10-Q 1 icfi-10q_20220331.htm 10-Q icfi-10q_20220331.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM              TO             

Commission File Number: 001-33045

 

ICF International, Inc.

(Exact name of Registrant as Specified in its Charter)

 

 

Delaware 

 

22-3661438  

(State or Other Jurisdiction of

Incorporation or Organization) 

 

(I.R.S. Employer

Identification No.) 

 

 

 

9300 Lee Highway, Fairfax, VA 

 

22031 

(Address of Principal Executive Offices) 

 

(Zip Code) 

 

Registrant’s telephone number, including area code: (703934-3000

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act.

 

Title of each class

Trading Symbols(s)

Name of each exchange on which registered

Common Stock

ICFI

NASDAQ

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes       No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes       No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer

 

 

 

 

Accelerated filer

 

Non-accelerated filer

 

 

 

 

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes       No

As of April 29, 2022, there were 18,793,455 shares outstanding of the registrant’s common stock.

 

 

 


 

ICF INTERNATIONAL, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q FOR THE

PERIOD ENDED MARCH 31, 2022

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

Consolidated Balance Sheets at March 31, 2022 (Unaudited) and December 31, 2021

3

 

 

 

 

Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March 31, 2022 and 2021

4

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2022 and 2021

5

 

 

 

 

Notes to Consolidated Financial Statements

6

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

 

 

 

Item 4.

Controls and Procedures

29

 

 

PART II. OTHER INFORMATION

30

 

 

 

Item 1.

Legal Proceedings

30

 

 

 

Item 1A.

Risk Factors

30

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

 

 

 

Item 3.

Defaults Upon Senior Securities

30

 

 

 

Item 4.

Mine Safety Disclosures

30

 

 

 

Item 5.

Other Information

30

 

 

 

Item 6.

Exhibits

31

 

 

 


 

PART I. FINANCIAL INFORMATION

Item  1.

Financial Statements 

ICF International, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

  

(in thousands, except share and per share amounts)

 

March 31, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,392

 

 

$

8,254

 

Restricted cash - current

 

 

1,681

 

 

 

12,179

 

Contract receivables, net

 

 

205,827

 

 

 

237,684

 

Contract assets

 

 

189,147

 

 

 

137,867

 

Prepaid expenses and other assets

 

 

41,176

 

 

 

42,354

 

Income tax receivable

 

 

8,288

 

 

 

10,825

 

Total Current Assets

 

 

453,511

 

 

 

449,163

 

Property and Equipment, net

 

 

62,886

 

 

 

52,053

 

Other Assets:

 

 

 

 

 

 

 

 

Goodwill

 

 

1,045,503

 

 

 

1,046,760

 

Other intangible assets, net

 

 

74,274

 

 

 

79,645

 

Operating lease - right-of-use assets

 

 

172,133

 

 

 

177,417

 

Other assets

 

 

49,416

 

 

 

44,496

 

Total Assets

 

$

1,857,723

 

 

$

1,849,534

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

10,000

 

 

$

10,000

 

Accounts payable

 

 

95,706

 

 

 

105,652

 

Contract liabilities

 

 

31,491

 

 

 

39,665

 

Operating lease liabilities - current

 

 

30,530

 

 

 

34,901

 

Accrued salaries and benefits

 

 

94,931

 

 

 

85,517

 

Accrued subcontractors and other direct costs

 

 

40,165

 

 

 

39,400

 

Accrued expenses and other current liabilities

 

 

41,388

 

 

 

61,496

 

Total Current Liabilities

 

 

344,211

 

 

 

376,631

 

Long-term Liabilities:

 

 

 

 

 

 

 

 

Long-term debt

 

 

449,776

 

 

 

411,605

 

Operating lease liabilities - non-current

 

 

189,857

 

 

 

191,805

 

Deferred income taxes

 

 

47,684

 

 

 

41,913

 

Other long-term liabilities

 

