin Percent on Revenue (10)

6.3 %

4.7 %

5.6 %

4.1 %

EBITDA Margin Percent on Revenue (11)

11.3 %

9.8 %

11.2 %

9.6 %

Adjusted EBITDA Margin Percent on Revenue (11)

11.3 %

10.8 %

11.1 %

10.5 %

Reconciliation of Non-GAAP Diluted EPS (4)

U.S. GAAP Diluted EPS

$                      1.73

$                      1.25

$                    4.53

$                    3.19

Impairment of long-lived assets

—

0.15

—

0.20

Acquisition and divestiture-related expenses

0.01

0.09

0.01

0.25

Severance and other costs related to staff realignment

0.02

0.03

0.06

0.23

Expenses related to facility consolidations and office closures (12)

—

0.12

0.04

0.14

Pre-tax gain from divestiture of a business

(0.02)

(0.13)

(0.11)

(0.13)

Amortization of intangibles

0.44

0.46

1.31

1.43

Income tax effects of the adjustments (13)

(0.05)

(0.16)

(0.26)

(0.50)

Non-GAAP Diluted EPS

$                      2.13

$                      1.81

$                    5.58

$                    4.81

(2) These tables provide reconciliations of non-GAAP financial measures to the most applicable GAAP numbers. While we believe that these non-GAAP financial measures 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 GAAP. Other companies may define similarly titled non-GAAP measures differently and, accordingly, care should be exercised in understanding how we define these measures. 

(3) Revenue from the exited U.K. commercial marketing business (June 30, 2023), U.S. commercial marketing business (September 11, 2023), and Canadian mobile text aggregation business (November 1, 2023). Subcontractor and other direct costs from the exited business are approximately 15.0% and 31.1% of revenue of the exited business for the three and nine months ended September 30, 2023, respectively.

(4) Reconciliations of EBITDA, Adjusted EBITDA, and Non-GAAP Diluted EPS were calculated using numbers as reported in U.S. GAAP.

(5) Represents impairment charges recorded in the first and third quarters of 2023 of $0.9 million and $2.9 million, respectively, of an intangible asset associated with the exit of our commercial marketing business in the U.K. and operating lease right-of-use assets.

(6) These are primarily third-party costs related to acquisitions and potential acquisitions, integration of acquisitions, and separation of discontinued businesses or divestitures.

(7) These costs are mainly due to involuntary employee termination benefits for our officers, and employees who have been notified that they will be terminated as part of a business reorganization or exit.

(8) These are exit costs associated with terminated leases or full office closures that we either (i) will continue to pay until the contractual obligations are satisfied but with no economic benefit to us, or (ii) paid upon termination and ceasing to use the leased facilities.

(9) Pre-tax gain related to the 2023 divestiture of our U.S. commercial marketing business which include contingent gains realized in the first and the third quarter of 2024.

(10) Net Income Margin Percent on Revenue was calculated by dividing net income by revenue.

(11) EBITDA Margin Percent and Adjusted EBITDA Margin Percent on Revenue were calculated by dividing the non-GAAP measure by the corresponding revenue.

(12) 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.

(13) Income tax effects were calculated using the effective tax rate, adjusted for certain discrete items, if any, of 13.8% and 21.7% for the three months ended September 30, 2024 and 2023, respectively, and 20.0% and 23.5% for the nine months ended September 30, 2024 and 2023, respectively.

  

ICF International, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

September 30, 2024

December 31, 2023

ASSETS

Current Assets:

Cash and cash equivalents

$                       6,911

$                      6,361

Restricted cash

724

3,088

Contract receivables, net

212,412

205,484

Contract assets

237,742

201,832

Prepaid expenses and other assets

24,785

28,055

Income tax receivable

10,541

2,337

Total Current Assets

493,115

447,157

Property and Equipment, net

71,299

75,948

Other Assets:

Goodwill

1,221,437

1,219,476

Other intangible assets, net

70,030

94,904

Operating lease – right-of-use assets

122,543

132,807

Other assets

49,754

41,480

Total Assets

$                 2,028,178

$               2,011,772

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Current portion of long-term debt

$                     13,750

$                    26,000

Accounts payable

121,093

134,503

Contract liabilities

17,176

21,997

Operating lease liabilities 

21,204

20,409

Finance lease liabilities

2,590

2,522

Accrued salaries and benefits

91,103

88,021

Accrued subcontractors and other direct costs

55,600

45,645

Accrued expenses and other current liabilities

85,274

79,129

Total Current Liabilities

407,790

418,226

Long-term Liabilities:

Long-term debt

405,396

404,407

Operating lease liabilities – non-current

160,926

175,460

Finance lease liabilities – non-current

11,922

13,874

Deferred income taxes

5,982

26,175

Other long-term liabilities

59,845

56,045

Total Liabilities

1,051,861

1,094,187

Commitments and Contingencies

Stockholders’ Equity:

Preferred stock, par value $.001; 5,000,000 shares authorized; none issued

—

—

Common stock, par value $.001; 70,000,000 shares authorized; 24,138,735 and 23,982,132 shares issued at September 30, 2024 and December 31, 2023, respectively; 18,762,710 and 18,845,521 shares outstanding at September 30, 2024 and December 31, 2023, respectively

24

24

Additional paid-in capital

436,671

421,502

Retained earnings

852,835

775,099

Treasury stock, 5,376,025 and 5,136,611 shares at September 30, 2024 and December 31, 2023, respectively

(300,718)

(267,155)

Accumulated other comprehensive loss

(12,495)

(11,885)

Total Stockholders’ Equity

976,317

917,585

Total Liabilities and Stockholders’ Equity

$                 2,028,178

$               2,011,772

 

ICF International, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended

September 30,

(in thousands)

2024

2023

Cash Flows from Operating Activities

Net income

$                         85,607

$                         60,450

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses

3,176

691

Deferred income taxes and unrecognized income tax benefits

(16,957)

(3,533)

Non-cash equity compensation

12,494

10,134

Depreciation and amortization

40,177

46,207

Gain on divestiture of a business

(2,009)

(4,302)

Other operating adjustments, net

2,206

2,563

Changes in operating assets and liabilities, net of the effects of acquisitions:

Net contract assets and liabilities

(40,155)

(52,010)

Contract receivables

(9,634)

12,087

Prepaid expenses and other assets

(434)

11,893

Operating lease assets and liabilities, net

(3,065)

3,897

Accounts payable

(13,402)

(13,333)

Accrued salaries and benefits

2,889

(8,521)

Accrued subcontractors and other direct costs

9,660

(3,353)

Accrued expenses and other current liabilities

16,979

(18,727)

Income tax receivable and payable

(9,574)

450

Other liabilities

(1,774)

959

Net Cash Provided by Operating Activities

76,184

45,552

Cash Flows from Investing Activities

Payments for purchase of property and equipment and capitalized software

(15,559)

(17,876)

Payments for business acquisitions, net of cash acquired

—

(32,664)

Proceeds from divestiture of a business

1,985

47,151

Net Cash Used in Investing Activities

(13,574)

(3,389)

Cash Flows from Financing Activities

Advances from working capital facilities

917,953

972,266

Payments on working capital facilities

(930,043)

(995,244)

Proceeds from other short-term borrowings

43,735

25,394

Repayments of other short-term borrowings

(53,280)

(18,845)

Receipt of restricted contract funds

1,275

6,412

Payment of restricted contract funds

(3,586)

(7,042)

Dividends paid

(7,880)

(7,903)

Net payments for stock issuances and share repurchases

(30,995)

(20,601)

Other financing, net

(1,777)

(1,501)

Net Cash Used in Financing Activities

(64,598)

(47,064)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash

174

(213)

Decrease in Cash, Cash Equivalents, and Restricted Cash

(1,814)

(5,114)

Cash, Cash Equivalents, and Restricted Cash, Beginning of Period

9,449

12,968

Cash, Cash Equivalents, and Restricted Cash, End of Period

$                           7,635

$                           7,854

Supplemental Disclosure of Cash Flow Information

Cash paid during the period for:

Interest

$                         24,388

$                         29,173

Income taxes

$                         50,382

$                         12,604

 

ICF International, Inc. and Subsidiaries

Supplemental Schedule (14)

Revenue by client markets

Three Months Ended

Nine Months Ended

September 30, 

September 30,

2024

2023

2024

2023

Energy, environment, infrastructure, and disaster recovery

46 %

41 %

46 %

40 %

Health and social programs

38 %

42 %

38 %

42 %

Security and other civilian & commercial

16 %

17 %

16 %

18 %

Total

100 %

100 %

100 %

100 %

Revenue by client type

Three Months Ended

Nine Months Ended

September 30, 

September 30,

2024

2023

2024

2023

U.S. federal government

55 %

56 %

55 %

55 %

U.S. state and local government

15 %

15 %

16 %

16 %

International government

5 %

5 %

5 %

5 %

Total Government

75 %

76 %

76 %

76 %

Commercial

25 %

24 %

24 %

24 %

Total

100 %

100 %

100 %

100 %

Revenue by contract mix

Three Months Ended

Nine Months Ended

September 30, 

September 30,

2024

2023

2024

2023

Time-and-materials

43 %

41 %

42 %

41 %

Fixed-price

46 %

45 %

46 %

45 %

Cost-based

11 %

14 %

12 %

14 %

Total

100 %

100 %

100 %

100 %

(14) As is shown in the supplemental schedule, 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.  Revenue by contract mix provides insight in terms of the degree of performance risk that we have assumed.