 

22,893

 

 

 

24,110

 

Total Liabilities

 

 

1,054,421

 

 

 

1,046,064

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 19)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, par value $.001; 70,000,000 shares authorized; 23,679,411 and 23,535,671 shares issued at March 31, 2022 and December 31, 2021, respectively; 18,793,455 and 18,876,490 shares outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

23

 

 

 

23

 

Additional paid-in capital

 

 

388,639

 

 

 

384,984

 

Retained earnings

 

 

664,532

 

 

 

649,298

 

Treasury stock, 4,885,956 and 4,659,181 shares at March 31, 2022 and December 31, 2021, respectively

 

 

(241,516

)

 

 

(219,800

)

Accumulated other comprehensive loss

 

 

(8,376

)

 

 

(11,035

)

Total Stockholders’ Equity

 

 

803,302

 

 

 

803,470

 

Total Liabilities and Stockholders’ Equity

 

$

1,857,723

 

 

$

1,849,534

 

The accompanying notes are an integral part of these consolidated financial statements.

3


ICF International, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in thousands, except per share amounts)

 

2022

 

 

2021

 

Revenue

 

$

413,468

 

 

$

378,478

 

Direct costs

 

 

258,158

 

 

 

232,082

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Indirect and selling expenses

 

 

117,452

 

 

 

109,982

 

Depreciation and amortization

 

 

4,838

 

 

 

5,270

 

Amortization of intangible assets

 

 

5,317

 

 

 

3,015

 

Total operating costs and expenses

 

 

127,607

 

 

 

118,267

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

27,703

 

 

 

28,129

 

Interest expense

 

 

(2,697

)

 

 

(2,683

)

Other expense

 

 

(369

)

 

 

(417

)

Income before income taxes

 

 

24,637

 

 

 

25,029

 

Provision for income taxes

 

 

6,775

 

 

 

6,678

 

Net income

 

$

17,862

 

 

$

18,351

 

 

 

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

 

Basic

 

$

0.95

 

 

$

0.97

 

Diluted

 

$

0.94

 

 

$

0.96

 

 

 

 

 

 

 

 

 

 

Weighted-average Shares:

 

 

 

 

 

 

 

 

Basic

 

 

18,795

 

 

 

18,885

 

Diluted

 

 

19,012

 

 

 

19,118

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.14

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax

 

 

2,659

 

 

 

2,780

 

Comprehensive income, net of tax

 

$

20,521

 

 

$

21,131

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


ICF International, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in thousands)

 

2022

 

 

2021

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

17,862

 

 

$

18,351

 

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

(Recovery of) provision for credit losses

 

 

(170

)

 

 

5,334

 

Deferred income taxes

 

 

4,505

 

 

 

1,838

 

Non-cash equity compensation

 

 

3,563

 

 

 

3,275

 

Depreciation and amortization

 

 

10,154

 

 

 

8,285

 

Facilities consolidation reserve

 

 

(78

)

 

 

(75

)

Amortization of debt issuance costs

 

 

154

 

 

 

155

 

Impairment of long-lived assets

 

 

 

 

 

303

 

Other adjustments, net

 

 

353

 

 

 

457

 

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

 

 

 

 

 

 

 

 

Net contract assets and liabilities

 

 

(59,689

)

 

 

(19,750

)

Contract receivables

 

 

31,473

 

 

 

2,531

 

Prepaid expenses and other assets

 

 

(11,708

)

 

 

2,016

 

Operating lease assets and liabilities, net

 

 

(532

)

 

 

(1,143

)

Accounts payable

 

 

(9,815

)

 

 

(354

)

Accrued salaries and benefits

 

 

9,513

 

 

 

4,715

 

Accrued subcontractors and other direct costs

 

 

1,078

 

 

 

(33,466

)

Accrued expenses and other current liabilities

 

 

(6,883

)

 

 

8,303

 