 

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Faith: The Spark Born by the Yudu Riverside

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BEIJING, Oct. 18, 2026 /PRNewswire/ — An interview from China.org.cn with Wang Xiaohui and David Ferguson on the Long March:

David Ferguson:

This is the Yudu River. One dusk in October, 1934, more than 86,000 soldiers of the Red Army crossed this river and embarked on the Long March, a two-year saga that has left its mark in history.

Yet, lingering here by the river, I am struck by a simple question: If you have faith in a bright future, and reality seems to thwart you at every turn, where do you find the moral strength to keep believing?

Wang Xiaohui:

At dusk on Oct. 17, 1934, an army of more than 86,000 troops gathered along the banks of the Yudu River. Over 800 boats of all sizes floated on the water, bound together with planks collected from villagers’ home gates, timber beams, and even coffin boards reserved for elderly locals. The people of Yudu built this pontoon bridge, determined to help the army led by the Communist Party of China (CPC) cross the river.

At that time, no one knew that the great expedition embarked upon by the banks of the Yudu River would go on to transform China and exert far-reaching influence across the world.

China in the 1920s and 1930s was plagued by chaos and despair.

The Kuomintang (KMT), the ruling party back then, was not capable of unifying the nation, leaving warlords locked in endless fighting. In 1931, Japanese invaders launched an assault on northeastern China, beginning their invasion. Crushed under domestic turbulence and foreign aggression, countless civilians were displaced, with many even starving to death on the streets; in certain regions, severe drought resulted in zero harvests, yet the farmers were forced to pay land taxes assessed for more than a decade into the future.

Amid this turmoil, the only glimmer of hope for the Chinese nation was kindled by the revolution ignited by the Communist Party of China.

The CPC, dedicated to winning liberation for the people and national independence, built contingents of workers’ and peasants’ Red Army troops and revolutionary base areas across the countryside. Impoverished farmers were granted land ownership, as well as unprecedented political dignity. On Nov. 7, 1931, the Chinese Soviet Republic was officially proclaimed in Ruijin, then a small village in southeastern China’s Jiangxi Province, establishing a Soviet system under which workers, peasants and soldiers elected representatives to run regional affairs and make policies.

The communist ideal of a fair society free from exploitation and equality for all blazed like a spark in the darkness; it kindled hopes among impoverished Chinese and became the wellspring of faith that enabled the Red Army — a force made up of poor workers and peasants — to overcome all hardships in the days to come.

Yet, bright as the spark was, it burned thin and fragile at times. Could this flame still endure when the ideals it carried were repeatedly battered by harsh reality?

In September 1933, flocks of warplanes clouded the skies over the Red Army’s revolutionary base areas. By then, Japanese invaders were steadily advancing towards North China, but Chiang Kai-shek’s KMT turned a blind eye to the looming national crisis. They mobilized over a million troops and more than 200 aircraft to launch a massive offensive at the Red Army’s base areas. Over the previous three years, Chiang Kai-shek had mounted four major military “encirclement” campaigns aimed at exterminating the Red Army, but all ended in failure. He was desperate for a pivotal victory to restore his prestige and to wipe out the CPC and the Red Army.

At the time, the commander of the Red Army abandoned mobile warfare tactics pioneered by Mao Zedong and other commanders, opting instead for rigid positional warfare involving conventional head-on clashes. But the reality was, some Red Army units didn’t even possess a single light machine gun; how could they confront the heavily-armed KMT army head-on?

Zhong Ming, a Red Army medic, could never erase the memories of gravely wounded soldiers being carried to his aid station. He remembered how a soldier whose chest was blown open begged his comrades to end his life. At the frontline, a whole battalion of Red Army soldiers religiously followed orders to defend crude earth-and-wood bunkers, but under the constant barrage of KMT artillery and airstrikes, every soldier in the battalion laid down their lives; not a single man survived.

What’s more heart-wrenching is that no matter how fearlessly the Red Army fought, the steep imbalance in military strength, paired with erroneous military command led to irreversible losses. By October 1934, the KMT’s iron-clad encirclement closed menacingly around Ruijin.

Faced with this dead-end, what decision would you make?

This stood as the most agonizing decision for the Red Army. The biggest challenge lay not in sacrificing one’s life for an ideal, but in finding a way to keep the revolutionary cause alive.

To stay meant defeat — the Red Army had no room to maneuver within the Central Revolutionary Base Area. To break through the encirclement, however slim the odds, offered a fighting chance. Preserving the Red Army as a living force mattered much more than clinging to isolated strongholds. Where the spark survives, the path ahead remains lit.

The air already turned chilly in October. Units of the Central Red Army assembled in Yudu to prepare for a strategic shift. The plan was kept strictly classified; none of the soldiers knew they were evacuating the base areas, only sensing an unusual vibe.

At dusk on Oct. 17, crowds lined up at the Yudu riverbank. Tens of thousands of villagers flocked from every corner to see the Red Army off. They walked alongside the marching columns, slipping food like eggs and glutinous rice balls into the soldiers’ pockets, praying for their swift homecoming.

The main force of the Central Red Army set off. Within days, they left behind revolutionary base areas where they had survived, grown and taken root. No one anticipated that the journey they embarked on would become the Long March, a trek spanning over 10 provinces. Still less could anyone imagine that this journey would ultimately pave the way for a brand-new China.

Looking back on this chapter of history, many claim that the Red Army only set out on this expedition because the enemies left them no other choice. To a degree, yes, the Long March was indeed a forced strategic shift, yet this fact does nothing to diminish its greatness and glory.

The ordinary Red Army soldiers had no idea how far they would march, or where they were heading. But they clung firmly to their founding mission: to deliver liberation for the people and independence to the nation. This unswerving conviction kept them from disintegrating through countless perils, sustaining them as they marched into the unknown with resolve.

David Ferguson:

I now realize that faith and ideals untested by harsh reality may have no true substance.

Since its founding, the Communist Party of China has always upheld the realization of communism as its fundamental goal. Despite devastating losses and extreme adversity, the Red Army continued to press forward resolutely and never faltered. Its inner strength came from an unshakable belief in the cause, an unwavering commitment to the founding aspiration, and a profound sense of mission. The Red Army was never fleeing pursuers in search of safety; it was marching forward to a future in which it had a steadfast belief.

Wang Xiaohui:

The Long March went on for two years. The Red Army trekked 25,000 li across some of China’s harshest terrain, but they kept their heads high, seeking hope amid despair and marching towards light through unending darkness. The lofty ideals and sense of mission they upheld have also become the torch that guides generations of CPC members in the following centennial, tempering them into steel as they press forward unswervingly toward national rejuvenation.

That spark lit along the Yudu River has never dimmed since.

China Mosaic
http://www.china.org.cn/video/node_7230027.htm

Faith: The Spark Born by the Yudu Riverside
http://www.china.org.cn/2026-10/16/content_118736835.shtml

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Linktel Technologies Highlights Breakthrough 1.6T LPO Performance & Strong Market Pull at OCP 2026

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SAN JOSE, Calif., Oct. 18, 2026 /PRNewswire/ — At the recent 2026 OCP Global Summit, Linktel Technologies showcased its cutting-edge optical interconnect portfolios engineered specifically for next-generation AI computing networks. Among the heavy lineup, Linktel’s 1.6T Linear Pluggable Optics (LPO) solutions commanded immense industry attention, drawing heavy customer interest for their unprecedented energy efficiency, ultra-low latency, and supply-chain resilience.

Spotlight: 1.6T LPO Performance & High Customer Traction

AI data centers face immense scaling pressures, demanding higher bandwidth densities with tighter thermal and power budgets. Linktel’s 1.6T LPO solutions—highlighted by the 1.6T LPO 2DR4—delivered standout performance metrics that captured the spotlight at the summit:

Ultra-Low Power Consumption: Operates with power consumption as low as an impressive 10W, drastically mitigating data center cooling and power loads.Minimal Latency: Features a linear optics architecture that cuts down signal processing delays, making it a critical asset for high-performance AI scale-out fabrics.Enhanced Supply-Chain Resilience: Eliminating the optical DSP mitigates component choke points, ensuring robust scalability for mass deployments.Proven Interoperability: Following its breakthrough performance and multi-switch platform interoperability at the early September 2026 1.6T LPO-MSA Plugfest, Linktel has laid a solid foundation for the 200G-per-wavelength ecosystem.