Income tax receivable and payable

 

 

2,621

 

 

 

3,924

 

Other liabilities

 

 

544

 

 

 

262

 

Net Cash (Used in) Provided by Operating Activities

 

 

(7,055

)

 

 

4,961

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures for property and equipment and capitalized software

 

 

(6,454

)

 

 

(3,595

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Advances from working capital facilities

 

 

329,690

 

 

 

185,755

 

Payments on working capital facilities

 

 

(291,662

)

 

 

(174,674

)

Receipt of restricted contract funds

 

 

4,301

 

 

 

451

 

Payment of restricted contract funds

 

 

(14,714

)

 

 

(27,081

)

Proceeds from exercise of options

 

 

92

 

 

 

2,702

 

Dividends paid

 

 

(2,644

)

 

 

(2,642

)

Net payments for stock issuances and buybacks

 

 

(22,268

)

 

 

(17,104

)

Payments on business acquisition liabilities

 

 

(121

)

 

 

(682

)

Net Cash Provided by (Used in) Financing Activities

 

 

2,674

 

 

 

(33,275

)

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

 

 

(525

)

 

 

745

 

 

 

 

 

 

 

 

 

 

Decrease in Cash, Cash Equivalents, and Restricted Cash

 

 

(11,360

)

 

 

(31,164

)

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

 

 

20,433

 

 

 

81,987

 

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

 

$

9,073

 

 

$

50,823

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

2,760

 

 

$

2,637

 

Income taxes

 

$

949

 

 

$

961

 

Non-cash investing and financing transactions:

 

 

 

 

 

 

 

 

    Tenant improvements funded by lessor

 

$

10,843

 

 

$

 

The accompanying notes are an integral part of these consolidated financial statements.

5


Notes to Consolidated Financial Statements

(dollar amounts in tables in thousands, except share and per share data)

NOTE 1 - BASIS OF PRESENTATION AND NATURE OF OPERATIONS

Basis of Presentation

The accompanying consolidated financial statements include the accounts of ICF International, Inc. (“ICFI”) and its principal subsidiary, ICF Consulting Group, Inc. (“Consulting,” and together with ICFI, the “Company”), and have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”). Consulting is a wholly owned subsidiary of ICFI. ICFI is a holding company with no operations or assets other than its investment in the common stock of Consulting. All other subsidiaries of the Company are wholly owned by Consulting. All significant intercompany transactions and balances have been eliminated.

Nature of Operations

The Company provides professional services and technology-based solutions to government and commercial clients, including management, marketing, technology, and policy consulting and implementation services, in the areas of energy, environment, and infrastructure; health, education, and social programs; safety and security; and consumer and financial. The Company offers a full range of services to these clients throughout the entire life cycle of a policy, program, project, or initiative, from research and analysis and assessment and advice to design and implementation of programs and technology-based solutions, and the provision of engagement services and programs.

The Company’s major clients are U.S. federal government departments and agencies, most significantly the Department of Health and Human Services, Department of State, and Department of Defense. The Company also serves U.S. state (including territories) and local government departments and agencies, international governments, and commercial clients worldwide. Commercial clients include airlines, airports, electric and gas utilities, health care companies, banks and other financial services companies, transportation, travel and hospitality firms, non-profits/associations,  manufacturing firms, retail chains, and distribution companies. The term “federal” or “federal government” refers to the U.S. federal government, and “state and local” or “state and local government” refers to U.S. state (including territories) and local governments, unless otherwise indicated.

The Company, incorporated in Delaware, is headquartered in Fairfax, Virginia. The Company maintains additional offices throughout the world, including over 50 offices in the U.S. and U.S. territories and more than 20 offices in key markets outside the U.S., including offices in the United Kingdom, Belgium, China, India, and Canada.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. Areas of the consolidated financial statements where estimates may have the most significant effect include contractual and regulatory reserves, valuation and lives of tangible and intangible assets, contingent consideration related to business acquisitions, impairment of goodwill and long-lived assets, accrued liabilities, revenue recognition and costs to complete fixed-price contracts, bonus and other incentive compensation, stock-based compensation, reserves for tax benefits and valuation allowances on deferred tax assets, provisions for income taxes, collectability of receivables, and loss accruals for litigation. Actual results experienced by the Company may differ from management's estimates.

Interim Results

The unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These rules and regulations permit some of the information and footnote disclosures normally included in financial statements, prepared in accordance with U.S. GAAP, to be condensed or omitted. In management’s opinion, the unaudited consolidated financial statements contain all adjustments that are of a normal recurring nature, necessary for a fair presentation of the results of operations and financial position of the Company for the interim periods presented. The Company reports operating results and financial data in one operating segment and reporting unit. Operating results for the three months periods ended March 31, 2022 and 2021 are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2021 and the notes thereto included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 25, 2022 (the “Annual Report”).

 

6


 

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

 

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The provisions of this ASU are elective and apply to all entities, subject to meeting certain criteria, that have debt or hedging contracts, among other contracts, that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The Company can elect to not apply certain modification accounting requirements to contracts affected by reference rate reform if certain criteria are met. Also, the Company can elect various optional expedients that would allow it to continue to apply hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met. This guidance was effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of the transition from LIBOR to alternative reference interest rates for the current Credit Facility (see Note 7—Long-Term Debt) and the related interest rate hedges (see Note 9—Derivative Instruments and Hedging Activities) but does not expect a significant impact to its operating results, financial position, or cash flows.

 

NOTE 2 – RESTRICTED CASH

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets for the periods presented to the total of cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows for the three months ended March 31, 2022 and 2021:

 

 

March 31, 2022

 

 

March 31, 2021

 

 

 

Beginning

 

 

Ending

 

 

Beginning

 

 

Ending

 

Cash and cash equivalents

 

$

8,254

 

 

$

7,392

 

 

$

13,841

 

 

$

8,592

 

Restricted cash - current (1)

 

 

12,179

 

 

 

1,681

 

 

 

68,146

 

 

 

42,231

 

Total of cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows

 

$

20,433

 

 

$

9,073

 

 

$

81,987

 

 

$

50,823

 

 

(1)

Under a contract with a customer that commenced in the fourth quarter of fiscal year 2020, the Company received advance payments to be used to pay providers of services to the customer, a separate third-party. The advanced payments are treated as restricted cash - current as the Company is required under the contract to distribute the advanced funds to the third-party providers of services or return the advanced funds to the customer. Because the Company receives the advance payments from the customer, which must be refunded to the customer or remitted to a third party, the cash receipts are treated as borrowings rather than receipts for the provision of goods or services. Therefore, these cash receipts are presented in the consolidated statements of cash flows as financing cash inflows, “Receipt of restricted contract funds” with the subsequent payments classified as financing cash outflows, “Payment of restricted contract funds.” See Note 6 – Accrued Expenses and Other Current Liabilities for the corresponding liability.

 

NOTE 3 – CONTRACT RECEIVABLES, NET

Contract receivables, net consisted of the following: 

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Billed and billable

 

$

211,827

 

 

$

245,425

 

Allowance for expected credit losses

 

 

(6,000

)

 

 

(7,741

)

Contract receivables, net

 

$

205,827

 

 

$

237,684

 

 

NOTE 4 – GOODWILL

The changes in the carrying amount of goodwill during the three-months period ended March 31, 2022 were as follows:

 

Balance as of December 31, 2021

 

$

1,046,760

 

Measurement period adjustments - ESAC acquisition

 

 

87

 

Measurement period adjustments  - Creative Systems and Consulting acquisition

 

 

(1

)

Effect of foreign currency translation

 

 

(1,343

)

Balance as of March 31, 2022

 

$

1,045,503

 

 

  

7


 

NOTE 5 – LEASES

The Company has operating leases for facilities and equipment which have remaining terms ranging from 1 to 17 years. The leases may include options to extend the lease periods for up to 5 years at rates approximating market rates and/or options to terminate the leases within 1 year. The leases may include a residual value guarantee or a responsibility to return the property to its original state of use. A limited number of leases contain provisions that provide for rental increases based on consumer price indices. The change in rent expense resulting from changes in these indices are included within variable rent.