Surging Market Interest

Throughout OCP 2026, Linktel’s live demonstrations of its 1.6T LPO, LRO, and FRO modules drew crowds of data center architects and industry partners. With volume production already in place, Linktel is fully equipped to meet the exploding market demand for energy-efficient, high-density 1.6T connectivity.

Overview of Other Innovations at OCP 2026

In addition to the heavily requested 1.6T LPO lineup, Linktel showcased two other major high-speed architectural pillars:

12.8T Liquid-Cooled XPO:Featured a live thermal demonstration integrating advanced liquid cooling to guarantee stable operations in high-density AI nodes.As a founding member of the XPO MSA, Linktel is actively scaling XPO series with FRO, LRO, and LPO variants for comprehensive scale-up, scale-out, and scale-across frameworks.6.4T/7.2T NPO Modules:Displayed with covers removed to reveal internal architectural designs supporting both ELS and ILS configurations.Combines compact high density with low power and low latency, backed by an established 6.4T/7.2T NPO roadmap.DMD Technology & Executive Presentation:Linktel Engineer Director Dr. Grace Zhang hosted a heavily attended Executive Session titled “Dispersion Managed Transceiver for Next-Gen AI Fabrics,” detailing cost-effective 800G (20km) and 1.6T (10km) solutions for OCS SuperPOD architectures, as well as the feasibility of 400G per lambda (3km).With its DMD product line already in volume production, Linktel actively calls upon ecosystem partners to join forces in collaborative development. To drive ecosystem maturity, Linktel is open to sharing its U.S.-filed patents, paving the way for industry-wide adoption and advancements in next-gen AI fabrics.

About Linktel Technologies

Linktel Technologies is a global leader in optical transceiver development and manufacturing, supplying high-speed optical I/O connectivity—including pluggable transceivers, optical engines, and ODM/JDM services.

For more information, visit www.linktel.com or follow Linktel Technologies on LinkedIn.

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Advanced Manufacturing in Focus: Smart Life and Robotics Take the Spotlight at 140th Canton Fair

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GUANGZHOU, China, Oct. 18, 2026 /CNW/ — Phase 1 of the 140th Canton Fair, themed “Advanced Manufacturing,” opened on October 15 and will run through October 19. As one of the event’s most closely watched sections, the Consumer Electronics and Information Products zone once again serves as a showcase for the latest achievements in China’s manufacturing and technology industries.

Smart Life Solutions Address an Aging and Globalized Market

A highlight of this section is the focus on smart living, which brings together smart solutions designed to support healthier, safer, and more independent lifestyles.

For example, wearable devices and continuous glucose monitoring systems enable convenient tracking of key health indicators such as heart rate and blood glucose levels. Meanwhile, wearable exoskeletons and other AI-powered devices support mobility training and functional recovery. For home and elderly care, companion robots, electric nursing beds and home-use hyperbaric oxygen chambers, offer a combination of daily care, wellness support and lifestyle assistance. All these solutions highlight a growing shift toward technology-enabled living, where health management, personal care, and independent living are becoming more accessible and connected.

Service Robots Demonstrate Expanding Real-World Applications

The Service Robot Zone remains one of the fair’s most popular attractions in this edition.

Among the crowd favorites is a humanoid robot standing roughly 70–80 centimeters tall. With its expressive movements and playful appearance, the robot draws constant attention as it dances, approaches visitors and occasionally performs flips to the delight of onlookers. Behind the product is a company that has overcome key challenges in compact joint modules and modular humanoid robot development. Its independently developed high-power-density joints deliver remarkable agility and explosive movement, while modular architecture provides flexibility for a wide range of future applications.

More broadly, the Service Robot Zone features exhibits spanning a wide range of application areas, including embodied intelligence, specialized operations, urban services, and smart living. Full-size humanoid robots, dexterous hands with multimodal sensing capabilities and wheeled robots highlight the latest advances in artificial intelligence, perception technologies and motion control. For demanding industrial and emergency environments, exhibitors are presenting robotic inspection systems, live-line maintenance robots and underwater propulsion robots designed to improve safety and operational efficiency.

The commercial services sector is also well represented through reception robots, façade-cleaning robots and fully automated coffee kiosks, while everyday life applications include wearable exoskeletons, robotic lawn mowers and educational robots for home use. Together, these exhibits demonstrate how China’s robotics industry is accelerating its transition from technological innovation to large-scale commercialization.

As the 140th Canton Fair gets underway, the showcased innovations highlight China’s growing strength in advanced manufacturing, turning cutting-edge technologies into practical, market-ready solutions for global customers.

For more convenient attendance, please click here for pre-registration:
https://buyer.cantonfair.org.cn/register/buyer/email?source_type=16

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