The Company’s lease cost is recognized on a straight-line basis over the lease term. Lease cost consists of the following:

 

 

Three Months Ended

 

 

 

March 31, 2022

 

 

March 31, 2021

 

Operating lease cost

 

$

9,502

 

 

$

8,793

 

Short-term lease cost

 

 

133

 

 

 

131

 

Variable lease cost

 

 

20

 

 

 

10

 

Sublease income

 

 

(10

)

 

 

 

Total lease cost

 

$

9,645

 

 

$

8,934

 

Future minimum lease payments under non-cancellable leases as of March 31, 2022 were as follows:

March 31, 2023

 

$

33,057

 

March 31, 2024

 

 

20,984

 

March 31, 2025

 

 

23,628

 

March 31, 2026

 

 

21,643

 

March 31, 2027

 

 

20,369

 

Thereafter

 

 

152,425

 

Total future minimum lease payments

 

 

272,106

 

Less:  Interest

 

 

(51,719

)

Total operating lease liabilities

 

$

220,387

 

 

 

 

 

 

Operating lease liabilities - current

 

$

30,530

 

Operating lease liabilities - non-current

 

 

189,857

 

Total operating lease liabilities

 

$

220,387

 

Other information related to operating leases is as follows:

 

 

March 31, 2022

 

 

March 31, 2021

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

10,110

 

 

$

4,130

 

Right-of-use assets obtained in exchange for operating lease liabilities

 

$

2,952

 

 

$

142

 

Weighted-average remaining lease term - operating leases

 

 

11.5

 

 

 

5.8

 

Weighted-average discount rate - operating leases

 

 

3.2

%

 

 

3.4

%

 

8


 

NOTE 6 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

At March 31, 2022 and December 31, 2021, accrued expenses and other current liabilities consisted of the following:

 

 

March 31, 2022

 

 

December 31, 2021

 

Deposits

$

21,162

 

 

$

21,088

 

Restricted contract funds

 

1,668

 

 

 

12,165

 

Accrued IT and software licensing costs

 

1,231

 

 

 

1,702

 

Accrued taxes and insurance premiums

 

3,632

 

 

 

5,267

 

Accrued facilities rental and lease exit costs

 

1,027

 

 

 

1,291

 

Accrued interest

 

171

 

 

 

212

 

Accrued professional services

 

2,363

 

 

 

3,068

 

Accrued dividends

 

2,627

 

 

 

2,643

 

Contingent and contractual liabilities from acquisitions

 

1,212

 

 

 

1,245

 

Interest rate swap liability - current

 

508

 

 

 

3,026

 

Forward contract agreements liability - current

 

182

 

 

 

 

Other accrued expenses and current liabilities

 

5,605

 

 

 

9,789

 

Total accrued expenses and other current liabilities

$

41,388

 

 

$

61,496

 

 

NOTE 7 – LONG-TERM DEBT

At March 31, 2022 and December 31, 2021, debt consisted of:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

Average

Interest Rate

 

 

Outstanding

Balance

 

 

Average

Interest Rate

 

 

Outstanding

Balance

 

Term Loan

 

 

 

 

 

$

180,000

 

 

 

 

 

 

$

182,500

 

Revolving Credit

 

 

 

 

 

 

281,583

 

 

 

 

 

 

 

241,055

 

Total before debt issuance costs

 

1.40%

 

 

 

461,583

 

 

1.65%

 

 

 

423,555

 

Unamortized debt issuance costs

 

 

 

 

 

 

(1,807

)

 

 

 

 

 

 

(1,950

)

 

 

 

 

 

 

$

459,776

 

 

 

 

 

 

$

421,605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

 

 

 

$

10,000

 

 

 

 

 

 

$

10,000

 

Long-term debt - non-current

 

 

 

 

 

 

449,776

 

 

 

 

 

 

 

411,605

 

 

 

 

 

 

 

$

459,776

 

 

 

 

 

 

$

421,605

 

 

On March 3, 2020, the Company entered into the First Amendment (the “First Amendment”) to the Fifth Amended and Restated Business Loan and Security Agreement with a group of ten commercial banks (the “Credit Facility”). The First Amendment amended the Fifth Amended and Restated Business Loan and Security Agreement to, among other things, (i) add a new term loan facility in the original principal amount of $200.0 million; (ii) increase the swing line commitment amount by $25.0 million to $75.0 million; (iii) extend the maturity date; and (iv) modify certain definitions and certain covenants. As a result, the Credit Facility now consists of (i) a term loan facility of $200.0 million; (ii) a revolving line of credit of up to $600.0 million with additional revolving credit commitments of up to $300.0 million, subject to lenders’ approval (the “Accordion”); and (iii) a sub-limit of $75.0 million for swing line loans. The Credit Facility matures on March 3, 2025.

The Company has the option to borrow funds under the Credit Facility at interest rates based on both LIBOR (1, 3, or 6-month rates) and the Base Rate (as defined herein), at its discretion, plus their applicable margins. Base Rates are fluctuating per annum rates of interest equal to the highest of (i) the Overnight Bank Funding Rate, plus 0.5%, (ii) the Prime Rate (as defined under the Credit Facility) and (iii) the daily LIBOR rate, plus a LIBOR margin between 1.00% and 2.00% based on its Leverage Ratio (as defined under the Credit Facility). The interest accrued based on LIBOR rates is to be paid on the last business day of the interest period (1, 3, or 6 months), while interest accrued based on the Base Rate is to be paid in quarterly installments. The Credit Facility also provides for letters of credit aggregating up to $60.0 million which reduce the funds available under the Credit Facility when issued. The unused portion of the Credit Facility is subject to a commitment fee between 0.13% and 0.25% per annum based on the Leverage Ratio.

The Credit Facility is collateralized by substantially all the assets of the Company and requires that the Company remain in compliance with certain financial and non-financial covenants. The financial covenants require, among other things, that the Company maintain at all times an Interest Coverage Ratio (as defined under the Credit Facility) of not less than 3.00 to 1.00 and a Leverage Ratio of not more than 4.00 to 1.00 (subject to a step-up to 4.25 to 1.0 for a four quarter period following permitted acquisitions as

9


defined under the Credit Facility) for each fiscal quarter. As of March 31, 2022, the Company was in compliance with its covenants under the Credit Facility. The Credit Facility also has a conforming dividend covenant that allows the Company to pay dividends as long as it remains in compliance with the financial covenants set forth in the Credit Facility.

As of March 31, 2022, the Company had $461.6 million of long-term debt outstanding from the Credit Facility (including the term loan of $180.0 million, exclusive of unamortized debt issuance costs of $1.8 million), and unused borrowing capacity under the $600.0 million revolving line of credit of $315.1 million under the Credit Facility.  The unused borrowing capacity is inclusive of nine outstanding letters of credit totaling $3.3 million. Taking into account the financial, performance-based limitations, available borrowing capacity (excluding the Accordion and the term loan) was $250.4 million as of March 31, 2022. 

Future scheduled repayments of debt principal are as follows:

Payments due by

 

Term Loan

 

 

Revolving Credit

 

 

Total

 

March 31, 2023

 

$

10,000

 

 

$

 

 

$

10,000

 

March 30, 2024

 

 

15,000